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Labour law-II

Unit-I

Qs. Concept of Social Security, Origin and development in India

Ans. Introduction

The concept of Social Security is related to the high ideals of human dignity and social justice. Social
Security means the protection given by society to its members against contingencies'. People with limited
means of living can hardly provides effective security against the contingencies like sickness, maternity,
accidents, old age, death or other emergency expenses. This is basically due to the fact that they don’t have
the capacity or the foresight to carry out the plan of saving or insurance. These contingencies impaired the
ability of the workers to support themselves and their dependents. It is designed to eliminate the 5 giants of
Beveridge: want disease, ignorance, squalor and idealness. It is a security provided by the society to its
members, particularly the weaker ones, so that they can lead a normal and decent life even under adverse
circumstances. It is a kind of wise investment earning rich dividends in the long run. It consists of schemes
by which all citizens of the country are assured by the government a minimum standard of material welfare
on a basics wide enough to cover the contingencies of modern life. Germany was the first country who
introduced the social security schemes in 1883.

Meaning of social security

Social security is any government system that provides monetary assistance to people with an inadequate or
no income. social insurance, where people receive benefits or services in recognition of contributions to an
insurance program. These services typically include provision for retirement pensions, disability insurance,
survivor benefits and unemployment insurance.

Definition

According to a definition given in the ILO publication’, “Social security is the security that society furnishes
through appropriate organisation against certain risks to which its members are exposed. These risks are
essentially contingencies of life which the individual of small means cannot effectively provide by his own
ability, or foresight alone or even in private combination with his fellows”.

William Beveridge has defined social security as “a means of securing an income to take the place of
earnings when they are interrupted by unemployment, sickness or accident to provide for the retirement
through old age, to provide against loss of support by death of another person or to meet exceptional
expenditure connected with birth, death, or marriage. The purpose of social security is to provide an income
up to a minimum and also medical treatment to bring the interruption of earnings to an end as soon as
possible.”

Objectives of Social Security:

The objectives of social security can be sub-summed under three, categories:

1. Compensation

2. Restoration
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3. Prevention

A brief description of these is given as under:

Compensation:

Compensation ensures security of income. It is based on this consideration that during the period of

contingency of risks, the individual and his/her family should not be subjected to a double calamity, i.e.,

destitution and loss of health, limb, life or work.

Restoration:
It connotates cure of one’s sickness, reemployment so as to restore him/her to earlier condition. In a sense, it

is an extension of compensation.

Prevention:
These measures imply to avoid the loss of productive capacity due to sickness, unemployment or invalidity

to earn income. In other words, these measures are designed with an objective to increase the material,

intellectual and moral well-being of the community by rendering available resources which are used up by

avoidable disease and idleness.

The evaluation of social security in India

The evaluation of social security in India can be studied broadly in two segments

Pre-Independence Period

Post-Independence Period

There was large scale industrialization in Indian from 1850 especially in the Textile Industries. But as
workers being totally unorganized no attention could be paid towards the welfare.

Pre-Independence Period and Social Security of Workers

In 1877 first labour unrest took place at “Empress Mills Nagpur” for improving their wages. In 1890 first
Trade Union Bombay Mill Hands association was formed under the leadership of N.M. Lokhande.

In 1885 the first Fatal accident Act was passed. Inspite of this workers were living under very poor
inhumane conditions. There was no provisions of any measures for social security before 1920.

In 1920 International Labour Organization gave a boost to labour welfare and social security schemes. In the
convention of 1929 of ILO the workers social security schemes. In the convention of 1929 of ILO the
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workers social security was considered as of high importance. Then there came the appointment of strong
recommendations on labour welfare and social security.

After the first world war, due to Indian National movement. British Government started thinking about the
employees and accordingly (i) Workmen’s compensation Act, 1923 (ii) The payment of wages Act’ 1936
(iii) Minimum wages Payment Act (iv) Maternity Benefits Act were passed from time to time Mr.B.R.
Ambedkar was appointed as a ‘labour member of the victory’s council” after second world war.

In 1937 a contributory Health Insurance scheme was formulated. At the same time , the Bombay Textile
enquiry Committee also recommended the formulation of health Insurance Scheme in which the (i)
employer (ii) Employee and (iii) The state Government contributed towards the fund.

In 1940 during the first Labour Minister’s conference the need for sickness Benefit fund was felt. In 1943
Indian Government appointed a commission under the chairmanship of B.R. Ambedkar and its report was
submitted in 1944.

B.R. Ambedkar commission strategy recommended the upper age limit of 60 years and employment was
divided into three categories- permanent, temporary and casual. The employer was required to pay
contribution towards insurance schemes for all the workers, whereas only permanent and temporary workers
were required to pay their contribution.

In 1947, the Industrial dispute Act was enacted with the main objective was to make provisions for the
investigation and settlement of industrial disputes. Most important contribution of employee’s State
insurance Act 1923.

Post–Independence period and Social Security

In 1947 India got Independence and Indian Government intensified the labour welfare and social security
measures. In 1948 employees state Insurance was duly modified and that was beginning of the era of Social
Insurance of Indian labour.

“In 1952 international Labour Organization provided the expert advice of eight experts on social security for
long six month for proper implementation of the schemes of employee state Insurance Act. They devised
and advised the method of its administration, the development of the panel system of medical benefit and
training of the necessary staff in order to extend the scheme throughout the country.”

In 1948 Indian government made certain important amendments in existing Indian factories act 1934 and
came with an entirely new nomenclature “The factories act 1948” with a main purpose of regulating
conditions of work in manufacturing establishment for ensuring adequate health, welfare measures, hours of
work and leave with wages.

In 1948 Indian government made certain important amendments in existing Indian factories Act 1934 and
came with an entirely new nomenclature “ The Factory Act 1948” with a main purpose of regulating
conditions of work in manufacturing establishment for ensuring adequate health, welfare measures, hours of
work and leave with wages.

In 1948 the Government enacted Maximum wages Act for prevention of exploitation of labour due to
payment of unduly low wages.
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In 1952 Government enacted Employee’s Provident fund and miscellaneous provision act with a main
objective of providing substantial measures of financial security and timely monetary assistance to industrial
works and their families.
‘Besides this’

(i) “The Assam tea plantations provident fund act 1995.” The personal injuries (Compensation Insurance)
act, 1963.

(ii) The seamen’s provident fund Act 1966

(iii) The plantation labour Act 1951

(iv) The(central) maternity benefit Act, 1961Were enacted for providing social security to weaker section of
the society where there were more chances of exploitation and victimization.

Qs. Committees, corporation, standing committee and medical benefit council under the Employee
state insurance Act 1949

Ans.

The Employees’ State Insurance Corporation

The administration of the scheme of insurance contained in the act is vested in the employees’ state
Insurance Corporation created by the act. The corporation is a body corporate having perpetual succession
and a common seal. It can sue be sued by its name.

Members section 4

According to the Act, the corporation consists of the following members;

1. A chairman to be nominated by the Central Government ;
2. A vice – Chairman to be nominated by the Central government;
3. Not more than five person to be nominated by the Central Government ;
4) One person each representing each of states in which this act is in force to be nominated by the central
government;

5) One person to be nominated by the central government to represent the Union territories;

6) Five person representing employers to be nominated by the central government in consultati on with such
organization of employees as may be recognized for the purpose by the central government;

7) Three members of Parliament of whom two shall be members of the Lok sabha and one shall be a
member of the rajya sabha elected respectively by the two houses;

8) The director General of the corporation, ex – officio;

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The term of office of members is ordinarily four years but nominated member holds office during the
pleasure of the government nominating them.

Term of the corporation section 5

Term of the office members shall be four years from the date of their appointment or election. The member
shell be eligible for reappointment or reelection.

PRINCIPAL OFFICERS:

The principal officers of the corporation are

(a) a Director general of employees’ state insurance ;
(b) an insurance commissioner ;
(c) a medical commissioner ;
(d) a chief account officer ; and
(e) an actuary. The director general is the chief executive officer of the corporation. The officer and whole
time officers cannot undertake any work unconnected with their office without the sanction of the central
govt. or of the corporation.

Meetings:
Meetings of the members, the standing committee and the medical benefit council, must be held according
to the regulations. Sec-20.

Supersession:
The central govt. may supersede the corporation or the standing committee if it persistently makes default in
performing its duties or abuses its power. After supersession the central govt. may appoint new members or
create an agency to exercise the powers and the functions of these bodies.

Delegation:
The corporation may appoint regional boards; local committees and regional and local medical benefit
councils in such area and in such manner and delegate to them such powers and functions may be provided
by the regulation.

Duties of the ESI Corporation

1) Budget estimates:
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the corporation shall in each year frame a budget showing the probable receipts and the expenditure
which it proposes to incur during the following year and shall submit a copy of the budget for the approval
of the central govt. before such date as may be fixed by it in that behalf.

2) Accounts:
The corporation shall maintain correct accounts of its income and expenditure in such from and in such
manner as may be prescribed by the central govt.

3) Audit:
The account of the corporation shall be audited, at such time and in such manner as may be prescribed
by the auditor by the central govt.

4) Annual report:
The corporation shall submit to the central govt. an annual report of its work and activities.

5) Placement to parliament:
The annual report the audited accounts of the corporation and the budget as finally adopted by the
corporation shall be placed before and published in the official gazettes.

Standing committee under E.S.I Act

Introduction -

The Employees State Insurance Act,1948 is a great landmark in the history of social security
legislation in India. Its object is to protect the interest of workers and their families, who are exposed to the
risks of sickness, employment injury, occupational diseases and Maternity in case of female
employees. Section 3 to 25 of the Employees State Insurance Act 1948 lays down the provisions relating to
the Employees State Insurance Corporation, Standing Committee and Medical benefit Council. Section
3 to7 of the said Act lays down the provisions relating to Employees State Insurance Corporation.

Constitution of standing committee (Section 8) –

A Standing Committee of the Corporation shall be constituted from among its members, consisting of

(a) A Chairman, appointed by the Central Government;

(b) Three members of the Corporation appointed by the Central Government;

(c) Three members of the Corporation representing such three State Governments thereon as the Central
Government may, by notification Gazette, specify from time to time;

(d) Eight members elected by the Corporation as follow

(i) Omitted
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(ii) Three members from among the members of the Corporation representing employers;

(iii) Three members from among the members of the Corporation representing employees;

(iv) One member from among the members of the Corporation representing the medical profession; and(v)
One member from among the members of the Corporation elected by Parliament;

(d) The Director General of the Corporation, ex officio.

Term of office (Section 9)

the term of office of a member of the Standing Committee, other than a member referred to in clause (a) or
clause (b) or clause (c) of section 8, shall be two years from the date on which his election is notified:
A member of the Standing Committee referred to in clause (a) or clause (b) or clause (bb) of section 8 shall
hold office during the pleasure of the Central Government.

Powers of standing committee section 8

I. Standing committee is constituted to administer the affairs of the corporation.
II. It is to function in accordance with the regulations framed by the corporation.
III. Its activities are controlled and supervised by the corporation.

IV. The committee has powers to administer the affairs of the corporations under the general provisions
and matters as specified in the regulations for the corporation's consideration and decision.

Medical Benefit Council

Introduction -

The Employees State Insurance Act, 1948 is a great landmark in the history of social security legislation in
India. Its object is to protect the interest of workers and their families, who are exposed to the risks of
sickness, employment injury, occupational diseases and Maternity in case of female employees. Section 3 to
25 of the Employees State Insurance Act 1948 lays down the provisions relating to the Employees State
Insurance Corporation, Standing Committee and Medical benefit Council. Section 3 to7 of the said Act lays
down the provisions relating to Employees State Insurance Corporation.

