lesson 1 factories act 1948 - dheeraj tyagi...

CS EXECUTIVE CS NAINA JINDAL

1

Lesson 1

Factories Act 1948

Introduction The first law in lndia relating to regulation of workers in the factories was passed in 1881.

The Factories Act, 1948 was enacted after independence.

It came into force on 01.04.1949.Objectives To ensure adequate safety measures and promote the health and

welfare of the workers in factories.

To prevent haphazard growth of factories by ensuring previous approval of plans for setting up factories.

To regulate the working condition, working hours, leave, holidays,

overtime, employment of children, women and young persons etc. in factories.

Applicability The Act extends to the whole of India.

It is applicable to all factories using power and employing 10 or more workers on any day of the preceding 12 months.

It also applies to factories not using power but employing 20 or more

workers on any day of the preceding 12 months. The Act is also applicable to factories belonging to the Central or State

Governments.Employees covered under Act

The Act covers all workers employed in the factory premises or precincts, thereof,

directly or by or through any agency including a contractor, with or

without the knowledge of the principal employer, whether for remuneration or not,

In any manufacturing process or any kind of work incidental or connected thereto.

There must be a nexus between the employment of the worker concerned and the manufacturing process.

The worker need not necessarily do manual labour or receive remuneration for his services. Thus, pieces-rated workers are also covered under the Act

Employees in the canteen established under section 46 of the Act shall be the employees of the occupier of the factory, and thus covered under the Act.

But, where the workmen are employed in a canteen run by a Co-

operative Society, they do not become employees of the occupier of factory, and are not covered by the Factories Act but by the law


2

governing the Co-operative societies.

Besides, persons employed only for selling the manufactured article are not covered under this Act, since sale, distribution or transport of an article after its manufacturing, is nota process.

Any member of the armed forces of the Union is not covered by the

definition of worker.Definitions

Child [Section 2(c)]

Child means a person who has not completed his 15 years of age.

Adolescent [Section 2(b)]

Adolescent means a person who has completed his 15 year of age but has not completed his 18 year.

Adult [Section 2(a)]

Adult means a person who has completed his 18 years of age.

Young Person [Section 2(d)]

Young person means a person who is either a child or an adolescent.

Power [Section 2(g)]

Power means electrical energy, or any other form of energy which is mechanically transmitted and is not generated by human or animal agency.

Factory [Section 2(m)]

Factory means any premises including the precincts thereof ~

whereon 10 or more workers are working, or were working on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or

Whereon 20 or more workers are working, or were working on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on.

All the workers in different groups and relays in a day shall be taken into account.

Manufacturing Process [Section 2(k)]

Manufacturing process includes Manufacturing process does not includes

making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal; or

Exhibition of film process.

pumping oil, water, sewage or any other substance; or

Industrial schools or institute imparting training, producing


3

cloth not for sale.

generating, transforming or transmitting power; or

Receiving news from various sources through tele-printer.

composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; or

Preliminary Packaging of raw materials.

constructing reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or

Finished goods and packaging.

preserving or storing any article in cold storage.

Worker [Section 2(l)]

Worker means a person employed,

directly or by any agency (including a contractor) with or without the knowledge of the principal employer.

whether for remuneration or not,

in any manufacturing process, or

in cleaning any part of the machinery or premises used for a manufacturing process.

in any other kind of work incidental to, or connected with, the manufacturing process,.

The concept employment covers three things, employer, employee and employment. All employees are workers but all workers may not be employees.

Hazardous Process [Section 2(n)]

Hazardous process means any process or activity in relation to an industry specified in the First Schedule where, unless special care is taken, raw materials used therein or the intermediate or finished products, by-products, wastes or effluents thereof would --

Cause material impairment to the health of the persons engaged in or connected therewith, or

Result in the pollution of the general environment.Occupier [Section 2(n)]

Occupier of a factory means the person who has ultimate control over the affairs of the factory.

In the case of a firm or other association of individuals -Any meet the individual partners or members.

In the case of a company -Any one of the directors.

In the case of a factory owned or controlled by the Government or any local authority - The person appointed to manage the affairs of the factory by the Government or the local authority.


4

In the case of a dry dock which is available for hire -The owner of the dock.

In case of ship -The owner of the ship or his agent or master or other officer-in-charge of the ship.

General duties of the occupier [Section 7A]

Every occupier shall ensure the health, safety and welfare of all workers.

The duty extends, shall include the following:

Maintenance of plant and systems of work in the factory. Arrangements in the factory for ensuring safety and absence of risks to

health.

Provision for information, instruction, training and supervision to ensure the health and safety of workers.

Maintenance of all places of work in the factory in proper condition.

Maintenance or monitoring of working environment in the factory.

Provisions for health of Workers

Cleanliness [Section 11]

Every factory shall be kept clean and free from effluvia.

The floor of every work-room shall be washed using disinfectant in every week.

Inside walls, ceilings, staircases which are painted or varnished, be

repainted or varnished once in every 5 years.

Where these are painted with washable paints, be repainted once in every 3 years and washed once in every 6 months.

White-washing or colour washing be done at least once in every 14 months.

All doors, window frames and shutters shall be painted or varnished in at least once in every 5 years.

Ventilation and Temperature [Section 13]

Suitable provision shall be made for adequate ventilation.

Walls and roofs shall be of such material and design to keep temperature low.

Dust and Fume [Section 14]

Effective measures shall be taken to prevent inhalation of dust or fume.

Exhaust appliance shall be applied.

Internal combustion engine shall be operated that exhaust into the open air.

Artificial Humidification [Section 15]

Where humidity of air is artificially increased. the standards of humidification shall be followed.

Water used for the purpose shall be taken from a public supply or shall

be effectively purified before use.Overcrowding No room in any factory shall be overcrowded.


5

[Section 16] There shall be at least 14.2 cubic meters of space for every worker in the work room.

Lighting [Section 17]

Where workers are working or passing, sufficient and suitable lighting shall be provided.

All glazed windows and skylights shall be kept clean on both the inner and outer surfaces.

Drinking Water [Section 18]

Arrangements shall be made at convenient points for sufficient supply of wholesome drinking water.

All such points shall be legibly marked "Drinking Water" in a language understood by a majority of the workers.

Latrines and Urinals [Section 19]

Sufficient latrine and urinal shall be provided.

The floors, walls and the sanitary pans shall be washed and cleaned once in every 7 days with detergents or disinfectants or with both.

Spittoons [Section 20]

In every factory there shall be sufficient number of spittoons at convenient places.

These shalt be maintained in a clean and hygienic condition.

Provision for Safety

Employment of young persons on dangerous machines [Section 23]

No young person shall work at any machine unless he has been fully instructed of the dangers of the machine.

He should receive sufficient training or should be under supervision of a person having knowledge and experience of the machine.

Floors stairs and means of access [Section 32]

All floors, steps, stairs. passages and gangways shall be of sound construction.

These shall be properly maintained and kept free from obstructions.

Protection of eyes [Section 35]

Where any manufacturing process involves risk of injury to the eyes from particles or fragments thrown off in the course of the process, or by reason of exposure to excessive light, effective screens or suitable goggles shall be provided.

Precautions in case of fire [Section 38]

All practicable measures shall be taken to prevent outbreak of fire and its spread.

Safe means of escape for all persons in the event of a fire shall be provided.

Necessary equipment and facilities for extinguishing fire shall be provided.

Safety Officers [Section 40 B]

In every factory, wherein 1000 or more workers are employed, or any manufacturing process is carried on which involves any risk of bodily injury, poisoning or disease, or any other hazard to health, the occupier shall employ Safety Officers.


6

Provision for Welfare

Washing facilities [Section 42]

In every factory adequate and suitable facilities for washing shall be provided and maintained.

Separate facilities shall be provided for male and female workers.

Facilities for sitting [Section 44]

Suitable arrangements for sitting shall be provided and maintained for all workers who work in a standing position so that they may take rest in the course of their work when available.

First-aid appliances [Section 45]

First-aid boxes or cupboards shall be provided in the factory readily accessible to the workers.

At least one box or cupboard shall be provided for every 150 workers.

Where more than 500 workers are employed, an ambulance room with prescribed equipment shall be provided.

Canteens [Section 46]

In any factory where more than 250 workers are employed, canteen shall be provided and maintained.

Shelters rest rooms and lunch rooms [Section 47]

Where more than 150 workers are employed, adequate and suitable shelters or rest rooms and lunch room, with provision for drinking water, shall be provided.

Creches [Section 48]

Where more than 30 women workers are employed. creches shall be provided for use of children under the age of 6 years.

Such rooms shall provide adequate accommodation, adequately lighted and ventilated, maintained in a clean and sanitary condition.

Welfare officers [Section 49]

Where 500 or more workers are ordinarily employed, the occupier shall employ welfare officers.

Specific Responsibility of the Occupier [Section 41C]

Every occupier shall maintain accurate and up-to-date health records or medical records of the workers who are exposed to any chemical. toxic or any other harmful substances.

He shall appoint qualified persons having experience in handling hazardous substances.

He shall provide for medical examination of every worker before such

worker is assigned to a job involving hazardous substance, while continuing in such job and after he has ceased to work in such job, at intervals not exceeding 12 months.

Employment of Adults

Weekly working hours [Section 51]

No adult worker shall be required to work for more than 48 hours in any week.

Intervals for rest

No worker shall work for more than 5 hours before an interval for rest of at least half an hour.


7

[Section 55] The State Government or the Chief Inspector may exempt any factory from this provision.

The total number of hours of work without an interval shall not exceed 6 hours.

Prohibition of overlapping shifts [Section 58]

Shifts shall be arranged so that not more than one relay of workers work of the same work at the same time.

The State Government or the Chief Inspector may exempt on this condition.

Restriction on double employment [Section 60]

No adult workers do work on anyday on which he has already been working in any other factory.

Notice of periods of work for adults [Section 61]

A notice shall be displayed and correctly maintained in every factory stating the periods of work for adults.

Where all the adult workers are required to work during the same periods, the manager shall 6x those periods.

Register of adult workers [Section 62]

The manager of every factory shall maintain a register of adult workers showing the following:

Name of each adult worker in the factory.

Nature of his work.

Group, if any, in which he is included.

Where his group works on shifts, the relay to which he is allotted.

Employment of Child and Adolescent

Prohibition of employment [Section 67]

No child who has not completed his 14 year to work in any factory.

Working hours of children [Section 71]

A child of more than 14 years (during 15 year) if employed shall not be employed for more than four and a half hours in any day.

No child shall be allowed to work during the night. Night means 12

consecutive hours including time between 10 PM. and 6 AM. The period of work of all children shall be limited to 2 shifts.

The shift shall not ‘spread over more than 5 hours each.

No child shall work more than 48 hours in a week.

No child shall be required to work on any day on which he has already been working in another factory.

A female child shall work in any factory between 8 AM. and 7 PM.Notice of periods of work for

To display of notice showing clearly the periods during which children may work in the factory.

The periods shown in the notice shall be fixed beforehand.


8

children [Section 72]

Register of child workers [Section 73]

The manager of every factory shall maintain a register of child workers.

The register shall contain the following:

Name of each child worker in the factory.

Nature of his work.

Group, if any in which he is included.

Where his group works on shifts, the relay to which he is allotted.

Number of his certificate of fitness.

Non-adult workers to carry tokens [Section 68]

A child who has completed his 14th year or an adolescent shall not work in any factory unless a certificate of fitness is given to the manager of the factory. Such child or adolescent shall carry a token giving a reference to such certificate.

Certificate of fitness to young person [Section 69]

On the application of any young person or his parent or guardian with a document signed by the manager of a factory that such person will be employed if certified to be fit, or on the application of the manager of the factory, the certifying surgeon shall examine such person and issue certificate of fitness.

A certificate of fitness granted or renewed shall be valid for a period of 12 months.

A certifying surgeon shall revoke any certificate if, in his opinion, the holder is no longer fit to work.

Certificate of fitness to adolescent [Section 70]

An adolescent having a certificate of fitness as an adult carrying a token, shall be deemed to be an adult.

No female adolescent or a male adolescent who has not attained the

age of 17 years but who has been granted a certificate of fitness as an adult shall not work in any factory between except 6 AM. and 7 PM.

The State Government may change the time so that any female adolescent shall not be employed between 10 PM. and 5 AM.

Restriction of Employment of Women [Section 66]

A woman shall work in a factory between 6 AM. and 7 PM.

The State Government may vary the limits but not between 10 PM. and 5 AM.

There shall be no change of shifts except after a weekly holiday or any other holiday.

The State Government may exempt the restrictions for women

working in fish-canning, where the employment beyond the specified hours is necessary to prevent damage in any raw material.

The rules shall remain in force for not more than 3 years at a time. Weekly holidays [Section 52]

An adult worker who works on the first day of the week, has or will have a holiday for a whole day 3 days immediately before or after the said day.

No worker shall work for more than 10 days consecutively without a holiday for a whole day.


9

Annual Leave with Wages [Section 79]

Number of days of leave

Every worker working for 240 days during a calendar year shall be allowed during the subsequent calendar _ year leave with wages -

if an adult, one day for every 20 days of work performed by him during the previous year;

if a child, one day for every 15 days of work performed by him during the previous year.

Fraction of leave of half a day or more shall be treated as one full clay.

The leave shall be exclusive of all holidays whether occurring during or at either end of the period of leave.

In calculating the number of days, the following shall be considered as working days:

Any day of lay off, by agreement or contract or as permissible

under the standing orders. in the case of a female worker, maternity leave upto 12 weeks.

The leave earned in the year prior to that in which the leave is enjoyed.

Wages in lieu of leave

if a worker is dismissed from service or quits his employment or is superannuated or dies while in service, he or his heir or nominee, shall be entitled to leave wages due to him.

Such payment shall be made

where the worker is dismissed or quits employment, before the expiry of the 2nd working day from the date of such discharge, dismissal or quitting;

where the worker is superannuated or dies while in service, before

the expiry of 2 months from the date of such superannuation or death.

Carry forward of leave

If a worker does not in any one calendar year take the whole of his due leave, the balance shall be added to his leave of the succeeding calendar year.

The total number of days of leave to be carried forward shall not exceed 30 in the case of an adult and 40 in the case of a child.

A worker, who has applied for leave with wages but has not been

given such leave, shall be entitled to carry forward such leave refused beyond the limit.


10

Overtime [Section 59]

Where a worker works more than 9 hours in any day or for more than 48 hours in any week, he shall be entitled to wages twice of his ordinary rate of wages for the extra hours called overtime.

Ordinary rate of wages’ means the basic wages plus dearness allowances, including the cash equivalent i0r concessional sale of food grains and other articles. it does not include bonus and wages for overtime work.

Penalties General penalties for offences

If there is my contravention of any of the provisions of the Act or of any rules made thereunder, the occupier and manager of the factory shall be punishable with imprisonment up to 2 years or with tine up to Rs. 1 lakh or with both.

If the contravention is continued after conviction, a further tine up to i“ 1000 for each day on which the contravention is continued shall be made.

Penaty for subsequent offence

If any person who has been convicted of any 'offence is again guilty of an offence involving the same provision he shall be punishable on a subsequent conviction with imprisonment up to 3 years or with tine which shalt not be less than 1‘ 10,000 but which may extend to Rs. 2 lakh or with both.

Offences by workers

If any worker contravenes any provision of the Act imposing any duty or liability on workers, he shall be punishable with fine up to Rs. 500.

Where a worker is so convicted, the occupier or manager shall not be deemed to be guilty of the offence.

Power of Inspectors

An inspector may exercise any of the following powers within the local limits for which he is appointed.

He can enter any place which is used or which he has reasons to believe, is used as factory.

He can make examination of the premises, plant and machinery etc He can require the production of any prescribed register or any other document relating to the factory

Take measurement and photographs and make such recordings as he considers necessary for the purpose of any examination.


11

Special Provisions relating to Hazardous Processes

Special provisions relating to hazardous processes have been envisaged under Chapter IVA of the Factories Act, 1948. This chapter was inserted by the Factories (Amendment) Act, 1987 and Consists of Section 41 A to 41 H. these sections are as follows:

Constitution of Site appraisal Committees [Section 41A]

A Committee under the name Site appraisal Committees shall be constituted by the State Government to advise the Government in the matter of examination of applications for establishment of factories involving hazardous processes. The constitution of the site appraisal committee consisting of committee has been specified therein. The Site appraisal Committee shall examine an application for the establishment of a factory involving hazardous process and make its recommendation to the State Government within a period of ninety days in the prescribed form.

Compulsory disclosure of information by the occupier [Section 41B]

It is compulsory on the part of the occupier of every factory involving a hazardous process to disclose all information regarding dangers, including health hazards to the workers employed in the factory, the Chief Inspector, the local authority within whose jurisdiction the factory is situated and the general public in the vicinity.

Inquiring Committee [Section 41D]

In the event of occurrence of an extraordinary situation, the Central Government may appoint an Inquiry Committee to inquire into standards of health and safety observed in the factory with a view to finding out the causes of any failure or neglect in the adoption of any measures prescribed for the health and safety of the workers or the general public.

Emergency standards [Section 41E]

The Director General of Factory Advice Service and Labour Institutes may be directed by the Central Government to lay down emergency standards in respect of hazardous process.

Permissible limits of exposure of chemical and toxic substances [Section 41F]

The Section Schedule added to the Act, indicates maximum permissible threshold limits of exposure of chemical and toxic substances in manufacturing processes in any factory.

Workers Participation in safety management [Section 41G]

The occupier in every factory shall set up a safety committee consisting of equal number of representatives of workers and management to promote co-operation between the workers and the management in maintaining proper safety and health at work and to review periodically the measures taken in that behalf where hazardous process is involved.

Warning about imminent danger

If there is reasonable apprehension regarding likelihood of imminent danger to the lives or health of the workers employed in a factory, they may bring the same to the notice of the occupier agent, manager etc.


12

[Section 41H]

Important Cases

Employers Association of Northern India v. Secretary for Labour U.P. Govt.

Seasonal factory does not cease to be a factory when no manufacturing process is carried on during the off-season.

Workmen of Delhi Electric Supply Undertaking v. Management of D.E.S.U.

Process undertaken in zonal, sub-stations and electricity generating stations relating to transforming and transmitting electricity generated at the power station does not fall within the definition of manufacturing process and could not be said to be factories.

Chintaman Rao v. State of MP.

The prima facie test for determination of the relationship between the employer and employee is the existence of the right of the employer to supervise and control the work done by the employee not only in the matter of directing what work the employee is to do but also the manner in which he shall do his work.

Shankar Balaji Waje v. State of Maharashtra

Piece-rate workers are workers within the definition of ’worker’ as per Factories Act, 1948, if they are regular workers and work under supervision and control of employer.

Shinde v. Bombay Telephones

Employee employed in work incidental to process connected with factory is workman whether he stands outside the factory premises or inside it.

J .K. Industries Ltd. v. Chief Inspector of Factories

In case of company, only director can be occupier of the factory of the Company. Company owing factory cannot nominate its employees or officers except director of the company as occupier of its factory.

State of Bombay v. Ardeshir Hormusji Bhiwandiwala

Land in which manufacturing process of salt is carried on would be deemed a factory.

Ravi Shankar Sharma v. State of Rajasthan

Factories Act is a social legislation and it provides for the health, safety, welfare and other aspects of the workers in the factories.


13

Lesson 2

Minimum Wage Act 1948

Introduction The concept of minimum wages was first evolved by InternationalLabourOrganisation in 1928.

0n the recommendation of the 8‘" Standing Labour Committee, the

Minimum WagesAct, 1948 was passed.

It came into force on 15th March, 1948.

Objectives The main object of the Act is for fixing minimum rates of wages in certain employments.

Scope and Coverage

The Act applies to the whole of India. All the provisions of the Act equally apply to both male and female workers.

“Scheduled employment’ refers to the employments specifically stated in the Schedule to the Act.

Employees Entitled

The Act covers every employee engaged in any Scheduled employment, including an 'out-worker’ to whom the materials are given out for manufacturing or processing at his own premises. The Act is applicable to all employees engaged to do any work, skilled, unskilled, manual or clerical, in a scheduled employment, including out-workers.

Definitions

Child [Section 2(bb)]

Child means a person who has not completed his 14 year of age.

Adult [Section 2 (aa)]

Adult means a person who has completed his 18th year of age.

Appropriate Government [Sec 2 (b)]

“Appropriate Government” means – (i) In relation to any scheduled employment carried on by or under the

authority of the Central or a railway administration, or in relation to a mine,

oilfield or major part or any corporation established by a Central Act, the

Central Government, and

(ii) In relation to any other scheduled employment, the State Government.

Adolescent [Section 2 (a)]

Adolescent means a person who has completed his 14th year of age but not completed his 18th year.

Wages [Section 2(h)]

Wages means all remuneration capable of being expressed in terms of money which would be payable to a person employed in respect of his employment or of work done in such employment if the terms of the contract of employment express or implied, were fulfilled. It includes house rent allowance.


14

Wages does not includes;

The value of any house accommodation, supply of light, water, medical attendance, or any other amenity or any service excluded by general or special order of the appropriate government.

Any contribution paid by the employer to any pension fund or

provident fund or under any scheme of social insurance. Any travelling allowance or the value of any travelling concession. I Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment. Any gratuity payable on discharge.

Scheduled Employment [Section 2(g)]

Scheduled employment means an employment specified in the Schedule to the Act or any process or branch of work forming part of such employment.

The following are some of the industries to' which the Act applies as provided in the Schedule:

Employment in any woolen carpet making or shawl weaving establishment.

Employment in any rice mill, flour mill or dal mill.

Employment in any tobacco (including bidi making) manufactory. Employment in any plantation that is to say any estate which is maintained for the purpose of growing cinchona rubber, tea or coffee.

Employment in any oil mill. Employment under any local authority.

Employment on the construction or maintenance of roads or in building operations.

Employment in stone breaking or stone crushing.

Employment in public motor transport

Employment in tanneries and leather manufactory. Scheduled employment also includes employment in agriculture including cultivation and tillage of the soil, dairy farming, production, cultivation, growing and harvesting of any agricultural or horticultural commodity, raising of live-stock, bees or poultry and any practice performed by a farmer or a farm incidental to or in conjunction with farm operation including any forestry or timbering operations and the preparation for market and delivery to storage or to market or to carriage for transportation to market of farm produce.

