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LABOUR LAW IN INDIA: STRUCTURE AND WORKING Debi S. Saini*

I. INTRODUCTION

Especially after the Second World War, labour law has enjoyed a significant place in developed as well as developing economies. It is expected to work as an important instrument of welfare state. It has helped countries to lay down foundations of societies as well as some of the basic postulates of organizational governance. The subject has occupied a prominent place in general economic and social discourse as well. Labour law––especially industrial relations law––can also be seen as an instrument of maintaining some kind of balance between incomes of people as also a medium of securing dignity of worklife to working people. Most nations view labour rights as fundamental for ensuring fairness in the carrying out of the labour process. In actuality, labour rights reflect some kind of compromise between notions of productivity, efficiency and freedom of contract on the one hand and social justice and labour standards on the other. After Independence from the colonial rule in 1947, the Indian state consciously chose the path of passing labour legislations on different spheres of work. A number of such laws were enacted with the active role of trade union leadership. This branch of law has come to be accepted as distinct from rest of the Indian legal system. For example, most labour laws in the country envisage quasi-judicial bodies for expeditious settlement of labour claims under different labour laws. India adopted a system of Five-Year plans for planning its economic development. Most five-year plans have made particular mention of promoting growth with social justice; and labour laws were given a prominent place in this regard. The Indian judiciary has played a salutary role in progressive interpretation of these laws. This chapter attempts to analyze the structure of Indian labour law in the overall context of the notion of social and economic justice as enshrined in the Constitution of India. It also focuses on the working of the labour law framework in terms of its stated goals as also the changing needs of a globalizing economy. It deals with questions, among others: the constitutional context of labour law; the structure and functioning of different branches of labour law i.e. law of working conditions, labour relations law, law of wages and monetary benefits, law of social security; and a review of the working of these laws. While discussing the working of these laws in the last part, the chapter focuses, among others, on the implementation of labour laws and the role being played in this regard by the state and its agencies. The concluding part discusses how the realization of labour law objectives can be made more realistic from the view point of the constitutional promise of socio-economic justice, as also the changing context of the employer and employees’ power position. II. CONSTITUTIONAL FRAMEWORK AND LABOUR LAW The Constitution of India – the super-ordinate law of the land – guides all legislative, executive and judicial actions in the country. The Seventh Schedule of the constitution envisages distribution of * Professor & Chairperson––Human Resource Management Area, Management Development Institute, Mehrauli Road, Gurgaon-122001, Haryana.

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legislative powers between central and state legislatures on different matters. The Schedule contains three lists – Central List (List I), State List (List II) and Concurrent List (List III). For matters contained in List I only Parliament, the Central Legislature, can enact a law; for matters specified in List II only the State Legislature concerned can enact a law; and for matters contained in List III, both Central and State Legislatures can enact a law. In case a matter falls in List III, and a case of repugnancy arises between the laws passed by the Central Legislature and the State Legislature, then the Central law will prevail over State law. But in case such legislation is submitted to the President for his assent, and which is duly accorded, then the State law will prevail over the central law. Most labour matters find place in List III (Concurrent List). Among others, these includes: trade unions; industrial and labour disputes; social security and social insurance; employment and unemployment; welfare of labour including conditions of work; provident funds; employers’ liability; workmen’s compensation; invalidity and old age pensions; and maternity benefits. However, regulation of labour and safety in mines and oilfields is the exclusive domain of the Central Legislature as these matters are specified in list I. Likewise, relief for the disabled and unemployable is under the exclusive jurisdiction of the State Legislatures as these matters are specified in list II. Since most labour matters fall in the Concurrent List, Parliament has enacted labour laws in almost all these matters. However, states have made amendments in the central Acts as per their local requirements and have obtained the President’s assent to the changes made. Perhaps the most important parts of the Indian Constitution are provisions of Chapters III and IV. The former is titled, the Fundamental Rights and the latter, the Directive Principles of State Policy. The Fundamental Rights are modeled after the American Bill of Rights. Their violation can be challenged though the writ jurisdiction of the Supreme Court and the High Courts. These rights limit the power of the legislature to enact laws. Among others, the Fundamental Rights pertain to right to equality before law, along with rights to particular freedoms. These particular freedoms include speech; association; movement throughout the territory of India; residence; profession, trade and business; protection of life and personal liberty and religion. The Constitution confers a fundamental Right on children, as per which it prevents employment of children below 14 years of age in hazardous employments. It also prevents traffic in human beings and employment of forced labour.1 The Preamble of the Constitution is also an important source of power to the legislature for enacting laws for the protection of labour. It promises to secure to the people “justice, social, economic and political; liberty of thought, expression, belief, faith and worship; equality of status and of opportunity ….” The Directives Principles of State Policy as envisaged in Part IV of the Constitution are not enforceable in any court of law. But they have been held by the Supreme Court of India to be ‘nevertheless fundamental in the governance of the country’. And, the judiciary in general has time and again expressed its advice to the Government/legislature to apply them in making laws. It has often taken the support of this chapter in holding the constitutional validity of many labour laws. A reading of Part IV of the constitution and its Preamble helps to know the basic philosophy of the Constitution. The Directive Principles contained in Part IV represent certain key values which are to be rooted in the “reconstruction of Indian society and Government along lines of a modern welfare state” (Galanter, 1989). Some of these directives relate to promotion of welfare of people2 including minimizing inequalities; 3 directing the State’s policy towards securing fulfillment of certain minimum needs;4 right to work, education, and to public assistance in certain cases;5 provision of just

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and humane conditions of work and maternity relief;6 living wage 7 , participation of workers in management of industries; 8 free and compulsory education for children; 9 and to improve public health.10 Interestingly, much of the development of labour jurisprudence in the country owes to the above-mentioned provisions contained in Part IV. This part in a way legitimizes the labour’s demands raised through demand charters submitted to managements. While delivering many judgements, the judiciary has often reminded the executive and the legislature to enact legislations that provide for basic needs of the people and to enforce them as per the spirit in which they have been created. The directive principles are considered so important that some jurists have described them as the “soul of the Constitution” (Dhavan, 1989: xxii). Premised in the framework of the directive principles, labour legislation in the country provides a large number of central (federal) labour statutes. These laws can be classified into mainly four categories: conditions of work; labour relations; wages and monetary benefits; and social security. Since labour is a subject in the concurrent list of the Constitution, the 28 states and 6 union territories comprising the Indian federation have in some cases enacted their own labour legislation. This is over and above the central enactments on the same matters to suit indigenous situations and local power realities. So, the central and state labour enactments in the country add up to more than 200. In fact, India is often being viewed as a society where labour is overprotected through law (Debroy, 1996). However cases of labour law violation are too many; so much so that often when one sees the working conditions of the unorganized labourers, one would wonder whether any labour law exists at all for them (Saini, 1998, 1999; Patel and Desai, 1995). In all, over 60 major central labour legislations have been enacted by the central legislature. Similarly, about over 150 labour legislations have been enacted by the state legislatures; each of these legislations is specific to the needs of the state concerned. Some of the central labour legislations in India that are considered to be important are as follows: Apprentices Act, 1961 Beedi & Cigar Workers (Conditions of Employment) Act, 1966 Bonded Labour System (Abolition) Act, 1976 Building and Other Construction Workers (Regulation of Employment Service) Act, 1996 Child Labour (Prohibition & Regulation) Act, 1986 Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981 Contract Labour (Regulation & Abolition) Act, 1970 Dangerous Machines (Regulation) Act, 1983 Dock Workers (Regulation of Employment) Act, 1948 Dock Workers (Safety, Health and Welfare) Act, 1986 Emigration Act, 1983 Employees Provident Fund & Miscellaneous Provisions Act, 1952 Employees' State Insurance Act, 1948 Employment exchanges (Compulsory Notification of vacancies) Act, 1959 Employers' Liability Act, 1938 Equal Remuneration Act, 1976 Factories Act, 1948

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Industrial Disputes Act, 1947 Industrial Employment (Standing Orders) Act, 1946 Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979 Labour Laws (Exemption from Furnishing Returns & Maintaining Registers by Certain Establishments) Act, 1988 Maternity Benefit Act, 1961 Mines Act, 1952 Minimum Wages Act, 1948 Motor Transport Workers Act, 1961 National Commission for Safai Karamcharis Act, 1993 Payment of Bonus Act, 1965 Payment of Gratuity Act, 1972 Payment of Wages Act, 1936 Plantations Labour Act, 1951 Public Liability Insurance Act, 1991 Sales Promotion Employees (Conditions of Service) Act, 1976 Trade Union Act, 1926 Weekly Holidays Act, 1948 Workmen's Compensation Act, 1923 Legislation is only one of the sources of labour law. Almost each labour legislations is supplemented by a commensurate secondary legislation, which consists of Regulations and Rules made by the appropriate Government—Central as well as state––to give effect to the legislations or to administer them. Case law in the form of decisions of the Supreme Court and various High Courts are also a very important source of labour law. Thousands of such decisions have been delivered; many of them have been overruled to bring in fresh perspectives of the legal position concerned. Further, terms and conditions of a labour contract could be derived from a collective bargaining contract or an individual contract between employer and employee. International standards laid down by bodies like International Labour Organization (ILO) too have been referred by especially the higher judiciary to support its decisions; thus they are considered as important sources of labour law in appropriate situations. III. THE LAW OF WORKING CONDITIONS There are several classes of work organization where people are employed. These include: factories, establishments, shops, mines, plantations, etc. Agriculture too is a major activity, which employs the largest number of workers in India; but most parts of agricultural operations are not regulated through law. The issue of conditions of employment needs state attention in case of contract workers; they are normally made to work in difficult work environment. Inter-state migrant workers and child workers too are highly susceptible to exploitation. Indian state has enacted legislation for regulating conditions of work of such categories of workers. Most of the provisions of laws regulating conditions of work relate to health, safety and welfare of workers. The judiciary has often expanded the scope of these provisions by giving them liberal interpretation. In doing so, it has repeatedly referred to the Directive Principles of State Policy stated in the previous section. We may discuss these legislations as under:

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The Factories Act, 1948 The Factories Act, 1948 regulates the work conditions of most workers employed in the organized manufacturing sector in India. The first legislation on factories in India dates back to 1881. Ten years later it was replaced by the Indian Factories Act, 1891. Soon after independence the Factories Act, 1948 was enacted to further humanize the conditions of work in factories. The word ‘factory’ has been defined as premises or precincts where a manufacturing process is carried on by 10 or more workers with the aid of power or by 20 or more workers without the aid of power. The word manufacturing process has been given a very wide definition; and includes even processes such as repairing of movable things for the purpose of sale or disposal; and pumping of oil, water, etc. The word worker too has a wide definition and includes all persons involved in the manufacturing process; the scope of this definition was further widened in 1976 to include workers employed through or by contractor. This legislation mainly deals with the following: provisions related to health, welfare, and safety; working hours for adults and children; and protection to women and children against certain hazards. The Act also provides for registration and licensing of factories; obtaining the approval of factory sites; obligations of occupier of a factory; and provision of annual leave with wages to workers. The Act provides a maximum of nine hours of work per day with a rest interval of at least half an hour after five hours of work. Also provided is a daily spread over of not more that ten and a half hours. Overtime work in a factory has to be paid double the rate. The Act provides for a weekly holiday. Children below 14 years of age are not permitted to be employed in any factory. The health provisions deal with, among others, issues like cleanliness, disposal of wastes, ventilation, dust and fumes, artificial humidification, over crowding, drinking water, latrines and urinals and spittoons. Provision has also been made for welfare facilities like washing, storing and drying of clothes, places of sitting, rest shelters and lunch rooms, first aid appliances, canteens and crèches. Safety provisions include, among others, detailed specification of space to be provided for every person working; installations of and working on machines; hoists, lifts, lifting machines, chains, ropes, etc.; pits sumps, opening in floors; carrying of weights; precautions in case of fire. In 1984, the Bhopal Gas disaster took place at a factory of the Union Carbide Ltd. in Bhopal, Madhya Pradesh. This led to killing of nearly 8000 people and disabling several thousand. This tragedy showed holes in the safety provisions of the Factories Act, 1948. This led to an amendment in the Act in 1987. Consequently, chapter IV-A was added to the Act which has been titled: Provisions Relating to Hazardous Processes. This chapter provided new sections from 41-A to 41-H. Two new schedules were added to the Act in the form of the First Schedule and the Second Schedule. The First Schedule provides a list of 29 industries that involve hazardous processes. The Second Schedule provides the permissible levels of certain chemical substances in work environment. Provisions of the new chapter IV-A relate to, among others, constitution of site appraisal committees, compulsory disclosure of certain information by the occupier, permissible limits of exposure of chemical and toxic substances, workers’ participation in safety management, and rights of workers to be warned against imminent danger. The amended Act also gives a right to every worker (section 111-A) to obtain from the occupier information related to workers’ health and safety at work and get trained in health and safety matters at the expense of the employer.

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Certain authorities like inspectors, welfare officers, certifying surgeons have been provided, who are expected to ensure the implementation of the Act. Penalties for violation of the Act have been substantially hiked by the 1987 amendment to the Act. For example, the general penalty for offences can be imprisonment up to two years and a fine of Rs. one hundred thousand. The Shops and Establishments legislation India does not have any central legislation for shops and establishments. It has been left to be enacted by the state legislature. Each state has enacted its own legislation, and has framed its own rules under the Act. Most state legislations have similar provisions, with minor differences here and there. This area of work pertains to mostly workers in the unorganized sector, as most shops and establishments are small. However, larger establishments are also covered. Those units which do not fall in the definition of the Factories Act, 1948 due to less number of people employed are covered under the Shops & Establishments law. Mostly the state governments can exempt, either permanently or for a specified period, any establishments from all or any provisions of its shops and establishment legislation. It is applicable to all persons employed in an establishment with or without wages, except the members of the employer's family. The Act provides for compulsory registration of shop/establishment concerned. Provisions related to hours of work per day and week as well as the guidelines for spread-over, rest interval, opening and closing hours, closed days, national and religious holidays, overtime work, etc. are usually there in each such law. The Delhi Shops and Establishments Act 1955 has extended the provisions of workmen’s Compensation Act 1923 to all workers covered by that Act. Most Acts are administered by inspectors. The Mines Act, 1952

The Mines Act, 1952 contains provisions for measures relating to the health, safety and welfare of workers employed in mines. According to the Act, the term 'mine' means any excavation where any operation for the purpose of searching for or obtaining minerals has been or is being carried on and includes all borings, bore holes, oil wells and accessory crude conditioning plants, shafts, opencast workings, conveyors or aerial ropeways, planes, machinery works, railways, tramways, slidings, workshops, power stations, etc. or any premises connected with mining operations and near or in the mining area. Among others, the Act provides for supply of drinking water, conservancy, and medical appliances. There is provision also for giving notice to appropriate authorities in case of accidents and certain diseases. Over time rate has been provided to be twice the daily wage both for workers working above and below the ground work. Women workers are not allowed to work below the ground. A person below the age of 18 years is not allowed to work in a mine. But apprentices and other trainees not below the age of 16 years may be allowed to work under proper supervision by the manager. Provision has also been made for annual leave with wages. Such leaves are to be calculated at the rate of one day for every fifteen days’ work.

The Act is administered by inspectors and certifying surgeons. Since it is fully under the central jurisdiction, the central Ministry of Labour and Employment through the Directorate General of Mines Safety (DGMS) has been entrusted the responsibility for administering this law. DGMS conducts inspections and inquiries, and issues competency tests for the purpose of appointment to various posts in the mines. It also organizes seminars/conferences on various aspects of safety of workers.

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The Plantations Labour Act, 1951 The Plantation Labour Act, 1951 regulates the conditions of work for plantations labour. It applies to tea, coffee, rubber, and cinchona plantations. The state governments may apply it to any other plantation. All plantations are required to be registered with a registering officer. It mainly provides for health and welfare measures. According to the Act, the term plantation means “any plantation to which this Act, whether wholly or in part, applies and includes offices, hospitals, dispensaries, schools, and any other premises used for any purpose connected with such plantation…”. Among others, the Act provides for drinking water, conservancy, medical facilities, canteen, crèches, recreational facilities, educational facilities, and housing for workers and their families. Also, there is provision for supply of umbrellas, blankets and rain coats. Employers are obliged to provide and maintain necessary housing accommodation for every worker (including his family) residing in plantation; and for every worker and family residing outside the plantation, who has put in six months of continuous service in the plantation and has expressed a desire to reside in the plantation. Children under 12 years of age are prohibited for employment in any plantation. Children of workers between the age of 6 and 12 have to be provided free educational facilities. The Act regulates working hours, provides for a weekly holiday, and leave with wages. It also provides for appointment of suitable inspecting, medical or other staff for the purpose of securing compliance with various provisions of the Act. The Act is administered by inspectors and certifying surgeons.

The Motor Transport Workers Act, 1961

The Motor Transport Workers Act, 1961 seeks to regulate the conditions of work of motor transport workers. The Act applies to every motor transport undertaking employing five or more motor transport workers. The State Government has been authorized to extend the Act to any motor transport undertaking employing less than five motor transport workers. It can do so after giving notification in the Official Gazette. According to the Act, a “motor transport undertaking' has been defined as “an undertaking engaged in carrying passengers or goods or both by road for hire or reward and includes a private carrier.” Every employer of a motor transport undertaking to which this Act applies is obliged to register such undertaking under this Act.

The welfare and health provisions to be made available to all workers include: canteens where 100 or more motor transport workers are employed, restrooms where workers are required to halt at night, uniforms, and medical and first-aid facilities. No adult motor transport worker can be required or allowed to work for more than eight hours in any day and forty-eight hours in any week. The hours of work can not spread over more than 12 hours in any day. Provision has been made for weekly day of rest and compensatory day of rest. Children are prohibited to work as motor transport worker. Also, no adolescent shall be employed or required to work as a motor transport worker in any motor transport undertaking for more than six hours a day including rest interval of half-an-hour; and between the hours of 10 P.M. and 6 A.M. Overtime has to be paid at the rate of twice the ordinary rate of wages. Annual leave with wages are payable on similar pattern as in case of factory workers. The Act is administered by inspectors and certifying surgeons.