2. Constitution of Medical Benefit Council –section 10

(1) The Central Government shall constitute a Medical Benefit Council consisting of –
(a) the Director-General, the Employees’ State Insurance Corporation, ex-officio as Chairman.
(b) the Director-General, Health Services, ex officio as Co-chairman;
(c) the medical commissioner of the Corporation, ex officio;
(d) one member each representing each of the States (other than Union Territories) in Which this Act is in
force to be appointed by the State Government concerned;
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(e) three members representing employers to be appointed by the Central Government in consultation with
such organizations of employers as may be recognized for the purpose by the Central Government;
(f) three members representing employees to be appointed by the Central Government in consultation with
such organizations of employees as may be recognized for the purpose by the Central Government; and
(g) three members, of whom not less than one shall be a woman, representing the medical profession, to be
appointed by the Central Government in consultation with such organizations of medica l practitioners as
may be recognized for the purpose by the Central Government.
Term of office
the term of office of a member of the Medical Benefit Council, other than a member referred to in any of the
clauses (a) to (d) of sub-sec. (1), shall be four years from the date on which his appointment is notified: A
member of the Medical Benefit Council referred to in clauses (b) and (d) of sub-section (1) shall hold office
during the pleasure of the government appointing him.
3. Resignation of membership
According to Section 11 of the said Act, A member of the Corporation, the Standing Committee or the
Medical Benefit Council may resign his office by notice in writing to the Central Government and his seat
shall fall vacant on the acceptance of the resignation by that government.
4. Cessation of membership
According to Section 12 of the Employees State Insurance Act, 1948
(1) A member of the Corporation, the Standing Committee or the Medical Benefit Council shall cease to be
a member of that body if he fails to attend three consecutive meetings.
(2) Where in the opinion of the Central Government any person appointed or elected to represent employers,
employees or the medical profession on the Corporation, the Standing Committee or the Medical Benefit
Council, as the case may be, has ceased to represent such employers, employees, or the medical profession,
the Central Government may, by notification in the Official Gazette, declare that with effect from such date
as may be specified therein such person shall cease to be a member of the Corporation, the Standing
Committee or the Medical Benefit Council, as the case may be.

(3) A person referred to in clause (i) of section 4 shall cease to be a member on becoming a Minister or
Speaker or Deputy Speaker of the House of the People or Deputy Chairman of the Council of States or when
he ceases to be a Member of Parliament.
5. Disqualification
A person shall be disqualified for being chosen as or for being a member of the Medical Benefit Council -
(a) if he is declared to be of unsound mind by a competent court; or
(b) if he is an undercharged insolvent; or
(c) if he has directly or indirectly by himself or by his partner any interest in a subsisting contract with, or
any work being done for, the Corporation except as a medical practitioner or as a shareholder (not being a
director) of a company; or/
(d) if before or after the commencement of this Act, he has been convicted of an offense involving moral
turpitude.
6. Filling of vacancies
(1) Vacancies in the office of appointed or elected members of the Medical Benefit Council shall be filled by
appointment or election.
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(2) A member of the Medical Benefit Council appointed or elected to fill a casual vacancy shall hold office
only so long as the member in whose place he is appointed or elected would have been entitled to hold
office, if the vacancy had not occur.
7. Fees and allowances
Members of the Medical Benefit Council shall receive such fees and allowances as may from time to time be
prescribed by the Central Government.
Duties of Medical Benefit Council section 22
a. Advise the corporation and the standing committee o matters relating to the administration of
medical benefit, the certification for purposes of the grant of benefits and other connected matters.
b. Ha as powers and duties of investigation as may be prescribed in relation to complaints against
medical practitioners in connection with medical treatment and attendance and
c. Perform such other duties in connection with medical treatment and attendance as may be specified
in the regulation.
Qs. Types of benefits under the act
Ans. The act provides for six types of benefit to insured workmen: A) Sickness benefit B) maternity benefit
C) disablement benefit D) dependent's benefit E) medical benefit F) funeral benefit. Benefits are receivable
during the benefit period, which is defined as follows.
Benefit period means such period, being not less than 25 but not more than 27 consecutive weeks or 6
consecutive months corresponding period a s may be specified in the regulation framed under the act. For
the first benefit period a shorter or longer period may be fixed.
1. Sickness benefit
Sickness benefit represents periodical payments made to an insured person for the period of certified
sickness after completing nine months insurable employment. To quality for these benefits, contribution
should have been paid for at least78 days in the relevant contribution period. The maximum duration for
availing sickness benefit is 91 days in two consecutive benefit periods. There is waiting period of 2 days
which I waived if the insured person is certified sic within 15 days of the last spell for which sickness
benefit period was last paid. The daily rate of sickness benefit in respect of a person during any benefit
period shall be 20 percent more than “standard benefit rate”
2. Maternity benefit
Maternity benefit implies cash payment to an insured woman in case of confinement or miscarriage or
sickness arising out of pregnancy, premature birth of child as certified by a duly appointed medical officer or
midwife. For entitlement to maternity benefit, the insured woman should have contributed for not less than
70 days in the immediately preceding two consecutives contribution periods corresponding to the benefit
period in which the confinement occurs or is expected to occur. The daily rate of benefit doubles the
standard sickness benefit rate i.e. full wages.
Maternity benefit is normally payable for a maximum period of 12 weeks in case of confinement, 6weeks in
case of miscarriage or medical termination of pregnancy which can be extended up to one additional month
in case of sickness arising out of confinement and duly certified by an authorized medical officer. Maternity
benefit continues to be payable even in the event of the death of an insured woman, during her confinement,
or during the period of 6 weeks immediately following her confinement leaving behind a child for the
whole of that period , and in case the child also dies, during the said period, until the death of the child.
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3. Disablement benefit
In case of temporary disability arising out of an employment injury, disablement benefit is admissible to an
insured person for the entire period so certified by an insurance medical officer/ practitioner for which the
insured person does not work for wages. the benefit is not subject to any contributory condition and is
payable at the daily rate of 15 percent more than the standard benefit rate. The benefit is, however, not
payable if the incapacity is less than 3 days excluding the rate date of accident.
4. Dependent’s benefit
Periodical pension is paid to the dependent of a deceased insured person where death occurs as a result of an
employment injury or occupational diseases. The daily rate of dependent’s shall be 15 percent more than the
standard benefit rate. The widow receives monthly pension for life or until remarriage, at a fixed rate
equivalent to 3/5th of the disablement benefit rate and each dependent child is paid an amount equivalent
2/5th thereof until he/she attains 18 years of ages, provides that , in case of infirmity, the benefit continues
to be paid till infirmity.
However, it is subject to the condition that the total dependents’ benefit distributed among the widow and
legitimate or adopted children of the deceased insured persons, does not exceed, at any time, the full rate of
disablement benefit. In case it exceeds the given ceiling; the share of each of the dependents is,
proportionately reduced. The benefit is not payable to married daughter.
In case the insured person does not leave behind any widow or child, the benefit is payable to other
dependents including parents.
5. Medical benefit

An insured person and his family member become entitled to medical care from the date he enters the
insurable employment and the entitlement continues as long as the insured person is in insurable
employment or is qualified to claim sickness, maternity, or disablement benefit. The entitlement to medical
care is extended up to two years to persons suffering from any specified chronic or long-term diseases.
Medical treatment to persons, who go out of coverage during the period of treatment, is not discontinued till
the spell of sickness ends. All insured persons and member of there are entitled to free, full and
comprehensive medical care under the scheme.
The package covers all aspects of health care from comprehensive medical care facilities, such as
I.Out- patient treatment.
II.X- Ray and laboratory investigation.
III.Ambulance service or conveyance.
IV.Family welfare services and other national health programmes services.
V.Medical certification and
VI.Special provision including super-specialty treatment
6. Funeral benefit:
Funeral expenses are in the nature of a lump sum payment up to three thousand rupees made to defray the
expenditure of the funeral of deceased insured person. The amount is paid either to the eldest surviving
member of the family or, in his absence, to the person who actually incurs the expenditure on the funeral.
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Qs. Claim and adjudication of disputes under the employee state insurance act 1948.
Ans. Employees Insurance Court:
It is the court which decides all the disputes arising under the ESI Act, 1948. As per Section 74 of ESI Act,
the State Government shall constitute an Employees’ Insurance Court for such local area as may be specified
in the notification. The Court shall consist of one or more judges as the State Government may think fit. The
State Government may appoint the same Court for two or more local areas or two or more Courts for the
same local area.

Matters to be decided by the Employees State Insurance Court

All disputes s 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
I. Whether any person is an employee or whether he is liable to pay the employee’s contribution, or
II. The rate Of wages or average daily wages of an employee for the purpose of ESI Act, or
III. The rate of contribution which is payable by a principal employer in respect of any employee, or
IV. The person who is or was the principal employer in respect of any employee, or
V. The right of any person to any benefit under the ESI Act and the amount and duration thereof, or
VI. Any other matter which is in 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.

Following claims are to be decided by the ESI Court:

I. Claim for recovery of contributions from the principal employer;

II. Claim by a principal employer to recover contribution from immediate employer if any;
III. Claim against a principal employer under Section 68 (where principal employer fails or neglects to
pay any contribution);
IV. Claim under Section 70 for the recovery of the value or amount of benefits received by a person
when he is not lawfully entitled to such benefits; and
V. Any claim for the recovery of any benefit admissible under the Act.

Institution of proceedings, etc:

Subject to the provisions of the ESI Act and any rules made by the State Government in this regard, all
proceedings before the Employees Insurance Court shall be instituted in the Court appointed for the local
area in which the insured person was working at the time the question or dispute arose (Section 76).

Commencement of proceedings:

The proceedings before an Employees Insurance Court shall be commenced by application. Every such
application should be made within a period of three years from the date on which cause of action arose
(Section 77).

Powers of Employees Insurance Court:

The Employees Insurance Court enjoys the powers of a Civil Court for the purposes of –

I. summoning and
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II. enforcing the attendance of witnesses,

III. compelling the discovery and production of documents and material objects,
IV. administering oath and recording evidence.

An order of the ESI court shall be enforceable as if it were a decree passed in a suit by a Civil Court (Section
78).

Appeal

The Court can refer any question of law to the High Court for decision. The decision of the ESI court can be
appealed against in the High Court within 60 days if it involves a substantial question of law. Except for
this, no appeal shall lie from an order of an Employee’s Insurance Court (Section 82).

Qs. unorganised labour social security Act 2008

Ans Unorganised Workers' Social Security Act 2008 is an Act of the Parliament of India enacted to provide
for the social security and welfare of the unorganised workers (meaning home-based workers, self-employed
workers or daily-wage workers). This act received the assent of the President of India on 30 December 2008.

The act provides for the constitution of National Social Security Board at the Central level which shall
recommend formulation of social security schemes viz life and disability cover, health and maternity
benefits, old age protection and any other benefit as may be determined by the Government for unorganised
workers. As a follow up to the implementation of the Act, the National Social Security Board was set up on
18 August 2009.

Definition of Unorganised Workers

According to Unorganised labour social security Act 2008 section 2(m) unorganised worker” means a home-
based worker, self-employed worker or a wage worker in the unorganised sector and includes a worker in
the organised sector who is not covered by any of the Acts mentioned in Schedule II to this Act.

This definition of analogy of the first national labour commission will help us understand what the organised
sector is. Therefore based on this the national commission on labour listed and identified the following
categories of unorganised labour workforce with the above attribution.
1. Contract labour including construction workers.

2. Labour employed in small scale industries.

3. Employees in shop and establishments.

4. Child labour.5. Agriculture and rural workers.

6. Casual labour.

7. Bonded labour.

8. Female labour.

9. Handloom and power loom workers.

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10. Bidi and cigar workers.

