Module 1

Concept of Industrial Relations - Factors affecting industrial relations, importance of Industrial

Relations, Collective bargaining; International Labour Organisation : Genesis, development and
dimensions, aims and objectives, Organs of the International Labour Organisation; Role of the
Trade Unions in Modern Industrial Society of India - Trade Union of Employers and Workers,
their forms and types in India.

Importance of IR

Prior to the IR, the problem of IR was literally non-existent as the owners were themselves
producers or the production was carried out by the family members themselves. As with
emergence of factories, the cottage industries were thrown in back gear, which compelled a
large number of workers to leave the farms and become wage earners in factories with meager
wages under tiring working conditions. Gradually two groups, the haves, the status dominated
and aspiring class and other haves not, both having different interests and ideologies developed
their own unions to give a tough fight to other.

The government came on the scene for regulating the working conditions of employees
production, work methods, supply of better skilled workers etc. changed the complexion of
industrial relations considerably. Further changes in the techniques and methods of production,
work methods, supply of better skilled workers etc. changed the complexion of IR considerably.

IR patterns, Organized sector and their impact on unorganized.

The pattern of IR in the organized sector of economy has a definite impact on labor
management relations in unorganized sector. The trends and pattern established in the organized
sector spills over or influences the practices of even the most unorganized industries.

Unions are important force in the important force in the Indian political system: The impact of
Indian trade unions on the political system is much wider than on industry. In addition, the
unions sponsored by the ruling party do influence the legislative process through the intense
lobbying activities.

Components of IR system

An industrial relations system is made up of certain institutions, which are popularly known as
three actors of the system.

1 Workers and their Organization: When the bulk of workforce is employed in the
production of goods and services, the relations between t hem impersonal and dehumanized.
Further, if they are forced to work in an alienated, monotonous, unhygienic work environment
where t heir activities are closely regulated and controlled by the managerial personnel, their
dissatisfaction with system forces them to revolt against it, so workers form their unions.

2 .The Management: The employer/management is the key actor in the system of IR

around which the whole process revolves. As they not only provide jobs to workers but also lay
down the terms and conditions of their employment, administer various social security and labor
welfare programme over and above managing various aspects of industries that directly or
indirectly influence the total system. Leadership styles that are commonly practiced by the
managers to manage people at work.

They are an exploitative and authoritative system, benevolent authoritative system, with
further growth of lab our legislation and the development of trade unions.

3. The Government: In the system of industrial relations, government acts as a

regulator and judge. Till 19th century, the Government almost everywhere including
India, adopted a policy of laissez faire, i.e. it did not bother to intervene between the
employer and workers problems . As such, parties were left free to settle the score the
way they liked to combine for a common cause-for protest against the inhuman
conditions. Government attitude changed in the end of the 19 th century, The Government
was constrained to bring in some type of protective legislation relating to conditions of
work etc.
In the early forties of the present century and after independence, the Government laid
emphasis on the need for consultation between the representatives of labour,
management and the Government in tripartite and bipartite forums.

These three actors in the system interact with each other to yield the basic output. Which
si the set of rules that govern working conditions and the terms of employment.
Collective Bargaining

According to Dale Yoder, Collective bargaining is the term used to describe a

situation in which the essential conditions of employment are determined by
bargaining process undertaken by representatives of a group of workers on the one
hand and of one or more employers on the other.

In the words of Flippo, Collective bargaining is a process in which the

representatives of a labour organisation and the representatives of business
organisation meet and attempt to negotiate a contract or agreement, which specifies
the nature of employee-employer-union relationship.

Features of Collective Bargaining

1. It is a collective process. The representatives of both workers and management

participate in bargaining.

2. It is a continuous process. It establishes regular and stable relationship between the

parties involved. It involves not only the negotiation of the contract, but also the
administration of the contract.

3. It is a flexible and dynamic process. The parties have to adopt a flexible attitude
through the process of bargaining.

4. It is a method of partnership of workers in management

Subject Matter of collective bargaining

The Indian Institute of Personnel Management suggested the following subject matter of
collective bargaining:

I. Purpose of agreement, its scope, and the definition of important terms

II. Rights and responsibilities of the management and of the trade union

III. Wages, bonus, production norms, leave, retirement benefits, and terms and conditions of
service

IV. Grievance redressal procedure

V. Methods and machinery for the settlement of possible future disputes

Importance of Collective Bargaining

Importance to employees

Collective bargaining develops a sense of self respect and responsibility among the
employees.

It increases the strength of the workforce, thereby, increasing their bargaining capacity
as a group.

Collective bargaining increases the morale and productivity of employees.

It restricts managements freedom for arbitrary action against the employees. Moreover,
unilateral actions by the employer are also discouraged.

Effective collective bargaining machinery strengthens the trade unions movement.

The workers feel motivated as they can approach the management on various matters
and bargain for higher benefits.

It helps in securing a prompt and fair settlement of grievances. It provides a flexible

means for the adjustment of wages and employment conditions to economic and
technological changes in the industry, as a result of which the chances for conflicts are
reduced.

Importance to employers
 It becomes easier for the management to resolve issues at the bargaining level rather
than taking up complaints of individual workers.

Collective bargaining tends to promote a sense of job security among employees and
thereby tends to reduce the cost of labor turnover to management.

Collective bargaining opens up the channel of communication between the workers and
the management and increases worker participation in decision making.

Collective bargaining plays a vital role in settling and preventing industrial disputes.

Importance to society

Collective bargaining leads to industrial peace in the country

It results in establishment of a harmonious industrial climate which supports which helps

the pace of a nations efforts towards economic and social development since the
obstacles to such a development can be reduced considerably.

The discrimination and exploitation of workers is constantly being checked.

It provides a method or the regulation of the conditions of employment of those who are
directly concerned about them.

Pre-requisites for collective bargaining:

Effective negotiations and enforcement requires a systematic preparation of the base or ground
for bargaining which involves the following three steps:

Recognition of the Bargaining Agent. The management should give recognition to the
trade union for participating in the collective bargaining process. In case there is more
than one union, selection could be done through verification of membership by a
government agency giving representation to all the major unions through joint
consultations. Thus, the bargaining agent of the workers should be properly identified
before initiating any action.

Deciding the Level of Bargaining. Whether the dealings are confined to enterprise
level, industry level, regional or national level should be decided as the contents, scope
and enforcement agencies differ in each case.

Determining the Scope and Coverage of Bargaining. It would be better to have a

clear understanding of what are the issues to be covered under bargaining. Many a time,
bargaining is restricted to wage and working conditions related issues but it would be
advantageous for both the management and union to cover as many issues as possible to
prevent further friction and disputes. Therefore, all the important and interrelated issues
are to be taken for consideration.

Problems of Collective Bargaining

 I. Due to the dominance of outsiders in trade unionism in the country, there is multiplicity
of unions which are weak and unstable, and do not represent majority of the employees.
Moreover, there are inter-union rivalries, which further hinder the process of collective
bargaining between the labour and the management.

II. Since most of the trade unions are having political affiliations, they continue to be
dominated by politicians, who use the unions and their members to meet their political
ends.

III. There is a lack of definite procedure to determine which union is to be recognised to

serve as a bargaining agent on behalf of the workers

IV. In India, the law provides an easy access to adjudication. Under the Industrial Disputes
Act, the parties to the dispute may request the Government to refer the matter to
adjudication and the Government will constitute the adjudication machinery, i.e., labour
court or industrial tribunal. Thus, the faith in the collective bargaining process is
discouraged.

V. There has been very close association between the trade unions and political parties.
As a result, trade union movement has leaned towards political orientations rather than
collective bargaining.

General advantages and disadvantages of collective bargaining

Pros/ advantages

Can lead to high-performance workplace where labor and management jointly

engage in problem solving, addressing issues on an equal standing.

Provides legally based bilateral relationship.

Managements rights are clearly spelled out.

Employers and employees rights protected by binding collective bargaining

agreement.

Multi-year contracts may provide budgetary predictability on salary and other

compensation issues.

Unions may become strong allies in protecting higher education from the effects of
an economic slowdown.

Promotes fairness and consistency in employment policies and personnel decisions

within and across institutions.

Employees may choose whether they want union representation.

A strong labor management partnership may enable the workforce development

needed for engaging the technology revolution.
Cons/ disadvantages

Managements authority and freedom are much more restricted by negotiated rules.

Creates significant potential for polarization between employees and managers.

Disproportionate effect of relatively few active employees on the many in the bargaining
unit. This is particularly the case when collective bargaining involves a system-wide
structure of elections.

Increases bureaucratization and requires longer time needed for decision making.