The Contract Labour (Regulation & Abolition) Act, 1970

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Contract workers are subjected to intense exploitation by contractors as well as the principal employers. These workers are generally engaged in agricultural operations, plantation, construction industry, ports & docks, oil fields, factories, railways, shipping, airlines, road transport, etc. The Contract Labour (Regulation & Abolition) Act, 1970 (CLA) was enacted to regulate employment of labour employed by contractors so as to provide some sense of security to workers working with them. It also regulates the conditions of work of such workers. The Act provides for registration of all employers covered by the Act, and licensing of contractors and sub-contractors. It requires payment of wages by the contractor in the presence of the representative of the principle employer, who has to certify that correct payment has been made in his presence. There is provision for constitution of Central and State Advisory Boards for advising the appropriate government for administering the CLA.

Chapter V of the CLA provides for certain welfare and health measures for contract labour. In case 100 or more contract labourers are employed a canteen has to be provided. Where contract labour is supposed to halt at night, rest rooms have to be provided. First-aid facilities have to be readily made available. Other welfare facilities to be provided include: wholesome drinking water; sufficient number of latrines and urinals; and washing facilities.

The Act is implemented both by the Centre and the State Governments. The Central Government has jurisdiction over establishments like railways, banks, mines, etc. and the State Governments have jurisdiction over units located in that state.

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

The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 (ISMWA) was enacted to protect the rights of migrant workers, and thus safeguard their interest. It regulates their employment and provides for minimum conditions of work for this category of workers. It applies to every establishment and the contractor that employs five or more inter-state migrant workmen. Among others, it provides for compulsory registration of principal employers and licensing of contractors. The Act fixes responsibility on the contractor and the principal employer for payment of wages. It is provided that all liabilities of migrant labourers are deemed to be extinguished after the completion of the period of employment.11

The Act has provision for issue of Pass-Book to every inter-state migrant workman with full details, payment of displacement allowance, payment of journey allowance including payment of wage during the period of journey, suitable residential accommodation, medical facilities and protective clothing, payment of wages, equal pay for equal work irrespective of sex, etc. The Act fixes the responsibility of wage payment on the contractor as well as the principal employer. The Act is administered by inspectors.

Child Labour (Abolition and Regulation) Act 1985 No enlightened society can allow its children to be subjected to work at a tender age. World over child labour is a serious issue for human right activists. There is considerable pressure on states for its complete abolition. Indian situation on employment of child labour is quite bad. Even as the best

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friends of children were waiting for compulsory primary education to become a reality and abolish child labour altogether, the Indian Parliament passed the Child Labour (Prohibition and Regulation) Act 1985. This Act banned the employment of children below the age of 14 years in hazardous occupations; which among others, include glass and glassware, fireworks and matchmaking, and carpet weaving. The Act regulates the work of children where they are permitted to work. It fixes the number of hours for child work. It is provided that the total spread over of child’s work shall not exceed 6 hours. There is a provision of weekly holiday. There are provisions for health and safety of children employed or permitted to work in any establishment. It lists 24 areas in which governments are expected to frame rules for the protection of child labour. These, among others, include cleanliness, disposal of wastes, lighting, drinking water, safety issues, maintenance of buildings, etc. The Act provides stringent punishment for violation of the Act. IV. INDUSTRIAL RELATIONS LAW The individual contract of employment is known to favour the employer, who is a stronger side in the employment relationship. The common law envisages some strong managerial prerogatives for employers that they exercise over workers. This gives rise to the need to allow labour to unite, form collectives, and thus struggle to seek workplace justice on its own. Unionization and collective bargaining lie at the root of most labour relations issues. Interestingly, Article 23 of the Universal Declaration of Human Rights adopted by the United Nations Organization as a common standard of achievement for all people in all nations recognizes the legitimacy of union rights. It provides, among others, for everyone “the right to form and to join trade unions, for the protection of his interests”. The constitutional guarantee provided by Article 19 (1) (c) of the Indian Constitution, envisages provision of association/union rights to citizens in general. The IR law provides a framework to operationalize the spirit behind this fundamental guarantee. The disputant parties also need to be made available a system of effective industrial dispute resolution. In India, the industrial dispute resolution law can be found in the Industrial Disputes Act, 1947 (IDA). The Industrial Employment (Standing Orders) Act 1946 provides that every employer should make available to its employees just and fair terms of employment. Perhaps, the most crucial aspect of labour laws in any country is the law of industrial relations. As per this thinking, the state should so evolve a legal framework of IR that it is able to play the role of a neutral referee. Also, it should enable the weaker party to safeguard itself against the use of unfair labour practices (ULPs) by the other side. If the state is able to ensure this, then the parties can develop some kind of bilateral bargaining framework to carve out rules of workplace working. The principal IR legislations in India are: the Trade Unions Act 1926 (TUA); the Industrial Employment (Standing Orders) Act 1946; and the Industrial Disputes Act 1947 (IDA). These laws have been enacted by the central legislature. The framework of these laws can be discussed as follows: The Trade Unions Act, 1926 The Trade Unions Act, 1926 (TUA) is one of the oldest labour legislations in India. The early enactment of the TUA and the constitutional provision of guaranteeing freedom of association have helped trade unions to legitimize their existence and operations. It envisages the procedure for

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registration of unions. A union can be organized by workers employed in industry; however, the definition of worker is wide enough to include even managers. A trade union can be registered by any seven or more members. But this is subject to a minimum of 10 per cent of workers employed in an industry or 100 whichever is less. When registered, a trade union gains the status of a legal entity distinct from the members of the union. The TUA specifies their rights and obligations, including conferring certain immunities on a registered trade union against certain actions which otherwise could violate civil and criminal law. The Act provides the minimum rates of subscription for union membership in rural, unorganized and organized industries, which are Rs. 1, 3, and 12 per annum respectively. It also contains rules relating to constitution of “general fund” and “political fund” of a trade union, and the objectives in furtherance of which they could be spent. Provision has been made for filing of annual returns by a trade union to the registrar of trade unions. Outsiders are permitted to become special members of a union; the number of such persons is different in organized and unorganized sector. The 2001 amendment to the TUA has reduced the maximum number of outsiders in a trade union from ½ to 1/3 or 5 persons whichever is less. This is expected to promote insider leadership. The TUA confers on workers the immunity against civil and criminal liability for taking industrial action for certain acts done in furtherance of an industrial dispute. It was so provided to acknowledge the necessity of collective bargaining for securing dignified and lasting peace. The Industrial Disputes Act 1947 (IDA) is the main law for processing of industrial disputes in India. Technically, the structure of the IDA is such that an industrial dispute can be espoused by a substantial number of persons. The Supreme Court has held about 20 per cent or more of the workforce can constitute substantial number of persons in this regard. Thus, collective bargaining and collective industrial dispute espousal in India are possible without forming a trade union. In actuality, however, it rarely so happens. The TUA provides only for registration and not recognition of trade unions. However, provision for union recognition was made in the TUA by way of amendment in 1947. But this has not been enforced till date. Today, recognition can be gained by a union only through show of its strength. The Industrial Employment (Standing Orders) Act, 1946 The Industrial Employment (Standing Orders) Act, 1946 (IESOA) envisages framing of standing orders by the employers to whom this legislation applies. It applies to industrial establishments employing 100 or more workers. But its applicability can be extended by the appropriate government to establishments employing 50 or more workers. The Act is administered by the appropriate government, the definition of which is more or less the same as in case of the IDA. The IESOA provides for certification of standing orders by a certifying officer, who is a government officer. Standing orders are the conditions of employment related to matters given in the schedule to the Act that have been so certified. When certified, each standing order is deemed to form part of a worker’s contract of employment. Contract of employment is known to be a relationship between unequals (Kahn-Freund, 1977: 1) and therefore the weaker side needs to be protected. The IESOA recognizes this. The Act requires employers in industrial establishments to define with sufficient precision the conditions of employment and make them known to the workers employed by them.