11. Sweepers and scavengers.

12. Workers in tanneries.

13. Tribal labour.

NATIONAL SOCIAL SECURITY BOARD FOR UNORGANISED WORKERS

National Social Security Board.—

(1) The Central Government shall, by notification, constitute a National Board to be known as the National
Social Security Board to exercise the powers conferred on, and to perform the functions assigned to, it under
this Act.

(2) The National Board shall consist of the following members, namely:—

(a) Union Minister for Labour and Employment-Chairperson, ex officio;

(b) the Director General (Labour Welfare)-Member-Secretary, ex officio; and

(c) thirty-four members to be nominated by the Central Government, out of whom—

a. seven representing unorganised sector workers;

b. seven representing employers of unorganised sector;
c. seven representing eminent persons from civil society;
d. two representing members from Lok Sabha and one from Rajya Sabha;
e. five representing Central Government Ministries and Departments concerned; and
f. five representing State Governments.

(3) The Chairperson and other members of the Board shall be from amongst persons of eminence in the
fields of labour welfare, management, finance, law and administration.

(4) The number of persons to be nominated as members from each of the categories specified in clause (c) of
sub-section (2), the term of office and other conditions of service of members, the procedure to be followed
in the discharge of their functions by, and the manner of filling vacancies among the members of, the
National Board shall be such as may be prescribed: Provided that adequate representation shall be given to
persons belonging to the Scheduled Castes, the Scheduled Tribes, the Minorities and Women.

(5) The term of the National Board shall be three years.

(6) The National Board shall meet at least thrice a year, at such time and place and shall observe such rules
of procedure relating to the transaction of business at its meetings, as may be prescribed.

The National Board shall perform the following functions, namely:—

(a) recommend to the Central Government suitable schemes for different sections of unorganised workers;

(b) advise the Central Government on such matters arising out of the administration of this Act as may be
referred to it;
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(c) monitor such social welfare schemes for unorganised workers as are administered by the Central
Government;

(d) review the progress of registration and issue of identity cards to the unorganised workers;

(e) review the record keeping functions performed at the State level; (f) review the expenditure from the
funds under various schemes; and

(g) undertake such other functions as are assigned to it by the Central Government from time to time.

Limitations of the act:

I. Neither agricultural labourers have been brought under the purview of the act nor a separate bill for
agricultural labourers tabled.
II. Two bills were prepared by the NCEUS. The social security has been dumped and it confines itself
only to social security in its most diluted form.
III. The 2008 act appears to have excluded vast sections of unorganised workers. This exclusion reveals
the true colours of the “politics of inclusiveness”.
IV. The act is applicable only to a small section of unorganised labourers.
For the establishment of a central welfare fund, the passage of the act is not accompanied by any
legally stipulated guarantee. There is no provision for penalties in the act to punish those employers
who violates it.
V. As a result of dropping the bill on conditions of work prepared by the Arjun sengupta commission,
working conditions of unorganised workers would remain unregulated and unenforced.

VI. The special problem of women unorganised workers do not figure in the bill. Their problems have
been totally neglected.
VII. Not only penalty exclusion but also no action against the bureaucrats who refuse to register any
unorganised worker under any of the twin scheduled schemes.

Unit-II

Qs. Obligation of employer under Factory Act 1948 Health, welfare and safety of worker.

INTRODUCTION

In Great Britain, the second half of the 18th century, there was a rapid growth of industrial towns &
factories. As it was started without planning, they employed the women as well as their children in factories
who needed to work for more than 12 hours a day. Some of the employees took initiative to implement
labour legislations; Factories Act came into existence in 1819. After some modifications, the final amended
of Factories Act took place in 1948

FACTORIES ACT IN INDIA

In India, the First factories Act was passed in 1881. This Act was basically designed to protect children and
to provide few measures for health and safety of the workers. This law was applicable to only those
factories, which employed 100 or more workers. In 1891 another Factories Act was passed which extended
to the factories employee 50 or more workers.

FACTORIES ACT INCLUDES:

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Health

Safety

Welfare

Working Hours of Adults

Annual Leave With wages

DEFINITIONS:

Factory is defined in section 2(m) of the Act. It means any premises including a) Whereon 10 or more
workers are working, or were working on any day of the preceding 12 months, and in any part of which a
manufacturing process is being carried on with the aid of power, or is ordinarily so carried on; or

b) Whereon 20 or more workers are working, or were working on any day of the preceding 12 months, and
in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so
carried on. But does not include a mine subject to the operation of the Mines Act, 1952 or a mobile unit
belonging to the Armed forces of the Union, a railway running shed or a hotel, restaurant or eating place. .

OBJECTIVES:

The main objective of Factories Act, 1948 is…

I. Ensure adequate safety measures and

II. promote the health and safety and welfare of the workers employed in factories.
III. The act also makes provisions regarding employment of women and young persons
IV. Annual leave with wages etc.

PROVISIONS REGARDING HEALTH:

1. Cleanliness (sec.11)
2. Disposal of Wastes & Effluents (sec.12)
3. Ventilations & Temperature (sec.13)
4. Dust & Fumes (sec.14)
5. Artificial Humidification (sec. 15)
6. Overcrowding (sec.16)
7. Lighting (sec.17)
8. Drinking Water (sec.18)
9. Latrines & Urinals (sec.19)
10. Spittoons (sec.20)

1. Cleanliness (Sec. 11):

I. Dirt should be swiped and cleaned daily.

II. Floor of workroom should be cleaned at least once in a week.
III. If the floor is wet through any manufacturing process effective drainage shall be provided.
IV. Inside walls, partition, ceilings, tops of rooms should be painted or vanished and repainted and
revarnishedonce in 5 year.
V. if washable paints are used it can be repainted once in 3 years.and washable once in 6 months.
 16

VI. other cases white or colour wash may be carried out once in every 14 months.
VII. Doors, windows, wooden or metallic frame work shetters should be painted once in every 5 years.

2. Disposal of wastes and effluents (Sec.12):

There should be such arrangement in the factory that the wastes and effluents easily disposed off. Sec. 12(2)
provide state Gov. can form rules regarding the arrangements and it shall be approved by the authority.

3. Ventilation and Temperature (Sect.13)

Effective and suitable provision shall be made in every factory for securing and maintaining in every
workroom (a) Adequate ventilation and the circulation of fresh air, and (b) Workers therein reasonable
conditions of comfort and prevention from injury to health. Beside this, where the nature of the work carried
on in the factory involves production of excessively high temperatures, adequate measures as are necessary
shall be taken to protect the workers.

4. Dust and Fume (Sect. 14)

In a factory in which manufacturing process is carried on, there may be given off any dust or fume. Its
inhalation by workers in any workroom is injurious or offensive to the workers employed. So, in order to
prevent this the point of origin of the dust, fume or other impurity, shall be enclosed as far as possible. On
the other hand, in any factory no stationary internal combustion engine shall be operated unless the exhaust
is conducted into the open air.

5. Artificial humidification (Sec. 15)

In respect of all factories in which the humidity of the air is artificially increased, the State Government may
make rules,- (a) prescribing standards of humidification; (b) regulating the methods used for artificially
increasing the humidity of the air; (c) directing prescribed tests for determining the humidity of the air to be
correctly carried out and recorded; (d) prescribing methods to be adopted for securing adequate ventilation
and cooling of the air in the workrooms.

6. Overcrowding (Sec. 16): • The overcrowding affects the workmen not only in the discharge of duties but
also their health. The working space should be 9.9 cubic meters of space per worker in every workroom
before the commencement of this Act. And after the commencement of this Act, the space per worker is
14.2 cubic meter.

7. Lighting (Sec. 17)

The Factories Act makes following provisions in this respect,

(a) There shall be provided and maintained sufficient and suitable lighting, natural or artificial, or both, in
every part of the factory.

(b) In every factory all glazed windows and skylights be used and workrooms shall be kept clean on both the
inner and outer surface.

(c) The State Government prescribes standards of sufficient and suitable lighting for factories or for any
class of description of factories or for any manufacturing process.

8. Drinking water (Sec. 18)

 17

The provisions in this respect under the Factories Act, are;

(a) Arrangements shall be made to provide and maintain sufficient supply of wholesome drinking water.
Points should be marked as “DRINKING WATER” in the language understood by majority of workers. It
should be situated within 6 M of any washing palace, urinal, latrine, spittoon, ect.,,

(b) Provision shall be made for cooling drinking water during hot weather by effective means and for
distribution thereof in every factory wherein more than two hundred and fifty workers are ordinarily
employed.

(c) Examine as prescribed by the authorities of the supply and distribution of drinking water in factories.

9. Latrine and Urinal (Sec. 19)

The Factories Act makes following provisions in this respect, 1.

(a) sufficient latrine and urinal accommodation of prescribed types shall be provided and conveniently
situated to make them accessible to workers at all times while they are at the factory;

(b) separate enclosed accommodation shall be provided for male and female workers and there should be
adequately lighted and ventilated;

(d) they shall be maintained in a clean and sanitary condition at all times;

(e) sweepers shall be employed whose primary duty would be to keep latrines, urinals and washing places
clean.

10. Spittoons (Sec. 20)

There shall be provided sufficient number of spittoons in convenient places and they shall be maintained in a
clean and hygienic condition. The State Government may make rules prescribing the type and the number of
spittoons to be provided and their location in any factory.

SAFETY

(SEC.21-35) Chapter IV of the Factories Act, 1948, deals with the provisions relating to the safety of the
workers in a factory.

1. Fencing of machinery (Sec. 21)

According to Section 21 of Factories Act, 1948, in every factory, the dangerous parts of all machineries
should be securely fenced. The following should be securely fenced (a) every part of an electric generator, a
motor or rotary convertor; (b) every part of transmission machinery; and (c) every dangerous part of any
other machinery,

2. Work On Or Near Machinery In MotionSec 22:

Examination shall be carried out only by specially trained male workers.Such workers should wear tight
fitting clothes. Such worker shall not handle a belt at moving pulley. No woman or young person shall be
allowed to clean, lubricate or adjust any part of prime mover
 18

3.Employment of young persons on dangerous machines (Sec.23)

Section 23 provides that young person shall be required or allowed to work at any machine to which he has
been fully instructed as to the dangers arising in connection with the machine and the precautions to be
observed and- (a) has received sufficient training in work at the machine, or (b) is under adequate
supervision by a person who has a through knowledge and experience of the machine.

4. Striking gear and devices for cutting off power (Sec. 24)

Section 24 provides that suitable striking gear or other efficient mechanical appliance shall be maintained
and used to move driving belts to and from fast and loose pulleys which form part of the transmission
machinery, and such gear or appliances shall be so constructed, placed and maintained as to prevent the belt
from creeping back on to the fast pulley. Further driving belts, when not in use, shall not be allowed to rest
or ride upon shafting in motion. Besides these, in every factory suitable devices for cutting off power in
emergencies from running machinery shall be provided and maintained in every work-room.

5. Self-acting machines (Sec. 25)

No traversing part of a self-acting machine in any factory and no material carried thereon shall, if the space
over which it runs is a space over which any person is liable to pass, whether in the course of his
employment or otherwise, be allowed to run on its outward or inward traverse within a distance of forty-five
centimeters from any fixed structure which is not part of the machine

6. Prohibition of employment of women and children near cotton- openers (Sec. 27)

In any part of a factory where a cotton-opener is at work for pressing cotton, no woman or child shall be
employed. Provided that the Inspector may in any particular case specify in writing that the women and
children may be employed on the side of the partition where the feed-end is situated.

7. Hoists and lifts (Sec. 28)

Every hoist and lift shall be of good mechanical construction, sound material and adequate strength,
properly maintained ,protected by an enclosure fitted with gates, and shall be thoroughly examined by a
competent person .

8. Lifting machines, chains, ropes and lifting tackles (Sec. 29)

Every lifting machine and every chain, rope and lifting tackle for the purpose of raising or lowering persons,
goods or materials, all parts, including the working gear, whether fixed or movable, of every lifting machine
and every chain, rope or lifting tackle shall be of good construction, sound material and adequate strength
and free from defects. It should be properly maintained.