Increases participation by external entities (e.g., arbitrators, State Labor Relations

Board) in higher educations decision making.

More difficult for employees at smaller campuses to have their voices heard.

Protects the status quo, thereby inhibiting innovation and change. This is particularly
the case when the change involves privatizations.

Higher management costs associated with negotiating and administering the agreements.

Eliminates ability of management to make unilateral changes in wages, hours, and other
terms and conditions of employment.

Restricts managements ability to deal directly with individual employees.

Increased dependence on the private sector for certain services, particularly those
requiring technological competence, may be compromised.

Contract administration is a very difficult process to manage and significantly changes

the skill set required of managers and supervisors.

International Labour Organization (ILO)

The International Labour Organization (ILO) is a United Nations agency dealing with labour
issues, particularly international labour standards, social protection, and work opportunities for
all. The ILO has 186 member states. It was established in the year 1919

Unlike other United Nations specialized agencies, the International Labour Organization has a
tripartite governing structure representing governments, employers, and workers (usually with
a ratio of 2:1:1). The rationale behind the tripartite structure is the creation of free and open
debate among governments and social partners.

Establishment of International Labour Organisation

The following are the principles which gave birth to the I.L.O and these following principles
were incorporated in Part-XIII of the Treaty Versailles.

(1) Universal peace can be established only if it is based on social justice and social justice
implies the working of the equitable conditions of labour.
(2) Regulation of labour conditions must be accomplished internationally because the failure of
any nation to adopt human conditions for labour is an obstacle in the way of the other nations
which desire to improve the conditions of labour in their own countries.

(3) Examples of methods for improving conditions of labour are indicated as below :-

a. Establishment of maximum working days and week;

b. Prevention of unemployment;

c. Provision of adequate living wage;

d. Protection of labour against sickness, disease and injury arising out of his
employment;

e. Protection of children women and young persons;

f. Provision for odd-age

Aims of the International Labour Organisation

The principle aim of the I.L.O is the welfare of labour as reaffirmed by the Philadelphia
Conference of 1944 under the Philadelphia Declaration, on which the I.L.O. is based.

(a) Labour is not a commodity;

(b) Freedom of expression and of association are essential to sustained progress;

(c) Poverty anywhere constitutes danger to prosperity everywhere; and 144

(d) The war against want requires to be carried on with unrelenting vigour within each nation,
and by continuous and concerted international effort in which the representatives of workers and
employers, employing equal status with those of governments, join with them in free discussion
and democratic decision with a view to the promotion of the common welfare.

The objectives of the I.L.O

The objectives of the I.L.O are enunciated in the preamble to its Constitution, supplemented by
Article 427 of the Peace Treaty of Versailles, 1919; as well as by the Philadelphia Declaration of
1944. The Declaration of Philadelphia set for 10 objectives, which the International Labour
Organisation was to further promote among the Nations of the world.

(a) Full employment and the revising of standards of living,

(b) The employment of workers in the occupation in which they can have the satisfaction of
giving the fullest measure of their skill and make their contribution to the common well being

(c) The provision, as means to the attainment of this end, and under adequate guarantees for all
concerned, of facilities for training and the transfer of labour, including migration for
employment and settlement.
(d) Policies in regard to wages and earning forms and other conditions of work. Calculate to
ensure a just share of the fruits of progress to all, and a minimum living wage to all employed
and in need of protection.

(e) The effective recognition of the right of collective bargaining, the co-operation of
management and labour in the continuous improvement of productive efficiency and the
collaboration of workers and employers in social and economic measures,

(f) The extension of social security measures to provide a basic income to all in need of such
protection and comprehensive medical care,

(g) Adequate protection for the life and health of workers in all occupations,

(h) Provision for child welfare and maternity protection

INTERNATIONAL LABOUR CONFERENCE

Annual over 4,000 delegates

Each country represented by 2 Govt, 1 Workers, 1 Employers
Elect Director general after every 5 years
Decides agenda for ILC
Follow up recommendation and conventions of ILC
Members are elected after 3 years

FUNCTIONS
Adoption of International standards
Supervision of the application of ratified conventions
 Examination of the report of the Director General

INTERNATIONAL LABOUR OFFICE

Permanent Secretariat of the Organization

More than 1000 independent officials (100 countries).
The ILO secretariat, operational headquarters, research centre and publishing house, are
based in the International Labor Office, Geneva.
Administration and management are decentralized in regional, area, and branch offices.

Functions

To Collect and disseminate information on Labour

To carry out studies
To execute technical co-operation
To publish studies and reviews
To provide secretariat for meetings

Trade Unions: Meaning, Types and Roles of Trade Unions

A trade union is a combination of persons. Whether temporary or permanent, primarily for the
purpose of regulating the relations between workers and employers or between workers for
imposing restrictive conditions on the conduct of any trade or business and includes the
federations of two or more trade unions as per Sec. 2 (6) Trade Unions Act, 1926.

A Trade Union is an organisation of workers, acting collectively, who seek to protect and
promote their mutual interests through collective bargaining.

Objectives:
1. Ensure Security of Workers:
This involves continued employment of workers, prevent retrenchment, lay off or lock-outs.
Restrict application of fire or dismissal or discharge and VRS.

2. Obtain Better Economic Returns:

This involves wages hike at periodic intervals, bonus at higher rate, other admissible
allowances, subsidized canteen and transport facilities.

3. Secure Power To Influence Management:

This involves workers participation in management, decision making, role of union in policy
decisions affecting workers, and staff members.

4. Secure Power To Influence Government:

This involves influence on government to pass labour legislation which improves working
conditions, safety, welfare, security and retirement benefits of workers and their dependents,
seek redressal of grievances as and when needed.
Functions of a Trade Union:
The important basic functions of unions listed by National Commission on labour are:

(i) To secure fair wages to workers

(ii) To safeguard security of tenure and improve conditions of service.

(iii) To enlarge opportunities for promotion and training.

(iv) To improve working and living conditions.

(v) To provide for educational, cultural and recreational facilities.

(vi) To co-operate in and facilitate technological advance by broadening the understanding of

workers on its underlying issues.

(vii) To promote identity of interests of workers with their industry.

(viii) To offer responsive co-operation in improving levels of production and productivity,

discipline and high standards of quality and

(ix) To promote individual and collective welfare.

Trade Union Movement in India:

Trade union movement in our country has a century-long history. The first quarter of the present
century saw the birth of the trade union movement, but the seeds of the movement were sown
much earlier.

In the twenties, soon after the World War I, working class in our country realised the
effectiveness of labour strike as a means of obtaining concessions, higher wages and better
working conditions. Many strikes were declared consequently and most of them were
successful. This success led to the formation of several unions.

The AITUC was set up in 1920 with the objectives of representing workers interests, to co-
ordinate the activities of all labour organisations in the country, and to spread the message about
the need for union movement. Hundreds of unions came into being in big and small industries.
Their number, as well as membership, increased considerably.

A landmark in the history of labour movement was the enactment of the Trade Unions Act 1926.
The Act gave a legal status to the registered trade unions and conferred on them and their
members a measure of immunity from civil suits and criminal presentation. Registration of
union gave them respectability before employers and the general public.
Towards the end of 1920s, there was a split in the union movement, the split being caused by
the leaders ideological differences. The AITUC was captured by the communists. The
moderates formed a new organisation, called All India Trade Union Federation. Ideological
differences and splits had their effect on strikes too. Majority of the strikes failed.

Unlike 1920s, the 1930s were not favourable to the trade union movement. The presentation of
the communists involved in the Meerut conspiracy case and the failure of the Bombay textile
strike of 1929 brought a lull in trade union activities.

Economic depression of the period also added to the dull phase of union movement.
Retrenchments and strikes were common, the latter being mostly ineffective. There were further
splits in the movement, but just before the World War II some unity was achieved.

The unity was shattered during the World War II because of ideological differences and
mounting cost of living. Industrial unrest increased and the Govt, banned strikes and lockouts
invoking the Defence of India Rules. Luckily workers realized the need for an organized
movement to secure relief. This realisation led to an increase in the number of unions.

The aftermath of independence was not good for unions. The hopes of workers to secure better
facilities and wages from the national government were not realized. There was large scale
unrest and strikes and lock outs multiplied.

The disunity in the trade union ranks was aggravated by the starting of three central labour
organisations, namely the INTUC in 1947, the Hind Mazdoor Sabha (HMS) in 1948, and the
United Trade Union Congress (UTUC) in 1949.

As years went by, more unions and central organisations came into being the movement became
deeply entrenched as of today, there are 50,000 registered unions and most of them are affiliated
to one or the other central trade union.

