Notes: Module IV –Labour Environment.............. K.

Sweta
Labour Environment o Labour legislation in India o Social Security benefits o Industrial
disputes- causes and preventive measures o Settlement of Disputes o ILO o Trade Union-
meaning and function, o Trade Union Act

Introduction Labour – an active and important factor of production; It embodies both

physical and mental labour; It covers all the levels of hierarchy from top management to the
workers at the shop floor level. The relationship which exists between labour, management
and organisation is Industrial Relation and are key factor in the overall labour environment.

Labour environment –

a)refers to the conditions which affect the working environment of labour and management
and the relationship between the two (Labour & the Mgmt.).

b)It is greatly conditioned by the socio-economic and cultural factors, and the labour laws in
force.

A Congenial labour environment: Promotes domestic and foreign investment; Increases

efficiency, productivity and competitiveness of business organisations; Increases the level of
motivation, and work satisfaction; Results in better utilisation of productive assets; Promotes
employment; Promotes industrial peace; Increases the role and status of workers in the
society; Promotes work culture; and Promotes growth of the economy.

Labour Legislation

Labour legislation has been instrumental in shaping the course of industrial relations in
India. Establishment of social justice has been the principle which has guided the origin and
development of labour legislation in India.

Labour legislation in India has a history of over 125 years

The labour laws regulate not only the conditions of work of industrial establishments, but
also industrial relations, payment of wages, registration of trade unions, certification of
standing orders, etc. In addition, they provide social security measures for workers. They
define legal rights and obligations of employees and employers and also provide guidelines
for their relationship.

In India, all laws emanate from the Constitution of India. Under the Constitution, labour is a
concurrent subject, i.e., both the Central and State governments can enact labour legislation,
with the clause that the State legislature cannot enact a law which is repugnant to the Central
law. A rough estimate places the total number of enactments in India to be around 165.

Objectives:
Labour Legislation in India are to
i. Protect workers from exploitation
ii. Strengthen industrial relations;
iii. Provide machinery for settling industrial disputes and welfare of workers.

Types of Labour Legislation in India

1. Protective and Employment Legislation:

The following acts can be grouped under this category: Factories Act,Mines Act, Payment of
Wages Act, Minimum Wages Act, Equal Remuneration Act, Payment of Bonus Act. Some of
these are concerned with the health and safety of the worker at his workplace. Others protect
the worker by ensuring that he gets paid for the work done at the end of each month.

1.Factories Act, 1948: provides for the licensing, registration, and inspection of factories, for
protecting the interests of workers by ensuring for them better work conditions, and safe and
healthy working conditions in factories.

a).max of 48 hrs /week for adult.b)ban on child labour below 14 yrs c)provision of crèche if
women worker more than 30.d)requirement of welfare officer where no of woker exceed 250.

2.Payment of Wages Act, 1936: Ensures that industrial workers receive payment of their
wages at regular intervals and that no unauthorised deductions are made from their wages.

3.Minimum Wages Act, 1948: empowers the Government to fix, review, revise, and enforce
minimum wages of workers employed in all scheduled employments.

4.Equal Remuneration Act, 1976 – This Act seeks: - to protect the interests of women
labour; equal remuneration to women workers (as that paid to men workers) for same /
similar work; that women are not discriminated against in matters of recruitment or service
conditions.

5.Payment of Bonus Act, 1965: provides for the payment of bonus to all employees working
in industrial establishments and drawing up to Rs. 3,500 p.m.

6.Bonded Labour System (abolition) Act, 1976: This Act abolishes bonded labour system
in India. Under the Act, every bonded labourer stands freed and discharged from any
obligation to render any bonded labour

2. Social Security Legislation:

This category includes acts such as the Employees State Insurance Act, 1948, Employees
Provident Fund Act, 1952 and the Payment of Gratuity Act, Workmen Compensation Act
1923, Maternity Benefit Act 1961. These social security measures are meant to protect
workers against risks of undue hardship and privation. The ESI Act, for example, provides
medical care, accident compensation and compensation to a worker when he is unemployed
or ill. The Provident Fund and Gratuity Schemes are meant to provide to the worker with
some income after his retirement.

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

1. Compensation
2. Restoration

3. Prevention

Compensation: Compensation ensures security of income. It is based on this consideration

that during the period of contingency of risks, the individual and his/her family should not be
subjected to a double calamity, i.e., destitution and loss of health, limb, life or work.