9. Protection of eyes (Sec. 35)

Prescribed process should be taken which involves risk of injury to the eyes from particles or fragments
thrown off in the course of the process, or risk to the eyes by reason of exposure to excessive light. Effective
screens or suitable goggles shall be provided for the protection of persons employed.

10. Precautions against dangerous fumes, gases, etc (Sec. 36)

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No person shall be allowed to enter any chamber, tank, vat, pit, pipe, flue or other confi ned space in any
factory in which any gas, fume, vapour or dust is likely to be present.

WELFARE

There are many welfare provisions mentioned under the Act—

1. Washing facilities (Sec. 42)

In every factory adequate washing facilities should be provided for both male and female workers. They
should be conveniently accessible and kept clean. The State Government prescribes standards for adequate
and suitable facilities for washing.

2. Facilities for storing and drying clothing (Sec. 43)

There should be suitable places for keeping the clothing not worn during working hours and for the drying
of the wet clothing.

3. Facilities for sitting (Sec. 44)

In every factory suitable arrangements for sitting as well as standing shall be provided and maintained for all
workers for rest which they may require in course of their work.

4. First-aid appliances (Sec. 45)

There should be readily accessible during all working hours the first-aid boxes or cupboards equipped with
the prescribed contents, and the number of such boxes or cupboards to be provided and maintained shall not
be less than one for every one hundred and fifty workers ordinarily employed . Each first-aid box or
cupboard shall be kept in the charge of a separate responsible person.

Each first aid box or cup-boards shall contain the following equipments :- (i) 6 small sterilized dressings. (ii)
3 medium size sterilized dressings. (iii) 3 large size sterilized dressings. (iv) 3 large size sterilized burn
dressings. (v) 1 (1 oz.) bottle containing a two per cent, alcoholic solution of iodine. (vi) 1 (1 oz.) bottle
containing sal-volatile having the dose and mode of administration indicated on the label. (vii) A snake-bite
lancet. (viii) 1 (1 oz.) bottle of potassium permanganate crystals. (ix) 1 pair scissors. (x) 1 copy of the first
aid leaflet issued by the Chief Adviser, Factories, Government of India. (xi) Tables aspirin (Grs. 5) One
dozen. (xii) Burn Ointment. One tube. (xiii) Dettol. One phial (about 2 ozs.)

5.Shelters, rest-rooms and lunch-rooms.-sec 47

In every factory wherein more than one hundred and fifty workers are ordinarily employed adequate and
suitable shelters or rest-rooms and a suitable lunch-room, with provision for drinking water, where workers
can eat meals brought by them, shall be provided and maintained for the use of the workers.

6. Canteens (Sec. 46)

In a factory wherein more than two hundred and fifty workers are ordinarily employed, a canteen or
canteens shall be provided. Besides the foodstuffs to be served therein, the construction, accommodation,
furniture and other equipment of the canteen should be of good standards. The shelters or rest rooms or
lunch rooms to be provided shall be sufficiently lighted and ventilated and shall be maintained in a cool and
clean condition.
 20

7. Creches (Sec. 48)

Wherein more than thirty women workers are ordinarily employed in a factory, there shall be provided and
maintained a suitable room or rooms for the use of the children under the age of six years of such women.
The rooms should An adequately lighted and ventilated, shall be maintained in a clean and sanitary
condition and shall be under the charge of women trained in the care of children and infants.

8. Welfare officers (Sec. 49)

Wherein five hundred or more workers are ordinarily employed in a factory the occupier shall employ such
number of welfare officers as may be prescribed by the State Government.

Qs. Provision regarding the employment of young person under the Factory Act 1948.

Ans.

1. Prohibition of Employment of Young Children [Section 67]

A child who has not completed his fourteenth year is prohibited from working in any factory. Under any
circumstances, whatsoever, no exemption even in case of emergency can be allowed to overcome the
provisions of this section.

This is an absolute prohibition and admits of no exception. It is the duty of the employer to ascertain the age
of the children whom he allows to work in his factory. He cannot depend on the statement of the applicant.

2. Non-Adult Workers to Carry Tokens [Section 68]

A child who has completed his fourteenth year or an adolescent shall not be required or allowed to work in
any factory unless he is given a certificate of fitness by a competent certifying surgeon. Such a certificate
shall be in the custody of the manager of the factory. The young person shall carry while he is at work a
token giving a reference to such a certificate. The object of section 68 is to prevent the exploitation of the
young labour force.

3. Certificate of Fitness [Section 69]:

The certificate of fitness is granted by a certifying surgeon on the application of young person or a guardian.
The application must be accompanied by a document signed by the manager of a factory that the young
person will be employed therein if certified to be fit for work in a factory.The application for the grant of the
certificate of fitness can also be made by the manager of the factory in which the young person wishes to
work. The certifying surgeon shall examine the young person and ascertain his fitness for work in a factory.

If the certifying surgeon is satisfied, he may grant or renew to such young person in the prescribed form:

(a) A certificate of fitness to work in factory as a child, provided he has completed his fourteenth year, has
attained the prescribed physical standards and is fit for such work;

(b) A certificate of fitness to work in a factory as an adult, provided he has completed his fifteenth year and
is fit for a full day’s work in a factory.
 21

The certifying surgeon must have personal knowledge of the proposed place of work and of the
manufacturing process involved.

The certificate of fitness is valid only for a period of 12 months. It may be granted subject to such conditions
as regard the nature of the work involved and periodical re-examination. The certificate may be revoked by a
certifying surgeon if the holder of the certificate is no longer fit to work. Where certifying surgeon refuses to
grant or renew a certificate or revokes a certificate, he shall state his reasons in writing for so doing.

Any fee payable for a certificate under this section shall be paid by the occupier and shall not be recovered
from the young person, his parent or guardian.

4. Effect of Certificate of Fitness Granted to Adolescent [Section 70]

An adolescent who has been granted a certificate of fitness to work as an adult, would be deemed to be an
adult and all provisions of the Factories Act relating to adult workers would apply to him.No female
adolescent or a male adolescent who has not attained the age of seventeen years but who has been granted a
certificate of fitness to work in a factory as an adult shall be required or allowed to work in any factory
except between 6 A.M. and 7 P.M.

5. Working Hours for Children [Section 71]

No Child can be employed or permitted to work in any factory:

(1) For more than four and a half hours in any day;

(2) During the night i.e., a period of at least twelve consecutive hours including the interval between 10 p.m.
and 6 a.m.

(3) On any day on which he has already been working in any other factory.

The period of work of all children employed in a factory shall be limited to two shifts. Such shifts shall not
overlap or spread over more than five hours. Each child must be employed in only one of the relays which
must not be changed more frequently than once in thirty days, except with the previous permission in
writing of the Chief Inspector.

Provision relating to weekly holidays for adults under section 52 will also apply to child workers. No child
can be required or allowed to work in any factory on any day on which he has already been working in
another factory.No female child shall be required or allowed to work in any factory except between 8 A.M.
and 7 P.M.

6. Notice of Periods of Work for Children [Section 72]

Every factory must display and correctly maintain a notice of periods work for children. Such notice should
show clearly the periods during which children may be required or allowed to work. The periods shown in
the notice shall be fixed beforehand as per section 61 regarding period of work for adults, but there shall be
no contravention of the provisions of section 71.

7. Register of Child Workers [Section 73]:

The manager of every factory in which children are employed shall maintain a register of child workers
showing:
 22

(a) The name of each child worker in the factory

(b) The nature of his work

(c) The group in which he is included

(d) Where his group works on shifts, the relay to which he is allotted

(e) The number of his certificate of fitness

No child worker shall be required or allowed to work in any factory unless his name other particulars have
been entered in the register of child workers Section73 (1—A)

This register must be made available to the Inspector at all times during working hours or when any work is
being carried on in a factory.

The State Government may prescribe the form of the register of child workers, the manner in which it shall
be maintained and the period for which it shall be preserved.

8. Hours of work to Correspond with Notice Under Section 72 and Register Under Section 73 [Section
74]:

No child shall be employed in any factory otherwise than in accordance with the notice of periods of work
for children displayed in the factory and the entries made before hand against his name in the register of
child workers of the factory.

9. Power to Require Medical Examination [Section 75]

An inspector has power to server a notice on the manager of the factory asking him for the medical
examination of the young person who works in a factory either without a certificate of fitness, or with a
certificate of fitness but is no longer fit to work in that capacity.

Such a young person, shall not, if the inspector so directs, be employed or permitted to work in any factory
until he has been granted certificate of fitness or fresh certificate of fitness as the case may be or has been
certified by the certifying surgeon examining him not to be a young person.

10. Power to make Rules [Section 76]

This section authorises the state Government to make rules:

(a) Prescribing the forms of certificates of fitness to be granted to young persons, and the procedure for their
issue

(b) Prescribing the physical standards to be attained by children and adolescents working in factories

(c) Regulating the procedure of certifying surgeons

(d) Specifying other duties which the certifying surgeons may be required to perform in connection with the
employment of young persons in factories.

11. Provisions relating to Safety of Young Persons:

 23

The provisions relating to the safety of young persons are scattered through the Act, but for the convenience
of the readers are summarised as under:

1. No young person shall be allowed to clean, lubricate, or adjust any part of the machinery while it is in
motion if it is likely to expose him to risk of injury from any moving part (Section 22).

2. No young person shall work at any dangerous machine unless:

(a) He has been fully instructed as to the dangers arising in connection with the machine and the precautions
to be observed, and

(b) He has received sufficient training in work at the machine or is under adequate supervision by a person
who has a thorough knowledge and experience of the machine (Section 23).

3. No child shall be employed in any part of a factory for pressing cotton in which a cotton-opener is at
work. This prohibition may be relaxed in certain cases (Section 27).

4. Where the State Government declares any manufacturing process or operation in any factory as dangerous
or injurious to the health of young person, it may make rules prohibiting or restricting the employment of
young person in the operation (Section 87).

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

The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 is an
Act of the Parliament of India enacted to regulate the condition of service of inter -state labourers in Indian
labour law. The Act's purpose is to protect workers whose services are requisitioned outside their native
states in India. Whenever an employer faces shortage of skills among the locally available workers, the act
creates provision to employ better skilled workers available outside the state.

Service conditions of interstate worker

In addition to the general labour laws applicable to all workers, the interstate workers are entitled with equal
or better wages for the similar nature & duration of work applicable for the local workmen or stipulated
minimum wages under the Minimum Wages Act, 1948 whichever is more,

I. displacement allowance (Section 14),

II. home journey allowance (Section 15) including payment of wages during the period of journey,
III. Suitable residential accommodation and medical facilities free of charge on mandatory basis.
IV. Termination of employment after the contract period without any liability.
V. Right to lodge compliant with the authorities within three months of any incident, accident, etc.

13. Wage rates and other conditions of service of inter-State migrant workmen.—

(1) The wage rates, holidays, hours of work and other conditions of service of an inter-State migrant
workman shall,—

(a) in a case where such workman performs in any establishment, the same or similar kind of work as is
being performed by any other workman in that establishment, be the same as those applicable to su ch other
workman; and
 24

(b) in any other case, be such as may be prescribed by the appropriate Government Provided that an inter -
State migrant workman shall in no case be paid less than the wages fixed under the Minimum Wages Act,
1948 (11 of 1948).

(2) Notwithstanding anything contained in any other law for the time being in force, wages payable to an
inter-State migrant workman under this section shall be paid in cash.

14. Displacement allowance.—

(1) There shall be paid by the contractor to every inter-State migrant workman at the time of recruitment, a
displacement allowance equal to fifty per cent. of the monthly wages payable to him or seventy-five rupees,
whichever is higher.