Fixation of Minimum Wages [Section 3(1)]

The appropriate government to fix minimum rates of wages in an employment specified in Part I or Part ll of the Schedule.

In respect of employment specified in Part ll of the Schedule, minimum rates of wages may be fixed for part of the State or for any class or classes of such employment.

Revision of Minimum Wage

The ‘appropriate Government’ may review at such intervals as it may thing fit, such intervals not exceeding five years, and revise the


15

[Section 3(1)(b)]

minimum rate of wages, if necessary. This means that minimum wages can be revised earlier than five

years also. Manner of Fixation/ Revision of minimum wage [Section 3(2)]

The ‘appropriate Government’ may fix minimum rate of wages for:

time work, known as a Minimum Time Rate;

piece work, known as a Minimum Piece Rate; a “Guaranteed Time Rate” for those employed in piece work for the purpose of securing to such employees a minimum rate of wages on a time work basis

a “Over Time Rate” i.e. minimum rate whether a time rate or a piece rate to apply in substitution for the minimum rate which would otherwise be applicable in respect of overtime work done by employee.

Different wages for different employees

Different minimum rates of wages may be fixed for – different scheduled employments;

different classes of work in the same scheduled employments;

adults, adolescents, children and apprentices;

different localities

Further, minimum rates of wages may be fixed by any one or more of the following wage periods, namely:

by the hour,

by the day,

by the month, or

by such other large wage periods as may be prescribed;

Minimum rate of Wages [Section 4]

Any minimum rate of wages fixed or revised by the appropriate Government under Section 3 may consist of—

(i) A basic rate of wages and a special allowance at a rate to be

adjusted, at such intervals and in such manner as the appropriate

Government may direct to accord as nearly as practicable with the

variation in the cost of living allowance; or (ii) A basic rate wages or without the cost of living allowance and the

cash value of the concession in respect of supplies of essential commodities

at concessional rates where so authorized; or

(iii) An all inclusive rate allowing for the basic rate, the cost of living

allowance and the cash value of the concessions, if any;

Procedure for Fixing and Revising Minimum Wages [Section 5]

In fixing minimum rates of wages in respect of any scheduled employment

for the first time or in revising minimum of wages, the appropriate

Government can follow either of the two methods described below.

Committee Method


16

The appropriate Government may appoint as many committee and

sub-committees as it considers necessary to hold enquiries and

advise it in respect of such fixation or revision as the case may be.

After considering the advise of the committee or sub-committees,

the appropriate Government shall, be notification in the Official

Gazette, fix or revise the minimum rates of wages. The wage rates shall come into force from such date as may be specified in the notification. If no date is specified, wage rates shall come into force on the expiry of three months from the date of the issue of the notifications.

Notification Methods

When fixing minimum wages, the appropriate Government shall be

notification, in the official gazette publish its proposals for the

information of persons likely to be affected thereby and specify a

date not less than 2 months from the date of notification, on which

the proposals will be taken into consideration. The representations received will be considered by the appropriate

Government. It will also consult the Advisory Board constituted under

Section 7 and thereafter fix or revise the minimum rates of wages by

notification in the Official Gazette.

The new wage rates shall come into force from such date as may be

specified in the notification. However, if no date is specified, the notification

shall come into force on expiry of three months from the date of its issue.

Minimum wage rates can be revised with retrospective effect.

Minimum Wage-Whether to be paid in Cash or Kind [Section 11]

Minimum wages payable under the Act shall be paid in cash.

But where it has been the custom to pay wages in kind, the appropriate government, on being satisfied, may approve and authorize such payments.

Such Government can also authorize for supply of essential

commodities at concessional rates.

Payment of Minimum Wages is Obligatory on Employer [Section 12]

Payment of less than the minimum rates of wages notified by the appropriate Government is an offence.

Advisory Boards

State Advisory Board

The advisory board is constituted, under Section 7 of the Act, by the

State Government for the purpose of co-ordinating the work of

committee and subcommittees appointed under Section 5 of the act


17

and advising the appropriate Government generally in the matter of

fixing and revising of minimum rates of wages. The advisory board shall consist of persons to be nominated by the

State Governmentrepresenting employers and employees in the scheduled employment who shall be equal in number and independent persons not

exceeding 1/3rd

of its total number of members, one of such independent

persons shall be appointed as the Chairman by the state government.

An independent person means a person who is neither an employer nor an employee in the employment for which the minimum wages are to be fixed.

Central Advisory Board

Section 8 of the Act provides that the Central Government shall

appoint a Central Advisory Board for the purpose of advising the

Central Government and State Governments in the Matters of

fixation and revision of minimum rates of wages and other matter

under the Minimum Wages Act and for coordinating work of the

advisory boards. The Central Advisory Board shall consist of persons to be

nominated by the CentralGovernment representing employers and employees in the scheduled employment who shall be equal in number; and

independent persons not exceeding 1/3rd

of its total number of members,

one of such independent persons shall be appointed as the Chairman of the Board by Central Government.

Overtime Rate [Section 14]

Where an employee whose minimum rate of wages is fixed by hour, day or such a longer wage-period, works on any day in excess of normal hours, he shall be entitled to overtime rate for the excess hour.

Overtime rate is fixed by the appropriate government. It is generally double the actual rate.

Time of Payment of Wages

In the case of establishments with

less than 1000 employee.

Before the expiry of the 7 day after

the last day of wage period.

In the case of other establishments. Before the expiry of the 10 day after the last day of wage period.

Where the employment of any person is terminated by the employer.

Before the expiry of the 2nd working day after the day on which the employment is terminated.


18

Working Hours and Rest Day [Section 13]

The appropriate government may fix the working hours and intervals.

It may provide for a day of rest in every period of 7 days.

Claim for Minimum wages and Compensation

The following persons may apply to the authority for a direction for payment of minimum rate of wages.

The employee.

Any legal practitioner authorised in writing.

Any official of a registered trade union authorised in writing.

Any Inspector or any person acting with the permission of the authority appointed.

A single application may be made on behalf of a number of employees.

Every application shall be presented within six months from the date on which the minimum wages is due.

Any such application may be admitted after six month if sufficient cause is given.

Relinquishing Right to Minimum Wages [Section 25]

Any contract or agreement whereby an employee relinquishes or reduces his right to minimum rate of wages shall be null and void.

Offence and Penalties

Any employer who pays to anyemployee less than the minimum rates of wages, shall be punishable with imprisonment up-to six months or with fine up to Rs. 500 or with both. [Section 22]

Any employer who contravenes any provision of the Act or of any

rule or order made thereunder shall, if no other penalty is provided for such contravention by the Act, be punishable with fine up to Rs 500. [Section 22A]

Maintenance of Registers and Records [Section 18]

Every employer shall maintain registers and records in prescribed manner giving particulars of employees, work performed by them, the wages paid to them, the receipts given by them etc. Every employer shall keep exhibited, in prescribed manner in the factory, workshop or place where the employees may be employed, or in the case of out-workers, in such factory, workshop or place as may be used for giving out work to them, notices containing prescribed particulars.

The appropriate government may make rules for the issue of wage books or wage slips to employees and the manner in which entries shall be made and authenticated in such wage books or wage slips by the employer or his agent.


19

Lesson 3

Payment of wages Act 1936

Objectives The Payment of Wages Act, 1936 has been enacted to regulate the payment of wages to workers employed in certain specified industries. The Payment of Wages Act, 1936 was enacted with the object of

regulating payment of wages, imposition of fines and deductions from wages, and

eliminating all malpractioes by laying down wage periods and times

and mode of payment of wages.

The Act, therefore, ensures payment of wages in a particular form at regular intervals without unauthorized deductions. The Act came into force on 28.03.1937.

Scope and Coverage

The Act extends to the whole of India.

It applies to any factory, any railway establishment and any industrial or other establishment like tramway service, motor transport service, air transport service, dock, wharf, jetty, inland vessel, mine, quarry, oilfield, plantation, workshop or other establishment producing, adapting or manufacturing any article, establishments engaged in construction, development and maintenance of buildings, roads, bridges or canals, navigation, irrigation or supply of water, generation, transmission and distribution of electricity/power and any other establishment notified by the Central or a State Government.

Applicability of the Act

The Act extends to the whole of india.

The Act applies for payment of wages

to persons employed in any factory, to persons employed otherwise than in a factory upon any railway or directly or through a sub-contractor. The State Government may, giving three months‘ notice extend the provisions of the Act to any class of persons.

Non-Applicability of the Act

The Act shall not apply where wages payable is Rs. 18,000 or more ‘per month. vide notification no. SO 2260(E), dated 11-94012]

Definitions

Wages Section 2 (vi)

Wages means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would be payable to a person employed in respect of his employment or of work done in such employment.


20

Wages Includes Wages Does not includes

Remuneration payable under any award or settlement between the parties or order of a Court.

Any bonus.

Remuneration in respect of overtime work or holidays or for any leave period.

The value of any house-accommodation or of the supply of light, water, medical a or of any service excluded from the computation of wages by a general or Special order of appropriate Government.

Any additional remuneration payable under the terms of employment (whether bonus or by any other name).

Any contribution paid by the employer to any pension or provident fund and interest accrued thereon

Any sum payable under any law on termination of employment but does not provide for the time within which the payment is to be made.

Any travelling allowance or the value of any travelling concession.

Any sum payable under any scheme framed under any law for the time being in force.

Any sum paid to defray special expenses entailed on him by the nature of employment.

Employed person [Section 2 (ia)]

Employed person includes the legal representative of a deceased employed person.

Employer [Section 2 (ib)

Employer includes the legal representative of a deceased employer.

Obligations of Employers

Responsibility for Payment of Wages

Every employer shall be responsible for the payment of wages. ln factories, the person named as manager under the Factories Act,

1948; In industrial establishments, the person responsible for the supervision and control of the establishments.

ln railways (otherwise than in factories), if the employer is the railway administration, the person nominated by the railway administration for any local area.

In case of a contractor, the contractor or a person designated by such contractor who is directly in charge of the contract.

In any other cases, a person designated by the employer for complying with the provisions of the Act.


21

Fixation of Wages-Periods

Every person responsible for the payment of wages has to fix wage period.

No wage-period shall exceed one month. Time of Payment Sec. 5

Nature of employment Time of payment of wages

In any railway factory or industrial or other establishment in which less than 1000 persons are employed.

Before the expiry of the 7'" day after the last day of the wage-period.

In any other railway, factory or industrial or other establishment.

Before the expiry of the 10th day, after the last day of the wage-period.

In a dock, wharf or jetty or in a mine, the balance of wages found due on completion of the final tonnage account of the ship or wagons loaded or unloaded.

Before the expiry of the 7th day from the day of such completion. (Normal wages shall be paid before expiry of the 10th day of the wage-period)

In case of termination of employment by the employer.

Before the expiry of the 2"d working day from the day on which employment is terminated.

Mode of payment

All wages shall be paid in current coin or currency notes or in both.

The employer may, with written Authorization of the employee, pay him the wages by cheque or by crediting bank account.

Appeal [Section 17]

An appeal against an order dismissing an application may be preferred within 30 days of the date on which the order or direction was made, in a Presidency-town before the Court of Small Causes, and elsewhere before the District Court.

Where an employer prefers an appeal, the concern appealed authority shall withhold payment of any sum in deposit with it.

Offences and Penalties

Offences Penalties

Delay in, or non-payment of, wages within the Prescribed time

Fine up to Rs. 7500/(Minimum Fine 1500/-)

Making any unauthorized deduction or imposition of tines in contravention of the Act

As above

Failure to fix the wage period or make payment of wages on a working day and in current coins or notes.

Fine upto 3,750

Failure to maintain the registers of fines and deductions or display the

As above


22

prescribed notices.

Failure to nominate or designate a person under section 3 of the Act

Fine upto 3,000

Failure to maintain the prescribed returns and records, failure to furnish the required information or furnishing of false information.

Fine upto 7,500/(Minimum Fine 1,500/-)

Obstructing the Inspector or refusal to produce before himthe records/documents, for inspection.

As above

Deductions [Section 7]

Wages shall be paid without deduction except as authorised by the Act. The Act however authorises the following deductions:

Fines. For absence from duty.

For damage to or loss of goods expressly entrusted to the employed person for custody.

For loss of money which he is required to account and the loss is

due to his neglect or default.

For house-accommodation supplied by the employer or by Government or any housing board.

For amenities and services supplied by the employer as the

Appropriate Government may authorise. For recovery of advances including interest due thereon if any.

For adjustment of over-payments of wages. For recovery of loans

from any approved fund and interest due thereon. For recovery of loans granted for house building and the interest due

thereon.

Income-tax payable by the employed person.

Any amount as per order of a Court or other competent authority.

For contribution and repayment of advances from provident fund.

For payments to approved co-operative societies or insurance scheme of Post Office.

Amount authorized by employee for payment of LIC premium.

Amount authorized by employee for purchase of Government securities.

Amount authorized by employee for deposit in Post Office Savings Bank.

Amount authorized by the employee for payment to any approved

fund constituted by the employees.

Amount authorized by employee for payment to registered trade union for the welfare of the employees.


23

Amount authorized by the employee for payment to registered trade union.

Amount authorised by the employee for payment to the Prime

Minister's National Relief Fund or any approved Fund.

For contributions to any insurance scheme framed by the Appropriate Government for benefit of its employees.

The following shall not be deemed to be a deduction from wages:

Withholding of increment or promotion (including stoppage of increment at an efficiency bar).

Reduction to a lower post or time scale or to a lower stage in a time scale.

Loss of wages due to suspension.

MAXIMUM DEDUCTION

The total amount of deductions in any wage period shall not exceed 75% of such wages in case of payment to co-operative societies. .

In any other case, the deduction shall not exceed 50% of such wages.Fines [Section 8]

No fine shall be imposed for acts and omissions previously approved by the Appropriate Government.

Such notice shall be exhibited on the premises in which the employment is carried on. ’

No fine shall be imposed until an opportunity has been given of showing cause.

The total amount of fine in any one wage-period shall not exceed 3%

of the wages payable for that wage-period. No fine shall be imposed on any employed person under the age of 15

years.

No fine shall be recovered by installments or after the expiry of 90 days from the day on which it was imposed.

All fines and all realisations shall be recorded in a register.

All such realisations shall be applied only for purposes beneficial to the employees.

Maintenance of registers [Section 13A]

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

Every such register and record shall be preserved for a period of 3 years after the date of the last entry made therein.


24

Lesson 4

Equal Remuneration Act 1976

Objectives Article 39 of the Constitution of India envisages that the State shall direct its policy towards securing equal pay for equal work for both men and women.

To give effect to this constitutional provision, the Equal Remuneration Act, 1976 was enacted.

Scope and Coverage

The Act extends to the whole of India.

The Central Industrial Relations Machinery in the Ministry of Labour is responsible for enforcing the Act.

The Act aims to provide for payment of equal remuneration to men and

women workers and for the prevention of discrimination on the ground of sex against women in the matter of employment.

The provisions of the Act shall have overriding effect of any other law or any award, judgment or contract of service.

Exemptions [Section 15]

The provisions of the Act shall not apply to employment of woman in complying with the requirements of any law giving special treatment to women.

It shall also not apply where special treatment is given to women in connection with

birth or expected birth of a child, or

retirement, marriage or death.

Definitions

Remuneration [Section 2(g)]

Remuneration means the basic wage or salary, and any additional emoluments whatsoever payable, either in cash or in kind, to a person employed in respect of employment or work done in such employment, if the terms of the contract of employment, express or implied, were fulfilled.

Same work or work of a similar nature [Section 2 (h)]

Same work or work of a similar nature means work in respect of which the skill, effort and responsibility required are the same, when performed under similar working conditions by a man or a woman.

The differences, if any, between the skill, effort and responsibility

required of a man and a woman are not of practical importance in relation to the terms and conditions of employment.

Payment of Equal Remuneration

No employer shall pay to any worker remuneration at rates less favourable than paid to the workers of the opposite sex in such establishment for performing the same work or of a similar nature.


25

[Section 4] This means men and women are to be paid same remuneration for same or similar nature of work.

[Employer has the same meaning as in the Payment of Gratuity Act, 1972]

No Discrimination in Recruiting Men and Women [Section 5]

No employer shall make any discrimination against women while making recruitment for the same or similar work, or changing service condition like promotions, training or transfer etc.

Advisory Committee [Section 6]

For the purpose of providing increasing employment opportunities for women, the appropriate Government shall constitute one or more Advisory Committees to advise it with regard to the extent to which women may be employed in such establishments or employments as the Central Government may, by notification, specify in this behalf.

Every Advisory Committee shall consist of not less than ten persons, to be nominated by the appropriate Government, of which one-half shall be women.

Claims and Complaints [Section 7]

The appropriate Government may, by notification, appoint such officers, not below the rank of a Labour Officer, as it thinks fit to be the authorities for the purpose of hearing and deciding

complaints with regard to the contravention of any provision of this Act;

claims arising out of non-payment of wages at equal rates to men and women workers for the same work or work of a similar nature, and may, by the same or subsequent notification, define the local limits within which each, such authority shall exercise its jurisdiction.

Cognizance and Trial of offences [Section 12]

No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under the Act.

No court shall take cognizance of an offence punishable under this Act except upon

its own knowledge or upon a complaint made by the appropriate government or an officer authorized by it in this behalf, or

a complaint made by the person aggrieved by the offence or by any recognized welfare institution or organization.

Appeal Any employer or worker aggrieved by any order made by any authority, may, within 30 days from the date of the order, make an appeal to the appellate authority.

The appellate authority may confirm, modify or reverse the order.

No further appeal shall lie against the order.

Penalties

An employer shall be punishable with simple imprisonment for a term up to one month or with fine up to Rs. 10,000 or with both under the


26

following circumstances:

If the employer omits or fails to maintain any register or other document in relation to workers employed by him.

If the employer omits or fails to produce any register, muster-roll

or other document relating to the employment.

If the employer omits or refuses to gives any evidence or prevents his agent, servant, or any other person in charge of the establishment, or any worker, from giving evidence.

If the employer omits or refuses to give any information.

An employer shall be punishable with fine which shall not be less than Rs. 10,000 but which may extend to Rs. 20,000 or with imprisonment for a term which shall be not less than 3 months but which may extend to one year or with both for the first offence, and with imprisonment which may extend to two years for the second and subsequent offences in the following cases:

If any person omits or refuses to produce to an Inspector any register or document or information, he shall be punishable with fine upto Rs. 500.


27

Lesson 5

Employees State Insurance Act 1948

Objectives In order to provide benefits to employees in case of sickness, maternity, employment injury etc. the government thought to regularize the process through legislation.

The Employees’ State Insurance Act, 1948 was enacted for this purpose.

The Act came into force on 19.04.1948.

Scope and Coverage

The Act extends to the whole of India. ' It is applicable to non-seasonal factories employing 10 or more persons.

The Scheme has been extended to shops, hotels, restaurants, cinemas including preview theatres, road-motor transport undertakings and newspaper establishments employing 20 or more persons. The Scheme has also been extended to Private Medical and Educational institutions employing 20 or more persons in certain States and Union Territories.

Exemption The Act does not apply to the following:

Seasonal factories Factories or establishments under the control of the Government

getting better benefits

Indian Army, Navy and Air Force Factories where less than 10 workers are employed

Mines

Railway running shed

Employees drawing wages exceeding Rs. 15,000/per month.

Employees Entitled

Every employee (Including casual and temporary employees), whether employed directly or through a contractor, who is in receipt of wages upto 21000/p.m. (excluding remuneration for overtime work), is entitled to be insured under the ESL Act

Persons engaged as apprentices [Including those whose period of training is extended by period of time] are also covered.

However, apprentices engaged under the Apprentices Act are not entitled to the ESI benefits.

Employee as per section 2(9) of the ESI Act means any of the following persons employed for wages in or in connection with the work of a factory or establishment to which the Act applies:


28

Any person who is directly employed by the principal employer whether such work is done in the factory or establishment or elsewhere.

Any person who is employed by or through an immediate

employer or under the supervision of the principal employer or his agent which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment.

whose services are temporarily lent or let on hire to the principal

employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service ;

Employees includes Employees does not includesAny person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 and includes such person engaged as apprentice whose training period is extended to any length of time.

Any member of the lndian Naval, Military or Air Forces; Any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government.

An employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period.

The Central Government has since prescribed by a Notification under Rule 50 of the ESL Rules, 1950 wage limit for coverage of an employee under Section 2(9) of the Act 10,000 per month. Further, it is provided that an employee whose wages (excluding remuneration for overtime work) exceed 10,000 a month at any time after and not before the beginning of the contribution period, shall continue to be an employee until the end of the period.

Dependent [Section 2(6A)]

Dependent means any of the following relatives of a deceased insured person namely:

a widow, a legitimate or adopted son who has not attained the age of twenty-five years,, an unmarried legitimate or adopted daughter,


29

a widowed mother,

if wholly dependent on the earnings of the insured person at the time of his death, a legitimate oradopted son or daughter who has attained the age of 25 years and is infirm;

if wholly or in part dependent on the earnings of the insured person at

the time his death: a parent other than a widowed mother,

a minor illegitimate son, an unmarried illegitimate daughter or a

daughter legitimate or adopted or illegitimate if married and minor or if widowed and a minor,

a minor brother or an unmarried sister or a widowed sister if a minor,

a widowed daughter-in-law,

a minor child of a pre-deceased son,

a minor child of a pre-deceased daughter where no parent of the child is alive or,

a paternal grand parent if no parent of the insured person is alive.

Meaning of Employer

Employer means the following:

Owner of the factory; Head of the department in case of Government department; Person responsible for supervision and control in the case of any other

establishment.

In case of contracted labour, primary liability of ESI contribution is that of principal employer. However, he can recover the contribution paid by him from the contractor.

Immediate Employer and Principal Employer

“Immediate Employer” in relation to employees employed by or through him

means a person who has undertaken the execution on the premises of a

factory or an establishment to which this act applies or under the supervision

of principal employer or his agent, of the whole or any part of any work which

is ordinarily part of the work of the factory or establishment of the principal

employer or is preliminary to the work carried on, in or incidental to the

purpose of any such or establishment.