Restoration: It connotates cure of one’s sickness, reemployment so as to restore him/her to

earlier condition. In a sense, it is an extension of compensation.

Prevention: These measures imply to avoid the loss of productive capacity due to sickness,
unemployment or invalidity to earn income. In other words, these measures are designed with
an objective to increase the material, intellectual and moral well-being of the community by
rendering available resources which are used up by avoidable disease and idleness.

Social Security Benefits and Welfare of the Labour:

Welfare and Amenities within the Organization:

1. Lavotaries.

2. Washing and bathing facility.

3. Crèches.

4. Rest shelters and canteens.

5. Drinking water.

6. Arrangement of prevention of Fatigue.

7. Health service including occupational safety.

8. Administration arrangements inside a plant to look after welfare.

9. Uniforms and protective clothing.

10. Shift allowance.

Welfare and Amenities outside the Organization:

1. Maternity benefits.

2. Social security measures like insurance, gratuity, PF and rehabilitation.

3. Benevolent funds.

4. Medical facilities, including programmes for Physical fitness and efficiency, family
planning and child welfare.
5. Educational facility including adult education.

6. Housing facility and Transportation.

7. Recreational facility.

8. Holiday facility, LTC.

Social Security Measures (benefits) in India

1. Workmen’s Compensation Act, 1923: It provides compensation to workers in case of

industrial accidents and injury. Under this Act compensation is paid by the employer and the
amount of compensation depends upon the nature of injury and the salary of the worker
concerned. There is no wage limit for coverage under the Act. It covers all workers employed
in factories, mines, plantations, mechanically propelled vehicles, construction workers, and
certain other hazardous occupations. The Act is, however, not applicable to the persons who
are covered by Employees State Insurance Act, 1948.

2. Maternity Benefit Act, 1961: The Act provides benefits to women worker before and
after child birth working in mines factories industry circus shops plantations and
establishments employing 10 or more persons.The coverage of the Act can be extended by
state governments.Only exception that this benefit are not available to employees covered
under Employees State Insurance Act 1948.

3. Employees’ State Insurance Act, 1948: The purpose of this Act is to provide compulsory
and contributory health insurance facilities to workers. It provides for medical care and
treatment (to workers and to their families), cash benefit during sickness, maternity benefits,
employment injury, pension to the dependents on the death of worker. The Act covers
employees working in organised industrial sector and whose monthly income is less than Rs.
15,000/-.

4. Employees’ Provident funds and Miscellaneous Provision Act, 1952 : The Act provides
for provident fund (PF), family pension, and deposit linked insurance for employees working
in industrial establishments. The pay (Basic pay + D.A) limit for the purpose of coverage
under the Act is Rs. 15,000 p.m. The scheme is compulsory and contributory. Both, the
employer and the employee contribute equally (a fixed percent of employee’s monthly pay)
on a monthly basis into the PF account of the employee with the PF department (of
government). Interest is credited on a regular basis on the accumulated balance in the
account. On retirement (or death), the money is given to the employee (or to his family).

5. Payment of Gratuity Act, 1972: The Act covers employees working in factories, mines,
oilfields, plantations, ports, railways, companies, shops or other establishments employing
more than 10 persons; There is no wage ceiling for getting benefit under this Act; On
completion of 5 years of service, the employee is entitled to gratuity payable at the rate of 15
days wages for each completed year of service, subject to a maximum of Rs. 3.5 lacs.

3. Regulatory Legislation:

The Industrial Disputes Act, 1947, and the Trade Unions Act, 1926, etc. come under this
category.
Trade Unions Definition: “Trade Unions are voluntary organisations (associations) of
workers formed to promote and protect their interests by collective action”