(2) The amount paid to a workman as displacement allowance under sub-section (1) shall not be refundable
and shall be in addition to the wages or other amounts payable to him.

15. Journey allowance, etc.—

A journey allowance of a sum not less than the fare from the place of residence of the inter -State migrant
workman in his State to the place of work in the other State shall be payable by the contractor to the
workman both for the outward and return journeys and such workman shall be entitled to payment of wages
during the period of such journeys as if he were on duty.

16. Other facilities.—

It shall be the duty of every contractor employing inter-State migrant workmenin connection with the work
of an establishment to which this Act applies,—

(a) to ensure regular payment of wages to such workmen;

(b) to ensure equal pay for equal work irrespective of sex;

(c) to ensure suitable conditions of work to such workmen having regard to the fact that they are

required to work in a State different from their own State;

(d) to provide and maintain suitable residential accommodation to such workmen during the

period of their employment;

(e) to provide the prescribed medical facilities to the workmen, free of charge;

(f) to provide such protective clothing to the workmen as may be prescribed; and

(g) in case of fatal accident or serious bodily injury to any such workman, to report to the

specified authorities of both the States and also the next of kin of the workman.

Role of contractors

Role of contractor is following

I. Registration of all contractors who employs or employed five or more Interstate Migrant Workmen
on any day of the preceding 12 months.
 25

II. Furnish the details of workmen periodically in such forms as prescribed by state government.
III. Maintain the registers indicating the details of interstate workers and make available for scrutiny by
the statutory authorities.
IV. Issue of passbook affixed with a passport-sized photograph of the workman indicating the name and
the place of the establishment where the worker is employed, the period of employment, rates of
wages, etc. to every inter-state migrant workman.
V. Reporting by the contractor the incidence of fatal accident or serious injury of such workman to the
specified authorities of both the States and also the next of kin of the workman.
VI. Liable for the prescribed punishments for violations committed under this Act.

Role of principal employers

Role of principal employer is following

I. Registration of all principal employers who employs or employed directly or indirectly five or more
Interstate Migrant Workmen on any day of the preceding 12 months.
II. Maintain the registers indicating the details of interstate workers and make available for scrutiny by
the statutory authorities.
III. Every principal employer shall nominate a representative duly authorized by him to be present at the
time of disbursement of wages by the contractor and it shall be the duty of such representative to
certify the amounts paid as wages in such manner and may be prescribed.
IV. Principal employer shall be liable to bear the wages and other benefits to interstate workers in case of
failure by the contractor to effect the same.
V. Liable for the prescribed punishments for violations committed under this Act.

Role of state governments

Role of state government is following

I. Appointment of inspectors to oversee implementation of this act.

II. Appointment of registration officers to grant and revoke registration of contractors / principal
employers / establishments.
III. Appointment of licensing officers to grant, suspend and revoke licenses to contractors / principal
employers / establishments
IV. Making rules for carrying out the purposes of this Act subject to the condition of previous
publication
V. Entertaining appeals from the aggrieved parties and disposal of the same as per this Act

Unit-III

Qs. Concept of wages (Minimum Wages, Fair Wages and Living Wages)

Introduction

Wage is a remuneration to labour for the work done for the service rendered by it to the employer. There are
different theories on the concept of wages as enunciated by economists and sociologists, which explain
various aspects of wage problems. However, these theories are not applicable in all circumstances.
 26

Meaning and Definition of Wage

According to Section 2(h) of the Minimum wages Act, 1948 the term "wages" means all remuneration
capable of being expressed in terms of money which would if the terms of the contract of employment
express or implied were fulfilled be payable to a person employed in respect of his employment or of work
done in such employment and includes house rent allowance but does not include –

(i) the value of –(a) any house accommodation supply of light water medical attendance or(b) any other
amenity or any service excluded by general or special order of the appropriate government;

(ii) any contribution paid by the employer to any person fund or provident fund or under any scheme of
social insurance;

(iii) any travelling allowance or the value of any traveling concession;

(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his
employment; or

(v) any gratuity payable on discharge;

Concepts of Wages

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

(a) Living Wage

(b) Fair Wage

(c) minimum Wage

(a) 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.

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 ilcluding 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.

Workmen v/s Reptakus Breet & co. Ltd it was held by the court that a living wage has been promised to
the workers under the constitution in part IV under article 43

(b) Fair Wage -

 27

Fair wage is a mean between the living wage and the minimum wage. A fair wage is related to fair work -
load and the earning capacity. It can say that it is more than minimum wage but less than the living wage. It
may roughly be said to approximate to the need based minimum, in the sense of the wage which is adequate
to cover the normal needs of the average employee regarded as a human being in a civilized society. Fair
wage is fixed, taking into consideration, the present economic position and further prospects of the Industry.
Between these two limits (Living Wage and the Minimum Wage) actual wage would depend upon a
consideration of certain factors namely-

i) the productivity of Labour.

ii) the prevailing rates of wages in the same industry for similar occupations in the same or similar
occupations in the same or neighbouring localities;

iii) the level of national income and its distribution; and the place of the industry in the economy of the
country.

The Concept of fair wages, therefore, involves a rate sufficiently high to enable the worker to provide a
standard family with food, shelter, clothing, medical care and education for children appropriate to his status
in life but not at a rate exceeding the wage-earning capacity of the class of establishment concerned. As time
passed and prices rise even the fair wage fixed for the time being tends to sag downwards and then revision
becomes necessary.

(c) Minimum Wage -

The term 'Minimum Wage' has not been defined in the said Act ( Minimum Wages Act, 1948) The
minimum wage is the lowest wage in the scale below which the efficiency of a worker is likely to be
inspired. The minimum wage includes not only the bare physical necessities but also a modicum of comfort
otherwise known as conventional necessities. The Minimum wages must, therefore, provide not merely for
the bare subsistence of life but also for the preservation of the efficiency of the worker. For this purpose, the
minimum wage must also provide for the same measure of education, medical requirements, and amenities.
Therefore any employer who is unable to pay this minimum wage to workers has no right to exist. Where a
person provides labour or service to another for remuneration which is less than the minimum wages, such
labour is 'forced labour' within the meaning of Article 23 of the Indian Constitution and thereby entitles the
person to invoke Article 32 or Article 226 of the Constitution of India.

Kamani Metal Alloys Ltd. V/s Workmen in this case Supreme court held that an employer cannot be
allowed to run the scheduled industry if he is unable to pay even the minimum wages to his employees.

Qs. Fixation of minimum rate of wages under minimum wages act 1948

Ans. INTRODUCTION

Workers in developing countries like India with a high rate of unemployment can be exploited by employers
because of their existing low bargaining power. In such a circumstance, the worker may receive wages that
is much below the expected level and can result in the inability of the workers to meet his daily needs.

OBJECTIVES OF THE MINIMUM WAGES ACT

I. To ensure that the employee can have the basic physical needs, good health and a level of comfort.
II. To ensure a secure and adequate living wage for all laborers in the interest of the public.
 28

III. To ensure that the employee has enough to provide for his family. Ensuring a decent life standard
that pertains to the social comfort of the employee.

PROCEDURE FOR REVIEW AND FIXATION OF MINIMUM WAGE

The requirements for the review and fixation of a minimum wage is under Section 5 of the 1948 minimum
wage Act. The rule provides that:

1. Committees and sub-committees, Advisory Board and Central advisory board shall be
appointed by the appropriate government as it deems fit; to inform it on the possible review
and fixation of the minimum wage rate.
2. The government shall notify the persons concerned by making a publication in one of the national
dailies and specify a date not later than a period of two months from the publication date before the
commencement of the hearing on the matter.

After the government must have considered the inputs from representatives of the persons concerned or the
advice of the committee, is shall review or fix the minimum rate through a publication in the official news
media based on each schedule of employment. The enforcement of the fixation or review shall not be more
than three months from the date of publication.

The appropriate government shall work in conjunction with the minimum wages Advisory Board while
reviewing the wages. The review is limited to the employment that are under the schedule. However,
Section 27 of the Act empowers the appropriate government to add any employment to the schedule.

The prevailing economic conditions, cost of living in a place, conditions which the work is performed and
nature of work to be performed shall be used as the factors to determine the fixation of the minimum wage.

BASIS FOR FIXING OF MINIMUM WAGE

Under section 3 the government is empowered to fix the minimum wage on the Basos of:

1 Cost of Living Index – the government may fix:

I. Minimum time rate which is the time factor on which the minimum wage can be fixed.
II. Minimum piece rate which allows the minimum wage to be fixed based on the pieces of items
manufactured by the industry.
III. Guaranteed time rate which is a combination of piece rate and time rate with reference to time work
basis and pieces of items manufactured by the industry on which the minimum wage is based.
IV. Overtime rate which is minimum wage fixed based on overtime work performed by employees,
irrespective of the time work or piece rate.

2 The Different minimum wage for various industrial areas – Section 3 (3) (a) of the Act provides that
different minimum rates may be fixed for different:

I. scheduled employment
II. classes of work in a schedule of employment
III. locations.
 29

IV. Adults, children, adolescent and apprentices have different rates of wages.

3 The Minimum rate of wages on the basis of a basic rate of wages featured in other allowances – Section 4
provides that any minimum rate of wages revised or fixed based on the scheduled employments under
Section 3 may contain:

I. A special allowance and a basic rate of wages that shall be known as ‘cost of living allowance’. The
rate of cost of living allowance shall be reviewed periodically in a manner that is directed by the
appropriate government. The fixed rate shall correspond with the present living cost in the country
and with the number of workers.
II. A basic rate of wages that is not only limited to the cost of living allowance, cash value based on
prices of commodities.

4 An all-inclusive rate that is based on the cost of living allowance, and the value of cash.

The cost of living allowance and cash value in respect of the essential commodities supplied shall be
calculated by an authorized body. The calculation shall be carried out by the competent body based on the
directives of the appropriate government.

FACTORS CONSIDERED AS IRRELEVANT IN FIXATION OF MINIMUM WAGES

The following factors are irrelevant in fixation of minimum wages:

I. The fact that an employer may have difficulties in business

II. Financial abilities of the employer
III. Losses that may have been incurred by the company in the previous year
IV. The inability of the employer to import raw materials
V. The regional industrial principles.

ROLE OF THE WAGE COMMITTEE

The wage committee or sub-committee inaugurated by the appropriate government shall be made up of the
same number of representatives of both employees and employers. An independent person with no direct or
indirect interest in the schedule of employment shall be made the chairman of the committee. Experience
and knowledge shall be the criteria for one’s membership in the committee.

The government is at the discretion of regarding or disregarding the recommendations from the committee it
had appointed. The purpose of the committee is to advise; therefore, the government is not bound to accept
all of its recommendations. Irregularities that may have occurred in the constitution of the committee will
not affect the validity of a notice that may have been published by the appropriate government.

THE ROLE OF ADVISORY BOARD

Section 7 provides that the appropriate government shall shoulder the responsibility for inaugurating an
advisory board to:

Coordinate the obligations of committees and sub-committees appointed by the government Inform the
appropriate government on matters related to fixing and reviewing of the minimum wage.

The procedure for the functioning of the Advisory board is not prescribed in the minimum wage Act.
However, the board can set up its peculiar procedure. A Central Advisory Board shall be constituted by the
 30

Central Government to advise and counsel both the Central and State government on fixation and review of
minimum wages rates and the works of the Advisory boards as stated in the Act.

Those who are to serve as members of the board shall be nominated by the Central Government from
representatives of both the labor and the employers. Independent members of the board shall not exceed
one-third of the total members. An official of the government can be one of the independent members and
from this class shall the chairman emerge.

CONSEQUENCES OF NON-COMPLIANCE WITH THE MINIMUM WAGES ACT

Non-payment and underpayment of the minimum wage are considered as a culpable offense. The penalty to
an offender may be up to 5 years imprisonment with a fine of Rs 10000 as provided in Section 22 of the Act.