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The IESOA provides that the draft standing orders are submitted by the employer to the certifying officer. The certifying officer is supposed to invite workers’ representatives to discuss the draft and take into view their point of view before certifying the draft. After certification, they are entered into the register of standing orders. The employer is supposed to post them on the notice board. Some of the issues that are mentioned in the schedule, among others, are classification of workmen, discipline, shift working, attendance and late coming, conditions for applying for leaves, termination of employment, and means of redressal of grievances. The Act also provides for suspension allowance to be paid to a worker while s/he remains suspended for disciplinary action. While certifying the standing orders, the certifying officer is obliged to satisfy himself that they are “just and fair.” There is a provision of appeal against the decision of the certifying officer. The Act provides penalty for violating the Act. The Industrial Disputes Act, 1947 The Industrial Dispute Act, 1947 (IDA) is the principal industrial relations law in India, which deals with machinery for industrial disputes resolution. It provides a conciliation-arbitration-adjudication model of collective as well as individual disputes resolution. It envisages seven forums for processing of industrial disputes. There is provision for constitution of works committee in every industry employing 100 or more workers. This committee consists of representatives of employer as well as workers, and is expected to promote amity and good relations especially in the shop floor working. The conciliation machinery consists of conciliation officer (CO) and board of conciliation (BOC). COs are government officers, who are trained in promoting negotiation among disputant parties. There is a provision of constitution of a court of inquiry by the appropriate government for determining matters connected with an industrial dispute. The adjudication of industrial disputes can be done by labour courts, industrial tribunals, or a national tribunal, depending upon the nature of the dispute. Adjudication is not automatic but depends on reference of the dispute by the appropriate government to an adjudicatory body. Reference is discretionary on the part of the government. There are two important schedules to the Act: the second schedule and the third schedule. The former enumerates rights matters, which fall in the jurisdiction of a labour court, and the latter contains interest matters, which normally are in the jurisdiction of an industrial tribunal. The central as well as state governments have been designated as appropriate governments under this law in different sets of employments. In case a dispute is of national importance or involves workers in more than one state, such a dispute can be referred by the central government to a national tribunal. An adjudicatory body delivers an award, which has to be published in government’s official gazette before it becomes enforceable. Even though entering into conciliation in a dispute is discretionary on the part of the conciliation officer (CO), in actuality it is usually done in all disputes. If a dispute is settled before the CO, he has to register a settlement12. In case the CO fails to resolve the dispute, he has to send a failure report to the appropriate government. On receipt of the failure report, or on its own motion, the appropriate government can refer the dispute to a labour court or an industrial tribunal, which are adjudicatory bodies under this Act. This process is technically called “reference”. The awards of adjudicatory bodies are sent to the appropriate government which is obliged to publish them in the official gazette within a period of 30 days from the receipt of the award. The award is enforceable after the expiry of another 30 days from the date of is publication.

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The IDA also provides for arbitration of industrial disputes. An arbitrator is appointed by the disputant parties. He is supposed to give award after holding the arbitration proceedings. Ironically, however, arbitration is almost dead in India as parties – especially workers – often fear that they can be influenced by the employers. The IDA also regulates strikes and lock outs in public utilities and non-public utilities. The government interventions in strikes and lock outs are believed to be indeed quite excessive. Under section 10 (3) of the IDA, the appropriate government can prohibit the strike that was in existence in case it decides to refer the dispute for adjudication. It is believed that the law of strikes and lockouts in India is so structured that a legal strike/lockout is almost impossible (Ramaswamy, 1984).

This Act prohibits lawyers to appear before COs. And, there are restrictions on their appearance before labour courts and tribunals as well. However, with the passage of time, the presence of lawyers in adjudication proceedings has become a reality in most cases. Penal provisions have been made for violation of awards and settlements. Working of the IR Laws

The three IR laws have played a key role in creating working class consciousness about their collective and individual labour rights. Progressive interpretation of these laws by the judiciary heightened the clash between workers’ aspiration and employers’ willingness to grant benefits. During the 1960s and 1970s, the personnel managers in India were seen as children of the IDA; for their main work involved maintenance of peaceful industrial relations—a sphere where labour law played the key role. At the same time, being a labour surplus economy, the country’s labour market realities helped the employers to make cheap labour available to them. The situation was such that it led them to violate minimum employment standards by colluding with the labour bureaucracy, and in many cases with brief-case union leaders (Saini, 1995b). Thus, the IR system has so worked that employers have learnt to subvert the legal requirements through various means. A large number of labour relations consultants provide legal and extra legal advice to facilitate this process. The IDA model has played the key role in shaping the IR environment in India. This model could not be replaced or even diluted despite a 55-year debate on its fate. The influence of the adjudication system envisaged in the IDA has been so strong that arbitration as a method of industrial disputes resolution is almost dead, except to some extent in the Mumbai-Thane-Pune industrial belt, where it is still resorted to. Especially in the private sector most employers make widespread use of the legal institutions to dilute the efficacy of unions than indulging in genuine collective bargaining. Variegated unfair labour practices (ULPs) are seen as being committed by both sides but more by the employers as they are a stronger party. Research has revealed that the compulsory adjudication system for industrial dispute resolution has kept the trade unions week. The adjudication system has reflected: undue delays in its working (baxi, 1994; Upadhyay, 1995); lack of accessibility from especially the viewpoint of workers as they perceive its working as unjust; and formalism in its working including juridification13 of IR (Saini, 1999; 1995). The powers of the COs under the IDA appear small as they cannot impose their own views on the disputant parties. But the working of the IDA shows that these powers have been

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abundantly misused including at the instance of the political executives under whose overall direction they work (Saini, 1995). Due to widespread presence of the IDA in the dispute process, a large number of trade union leaders are running consultancy services for workers by representing them before these bodies; in actuality, they have become brief-case union leaders (Saini 1995b), and hardly involve themselves in any labour organization process. So far as unionization in the country is concerned, it saw rapid growth in the organized sector in the country (both private and public) during 1950s and 1960s. But unionization started declining after the famous Bombay Textile Strike in 1982, which lasted more than a year. Thus unions have become defensive in their fight against perceived unfairness. This has brought a sea change in the concept of collective bargaining, which is now less and less on industry basis and more on unit basis (Business India, 1998). The recent signals from the judiciary in the labour field have further depressed the union power. Lately, some of the recent labour judgments in India reflect the belief that the judiciary is more sympathetic with the employers and realizes their susceptibilities in the new environment. The number of strikes resorted to is much less than the lockouts, (Business India, 1998; Mishra, 2001). So, the objective of the industrial relations laws are far from realized as per the projections made. V. THE LAW OF WAGES AND MONETARY BENEFITS

Wages and monetary benefits are perhaps the most important issues of conflict between employer and employees. Mostly, IR issues centre around wages and bonuses. There are four important laws that fall in this branch of labour law. They are: the Minimum Wages Act 1948; the Payment of Wages Act, 1936 (POWA); the Payment of Bonus Act, 1965 (POBA); and the Equal Remuneration Act, 1976 (ERA). It is interesting to note that the definition of the term ‘wage’ is not uniform under all these laws. Also, coverage of workers under these laws is also different. POWA has a wage limit of Rs. 6,500 for its application. POBA covers employees getting upto Rs. 3,500 per month. It has a further limit of Rs. 2,500 for the purpose of calculation of bonus amount. Since its coverage limit is so low, most workers remain out of the Act. The ERA has universal application, and covers all categories of employees irrespective of the functions they perform and the wages they get. The MWA provides only the minimum wage payable; the actual wages are fixed as per collective bargaining agreement in the unionized sector or by wage boards in some sectors like steel or unilaterally by the employer. We may discuss the broad features of these laws as follows: The Minimum Wages Act, 1948 The Minimum Wages Act, 1948 (MWA) seeks to provide a comprehensive machinery for fixation and revision of wages in certain industries. These are especially those industries which employ sweated labour. The central as well state governments are appropriate governments for fixing minimum wage rates in their respective jurisdictions. The Act is applicable to persons employed in those employments that are provided in the schedule to this Act, which consists of two parts. Part I lists a number of industries including woolen carpet making, rice mill, flour mil, construction and maintenance of roads, municipality, public motor transport, docks and ports, and most of the mines. Different state governments have made amendments to the schedule to list additional set of industries. Part II includes employment in most of agricultural activities. Taking work from workers against payment of less than the minimum wages has been held by the Supreme Court to be violative of

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article 23 of the constitution and thus forced labour.14 It has been held by the Supreme Court of India that “no industry has a right to exist unless it is able to pay its workmen at least a base minimum wage.”15 Wages under the Act can be fixed in the form of a time rate or a piece rate (with a guaranteed time rate) and an overtime rate. The law provides that different rates of wages can be fixed for different employments in the Schedule. And, different rates can be fixed for adults, adolescents, children and apprentices. They can even be different for different localities. It has been held by the Supreme Court that no employer has the right to carry on his industry if he pays wages that are below those fixed under the Act.16 MWA gives a blank cheque to the wage fixation authority as it does not provide any guidelines on the basis of which minimum wages are to be fixed. However, the judiciary has tried to provide some broad guidelines to them. A wage rate can be fixed per hour or per day or per month or any longer wage period. The minimum wage rates can be fixed by any of the two methods: 1) the committee method: under this method the appropriate government appoints a committee that studies the issue of desired minimum wage and also takes advice of the Advisory Boards; or 2) gazette notification method: under this method the appropriate government gives a gazette notification of the proposed minimum wage rates that it wishes to fix and later on invites objections to them, if any, from the employers and the employees, before finalizing the minimum wage rates. The Act is administered by inspectors. It also envisages appointment of a quasi-judicial authority to hear and decide claims related to payment of less than the minimum wage and making delayed payment of minimum wage. Penal provisions have been made for violating this Act. Penalties and procedures for violation of the provisions of the Act have been specified. The rule-making powers have been vested in the appropriate government. The Payment of Wages Act, 1936 In the initial stage of industrialization, some of the common malpractices adopted by employers were delayed payment of wages and undue deduction from wages. On the recommendation of the Royal Commission on Labour 1931, the Payment of Wages Act, 1936 (POWA) was passed so as to overcome such practices. The main objective of this law is to ensure that wages are paid to the workers on time, in current coins or currency and without impermissible deductions. The Act applies to factories, railways and other establishments. The responsibility of payment of wages is of the employer. In addition, the person who is responsible to the employer for supervision and control has also been made responsible. The Act requires that a wage period can not be more than one month. Wages must normally be paid before the expiry of the 7th day from the last day in the wage period. It contains a list of permissible deductions that the employer can make from the employees’ wages. Some of the permissible deductions that can be made from wages are: fines; absence from duty; damage or loss of goods entrusted to employed person; accommodation and service; recovery of advance; recovery of loans; income tax, etc. Employers are obliged to maintain registers and records. The Act is administered by central as well state governments in their respective jurisdictions through inspectors. Employers have been obliged to display a notice containing abstracts of the Act and the rules made there under.

