LABOUR LAW-I UNIT-IV:

Concept and Importance of Social Security - Influence of I'LO' -

UNIT-I:
Constitutional Mandate, The Employees Compensation Act, 1923 - Definitions -
Historical aspects - Master and Slave Relationship, Trade Unionism in India
employee, employer, dependent, partial disablement, total disablement, etc. -
and UK, Enactment of the Trade Unions Act, 1926, ILO Conventions relating to
Employer's liability for compensation -Conditions and Exceptions - Procedure for
Trade Unions and relevant Constitutional provisions. A bird's eye view of the Act-
claiming compensation. Computation of Compensation, Commissioner- Jurisdiction,
Definitions - Trade Union, Trade Dispute, etc. Provisions relating to registration,
Powers etc.
withdrawal and cancellation of registration Funds of Trade Union, Immunities,
problems of Trade Union, Amalgamation of Trade Union, Recognition of Trade The Employees State Insurance Act, 1948 - Definitions - Employment injury,
Unions - Methods, need and efforts in this regard, Collective Bargaining - Meaning, Contribution, Dependent, Employee, Principal Employer etc. Employees State
methods, status of collective bargaining settlements, collective bargaining and Insurance Funds- Contribution, Benefits available - Administrative Mechanism - ESI
liberalization. Corporation, Standing Committee, Medical Benefits Council - Composition, Powers,
UNIT -II: Duties - Adjudication of Disputes, E.S.I Courts. Comparative analysis of the ESI Act,
1948 with the Employees' Compensation Act, 1923
Historical Background and Introduction to the Industrial Disputes Act, 1947-
Definitions - Industry, Workman, Industrial Dispute, Appropriate Government, etc, - UNIT-V:
Authorities/Industrial Dispute resolution machinery - Works Comrnittee, Conciliation
and Board of Conciliation - powers and Functions, court of Inquiry, Grievance The Payment of wages Act, 1936 - Definitions - employed person, factory,

settlement Authority, industrial and other establishment, wages, etc. – Deductions - Authorities - Inspectors

Voluntary Arbitration Li/S 10-4, Compulsory Adjudication- Government's and Payment of Wages Authority.

power of reference U/S- l0 - Critical analysis with reference to decided cases.

The Factories Act, 1948 - Definitions - factory, manufacturing process,
Compulsory Adjudication- Composition, Qualification, Jurisdiction, powers of
occupier' worker, hazardous process, etc. - Provisions of the Factories Act relating to
adjudication authorities - Award and Settlement - Definition, Period of operation,
health, safety and welfare of workers - provisions relating to Hazardous process -
binding nature and Juridical Review of award.
provisions relating to working conditions of employment - Working hours, Weekly
UNIT –III:
leave, Annual leave facility, Provisions relating to regulation of employment of
Law relating to regulation of strikes and lockouts- Definition of strikes and women, children and young persons.
lockouts' Analysis with reference to Judicial interpretations, Regulation U/Ss 22,23,10-
A(4A), and 10 (3) Illegal strikes and lockouts, penalties. - Regulation of Job losses-
concepts of Lay-off' Retrenchment, closure and Transfer of undertakings with reference
to statutory definition and Judicial interpretations - Regulation of job losses with
reference to the provisions of chapter V-A and V-B of the ID Act, l947 - Regulation of
managerial prerogatives - Sections 9A, 1lA, 33 and 33A of ID Act, 1947, Certified
Standing orders - Meaning and Procedure for certification' certifying officers- Powers
and Functions etc.
 UNIT-I need for protecting and safeguarding the interest of labour as human beings has been
enshrined in Chapter-III (Articles 16, 19, 23 & 24) and Chapter IV (Articles 39, 41,
LAW RELATING TO TRADE UNION IN INDIA
42, 43, 43A & 54) of the Constitution of India keeping in line with Fundamental
Introduction: Rights and Directive Principles of State Policy. Labour law reforms are an ongoing
and continuous process and the Government has been introducing new laws and
The law relating to labour and employment in India is primarily known under
amending the existing ones in response to the emerging needs of the workers in a
the broad category of “Industrial Law”. Industrialization is considered to be one of the
constantly dynamic economic environment. Labour is a subject in the Concurrent List
key engines to support the economic growth of any country. The commence of
where both the Central & State Governments are competent to enact legislation
industry and its growth is not a venture of the employer alone; yet it involves the hard
subject to certain matters being reserved for the Centre.
work and tough grind of each and every stakeholder of the industry including the
labourers, supervisors, managers and entrepreneurs. With the initiation of the concept Historical aspects: Master and Slave Relationship
of welfare state in the early realm of independence of our country, various legislative
Since the Industrial Revolution, the law and practice of capital-labour
efforts have made their first move in the direction of welfare, equitable rights, social
relationship which is the most important aspect of master and servant relationship
justice, social equity and equitable participation of the labour as a stakeholder at
have undergone a great evolution and for the proper understanding of the significance
parity. A plethora of labour laws have been established to ensure elevated health,
and development of industrial Jurisprudence, a resume of this evolution is very
safety, and welfare of workers; to protect workers against oppressive terms as
essential.
individual worker is economically weak and has little bargaining power; to encourage
and facilitate the workers in the organization; to deal with industrial disputes; to During the early stage of capitalism, the relationship between the capitalist and
enforce social insurance and labour welfare schemes and alike. the labourer was governed by the principle of master and slave. According to this
principle, the capitalist was a man and the labour was a thing. The former, therefore,
Labour laws are the one dealing with employment laws in any organization –
could not confer on the latter nor could the latter contract from the former any rights.
whether it is a manufacturing organization or trading organization or shops and
The capitalist did not employ the labourer; either he bought him or got him. The
establishment. The labour laws address the various administrative rulings (such as
relationship between them was based on coercion and not on free will. In the language
employment standing orders) and procedure to be followed, compliance to be made
of law, it was status and not contract that determined their relationship.
and it addresses the legal rights of, and restrictions on, working people and their
organizations. By and large the labour law covers the industrial relations, certification Later on, when the labourer’s position improved from slave to serf, he could

of unions, labour management relations, collective bargaining and unfair labour contract few rights. But even then, the capitalist retained most of his unrestricted

practices and very importantly the workplace health and safety with good coercive powers over him. As a serf, the labourer was neither an unfree slave nor a

environmental conditions. Further the labour laws also focus on employment free servant; he was rather a half slave and half servant. It was predominantly status,

standards, including general holidays, annual leave, working hours, unfair dismissals, again, that determined the relationship between the labourer as a serf and the

minimum wage, layoff procedures and severance pay and many other issues related to capitalist.

employer and employee and the various compliance requirements. In the next stage, the capital-labour relationship came to be based on contract

The labour laws derive their origin, authority and strength from the provisions instead of on status. The relationship between the capitalist and the labourer was now

of the Constitution of India. The relevance of the dignity of human labour and the that of master and servant. They were, at least in theory, free to acquire rights from
and impose duties upon each other by voluntary mutual contract; though in practice holds authority over the servant and the servant owes obeyance to the master. In other
the freedom was false. The then prevailing state of policy of laissez faire i.e. of letting words, the servant is under the control and bound to obey the orders of the master.
the bargain between the capitalist and the labourer be what they liked in combination The master is the superior of the servant and the servant is the inferior of the master.
with the superior social and economic position of the capitalist, rendered the freedom The so called equality of persons before the law is conspicuous by absence in the
of contract meaningless. master and servant relation. The masters economic and social might determine his
legal rights. The strong is never wrong and the weak must ever be meek is the maxim
In an industrial era, now the evolution of capital labour relationship is marked
of the master and servant law. The master and the servant are truly the ruler and the
by the recognition of two aspects, namely-
ruled”.
(i) The existence of two distinct social groups or classes i.e. Capitalist and
Labourers, each possessing a different social and economic position; and In recent times of democratic order and social justice, however, the words
master and servant have almost fallen out of use and new ones like manager and
(ii) The necessity of State intervention in capital-labour relationship for protecting
worker or employer and employee have taken their place. No doubt, this is in
and balancing the contracting claims of these groups.
conformity with the great social revolution, sometimes styled as the “New Industrial

The enhancement of industrial laws in particular, and State support to trade Revolution” or the “Second Industrial Revolution” that is taking place in the field of

unionism and collective bargaining in general, are the important characteristics of the industrial relations. This transformation of words master and servant is certainly

new basis of capital-labour relationship. The new capital-labour relationship is still significant in that the new words no more smell at least in theory of the ideas of

that of master and servant and is based on the freedom of contract, but unlike in the domination and submission, unlike their predecessors. Taken at their dictionary

past, the freedom is now no more the individual freedom of a labourer, but is the meaning, these new words are truly descriptive of the functions rather than the

collective freedom of a group or union of labourers and the contract is no more an relations of the master and the servant.

individual contract between the capitalist and the labourer but is ‘collective
But though outwardly, the new words possess dignity and respect, it is quite
agreement’ between a group or class or union of labourers on the one hand and the
evident after a little reflection that the transformation of the words is more apparent
capitalist or group of capitalists on the other. In short, the labourer is now no more a
than real as regards the actual facts. They are certainly changed in point of form, but
condemned slave, neither an unfree serf nor a submissive servant, but is a free
they remain more or less the same in substance. There is no improvement in the
member of a group or class or union of labourers now known by the name ‘employee’
relationship between the employer and the employee formerly known as the master
or ‘worker’. However, this recognized right assuming different dimensions with the
and the servant which ought to have followed the improvement in their nomenclature.
changing needs of the State and employer.
The transformation is incomplete giving rise to a problem known as the human
The Nature of Master and Servant Relationship
relations problem.

A servant is one who works for another individual, known as the master, with
The cherished objectives of harmonious and amicable relations between the
or without pay. The master and servant relationship only arises when the tasks are
employer and the workmen could not in these circumstances be achieved within the
performed by the servant under the direction and control of the master and are subject
framework of the then prevailing juristic thought, legal principles or legal traditions;
to the master's knowledge and consent. Advocate S. R. Samant observed that: “The
(it called for altogether new approach, based on new legal thought and philosophy so
words master and servant are suggestive of the ideas of domination and submission
that new legal traditions could come up so as to pave the way for social justice and for
hidden behind them. According to the settled law of master and servant, the master
an equitable distribution of profits and benefits accruing from the industry between
the industrialist and the workers), which alone could afford real protection to the not have much impact, unlike in developing economy. Countries like the U.S. and
workers against harmful effects to the health, safety and morality rather than mere England, etc. with advanced and free market economy only lay down bare rules for
compliance with the contract of employment. observance of employers and workers giving them freedom to settle their disputes. In
the U.S., States intervention in industrial dispute is eliminated to actual or threatened
Thus, the need for Industrial Jurisprudence was imminent and imperative; it
workers’ stoppages that may imperil the national economy, health or safety.
was a sociological necessity so that the dominance of the laissez faire based as it was
However, in a developing economy, the States rules cover a wider area of
upon the so called natural rights of the individual could bid a goodbye.
relationship and there is equally greater supervision over the enforcement of these
Constitution and Labour Laws rules. This is emphatically so in developing countries with labour surplus. It is a
The Constitution of a country is the fundamental law of the land on the basis of concern of the state to achieve a reasonable growth rate in the economy and to ensure
which all other laws are made and enforced. Every organ of the state, be it the executive the equitable distribution thereof. This process becomes more complex in a country
or the legislative or the judiciary, derives its authority from the constitution and there is with democratic framework guaranteeing fundamental individual freedoms to its
no authority, no department or branch of the State, which is above or beyond the citizens. Hence, the State in a developing country concerns itself not only with the
Constitution or has powers unfettered and unrestricted by the Constitution. content of work rules but also with the framing of rules relating to industrial
Thus, a Constitution is the supreme or fundamental law of the country which discipline, training, and employment.
not only defines the framework of the basic political principles, but also establishes The founding fathers of democratic Constitution of India were fully aware
what the different government institutions should do in terms of procedure, powers about these implications while they laid emphasis to evolve a welfare state embodying
and duties. A Constitution if the vehicle of a nation’s progress. The Constitution is the federal arrangement. Entries about labour relations are represented in all the three lists
supreme law of the country and it contains laws concerning the government and its in the Constitution. Yet most important ones come under the Concurrent list. These
relationships with the people. are industrial and labour disputes, trade unions and many aspects of social securities
The relevance of the dignity of human labour and the need for protecting and and welfare like employer’s’ liability, employees’ compensation, provident fund, old
safeguarding the interest of labour as human beings has been enshrined in Chapter-III age pensions, maternity benefit, etc. Thus, the Industrial Disputes Act, 1947, the
(Articles 16, 19, 23 & 24) and Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Minimum Wages Act, 1948, the Employees’ State Insurance Act, 1948, etc. come
Constitution of India keeping in line with Fundamental Rights and Directive under the concurrent list. Some States have enacted separate amendment Acts to some
Principles of State Policy. The Labour Laws were also influenced by important of the above legislations to meet local needs. Such amendments are recommended
human rights and the conventions and standards that have emerged from the United either with the assent of the President of India or by promulgating rules pursuant to
Nations. These include right to work of one’s choice, right against discrimination, the powers delegated by the Central Act. Under the rule making powers delegated by
prohibition of child labour, just and humane conditions of work, social security, the Centre, the States have often been able to adopt Central Act to local needs without
protection of wages, redress of grievances, right to organize and form trade unions, the President’s assent. The Central acts often delegate such powers. For example,
collective bargaining and participation in management. Section 38 of the Industrial Disputes Act delegates to the appropriate government,
Under the Constitution of India, Labour is a subject in the Concurrent List which in many is the State Government, the power to promulgate such rules as may
and, therefore, both the Central and the State governments are competent to enact be needed for making the Act effective.
legislations subject to certain matters being reserved for the Centre. Similarly, Section 29 and Section 30 of the Minimum Wages Act and Section
The extent of state control or intervention is determined by the stage of 26 of the Payment of Wages Act delegated the rule making power to the State. In
economic development. In a developed economy, work stoppages to settle claim may pursuance to this, several States have promulgated separate minimum wages rules and
payment of wage rules. The Factories Act also contains similar provisions and they lock out, pen down etc against exploitation. To make people strengthen in a
have been similarly availed of. democratic way to asset their demands over their contribution to an organization,
Further, the goals and values to be secured by labour legislation and workmen people associate themselves in a group and constitute a Union for common welfare.
have been made clear in Part IV, Directive Principles of the State Policy of the Thus Trade Union is an instrument of defence formed by employees against
Constitution. Thus, the State shall secure a social order for the promotion of welfare exploitations to protect themselves from economic as well as social interests. This is a
of the people and certain principles of policy should be followed by the State towards complex institution with a numerous facts like social, economic, political and
securing right to adequate means of livelihood, distribution of the material resources psychological. Trade Union provides services as an agent of workers and working
of the community to subserve the common good, prevention of concentration of classes at large. In this epistle thought on Trade Union Movement in India, a brief
wealth via the economic system, equal pay for equal work for both men and women, discussion is made on stipulations in relation to Trade Unionism.
health and strength of workers including men, women and children are not abused,
The need for Trade Unionism:
participation of workers in management of industries, just and humane conditions of
work and that childhood and youth are protected against exploitation against The need for Trade Unionism since the human set up has been felt necessary
exploitation and against moral and material abandonment. in the following ways-
By and large industrial and labour legislations have been directed towards the
a) To provide job security to the workers group working in different industries.
implementation of these directives. Factories Act, 1948, ESI Act, 1948, Employees’
b) To safe guard workers common interest.
Compensation Act, 1923 are focused to the regulation of the employment of the
c) To bring the situation in participation of decision making.
women and children in factories, just and humane conditions of work, protection of
d) To communicate better industrial relation among workers, employers and
health and compensation for injuries sustained during work. Minimum Wages Act,
system groups.
1948 and the Payment of Wages Act, 1936 regulate wage payment. Payment of Bonus
e) To bring an industrial relation with win-win- situation through collective
Act, 1965 seeks to bridge the gap between the minimum wage and the living wage.
bargaining with the union leaders’ representativeness.
However, the directives relating to distribution of wealth, living wages, equal pay for
equal work, public assistance, etc. have not been generally implemented as yet. Gandhiji comments, Trade Union movement as a reformist and economic
organization and considers capital and lobour are equally parts and parcels of an
TRADE UNIONS ACT, 1926
organization.(Known as Sorvodya)

Trade Union Movement in India is not a new idea. From the Marxian to the History of Trade Union Movement in India:
Gandhian, move violently to non violence, howlingness to achievement Trade Union
Movement has been gradually developed till date. It is mentionable that, in In India, Trade Union movement has been considered as the product of

industrially developed countries, there are every Trade Unionism in the fields of industrial development since the First World War 1914-18. Before the time Indian

Agriculture, Industry, Bus and Lorry, Handy Workers and Labours, and Edu- workers were poor and did not have strong union to effort legal fight against any

