KAMKUS COLLEGE OF LAW

LL.B. IVTH SEM

CODE (K-4002)
LABOUR AND INDUSTRIAL LAW

Suggested Detailed Questions-Answers

Q.1 Give a brief account of evolution of industrial legislation in India?

ANS. INTRODUCTION
Labour law also known as employment law is the body of laws, administrative rulings,
and precedents which address the legal rights of, and restrictions on, working people and their
organizations. As such, it mediates many aspects of the relationship between trade unions,
employers and employees. In other words, Labour law defines the rights and obligations as
workers, union members and employers in the workplace. Generally, labour law covers:

• Industrial relations – certification of unions, labour‐management relations,

collective bargaining and unfair labour practices;
• Workplace health and safety;
• Employment standards, including general holidays, annual leave, working
hours, unfair dismissals, minimum wage, layoff procedures and severance
pay.

There are two broad categories of labour law.

First, collective labour law relates to the tripartite relationship between employee, employer
and union.
Second, individual labour law concerns employees' rights at work and through the contract for
work.
The labour movement has been instrumental in the enacting of laws protecting labour rights in
the 19th and 20th centuries. Labour rights have been integral to the social and economic
development since the industrial revolution.

History of Labour laws

Labour law arose due to the demands of workers for better conditions, the right to organize, and
the simultaneous demands of employers to restrict the powers of workers in many organizations
and to keep labour costs low. Employers' costs can increase due to workers organizing to win
higher wages, or by laws imposing costly requirements, such as health and safety or equal
opportunities conditions. Workers' organizations, such as trade unions, can also transcend purely
industrial disputes, and gain political power ‐ which some employers may oppose. The state of
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labour law at any one time is therefore both the product of, and a component of, struggles
between different interests in society.

International Labour Organisation (ILO) was one of the first organizations to deal with
labour issues. The ILO was established as an agency of the League of Nations following the
Treaty of Versailles, which ended World War I. Post‐war reconstruction and the protection of
labour unions occupied the attention of many nations during and immediately after World War I.
In Great Britain, the Whitley Commission, a subcommittee of the Reconstruction Commission,
recommended in its July 1918 Final Report that "industrial councils" be established throughout
the world. The British Labour Party had issued its own reconstruction programme in the
document titled Labour and the New Social Order. In February 1918, the third Inter‐Allied
Labour and Socialist Conference (representing delegates from Great Britain, France, Belgium
and Italy) issued its report, advocating an international labour rights body, an end to secret
diplomacy, and other goals. And in December 1918, the American Federation of Labor (AFL)
issued its own distinctively a political report, which called for the achievement of numerous
incremental improvements via the collective bargaining process.

As the war drew to a close, two competing visions for the post‐war world emerged. The first was
offered by the International Federation of Trade Unions (IFTU), which called for a meeting in
Berne in July 1919. The Berne meeting would consider both the future of the IFTU and the
various proposals which had been made in the previous few years. The IFTU also proposed
including delegates from the Central Powers as equals. Samuel Gompers, president of the AFL,
boycotted the meeting, wanting the Central Powers delegates in a subservient role as an
admission of guilt for their countries' role in the bringing about war. Instead, Gompers favored a
meeting in Paris which would only consider President Woodrow Wilson's Fourteen Points as a
platform. Despite the American boycott, the Berne meeting went ahead as scheduled. In its final
report, the Berne Conference demanded an end to wage labour and the establishment of
socialism. If these ends could not be immediately achieved, then an international body attached
to the League of Nations should enact and enforce legislation to protect workers and trade
unions.

The British proposed establishing an international parliament to enact labour laws which each
member of the League would be required to implement. Each nation would have two delegates to
the parliament, one each from labour and management. An international labour office would
collect statistics on labour issues and enforce the new international laws. Philosophically
opposed to the concept of an international parliament and convinced that international standards
would lower the few protections achieved in the United States, Gompers proposed that the
international labour body be authorized only to make recommendations, and that enforcement be
left up to the League of Nations. Despite vigorous opposition from the British, the American
proposal was adopted.

The Americans made 10 proposals. Three were adopted without change: That labour should not
be treated as a commodity; that all workers had the right to a wage sufficient to live on; and that
women should receive equal pay for equal work. A proposal protecting the freedom of speech,
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press, assembly, and association was amended to include only freedom of association. A
proposed ban on the international shipment of goods made by children under the age of 16 was
amended to ban goods made by children under the age of 14. A proposal to require an eight‐hour
work day was amended to require the eight‐hour work day or the 40‐hour work week (an
exception was made for countries where productivity was low). Four other American proposals
were rejected. Meanwhile, international delegates proposed three additional clauses, which were
adopted: One or more days for weekly rest; equality of laws for foreign workers; and regular and
frequent inspection of factory conditions.

The Commission issued its final report on 4 March 1919, and the Peace Conference adopted it
without amendment on 11 April. The report became Part XIII of the Treaty of Versailles. (The
Treaty of Versailles was one of the peace treaties at the end of World War I. It ended the state of
war between Germany and the Allied Powers. It was signed on 28 June 1919.)

The first annual conference (referred to as the International Labour Conference, or ILC) began
on 29th October 1919 in Washington DC and adopted the first six International Labour
Conventions, which dealt with hours of work in industry, unemployment, maternity protection,
night work for women, minimum age and night work for young persons in industry. The
prominent French socialist Albert Thomas became its first Director General. The ILO became a
member of the United Nations system after the demise of the League in 1946.

Evolution of Labour law in India

The law relating to labour and employment is also known as Industrial law in India. The history
of labour legislation in India is interwoven with the history of British colonialism. The
industrial/labour legislations enacted by the British were primarily intended to protect the
interests of the British employers. Considerations of British political economy were naturally
paramount in shaping some of these early laws. Thus came the Factories Act. It is well known
that Indian textile goods offered stiff competition to British textiles in the export market and
hence in order to make India labour costlier the Factories Act was first introduced in 1883
because of the pressure brought on the British parliament by the textile magnates of Manchester
and Lancashire. Thus India received the first stipulation of eight hours of work, the abolition
of child labour, and the restriction of women in night employment, and the introduction of
overtime wages for work beyond eight hours. While the impact of this measure was clearly
welfarist the real motivation was undoubtedly protectionist.

The earliest Indian statute to regulate the relationship between employer and his workmen was
the Trade Dispute Act, 1929 (Act 7 of 1929). Provisions were made in this Act for restraining
the rights of strike and lock out but no machinery was provided to take care of disputes.

The original colonial legislation underwent substantial modifications in the post‐colonial era
because independent India called for a clear partnership between labour and capital. The content
of this partnership was unanimously approved in a tripartite conference in December 1947 in

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which it was agreed that labour would be given a fair wage and fair working conditions and in
return capital would receive the fullest co‐operation of labour for uninterrupted production and
higher productivity as part of the strategy for national economic development and that all
concerned would observe a truce period of three years free from strikes and lockouts. Ultimately
the Industrial Disputes Act (the Act) brought into force on 01.04.1947 repealing the Trade
Disputes Act 1929 has since remained on statute book.

Constitutional provisions with regard to labour laws

The relevance of the dignity of human labour and the need for protecting and safeguarding the
interest of labour as human beings has been enshrined in Chapter‐III (Articles 16, 19, 23 & 24)
and 7 Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India keeping in
line with Fundamental Rights and Directive Principles of State Policy.

Labour is a concurrent subject in the Constitution of India implying that both the Union and the
state governments are competent to legislate on labour matters and administer the same. The
bulk of important legislative acts have been enacted by the Parliament.

Constitutional Status

Union List Concurrent List

Entry No. 55: Regulation of labour and
safety in mines and oil fields
Entry No. 61: Industrial disputes concerning
Union employees
Entry No.65: Union agencies and Institution
for “Vocational…… training….”
Entry No. 22: Trade Unions; Industrial and
labour disputes.
Entry No. 23: Social Security and Insurance,
employment and unemployment.
Entry No. 24: Welfare of about including
conditions of work, provident funds, employers
“Invalidity and old age pension and maternity
benefit.

The legislations can be categorized as follows:

(1) Labour laws enacted by the Central Government, where the Central Government
has the sole responsibility for enforcement.

(2) Labour laws enacted by Central Government and enforced both by Central and
State Governments.

(3) Labour laws enacted by Central Government and enforced by the State
Governments.

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 (4) Labour laws enacted and enforced by the various State Governments which apply
to respective States.
The Constitution of India provides detailed provisions for the rights of the citizens and also lays
down the Directive Principles of State Policy which set an aim to which the activities of the state
are to be guided. These Directive Principles provide:

a. for securing the health and strength of employees, men and women;
b. that the tender age of children are not abused;
c. that citizens are not forced by economic necessity to enter avocations unsuited to their
age or strength;
d. just and humane conditions of work and maternity relief are provided; and
e. that the Government shall take steps, by suitable legislation or in any other way, to
secure the participation of employee in the management of undertakings,
establishments or other organisations engaged in any industry.

Types of Labour Legislation in India:

(1) Protective and employment legislation
(2) Social security legislation
(3) Regulatory legislation.

A list of Labour Legislation in India:

Legislation Related to Industrial Relations:

The Trade Union Act, 1926 and the Trade Union Amendment Act, 2011
The Industrial Employment (Standing Orders) Act, 1946
The Industrial Disputes Act, 1947.

Legislation Pertaining to Wages:

The Payment of Wages Act, 1936 and The Payment of Wages (Amendment) Act, 2005
The Minimum Wages Act, 1948
The Payment of Bonus Act, 1965
The Equal Remuneration Act, 1976

Legislation Pertaining to Women and Children:

The Maternity Benefit Act, 1961
The Child Labour (Prohibition and Regulation) Act, 1986

Legislation Pertaining to Social Security:

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The Workmen's Compensation Act, 1923 and The Workmen's Compensation (Amendment) Act,
2000.
The Employees State Insurance Act, 1948
The Employees” provident Fund and Miscellaneous Provisions Act, 1952 and The Employees”
Provident Fund and Miscellaneous Provisions (Amendment) Act, 1996

The Payment of Gratuity Act, 1972

The Unorganized Workers Social Security Act, 2008.

Conclusion
Thinking about labour law in India requires us to think not merely about the application of asset
of legal or regulatory conventions governing labour in a particular society. It also requires
thinking about what 'labour law' might mean in varying economic and social contexts. In certain
respects Indian labour law is much like the labour law of developed industrial societies. It has
extensive legislation providing for minimum standards of employment, social security,
occupational health and safety and so on. Its labour law legalizes trade unions and their
activities, and provides a framework for the settlement of industrial disputes. It legalizes
industrial action in pursuit of collective interests. Yet, as we have seen, formally the labour law
of India covers only a very small percentage of the Indian workforce, and even among that
cohort the law's application in practice is lax to say the least. Neither of the two principal objects
of the labour law system identified in this paper appears to have been met in practice. To all
intents and purposes then, this is a nonfunctioning system

Q.2 Define Industry. Discuss the Judicial interpretation of the term

“Industry” under Industrial Dispute Act, 1947?

Ans. 1. Definition of Industry

The definition of INDUSTRY as provided in Section 2(j), which came into effect immediately
after independence, says that “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.”

An industry exists only when there is relationship between employers and employees, the
former is engaged in business, trade, undertaking, manufacture or calling of employers and the
latter is engaged in the calling, service, employment, handicraft or industrial occupation and
avocation.

2. What Constitutes an “Industry?”

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Section 2 (j) of the Industrial Disputes Act, 1947 can be divided into two components. The
first component enumerates as the statutory meaning of ‘industry’; the second component
provides as to what does an industry includes within its definition. This definition is not
exhaustive and cannot be treated as restricted in any sense has therefore been subjected to
immense judicial scrutiny.

3. Judicial Interpretation of the term “Industry’’

The landmark judgment is the Bangalore Water Supply case, enlarged the definition to a
large extent and over-ruled case precedents which were a part of narrow interpretation, that is to
say, before the Bangalore Water Supply case clubs, hospitals universities solicitor firms,
government departments were excluded from the definition of industry but after the Bangalore
judgment they have been declared as industry. The triple test of the Bangalore case forms the
quintessential part of the amended definition of industry in 1982.

The definition and interpretation of ‘INDUSTRY’ in Section 2(j) of the Industrial Disputes Act,
1947, has been a contentious issue for over four decades. Considering its “serious and
wide-ranging implications,” a seven-judge Constitution Bench of the Supreme Court has
referred the issue to a nine-judge bench.
As serious doubts were raised about the correctness of the view taken in the Bangalore
Water Supply’s case, a five-judge bench in May 2005, had referred the matter to a larger bench
which was supposed to give a meaning and effect to the definition clause in the present context
and also keeping in view the amended definition of ‘industry’ which has been kept dormant for
many years since amendment in 1982.

“Pressing demands of the competing sectors of employers and employees and the
helplessness of legislature and executive in bringing into force the Amendment Act
compel us to make this reference,” the five-judge bench had said in its 2005 reference
order. This was after a three-judge bench found an “apparent conflict” between its two
decisions of 1996 and 2001 on the issue.

Earlier in 1996, a three-judge bench while relying on a 1978 seven-judge bench verdict had held
that the social forestry department was covered by the definition of ‘industry’. Later in 2001, a
two-judge bench took a contrary view on the issue. The definition of industry as provided in
Section 2(j), which came into effect immediately after independence, says that “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.”

In the landmark judgment, Bangalore Water Supply and Sewerage Board versus A.
Rajappa, (AIR 1978 SC 548)

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 A seven-judge SC bench in 1978 extended the definition from manufacturing units to other
government establishments, irrespective of the functions performed by them. It decided that
Bangalore Water Supply was an industry by a majority vote of 5:2, a stand opposed by the board
itself.
TRIPLE TESTS:

A set of three criteria was developed by Justice Krishna Iyer in the case to determine
conclusively what activity and establishment should constitute an industry. It was stated that:

1. Where there is a
(i) Systematic activity,
(ii) Organised by co-operation between employer and employee,
(iii) For the production and/or distribution of goods and services calculated to satisfy
human wants and wishes, prima facie, there is an ‘industry’ in that enterprise.

2. It is immaterial whether or not there is profit motive or whether or not there is capital.
3. If the organization is a trade or business it does not cease to be one because of philanthropy
animating the triple test, cannot be exempted from scope of definition of industry.
4. Dominant nature test – whether there is complex of activities, the test would be
predominant nature of services and integrated nature of departments. All departments
integrated with industry will also be industry.
5. The exceptions to industry are-

Casual activities (because they are not systematic)

• Small clubs, co–operatives, research labs, gurukuls which have an essentially non
employee character.
• Single door lawyers taking help from clerk (because there is no organized labour).
• Selfless charitable activities carried on through volunteer’s e.g. free legal or medical
service.

Sovereign functions – strictly understood, i.e., maintenance of law and order, legislative
functions and judicial function.

Charitable Institutions:
These fall into three categories –

(a) Those that yield profit, but the profits are not siphoned off for altruistic purposes;
(b) Those that make no profit but hire the service of employees as in any other business,
but the goods/ services which are the output, are made available at a low or no cost
to the indigent poor; and

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 (c) Those that are oriented on a humane mission fulfilled by men who work, not because
they are paid wages, but because they share the passion for the cause and derive job
satisfaction.

The first two categories are industries, but not the third, on the assumption that they all involve
co-operation between employers and employees.
With the 1978 judgment, professions such as attorneys, activities like clubs, educational
institutions, co-operatives, research institutes, and philanthropic enterprises were also covered in
the definition of industry. The top court also held that the absence of profit motive or gainful
objective or whether the venture is public/joint or private or other sector is irrelevant while
deciding whether an enterprise is an industry. It also ruled that welfare economic activities
undertaken by the government or statutory bodies not being sovereign functions are also covered
by the definition.

Aggrieved by the widened definition, the Government amended the Industrial Disputes Act in
1982. Although the new provision is yet to come into force.
With this as the background, the apex court in 2005 in the case of State of UP vs. Jai Bir Singh
sought a reconsideration of the 38-year-old verdict by a larger bench as the verdict carried an
“over-emphasis on the rights of the workers.”

4. Whether Hospital University & Municipal Corporation is Industry?

The provisions of strike, lockout, retrenchment, layoff, bipartite forums and adjudication be
applicable to Gangaram Hospital, ISRO, ISB, University of Delhi, Mohun Bagan Football
Club, Municipal Corporation of Delhi and organizations like these? The answer lies in
whether they are covered within the ambit of Industry in Industrial Disputes Act.

The definition of ‘Industry’ in the Act has gone through tumultuous journey in last 68 years. A
historical perspective of this journey not only gives a peep into the evolving thoughts of judiciary
and legislature on what should and shouldn’t be industry, but also signals the landmines that are
not yet diffused.

‘Industry’ is defined in very generic terms in the Act. From employers’ perspective, it includes
any business, trade, undertaking, manufacture or calling and from workmen’s perspective, it
includes any calling, service, employment, handicraft or industrial occupation or avocation.

• Whether Hospital is an Industry?

• In State of Bombay v. Hospital Mazdoor Sabha, ( AIR 1950 SC 610)
The Supreme Court held the State is carrying on an ‘undertaking’ within Sec. 2(j) when it runs
a group of hospitals for purpose of giving medical relief to the citizens and for helping to
impart medical education. The court observed as follows:
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 • An activity systematically or habitually undertaken for the production or distribution of
goods or for the rendering of material services to the community at large or a part of such
community with the help of employees is an ‘undertaking.
• It is the character of the activity in question which attracts the provisions of Sec. 2 (j),
who conducts the activity and whether it is conducted for profit or not, do not make a
material difference.

Thus, activities that have no commercial implications, such as hospitals carried on with
philanthropic motives would be covered by the expression ‘undertaking’. The mere fact that
Government runs such activity is immaterial. In case an activity is industry if carried on by a
private person, it would be so, even if carried on by the Government.

• In Management of Safdarjung Hospital v. Kuldip Singh ( AIR 1960

SC 610)
It was held that a place of treatment of patients run as a department of the government was not
an industry because it was a part of the functions of the government. Charitable hospitals run by
Government or even private associations cannot be included in the definition of industry because
they have not embarked upon economic activities analogous to trade or business. If hospitals,
nursing home or a dispensary is run as a business in a commercial way, there may be elements of
industry.

• In Bangalore Water Supply vs. A. Rajappa (AIR 1978 SC 548)

The Supreme Court overruled Safdarjung Hospital case, and approved the law laid down in
Hospital Mazdoor Sabha case. It was held that hospital facilities are surely services and hence
industries. The government departments while undertaking welfare activities cannot be said to
be engaged in discharging sovereign functions and hence outside the ambit of Sec. 2(j) of the
Act.

• Whether Municipal corporation is an Industry

In 1953, the definition of industry was interpreted for first time

In D.N. Banerji vs. P.R. Mukherjee Case, (It is known as Budge-2 Municipality
Case) Sanitary Inspector and Head Clerk were suspended by Budge Budge Municipality and
the Workers’ Union had raised dispute demanding reinstatement. In the Supreme Court, the
Municipality pleaded that it is discharging sovereign function under the Bengal Municipal Act
and hence, it is not industry and thus the dispute is not an industrial dispute. The Court observed
that the definition is intended to include even those activities that cannot be called trade or
business. It held that Municipality is an industry because sanitation and conservation is an
undertaking which is comparable to trade and industry.

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 • In Bangalore Water Supply Case
The watershed judgment on definition of industry was delivered in 1978 in Bangalore Water
Supply Case. This case devised a triple test to determine whether an activity can be called
industry or not. These tests were:

a. Systematic activity
b. Organized by co-operation between employer and employees
c. For production and distribution of goods and services calculated to satisfy
human wishes

Hence Municipalities were covered within the ambit of industry under sec 2(j) of the I. D. Act,
1947.

• Whether Educational Institution is an Industry?

• In University of Delhi Vs Ram Nath
A driver of Miranda House was discharged from service which led to dispute. University
claimed that it is not industry and the Court agreed. The Court held that education is imparted by
teachers who are not workmen. The intention of legislature was not be include educational
institutions within industry to extend benefits to the drivers and others who are not core service
providers.

• In Bangalore Water Supply Case

The definition of industry was delivered in 1978 in Bangalore Water Supply Case. This case
devised a triple test to determine whether an activity can be called industry or not. These tests
were:
a. Systematic activity
b. Organized by co-operation between employer and employees
c. For production and distribution of goods and services calculated to satisfy human
wishes

The implication of this judgment was sweeping: Hospitals, Clubs, Education institutions,
Charitable organizations, Municipalities, Research Institutes, Training organizations were
covered within the ambit of industry.

Conclusions:
The Government responded to judicial activism and amended the definition in 1982 by adopting
a triple test of Bangalore Water Supply Case but, mindful of the dissenting judgments, excluded
hospitals, educational institutions, research & training institutions, charitable organizations from
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the definition. This definition would put all noises to rest and be an absolute enabler to India’s
growth story. It has been 33 years but the definition is not made effective yet. Meanwhile,
dissent continues in corridor of Supreme Court.

In Coir Board Case of 1990, apex Court was faced with whether Coir Board of Ernakulam, set
up to support the Coir Industry, would be industry. The Court was of view that the Coir Board is
delivering sovereign function and hence it is not industry. It differed with the judgment of
Bangalore Water Supply Case and requested a larger Bench to review the judgment.