Trade Union Formation:/Types

Trade unions are formed on different criteria.

Some of the criteria are:

(1) Craft basis, (2) Industrial Unions, (3) General grouping based on place and (4) Federations.

1. Craft Unions:
In this organisation the labour class is grouped based on particular trade or occupation. This
category is mainly amongst the white collared employees. The measures are mostly in
horizontal system and craft conscious rather than class conscious.
This will have lot of commonality in thinking and approach to problems resolution. The bank
employees union, doctors union, lawyers association, teachers association come under this
category.

2. Industrial Unions:
A particular category of industry will have their own unions. All crafts and trades coming under
that industry are part of the union. Textile mill unions, steel industry unions, mill mazdoor
sangh, grini kamgar unions are some of the examples of industrial unions in India.

They form a strong force in collective bargaining. They cover all welfare of similar industry
workers in a city or industrial town. Industrial unions are more vocal, volatile and indulge in
agitation and strikes. Similarly these industries face more lockouts and arbitration for disputes
redressal.

3. General Union:
This is a conglomerate group of different industry employees forming a union. This happens
normally in industrial towns, ancillary units, and SSI units in a city or suburb. Examples are
Thane industry employees unions and Jamshedpur labour union.

4. Federations:
These are apex bodies at national level. All trade unions like craft union, industrial unions and
general union become members of federations to have bigger identity. Central trade unions as
federations help smaller unions and support at national level to address their cause.

ROLE OF TRADE UNIONS IN INDIA

Trade unions in India are governed by the Trade Unions Act of 1926, which is the main
legislation that provides various rules, regulations and controlling mechanisams related trade
unions. The contribution of trade unions to the development of the labour movement in South
Asia, as well as at the global level, is well recognised. Attention has, however, remained focused
on the formal sector. Unionisation is almost non-existent in the small and informal sector. The
union structure in India is rather well-developed despite the fact that only 20% of registered
unions have sought affiliation to any of the other of the 13th Central Trade Union Organizations
(CTUO). The extent of unionisation in the country is as high as 90% within the public sector,
while, surprisingly, it is much lower in the private sector. The changing role of the government
in India and the introduction of new technology have both radically altered the employment
scenario.
 Module 5
Acts and Laws (objectives and key provisions):
1. The Industrial Disputes Act, 1947
2. The Industrial Employment (Standing Orders) Act, 1946
3. The Maternity Benefit Act, 1961
4. The Payment of Bonus Act, 1965
5. The Payment of Gratuity Act, 1972
6. The Payment of Wages Act, 1936
7. The Trade Unions Act, 1926
8. The Employees Provident Fund and Miscellaneous
Provisions Act, 1952
9. The Employees Compensation Act, 1923
10. The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013

THE TRADE UNIONS ACT, 1926

1. OBJECT: To provide for the registration of trade unions and to define law relating to
registered trade unions.

2. APPLICABILITY: It extends to the whole of India.

3. TRADE UNIONS:

means any combination whether temporary or permanent formed primarily for

the purpose of regulating the relations between workmen and employers for
imposing restrictive conditions on the conduct of any trade or business, and
includes any federation of two or more trade unions.

4. MODE OF REGISTRATION:

Any seven or more members of a trade union may apply for registration of a
trade union in Form - A to the Registrar appointed for the area.

Along with byelaw, Seven ordinary members of the union to make an application
for registration of the union, and a treasury chalan of Rs.100/- remitted as
registration fee. (Section 4 and 5 read with Regulation: 3 & 5)

5. REGISTRATION CERTIFICATE:

On receipt of the application for registration, the Registrar, after making

reasonable enquiry issue a Registration Certificate in Form - B (Section 8 & read
with Regulation 6)

6. CANCELLATION OF REGISTRATION:

A certificate of Registration may be withdrawn or cancelled by the Registrar:

1. On an application of a Trade Union in Form-H, or

 2. If the Registrar is satisfied that the certificate is obtained by fraud of mistake
or that the trade union had ceased to exist or willfully and after notice from the
Registrar contra vent any provisions of the Act or rules etc. (Section 10 read with
Regulations 8 to 12)

7. APPEAL:

Any person aggrieved by any order of the Registrar may appeal within two
months to the Civil Court not inferior to the court of an Additional or Assistant
Principal Civil Court.

(Section 11 read with Regulation 13)

8. CHANGE OF NAME

Any registered trade union may with the consent of not less than 2/3 of its total
members may make application in Form-L, for the change of its name (Section -
23 read with Regulation 16-72)

9. ANNUAL RETURNS

Every trade union shall send annual returns to the Registrar on or before the 1st
day of May of the year succeeding the calendar year in Form-E in the case of
individual trade unions and in Form-F in the case of federation of trade unions
(Section 28 read with Regulation 21)

10. PENALTIES

Offences punishable for the failure to submit returns may extend to Rs.5/- and in
the case of continuing default with an additional fine which may extend to Rs.5/-
for each week and shall not exceed Rs.50.00. Any person who willfully makes,
or causes to be made any false entry or any omission from the general statement
required by Section 28 etc. shall be punishable which may extend to Rs.500/-.
Registered trade unions, furnishing false informations, shall be punishable with
fine which may extend to Rs.200/- (Section 31)

11. WHO CAN FILE PROSECUTIONS:

1. Registrar

2. Persons with the previous sanction of the Registrar.

3. Aggrieved person under Section 32.

The complaint shall be filed within six months of the date on which the offence
is alleged to have been committed.

No court inferior to that of a Presidency Magistrate or a Magistrate of First Class

shall try any offence under the Act.
 12. AUTHORITIES UNDER THE ACT:

Registrar of Trade Unions (under Section - 3)

Labour Commissioner

Additional Registrar of Trade Unions

Additional Labour Commissioner

3. Deputy Registrar of Trade Unions

Joint Labour Commissioner

13. AMALGAMATION OF TRADE UNIONS

Any two or more registered trade unions may become amalgamated together as
one trade union provided the votes of at least one half of the members of each or
every such trade union entitled to vote and at least 60% of the votes recorded are
in favor of the proposal. Notice of the amalgamation shall be sent to the
Registrar Form-R (Section 24 to 26 read with Regulation 18)

14. DISSOLUTION

When a registered trade union is dissolved the notice of dissolution shall be sent
to the Registrar in Form - Q, within 14 days of the dissolution along with the
registration certificate (Section 27 read with Regulation 19)

Gratuity Act 1972

Section 1 Extent and Application

It extends to the whole of India

Applicable to:

every factory, mine, oilfield, plantation, port and railway company;

every shop or establishment in which 10 or more persons are employed, or were employed, on
any day of the preceding twelve months

Section 2 Definitions

S.2 (e) "employee" means any person employed to do any skilled, semi-skilled, or unskilled,
manual, supervisory, technical or clerical work

it does not include an apprentice

S.2 (s) "wages" includes dearness allowance but does not include any bonus, commission, house
rent allowance, overtime wages and any other allowance.

MEANING OF GRATUITY
 THE TERM GRATUITY WAS CONSIDERED AS AN AMOUNT GIVEN FREELY
AND COULD NOT BE DEMANDED AS A MATTER OF RIGHT BY THE
EMPLOYEES. IN MANY CASES GRATUITY WAS GIVEN AS A MATTER OF FAVOUR.

EMPLOYERS USED TO PAY GRATUITY AS A REWARD FOR LONG,CONTINOUS &

MERITRORIOUS SERVICE.

WITH A VIEW TO ENSURE A UNIFORM PATTERN OF THE PAYMENT OF

GRATUITY TO THE EMPLOYEES ,THE CENTRALGOVERNMENT ENACTED
THETHE PAYMENT OF GRATUITY ACT,1972.

Section: 4 Gratuity when payable ?

Gratuity shall be payable to an employee

Who has rendered continuous service for not less than 05 years

on the termination of his employment -

on his superannuation, or

on his retirement or

resignation, or

on his death or disablement due to accident or disease:

Note:-

The completion of continuous service of five years shall not be necessary where the termination
of the employment of any employee is due to death or disablement:

How to calculate the Amount of Gratuity

Monthly rated employee :

At the rate of 15 days wages based on the rate of wages last drawn by the employee
concerned:

Formula:-last drawn wages X 15 days X No. of completed year of service

piece-rated employee, daily wages :

On the average of the total wages received by him for a period of three months
immediately preceding the termination of his employment excluding overtime wages

seasonal establishment

At the rate of seven days wages for each season.

Maximum Limit Rs.3,50,000/-

Higher benefits can be paid if the employer so desires.

Can Gratuity be withheld by the employer ?