Professionals etc. Their Trade Unionism had made a great impact on the social, exploiters. At that time they used to follow the guidelines of Government of India’s

political and economic life, while in India; Trade Unionism can be seen only in the Factory Act 1881 which was not perfect to protect the interests of employees. The

field of Industrial area. As long as history of human society various conflicts between system of collective bargaining was totally absent. In several industries, the workers

workers group and employers group have been lasting in the form of strike, gherao, went on strikes every now and then to secure wage increase. In that mean time,
Labour leader Narayan Meghaji Lokkande led a labour movement and formed
“Bombay Mill Hands Association” and succeeded a weekly holiday system for The importance of the formation of an organized trade union was realized by
Bombay Mill Owners Association. nationalist leaders like Mahatma Gandhi who to improve the employer and worker
relationship gave the concept of trusteeship which envisaged the cooperation of the
In 1918 Trade Union Movement in India became more organized and formed
workers and employers. According to the concept, the people who are financially
varieties of unions e.g. Indian Collie or Employees Association, Indian Seamen’s’
sound should hold the property not only to make such use of the property which will
Union, Railway Men’s Union, Port Trust Employees Union etc. Meanwhile Gandhiji
be beneficial for themselves but should make such use the property which is for the
formed The Textile Labour Association in 1920 for fulfilling the demands of spinners
welfare of the workers who are financially not well placed in the society and each
and weavers society. More over the different labour unions and their representatives
worker should think of himself as being a trustee of other workers and strive to
from all over India met in Bombay in 1920 and established the All India Trade Union
safeguard the interest of the other workers.
Congress (AITUC) led by Lala Lajpat Rai.
Many commissions also emphasized the formation of trade unions in India
With the days passed, Trade Union Movement in India gradually strengthened
for eg. The Royal Commission on labour or Whitley commission on labour which
and became national figure in leading of periodic strikes, Gherao, picketing and
was set up in the year 1929-30 recommended that the problems created by modern
boycotts etc in contrary of different work fields for prevention and settlement of
industrialization in India are similar to the problems it created elsewhere in the
industrial disorders. The historic background of Bombay Mill Case of 1920 over
world and the only solution left is the formation of strong trade unions to alleviate
which Madras High Court witnessed Madras Labour Union forbidding by an interim
the labours from their miserable condition and exploitation.
injunction against The Laborers’ strike which was pondered about some necessary
legislation for protecting the sustained Trade Union in India. The Eighteenth Session of the All-India Trade Union Congress led by Suresh
Chandra Banerjee, President of the Congress, was held at Bombay on 28 and 29
As a result Mr. N.M. Joshi, the then General Secretary of All India Trade
September 1940; The session constituted a landmark in the history of the Indian Trade
Union Congress moved a resolution in the Central Legislative Assembly in 1921
Union Movement is that it witnessed the restoration of complete unity in Indian Trade
recommending the Government to introduce legislation for the registration and
Union from the merging of the National Trades Union Federation in the All-India
protection of Trade Union’s existence in India. The resolution was strongly protested
Trade Union Congress.
by Bombay Mills Owners and it took a long bed rest on the table of the Central
Legislative Assembly. A Tripartite Labour Conference was convened in 1942 to provide common
platform for discussion between employees and employers. Indian National Trade
While in the year of 1924, many communist leaders were arrested and
Union Congress (INTUC) was formed in 1947 to settle the industrial disputes in
prosecuted against aggressive and lengthy strikes. From the period numbers of Indian
democratic and peaceful methods. Moreover, the Indian Federation of Labour formed
working classes including Peasants Party united and demanded Indian government
in 1949, Hind Mazdoor Sabha in 1948 and United Trade Union Congress formed in
through the AITUC to pass an act to protect the interest of all India workers group
1949 in the national level and recognized by the government of India as to serve
which results The Trade Union Act 1926 in India. More over different situations in
national and International conference. Trade Union Movement does not delimit its
different times formed many Unions and Federations, which of some are All India
operation within Bombay vicinity nor Delhi only. With the passage of time the
Trade Union Congress 1920, Red Trade Union Congress 1931, National Federation of
movement spreads all across the country and convenient groups welcome the
Labour 1933 Red Trade Union Congress merged with AITUC in 1935 and Indian
organism of Trade Union Movement from different parts of India. In state of Assam,
Federation of Labour 1941 etc.
the garden men’s forum, Assam Chah Mazdoor Sangha, claims for their minimum
wages from their employers according to the rules of The Plantation Labour Act, 2. Freedom of expression and of association are essential to sustained
1951, which regulates the wages of tea-garden workers, their duty hours and the progress;
amenities, states that the management is supposed to provide housing, drinking water, 3. Poverty anywhere constitutes danger to prosperity everywhere; and
education, health care, child care facilities, accident cover and protective equipment. 4. The war against want requires to be carried on with unrelenting vigour
within each nation, and by continuous and concerted international
ILO Conventions relating to trade Unions and Constitutional Provision:
effort in which the representatives of workers and employers,
International Labour Organisation (ILO) is the most important organisation in employing equal status with those of governments, join with them in
the world level and it has been working for the benefit of the workers throughout the free discussion and democratic decision with a view to the promotion
world. It was established in the year 1919. It is a tripartiate body consisting of of the common welfare.
representatives of the Government, Employer, workers. It functions in a democratic International Labour Standards on Freedom of Association:
way by taking interest for the protection of working class throughout the world.
The principle of freedom of association is at the core of the ILO's values: it is
It is also working at the international level as a ‘saviour of workers’ ‘protector enshrined in the ILO Constitution (1919), the ILO Declaration of Philadelphia (1944),
of poor’ and it is a beacon light for the change of social justice and social security. and the ILO Declaration on Fundamental Principles and Rights at Work (1998). It is
The I.L.O examines each and every problem of the workers pertaining to each also a right proclaimed in the Universal Declaration of Human Rights (1948). The
member country and discusses thoroughly in the tripartiate body of all the countries. right to organize and form employers' and workers' organizations is the prerequisite
The I.L.O passes many Conventions and Recommendations on different subjects like for sound collective bargaining and social dialogue. Nevertheless, there continue to be
Social Security, Basic Human Rights, Welfare Measures and Collective Bargaining. challenges in applying these principles: in some countries certain categories of
On the basis of Conventions and Recommendations of I.L.O. every country workers (for example public servants, seafarers, workers in export processing zones)
incorporates its recommendations and suggestions in its respective laws. are denied the right of association, workers' and employers' organizations are illegally
suspended or interfered with, and in some extreme cases trade unionists are arrested
The idea of protecting the interest of the labour against the exploitation of
or killed. ILO standards, in conjunction with the work of the Committee on Freedom
capitalists owes its origin to the philanthropic ideology of early thinkers and
of Association and other supervisory mechanisms, pave the way for resolving these
philosophers, and famous among them is “Robert Owen” who being himself an
difficulties and ensuring that this fundamental human right is respected the world
employer took interest in regulating hazardous working conditions of the workers and
over.
also in human conditions under which the workers were being crushed underneath the
giant wheels of production. 1. Freedom of Association and Protection of the Right to Organize
Convention, 1948:
Aims of the International Labour Organisation:
This Convention provides that workers and employers shall have the right to
The principle aim of the I.L.O is the welfare of labour as reaffirmed by the establish and join organizations of their own choosing without previous authorization.
Philadelphia Conference of 1944 under the Philadelphia Declaration, on which the The public authorities are to refrain from any interference which would restrict the
I.L.O. is based right to form organization or impede its lawful exercise. These organizations shall not
be liable to be dissolved or suspended by administrative authority. It also provides
1. Labour is not a commodity;
protection against act of anti-union discrimination in respect of their employment.
This convention has been ratified by Albania, Argentina, Austria, Belgium, Brazil,
Byelorussia, Cuba, Denmark, Dominican Republic, Finland and France. Federal 4. Rural Workers' Organizations Convention, 1975
Republic of Germany and India have not ratified this particular convention.
All categories of rural workers, whether they are wage earners or self-
As regards the Trade Unions Act, 1926, it limits the number of outsiders in the
employed, shall have the right to establish and, subject only to the rules of the
executive of a trade union. Further there is restriction on outsiders in the federations
organization concerned, to join organizations, of their own choosing without previous
of Government servants who cannot affiliate themselves with any central federations
authorization. The principles of freedom of association shall be fully respected; rural
of workers. Also, the Government in public interest can forego any association or
workers' organizations shall be independent and voluntary in character and shall
trade union and detain or arrest a trade union leader under the Essential Services Act,
remain free from all interference, coercion or repression. National policy shall
1967 , the Preventive Detention Act, 1950, the Maintenance of Internal Security Act,
facilitate the establishment and growth, on a voluntary basis, of strong and
1971 Likewise the Code of discipline in industry, although non-legal and non-
independent organizations of rural workers as an effective means of ensuring the
statutory, one regulates the organization of constitution of India itself, while
participation of these workers in economic and social development.
guaranteeing freedom in public interest and public good. These laws and practice on
trade unions do not conform to the requirements of the convention. Freedom of Association and Constitution of India:
Article 19(1)(c) of the Constitution of India, 1950 which envisages
2. Right to Organize and Collective Bargaining Convention, 1949
fundamental right to freedom of speech and expression also guarantees the country’s
This fundamental convention provides that workers shall enjoy adequate
citizens the right “to form associations or unions” including trade unions. The right
protection against acts of anti-union discrimination, including requirements that a
guaranteed in Article 19(1) (c) also includes the right to join an association or union.
worker not join a union or relinquish trade union membership for employment, or
This right carries with it the right of the State to impose reasonable restrictions.
dismissal of a worker because of union membership or participation in union
Furthermore, it has been established that the right to form associations or unions does
activities. Workers' and employers' organizations shall enjoy adequate protection
not in any manner encompass the guarantee that a trade union so formed shall be
against any acts of interference by each other, in particular the establishment of
enabled to engage in collective bargaining or achieve the purpose for which it was
workers' organizations under the domination of employers or employers'
formed. The right to recognition of the trade union by the employer was not brought
organizations, or the support of workers' organizations by financial or other means,
within the purview of the right under Article 19(1)(c) and thus, such recognition
with the object of placing such organizations under the control of employers or
denied by the employer will not be considered as a violation of Article 19(1)(c). The
employers' organizations. The convention also enshrines the right to collective
various freedoms that are recognized under the fundamental right, Article 19(1)(c),
bargaining.
are
3. Workers' Representatives Convention, 1971
1. The right of the members of the union to meet,
Workers' representatives in an undertaking shall enjoy effective protection
2. The right of the members to move from place to place,
against any act prejudicial to them, including dismissal, based on their status or
3. The right to discuss their problems and propagate their views, and
activities as a workers' representative or on union membership or participation in
4. The right of the members to hold property.
union activities, in so far as they act in conformity with existing laws or collective
agreements or other jointly agreed arrangements. Facilities in the undertaking shall be Objectives of Trade Union Act:
afforded to workers' representatives as may be appropriate in order to enable them to Trade union is a voluntary organization of workers relating to a specific trade,
carry out their functions promptly and efficiently. industry or a company and formed to help and protect their interests and welfare by
collective action. Trade unions are the most suitable organizations for balancing and
improving the relations between the employees and the employer. They are formed gardeners and maistries employed at the Raj Bhavan at Ootacamund. Those persons
not only to cater to the workers' demand, but also for imparting discipline and are employed for doing domestic and other services and for the maintenance of the
inculcating in them the sense of responsibility. They aim to:- Governor's household and to attend to the needs of the Governor, the members of his
1. Secure fair wages for workers and improve their opportunities for promotion family, staff and State guests. When employees applied for the registration of trade
and training. union, the registrar had rejected their application on the ground that, Raj Bhavan not
2. Safeguard security of tenure and improve their conditions of service. comes under the meaning of trade and business. The petition has been field seeking to
3. Improve working and living conditions of workers. set aside the order of the Registrar of Trade Unions, Madras refusing to register the
4. Provide them educational, cultural and recreational facilities. union of employees of the Madras Raj Bhavan as a trade union under the Trade
5. Facilitate technological advancement by broadening the understanding of the Unions Act.
workers.
Supreme Court rejecting the petition, held that, even apart from the
6. Help them in improving levels of production, productivity, discipline and high
circumstance that a large section of employees at Raj Bhavan are Government
standard of living.
servants who could not form themselves into a trade union, it cannot be stated that the
7. Promote individual and collective welfare and thus correlate the workers'
workers are employed in a trade or business carried on by the employer. The services
interests with that of their industry.
rendered by them are purely of a personal nature. The union of such workers would
8. to take participation in management for decision-making in connection to
not come within the scope of the Act, so as to entitle it to registration there under.
workers and to take disciplinary action against the worker who commits in-
disciplinary action.
The term "trade union" as defined under the Act contemplates the existence of
the employer and he employee engaged in the conduct of a trade or business. The
Definition of Trade Union:
definition of the term "workmen" in Sec. 2 (g) would prima facie indicate that it was
Sec 2 (h) states that "Trade Union" means any combination, whether
intended only for interpreting the term "trade dispute". But even assuming that that
temporary or permanent, formed primarily for the purpose of regulating the relations
definition could be imported for understanding the scope of the meaning of the term
between workmen and employers or between workmen and workmen, or between
"trade union" in S. 2 (h), it is obvious that the industry should be one as would
employers and employers, or for imposing restrictive conditions on the conduct of any
amount to a trade or business, i.e., a commercial undertaking. So much is plain from
trade or business, and includes any federation of two or more Trade Unions.
the definition of the term "trade union", itself. I say this because the definition of
Important elements of Trade Union:
"industry" in the Industrial Disputes Act is of wider significance. Section 2 (j) of the
1. There must be combination of workmen and employers;
Industrial Disputes Act which defines "industry" states its meaning as “any business,
2. There must be trade or business; and
trade undertaking, manufacture or calling of employers and includes any calling,
3. The main object of the Union must be to regulate relations of
services, employment, handicraft or industrial occupation or avocation of workmen."
employers and employees or to impose restrictive conditions on the
conduct of any trade or business.
In Tamil Nadu NGO Union v. Registrar, Trade Unions, in this case Tamil
Nadu NGO Union, which was an association of sub magistrates of the judiciary,
In Rangaswami V. S Registrar of Trade Unions, in the Raj Bhavan at Guindy,
tahsildars, etc., was not a trade union because these people were engaged in sovereign
a number of persons are employed in various capacities such as household, staff,
and regal functions of the State which were its inalienable functions. In GTRTCS and
peons, chauffers, tailors, carpenters, maistries, gardeners, sweepers etc. There are also
Officer’s Association, Bangalore and others vs Asst. Labor Commissioner and
anothers, in this case the definition of workmen for the purpose of Trade Unions is a Mode of registration:
lot wider than in other acts and that the emphasis is on the purpose of the association
Sec 4 of the Act states that, any seven or more members of a Trade Union
rather than the type of workers and so it is a valid Trade Union.
may, by subscribing their names to the rules of the Trade Union and by otherwise
Definition of Trade Dispute: complying with the provisions of this Act with respect to registration, apply for
registration of the Trade Union under this Act. However, no Trade Union of workmen
"trade dispute" means any dispute between employers and workmen, or
shall be registered unless at least ten per cent. or one hundred of the workmen,
between workmen and workmen, or between employers and employers which is
whichever is less, engaged or employed in the establishment or industry with which it
connected with the employment or non-employment, or the terms of employment or
is connected are the members of such Trade Union on the date of making of
the conditions of labor, of any person, and "workmen" means all persons employed in
application for registration.
trade or industry whether or not in the employment of the employer with whom the
trade dispute arises; No Trade Union of workmen shall be registered unless it has on the date of

Procedures for the Registration of Trade Unions: making application not less than seven persons as its members, who are workmen
engaged or employed in the establishment or industry with which it is connected.
The main object of the Trade Unions Act, 1926 is to provide machinery for
registration and regulation of Trade Unions. Although registration of a trade union is Where an application has been made under sub-section (1) of Sec 4 for the
not mandatory, it is advisable to register the trade unions as the registered trade registration of a Trade Union, such application shall not be deemed to have become
unions are entitled to get several benefits, immunities and protection under the act. invalid merely by reason of the fact that, at any time after the date of the application,
There are specific rights and privileges conferred on the members of the registered but before the registration of the Trade Union, some of the applicants, but not
trade unions. The members of the registered trade unions are entitled to get protection, exceeding half of the total number of persons who made the application, have ceased
immunity and certain exceptions from some civil and criminal liabilities. A trade to be members of the Trade Union or have given notice in writing to the Registrar
union can only be registered under the Trade Unions Act, 1926. dissociating themselves from the applications.