“Principal Employer” means the following: In a factory, owner or occupier of the factory and includes the

managing agent of such owner or occupier, the legal representative of a deceased owner or occupier and where


30

Wages [Section 2(22)]

Wages means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled.

Wages includes Wages does not includes

ny payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two months.

Any contribution paid by the employer to any pension fund or provident fund, or under the ESl Act.


Any sum paid to defray special expenses by the nature of employment.

Any gratuity payable on discharge.

Wage period [Section 2(23)]

Wage period means the period in respect of which wages are ordinarily payable whether in terms of the contract of employment, express or implied or otherwise.

Contribution [Section 2(4)]

Contribution means the sum of money payable to the Corporation by the principal employer in respect of an employees and includes any amount payable by or on behalf of the employee in accordance with the provisions of the Act.

Contribution is payable by the employer and also the employee.

Contribution is paid in respect of each wage period.

RATE or CONTRIBUTION

Employer’s : 4.75% of the wages

Employee's : 1.75% of the wages. (to be rounded off to the next higher rupee)

Employees’ State Insurance Act, 1948

Time and Mode of Deposit

The amount of contribution should be paid be paid into the ESL Account with anauthorised branch of State Bang of lndia, through an E.S.l challan in

quadruplicate, on or before the 21st

of the month following the calendar month in which the wages fall due.

The aggregate amount should be rounded off to the next higher rupee.

Levy of Interest Interest shall be payable @ 12% pa. in respect of each day of default or delay in payment of contributions.


31

Standard Benefit Rate

The benefits available under the ESI Scheme are linked to the standard benefit rate which is in turn linked to the 'average daily wages' of the employee.

Standard benefit rate = Total wages paid during the Contribution period No. of days for which these wages were paid

Medical Benefit

An insured person or a member of his family whose condition requires medical treatment shall be entitled to receive medical benefit.

The medical benefit may be given either in the form of out-patient

treatment in authorised hospital or dispensary, clinic or other institution or by visits by doctor to the home of the insured person or treatment as in-patient in hospital or other institution.

An insured person whoceases to be in insurable employment on

account of permanent disablement shall continue to receive medical benefit till the date on which he would have vacated the employment on attaining the age of superannuation.

An insured person, who has attained the age of superannuation, and

his spouse, shall be eligible to receive medical benefit subject to payment of contribution.

Sickness Benefit

Sickness Benefit in the form of cash @70% of wages is payable to insured workers during the periods of sickness for a maximum of 91 days in a year.

In order to qualify for sickness benefit the insured worker is required to

contribute for 78 days in a contribution period of 6 months. The sickness has to be certified by ESl registered doctor.

No employer shall dismiss, discharge, or reduce or otherwise punish an employee during the period when he is in receipt of sickness benefit.

Extended sickness benefit

Sickness benefit extendable upto two years in the case of 34 malignant and long-term diseases @ 80% of wages.

Enhanced sickness benefit

Enhanced Sickness Benefit equal to full wage is payable to insured persons undergoing sterilization for 7 days/14 days for male and female workers respectively.

Maternity Benefit

Maternity Beneht for conhnement/pregnancy is payable for 26 weeks.

This is extendable by further one month on medical advice at the rate of full wage.

Contribution is to be paid 70 days in the preceding year. Not more than 8 weeks shall precede the expected date of confinement. No employer shall dismiss, discharge, or reduce or otherwise) unish an employee during the period the employee is in receipt of maternity benefit.

Disablement In case of temporary disablement, benefit is payable from day one of


32

Benefits entering insurable employment & irrespective of having paid any contribution in case of employment injury.

Temporary Disablement Benefit at the rate of 90% of wage is payable

so long as disability continues.

In case of permanent disablement, the benefit is paid (:2 90% of wage in the form of monthly payment depending upon the extent of loss of earning capacity a 5 certified by a Medical Board.

A person shall be qualified to claim temporary disablement benefit for

not less than 3 days (excluding the day of accident) for the period of such disablement.

Dependant Benefits

Dependant benefit is paid @ 90% of wage in the form of monthly payment to the dependant of a deceased insured person in cases where death "occurs due to employment injury or occupational hazards.

Other Benefits

Funeral Expenses An amount of Rs. 10,000 is payable to the dependents or to the person who performs last rites from day one of entering insurable employment.

Confinement Expenses an Insured Women or an I.P.in respect of his wife in case confinement occurs at a place where necessary medical facilities under ESI Scheme are not available.

Benefits Payable on Death [Section 71]

If a person dies during any period for which he is entitled to a cash benefit, the amount of such benefit up to and including the day of his death shall be paid to his nominee.

If there is no such nomination, to the heir or legal representative of the deceased person.

Employer not to Dismiss or Punish employee During Period of Sickness, etc. Section 73

No employer shall dismiss, discharge or punish an employee during the period he is in receipt of sickness benefit or maternity benefit.

It shall not dismiss, discharge or punish an employee during the period he is in receipt of temporary disablement benefit or is under medical treatment for sickness or is absent from work for illness arising out of the pregnancy

Employee Insurance Court

Constitution Section 74 of the Act provides that the State Government shall by notification in theOfficial Gazette constitute an Employees’ Insurance Court for such local area as may be specified in the notification.

The Court shall consist of such number of judges as the State Government may think fit.

Any person who is or has been judicial officer or is a legal practitioner of 5 years standing shall be qualified to be a judge of E.I. Court. The State Government may appoint the same Court for two or more


33

local areas or two or more Courts for the same local area and may regulate the distribution of business between them.

Adjudication of disputes

The Employees’ Insurance Court has jurisdiction to adjudicate disputes, namely, whether any person is an employee under the Act, rate of wages/contribution, as to who is or was the principal employer, right of a person to any benefit under the Act.

Adjudication of claims

The E.I Court also has jurisdiction to decide claims for recovery of contribution from principal employer or immediate employer, action for failure or negligence to pay contribution, claim for recovery of any benefit admissible under the Act.

Proceedings in both the above cases can be initiated by filing application in the prescribed form by the employee or his dependent or employer or the corporation depending who has cause of action. No Civil Court has power to decide the matters falling within the purview/ jurisdiction of E.I. Court.

Appeal An appeal shall lie to the High Court against an order of an Employees’ Insurance Court, if it involves a substantial question of law. The appeal should be preferred within 60 days.

Offences and Penalties

Giving False statements Imprisonment upto 6 months, or with fine not exceeding 2000, or with both

Failure to pay contributions, etc Imprisonment for a term up to 3 years and shall also fine of 5000.

in other cases Imprisonment upto one year or with fine upto 4000 or with both under the following circumstances:

if employer's contribution is deducted from the wages of employee.

If wages or any privileges or benefits admissible to an employee is reduced.

if an employee is dismissed, discharged, reduced or otherwise

punished during the period of receipt of disablement/ maternity benefit.

If there is failure or refusal to submit any return or makes a false return.

if there is obstruction to any Inspector or other official of the Corporation in the discharge of his duties. If here is contravention of or non-compliance with any of the requirements of the Act or the rules or the regulations in respect of which no special penalty is provided.

Offences by Companies [Section 86A]

If a company commits an offence, the company and every person, who at the time the offence was committed was in charge of and was responsible for the conduct of the business of the company, shall be deemed to be guilty of the offence and shall be liable to punishment.


34

Lesson 6

Employees Provident Funds and Miscellaneous

Provisions Act 1952

Objectives The employees’ Provident Funds and Miscellaneous Provident Act, 1952 came in to force on 1st November 1952.

It is a social security measure meant for providing provident fund, famiiy pension and deposit linked irsurm benefits to employees.

Both the employee and employer contribute to the Fund equally

throughout the covered persons’ employment The amount is payable normally on retirement, superannuation or

death.

Scope and Coverage

The Act extends to the whole of India except the State of Jammu and Kashmir.

The Act applies to the following establishments:

Every factory engaged in any industry specified in Schedule l and in which 20 or more persons are employed. .

Any other establishment employing 20 or more persons. 0 Any

class of establishments which the Central Government by notification Specifies.

As per Section 1 an establishment to which the Act applies shall continue to be governed by the Act even if the number of employee at any time falls below 20.

The Act is administered by the Central Government through the Employees Provident Fund Organisation.

Non-applicability of the Act [Section 16]

Any establishment registered under the Co-operative Societies Act, 1912, or under any other State law relating to co-operative societies employing less than 50 persons and working without the aid of power.

Any other establishment belonging to or under the control of the

Central or State Government and whose employees are entitled to the benefit of contributory provident fund or old age pension in accordance with any Scheme framed by the Government.

Any other establishment set up under any Central or State Act and whose employees are entitled to the benefits of contributory provident fund or old age pension in accordance with any scheme framed under that Act.

Section 16 does not restrict the scope of the Act.


35

The Central Government having regard to the financial position of any class of establishments or other circumstances may exempt such establishment prospectively or retrospectively from operation of the Act for any period.

Employee [Section 2(f)]

Any person who is employed for wages in any kind of work, manual or otherwise.

Any person who gets his wages'directly or indirectly from the employer.

Employee includes Employee does not includes

Any person employed by or through a contractor in or in connection with the work of the establishment;

An employee who has withdrawn the full amount of his PF :

on retirement from service after attaining the age of 58 years or

An apprentice, not being an apprentice under the Apprentices Act, 1961 or under the standing orders of the establishment.

Before migration from India for permanent settlement abroad or for taking employment abroad.

An employee whose pay at the time he is entitled to become a member of the Fund exceeds Rs. 25,000 per month.

An apprentice.

Superannuation [Section 2(ll)]

Superannuation in relation to an employee, who is the member of the Pension Scheme, means the attainment of the age of 58 years by the said employee.

Basic Wages [Section 2(b)]

Basic wages means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in accordance with the contract of employment and which are paid or payable in cash to him.

Basic wages does not include the following: The cash value of any food concession. Dearness allowance, house-rent allowance, overtime allowance,

bonus, commission or any other allowance payable to the employee in respect of his employment or of work done in such employment.

Any presents made by the employer.Employer [Section 2(a)]

The owner or occupier of the factory, including the agent of such owner or occupier.

The legal representative of a deceased owner or occupier.

A person named as a manager of the factory under the Factories Act,


36

1948. The person or the authority which has the ultimate control over the affairs of the establishment Where the affairs are entrusted to a manager, managing director, such manager, managing director.

Different Schemes

Three schemes have been framed by the Central Government under the Act:

Employees Provident Fund Scheme, 1952

Employees Pension Scheme, 1995

Employees Deposit-Linked Insurance Scheme, 1976.

Provident Fund Scheme

Membership of Fund

Every employee employed in any factory or other establishment to which the Scheme applies shall be entitled to join the Scheme and become a member of the Scheme.

Exempted employees are excluded. Voluntary contribution

Any employee if so desires may contribute voluntarily to the Fund in excess of his statutory contribution.

The amount shall not exceed 10% of his basic wages, dearness

allowance and retaining allowance (if any). The employer may not make any contribution for such voluntary contribution.

Wages for contribution means basic wages, dearness allowance and retaining allowance (if any). Cash value of any food concession allowed to the employee.

Investment of Fund

All moneys belonging to the Fund shall be deposited in the Reserve Bank of India or State Bank of India Or any Scheduled Banks approved by the Central Government from time to time.

The fund shall be invested in the securities referred to in Section 20 of the Indian Trusts Act, 1882.

Advance and withdrawal The EPF Scheme allows members to obtain advances or to withdraw the PF balance under following circumstances:

In case a factory or other establishment has been locked up or closed down for more than 15 days and its employees are rendered unemployed without any compensation.

In case an employee does not receive his wages for a continuous

period of 2 months or more. Advance from the Fund for illness in certain cases.


37

Advance from the Fund for marriages or post-matriculation education of children.

Grant of advances in abnormal conditions like floods, earthquakes or riots, etc.

Grant of advance to members affected by cut in the supply of electricity.

A member may be allowed a non-refundable advance if there is a cut in the supply of electricity to a factory or establishment in which he is employee. A physically handicapped member may get non-refundable advance for purchasing equipment required to minimize the hardship on account of handicap.

Pension Scheme

Under the EPF Act, the Central Government framed Employees‘ Pension Scheme, 1995 for payment of pension to the employees of any establishment to which the Act applies.

The scheme also covers payment of widow or widower's pension,

children pension or orphan pension payable to the beneficiaries of such employees. Pension is payable on

(i) superannuation, (ii) retirement, (iii) permanent total disablement, (iv) death.

Normal superannuation pension is payable on attaining 58 years of age.

0n attaining 50 years of age, pension may be paid at discounted rate.

Minimum 10 years of pensionable service is required to get pension.

Pension is payable only if contribution is paidotherwise the liability rests with the employer.

Calculation of pension

Pension amount is calculated as [Pensionable salary x (Pensionable service+2)]/70.

Where the pensionable service is more than 10 years but less than 20 years, pension shall be calculated considering pensionable service as 20 years. The amount so arrived shall be reduced @3% per year by which the pensionable service is shorter than 20 years subject to maximum of 25%.

Insurance Benefits

The benefit provided under the EDLlS is called Assurance Benefit.

On the death of the member while in service, the nominee or any other person entitled to receive the Provident Fund benefits will, in


38

addition to the Provident Fund, receive the Assurance Benefit under EDLIS.

The amount of Assurance Benefit is equal to the average balance in the amount, of deceased in the Fund during the preceding 12 months or during the period of his membership whichever is less. However, where the average balance exceeds 50,000, amount payable shall be 50,000 plus 40% of the amount in excess of 50,000 subject to a selling of 1,00,000.

Contributions Schemes Employees Contribution

Employers Contribution

Provident Fund Scheme

12% of wages, 10 % in specific industries

3.67%

Pension Scheme 0 8.33% of employee’s wages

Employee Linked Insurance Scheme

0 0.5% of employee’s wages

EPF Administrative Charge

0 0.85%

EDLI Administrative Charge

0 0.01%

UNDER EPF The contributions are payable on maximum wage ceiling of it 25000/by employee and employer.

The employee can pay at a higher rate and in such case employer is

not under any obligation to pay at such higher rate. To pay contribution on higher wages, a joint request from Employee and employer is required [Para 26(6) of EPF Scheme]. In such case employer has to pay administrative charges on the higher wages (wages above 25000/-) For an International Worker, wage ceiling of 25000/is not applicable.

UNDER EPS Contribution is payable out of the employer's share of PF and no contribution is payable by employee.

Pension contribution not to be paid:

When an employee crosses 58 years of age and is in service (EPS members ceases on completion of 58 years).

When an EPS pensioner is drawing Reduced Pension and re-joins as an employee.

In both the cases the Pension Contribution @ 8.33% is to be

added to the Employer Share of PF. (Pension contribution is not to be diverted and total employer share goes to the PF).

In case an employee, who is not existing EPFIEP member joins on

or after 01-09-2014 with wages above 15000 In these cases the pension contribution part will be added to


39

employee share, EPF.

In all other cases Pension Contribution is payable. A member joining after 50 years age, if not a pensioner does not have choice of not getting the Pension Contribution on grounds that he will not complete 10 years of eligible service. The social security cover is applicable till he/she is a member.

For lnternational Worker, higher wage ceiling of 15000 is not

applicable from 11-09-2010. UNDER EDLI Contribution to be paid on upto maximum wage ceiling of Rs. 15000

even if PF is paid on higher wages.

Each contribution is to be rounded to nearest rupee. (Example for each employee getting wages above Rs. 15000, amount will be Rs. 75/-)

EDLI contribution to be paid even if member has crossed 58 years age and pension contribution is not payable. This is to be paid as long as the member is in service and PF is being paid.

[Contribution is rounded to the nearest rupee for each employee, for the employee share, pension contribution and EDLI contribution]

Procedure for determination of money from employer in case of any dispute

When any employee is dissatisfied with any PF money received from the authorities, he may approach the PF authorities for settlement.

The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner or any Assistant Provident Fund Commissioner may determine the amount due from any employer under any provisions of the Act. The Scheme or the Pension Scheme or the insurance Scheme, as the case may be.

The officer conducting the inquiry shall have the same powers as vested in a court under the Code of Civil Procedure, 1908, for trying a suit.

Such inquiry shall be deemed to be judicial proceeding. Review of order

Review of order Any person aggrieved by an order of the Provident Fund authorities for which no appeal has been preferred may apply for a review of that order to the officer who passed the order.

Such review shall be preferred under the following circumstances:

When new and important matter or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the order was made was discovered.

When, on account of some mistake or error apparent on the

face of the record, such review is required. When there is any other sufficient reason for such review.

Recovery of The amount of contribution and other charges paid by an employer in


40

money from contractors [(Section 8A)]

respect of an employee employed by contractor may be recovered by such employer from the contractor, either by deduction from any amount payable to the contractor or as a debt payable by the contractor. A contractor, from whom the amount may be recovered in respect of any employee employed by him, may recover the employee’s contribution from such employee by deduction from his wages.

No contractor shall be entitled to deduct the employer's contribution or the charges from the wages payable to an employee.

Appeals to the Tribunal [Section 7-l]

Any person aggrieved by a notification issued by the Central Government, or an order passed by me Central Government, or any authority, except an order rejecting an application for review, may prefer an appeal to a Tribunal against such order. The Tribunal may, after giving the parties an opportunity of being heard, pass such orders as it thinks fit, confirming, modifying or annulling the order appealed against

Penalties For avoiding payment Whoever avoids payment, knowingly makes false statement or false representation, shall be punishable with imprisonment up to one year, or with fine of 5,000, or with both. For not paying charges

An employer who contravenes, or makes default in payment of inspection or administrative charges, shall be punishable with imprisonment up to 3 years. This shall not be less than one year and fine of 10000 in case of default in payment of employees' contribution which has been deducted by the employer from the employees' wages; six months and fine of 5000, in any other case.

The court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term.

For not paying inspection charges

An employer who contravenes, or makes default in complying with, the provisions in so far as it relates to payment of inspection charges, shall be punishable with imprisonment for a term which may extend to one year but which shall not be less than six months and shall also be liable to line which may extend to 5000. The court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term.

Separate penalty by schemes

Subject to the EFF Act, the Schemes may provide for penalty for contravenes of the Schemes, shall be punishable with imprisonment upto one year, or with line up to 4000 or with both.

Offences and penalties by companies [(Section 14A)]

If a company commits any offence under the EFF Act, the Scheme, the Pension Scheme or the Insurance Scheme, the company and every person, who at the time the offence was committed was in charge of and responsible to the company for the conduct of the business shall be deemed to be guilty of the offence and punished accordingly.

EPF Appellate The Central Government is empowered to constitute the Employees’


41

Tribunal [Section 7D]

Provident FundsAppellate Tribunal.

A Tribunal shall consist of one person only to be appointed by the Central Government.

A person shall not be qualified for appointment as a Presiding Officer

of a Tribunal unless he is or has been or is qualified to be (i) A Judge of a High Court; or (ii) A District Judge.

The Presiding Officer of a Tribunal shall hold office for a term of 5 years or until he attains the age of 62 years, whichever is earlier.

Attachment of PF [Section 10]

The amount standing to the credit of any member in the Provident Fund shall not in any way be assigned or charged or attached under any decree or order of any Court in respect of any debt or liability incurred by the member.

Neither the official assignee nor any receiver shall be entitled to any

claim on any such amount. Any amount standing to the credit of a member in the provident fund at the time of his death and payable to his nominee vests in the nominee and shall not be liable to attachment under any decree or order of any Court

The above provisions shall apply to the family pension or any amount payable under the Pension Scheme and Insurance Scheme.

Exempted Establishment [Section 17]

Exempted establishment means an establishment in respect of which an exemption has been granted under section 17 from the operation of all or any of the provisions of any Scheme or the Insurance Scheme.

Section 17 provides that the Central Government may, on application by the employer and the majority of employees in relation to an establishment employing 100 or more persons, authorise the employer to maintain separate provident fund account in relation to the establishment.

No such authorization shall be made if the employer had committed any default in the payment of provident fund contribution or had committed any other offence under the Act during the 3 years immediately preceding the date of such Authorization.

Application of the Act to International workers

The Employees Provident Fund Scheme, 1952 and Employees Pension Scheme, 1995 was amended enlarging the ambit of the schemes to include international workers.

International Worker means the following persons: An lndian employee having worked or going to work in a foreign

country with which India has a Social Security Agreement and is eligible to avail the benefits under a social security programme of that country under the said agreement.

An employee, other than an lndian employee, holding other than an Indian passport and working for all establishment in lndia to which the EPF Act applies.


42

Lesson 7

Payment of bonus Act 1965

Objectives The Payment of Bonus Act, 1965 was enacted to pay bonus to certain categories of employees. The broad frameworks of the Act are the following:

To impose statutory liability on employer to pay bonus.

To provide for minimum and maximum bonus.

To prescribe means for determination of bonus.

To prescribe machinery for administration and enforcement of liability.

Scope and Coverage

The Act applies to

every factory; and every other establishment in which 20 or more persons are employed on any day during an accounting year_

An establishment to which the Act applies shall continue to be governed by the Act even if the number of persons employed therein falls below 20.

In deciding the number of persons all employees even though they are getting salary above the eligible amount is to be considered. The appropriate government may after giving not less than two months' notice, apply the provisions of the Act with effect from such accounting year specified in the notification, to any establishment or class of establishments, including a factory employing less than 20 persons but not less than 10 persons.

Employees Entitled

Employee means as per section 2(13) of the Act any person (other than an apprentice) employed on a salary or wage not exceeding. Rs. 21,000 per month in any industry to do any skilled or unskilled, manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied.

As per Section 21, employee includes a person who is entitled to bonus under the Act but who is no longer in employment.

Definitions Salary or Wages Section 2(21)

Salary or wages means all remuneration (other than remuneration for over-time work) capable of being expressed in terms of money, which would be payable to an employee in respect of his employment or of work done in such employment, if the terms of employment, express or implied, were fulfilled.

It includes dearness allowance.


43

Salary or wages does not include the following:

Any allowance.

The value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles.

Any traveling concession.