Again in 2005, Jai Bir Singh’s case rebelled with the Bangalore Water Supply Case. The
Court held that the social forestry Department of a State is a sovereign function and not industry.
Let a larger Bench review Bangalore Water Supply Case.

Q.3 Define Industrial Dispute? When does Individual Dispute become

Industrial Disputes

Ans. I. General:
The Industrial Disputes Act, 1947, is an effort on the part of the government to normalize
industrial relations in India. This legislation is premeditated to ensure industrial peace by
recourse to a given procedure and machinery for investigation and settlement of industrial
disputes. Its foremost objective is to provide for an unbiased and equitable settlement of disputes
by negotiations, conciliation, mediation, voluntary arbitration and compulsory adjudication
instead of by trial of strength through strikes and lockouts. But, when the industrial disputes act
came, labour disputes had gained new grounds, large and scary. There were clashes between
workmen and employers on several occasions. The word INDUSTRIAL DISPUTE express
meaning to the everyday person that the dispute must be such as would affect large groups of
workmen and employers ranged on opposite sides on some general question on which each
group is bound together by community of interests, such as wages, bonuses, allowances,
pensions and so on.

II Definition of Industrial Dispute

Industrial Dispute- Sec. 2(k) The term “Industrial Dispute” has been defined in Section
2(k) of the Industrial Disputes Act 1947 as follows;

“Industrial dispute" means any dispute or difference between employers and

employers, or between employers and workmen, or between workmen and workmen,

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 which is connected with the employment or non-employment or the terms of
employment or with the conditions of labour, of any person”

It has remained unamended since then. This definition is taken from the definition of “trade
dispute" u/s 2 (j) of the repealed Trade Disputes Act, 1929 which was in turn a reproduction of
S.8 of the Industrial Courts Act 1919 of United Kingdom. As per this Act,
“Any dispute or difference between employers and workmen or between workmen and
workmen, connected with the employment or non-employment or the terms of
employment, or with the condition of labour of any person”

The definition of “Industrial Dispute” in Industrial Disputes Act 1947 is a modified

form. Therefore the definition is comprehensive and wide enough to include all disputes or
differences between employers and employers or employers and workmen or workmen and
workmen for employment and non-employment or terms of employment or conditions of labour
of a person. The definition does not refer to “industry”. But the grammar of the expression
indicates that it is a dispute in an industry. Moreover, the use of the expressions “workmen” and
“employers” in the definition shows the requirement of “industry”.

• In Madras Gymkhana Club Employees’ Union v. Gymkhana Club case, Supreme Court
said that the definition contains two limitations-The term “industrial" relates to the dispute
of industry only It expressly states that not all disputes and differences but only those which
bear upon the relationship of employers and workmen regarding employment and
non-employment, terms of employment and conditions of labour are contemplated.

III. Essentials of Industrial Dispute:

A. Factum of Industrial Dispute
B. Parties to the Dispute
(i) Employers and Employers.
(ii) Employers and Workmen.
(iii) Workmen and Workmen.

C. Subject matter of Industrial Disputes

(i) Employment.
(ii) Non- Employment.
(iii) Terms of Employment.
(iv) Conditions of Labour.

D. Any person.

A Factum of Industrial Disputes:

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The expression ‘dispute or difference’ connotes a real and substantial difference having some
elements of persistency and likely, if not adjusted, to endanger the industrial peace of the
community. Therefore, it means a controversy, fairly definite and of real substance, connected
with the employment or non-employment, with the terms of employment or with the conditions
of labour of any person and is one in which the contesting parties are directly interested in
maintaining their respective contentions. The definition further shows that certain type of
disputes can never fall within its ambit. For e.g. disputes between a government and an industrial
establishment or between workmen and non-workmen. There is divergence of opinion on the
issue whether a mere demand to the appropriate government or to the Conciliation Officer
without a dispute being raised by the workmen with the employer regarding such demand can be
called an industrial dispute? In the earlier decisions SC held that the industrial dispute must be
inexistence or apprehended on the date of preference. The net effect of the principle is that even
if the demand is not made earlier before the management and rejected by them and is raised at
the time of reference or conciliation proceedings, the dispute may be an industrial dispute. This
view was followed in Shambhunath Goel v. Bank of Baroda.

• In Workmen of Hindustan Lever Ltd v. Hindustan Lever Ltd

Maharashtra Government referred a dispute between Hindustan Lever Ltd and its employees for
adjudication to the Industrial Tribunal. The employers objected that the reference was
incompetent because the dispute raised by the workmen and referred by the government was not
an industrial dispute. This contention was accepted by Industrial Tribunal but rejected by SC by
saying that ‘the expression of industrial dispute has been widely defined and any that may
develop between the employer and its workmen cannot go outside the purview of the definition.’

• In Sindhu Resettlement Corporation Ltd v. Industrial Tribunal

SC said that if there is no dispute raised by the workmen with the management, any request sent
by them to the government would only be a demand. A mere demand to the government without
a dispute being raised cannot become an industrial dispute

B. Parties to the Dispute

• Employers and Employers-

The term ‘employers and employers’ have been included in the definition to widen its scope
and ambit, the eventualities in certain types of disputes connected with the employment- or
non-employment, terms of employment or conditions of labour of any person in which there may
be some interest.

• Employers and Workmen

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An employer-workmen relationship needs to exist in order to consider it an industrial dispute.
Here, ‘Employer’ means an industrial employer and the ‘workmen’ should satisfy the
conditions u/s 2(s) of the Act. Due to the absence of an employer-employee relationship
between a contract worker and principle employer, a dispute between them regarding the
regularization of the service of contract workers cannot be called an industrial dispute

• Workmen and Workmen

A dispute between two sets of workmen also falls within the ambit of industrial dispute. The
dispute must be between the workmen for whom the trade unions act as representative capacity
but a dispute between trade unions is a pure-inter union dispute and cannot be an industrial
dispute. In English Law controversy between two unions which was not connected with
employment or non- employment does not fall within the meaning of ‘trade dispute’ but a
dispute springing out of the rivalry of one union with another is a trade dispute. In India there is
no decision of High Court or Supreme Court with respect to dispute between workmen and
workmen.

C. Subject matter of Industrial Disputes

A dispute or difference must relate to either employment or non-employment or terms of
employment or the conditions of labour of any person. Unless a dispute is connected with these
matters, it will not satisfy the requirements of law and will not fall within the ambit of ‘industrial
dispute’. Thus the subject matters are-

➢ Employment
➢ Non-employment
➢ Terms of employment
➢ The conditions of labour

Various matters may give rise to industrial dispute has been enumerated in the second and third
schedules of the Act. ‘Employment and non-employment’ has the widest amplitude amongst the
other subject-matters. These words have not been defined in the Act but ‘employment’ refers to
a condition in which a man is kept occupied in executing any work and it means not only an
appointment to an office for the first time but also continuity of the appointment. The concept of
employment brings in the contract of service between the employer and employee.

• In Chinataman Rao v. State of Madhya Pradesh Subba Rao J. said

The Concept of employment has three ingredients-

(i) Employer- one who employs
(ii) Employee- one who works for another for hire
(iii) Contract of Employment

15
Non- employment is the negative of employment. It is the positive or negative act of the
employer that leads to the employment or non- employment or it may relates to an existing fact
of non- employment. The failure to employment or refusals to employment are actions in the part
of the employer which falls under non-employment.

D Meaning of “Any Person”

The dispute can be raised either for a workman or any person about whom the workmen have
substantial interest in the employment or non-employment or terms of employment or conditions
of labour. ‘Any person’ in the definition has not been equated with workmen and it has a wider
connotation. But ‘any person’ is also subject to limitation under the process of judicial
interpretation. Any person must have a direct relation with the workmen about whose
employment or non-employment or terms of employment or conditions of labour workmen have
direct and substantial interest. It means that any person must be an employee of the industry in
which the workmen are employees.

INDIVIDUAL DISPUTES VIS-À-VIS INDUSTRIAL DISPUTES

(Can Individual disputes be considered as Industrial disputes)?
Is a dispute between individual workman and his employer an industrial dispute u/s 2(k) Act?
This is a question of great controversy in Central Provinces Transport Service v. Raghunath
Gopal Patwardhan the court gave two views as to the meaning of the expression’ A Industrial
Dispute’. They are:

➢ A dispute between an employer and a single workman cannot be an industrial

dispute.
➢ It cannot per se be an industrial dispute but may become one if taken up by a
number of workmen or trade union.

• In Newspapers Ltd v. State Industrial Tribunal Tajammal Hussain, a lino typist

was dismissed by the Newspapers on the ground of incompetence. His case was
neither taken up by the Union of workers of the establishment or by any union of
similar trade. His case was taken up by U.P Journalists Union with which the
employee had no concern. The government referred the dispute to the Industrial
Tribunal for adjudication. The Tribunal ordered reinstatement. The appellate
Tribunal and High Court affirmed it. Appeal went to SC who held that Tajammal
Hussain could not be termed as workmen and U.P Journalists Union is not his
Union nor there any indication that the individual dispute has been transferred to
industrial dispute.

• In Bombay Union of Journalists v. The Hindu, the scope of industrial dispute

was further curtailed. In this case the dispute of a workman was taken up the
Bombay Union of Journalists of which union the workman was a member. The
16
 Bombay Union of Journalists was a union not to employee of one employment
but of all employees in the industry of journalism in Bombay. None of the
employees of The Hindu were its members. SC held that it is an individual
dispute and not an industrial dispute.

• In Workmen of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea

Estate
SC gave two tests to determine whether a dispute is industrial or individual. They
are-The must be a real dispute capable of being settled by relief given by one party to
other. The person in respect of whom the dispute is raised must be one in whose
employment, non- employment, terms of employment or conditions of labour, the
parties to the dispute have a direct or substantial interest and this must depend on
facts and circumstances of each particular case.

SC held that an individual dispute may be converted into an industrial dispute when-
(1) it is espoused by trade union or
(2) it is espoused by an appreciable number of workmen.

So as per the first condition to make an individual dispute into an industrial dispute it must be
taken up by a union of workers of the establishment and where there is no such union it may be
espoused by any of the union of workmen employed in similar trades. As far as the second
condition is concerned if an individual dispute of a workman is espoused by an appreciable
number of workmen of the same establishment, then it is converted into an industrial dispute.
The court has admitted that the expression “appreciable number" does not mean majority of the
workmen.

• In Workmen of Dharampal Premchand v. M/S Dharampal Premchand out of 45

workmen, 18 were dismissed. There was no union of workmen. The court said that this
dispute is espoused by an appreciable number of workmen and therefore can be called as
an industrial dispute. Thus SC relaxed the requirement of considering an individual
dispute as an industrial dispute and thereby overruled Bombay Union of Journalists
case.

The net effect of the aforesaid decisions is that an individual worker unsupported by an
appreciable number of workmen or union has no remedy under the Industrial Disputes Act,
1947.

Legislative Responses: Insertion of S. 2A

Before the introduction of S. 2A, as a result of judicial interpretation an individual workmen who
has been discharged, suspended etc from the work had no remedy under the Industrial Dispute
Act 1947 unless his case was sponsored by his fellow workmen or trade union. His only remedy
was to approach the civil court. This new section was inserted by the Amendment Act 1965.

17
S.2A provides that dispute or difference between an individual workman and his employer
connected with discharge, dismissal, retrenchment or otherwise termination of service of a
workman shall deemed to be an industrial dispute even though it has not been sponsored by his
fellow workmen or trade union. But the scope of S.2A is limited.

Section 2 (k) compared with Section 2-A

An individual dispute even though not sponsored by other workmen or espoused by the union
would by deemed to be an industrial dispute if it covers any of the matters mentioned in Section
2-A. So far as the subject matter of the dispute is concerned 2-A does not bring about any
change. The provisions of Section 2(K) alone determine that question.

The only change introduced by Section 2-A is that before its introduction, a dispute even though
was an industrial dispute from the perspective of subjects referred to in Section 2 (k) would not
have become an industrial dispute if it were only an individual dispute and it was not taken up
either by the union or by a substantial body or workmen. But after the introduction of Section
2-A such a dispute would be an industrial dispute in respect of those matters specified in that
Section even though it is not sponsored by a union or a considerable number of workmen.
Section 2-A can be treated as an explanation to Section 2 (k).

Conclusion
In a democratic society an individual is the unit of the society. But the Hon’ble Supreme Court in
the process of interpretation has limited the scope of the definition although it is the admitted
position that the definition includes individual disputes but the scheme of the Act contemplates
community interest. Is it true that by excluding individual disputes from the purview of the
definition, Supreme Court is rendering social justice? In our society labour is the weaker party
and they cannot dictate terms on their employer but is exploited, suffers a lot at the hand of the
employer and has become the most vulnerable and unprotected section of the population. Apart
from this, when under General Clauses Act a singular includes plural there is no legal
justification to restrict the definition by judicial interpretation. Legislature tried to solve the
problem by inserting S. 2A within the Act, partially because only dismissed or discharged or
terminated employees have a legal status to raise the dispute whereas an individual in
employment has been deprived of his legal status. As per Supreme Court decisions, workmen as
a class have a legal status whereas an individual workman has no legal status. Collectivism or
community is inconsistent with the concept of democracy based on atomic individual. So the
researcher is of the view that the Supreme Court decision in this concept of individual dispute
vis-à-vis industrial dispute needs revision and thereby giving legal status to each individual and
not restricting their right by judicial interpretation.

18
Q.4 Illustrate briefly the compositions and powers of the various authorities
constituted under the Industrial Disputes Act, 1947.
OR
What are the various authorities under the Industrial dispute Act, 1947? Discuss
the constitution and function of the authorities.
OR
Discuss machineries which the Industrial Disputes Act, 1947 provide for the
settlement of the Industrial Disputes? Are these measures sufficient in your
opinion in the direction of achieving the aim?

Ans. The whole object of Industrial Dispute Act, 1947 is to assure peace and harmony in the
Functioning of the Industry with a view to achieve maximum industrial Productivity. It has
provided the following authorities for the prevention and settlement of Industrial Disputes are as
follows –

(1) Conciliation Machinery - This machinery consists of the following machinery --

1. The Working Committee

Section 3 of the Industrial Dispute Act, 1947 provides for the constitution of Works
Committees. The expression 'Works Committee' denotes "A committee comprising of
representatives from both the parties (for example employer and their employees) to the Dispute.
The appropriate government is empowered to prescribe that works committee should be
constituted in every industrial establishment employing 100 or more workers.

The Purpose of Creating Works Committee

The main purpose of creating the Works committee is to develop a sense of partnership
between the employee and his workmen.

Constitution of Works Committee:

(1) In the case of any industrial establishment in which one hundred or more workmen are
employed or have been employed on any day in the preceding twelve months, the appropriate
Government may by general or special order require the employer to constitute in the prescribed
manner a Works Committee consisting of representatives of employers and workmen engaged in
the establishment so however that the number of representatives of workmen on the Committee
shall not be less than the number of representatives of the employer.

19
 The representatives of the workmen shall be chosen in the prescribed manner from
among the workmen engaged in the establishment and in consultation with their trade union, if
any, registered under the Indian Trade Unions Act, 1926 (16 of 1926).

Duties and Functions of the Works Committee:

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 endeavor to compose any
material difference of opinion in respect of such matters.

Dealing with the scope of functioning of the Works committees, it was held in Kemp and
Co. Ltd Vs. Their workmen (1955) L.L.J. 48 (L.A.T) that the Institution of works committee has
been provided in the rules passed under the Industrial Dispute Act in order to look after the
interest of the workmen. They are normally concerned with the problems arising in the day to
day working of the grievance of the employees and to arrive at some agreement also. But the
functions and the responsibility of the Works Committee as their very nomenclature indicates
cannot go beyond the recommendations and as such, they are no more or less bodies who in the
first instance endeavor to compose the differences and the final decisions rests with the union as
the whole.

Dissolution of the Works Committee:

The Central Government or any officer authority to whom the power under Section 39
has been delegated, may, after making necessary enquiry, dissolve any works committee at any
time, by an order in writing provided it or he is a satisfied the committee has not been constituted
in the accordance with the rules or that not less than 2/3rd of the number of representatives of
workmen have without any reasonable justification, failed to attend three consecutive meetings
of the committee or that the committee has ceased to function for any other reason, thus
defeating the very purpose for which this institution exists in the Industrial law.

2. Conciliation
Conciliation is a process by which discussion between the employers and the employees is
kept going through the participation of a conciliator. Conciliator plays a pivotal role in bringing
round the parties involved in the disputes and held in resolving difference by making the parties
understand and appreciate the difficulties of each party involved in the dispute in the Industrial
field. As a mediator, his tactful handling of the situation sometimes saves the situation from
taking a serious turn.

There are two authorities designed for the process of conciliation as follows:
(i) Conciliation Officer (Section 4 of the Industrial Disputes Act, 1947)
20
 (ii) Board of Conciliation (Section 5 of the Industrial Disputes Act, 1947)

(i) Conciliation Officer: [Section 4]

According to Section 4 of the Industrial Disputes Act, 1947 the appropriate Government
may appoint one or more conciliation officers. A 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. Under Section 21 of the Indian Penal
Code (IPC) a Conciliation officer shall be deemed to be a public servant. The Conciliation
officer is empowered to exercise all quasi-judicial powers of a Civil Court under the Civil
Procedure Code, 1908. (CPC)

He is or has been a Deputy Chief Labour Commissioner (Central) or Joint

Commissioner of the State Labour Department, having a degree in law and at least seven
years' experience in the labor department including three years of experience as Conciliation
Officer.
Powers of Conciliation Officer: [Section 11]
The Powers and Procedure is laid down in Section 11 of the Industrial Dispute Act, 1947.

(i) Conciliation Officer for the purpose of inquiring into an existing apprehended Industrial
Dispute is empowered, after giving the notice to enter the premises occupied by the
Industrial establishment.
(ii) Conciliation Officer is also empowered to call for and inspect any document which he
may consider relevant to the dispute.
(iii) Conciliation Officer enjoys the same powers as are available to the civil Courts in respect
of compelling the parties, to appear and produce all the relevant documents.
(iv) All Conciliation Officers are Public Servants within the meaning of Section 21 of the
Indian Penal Code.

Duties of Conciliation officer: [Section 12]

The duties of the Conciliation Officers are prescribed under Section 12 of the Industrial
Dispute Act 1947 which are as follows -

(1) Where any industrial dispute exists or is apprehended, the conciliation officer may, or
where the dispute relates to a public utility service and a notice under section 22 has been
given, shall, hold conciliation proceedings in the prescribed manner.

(2) The conciliation officer shall, for the purpose of bringing about a settlement of the
dispute without delay investigate the dispute and all matters affecting the merits and right
settlement thereof and may do all such things as he thinks fit for the purpose of inducing
the parties to come to a fair and amicable settlement of the dispute.
21
 (3) If a settlement of the dispute or of any of the matters in dispute is arrived at in the
course of the conciliation proceedings the conciliation officer shall send a report thereof
to the appropriate Government or an officer authorised in this behalf by the appropriate
Government together with a memorandum of the settlement signed by the parties to the
dispute.

(4) If no such settlement is arrived at, the conciliation officer shall, as soon as practicable
after the close of the investigation, send to the appropriate Government a full report
setting forth the steps taken by him for ascertaining the facts and circumstances relating
to the dispute and for bringing about a settlement thereof, together with a full statement
of such facts and circumstances, and the reasons on account of which, in his opinion, a
settlement could not be arrived at.

(5) If, on a consideration of the report referred to in sub-section (4), the appropriate
Government is satisfied that there is a case for reference to a Board, Labour Court,
Tribunal or National Tribunal], it may make such reference. Where the appropriate
Government does not make such a reference it shall record and communicate to the
parties concerned its reasons there for.

(6) A report under this section shall be submitted within fourteen days of the
commencement of the conciliation proceedings or within such shorter period as may be
fixed by the appropriate Government. Provided that, subject to the approval of the
conciliation officer, the time for the submission of the report may be extended by such
period as may be agreed upon in writing by all the parties to the dispute.

Effects of Conciliation Proceedings

Under Section 22 of the Act, the Strike and Lockout in a public utility
service is prohibited during the conciliation proceedings. Is a settlement arrived at, he is
required to send a report along with a copy of a memorandum of settlement signed by the parties
to the appropriate government. If no settlement is arrived at between the parties the conciliation
officer is required to send a full report to the appropriate government, giving all the
circumstances relating to the dispute and the steps taken by him to resolve the dispute along with
the reasons why the settlement could not be arrived at. Section 33 of the Act provides that during
the pendency of Conciliation proceedings, no employer shall after the conditions of service of a
workman to his prejudice discharge or punish by dismissal any workman during above
proceedings.

(ii) Board of Conciliation: [Section 5]

22
 According to Section 5 of the Industrial Disputes Act, 1947 the appropriate Government
may as occasion arises by notification in the Official Gazette constitute a Board of Conciliation
for promoting the settlement of an industrial dispute.

Constitution of Board of Conciliation

A Board shall consist of a chairman and two or four other members, as the
appropriate Government thinks fit. The chairman shall be an independent person and the other
members shall be persons appointed in equal numbers to represent the parties to the dispute and
any person appointed to represent a party shall be appointed on the recommendation of that
party: Provided that, if any party fails to make a recommendation as aforesaid within the
prescribed time, the appropriate Government shall appoint such persons as it thinks fit to
represent that party.