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Like the minimum Wages Act, 1948 this legislation also envisages the constitution of a quasi-judicial authority to hear and decide claims related to non-payment of wages. An employee can approach the prescribed authority within a period of 6 months for claiming unpaid or delayed wages. There is provision for appeal against the decision of the authority. Penalty has been prescribed for violating the provisions of the Act. The Payment of Bonus Act, 1965 The Payment of Bonus Act 1965 (POBA) extends to the whole of India, and applies to every factory as defined under the Factories Act, 1948; and every other establishment wherein 20 or more persons are employed on any day during the accounting year. The Act seeks: 1) to impose a statutory liability upon every establishment covered under this legislation to pay bonus to its employees; 2) to define the principle of payment of bonus according to the formula prescribed under this Act; 3) to provide the payment of minimum and maximum bonus and link the payment of bonus with the scheme of set off and set on; and 4) to provide a machinery for enforcement of the payment of bonus liability under the Act. The Act does not define the term bonus, nor does the term bonus exist in any other Act. The bonus formula provides that first of all the gross profit for the bonus year has to be determined as per the relevant entries given in the second schedule of the Act. From the gross profit so derived certain deductions have to be made. These deductions have been envisaged under sections 5, 6 & 7 of the Act. These include the notional normal depreciation, development rebate, investment allowance and development allowance, the direct tax, and such further sums as are specified in the 3rd schedule. The bonus has to be paid from the resulting allocable surplus. Every employee is entitled to bonus provided he has worked for not less than 30 days in a year. And, an employee shall be disqualified to receive bonus if he is dismissed from service for: fraud; or riotous or violent behaviour while on the premises of the establishment; or theft, misappropriation or sabotage of any property of the establishment. In case in an accounting year the allocable surplus falls short of the minimum bonus, the minimum bonus will have to be paid according to section 10. And if the allocable surplus permits, bonus should be paid up to the maximum bonus prescribed under section 11. In any case the principle of set on and set off comes into play. The purpose of set on and set off principle is to envisage payment of a minimum bonus to the workman even in the cases of losses. POBA also provides for machinery for enforcement of the Act. Qualifications and disqualifications of employees entitled to receive bonus has also been prescribed. POBA envisages payment of minimum annual bonus even in situations of loss. So bonus under the Act is a deferred wage in certain situations, for Indian realities are not considered similar to those of the developed countries where there is no such system of payment of bonus. But in the first five years of the setting up of the establishment, bonus is payable only if it has allocable surplus. The Act provides that the employer and employees can agree to devise their own scheme of bonus that is linked to production or productivity in lieu of bonus based on profits as envisaged under this Act.

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The Act is administered by the appropriate government through inspectors. Imprisonment as well as fines is provided for violation of the Act. In case there is a dispute about payment of bonus, it is considered as an industrial dispute under the Industrial Disputes Act, 1947. The Equal Remuneration Act, 1976 It was during 1975––the international year of the women––that India promulgated the equal remuneration ordinance to give effect to Article 39 of the Constitution, which envisages equal remuneration for men and women. Later on, the ordinance was replaced by the Equal Remuneration Act 1976 (ERA). The Act applies to all establishments, employments––public and private––including domestic service. The Act puts a duty on every employer to pay equal remuneration to men and women workers for doing same work or work of similar nature. In order to warrant payment same remuneration, the work done by a female and male employee need not be identical. Broadly, the skill, efforts, and responsibilities required are to be the same when performed under similar conditions. The ERA also prohibits discrimination between men and women while making recruitment for the same work or work of a similar nature. However, this provision will be inapplicable to any priority or reservation in favour of Scheduled Castes or Scheduled Tribes, ex-servicemen, retrenched employees or any other class of persons. The Act provides for constitution of advisory committees for giving advice in matters of providing increasing employment opportunities for women. The appropriate government may appoint authorities for hearing and deciding complaints regarding contravention of the Act and claims arising out of non-payment of equal wages. The Act is administered by the appropriate government through inspectors. Penalties in the form of fines and imprisonment have been provided for various violations of the Act. VI. THE LAW OF SOCIAL SECURITY The Directive Principles of State Policy as enshrined in the Constitution of India recognize the right to social protection for all citizens. Following these directives, the Indian state has provided for, or reinforced the existing provisions of, some measures of social protection through legislation and policy. Collective agreements in the formal sector between employers and unions also reflect provision of social security measures by the employers. At the global level, social security consists of two forms of protections: social insurance and social assistance. The Indian system of social security in the organized sector can be divided into five broad types, namely: creation of employer’s unilateral liability; social insurance; provident fund; social assistance; and welfare funds. The most usual type of Indian social security with widest coverage envisages creation of employer’s unilateral liability. Four laws can be said to fall under this heading: Workmen’s Compensation Act 1923 (WCA); Maternity Benefit Act 1961 (MBA); Payment of Gratuity Act 1972 (PGA); and Industrial Disputes Act 1947 (IDA). The key law falling in the category of social insurance laws is the Employees’ State Insurance Act 1948 (ESIA). Countries in South Asia including India have a unique system of social protection called the provident funds. They are envisaged, among others, by laws such as the Employees Provident Funds (and Miscellaneous Provisions) Act, 1952 (EPFA). The state Governments also provide for some amount of social protection, especially to senior citizens and disabled people. This falls in the category of social

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assistance. In some spheres of employment—like bidi making, film production, etc.––welfare funds have been created by the Central Government for protecting the employees concerned. The Workmen’s Compensation Act 1923 India had no social security system before the British Indian Government enacted the Workmen’s Compensation Act 1923 (WCA). This Act symbolizes the beginning of social security in India. It was passed in 1923 on the model of a similar Act in Britain. It provides for payment of compensation unilaterally by the employer to his workmen in certain cases. Compensation under this Act is also payable to the dependants in case of death of the employee. Certain categories of occupational diseases too are covered. Injuries by accident also include contracting of some diseases in certain circumstances. The WCA applies to any person who is employed, otherwise than in a clerical capacity, in railways, factories, mines, plantations, construction, electricity generation, cinemas, circus, and other hazardous employments as specified in Schedule II of the Act. The Act excludes those who are covered by the Employees’ State Insurance Act 1948 (ESIA). Interestingly, the employer’s liability is not based on any negligence on the part of the employer. However, cases covered must have a rational nexus with the employment. The accident resulting in injuries or death must normally take place during the working hours and at the employer’s premises, except where the premises are notionally extended. Compensation is payable for death or disablement (temporary or permanent) resulting from accidents “arising out of and in the course of employment.” Thus, the WCA overrides the common law rule of voluntary assumption of risk under which the employer was mostly not responsible to pay damages to his employees as they were presumed to be working subject to the risk involved in the work. “The facts and circumstances of each case will have to be examined very carefully in order to determine whether the accident arose out of and in the course of employment of a workman, keeping in view at all times the theory of notional extension [of employer’s premises]”17

All persons covered by the definition of workman are entitled to compensation in the event of specified contingencies. But there is wage ceiling of Rs. 4000 per month for the purpose of calculation of compensation. Compensation depends on wage and the relevant factor as specified in Schedule IV of the Act. The relevant factor depends on the age of the worker concerned.

In case of death the compensation payable is an amount equal to 50 per cent of the monthly wages of the deceased workman multiplied by the relevant factor; or an amount of eighty thousand rupees, whichever is more. Where the worker suffers permanent total disablement, he is paid an amount equal to sixty per cent of the monthly wages of the injured workman multiplied by the relevant factor, or an amount of ninety thousand rupees, whichever is more. In case the permanent disability is not total, then the workman is given that percentage of the compensation payable for total disablement as is the reduction in the earning capacity. In case of temporary disablement, the compensation is paid fortnightly at the rate of around 25 per cent wages per fortnight.