Trade union Act, 1926 not provides compulsory registration. However, there
The Supreme Court in Tirumala Tirupati Devasthanam held that, any group of
are certain disadvantages of non registration. Therefore it is better to register the trade
employees may be registered as a trade union under the Act for the purpose of
union. The following is the procedure for registration of trade union.
regulating the relations between them and their employer or between themselves. It
Appointment of Registrar: would be apparent from this definition that any group of employees which comes
Section 3 of the Trade Union Act, 1926 empowers the appropriate together primarily for the purpose of regulating the relations between them and their
Government to appoint a person to be a registrar of Trade Unions. The appropriate employer or between them and other workmen may be registered as a trade union
Government is also empowered to appoint additional and Deputy Registrars as it under the Act.
thinks fit for the purpose of exercising and discharging the powers and duties of the
Registrar. However, such person will work under the superintendence and direction of Application for registration:

the Registrar. He may exercise such powers and functions of Registrar with local limit Application for registration must be submitted in the prescribed format. Sec 5

as may be specified for this purpose. provides that, every 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 and a f) the payment of a minimum subscription by members of the Trade Union
statement of the following particulars, namely: which shall not be less than—
1. the names, occupations and addresses of the members making the application; i. one rupee per annum for rural workers;
2. in the case of a Trade Union of workmen, the names, occupations and ii. three rupees per annum for workers in other unorganized sectors; and
addresses of the place of work of the members of the Trade Union making the iii. twelve rupees per annum for workers in any other case;
application; g) the conditions under which any member shall be entitled to any benefit
3. the name of the Trade Union and the address of its head office; and assured by the rules and under which any fine or forfeiture may be imposed on
4. the titles, names, ages, addresses and occupations of the 4 office-bearers of the the members;
Trade Union. h) the manner in which the rules shall be amended, varied or rescinded;
i) the manner in which the members of the executive and the other office-bearers
Where a Trade Union has been in existence for more than one year before the
of the Trade Union shall be elected and removed;
making of an application for its registration, there shall be delivered to the Registrar,
j) the duration of period being not more than three years, for which the members
together with the application, a general statement of the assets and liabilities of the
of the executive and other office-bearers of the Trade Union shall be elected;
Trade Union prepared in such form and containing such particulars as may be
k) the safe custody of the funds of the Trade Union, an annual audit, in such
prescribed.
manner as may be prescribed, of the accounts thereof, and adequate facilities

Provisions to be contained in the rules of a Trade Union: for the inspection of the account books by the office-bearers and members of

Every application must accompany the rules of trade union that has been the Trade Union; and

provided under Sec 6 of the Act. A Trade Union shall not be entitled to registration l) the manner in which the Trade Union may be dissolved.

under this Act, unless the executive thereof is constituted in accordance with the
Power to call for further particulars and to require alteration of name:
provisions of this Act, and the rules thereof provide for the following matters, namely:
a) the name of the Trade Union; Under Sec 7 of the Act, the Registrar has power to call for further information

b) the whole of the objects for which the Trade Union has been established; for the purpose of satisfying himself that any application complies with the provisions

c) the whole of the purposes for which the general funds of the Trade Union shall of section 5, or that the Trade Union is entitled to registration under section 6, and

be applicable, all of which purposes shall be purposes to which such funds are may refuse to register the Trade Union until such information is supplied.

lawfully applicable under this Act; It further states that, if the name under which a Trade Union is proposed to be
d) the maintenance of a list of the members of the Trade Union and adequate registered is identical with that by which any other existing Trade Union has been
facilities for the inspection thereof by the office-bearers and members of Trade registered or, in the opinion of the Registrar, so nearly resembles such name as to be
Union; likely to deceive the public or the members of either Trade Union, the Registrar shall
e) the admission of ordinary members who shall be persons actually engaged or require the persons applying for registration to alter the name of the Trade Union
employed in an industry with which the Trade Union is connected, and also stated in the application, and shall refuse to register the Union until such alteration has
the admission of the number of honorary or temporary members as office- been made.
bearers required under section 22 to form the executive of the Trade Union;
Registration: Registrar to the Trade Union shall give a previous notice of two months in
As per sec 8 of the Act, the Registrar, on being satisfied that the Trade Union writing specifying the ground on which he proposed to withdraw or cancel the
has complied with all the requirements of this Act in regard to registration, shall certificate of registration otherwise than on the application of the Trade Union.
register the Trade Union by entering in a register, to be maintained in such form as
Appeal:
may be prescribed, the particulars relating to the Trade Union contained in the
Any person aggrieved by any refusal of the Registrar to register a Trade Union
statement accompanying the application for registration.
or by the withdrawal or cancellation of a certificate of registration may, within such
Certificate of registration: period as may be prescribed, appeal under Sec 11 of the Act,
a) where the head office of the Trade Union is situated within the limits
Sec 9 of the Act empowers the Registrar, on registering a Trade Union under
of a Presidency town to the High Court, or
section 8, shall issue a certificate of registration in the prescribed form which shall be
b) where the head office is situated in an area, falling within the
conclusive evidence that the Trade Union has been duly registered under this Act.
jurisdiction of a Labour Court or an Industrial Tribunal, to that Court

Minimum requirement about membership of a Trade Union: or Tribunal, as the case may be;
c) where the head office is situated in any area, to such Court, not inferior
Sec 9-A provides that, a registered Trade Union of workmen shall at all times to the Court of an additional or assistant Judge of a principal Civil
continue to have not less than ten percent or one hundred of the workmen, whichever Court of original jurisdiction, as the appropriate Government may
is less, subject to a minimum of seven, engaged or employed in an establishment or appoint in this behalf for that area.
industry with which it is connected, as its members.
The appellate Court may dismiss the appeal, or pass an order directing the
Cancellation of registration: Registrar to register the Union and to issue a certificate of registration under the
provisions of section 9 or setting aside the order or withdrawal or cancellation of the
A certificate of registration of a Trade Union may be withdrawn or cancelled
certificate, as the case may be, and the Registrar shall comply with such order.
under Sec 10 of the Act, by the Registrar
Advantages of registration of trade Union:
1. on the application of the Trade Union to be verified in such manner as may be A trade union enjoys the following advantages after registration under sec 13,
prescribed; namely
2. if the Registrar is satisfied that the certificate has been obtained by fraud or a) A trade union after registration becomes a body corporate
mistake, or that the Trade Union has ceased to exist or has willfully and after b) It gets perpetual succession and common seal
notice from the Registrar contravened any provision of this Act or allowed any c) It can acquire and hold both movable and immovable property
rule to continue in force which is inconsistent with any such provision, or has d) It can enter into a contract
rescinded any rule providing for any matter provision for which is required by
section 6; e) It can sue and be sued in its registered name

3. if the Registrar is satisfied that a registered Trade Union of workmen ceases to

have the requisite number of members:
Objects on which general funds may be spent: Constitution of a separate fund for political purposes:

Sec 15 provides the objects on which general fund may be spent. The general A registered Trade Union may constitute a separate fund, from contributions
funds of a registered Trade Union shall not be spent on any other objects than the separately levied for or made to that fund, from which payments may be made, for the
following, namely:— promotion of the civic and political interests of its members, in furtherance of any of
1. the payment of salaries, allowances and expenses to office-bearers of the the objects specified in sub-section (2).
Trade Union;
Sub Sec (2) of sec 16 provides the following object on which political fund
2. the payment of expenses for the administration of the Trade Union, including
may be spent, namely
audit of the accounts of the general funds of the Trade Union;
3. the prosecution or defence of any legal proceeding to which the Trade Union 1. the payment of any expenses incurred, either directly or indirectly, by a

or any member thereof is a party, when such prosecution or defence is candidate or prospective candidate for election as a member of any legislative

undertaken for the purpose of securing or protecting any rights of the Trade body constituted under the Constitution or of any local authority, before,

Union as such or any rights arising out of the relations of any member with his during, or after the election in connection with his candidature or election; or

employer or with a person whom the member employs; 2. the holding of any meeting or the distribution of any literature or documents in

4. the conduct of trade disputes on behalf of the Trade Union or any member support of any such candidate or prospective candidate; or

thereof; 3. the maintenance of any person who is a member of any legislative body

5. the compensation of members for loss arising out of trade disputes; constituted under the Constitution or for any local authority; or

6. allowances to members or their dependants on account of death, old age, 4. the registration of electors or the selection of a candidate for any legislative
sickness, accidents or unemployment of such members; body constituted under the Constitution or for any local authority; or
7. the issue of, or the undertaking of liability under, policies of assurance on the 5. the holding of political meetings of any kind, or the distribution of political
lives of members, or under policies insuring members against sickness, literature or political documents of any kind.
accident or unemployment;
Contribution to political fund is not compulsory:
8. the provision of educational, social or religious benefits for members
(including the payment of the expenses of funeral or religious ceremonies for The subscription to a trade union for political funds is only voluntary. Sec 16

deceased members) or for the dependants of members; (3) provides that, If a member does not contribute to the political fund, he will be

9. the upkeep of a periodical published mainly for the purpose of discussing under no disadvantage or disability but in respect of control and management of this

questions affecting employers or workmen as such; fund. He cannot be excluded in any way from the benefits of the trade union nor can

10. the payment, in furtherance of any of the objects on which the general funds of any condition be imposed for his admission to the trade union.

the Trade Union may be spent, of contributions to any cause intended to

Immunities/Privileges of a Registered Trade Union:
benefit workmen in general, provided that the expenditure in respect of such
contributions in any financial year shall not at any time during that year be in In the case of Buckinghum and Carnatic Mills, the employers were awarded

excess of one-fourth of the combined total of the gross income which has up to damages and the unions were held responsible for illegal conspiracies. The Trade

that time accrued to the general funds of the Trade Union during that year and Unions Act, 1926 has made provisions for the members and office-bearers of a

of the balance at the credit of those funds at the commencement of that year.
registered trade union from criminal and civil conspiracies during the strikes and Until 1926, unions of workers indulging in strike and causing financial loss to
causing any financial loss to the employer. management were liable for illegal conspiracies. For instance in Buckingham and
Carnatic Mills the unions were held liable for illegal conspiracies and employers were
Workmen's Right to sell his labour at his own price, and the employer's right
awarded damages. It was only in 1926 that the Trade Unions Act, 1926 immunizes
to determine the terms and conditions on which he would get the work done, have
trade union activity, from restraint of trade and conspiracy. But these provisions are of
seldom been absolute. In former days. statutes fixing wages prohibited labour to claim
pre constitutional era. These statutory provisions must now be considered in the light
more. In modem times, minimum standard legislations prohibit employers to pay less.
of the Constitutional guarantees of the right to freedom of speech and expression, to
The repeal of mediaeval statutes opened the theoretical possibility of free assemble peaceably, to form associations and unions, to practice any profession and to
bargaining between workmen and employers (subject, of course, to the provisions of carry on any occupation, trade or business, and grants protection against economic
the minimum standard statutes). If the terms of employment were not satisfactory, the exploitation.
worker could withdraw his labour until the employer paid more. Ifthe terms were too
Let’s examine the nature and scope of the immunity afforded to the members
onerous, the employer could suspend the work until the workmen accepted less. But,
and office-bearers of registered trade union from civil and criminal conspiracies and
in practice, mechanization of industries which took away the importance of their
restraint of trade under the Trade Unions Act, 1926.
craftsmanship, surplus labour market which made alternative cheap labour available,
the statutes penalizing breach of contract under which workmen except on pain of 1. Immunity From Criminal Conspiracy
imprisonment, agitated for better terms. and the overall economic superiority of
Section 17 of the Trade Unions Act, 1926 seeks to insulate trade unions
employers heavily tilted the bargaining power in favour ofthe employer and the
activity from liability for criminal conspiracy. It states that, no office-bearer or
workmen became helpless participants.
member of a registered Trade Union shall be liable to punishment under sub-section
Under the circumstances, it was natural for the working class to combine (2) of Section 120-B of the Indian Penal Code in respect of any agreement made
together to retrieve their lost position. But the Act of combination invited the between the members for the purpose of furthering any such object of the Trade
application of the concept of conspiracy to labour management relations and although Union as is specified in Section 15, unless the agreement is an agreement to commit
the law did not make any distinction between employers and workmen as such. the an offence.
element of combination made labourers the worst sufferers. Further, in an era which The immunity is, however, available only:
was fast moving from status to contract, the workmen's "protest" also invited the (i) to office-bearers and members of registered trade unions;
application of the common law doctrine of restraint of trade. By the time law courts (ii) for agreement;
refined the "objectives" and the "means" tests to protect protest movement from (iii) which further any such trade union object as is specified in section 15
conspiracy and disentangled labour management relations from the concept of of the Act; and
restraint of trade, the community itself had intervened to protect labour from the (iv) which are not agreements to commit offences.
hazards of the aforesaid common law doctrines. But, the passage of time and resulting The last of the limitations on the scope of the immunity granted by section 17
experience made it equally clear that the community could not altogether ignore of the Trade Unions Act, 1926 raises an issue relating to the very nature of the
strikes and lock-outs. Quite apart from the economic aspects, and law and order which immunity. Section 120-A of the Indian Penal Code defines criminal conspiracy to
in themselves were important, the health and welfare of the people depended on the mean: (i) an agreement between two or more persons to commit an offence, t.e., in
smooth running of industries. general," an act which is punishable under the Indian Penal Code or any other law for
the time being in force; and (ii) an overt act done in pursuance of an agreement labour in breach of contract to be an offence of a member of the consenting party
between two or more persons to do an illegal act or to do a legal act by illegal means. takes any step to encourage, abet, instigate, persuade, incite or in any manner act in
The Indian Penal Code defines the word "illegal" to include, inter alia, everything furtherance of the objective, the crime of criminal conspiracy would have been
which is prohibited by law, or which furnishes ground for a civil action. committed. Finally, since criminal conspiracy is a substantive offence punishable
under section 120-B of the Indian Penal Code it is doubtful if Section 17 grants
Since workman's use of instruments of economic coercion in an industrial
immunity at all.
dispute involve breach of contract and 'frequently injury to the property right of the
employer both of which are actionable, use of the instruments of economic coercion The word "illegal" is applicable to everything which is an offence or which is
amounts to an illegal act within the meaning of section 120-A read with section 43 of prohibited by law, or which furnishes ground for a civil action, and a person is said to
the Indian Penal Code. However, section 18 of the Trade Unions Act, inter alia. be "legally' bound to do, whatever it is illegal for him to omit. Reading section 18 of
provides: No suit or other legal proceeding shall be maintainable in any. Civil Court the Trade Unions Act with section 43 of the Indian Penal Code it would appear that
against any registered Trade Union or any office bearer or member thereof in respect withdrawal of labour as an instrument of economic coercion in an industrial dispute in
of any act 'done in contemplation or furtherance of a trade dispute to which a member breach of contract is not illegal. Accordingly, an agreement between two or more
of the Trade Union is a party on the ground only that such act induces some other workmen, members of a registered trade union to withdraw labour as an instrument of
person to break a contract of employment, or that it is in interference with the trade, economic coercion in an industrial dispute is not an agreement "to do or cause to be
business or employment of some other person or with the right of some other person done an illegal act" and amounts to a criminal conspiracy within the meaning of
to dispose of his capital or of his labour as he wills. section 120-A of the Indian Penal Code. Accordingly, withdrawal of labour in breach
of contract does not give rise to a cause of action in civil courts.
Thus, under Section 17 the breach of contract and injury to employers
property right cease to be actionable and. therefore, does not amount to criminal The Calcutta High Court in Jay Engineering Works Ltd. v. Staff while
conspiracy" as defined in section 120-A read with section 43 of the Indian Penal interpreting the provisions of section 17 of the Trade Unions Act, 1926 held that, no
Code. A question, therefore, arises as, what is the criminal liability in respect of which protection is available to the members of a trade union for any agreement to commit
Section 17 of the Trade Unions Act, 1926 grants immunity? In considering the matter an offence. When a group of workers, large or small, combined to do an act for the
it is relevant to note that section 17 does not grant charter of liberty to commit an purpose of one common aim or object it must be held that there is an agreement
offence, which is punishable with death, life imprisonment or rigorous imprisonment among the workers to do the act and if the act committed is an offence, it must
for a term of two years or more. In fact as the last words of the section 17 of the Trade similarly be held that there is an agreement to commit an offence.
Union Act, 1926 indicate that it does not insulate agreement to commit any offence
2. Immunity From Civil Actions
whatsoever. Perhaps the immunity is confined to agreement between two or more
persons to do or cause to be done, acts which are prohibited by law but which neither Section 18 of the Trade Unions Act, 1926, grants immunity to registered trade
amounts to an offence nor furnishes ground for civil action. unions from civil suits
i. No suit or other legal proceeding shall be maintainable in any civil court
Breach of contract does give rise to a civil cause of action, therefore, under
against any registered trade union or any officebearer or member thereof in
section 43 of the Indian Penal Code an agreement to commit breach of contract
respect of any act done in contemplation or furtherance of a trade dispute to
through withdrawal of labour as an instrument of economic coercion in an industrial
which a member of the trade union is a party on the ground only that such act
dispute, is a criminal conspiracy. Further, so long as any law declares withdrawal of
induces some other person to break a contract of employment, or that it is in
 interference with the trade business or employment ofsome other person or decision set out above is that Sections 17 and 18 of the Indian Trade Unions Act grant
with the right ofsome other person to dispose of his capital or his labour as he certain exemption to members of a trade union but there is no exemption against
wills. either an agreement to commit an offence or intimidation, molestation or violence,
ii. A registered trade union shall not be liable in any suit or other legal where they amount to an offence. Members of a trade union may resort to a peaceful
proceeding in any civil court in respect of any tortuous act done in strike, that is to say, cessation of work with the common object of enforcing their
contemplation or furtherance of a trade dispute by an agent of the trade union claims. Such strikes must be peaceful and not violent and there is no exemption where
if it is proved that such person acted without the knowledge of, or contrary to an offence is committed. Therefore, a concerted movement by workmen by gathering
express instructions given by the executive of the trade unions together either outside the industrial establishment or inside within the working hours
The above section does not afford immunity to the members or office bearers is permissible when it is peaceful and not violate the provisions of law. But when such
of a trade 'union for an act of deliberate trespass.? The immunity also cannot be a gathering is unlawful or commits an offence then the exemption is lost. Thus, where
availed of by them for unlawful or tortuous act. IO Further such immunity is denied if it resorts to unlawful confinement of person’s criminal trespass or where it becomes
they indulge in an illegal strike or gherao. Moreover the immunities enjoyed by the violent and indulges in criminal force or criminal assault or mischief to person or
union do not impose any public duty on the part of the union. property or molestation or intimidation, the exemption can no longer be claimed.