The gratuity of an employee, whose services have been terminated for any act, wilful omission
or negligence causing any damage or loss to, or destruction of, property belonging to the
employer, shall be forfeited to the extent of the damage or loss so caused.

The gratuity payable to an employee may be wholly or partially forfeited

If the services of such employee have been terminated for his riotous or disorderly conduct or
any other act of violence on his part, or

If the services of such employee have been terminated for any act which constitutes an offence
involving moral turpitude, provided that such offence is committed by him in the course of his
employment.

Section:6 Nomination

Each employee, who has completed one year of service, shall make nomination for to receive
the amount of gratuity.

In his nomination, an employee may, distribute the amount of gratuity payable to him amongst
more than one nominee.

If at the time of making nomination he has already family, he can not make nomination in
favour of a person who is not a member of his family. If he does so it shall be void.

Fresh nomination in favour of one or more members of his family is required where he has not
family at the time of making nomination..

If a nominee predeceases the employee, the interest of the nominee shall revert to the employee
who can make a fresh nomination.

Every nomination, fresh nomination or alteration of nomination, as the case may be, shall be
sent by the employee to his employer, who shall keep the same in his safe custody.

Section: 7
Determination of the amount of gratuity

A person who is eligible for payment of gratuity shall send a written application to the
employer.

The employer shall determine the amount of gratuity and give notice in writing to the person to
whom the gratuity is payable and also to the controlling authority specifying the amount
gratuity so determined as soon as gratuity becomes payable and whether or not an application
has been made by the concerned employee.

The employer shall arrange to pay the amount of gratuity within 30 days from the date it
becomes payable.

Section: 9
Penalties
Knowingly making false statement/ false representation to avoid to make payment
imprisonment up to 06 months, or with fine which may extend to Rs.10,000/- or with both.

Breach, or makes default in complying with any of the provisions of this Act imprisonment
for 03 months to 01 year, or with fine which shall not be less than Rs.10,000/- but which may
extend to Rs.20,000/- or with both:

Non-payment of any gratuity imprisonment 6 months to 02 years + a fine.

Payment of Bonus Act ,1965

Eligibility

Every employee shall be entitled to be paid by his employer in an accounting year,

bonus, in accordance with the provisions of this Act, provided he has worked in the
establishment for not less than thirty working days in that year

Disqualification for bonus

Notwithstanding anything contained in this Act, an employee shall be disqualified from

receiving bonus under this Act, if he is dismissed from service for

(a) fraud; or

(b) riotous or violent behavior while on the premises of

the establishment; or

(c) theft, misappropriation or sabotage of any property of the establishment

Payment of minimum bonus

Every employer shall be bound to pay to every employee a minimum bonus which shall
be 8.33 percent of the salary or wage earned by the employee during the accounting
year.

Payment of maximum bonus

If the allocable surplus exceeds the amount of minimum bonus payable to the employees
under that section, the employer shall, in lieu of such minimum bonus, be bound to pay
to every employee in respect of that accounting; year bonus which shall be an amount in
proportion to the salary or wage earned by the employee during the accounting year
subject to a maximum of twenty per cent, of such salary or wage.

In computing the allocable surplus under this section, the amount set on or the amount
set off under the provisions shall be taken into account in accordance with the provisions
of that section

Computation of number of working days

 An employee shall be deemed to have worked in an establishment in any accounting
year also on the days on which
(a) he has been laid off under an agreement or as permitted by standing orders under the
Industrial Employment (Standing Orders) Act, 1946

(b) he has been on leave with salary or wage;

he has been absent due to temporary disablement caused by accident arising out of
and in the course of his employment; and

(d) the employee has been on maternity leave with salary or wage, during the accounting
year

Set on and set off allocable surplus

Where for any accounting year, the allocable surplus exceeds the amount of maximum
bonus payable to the employees in the establishment, then, the excess shall, subject to a
limit of twenty per cent. of the total salary or wage of the employees employed in the
establishment in that accounting year, be carried forward for being set on in the
succeeding accounting year and so on

Where for any accounting year, there is no available surplus or the allocable surplus in
respect of that year falls short of the amount of minimum bonus payable to the
employees in the establishment and there is no amount of sufficient amount carried
forward and set on which could be utilized for the purpose of payment of the minimum
bonus, then, such minimum amount or the deficiency, as the case may be, shall be
carried forward for being set off in the succeeding accounting year and so
on up to and inclusive of the fourth accounting year in the manner

Where in any accounting year any amount has been carried forward and set on or set off
under this section, then, in calculating bonus for the succeeding accounting year, the
amount of set on or set off carried forward from the earliest accounting year shall first
betaken into account

Where any money is due to an employee by way of bonus from his employer under a
settlement or an
award or agreement, the employee himself or any other person authorized by him in
writing in this behalf, or in the case of the death of the employee, his assignee or heirs
may, without prejudice to any other mode of recovery, make an application to the
appropriate Government or such authority as the appropriate Government may specify in
this behalf is satisfied that any money is so due, it shall issue a certificate for that
amount to the Collector who shall proceed to recover the same in the same manner as an
arrears of land revenue

Provided that every such application shall be made within one year from the date on
which the money became due to the employee from the employer
 Provided further that any such application may be entertained after the expiry of the said
period of one year, if the appropriate Government is satisfied that the applicant had
sufficient cause for not making the application within the said period.

set on--first we calculate allocable surplus and out of that surplus we pay bonus and after
paying max bonus i.e 20% ,if some amount left balance is called set on and this amount
is kept in reserve for future .

set off-if in any accounting year you do not have sufficient surplus and even you are not
able to pay minimum bonus of 8.33% than legally you have to pay 8.33%,so balance
amount which you do not have in surplus will be shown as set off for future and you
have to take care of set off/on in future before deciding rate of bonus.

The Employees Provident Fund and Miscellaneous Provisions Act, 1952

PF act was came into force in 1952 in order to secure the life of an employee for rendering his
services to organization, this is a statutory liability of employer to give PF amt to an employee.

This amount is paid after the retirement from the services.

Applicability of the act

PF is applicable in any organization where 20 or more persons are employed

PF is applicable in every state except J & k.

Benefits of the act

To provide Monetary benefits to survive after retirement.

To minimize risk against health, sickness, disablement of the employee and his
dependents.

Old age Pension benefits.

Widow pension.

To maintain dignity & Social status.

PF Contribution

PF is deducted on basic salary. If employee's basic is less than or equals to Rs.6500 he will be
covered in pf.

12 % Employee side

3.67%(epf part)+ 8.33 % (Pension part)

13.61% Employer side

3.67 (EPF)+8.33 (Pension)+ 1.1(Admin charge) + 0.5(EDLI) +

0.01(Inspection charge /admin on edli)

Employees Deposit linked insurance scheme.

Challans & Returns

PF challans are submitted on 15th of every month, 5 days grace period is given to submit
challans.

PF Returns are submitted twice a year-

PF RETURNS

Form 5 is used to submit pf monthly return in which new employee details is mentioned.

Form 10 is used to submit pf monthly return in which left employee details is

mentioned.

Form 12A that is used for the same purpose which contains consolidated details of that
particular month-new joinees, left employees & employees/employer pf contribution.

Form 3A is used for pf annual return.

The Employees Compensation Act, 1923/Workmen Compensation Act

The Workmens Compensation Act, aims to provide workmen and/or their dependents
some relief in case of accidents arising out of and in the course of employment and
causing either death or disablement of workmen.

It provides for payment by certain classes of employers to their workmen compensation

for injury by accident.

EMPLOYEES ENTITLED TO COMPENSATION

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

EMPLOYERS LIABILITY FOR COMPENSATION (ACCIDENTS)

The employer of any establishment covered under this Act, is required to compensate an
employee:
a. Who has suffered an accident arising out of and in the course of his employment,
resulting into (i) death, (ii) permanent total disablement, (iii) permanent partial
disablement, or (iv) temporary disablement whether total or partial, or
b. Who has contracted an occupational disease.
 HOWEVER THE EMPLOYER SHALL NOT BE LIABLE

a. In respect of any injury which does not result in the total or partial disablement of the
workmen for a period exceeding three days;
b. In respect of any injury not resulting in death, caused by an accident which is directly
attributable to-
i. the workmen having been at the time thereof under the influence or drugs, or
ii. the willful disobedience of the workman to an order expressly given, or to a rule
expressly framed, for the purpose of securing the safety of workmen, or
iii. The willful removal or disregard by the workmen of any safeguard or other device
which he knew to have been provided for the purpose of securing the safety of
workmen.
The burden of proving intentional disobedience on the part of the employee shall lie
upon the employer.
iv. when the employee has contacted a disease which is not directly attributable to a
specific injury caused by the accident or to the occupation; or
v. When the employee has filed a suit for damages against the employer or any other
person, in a Civil Court.