CASE LAWS

In the case between the State of Madras and P.N. Ram Chander Rao in 1956, the court ruled that any
notification not specifying the manner and what interval special allowance made payable to be adjusted is a
defect and impaired by an apparent error of law .

In the case between Cashew Manufacturers and Exporters Association v/s State of Kerala in 1999, the
high court ruled that the government is not bound by the Advisory Board’s report.

In the case between S.D. Basha and the State of Madras, it was held that in a condition where the
members appointed into the committee are bereft of knowledge and experience, such a committee shall be
invalid. A committee with men of no knowledge and experience is illegal.

Qs. Liability to pay the wages period for payment of wages and permissible deductions under the
payment of wages act 1936

Ans. The Payment of Wages Act regulates the payment of wages to certain classes of persons employed in
industry and its importance cannot be under-estimated. The Act guarantees payment of wages on time and
without any deductions except those authorised under the Act. The Act provides for the responsibility for
payment of wages, fixation of wage period, time and mode of payment of wages, permissible deduction as
also casts upon the employer a duty to seek the approval of the Government for the acts and permission for
which fines may be imposed by him and also sealing of the fines, and also for a machinery to hear and
decide complaints regarding the deduction from wages or in delay in payment of wages, penalty for
malicious and vexatious claims. The Act does not apply to persons whose wage is Rs. 24,000/- or more per
month. The Act also provides to the effect that a worker cannot contract out of any right conferred upon him
under the Act.

Responsibility for payment of wages [Section 3].

I. Every employer shall be responsible for the payment to persons employed by him of all wages
required to be paid.
II. In the case of the factory, manager of that factory shall be liable to pay the wages to employees
employed by him.
III. In the case of industrial or other establishments, persons responsibility of supervision shall be liable
for the payment of the wage to employees employed by him.
IV. In the case of railways, a person nominated by the railway administration for specified area shall be
liable for the payment of the wage to the employees.
 31

V. In the case of contractor, a person designated by such contractor who is directly under his charge
shall be liable for the payment of the wage to the employees. If he fails to pay wages to employees,
person who employed the employees shall be liable for the payment of the wages .

Fixation of wage periods. [Section 4]

Every person responsible for the payment of wages under section 3 shall fix periods in respect of which such
wages shall be payable. No wage-period shall exceed one month. That means wage can be paid on daily,
weekly, fortnightly (for every 15 days) and monthly only. Wage period for payment of wages to employees
by employer should not exceed 30days i.e. one month according to this act. But wages cannot be paid for
quarterly, half yearly or once in a year. Time Of Payment Of Wages. [Section 5]

In railway factory or industrial or other establishment, if there are less than 1000 employees, wages of
employees should be paid before the expiry of the 7th day after the last day of the wage period. (ex:- wages
should be paid on starting of present month within 7 days i.e. before 7th date if wage is paid on 1st in
previous month )

In other railway factory or industrial or other establishment, if there are more than 1000 employees, wages
of employees should be paid before the expiry of the 10th day after the last day of the wage period. (ex: -
wages should be paid on starting of present month within 10 days i.e. before 10th date if wage is paid on 1st
in previous month )

For employees of port area, mines, wharf or jetty, wages of employees should be paid before the expiry of
the 7h day after the last day of the wage period.

[Sec 5 (2)]

If the employee is terminated or removed for the employment by the employer the wage of that employee
should be paid within 2 days from the day on which he was removed or terminated

DEDUCTIONS WHICH MAY BE MADE FROM WAGES.

At the time of payment of the wage to employees, employer should make deductions according to this act
only. Employer should not make deductions as he like. Every amount paid by the employee to his employer
is called as deductions.

The following are not called as the deduction

I. Stoppage of the increment of employee.

II. Stoppage of the promotion of the employee.
III. Stoppage of the incentive lack of performance by employee.
IV. Demotion of the employee
V. Suspension of the employee

The above said actions taken by the employer should have good and sufficient cause.

Deductions [Sec 7 (2)]

Deduction made by the employer should be made in accordance with this act only. The following are said to
be the deductions and which are acceptable according to this act.
 32

Illustration: if the employee was terminated or removed from the employment by the employer on 10th of
this month, his wage should be paid within 2 days from the day on which he was removed or terminated, i.e.
his/her wage should be paid by 12th date of this month and this date should not exceed.

DEDUCTIONS WHICH MAY BE MADE FROM WAGES.

At the time of payment of the wage to employees, employer should make deductions according to this act
only. Employer should not make deductions as he like. Every amount paid by the employee to his employer
is called as deductions. The following are not called as the deduction

I. Stoppage of the increment of employee.

II. Stoppage of the promotion of the employee.
III. Stoppage of the incentive lack of performance by employee.
IV. Demotion of the employee Suspension of the employee

The above said actions taken by the employer should have good and sufficient cause

Deductions [Sec 7 (2)

Deduction made by the employer should be made in accordance with this act only. The following are said to
be the deductions and which are acceptable according to this act.

I. Fines,
II. Deductions for absence from duty,
III. Deductions for damage to or loss of goods made by the employee due to his negligence,
IV. Deductions for house-accommodation supplied by the employer or by government or any housing
board,
V. Deductions for such amenities and services supplied by the employer as the State Government or any
officer,
VI. Deductions for recovery of advances connected with the excess payments or advance payments of
wages,
VII. Deductions for recovery of loans made from welfare labour fund,
VIII. Deductions for recovery of loans granted for house-building or other purposes,
IX. Deductions of income-tax payable by the employed person,
X. Deductions by order of a court,
XI. Deduction for payment of provident fund,
XII. Deductions for payments to co-operative societies approved by the State Government,
XIII. Deductions for payments to a scheme of insurance maintained by the Indian Post Office
XIV. Deductions made if any payment of any premium on his life insurance policy to the Life Insurance
Corporation with the acceptance of employee,
XV. Deduction made if any contribution made as fund to trade union with the acceptance of employee,
XVI. Deductions, for payment of insurance premia on Fidelity Guarantee Bonds with the acceptance of
employee,
XVII. Deductions for recovery of losses sustained by a railway administration on account of acceptance by
the employee of fake currency,
XVIII. Deductions for recovery of losses sustained by a railway administration on account of failure by the
employee in collections of fares and charges,
 33

XIX. Deduction made if any contribution to the Prime Minister’s National Relief Fund with the acceptance
of employee,
XX. Deductions for contributions to any insurance scheme framed by the Central Government for the
benefit of its employees with the acceptance of employee,

Limit for deductions [Sec 7 (3)]

The total amount of deductions from wages of employees should not exceed 50%, but only in case of
payments to co-operative societies, deduction from wages of employee can be made up to 75%.

FINES. [Sec 8]

Fine should be imposed by the employer on employee with the approval of the state government or
prescribed authority. Employer should follow the rules mentioned below for and before imposing of fine on
the employee.

I. Notice board of fines on employee should be displayed in the work premises and it should contain
activities that should not be made by employee.
II. Fine should not be imposed on the employee until he gives the explanation and cause for the act or
omission he made.
III. Total amount of fine should not exceed 3% of his wage.
IV. Fine should not be imposed on any employee who is under the age of 15 yea rs.
V. Fine should be imposed for one time only on the wage of the employee for the act or omission he
made.
VI. Fines should not be recovered in the way of installments from the employee.
VII. Fine should be recovered within 60 days from the date on which fine were imposed.
VIII. Fine should be imposed on day act or omission made by the employee.
IX. All fines collected from the employee should be credited to common fund and utilize for the benefit
of the employees.

DEDUCTIONS FOR ABSENCE FROM DUTY. [Sec 9]

I. Deductions can be made by the employer for the absence of duty by the employee for one day or for
any period.
II. The amount deducted for absence from the duty should not exceed a sum which bears the same
relationship to the wage payable in respect of the wage-period as this period of absence does to such
wage-period. (Example: if the salary of an employee is 6000/- per month and he was absent for duty
for one month. Deduction from the salary for absence of duty should not exceed 6000/-)
III. Employee present for the work place and refuses to work without proper reason shall be deemed to
be absent from duty.
IV. If 10 or more persons together absent for the duty without any notice and without reasonable cause,
employer can make 8 day of wages as deduction from their wage.

DEDUCTIONS FOR DAMAGE OR LOSS. [Sec 10]

Employer should give an opportunity to the employee to explain the reason and cause for the damage or loss
happened and deductions made by employer from the employee wage should not exceed the value or
amount of damage or loss made by the employee.
 34

[Sec 10 (2)] All such deduction and all realizations thereof shall be recorded in a register to be kept by the
person responsible for the payment of wages under section 3 in such form as may be prescribed.

DEDUCTIONS FOR SERVICES RENDERED. [Sec 11]

House-accommodation amenity or service provided by the employer should be accepted by the employee,
than only the employer can make deduction from the wage of the employee. Deduction should not exceed an
amount equivalent to the value of the house-accommodation amenity or service supplied.

DEDUCTIONS FOR RECOVERY OF ADVANCES. [Sec 12]

In case of advance paid to the employees by the employer before employment began, such advance should
be recovered by the employer from the first payment of the wages /salary to the employee. But employer
should not recover the advance given for the travelling expense for the employee.

DEDUCTIONS FOR RECOVERY OF LOANS. [Sec 12A]

Deductions for recovery of loans granted for house-building or other purposes shall be subject to any rules
made by the State Government regulating the extent to which such loans may be granted and the rate of
interest payable thereon.

DEDUCTIONS FOR PAYMENTS TO CO-OPERATIVE SOCIETIES AND INSURANCE

SCHEMES. [Sec 13]

Deductions for payments to co-operative societies or deductions for payments to scheme of insurance
maintained by the Indian Post Office or with employee acceptance deductions made for payment of any
premium on his life insurance policy to the Life Insurance Corporation shall be subject to such conditions as
the State Government may impose.

MAINTENANCE OF REGISTERS AND RECORDS. [Sec 13A]

Every employer should maintain such registers and records giving such particulars of persons employed by
him, the work performed by them, the wages paid to them, the deductions made from their wages, the
receipts given by them and such other particulars and in such form as may be prescribed.

Every register and record required to be maintained and preserved for a period of three years after the date
of the last entry made therein. It means for every transaction made within employer and employee should
have 3 years of record.

Qs. Claim and adjudication under the payment of wages act 1936

Ans. To hear and decide all claims arising out of deductions from the wages, or delay in payment of the
wages, of persons employed or paid, including all matters, incidental to such claims, there will be a officer
mentioned below appointed by the appropriate government.

(a) any Commissioner for Workmen's Compensation; or

(b) any officer of the Central Government exercising functions as –(i) Regional Labour Commissioner; or(ii)
Assistant Labour Commissioner with at least two years' experience; or
 35

(c) any officer of the State Government not below the rank of Assistant Labour Commissioner with at least
two years' experience; or

(d) a presiding officer of any Labour Court or Industrial Tribunal, constituted under the Industrial Disputes
Act, 1947 (14 of 1947) or under any corresponding law relating to the investigation and settlement of
industrial disputes in force in the State; or

(e) any other officer with experience as a Judge of a Civil Court or a Judicial Magistrate, as the authority to
hear and decide for any specified area all claims arising out of deductions from the wages, or delay in
payment of the wages, of persons employed or paid in that area, including all matters incidental to such
claims:

Appropriate Government considers it necessary so to do, it may appoint more than one authority for any
specified area and may, by general or special order, provide for the distribution or allocation of work to be
performed by them under this Act.

[Sec 15(2) Application to the authority

If any employer does opposite to the provisions of this act, any unreasonable deduction has been made from
the wages of an employed person, or any payment of wages has been delayed, in such case any lawyer or
any Inspector under this Act or official of a registered trade union authorized to write an application to the
authority appointed by government for direction of payment of wages according to this act. Every such
application shall be presented within 12 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. Time of making an
application can be accepted if there is reasonable cause.