In Rohtas Industries Staff Union v. State of Bihar, certain workmen went on The Calcutta High Court once again in Reserve Bank of India v. Ashis held
an illegal and unjustified strike at the instance of the union. A question arose whether that in oder to secure immunity from civil liability under section 18 inducement or
the employers have any right of civil action for damages against the strikers. The procurement in breach of employment in furtherance of trade dispute must be by
arbitrator held that the workers who participated in an illegal and unjustified strike, lawful means and not by means which would be illegal or wrong under any other
were jointly and severely liable to pay damages. On a writ petition the Patna High provisions of the law. The Madras High Court in Sri Ram Vilas Service Ltd. v.
Court quashed the award of the arbitrator and held that employers had no right of civil Simpson Group Company Union held that it was not within the purview of the high
action for damages against the employees participating in an illegal strike within the court to prevent or interfere with the legitimate rights of the labour to pursue their
meaning of section 24 of the Industrial Disputes Act, 1947. From this decision it is agitation by means of a strike so long as it did not indulge in acts unlawful and
evident that section 18 grants civil immunity in case of strike by the members of the tortious.
trade union. On appeal, the Supreme Court affirmed the judgment of the high court on
In Indian Newspapers (Bom) Pvt. Ltd. v. T.M. Nagarajan the Delhi High
the ground that the claim for compensation and the award thereof in arbitration
Court held that when there are allegations of violence made by the management in the
proceedings were invalid and such compensation for loss of business was not a
plaint supported by documents then prima facie a suit would be maintainable and the
dispute or difference between the employers and the workmen which was connected
protection of section 18 of the Trade Unions Act, 1926 would not be available. The
with the employment or non-employment or terms of employment or with the
fact whether any act of violence was committed or not would be decided in the suit.
condition of labour of any person. The Supreme Court found itself not obliged to
decide the question as to whether the Patna High Court was right in relying on section In Ahmedabad Textile Research Association v. ATIRA Employees Union a
I8 of the Act to rebuff the claim for compensation because the learned judges of Division Bench of the Gujarat High Court held that it is not within the purview of the
civil court to prevent or interfere with the legitimate rights of the workmen to pursue
In Jay Engineering Works v, Staff the Calcutta High Court was invited to
their demands by means of strike or agitation or other lawful activities so long as they
consider the question whether the protection under sections 17 and 18 of the Trade
do not indulge in acts unlawful, tortious and violent. The court further held that any
Unions Act can be availed of where workers resort to gherao. The net result of the
agitation by the workmen must be peaceful and not violent. Any concerned movement 5. Small size: On account of the limited membership, the size of the unions in
by workmen to achieve their objectives is certainly permissible even inside the India is very small. About 70 to 80% of the unions have less than 500
industrial establishment. members.
6. Lack of unity: The major weakness of the trade union movement in India is
3. Enforceability of Agreements:
the lack of unity among the various unions existing in India at present. The
Section 19 grants protection to the agreements (between the members of a labour leaders have their own political affiliations. They use labour force for
registered trade union) whose objects are in restraint of trade notwithstanding achieving their political gains rather than concentrating on the welfare of the
anything contained in any other law for the time being in force declaring such workers.
agreements to be void or voidable. 7. Lack of trained workers: The workers in India are uneducated and untrained.
The politicians, who are least concerned with the welfare of the workers,
Problems of trade Union:
become their leaders. Backwardness of the workers and their fear of
Following are some of the problems that are faced by trade unions in India,
victimisation keep them away from union activities.
namely
8. Political dominance: It is very unfortunate for the workers that all trade
1. Multiplicity of unions: Unlike the developed countries of the world (like
unions in India are being controlled by political parties. In order to achieve
U.K. and U.S.A) the number of unions is relatively large in India. A number
their political ends, they exaggerate workers’ demands and try to disturb the
of unions exist in one industrial unit. The rival unions sometimes do more
industrial peace of the country.
harm to the workers than good.
9. Hostile attitude of employers:The employers have their own unions to
2. Absence of union structure: The structure of the trade union may be a craft
oppose the working class. According to M. M. Joshi “They first try to scoff at
union, industrial union or the general union. A craft union is a union of
it, then try to put it down; lastly if the movement persists to exist, they
workers representing particular skills such as electricians. When all the
recognise it”. In order to intimidate the workers, employers use many foul
workers of an industry become members of the union, it is known as industrial
means which go to the extent of harassing the leaders by black-listing them or
union. A general union on the other hand covers various types of workers
threatening them through hired goondas.
working in the different industries. In India, there is an absence of craft union.
National commission on labour has recommended the formation of industrial Certain other reasons which also make the union movement weak are

unions and industrial federations. a) recruitment of workers through the middlemen who do not allow these

3. Limited membership: The membership of the trade unions in India is very persons to become members of the union

less. A trade union cannot become strong unless it can enroll large number of b) workers in India come from different castes and linguistic groups it

workers as its members. affects their unity

4. Scarcity of finances: The main problem faced by trade unions in India is the c) unions least care for the welfare activities of their members.

paucity of financial resources. Fragmentation necessarily keeps the finances of The weak position of the Trade Unions in the country stands in the way of the

the union very low. The membership fees paid by the members are very healthy growth of the device of collective bargaining for the achievement of workers’

nominal. For this reason it is not possible for the union to take up welfare aims. It is one of the principal reasons that adjudication rather than negotiation has to

activities for its members. be applied for the settlement of industrial disputes.
 It is incumbent on the part of all concerned with the welfare of the workers to a) The Union has a minimum of five lakhs membership as on March, 1997.
make the trade unions strong and effective for the purposes for which they are b) The Union must have members from at least four states,
formed. A strong union is good for the workers, the management, as well as for the c) The Union must have a membership at least in four industries.
community.
The Central Chief Labour Commissioner is authorized to verify the fulfillment
Amalgamation of Trade Unions: of above conditions.
Collective Bargaining:
Sec 24 provides that, any two or more registered Trade Unions may become
The term “Collective Bargaining” was used by Beatrice Webb in 1897 for the
amalgamated together as one Trade Union with or without dissolution or division of
first time in his famous book “Industrial Democracy”. Collective Bargaining means
the funds of such Trade Unions or either or any of them, provided that the votes of at
negotiation between the employer and workers to reach agreement on working
least one-half of the members of each or every such Trade Union entitled to vote are
conditions and other conflicting interests of both sides (employer and workers).
recorded, and that at least sixty per cent. of the votes recorded are in favour of the
In simple words, collective bargaining means bargaining between an employer
proposal.
or group of employers and a bonafide labour union. There are few advantages and
Notice of change of name or amalgamation: disadvantages of collective bargaining.
Sec 25 provides that, notice in writing of every change of name and of every Advantages:
amalgamation signed, in the case of a change of name, by the Secretary and by seven
1. Collective Bargaining imposes an obligation on both parties to the dispute
members of the Trade Union changing its name, and in the case of an amalgamation,
and creates a specific code of conduct for parties to the process.
by the Secretary and by seven members of each and every Trade Union which is a
2. The parties to the dispute undertake not to resort to strikes or lock-outs, and
party thereto, shall be sent to the Registrar and where the head office of the
thus collective bargaining ensures peace and industrial harmony.
amalgamated Trade Union is situated in a different State, to the Registrar of such
Disadvantages:
State.
1. Increase in wages, and extra expenses to provide other amenities to
Recognition of Trade Union:
workmen and improvement of working conditions can cause higher cost of
There is no specific provision for the recognition of the trade unions under the production.
Trade Unions Act, 1926. Hence, recognition is a matter of discretion in the hands of 2. Political interference in the labour unions during the collective bargaining
the employer. Provisions for the recognition of trade unions were included in the process increases the chance for adverse effects.
Trade Union (Amendment) Act, 1947, but the act has not been implemented. The
Trade Union Bill, 1950 also provided for recognition of trade union (based on the
largest membership among the existing trade unions), but the bill lapsed due to
dissolution of parliament.
Recognition of Central Trade Unions
The Central Government gives recognition to Trade Union as Central Trade
Union for the purpose of representing in the International Labour Organizations and
International Conferences, if such trade union fulfils the following conditions:
 UNIT II industrial disputes. The Whitely Commission made in this regard the perceptive
observation that the attempt to deal with unrest must begin rather with the creation of
INDUSTRIAL DISPUTES ACT, 1947
an atmosphere unfavourable to disputes than with machinery for their settlement. The
Historical background and Introduction to the Industrial Disputes Act, 1947 next stage in the development of industrial law in this country was taken under the
stress of emergency caused by the Second World War. Rule 81-A of the Defence of
Industrial disputes are the disputes which arise due to any disagreement in an
India Rules was intended to provide speedy remedies for industrial disputes by
industrial relation. Industrial relation involves various aspects of interactions between
referring them compulsorily to conciliation or adjudication, by making the awards
the employer and the employees. In such relations whenever there is a clash of
legally binding on the parties and by prohibiting strikes or lock-outs during the
interest, it may result in dissatisfaction for either of the parties involved and hence
pendency of conciliation or adjudication proceedings and for two months thereafter.
lead to industrial disputes or conflicts. These disputes may take various forms such as
This rule also put a blanket ban on strikes which did not arise out of genuine trade
protests, strikes, demonstrations, lock-outs, retrenchment, dismissal of workers, etc.
disputes.
Industrial Disputes Act, 1947 provides machinery for peaceful resolution of
With the termination of the Second World War, Rule 81-A was about to lapse
disputes and to promote harmonious relation between employers and workers. The
on 1st October, 1946, but it was kept alive by issuing an Ordinance in the exercise of
Act is a benign measure which seeks to pre-empt industrial tensions, provide the
the Government’s Emergency Powers. Then Industrial Disputes Act, 1947 enacted.
mechanics of dispute resolutions and set up the necessary infrastructure so that the
The provisions of this Act, as amended from time to time, have furnished the basis on
energies of partners in production may not be dissipated in counterproductive battles
which industrial jurisprudence in this country is founded.
and assurance of industrial may create a congenial climate. The Act enumerates the
contingencies when a strike or lock-out can be lawfully resorted to, when they can be OBJECT AND SIGNIFICANCE OF THE ACT
declared illegal or unlawful, conditions for laying off, retrenching, discharging or
The Industrial Disputes Act, 1947 makes provision for the investigation and
dismissing a workman, circumstances under which an industrial unit can be closed
settlement of industrial disputes and for certain other purposes. It ensures progress of
down and several other matters related to industrial employees and employers. Under
industry by bringing about harmony and cordial relationship between the employers
the Act various Authorities are established for Investigation and settlement of
and employees. Definitions of the words ‘industrial dispute, workmen and industry’
industrial disputes. They are Works Committee; Conciliation Officers; Boards of
carry specific meanings under the Act and provide the framework for the application
Conciliation; Court of Inquiry; Labour Tribunals; Industrial Tribunals and National
of the Act.
Tribunals. The knowledge of this legislation is a must for the students so that they
develop a proper perspective about the legal frame work stipulated under the In the case of Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate,
Industrial Disputes Act, 1947. AIR 1958 S.C. 353, the Supreme Court laid down following objectives of the Act:

The first enactment dealing with the settlement of industrial disputes was the (i) Promotion of measures of securing and preserving amity and good
Employers’ and Workmen’s Disputes Act, 1860. This Act weighed much against the relations between the employer and workmen.
workers and was therefore replaced by the Trade Disputes Act, 1929. The Act of 1929 (ii) Investigation and settlement of industrial disputes between
contained special provisions regarding strikes in public utility services and general employers and employers, employers and workmen, or workmen
strikes affecting the community as a whole. The main purpose of the Act, however, and workmen with a right of representation by registered trade
was to provide a conciliation machinery to bring about peaceful settlement of
 union or federation of trade unions or an association of employers or although industry is ordinarily something which employers create or undertake".
a federation of associations of employers. However, the concept that "industry is ordinarily something which employers create
(iii) Prevention of illegal strikes and lock-outs. or undertake" is gradually yielding place to the modern concept which regards
(iv) Relief to workmen in the matter of lay-off and retrenchment. industry as a joint venture undertaken by employers, and workmen, an enterprise
(v) Promotion of collective bargaining. which belongs equally to both. Further it is not necessary to view definition of
industry under Section 2(j) in two parts.
This Act extends to whole of India. The Act was designed to provide a self-
contained code to compel the parties to resort to industrial arbitration for the The definition read as a whole denotes a collective which employers and
resolution of existing or apprehended disputes without prescribing statutory norms for employees are associated. It does not consist either by employers alone or by
varied and variegated industrial relating norms so that the forums created for employees alone. An industry exists only when there is relationship between
resolution of disputes may remain unhampered by any statutory control and devise employers and employees, the former engaged in business, trade, undertaking,
rational norms keeping pace with improved industrial relations reflecting and manufacture or calling of employers and the latter engaged in any calling, service,
imbibing socio-economic justice. This being the object of the Act, the Court by employment, handicraft or industrial occupation or avocation. There must, therefore,
interpretative process must strive to reduce the field of conflict and expand the area of be an rise in which the employers follow their avocations as detailed in the
agreement and show its preference for upholding agreements sanctified by mutuality defamation and employ workmen. Thus, a basic requirement of 'industry' is that the
and consensus in larger public interest, namely, to eschew industrial strife, employers must "Be" ""carrying on any business, 'trade, undertaking, manufacture or
confrontation and consequent wastage (Workmen, Hindustan Lever Limited v. calling of employers'. There is next much difficulty in ascertaining the meaning of the
Hindustan Lever Limited, (1984) 1 SCC 728). words business, trade, manufacture, or calling of employers in order to determine
whether a particular activity carried on with the co-operation of employer and
Important Definitions under Industrial Disputes Act, 1947
employees is an industry or not but the difficulties have cropped up in defining the
Definition of Industry: word 'undertaking'.