Quorum
The Quorum of Board is three (including the Chairman) if the number of members is
four. The quorum is two if the number of members is two.

Duties of Board of Conciliation: [Section 13]

The duties of the Board of Conciliation are prescribed under Section 13 of the said Act.
The Board is required to investigate the report without delay and to induce the parties to the
dispute, come to a fair and amicable settlement.

If the dispute is settled, the Board has to send a report to the Government along with a
memorandum of the settlement signed by the parties. If not settled, it has to send a report to the
Government stating the reasons and recommendations for determination of the dispute.

There are only three points of difference between the duties of the Board and the Conciliation
Officer.

(i) Proceedings are initiated only before a Board only on a reference by the appropriate
government.
(ii) When a Board sends a failure report, it has also inter alia, to send its memorandum for
determination of the dispute.
(iii) The board has to submit its report within 2 months instead of 14 days in the case of
proceedings before the Conciliation Officer.

(2) Adjudication machinery – It consists of the following three authorities ---

(i) Labour Court: [Section 7]

23
 According to Section 7 of the Industrial Dispute Act, 1947, the appropriate Government
has been empowered to constitute Labour Court. The appropriate government, by notification, in
the official gazette, may constitute one or more labor Courts for adjudication of industrial dispute
specified in the second schedule. It consisted of one person, appointed by the government. He is
called the presiding officer

A) Qualification for the appointment of a Presiding Officer of the Court:

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

(ii) He has for a period of not less than 3 years, been a district judge or an additional
judge
(iii) He has held any judicial office in India for not less than 7 years
(iv) He has been the presiding officer of labor Court constituted under any Provision
Act for not less than 5 years

Disqualifications: [Section 7-C]

Section 7-C of the Industrial Dispute Act, 1947 prescribes Disqualifications for the
presiding officer to be appointed to the Labor Court. It provides that no person shall be appointed
to or continue in office if:

(a) He is not an independent person; or

(b) he has attained the age of 65 years

Under Section 8 of the industrial dispute Act, 1947 the appropriate government is vested with
the powers to fill up the vacancy in the Labor Court caused for any reason.

Jurisdiction of the Labour Court:

A limited jurisdiction has been made available to the Labor Court which is
circumscribed by the Section itself and the matter enumerated in the second scheduled (E.g.,
Dismissal, Retrenchment, Strike, Lockout etc) Labour court is not a Tribunal within the
meaning of section 7-A (3)(b) read with Section 2(R) and hence not bound by the rules of
evidence and natural justice as is the case with Industrial Tribunal..

Duties of Labour Court:

Labour Court shall hold its proceedings within the specified period and shall submit its award to
the Government. Such award must be in writing and signed by the presiding officer.

The Labour Court has the same power of a Civil Court. The proceeding of the Labour Court shall
not be questioned on the ground that it is not properly constituted

24
Functions of the Labour Court: [Section 7]

The functions of the Labor Court are laid down in Section 7 of the said Act.

(I) Adjudicating upon industrial dispute specified in the second schedule of the said Act; are as
follows:

(1) The propriety or legality of any order passed by an employer under the standing
orders;
(2) The application and interpretation of the Standing Orders
(3) Discharge or dismissal of the workman including reinstatement of, or grant of relief
to, the workman wrongfully dismissed;
(4) Withdrawal of any customary concession or privilege
(5) Illegality or otherwise of a strike or Lockout; and
(6) All matters other than those specified in the Third Schedule which fall within the
jurisdiction of Industrial Tribunal.

(II) Performing such other functions as may be assigned to it under the Industrial Dispute Act,
1947

The Other matters assignable on the Labor Court are:

(1) Voluntarily reference of dispute by written agreements between the parties under
Section 10A;
(2) Arbitration reference under Section 10A;
(3) Permission to or approval of the action of discharge under Section 33;
(4) Complaint by the aggrieved employees under Section 33A;
(5) Application under Section 33(c)2 for the computation of any money or any
benefit which is capable of being computed in the terms of money.

(6) Reference of awards or settlement for the interpretation in case of difficulty or

doubt under Section 36A

(ii) Industrial Tribunal

There was no provision of any adjudicatory machinery in the repealed Trade Dispute Act, 1929.
Tribunals were created for the first time by Section 7 of the Industrial Dispute Act 1947 for the
purpose of adjudicating upon the industrial matters referred to them by the appropriate
government, thus introducing the concept of compulsory adjudication, where voluntary
negotiation or meditation through the machinery of conciliation authorities have failed. But the
original Section 7 was replaced by the present section 7(A), 7(B) and 7(C) by the Industrial
Disputes (Amendment and Miscellaneous Provisions) Act 1956.

25
 According to Section 7(A) of the Act, by 1956 Amendment Act, the appropriate
Government by notification in the Official Gazette may constitute one or more Industrial
Tribunals for the adjudication of industrial disputes relating to any matter specified in the Second
Schedule or the Third Schedule and for performing such other functions as assigned. A Tribunal
once appointed cannot be abolished by an executive act.

The government which constituted the tribunal is entitled to make a reference to a

Tribunal for clarification of a prior award and there is no bar or On The Tribunal to make a
supplementary award

Constitution of the Industrial Tribunal:

A Tribunal shall consist of one person only to be appointed by the appropriate Government. It
may be constituted for a limited time or for any particular Case. It is headed by one person
known as Presiding Officer.

Qualification of Preceding officer

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 a High Court; or
(b) He has, for a period of not less than three-years, been a District Judge or
an Additional District Judge;
(c) He is or has been a Deputy Chief Labour Commissioner (Central) or Joint
Commissioner of the State Labour Department, having a degree in law and
at least seven years' experience in the labor department including three
years of experience as Conciliation Officer:
(d) He is an officer of Indian Legal Service in Grade III with three years'
experience in the grade.
(e) The presiding officer shall be an independent person.
(f) He must not have attained the age of 65 years.

Jurisdictions of the Industrial Tribunals

The Industrial Tribunal are assigned the jurisdiction to adjudicate upon industrial disputes
specified in the second and third schedule of the Act or any matter appearing to be connected
with or relevant to such disputes, referred to it under Section 10(1)(d) of the Act. It is
immaterial whether any such matter appearing to be connected with or relevant to the basic
dispute relates to any matter specified in Second and third schedule or not. The first proviso to
Section 10 lays down that way in the dispute relates to matter specified in the third schedule and
it is not likely to affect more than a hundred workmen, the appropriate government has the
discretion to make a reference to the Labor Court.

The following matters are specified in the third schedule of the Act –
26
 (1) Wages including the period and mode of payment;
(2) Hours of work and rest intervals;
(3) Leave with wages and holidays
(4) Compensatory and other allowances
(5) Bonus, profit sharing, provident fund and gratuity;
(6) Shift working otherwise than in accordance with standing orders;
(7) Classification by grades
(8) Rates of discipline
(9) Rationalization
(10) Retrenchment of workmen and closure of establishment;
(11) Any other matter that may be prescribed.

Thus, whereas questions arising under the second schedule can be adjudicated
both by Industrial Court and tribunal, questions arising from matters included in the third
schedule can be referred for adjudication to a Tribunal alone unless the case falls under the
provision to Section 10 (1) (d). Lays down that the appropriate government may refer the dispute
or any matter appearing to be connected with or relevant to, the dispute, whether it relates to any
matter specified in the Section or third schedule to a Tribunal for adjudication.

There was no provision of any adjudicatory machinery in the repealed Trade Dispute Act, 1929.
Tribunals were created for the first time by Section 7 of the Industrial Dispute Act 1947 for the
purpose of adjudicating upon the industrial matters referred to them by the appropriate
government, thus introducing the concept of compulsory adjudication, where voluntary
negotiation or meditation through the machinery of conciliation authorities have failed. But the
original Section 7 was replaced by the present section 7(A), 7(B) and 7(C) by the Industrial
Disputes (Amendment and Miscellaneous Provisions) Act 1956.

(iii) National Tribunal: [Section 7B]

According to Section 7B of the said Act, the Central Government may by
notification in the Official Gazette constitute one or more National Industrial Tribunals for the
adjudication of industrial disputes which in the opinion of the Central Government involve
questions of national importance or 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.
Constitution
A National Tribunal shall consist of one person only to be appointed by the Central
Government called Presiding officer. The Central Government may if it so thinks fit appoint two
persons as assessors to advise the National Tribunal in the proceeding before it.

Qualification of Presiding officer

27
 The person to be appointed as the Presiding Officer of a National Tribunal must be a Judge
of High Court.

Disqualification:
According to Section 7(C), no person shall be appointed or continue in the
office of the presiding officer of a National Tribunal, if-

(a) He is not an independent person; or

(b) He has attained the age of sixty-five years.
Duties of National Tribunals
The Duties of Tribunals under Section 15 of the said Act are as under:
To hold adjudication proceedings expeditiously, the whole object of the Industrial
Disputes Act, 1947 is to assure peace and harmony in the functioning of the industry with a view
to achieve maximum industrial productivity. With this object in view the Legislature has
enjoined upon the Tribunals to hold the adjudicatory proceedings expeditiously.

(iv) Court of Inquiry

The appropriate Government may constitute a Court of Inquiry for inquiring any matter
appearing to be connected with or relevant to an Industrial Dispute. The Institution of Court of
Inquiry is taken from the British Industrial Courts Act, 1919.

According to Section 6 (1) of the Industrial Dispute Act, 1947, the appropriate
Government may as occasion arises by notification in the Official Gazette constitute a Court of
Inquiry for inquiring into any matter appearing to be connected with or relevant to an industrial
dispute.

Constitution of Court of Inquiry

A Court of Inquiry 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.
Quorum
A Court, having the prescribed quorum, the quorum is one if the number of
members is not more than two. The quorum is two if the number of members is two, but less
than five. The quorum is three if the number of members is more than five.

Duties of the Court of Inquiry: [Section 14]

Section 14 of the Industrial Act 1947 prescribes duties of the Court of inquiry are as follows -

28
(i) The court of inquiry is to inquire into the matters referred to it under section 10(1) of the
said Act by the appropriate government. It is only those matters which are appearing to be
or connected with the industrial dispute that can be referred to it under section 10(1) or
under Section 12(5) of the Industrial Dispute Act, 1947.

(ii) The court of inquiry is to make a report to the appropriate government on the basis of an
inquiry held by it on the matters referred to it, ordinary leave within 6 months from the date
of commencement of the inquiry. The inquiry made beyond the period of 6 months will not
be illegal as the provision is directory in nature.

Effects of Proceedings before Court of Inquiry:

Unlike the proceedings in the nature of conciliation when there is a legal bar
regarding the worker's right to go on strike, the employer's right to declare Lockout and dismiss
or otherwise punish the workmen under Section 33 of the said Act. The provision of this sections
22, 23 and 33 provide that during the pendency of the preceding before the Court, the following
rights remain unaffected.

(1) The workmen's right to go on strike;

(2) The Employer's right to declare Lockout; and
(3) The employer's right to dismiss or otherwise punish the workmen under Section 33
of the Act.

(v) Arbitration Machinery

Section 10(a) contains the provision for referring the industrial disputes for arbitration
voluntarily by the employers and the workmen with free consent. The number of arbitrators shall
be equal from both the parties. The parties can refer the disputes by their mutual agreement
reduced in writing provided they are not already referred to Labour Court or tribunal for
adjudication under Section 10 of the Act. Disputes cannot be referred for adjudication and
arbitration at one and the same time. That will be illegal procedure.

(vi) Grievance Settlement Authority

The provision for such authority was made by adding/inserting a new Section 9 (c) through an
amendment made in 1982. The employer of such establishment, where the number of the
workmen is 100 or more, is bound to appoint such authority for the purpose of settlement of
individual dispute. Now, the individual industrial dispute should be referred to the Grievance
Settlement Authority. This is mandatory provision. It is only on the non-acceptance of the
decision of the authority, that the dispute may be referred for adjudication under Section 10 (1).

Are these measures sufficient- Inspite of the fact of the said provision of the constitution of
five machineries, there is no decreasing trend in the industrial disputes and at the same time it
29
has not been possible to wipe out the differences between the employers and the workmen. The
increasing dissatisfaction and inimical attitude is not satisfactorily removed or lessened. The
Central Government is well acquainted with such a situation. This is why the Standing
Committee of the Central Labour Ministry is very seriously thinking of introducing a new system
for the settlement of the industrial disputes.

Q.5 “Section 11-A of the Industrial Disputes Act, 1947 gives discretionary
power to Labour Court, Industrial Tribunal and National Tribunal to give
appropriate relief to the discharged or dismissed workman.” Comment.

ANS. Section 11-A. Powers of Labour Courts, Tribunals and National Tribunals to give
appropriate relief in case of discharge or dismissal of workmen.- 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:

Provided that 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 any
fresh evidence in relation to the matter.

Section 11-A is prospective in its operation and applies only to disputes referred for
adjudication on or after the date of its coming into force. The mere fact that the domestic inquiry
held against the workman is defective or no inquiry has been held at all does not by itself render
the dismissal of workman illegal. Proviso to Section 11-A does not take away the right of the
employer to adduce evidence justifying his action. Even where the dismissal of a workman by an
employer on ground of misconduct is preceded by a proper and valid domestic inquiry Section
11-A now empowers the Labour Court or Tribunal to reappraise the evidence and examine the
correctness of the finding arrived at the domestic inquiry. Section 11-A further empowers the
Tribunals to interfere with the punishment and alter the same. Interference by the Industrial
Tribunal under the section, with decision of the employer will be justified only when the inquiry
is unfair, or the findings arrived at are perverse or have no basis in evidence or the management
is guilty of victimizing, unfair labour practice or mala fide or the punishment is harsh or
oppressive. But an award by an arbitrator cannot be challenged on any procedural ground.

In Gujarat Steel Tubes Ltd. vs. G.S.T. Mazdoor Sabha, (1980) I LLJ 137 (SC), the
workmen of the appellant went on a total strike and in consequence the management terminated
30
their services. The matter was referred to Arbitrator U/Sec. 10-A who upheld the action of the
management. On appeal the High Court reversed the Arbitrators award and hence an appeal was
moved to the Supreme Court. The question for consideration was whether Arbitrators appointed
U/Sec. 10-A enjoy the powers conferred by Section 11-A. it was held by majority that section
11-A applies to the Arbitrators in the present case and he has the power to examine whether the
punishment imposed in the instant case is excessive. The High Court also has similar powers if
the award suffers from a fundamental flaw. In reaching this conclusion their lordships examined
the objects and reasons underlying the enactment. It may be submitted that the majority view
held by Mr. J. Koshal appears to be more correct, who has taken the view that the language
employed in Section 11-A is clear and unambiguous and is capable of only one meaning, i.e., the
word ‘tribunal’ in this section is used in the sense in which it is used in Section 2(r). Thus powers
given to a tribunal under Section 11-A are not exercisable by an Arbitrator and he cannot,
therefore, interfere with the punishment awarded by the employer.

In M/s. Mukund Engineering Works vs. Bansi Purshottam, (1995) II Lab LJ 62 (SC), it was
held that where once a misconduct alleged against the workman is proved, no reinstatement can
be ordered with back wages. The workman should be bound to opt for either reinstatement with
no back wages without reinstatement.

In Engineering Laghu Udyog Employees Union vs. Judge Labour Court and Industrial
Tribunal, (2004) I L.L.J. 1105 (SC), the Labour Court upheld the termination of a
womanemployee after permitting the employer to lead evidence. It also held the charges as
proved. In such a case the Supreme Court held that the termination would relate back to the date
of termination and not merely from the date of Labour Court’s award.

Q.6 “Lockout is a weapon in the hands of Employer and strike in the hands of
Workers.” Discuss under the provisions of Industrial Dispute Act, 1947?
OR
What is lock out? Whether a notice is necessary before declaring lock out?
If so under what circumstances a notice can be dispensed with? What are
the consequences of illegal lockout? Illustrate your answer.

Ans. In any Industrial endeavour co-operation of labour and capital is quite essential
for its success, although they have interests contrary to each other. They have different strategies
and weapons to ventilate their grievances and safeguard their interests. These democratic
weapons often used by them are strikes and lock-outs. Just as strike is a weapon available to
employees for enforcing their Industrial demands, a lock-out is a weapon available to the
employer to persuade by a coercive process to see his point of view and to accept his demands.
In the struggle between capital and labour, as the weapon of strike is available to labour and is
often used by it, so is the weapon of lock-out available to the employer and can be used by him.
31
Meaning of Strike
As per Cambridge Dictionary

“Strike is to refuse to continue working because of an argument with an employer

about working conditions, pay levels, or job losses”.

• General Meaning
A strike is a powerful weapon used by trade unions or other associations or workers to put
across their demands or grievances by employers or management of industries. In another way,
it is the stoppage of work caused by the mass refusal in response to grievances. Workers put
pressure on the employers by refusal to work till fulfilment of their demands. Strikes may be
fruitful for workers’ welfare or it may cause economic loss to the country.

• Statutory Definition:

As per Section 2(q) of the Industrial Disputes Act, 1947 “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.

• Essentials of Strike
The analysis of the definition would show that there are the following essential requirements for
the existence of a strike:

(1) There must be cessation of work.

(2) The cessation of work must be by a body of persons employed in any industry;
(3) The strikers must have been acting in combination;
(4) The strikers must be working in any establishment which can be called industry
within the meaning of Section 2(j); or
(5) There must be a concerted refusal; or
(6) 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;
(7) They must stop work for some demands relating to employment, non-employment
or the terms of employment or the conditions of labour of the workmen.

Cessation of Work:-
This is most significant characteristic of the concept of strike. It has been variedly
expressed as abandonment, stoppage, omission of performance of duties of their posts,
hampering or reducing normal works, hindrance to the working or suspension of work,
32
discontinuing the employment or breaking their contract of service or refusing or failing to return
to or resume employment or refusing or failing to accept engagement for any work which they
are usually employed for Thus what required for strike is that there must be stoppage of work or
there must be refusal to continue to work or to accept employment by any number of persons
employed for the work but the refusal must be concerted or under a common understanding.

The cessation of work may take any form. It must, however, be temporary and not for ever and it
must be voluntary. No duration can be fixed for this. If the cessation of work is as a result of
renunciation of work or relinquishment of the strikers’ status or relationship, it is not strike.
Permanent cessation of work would result in termination of the contract of work which is alien to
the underlying sanction of strike retaining contractual relationship during the strike periods.
Cessation of work is not a cessation of contract of employment.

Concerted action
Another important ingredient of the strike is a concerted action. The workers must act under a
common understanding. The cessation of work by a body of persons employed in any industry in
combination is a strike. Thus in a strike it must be proved that there was cessation of work or
stoppage of work under a common understanding or it was a concerted action of the workers or
there was cessation of work by workers acting in combination. Stoppage of work by workers
individually does not amount to strike. the concerted refusal or refusal under a common
understanding to continue to work or to accept employment or to resume work by any number of
persons is a strike.

• Kinds of strike
Mere stoppage of work does not come within the meaning of strike unless it can be shown that
such stoppage of work was a concerted action for the enforcement of an industrial demand.

1) Economic Strike: Under this type of strike, labors stop their work to enforce
their economic demands such as wages and bonus. In these kinds of strikes, workers
ask for increase in wages, allowances like traveling allowance, house rent allowance,
dearness allowance, bonus and other facilities such as increase in privilege leave and
casual leave.

2) Sympathetic Strike: When workers of one unit or industry go on strike in

sympathy with workers of another unit or industry who are already on strike, it is
called a sympathetic strike. The members of other unions involve themselves in a
strike to support or express their sympathy with the members of unions who are on
strike in other undertakings. The workers of sugar industry may go on strike in
sympathy with their fellow workers of the textile industry who may already be on
strike.

33
In Kambalingan v. Indian Metal & Metallurgical Corporation, the Supreme Court examined
the issue on the basis of the essential ingredients of strike and held that when the workmen
resorting to sympathetic strike do not have any grievance of their own in relation to their
employer or even in regard to conditions of service the element, of mens rea i.e. the mental
element on part of the strikes is not there to pressurize their employer for the redressal of their
grievance. In fact there was no animosity on part of the workmen against their own employer and
since the essential element of mens rea is absent, the sympathetic strike cannot be regarded as
strike within the meaning of S. 2(q) and management can take disciplinary action against any
such workmen.

3) General Strike: It means a strike by members of all or most of the unions in a

region or an industry. It may be a strike of all the workers in a particular region of
industry to force demands common to all the workers. These strikes are usually intended
to create political pressure on the ruling government, rather than on any one employer. It
may also be an extension of the sympathetic strike to express generalized protest by the
workers.

4) Sit down Strike: In this case, workers do not absent themselves from their place of
work when they are on strike. They keep control over production facilities. But do not
work. Such a strike is also known as 'pen down' or 'tool down' strike. Workers show up to
their place of employment, but they refuse to work. They also refuse to leave, which
makes it very difficult for employer to defy the union and take the workers' places.

In June 1998, all the Municipal Corporation employees in Punjab observed a pen down strike to
protest against the non-acceptance of their demands by the state government.