Any bonus including incentive, production and attendance bonus.

Any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit at the employee under any law for the time being in force.

Any retrenchment compensation or any gratuity or other retirement benetit payable.

Any ex-gratia payment made to him. (viii) Any commission payable to the employee.

Where the employer gives an employee in lieu of the whole or part of the salary or wages free food allowance or free food, such food allowance or the value of such food shall be deemed to form part of the salary or wages.

Allocable Surplus [Section 2(4)]

Allocable surplus is as follows:

ln relation to a non-banking company which has not made the arrangement for the declaration and payment within india of dividends payable out of its profits 67% of the available surplus in an accounting year;

In any other case -60% of such available surplus.

The allocable surplus is the amount which is eligible to be distributed as bonus to the employees.

Eligibility of Bonus

Minimum working days (Section8)

Every employee who has worked in the establishment for not less than 30 working days in a year shall be entitled to bonus from his employer in that accounting year.

Salary Limit Section 2 (13)

An employee earning more than f 21,000 per month is not eligible to bonus.

As per Section 12, where the salary of an employee exceeds 21,000 per month, it bonus is paid to such employee, it shall be calculated as if his salary is seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher

Determination of Bonus

Pay ability of bonus is to be determined on the basis of allocable surplus of the establishment.


44

Allocable surplus is to be arrived at from the available surplus.

Available surplus is derived from the gross profit calculated under section 6.

The gross prams in respect of any accounting year shall be computed in the case of a banking company in the manner specified in the First Schedule and in any other case, in the manner specified in the Second Schedule.

Disqualification for Bonus [(Section 9)]

An employee shall not be entitled to get bonus, if he is dismissed from service on the following ground:

Fraud. Riotous or violent behavior while on the premises of the establishment.

Theft, misappropriation or sabotage of any property of the establishment.

Calculation of number of working days [Section 14]

In calculating the number of working days the following shall be considered as working days:

When the employee has been laid off under an agreement or as permitted by standing orders or under the Industrial Disputes Act, 1947, or under any other law applicable to the establishment.

When the employee has been on leave with salary or wages. When the employee has been absent due to temporary disablement caused by accident arising out of and in the course of his employment. When the employee has been on maternity leave with salary or wages.

Customary Bonus [Section 17]

Customary bonus generally means a bonus paid by an establishment to its employees for a long time.

Section 17 of the Act provides that where in any accounting year an employer has paid any puja (festival) bonus or other customary bonus to an employee then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable to the employee under the Act in respect of that accounting year and the employee shall be entitled to receive only the balance.

Applicability of the Act to establishments in Public Sector

Establishment in public sector means an establishment owned, controlled or managed by the following:

A Government Company.

A Corporation in which not less than 40% of its capital is held whether singly or taken together by (i) the Government; or (ii) the Reserve Bank of India; or (iii) a Corporation owned by the Government or the Reserve Bank of India.

If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both is not less than 20% of the gross


45

income of the establishment for that year, the provisions of the Act shall apply to such establishment as they apply in relation to a like establishment in private sector.

Minimum Bonus irrespective of Loss

An employer is required to pay minimum bonus irrespective of profit or loss. Such bonus is payable as under:

Employee above 15 years of age (Section 10)

Every employer shall be bound to pay minimum bonus to every employee above 15 years of age @ 8.33% of the salary or wages earned by the employee during the accounting year or Rs. 100 whichever is his/her.

EmpIoyee not completed 15 years of his age (Section 10)

Where an employee has not completed 15 years of age at the beginning of the accounting year, he shall be entitled to minimum bonus @ 8.33% of salary or wages or Rs. 60 whichever is higher.

Maximum Bonus [Section 11]

Where in any accounting year, the allocable surplus exceeds the minimum bonus payable to the employees, the employer shall pay to every employee bonus for that accounting year proportion to the salary earned by the employee subject to a maximum of 20% of such salary.

In computing the allocable surplus the amount of set on or set off shall be taken into account.

Time of Payment of Bonus

Bonus shall be paid in cash within 8 months from the close of the accounting year.

Where there is a dispute regarding payment of bonus pending before

any authority, bonus shall be paid within one month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute.

The appropriate government may, on application by the employer

and for sufficient reasons extend the period of 8 months to such further period or periods as it thinks fit so that the total period so extended shall not In any case exceed 2 years.

Set on of allocable surplus

Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment, the excess shall be carried forward subject to a limit of 20% of the total salary or wages of the employees employed in the establishment-in that accounting year.

Such carried forward amount are to be added to the available surplus

in the succeeding accounting year and so on up to and inclusive of the 4th accounting year for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.

Set off of allocable surplus

Where for any accounting year, there is no available surplus or the allocable surplus falls short of the amount of minimum bonus payable and there is no amount or sufficient amount carried forward before which could be utilised for the purpose of payment of the minimum bonus, then the deficiency shall be carried forward and set off in the succeeding accounting year up to and


46

inclusive of the 4th accounting year in the manner illustrated in the Fourth Schedule.

Order of set on/set off

Where in any accounting year any amount has been carried forward and set on or set off, in calculating bonus for the succeeding accounting year, the amount carried forward from the earliest accounting year shall first be taken into account.

Deduction [Section 6]

The following sums shall be deducted from the gross profit. Depreciation admissible under the Income-tax Act, or agricultural

Income-tax law. Development rebate or investment allowance or development

allowance under the Income-tax Act

Direct tax which the employer is liable to pay for the accounting year on his income, profits and gains.

Such further sums as specified in respect of the employer in the Third Schedule.

Deduction from Bonus from Misconduct [Section 18]

Where in any accounting year an employee is found guilty of misconduct causing of natural loss to the employer, the employer can deduct the amount of such loss from the bonus payable to the employee in respect of that accounting year only.

Bonus Linked with Production or Productivity [Section 31A]

Where an agreement or a settlement has been entered into between the employees and the employer for payment of annual bonus linked with production or productivity in lieu of bonus based on profits payable under the Payment of Bonus Act, such employees shall be entitled to receive bonus under such agreement.

Such bonus shall be more than the minimum bonus as per the Act.

Such bonus shall also not be more than 20% of the salary.

Newly Set up Establishment

In a newly set up establishment, bonus shall be paid as under: In the first five accounting years -In the first five accounting years

following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment. No set off and set on is allowable.

For the sixth accounting year -Set on or set off shall be made in the

manner illustrated in the Fourth Schedule taking into account the excess or deficiency of the allocable surplus set on or set off in respect of the fifth and sixth accounting years.

For the seventh accounting year -Set on or set off shall be made in

the manner illustrated in the Fourth Schedule taking into account the excess or deficiency of the allocable surplus set on or set off in respect of the fifth, sixth and seventh accounting years.

From the eighth accounting year -From the eighth accounting year

the provisions of set off and set on shall apply in relation to such


47

establishment as they apply in relation to any other establishment.An establishment shall not be deemed to be newly set up merely by reason of a change in its location, management, name or ownership.

Penalty Offence by any person- if any person contravenes any of the provisions of the Act or if any person to whom a direction is given or a requisition is made under the Act fails to comply with the direction or requisition, he shall be punishable with imprisonment up to six months, or with fine up to Rs. 1000, or with both.

Offence by company- Where a company commits an offence, the

company and every person who, at the time when the offence was committed was in charge of and was responsible for the conduct of its business shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Such person shall not be liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.


48

Lesson 8

Payment of Gratuity Act 1972

Objectives The Payment of Gratuity Act, 1972 envisages to provide a retirement benefit to the workmen who have rendered long and unblemished service to the employer, and have thus contributed to the prosperity of the employer. Gratuity is a reward for long and meritorious service.

The significance of this Act lies in the acceptance of the principle

of gratuity as a compulsory, statutory retrial benefit.

Scope and Coverage The Act extends to the whole of India except that it does not extend to the State of Jammu and Kashmir so far as it relates to plantations or ports.

The Act applies to the following:

Every factory, oilfield, plantation, port, railway company and

mine.

Every shop or establishment in which 10 or more persons are employed, or were employed on any day of the preceding 12 months.

As per Section 3A, a shop or establishment to which the Act becomes applicable shall continue to be governed by the Act even if the number of employees falls below 10.

The Central Government has specified Motor Transport

undertakings, clubs, chambers of industries, inland water

transport establishments, solicitor’s office, local bodies, trusts

and societies, circus industry in which 10 or more persons are

employed or were employed on any day during the preceding 12

months to be covered under the Act.

Exemption The appropriate government is empowered to exempt, by notification, any establishment, factory, mine, oilfield, plantation, port, railway company or shop to which this Act applies from the operation of the Act.

If the government so opines that the employees of such

establishment, etc. are in receipt of gratuity or pensionary

benefits not less favourable than the benefits conferred under this

Act. The appropriate government may also exempt any employee


49

or class of employees, similarly.

Employees Entitled Employee as defined in section 2(e) means any person (other than an apprentice) who is employed on wages, whether the terms of such employment are express or implied, in any kind of work, manual or otherwise in or in connection with the work of a factory, mine, oilfield, plantation, port, railway company or shop, other establishment to which the Act applies.

Teachers are now covered under the Act in terms of the amendment of the Act in 2010 though teaches were not earlier covered under the Act.

Employee does not include any person who holds a post under

the Central or State Government and is governed by any other

Act or rules providing for payment of gratuity.

Employer [Section

2(f)]

In relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop belonging to, or Under the control of the Central or a State Government:

Any person or authority appointed by the appropriate government for the supervision and control of employees.

Where no person or authority has been so appointed, the head of the Ministry or the Department concerned.

In relation to any establishment, factory, mine, oilfield, plantation, port, railway company or shop belonging to, or under the control of any local authority.

The person appointed by such authority for the supervision and

control of employees'

Where no person has been so appointed, the chief executive

officer of the local authority.

.

In any other case :

The person, who or the authority which has the ultimate control over the affairs of the establishment, factory, mine, oilfield, plantation, port, railway company or shop.

Where the said affairs are entrusted to any other person, whether

called a manager, managing director or any other name, such

person.

Family [Section

2(h)]

Family in relation to an employee shall be deemed to consist of the

following:


50

(i) In the case of a male employee :

himself,

his wife,

his children, whether married or unmarried,

his dependent parents,

the dependent parents of his wife, and the widow and children of his predeceased son, if any.

(ii) In the case of a female employee :

herself,

her husband,

her children, whether married or unmarried,

her dependent parents,

the dependent parents of her husband, and

the widow and children of her predeceased son, if any.

(iii) Any child lawfully adopted shall be deemed to be included in his

family. (iv) Where a child has been lawfully adopted by another person, such

child shall be excluded from the family. Wages [Section 2(s)] Wages means all emoluments which are earned by an employee

while on duty or on leave in accordance with the terms and conditions of his employment which are paid or payable to him in cash.

Wages includes dearness allowance. Wages does not include any bonus, commission, house rent

allowance, overtime wages and any other allowance

Continuous Service

[Section 2A] Eligibility of an employee for gratuity depends upon his

continuity of service An employee shall be in continuous servrce for a period if he has

been in uninterrupted service for that period. Any interruption in service on account of sickness, accident,

leave, absence from duty Without leave, layoff, strike or a lock-out or cessation of work not due to any fault of the employee shall be ignored.

Any absence for which an order treating it as break in service has

been passed as per the standing orders shall not be in continuous

service.

DEEMED

CONTINUOUS

SERVICE OTHER

THAN IN

SEASONAL

For one year

If he actually worked for not less than 190 days below the ground in a mine or In an establishment which works for less than 6 days in a week;

In any other case, if he actually worked for not less than 240 days


51

ESTABLISHMENT

SECTION 2A

in a year.

For six month

If he actually worked under the employer for not less than 95 days (i) below the ground in a mine or

in an establishment which works for less than 6 days in a week;

In any other case, if he actually worked for not less than 120

days.

Consideration of

days

The number of days on which an employee has actually worked include

the following:

The days on which he has been laid-off under an agreement or as permitted by standing orders.

The days on which he has been on leave with full wages. The days on which he has been absent due to temporary

disablement caused by accident arising out of and in the course of his employment.

In the case of a female, the days on which she has been on

maternity leave not exceeding twelve weeks

DEEMED

CONTINUOUS

SERVICE IN

SEASONAL

ESTABLISHMENT

An employee employed in a seasonal establishment shall be deemed to be in continuous service if he has actually worked for not less than 75% of the number of days on which the establishment was in operation during period of one year or six month as the case may be.

What is Gratuity Gratuity is a lump sum payment made by the employer to an employee when he retires or leaves service.

Entitlement of

Gratuity

[Section 4]

After 5 years of continuous service - On superannuation or

retirement or resignation.

Less than 5 years of continuous service - On death or disablement due to accident or disease.

To WHOM

GRATUITY BE

PAID IN CASE OF

DEATH

In case of death gratuity shall be paid to the nominee of the

employee.

If no nomination has been made, gratuity shall be paid to his

heirs. Where any such nominee or heir is a minor, the share of such

minor shall be deposited with the controlling authority.

Computation of

Gratuity in Case of

Monthly Wage

Employee

The employer shall pay gratuity to an employee at the rate of 15 day8‟ wages based on last drawn wages for every completed year of service or part thereof in excess of six months.

The 15 days' wages shall be calculated by dividing the last drawn wages by 26 and multiplying the quotient by 15

Gratuity = Last drawn wages x (15/26) x completed year of

service

Computation of Daily wages shall be computed on the average of the total wages


52

Gratuity in the

Case of a Price

Rated Employee

received by him for a period of 3 months immediately preceding the termination of his employment.

The wages paid for overtime work shall not be taken into

account.

Gratuity shall be computed at the rate of 15 days wages for

completed years of service.

Gratuity = Average daily wages x 15 x completed year of service

Computation of

Gratuity in the case

of Seasonal

Establishment

The employer shall pay the gratuity at the rate of 7 days' wages for each season.

Maximum Amount

of Gratuity

The amount of gratuity shall not exceed Rs. 10,00,000/-. An employee may receive better terms of gratuity under any

award or agreement or contract.

Forfeiture or

Gratuity

[Section 4(6)]

If the services of an employee have been terminated for any act, willful omission or negligence causing any damage or loss or destruction of the property of the employer gratuity shall be forfeited to the extent of the damage or loss caused

If the service of such employee is terminated for his riotous or disorderly conduct or any other act of violence gratuity may be wholly or partially forfeited.

If the service of any employee is terminated for any offence

involving moral turpitude gratuity may be wholly or partially

forfeited.

Intimation of

Gratuity Becoming

Payable

As soon as gratuity becomes payable, the employer should determine the amount of gratuity and give a notice in the prescribed form to the payee viz. the employee or his nominee or legal hair and to the controlling authority of that area.

Application for

Payment of

Gratuity

A person shall make application in Form ‟I” within 30 days from the date the gratuity is payable for payment of gratuity.

A nominee shall apply ordinarily within 30 days from the date of gratuity became payable to him, in Form 'J'.

An application in plain paper with relevant particulars shall also

be accepted. A legal heir shall apply ordinarily within one year from the date

of gratuity became payable to him, in Form „K„. An application filed after the expiry of the specified periods shall

be entertained on sufficient ground. No claim shall be invalid merely because the claimant failed to

present his application within the specified period.

Duty of Employer

to Pay Gratuity

[Section 7]

The employer shall whether application has been made or not determine the amount of gratuity and pay within 30 days from the date it becomes payable.

If the amount is not paid within 30 days. The employer shall pay

simple interest.

NO interest shall be payable if the delay is due to the fault of the


53

employee.

Insurance and

Registration

[Section 4A]

Every employer, other than under the control of the Central or State Government, shall have insurance for its liability for payment of gratuity with the Life Insurance Corporation of India or any other prescribed insurer.

The appropriate government may exempt any employer employing 500 or more persons who establishes an approved gratuity fund.

Every such employer shall get his establishment registered with

the controlling authority. Where an employer fails to make any payment of premium to the

insurance company or contribution to an approved gratuity fund, he shall be liable to pay gratuity (including interest, if any, for delayed payments) forthwith to the controlling authority.

Whoever contravenes the aforesaid provisions shall be punishable with fine up to Rs. 10,000 and for continuing offence with a further tine up to Rs. 1,000 for each day during which the offence continues.

Nomination

[Section 6]

Each employee, who has completed one year of service, shall make nomination (in Form F) for receiving gratuity.

An employee may distribute the amount of gratuity amongst

more than one nominee. If an employee has a family at the time of making a nomination,

the nomination shall be made in favour of one or more members of his family. Any nomination made in favour of a non-family member shall be void.If at the time of making a nomination the employee has no family, the nomination may be made in favour of any person. On subsequently acquiring a family, such nomination shall forthwith become invalid and the employee shall make a fresh nomination (in Form G) in favour of one or more members of his family.

A nomination may be modified by an employee at any time

giving notice in Form H. If a nominee predeceases the employee, the interest of the

nominee shall revert to the employee.

Attachment and

Assignment of

Gratuity

[Section 13]

Gratuity shall not be liable to attachment in execution of any decree or order of any civil, revenue or criminal court.

Disputes and

Settlement

[Section 7(4)]

Where there is any dispute regarding the amount of gratuity or admissibility of any claim, or entitlement of the person to receive gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable.

The employer or employee or any other person raising the dispute may make an application to the controlling authority for deciding


54

the dispute. The controlling authority shall, after giving the parties a

reasonable opportunity of being heard, determine the matter. If any amount is payable to the employee, the controlling

authority shall direct the employer to pay such amount. The controlling authority shall pay the amount deposited

including the excess amount, if any, deposited by the employer to the person entitled it.

Penalties

[Section 9]

Whoever knowingly makes any false statement or false representation for avoiding payment of gratuity, he shall be punishable with imprisonment for a term upto 6 months, or with fine upto Rs. 10,000 or with both.

An employer who contravenes any of the provisions of the Act, he shall be punishable with imprisonment not less than 3 months but which may extend to one year, or with fine which shall not be less than Rs. 10,000 but which may extend to 20,000 or with both.

Where the offence relates to non-payment of any gratuity, the employer shall be punishable with imprisonment for a term which shall not be less than 6 months but which may extend to 2 years unless the court allows a lesser term.


55

Lesson 9

Employee’s Compensation Act 1923

Objectives The Employees' Compensation Act, 1923 is an Act to provide for payment of compensation by certain classes of employers to their employees for injury due to accident.

The Act was originally enacted as the Workmen's Compensation Act,

1923. By the Workmen’s Compensation (Amendment) Act, 2009 which

came into force on 18.01.2010, the word Workmen' was replaced by

the word Employee'.

Scope and

Coverage The Act extends to the whole of India. It applies to factories, mines, docks, construction establishments,

plantations, oilfields and other establishments listed in Schedule ll and III to the Act.

The Act covers workers of newspaper establishments, drivers, cleaners, etc. working in connection with a motor vehicle, workers employed by lndian companies abroad, persons engaged in spraying or dusting of insecticides or pesticides in agricultural operations, mechanised harvesting and thrashing, horticultural operations and doing other mechanical jobs.

Every employee including those employed through a contractor,

except casual employees, who is engaged for the purposes of

employer's business and who suffers injury in any accident arising out

of and in the course of his employment, shall be entitled for

compensation under the Act.

Exceptions The Act does not cover establishments covered by the Employees

State Insurance Act

It also does not apply to the Armed Forces.

Employees

Entitled

As delined in SectIon 2(dd), employee means a person, who Is - a railway servant not permanently employed in any administrative

district or sub-divisional office of a railway and not employed In any such capacity as is specified In Schedule II; or

a master seaman or other members of the crew of a ship,

a captain or other member of the crew of an aircraft, a person recruited as driver, helper, mechanic, cleaner or in any other

capacity in a motor vehicle,

a person recruited for work abroad by a company, and who is employed outside India in any such capacity as is specilied in Schedule II and the ship, aircraft or motor vehicle, or company, as the


56

case may be, is registered in India; or employed in any such capacity as is specified in Schedule II, and

whether such contract is express or implied, oral or in writing.

Exceptions: Employee does not include any person working in the

capacity of a member of the Armed Forces of the Union. It also does

not include 3 employees whose employment is of casual nature and his

work not connected with the employer’s trade or business.

Definitions

Dependent

[Section 2(1)(d)]

Dependent means any of the following relatives of a deceased employee

A widow, a minor legitimate son, and unmarried legitimate daughter, or a widowed mother,

If wholly dependent on the employee at the time of his death, a son or a daughter who has attained the age of 18 years and who is infirm.

If wholly or partly dependent on the employee at the time of death,

a widower,

a parent other than a widowed mother, a minor illegitimate son, an unmarried illegitimate daughter or a

daughter legitimate or illegitimate if married and a minor or if widowed and a minor,

a minor brother or a unmarried sister or a widowed sister if a

minor,

a widowed daughter-in-law, a minor child of a pre-deceased son,

a minor child of a pre-deceased daughter where no parent of the

child is alive, or

a paternal grandparent if no parent of the employee is alive.

Son, daughter and child include adopted son, daughter and adopted

child.

Temporary

Partial

Disablement

[Section 2

(1)(g)]

Where the disablement is of such a nature that it reduces the earning capacity of the employee in which he was engaged at the time of the accident.

Every injury specified in Part II of Schedule I.

Permanent

Partial

Disablement

[Section 2

(1)(g)]

Where the disablement is of such a nature that it reduces the earning

capacity of the employee in every employment which he was capable

of undertaking at the time of the accident resulting in the disablement.

Total

Disablement

[Section

2(1)(I)]

Disablement, whether temporary or permanent that incapacitates an

employee for all work which he was capable of performing at the time

of the accident.

Permanent

Total Every injury specified in Part I of Schedule I. Any combination of injuries specified in Part II where the aggregate


57

Disablement

[Section

2(1)(I)]

percentage of the loss of earning capacity specified in the said Part II

against those injuries is 100% or more.

Wages Section

2(1)(m) Wages includes any privilege or benefit which is capable of being

estimated in money. Wages does not include the following:


Contribution paid by the employer towards any pension or

provident fund. Any sum paid to an employee to cover any special expenses entailed

on him by the nature of his employment.

Liability for

Compensation

[Section 3]

The employer is liable for payment of compensation it personal injury

is caused to an employee by accident arising out of and in the course

of his employment.