FUNCTIONS OF TRADE UNIONS

Trade unions in present era of industrial development, perform two
sets of functions: the "Militant Functions and the Fraternal Functions." The
trade union is a militant organisation designed to fight for the cause of the
workers. One of the main aims of the organisation of workers into trade
union is to secure better conditions of work and employment. The trade
unions try to fulfill this aim by the method of collective bargaining and
negotiations and if they do not succeed in securing their purpose in this
manner, they put up a fight with the employers for achieving their end in the
form of strikes and boycotts.Then, the trade union is also a fraternal association, a benefit
organization, providing sickness and accident benefits to the members and
supporting them during strikes and lockouts and during the period when they
are temporarily out of work. Such financial help to the members is given by
the trade unions out of their own funds created through subscriptions by
members. Such functions are known as fraternal functions : However, in
modern period, the various functions are performed by trade unions as
pointed out below:
(A) Militant or protective or intra-mutual functions : These
functions include protecting the workers' interests, i.e., hike in
wages, providing more benefits, job security, etc. through
collective bargaining and direct action such as strikes, gheraos,
etc.
(B) Fraternal or extra-mutual functions : These functions include
providing financial and non-financial assistance to workers
during the periods of strikes and lock-outs, extension of medical
facilities during slackness and casualties, provision of
education, recreation, recreational and housing facilities,
provision of social and religious benefits, etc.
(C) Political functions : These functions include affiliating the
union to a political party, helping the political party in enrolling
members, collecting donations, seeking the help of political
parties during the periods of strikes and lock-outs.
(D) Social functions : These functions include carrying out social
service activities, discharging social responsibilities through
various sections of the society like educating the customers etc.

In every country the role of the trade unions has to change

depending on the stage of economic and social development. It also depends
on the strength of the unions, both organisational and financial, and also to a
great extent on the institutional set-up of the society in which they operate.

Trade Unions Act, 1926: The Act is the enabling legislation for the formation of trade
union.It lays down procedure for registration of trade unions and defines their rights and
liabilities. Members of registered trade unions get protection against various civil and
criminal liabilities which they are likely to incur in promoting and safeguarding their
legitimate interests.

Trade Union Act, 1926 Objectives –

a) To lay down the procedure for registration of Trade Unions,

b) Defining their rights and liabilities,

c)regulating their activities, and making them more purposeful for the society.

The Act extends to the whole of India.

Provisions of the Trade Union Act, 1926 :

Section 3:Appointment of Registrars - The appropriate Government is empowered to

appoint a Registrar of Trade Unions for each State. It may also appoint Additional and
Deputy Registrars of Trade Unions.

Section 4: Mode of Registration - Any seven or more members of a Trade Union may
apply for registration of the Trade Union under this Act: -by subscribing their names to the
rules of the Trade Union; and -by complying with the provisions of this Act with respect to
registration.

Section 5: Application for registration : Application for registration of a Trade Union shall
be made to the Registrar and shall be accompanied by: -A copy of the rules of the Trade
Union; -Statement of the following particulars:- The names, occupations and addresses of the
members making the application. The name of the Trade Union and the address of its head
office. Where a Trade Union has been in existence for more than one year before the making
of an application for its registration it needs to submit a statement of the assets and liabilities
held by it.

Section 6: A Trade Union shall not be entitled to registration under this Act, unless its
executive body is constituted in accordance with the provisions of this Act, and its rules
provide for the following: -the Name of the Trade Union; -the Object for which the Trade
Union has been established; and -the purposes for which the general funds of the Trade
Union shall be applicable.

Section 8, 9: Registration The Registrar, on being satisfied that the Union has complied
with all the requirements of this Act in regard to registration, shall register and issue a
certificate of registration to the Trade Union. Note: The Registrar cannot refuse to register a
Trade Union if the application for registration complies with the technical requirement as laid
down in this Act.

Section 10: Cancellation of Registration The certificate of registration of a Trade Union

may be withdrawn or cancelled: On the application by the concerned Trade Union; If the
Registrar is satisfied that the certificate has been obtained by fraud or mistake.
Section 12: Registered office - All communications and notice to a registered Trade Union
may be addressed to its registered office. Notice of any change in the address of the head
office shall be given within fourteen days of such change to the Registrar in writing.

Section 13: Every registered Trade Union: - –Shall have separate legal existence and be
known by the name under which it is registered. –It would have perpetual succession and a
common seal; –Shall have power to acquire and hold both movable and immovable property;
–Can sue and be sued.

Section 15: Objects on which general funds may be spent - Payment of salaries,
allowances and expenses to office bearers, expenses for the administration, compensation to
members for loss arising out of trade disputes; Allowance to members or their dependants on
account of death, old age, sickness, accidents or unemployment; Provision of educational,
social or religious benefits for members or for the dependants of members; Upkeep of a
periodical published for the purposes of discussing questions affecting employers or
workmen; Any other object notified by the appropriate Government in the official Gazette.