5) Slow Down Strike: Go-slow is yet another form of industrial protest in which
workmen do not stop the work but deliberately slow-down the process of production in
order to cause loss of production to the employer. It must be noted that there is no
cessation of work at all, and in fact, workmen pretend themselves as engaged in doing
their work.

In Sasa Musa Sugar Works (P) Ltd. v. Shobrati Khan, the Supreme Court held that go-slow is
not considered as strike within the ambit of Section 2(q), but it is a serious misconduct on part of
the workmen. Mr. V.V. Giri, described go-slow as “enemy number one” of the workmen as it
ultimately causes damage to their means of livelihood, apart form causing harm to the employer.
Indian Courts have also taken a serious view on the go-slow and refused to interfere with the
punishment inflicted by the employer for this misconduct, so that the coward practice could be
discouraged.

6) Hunger strike: in this form of industrial protest, workmen resort to fasting near the
workplace in order to demand the employer to redress their grievances.

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 • Is Right to Strike is a Fundamental Right or not?
In India, right to protest is a fundamental right under Article 19 of the Constitution of India. But
right to strike is not a fundamental right but a legal right and with this right statutory restriction is
attached in the Industrial Dispute Act, 1947.

Position in India:
In India unlike America right to strike is not expressly recognized by the law. The Trade Union
Act, 1926 for the first time provided limited right to strike by legalizing certain activities of a
registered trade union in furtherance of a trade dispute which otherwise breach of common
economic law.

Now days a right to strike is recognized only to limited extent permissible under the limits laid
down by the law itself, as a legitimate weapon of Trade Unions.

The right to strike in the Indian Constitution set up is not absolute right but it flow from the
fundamental right to form union. As every other fundamental right is subject to reasonable
restrictions, the same is also the case to form trade unions to give a call to the workers to go on
strike and the state can impose reasonable restrictions.

In the All India Bank Employees Association v. I. T., the Supreme Court held, "the right to
strike or right to declare lock out may be controlled or restricted by appropriate industrial
legislation and the validity of such legislation would have to be tested not with reference to the
criteria laid down in clause (4) of article 19 but by totally different considerations."

Thus, there is a guaranteed fundamental right to form association or Labour unions but there is
no fundamental right to go on strike. Under the Industrial Dispute Act, 1947 the ground and
condition are laid down for the legal strike and if those provisions and conditions are not fulfilled
then the strike will be illegal.

However, strike is not expressly recognized in the Constitution of India. The Supreme Court
settled the case of Kameshwar Prasad v. The State of Bihar on 7 July 1958 by stating that strike
is not a fundamental right. Government employees have no legal or moral rights to go on strikes.
(T.K. Rangrajan Vs State of Tamil Naidu A.I.R 2003.S.C)

• LOCK-OUT ( SEC-2(L)

A lockout is a work stoppage in which an employer prevents employees from working. It is

declared by employers to put pressure on their workers to come to their way by consensus about
settlement of issued lead to lockout. This is different from a strike, in which employees refuse to
work. Thus, a lockout is employers’ weapon while a strike is raised on part of employees.
According to [section 2(1)] of Industrial Disputes Act 1947, lock-out means the temporary
35
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.

According to Industrial Disputes Act 1947,Lockout [Sec. 2(1)]: Lockout 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". It is a weapon of the employer
while strike is weapon in the hands of workers.

• Just as the strike as a weapon in the hands of the workers for enforcing their demands,
lockout is a weapon available to the employer to make their employees to come to their
way and to make accept them to the management terms and conditions.
• The Industrial Dispute Act does not intend to take away these rights.
• However, the rights of strikes and lockouts have been restricted to achieve the purpose of
the Act, namely peaceful investigation and settlement of the industrial disputes.

Essentials of Lock-Out:
1. The temporary closing of a place of employment, or
2. The suspension of work, or
3. The refusal by an employer to continue to employ any number of persons employed
by him.

Q.7 When does a Strike and lock out becomes Illegal?

Ans. Section 22 of Chapter V of Industrial Disputes Act clarifies the Prohibitions on right to
strike. It states that no person employed in a public utility service shall go on strike in breach of
contract.

1. without giving to the employer notice of strike, as hereinafter provided, within six weeks
before striking; or
2. within fourteen days of giving such notice; or
3. before the expiry of the date of strike specified in any such notice as aforesaid; or
4. during the pendency of any conciliation proceedings before a conciliation officer and
seven days after the conclusion of such proceedings.

Significance of section 22
• It must be noted that above regulations for strike are applicable for employees who work
for public utility service in Industry.
• It is mandatory to give employer notice with or without strike date.
36
 • In case date of strike is not mentioned in the notice, then such notice will be valid for six
weeks only from the date of notice. If the employees do not go on strike within the 6
weeks, then it is necessary to give fresh notice of strike by the employee if they are
willing to go on strike.
• In case the date of strike is mentioned in the notice then employees cannot go on strike
before the expiry of 14 days from the date of the notice.
• Employee cannot go on strike during the pendency of any conciliation proceedings before
a conciliation officer and seven days after the conclusion of such proceedings.

Points a) and b) of section 22 clarify that employee who works in public utility service can go on
strike at least after 14 days. It is important to note that generally, 14 days is the consideration
period in which employer can consider their employee demands.

Section 23 – General prohibition of strikes and lock-outs:

Section 23 deals with General prohibitions of strikes it is applicable for public utility services
and non-public utility services. It gives the general guidelines for prohibitions of strike however
section 22 deals only with services related to public utility.

No workman who is employed in any industrial establishment shall go on strike in breach of

contract and no employer of any such workman shall declare a lock-out—

(a) during the pendency of conciliation proceedings before a Board and seven days
after the conclusion of such proceedings;
(b) during the pendency of proceedings before a Labour Court, Tribunal or National
Tribunal and two months after the conclusion of such proceedings;
(bb) during the pendency of arbitration proceedings before an arbitrator and two months
after the conclusion of such proceedings, where a notification has been issued under
sub-section (3A) of section 10A; or
(c) during any period in which a settlement or award is in operation, in respect of any
of the matters covered by the settlement or award.

Section 24- Illegal strikes and lockouts:

(1) A strike or a lock-out shall be illegal if—
(i) It is commenced or declared in contravention of section 22 or section 23; or
(ii) It is continued in contravention of an order made under sub-section (3) of
section 10 or sub-section (4A) of section 10A.
(2) Where a strike or lock-out in pursuance of an industrial dispute has already
commenced and is in existence at the time of the reference of the dispute to a
Board, an arbitrator, a Labour Court, Tribunal or National Tribunal, the
continuance of such strike or lock-out shall not be deemed to be illegal, provided
that such strike or lock-out was not at its commencement in contravention of the
37
 provisions of this Act or the continuance thereof was not prohibited under
sub-section (3) of section 10 or sub-section (4A) of section 10A.
(3) A lock-out declared in consequence of an illegal strike or a strike declared in
consequence of an illegal lock-out shall not be deemed to be illegal.

Section 24 differentiates between a legal strike and an illegal strike. It states that legal strikes are
those strikes in which procedures for going on strikes as laid down in section 22 or section 23 are
followed. However, illegal strikes will not be in conformity with sections 22 or 23.

• Section 26- Penalty for Illegal strikes and lockouts:

This section prescribes penalties for conducting an illegal strike. As per the act any workmen
who were involved or interested in strikes which were illegal, will get punishment as well
imprisonment for a term and same will be extended to one month, or they have to pay with fine
up to fifty rupees, or both. Its main aim is to establish the balancing situation among industries,
workers or unions.

Q.8 Define lay-off and Retrenchment. What are the principles for determining
payment of compensation in each?

Ans. Retrenchment
The original legislation of 1947 does not have the definition of the word retrenchment; it was in
1953 that with an amendment Act this definition was inserted. It would also be interesting to
know that till 1983 the courts of law used to consider termination of service due to nonrenewal
of the agreement of employment as the act of retrenchment in pronouncements like of Hindustan
Aluminium Corporation v. State of Orissa, later, the judgment was held to be a bad one and
with the Amendment 49 of 1984 the provision of (bb) was inserted in the definition of
retrenchment declaring such kind of termination not to be included within the ambit of
retrenchment. Retrenchment refers to discharge of surplus labour by the employer. It may be due
to inevitable reasons including rationalisation or installation of new labour-saving machinery.

Meaning of Retrenchment:
Retrenchment means the discharge of surplus labour or staff by the employer for any reason
whatsoever, otherwise than by way of punishment inflicted as a measure of disciplinary action.
The words ‘for any reason whatsoever’ are the key words. It implies that the discharge of labour
force may be for any reason such as:

(i) economy
(ii) rationalisation in industry
38
 (iii) installation of a new labour saving machinery but the only thing provided is
that it should not as a punishment.

For what reasons and at what time the employer would discharge the surplus, is entirely his
discretion.

Definition of Retrenchment:
S. 2 (oo) of The Industrial Disputes Act, 1947 defines the term in the following words:
Retrenchment means the termination by the employer of the service of a workman;
The termination may be for any reason whatsoever;

But the termination should not be as a measure of punishment by way of disciplinary action.
The following are not retrenchment:

(a) voluntary retirement of a workman, or

(b) retirement of a workman on 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 a 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 , or
(c) termination of the service of a workman on the ground of continued ill- health.

Essential Elements of Retrenchment:

Retrenchment -2 (oo) of The Industrial Disputes Act, 1947 defines the term

Retrenchment analyse in the following ways:

1. The termination by the employer

2. of the service of a workman;
3. for any reason whatsoever;

The following are not retrenchment:

1. If the termination should not be as a measure of punishment by way of disciplinary action.

(a) voluntary retirement of a workman, or

(b) Retirement of a workman on reaching the age of superannuation if the contract of
employment between the employer and the workman concerned contains a
stipulation in that behalf; or

39
 (bb) Termination of the service of a 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 , or
(c) Termination of the service of a workman on the ground of continued ill- health.

RETRENCHMENT COMPENSATION and THE AMENDMENTS

As mentioned earlier the employer has discretionary power to retrench the employees. Thus it is
clear that the workmen without any fault are deprived of their right to work but are they
compensated for this? That’s really a vital question and most surprisingly the original enactment
of 1947 contained no provision for retrenchment compensation. As a result amendment became
necessary and in this respect the 3 amendments respectively of 1953, 1964 and 1976 are mention
worthy.

1953 AMENDMENT
IN 1953 a huge stock had accumulated in textile industries. Textile mills were in a mood to close
one or more shifts. The closure must have resulted in retrenchment or laying-off a large number
of textile employees causing great unrest in the whole of the textile industry. In order to
overcome the situation the President of India promulgated the Industrial Disputes (Amendment)
Ordinance, 1953 to take effect from 24th October, 1953. The Ordinance made provision for
payment of compensation for lay-off and retrenchment. The said Ordinance was repealed and
replaced by the Industrial Disputes (Amendment) Act, 1953 on 23rd December, 1953. By this
amendment Ss. 25-A to 25-J under Chapter V- A was introduced to the Act. Among these
sections Ss. 25- F, 25-G and 25- H deals with retrenchment provisions.

1976 AMENDMENT
The 1976 amendment inserted another chapter called Chapter V- B which contains the special
provisions relating to lay- off and retrenchment. This Chapter is applicable to the following
industries:
Industry not being seasonal or in which work is not performed only intermittently and in which
not less than 100 workmen are employed on an average per working day in the preceding 12
months.
This means that the rest are covered by the provisions of Chapter V-A.

GENERAL PROVISIONS APPLICABLE TO BOTH THE CHAPTERS S. 25-G

& 25-H:
Both the chapters are guided by two principles which are:

(1) “FIRST COME LAST GO, LAST COME FIRST GO”

40
 (2) PRINCIPLE OF RE-EMPLOYMENT

Conditions for FIRST COME LAST GO AND LAST COME FIRST GO PRINCIPLE
To claim protection under this principle:

(1) he must be a workman and the establishment he works in is an industry within the
meaning of this Act
(2) he must belong to a particular category of workman.
Conditions for PRINCIPLE OF RE- EMPLOYMENT
It is based on the known principle that when a workman has been retrenched by the employer on
the ground of surplus staff, such workman should first be given an opportunity to join service
whenever an occasion to employ another hand arises. This section imposes a statutory obligation
on the employer to give opportunity to the retrenched employees to offer themselves for re-
employment. However in order to claim preference in employment a workman must satisfy the
following conditions:

(1) he should have been retrenched prior to re- employment;

(2) he should be a citizen of India;
(3) he should offer himself for re-employment in response to the notice by the employer
(4) he should have been retrenched from the same category of service in the industrial
establishment in which the re- employment is proposed.

CHAPTER V-A
S. 25-F deals with some mandatory pre-conditions which the employer must fulfill otherwise the
retrenchment would become invalid and it would attract penalty u/s 31 (2) of the Act. It says
that:
(a) Notice: One month prior notice indicating the reasons for retrenchment must be given to
the employee or wages should be paid for the period of notice in lieu of the notice
(b) Compensation: The workman should have been paid at the time of retrenchment,
compensation equivalent to 15 days average pay for every completed year of service or any
part thereof in excess if six months.
(c) Notice in the prescribed manner should be given to the appropriate government or to the
specified authority by the appropriate government.

If the above 3 steps are not complied then the retrenchment will be void ab-initio and the
employee would be entitled to all consequential benefits as if there had been no retrenchment.

CHAPTER V-B
S.25-N contains some mandatory pre-conditions which are to be followed by industries under
Chapter V- B. it can be summarized into the following steps:

41
1. Notice: 3 months prior notice indicating the reasons for retrenchment must be given to the
employee by the employer and in absence of such a notice wages for the period of notice
should be paid to the employee.

2. Application: An application in the prescribed manner seeking the permission of

retrenchment should be given to the appropriate government or any authority specified by the
appropriate government.

3. Enquiry: On receipt of the application the authority makes an enquiry in this behalf in the
industrial establishment.

4. Order: after conducting enquiry and after considering all factors in this respect the authority
issues its order, either granting or refusing the application. If the authority does communicate
its order within a period of 60 days from the receipt of the application then it is deemed to be
granted.

In case the application is granted then the employer can go for retrenchment after providing the
employee, at the time of retrenchment, compensation equivalent to 15 days average pay for every
completed year of service or any part thereof in excess of six months.

However in case, no application is made or the application is refused then there will be no
retrenchment and the workman will be entitled to all such benefits as I f there had been no
retrenchment.

In addition to this there is another penal provision for the employer u/s 25- Q

PENALTY
S.25-Q: an employer who contravenes the provisions of s. 25 –N shall be penalized as follows:
(1) imprisonment upto one month or
(2) fine upto Rs. 1000
(3) with both.

• Lay-off
Definition of Lay-off
Lay-off is defined in Section 2(kkk) and analyse as following elements - “Lay-off” means-

1. The failure, refusal or inability of an employer

2. On account of shortage of coal, power or raw materials or
42
 3. The accumulation of stocks or
4. The breakdown of machinery or
5. Natural calamity or
6. For any other connected reason]
7. To give employment to a workman whose name is borne on the muster rolls of his
industrial establishment and who has not been retrenched.

• Some landmark case laws

The Supreme Court in Byram Pestonji Gariwala v. Union Bank of India and others had
restricted the defintion of ‘Retrenchment’ under S. 2 (oo) (bb) to occur only when there is a
‘discharge of excess labor’ by the employer.

Later the Supreme Court in State Bank of India v. N. Sundara Money, Punjab Land
Development and Reclamation Corporation Ltd., Chandigarh v. Presiding Officer, Labour
Court, Chandigarh and subsequent decisions rejected the narrow interpretation adopted by the
Court in the earlier decision and held that any retrenchment, as defined in Section 2 (oo), means
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 and those expressly excluded by
Clauses (a), (b) and (c) of the definition. In view of these decisions, it cannot be said that
retrenchment means termination by the employer of the service of a workman as surplus labor.

The Supreme Court excluded closure from the scope of retrenchment in Hariprasad
Shivshankar Shukla vs. A.D. Divelkar. Further, in the State Bank of India vs. Sundara Money,
the Supreme Court adopted the literal meaning of retrenchment, which is exhaustive and
comprehensive and held that the expression "for any reason whatsoever" was very wide and
admitted almost no exceptions. So, retrenchment means termination of a worker's services for
any reason whatsoever, other than those specified in Section 2(oo).

The Bombay High Court, in State Bank of India v. Sundaramony held that wherein the court
held that an analysis of the definition reveals four essential ingredients, namely-

1) There must be a termination of the service of a workman.

2) The termination must be by the employer,
3) For any reason whatsoever, and
4) Otherwise than as by way of punishment inflicted by way of disciplinary action.

In the case of Ambala Cantt. Electric Supply vs Commissioner of Income-Tax, the

High Court of Punjab & Haryana had explained the object of Sections 25F and 25FF of the
ID Act. The Court in the case observed that Section 25FF was introduced to safeguard the rights
of workmen, who because of the transfer of an undertaking could not be employed by the
transferee. The Court in the case further observed that the language of Section 25FF of ID Act
makes it clear that if the right of the retrenchment compensation accrues to the workman, then it
must be a right to receive compensation from the employer, who was its” (undertaking’s) owner
up to the date and time of transfer.
43
Conclusion
Globalization induces labour market flexibility which India is yet to attain due to its unyielding
labour law system. It has started making attempts to achieve full employment of all resources
and optimal social welfare but several issues are left unanswered, including Retrenchment.
Ordinarily, Retrenchment is discharge of surplus labour by the employer. According to
Section 2(oo) of the Industrial Disputes Act, 1947 (IDA), retrenchment is the termination of
service of a worker "for any reason whatsoever", but excludes termination by way of
punishment inflicted pursuant to disciplinary action, voluntary retirement, retirement on
reaching the age of superannuation if the contract of employment contained such stipulation,
non-renewal of the contract of employment, and continued ill health. Retrenchment may be
due to inevitable reasons including rationalization or installation of new labour-saving
machinery. An employer has a right to organize his business in any lawful manner he considers
best and courts cannot question its propriety. If re-organization results in surplus employees, no
employer is expected to carry their burden. There is consensus of judicial opinion in deciding
retrenchment on the facts and circumstances of each case. Courts have decided that termination
of services due to loss of confidence in an employee, inefficiency or misconduct does not amount
to retrenchment. Termination for unauthorized absence from duty, discontinuance of service of
casual, daily employees, invalid initial appointment, compulsory retirement, and closure or
transfer of business have been held to be retrenchment. Indian employers have responded to the
restrictive retrenchment laws in several ways including the greater use of contract, temporary
and/or casual labour, the use of golden handshakes, and setting up production in states where
labour is not organized. The government is pursuing privatization and disinvestment. Any
anomaly in retrenchment laws, which address the basic functioning of companies, needs the
immediate attention of lawmakers.

Suggested Short Questions-Answers:

Q.1 Discuss briefly the objects and characteristics of Industrial Disputes Act,
1947.

ANS. Objects of Passing the Industrial Dispute Act, 1947-

1. To harmonise the relations between the employer and employees.
2. To restore and maintain industrial peace.
3. Provide effective machinery for settlement of industrial dispute.
4. Compensation to prohibit and restrict strikes and lock outs.
5. To provide retrenchment compensation to retrenched employees.
6. To provide certain rules regarding lay off.
44
Characteristics of Industrial Dispute Act, 1947-

1. Any industrial dispute may be referred to an industrial tribunal by an agreement of parties to

the dispute or by the State Government if it deems it expedient so to do.
2. An award shall be binding on both the parties to the dispute for the specified period not
exceeding one year. It shall be normally enforced by the Government.
3. Strike and lock-outs are prohibited---

(1) During the pendency of conciliation and adjudication proceedings;

(2) During the pendency of settlements reached in the course of conciliation proceedings;
(3) During the pendency of awards of Industrial Tribunal declared binding by the
appropriate Government.

4. In public interest or emergency the appropriate Government has power to declare the
transport (other than railways), coal, cotton textiles, food stuffs and iron and steel industries
to be a public utility service for the purposes of this Act, for a maximum period of six
months.

5. In case of lay off or retrenchment of workmen the employer is required to pay compensation
to them.

6. Provision has also been made for payment of compensation to workmen in case of transfer or
closure of an undertaking.

7. A number of authorities such as, Works Committee, Conciliation Officers, Board of

Conciliation, Courts of Inquiry, Labour Courts, Tribunal and National Tribunal are provided
provided for settlement of industrial disputes.

8. The nature of powers, functions and duties of these authorities differ from each other but
each one of them plays an important role in ensuring industrial disputes and industrial peace.

Q.2 Distinguish between Strike and Lock-Out?

Ans. Workers have a right to strike, and employers have a right to lock out workers, if a
dispute cannot be resolved certain procedures and certain limitations apply under certain
conditions. Secondary strikes and pickets may also be held.

• What is a strike?
To strike is the refusal to work, the slowing down of work or the obstruction of work by
employees (“strikers”). A strike takes place to resolve a dispute between the employees and their
45
employer. The dispute must be about something in the employer’s control for example, wages,
improved working conditions and other disputes of mutual interest. While employees have the
right to strike, an employer has an option to lock-out. However, these rights can sometimes be
limited, for example, if the employees are bound by a collective agreement or are involved with
essential services.