[Sec 15(3) Compensation

After receiving of the application the authority shall give an opportunity to hear the applicant and the
employer or other person responsible for the payment of wages and conducts the enquiry if necessary. It is
found that there is mistake with employer; authority shall order the employer for payment of the wage or
refund to the employee of the amount deducted unreasonably or the payment of the delayed wages, together
with the payment of such compensation as the authority may think fit. There will not be any compensation
payable by employer if there is a reasonable and genuine cause in delay in the payment of wages.

POWERS OF AUTHORITIES APPOINTED. [Section 18]

Taking evidence and of enforcing the attendance of witnesses and compelling the production of documents.

SINGLE APPLICATION IN RESPECT OF CLAIMS FROM UNPAID GROUP. [Section 16]

There is no necessity of many applications if there are many employees whose wages has not been paid.
Such all employees can make one application to the authority for payment of wages according to this act.

APPEAL. [Section 17]

I. In the following situation the parties who ever dissatisfied can appeal to the district court
If the application dismissed by above authorities
II. Employer imposed with compensation exceeding 300/- rupees by the authorities.
 36

III. If the amount exceeding 25/- rupees withheld by the employer to single unpaid employee. 50/- in
case of many unpaid employees

PENALTY FOR OFFENCES UNDER THE ACT. [Section 20] (2005 amendments) Reasons
for penalty

I. Delay in payment of wages

II. Un reasonable deductions
III. Excess deduction for absence of duty
IV. Excess deduction for damage or loss to employer
V. Excess deduction for house-accommodation amenity or service

Punishable with fine which shall not be less than 1000/- rupees but which may extend to 7500/- rupees.
If Wage period exceed one month.

I. Failure in payments of wages on a working day.

II. Wages not paid in form of current coin or currency notes or in both.
III. Failure to maintain record for collected fines from employee.
IV. Improper usage of fine collected from employees.
V. Failure of employee to display notice containing such abstracts of this Act and of the rules made.

Punishable with fine which may extend 3000/- rupees

I. Whoever obstructs an Inspector in the discharge of his duties under this Act
II. Whoever wilfully refuses to produce on the demand of an Inspector any register or other document.
III. Whoever refuses or wilfully neglects to afford an Inspector any reasonable facility for making any
entry, inspection, examination, supervision, or inquiry authorized by or under this Act

Unit-IV

Qs. Concept and scope of compensation to industrial workers.

Ans. The Workmen's Compensation Act, aims to provide workmen and/or their dependents some relief in
case of accidents arising out of and in the course of employment and causing either death or disablement of
workmen. It provides for payment by certain classes of employers to their workmen compensation for injury
by accident.

WHO IS A WORKMAN

Workman means any person (other than a person whose employment is of a casual nature and who is
employed otherwise than for the purposes of the employer's trade or business) who is-

I. a railway servant as defined in section 3 of the Indian Railways Act, 1890 not permanently employed
in any administrative, district or sub-divisional office of a railway and not employed in any such
capacity as is specified in Schedule II, or
 37

a) a master, seaman or other member of the crew of a ship,

b) a captain or member of the crew of an aircraft,
c) a person recruited as driver, helper, mechanic, cleaner or in other capacity in connection with a
motor vehicle.
d) A person recruited for work abroad by a company & who is employed outside India in any such
capacity as is specified in Schedule II & the ship, aircraft or motor vehicle or company as the
case may be, is registered in India.
II. a) any person who is employed in any such capacity as is specified in Schedule II, whether the
contract of employment was made before or after the passing of this Act and whether such contract is
expressed or implied, oral or in writing.
b) whether the workman is dead any reference to a workman shall include his dependants as defined
in this cat.

Who is not a workman: the following person is not a workman:

1) Any person in the capacity of a member of the Armed forces of the union of India.
2) A person whose employment is of a casual nature & who is employed otherwise than for the purpose
of the employers trade of business is not a workman.

Contract of employment: to be a workman under Sec. 2(1) (n) of the workman compensation Act, there
must be a contract of employment between the employer & the workman.

Case: Shri Chintaman Rao Vs State of M.P.: in this case the Supreme Court explained the concept of
contract of employment as follows- “The concept of employment involves three ingredients:

a) The employer.
b) The employee.
c) The contract of the employment.

The employer is one who employs & the employee is one who works for another for hire. The employment
is the contract of service between the employer & the employee where under the employee agrees to serve
the employer subject to his control and supervision.

EMPLOYEES ENTITLED TO COMPENSATION

Every employee (including those employed through a contractor but excluding casual employees), who is
engaged for the purposes of employer's business and who suffers an injury in any accident arising out of and
in the course of his employment, shall be entitled for compensation under the Act.

Employer's Liability For Compensation

The employer of any establishment covered under this Act, is required to compensate an employee:

Who has suffered an accident arising out of and in the course of his employment, resulting into (i) death, (ii)
permanent total disablement, (iii) permanent partial disablement, or (iv) temporary disablement whether
total or partial, or

Who has contracted an occupational disease.

HOWEVER THE EMPLOYER SHALL NOT BE LIABLE

 38

In respect of any injury which does not result in the total or partial disablement of the workmen for a period
exceeding three days;

In respect of any injury not resulting in death, caused by an accident which is directly attributable to-

I. the workmen having been at the time thereof under the influence or drugs, or
II. the willful disobedience of the workman to an order expressly given, or to a rule expressly framed,
for the purpose of securing the safety of workmen, or
III. the willful removal or disregard by the workmen of any safeguard or other device which he knew to
have been provided for the purpose of securing the safety of workmen

Qs. Concept of employer, workman, dependent, disablement

Ans: Employer: accordance to the definition under sec. 2 (e) the term employer includes the following
persons:

1) any body of persons whether incorporated or not.

2) Managing agent of the employer.
3) Legal representative of a deceased employer.
4) When the services of the workman are temporarily lent or let on hire to another person by the person
with whom the workman has entered into a contract of service or apprenticeship, mean such other
person while the workman is working for him.

Lending or Letting on Hire: when the services of a workman is let on hire to some other person & he is
under the order & control of such other person, the person to whom the services are being actually rendered
shall be in laws the employer of the workman & would be liable to pay compensation. Where the workmen
works upon another premises, the principal employer is liable only when such workman works under his
orders & controls & provided further that it is the ordinary trade & nor business of the principal employer to
do such work.

Liability of the Legal Representative- after the death of the employer, the liability of his legal
representative is limited to the extent of the estate of the deceased at his hand. He is not absolutely liable.

Contract of services and contract for service: to establish the relationship of the employer & employee a
contract of service is usually necessary whether the contract is express or implied. There is difference
between service & contract for service. It is former & not the latter which is essential for employer-
employee relationship.

A contract of service imports an obligation of the employee to obey the orders of the person served, but a
contract for service does not import an obligation to obey each & every order given by the employer. The
workman’s compensation acts deals only with those cases where there is a contract of service & not a
contract for service.

Managing agent- the definition of Managing Agent is given in Sec. 2(1) (f) is very vague & it consist of
two parts. The first part says that any person appointed or acting as representatives of another for the
purpose of carrying on such other person trade or business is managing agent. No written authority is
necessary to constitute the managing agency. The later part of the definition is restrictive & excludes an
individual manager subordinate to an employer. Thus two parts of the section do not clearly define
 39

managing agent. The later part is in the nature of a provision & therefore, it has to be interpreted strictl y.
There are two modes of constituting managing agent:

a) Once by appointment &

b) Other as representative of another.

Case: Municipal Board Almora Vs Jasod Singh

Facts: the state was executing the electrification scheme of a town on behalf of the municipal board &
during the construction an employee of the state engaged in such construction suffered permanent partial
injury.

Decision: it was held that the state was liable to pay compensation. In this case, it was immaterial whether
the state was working for itself or for municipal board. The board, therefore is not liable, under sec. 12 of the
act if it entrusts the construction of the govt. because it is not ordinary trade or business of municipal Board
to execute electrical projects.

Disablement:

Disablement has been divided into two categories:

1) Partial disablement
2) Total disablement.

This division is made in order to determine the quantum of compensation.

Let us discuss them:

1). Partial disablement- sec. 2(1) (g) defines partial disablement. Such disablement I of two kinds:

a) Temporary partial disablement.

b) Permanent partial disablement.

a) Temporary partial disablement- if the earning capacity of the workmen is reduced in relation to the
employment he had been at the time of the accident resulting in such disablement, it is temporary partial
disablement.

b) Permanent partial disablement- if the injury caused by an accident results in the reduction of the
earning capacity in respect of employment which the workman was capable of undertaking at the time of the
accident, it is called permanent partial disablement.

How to decide whether injury is permanent or temporary- to determine whether the injury is permanent
or temporary the courts have to see whether the injury has incapacitated the workman from every
employment which has was capable of undertaking at the time of accident or merely from the particular
employment in which he was at the time of the accident resulting disablement is partial in the latter case it is
temporary.

Case: General Manager G.R.P. Railway, Bombay Vs. Shankar.

Facts: in this case a railway servant working on A.I. lost one eye and two teeth’s as a result of collision
between two engines. He was declared by the medical officer as unfit for AI & B jobs but fit for C -2 job
 40

because of his defective vision. Class C-2 job was offered to him by the railway administration. He was
refused the offer & claimed compensation on the basis of total disablement.

Decision: it was held that “the workman was entitled to compensation not on the basis of total but partial
disablement.

2). Total disablement: total disablement is defined in sec. 2(1) (1) of the act. When a workman is
incapacitated of doing any work which he was capable of performing at the time of accident resulting in
such disablement, it is called total disablement. It means than an employee who is suffering from any injury
is not in a position to perform any work.

Case: National Insurance Co. Ltd. Vs Mohd. Saleem Khan & Others- in this case, it was held that if the
workman is incapacitated to do all the work which he was capable of performing at the time of accident it is
case of disablement.

If the incapacity is of such a nature that a workman cannot get employment for any work he can undertake,
it would be total permanent disability. In case of total disablement there must be incapacity to work resulting
in 100% loss of earning capacity.

Dependent Definition [Sec 2(1)]

"Dependent" means any of the following relatives of a deceased (dead) workman, namely :-

(i) a widow, a minor legitimate or adopted son, and unmarried legitimate or adopted daughter, or a
widowed mother; and

(ii) if wholly dependent on the earnings of the workman at the time of his death, a son or a daughter who
has attained the age of 18 years and who is infirm;

(iii) if wholly or in part dependent on the earnings of the workman at the time of his death,

a) a widower,
b) a parent other than a widowed mother,
c) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or illegitimate
or adopted if married and a minor or if widowed and a minor,
d) a minor brother or an unmarried sister or a widowed sister if a minor,
e) a widowed daughter-in-law,
f) a minor child of a pre-deceased son,
g) a minor child of a pre-deceased daughter where no parent of the child is alive, or
h) (h) a paternal grandparent if no parent of the workman is alive.

Qs. Employers liability to pay compensation, Amount of compensation, Notice and claim

Ans. Introduction

The Workmen Compensation Act, 1923 has made it the responsibility of the employer to provide
compensations to workers under them who fall as victims of accidents within the course of employment.
This is regardless of the degree of the accident that could have either led to disablement or even death of a
worker. The employer stands liable to that. This is the social and economic security granted to workmen.
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Workmen Commissioners have been given the mandate to establish the amount of compensation required
according to the degree of the accident whenever an application for a compensation is made.

Employer’s Liability For Compensation

S.3(1) holds the employer liable to pay a compensation to a workman when:

I. A personal injury is attained by the workman.

II. An accident is the cause of the injury.
III. The accident occurred out of and during the course of employment.
IV. The effects of the injury upon the workman is either death, permanent or temporary disablement or
total or partial disablement.
V. There is an employment relationship.