Accident

arising out of

and in the

course of

employment

Accident arising out of employment

An accident arising out of employment means that at the time of injury the employee has been engaged in the business of the employer and not doing something for his personal benefit.

The accident occurs at the place where the employee is performing his

duties. The injury has resulted from some risk incidental to his duties or

inherent in the nature of condition of employment.

Accident arising in the course of employment

Accident in the course of employment refers to the accident suffered

when the employee is on duty at or about the place of his work.

Statutory

provisions for

accident

arising out of

and in the

course of

employment

Section 3(2) provides the following provisions

If an employee is in employment specified in Part A of the Schedule III contacts any disease, it is accident arising out of and in the course of employment.

If an employee is in employment specified in Part B of the Schedule III contacts any disease for not less than 6 months, it is accident arising out of and in the course of employment.

If an employee is in employment specified in Part C of the Schedule

III contacts any disease, it is accident arising out of and in the course

of employment.

Non-liability of

Employer

The employer shall not be liable to pay compensation under the following

circumstances:

In respect of any injury which does not result in total or partial disablement exceeding 3 days.

In respect of any injury, not resulting in death, caused by an accident directly due to the employee under the influence of drink or drugs, or


58

wilful disobedience of an order expressly given or to a rule expressly framed, for the purpose of securing the safety of employee, or wilful removal or disregard by the employee of any safety guard or other device which he knew to have been provided for safety of employees.

In respect of any disease if the disease is not directly attributable to the injury by accident arising out of and in the course of employment.

In respect of any injury for which he has instituted in a Civil Court a

suit for damages.

Amount of

Compensation

[Section 4]

Nature of injury, his monthly wages and the „Factor‟ provided in Schedule IV to the Act with respect to his completed year of age.

Such compensation may be for death, disablement whether total or partial or temporary or permanent. '

The amount of compensation shall be as follows:

In case of death

Where death results from the injury, an amount equal to 50% of the monthly wages of the deceased employee multiplied by the relevant factor as given in Schedule IV; or an amount of Rs. 1,20,000 whichever is more.

In case of permanent total disablement

Where permanent total disablement results from the injury, an amount equal to 60% of the monthly wages of injured employee multiplied by the relevant factor; or an amount of Rs. 1,40,000, whichever is more.

In case of Permanent partial disablement

Where permanent partial disablement results from injury specified In Part II

of Schedule I, such percentage of the compensation which would have been

payable in the case of permanent total disablement as is specified in the

schedule. Where more than one injury is caused by the same accident, the

amount of compensation payable shall be aggregated. Such amount shall not

exceed the amount which would have been payable if permanent total

disablement had resulted from the injuries.

In case of temporary disablement In case of temporary disablement, whether

total or partial result from the injury, a half-monthly payment at the monthly

wages or sum equivalent to Rs. 25,000 to be paid.

Time of

Payment and

Distribution of

Compensation

[Section 4A(1)]

Compensation to employees shall be paid as soon as it falls due. In cases where the employer does not accept the liability for

compensation to the extent claimed, he shall t bound to make provisional payment based on the extent of liability which he accepts.

Such payment shall be deposited with the Commissioner or made to

the employee. Where any employer is in default in paying the compensation due

within one month from the date it fell (ill! the Commissioner shall


59

direct that, in addition to the amount of the arrears, simple interest at the rate of 12% per annum on the amount due together with, if in the opinion of the Commissioner there is no justification fc the delay, a further sum not exceeding 50% of such amount. shall be recovered from the employer.

Time of

Payment and

Distribution of

Half-monthly

Compensation

[Section 4A(2)]

Half-monthly payment shall be payable on the 16”1 day from the date of disablement where such disablement lasts for a period of 28 days or more.

Where such disablement lasts for a period of less than 28 days, half-monthly payment shall be payable on the „16th day alter the expiry of a waiting period of 3 days from the date of disablement.

Thereafter, the payment shall be made half-monthly during the disablement or during a period of 5 years whichever period is shorter.

The amount of any allowance which the employee has received from the employer by way of compensation during the period of disablement prior to the receipt of lump sum or of the first half-monthly payment, shall be deducted from the lump sum or half-monthly payments.

Any payment received from the employer towards medical treatment

shall not be deemed to be a payment by way of compensation.

Payment of

Compensation

to Contract

Labour

The principal employer is liable to pay compensation to contract labour in the same manner as his departmental labour. He is entitled to be indemnified by the contractor. The principal employer shall not however be liable to pay any interest and penalty leviable under the Act

Calculation of

Monthly

Wages

[Section 5]

Monthly wages means the amount of wages deemed to be payable for

a month„s service. whether the wages are payable by the month or by

whatever other period or at piece rates.

Such wages is to be calculated as follows :

In case of monthly wages

Where the employee is liable to compensation during a continuous period of

not less than 12 months immediately preceding the accident, monthly wages of the employee shall be one-tweth oi the total wages in the last twelve months of that period.

In case of less than a month’s wages

Where the whole of the continuous period of service immediately preceding the accident is less than one month. the monthly wages shall be the average

monthly amount during the twelve months immediately preceding the accident earned by any employee employed on the same work by the same

employer, or, if there was no employee so employed, by an employee


60

employed on similar work in the same locality.

In case of insufficient information

ln other cases, the monthly wages shall be 30 times of the total wages earned in respect of the last continuous period of service immediately preceding the accident from the employer who is liable to pay compensation, divided by the number of days comprising such period.

Review of

Half-monthly

Payment

[Section 6]

Any half monthly payment may be reviewed by the Commissioner on the application of the employer or the employee.

Such application shall be accompanied by certificate of a qualified medical practitioner that there has been a change in the condition of the employee or rules.

Any half-monthly payment may on review be continued, increased,

decreased or ended. If the accident is found to have resulted in permanent disablement,

half-monthly payment may be converted to the lump sum.

Computation

of Half-

monthly

Payment

[Section 7]

Any right to receive half-monthly payments may, by agreement between the parties or, if the parties by the parties or determined by the Commissioner.

Distribution of

Compensation

in case of

Death of the

injured

Employee

[Section 8]

Compensation amount shall be deposited with the Commissioner.

Payment made directly shall not be a payment of compensation. An employer may make advance not exceeding (100 but the amount

shall be deducted from such compensation. The Commissioner shall deduct the actual cost of the employee's

funeral expenses not exceeding 5,000 and pay the same to the person who incurred the same.

If the Commissioner is satisfied that no dependant exists, the balance money be paid to the employer.

No Assignment

and

Attachment of

Compensation

[Section 9]

Any lump sum or half-monthly payment shall not be assigned or charged or be liable to attachment or pass to any person other than the employee by operation of law.

Any claim shall not be set off against the compensation.

Procedure for

Claiming

Compensation

[Section 10]

Notice of the accident to be given as soon as practicable after the happening of the accident.

The claim is to be made within two years of the occurrence of the

accident or death. " The Commissioner may entertain any claim even if the notice has not

been given or the claim has not been preferred in due time on sufficient cause.

The Commissioner shall dispose of the matter within a period of three months from the date of reference and intimate the decision within the said period to the employee.


61

Penalties

[Section 18A]

Whoever fails (a) to maintain a notice-book, or (b) to send to the Commissioner a statement or (c) to send a report under Section 108, or (d) to make a return under section 16, shall be punishable with fine up to 5,000.

No prosecution shall be instituted except previous sanction of the

Commissioner. No Court shall take cognizance of any offence, unless complaint is

made within six months of the date on which the alleged offence came to the knowledge of the Commissioner.


62

Lesson 10

Contract Labour Act, 1970

Objectives Contract Labours suffer from lack of job security, poor economic conditions, casual nature of employment low payment etc.

To regulate the conditions of these labours, the Contract Labour (Regulation and Abolition) Act, 1970 was passed

The Act came into force from 10.02.1971. The main objective of the Act is to stop the exploitatlon of the

contract labours and to abolish the practice of contract labour under the following circumstances: if the work is of perennial nature. o If the work is incidental to

and necessary for the work of the factory. If the work is of the nature that it can employ considerable

number of whole time workmen.

If the work can be done by ordinary or regular workmen.

Scope and

Coverage

The Act extends to the whole of India. The Act applies to the following:

To every establishment in which 20 or more workmen are employed or were employed on any day of the preceding twelve months as contract labour.

To every contractor who employs or who employed on any day of the preceding twelve months 20 or more workmen.

The appropriate Government may, after giving not less than two months' notice apply the provisions of the Act to any establishment or contractor employing less than 20 workers.

The Act does not apply to establishments in which work of an

intermittent or casual nature is performed.

Work of

intermittent

nature

As provided in explanation to section 1. Work is intermittent nature if

it was performed for not more than 120 days in the preceding twelve

months. In case of a seasonal establishment. The work performed is

not more than 60 days in a year.

Workman

Entitled

Workman means any person employed in or in connection with the work of

any establishment to do any skilled. Semi-skilled or un-skilled, manual,

supervisory, or clerical work for hire or reward, whether the terms of

employment be express or implied. [Section 2(1)(i)]

Exceptions

A workman does not include the following person:

A person employed mainly in a managerial or administrative

capacity.


63

A person employed in a supervisory capacity drawing wages

exceeding 500 pm.

A person exercises functions mainly of a managerial nature.

Who is an out worker.

Contract

Labour

[Section 2(1)(b)]

A workman shall be deemed to be employed as contract labour in or

in connection with the work of an establishment when he is hired by

or through a contractor, with or without the knowledge of the

principal employer.

Registration of

Establishments

[Section 7]

An establishment to which the Act applies has to get registered

under the Act. The Contract Labour (Regulation and Abolition) Rules, 1971

provides that every principal employer of an establishment shall make an application to the Registering Officer of the area in which the establishment sought to be registered is located in Form I for registration within time fixed by the appropriate government.

The registering officer may entertain any such application after expiry of the period for sufficient cause.

The application shall be accompanied by a demand draft showing payment of the fees which vary from 20 to 500 which is related to the number of workmen employed as contract Labour.

If the application is complete in all respects, the registering officer shall register the establishment and issue a certificate of registration.

Revocation of

Registration

[Section 8]

If the registering officer is satisfied that the registration has been

obtained by misrepresentation or suppression of any material fact, or

that for any other reason the registration has become useless or

ineffective and requires to be revoked, the registering officer may,

after giving an opportunity to the principal employer of the

establishment to be heard and with the previous approval of the

appropriate Government, revoke the registration of such

establishment.

Effect of Non-

Registration

[Section 9]

No principal employer of an establishment, to which the Act applies, shall

employ contract labour if the establishment is not registered or the

registration has been revoked.

Prohibition of

Employment of

Contract

Labour

[Section 10]

The appropriate Government to prohibit employment of contract Labour in any process, operation or other Work in consultation with the Central or the State Board.

If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final.

Licencing of

Contractor

[Section 12]

No contractor shall undertake any work through contract labour except under a licence issued by the licensing officer.

Every application for a license shall be made, in triplicate, in Form IV, to the licensing officer of the area in Which the establishment is located.

The application shall be accompanied by a demand draft showing


64

deposit of the security and the payment of fees. The deposit shall be calculated @ Rs 90 for each workman to be

employed as contract labour. Where the contractor is a Co-operative Society, the deposited

shall be @ Rs. 15 for each contract labour. A certificate by the principal employer in Form V to the effect

that the applicant has been employed by him as a contractor and that he undertakes to be bound by all the provisions as applicable to him as principal employer is to be given along with the application.

On receipt of the application, the licensing officer shall grant an acknowledgement to the applicant.

Revocation

Suspension of

Licence

[Section 14]

If the licensing officer is satisfied that a licence has been obtained by misrepresentation or suppression of any material fact, the licensing officer may, after giving the holder of the licence an opportunity of showing cause, revoke or suspend the licence or forfeit the deposit for the due performance of the conditions subject to which the licence has been granted.

Welfare and Health of Contract Labour

Canteens

[Section 16]

Every establishment to which the Act applies and wherein 100 or more contract labourers are ordinarily employed by a contractor, one or more canteens shall be provided and maintained by the contractor.

Rest-rooms

[Section 17]

In every place wherein contract labour is required to halt at night in connection with the work, the contractor shall maintain for the use of the contract labour, rest-rooms or such other suitable alternative accommodation.

Other facilities

[Section 18] Every contractor shall provide and maintain (a) sufficient supply of

wholesome drinking water at convenient places; (b) sufficient number of latrines and urinals convenient and accessible and (c) washing facilities.

First-aid facility

[Section 19]

The contractor shall provide not less than one first-aid box for 150 contract labour. The boxes shall be readily accessible during all working hours at every place where contract Labour is employed.

Liability of

principal

employer

[Section 20]

If any amenity required to be provided for the benefit of the contract labour is not provided by the contractor, such amenity shall be provided by the principal employer.

Payment of

Wages to

Contract

Labours

[Section 21]

A contractor shall be responsible for payment of wages to each worker employed by him as contract labour.

Every principal employer shall nominate a representative duly authorized by him to be present at the time of disbursement of wages by the contractor.

lt shall be the duty of such representative to certify the amounts paid

as wages.


65

lt shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorized representative of the principal employer.

In case the contractor fails to make payment of wages within the prescribed period or makes short payment, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due to the contract labour employed by the contractor.

The principal employer shall recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

Penalties

Obstruction

(Section 22)

Whoever obstructs an inspector in the discharge of his duties or refuses or willfully neglects to afford the inspector any reasonable faculty for making any inspection, examination, inquiry or investigation, he shall be punishable with imprisonment up to 3 months, or with fine up to Rs. 500, or with both.

Refusal to give

documents

(Section 22)

Whoever willfully refuses to produce to an inspector any register or other document or prevents or attempts to prevent or does anything which he has reason to believe is likely to prevent any person from appearing before or being examined by an inspector, shall be punishable with imprisonment up to 3 months, or with fine up to Rs. 500, or with both.

Contravention

of provisions of

the Act

[Section 23]

Whoever contravenes any provision of the Act or of any rules made thereunder, shall be punishable with imprisonment up to 3 months, or with fine up to Rs. 1000, or with both. in the case of a continuing contravention, an additional fine upto Rs. 100 for every day during which such contravention continues after conviction for the first shall be paid.

Other offences

[Section 24]

If any person contravenes any of the provisions of the Act or of any rules made there under for which no other penalty is elsewhere provided, he shall be punishable with imprisonment for a term up to 3 months, or with fine up to Rs. 1000, or with both.

Ofences by

Companies

[Section 25]

If a company commits an offence, the company as well as every person in charge of and responsible to the company for the conduct of its business at the time of the commission of the offence shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly

Registers and

Records

[Section 29]

Every principal employer and every contractor shall maintain registers and records giving particulars of contract labour employed, the nature of work performed, the rates of wages paid etc.

Display of

Notice

Every principal employer and every contractor shall exhibit within the premises of the establishment where the contract labour is employed, notices containing particulars of hours of work, nature of duty etc.


66

Lesson 11

Maternity Benefit Act 1961

Objectives The object of maternity leave and benefit is to protect the dignity of motherhood by providing for the full and healthy maintenance of working woman and her child when she is not working.

With this object the Maternity Benefit Act, 1961 was enacted The Act came into force on 01.11.1963 As per preamble of the Act, it is an Act to regulate the employment of

woman in certain establishments for certain period before and after

child-birth and to provide for maternity and certain other benefits.

Scope and

Coverage The Act extends to the whole of india. It applies to every establishment being a factory, mine or plantation

including any such establishment belonging to Government and to every establishment wherein persons are employed for the exhibition of equestrian acrobatic and other performances.

The Act also applies to every shop or establishment in which 10 or more persons are employed or were employed on any day of the preceding 12 months.

Where ESI Act applies to the factory but any employee is out of its

coverage due to salary limit, the provisions of the Maternity Benefit Act

shall apply in her case.

Exception The Act shall not apply to any factory or establishment to which the

Employees„ State insurance Act, 1948 applies except as provided in

Sections 5A and 58.

Employees

Entitled

Every woman employee, whether employed directly or through a contractor, who has actually worked in the establishment for a period of at least 80 days during the 12 months immediately preceding the date of her expected delivery, is entitled to receive maternity benefit. [Sec 5(2)]

The qualifying period of 80 days shall not apply to a woman who has immigrated into the State of Assam and we pregnant at the time of immigration, [Sec- 5(2)]

For calculating the number of days on which a woman has actually worked during the preceding 12 months, the days on which she has been laid off or was on holidays with wages, shall also be counted.

There is neither a wage ceiling for coverage under the Act nor there is

any restriction as regards the type of work a woman is engaged in.

Female workers engaged on casual basis or on muster roll on daily

wages are also entitled to benefit under the Act since there is nothing in

the Act which confers the benefit only on regular women employees.

Maternity Benefit

Rate of Every woman shall get maternity benefit for the period of her actual


67

Benefit absence at the rate of average daily wage.

Average daily wage for this purpose means the average wages payable

to her for the days on which she has worked during the period of three

calendar months immediately preceding the date from which she

absents herself on account of maternity, or the minimum rate of wage

fixed or revised under the Minimum Wages Act, 1948 or „10 whichever

is the highest.

Minimum

Working

Period

A woman shall be entitled to maternity benefit if she has actually

worked in an establishment for t not less than 80 days in the 12 months

immediately preceding the date of her expected delivery.

For calculating the actual working days, the days for which she has been

laid off or was on holidays shall be taken into account as working days.

Maximum

Benefit

Period

The maximum period for entitlement of maternity benefit shall be 26 weeks of

which not more than 8 weeks shall precede the date delivery.

Death of a

Woman

Before

Actually

Receiving

Benefit

If a woman entitled to maternity benefit or any other amount dies before

receiving such benefit or amount, the employer shall pay such benefit or

amount to the person nominated by the woman in the notice and in case there is

no such nominee, to her legal representative.

Claim for Maternity Benefit [Section 6]

Any woman entitled to maternity benefit may give notice in writing to her „employer claiming the benefit.

She may nominate any person in the notice and state that she will not work in any establishment during the period for which she receives maternity benefit.

She shall state the date from which she will be absent not earlier than six weeks from the date of her expected delivery.

Any woman who has not given the notice when she was pregnant may give such notice as soon as possible after the delivery.

On receipt of the notice, the employer shall permit such woman to absent herself during the period for which she receives the maternity benefit.

The amount of maternity benefit for the period preceding the date of her expected delivery shall be paid in advance on production of proof.

The amount due for the subsequent period shall be paid within 48 hours on production of proof of delivery of child.

The failure to give notice shall not disentitle a woman to maternity benefit.

Forfeiture of Maternity Benefit

If a woman after she has been permitted by her employer to absent for any period works in any establishment during such authorized absence, she shall forfeit the maternity benefit for such period.

Maternity bonus

Every woman entitled to maternity benefit under this Act shall also be entitled to receive from her employer 8 medical bonus of Rs. 1000, if no pre-natal confinement and post-natal care is provided for by the


68

[Section 8] employer free of charge.

Leave Leave for Miscarage [Section 9]

In case of miscarriage or medical termination of pregnancy, a woman shall be entitled to leave with wages for a period of 6 weeks immediately following the day of miscarriage 0" medical termination of pregnancy.

Leave with wages for tubectomy operation [Section 9A]

In case of tubectomy operation, a woman shall be entitled to leave with wages at the rate of maternity benefit for a period of 2 weeks immediately following the day of her tubectomy operation.

Leave for illness [Section 10]

A woman suffering from illness arising out of pregnancy, delivery; premature birth of child, miscarriage, medical termination of pregnancy or tubectomy operation shall be entitled to leave with wages at the rate of maternity benefit for a maximum period of one month in addition to the period of absence allowed to her.

Nursing Breaks [Section 11]

Every woman who delivered of a child if returns to duty after such delivery shall, in addition to the normal interval for rest, will get two breaks for nursing the child until the child attains the age of 15 months.

Dismissal During Absence for Pregnancy

When a woman absents herself from work in accordance with the Act it shall be unlawful for her employer to discharge or dismiss her during such absence.

The employer shall not vary to her disadvantage any of the conditions of her service.

The discharge or dismissal of a woman at any time during her pregnancy shall not deprive her of the maternity benefit or medical bonus.

No Deduction of Wages

No deduction from the normal and usual daily wages of a woman entitled to maternity benefit shall be made by reason only of (a) the nature of work assigned to her; or (b) breaks for nursing the child allowed to her.

Penalties

Non-payment of benefit or

If any employer fails to pay any amount of maternity benefit to a


69

discharge of women

woman or discharges or dismisses such woman during her absence, he shall be punishable with imprisonment which shall not be less than 3 months but which may extend to one year and with fine which shall not be less than Rs. 2,000 but which may extend to Rs. 5,000. The court may, for sufficient reasons impose a sentence of imprisonment for a lesser term or fine only in lieu of imprisonment.

Contravention of the Act

If any employer contravenes the provisions of the Act or the rules made thereunder, he shall, if no other penalty is elsewhere provided under the Act, be punishable with imprisonment which may extend to one year, or with fine which may extend to Rs. 5,000, or with both.


70

Lesson 12

Child Labour (Prohibition & Regulation) Act

1986

Objectives In order to ban employment of children below the age of 14 years in factories, mines and hazardous employments and to regulate the working conditions of children in other employments, Child Labour (Prohibition & Regulation) Act, 1986 was enacted.

The objectives of the Act are as follows:

To ban the employment of children in Specified occupations and processes.

To lay down procedures for modifications to the Schedule of banned occupations or processes.

To regulate the conditions of work of children in employments where they are not prohibited.

To lay down enhanced penalties for employment of children where they are prohibited.

Scope and Coverage

The Act applies to all establishments and workshops wherein any industrial process is carried on.

It does not apply to any factory to which Section 67 of the Factories Act, 1948 (Employment of Children) applies.

It prohibits employment of children in all occupations and processes to facilitate their enrolment in schools in view of the Right of Children to Free and Compulsory Education Act, 2009 and to prohibits employment of adolescents (persons who have completed fourteenth year of age but have not completed eighteenth year) in hazardous occupations and processes and to regulate the conditions of service of adolescents.

The Schedule to the Act now provides 18 occupations and 65 processes Where employment of children is prohibited.