• What is a lock-out?
A lock-out is the refusal of the employer to grant the employees access to the workplace. This
means that the employees are not able to tender their services and as a result will not be paid.
A lock-out takes place in response to a strike or to force the employees to accept a demand of the
employer. The demand must relate to disputes of mutual interest. The demand of the employer
can be, for example, to force the employees to accept changes to their terms and conditions of
employment.

Q.3 Is Right to Strike is a Fundamental Right or not?

Ans. Is Right to Strike is a Fundamental Right or not?

In India, right to protest is a fundamental right under Article 19 of the Constitution of India.
But right to strike is not a fundamental right but a legal right and with this right statutory
restriction is attached in the Industrial Dispute Act, 1947.

Position in India:
In India unlike America right to strike is not expressly recognized by the law. The Trade Union
Act, 1926 for the first time provided limited right to strike by legalizing certain activities of a
registered trade union in furtherance of a trade dispute which otherwise breach of common
economic law.
Now days a right to strike is recognized only to limited extent permissible under the limits laid
down by the law itself, as a legitimate weapon of Trade Unions.

The right to strike in the Indian Constitution set up is not absolute right but it flow from the
fundamental right to form union. As every other fundamental right is subject to reasonable
restrictions, the same is also the case to form trade unions to give a call to the workers to go on
strike and the state can impose reasonable restrictions.

In the All India Bank Employees Association v. I. T., the Supreme Court held,
"the right to strike or right to declare lock out may be controlled or restricted by
appropriate industrial legislation and the validity of such legislation would have to be tested

46
not with reference to the criteria laid down in clause (4) of article 19 but by totally different
considerations."

Thus, there is a guaranteed fundamental right to form association or Labour unions but there is
no fundamental right to go on strike. Under the Industrial Dispute Act, 1947 the ground and
condition are laid down for the legal strike and if those provisions and conditions are not fulfilled
then the strike will be illegal.

However, strike is not expressly recognized in the Constitution of India. The Supreme Court
settled the case of Kameshwar Prasad v. The State of Bihar on 7 July 1958 by stating that strike
is not a fundamental right. Government employees have no legal or moral rights to go on strikes.
(T.K. Rangrajan Vs. State of Tamil Naidu A.I.R 2003.S.C)

Q.4 Explain the concept of Contract of Employment?

Ans. Contract of Employment

Oral or written, express or implied, agreement specifying terms and conditions under which a
person consents to perform certain duties as directed and controlled by an employer in return for
an agreed upon wage or salary. Whether stated or not in the contract, both the employee and the
employer owe the duty of mutual confidence and trust, and to make only lawful and reasonable
demands on each other. Every employee is under the obligation to carry assigned duties, or the
employer's instructions to the best of his or her abilities. The employer is under the obligation to
protect the employee from harm or injury, and make fair compensation for any loss or damage
resulting from any job-related accident.

An employment contract is a signed agreement between an employee and employer. It

establishes both the rights and responsibilities of the two parties: the worker and the company.

What is included in an Employment Contract?

It is also known as a contract of employment or employment agreement, an employment

contract lays out the rights and responsibilities of both employer and employee. More
specifically an employment contract can include:

• Salary or wages: Contracts will itemize the salary, wage, or commission that has been
agreed upon.
• Schedule: In some cases, an employment contract will include the days and hours an
employee is expected to work.
• Duration of employment: An employment contract will specify the length of time the
employee agrees to work for the company. In some cases, this might be an ongoing

47
 period of time. In other cases, it might be an agreement set for a specific duration. Other
times, a minimum duration is laid out, with the possibility of extending that period.
• General responsibilities: Contracts can list the various duties and tasks a worker will be
expected to fulfill while employed.
• Confidentiality: Although you may have to sign a separate non-disclosure agreement,
sometimes a contract might include a statement about confidentiality.
• Communications: If an employee's role involves handling social media, websites or
email, a contract might include a point that the company retains ownership and control
over all communications.
• Benefits: A contract should lay out all promised benefits, including, but not limited to,
health insurance, 401k, vacation time, and any other perks that are part of the
employment.

Q.5 Distinguish between Lay-off and Retrenchment?

Ans. Differences between Layoff and Retrenchment

1. Layoff refers to the provisional termination of the employee, at the instance of the employer.
Retrenchment means involuntary separation of an employee due to the replacement of
labour by machines or the close of the department.
2. The layoff is an action step, whereas Retrenchment is a business strategy to reduce
company’s expenses.
3. The layoff is defined in section 2 (kkk) of the Industrial Disputes Act, 1947. Conversely,
Retrenchment is defined in section 2 (oo) of the Industrial Disputes Act, 1947.
4. The layoff is of a temporary nature, i.e. it is for a definite period, in which the employees are
recalled after the expiry of the term. As opposed to retrenchment, is permanent in nature.
5. After the declaration of layoff, the company’s operations stops because of the shortage of
raw material, the breakdown of machinery, economic recession and so on. On the other hand,
the operations of the company continue even after retrenchment is declared.
6. As soon as the layoff period is over, the employees are re-appointed to their previous posts.
Unlike Retrenchment, in which the employees are not taken back by the company, once they
are terminated.

Conclusion:
Therefore, with the above discussion, it is quite clear that Layoff and Retrenchment are two
different ways of involuntarily terminating employees. While in both the cases the employees are
paid compensation as per the method specified in the act. However, gratuity is paid only in
retrenchment but not in layoff.

48
Q.6 What is Procedure of Retrenchment?

Ans. Procedure of Retrenchment

Section 25G of Industrial Dispute Act, 1947 lays down the procedure of retrenchment.
“Where any workman in an industrial establishment, who is a citizen of India, is to be
retrenched and he belongs to a particular category of workmen in that establishment, in
the absence of any agreement between the employer and the workman in this behalf, the
employer shall ordinarily retrench the workman who was the last person to be employed
in that category, unless for reasons to be recorded the employer retrenches any other
workman. The employer is also required to maintain a seniority list of the workmen. The
system of last in first out is to be followed in retrenching workmen.’’

Conditions for first come last go and last come first go principle
To claim protection under this principle:

(1) He must be a workman and the establishment he works in is an industry within the
meaning of this Act
(2) He must belong to a particular category of workman.

Q.7 What are the conditions for principle of Re- Employment?

Ans. Section 25H of Industrial Dispute Act, 1947 lays down principle of Re- Employment:
It is based on the known principle that when a workman has been retrenched by the employer on
the ground of surplus staff, such workman should first be given an opportunity to join service
whenever an occasion to employ another hand arises. This section imposes a statutory obligation
on the employer to give opportunity to the retrenched employees to offer themselves for re-
employment. However in order to claim preference in employment a workman must satisfy the
following conditions:

(1) He should have been retrenched prior to re- employment;

(2) He should be a citizen of India;
(3) He should offer himself for re-employment in response to the notice by the
employer
(4) He should have been retrenched from the same category of service in the
industrial establishment in which the re- employment is proposed.

49
Q.8 Define Closure? Discuss Procedure for closing down an undertaking?

Ans. Definition of Closure (Section 2(cc))-

“Closure” means the permanent closing down of a place of employment or part thereof;

Section 25-O Procedure for closing down an undertaking-

(1) An employer who intends to close down an undertaking of an industrial establishment to

which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least
ninety days before the date on which the intended closure is to become effective, to the
appropriate Government, stating clearly the reasons for the intended closure of the undertaking
and a copy of such application shall also be served simultaneously on the representatives of the
workmen in the prescribed manner:

Provided that nothing in this sub-section shall apply to an undertaking set up for the construction
of buildings, bridges, roads, canals, dams or for other construction work,

(2) Where an application for permission has been made under sub-section (1), the appropriate
Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity
of being heard to the employer, the workmen! and the persons interested in such closure may,
having regard to the genuineness and adequacy of the reasons stated by the employer, the
interests of the general public and all other relevant factors, by order and for reasons to be
recorded in writing, grant or refuse to grant such permission and a copy of such order shall be
communicated to the employer and the workmen.

Q.9 Who is a protected workman? How many of them are permissible in an

Industrial establishment and how are they chosen? What protection does
the Act provide for “protected workmen”, in the case of prejudicial
alteration of conditions of their service or punishment during the
pendency of a proceeding under the Act?

Ans. Section 33(3) of Industrial Disputes Act, 1947 defines and says that protected
workmen means----

(i) A workman who is the member of the executive or other office bearer of a registered
trade union connected with the establishment and
(ii) Who is also recognised as “protected workman” under the rules applicable to the
establishment.

50
According to Section 33(4), in every establishment the number of recognised protected
workmen shall be one percent of the total number of workmen employed therein. There shall be
minimum 5 and maximum 100 protected workmen. The appropriate Government may make
rules for choosing and recognizing them.

No employer shall, during the pendency of any conciliation proceeding before a Conciliation
Officer or a Board or of any proceeding before a Labour Court, Tribunal or National Tribunal in
respect of any industrial dispute, take any action against any protected workman concerned in
such dispute—

(a) By altering, to the prejudice of such protected workman, the conditions of service
applicable to him immediately before the commencement of such proceedings,

(b) By discharging or punishing whether by dismissal or otherwise, such protected

workman, save with the express permission in writing of such authority before which the
proceeding is pending.

Only the protected workmen are entitled to take the benefit of this provision and not others. But
this protection may be availed of only when any Disputes is pending for conciliation or
adjudication. The protected workman should prove that action taken by the employer is to the
prejudice of him. This remedy will be available only when a dispute is pending for settlement or
adjudication before the authority and there is contravention of Section 33. This section gives
protection to the workman against victimization by the employer. If victimization is proved, the
labour court/ tribunal can set aside the order of punishment.

Q.10 Powers of the appropriate Government regarding the transfer of

proceedings under the Industrial Disputes Act, 1947?

Ans. Section 33-B of Industrial Disputes Act, 1947 says that the appropriate Government
may, by an order in writing and for reasons to be stated therein, withdraw any proceedings under
this act pending before a Labour Court, Tribunal or National Tribunal as the case may be, for the
disposal of the proceedings and the Labour Court, Tribunal or National Tribunal to which the
proceeding is transferred may subject to special directions of the order of transfer, proceed either
de novo or from the stage at which it was transferred. It is up to the transferee authority to decide
from where to start with. There will be no direction from the side of the appropriate Government
in this respect. The transfer of proceeding should be made on appropriate solid grounds and not
arbitrarily.

Any Tribunal or National Tribunal subject to the other provisions, if so authorised by the
appropriate Government may transfer any proceeding U/S 33 or Section 33-A pending before it
to any one of the Labour Courts specified for the disposal of such proceedings by the appropriate

51
Government by notification in the Official Gazette and the Labour Court to which the proceeding
is so transferred shall dispose-off the same.

If the appropriate government does not record the reasons and give opportunity to the parties to
the dispute , to represent their stand, the decision shall be fatal to the transfer and will vitiate it.

Q.11 “Grievance Redressal Committee”. Discuss

Ans. A new Chapter II-B has been substituted by the Industrial Disputes (Amendment) Act,
2010 whereby the present section 9-C has been substituted and enforced with effect from 15th
September 2010.

Section 9C. Setting up of Grievance Redressal Machinery

(1) Every industrial establishment employing twenty or more workmen shall have one or more
Grievance Redressal Committee for the resolution of disputes arising out of individual
grievances.
(2) The Grievance Redressal Committee shall consist of equal number of members from the
employer and the workmen.
(3) The chairperson of the Grievance Redressal Committee shall be selected from the employer
and from among the workmen alternatively on rotation basis every year.
(4) The total number of members of the Grievance Redressal Committee shall not exceed more
than six: Provided that there shall be, as far as practicable one woman member if the Grievance
Redressal Committee has two members and in case the number of members are more than two,
the number of women members may be increased proportionately.
(5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal
Committee shall not affect the right of the workman to raise industrial dispute on the same matter
under the provisions of this Act.
(6) The Grievance Redressal Committee may complete its proceedings within thirty days on
receipt of a written application by or on behalf of the aggrieved party.
(7) The workman who is aggrieved of the decision of the Grievance Redressal Committee may
prefer an appeal to the employer against the decision of Grievance Redressal Committee and the
employer shall, within one month from the date of receipt of such appeal, dispose off the same
and send a copy of his decision to the workman concerned.
(8) Nothing contained in this section shall apply to the workmen for whom there is an established
Grievance Redressal Mechanism in the establishment concerned.

52
Very Short Answers Questions

Q.1 Explain the “Unfair Labour Practice” and discuss the law relating to the
unfair labour practice as provided in the Industrial Disputes Act, 1947.

Ans. According to Section 2(ra), Unfair Labour Practice means any of the practice’s
specified in the fifth schedule. The provisions about such practices are contained in Sections 25
and 25 U newly inserted by the Amendment Act, 1982 and they provide for a restriction on
unfair labour practice. Such unfair labour practices are 16 in number. The Schedule has two
parts--- one part deals with the unfair labour practices by the Trade Union. Section 25 provides
that no employer or workman or a Trade Union, whether registered under the Trade Unions
Act, 1926, or not, shall commit any unfair labour practice. According to Section 25, if a person
commits any unfair labour practice, he shall be punishable with imprisonment for a term which
may extend to six months or with fine which may extend to Rs. 1000 or both.

Maternity Benefit Act, 1948, Employee’s State Insurance Act, 1948

Q.1 Discuss the objects and salient features of Maternity Benefit Act, 1961.

ANS. An Act to regulate the employment of women in certain establishments for

certain periods before and after child-birth and to provide for maternity benefit
and certain other benefits.

Maternity Benefit Act, 1961 (MBA)

WHAT IS MATERNITY BENEFIT? (S. 5)

Payment at average daily wage Absence from work before and after delivery.

Average wage = period of 3 calendar months immediately preceding herself she absents herself
= fixed as per the Minimum Wages Act, 1948 or Rs. 10, whichever higher.
For period of her actual absence
53
i.e. period immediately preceding day of delivery, actual day of delivery and any period
immediately following that day

WHERE DOES IT APPLY? (S. 3)

• All establishments, including mines, factories and plantations belonging to Government.

• Any establishment wherein persons are employed for exhibition of equestrian, acrobatic
and other performances.
• Any shop or establishment under any other law pertaining to shops or establishment in
State where 10 or more people are/were employed, in the preceding 12 months.
• Except those to which the Employees’ State Insurance Act, 1948 (ESI) are applicable
for the time being. (S.5A & 5B)
• To women who cannot claim under ESI – Section 50 (because income is above 3000 pm)
then they can claim under MBA. (S.5A & 5B)

WHOM DOES IT APPLY TO? (S. 5)

• Woman should have worked for not less than 80 days in the 12 preceding months from
her expected date of delivery.

• Working period = days the woman was laid-off paid holidays

• Not to woman who has immigrated into Assam or was pregnant at that time.

• If the woman dies during delivery or in the period immediately following the delivery
and the child survives, then the employer is liable to pay the full maternity benefit of
that period to the child. (S. 7)

• But if the child dies, then the benefit is calculated up to and including the date of death of
child.

• Women engaged in casual or muster roll basis on daily wages also entitled.

NOTICE FOR MATERNITY BENEFIT? (S. 6)

• Notice in writing (in the prescribed form) to her employer.

• Maternity amount paid to her or to her nominee (to be specified in the notice)
• Will not work in any establishment during the period.
• Advance amount paid before leave and due amount paid on proof that child is delivered.
• If notice not given before deliver, can be given as soon as possible after delivery.
• The failure to give notice, however, does not disentitle the woman to the benefit of the
Act.

54
MEDICAL BONUS

• If free medical care not provided to the woman.

• Amount of Rs. 3500 (w.e.f. 19-12-2011)

GRANTING OF PAID LEAVE [wages @ maternity benefit] (S. 9 – S. 12)

GRANTING OF PAID LEAVE [wages @ maternity benefit] (S. 9 – S. 12)

Section Purpose of leave Period Note As per

Amendment
Act (2017)
Not more than 6 weeks 26 weeks (not more
preceding delivery than 8 weeks
5(3) Pregnancy and delivery 12 weeks preceding delivery).

Starting immediately No change

the next date following
9 Tubectomy operation 2 weeks

Illness – due to In addition to: No change

10 pregnancy, delivery, Up to 1 Absence allowed under

miscarriage, medical month Section 6 & Section 9
termination, tubectomy
operation

Two In addition to: No change

breaks of
11 Nursing breaks prescribe Absence allowed to her
d during the course of
duration daily work.

55
 ADDITIONAL REASONS FOR LEAVE MENTIONED IN AMENDMENT
ACT, 2017

• Adoptive mothers – child below 3 months of age – 12 weeks leave.

• Commissioning mother (having surrogate child) – from the day the child is handed
over to her for 12 weeks.

• Option to work from home – immediately from the next date after the maternity leave is
over – till mutually decided by the employer and employee – only if the nature of
work assigned to her permits her.

UNLAWFUL DISMISSALS (S. 12)

• During or on account of such absence.

• Give notice that will expire during her period of absence
• During her pregnancy such that she cannot avail the benefits (unless it is gross
misconduct and properly communicated to the woman).

PENALTY FOR CONTRAVENTION

• For non-payment of benefit or dismissing or discharging

• Punishment of imprisonment not less than 3 months up to 1 year
• Fine not less than Rs. 2000 up to Rs. 5000.

Q.2 Discuss the various benefits available to an employee under the employee’s
State Insurance Act, 1948

ANS. The Employees’ State Insurance Act, 1948 is one of the most important laws
that provide social security. It contains six kinds of ESI benefits that injured employees can
avail. All of these benefits must arise in the course of employment in order to enable workers to
access them.

ESI Benefits
Section 46 of the Act describes all benefits that an injured employee can avail. It is important to
note that a worker can avail these benefits in the course of employment only.

For example, if a worker suffers an injury, this injury must be an employment injury only.

56
Section 2(8) says that an employment injury is a personal injury that an employee suffers. Such
injury must be the result of an accident or occupational disease that arises out of employment.
Apart from benefits related to injuries and sickness, some ESI benefits can arise after maternity
as well. The ESI Corporation provides some compensation and financial support to employees
during these periods.

The following are some ESI benefits that employees can avail under the ESI Act:

• Medical benefit
• Sickness benefit
• Maternity benefit
• Dependants benefits
• Disablement benefits
• Other benefits

1. Medical benefit
Every insurable employee under the Act gets medical benefits the day he becomes an employee.
This benefit extends to his family members as well. This medical benefit has no ceiling in terms
of expenditure on healthcare.
Hence, the ESI Corporation takes care of all treatment expenses as per its rules.

Apart from general healthcare benefits, retired and permanently disabled workers also get an
annual premium of Rs. 120. This benefit extends to the spouses of the workers as well.

2. Sickness benefit
Insurable employees under the Act can draw some cash compensation in case they fall sick. This
compensation is generally 70% of their wages during the period of sickness for a maximum of
91 days in a year.
In order to avail this sickness benefit, a worker must pay his contribution for 78 days out of 6
months. Hence, he cannot seek this benefit if he contributes for less than 78 days.

3. Maternity benefit
All female insurable employees can avail maternity benefits under the Act in cases of pregnancy
or confinement.
Confinement, in this case, means labour which results in the birth of a living child. It can also
mean birth after 26 weeks of pregnancy, whether the child is living or not.

This maternity benefit is generally payable to employees for three months. It may, however, be
extendable for one more month depending on medical advice.

57
The compensation amount in such cases is the full wage amount of the employees. This is
payable only if the employee makes a contribution for 70 days in the preceding year.

4. Dependants benefits
ESI benefits extend not only to the employees but to their dependents as well in case of the
employee’s death. Such death, however, must occur in the course of an employment injury or an
occupational hazard.
This compensation is generally 90% of the dead employee’s wages in the form of monthly
payments.
5. Disablement benefits
In case an employee suffers some disablement due to an employment injury, he can seek
disablement benefits. Such disablement may be either temporary or permanent.
In the case of temporary disablement, the compensation is generally 90% of the wage amount
until the disablement continues. The employee can claim this benefit irrespective of whether or
not he paid his contribution.

As far as permanent disablement is concerned, the compensation amount depends on the extent
of the injury. The Medical Board first determines the extent of the employee’s loss of earning
capacity and then decides it.

6. Other benefits
Apart from these five basic ESI benefits, an insurable employee can avail the following
miscellaneous benefits also:

(a) Funeral expenses: The dependents of a deceased employee receive Rs. 10,000 to
perform his last rites.

(b) Vocational/physical rehabilitation: This is generally payable to permanently

disabled employees. They can avail of this benefit for undergoing vocational and physical
rehabilitation.

(c) Old age medical care: This is payable for employees retiring on superannuation or
under VRS/ERS. Even persons who leave employment after suffering a permanent injury and
their spouses can avail this benefit. The compensation amount here is generally Rs. 120 per
month.

58
Suggested Short Questions-Answers:

Q.1 Write in brief the salient features of Indian Maternity Benefits Act, 1961.

ANS. MATERNITY BENEFIT ACT, 1961

Economic dependence of women is what gives rise to their subordination in society today. Hence
to remove such subordination and to lay the foundation of women too must be made
economically independent and must take an active role in all sectors of business today. To
support such initiative the Government must provide some conditions which are suitable for the
needs of women.