Section 2(j) defines industry, industry" means any business, trade, "Undertaking" means anything undertaken, any business, work or project
undertaking, manufacture or calling of employers and includes any calling, service, which one engages in or attempts, or an enterprise. It is a term of very wide
employment, handicraft, or industrial occupation or avocation of workmen. denotation have been evolved by the Supreme Court in a number of decisions which
But all decisions of the Supreme Court are agreed that an undertaking to be within the
This definition is in two parts. The first says that industry means any business,
definition in Section 2(j) must be read subject to a limitation, namely, that it must be
trade, undertaking, manufacture or calling of employers and the second part provides
analogous to trade or business.1 Some working principles furnish a guidance in
that it includes any calling, service, employment, handicraft, or industrial occupation
determining what are the attributes or characteristics which will indicate that an
or avocation of workmen. "If the activity can be described as an industry with
undertaking is analogous to trade or business. The first principles was stated by
reference to the occupation of the employers, the ambit of the industry, under the
Gajendragadkar, J. in Hospital Mazdoor Sobfefl case as follows :
force of the second part takes in the different kinds of activity of employees
mentioned in the second part. But the second part standing alone cannot define "As a working principle it may be stated that an activity systematically or
industry. By the inclusive part of the definition the labour force employed in any habitually undertaken for the production or distribution of goods or for the rendering
industry is made an integral part of the industry for the purpose' of industrial disputes of material services to the community at large or a part of such community- with, the
help of employees is an undertaking. Such an activity generally involves the co- and other kindred adventures, if they fulfill the triple test stated above cannot be
operation of the employer and the employees; and its object is the satisfaction of exempted from the scope of Section 2(j) of the Act.
material human needs. It must be organized an arranged in a manner in which trade or
Dominant nature test:
business is generally organized or arranged. It must not be casual, nor must it be for
one's self nor for pleasure. Thus the manner in which the activity in question is Where a complex of activities, some of which qualify for exemption, others
organized or arranged, the condition of the co-operation between the employer and not, involve employees on the total undertaking some of whom are not workmen or
the employee necessary for its success and its object to render material service to the some departments are not productive of goods and services if isolated, even then the
community can be regarded as some of the features which are distinctive of activities predominant nature of the services and the integrated nature of the departments will
to which Section 2(j) applies." be true test, the whole undertaking will be "industry" although those who are not
workmen by definition may not benefit by status.
In Bangalore Water Supply v. A. Rajappa, a seven Judges' Bench of the
Supreme Court exhaustively considered the scope of industry and laid down the Exceptions:
following test which has practically reiterated the test laid down in Hospital Mazdoor
A restricted category of professions, clubs, co-operatives and even gurukulas
Sabha case.
and little research labs, may qualify for exemption if in simple ventures, substantially
Triple Test: and, going by the dominant nature criterion substantively, no employees are
entertained but in minimal matters, marginal employees are hired without destroying
Where there is (i), systematic activity, (ii) organised by cooperation between
the non-employee character of the unit. If in pious or altruistic mission, many employ
employer and employee (the direct and substantial element is chimerical), (iii) for the
themselves, free or for small honorarium or like return, mainly drawn by sharing in
production and/or distribution of goods and services calculated to satisfy human
the purpose or cause, such as lawyers volunteering to-run a free legal services, clinic
wants and wishes, prima facie, there is an "industry" in that enterprise. This is known
or doctors serving in their spare hours in a free medical centre of ashramites working
as tripple test. The following points were also emphasized in this case:
at the bidding of the holiness, divinity or like central personality, and the services are
1. Industry does not include spiritual or religious services or services geared to supplied free or at nominal cost and-those who serve are not engaged for
celestial bliss, e.g., making, on a large scale, prasad or food. It includes remuneration or on the .basis of 'master and servant relationship, then, the institution
material services and things. is not an industry even if stray servants, manual or technical are hired. Such
2. Absence of profit motive or gainful objective is irrelevant, be the venture in elementary or like undertakings alone are exempt not other generosity, compassion,
the public, joint, private or other sector. developmental passion or project.
3. The true focus is functional and the decisive test is the nature of the activity
Sovereign functions, strictly understood, (alone) qualify for exemption, not the
with special emphasis on the employer-employee relations.
welfare activities or economic adventures undertaken by Government or statutory
4. If the organization is a trade or business-it does not cease to be one because of
bodies. Even in departments discharging sovereign functions, if there are units which
philanthropy animating the undertaking.
are industries and they are substantially severable, then they can be considered to
Therefore the consequences of the decision in this case are that professions, come within Section It was further observed that : "Undertaking must suffer a
clubs, educational institutions co-operatives, research institutes, charitable projects contextual and associational shrinkage as explained in D.N. Barterjee v. P.R.
Mukherjee, so also, service calling and the like. This yields to the inference that all
organised activities possessing the triple elements abovementioned, although not trade The definition was apparently intended to include within its scope what might
or business, may still be industry provided the nature of the activity,, viz. the employer- not strictly be called a trade or business. Neither investment of capital nor profit
employee basis, bears resemblance to what is found in, trade or business. This takes making motive is essential to constitute an industry as they are generally, necessary in
into the fold of "industry" undertaking, callings and services, adventures analogous to a business, A public utility service such as railways, telephones, and the supply of
the carrying on of trade or business. All features other than the methodology of carrying power, light or water to the public may be carried on by private companies or business
on the activity, viz., in organizing the co-operation between employer and employee, corporations and if these public utility services are carried on by local bodies like a
may be dissimilar. It does not matter if on the employment terms there is analogy". Municipality they do not cease to be an industry, for the reasons stated above
Municipal Corporation was held to be an industry.
The Supreme Court in Management of Safdarjung Hospital, Delhi v. Kuldip
Singh counter to the principles enunciated in Bangalore Water Supply v. A. Rajappa In Permanand v. Nagar Palika, Dehradun and others the Supreme Court held
case and overrule its decision. that the activity of a Nagar Palika in any of its department except those dealing with
levy of house tax etc, falls within the definition of industry in U.P. Industrial Disputes
Whether Municipal corporation can be regarded as an industry
Act, 1947.
This question was decided by the court in D.N. Banerjee v. P.R. Mukherjee. In
Whether hospital is an industry:
this case the Budge Municipality dismissed two of its employees, Mr. P.C. Mitra, a
Head clerk and Mr. P.N. Ghose a Sanitary Inspector on charges for negligence, The question whether hospital is an industry or not has come for determination
insubordination and indiscipline. The Municipal Workers Union of which the by the Supreme Court on a number of occasions and the uncertainty has been allowed
dismissed employees were members questioned the propriety of the dismissal and the to persist because of conflicting judicial decisions right from Hospital Mazdoor Sabha
matter was referred to the Industrial Tribunal. The Tribunal directed reinstatement and case to the Bangalore Water Supply v. A. Rajappa.
the award was challenged by the Municipality on the ground that its duties being
In State of Bombay v. Hospital Mazdoor Sabha case, the Hospital
connected with the local self-government it was not an industry and the dispute was
MazdoorSabha was a registered Trade Union of the employees of hospitals in the
not an industrial dispute and therefore reference of the dispute to the tribunal was bad
State of Bombay, The services of two of its members were terminated by way of
in law.
retrenchment' by the Government and the Union claimed their reinstatement through a
The Supreme Court observed that in the ordinary or non-technical sense writ petition. It was urged by the State that the writ application was misconceived
industry or business means an undertaking where capital and labour co-operate with because hospitals did not constitute an industry. The group of hospitals were run by
each other for the purpose of producing wealth in the shape of goods, tools etc. and the State for giving medical relief to citizens and imparting medical education.
for making profits. In the opinion of the Court every aspect of activity in which the
The Supreme Court held the group of hospitals to be industry and observed as
relationship of master and servant or employer and employees exists or arises does
follows :
not become an industry It was further observed that 'undertaking' in the first part and
industrial occupation or avocation in the second part of Section 2(j) obviously mean 1. The State is carrying on an 'undertaking' within Section 2(j) when it runs a
much more than what is ordinarily understood by trade or business. group of hospitals for purpose of giving medical relief to the citizens and for
helping to impart medical education.
2. An activity systematically or habitually undertaken for the production or
distribution of goods or for the rendering of material services to the
 community at large or a part of such community with the help of employees is The order of termination was challenged on the ground that the drivers were
an undertaking. workmen and the termination of their services amounted to retrenchment. They
3. It is the character of the activity in question which attracts the provisions of demanded payment of retrenchment compensation under Section 25-F of the Act by
Section 2(j), who conducts the activity and whether it is conducted for profit filing petitions before the Industrial Tribunal. The Tribunal decided the matter in
or not make a material difference. favour of the drivers and hence the University of Delhi challenged the validity of the
4. The conventional meaning attributed to the words, 'trade and business' has lost award on the ground that activity carried on by the University is not industry. It was
some of its validity for the purposes of industrial adjudication...it would be held by the Supreme Court that the work of imparting education is more a mission
erroneous to attach undue importance to attributes associated with business or and a vocation than profession or trade or business and therefore University is not an
trade in the popular mind in days gone by. Hospital run by the Government as industry. But this case has been overruled by the Supreme Court in Bangalore Water
a part of its function is not an industry. Supply case and in view of the triple test laid down in Bangalore Water Supply case
even a University would be an industry although such of its employees as are not
Hospitals run by the State of Orissa are places where persons can get treated.
workmen within the meaning of Section 2(s) of the Act, may not get the desired
they are run as departments of Government. The mere fact that payment is accepted in
benefits to which a workman in an industry may be entitled to.
respect of some beds cannot lead to the inference that the hospitals are run as a
business in a commercial way. Primarily, the hospitals are meant as free service by In Brahma Samaj Education Society v. West Bengal College Employees'
the Government to the patients without any profit motive". But in view of the decision Association, the society owned two colleges. A dispute arose between the society and
of the Supreme Court in Bangalore Water Supply v. A. Rajappa Dhanrajgiri Hospital non-teaching staff of the colleges. It was pleaded that the society was purely an
case has been overruled and all hospitals fulfilling the test laid down in Bangalore educational institution and not an industry because there was no production of wealth
Water Supply case will be industry. with the co-operation of labour and capital as is necessary to constitute an industry.
The Calcutta High Court observed that our conception of industry has not been static
Thus on an analysis of the entire case law up to Bangalore Water Supply case
but has been changing with the passage of time. An undertaking which depends on the
on the subject it can be said that such hospitals as are run by the Government as part
intelligence or capacity of an individual does not become an industry simply because
of its sovereign functions with the sole object of rendering free service o the patients
it has a large establishment. There may be an educational institution to which pupils
are not industry. But all other hospitals, both public and private; whether charitable or
go because of the excellence of the teachers; such institutions are not industry. On the
commercial would be industry if they fulfil the triple test laid down in Bangalore
other hand, there may be an institution which is so organized that it is not dependent
Water Supply v. A. Rajappa.
upon the intellectual skill of any individual, but is an organization where a number of
Whether University and Educational Institutions: individuals join together to render services which might even have a profit motive.
Many technical institutions are run on these lines. When again we find these
In University of Delhi v. Ram Nath, the respondent Mr. Ram Nath was
institutions also do business by manufacturing things or selling things and thereby
employed as driver by University College for women. Mr. Asgar Mashih was initially
making a profit they certainly come under heading of "industry". These being the
employed as driver by Delhi University but was later on transferred to the University
tests, it is clear that it will be a question of evidence as to whether a particular
College for women in 1949. The University of Delhi found that running the busess for
institution can be said to be an industry or not.
transporting the girl students of the women's college has resulted in loss. Therefore it
decided to discontinue that facility and consequently the services of the above two In Osmania University v. Industrial Tribunal Hyderabad, a dispute having
drivers were terminated. arisen between the Osmania University and its employees, the High Court of Andhra
Pradesh, after closely examining the Constitution of the University, held the dispute Supreme Court. It was held that the Law Department of Government could not be
not to be in connection with an industry. The correct test, for ascertaining whether the considered as an industry. Labour Court and the High Court have not indicated as to
particular dispute is between the capital and labour, is whether they are engaged in co- how the Law Department is an industry. They merely stated that in some cases certain
operation, or whether the dispute has arisen inactivities connected directly with, or departments have been held to be covered by the expression industry in some
attendant upon, the production or distribution of wealth. decisions. It was also pointed out that a decision is a precedent on its own facts.
Courts should not place reliance on decisions without discussing as to how the factual
In Ahmedabad Textile Industry's Research Association v. State of Bombay an
situation fits in with the fact situation of the decision on which reliance is placed.
association was formed for founding a scientific research institute. The institute was
to carry on research in connection with the textile and other allied trades to increase Whether Club is an industry:
efficiency. The Supreme Court held that "though the association was established for
Clubs or self-service institutions or non-proprietary member's club will be
the purpose of research, its main object was the benefit of the members of the
industry provided they fulfill the triple test laid down in Bangalore 'Water Supply v,
association, the association is organised, and arranged in the manner in which a trade
A. Rajappa.1 The Cricket Club of India case and Madras Gymkhana Club case
or business is generally organised; it postulates cooperation between employers and
(discussed below) which were the two leading cases, on- the point so far have been
employees; moreover the personnel who carry on the research have no right in the
overruled by Bangalore Water Supply case.
result of the research. For these reasons the association was held to be "an industry".
But a society which is established with the object of catering to the intellectual as In Cricket Club of India v. Bombay Labour Union the question was whether
distinguished from material needs of men by promoting general knowledge of the the Cricket Club of India, Bombay which was a member's club and not a proprietary
country by conducting research and publishing various journals and books is not an club, although it was incorporated as a company under the Companies Act was an
industry. Even though it publishes books for sale in market, when it has no press of its industry or not. The club had membership of about 4800 and was employing 397
own the society cannot be termed even an 'undertaking' for selling of its publication employees. It was held that the club was a self service institution and not an industry
was only an ancillary activity and the employees were engaged in rendering clerical and it was wrong to equate the catering facilities provided by the club to its members
assistance in this matter just as the employees of a solicitor'firm help the solicitors in or their guests (members paying for that), with a hotel. The catering facility also was
giving advice and service. in the nature of self service by the club to its members. This case has now been
overruled.
Since University of Delhi v. Ram Nath has been overruled by the Supreme
Court in Bangalore Water Supply v. A. Rajappa the present position is that the Madras Gymkhana Club Employees' Union v. Management; is another case on
educational institutions including the university are industry in a limited sense. Now this point. This was a member's club and not a proprietary club with a membership of
those employees of educational institutions who are covered by the definition of about 1200. Its object was to provide a venue for sports and games and facilities for
workman under Section 2(s) of the Industrial Disputes Act, 1947 will be treated as recreation and entertainment. It was running a catering department which provided
workman of an industry. food and refreshment not only generally but also on special occasion. It was held that
the club was a member's self-serving institution and not an industry. No doubt the
Is Government Department an industry?
material needs or wants of a section of the community were catered but that was not
In State of Rajasthan v. Ganeshi lal, the Labour Court had held the Law enough as it was not done as part of trade or business or as an undertaking analogous
Department of Government as an industry. This view was upheld by the Single Judge to trade or business. This case has also been overruled. Now it is not necessary that
and- Division Bench of the High Court. It was challenged by the State before the activity should be a trade or business or analogous to trade or business It may,
therefore, be submitted that both Cricket Club of India and Madras Gymkhana Club Amended definition of ‘industry’ under the Industrial Disputes (Amendment)
would now be an industry because they fulfill the triple test laid down in Bangalore Act, 1982
Water Supply case. Both are systematically organized with the co-operation of
2(j) “Industry” means any systematic activity carried on by co-operation
employer and employee for distribution of service to satisfy human wishes.
between an employer and his workmen (Whether such workmen are employed by
Whether Agricultural Operation is an industry: such employer directly or by or through any agency, including a contractor) for the
production, supply or distribution of goods or services with a view to satisfy human
The carrying on of agricultural operations by the company for the purposes of
wants or wishes (not being wants or wishes which are merely spiritual or religious in
making profits, employing workmen who contribute to the production of the
nature), whether or not:
agricultural commodities bringing profits to the company was held to be an industry
within the meaning of this clause. Where a Sugar Mill owned a cane farm and used its i. any capital has been invested for the purpose of carrying on such activity; or
produce for its own consumption and there was evidence that the farm section of the ii. such activity is carried on with a motive to make any gain or profit, and
mill was run only to feed the mill, it was held that the agricultural activity being an includes:
integral part of industrial activity, the farm section was an industry.
(a) any activity of the Dock Labour Board established under Section 5A of the
Whether Solicitor’s Firm or Lawyer’s Office are industries: Dock Workers (Regulations of Employment) Act, 1948, (9 of 1948);

In N.N.U.C. Employees v. Industrial Tribunal31; the question was whether a (b) Any activity relating to the promotion of sales or business or both carried on
solicitor’s firm is an industry or not. It was held that a solicitor’s firm carrying on by an establishment, but does not include:
work of an attorney is not an industry, although specifically considered it is organized
1. Any agricultural operation except where such agricultural operation is carried
as an industrial concern. There are different categories of servants employed by a
on in an integrated manner with any other activity (being any such activity as
firm, each category being assigned by separate duties and functions. But the service
is referred to in the foregoing provisions of this clause) and such other activity
rendered by a firm, each category being assigned separate duties or functions. But the
is the predominant one. Explanation: For the purpose of this sub-clause,
service rendered by a solicitor functioning either individually or working together
“agricultural operation” does not include any activity carried on in a plantation
with parties is service which is essentially individual; it depends upon the professional
as defined in clause (f) of Section 2 of the Plantations Labour Act, 1951; or
equipments, knowledge and efficiency of the solicitor concerned. Subsidiary work
2. hospitals or dispensaries; or
which is purely incidental type and which is intended to assist the solicitor in doing
3. educational, scientific, research to training institutions; or
his job has no direct relation to the professional service ultimately rendered by the
4. institutions owned or managed by organisations wholly or substantially
solicitor. The work of his staff has no direct or essential nexus or connection with the
engaged in any charitable, social or philanthropic service; or
advice which it is the duty of the solicitor to give to his client. There is, no doubt, a
5. khadi or village industries; or
kind of cooperation between the solicitor and his employees, but that cooperation has
6. any activity of the Government relatable to the sovereign functions of the
no direct or immediate relation to the professional service which the solicitor renders
Government including all the activities carried on by the departments of the
to his client. This case has been overruled again in Bangalore Water Supply case and
Central Government dealing with defence research atomic energy and space;
now a solicitor’s firm employing persons to help in catering to the needs of his client
or
is an industry.
7. any domestic service; or
 8. any activity, being a profession practised by an individual or body of operation incidental to such industry are also covered under the definition of
individuals, if the number of persons employed by the individuals or body of workman.
individuals in relation to such profession is less than ten; or
(a) Employed in “any industry”
9. any activity, being an activity carried on by a co-operative society or a club or
any other like body of individuals, if the number of persons employed by the co- To be a workman, a person must have been employed in an activity which is
operative society, club or other like body of individuals in relation to such an “industry” as per Section 2(j). Even those employed in operation incidental to such
activity is less than ten. industry are also covered under the definition of workman.