WHAT IS DISABLEMENT

Disablement is the loss of the earning capacity resulting from injury caused to a
workman by an accident.
Disablements can be classified as (a) Total, and (b) Partial. It can further be classified
into (i) Permanent, and (ii) Temporary, Disablement, whether permanent or temporary is
said to be total when it incapacitates a worker for all work he was capable of doing at the
time of the accident resulting in such disablement.

ACCIDENT ARISING OUT OF AND IN THE COURSE OF EMPLOYMENT

An accident arising out of employment implies a casual connection between the injury
and the accident and the work done in the course of employment. Employment should
be the distinctive and the proximate cause of the injury. The three tests for determining
whether an accident arose out of employment are:
1. At the time of injury workman must have been engaged in the business of the
employer and must not be doing something for his personal benefit;
2. That accident occurred at the place where he as performing his duties; and
3. Injury must have resulted from some risk incidental to the duties of the service, or
inherent in the nature condition of employment.

The general principles that are evolved are:

There must be a casual connection between the injury and the accident and the work
done in the course of employment;

It is not necessary that the workman must be actually working at the time of his death or
that death must occur while he was working or had just ceased to work;
 COMPENSATION IN CASE OF OCCUPATIONAL DISEASES

Workers employed in certain types of occupations are exposed to the risk of contracting
certain diseases, which are peculiar and inherent to those occupations. A worker
contracting an occupational disease is deemed to have suffered an accident out of and in
the course of employment and the employer is liable to pay compensation for the same.
Occupational diseases have been categorized in Parts A, B and C of Schedule III. The
employer is liable to pay compensation:
a. When a workman contracts any disease specified in Part B, while in service for a
continuous period of 6 months under one employer.

b. When a workman contracts any disease specified in Part C, while he has been in
continuous service for a specified period, whether under one or more employers.

CALCULATION OF COMPENSATION

The amount of compensation payable by the employer shall be calculated as follows:

(a) In case of death. - 50% of the monthly wages X Relevant Factor or Rs. 50,000,
whichever is more and Rs.1000 for funeral expenses.
(b) In case of total permanent disablement Specified under -60% of the monthly wages
X Relevant Factor or Rs. 60,000, whichever is more.

(d) In case of partial permanent disablement .-Such percentage of the compensation

payable in case (b) above, as is proportionate to the loss of earning Capacity (as assessed
by a qualified medical practitioner).
(e) In case of temporary disablement (whether total or partial). - A half-monthly
installment equal to 25% of the monthly wages, for the period of disablement or 5 years,
whichever is shorter

WHEN COMPENSATION TO BE DEPOSITED WITH COMMISSIONER ?

The amount of compensation is not payable to the workman directly. It is generally

deposited along with the prescribed statement, with the Commissioner who will then pay
it to the workman. Any payment made to the workman or his dependents, directly, in the
following cases will not be deemed to be a payment of compensation:

i. in case of death of the employee;

ii. in case of lump sum compensation payable to a or a minor or a person of unsound mind or
whose entitlement to the compensation is in dispute or a person under a legal disability.
The receipt of deposit with the Commissioner shall be a sufficient proof of discharge of the
employers liability.

AMOUNTS PERMISSIBLE TO BE PAID TO THE WORKMAN/ DEPENDENTS

DIRECTLY

Following amounts may be paid directly to the workman or his dependents:

a. In case of death of the workman, any advance on account of compensation up to [an
 amount equal to three months wages of such workman] may be paid to any dependent.
b. In case of lump sum compensation payable to an adult male worker not suffering from
any legal disability.
In case of half-monthly payments payable to any workman.

REGISTRATION OF AGREEMENTS OF COMPENSATION

1. Where the amount payable as compensation has been settled by agreement a

memorandum thereof shall be sent by the employer to the Commissioner, who shall, on
being satisfied about its genuineness, record the memorandum in a registered manner.

2. However where it appears to the Commissioner that the agreement ought not to be
registered by reason of the inadequacy of the sum or amount, or by reason that the
agreement has been obtained by fraud or undue influence or other improper means he
may refuse to record the agreement and may make such order including an order as to
any sum already paid under the agreement as he thinks just in the circumstances.

3. An agreement for payment of compensation which has been registered shall be

enforceable under this act notwithstanding anything contained in the Indian Contract
Act, or any other law for the time being in force.
EFFECT OF FAILURE TO REGISTER AGREEMENT
When a memorandum of any agreement is not sent to the Commissioner for registration,
the employer shall be liable to pay the full amount of compensation, which he is liable to
pay under the provisions of this Act.

FILING OF CLAIMS

A claim for the compensation shall be made before the Commissioner.

No claim for compensation shall be entertained by the Commissioner unless the notice
of accident has been given by the workman in the prescribed manner, except in the
following circumstances:

a. in case of death of workman resulting from an accident which occurred on the

premises of the employer, or at any place where the workman at the time of the accident
was working died on such premises or such place or in the vicinity of such premises or
place;
b. in case the employer has knowledge of the accident from any other source, at or about
the time of its occurrence;
c. in case the failure to give notice or prefer the claim, was due to sufficient cause.

LIMITATION

Workman, to the Commissioner, may file the claim for accident compensation in the
prescribed form, within 2 years from the occurrence of the accident or from the date of
 death. The claim must be preceded by
(i) a notice of accident, and

(ii) the claimant-employee must present himself for medical examination if so required
by the employer.

DUTIES OF EMPLOYERS / EMPLOYEES

To pay compensation for an accident suffered by an employee, in accordance with the

Act.
To submit a statement to the Commissioner (within 30 days of receiving the notice) in
the prescribed form, giving the circumstances attending the death of a workman as result
of an accident and indicating whether he is liable to deposit any compensation for the
same.
To submit accident report to the Commissioner in the prescribed form within 7 days of
the accident, which results in death of a workman or a serious bodily injury to a
workman.
To maintain a notice book in the prescribed from at a place where it is readily
accessible to the workman.
To submit an annual return of accidents specifying the number of injuries for which
compensation has been paid during the year, the amount of such compensation and other
prescribed particulars.

DUTIES OF EMPLOYEES

To send a notice of the accident in the prescribed form, to the Commissioner and the
employer, within such time as soon as it is practicable for him. The notice is
precondition for the admission of the claim for compensation.
To present himself for medical examination, if required by the employer.

Maternity Benefit Act 1961

F Object of the Act

{ To protect the dignity of motherhood and the dignity of a new person birth by providing for
the full and healthy maintenance of the woman and her child at this important time when she is
not working

F Coverage of the Act

Upon all women employees either employed directly or through contractor except domestic
women employed in mines, factories, plantations and also in other establishments if the State
Government so decides. Therefore, if the State Government decides to apply this Act to women
employees in shops and commercial establishments, they also will get the benefit of this Act.
Sec.3

Conditionsforeligibilityof benefits
 { Women indulging temporary or unmarried are eligible for maternity benefit when she is
expecting a child and has worked for her employer for at least 80 days in the 12 months
immediately preceding the date of her expected delivery.

Sec. 5

GCONDITIONS FOR CLAIMING BENEFITS

Ten weeks before the date of her expected delivery, she may ask the employer to give
her light work for a month. At that time she should produce a certificate that she is
pregnant.

She should give written notice to the employer about seven weeks before the date of her
delivery that she will be absent for six weeks before and after her delivery. She should
also name the person to who payment will be made in case she cannot take it herself.

She should take the payment for the first six weeks before she goes on leave.

She will get payment for the six weeks after child-birth within 48 hours of giving proof
that she has had child. She will be entitled to 2 nursing breaks of 15 minutes each in the
course of her daily work till her child is 15 months.

Her employer cannot discharge her or change her conditions of service while she is on
maternity leave.

Sec.5

F Cash Benefits

Leave with average pay for six weeks before the delivery

Leave with average pay for six weeks after the delivery

A medical bonus of Rs. 1000, if the employer does not provide free medical care to the
woman.

An additional leave with pay up to one month if the woman shows proof of illness due
to the pregnancy, delivery, miscarriage, or premature birth.

In case of miscarriage, six weeks leave with average pay from the date of miscarriage.

Non Cash Benefits & Privilege

F Light work for 10 weeks (6 weeks plus 1 month) before the date of her expected
delivery, if she asks for it.

F 2 Nursing breaks in the course of her daily work until the child 15 months old.