Section 18: Immunity from civil suit to certain cases : No suit or other legal proceeding
shall be maintained in any Civil Court against any registered Trade Union or its member in
respect of any act done in contemplation or furtherance of a trade dispute to which such
member or the Trade Union is a party.

Section 27: Dissolution When a registered Trade Union is dissolved, notice for the
dissolution signed by seven members and by the Secretary of the Trade Union shall, within
fourteen days of the dissolution, be sent to the Registrar.

Problems

1) Lack of unity among workers due to diversity

2) Poverty and illiteracy of workers due to which they are unable to understand the role
of Trade Union.
3) External political influence and interference
4) Multiplicity of unions and inter union rivalry
5) Lack of funds and less of welfare activities
6) Migratory character of a large no. Of workers leading to indifference towards Trade
Union.

Examples of Trade Union

INTUC-Indian National Trade Union Congress

HMS-Hind Mazdoor Sangh
BMS-Bhartiya Mazdoor Sangh
AITUC-All India Trade Union Congress
UTUC-The UnitedTrade Union Congress
CITU-Centre of Trade Union Congress
Industrial disputes may be said to be disagreement or controversy between
management and labor with respect to wages, working conditions, other employment
matters or union recognition.

Industrial Disputes Introduction :There are conflicts between employers and workers; These
conflicts (disputes) have different forms; From the side of workers, the protests may be in the
form of: strikes, go slow, gheraos, demonstration etc.; From the side of employers, it could be
in the form of: retrenchment, dismissals, lockouts etc. Industrial disputes result in loss of
production and decline in national income.

The Industrial Disputes Act, 1947, basically provides for the investigation and settlement of
industrial disputes. Its main objective is to provide for a just settlement of disputes by
negotiations, conciliation, mediation, voluntary arbitration and compulsory adjudication. The
Act places constraints on strikes and lockouts. It provides for a works committee at the plant
level to ensure that management and worker contribute to the efficient day to day working of
the enterprise.

The main objectives of the Act are: -

a)Promotion of measures for securing good relations between employers and workers;

b)Investigation and settlement of disputes between labour and employers, workmen and
workmen, employers and employers;

c)Prevention of illegal strikes and lockouts.

d) Providing relief to workers adversely affected by retrenchments (layoffs).

Causes of Industrial Disputes 1.Workers demand for more wages (wages not rising in
proportion to rise in prices); 2.Workers demand for bonus the increase in bonus: There is an
increasing feeling among workers that they should have greater share in the profits. Non-
acceptance of this fact by the employers becomes a source of friction; 3.Demand for
improved working conditions – such as normal working hours, lunch time, holidays and
leaves, better occupational health & safety measures at workplace, drinking water, clean
washrooms, medical facilities, canteens, restrooms, etc. – their absence or lacking may cause
workers protest. 4.Labour retrenchment or dismissal; 5.Non-implementation of Labour
Acts, awards and agreements, standing orders by the employers; 6.Workers indiscipline and
violence – resulting into lockouts. When the managements think that labour productivity has
failed to rise commensurate with the rise in wages, consequently, the managements think that
it is better to close down than pay inflated wages to an undisciplined labour force;

Settlement of Industrial Disputes Under the Industrial Dispute Act (IDA), 1947, the
following arrangement exists for the prevention and settlement of industrial disputes: -

Collective bargaining is a type of negotiation used by employees to work with their

employers.During a collective bargaining period, workers' representatives approach the
employer and attempt to negotiate a contract which both sides can agree with.Typical issues
covered in a labor contract are hours, wages, benefits, working conditions, and the rules of
the workplace.Once both sides have reached a contract that they find agreeable, it is signed
and kept in place for a set period of time, most commonly three years.The final contract is
called a collective bargaining agreement, to reflect the fact that it is the result of a
collective bargaining effort.The parties often refer to the result of negotiation as a Collective
Bargaining Agreement (CBA) / as a Collective Employment Agreement (CEA).

In the event of failure of negotiations, a likely resort to strike or lock-out to force there
calcitrant party to come to terms.When collective negotiations reach a deadlock, the parties
themselves may call in third persons to help them settle their disputes.The role of this third
person is to break the deadlock, to interpret the view point of one to the other, and thereby to
help the parties arrive at an agreement.