Definition of Workman: In the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. L.A.T.,
AIR 1964 S.C. 737, the Supreme Court held that ‘malis’ looking after the garden
Under sec 2(s) of the Act “Workman” means any person (including an
attached to bungalows provided by the company to its officers and directors, are
apprentice) employed in any industry to do any manual, unskilled, skilled, technical,
engaged in operations incidentally connected with the main industry carried on by the
operational, clerical or supervisory work for hire or reward, whether the terms of
employer. It observed that in this connection it is hardly necessary to emphasise that
employment be expressed or implied and for the purposes of any proceeding under
in the modern world, industrial operations have become complex and complicated and
this Act in relation to an industrial dispute, includes:
for the efficient and successful functioning of any industry, several incidental
a) any such person who has been dismissed, discharged or retrenched in operations are called in aid and it is the totality of all these operations that ultimately
connection with, or as a consequence of that dispute, or constitutes the industry as a whole. Wherever it is shown that the industry has
b) any person whose dismissal, discharge or retrenchment has led to that dispute, employed an employee to assist one or the other operation incidental to the main
but does not include any such person: industrial operation, it would be unreasonable to deny such an employee the status of
i. who is subject to the Army Act, 1950, or the Air Force Act, 1950 or a workman on the ground that his work is not directly concerned with the main work
the Navy Act, 1957; or or operation of the industry.
ii. who is employed in the police service or as an officer or other
(b) Person employed
employee of a prison; or
iii. who is employed mainly in a managerial or administrative capacity; or A person cannot be a workman unless he is employed by the employer in any
iv. who is employed in a supervisory capacity drawing more than Rs. industry. The relationship of employer and workman is usually supported by a
1,600 per month as wages; or contract of employment which may be expressed or implied. This is also a must for
v. who is exercising either by the nature of the duties attached to the regarding an apprentice as a worker (Achutan v. Babar, 1996-LLR-824 Ker.). But
office or by reason of the powers vested in him, functions mainly of a such a question cannot be derived merely on the basis of apprenticeship contract
managerial nature. (R.D. Paswan v. L.C., 1999 LAB 1C Pat 1026). The employee agrees to work under
the supervision and control of his employer. Here one must distinguish between
Some of the expressions used in the definition of “workman” have been the
contract for employment or service and contract of employment or service. In the
subject of judicial interpretation and hence they have been discussed below: (a)
former, the employer can require what is to be done but in the latter, he can not only
Employed in “any industry” To be a workman, a person must have been employed in
order what is to be done, but also how it shall be done. In the case of contract for
an activity which is an “industry” as per Section 2(j). Even those employed in
employment, the person will not be held as a ‘workman’ but only an ‘independent
contractor’. There should be due control and supervision by the employer for a master Whether teachers are workmen or not
and servant relationship (Dharangadhara Chemical Works Ltd. v. State of Saurashtra).
After amendment of Section 2(s) of the Act, the issue whether “teachers are
Payment on piece rate by itself does not disprove the relationship of master and
workmen or not” was decided in many cases but all the cases were decided on the
servant. Even a part time employee is a worker (P.N. Gulati v. Labour
basis of definition of workman prior to amendment. The Supreme Court in
Commissioner). Since he is under an obligation to work for fixed hours every day,
Sunderambal v. Government of Goa held that the teachers employed by the
jural relationship of master and servant would exist. A casual worker is nonetheless a
educational institution cannot be considered as workmen within the meaning of
workman.
Section 2(s) of the Act, as imparting of education which is the main function of the
(c) Employed to do skilled or unskilled etc. teachers cannot be considered as skilled or unskilled manual work or supervisory
work or technical work or clerical work. The Court in this case also said that manual
Only those persons who are engaged in the following types of work are covered
work comprises of work involving physical exertion as distinct from mental and
by the definition of “workman”:
intellectual exertion. The teacher necessarily performs intellectual duties and the work
(i) Skilled or unskilled manual work; is mental and intellectual as distinct from manual.
(ii) Supervisory work;
A person doing technical work is also held as a workman. A work which
(iii) Technical work;
depends upon the special training or scientific or technical knowledge of a person is a
(iv) Clerical work.
technical work. Once a person is employed for his technical qualifications, he will be
Where a person is doing more than one work, he must be held to be employed
held to be employed in technical work irrespective of the fact that he does not devote
to do the work which is the main work he is required to do (Burma Shell Oil Storage
his entire time for technical work. Thus, the person doing technical work such as
& Distributing Co. of India v. Burma Shell Management Staff Association, Manual
engineers, foreman, technologist, medical officer, draughtsman, etc., will fall within
work referred in the definition includes work which involves physical exertion as
the definition of “workman”. A medical representative whose main and substantial
distinguished from mental or intellectual exertion. A person engaged in supervisory
work is to do convassing for promotion of sales is not a workman within the meaning
work will be a workman only if he is drawing more than Rs. 1,600 per month as
of this Section (1990 Lab IC 24 Bom. DB). However, a salesman, whose duties
wages. The designation of a person is not of great importance, it is the nature of his
included manual as well as clerical work such as to attend to the customer, prepare
duties which is the essence of the issue. If a person is mainly doing supervisory work,
cash memos, to assist manager in daily routine is a workman (Carona Sahu Co. Ltd. v.
but incidentally or for a fraction of the time, also does some clerical work, it would
Labour Court 1993 I LLN 300). A temple priest is not a workman (1990 1 LLJ 192
have to be held that he is employed in supervisory capacity; and conversely, if the
Ker.).
main work done is of clerical nature, the mere fact that some supervisory duties are
also carried out incidentally, will not convert his employment as a clerk into one in Person employed mainly in managerial and administrative capacity:
supervisory capacity. In other words, the dominant purpose of employment must be
Persons employed mainly in the managerial or administrative capacity have
taken into account at first and the gloss of additional duties to be rejected, while
been excluded from the definition of “workman”. Development officer in LIC is a
determining status and character of the job. The work of labour officer in jute mill
workman (1983 4 SCC 214). In Standard Vacuum Oil Co. v. Commissioner of
involving exercise of initiative, tact and independence is a supervisory work. But the
Labour, it was observed that if an individual has officers subordinate to him whose
work of a teller in a bank does not show any element of supervisory character.
work he is required to oversee, if he has to take decision and also he is responsible for
ensuring that the matters entrusted to his charge are efficiently conducted, and an
ascertainable area or section of work is assigned to him, an inference of a position of demand to the appropriate Government without a dispute being raised by the
management would be justifiable. Occasional entrustment of supervisory, managerial workmen with their employer regarding such demand, cannot become an industrial
or administrative work, will not take a person mainly discharging clerical duties, out dispute.
of purview of Section 2(s).
However, in Bombay Union of Journalists v. The Hindu, the Supreme Court
Industrial Dispute: observed that for making reference under Section 10, it is enough if industrial dispute
exists or is apprehended on the date of reference. Therefore, even when no formal
Industrial Dispute “Industrial Dispute” means any dispute or difference
demands have been made by the employer, industrial dispute exists if the demands
between employers and employers, or between employers and workmen, or between
were raised during the conciliation proceedings. When an industrial dispute is referred
workmen and workmen, which is connected with the employment or non-employment
for adjudication the presumption is that, there is an industrial dispute.
or the terms of employment or with the conditions of labour, of any person. [Section
2(k)] Unless there is a demand by the workmen and that demand is not complied
with by the management, there cannot be any industrial dispute within the meaning of
The above definition can be analyzed and discussed under the following
Section 2(k). Mere participation by the employer in the conciliation proceedings will
heads:
not be sufficient.
1. There should exist a dispute or difference;
2. Parties to the dispute
2. he dispute or difference should be between:
(a) Employer and employer; Most of the industrial disputes exist between the employer and the workmen
(b) Employer and workmen; or and the remaining combination of persons who can raise the dispute, has been added
(c) Workmen and workmen. to widen the scope of the term “industrial dispute”. So the question is who can raise
3. The dispute or difference should be connected with (a) the employment or non- the dispute? The term “industrial dispute” conveys the meaning that the dispute must
employment, or (b) terms of employment, or (c) the conditions of labour of be such as would affect large groups of workmen and employers ranged on opposite
any person; sides. The disputes can be raised by workmen themselves or their union or federation
4. The dispute should relate to an industry as defined in Section 2(j). on their behalf. This is based on the fact that workmen have right of collective
1. Existence of a dispute or difference bargaining. Thus, there should be community of interest in the dispute.

The existence of a dispute or difference between the parties is central to the It is not mandatory that the dispute should be raised by a registered Trade
definition of industrial dispute. Ordinarily a dispute or difference exists when Union. Once it is shown that a body of workmen either acting through their union or
workmen make demand and the same is rejected by the employer. However, the otherwise had sponsored a workmen’s case, it becomes an industrial dispute. The
demand should be such which the employer is in a position to fulfill. The dispute or dispute can be raised by minority union also. Even a sectional union or a substantial
difference should be fairly defined and of real substance and not a mere personal number of members of the union can raise an industrial dispute. However, the
quarrel or a grumbling or an agitation. The term “industrial dispute” connotes a real members of a union who are not workmen of the employer against whom the dispute
and substantial difference having some element of persistency, and likely, and if not is sought to be raised, cannot by their support convert an individual dispute into an
adjusted, to endanger the industrial peace of the community. An industrial dispute industrial dispute. In other words, persons who seek to support the cause must
exists only when the same has been raised by the workmen with the employer. A mere themselves be directly and substantially interested in the dispute and persons who are
not the employees of the same employer cannot be regarded as so interested. But dispute as their own and espousing it. Whether the individual dispute has been
industrial dispute can be raised in respect of non-workmen. Industrial dispute can be espoused by a substantial number of workmen depends upon the facts of each case.
initiated and continued by legal heirs even after the death of a workman;
If after supporting the individual dispute by a trade union or substantial
Individual dispute whether industrial dispute? number of workmen, the support is withdrawn subsequently, the jurisdiction of the
adjudicating authority is not affected. However, at the time of making reference for
Till the provisions of Section 2-A were inserted in the Act, it has been held by
adjudication, individual dispute must have been espoused, otherwise it will not
the Supreme Court that an individual dispute per se is not industrial dispute. But it can
become an industrial dispute and reference of such dispute will be invalid.
develop into an industrial dispute when it is taken up by the union or substantial
number of workmen. This ruling was confirmed later on in the case of Newspaper DISMISSAL ETC. OF AN INDIVIDUAL WORKMAN TO BE DEEMED TO
Ltd. v. Industrial Tribunal. In the case of Workmen of Dimakuchi Tea Estate v. BE AN INDUSTRIAL DISPUTE
Dimakuchi Tea Estate, the Supreme Court held that it is not that dispute relating to
According to Section 2-A, where any employer discharges, dismisses,
“any person” can become an industrial dispute. There should be community of
retrenches or otherwise terminates the services of an individual workman, any dispute
interest. A dispute may initially be an individual dispute, but the workmen may make
or difference between the workman and his employer connected with or arising out of,
that dispute as their own, they may espouse it on the ground that they have a
such discharge, dismissal, retrenchment or termination shall be deemed to be an
community of interest and are directly and substantially interested in the employment,
industrial dispute notwithstanding that no other workman nor any union of workmen
non-employment, or conditions of work of the concerned workmen. All workmen
is a party to the dispute.
need not to join the dispute. Any dispute which affects workmen as a class is an
industrial dispute, even though, it might have been raised by a minority group. It may The ambit of Section 2-A is not limited to bare discharge, dismissal,
be that at the date of dismissal of the workman there was no union. But that does not retrenchment or termination of service of an individual workman, but any dispute or
mean that the dispute cannot become an industrial dispute because there was no such difference between the workman and the employer connected with or arising out of
union in existence on that date. If it is insisted that the concerned workman must be a discharge, dismissal, retrenchment or termination is to be deemed industrial dispute. It
member of the union on the date of his dismissal, or there was no union in that has to be considered whether the claim for gratuity is connected with or arises out of
particular industry, then the dismissal of such a workman can never be an industrial discharge, dismissal, retrenchment or termination of service. The meaning of the
dispute although the other workmen have a community of interest in the matter of his phrase “arising out” of is explained in Mackinnon Mackenzie & Co. Ltd. v. I.M.
dismissal and the cause for which on the manner in which his dismissal was brought Isaak. A thing is said to arise out of another when there is a close nexus between the
about directly and substantially affects the other workmen. two and one thing flows out of another as a consequence. The workman had claimed
gratuity and that right flowed out of the termination of the services. Whether he is
The only condition for an individual dispute turning into an industrial dispute,
entitled to gratuity is a matter for the Tribunal to decide. It cannot be accepted that the
as laid down in the case of Dimakuchi Tea Estate is the necessity of a community of
claim of gratuity does not arise out of termination.
interest and not whether the concerned workman was or was not a member of the
union at the time of his dismissal. Further, the community of interest does not depend 3. Subject matter of dispute
on whether the concerned workman was a member or not at the date when the cause
The dispute should relate to employment or non-employment or terms of
occurred, for, without his being a member the dispute may be such that other
employment or conditions of labour of any person. The meaning of the term
workmen by having a common interest therein would be justified in taking up the
“employment or non-employment” was explained by Federal Court in the case of
Western India Automobile Association v. Industrial Tribunal. If an employer refuses Mazdoor Union, it was held that an “industrial dispute” can arise only in an “existing
to employ a workman dismissed by him, the dispute relates to non-employment of industry” and not in one which is closed altogether. The mere fact that the dispute
workman. But the union insists that a particular person should not be employed by the comes under the definition of Section 2(k) does not automatically mean that the right
employer, the dispute relates to employment of workman. Thus, the “employment or sought to be enforced is one created or recognised and enforceable only under the
non-employment” is concerned with the employer’s failure or refusal to employ a Act. Where the right of the employees is not one which is recognised and enforceable
workman. The expression “terms of employment” refers to all terms and conditions under the Industrial Disputes Act, the jurisdiction of the Civil Court is not ousted.
stated in the contract of employment. The expression terms of employment would
“Definition of Appropriate Government”
also include those terms which are understood and applied by parties in practice or,
habitually or by common consent without ever being incorporated in the Contract. According to Section 2 (a) of the Act, the term ‘Appropriate Government’ to
include both the Central and State Government and lays down their respective
The expression “condition of labour” is much wider in its scope and usually it
dominions in relation to industrial disputes. The Constitution of India also envisages
was reference to the amenities to be provided to the workmen and the conditions
jurisdiction of both the Central and State Government on all matters of labour and
under which they will be required to work. The matters like safety, health and welfare
industrial disputes in respect of both legislative and executive powers.
of workers are also included within this expression. It was held that the definition of
The definition of Appropriate Government under Section 2(a), the Act is
industrial dispute in Section 2(k) is wide enough to embrace within its sweep any
exhaustive. To facilitate the meaning it may be divided in following six headings.
dispute or difference between an employer and his workmen connected with the terms
(i) Industrial disputes concerning any industry carried on by or under authority of
of their employment. A settlement between the employer and his workmen affects the
the Central Government, the Central Government is an Appropriate
terms of their employment. Therefore prima facie, the definition of Industrial dispute
Government. For example, Defense Factories, Central Government printing
in Section 2(k) will embrace within its sweep any fraudulent and involuntary
press, mint houses and press for currency notes, opium factory etc.
character of settlement. Even a demand can be made through the President of Trade
(ii) Industrial disputes concerning any industry carried on by Railway Company,
Union (1988 1 LLN 202). Dispute between workmen and employer regarding
the Central Government is an Appropriate Government; and
confirmation of workman officiating in a higher grade is an industrial dispute.
(iii) Industrial disputes concerning any industry which is a controlled industry, the
Employer’s failure to keep his verbal assurance, claim for compensation for Central Government is an Appropriate Government. It has two ingredients i.e.
loss of business; dispute of workmen who are not employees of the Purchaser who the industry must be a controlled industry and the same must be specified that
purchased the estate and who were not yet the workmen of the Purchaser’s Estate, the Appropriate Government under Section 2(a) would be the Central
although directly interested in their employment, etc. were held to be not the Government.
industrial disputes. Payment of pension can be a subject matter of an industrial The provision has been clarified by Hon’ble Apex Court in Bijay Cotton Mills
dispute. Ltd. v. Its workman, and in Management of Vishnu Sugar Mills Ltd. v. Workmen, and
held that “it is not enough that the industry is controlled industry, but it must be
4. Dispute in an “Industry”
specified also under Section 2 (a) of the Act that the Appropriate Government for
Lastly, to be an “industrial dispute”, the dispute or difference must relate to an such controlled industry would be the Central Government”.
industry. Thus, the existence of an “industry” is a condition precedent to an industrial
dispute. No industrial dispute can exist without an industry. The word “industry” has
been fully discussed elsewhere. However, in Pipraich Sugar Mills Ltd. v. P.S.M.
 (i) Industrial disputes concerning any industry which are established under the Bengal was bad. It was held that “an industry mentioned in the first schedule of the
provisions of any Central legislation, the Central Government is an Industries (Development and Regulation) Act, 1951 is a ‘Controlled Industry’, but it
Appropriate Government. is not necessarily an industry carried on by or under the authority of the Central
(ii) Industrial disputes concerning some other industries which are specified by the Government. For an industry to be carried on under the authority of the Central
Central Government not covered under above categories under its wisdom and Government it must be an industry belonging to the Central Government i.e. its own
authority which are, the Industrial Finance Corporation of India Ltd. formed undertaking”.
and registered under the Companies Act, an Air Transport Service or a
In Shri Sankara Allom Ltd.v. The State of Travancore, Cochin, it was held
Banking or an Insurance Company, Mine, an oil field, a Cantonment Board or
that, “merely because the manufacture of salt was carried on by the company under a
a major port, the Appropriate Government would be the Central Government;
license from Government, it cannot become a Government business or one carried on
and
under authority of the Government”.
(iii) In relation to any other industrial disputes, Appropriate Government would be
the State Government. The Kerala High Court in India Naval Canteen Control v. Industrial
If the Government refers a dispute for adjudication is not the Appropriate Tribunals, held that, “the question as to whether an industry is carried on by or under
Government within the meaning of this definition, the Tribunal to which the dispute is the authority of the Central Government, is essentially a question of fact depending on
referred would not acquire jurisdiction to adjudicate upon the dispute and even if an the circumstances of each case”. As such a business carried on by a Naval Canteen
award is rendered, it would be invalid. Therefore, the parties in certain cases exploited Control Board was held not to be carried on by or under the authority of Central
this legal position by challenging the awards on the ground that the Government that Government even if the trust was constituted by the Central Government.
referred the dispute for adjudication was not the Appropriate Government. In the light of the above two cases, simply because an industry is a controlled
industry or the license is granted by the Central Government, industry is not
A controversy arose on the phrase “under the authority of Central
necessarily one carried on by or under the authority of the Central Government. The
Government”. In construing the phrase ‘carried on by or under the authority of the
Act requires that, not only the industry should be a controlled industry but also that
Central Government,’ the word authority must be construed according to its ordinary
Central Government must specify in this behalf that the industry concerned is a
meaning and, therefore must mean a legal power given by one person to another to do
controlled industry. In other words, the specification must be taken by the Central
an act. The words ‘under the authority of’ mean pursuant to the authority, such as
Government by reference to and for the purpose of this Act, in order that the Central
where an agent or servant acts under such authority of his principal. These words
Government may itself become the Appropriate Government in such industry under
mean much the same as ‘on behalf of’. This phrase must, therefore, mean and is
this provision.
intended to apply to industries carried on directly under the authority of the Central
In Administrative officer Central Electro Chemical Research Institute
Government.
Karaikudi v. State of Tamilnadu, the question was whether the Central or State
The expression ‘carried on by or under the authority of the Central Government was the Appropriate Government in respect of the National Laboratory
Government’ involves a direct nexus with the industry, through servants or agents of setup by its parent body i.e. Council of Scientific and Industrial Research (CSIR). It
the Central Government. In Bharat Glass Works Pvt. Ltd. v. State of West Bengal, the was held that the Central Electro Chemical Research Institute as well as the CSIR was
appellant carried on an industry in the manufacture of glass and ceramics. Their functioning under the authority of the Central Government notwithstanding the fact
contention was that it was a ‘controlled industry’ and as such the Central Government that CSIR was held not an authority of the Central Government within the meaning of
being the Appropriate Government the reference made by the Government of West Article 12 of the Constitution. The Court’s conclusion was supported by the
notification of the Central Government wherein it has been stated that CSIR is a Motors case the Court laid down a test “where did the dispute arise?. Ordinarily, if
Society owned and controlled by the Central Government. The award was quashed there is a separate establishment and the workman is working in that establishment,
because the reference was made by the State Government. the dispute would arise at that place, there would clearly be some nexus between the
According to the interpretation of this provision, no industry carried on by a dispute and the territory of the State and not necessarily between the territory of the
private person or a limited company can be a business carried on by or under the State and the industry concerning which the dispute arose”.
authority of the Government. ikewise, industries which are carried on by incorporated But ambiguity still persist on the question, whether the existence of a separate
commercial corporations, which are governed by their own constitutions for their own branch or establishment in State other than the State in which the head quarters of the
purposes cannot be described as carried on by or under the authority of the Central industry is situate, is necessary to consider the former as the Appropriate Government
Government as these corporations are independent legal entities and run the industries with respect to disputes concerning the workmen employed in that State. In other
for their own purposes. words, for the application of the above principle, whether “the existence of a separate
The Second part of the Section 2(a) which declares that the State Government branch” is part of the ratio of the above mentioned Supreme Court decisions.
is the Appropriate Government in relation to all other industrial disputes, also gave In Association of Medical Representatives v. Industrial Tribunal, the M.P.
scope for much of litigation in case of concerns having establishments in more than High Court held that, “in respect of a dispute relating to a workman employed in the
one State. All industrial disputes which are outside the industrial purview of sub- State of M.P., where there is no separate establishment of the company, the
clause (i) are the concerns of the State Government under sub-clause (ii). Thus, the Appropriate Government was the State of Maharashtra in which the head quarters are
employee would be referred for adjudication by the State Government, except in the situated”. But in Paritosh Kumar pal v. State of Bihar, a full Bench of the Patna High
cases falling under Section 2 (a) (i) of the Act. Court considered that, “the existence of a separate establishment is not a necessary
While interpreting the provision, the Courts have generally relied upon the part of the ratio and therefore, in respect of dispute relating to a workman employed in
principles governing the jurisdiction of Civil Courts to entertain actions or Bihar, where there was no separate establishment of the company, the Appropriate
proceedings. In Lalbhai Tricumlal Mills Ltd. v. D.M. Vin, Chagla C.J. observed that Government was the State of Bihar and not the State of West Bengal in whose
“Applying the well known principles of jurisdiction, a court or tribunal would have territories the head quarters of the company situated”.
jurisdiction if the parties reside within its jurisdiction or if the subject matter of the This ambiguity is further confounded by a new principle enunciated by some
dispute substantially arises within its jurisdiction. And, therefore, the correct approach of the High Courts, according to which there can be two Appropriate Governments for
to the question is to ask ourselves – where did the dispute substantially arise?” the same dispute and a reference by either of them can be valid. Although most of
In Indian Cable Company Ltd. v. Its Workmen, the Supreme Court echoing the them are obiter dictums, Delhi High Court in Gesterner Duplicators (P) Ltd. v. D.P.
voice of the Chagla C.J. observed that, “As the Act contained no provision bearing on Gupta, had specifically taken this view and applied this principle to the facts in this
the question, it must consequently be decided on the principles governing the case by validating reference made by the Delhi Administration, where the Appropriate
jurisdiction of courts to entertain actions or proceedings. The court extracted the Government was, as per the principle enunciated earlier by the Supreme Court, the
above quoted passage from Lalbhai Tricumlal Mills case and held that “these Karnataka State Government. The pragmatic approach of these courts deserves to be
principles are applicable for deciding which of the states has jurisdiction to make a appreciated. But a separate line of cases exist where some other High Courts had
reference under Section 10 of the Act.” entirely rejected this theory of two Appropriate Government on purely technical and
The principle established in the above two cases was followed by the Supreme legalistic considerations.
Court in workmen of Sri Rangavilas Motors (P) Ltd. v. Sri Rangavilas Motors (P) In J and J Dechane Distributors v. State of Kerala, Golanan Nambiya J.
Ltd., and later in Hindustan Aeronautics Ltd. v. their workmen, In Sri Rangavilas observed that: “It seems reasonable and fairly clear that there can be only one
Government which can be regarded as the Appropriate Government for the purpose of 2. Conciliation Officers
making a reference of industrial dispute. The consequences of holding that more than
With the duty of mediating in and promoting the settlement of industrial
one Government can refer the same industrial dispute for adjudication appear to us to
disputes, the appropriate Government may, by notification in the Official Gazette,
be startling.”
appoint such number of Conciliation Officers as it thinks fit under Sec 4 of the Act.
In spite of various decisions of High Courts, it is really painful that after a
The Conciliation Officer may be appointed for a specified area or for specified
lapse of sufficient time spent on adjudication of dispute and the award was rendered,
industries in a specified area appointing the Conciliation Officers, by the appropriate
the courts quash the award on jurisdictional grounds because the Government which
Government, is to create congenial atmosphere within the establishment where
initially referred the dispute for adjudication was not the Appropriate Government in
workers and employers can reconcile on their disputes through the mediation of the
the opinion of those courts. Until the definition is suitably amended to provide for
Conciliation Officers. Thus, they help in promoting the settlement of the disputes.
such situations, it is better that the principle of simultaneous jurisdiction of two
Appropriate Governments is recognized, so that awards made by the tribunals shall be Sec 12 provides that where any industrial dispute exists or is apprehended, the