F No discharge or dismissal while she is on maternity leave.

F No charge to her disadvantage in any of the conditions of her employment while on

maternity leave.
 Leave for Miscarriage & Tubectomy Operation

Leave with wages at the rate of maternity benefit, for a period of 6 weeks immediately
following the day of her miscarriage or her medical termination of pregnancy.

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 arising out of pregnancy etc.,

Forfeiture of maternity benefit

o If permitted by her employer to absent herself under the provisions of sec.6 for any
period during such authorised absence, she shall forfeit her claim to the maternity
benefit for such period.

o For discharging or dismissing such a woman during or on account of her absence from
work, the employer shall be punishable with imprisonment which shall not be less than 3
months, but it will extend to one year and will find, but not exceeding Rs. 5000/-

Industrial Disputes Act ,1947

What are Industrial Disputes?

Industrial Dispute means any dispute or differences between employers and employers
or between employers and workmen or between workmen and workmen which is
connected with the employment or non-employment or the terms of employment or with
the conditions of labour of any person

What are the different categories of Industrial Disputes?

The Second Schedule of the I.D. Act deals with matters within the jurisdiction of Labour
Courts which fall under the category of Rights Disputes.

The propriety or legality of an order passed by an employer under the standing orders;

The application and interpretation of standing orders which regulate conditions of

employment.

Discharge or dismissal of workmen including reinstatement of, or grant of relief to

workmen wrongfully dismissed;

Withdrawal of any customary concession or privilege;

Illegality or otherwise of a strike or lock-out;

 The Third Schedule of the I.D. Act deals with matters within the jurisdiction of Industrial
Tribunals which could be classified as Interest Disputes.

These are :

Wages, including the period and mode of payment;

Compensatory and other allowances;

Hours of work and rest intervals;

Leave with wages and holidays;

Bonus, profit sharing, provident fund and gratuity;

Shift working otherwise than in accordance with standing orders;

Classification by grades;

Rules of discipline;

Rationalization;

Retrenchment of workmen and closure of establishment; and

Any other matter that may be prescribed.

Who can raise an Industrial Dispute?

Any person who is a workman employed in an industry can raise an industrial dispute.

A workman includes any person (including an apprentice) employed in an industry to do

manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or
reward.

It excludes those employed in managerial or administrative capacity.

Industry means any business, trade, undertaking, manufacture and includes any service,
employment, handicraft, or industrial occupation or avocation of workmen.

How to raise an Industrial Dispute?

A workman can raise a dispute directly before a Conciliation Officer in the case of
discharge, dismissal, retrenchment or any form of termination of service. In all other
cases listed at 2 above, the dispute has to be raised by a Union / Management.

Purpose of the Act

SETTLEMENT MACHINERIES

CONCILITAION

ARBITRATION
 COURT OF INQUIRY

-INDUSTRIAL TRIBUNAL

NATIONAL TRIBUNAL

Works Committee

It shall be the duty of the Works Committee to promote measures for

securing and preserving amity and good relations between the employer
and workmen and, to that end, to comment upon matters of their common
interest or concern and endeavour to compose any material difference of
opinion in respect of such matters

Conciliation officer

The appropriate Government may, by notification in the Official Gazette, appoint such
number of persons as it thinks fit, to be conciliation officers, charged with the duty of
mediating in 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 and either permanently or for a
limited period.

Board of conciliation

Provided that, if any party fails to make a recommendation as aforesaid within the
prescribed time, the appropriate Government shall appoint such persons as it thinks fit to
represent that party.

(4) A Board, having the prescribed quorum, may act notwithstanding the absence of the
Chairman or any of its members or any vacancy in its number:

Provided that if the appropriate Government notifies the Board that the services of the
Chairman or of any other member have ceased to be available, the Board shall not act
until a new chairman or member, as the case may be, has been appointed

Courts of inquiry

Labour courts

(3) A person shall not be qualified for appointment as the Presiding Officer of a Labour
Court, unless -
(a) he is, or has been, a Judge of a High Court; or
(b) he has, for a period of not less than three years, been a District Judge or

an Additional District Judge; or]

(c) he has held any judicial office in India for not less than seven years ; or
(d) he has been the Presiding Officer of a Labour Court constituted under

any Provincial Act or State Act for not less than five years
 Industrial tribunals

The appropriate Government may, by notification in the Official Gazette, constitute one
or more Industrial Tribunals for the adjudication of industrial disputes relating to any
matter and for performing such other functions as may be assigned to them under this
Act.

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

appropriate Government.

(3) A person shall not be qualified for appointment as the presiding officer of a

Tribunal unless:

(a) he is, or has been, a Judge of a High Court; or

(b) he has, for a period of not less than three years, been a District Judge or an
Additional District Judge.

(4) The appropriate Government may, if it so thinks fit, appoint two person as assessor,
to advise the tribunal

National tribunals

The Central Government may, by notification in the Official Gazette,

constitute one or more National Industrial Tribunals for the adjudication of industrial
disputes which, in the opinion of the Central Government, involve questions of national
importance or are of such a nature that industrial establishments situated in more than
one State are likely to be interested in, or affected by, such disputes.

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

(3) A person shall not be qualified for appointment as the presiding officer of a

National Tribunal unless he is, or has been, a Judge of a High Court.

(4) The Central Government may, if it so thinks fit, appoint two persons as assessors to
advise the National Tribunal in the proceeding before it

Strike

1. By workmen

2. Refusal to work/ accept employment

Lockout

By employee
 Temporary closure

Refusal to continue to employ the persons employed

Illegal strikes

Without giving 14 days notice

Commenced after 42 days of notice

Prior to the date indicated in the notice

In non PUs

During the pendency of proceedings

Strike/lock out will be illegal if Govt bans.

Lay off

Temporary suspension or permanent termination of employees.

Where in 50 or more workers are employed, shall be laid off by prior permission of the
appropriate government.

Lay off compensation

50% of Basic + DA

Alternative employment within 5 miles not eligible for compensation.

Retrenchment

It is a way of downsizing, cutting costs.

One month notice /pay for small Co.

3 months notice /pay in larger establishments.

Retrenchment Compensation

15 days wages for every completed year.

Closure

Permanent closure of place of employment.

No permission is required in case of smaller establishments

For larger establishments, 90 days prior in advance to get permission from the
government.
Industrial employment (standing orders) Act, 1946

What are Standing Orders?

Section 2(g) Standing orders means rules relating to matters set out in the Schedule;

Standing Orders means rules of conduct for workmen employed in industrial

establishments.

The object of the Act is to require employers in industrial establishments to formally

define conditions of employment under them.

THE SCHEDULE
MATTERS TO BE PROVIDED IN STANDING ORDER UNDER THIS ACT

1. Classification of workmen, e.g. whether permanent, temporary, apprentices, probationers, or

badlis.

2. Manner of intimating to workmen periods and hours of work, holidays, pay-days and wage
rates.

3. Shift working.

4. Attendance and late coming.

5. Conditions of procedure in applying for, and the authority which may grant, leave and
holidays.

6. Requirement to enter premises by certain gates, and liability to search.

7. Closing and re-opening of sections of the industrial establishment, and temporary stoppages
of work and the rights and liabilities of the employer and workmen arising therefrom.

8. Termination of employment, and the notice thereof to be given by employer and workmen.

9. Suspension or dismissal for misconduct, and acts or omissions, which constitute misconduct.

10. Means of redress for workmen against unfair treatment or wrongful exactions by the
employer or his agents or servants.

11. Any other matter, which may be prescribed.

[section 1(3)]. Applicability of the Act - The Act is applicable to all industrial establishments
employing 100 or more workmen.
Provided that the appropriate Government may, after giving not less than two months notice of
its intention so to do, by notification in the official Gazette, apply the provision of this Act to
any industrial establishment employing such number of persons less than one hundred as may
be specified in the notification.

Industrial establishment means (i) an industrial establishment as defined in section 2(i) of

Payment of Wages Act (ii) Factory as defined in section 2(m) of Factories Act (iii) Railway (iv)
Establishment of contractor who employs workmen for fulfilling contract with owner of an
industrial establishment. [section 2(e)].

The term industrial establishment includes factory, transport service, construction work,
mines, plantation, workshop, building activity, transmission of power etc.

Nothing in this Act shall apply to.

(i) Any industry to which the provisions of Chapter VII of the Bombay Industrial Relations Act,
1946 (Bombay Act II of 1947) apply; or

(ii) Any Industrial establishment to which the provisions of the Madhya Pradesh Industrial
Employment (Standing Orders) Act, 1961 (Madhya Pradesh Act 26 of 1961 apply:

Provided that notwithstanding anything contained in the Madhya Pradesh Industrial

Employment (Standing Orders) Act, 1961 (Madhya Pradesh Act, 26 of 1961), the provision of
this Act shall apply to all industrial establishments under the control of the Central
Government.]