1.Works Committees – These are joint committees comprising members from both,
management and the workers, and is set up in order to promote harmonious relations between
the two groups. These committees provide a forum for negotiations between workers and
management at the factory level.

2.Conciliation - Under this, all establishments employing 50 workers or more, are required to
establish Grievance Settlement Authority (GSA). All labour disputes have to be initially
referred to it. If the decision of the GSA is not acceptable to all the concerned parties, then it
is referred to a conciliation officer appointed by the Government for the purpose. If a
settlement is arrived, the conciliation officer sends his report with the Memorandum of
Settlement (signed by all the parties to the dispute) to the government. If the settlement is not
arrived, the reasons for non-settlement are recorded and a report (of non-settlement) is sent to
the government, which may then constitute a Board of Conciliation (consisting of a Chairman
– an independent person, and members from both management and workers). The Board then
reports to the government about the success or failure of its efforts;

3.Arbitration - In arbitration mechanism, the concerned parties, by mutual agreement, can

refer the dispute to an arbitrator (an external third person, acceptable to all) before the same
has been referred for adjudication. In case the matter is not solved by arbitration, it is then
referred to court (i.e. for adjudication);

4.Court of Enquiry – Whenever the industrial dispute is not settled by conciliation and
arbitration, the matter is referred to a court of enquiry. The court will investigate the whole
dispute and will submit its report to the government (within a period of six months from the
date of commencement of its inquiry). The case will then be referred to either a Labour Court
or an Industrial Tribunal for adjudication;

5.Adjudication (to deliver judgment) – Under the IDA, 1947 the adjudication mechanism is
divided into two, depending upon the type of problem - The labour Court, and the Industrial
Tribunals. The latter could be of two types, viz., State Tribunals, and National Tribunals.

5 a) Labour Courts – Set up by State governments; Decide matters (contained in the 2 nd

Schedule of IDA, 1947) like disputed orders of the employers, dismissals, suspensions of
employees, legality of strikes, lock-outs etc. The labour courts decide matters speedily and
report to the government. 5 b) Industrial Tribunals – These tribunals decide matters
(contained in 3 rd Schedule of IDA, 1947) related to wages, bonus, allowances, other
benefits, working conditions, discipline, retrenchment etc.). When set up by the State Govt.
they are called State Tribunals. National Tribunals are set up by the Central Govt. to decide
upon matters of national importance or which affect industrial establishments situated in
more than one State.
Note: case study of Labour Unrest in Maruti Suzuki plant at Manesar Gurgaon. 2012

Recent news:Labour unrest at Honda Motorcycle & Scooters India Ltd at Rajasthan Tapukara
Plant.

International Labour Organization (ILO)

The International Labour Organization (ILO) was established in 1919 after World War I at
Versailles; India become member of ILO in 1919; The International LabourOrganization is
built on the constitutional principle that universal and lasting peace can be established only if
it is based upon social justice.. It (ILO) is a tripartite UN agency that brings together
governments, employers and workers of its member states in common action to promote
decent and productive work, throughout the world.

Principle objectives

1. To promote better working and living conditions

2. To support and protect peaceful industrial relations
3. To support economic development by homogeneous standards
4.To hinder war by ensuring social justice

Key ILO Conventions:

To promote its objectives, ILO has from time to time passed certain conventions (agreements
between member States). Some of them are: - 1.Freedom of Association and Protection of the
Right to Organize (1948) 2.Abolition of Forced Labour (1957); 3.Equal Remuneration (for
work of equal value) (1951); 4.Elimination of Discrimination (a regards employment and
occupation) (1958); 5.Minimum Age (1973).

Role of ILO in Promoting Industrial Relations:

1.Promoting International labour standards (decent working conditions, and enhanced labour
productivity);

2.Promoting freedom, equity, security and dignity at work place;

3.A common platform (of employers, employees, governments, NGOs, and other experts) for
international dialogue on labour issues;

4.It generates a worldwide Public Awareness for events, campaigns and issues concerning
labour;

5.Effort towards prohibition of Child Labour worldwide;

6.Protecting the rights of Migrant workers;

7.Effort towards workers skills enhancement & training.

8.Promoting - Health, Safety, Welfare, and Social Security measures for workers worldwide;