quashed on such technical grounds. conciliation officer may, or where the dispute relates to a public utility service and a
notice under Section 22 has been given, shall, hold conciliation proceedings in the
Dispute Resolution Machineries: prescribed manner.

The Act provides for following Authorities for Investigation and settlement of The Conciliation Officer shall, for the purpose of bringing about a settlement
industrial disputes: of the dispute, without delay, investigate the dispute and all matters affecting the
1. Works Committee. merits and the right settlement thereof and may do all such things as he thinks fit for
2. Conciliation Officers. the purpose of inducing the parties to come to a fair and amicable settlement of the
3. Boards of Conciliation. dispute.
4. Court of Inquiry.
If a settlement of the dispute or of any of the matters in dispute is arrived at in
1. Works Committee
the course of the conciliation proceedings the conciliation officer shall send a report
Section 3 of the Act provides that the appropriate Government may by general thereof to the appropriate Government 5[or an officer authorized in this behalf by the
or special order require the employer to constitute in the prescribed manner a Works appropriate Government] together with a memorandum of the settlement signed by
Committee in industrial establishments, where 100 or more workmen are employed or the parties to the dispute.
have been employed on any working day in the preceding 12 months. The Works
If no such settlement is arrived at, the conciliation officer shall, as soon as
Committee will be comprised of the representatives of employers and workmen
practicable after the close of the investigation, send to the appropriate Government a
engaged in the establishment.
full report setting forth the steps taken by him for ascertaining the facts and
It shall be the duty of the Works Committee to promote measures for securing
circumstances relating to the dispute and for bringing about settlement
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 3. Boards of Conciliation

to compose any material difference of opinion in respect of such matters [Section For promoting the settlement of an industrial dispute, the appropriate
3(2)]. Government may, as occasion arises, constitute by a notification in the Official
Gazette, a Board of Conciliation. A Board shall consist of a Chairman and two or four concept. In the industrial sphere, voluntary arbitration originated at Ahmedabad in the
other members as the appropriate Government thinks fit. textile industry under the influence of Mahatma Gandhi. Provision for it was made
under the Bombay Industrial Relations Act by the Bombay Government along with
Under sec 13 of the Act it shall be the duty of Board to endeavor to bring
the provision for adjudication, since this was fairly popular in the Bombay region in
about a settlement of the dispute and for such purpose it shall, without delay,
the 40s and 50s. The Government of India has also been emphasizing the importance
investigate into the dispute and all matters affecting the merits and the right
of voluntary arbitration’ for settlement of disputes in the labour policy chapter in the
settlement. The Board may also do all such things which may be considered fit by it,
first three plan documents, and has also been advocating this step as an essential
for including the parties to come for a fair and amicable settlement of the dispute. In
feature of collective bargaining. This was also incorporated in the Code of Discipline
case of settlement of the dispute, the Board shall send a report thereof to the
in Industry adopted at the 15th Indian Labour Conference in 1958. Parties were
appropriate Government together with a memorandum of settlement signed by all the
enjoined to adopt voluntary arbitration without any reservation. The position was
parties to the dispute. In case no settlement is arrived at, the Board shall forward a
reviewed in 1962 at the session of the Indian Labour Conference where it was agreed
report to appropriate Government enlisting therein the steps taken by the Board for
that this ‘step would be the normal method after conciliation effort fails, except when
ascertaining the facts and circumstances related to the dispute and for bringing about a
the employer feels that for some reason he would prefer adjudication. In the Industrial
settlement thereof. The Board will also enlist the reasons on account of which in its
Trade Resolution also which was adopted at the time of Chinese aggression, voluntary
opinion a settlement could not be arrived at and its recommendations for determining
arbitration was accepted as a must in all matters of disputes. The Government had
the disputes. (Section 5)
thereafter set up a National Arbitration Board for making the measure popular in all
4. Courts of Inquiry
the states, and all efforts are being made to sell this idea to management and
According to Section 6 of the Act, the appropriate Government may as employees and their unions.
occasion arises, by notification in the Official Gazette constitute a Court of Inquiry In 1956 the Government decided to place voluntary arbitration as one of the
into any matter appearing to be connected with or relevant to an industrial dispute. A measures for settlement of a dispute through third party intervention under the law.
Court may consist of one independent person or of such number of independent Sec. 10A was added to the Industrial Disputes Act, and it was enforced from 10th
persons as the appropriate Goverment may think fit and where a Court consists of two March, 1957.
or more members, one of them shall be appointed as the Chairman. It is the duty of
Reference of Disputes for Arbitration
such a Court to inquire into matters referred to it and submit its report to the
appropriate Government ordinarily within a period of six months from the Where a dispute exists or is apprehended, it can be referred for arbitration if
commencement of the inquiry. The period within which the report is to be submitted the parties to the dispute agree to do so by submitting a written agreement to that
is not mandatory and the report may be submitted even beyond the period of six effect, mentioning the person acceptable to them as arbitrator and also the issues to be
months without affecting the legality of the inquiry. decided in arbitration - proceedings, to the Government and the Conciliation Officer
concerned before it is referred for adjudication to Labour Court or Tribunal. The
Voluntary Arbitration under Sec 10A
Agreement must be signed by both the parties. Both under Sec. 10A and 10(2)
When Conciliation Officer or Board of Conciliation fails to resolve
reference is obligatory.
conflict/dispute, parties can be advised to agree to voluntary arbitration for settling
their dispute. For settlement of differences or conflicts between two parties, Where an agreement provides for even number of arbitrators, it will provide
arbitration is an age old practice in India. The Panchayat system is based on this for the appointment of another person as an Umpire who shall decide upon the
reference if the arbitrators are divided in their opinion. The award of the Umpire shall pressed by the Government for over thirty years it has yet to take roots. During the
be deemed to be the arbitration award for the purposes of the Act. last decade not even 1% of the disputes reported were referred for arbitration. The
The appropriate Government shall within one month from the date of the National, Commission on Labour examined the working of arbitration as a method of
receipt of the copy of the arbitration agreement publish the same in the Official settling disputes, and found that it was yet to be accepted by the parties, particularly
Gazette if the Government is satisfied that the parties, who have signed the agreement by the ‘employers, unreservedly.
for arbitration, represent majority of each party; otherwise it can reject the request for
The main hurdles noticed yet are, the Choice of suitable arbitrator acceptable
arbitration.
to both parties and payment of-arbitration-fees-Unions can seldom afford to share
Where any such notification has been issued, the employer and workmen who
such costs equally with management. Apart from these, it appears that arbitration
are not parties to the arbitration agreement, but are concerned in the dispute, shall be
under the Act is not correctly understood by the employers and trade unions. When
given an opportunity to present their case before the arbitrator or arbitrators.
arbitration is suggested, the impression often is that matter is to be left to the sole
The arbitrator shall investigate the dispute and submit to the Government the
decision of an individual who can act in any manner he likes. The sanctity of the
Arbitration Award signed by him. Where an industrial dispute has been referred for
decision by an arbitrator is also held in doubt. The fact that law covers voluntary
arbitration and notification has been issued, the Government may by order prohibit
arbitration and places it almost parallel to adjudication, is not appreciated or known
the continuance of any strike or lock-out in connection with such dispute, which may
widely.
be in existence on the date of reference.
The arbitration award which is submitted to the Government and becomes Power of Appropriate Government to refer Industrial Dispute
enforceable, is binding on all parties to the agreement and all other parties summoned
to appear in the proceedings as parties to ‘dispute. Such an award is also binding on The State sponsored conciliation and adjudication are the hall mark of the law

all, employees at the time of award, or to be employed subsequently even if they are of industrial dispute resolution in India. The Act is the principal Central law which

not party to the initial agreement. If the arbitration agreement is not notified in the provides the mechanism for and conditions subject to which, the conciliation and

Official Gazette under Sec. 10A, it is applicable only to the parties who have agreed adjudication powers are to be exercised. Under the Act, adjudication cannot be

to refer the dispute for arbitration. Arbitration Award is enforceable in the same demanded by a disputant party as of right; it is the discretion of the “Appropriate

manner as the adjudication award of Labour Court or Industrial Tribunal. Government” to refer or not to refer an industrial dispute collective or individual for

Arbitration is an alternative-to adjudication and the two cannot be used adjudication by an adjudicatory body. If the disputants are not able to arrive at a

simultaneously. It is voluntary at the discretion of the parties to a dispute. Arbitrator is “settlement” or if they are disinclined to refer their disputes to an Arbitrator, then, the

a quasi-judicial body. He is an independent person and has all the attributes of a ultimate legal remedy for the unresolved dispute is its reference to adjudication by the

statutory arbitrator. He has wide freedom, but he must function within the limit of his Appropriate Government.

powers. He must follow due procedure of giving notice to parties, giving fair The Act envisages the exclusive power of the Appropriate Government to

hearings, relying upon all available evidence and documents. There must be no refer disputes for adjudication there by rendering the adjudication conditional on its

violation of the principles of natural justice. discretion except applications under Sec 33, 33-A, 33(C)(2) all other matters will have
to come before the adjudicatory authorities only through an order of reference by the
Acceptance of Arbitration Appropriate Government. But, now in some States like Karnataka, Tamilnadu and

Voluntary arbitration has been recommended and given place in law by the Andhra Pradesh in case of individual disputes relating to discharge, dismissal,