Problems faced women in the economic sphere of life are mostly relating to unequal wages and
discrimination resulting from their biological role in nature of childbearing. To curb such
problems and protect the economic rights of women the legislature introduced the Equal
Remuneration Act, 1976 and the Maternity Benefit Act of 1961.

Maternity benefits were first recognized when the Maternity Protection Conference was held
by the International Labour Organisation in 1919. In a case in 1977, B. Shah vs. P.O. it was
held that women need to be withdrawn from the workforce during pregnancy and after the birth
also they need the steady income for medical expenses etc. and therefore, to preserve her health
law should make provisions for maternity benefit so women can ensure their productivity as well
as reproductivity.

The Object of the Act is to protect the dignity of motherhood and the dignity of a new person’s
birth by providing for the full and healthy maintenance of the woman and her child at this
important time when she is not working.

Benefits under the Act:

Cash Benefits
• Leave with average pay for six weeks before the delivery
• Leave with average pay for six weeks after the delivery
• A medical bonus if the employer does not provide free medical care to the woman
• An additional leave with pay up to one month if the woman shows proof of illness due to
the pregnancy, delivery, miscarriage or premature birth
• In case of miscarriage, six weeks leave with average pay from the date of miscarriage.

Non Cash Benefits/Privilege

• Light work for ten weeks (six weeks plus one month) before the date of her expected
delivery, if she asks for it
• Two nursing breaks in the course of her daily work until the child is 15 months old
59
 • No discharge or dismissal while she is on maternity leave
• No change to her disadvantage in any of the conditions of her employment while on
maternity leave
• Pregnant women discharged or dismissed may still claim maternity benefit from the
employer.

Under the Maternity Benefits Act, 1961 the condition levied is that the female employee
should have served the institution for a minimum period of 80 days in 12 months preceding the
date of expected delivery. Also, the Act has undergone regular amendments with the recent one
being in 2008. Here, the minimum medical bonus in case of inability of employer to provide free
medical care to pregnant women employee was raised from Rs 25 to Rs.1000 extending to Rs.
20000.
The Act provides for 12 weeks of paid leave as maternity leave and 6 weeks in case of
miscarriage or termination of pregnancy. In addition to the provisions for leave and cash
benefits, the Act also makes provisions for matters like light work for pregnant women 10 weeks
prior to her delivery, nursing breaks during daily work till the child attends age of 15 months,
etc.
The Act serves as a protective umbrella as it restricts termination of service of a pregnant woman
employee except on grounds of misconduct. Moreover, it imposes punishment for a period of
minimum three months or fine extending to Rs. 5000 on the employer, in the event of any failure
to provide maternity benefits to female employees.

After analyzing various provisions of the 1961 Act and related cases it can be concluded that
Maternity Benefit Act, 1961 is a boon for the working women in the sense that they don’t have
job insecurity during their maternity period. But there are certain shortcomings of the Act which
needs to be looked upon. Firstly, the duration of leave must be extended in order to allow a
mother to fully recover and recuperate as well as efficiently nurse her new born child. Within
this, the duration of post natal period must be extended keeping in mind factors like rise in
number of late marriages, cesarean births, nuclear families and increasing urbanization. In the
44th Indian Labour Conference, held in February, 2012, it has been recommended that
Maternity Leave under the Maternity Benefit Act be increased from the present level of 12
Weeks to 24 Weeks.

Secondly, The MBA does not comply with international standards and there are huge gaps in its
implementation as the entire responsibility of the Act rests with the employer. Placing the entire
burden of providing maternity benefit on the employer is akin to giving him an incentive to not
provide any benefit at all. Thus, the cost of maternity protection should be shared amongst
different agencies through some form of social insurance scheme or general taxation.

Thirdly, the responsibility of child care is often singularly put upon women. This reinforces
patriarchal notions and stereotypes and also enhances the discrimination they face from
employers. In order to reduce these factors, the Act should also make a provision for paternity
leave and follow a more egalitarian approach. Also, protection should be available to persons
who adopt children.
60
Q.2 Describe the constitution and functions of the Employees State Insurance
Court.

ANS. Constitution of Employees State Insurance Court: Section 74 of the Act

authorizes the State Government to constitute an Employees Insurance Court. The
Insurance Court shall be constituted by issuing a notification in the Official Gazette. The local
area within which the Court shall, exercise its jurisdiction will be specified in the notification.
The number of Judges, as shall constitute the Court, shall be determined by the State
Government. A Judicial officer or a legal practitioner of five years standing is qualified for the
appointment as a Judge of the Employees Insurance Court. The State Government may appoint
the same Court for two or more local areas , or two or more Courts for the same local area.
Where there are more than one Court in the same local area, the distribution of work amongst
them may be regulated by general or special order of the State Government.

Matters to be decided by the Employees State Insurance Court:

All disputes arising under the ESI Act, 1948, shall be decided by the Employees Insurance Court.
Section 75 provides that the following matters are to be decided by the ESI Court-

• Whether any person is an employee or whether he is liable to pay the employee’s

contribution, or
• The rate of wages or averages daily wages of an employee for the purpose of ESI Act, or
• The rate of contribution which is payable by a principal employer in respect of any
employee, or
• The person who is or was the principal employer in respect of any employee, or
• The right of any person to any benefit under the ESI, Act and the amount and duration
thereof, or
• Any other matter which is dispute between a principal employer and the Corporation or
between principal employer and an immediate employer or between an employee and
principal or immediate employer.

______________________

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 Minimum Wages Act, 1948, Payment of Wages Act, 1936, Equal
Remuneration Act, 1976

Q.1 Define wages. Discuss the objects and scope of Payment of Wages Act.

ANS: The Payment of Wages Act, 1936 is a central legislation which has been enacted to
regulate the payment of wages to workers employed in certain specific industries and to ensure a
speedy and effective remedy to them against illegal deductions and/ or unjustified delay caused
in paying wages to them. It applies to the person employed in a factory, industrial or other
establishment or in a railway, whether directory or indirectory, through a sub-contractor. Further,
the Act is applicable to employees drawing wages up to Rs. 1600/- a month.

The Central Government is responsible for enforcement of the Act in railways, mines, oilfields
and air transport services, while the State Governments are responsible for it in factories and
other industrial establishments.

The basic provisions of the Act are as follows:

• The person responsible for payment of wages shall fix the wage period upto which wage
payment is to be made. No wage-period shall exceed one month.

• All wages shall be paid in current legal tender, that is, in current coin or currency notes or
both. However, the employer may, after obtaining written authorization of workers, pay
wages either by cheque or by crediting the wages in their bank accounts.

• All payments of wages shall be made on a working day. In railways, factories or

industrial establishments employing less than 1000 persons, wages must be paid before
the expiry of the seventh day after the last day of the wage period. However, the wages of
a worker whose services have been terminated shall be paid on the next day after such
termination.

• Although the wages of an employed person shall be paid to him without deductions of
any kind, the Act allows deductions from the wages of an employee on the account

Q.2 Explain the main provisions of Equal Remuneration Act, 1976.

62
ANS. In India, the Vedic period gave equal status to men and women, but this ideology had
a tectonic shift over a period. The men have overshadowed the position of women in the society.
At the time of Independence, the inequality was apparent, and the constitutional framers had to
address this as it chose a democratic republic as a form of governance. Systems have to be put in
place for the operation of the democratic forces to ensure equality. The constitutional provisions
and various legislations have been enacted which became a bedrock towards ensuring equal
opportunities to men and women. When equal opportunities are put in place, the next line of
action needed is equal remuneration for the same work done without reference to the gender. To
make this legislation a success, the onus is on the employer for effective implementation.

The employment of women has been increasing gradually over the years. Moreover, the works
which were considered gender specific underwent a sea of change. Women were usually seen as
less productive than their male counterparts. The general perspective of women was that they
weren’t as serious as men in their work as family and home are their main priority. Economic
dependency is the major cause for the women to have a weak bargaining power. This usually
makes the employer take them for granted, and the wage rate would be unequal.

In the modern times, the women are no longer restricted to minimal jobs or the traditional works.
They are employed at par with men and to protect their interests and ensure they get a fair
chance, statutory recognition is given through different legislations, enacted both at center and
state levels. The Workmen Compensation Act, Payment of Wages Act, Factories Act,
Minimum Wages Act, The Equal Remuneration Act, Maternity Benefits Act, ESI Act, etc. are
some of the legislations aimed at ensuring equal wages without gender bias.

Constitutional validity
Gender Justice is an important ingredient of every civilized society. It’s no longer the popular
mindset that the female is a weaker sex. To imbibe this principle in the society, various steps
were taken at the international level:

• The International Labour Organization held in 1951 a Convention concerning Equal

Remuneration for Men and Women Workers for the Work of Equal Value.

• The Universal Declaration of Human Rights, under Article 23 ensures that everyone
without any discrimination has the right to equal pay for equal work.

• The Convention on Elimination of all form of Discrimination, 1979 has it’s the main
objective to prevent discrimination especially in the case of women.

At the national level, certain legislations were enacted by the British India. But it’s the national
leaders, freedom fighters and intellectuals and the democratic movements sweeping the world
over brought about positive changes in the position of women and in achieving equality.

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 • The Preamble of the Constitution provides for Justice and Equality to all.
• Article 14 equality before law
• Article 15 guarantees a right against discrimination
• Article 15(3) recognizes ‘protective discrimination’ to bring women at par with men in
all possible respects.
• Article 16 provides right to equal opportunity regarding public employment irrespective
of the sex of the person.
• Article 39(a) states that the citizens, men, and women, equally, have the right to an
adequate means of livelihood.
• Article 39(d) “that there is equal pay for equal work for both men and women”.
• Article 42 requires the state to make provision for securing humane conditions of work
and maternity relief.

The Doctrine of ‘equal pay for equal work’ is not a fundamental right but a Constitutional right.
Equal remuneration for men and women is the right of an employee without any qualification.
The Act of Equal Remuneration, 1976 was enacted to comply with the provisions of Directive
Principle of State Policy (DPDP) under Article 39. The Act, being a beneficial legislation,
ensures adequate payment or remuneration to be made irrespective of the physical strength of
employee and removing the scope of social and economic injustice merely on the ground of sex,
thereby working to establish a just society in the country.

The salient features of the Equal Remuneration Act, 1976

• The Act is a Central Legislation and applies to the whole of India.

• The objective of the Act is to provide for protection against discrimination of women
workers on the ground of sex, about the payment of equal remuneration in the matter of
employment.
• Restricting the employer to create terms and conditions in a contract of service or work of
labor contrary to equal pay for equal work doctrine and the provisions of Equal
Remuneration Act.
• The Act doesn’t make a distinction like employment or the period of employment and
applies to all workers even if engaged only for a day or few days.
• No overriding effect is given to any agreement, settlement or contract to the provisions of
the Equal Remuneration Act.
• Any settlement or any agreement with the employee that is detrimental to the employee
isn’t allowed.
• The Ministry of Labour and The Central Advisory Committee are responsible for
enforcing this Act.

• Meaning of equality of work:

The equality of work is not based solely on the designation or the nature of work but also
on factors like qualifications, responsibilities, reliabilities, experience, confidentiality,

64
 functional need and requirements commensurate with the position in the hierarchy are
equally relevant.

• When the employer doesn’t comply with the provisions of the act, he will be liable to pay
fine, imprisonment, or both.

The duties of the employer under the Act

1. Section 4: The duty of the employer to pay equal remuneration to both

men and women workers for same work or work of similar nature.
No employer shall pay to any worker, employed by him in an establishment or employment,
remuneration, cash or in kind at rates less favorable than those at which he pays remuneration to
the workers of the opposite sex for performing the same work or work of a similar nature.
• The rate of remuneration of any worker will not be reduced to avoid complying with
Section 4 (1).
• In respect of any establishment, the rates of remuneration payable before the
commencement of the Act for men and women for same or similar nature work is
different only on the ground of sex, then the highest of the rates will be payable after the
commencement of the Act.

2. Section 5: No discrimination to be made while recruiting men and

women workers
For any recruitment or any condition of service after recruitment like promotions, training or
transfer, for the same or similar nature work, the employer will not make any discrimination
against women except where the employment of women in such work is prohibited or restricted
by or under any law for the time being in force.

Proviso: the provisions of the Act will not affect the priority given or reservation for SC, STs,
ex-service men, retrenched employees.

3. Section 8: Maintaining a Registrar

Rule 6 read with Section 8 provides that: The employer has to maintain proper registers and
relevant documents of all the employees and workers as prescribed by law in Form D. The Form
needs to have:

• category of workers
• Description of work
• No, if men employed
• Number of women employed

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 • Rate of remuneration
• Components of remuneration.

4. Relevant case laws:

The Indian Courts have played a major role in upholding the doctrine and ensuring proper
enforcement of the social legislations for the benefit of the class of people the legislation was
enacted for.

1. A landmark case in the light of equal pay for equal work was the Judgment given by the
Hon’ble Supreme Court in the case of Randhir Singh v. Union of India. Here, the
Court adopted a sociological ideology and deviated from strict interpretation to liberal
interpretation for the employees. The court, in this case, relied on ‘‘socialist’ as envisage
in the Preamble to the Constitution in deciding the case, and it was held that the
principle of equal pay for equal work was deducible from article 14 and 16 of the
Constitution of India, may be properly applied to the cases of unequal scale of pay
based on classification, though those drawing a different scale of pay do identical work
under the same employer.” Here, the court observed that “equal pay for equal work” is
deducible from Articles 14 &16, understood in the light of the Preamble and Art. 39(d).

Class or category of employee:

• M/s Mackinnon Mackenzie and Co. Ltd. v. Audrey D’Costa and other,
1987
In the given case, a woman employee was discriminated while payment of salary as the employer
contended that the lady was working as a Confidential Stenographer and is part of a different
class. The court rejected the plea of the employer that the woman was in a different class. It held,
‘If only women are working as Confidential Stenographers it is because the management
wants them there. Women are neither specially qualified to be Confidential Stenographers nor
disqualified on account of sex to do the work assigned to the male Stenographers. Even if
there is a practice in the establishment to appoint women as Confidential Stenographer such
practice cannot be relied on to deny them equal remuneration due to them under the Act.’
Therefore, the Court applied the Equal Remuneration Act to grant equal salary to female
stenographers.

• Inder Singh & Others v. Vyas Muni Mishra & Others 1987
The court decided that when two groups of persons are in the same or similar posts performing
the same kind of work, either in the same or in the different departments, equal pay will be paid
to them by removing unreasonable discrimination and treating the two groups that are similarly
situated, equally.

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Meaning of same work or work of similar nature:
Mackinnon Mackenzie & Co. Ltd. v. Audrey D’Costa & Another, 1987

The court observed while determining the term ‘same work or work of similar nature’ under
Section 2(h), the following are considered:

• the authority should take a broad view

• ascertain if any differences are of practical importance, the authority should take an
equally broad approach to the very concept of similar work implies differences in detail,
but these should not defeat a claim for equality on trivial grounds.
• It should look at the duties performed, not those theoretically possible. In making
comparison, the authority should look at the duties performed by men and women.

Relevance of conditions to employment:

Bhagwan Dass & Others v. State of Haryana & Others, 1987
The Court held that when it’s proved that the nature of duties and functions discharged and
worked done similar, then the mode of selection and period of appointment is irrelevant and
immaterial for the applicability of equal pay for equal work.

Constitutional relevance:

• Sita Devi & Others v. State of Haryana & Others, 1996

The learned Judge held that the “doctrine of equal pay for equal work is recognized as a facet
of the equality clause contained in Article 14 of the Constitution.”

• S. Nakara v. Union of India:

A Constitutional Bench affirmed the decision in the case of Randhir Singh, in the given case.
The Court held that “having regard to the constitutional mandate of equality and inhibition
against discrimination in Articles 14 and 16, in service jurisprudence, the doctrine of “equal
pay for equal work” has assumed the status of a fundamental right.”

Suggested Short Questions-Answers

Q.1 Discuss in brief the disposal of cases of unauthorized deductions under
Payment of Wages Act, 1936
67
ANS. Where contrary to the provisions of this Act any deduction has been made from the
wages of an employed person, or any payment of wages has been delayed, such person himself,
or any legal practitioner or any official of a registered trade union authorised in writing to act on
his behalf, or any Inspector under this Act, or any other person acting with the permission of the
authority appointed under sub-section(1), may apply to such authority for a direction under
sub-section (3):

Provided that every such application shall be presented within 62 [twelve months] from the
date on which the deduction from the wages was made or from the date on which the payment of
the wages was due to be made, as the case may be:

Provided further that any application may be admitted after the said period of 62 [twelve
months] when the applicant satisfies the authority that he had sufficient cause for not making the
application within such period.

When any application under sub-section (2) is entertained, the authority shall hear the applicant
and the employer or other person responsible for the payment of wages under section 3, or give
them an opportunity of being heard, and, after such further inquiry, if any, as may be necessary,
may, without prejudice to any other penalty to which such employer or other person is liable
under this Act, direct the refund to the employed person of the amount deducted, or the payment
of the delayed wages, together with the payment of such compensation as the authority may
think fit, not exceeding ten times the amount deducted in the former case and not exceeding three
thousand rupees but not less than one thousand five hundred rupees in the latter, and even if the
amount deducted or delayed wages are paid before the disposal of the application, direct the
payment of such compensation, as the authority may think fit, not exceeding two thousand
rupees: Provided that a claim under this Act shall be disposed of as far as practicable within a
period of three months from the date of registration of the claim by the authority: Provided
further that the period of three months may be extended if both parties to the dispute agree for
any bona fide reason to be recorded by the authority that the said period of three months may be
extended to such period as may be necessary to dispose of the application in a just manner:
Provided also that no direction for the payment of compensation shall be made in the case of
delayed wages if the authority is satisfied that the delay was due to—

(a) a bona fide error or bona fide dispute as to the amount payable to the employed
person; or
(b) the occurrence of an emergency, or the existence of exceptional circumstances, the
person responsible for the payment of the wages was unable, in spite of exercising
reasonable diligence; or
(c) the failure of the employed person to apply for or accept payment.]

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Very Short Questions-Answers

Q.1 Define living wage.

ANS. Living Wage -

The concept of "Living wage" is the wage rate which prevails in most
of the economically advanced Countries. The term Living Wage has not been defined under the
Minimum wages Act, 1948. South Australian Act of 1912 defines it as 'Living Wage means a
sum sufficient for the normal and reasonable needs of the average employee living in a
locality, where the work under consideration is done or is to be done.

Justice Higgins of the Australian Commonwealth Court of Conciliation defined the

living wage ‘as one appropriate for the normal needs of the average employee, regarded as a
human being living in a civilized society. The living wage must provide not merely for
absolutely essentials such as food, shelter, and clothing but for condition of frugal comfort,
estimated by current human standard.

Living wages are wages without which working people cannot live and perform their
duties as a citizen. It varies from country to country depending upon the price level of
necessaries of life, and it is determined by the socio-economic conditions of a particular country.

The living wage should enable the wage earner to provide for himself and his family not
merely the bare essentials of food, clothing and shelter but the measure of frugal comfort
including education for the children protection against ill health, requirements for essential social
needs and a measure of insurance against the more important misfortune including old age.

In India, there is no statutory definition for the term 'living wage'. According to
Article 43 of the Indian Constitution, “the State shall endeavor to secure to all workers living
wages, conditions of ensuring a decent standard of life and full enjoyment of leisure and
social and cultural opportunities”.

Child Labour Prohibition & Regulation) Act, 1986, Industrial

Employment(Standing Orders) Act, 1946, Trade Union Act, 1926

Q.1 What is ‘trade union’? How can a trade union be registered? Discuss.
OR

69
 Define Trade-Union. Discuss the procedure for the registration of a trade
union. How many members are required for the registration of Trade
Union?

Ans. Section 2(h) - Trade Union

General definition of Trade- Union:
Sri V.V. Giri defined trade union as “voluntary organizations of workers formed to promote
and protect their interest by collective action.”

The Oxford Dictionary has defined a trade union as “an association of workers in any trade or
allied trades for the protection and furtherance of their interests in regard to wages, hours and
conditions of labour’’

The British Trade Unions Act, 1871 has defined a ‘trade union’

“as any combination, whether temporary or permanent, for regulating the relations
between the workmen and masters, or between workmen and workmen, or between
masters and masters, or for imposing restrictive conditions on the conduct of any trade
or business.”

• Statutory Definition of ‘Trade Union’ in Indian Context

The term ‘trade union’ has been defined under Section 2(h) in the Trade Unions Act, 1926.

“Trade Union” means 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 condition on the conduct of any trade or business,
• and includes any federation of two or more Trade Unions.

This definition is similar to that of the definition of trade union as defined under the
Trade Unions Act, 1871 in England. The paramount purpose of the combination is to regulate
the relations between the employer and workmen and to impose the restrictive conditions on
the conduct of trade or business of some other person. This definition is having a specific
relevance to the immunities provided under sections 17, 18 and 19 of the Trade Unions Act,
1926. The Act also defines the term ‘registered Trade Union’ under section 2(e). The purpose is
a trade union can exist without registration as required under the provisions of the Act.

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 Exception

• Provided that this Act shall not affect–

(i) any agreement between partners as to their own business;
(ii) any agreement between an employer and those employed by him as to such
employment; or
(iii) any agreement in consideration of the sale of the good-will of a business or of
instruction in any profession, trade or handicraft.