Section 14. Power to exempt

The appropriate Government may, by notification in the official Gazette, exempt

conditionally or unconditionally, any industrial establishment or class of industrial
establishment from all or any of the provisions of this Act.

Wages and workman have the meanings, respectively assigned to them in Sec. 2 of the
Industrial Disputes Act, 1947 (14 of 1947).

Section 13B. Act not to apply to certain Industrial establishments

Act not to apply to certain Industrial establishments. Nothing in this Act shall apply to an
industrial establishment in so far as the workmen employed therein 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 Service (Classification, Control and Appeal) Rules or the
Indian Railway Establishment Code or any other rules or regulations that may be notified in this
behalf by the appropriate Government in the official Gazette, apply.]

Approval of Standing Orders - Every employer covered under the Act has to prepare Standing
Orders, covering the matters required in the Standing Orders. Five copies of these should be
sent to Certifying Officer for approval. [section 3(1)]. Certifying Officer means Labour
Commissioner and any officer appointed by Government to be Certifying Officer. [section
2(c)].

The Certifying Officer will inform the Union and workmen and hear their objections.
After that, he will certify the Standing Orders for the industrial establishment. [section 5]. Till
standing orders are certified, Model Standing Order prepared by Government will
automatically apply. [section12A].

Standing order should be displayed in English and local language on special notice
boards at or near entrance of the establishment. [section 9]. Modifications of Standing Order
shall be done by following similar procedure. [section 10].

Once the Standing Orders are certified, they supersede any term and condition of employment,
contained in the appointment letter. If there is inconsistency between Standing Order and
Appointment Letter, the provisions of Standing Order prevail - Eicher Goodearth Ltd. v. R K
Soni - (1993)

Standing orders are binding on employer and employee. These are statutorily imposed
conditions of service. However, they are not statutory provisions themselves (meaning that the
Standing Orders even when approved, do not become law in the sense in which Rules and
Notifications issued under delegated legislation become after they are published as prescribed.)
- Rajasthan SRTC v. Krishna Kant - AIR 1995

Model Standing Orders - The Act has prescribed Model Standing Orders. These are
automatically applicable till employer prepares his own Standing Orders and these are
approved by Certifying Officer. [section 12A].

Disciplinary Action - The most important use of Standing Orders is in case of disciplinary
action. A workman can be punished only if the act committed by him is a misconduct as
defined under the Standing Orders. The Model Standing Orders contain such acts like
insubordination, disobedience, fraud, dishonesty, damage to employers property, taking bribe,
habitual absence or habitual late attendance, riotous behaviour, habitual neglect of work, strike
in contravention of rules etc. as misconducts. The Certified Standing Orders may cover other
acts as misconduct, if approved by Certifying Officer.

Subsistence Allowance Where a workman is suspended by employer pending investigation or

enquiry into complaints or charges of misconduct against him, the workman shall be paid
subsistence allowance equal to 50% of wages for first 90 days of suspension and 75% of wages
for remaining period till completion of disciplinary proceedings. [section 10A(1)]. - - Wages
has same meaning as under section 2(rr) of Industrial Disputes Act. [section 2(i)].

The Payment of Wages Act, 1936

The Payment of Wages Act regulates the payment of wages to certain classes of persons
employed in industry and its importance cannot be under-estimated. The Act guarantees
payment of wages on time and without any deductions except those authorised under the Act.
The Act provides for the responsibility for payment of wages, fixation of wage period, time and
mode of payment of wages, permissible deduction as also casts upon the employer a duty to
seek the approval of the Government for the acts and permission for which fines may be
imposed by him and also sealing of the fines, and also for a machinery to hear and decide
complaints regarding the deduction from wages or in delay in payment of wages, penalty for
malicious and vexatious claims. The Act does not apply to persons whose wage is Rs. 10,000 or
more per month. The Act also provides to the effect that a worker cannot contract out of any
right conferred upon him under the Act.

DEFINITIONS

"employed person" [sec 2 (i)] includes the legal representative of a deceased employed
person;

"employer"[sec 2 (ia)] includes the legal representative of a deceased employer;

"industrial or other establishment"[sec 2 (i1)] means any -

(a) tramway service or motor transport service engaged in carrying passengers or goods or both
by road for hire or reward;
(aa) air transport service other than such service belonging to or exclusively employed in the
military naval or air forces of the Union or the Civil Aviation Department of the Government of
India;
(b) Dock wharf or jetty;
(c) inland vessel mechanically propelled;
(d) mine quarry or oil-field;
(e) plantation;
(f) workshop or other establishment in which articles are produced adapted or manufactured
with a view to their use transport or sale;
(g) establishment in which any work relating to the construction development or maintenance of
buildings roads bridges or canals or relating to operations connected with navigation irrigation
or to the supply of water or relating to the generation transmission and distribution of electricity
or any other form of power is being carried on;
(h) any other establishment or class of establishments which the Central Government or a State
Government may having regard to
the nature thereof the need for protection of persons employed therein and other relevant
circumstances specify by notification in the Official Gazette.

"wages" [sec 2 (iv)] means all remuneration (whether by way of salary allowances or
otherwise) expressed in terms of money or capable of being so expressed which would if the
terms of employment express or implied were fulfilled by payable to a person employed in
respect of his employment or of work done in such employment and includes -

(a) any remuneration payable under any award or settlement between the parties or order of a
court;

(b) any remuneration to which the person employed is entitled in respect of overtime work or
holidays or any leave period;
(c) any additional remuneration payable under the terms of employment (whether called a bonus
or by any other name);

(d) any sum which by reason of the termination of employment of the person employed is
payable under any law contract or instrument which provides for the payment of such sum
whether with or without deductions but does not provide for the time within which the payment
is to be made;

(e) any sum to which the person employed is entitled under any scheme framed under any law
for the time being in force, but does not include -

(1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part
of the remuneration payable under the terms of employment or which is not payable under any
award or settlement between the parties or order of a court;

(2) the value of any house-accommodation or of the supply of light water medical attendance or
other amenity or of any service excluded from the computation of wages by a general or special
order of the State Government;

(3) any contribution paid by the employer to any pension or provident fund and the interest
which may have accrued thereon;

(4) any travelling allowance or the value of any travelling concession;

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

(6) any gratuity payable on the termination of employment in cases other than those specified in
sub-clause (d).

Responsibility for payment of wages [Section 3].

Every employer shall be responsible for the payment to persons employed by him of all wages
required to be paid.
In the case of the factory, manager of that factory shall be liable to pay the wages to
employees employed by him.
In the case of industrial or other establishments, persons responsibility of supervision
shall be liable for the payment of the wage to employees employed by him.
In the case of railways, a person nominated by the railway administration for specified
area shall be liable for the payment of the wage to the employees.
In the case of contractor, a person designated by such contractor who is directly under
his charge shall be liable for the payment of the wage to the employees. If he fails to pay
wages to employees, person who employed the employees shall be liable for the
payment of the wages .

[Sec 5 (3)]
With the consultation of the central government, state government having power and can change
the person responsible for the payment of the wages in Railways, or person responsible to daily-
rated workers in the Public Works Department of the Central Government or the State
Government.

Fixation of wage-periods. [Section 4]

Every person responsible for the payment of wages under section 3 shall fix periods in respect
of which such wages shall be payable. No wage-period shall exceed one month. That means
wage can be paid on daily, weekly, fortnightly (for every 15 days) and monthly only. Wage
period for payment of wages to employees by employer should not exceed 30days i.e. one
month according to this act.

But wages cannot be paid for quarterly, half yearly or once in a year.

Time Of Payment Of Wages. [Section 5]

In railway factory or industrial or other establishment, if there are less than 1000
employees, wages of employees should be paid before the expiry of the 7th day after the
last day of the wage period. (ex:- wages should be paid on starting of present month
within 7 days i.e. before 7th date if wage is paid on 1st in previous month )
In other railway factory or industrial or other establishment, if there are more than 1000
employees, wages of employees should be paid before the expiry of the 10th day after
the last day of the wage period. (ex:- wages should be paid on starting of present month
within 10 days i.e. before 10th date if wage is paid on 1st in previous month )
For employees of port area, mines, wharf or jetty, wages of employees should be paid
before the expiry of the 7h day after the last day of the wage period.

[Sec 5 (2)]
If the employee is terminated or removed for the employment by the employer the wage of that
employee should be paid within 2 days from the day on which he was removed or terminated.