Who is a Child Labour

Child means a person who has not completed his fourteenth year of age or such age as may be specified in the Right of Children to Free and Compulsory Education Act, 2009, whichever is more. [Section 2(11)]

Establishment [Section 2(iv)]

Establishment includes a shop, commercial establishment, work-shop, farm, residential hotel, restaurant, eating-house, theatre or other place of public amusement or entertainment.

Prohibition of Section 3 of the Act provides that no child shall be employed or permitted to


71

employment of child labour [Section 3]

work in any occupations or process except:- helps his family or family enterprise, which is other than any

hazardous occupations or processes set forth in the Schedule, after his school hours or during vacations;

works as an artist in an audio-visual entertainment industry, including advertisement, films, television serials or any such other entertainment or sports activities except the circus, subject to such conditions and safety measures, as may be prescribed.

However no such work shall effect the school education of the child.Prohibition of employment of adolescents in certain hazardous occupations and processes

Section 3A provides that no adolescent shall be employed or permitted to work in any of the hazardous occupations or processes set forth in the Schedule. The hazardous occupations or processes set forth in the Schedule are as under:

Mines. Inflammable substances or explosives.

Hazardous process.

However, the Central Government may, by notification, specify the nature of the non hazardous work to which an adolescent may be permitted to work under the Act.

Hours and period of work [Section 7]

No child shall work in any establishment in excess of such number of hours as may be prescribed.

The period of work on each day shall be so fixed that no period shall exceed 3 hours.

No child shall work for more than 3 hours before an interval for rest for at least one hour.

The period of work shall not be spread over more than 6 hours, including waiting time on any day.

No child shall work between 7 pm. and 8 am. No child shall work overtime. No child shall work in any establishment on any day on which he has

already been working in another establishment.

Weekly Holidays [Section 8]

Every child employed in an establishment shall be allowed in each week, a holiday for one whole day.

The day shall be specified by the occupier in a notice permanently exhibited in a conspicuous place in the establishment.

The day so specified shall not be altered by the occupier more than once in 3 months.

These provisions shall not apply to any establishment where any process is carried on by the occupier with or to any schools established by, or receiving assistance or recognition from Government

Disputes as to age

If any question arises as to the age of any child and no certificate as to the age of such child is granted by the prescribed authority, the matter


72

[Section 10] be referred by the inspector to the prescribed medical authority. Every certificate as to the age of a child granted by a prescribed

medical authority shall be W evidence as to the age of the child.

Display of Notice [Section 12]

Every railway administration, every port authority and every occupier shall display in a conspicuous and accessible place at every station on its railway or within the limits of a port or at the place of work a notice in the local language and in the English language containing an abstract of Sections 3 and 14.

Penalties [Section 14]

Whoever employs any child or permits any child to work in contravention of the provisions of the Act shat] be punishable With imprisonment which shall not be less than 3 months but may extend to one year or With line not be less than Rs. 10,000 but which may extend to Rs. 20,000 or with both.

Whoever, having been convicted of an offence commits a like offence afterwards; he shall be punishable With imprisonment for a term which shall not be less than 6 months but which may extend to 2 years.

Any employer who fails to give notice or fails to maintain a register or makes any false entry in any such register; or fails to display a notice or fails to comply with or contravenes any other provisions of the Act or the rules made there under; shall be punishable with simple imprisonment up to one month or With fine.

Maintenance of Register

Every occupier shall maintain in respect of children a register showing the name and date of birth of every child;

hours and periods of work of any such child and the intervals of rest;

the nature of work; and

such other particulars as may be prescribed.The register shall be available for inspection by an Inspector at all times during working hours or when work is being carried on in any such establishment.


73

Lesson 13

Industrial Employment (Standing Order) Act 1946

Objectives The object of the Act is to have uniform Standing Orders providing for the matters enumerated in the Schedule to the Act.

As the preamble of the Act says it is an Act to require employers in industrial establishments formally to define conditions of employment under them and to make the said conditions known to workmen employed by them.

Scope and Coverage

The Act extends to the whole of India. The Act applies to every industrial establishment where 100 or more

workmen are employed, or were employed on any day of the preceding twelve months.

The appropriate government may, after giving not less than two months‟ notice, apply the provisions of the Act to any industrial establishment employing less than 100 workmen.

Standing Orders - Definition & Meaning

“Standing Orders‟ means rules of conduct for workmen employed in industrial establishments.

In order to maintain harmonious relationship between the employers and the employees, regulating the conditions of recruitment, discharge, disciplinary action, leave, holidays, etc. of the workers employed in industrial establishments, the Industrial Employment (Standing Orders) Act, 1946 was enacted.

Industrial Establishment [Section 2(e)]

Industrial establishment means the following:

An industrial establishment as defined in Section 2(ii) of the Payment of Wages Act, 1936.

A factory as defined in Section 2(m) of the Factories Act, 1948. A railway as defined in Section 2(4) of the lndian Railway Act, 1989. The establishment of a person who, for the purpose of fulfilling a

contract with the owner of any industrial establishment, employs workmen.

Submission of draft Standing Orders for Certification [Section 3]

Within six months from the date on which the Act becomes applicable to an industrial establishment, the employer shall submit to the Certifying Officer five copies of the draft standing orders for adoption in the industrial establishment.

The draft standing order shall be, as far as practicable, in conformity with the model standing order.

The draft standing orders shall be accompanied with a statement giving particulars of the workmen including the name of the trade


74

union, if any, to which they belong. A group of employers in similar industrial establishments may submit

a joint draft of standing orders.

Certification of Standing Orders [Section 5]

On receipt of the draft standing order, the Certifying Officer shall forward a copy thereof to the trade union of the workmen or where there is no such trade union, to the workmen together with a notice requiring objections, if any.

The objections, if any, are to be given within 15 days from the receipt of the notice.

After giving the employer and the trade union or such other representatives of the workmen an opportunity of being heard, the Certifying Officer shall decide whether any modification or addition to the draft submitted by the employer is necessary.

The Certifying Officer shall thereupon certify the draft standing orders after making modifications if any.

Within seven days thereafter he shall send copies of the certified standing orders to the employer and to the trade union or other representatives of the workmen.

Appeal against Certification [Section 6]

Any employer, Workmen, trade union or other representatives of the workmen aggrieved by the order of the Certifying Officer may, within 30 days from the date on which copies are sent, appeal to the appellate authority.

The appellate authority shall by order in writing confirm the standing orders either in the form certified by the Certifying Officer or after amending the said standing orders by making modifications or additions as it thinks necessary.

The appellate authority shall, within 7 days of its order send copies thereof to the Certifying Officer, employer and trade union or other representatives of the workmen, accompanied, unless it has confirmed without amendment, by copies of the standing orders as certified by it.

Effective Date of Operation of Standing Order [Section 7]

The standing orders shall, unless an appeal is preferred, come into operation on the expiry of 30 days from the date on which authenticated copies thereof are sent.

Where an appeal is preferred, the standing orders shall come into operation on the expiry of 7 days from the date on which copies of the order of the appellate authority are sent.

Display of Standing Order [Section 9]

The text of the finally certified standing orders shall be prominently posted by the employer in English and in the language understood by the majority of his workmen on special boards at or near the entrance through which the majority of the workmen enter the industrial establishment and in all departments where the workmen are employed.

Duration and Standing orders finally certified shall not be modified until the expiry


75

Modification of Certified Standing Orders [Section 10]

of six months from the date on which the standing orders or the last modifications came in to operation.

After six months, modification can be made if there is any agreement between the employer and the workmen or trade union or other representative of the workmen.

Any one of them may apply to the Certifying Officer for modification of the standing orders attaching five copies of the modifications proposed.

Where such modifications are proposed to be made by agreement a certified copy of that agreement shall be filed along with the application.

Powers of Certifying Officer and The Appellate Authority [Section 11]

All the powers of a Civil Court for the purposes of receiving evidence, administering oaths, enforcing the attendance of witnesses, and compelling the discovery and production of documents.

To correct any clerical or arithmetical mistake in any order passed by it or errors arising therein from any accidental slip or omission

Penalties An employer who fails to submit draft standing orders or who modifies his standing orders otherwise than in accordance with Section 10, shall be punishable with fine up to ? 5,000.

In the case of a continuing offence the punishment is with a further fine up to t 200 for every day after the first during which the offence continues.

An employer who does any act in contravention of the finally certified standing orders shall be punishable with fine up to Rs. 100.

In the case of a continuing offence the punishment is with a further fine up to Rs. 25 for every day after the first during which the offence continues.

Model Standing Orders

Model Standing Orders refer to the one given in the Schedule to the Industrial Employment (Standing Orders) Act, 1946. This model standing order can be used and followed by establishments in preparing their own standing order. This is like a sample standing order for use by the employers in preparing their standing orders. This standing order is applicable to an establishment which has no certified standing orders.

Draft Standing Order

Draft standing orders means the standing order prepared by an establishment and submitted to the Certifying officer for certification.

Certified Standing Order

When an establishment prepares it standing orders and get it registered with the authority, the standing orders are known as certified standing orders. Certified standing orders are the approved standing order to be followed in the establishment.

Subsistence Allowance (Section 10A)

Where any workman is suspended by the employer pending inquiry, the employer shall pay to such workman an allowance called subsistence allowance.


76

Such allowance is payable for the first 90 days of suspension @ 50% of the wages which workman was entitled to immediately preceding the date of such suspension.

If there is delay in completion of disciplinary proceedings against such workman not directly attributable to the conduct of such workman subsistence allowance @ 75% of such wages is payable for the remaining period of suspension. '

If any dispute arises regarding the subsistence allowance, the workman or the employer may refer the dispute to the Labour Court.

The Labour Court shall, after giving the parties an opportunity of being heard, decide the dispute such decision shall be final and binding on the parties.

Where provisions relating to payment of subsistence allowance under any other law for the time being in force in any State are more beneficial, the provisions of such other law shall be applicable to the payment of subsistence allowance in that State.


77

Lesson 14

Industrial Disputes Act 1947

INTRODUCTION The Employers and Workmen’s (Disputes) Act, 1880 was the first law dealing with industrial disputes in India,

The Trade Disputes Act, 1929, replaced this Act. The Industrial Disputes Act, 1947 came in place of the 1929 Act to give

more coverage to the industries disputes in the country. The Act came into force on the 01.04.1947.

The Act extends to the whole of lndia.

It applies to all industries whether owned by private owners or by the

Government

Objectives Workman of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate, AIR (1958) SC 353 . The Supreme Court laid down the following principal objectives of the Act:

Promotion of measures for securing and preserving amity and good

relations between the employer and workmen. Investigation and settlement of industrial disputes between employers

and employers, employers and workmen, or workmen and workmen. Prevention of illegal strikes and lock-outs.

Relief to workmen in the matter of lay-off and retrenchment.

Promotion of collective bargaining.

Providing machinery or authority for settlement of industrial disputes.

Relief to workmen in case of transfer and closure of undertaking.

Improving service conditions of labour.

Workman Section 2(5)

Any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment is express or implied.

For the purposes of any proceeding under the Act. Workmen includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of that dispute or whose dismissal, discharge or retrenchment has led to that dispute.

Workman does not include the following :

Any person who is subject to the Air Force Act, 1950,0r the Army Act, 1950, or the Navy Act, 1957.

Any person who is employed in the police service or as an officer or


78

other employee of a prison. Any person who is employed mainly in a managerial or administrative

capacity. Any person who, being employed in a supervisory capacity, draws

wages exceeding 10,000 p. m Any person who exercises functions mainly of a managerial nature.

Wages Section 2 (rr)

Wages means all remuneration capable of being expressed in terms of money, which would, if the terms of employment, expressed or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment.

Wages includes the following :

Allowances (including dearness allowance) as the workman is for the time being entitled to.

The value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food-grains or other articles.

Any travelling concession.

Any commission payable on the promotion of sales or business or both.

Industry [Section 2(i)]

Industry means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or evocation of workmen.

Case Laws; Bangalore Water Supply v. A Rajappa (1978) 2 SCC 213

[Triple Test]

A bench of the Supreme Court consisting of seven judges exclusively considered the scope of industry and laid down that "Where there is

systematic activity,

organised by co-operation between employer and employee, for the production and/or distribution of goods and services calculated

to satisfy human wants and wishes,

prima facie, there is an "industry" in that enterprise." This is known as the ‘Triple Test’ for defining an enterprise as industry.

Industrial Dispute [Section 2(k)]

Industrial dispute means any dispute or difference between

employers and employers or

employers and workmen, or

workmen and workmen,

which is connected with the employment or non-employment or the terms of


79

employment or with the conditions of labour of any person.

The two crucial limitations are the dispute must be a real dispute between the parties capable of

settlement or adjudication and the person against whom the dispute is raised must be one in whose

employment, non-employment, terms of employment, or conditions of labour, the parties to the dispute have a direct or substantial interest.

Individual Dispute or Collective Dispute

An industrial dispute may be individual dispute or collective dispute. Any dispute between an individual worker and the management is an individual dispute.

Where any dispute relates to the overall workers like dispute relating to hours of work, leave, wages, retrenchment, closure etc., these are collective disputes.

Case Laws : Workmen v. Cotton Greaves Co. Ltd. (1971) An industrial dispute can be raised for non-workmen.

Industrial Dispute by individual (Section 2A)

Where any employer discharges, dismisses, retrenches, or otherwise terminates the services of an individual Workman, the dispute or

difference between that workman and his employer shall be deemed to

be an industrial dispute even when no other workman nor any union of workmen is a party to the dispute.

Works Committee [Section 3]

In case of any industrial establishment in which 100 or more workmen are employed or have been employee; on any day in the preceding 12 months, the appropriate Government may order the employer to constitute a Works Committee.

The Committee shall consist of representatives of the employer and workmen engaged in the establishment.

Duties of Works Committee

To promote measures for securing and preserving amity and good relations between the employer anq workmen.

To comment upon matters of their common interest.

To endeavour to compose any material difference of opinion in respect

of any matters.

Conciliation Officer [Section 4]

Appropriate government to appoint conciliation officers. The conciliation officers shall be charged with the duty of mediating

and promoting the settlement of industrial disputes. A conciliation officer may be appointed for a specified area or for

specified industries in a specified area or for one or more specified industries either permanently or for a limited period.


80

Powers of Conciliation Officer

The conciliation officer may enter the premises of any establishment to which the dispute relates after giving reasonable notice for holding conciliation proceeding.

The conciliation officer may enforce the attendance of any person for the purpose of examination of such person

The conciliation officer may call for and inspect any documents which are relevant to the industrial dispute or for verifying the implementation of any award or carrying out any other duty.

Duties of Conciliation Officers

Where any industrial dispute exists or is apprehended, the conciliation officer may hold conciliation proceedings to settle the dispute.

Where the dispute relates to a public utility service and a notice has been given, the conciliation officer shall hold conciliation proceedings to settle the dispute.

The conciliation officer shall investigate the dispute and may do all such

things as he thinks ht for the purpose of inducing the parties to come to

a fair and amicable settlement.

A report shall be submitted within 14 days of the commencement of the conciliation proceedings or within such shorter period as may be fixed by the appropriate Government. The time may be extended by such period as may be agreed upon in writing by all the parties to the dispute.

Duties of Court A Court shall inquire into the matters referred to it and report thereon to the appropriate government ordinarily within a period of six months from the commencement of its inquiry.

Every report of a Court together with any minute of dissent shall, within a period of 30 days from the date of its receipt by the appropriate government, be published in such manner as the appropriate government thinks tit.The award so published shall be final and shall not be called in question by any Court.

Power of Labour Courts

A member of a Labour Court may, after giving reasonable notice, enter the premises occupied by any establishment to which the dispute relates for the purpose of inquiry.

The Court shall have the same powers as are vested in a Civil Court,. A Labour Court may appoint one or more persons having special

knowledge of the matter under consideration as assessor to advise it. The Labour Court shall have full power to determine by and to whom

and to what extent and subject to what conditions, if any, such costs are to be paid.

Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, and if it is satisfied that the order of discharge or dismissal was not justihed, it may set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions as it thinks tit.


81

The Labour Court shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter.

Reference of Disputes to the Board Court or Tribunals [Section 10]

Where the appropriate government is of opinion that any industrial dispute exists or is apprehended, it may refer the dispute to different adjudication authorities as under for adjudication:

To Board of Conciliation - For settlement of any dispute. To a Court for inquiry - Any matter appearing to be connected with

the dispute. (c) To a Labour Court if the dispute relates to any matter specified in the Second Schedule.

To a Labour Court - Where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than 100 workmen.

To a Tribunal -The dispute or any matter appearing to be connected with the dispute, whether it relates to any matter specified in the Second Schedule or the Third Schedule.

To National Tribunal -Where the Central Government is of opinion that any industrial dispute involves any question of national importance or is of such a nature that industrial establishments situated in more than one State are likely to be affected, the Central Government may, whether or not it is the appropriate Government in relation to that dispute, at any time refer the dispute.

THE

SECOND

SCHEDULE

Matters within the Jurisdiction of Labour Courts

1. The propriety or legality of an order passed by an employer under the standing orders; 2. The application and interpretation of standing orders;

3. Discharge or dismissal of workmen including reinstatement of, or grant of relief to, workmen wrongfully dismissed; 4. Withdrawal of any customary concession or privilege;

5. illegality or otherwise of a strike or locklout; and

6All matters other than those specified in the Third Schedule.

THE THIRD SCHEDULE

Matters within the Jurisdiction of Industrial Tribunals

1. Wages, including the period and mode of payment; 2. Compensatory and other allowances; 3. Hours of‘ work and rest intervals; 4. Leave With wages and holidays; 5. Bonus, profit sharing, provident fund and gratuity; 6. Shift working otherwise than in accordance with standing orders;


82

7. Classification by grades; 8. Rules of discipline; 9. Rationalisation; 10. Retrenchment of workmen and closure of establishment; and 11. Any other matter that may be prescribed.

Voluntarily Reference of Disputes to Arbitration [Section 10A]

Where any industrial dispute exists or is apprehended and the employer and the workmen agree to refer the dispute to arbitration, they may, at any time before the dispute has been referred to a Labour Court or Tribunal or National Tribunal, by a written agreement refer the dispute to arbitration.

The reference shall be as per the arbitration agreement.

Award As per Section 2(b), award means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, industrial Tribunal or National Industrial Tribunal. It includes an arbitration award. The report of a Board or Court shall be in writing and shall be signed by all the members of the Board or Court

The award of a Labour Court or Tribunal or National Tribunal shall be in writing and shall be signed by its presiding officer. ‘

Every report of a Board or Court together with any minute of dissent, every arbitration award and every award of a Labour Court, Tribunal or National Tribunal shall, within 30 days from the date of its receipt by the appropriate Government, be published in such manner as the appropriate Government thinks fit.The award published shall be final and shall not be called in question by any Court.

Settlement [Section 2(p)]

Settlement means a settlement arrived at in the course of conciliation

proceeding.

It includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding.

The agreement has to be signed by the parties. A Copy the agreement has to be sent to an officer authorised in this

behalf by the appropriate Government and to the conciliation officer.

Period of operation of Settlement [Section 19]

Such settlement shall be binding for such period as is agreed upon by

the parties.

If no such period is agreed upon, it shall be binding for a period of six months from the date on which the memorandum of settlement is signed by the parties to the dispute.

Change in Conditions of Service

No change without notice section 9A

An employer, who proposes to effect any change in the conditions of


83

service in respect of any matter specified in the Fourth Schedule, shall not effect such change without giving to the workmen a notice of the nature of the change proposed.

Such change shall not be effective within 21 days of giving such notice.

No notice shall be required under the following circumstances as provided

in section 9A

Where the change is effected in pursuance of any settlement or award.Where the workmen are persons to whom the Fundamental and

Supplementary Rules, Civil Services (Classification, Control and

Appeal) Rules, Civil Services (Temporary Service) Rules, Revised

Leave Rules. Civil Service Regulations, Civilians in Defence Services

(Classification, Control and Appeal) Rules or the Indian Railway

Establishment apply.

No action against protected workmen

No employer shall, during the pendency of any proceeding in respect of an industrial dispute, take any action against any protected workman concerned in dispute by altering the service conditions applicable to him immediately before the commencement of such proceedings.

No employer shall discharge or punish, whether by dismissal or otherwise, such protected workman.

Unfair Labour Pratice [Section 25T]

No employer or workman or a trade union shall commit any unfair

labour practice.Any person who commits any unfair labour practice shall be punishable with imprisonment up to six months or with fine up to 1000 or with both.

Strikes [Section 2(q)]

Strike means cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding of any number of persons who are so employed to continue to work or to accept employment.

Prohibition of Strikes Section 23

No workman shall go on strike in breach of contract under the following

situations:

During the pendency of conciliation proceedings before a Board and within 7 days after the conclusion of such proceedings.

During the pendency of proceedings before a Labour Court, Tribunal or National Tribunal and two months after the conclusion of such proceedings.

During the pendency of arbitration proceedings before an arbitrator and two months after the conclusion of such proceedings.

During any period in which a settlement or award is in operation, in respect of any of the matters covered by the settlement or award.


84

Illegal Strikes Section 24

A strike is legal if it does not violate any provision of the statute. A strike shall be illegal if it is in contravention of section 22 or section

23. Strike is also illegal if it is continued in contravention of an order made

under section 10(3) or section 10A(4A). Where a strike is in existence at the time of reference of the dispute to a

Board, Arbitrator, Labour Court, Tribunal or National Tribunal, the continuance of such strike shall not be deemed to be illegal if such strike was not in contravention of the provisions of the Act or not prohibited under section 10(3) or section 10A(4A) at commencement.

A strike declared in consequence of an illegal lock-out shall not be

deemed to be illegal.

Dismissal of Workman for illegal Strike

lf workers participate in illegal strike. the employer can dismiss them. Before, dismissal proper inquiry should be held and the worker be given

an opportunity to represent his case.

Wages for the Strike Period

The workmen shall be entitled to wages for the period of strike, where it is found that the strike is neither illegal nor unjustified.

A strike is legal if it does not violate any provision of the law.