➢ It is the object of the association or combination that determines whether it is a trade

union or not
• Example: A society of authors, publishers, and other owners of copyright meant to
protect their copyright in music and songs, was held NOT to be a Trade Union by the
House of Lords.

Tamil Nadu NGO Union vs Registrar, Trade Unions, AIR

1962, Madras HC

• Tamil Nadu NGO Union, which was an association of sub-magistrates of the judiciary,
tahsildars, etc., was not a trade union because these people were engaged in sovereign
and legal functions of the State, were its inalienable functions.

GTRTCS and Officer's Association, Bangalore and others vs. Asstt. Labor
Commissioner and anothers AIR 2002, Kar. HC

• The definition of workmen for the purpose of Trade Unions is a lot wider than in other
acts and that the emphasis is on the purpose of the association rather than the type of
workers and so it is a valid Trade Union.

Registration of Trade Unions (S. 3-14)

Important provisions
3. Appointment of Registrars.
4. Mode of Registration.
5. Application for registration.
6. Provisions to be contained in the rule of a Trade Union.
7. Power to call for further particulars and to require alteration of name.
8. Registration.
9. Certificate of registration.
10. Cancellation of registration.
11. Appeal.
12. Registered office.
13. Incorporation of registered Trade Unions.
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14. Certain Acts not to apply to registered Trade Unions.

Introduction
• The registration of a trade union is not necessary.
• However, upon registration, a trade union gets several benefits including some
immunities that are not available to an unregistered Trade Union.

Section 13 specifies that upon registration, a trade union gets a legal entity
status, due to which-
• it has perpetual succession and a common seal.
• can acquire and hold movable as well as immovable properties.
• can contract through agents.
• can sue and can be sued.
Procedure of Registration
• Appointment of the Registrar (S.3)
• Mode of registration
• Application of Registration
• Contains of the registration form.

Section-3 Appointment of Registrars

1. The appropriate Government shall appoint a person to be the Registrar of Trade Unions for
each State.
2. The appropriate Government may appoint as many Additional and Deputy Registrars of Trade
Unions as it thinks fit for the purpose of exercising and discharging, under the
superintendence and direction of the Registrar, such powers and functions of the Registrar
under this Act as it may, by order, specify and define the local limits within which any such
Additional or Deputy Registrar shall exercise and discharge the powers and functions so
specified.

S. 3…….. Subject to the provisions of any order under sub-section (2), where an Additional
Deputy Registrar exercises and discharges the powers and functions of a Registrar in an area
within which the registered office of a Trade Union is situated, the Additional or Deputy
Registrar shall be deemed to be the Registrar in relation to the Trade Union for the purposes of
this Act.

Mode of registration (S. 4)

Minimum Requirement of Registration of Trade Union (2001 amendment)

• Section 4 says that to register a Trade Union, an application must be sent to the Registrar
of Trade Unions appointed by an appropriate government.

72
• The application must be made by seven or more persons who are engaged in the trade or
industry in connection to which the Trade Union is to be formed.
• All the applicants must subscribe their names to the rules of the Trade Union and comply
with the provisions of this act regarding registration.
• There must be at least 10% or 100, whichever is less, members who are engaged or
employed in the establishment or industry to which it is connected.
• There must not be less than seven members who are engaged or employed in the
establishment or industry to which it is connected.
• If more than half of the persons who applied for the registration cease to be members of
the union or expressly disassociate themselves from the application, the application will
be deemed to be invalid.
Application of Registration
• Section 5 gives the details of the application. It says that the application should be sent to
the registrar along with the copy of the rules of the trade union and a statement of the
following particulars-

1) The name, occupation, and addresses of the applicants.

2) The name of the trade union and the address of its head office.
3) The titles, names, ages, addresses, and occupations of the office bearers of the trade
union.
4) If the trade union has been in existence for more than 1 yr, a general statement of its
assets and liabilities.

➢ Provisions to be contained in the rules of a Trade Union (2001

amendment) [sec. 6]

• Section 6 (Provisions to be contained in the rules of a Trade Union) specifies the

provisions that should be contained in the rule book of the trade union. A copy of this
rule book must be supplied along with the application for registration of the trade union.
This rule book details the internal administration of the trade union and also determines
and governs the relationship between the trade union and its members.
• It must contain the rules for the following matters:

1. name of the trade union.

2. the whole object of the trade union.
3. the whole purposes for which the general funds can be used.
4. the maintenance of the list of members and adequate facilities to inspect it by the
members of the trade union.
5. the membership of ordinary members who are actually engaged or employed in an
industry with which it is connected as well as the membership of the honorary or
temporary members.
6. the appointment of members of the executive body.
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 7. the membership or subscription fee, which shall not be less that 25 paisa per member
per month
8. the conditions under which a member can get the benefits or has to pay fines.
9. the safe custody of funds and provisions for inspecting or auditing the statements, or
other documents of the trade union.
10. dissolution of the trade union.

M. T. Chandersenan vs. Sukumaran AIR 1974

• SC held that if a member fails to pay subscription fee, he cannot be considered a member
of the trade union. However, subscriptions cannot be refused under some pretext which
results in the denial of membership.

Bokajan Cement Corporation Employees Union

Vs.
Cement Corporation of India, 2004

• SC held that membership of the union does not automatically cease upon termination of
the employment.

Power of Registrar (S.-7)

• the registrar has the power-
I. to ask for further information from the trade union to satisfy himself that the trade
union complies with section 5 and is eligible to be registered under section 6.
II. The registrar can refuse to register the trade union until he receives the information.
III. Further, he has the power to ask to change the name of the trade union if a union
with the same name already exists or if he feels that the name could be deceiving or
confusing to the public or the members of the trade union.

Registration
• Under section 8, upon satisfaction of all the requirements, the Registrar of the Trade
Unions will register the trade union. It is mandatory for the registrar to register a trade
union if the union satisfies all the technical requirements of this Act.

In the case of Re Indian Steam Navigation Workers Union AIR 1936 the court
held that a Registrar only has to see whether all the technical requirements are being
fulfilled and not whether it could be described as unlawful.

In the case of ACC Rajanka Limestone Quarries Worker's Union vs

Registrar of Trade Unions, AIR 1958, it was held that if the registrar does not
register the trade union within 3 months of application, an appeal can be made to the
High Court under Art 226.
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 Certificate
• Under section 9, the registrar will issue the certificate of registration in the prescribed
form, which shall be conclusive evidence that the trade union is registered under this act.

➢ Minimum requirement about membership of a Trade Union. [Sec 9A]

A registered Trade Union of workmen shall at all times continue to have not less than 10% or
100 of the workmen, whichever is less, subject to a minimum of seven, engaged or employed
in an establishment or industry with which it is connected, as its members.

Q.2 Discuss immunities from civil and criminal liabilities to the members and
office- bearers of a Trade Union?

Ans. PRIVILEGE AND IMMUNITIES OF A REGISTERED TRADE -

UNION
Since, the Industrial development in India is to a large extent inspired from the English system,
taking lessons from the problems faced by the trade unions in England, the Trade Union Act of
1926 provides for registration of trade unions. The object of registration is to encourage the
growth of permanent and stable unions. Section 17 and 18 of the Act provides certain
immunities to the trade union such as immunity from criminal conspiracy in trade disputes and
from civil suits in certain cases, but these are made available only to the registered trade unions
The office-bearers of trade union cannot perform their duties successful in order to carry out of
mission of the trade Union unless certain immunities are granted to the trade union as such and
to their officers and members. The Act intended to their Trade unions and to provide immunities
to them for the purpose to their lawful objectives. It contains following provisions in this regard :

➢ Immunity from Punishment for Criminal Conspiracy [Sec. 17]:

S. 17 of the Trade Unions Act lays down the grounds for providing the members of a trade
union immunity from prosecution in criminal proceedings for any act performed by them
while carrying out legitimate functions of the trade union. The section provides that no
member of a registered trade union will be found liable under the provisions of Sec. 120-B IPC,
1860 in respect of any agreement made between the members for the purpose of furthering any
object enumerated in Sec. 15 of the Trade Unions Act, 1926, unless the agreement in question
is an agreement to commit an offence.

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 Under the definition of Sec. 17, the ‘agreement’ must be an agreement to do
something contained in Sec. 15 and it cannot be an agreement to commit an offence as defined
under Sec. 40 IPC.
The rationale for this section is that in order to enforce their demands, trade
unions have to resort to collective bargaining which is their greatest strength. Collective action
undertaken by the trade union may take the form of strikes, picketing, and so forth. Even though
the object of such collective action is to ensure that the employers take note of their grievances,
under the strict definition of the law, the effect of such action is ‘interference with the trade or
business of the employer or with the employment of other workers.’ This collective action would
normally fall within the definition of criminal conspiracy under the IPC. It was this situation that
necessitated a provision like Sec. 17 of the Trade Unions Act. Members of a trade union cannot
be charged under criminal conspiracy for any action taken by them in furtherance of a trade
dispute or alternatively, in furtherance of the objects laid down in Sec. 15 of the Act. It must be
stated clearly at this point, that this protection is not afforded to any agreements entered into by
members of a trade union to perform illegal actions or offences as defined under Sec. 40 IPC.
An agreement to commit an offence or illegal act, even if it is in furtherance of a trade dispute,
would not fall within the protection granted by this section.

In the case of R.S. Ruikar v. Emperor the court stated that although trade unions have the
right to strike and commit actions in furtherance of trade disputes for which they cannot be held
civilly or criminally liable, this exemption does not extend to situations where they can be
afforded immunity from any criminal offence as defined under S. 40 IPC.

In the landmark case of Jay Engineering Works v. State, the court reiterated this view and stated
that the exemptions granted under S. 17 of the Act do not extend to: “agreements to commit an
offence or intimidation, molestation or violence, where they amount to an offence. Members of a
trade union may resort to peaceful strike such as cessation of work with the object of enforcing
their claims. Such strikes must be peaceful and never violent and there is no exemption where an
offence is committed. Therefore, a movement by workmen by gathering together either outside or
inside an industrial establishment within the working hours is permissible when it is peaceful
and does not violate the provisions of law. However, when such a gathering is unlawful or
commits an offence then such exemption is lost. Thus where the workmen resort to confinement
of persons, criminal trespass or where it becomes violent or indulges in criminal force or assault
or mischief to person or property, then the exemption granted under Sec. 17 of the Act cannot be
claimed.” In this case the court defined gherao as a “physical blockade of a target either by
encirclement or forcible occupation”. It declared that the objective of a gherao is to force the
management in power to agree to the demands of the workers, without regard for the machinery
provided for redressal of complaints as provided for by the law, and hence it took the view is that
a gherao is illegal and the persons involved cannot be granted immunity from criminal
prosecution.

➢ Immunity from civil suit to certain cases [Sec 18]:

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Sec. 18 of the Trade Unions Act provides for exemption from prosecution in civil cases. It
essentially states that immunity from civil proceedings is granted to the office bearers and
members of a registered trade union for the offence of bringing about a breach of contract of
employment between the employer and the employee. The trade union itself is also granted
immunity from civil proceedings for the offence of inducing a person to break his contract of
employment between the employer and the employee or of interfering with the trade, business or
employment of some other person, provided that such inducement is in furtherance of a trade
dispute. However the section clearly states that this inducement must be entirely legal and must
be done by lawful means.
The meaning of this section is that if the inducement to break the contract of
employment has been put forth legally, without threat of force or violence or malice, and if it is
in furtherance of a trade dispute, then it is not actionable under civil law. Similarly, if there is no
threat of violence or use of force and there is still interference in the trade, business or
employment of some person, then immunity is granted provided it was done in furtherance of a
trade dispute.

Sub-clause (2) of this section provides that the trade union will not be liable for any tortuous act
done by its agent if it is able to prove that the agent acted without their knowledge or in
contravention of his orders. Delay in the matters relating to the member of the Trade Union
regarding the trade disputes like ‘contract of employment’, (is an agreement between an
employer and an employee which sets out their employment rights, responsibilities and duties).
Trade Union or its members showing interest or interfering in matters of the trade or business.
Trade Union or its members showing interest or interfering in matters of the employment of the
persons. Trade Union or its members showing interest or interfering in matters of the removal of
labour. Trade Union or its members showing interest or interfering in matters of compensating or
remunerating the employee

Registered Trade Union shall not be liable in any suit or other legal proceeding in any Civil
Court for the tortious act (wrongful act) committed by the agent of the Trade Union. Registered
Trade Union is not liable for the vicarious liability (if agent commits mistake intentionally
without the knowledge of the Trade Union, agent is liable but not the Trade Union).

CONCLUSION
Since, the Industrial development in India is to a large extent inspired from the English system;
taking lessons from the problems faced by the trade unions in England the Indian Trade Union
Act 1926 provided certain immunities to the office bearers of the trade union under section 17
and 18 of the Act from criminal and civil proceedings.

The effectiveness of the immunities granted under section 17 and 18 can be seen from
the various cases decided by the Indian judiciary, such as the case of Standard Chartered Bank
v Hindustan Engineering and General Mazdoor Union and others. In this case the Delhi High
Court although found that the defendant union had no locus standi to hold the threatened
demonstration in front of the plaintiff’s office, yet it allowed the defendant to hold
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demonstrations at a distance of 50 or 100 meters from the bank premises, and thus preserved and
protected the legitimate right of the union. A similar stand was taken by the same court in the
case of Vidya Sagar Institute of Mental Health And Neuro Services v Vidya Sagar Hospital
Employees Union, in which the court allowed the members of the union to peacefully
demonstrate outside the radius of 200 metres from the hospital premise so that their act won’t
interfere in the normal functioning of the hospital. This view was also further upheld by the same
court in the case of Superior Crafts v Centre of Indian Trade Unions and Others.

Q.3 Give a brief account of the Child Labour (Proibition & Regulation) Act,
1986

ANS. THE CHILD LABOUR (PROHIBITIION AND REGULATION)

ACT, 1986.

The Act came in force from 23rd December, 1986.

An Act to prohibit the engagement of children in certain employments and to regulate the
conditions of work of children in certain other employment.

SOME IMPORTANT DEFINITIONS

Child: means a person who has not completed his fourteenth year of age.

Establishment: includes a shop, commercial establishment, workshop, farm, residential hotel,

restaurant, eating.

PROHIBITION OF EMPLOYMENT OF CHILDREN IN CERTAIN

OCCUPATIONS AND PROCESSES.

No Child shall be employed or permitted to work in:

1. Transport, catering or construction by railways.
2. Firecracker shop.
3. Slaughter House.
4. Automobile workshop/garages.

PROHIBITION OF EMPLOYMENT OF CHILDREN IN CERTAIN OCCUPATIONS

AND PROCESSES.
5. Foundries.
6. Handloom/Power loom.
7. Mines.
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 8. Plastic units and fiberglass workshop.
9. Domestic Servants.
10. Dhabas, restaurants, hotels, motels, tea shops, resorts, spas, or other recreational
12. Carpet weaving industry.
13. Cement Manufacture.
14. Cloth printing, dyeing and weaving.
15. Manufacture of matches, explosives and fire-works.
16. Mica-cutting and splitting.
17. Shellac Manufacture.
18. Soap manufacture.
19. Building and construction.
20. Gem cutting and polishing.
21. Cotton Industry.
22. Manufacturing of pesticides and insecticides.
23. Paper making.
24. Oil refinery.

HOURS AND PERIOD OF WORK

1. No child shall be required or permitted to work in any establishment in excess of such number
of hours as may be prescribed for such establishment or class of establishments.
2. The period of work on each day shall be so fixed that no period shall exceed three hours and
that no child
3. The period of work shall not be spread over more than six hours.
4. No child shall be permitted or required to work between 7 p.m. and 8 a.m.
5. No child shall be required or permitted to work overtime.
6. No child shall be required or permitted to

NOTICE TO INSPECTOR
Every occupier of establishment in which there is working child shall send written notice to
Inspector. The notice to contain:
1. Name and situation of establishment;
2. Name of person in actual management of the establishment.
3. Address for

EXCEPTION
The above section does not apply:-
1. To any workshop carried on by the occupier with the aid of his family; or
2. To any school established by Government or receiving assistance or recognition from
Government.

CHILD LABOUR TECHNICAL ADVISORY COMMITTEE

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This committee shall advise the Central Government about the additions of any industry or
occupations to exclude prohibit child employment.
The Committee shall consist of Chairman and other members not exceeding in total ten.

DISPUTE AS TO AGE
If any question arises between an Inspector and Occupier as to the age of any child who is
employed or is permitted to work by him in an establishment in absence of any certificate as to
age, refer the question to the decision of prescribed medical authority.

MAINTENANCE OF REGISTER
Every occupier shall maintained register for inspection by Inspector at all times during working
hours showing:
1. Name and birth of working child;
2. Hours and periods of work and intervals of rest;
3. Nature of work given to child;
4. Such other particulars as may be prescribed.

DISPLAY OF NOTICE
Every railway administration, every port authority and every occupier shall cause to be displayed
in a conspicuous and accessible place at every station on its railway or within the limits of port or
at the place of work, a notice in local language and in English Language containing abstract
about prohibition of child labour and penalties.

HEALTH AND SAFETY

The appropriate Government shall makes rules for child employment regarding:
1. Cleanliness at work place;
2. Disposal of wastes and effluents;
3. Ventilation and temperature;
4. Dust and fume;
5. Lighting and drinking water etc.

PENALTIES
Whoever employs any child in contravention of this act shall be punished with imprisonment for
a term which shall not be less than three months but which may extend to one year or fine which
shall not be less than ten thousand rupees but which may extend to twenty thousand rupees or
with both. If any one again commits similar offence for second time

PENALTIES APPLICABLE TO OTHER ACTS

Similar provision with respect to prohibition of child employment is found in section 67 of the
Factories Act, 1948, section 40 of the Mines Act, 1952, section 109 of the Merchant Shipping
Act, 1958 and section 21 of the Motor Transport Workers Act, 1961. the contravention of this
sections are punishable as per provisions of this Act.

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 PROCEDURE
Any person, police officer or inspector may file a complaint of the commission of an offence
under this Act in any Metropolitan Magistrate's Court or Court of Magistrate of First class.
The certificate by prescribed medical authority shall be conclusive evidence of the age of child.

Short Answers Questions:

Q.1 “In a welfare State, Social interests have top priority.” Comment.

Ans. The aim and object of the Trade Unions Act, 1926, was to interpret the registration of
the Trade Unions and formulate a law relating to the Trade Union registered in the provinces of
India.
“Every Trade Union registered is a body corporate in its own name, and it will have
consistent perpetual common sea., and succession and right to possess and acquire
movable and immovable property, right to enter into contract, it can sue and be sued in
its name.”

The Act provides three privileges to the Trade Unions----

(1) Any office bearer or the member of the Trade Union shall not be held responsible
for criminal conspiracy for any act done for the Union.
(2) It has been provided some defence under civil law.
(3) It shall not be held responsible for any agreement in restraint of trade.

Union may create a work culture by enforcing the agreement entered into by the parties and not
putting any hindrance in the production. A trend of degradation of union is seen since
independence.

Q.2 To what categories of industrial establishments Industrial Establishment

(Standing Orders) Act, 1946 apply?

ANS. Applicability of the Act

The Act applies to all industrial establishments involving 100 or more workers under Section
1(3). Under section 2(i) Industrial Establishment are the following entities are listed below:
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 • An industrial establishment as specified in section 2(i) of Payment of Wages Act.
• Factory as explained in section 2(m) of Factories Act.
• Railway Industry
• Establishment of contractor who employs workers for fulfilling the contract with the
owner of an industrial establishment under section 2(e).
• Workman as specified under section 2(s) of Industrial Disputes Act. Under Section
2(i) workman covers skilled, unskilled, manual or clerical work. However, workman does
not include employees engaged in a managerial or administrative capacity or supervisory
capacity and also it does not include workers subject to Army Act, Navy Act or Air Force
Act or police or prison services.

The provisions of this Act shall apply to all industrial establishments under the control of the
Central Government.
The appropriate Government may, after giving not less than 2 months notice of its intention to do
so, by notification in the Official Gazette, extend the provisions of this Act to any industrial
establishment employing such number of persons less than 100 as may be specified in the
notification.

Q.3 Explain the Rights and liabilities of a registered Trade Union.

Ans. A registered Trade Union has the following rights---

(1) A registered Trade Union is a body corporate. It has its full rights.
(2) It has a right as perpetual succession and common seal.
(3) It can buy and sell movable and immovable property in its own name.
(4) It can enter into contract in its own name.
(5) It can bring a suit in its own name and can be sued in that name.
(6) It has right to negotiate and correspond on various matters and issues which may lead to
dispute.
(7) It has right to punish its own members.
(8) Such a union has right to have its own notice board and realize the membership fees from its
members from the premises and departments of the establishment.
(9) It can change its own name and has also the right to transfer its own office from one place to
another.
(10)It has right of amalgamation with other union.
(11)It can form a federation also.