Personal Injury

The Act provides that the injuries bracketed as personal injury include physical, bodily and mental injury
and occupational disease.

Disability

Disability is the unfitness to work that results from personal injury during the course of employment. There
are four types of disabilities, namely:

1. Permanent disability: The ability to work is no longer present forever and can never be regained. 2.
Temporary disability: The ability to work is lost only for some time. It is subject to transition and can be
regained.

Total disability: Totally lost the capacity to work.

1. Partial disability: Capacity to work is partially lost.

Death is the greatest effect of an accident. In the event of death, the workman’s dependants have the right to
claim the compensation.

Accidents arising from and during the course of employment

This endeavours to explain the meaning of ‘arising out of employment’ which is likely to either be
misunderstood or understood partially. Besides meaning that the injury occurred as a result of the activities
of the employment, it also means that the injury does not necessarily have to be connected directly to the
results of the accident.

Cases where an employer is not liable for compensation

The following conditions provide cases where employers are not liable for the compensation of a workman:

I. When an injury does not lead to the total or partial disablement of the workman for a duration that
goes for more than 3 days.
II. When an injury which did not lead to death that was triggered by an accident is as a result of:
III. The influence of drugs or alcohol at the time of the accident. 4. Intentional defiance of a rule that was
made to ensure the safety of all workmen.
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IV. Doing away with a safety equipment intentionally that had been provided for the safety of the
workman.

Employers are able to unhook themselves from the responsibility of compensation if they are able to prove
the above mentioned cases in the event of a workman’s injury. However, regardless of the stated conditions,
an employer is liable to pay the compensation if the workman dies.

Occupational disease

Certain occupations expose workers to particular diseases. These diseases are inherent. For instance,
workers in the textile mills and cigarette factories are prone to contracting Tuberculosis.

1. 3(2) provides that an occupational disease is termed to be an accidental injury. This also holds the
employer responsible for the compensation of a workman who has contracted a disease that can be directly
attributed to a particular injury through an accident that resulted or occurred during employment.

The doctrine of Notional Extension of Employment

The theory of Notional Extension was executed by S.C. in:

1. Sourashtra Salt Mfg. Co. V/S Bai Bula Raja, AIR 1958 S.C. 881

The Supreme Court ruled that there are situations whereby an employer will have to account for the injury of
the workmen even if the workman was not within the premises when the accident occurred.

1. Works Manager and Wagon Shop E.I.R v/s Mahabir, AIR 1954 ALL. 32

The employer was liable in a case whereby one of the workmen was run over by an engine and was injured.
The workshop was located quite a distance from the railway station. The workers have to cross a railway
line before reaching the factory more preferably than using a different sub-way.

Case Laws

Moondra & Co. v/s Mst. Bhawani.

A truck owner employed a driver to drive a petrol tanker. However the driver discovered a leak in the tank
and sought for the permission of the owner to enter into the tank and look for the source of the leak. The
driver lit a matchstick which then caused a fire in the tank. Having received burn injuries, the driver died.
The ruling was that the dependents of the driver are entitled to a compensation since the accident occurred
out of employment.

Bhayabhai v/s Central Railway, AIR 1955, BOM. 105.

A workman in the railway had a job that entailed repairing clocks at different stations. While on his way to
repair a clock in one of the stations, the workman was stabbed and died eventually. The court ruled that the
death of the workman was as a result of an accident that happened in the line of employment.

Arya Muni v/s Union of India & Others, ILJ Pg 94 All. H.C.

A spark hit the eye of a worker in a factory that led to the losing of his eye. There was a notice written in
English that ordered all workers to put on goggles while working in the factory. The goggles were in stock
as it was later stated by the employer. He further said that the workman did not ask for them and that is why
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none of the goggles was supplied to him by his superior. However, the workman said that he did not
understand English and he had requested to be given goggles but none was supplied. The ruling concluded
that the workman had not disobeyed the factory rule intentionally. He is therefore liable to claim for
compensation.

Amount of compensation

Workers’ compensation settlement is estimated in the following manner based on the incidence which has
led to the compensation:

Before the calculation of settlement under workmen compensation insurance policy following points should
be noted:

a) Maximum monthly wage allowed for the calculation of compensation under the Act is Rs. 8000
b) Workers from the age of 18 years and above are eligible for the compensation
c) Relevant Factor is an age-based multiplier defined in Schedule IV of the Workmen Compensation
Act

1. Compensation in Case of Death:

a) 60% of the Monthly Wage x Relevant factor as per the age of the worker
b) Funeral expenses of Rs. 5000 is also payable
c) The minimum amount payable is Rs. 140,000

2. Compensation in case of Permanent Total Disability (PTD)

a) 50% of the Monthly Wage x Relevant factor as per the age of the worker
b) The minimum amount payable in this case is Rs. 120,000

3. Compensation in case of Permanent Partial Disability (PPD)

A percentage of the worker’s compensation will be payable under PPD. This percentage needs to be
estimated based on the “extent of the reduction in earning capacity” of the worker.

a) Compensation in case of Temporary Disability (Total or Partial)

b) 25% of the Monthly Wage of the Worker payable every half month
c) The compensation is payable if the worker is disabled for more than three consecutive days
d) The maximum tenure for the compensation is five years

Notice and claim

After the occurrence of the accident to the workman, giving notice to the employer is must.
After the occurrence of the accident to workman or the death of the workman, with in 2years notice should
be given to the employer. Without giving notice of accident or death of the workman, claim of compensation
is not considered by the commissioner. Every notice given to employer about the accident of the workman
should contain the following details

a) Name of the injured workman.

b) Address of the injured workman.

c) Date on which the accident happened. Notice should be registered post addressed.
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POWER TO REQUIRE FROM EMPLOYERS STATEMENTS REGARDING FATAL

ACCIDENTS.[Sec 10A]

Commissioner receives information from any source about the death of the workman or the occurrence of
the accident to the workman under employment, he is having power to send notice to employer through
registered post demanding the employer fro explanation about the cause and reasons for the accident or the
death of the workman.

Within 30 days from the receipt of the notice from commissioner by the employer has to submit all the
details of the accident or the death of the workman. Employer should mention whether he is liable to pay the
compensation or not liable to pay the compensation to the workman.

If employer accepts the liability to pay the compensation to the workman, employer should deposit the
compensation with the commissioner with in 3oday from the receipt of the notice.

If employer rejects the liability to the compensation to the workman, employer should mention all details
why he is not so liable.

REPORTS OF FATAL ACCIDENTS AND SERIOUS BODILY INJURIES. [Sec 10B]

After the occurrence of the accident results in death of the workman, or serious bodily injury of the
workman, employer should give notice to the authority appointed by the state government within 7 days.

Qs. Settlement of disputes under the workmen compensation Act, 1923

Ans. The claims for compensation broadly fall in three categories, namely (i) uncontested cases of
disablement; (ii) disputed cases of disablement and (iii) fatal cases. The procedures for settlement of the
three types of cases are as given below

(i) Uncontested Cases:

(a) After a workman has given notice of the accident, the employer is expected to arrange for medical
examination of the workman. It must be free of charge. The medical Examination will indicate the nature of
the disablement.

(b) If the disablement is of temporary nature the employer will pay compensation as half monthly payments,
direct to the workmen.

(c) If the disablement is of permanent nature compensation will be paid in lump sum by the employer to the
workman if he is a male over 18 years of age. In the case of woman and minors, the employer will deposit
the amount of compensation with the Commissioner, for disbursement.

(d) Where a workman has agreed to accept and has taken a smaller sum than the amount fixed by the Act his
right to bring proceed ings for the balance are protected.

(e) Any agreement with the workman for a lump sum payment must be registered with the Commissioner by
the employer.

(ii) Disputed Cases:

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(a) If the employer refuses to pay compensation or does not pay the full amount due, the workman has to
make an application to the Commissioner for Workman’s Compensation appointed by the State Government
or Union Territory. The application has to be made in Form ‘F* prescribed under the Workman’s
Compensation Rules. An illiterate person can have the application prepared under the direction of the
Commissioner.
(b) A claim for compensation must be preferred before the Commissioner within 2 years of the occurrence
of the accident or in the case of death within 2 years of the date of death. In the case of contracting of a
disease the accident is deemed to have occurred on the first of the day during which the workman was
continuously absent in consequence of the disablement caused by the disease.

(iii) Fatal Cases:

(a) The amount of compensation due has to be deposited by the employer with the Commissioner for
Workmen’s Compensation. The Act specifically provided that no payment made directly by the employer
shall be deemed to be a payment of compensation.

(b) The Commissioner shall distribute the lump sum amount of compensation to the dependants in such
proportion as he may decide.

(c) If the employer does not deposit the compensation the dependant or dependants have to make an
application to the Commissioner in Form ‘G’ prescribed under the Workmen’s Compensation Rules for the
issue of an order to deposit compensation.

Appointment of Commissioners [Section 20] :

The State Government may appoint any person to be a Commissioner for Workmen’s Compensation for the
specified areas. If more than one Commissioner has been appointed for any area, the State Government may,
by general or specific order regulate the business between them. Every Commissioner shall be deemed to be
a public servant within the meaning of the Indian Penal Code. Any Commissioner may choose one or more
persons possessing special knowledge to assist him in holding the inquiry.

Jurisdiction of Commissioners:

The parties are free to settle the matter amicably by the agreement. If the parties concerned could not settle
the matter by mutual agreement, they may refer the matter for decision to the Commissioner for workmen’s
compensation. According to, Section 19 of this Act, the Commissioner has jurisdiction over the following
matters:

1. Liability of any person to pay compensation,

2. Whether a person injured is or is not .a workman,

3. The nature and extent of disablement,

4. The amount or duration of compensation.

No Civil Court has jurisdiction to settle, decide or deal with any question which is under this Act, required
to be settled, decided or dealt by a commissioner.

Venue of Proceedings and transfer for Proceedings:

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As per Section 21, any matter under the Act to be done by or before a Commissioner, the same shall be done
for the area in which

a) The accident took place which resulted in the injury or

b) The workman or in case of this death, the dependent claiming the compensation ordinarily resides or
c) The employer has his registered office.

Where any proceeding pending before the Commissioner is sought to be transferred before any other
Commissioner, such transfer cannot be ordered by the Commissioner himself unless prior sanction of the
State Government is obtained. If the second Commissioner works for another State, then prior approval of
the Government of the State is required to be obtained for transfer.

Powers and Duties of the Commissioner: The powers and duties of the commissioner are:

a) To deposit and distribute compensation [Section 8].

b) Powers to require from employers statement regarding fatal accident (Section 10A).
c) Power of settlement of disputes [Section 19(1)].
d) Power of transfer [Section 21 (2)].
e) Power to require further deposit in case of fatal accident [Section 22A].
f) Power of Civil Court [Section 23].
g) Power to order costs [Section 26].
h) Power to submit cases [Section 27].
i) Power to withhold certain payments pending decisions of an appeal [Section 30A].
j) Power of recovery [Section 31].
k) Power and duty to record evidence.

The Commissioner shall have all the powers of a Civil Court for the following purposes:

a) Taking evidence on oath,

b) Enforcing the attendance of witnesses, and
c) Compelling the production of documents and material objects.

Appearance of Parties [Section 24]:

Any appearance, application or act which is required to be made by any person before a Commissioner, may
be made or done on behalf of such person by a legal practitioner or by an official of the insurance company
or a registered trade union or by an Inspector appointed under the Factories Act 1948 or under Mines Act or
any other officer authorized by the State Government.

Method of recording evidence:

Section 25 provides that the Commissioner shall make a brief memorandum of the substance of the evidence
of every witness. The memorandum should be written and signed by the Commissioner with his own hand
and shall form past of the record.