The WCA is administered by the state government; it has a unique method of administration. The administrative and adjudicatory powers are vested in the same person called the commissioner. The functions of the commissioner include: settlement of disputed claims; deciding cases of injuries involving death; and revision of periodical payments. In exercise of his adjudicatory powers, the

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commissioner distributes the amount of compensation to the dependents as defined under the Act in his discretion. In case of persons under legal disability, the commissioner may invest the money the way he likes. The commissioner also advises the workers about the available course of action to a workman in different situations. The Act does not allow contracting out. In case the employer does not pay compensation as per the Act, the workman concerned can make an application to the commissioner within a period of two years from the date of the accident. The commissioner can recover the amount due to a worker as arrears of land revenue.

The Employees’ State Insurance Act 1948 The key social insurance law in India is the Employees’ State Insurance Act 1948 (ESIA), which envisages an employees’ state insurance scheme (ESIS) administered by the Employees’ State Insurance Corporation (ESIC) created by this Act. The ESIA applies in the first instance to factories employing 20 or more persons. The provisions of the Act have been gradually extended to smaller power-using factories employing 10 to 19 persons, shops, hotels and restaurants, and cinemas. It applies to workers getting salary up to Rs. 7,500 per month. It also covers administrative staff. The ESIS is contributory in character whereby employers, employees and to a little extent the State contribute to a fund, out of which various types of benefits are provided to the beneficiaries. The amount of benefit is usually proportionate to the average daily wage of the employee concerned. The present rates of contribution to be made by the employer and the employee are 4.75 per cent and 1.75 per cent of the employee’s monthly wages respectively. Employees whose average daily wages are below Rs. 40 per day are exempted from making any contribution. The responsibility of the employer is to pay contribution in respect of his own employees as well as of contract labour. He can deduct contract labour’s contribution from his bills. In case of default: Employer has to pay 15 per cent interest per annum. In addition, the ESIC may impose damages, not exceeding the arrears due. These contributions are deposited in the ESI Fund, which is administered by the Employees State Insurance Corporation (ESIC), which is an autonomous institution. The State Governments contribute only a portion of the expenditure on the provision of medical care, whose share presently is one-eighth (12.5 per cent) of the medical expenditure of the ESIC. The Standing Committee of the ESIC looks after its working. The Act envisages sickness and extended sickness benefit, maternity benefit, disablement benefit, dependents’ benefit, reimbursement of funeral expenses, and medical benefit. Sickness benefit is payable in case of certified sickness at the standard daily benefit rate (SBR), which is roughly 50 per cent of wages. This is specified in the Standard Benefit Table. The maternity benefit is payable for 12 weeks at twice the SBR. The extended sickness benefit is payable for 309 days in two consecutive benefit periods. The rate of extended sickness benefit is about 25 per cent more than the ordinary SBR. The disablement benefit is payable at SBR plus 40 per cent of it per month. If injury suffered is not given in the schedule, the disablement is determined by the Medical Board. There is appeal against the Board’s decision which can be made to the Medical Appeal Tribunal The medical benefit consists of restricted medical care, expanded medical care, and full medical care. The State Governments are obliged to provide to the insured persons (i.e. the employees covered under the Act) and their families in the State reasonable medical, surgical and obstetric treatment through dispensaries, hospital and diagnostic care centers run by it. However, it may with the

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approval of the ESIC arrange for their medical treatment at clinics of private medical practitioners. The State Government also enters into an agreement with the ESIC in regard to the nature and scale of the medical treatment that should be provided by it to the insured persons and their families. Cash benefits payable under the Act are not liable to attachment in relation to payment of any debt by the employee. Any dispute under the provisions of the Act can be decided by the Employees’ Insurance Court and not by any civil court. The Act provides for penalties and imprisonment for various offences.

The Employees’ Provident Fund (and Miscellaneous Provisions) Act 1952 Along with the ESIA, the Employees’ Provident Fund and Miscellaneous Provisions Act 1952 (EPF Act) too is a key social security legislation in India. It applies to any factory relating to any industry specified in Schedule I to the Act in which 20 or more persons are employed, and also to other establishments employing 20 or more persons which may be specified by the central government by a notification in this regard. As on 31 March 2005, this includes 180 industries; and covers 41.11 million workers under the Employees’ Provident Fund Scheme (EPFS) both in exempted and unexampled sectors. An all, 408,831 establishments are covered under this Act. The Act covers employees getting salaries up to Rs. 6,500 per month. For workers employed in coal mines, the relevant law is the Coal Mines Provident Fund and Miscellaneous Provisions Act 1948. The EPF Act provides for creation of three important schemes. These are: the Provident Fund Scheme; the Deposit-linked Insurance Scheme; and the Employee Pension Scheme. The Employees’ Provident Fund Scheme (EPFS) is a kind of savings and pension scheme in which the employees as well as their employers pay regular contribution into a fund. Such contributions are credited to the accounts of the subscribers concerned. The fund is invested as per the norms laid down in this regard. Annual interest is credited to the account of the employee on the total amount of provident fund (PF) deposit in his/her account. When an employee superannuates or dies or seeks retirement, the balance standing to the account is refunded. The Employees’ Pension Scheme 1995 (EPS) provides for pension on superannuation, retirement, permanent total disablement and death. The Employees’ Deposit-Linked Insurance Scheme 1976 (EDLIS) provides an insurance cover to the persons covered without payment of any premium for this purpose. The insurance cover has been linked to the average balance in the provident fund account of the deceased during 12 months preceding his or her death subject to a ceiling. The Employees’ Provident Fund Scheme (EPFS) is financed through contributions from employees with matching contributions from employers. The normal rate of contribution to the provident fund by the employees and the employers prescribed under the EPF Act earlier was 10 per cent of wages for unnotified industries and establishments. This rate has been hiked to 12 per cent of wages for employees working in notified18 industries and establishments employing 50 or more persons. The EPS derives its financial resource from and out of the contributions payable by the employer in each month under the EPF Act and the rules framed under it. Contribution representing 8.33 per cent of the employees’ pay has to be remitted by the employer to the pension fund The Central

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Government also contributes to the Pension Fund at the rate of 1.6 per cent of the employee’s pay. Neither the employer nor the employee is required to make any additional contribution. The Act is administered by the Employees Provident Fund Organization, which works under the overall supervision and direction of the Central Board of Trustees and Committees. The Central Provident Fund Commissioner (CPFC) is the Chief Executive Officer of the Organisation. The Board of Trustees (BOT) is a body corporate having perpetual succession and a common seal. Unlike the ESIC, however, the Board of Trustees of the EPFO enjoys much less autonomy; the control of the Central Government in its working is much stronger. CBOT is empowered to appoint such officers and employees as it may consider necessary for the efficient administration of the schemes under the Act. These officers have been conferred quasi-judicial powers. Thus, they conduct inquiry as they deem necessary to determine the liability of the employer and make order on the basis of the inquiry so conducted. These authorities under the Act have a statutory duty to see that the provisions of the Act are complied with. Maternity Benefit Act, 1961 The Maternity Benefit Act, 1961 (MBA) seeks to regulate the employment of women workers in certain establishments for certain period before and after child birth. This law provides that all women employees shall be paid maternity benefit in case of child birth, miscarriage or sickness arising out of pregnancy. A worker when governed by the ESI Act cannot claim maternity relief under the Maternity Benefit Act. This Act also envisages a unilateral responsibility of the employer and the scheme contains no insurance element in it. It applies to factories, mines, circus, plantations, and shops and establishments employing 10 or more persons. However, in case a women employee is covered by the ESI Act, then this Act does not apply to her. The application of this legislation can be extended to other establishments by a State government after the prior approval of the central government. The central government is responsible for administering this Act in mines and circuses, and the state governments are responsible for its administration in factories, plantations and other establishments. The central Act has been adopted in nearly all the states in the country except Manipur, Nagaland19 and Sikkim. The maximum periods for which the maternity benefit is available to any woman worker is 12 weeks of which not less than six weeks shall precede the date of her expected delivery. In case of miscarriage, a woman is entitled to leave with wages at the rate of maternity benefit for a period of six weeks immediately following the day of her miscarriage. In case of illness arising out of pregnancy, delivery, premature birth of a child or miscarriage, the woman is entitled to leave with wages at the rate of maternity benefit for a maximum period of one month. A woman whose maternity benefit is improperly withheld may make a complaint to the inspector. Inspectors have been conferred powers, including quasi-judicial. If the inspector after making the inquiry is satisfied that the benefit was improperly withheld, he may direct the payment of maternity benefit in accordance with his orders. An appeal over the decision of the inspector lies to the prescribed authority in this regard. Any amount payable under the Act is recoverable by the collector in the same manner as an arrear of land revenue.

