Provisions of Indian Wage Legislation & Implementation Difficulties

Presented By
Nithin Prasad

Contents

Aim and Objectives Introduction to Indian Industrial Legislation Indian Wage Legislation Provisions of Wage Legislations Case Study Air India The crisis of 2008-09 Impact of Crisis Difficulties for Air India Conclusion & Recommendation Bibliography
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 Aim

To study the provisions of Indian wage Legislation & their implementation difficulties with respect to Air India, a leading aviation industry in India.

Objectives Literature survey on Provisions of Indian Wage Legislation. Understanding the implementation process with respect to Air India. Analysis on the difficulties of implementing Wage Legislation at Air India. Conclusion and Recommendations.
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Indian Industrial Legislation

Industrial regulatory body which intervenes in the conduct of the industry and impose statutory obligations.
[employer and employee]

It Governs the interest of the employees and the employer. [peace and good relation] The Industrial legislation is of 5 parts mainly Part 1 Working Conditions Obligations Part 2 Social Security mostly on employer Part 3 Wages and Bonus and very less on workers Part 4 Industrial Relations Part 5 Miscellaneous
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Indian Wage Legislation

Indian legislation influences the wage determination. The 2 acts that affect wage decisions areThe Payment of Wages Act 1936

Un-uniform wages given at irregular intervals. Delays in the payment and the practice of fines were high. [Result abuses and riots]

Minimum Wages Act 1948

Exploitation of unorganized, sweated labor for very low wages was high. Statutory fixation of minimum rates to maintain fair return and secure the welfare of labor was important.
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Provisions of Payment of Wages Act of 1936

Definitions. for employee, employer, wages, work place - industry,

mines, establishments, plantation, factory etc..

Rules for payment of wages, Responsibility for payment, fixation of

wage-periods, time of payment.

Wages to be paid in current coin or currency notes.

cash, cheque, crediting in bank accounts are the available options.

Deductions which may be made from wages. fines, absence,

damage or loss of property, house accommodation, other services and advances, loans, tax, maintenance etc..

Maintenance of registers and records. On work done, wage

given, deductions made, receipt.

Enforcement of the Act. Authority, inspector, powers to enquire,

appeal etc..

Penalties and offences. For delaying, not paying, failure to maintain

records, obstructing inspector, subsequent offences etc..

Miscellaneous. Bar of suits, protection in good faith, contracting etc..

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Provisions of Minimum Wages Act of 1948

Wage fixation. - Wage must be paid, either loss or profit, fair to meet needs,
industry ability to pay is irrelevant, no wage below minimum.

Constitutionality. - to prevent evil sweating and benefit workers who dont bargain. Definitions. - of adolescent, adult, child, competent authority, employer, employee, for
providing living wage.

Fixation and reservation of wages. - to fix min rates, different for work and
level.

Advisory board and Central Advisory board. - co-ordinate work of

Advisory board, Central and State government, committee and sub-committee.

Safeguards in payment of minimum wages. - wages in kind, right

amount, fixing hours, overtime, multi work wages, piece work, registers and records maintenance.

Enforcement of act. - Inspectors, authority, powers to appeal. Penalties and offences. - cognizance of offences and offence by company. Miscellaneous. - which include due payment, contracting out, exemptions and
exceptions, central government power to give direction, make rules and provide schedule for various employment.
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Case Study Air India

Air India

India's oldest and largest State-owned flag carrier. It operates a fleet of Airbus and Boeing aircraft serving Asia, Europe and North America. It is the 16th largest airline in Asia, after merging with Indian Airlines.

Has employee base of 31,500. With 14 unions under NACIL after merger with Indian Airlines. Fair and righteous legislation followed, by providing wages, PLI and other benefits. Spends around Rs. 350 crore monthly as wage and PLI, on the last day of every month.
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The crisis of 2009-10

The major expenditure every year - Salaries, fuel and depreciation.

Rs. 6500 crore additional expenditure on aircraft and engines. Grappling Loss of Rs.7200 crore on the consecutive years (200809). Debt of 17000 crore.

This led to huge financial woes and AI went in seek help from Government. Government agreed to help with Rs.14000 crore; soft loan, grant and equity infusion included. AI had to show cost cutting. It targeted Rs.1900 crore as cost cutting for the year 2009 and 2010.
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Impact of crisis

June 2009, in the process, AI instantly announced alarming situation and delayed payment of salaries. Employees and unions revolted and protested against deferred salaries. [There was communication loss] Jan 2010, AI started cost cutting, not by layoffs but, by restructuring the manpower costs.

Reduce wages to 15-20% PLI cut to 50% [annual PLI payment is Rs.1500 crore]

These were considered violation of Indian Wage Legislation - unions and employees protest raged to high levels. Causing about Rs.15 crore loss per day The appropriate government, had to intervene again.
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Difficulties for Air India

During such financial crisis, AIs management struggled as an employer to,

Pay wages on time, fix wage periods, To make deduction, or come to an agreement with employees and unions. There was a communication loss in notifying the industrys alarming situation.

For its survival, changes were vital and needed, but the legislation favored against the changes. The employees were more on the safer side than the employer. Some employees supported and others including unions resisted the change in wage structure. The economic variation pose threat to AI.
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Conclusion

When we compare to history, the employees status and welfare is being better than before. Legislation has supported both employer and employees, to maintain peace & relation between and also scrutinize & monitor the work culture. Employers are not spared from facing difficulties as business world poses lot of threat. Financial risk is always there, making difficulties for employer to implement Wage Legislation provisions.
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Recommendation

Difficulties are present and clear. They can be minimized by adopting risk management. Communication down the line should be transparent and clear. Employees and the unions are also part of industry, a good, collaborative relation with them can dilute the difficulties. A proactive management approach can make huge difference in effective implementation of Legislations.
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Bibliography

N D Kapoor, Handbook of Industrial Law (2006), Part 3: Wage & Bonus Legislations, Sultan chand & sons publications, ISBN 81-7014-498-1. Ashwini Phadnis & Shubhra Tandon, Air India's plan to cut wages, flights may run into rough weather, http://www.thehindubusinessline.com/2010/01/01/stories/2010010153040100.htm TNN, Jun 23, 2009, Air India set to cut wages, stir looms - India Business - Business - The Times of India http://timesofindia.indiatimes.com/business/india-business/Air-India-set-tocut-wages-stir-looms-/articleshow/4689910.cms#ixzz0wlqZ3Dhi Smita Aggarwal, Time to cut Air India wages, says GoM, passes the buck to Govt, http://www.indianexpress.com/news/time-to-cut-air-india-wages-says-gom-passe/575404/ Sindhu Bhattacharya, Aviation ministry plans 20% wage cut for Air India staff, http://www.dnaindia.com/india/report_aviation-ministry-plans-20pct-wage-cut-for-air-indiastaff_1367491 Express news service, Patel rules out job, wage cuts in AI turnaround plan, http://www.indianexpress.com/news/Patel-rules-out-job--wage-cuts-in-AI-turnaroundplan/651581 Sindhu Bhattacharya, Govt may defer Air India pay cuts till after Commonwealth Games, http://www.dnaindia.com/money/report_govt-may-defer-air-india-pay-cuts-till-aftercommonwealth-games_1387331 Business line, Air India to delay salary payment, http://www.blonnet.com/2009/06/15/stories/2009061551590100.htm Business line, Air India unions protest move to delay salaries, http://www.blonnet.com/2009/06/16/stories/2009061652261500.htm
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Thank You