And a strike cannot be said to be unjustified unless the reasons for it are entirely perverse or unreasonable.

In this connection, it is pertinent to note that in the case of Bank of indie Vs

T.S. Kelawala and Dre. the Supreme Court had observed that the workmen are

not entitled to wages for the strike period. irrespective of whether the strike is

legal or illegal. However, a larger bench of the Supreme Court had earlier

upheld the claim for wages for the strike period, where the strike was held to be

neither illegal nor unjustified. And. where there are two pronouncements of the

Supreme Court, suggesting or indicating contrary views, the ruling of the

decision rendered by the larger Bench should be adopted.

Strikes in Public Sector Undertaking [Section 22]

The Act prohibits strike in public utility service

Without giving notice of strike to the employer six weeks before

striking; or

Within fourteen days of giving such notice ; or

Before the expiry of the date of strike specified in any such notice


85

During the pendency of any conciliation proceedings and 7 days after the conclusion of such proceedings.

If an employer receives any such notice he shall within five days report to the appropriate Government

Lock-out [Section 2(I)]

Lock-out means the following:

Temporary closing of a place of employment or the suspension of work, or the refusal by an employer to continue to employ any employee.

Termination of the service of the workman due to non-renewal of the contract of employment on its expiry or the contract being terminated in terms of the contract.

Termination of the service of a workman on the ground of continued ill

health.

Lock out is opposite to and an antithesis of strike.

Prohibition of Lock-out Section 23

No employer shall declare a lock-out

During the pendency of conciliation proceedings before a Board and 7 days after the conclusion of Such proceedings;

During the pendency of proceedings before a Labour Court. Tribunal or National Tribunal and two months. after the conclusion of such proceedings;

During the pendency of arbitration proceedings before an arbitrator and two

months after the conclusion of such proceedings; or

During any period in which a settlement or award is in operation, in respect of any of the matters covered by the settlement or award.

Illegal Lockout [Section 24)

Lock-out shall be illegal if it is commenced or declared in contravention of section 22 or section 23 or it is continued in contravention of an order made under section 10(3) or section 10A(4A).

A lock-out declared in consequence of an illegal strike shall not be

deemed to be illegal.

Lay-Off As defined in Section 2(kkk), lay-off with its grammatical variations and

cognate expressions means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of

stocks or the breakdown of machinery or natural calamity or for any other

reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment.

Compensation to workmen laid-off Section 25C


86

Whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls and has completed one year of continuous service is laid-off, he shall be paid for all days during which he is so laid-off except for weekly holidays.

The compensation shall be equal to 50% of the total of basic wages and dearness allowance.

If during any period of twelve months, a workman is laid-off for more than 45 days, no such compensation shall be payable in excess of the first 45 days if there is an agreement between the workman and the employer.

Non-entitlement of Compsensation for laid off Section 25E

No compensation shall be paid to a workman if he refuses to accept any alternative employment in the same establishment, or in any other establishment belonging to the same employer situate in the same town or village or situate within a radius of five miles from the establishment to which he belongs,

Such alternative employment should not require any special skill or previous experience and can be done by the workman.

The wages should be that normally have been paid to the workman. If he does not present himself for work at the appointed time during

normal working hours at least once a day no compensation shall be paid.

If such laying-off is due to a strike or slowing-down of production on the part of workmen in another part of the establishment, no compensation shall also be paid.

Prohibition of lay-off Section 25M

Where the workman of a mine has been laid off, the employer shall, within a period of 30 days from the date of commencement of such lay-off, apply to the appropriate Government for permission to continue the lay-off.

Retrenchment As defined in Section 2(oo), retrenchment means the termination of the service of a workman by the employer for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action.

Exception Retrenchment does not include the following : Voluntary retirement of the workman.

Retirement of the workman on reaching the, age of superannuation. Termination of the service of the workman as a result of the non-

renewal of the contract of employment. Termination of the service of a workman on the ground of continued ill

health.


87

Retrenchment may be for surplus age, redundancy due to advanced machinery, slowdown in business. Reason does not matter.

Retrenchment Compensation Section 25F

A workman who has been in continuous service for not less than one year under an employer shall not be retrenched by the employer under the following circumstances :

Until the workman has been given one month's notice in writing indicating the reasons for retrenchment or the workman has been paid wages in lieu of such notice.

Until the workman has been paid compensation equivalent to 15 days' average pay for every completed year of continuous service or any part thereof in excess of six months.

Until notice is served on the appropriate Government.

Notice of Retrenchment Section 25N

In case of an industrial establishment (not being a seasonal

establishment or in which work is performed only intermittently) in

which not less than 100 workmen were employed on an average per

working day for the preceding 12 months no workman employed in any

such establishment, who has been in continuous service ,for not less

than one year under an employer shall be retrenched by that employer

until the workman has been given three months' notice in writing

indicating the reasons for retrenchment and the period of notice has

expired or the workman has been paid in lieu of such notice, wages for

the period of the notice.

Re-employment of retrenched workmen Section 25H

Where any workman is retrenched and the employer proposes to employ

any persons, he shall give an opportunity to the retrenched workmen who are citizens of India for re-employment.

Such retrenched workmen who offer themselves for re-employment shall have preference over other persons.

CLOSURE OF UNDERTAKING

As defined in Section 2(cc) ‘closure’ means the permanent closing down of a place of employment or part thereof.

Section 25FFA of the Act provides that an employer who intends to close down an undertaking shall serve a notice on the appropriate Government stating clearly the reasons for the closure at least 60 days before the date of the intended closure.


88

Compensation in case of Closure Section 25FFF

Where an undertaking is closed, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall be entitled to notice and compensation as if the workman had been retrenched.

Where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation shall not exceed average pay for 3 months.

Penalties An employer shall be liable to the following penalties for offences under the

Act:

Lay-off without previous permission " [Section 25Q] Imprisonment for a term up to one month or with fine up to 1000, or with both.

Retrenchment without previous permission [Section 25Q] Imprisonment for a term up to one month or with fine up to 1000, or with both.

Closure without permission [Section 25R] Imprisonment for a term up to six months or with fine up to 5000 or with both.

Closure if not permitted by authority -[Section 25R] Imprisonment up to one year, or with fine up to 5000, or with both. In case of continuing offence, further fine up to 2000 for every day during which the contravention continues.

Committing unfair labour practices [Section 25U] Imprisonment up to six months or with fine up to IOOO or with both.

Illegal strikes and lock-outs [Section 26] Imprisonment up to one month, or with fine up to 50, or with both.

Furtherance of illegal lock-outs [Section 26] Imprisonment up to one month, or with up to 1000, or with both.

Instigating strike etc. [Section 27] Imprisonment up to six months, or with up to 1000, or with both.

Giving financial aid to illegal strikes and lock-outs [Section 28] Imprisonment up to six months, or with fine up to 1000, or with both.

Committing breach of settlement or award [Section 29] Imprisonment up to six months, or with tine, or with both, and in case of continuing one, further tine up to 200 for every day during which the breach continues.


89

Disclosing confidential information [Section 30] Imprisonment up to six months, or with fine up to 1 000, or with both. '

Closure without notice [Section 30A] Imprisonment up to six months, or with fine up to 5000, or with both.

Other offences -[Section 31] Any employer who contravenes the provisions for changing conditions of service, etc. during pendency of proceedings, shall be punishable with imprisonment up to six months, or with fine up to 1000, or with both. Where no penalty is provided by the Act for any contravention fine up to 100.

Offence by companies, etc [Section 32] Where company commits an offence, every director, manager, secretary, or other officer or person concerned with the management thereof shall, unless he proves that the offence was committed without his knowledge or consent, be deemed to be guilty of such offence.


90

Lesson 15

Trade Union Act 1926

Objectives Trade unions are essential for safeguarding the rights of labourers when there is a struggle between the labourers and the management.

In order to regulate the trade union movement in India, the Trade Unions Act, 1926 was enacted on the recommendation of the Royal Commission of Labour.

The Act came into force on 01.06.1927.

The following are the main objects of the trade unions:

To secure fair wages for workers and improve their opportunities for promotion and training. To safeguard security of tenure and improve their conditions of service.

To improve working and living conditions of workers.

To provide educational, cultural and recreational facilities.

To facilitate technological advancement by broadening the understanding of the workers.

To help them in improving levels of production, productivity, discipline and high standard of living. To promote individual and collective welfare and thus correlate the workers‘ interests with that of their industry.

Scope & Coverage

The Act extends to the whole of India. Its main objective is to provide for the registration of trade unions and

to define law relating to registered trade unions. In order that the union may fight for its legitimate rights fearlessly, certain immunities from criminal and civil actions are granted to the members of a registered trade union to ensure a healthy trade union movement in India.

Trade Unions Trade union means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business.

It includes any federation of two or more Trade Unions.

Employees only engaged in business are eligible to form union.Minimum requirement about Membership of a Trade Union A registered Trade Union of Workmen shall at all times continue to have not less than 10% or 100 of the workmen whichever is less subject to a minimum of

(c)


91

seven engaged or employed in an establishment or industry with which it is connected as its members. [Sec9A] Who can be a member?

Any person who has attained the age of 15 years, is eligible to be a member of a registered trade union, subject to the rules of the union. [Sec -21]

Registration of Trade Union [Section 4]

At least seven members of a Trade Union may, apply to the Registrar of Trade Unions for registration of the Trade Union

No Trade Union shall be registered unless at least 10% or 100 of the workmen, whichever is less, engaged or employed in the establishment or industry with which it is connected are the members of such Trade Union on the date of making of application.

At least 7 persons should be workmen engaged or employed in the establishment or industry on the date of application.

The application shall not become invalid even if after the date of the application but before the registration, half of the total applicants have ceased to be members of the Trade Union or have given notice in writing to the Registrar dissociating themselves from the applications.

Cancellation of Registration Section 10

A certificate of registration of a Trade Union may be withdrawn or cancelled by the Registrar on the application of the Trade Union.

The registration may be withdrawn or cancelled if the Registrar is satisfied that the certificate has been obtained by fraud or mistake, or that the Trade Union has ceased to exist or has wilfully contravened any provision of the Act or allowed any rule to continue in force which is inconsistent with any such provision.

The registration may be withdrawn or cancelled if the Registrar is satisfied that a registered Trade Union ceases to have the requisite number of members.

Not less than two months' previous notice in writing specifying the ground is required.

Legal Status of a Registered Trade Union

A registered trade union is a body corporate with perpetual succession and a common seal.

it can acquire, hold, sell or transfer any movable or immovable property and can be a party to contracts.

A registered trade union can sue and be sued, in its own name. [Sec -13]No civil suit or legal proceeding can be initiated against a registered trade union in respect of any act done in furtherance of a trade dispute under certain conditions. [Sec - 18] No agreement between the members of a registered trade union shall be void


92

or voidable merely on the ground that any of its objects is in restraint of trade. [Sec -19]

Offences & Penalties

Offence Penalty

1. if the registered trade union/its office- bearers or members fail to give any notice or send any statement as required under the Act[Sec -31(1)].

Fine upto Rs. 5 plus additional fine upto Rs. 5 per week in case of continuing offence. (Maximum fine imposable Rs. 50)

2. if any person willfully makes any false entry in the annual statement of the union or its rules. [Sec 31 (2)]

Fine upto Rs. 500

3. if any person, with intent to deceive, gives an incorrect copy of rules of the union to any member or a prospective member. [Sec -32]

Fine upto Rs. 500

Dissolution of Trade Union [Section 27]

When a registered Trade Union is dissolved, notice of the dissolution signed by 7 members and by the Secretary of the Trade Union shall, within 14 days of the dissolution, be sent to the Registrar, for dissolution of the Trade Union.


93

Lesson 16

The Labour Laws (Exemption from Furnishing Returns and Maintaining Register by Certain Establishments) Act 1988

Introduction The Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by certain Establishments) Amendment Act, 2014 passed by the Rajya Sabha on November 26, 2014; the Lok Sabha on November 28, 2014 and received the assent of the President on the 9th December, 2014 amended the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by certain Establishments) Act, 1988.

The Amendment Act now includes 7 more Labour Acts under the purview of the Principal Act. Also, the coverage of Principal Act has been expanded from the establishments employing upto 19 workers to 40 workers. The Amendment Act also gives an option to maintain the registers electronically and to file the returns electronically which leads to ease of compliance as well as better enforcement of the labour laws.

Objectives From time to time a number of labour laws have been enacted for regulating employment and conditions of service of workers.

Whenever a new law was enacted, it prescribed certain registers to be maintained by the employers and also for furnishing various returns by the employers to the authorities.

The Labour Laws (Exemption from Furnishing Returns and Maintaining Register by Certain Establishments) Act, 1988 was enacted exempting from maintaining registers and filing returns by some establishments.

Act also provides for the simplification of procedure for furnishing returns and maintaining registers in relation to establishments employing a small number of persons under certain labour laws.

The Act came into force on 27.09.1988. Scope and Coverage

The Act extends to the whole of India. The Act was enacted to provide exemption to certain establishments given in the Schedule to the Act (Scheduled Act) employing a small number of persons from furnishing returns and maintaining registers under some labour laws.

Definitions Scheduled Act

The following acts are specified in the Schedule:

The Payment of Wages Act, 1936

The Weekly Holidays Act, 1942

The Minimum Wages Act, 1948

The Factories Act, 1948 The Plantations Labour Act, 1951


94

The Working Journalists and other Newspaper Employees (Conditions of

Service) and Miscellaneous Provisions Act, 1955 The Motor Transport Workers Act, 1961

The Payment of Bonus Act, 1965

The Beedi and Cigar Workers (Conditions of Employment) Act, 1966

The Contract Labour (Regulation and Abolition) Act, 1970 The Sales Promotion Employees (Conditions of Service) Act, 1976

The Equal Remuneration Act, 1976 The Inter-State Migrant Workmen (Regulation of Employment and

Conditions of Service) Act, 1979 The Dock Workers (Safety, Health and Welfare) Act, 1986

The Child Labour (Prohibition and Regulation) Act, 1986 The Building and Other Construction Workers (Regulation of Employment

and Conditions of Service) Act, 1996

Small Establishment Section 2 (e)

Small establishment means an establishment in which not less than 10 and not more than 40 persons are employed or were employed on any day of the preceding twelve months

Very Small Establishment Section 2(f)

Very small establishment means an establishment in which not more than 9 persons are employed or were employed on any day of the preceding twelve months.

Compliances The employer has to comply with the following:

Section 4(1) of the Act provides that it shall not be necessary for an employer in relation to any small establishment or very small establishment to which a Scheduled Act applies, to furnish the returns or to maintain the registers required to be furnished or maintained under that Scheduled Act.

It may be noted that such employer furnishes, in lieu of such returns, annual return in Form I; and

maintains at the work spot, in lieu of such registers,— (i) registers in Form II and Form III, in the case of small establishments, and

a register in Form III, in the case of very small establishments, Every such employer shall continue to issue wage slips in the Form

prescribed in the Minimum Wages (Central) Rules, 1950 made under sections 18 and 30 of the Minimum Wages Act, 1948 and

slips relating to measurement of the amount of work done by piece-rated workers required to be issued under the Payment of Wages (Mines)


95

Rules, 1956 made under sections 13A and 26 of the Payment of Wages Act, 1936; and

file returns relating to accidents under sections 88 and 88A of the Factories Act, 1948 and sections 32A and 32B of the Plantations Labour Act, 1951.

Furnishing or maintaining of returns and registers in electronic

Penalty Any employer who fails to comply with the provisions of the Act shall be punishable-

in the Case of the first conviction, with fine up to Rs. 5,000; and in the case of any second or subsequent conviction with imprisonment

not less than one month but which may extend to six months or with fine not less than Rs. 10,000 and may extend to Rs. 25,000 or with both.


96

Lesson 17

Employment Exchange (Compulsory Notification of

Vacancies) Act 1959

Objectives The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 was enacted to provide for compulsory notification of vacancies to the Employment Exchanges and for the rendition of returns relating to employment situation by the employers. '

The act came into force on 01.05.1960.Scope & Coverage

The Act extends to whole of India. It applies to all establishments in the public sector and to establishments in the private sector engaged in non-agricultural activities employing 25 or more workers.

Establishment in Public Sector [Sector 2(f)]

Unskilled office work means work done in an establishment by any of the following categories of employees:

Daftri.

Jemadar, orderly and peon.

Dusting man or farash. Bundle or record lifter.

Process server.

Watchman.

Sweeper. Any other employee which the Central Government may declare to be

unskilled office work. Establishment in Private Sector [Sector 2(g)]

Establishment in private sector means an establishment which is not an establishment in public sector and where ordinarily 25 or more persons are employed to work for remuneration.

Act not apply to in certain vacancies

The Act shall no apply in8 relation to the following vacancies: In any employment in agriculture (including horticulture) in any

establishment in private sector other than employment as agricultural or farm machinery operatives. ‘

In any employment in domestic service.

Inany employment the total duration of which is less than 3 months.

In any employment to do unskilled office work.

In any employment connected with the staff of Parliament.

In case of promotion or absorption of surplus staff.


97

Any employee carrying remuneration of less than t 60 per month.

Unless the Central Government otherwise directs by notification in the Official Gazette, the Act shah not also apply in relation to the following:

Vacancies which are proposed to be filled through promotion or by absorption of surplus staff of any branch or department of the same establishment or on the result of any examination conducted or interview held by, or on the recommendation of any independent agency, such as the Union or a State Public Service Commission.

Vacancies in an employment which carries a remuneration of less than 60 in a month.

Notification [Section4]

The employer in every establishment in public sector shall, before filling up any vacancy in any employment, notify the vacancy to the employment exchanges.

The appropriate Government may, by notification in the Official Gazette, require that the employer it every establishment in private sector shall, before filling up any vacancy in any employment, notify the vacancy to the employment exchanges and the employer shall comply with such requisition.

There is, however, no obligation to recruit any person through the employment exchanges.

Right of access to records and documents [Section 6]

Any authorized officer shall have access to any relevant record or document in the possession of any employer required to furnish any information or returns.

He may enter at any reasonable time any premises where he believes such record or document to be kept

He may also inspect or take copies of relevant records or documents or ask any question necessary for obtaining any information.

Power of Make Rules

The Central Government for carrying out the purposes of the Act framed the Employment Exchanges (Compulsory Notification of Vacancies) Rules, 1960, which came into force w. e. f. 1.5.1960.

Penalties lf any employer fails to notify to the employment exchanges, he shall be punishable for the first offence with hne up to t 500 and for every subsequent offence, with fine up to 111,000.

If any person required to furnish any information or return

refuses or neglects to furnish such information or return, or

furnishes any information or return which he knows to be false, or

refuses to answer, or gives a false answer to any question; orimpedes the right of access to relevant records or documents, he shall be punishable for the first offence with fine upto a 250 and for every subsequent offence with fine up to 500.


98

Lesson 18

Apprentice Act 1961

Objectives The Apprentices Act 1961 was enacted with the objective of regulating the programme of training of apprentices in the industry by utilising the facilities available therein for imparting on-the-job training.

The Act was amended in 1973 and 1986 to include training of graduates, technicians and technician (vocational) apprentices respectively under its purview.

It was further amended in 1997 and 2007 to amend various sections of the Act as regards definition of “establishment”, “worker”, number of apprentices for a designated trade and reservation for candidates belonging to Other Backward Classes, etc.

Comparing the size and rate of growth of economy of India, the performance of Apprenticeship Training Scheme is not satisfactory and a large number of training facilities available in the industry are going unutilised depriving unemployed youth to avail the benefits of the Apprenticeship Training Scheme.

Employers are of the opinion that provisions of the Act are too rigid to encourage them to engage apprentices and provision relating to penalty creates fear amongst them of prosecution and they have suggested to modify the Apprentices Act suitably.

In order to make the apprenticeship more responsive to youth and industry, the Apprentices Act, 1961 has been amended and brought into effect from 22nd December, 2014.

These amendments have been made with the objective of expanding the apprenticeship opportunities for youth.

Non engineering graduates and diploma holders have been made eligible for apprenticeship.

A portal is being setup to make all approvals transparent and time bound.

Apprenticeship can be taken up in new occupations also.Scope & Coverage

The Act extends to the whole of India. Its provisions apply to areas or industries specified by the Central

Government by notification in the Official Gazette. The Act shall not apply to an area or an industry until it is specified by

notification.Power to Make Rules

The Central Government has the powers to make rules, after consultations with the Central Apprenticeship Council, for enforcement of the provisions of the Act.


99

Apprentice [Section 2(aa)]

Apprentice means a person who is undergoing apprenticeship training in pursuance of a contract of apprenticeship

Apprentice Training [Section 2(aaa)]

Apprenticeship training means a course of training in any industry or establishment undergone in pursuance of a contract of apprenticeship and under prescribed terms and conditions which may be different for different categories of apprentices.

Trade Apprentice [Section 2(q)]

Trade Apprentice means an apprentice who undergoes apprenticeship training in any designated trade

Designated Trade [Section 2(e)]

Designated trade means any trade or occupation or any subject field in engineering or non-engineering or technology or any vocational course which the Central Government, after consultation with the Central Apprenticeship Council, may, by notification in the Official Gazette, specify as a designated trade for the purposes of this Act.

Graduate or Technician Apprentice [Section 2(i)]

Graduate or technician apprentice means an apprentice who holds, or is undergoing training in order that he may hold a degree or diploma in engineering or non-engineering or technology or equivalent qualification granted by any institution recognized by the Government and undergoes apprenticeship training in any designated trade.

Technician (Vocational) Apprentice [Section 2(pp)]

Technician (vocational) apprentice means an apprentice who holds or is undergoing training in order that he may hold a certificate in vocational course involving two years of study after the completion of the secondary stage of school education recognized by the All-India Council and undergoes apprenticeship training in designated trade.

Optional Trade [Section 2(ii)]

Optional trade means any trade or occupation or any subject field in engineering or non-engineering or technology or any vocational course as may be determined by the employer for the purposes of this Act.

Qualification of Apprentice [Section 3]

A person shall not be qualified for being engaged as an apprentice to undergo apprenticeship training -

in any designated trade, unless he is not less than 14 years of age, and

for designated trades related to hazardous industries, not less than 18 of age; and

satisfies such standards of education and physical fitness as may be prescribed:

Provided that different standards may be prescribed in relation to apprenticeship training in different designated trades and for different categories of apprentices.