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The Payment of Gratuity Act 1972 Payment of gratuity is another important social security benefit in India. Gratuity is a lump sum payment which is payable under the Payment of Gratuity Act 1972 (PGA). Gratuity is believed to be an award which the employer pays to the employee on retirement out of gratitude for a long and meritorious service. It replaces at least partly the loss of income at the time of superannuation, retirement or resignation, and death and disablement due to accident or disease. The PGA applies to factories, mines, oilfields, plantations, ports, railway companies, shops and other establishments where 10 or more persons are employed. Gratuity is a benefit payable by the employer for termination of service of an employee. But it is also payable in case of superannuation, retirement, resignation, death or disablement due to accident or disease. It is payable to every employee, other than apprentice, employed in an establishment to which the provisions of the Act apply. It is payable at the rate of 15 days’ wages for every completed year of service or part thereof, in excess of seven months. There is no wage ceiling for coverage under the Act. Ordinarily, for being entitled to gratuity, an employee must have completed with the employer concerned at least five years of continuous service. The maximum amount of gratuity payable under the Act was raised from Rs. 100000 to Rs. 350000 with effect from 24 September, 1997. Gratuity can be forfeited wholly or in part to the extent of loss if the service of an employee is terminated for an act or willful omission or negligence causing damage or loss to employer’s property. Also, it can be forfeited if services of an employee are terminated for riotous or disorderly conduct or other act of violence or for moral turpitude in the course of employment. There is provision for compulsory insurance of his liability on the part of the employer unless he constitutes an approved gratuity fund. Quasi-judicial powers are vested in the “controlling authority” which decides matters related to any disputes arising from non-payment. The Act is administered by central as well state governments in their respective jurisdictions.

Labour Welfare Funds

In many work areas India has found it difficult to reach contribution-oriented social security for various reasons. So a unique method has been coined for protecting workers employed in certain specified employments. The concept of “Labour Welfare Fund” was evolved to this end. Five welfare funds were set up under the Ministry of Labour and Employment. These funds are aimed to provide housing, medical care, water supply, educational and recreational facilities to workers employed in beedi industry, certain mines and cine workers. Such funds are financed out of the proceeds of cess levied under respective Cess/Fund Acts. The various legislation have been enacted to set up these funds. These include: the Mica Mines Labour Welfare Fund Act, 1946; the Limestone and Dolomite Mines Labour Welfare Fund Act, 1972; the Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines Labour Welfare Fund Act, 1976; the Beedi Workers Welfare Fund Act, 1976; and the Cine Workers Welfare Fund Act, 1981 (For details, see Saini, 2001). These Acts provide that the fund may be applied by the Central Government to meet the expenditure incurred in connection with measures and facilities which are necessary to provide the welfare of the workers concerned.

Chapter V-A and V-B of Industrial Disputes Act 1947

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As such, India has no system of providing social security in the contingencies of unemployment. This is so despite the ‘right to work’ having been provided for in the Constitution as a Directive Principle of State Policy. Perhaps, the unemployment and the underemployment situation in the country is so acute that no government has gone into the feasibility of introducing a system of unemployment insurance. The Industrial Disputes Act 1947 (IDA) provides some semblance of unemployment security in a limited sense under its provisions relating to lay off, retrenchment, closure, and transfer of industrial establishments. The idea underlying the retrenchment and closure compensation is to help the workers to maintain themselves until they are able to find alternative jobs. Review of Social Security law It is noticeable that a large part of social security legislation in India is in the form of creation of unilateral liability of the employer. However, it is important to note that this form is also believed to be the most primitive and is sometimes described as the “decaying form” of social security; for it does not contain any insurance or assistance element in it. It merely involves a statutory liability of the employer in the event of certain contingencies so as to provide certain protection to the employee. It is for this very reason that such laws are prone to being violated by the employers. The employer has the option to insure its liability under some of these laws or create a fund for meeting its liability. But despite this, the tendency to avoid his/its liability is quite high. Therefore, a progressive social security system should replace such schemes with professionally organized social insurance schemes. Further, there is a strong need for extending the scope of the ESI Act. The ESIC needs structural reforms, as many unions do not want to be covered by it, and seek exemption from its coverage so as to negotiate for devising alternative schemes (Saini, 2001). At the same time, better enforcement mechanism is needed for the Maternity Benefit At 1961. The incidence of violation of this Act is very high. It should also be noted that protections envisaged in most of these schemes apply to the organized sector. In effect, the informal sector employees enjoy very little or no social protection through law. However, some sections of these employees in the informal sector are covered under certain laws. For example, the Workmen’s Compensation Act, 1923 and the Minimum Wages Act apply to many types of establishments in the unorganized sector. VII. CONCLUDING REMARKS Post-independence India sought to implement the concept of welfare state as envisaged in the Preamble of the Constitution of India and its chapter on the Directive Principles of State Policy. A number of labour laws were enacted in all its four broad categories. The Indian judiciary gave liberal interpretation to many provisions of these laws; often rooting the liberal interpretation in the Directive Principles of State Policy in doing so. A plethora of public interest litigation (PIL) was initiated in this sphere by public-spirited citizens in the last 25 years or so. This also energized many non-governmental organizations (NGOs) in the informal sector to play a more active role in labour law implementation. But cases of labour law violation were still too many (Patel and Desai, 1995; Advani and Saini, 1995). Many strong nexuses worked to neutralize the legislative intention by forging alliances to serve personal interests. For example, almost negligible number of reinstatement

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decisions of labour courts and industrial tribunals were implemented (Saini, 1999, 1994). This included even some of the Supreme Court and high Court decisions. The Indian labour law model, as also those of the advanced Europe, was built on the basic postulates of the welfare state. The new economic policy of India in 1991 promised reform, but they were never carried out due to lack of strong central (federal) governments and fear of public reaction. Changes in labour policy were more at the executive and implementation level than by amending the labour laws. Globalization warrants laws promoting greater flexibility in the formal labour market. A study by Budhwar (2001: 82) found that a large percentage of Indian managers (61.5 per cent) believe that Indian national labour laws influence their HRM practices the most. This study also found that their actions and prerogatives are constricted by these laws. Employer would want more freedom in operating in the labour market especially in view of the chaotic competition caused by the new dispensation. Therefore, amendment in labour law framework is long overdue. In fact, Indian labour market can be said to be characterized by a sharp dichotomy. It is understandable that labour law is creating inflexibility for the organized sector which is difficult to sustain the era of globalization. At the same time, a large number of establishments in the unorganized sector remain outside any regulation, while the organized sector has been regulated fairly stringently. The organized sector is believed to have provided too much of job-security for too long, resulting into inertia and inefficiency, while the unorganized sector has provided too little to too many. In their present form, many aspects of Indian labour laws do not suit the globalizing environment. These laws apply only to the organized sector. Consequently, these laws have restricted labour mobility, have led to capital-intensive methods in the organized sector and adversely affected the sector's long-run demand for labour. Since labour is a subject in the Concurrent List in the Constitution of India, state-level labour regulations are also an important determinant of industrial performance. States like Kerala which have enacted more pro-worker regulations have lost out on industrial production in general. Interestingly, countries like China learnt to adjust to the environment much faster. With a history of extreme employment security, China has drastically reformed its labour relations and created a new labour market, in which workers are highly mobile. An enlightened society would like to enact labour laws that are relevant to the societal values adopted in a particular country. But it is important that they change when new values are adopted. But this has not happened in India. Especially the labour laws that fall in the category of “industrial relations laws” need to be re-looked. The most talked-about provision in the Indian industrial relations law is Chapter V-B of the IDA. This chapter requires all employers employing 100 or more workers in factories, mines and plantations to seek permission from the Government in matters of lay-off, retrenchment, and closure. It has been seen that this has led to unnecessary bureaucratization and harassment of employers. The Indian bureaucracy has been arbitrary in granting permission under this chapter; often extraneous considerations have dominated in these decisions. Many times, organizations which have been perennially sick have been refused permission under this chapter. Presently, a thinking is surfacing that the number of workers for application of this chapter should be raised to 300, though at time it was sought to amend the chapter to make it applicable to industries emphasizing 1000 or more workmen. Another area of controversy is section 9-A of the IDA. This section requires that a notice of 21 days should be given by the employer to workmen for effecting change in any of their service

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conditions. This section has also resulted in workers’ resistance to flexibility needs of the employers in this regard. When such a notice is given employee unions raise an industrial dispute, which creates resistance for implementing the desired change.

More and more employers want to implement variable service conditions for different sets of workers. Competency mapping is being used for creating a greater degree of differentiation amongst workers. So find the Industrial Employment (Standing Orders) Act, 1946 (IESOA) to be problematic. The labour laws in India are known to be very complex. Some of the problems in this regard relate to applicability; definition of worker/employee, appropriate government, wages; different administrative mechanisms; and different quasi-judicial bodies. This creates confusion and dependency on lawyers. For example, the term “wages” has been differently defined under different Acts. Some laws cover employees receiving monthly wages as low as Rupees 3500 per month (e.g. the Payment of Bonus Act, 1965), others cover even clerical and administrative employees (e.g. the Employee State Insurance Act 1948; the Employees’ Provident Fund Act, 1952; and the Gratuity Act 1972). For some there is no wage limit for coverage (e.g. highly paid pilots are workmen under the IDA). A plethora of case law has been delivered by the judiciary to clarify these complexities in variegated situations. This has made the grasping of labour laws a very complex affair (for a detailed discussion, see Debroy, 1996). In fact, labour law complexity has converted union leaders into full time pleaders, who have set up labour law practice as a vocation (Saini, 1995; 1994).