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

[Sec 5 (4)]

Except the payment of wage of the terminated employee, all the wages of the employees should
be paid by their employer on the working day only.

6. WAGES TO BE PAID IN CURRENT COIN OR CURRENCY NOTES

All the wages of the employees must be paid in form of currently using currency notes or coins
or in both forms. Currently using currency notes are 1000/-, 500/-, 100/-, 50/-, 20/-, 10/-, 5/- and
currently using coins are 10/-, 5/-, 2/-, 1/-.

7. DEDUCTIONS WHICH MAY BE MADE FROM WAGES.

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

The following are not called as the deduction

Stoppage of the increment of employee.
Stoppage of the promotion of the employee.

Stoppage of the incentive lack of performance by employee.

Demotion of the employee
Suspension of the employee

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

Deductions [Sec 7 (2)]

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

Fines,
Deductions for absence from duty,
Deductions for damage to or loss of goods made by the employee due to his negligence,
Deductions for house-accommodation supplied by the employer or by government or
any housing board,
Deductions for such amenities and services supplied by the employer as the State
Government or any officer,
Deductions for recovery of advances connected with the excess payments or advance
payments of wages,
Deductions for recovery of loans made from welfare labour fund,
Deductions for recovery of loans granted for house-building or other purposes,
Deductions of income-tax payable by the employed person,
Deductions by order of a court,
Deduction for payment of provident fund,
Deductions for payments to co-operative societies approved by the State Government,
Deductions for payments to a scheme of insurance maintained by the Indian Post Office
Deductions made if any payment of any premium on his life insurance policy to the Life
Insurance Corporation with the acceptance of employee,
Deduction made if any contribution made as fund to trade union with the acceptance of
employee,
Deductions, for payment of insurance premia on Fidelity Guarantee Bonds with the
acceptance of employee,
 Deductions for recovery of losses sustained by a railway administration on account of
acceptance by the employee of fake currency,
Deductions for recovery of losses sustained by a railway administration on account of
failure by the employee in collections of fares and charges,
Deduction made if any contribution to the Prime Ministers National Relief Fund with
the acceptance of employee,
Deductions for contributions to any insurance scheme framed by the Central
Government for the benefit of its employees with the acceptance of employee,

Limit for deductions [Sec 7 (3)]

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

FINES. [Sec 8]

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

1. Notice board of fines on employee should be displayed in the work premises and it
should contain activities that should not be made by employee.
2. Fine should not be imposed on the employee until he gives the explanation and cause for
the act or omission he made.
3. Total amount of fine should not exceed 3% of his wage.
4. Fine should not be imposed on any employee who is under the age of 15 years.
5. Fine should be imposed for one time only on the wage of the employee for the act or
omission he made.
6. Fines should not be recovered in the way of installments from the employee.
7. Fine should be recovered within 60 days from the date on which fine were imposed.
8. Fine should be imposed on day act or omission made by the employee.
9. All fines collected from the employee should be credited to common fund and utilize for
the benefit of the employees.

DEDUCTIONS FOR ABSENCE FROM DUTY. [Sec 9]

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

DEDUCTIONS FOR DAMAGE OR LOSS. [Sec 10]

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

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

DEDUCTIONS FOR SERVICES RENDERED. [Sec 11]

House-accommodation amenity or service provided by the employer should be accepted by the

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

DEDUCTIONS FOR RECOVERY OF ADVANCES. [Sec 12]

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

DEDUCTIONS FOR RECOVERY OF LOANS. [Sec 12A]

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

DEDUCTIONS FOR PAYMENTS TO CO-OPERATIVE SOCIETIES AND INSURANCE

SCHEMES. [Sec 13]

Deductions for payments to co-operative societies or deductions for payments to scheme of

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

MAINTENANCE OF REGISTERS AND RECORDS. [Sec 13A]

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

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

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)

Act, 2013

Sexual harassment is defined to include unwelcome sexually determined behaviour such as

physical contact, request for sexual favours, sexually coloured remarks, screening of
pornography, or any other conduct of sexual nature.

Highlights
The Act defines sexual harassment at the work place and creates a mechanism for
redressal of complaints. It also provides safeguards against false or malicious charges.
Every employer is required to constitute an Internal Complaints Committee at each
office or branch with 10 or more employees. The District Officer is required to
constitute a Local Complaints Committee at each district, and if required at the block
level.
The Complaints Committees have the powers of civil courts for gathering evidence.
The Complaints Committees are required to provide for conciliation before initiating an
inquiry, if requested by the complainant.
Penalties have been prescribed for employers. Non-compliance with the provisions of
the Act shall be punishable with a fine of up to Rs 50,000. Repeated violations may lead
to higher penalties and cancellation of licence or registration to conduct business.

Key Issues and Analysis

There could be feasibility issues in establishing an Internal Complaints Committee at
every branch or office with 10 or more employees.
The Internal Complaints Committee has been given the powers of a civil court.
However, it does not require members with a legal background nor are there any
provisions for legal training.
The Act provides for action against the complainant in case of a false or malicious
complaint. This could deter victims from filing complaints.
Two different bodies are called Local Complaints Committee. The Bill does not clearly
demarcate the jurisdiction, composition and functions of these Committees.
Cases of sexual harassment of domestic workers have been specifically excluded from
the purview of this Act.
Unlike sexual harassment legislation in many other countries, this Act does not provide
protection to men.

Key Features
The Bill lays down the definition of sexual harassment and seeks to provide a mechanism for
redressing complaints. It provides for the constitution of an Internal Complaints Committee at
the work place and a Local Complaints Committee at the district and block levels. A District
Officer (District Collector or Deputy Collector), shall be responsible for facilitating and
monitoring the activities under the Act.

Prohibition of Sexual Harassment at the Work Place

Sexual harassment is defined to include unwelcome sexually determined behaviour such
as physical contact, request for sexual favours, sexually coloured remarks, screening of
pornography, or any other conduct of sexual nature.

The Act prohibits sexual harassment at the work place which may include promise of
preferential treatment, threat of detrimental treatment, hostile work environment, or
humiliating conduct constituting health and safety problems.

The Act defines a work place to include all organizations, and any place visited by an
employee during the course of work. It covers every woman at the work place (whether
employed or not) except a domestic worker working at home. It defines employer as the
person responsible for the management, supervision and control of the work place.

Duties of the employer

The Act assigns certain duties to each employer. These include (a) providing a safe working
environment; (b) constituting an Internal Complaints Committee and conspicuously displaying
the order constituting the Committee; (c) undertaking workshops and training programmes at
regular intervals for sensitizing employees; (d) providing assistance during an inquiry; and (e)
initiating action against the perpetrator.

Structure for redressal of complaints

Every employer is required to constitute an Internal Complaints Committee at all
offices and branches with staff strength of 10 or more employees. Members of the
committee shall include a senior woman employee, two or more employees and one
member from an NGO committed to the cause of women. A member of this Committee
may not engage in any paid employment outside the duties ofthe office.

A Local Complaints Committee is required to be constituted in every district. An

additional Local Complaints Committee shall also be constituted at the block level to
address complaints in situations where the complainant does not have recourse to an
Internal Complaints Committee or where the complaint is against the employer himself.

The Local Complaints Committee, to be constituted by the District Officer, shall

include an eminent woman as the Chairperson, a woman working in the area, two
members from an NGO committed to the cause of women, and a Protection Officer
appointed under the Protection of Women from Domestic Violence Act, 2005.

At least 50 percent of the nominated members in any Internal or Local Committee must
be women.

Procedure for filing complaints and initiating inquiry

An aggrieved woman may complain to the Internal Committee. In the absence of such a
committee, she may file a complaint with the Local Committee. All complaints must be
in writing. The complainant may also pursue other remedies, including filing a criminal
complaint.
 The Committee shall provide for conciliation if requested by the complainant.
Otherwise, the Committee shall initiate an inquiry.

Penalties and appeal

If the allegation is proved, the Committee shall recommend penalties for sexual
harassment as per service rules applicable or the Rules under the Act. In addition, it may
provide for monetary compensation to the complainant.

If the allegation is proved to be false or malicious, the Committee may recommend

action against the complainant. However, action may not be taken against a complainant
merely on the inability to substantiate a complaint or provide adequate proof.

Appeals against the recommendations of either Committee shall lie with the courts.

Penalties have also been prescribed for employers who fail to comply with the
provisions of the Act. Non-compliance shall be punishable with a fine of up toRs
50,000. Repeated violations may lead to higher penalties and cancellation of licence or
registration required for carrying on the business.