Liabilities of a Registered Trade Union-

The Trade Unions Act imposes following liabilities on the unions registered under this Act-
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1. Duty to Make Provisions in the Rules of Certain Matters – Some of which are the
rules declaring the objects for which the Trade Union has been established, the purposes on
which general funds of the Trade Union may be spent, admission of members to the Trade
Union, the manner in which the Trade Union may be dissolved etc.
2. Duty to Constitute Executive as Required – The provisions relating to the constitution
of executive of the Trade Union are contained U/Sc. 21-A and 22 of the Act. There are two
duties imposed by the provisions of the Act as conditions precedent to the process of registration.
Unless these duties are complied with, the Registrar is empowered to refuse to register the
proposed Trade Union.
3. Duty to Spend General Funds as Required – The Trade Union is under statutory duty
to spend general funds of the Trade Union in accordance with Section 15 of the Act which
enumerates certain specified objects on which only the general funds can be spent and not
otherwise.
4. Duty to Constitute a Separate Political Fund – The Trade Union, if decides to
promote civil and political interests of its members, has to constitute a separate fund commonly
known as political fund in accordance with Section 16 and it may be spent on the objects
specified therein.
5. Duty to Provide Access to Books of Trade Union – The account books and list of
members shall be kept open by a Registered Trade Union for inspection by an office-bearer or
member of the Trade Union at such times as may be provided for in the rules of the Trade Union.
6. Duty to Send Notice to the Registrar - The Trade Union is under duty to send notice to
Registrar in cases of every change of its name, every amalgamation, any change in the address of
the head office of Trade Union and dissolution thereof.
7. Duty to Send Notice to the Registrar – There shall be sent annually to the Registrar, on
or before such date as may be prescribed, a general statement audited in the prescribed manner,
of all receipts and expenditure of every Registered Trade Union during the year ending on the
31st day of December, next preceding such prescribed date, and of the assets and liabilities of the
Trade Union existing on such 31st day of December.

Q.4 What are the objects on which the general funds of a Trade Union may be
spent?

Ans. Objects on which the general funds may be spent –

According to the provisions of Section 15 of the Act, any registered Trade Union may spend the
general fund on the fulfillment of the following object-

(i) Payment for salary, allowances and expenses for its members.
(ii) Payment for the expenses relating to the administration of the Trade Union, including the
expenses of the audit of the general fund of the union.
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(iii) For the conduct of any legal action or prosecution by or against any of its members.
(iv) Defence of its office-bearer or member in the industrial dispute by the Trade Union or its
member.
(v) Compensation to the member due to the loss caused by industrial dispute.
(vi) Allowance to the members of the union or their family, in case of their death, old age,
disease, accident or unemployment. Fund cannot be utilized in speculative matters.
(vii) To defray the liabilities of the insurance policy of its members, or accept the liabilities on
death, accident, unemployment, or ill-health of the members related to the life insurance policy.
(viii) Payment for the educational, social or religious profits of its members or their dependants
and funeral expenses or expenses relating to religious rites.
(ix) Papers published mainly for the analysis of the questions which may influence the employer
and the workmen.
(x) Payment for the contribution for the extension of the aims of the items on which general fund
may be spent.
(xi) Payment for any other object under any condition mentioned in the notification; which has
been published by the appropriate government in the Official Gazette.

Q.5 Discuss the items upon which the political fund may be spent?
OR
How the political fund may be collected? How can it be used?

Ans. Constitution of a separate fund for political purposes -

Section 16 of the Act provides the Registered Trade Union can constitute a separate fund by
contribution and realization of separate fees and contributions. The interest realized on the
political fund and shall form part of the political fund and gifts, subscriptions etc. can be
accepted for this fund.
The political fund may be utilized for the following objects or purposes-

(i) The payment of any expenses incurred either directly or indirectly, by a candidate or a
prospective candidate for election as a member of any legislative body constituted under the
constitution or local authority, before or during the election.
(ii) The holding of any meeting or the distribution of any literature or documents in support of
any such candidate or prospective candidate.
(iii) The maintenance of any person who is the member of any legislature or any local authority.
(iv) The registration of electors or the selection of a candidate for any legislative body
constituted under the constitution or local authority or
(v) The holding of political meetings of any kind or the distribution of political literature or
political documents of any kind.

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Q.6 Who are disqualified to be office bearer of a Registered Trade Union? Can
a minor be member of a registered Trade Union?

Ans. Can a minor be the member of the trade- union?

• Sec 21. Rights of minors to membership of Trade Unions.—

Any person who has attained the age of fifteen years may be a member of a registered Trade
Union subject to any rules of the Trade Union to the contrary, and may, subject as aforesaid,
enjoy all the rights of a member and execute all instruments and give all acquittances necessary
to be executed or given under the rules

➢ Disqualifications of office-bearers of Trade Unions [Sec 21A]

(1) A person shall be disqualified for being chosen as, and for being, a member of the
executive or any other office-bearer of a registered Trade Union if—
(i) He has not attained the age of eighteen years;
(ii) He has been convicted by a Court in India of any offence involving moral
turpitude and sentenced to imprisonment, unless a period of five years has
elapsed since his release.
(2) Any member of the executive or other office-bearer of a registered Trade Union who,
before the commencement of the Indian Trade Unions (Amendment) Act, 1964, has been
convicted of any offence involving moral turpitude and sentenced to imprisonment, shall on the
date of such commencement cease to be such member or office-bearer unless a period of five
years has elapsed since his release before that date.

(3) In its application to the State of Jammu and Kashmir, reference in sub-section (2) to the
commencement of the Indian Trade Unions (Amendment) Act, 1964 (38 of 1964), shall be
construed as reference to the commencement of this Act in the said State.

Q.7 When can Registrar issue Registration Certificate for Trade Union? What
is the remedy if registration to a union is refused? Can registration be
cancelled?

Ans. Certificate of registration (Sec. 9)

The Registrar, on registering a Trade Union under section 8, shall issue a certificate of
registration in the prescribed form which shall be conclusive evidence that the Trade Union has
been duly registered under this Act.

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Cancellation of Registration: The Registrar is empowered under Section 10 to cancel the
registration of any Trade Union in the following circumstances----

(1) When an application has been presented for the cancellation of its registration or
recognition.
(2) When the registration has been obtained fraudulently or by any other wrongful means or
mistake.
(3) The Trade Union has ceased to exist.
(4) The Trade Union has violated any of the provisions of the Act.
(5) When the primary or statutory aims of the Trade Union has extinguished or it has become
impossible to obtain them.
(6) The Trade Union has failed to amend its rule being advised and asked to do so by the
Registrar.

Registration may be cancelled in two ways----

1. On initiative of the Registrar.
2. On application of the union itself.

When registrar comes to know that union has failed in achieving its goal or is doing illegal acts,
he may cancel the registration of such union but he has to give two months prior notice in writing
making it clear in the notice itself the ground on which the cancellation is proposed.

Q.8 Discuss the grounds on which registration of a Trade Union can be

withdrawn or cancelled by the Registrar of Trade Union.

Ans. Grounds on which Registration of a Trade Union can be withdrawn or

cancelled: According to Section 10, a certificate of registration of a Trade Union may be
withdrawn or cancelled by the Registrar in one of the following two ways-

1. On the application of Trade Union - When an application for the cancellation of the
registration of any particular Trade Union is given, the Registrar on receiving such application
shall, before granting the application, satisfy himself that the withdrawal or cancellation of
registration was approved by a general meeting of the members of the Trade Union.
Cancellation of the registration of a Trade Union is effected by the Registrar only and resolution
passed by the majority of the members of the Trade Union. In the event of cancellation or
withdrawal of registration on the application of Trade Union two months prior notice by the
Registrar to the Trade Union concerned is not necessary.

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2. At the will of the Registrar - If the Registrar does not remain satisfied in positive
direction , he may cancel the certificate of registration on any one of the following grounds---

i) That the certificate has been obtained by fraud or mistake.

ii) That the Trade Union has ceased to exist.
iii) That the Trade Union has willfully and after notice from the Registrar contravened
any provision of the Trade Unions Act.
iv) That the Trade Union has allowed any rule to continue in force which is inconsistent
with any such provision contained in the Trade Unions Act.
v) That the Trade Union concerned has rescinded any rule providing for any matter,
provision for which is required by Section 6 such as manner of appointment and
removal of the executive and other office-bearers of the Trade Union, the manner of
dissolution of the Trade Union etc.

Q.9 Write about Collective Bargaining and Trade Dispute?

Ans. Trade Dispute [Sec. 2(g)]:

A trade dispute means any dispute between the employers and workmen, the workmen
and workmen and the employers and employers which is connected with the employment or
non-employment, or the terms of employment, or the conditions of labour of any person.
'Workmen' mean all persons employed in trade or industry whether or not in the employment of
the employer with whom the trade dispute arises.

➢ What is Collective Bargaining?

It is the process by which representatives of management and the unions meet and negotiate
over wages, hours and other terms and conditions of employment in good faith. It is a give and
take process which aims to arrive at a conclusion beneficial to both the parties. One of the
most important aspects of collective bargaining is that it is a never ending process. It does not
finish after an agreement has been reached. It continues for the life of the agreement and beyond.

➢ Importance of Collective Bargaining:

• To Employees:
a) It helps in developing a sense of responsibility amongst employees.
b) It helps ensure adequate wages and working conditions for employees.
c) It improves the morale and productivity of employees.
d) It helps in quick settlement of grievances.

• To Employers:
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 a) It is relatively easier for the management to resolve disputes at the bargaining level
instead of taking up complaints individually.
b) It improves the morale of employees and thereby reduces the cost of labor turnover.
c) It improves workers participation in decision making.

• To Society
It promotes peace in the country. It results in a harmonious industrial climate which helps in the
economic and social development of the country.

Q.10 Write a short note on Legal Status of Trade Union?

Ans. A trade union is a combination of persons. Whether temporary or permanent, primarily

for the purpose of regulating the relations between workers and employers or between workers
for imposing restrictive conditions on the conduct of any trade or business and includes the
federations of two or more trade unions as per Sec. 2(6) Trade Unions Act, 1926, “A Trade
Union is an organization of workers, acting collectively, who seek to protect and promote their
mutual interests through collective bargaining”.

➢ Features of Registered Trade Union [Sec. 13]

1. Registered Trade Union will have perpetual succession (will no stop after the death of the
members of the Trade Union.
2. Every registered Trade Union will have common seal.
3. Every registered Trade Union can acquire and hold both movable and immovable
property.
4. Every registered Trade Union can sue others.
5. Every registered Trade Union can sued by others also.

➢ Objects On Which General Funds May Be Spent:

The general funds of a registered trade union shall not be spent on any other objects than the
payment of salaries, allowances and expenses to the office bearers of the trade unions; expenses
for the administration of the trade union; the presentation or defiance of any legal proceeding to
which the trade union of any member thereof is a party; the conduct of trade disputes and
compensation of members for loss arising out of trade disputes; provision of education, social or
religious benefits for members; upkeep of a periodical published.

➢ Constitution of a Separate Fund for Political Purposes:

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A registered trade union may constitute a separate fund, from contributions separately levied for
or made to that fund, from which payments may be made for the promotion of the civic and
political interests of its members, in furtherance of any of the objects such as the payment of any
expenses incurred, either directly or indirectly; the holding of any meeting or the distribution of
any literature/documents in support of any such candidate; the registration of electors of the
selection of a candidate for any legislative body constituted under or for any local authority; the
registration of electors or the selection of a candidate for any legislative body constituted
under/or for any local authority; holding of political meetings of any kind.
Very Short Answers Questions:

Q.1 Amalgamation of Trade Union

Ans. AMALGAMATION OF TRADE UNIONS [Sec. 24]

Any 2 or more registered Trade Unions may become amalgamated together as one Trade Union
with or without dissolution or division of the funds of such Trade Unions or either or any of
them, provided that the votes of at least one-half of the members of each or every such Trade
Union entitled to vote are recorded, and that at least 60% of the votes recorded are in favor of the
proposal.

a) In case of change in the name of the Trade Union, written notice of the change of
name must be signed by secretary and 7 member of the Trade Union are required to
sent to registrar of the Trade Union.
b) In case of an amalgamation of the Trade Union, written notice of an amalgamation
must be signed by secretary and 7 member of the Trade Union are required to sent to
registrar of the Trade Union.
c) Trade Union name should not match with the other Trade Union names.
d) If Registrar satisfies with all requirements provided by the members of Trade Union,
Registrar will change the name and the same entered in the register.
e) If Registrar satisfies with all requirements provided by the members of Trade
Unions, Registrar will validate amalgamation and entered in the register. [Sec 25]

Q.2 Dissolution of Trade Union.

Ans. DISSOLUTION OF TRADE UNION [ Sec 27]

Notice of dissolution signed by secretary and 7 members of the Trade Union, should be
sent to the Registrar of the Trade Union within 14 days from the date of the dissolution of the
Trade Union.
a) If registrar satisfies with provisions and rules followed by the members of the
Trade Union for dissolution, he will confirm the dissolution.

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 b) Funds shall be divided by the Registrar among its members if there is no rules
mention by the Trade Union in distribution of the funds.

Q.3 Define child labour.

ANS. International Labour Organisation (ILO) defines the term child labour as, “work that
deprives children of their childhood, their potential and their dignity, and that is harmful to
physical and mental development. It refers to work that is mentally, physically, socially or
morally dangerous and harmful to children, or work whose schedule interferes with their ability
to attend regular school, or work that affects in any manner their ability to focus during school
or experience a healthy childhood.”

“Child” as defined by the Child Labour (Prohibition and Regulation) Act, 1986 is a person
who has not completed the age of fourteen years. A child of such tender age is expected to play
study and be carefree about his life. But as a fact of nature, expectations hardly meet reality.
Children, by will or by force are employed to work in the harsh conditions and atmosphere
which becomes a threat to their life. Child labour leads to underdevelopment, incomplete
mental and physical development, which in turn results in retarded growth of children.

__________________

UNIT-V
Payment of Bonus Act, 1965, Employee’s Provident Fund Act, 1952

Suggested Detailed Answers-Questions

Q.1 What is the provision relating to payment of minimum bonus?

ANS. Section 10: Payment of minimum bonus

Subject to the other provisions of this Act, every employer shall be bound to pay to every
employee in respect of the accounting year commencing on any day in the year1979 and in
respect of every subsequent accounting year, a minimum bonus which shall be 8.33 per cent of
the salary or wage earned by the employee during the accounting year or one hundred rupees,

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whichever is higher, whether or not the employer has any allocable surplus in the accounting
year:

Provided that where an employee has not completed fifteen years of age at the beginning of the
accounting year, the provisions of this section shall have effecting relation to such employee as
if for the words “one hundred rupees”, the words “sixty rupees” were substituted.
The statutory bonus of eight and one third percent shall be payable whether there are profits in
the accounting year or not. After coming into force of this Act, bonus has become an implied
term of employment not dependent upon the profits. Employees are entitled to festival bonus
only if there is an implied agreement or it is paid as customary bonus.

Section 10 of the Payment of Bonus Act fixes the amount of bonus payable by an employer to
every employee from the allocable surplus in respect of the accounting year. The Act is confined
on the ‘profit-based bonus’ and not to other categories of bonus which employees may be
entitled to claim from an employer. The Payment of Bonus Act, thus creates a statutory right in
the employees and imposed a statutory liability upon the employers covered by the Act to pay a
minimum bonus.

• Minimum bonus shall be 8.33% of salary or wage earned by the employee during the
accounting year or one hundred rupees, whichever is higher (Rs. 60 for employees who
have not completed 16 years of age at the beginning of the financial year)
• Minimum bonus shall be payable irrespective of allocatable surplus
• Supreme Court said that the payment of bonus whether there are profits in relevant
accounting year or not is in violation of Article 14 and 31(1) of the Constitution while
dealing with Jalan Trading Co vs. Mazdoor Sabha (AIR 1967 SC 691). The Supreme
Court overrules the decision later in AIR 1979 SC 233.
• SC said, right to minimum bonus is statutory right which vests in the employees. Anand
Oil Industries vs Labour Court (AIR 1979 SC 233)

Minimum Bonus
Previously, the maximum bonus payable was 20% of Rs 3500 per month. The minimum bonus
payment was capped at 8.33% of Rs 3500 per month or Rs 100, whichever is higher. The
calculation ceiling of Rs 3500 is currently doubled to Rs 7000 per month “or the minimum wage
for the scheduled employment, as fixed by the appropriate Government” (whichever is higher).
Therefore, the cost associated with bonus payments could be double, based on the organization’s
performance.
Calculation of Bonus as per Bonus Act (Amendment of 2015)
If the gross earning of your employees is below Rs.21000 you are eligible to pay bonus.

Calculation of bonus will be as follows:

• If Basic + DA is below Rs.7000 then bonus will be calculated on the actual amount.
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 • If Basic + DA is above Rs.7000 then the bonus will be calculated on Rs.7000.

Examples of calculation of bonus

• If the Basic salary of the employee is less than or equal to Rs 7,000
Rahul is working as an engineer in a Company in Bangalore. His basic salary is Rs. 6,500
per month.
Formula: Basic Salary 8.33% = Bonus per month
6500 8.33% = 541.45 (6497.4 per annum)
• If the Basic salary of the employee is higher than Rs 7,000
Siddharth is working as a Sales officer in one of the shops in Delhi. His basic salary is
Rs. 18,000 per month.
Formula: Basic Salary*20% = Bonus per month
7,000*20% = 1400 per month
• If the Basic salary of the employee is higher than Rs 21,000
There is no bonus applicable to employees having a basic salary of more than Rs 21,000.
Exempted establishments
The payment of bonus act will not apply to the following section of employees:
• The employees of Life Insurance company
• Seamen defined under clause 42 of the Merchant Shipping Act 1958.
• Employees who registered or listed under the Dock Workers Act 1948 and employed by
the registered or listed employers.
• The employees of any industry controlled by central or state government.
• Employees from Indian red cross society or education institutions, institutions not for
profit.
• Employees employed by the contractor on building operations
• Reserve Bank Of India (RBI) employees
• Employees of any financial corporation under the Section 3 or Section 3-a of the State
Financial Corporation Act (SFC) 1951
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 • Employees of IFCI, Deposit Insurance Corporation, agriculture Refinance Corporation.
• Any financial institution is an establishment in public sector which central government
notifies.
• The employees of inland water transport establishment

Q.2 Explain ‘Available Surplus’ under the Payment of Bonus Act. How is it
computed?

ANS. MEANING OF AVAILABLE SURPLUS

• Available Surplus = Gross Profit [as per section 4] – Depreciation

admissible u/s 32 of the Income tax Act - Development allowance
• Calculate the gross profit in the manner specified in
• First Schedule, in case of a banking company, or
• Second Schedule, in any other case.

Available surplus in respect to an accounting year is the gross profit after deducting the
provisions for depreciation, development rebate (both in accordance with the Income Tax Act),
direct taxes on income, profits and gains, and other sums prescribed in the Third Schedule of this
Act.

CALCULATE THE AVAILABLE SURPLUS

• Available Surplus = Gross Profit

1) – Depreciation admissible u/s 32 of the Income tax Act
2) - Development allowance
3) - Direct taxes payable for the accounting year
4) – Sums specified in the Third Schedule
5)+ Direct Taxes in respect of gross profits for the immediately preceding
accounting year
6) – Direct Taxes in respect of such gross profits as reduced by the amount of
bonus, for the immediately preceding accounting year.

FORMULA OF AVAILABLE SURPLUS

1. Direct taxes payable for the accounting year (calculated as per sec-7) - sums
specified in the third schedule.

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2. Direct taxes (calculated as per sec-7) in respect of gross profit for the
immediately preceding accounting year.
3. Allocable surplus = 60% of available surplus, 67% in case of foreign
companies.
4. Make adjustment for ‘set on’ and ‘set off’ for calculating the amount of bonus
in respect of an accounting year.

Short Questions-Answers:

Q.1 Discuss the applicability and objects of the Employees Provident Fund
Act, 1952

ANS. OBJECTIVE OF THE EPF AND MP ACT, 1952

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 aims to provide a kind
of social security to the industrial workers. The Act mainly provides retirement or old age
benefits, such as Provident Fund, Superannuation Pension, Invalidation Pension, Family Pension
and Deposit-Linked Insurance.
The Act provides for payment of terminal benefits on the happening of various contingencies
such as retirement, closure, retirement on attainment of the age of superannuation, voluntary
retirement and retirement due to factors which result in incapacity of the employee to work

EPF Applicability
• The Employees' Provident Funds & Miscellaneous Provisions Act, 1952 extends to
whole of India except the state of Jammu & Kashmir.
• It applies on every establishment employing 20 or more persons & engaged in industry
specified in Schedule I of the Act or any other activity notified by the Central
Government.
• It applies to all departments / branches of an establishment wherever situated.
• Any establishment employing even less than 20 persons can be covered voluntarily under
section 1(4) of the Act.

Very Short Questions-Answers:

Q.1 When an employee is disqualified for bonus?

ANS. Section 9: Disqualification for Bonus

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 An employee dismissed on charges of-
• fraud (as defined in Section 17 of Indian Contract Act, 1872)
• An employee, who is convicted by Court for the frauds committed against anybody
unconnected with employment, is also a good ground for dismissal from service.
• Riotous or violent behavior while on the premises of the establishment.
• As defined Section 351 of Indian Penal Code, 1860
• Theft as defined by Section 351 of Indian Penal Code, 1860
• Misappropriation as defined by Section 403 of Indian Penal Code, 1860
• Sabotage leading to physical loss or damage to the property of the establishment

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