There is a case for harmonization and unification of labour laws. This is an important area of reform, for tremendous ambiguities have been caused by complexities of the labour legislation. The National Labour Law Association (NLLA) has drafted a proposal to enact a National Labour Code 1994 (Draft), which has been appreciated as laudable. But if one looks at its contents, it is surely not likely to be acceptable to employers as they will fear that their competitive position will be adversely affected by extremely high rates of contribution that have been suggested in it. The social security laws in the country reflect lack of a comprehensive vision about the future of Indian society (Saini, 2001: 260). The system caters to only less than 7 per cent of the workforce. The definition of social security in developing countries including India is bound to be different as a large chunk of population does not have access to basic minimum needs. There is a need to integrate social security policy with anti-poverty policies (Guhan, 1994) and Indian laws have to reflect this thinking. Especially, there is a need to create low-cost group insurance scheme to meet the needs of self-employed people in rural as well as urban areas (Saini, 2001). In a country like India, the executive branch of the state has many constraints in performing its constitutional duties. There is a need for greater degree of public interest litigation for enforcing minimum labour standards and developing some basic postulates of sound labour relations. It can be a very useful instrument in the Indian context. But this needs to involve people who are genuinely interested in poverty alleviation. Globalization can not take away the need for labour law. The state needs to focus on better implementation and ensure that these laws do not become a mockery. REFERENCES:

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Advani, R. and Saini, D.S. (1995) “The Constitutional Vision of Development, Unorganized Labour, and Accessibility to Justice System,” In Saini (ed.) (1995c).

Baxi, U. (1994) “industrial Justice Dispensation: The dynamics of delay,” in Saini, Debi S. (ed.) (1994).

Budhwar, P. (2001), “Human Resource Management in India,” in Budhwar, P. and Yaw A. Debrah (Eds.) Human Resource Management in Developing Countries. London: Routledge.

Business India (1998) “Clutching at Straws,” Business India, March 9–22.

Debroy, B. (1996) “The Agenda for Labour Market Reform in India”, Paper presented at the International Conference on Law and Economics, Project LARGE (A project of the UNDP and National Labour Law School for the Ministry of Finance, Government of India), New Delhi, 11-13 January.

Dhavan, R. (1989): 'Introduction' in Galanter (ed) (1989). Galanter, M. (ed.) (1989), Law and Society in Modern India, Delhi: Oxford University Press. Guhan, S. (1994), “ Social Options for Developing Countries,” International Labour Review, Vol;.

33, No. 1. Government of India (2002) Report of the National Commission on Labour (Second). Ministry

Labour, New Delhi.

Johri, C. K. (1998) “INDIA,” in International Encyclopaedia of Laws: Labour Law and Industrial Relations (General Editor: R. Blanpain), The Hague: Kluwer Law International.

Kahn-freund, Sir Otto, Labour and the Law, 2nd edition, London: Stevens & Sons.

Mishra, L. (2001) Economy & Labour. New Delhi: Manak Publications Pvt. Ltd.

National Labour Law Association (NLLA), Indian Labour Code, National Labour Law Association, New Delhi, 1994.

Ramaswamy, E.A. (1984) Power and Justice, Delhi: Oxford University Press.

Saini, D. S. (2003) “Alleviating Poverty through Skills Development: Lessons for Law-making in Developing Countries”. Paper presented at Workshop on Law and Poverty V, organized by CROP programme of the Internatioinal Social Science Council and the Social Science Academy of Nigeria at Abuja (Nigeria) November 24-26, 2003.

Saini, D.S. (2001) “Social security: India” In Blanpain, R.(ed.), International Encyclopaedia of Laws,

Hague: Kluwer Law International.

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Saini, D.S. (1999), ‘Labour Legislation and Social Justice’, Economic and Political Weekly, 25 September, L-32–L-40.

Saini, D.S. (1998), “Liberalisation, Human Face and the Labour Justice System' in Paramanand Singh (ed) Legal Dimensions of Market Economy, New Delhi: Faculty of Law, University of Delhi and Universal Book Traders.

Saini, D S (1995) “Compulsory Adjudication Syndrome in India: Some Implications for Workplace

Relations” in Debi S. Saini (ed) (1995c). Saini, D.S. (ed.) (1995a.). Cases on Labour Law: Minimum Conditions of Employment, New Delhi:

Oxford & IBH.

Saini, D.S. (1995b) “Leaders or Pleaders: The Dynamics of Brief-case Trade Unionism under the Existing Legal Framework,” Journal of the Indian Law Institute, Vol.37, No. 1.

Saini, D.S. (ed.) (1995c), Labour Law, Work and Development, New Delhi: Westvill Publishers.

Saini, D. S. (ed.) (1994), “Introduction: Socio-legal Issues in Industrial Justice Dispensation in India,” in Saini, D.S. (ed.) (1994).

Saini, D. S. (ed.) (1994a), Labour Judiciary, Adjudication and Industrial Justice. New Delhi: Oxford & IBH.

Shrouti, A. and N. Kumar (1994), New Economic Policy, Changing Management Strategies––Impact on Workers and Trade Unions. Friedrich Ebert Stiftung: New Delhi.

Patel, A. and K. Desai (1995), “Rural Migrant Labour and Labour Laws” in Saini, Debi S. (ed.)

Labour Law, Work and Development, New Delhi: Westwill. Upadhyay, Sanjay. (1995), Delay in Industrial Adjudication: A Case Study of Central Government Industrial Tribunal (mimeo), V.V. Giri National, Labour Institute, Noida (India). Wedderburn, K.W., R. Lewis and J. Clark. (1983), Labour Law and Industrial Relations: Building

on Kahn-Freund, Oxford: Clarendon Press.

END NOTES: 1. Later on, this right was more specifically provided by the Bonded Labour System (Abolition) Act in 1976, which apart from specifying the manner of freeing the bonded labourers also envisages their rehabilitation after their release. This legislation prohibits making of any advance to a worker which can become a bonded debt and prohibits to compel any person to render bonded labour. It declares any custom of bonded labour in a family void, abolishes liability to pay bonded debt, and frees any attachment of the bonded labourer. The District Magistrate has been obliged to promote welfare of freed bonded labourers and protect their economic interests. It creates Vigilance Committees to identify and ensure abolition of bonded labourers. An important social protection question in the country is the rehabilitation of bonded labourers.

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2. Article 38(1) obliges the State to “strive to promote the welfare of the people by securing and promoting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of national life”. 3. Article 38(2) provides that “the State shall, in particular, strive to minimize the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations”. 4. Article 39 envisages State policies to be directed towards securing: “a) that the citizens, men and women equally, have the right to an adequate means of livelihood; b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment; d) that there is equal pay for equal work for both men and women; e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter vocations unsuited to their age or strength; f) that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment.” 5. Article 41 states that “the State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want.” 6. Article 42 provides that “the State shall make provision for securing just and humane conditions of work and for maternity relief.” 7. Article 43 provides that “the State shall endeavor to secure, by suitable legislation or economic organization or in any other way, to all workers agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities and, in particular, the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas. 8 . Article 43A provides that “the State shall take steps, by suitable legislation or in any other way, to secure the participation of workers in the management of undertakings, establishments or other organization engaged in any industry. 9. Article 45 provides that “the State shall endeavor to provide, within a period of ten years from the commencement of this Constitution, for free and compulsory education for all children until they complete the age of fourteen years.” 10. Article 47 provides that the State shall regard ‘the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties . . .’ 11 Two most important cases on this Act are : 1) People Union of Democratic Rights v. Union of India, 1982 II LLJ 454 (SC); and 2) Labourers Working on Salal Hydro Project v. State of Jammu & Kashmir, AIR 1984 SC 177. 12. Such a settlement is popularly known as a 12 (3) settlement as it is envisaged by section 12 (3) of the IDA. Its applicability and implications are different from that of a voluntary settlement. 13 . Juridification refers to “the extent to which behaviour of line and personnel managers, shop stewards and full-time officers in dealing with individual- and collective-employment issues (is) determined by reference to legal (or what are believed to be legal) norms and procedures, rather than voluntarily-agreed norms and procedures or to custom and practice” (Clark and Wedderburn, 1983: 188). 14 . People’s Union For Democratic Rights v. Union of India (1982) 3 SCC 235.

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15 . Crown Aluminum Works v. Their Workmen, AIR (1958, S.C. 30. 16. Bijaj cotton Mills Ltd. V. State of Ajmer, AIR 1955 C 33. 17. Saurashtra Salt manufacturing Co. v. Bai Valu Raju and Others [AIR 1958 SC 881] 18. Notified industries and establishments for the purpose of the EPF Act are those which are notified by the Central Government for contributing enhanced PF contributions. They are known to be comparatively stronger in their paying capacity. That is why the Act provides a higher rate of contribution in respect of these industries. The Central Government has notified 172 categories of establishments for the purpose of enhanced contribution to the provident fund. 19. The reason given by the States of Manipur and Nagaland claim that there are hardly any factories or establishments in these States.