Contract of Apprentices [Section 4]

No person shall be engaged as an apprentice to undergo apprenticeship training in a designated trade unless such person or, if he is minor, his guardian has entered into a contract of apprenticeship with the employer.

The apprenticeship training shall be deemed to have commenced on the date on which the contract of apprenticeship has been entered into.

Every contract of apprenticeship may contain such terms and conditions


100

as may be agreed to by the parties to the contract Provided that no such term or condition shall be inconsistent with any

provision of this Act or any rule made thereunder. Every contract of apprenticeship shall be sent by the employer within 30

days to the Apprenticeship Adviser until a portal-site is developed by the Central Government, and

thereafter the details of contract of apprenticeship shall be entered on the portal-site within 7 days, for verification and registration.

Objection in contract of Apprentice [Section 4A]

In the case of objection in the contract of apprenticeship, the Apprenticeship Adviser shall convey the objection to the employer within fifteen days from the date of its receipt.

Registeration of Contract (4B)

The Apprenticeship Adviser shall register the contract of apprenticeship within 30 days from the date of its receipt.

Period of Training [Section 6]

As per section 6 the period of apprenticeship training, which shall be specified in the contract of apprenticeship, shall be as follows- In the case of trade apprentices who, having undergone institutional training in a school or other institution recognized by the National Council, have passed the trade tests or examinations conducted by that Council or by an institution recognized by that Council , the period of apprenticeship training shall be such as may be prescribed.

In the case of trade apprentices who, having undergone institutional training in a school or other institution affiliated to or recognised by a Board or State Council of Technical Education or any other authority or courses approved under any scheme which the Central Government may, by notification in the Official Gazette specify in this behalf, have passed the trade tests or examinations conducted by that Board or State Council or authority or by any other agency authorised by the Central Government, the period of apprenticeship training shall be such as may be prescribed;

In the case of other trade apprentices , the period of apprenticeship training shall be such as may be prescribed;

In the case of graduate or technician apprentices, technician (vocational) apprentices and the period of apprenticeship training shall be such as may be prescribed.

Termination of Apprenticeship Contract [Section 7]

The contract of apprenticeship shall terminate on the‘expiry of the period of apprenticeship training.

Either party to a contract of apprenticeship may make an application to the Apprenticeship Adviser for the termination of the contract earlier

After considering the application and the objections, if any, the


101

Apprenticeship Adviser may terminate the contractNumber of apprentice for a designated trade [Section 8]

Central Government to prescribe the number of apprentices to be engaged by the employer for designated trade and optional trade.

Several employers may join together either themselves or through an agency, approved by the Apprenticeship Adviser, according to the guidelines issued from time to time by the Central Government in this behalf, for the purpose of providing apprenticeship training to the apprentices under them.

Practical Training of Apprentices [Section 9]

Every employer shall make suitable arrangements in his workplace for imparting a course of practical training to every apprentice engaged by him.

Any of the trade apprentices who have not undergone institutional training in a school or other institution recognised by the National Council or any other institution affiliated to or recognised by a Board or State Council of Technical Education or any other authority which the Central Government may, by notification in the Official Gazette, specify in this behalf, shall, before admission in the workplace for practical training, undergo a course of basic training and the course of basic training shall be given to the trade apprentices in any institute having adequate facilities.

Cost of Training

Recurring costs (including the cost of stipends) incurred by an employer in connection with basic training, imparted to trade apprentices shall be borne-

If such employer employs two hundred and fifty workers or more, by the employer;

If such employer employs less than two hundred and fifty workers, by the employer and the Government in equal shares up to such limit as may be laid down by the Central Government and beyond that limit, by the employer alone;

Recurring costs (excluding the cost of stipends) incurred by an employer in connection with the practical training imparted to graduate or technician apprentices technician (vocational) apprentices shall be borne by the employer and the cost of stipends shall be borne by the Central Government and the employer in equal shares up to such limit as may be laid down by the Central Government and beyond that limit, by the employer alone except apprentices who holds degree or diploma in non-engineering.

Objection of Employers

Every employer shall have the following obligations in relation to an apprentice:

To provide the apprentice with the training in his trade in accordance with the provisions of the Act and the rules made thereunder.

if the employer is not himself qualified in the trade, he shall ensure that a person who possesses the prescribed qualifications is placed in charge of the training of the apprentice.

To provide adequate instructional staff, possessing prescribed qualifications for imparting practical and theoretical training and facilities for trade test of apprentices.


102

To carry out his obligations under the contract of apprenticeship. Obligation of Trade Apprentice

Every trade apprentice shall have the following obligations: To learn his trade conscientiously and diligently and endeavour to qualify

himself as a skilled craftsman before the expiry of the period of training. To attend practical and instructional classes regularly.

To carry out all lawful orders of his employer and superiors in the establishments.

To carry out his obligations under the contract of apprenticeship. Hours of Work, Overtime, Leave and Holidays [Section 15]

The weekly and daily hours of work of an apprentice while undergoing practical training in a workplace shall be as determined by the employer subject to the compliance with the training duration, if prescribed.

No apprentice shall be required or allowed to work overtime except with the approval of the Apprenticeship Adviser who shall not grant such approval unless he is satisfied that such overtime is in the interest of the training of the apprentice or in the public interest.

An apprentice shall be entitled to such leave and holidays as are observed in the establishment in which he is undergoing training.

Records and Returns [Section 19]

Every employer shall maintain records of the progress of training of each apprentice undergoing apprenticeship training in his establishment in such form as may be prescribed.

Until a portal-site is developed by the Central Government, every employer shall furnish such information and return in such form as may be prescribed, to such authorities at such intervals as may be prescribed.

Every employer shall also give trade-wise requirement and engagement of apprentices in respect of apprenticeship training on portal-site developed by the Central Government in this regard.

Offence and Penalties [Section 30]

If any employer contravenes the provisions of the Act relating to the number of apprentices which he is required to engage under those provisions, he shall be given a month’s notice in writing, by an officer duly authorised in this behalf by the appropriate Government, for explaining the reasons for such contravention.

In case the employer fails to reply the notice within the period specified under subsection or the authorised officer, after giving him an opportunity of being heard, is not satisfied with the reasons given by the employer, he shall be punishable with fine of five hundred rupees per shortfall of apprenticeship month for first three months and thereafter one thousand rupees per month till such number of seats are filled up.

If any employer or any other person-

(a) required to furnish any information or return-

(i) refuses or neglects to furnish such information or return, or (ii) furnishes or causes to be furnished any information or return which is false and which is either knows or believes to be false or does not believe to be true, or (iii) refuses to answer, or give a false answer to any question necessary for


103

obtaining any information required to be furnished by him, or (b) refuses or wilfully neglects to afford the Central or the State Apprenticeship Adviser or such other person, not below the rank of an Assistant Apprenticeship Adviser, as may be authorised by the central or the State Apprenticeship Adviser in writing in this behalf any reasonable facility for making any entry, inspection, examination or inquiry authorised by or under this Act, or (c) requires an apprentice to work overtime without the approval of the Apprenticeship Adviser, or (d) employs an apprentice on any work which is not connected with his training, or (e) makes payment to an apprentice on the basis of piece-work, or (f) requires an apprentice to take part in any output bonus or incentive scheme. (g) engages as an apprentice a person who is not qualified for being so engaged, or (h) fails to carry out the terms and conditions of a contract of apprenticeship he shall be punishable with fine of one thousand rupees for every occurrence. (2A) The provisions of this section shall not apply to any establishment or industry which is under the Board for Industrial and Financial Reconstruction established under the Sick Industrial Companies (Special Provisions) Act, 1985.


104

Lesson 19

Audit Under Labour Legislations

Objectives The legislatures have, from time to time enacted numerous laws and legislations to protect the interest of labourers

Lack of legal awareness amongst the working population as well as the employers Is the major impediment In proper compliance with the laws and regulations

Business corporations have recognized the importance of legal compliance of the provisions of the labour laws.

For this purpose labour law audit is essential.Scope & Coverage

The scope of labour law audit includes in depth examination of various applicable laws, company records, facilities, policies practices and procedures to ensure proper and complete compliance with applicable labour laws

Labour law audit also suggests a remedial action if something Is in violation or not In line with the provisions of the applicable labour laws

Areas of Labour Audit

Registration and licenses (eg Factory, Shops and Establishment, Contract Labour, P F, E.S.l., etc)

Preparation and submission of various returns.) ' ‘

Updatation/maintenance of records and registers. Display of notices and extracts of Acts.

Process of disciplinary action.

Handling audits and inspections. Apprising of the corporations of any amendments and important

judgments on various labour laws for compliance Engaging law practitioners to appear in any matter or disputes before the

industrial and labour court and . other authoritiesAny other measures required under the special circumstances of your business.

Company Secretary as Labour Law Auditor

The institute of Company Secretaries of indie has mooted the concept of audit of compliance of labour laws‘.

The course content of the institute is such that qualified company secretaries are well versed with the legal aspect in a broader way.

It would be easy for the practicing company secretaries to have the labour law audit as independent professionals.

Similar to compliance certificate under the Companies Act, compliance certificate can be given the PCS to the government within specified time.

Provisions in the Companies Act, 2013

The Companies Act, 2013 provides provisions for compliance of various laws and empowers the Company Secretary to ensure that the company has made compliances with the provisions of the Act, the rules made


105

thereunder and other laws applicable to the company. To ensure this, complete check list is to be maintained by a Company

Secretary. This will serve some aspects. But for strict compliance, labour law audit is essential and will support the Company Secretary to ensure strict compliances by various departments of the company dealing with such compliances.


106

Lesson 20

SPECIFIC RELIEF ACT 1963

Introduction The term ‘relief’ means the remedy granted for some wrong or injury. There are two types of remedies:

Remedy by which the aggrieved party obtains the same thing to which he is entitled.

Remedy by which the aggrieved party does not obtain the very thing to which he is entitled but compensation for the loss.

The first remedy is to “Specific Relief”. While the second remedy is the “Compensatory Relief’s Thus, specific relief is a relief in specie which aims at the “exact” fulfillment of an obligation. It is also known as equitable relief. The concept of specific relief is governed by various provision of Specific Relief Act, 1963.

Principles upon which specific relief is granted

Following are the principles upon which remedy of specific relief is granted:

Damages is not an adequate remedy: Where damages in money are not an adequate remedy or relief, the court grants the remedy of specific relief.

Dissertation of the Court: An aggrieved party can always apply for the specific relief but whether specific relief will be granted or not it depends upon the discretion of the court. But this discretion of the court is not arbitrary, depending upon the will and pleasure of the court. It has to be exercised on sound and established principles of equity.

Specific relief granted only for enforcing individual and civil rights and no for enforcing Panel laws: Specific relief can be granted only for the purpose of enforcing individual civil rights. Thus, enforcement of Penal law is not possible, except where enforcement of a panel law is merely incidental to the grant of specific relief.

Recovery of Possession of Property

The Specific Relief Act, 1963 lays down the law in this regard under the following two heads;

Recovery of immovable property; and

Recovery of movable property.Recovery of Immovable Property

The Specific Relief Act, 1963 provides for the recovery of the possession of immovable property on the strength of:

Title; and

PossessionRecovery on A person entitled to the possession of specific immovable property may recover it


107

the strength of title [Section 5]

in the manner provided by the Code of Civil Procedure, 1908. According to this, he may file for ejectment on the strength of his title of property within 12 years from the date of dispossession

Recovery on the strength of Possession [Section 6]

A person may sometimes be dispossessed without his consent of immovable property otherwise than in due course of law. Such a person may file a suit, within six months from the date of dispossession, for the recovery of possession of such property. Following are the important points in this regard:

Plaintiff was disposed without his consent and otherwise than in due course of law.

A suit can be instituted even against the rightful owner of the property.

No suit under section 6 can be brought against the government.No appeal and no review of he order or decree passed under section 6 is allowed.

Recovery of possession of Immovable Property [Section 7]

A person who is entitled to the possession of specific movable property may recover the possession of that property if he is disposed of that property, in the manner provided by the Code of Civil Procedure, 1908. To recover the possession under section 7, following points may be noted:

The property to be recovered must be capable of being ascertained and identified.

The person suing must have a right to the immediate possession of the property.

Trustee may sue for the possession of movable property which is held by him in trust.

A person having a special or temporary right to the possession of property may also file a suit.

Section 8: This section deals with the liability of a person having the possession of a movable property of which he is not a legal owner. To apply Section 8, following conditions must be satisfied:

a) The defendant have the possession or control of the movable property; b) The defendant is not the owner of the movable property; and c) Plaintiff have the right to the immediate possession of the movable

property If the above conditions are satisfied, the defendant can be compelled to deliver the property to the plaintiff in the following cases: 1) When the property or thing is held by defendant as an agent or trustee of

the plaintiff. 2) When the compensation in money is not adequate for the property. 3) When it is not possible to ascertain the damage suffered from the loss of

article. When the possession of thing or article has been wrongly transferred from the plaintiff.

Difference between Section 7 &

Following are the important points of difference between Section 7 and Section 8: Section 7 provides a general relief, whereas Section 8 provides a


108

Section 8 special relief. Under section 7, even the owner of the movable property can be

sued. However, it is not possible under Section 8.Under Section 7, money compensation may be alternative remedy, whereas specific relief is the only remedy under Section 8.

Specific Performance of Contract Introduction

Specific performance is an equitable relief given by the court in cases of breach of contract. It is in the form of judgment by the court ordering the defendant o actually perform the contract according to its terms and condition. In the case of breach of contract, compensatory relief can also be granted but in some cases such relief may not be adequate and hence specific relief is granted. However, the defendant can also take the various defences in order to avoid the specific performance of contract. The subject of specific performance may be discussed under the following heads:

Contract which may be specifically enforced.

Contracts which cannot be specifically enforced.

Defences to an action for specific performance.Parties to an action for specific performance.

Contract may be specifically enforced Section 10:

The specific performance of any contract may be enforced in the following cases: When there exists no standard for determining the actual damage caused

as a result of non-performance of contract. When compensation in money is not an adequate relief for the non-

performance of the contract.

Section 10 further provides that, until and unless the contrary is proved, the court shall presume the following:

In case of breach of contract of transfer of immovable property, the compensation in money is not an adequate relief.

In case of breach of contract of transfer of movable property, the compensation in money is an adequate relief. However in the following cases, the court shall presume that the compensation in money is not an adequate relief:

When compensation in money is not an adequate relief.

When the property is of special value or interest to the plaintiff. Where the property consists of goods which are not easily available in

the market.

Where the property is held by the defendant as the agent/ trustee of the plaintiff.

Section 11: Specific performance of the contract may be enforced when the act agreed to be done is the performance of a trust.

Specific Performance of part of contract

The general rule is that the court normally does not grant the specific performance of only a part of a contract. However, the court may direct the specific performance of a part of a contract in the following cases:


109

[Section 12] Part left underperformed proportionately small and can be compensated in money.

Part left unperformed considerably large, if the plaintiff relinquishes all claim to further performance and all rights to compensation.

Separate and independent part. Contract which can not be specifically enforced

Section 14: Following contracts can not be specifically enforced: A contract in which compensation in money is an adequate relief

for the nonperformance of such contract. A contract requiring supervision of the court as the court’s time is

precious. A contract depending upon personal qualification or volition of

parties.

A contract which runs into such minute and numerous details which court could not enforce.

A contract of such nature that court cannot enforce its specific performance.

A contract which by it nature is a determinable contract. A determinable contract is a contract which can be terminated by any of the parties to a contract.

A contract to refer present future disputes to arbitration except provided by the arbitration law.

Contract to sell or let property by one who has no title [Section 17]

A contract to sell or let any immovable property cannot be specifically enforced in the following cases where

A seller or a lesser does not have any title to the property;

Where the seller or lesser cannot give the purchases/ lessee a free title at the time fixed by the parties or court.

Section 20 In the following cases, the court can use its discretion and may reject the specific relief:

Contract giving unfair advantages to the plaintiff.

Performance involving hardships on the dependant.When the enforcement makes it inequitable.

Section 14(3)

It lays down the exceptions where the court may enforce the specific performance in the following cases:

Where the suit is for the enforcement of a contract to execute a mortgage or furnish a security for securing the repayment of a loan which the borrower is not willing to repay.

Where the suit is for the performance/ enforcement of a contract to take up and pay for the debentures of a company.

Where the suit is for the executing the formal deed of partnership and the parties have commenced the business OR purchasing of shares of parties in a firm,

Where the suite is for the performance of contract for the construction of any building or the execution of any other work on land provided the


110

following conditions are satisfied: The building or other work is described sufficiently in the contract: The plaintiff has substantial interest in the performance of a

contract: Compensation in money is not an adequate relief for the non-

performance of contract; and

The defendant has obtained the possession of land where the work is to be done.

Defences of an action for specific performance

The following defences may taken by a defendant against a suit for specific performance of contract:

Contract by trustee in excess o his powers,

Specific performance of a part of a contract where unperformed part is large or substantial.

Unperformed part of a contract not separate and independent. Contracts not specifically enforceable.

Non enforcement except with variations,

For example. A sues B to compel specific performance of contract in writing to buy a house. B proved that he assumed that the contract included house and adjoining garage and a contract was so framed as to leave it doubtful weather the garage was included or not. The court will refuse to enforce the contract except with the variations set up by B,

Delay or laches

If time is the essence of the contract and there is failure on the part of the plaintiff to perform his part of the contract, then the defendant can take a defence to an action for specific performance of contract

Parties to an action for specific performance

The law on the parties to an action may be discussed under the following two heads:

A. Persons who may obtain specific performance; and Persons against whom contracts maybe specifically enforced

Parties who may obtain specific performance [Section 15]

Parties to the contract: The general rule is that the specific performance of the contract may be obtained by parties to the contract.

Representative in Interest: The specific performance of a contract may also be obtained by the representative in interest or the principle of any party therein.

Any person beneficially entitled: Where the contract in settlement of marriage or a compromise of doubtful right between the members of some family, any person beneficially entitled there under may claim specific performance.

Remainder Man: Remainder man means a man to whom the remaining interest in a property vast office the happening of a certain specified event.

Reversioner: Person having the Reversionary Interest. However in the following case, a specific performance of a contract cannot be enforced against a person. [Section 16]:


111

A person who would not to be entitled to recover compensation for its breach.

A person who has become incapable of performing.

A person who violates any essential terms of contract.

A person who act in a fraudulent manner.

A person who varies the terms and conditions of the contract in a wrongful manner.

A person who fails to perform his part of the contract or fails to prove that he is willing to perform his part of the contract.

Persons against whom contract may be specifically performed [Section 19]

Specific performance of a contract may be enforced against the following person: Either party thereto; Any other person claiming under him by a title arising subsequently to the

contract. However against a transferee for value who has paid his money in good faith and without notice of original contract, specific performance can not be granted;

Any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displayed by the defendant.

For example, A, a tenant for life of the property, with remainder to B, in due exercise of the power conferred by the settlement under which he is tenant for life; contract to sell the property C, who has notice of the settlement. Before the sale is completed, A dies, C may enforce specific performance of a contract against B

Meaning of declaratory decree [Section 34]

A declaratory decree of the court is a decree which declares that the plaintiff is entitled to any legal character or any legal right as to any property against the defendant who denies his title to such character or right. The main object of section 34 is to dispel a cloud cast upon the legal character or title of the plaintiff who seeks the aid of the court to get the declaration so that he can peacefully enjoy the legal character or title without any fear or disturbance.

Requisites for the purpose of declaratory decree

The court may issue a declaratory decree, if the following conditions are fulfilled: The plaintiff is entitled to any property.

The defendant denies the plaintiff’s title to such legal character or right;

The declaration asked for is for legal character or right to property only;

The plaintiff is not able to claim further relief other then declaration: and

The court is satisfies that the relief is proper Effect of Declaration [Section 35]

A declaration decree passed under Section 34 is binding only on the following persons:

The parties to the suit; The persons claiming through them respectively; and

The persons for whom any of the parties to the suit are trustees. Thus, declaration under section 34 is a judgment in personam and not a judgment


112

in rem. Hence, it is not binding on strangers. For example, A, a Hindu in a suit to which B, his alleged wife and her mother seeks a declaration that his marriage was duly organized and an order for the restitution of conjugal rights. The court makes the declaration and order, C, claiming that N is his wife then sues A for the recovery of B. The declaration made in the former suit is not binding upon C. Preventive relief means the relief where a party to the contract is prevented from doing particular act, which he is under an obligation not to do. Preventive relief is granted under the discretion of court by way of Injunction. Injunction is a judicial process whereby a party is ordered to refrain from doing or to do a particular act or thing.

Temporary injuction: A temporary injuction means an injuction which is to continue until a specific time or until the further orders of the court. It may be granted at any stage of the suit and does not conclude or determine the right. This is also known as interlocutory or interim injuction.

Perpetual Injuction: A perpetual injuction can be granted by decree made at the hearing and made upon the merits of the suit. It is granted only after full trial or hearing or the case, when a right is firmly established.

Mandatory Injuction: Sometime to prevent the breach of an obligation, it may be necessary to compel the performance of certain acts. If a court is capable of enforcing the performance of those acts, it may grant an injuction to prevent the breach complained of and also to compel the performance of the requisite act. This injuction is known as mandatory injuction.

Ex-parte Injunction : Where the facts and circumstances of the case require that an injunction should be granted in favour of one party without hearing the other party, the court may do so. This is known as ex-parte injunction.

Injuction to perform Negative Agreement [Section 42]

Sometime a contract may comprise of two agreements i.e., an affirmative agreement, to do a particular act and a negative agreement, not to do a certain at. In such a case, if the court is unable to compel the specific performance of the affirmation agreement, it may grant an Injunction to perform the negative agreement. Following are the essential requirements of Section 42:

The contract must consist of two agreements i.e., positive and negative agreement;

The contract must be divisible and the negative part must be capable of being separated from the rest of the contract: and

The applicant must not have failed to perform the contract so far as it is binding on him.

lesson 1 factories act 1948 - dheeraj tyagi...

Documents