Government. Experience, however, shows that although the step has been strongly retrenchment or termination of services, a workman may directly approach a Labour
Court for the adjudication of such disputes under the relevant State amendments to the strikes. It is with that object the reference is contemplated not only in regard to
Act. This power of the Government disables the trade unions or the workmen to make existing industrial disputes but also in respect of disputes which may be apprehended.
use of the adjudicatory forums for the settlement of disputes and as an effective This section confers wide and even absolute discretion on the Government either to
remedy for their grievances. There has been a constant demand by the trade union to refer or to refuse to refer an industrial dispute as therein provided. Naturally this wide
provide them and to the workers direct access to these adjudicatory authorities. discretion has to be exercised by the Government bona fide and on a consideration of
Further, the controversy about the Government power arises in the context of misuse relevant and material facts.
of this discretionary power for partisan ends with political motives. How and on what On the construction of this Section the Supreme Court in a number of
considerations should the reference power of the Government be exercised? Delay in decisions explained that this power of the Appropriate Government is purely of an
reference of disputes and Government’s reluctance to refer disputes to which it is a ‘administrative nature’, as the expression is understood in contradiction to quasi
party. judicial or judicial power. This implies that it is a discretionary function of the
Appropriate Government to form an opinion about the existence and apprehension of
Scope of Section 10 - Nature of Government Power
industrial dispute. This decision is based on subjective satisfaction of the
To say something with certainty about the powers of the Appropriate
Government, only the order of refusal to make a reference needs to be communicated
Government under Section 10(1) of the Act, to invariably refer a dispute for
and the order must record the reasons for refusing to make a reference. It is only an
adjudication is a risky one and the exercise is rather like skating on the thin ice. This
administrative order and not a quasi judicial order. There is no need to issue any
all has been there in spite of the fact that our Supreme Court is probably the strongest
notice to the employer or to hear the employer before making a reference or refusing
in the world and usually delivers the verdicts which are full of rare jurisprudential
to make a reference.
vision. It does not mean that there are no black spots and sometimes various decisions
Further, implication of holding it an administrative power is that, when the
of the Supreme Court on the very same subject rather observe a proposition
Government makes a reference of a dispute for adjudication by a Labour Court or a
conceptually, nationally and imaginatively. This is on account of the fact that Apex
Tribunal it does not decide any question of fact or law. The fact that it has to formed
Court has not become an absolute viable instrument. The views of the Supreme Court
an opinion as to the factual existence of a dispute as a preliminary step to discharge of
are changed with the change in the composition of its various benches. This is what
its function does not make it any the less administrative character. The expression ‘at
had happened as regards the powers of the Appropriate Government in matters of
any time’ empowers the Appropriate Government to review its earlier decision and
reference of disputes.
refer a dispute which was earlier refused. It can reconsider its earlier decision in the
Section 10(1) Act states that, where the Appropriate Government is of opinion
light of new facts and circumstances.
that any industrial dispute exists or is apprehended it may at anytime; by order in
The restriction on the Government is that it should exercise the power
writing refer the dispute to a Board or Court of Inquiry or Labour Court or to an
bonafide after application of its mind to the matter before it. It should take all relevant
Industrial Tribunal for adjudication. From the above provision, it is evident that the
matters into consideration and leave out all irrelevant consideration. In other words,
Appropriate Government can only refer a dispute to any adjudicatory body provided if
the discretion must be exercised according to law as established by courts in various
it is satisfied that there exists an industrial dispute or apprehension of such dispute but
cases. The discretionary power should be exercised to promote statutory objects and
not otherwise.
that a discretionary decision founded upon irrelevant factors or grounds would be
It shows that the foremost object of the Act is to provide for economical and
subject to judicial considerations.
expeditious machinery for the decision of all industrial disputes by referring them to
In State of Madras v. C.P. Sarathy, the Apex Court held that “the Government
adjudication, and avoid industrial conflict resulting from frequent lock-outs and
should satisfy itself on the facts and circumstances brought to its notice in its
subjection opinion that an industrial dispute exists or is apprehended. The factual improper exercise of power by the Appropriate Government under Section 10(1) of
existence of the dispute or its apprehension and the expediency of making a reference the Act.
are matters entirely for the Government to decide”. It was further observed that “the The Supreme Court of India has pointed out on many occasions that the
order of reference passed by the Government cannot be closely examined by a writ question as to whether a statute is mandatory or directory depends upon the intent of
under Article 226 of the Constitution to see if the Government had material before it the Legislature and not upon the language in which the intent is clothed. The meaning
to support the conclusion that the dispute existed or was apprehended”. and intention of the Legislature must govern, and these are to be ascertained not only
But later, the Supreme Court in Western India Match Co. v. Western India from the phraseology of the provision, but also by considering its nature, its design
Match Co. Workers Union and in Shambunath Goyal v. Bank of Baroda, Jullundur and the consequences which would follow from construing it the one way or the
insisted that, the Appropriate Government should satisfy itself on the basis of the other.
material available before it that an industrial dispute exists or is apprehended and it It is well settled that the use of word ‘may’ in a statutory provision would not
was held that such a satisfaction of the Government is a condition precedent to the by itself show that the provision is directory in nature. In some cases the legislature
order of reference. In other words, if there is no material before Government that an may use the word ‘may’ as a matter of pure conventional courtesy and yet intent a
industrial dispute exists or is apprehended, the Government has no power to make a mandatory force. In order, therefore, to interpret the legal import of the word ‘may’,
reference of cause, the court observed that “the adequacy or sufficiency of the the Court has to consider various factors, namely the object and the scheme of the
material on which the opinion was formed is beyond the pale of Judicial Scrutiny. Act, the context and the background against which the words have been used, the
Once the Government forms an opinion with respect to the existence of an industrial purpose and the advantages sought to be achieved by the use of this word, and the
dispute or its apprehension, the next question of expediency i.e. whether to refer the like. It is equally well-settled that where the word ‘may’ involves a discretion coupled
dispute for adjudication or not is left to the subjective satisfaction of the with an obligation or where it confers a positive benefit to a general class of subjects
Government”. However, where the Appropriate Government refuses to make a in a utility Act, or where the court advances a remedy and suppresses the mischief, or
reference on receipt of a failure report of a conciliation officer under Section 12(4), where giving the words a directory significance would defeat the very object of the
the Government is bound to give reasons for its refusal and communicate the same to Act, the word ‘may’ should be interpreted to convey a mandatory force.
the parties concerned. In D.A. Koregaonkar v. the State of Bombay, Chagla, C.J. observed that,“One
The exercise of power by the Government or refusal to do so is subject to the of the important tests that must always be employed in order to determine whether a
well recognized principles regarding the exercise of administrative discretion. The provision is mandatory or directory in character is to consider whether the non-
discretionary power must be exercised honestly and not for any corrupt or ulterior compliance of a particular provision causes inconvenience or injustice and if it does
purposes and the Appropriate Government must apply its mind to the relevant then the Court would say that that provision must be complied with and that it is
material before it and decide the question of expediency of referring the dispute in the obligatory in its character”.
interests of maintaining industrial peace in the concerned industry. It will be an absurd
The adjudication of industrial disputes under the Act, is based on the concept
exercise of discretion, if for example the Government forms the requisite opinion on
of compulsory adjudication and hence, the Appropriate Government has to refer the
account of pressure by any political party, within these narrow limits, the Government
industrial dispute and the adjudicator is bound to adjudicate on the referred industrial
opinion is not conclusive and can be challenged in a court of law. The well known
dispute and thereafter to give its decision in writing in the form of an award.
grounds for challenging the exercise of administrative discretion like malafide,
irrelevant considerations, not taking relevant considerations into account, improper
purpose, acting mechanically or under dictation are also available for challenging the
Power of Courts to direct the Government to make a reference of Industrial holding so the Court observed, the order passed by the Government under Section
Disputes: 12(5) may be an administrative order and the reasons recorded by it may not be
justifiable in the sense that their propriety, adequacy or satisfactory character may not
In Pratap Singh v. State of Punjab, the Supreme Court observed that, “the
be open to judicial scrutiny; in that sense it would be correct to say that the Court
Court is not an appellate forum where the correctness of the order of the Government
hearing a petition for mandamus is not sitting in appeal over a decision of the
could be canvassed. It has no jurisdiction to substitute its own view for entirely of the
Government, nevertheless, if the Court is satisfied that the reasons given by the
power, jurisdiction and discretion vested by law in Government the only question
Government for refusing to make a reference are extraneous and not germane then the
which could be considered by the Court is, whether the authority vested with the
Court can issue and would be justified in issuing a writ of mandamus even in respect
power has paid attention to or taken into account, circumstances, events or matter
of such administrative order.
wholly extraneous to the purpose which the satisfying a private or personal grudge of
The Supreme Court in Bombay Union of Journalists v. State of Bombay,
the authority”.
further discussed the question. Although it is difficult somewhat to reconcile this
Power of reference under Section 10 (1) is undoubtedly an administrative
decision with that of K.P. Krishnan, the Supreme Court clearly pointed out that while
function of the ‘Appropriate Government’ based upon its own opinion with respect to
the Government is not precluded from considering the prima facie merits of the case
the existence or apprehension of an industrial dispute and its subjective satisfaction as
before deciding as to whether a reference should be made or not, it cannot take final
to whether it would be expedient to make a reference or not. Though the earlier
decisions on questions of law or disputed questions of fact which are within the
thinking was that such an order cannot be interfered with at all by the courts, the
jurisdiction of the Tribunal. The Supreme Court then reiterated its earlier stand that in
recent trend of judicial thinking is that though in a very limited field, the order of
entertaining an application for a writ of mandamus against an order made by the
reference is amenable to judicial review under certain circumstances.
Appropriate Government under Section 10(1) read with Section 12(5), the Court is
The question of referring a industrial dispute for adjudication arises after the
not sitting in an appeal over the order and is not entitled to consider the propriety,
Government has received the failure report from the Conciliation Officer. According
adequacy or the satisfactory character of the reasons given by the said Government.
to Section 12(5), if on a consideration of the failure report by a conciliation officer,
The combined reading of the above two cases, no exhaustive or final criteria
the Appropriate Government is satisfied that there is a case for reference, it may make
emerges as to on what grounds an administrative order is amenable to judicial review.
such a reference. Where the Appropriate Government does not make such a reference
Nor any such exhaustive or final criterion is possible in a growing branch of law like
it shall record and communicate to the parties concerned its reasons therefore. Similar
the administrative law. However, some broad heads under which an order of reference
obligation to record reasons for non reference and communicating the same to the
may be reviewable are as follows.
parties concerned arises under Sec 13(4) of the Act where the failure report is
(i) When the Government does not act bonafide
submitted by a Board of Conciliation only in case of Public Utility Services.
In any enactment which creates powers, there is a condition implied that the
In State of Bombay v. K.P. Krishnan, the Appropriate Government on
powers shall be used bonafide for the purpose for which they are conferred. Exercise
consideration of the failure report refused to refer the dispute and the reason given by
of power of reference is said to be malafide if it is made for achieving an alien
the Government was that the workmen resorted to go slow during the year 1952-53
purpose. No public body can be regarded as having statutory authority to act in bad
for which year the workmen claimed bonus. The Supreme Court held that the
faith or from corrupt motives and any action purporting to be that of the body but
Government had taken into consideration altogether an irrelevant matter in refusing to
proved to be committed in bad faith or from corrupt motives would certainly held to
refer the dispute and therefore a writ of mandamus was issued to the Government
be in operative. However, such bad faith will be a matter to be established by a party
directing it to reconsider the matter by ignoring the irrelevant consideration. While
propounding bad faith or malafide. He should affirm the set of acts and it would not
be sufficient merely to allege the facts but they will have to be proved. In State of (d) Non-application of mind
Bihar v. D.N. Ganguli, while dealing with a case of cancellation of a notification of The Appropriate Government before forming an opinion to the questions
reference, the Supreme Court reiterated the same view and said that if validity of whether there is an industrial dispute existing or apprehended and whether it will be
cancellation of notification making an order of reference is challenged on the ground expedient to refer the dispute on the basis of material before it. If the order of
of malafide, it may be relevant and material to inquire into the motive of the reference challenged on the above ground the Government will have to satisfy the
Government. Thus, if the Court finds that the Government was actuated by malafide Court by filing an affidavit to show that it had material before it and the reference was
motives in making an order of reference, the reference shall be invalid. made after consideration of relevant factors, the absence of such evidence may make
(ii) Improper opinion of the Government the reference vulnerable on the lack of material or non-application of mind.
With respect to the existence or apprehension of an industrial dispute, the (iii)The activity carried on is not an ‘Industry’ and no ‘Industrial Dispute’
Government is the sole arbitrator and its opinion is final Likewise the determination The term ‘industrial’ in the definition of ‘industrial dispute’ relates to the
of the question whether it is expedient to make a reference or not depends upon the dispute in an ‘industry’ as defined in Sec 2(j) of the Act. Unless the dispute is related
discretion of the Appropriate Government and this discretion should be exercised to an industry it will not be an industrial dispute. Therefore, if the reference is made of
reasonably or else it is reviewable by a High Court in its writ jurisdiction under a dispute which relates to any activity which is not an industry it will not be a valid
Article 226 of the Constitution. The opinion of the Government may be assailable for reference.
the following reasons: In Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor union, Justice
(a) No material Venkatarama Ayer opines that“The definition of industrial dispute presupposes
In Orient Paper Mills Sramik Congress v. State of Orissa, the Court opined continued existence of industry and hence the dispute should be in a live industry and
that the formation of opinion cannot import an arbitrary or irrational state of affairs; not in a closed industry, because closed industry or establishment would not fall
the opinion must be grounded on materials which are of rational and probative value. within the definition of industry. The reference of an industrial dispute which arises
In forming the opinion if the Government had no material before it, the order of after the establishment becomes dead on account of closure shall therefore be invalid
reference will be liable to be quashed. as the provisions of the Act will apply only to an existing or live industry”.
(b) Omitted vital material from consideration The power of the State to make a reference is to be determined with reference
While exercising the power of reference under Section 10 of the Act, the not to the date on which it is made but with reference to the date on which the right,
Government did not take into account some vital material which is ought to have which is the subject matter of the dispute arises and the machinery provided under the
considered and refuses to refer the dispute for adjudication then the reference will be Act would be available for working out the right which accrued prior to the
liable to be quashed. dissolution of the business. There is thus a clear distinction between the two classes of
(c) Irrelevant Consideration cases namely:
If, in forming the opinion, the Appropriate Government looks into any (i) Those in which the cause of action arose at the time when the business had
extraneous or irrelevant consideration which had no rational connection with the been closed; and
question of making the reference, hence, order would be beyond the scope of the (ii) Those in which the cause of action arose at the time when the business was
power of the Government under Section 10(1) of the Act. In such a case the order of being still carried on.
reference will be bad even if the authority has acted bonafide and with the best of
There can be no ‘industrial dispute’ in respect of the first category of cases
intention.
because the real subject matter of the dispute had ceased to exist when the dispute
arose. But in regard to the second category, where the dispute actually arises before special enactments like Contract Labour (Regulation and Abolition) Act, 1970,
the closure of the business, it does not cease to be an industrial dispute merely Payment of Gratuity Act, 1972 etc. being a self contained code, cannot be validly
because subsequently the industry is closed. If the dispute related to a period when the referred or be adjudicated upon by the adjudicatory authorities under the Act.
industry was in existence the reference even after the closure of the industry can be
Disputes covered by a Settlement or a previous Award
validity made.
In Madras District Automobile and General Employees Union v. State of
The dispute with respect to the existence or apprehension of which the
Madras, held that reference of an Industrial Dispute the subject matter of which is
Appropriate Government is to form its opinion must be an industrial dispute as
covered by a Settlement as defined in Section 2 (p) of the Act would be invalid during
defined in Section 2 (k) of the Act. According to this, “any dispute or difference
the period of operation of such a Settlement because when once a dispute is resolved
between employers and employers and between employers and workmen or between
by a Settlement in the course of Conciliation or otherwise no dispute remains to be
workmen and workmen, connected with the employment or non employment or the
resolved by Arbitration or Adjudication. The Law is well settled that if there is a
terms of employment or with the conditions of labour of any person”.
binding settlement which has not been terminated in accordance with the procedure
In Shambhunath v. Bank of Baroda, Supreme Court held that the term
laid down in the Act, no industrial dispute can be raised with regard to the items
‘industrial dispute’ connotes a real and substantial difference having some element of
which form the subject matter of the settlement. Such matters cannot be the subject
persistency and continuity till resolved and likely, if not adjusted to endanger the
matter of conciliation proceedings under Section 12 or of reference under Section 10
industrial peace of the undertaking or the community. The definition of industrial
of the Act.
dispute expressly states that not dispute or difference of all sorts but only those which
bear upon the relationship of employers and employers, employers and workmen or From the analysis of above all cases the approach of the Supreme Court and
between workmen and workmen and if it is connected with grounds provided there High Courts in compelling the Appropriate Government to make a reference which
under are contemplated and the Appropriate Government before exercising its power may virtually amount to exercising appellate jurisdiction over the discretionary order
under Section 10, the industrial dispute must be in existence or apprehended on the of the Government is justified or not from a strict administrative law view point, the
date of reference i.e. a demand has been made by the workmen and it has been activists in these decisions is quite welcome from the point of view of labour law.
rejected by the employer before the date of reference, whether directly or through the In justification of the above decision of the Supreme Court, it may be stated
conciliation officer, it would constitute an industrial dispute. If there is no industrial First, that the Supreme Court is very much concerned about abnormal delay at the
dispute in existence or apprehended the Appropriate Government lacks power to stage of reference by the Government, in many of these cases the delay was more than
make any reference. a decade. Although the Supreme Court was satisfied that case for reference was made
(iv)Reference Contrary to Law: out, the Court stand was considered to be patently unreasonable. Secondly, the Court
The order of reference should be made to the authorities in accordance with in these cases also took into account the fact that the Appropriate Government had
the provisions of Section 10(1). If the order is contrary to these provisions in the decided for itself the questions of fact and law which ought to be determined by the
matter of selecting the appropriate authority, the order shall be invalid. Likewise Tribunal after adjudication. Thirdly, the Court was considering that the adjudication
where an order of reference covering some items of industrial disputes is pending of industrial disputes by the Tribunals should be considered as a quasi judicial remedy
adjudication a further order of reference covering the same subject matter would be provided to the industrial workmen for the resolution of their grievances and demands
invalid. In Rashtriya Hair Cutting Saloon v. Maharashtra Kamgar Sabha, held that a which lead to disputes. This is of particular importance if it is relating to discharge,
reference of dispute the subject matter of which is covered by the provisions of dismissal, retrenchment or the termination of services of workmen and therefore the
jurisdiction of Civil Courts is impliedly barred by the Act. Although disputes strictly case, it can “at any time” i.e. even when such proceedings have not begun or are still
relating to contract of employment may be taken before the Civil Courts for pending, decide to refer the dispute for adjudication. The expression “at any time”
enforcement of contractual rights the Civil Courts have no power to order thus takes in such cases where the Government decides to make a reference without
reinstatement even in cases of illegal termination of service, not to speak of the delay waiting for conciliation proceedings to begin or to be completed”.
or expense that go with the Civil Suits.
Section 10 not suggests that the Appropriate Government has to wait for the
Under these circumstances the remedy available to workmen is only under the
failure report of Conciliation officer. This position is amply made clear by Section 20
Act and if the Appropriate Government takes the stand that it has discretion whether
of the Act which states that the conciliation proceedings shall be deemed to be
to refer or not to refer such disputes the workmen who are deprived of their livelihood
concluded, among others, when a reference is made to a Court of Inquiry, Labour
would be at the many of the Government for justice and this would hindrance the very
Court, Tribunal or National Tribunal.
object of the Act and social justice principle under the Constitution.

(ii) Whether during the pendency of the proceedings under Section 33 a

Analysis of the term may “at any time” refer under Section 10
reference of the dispute can validly be made for adjudication?
Under the Act it is the Appropriate Government which has the power to make
the reference for adjudication. The words “at any time” preceded by the word “may” In ITC Ltd. v. Government of Karnataka, a question raised before the High

in Section 10(1) indicate the intention of the legislature that the Government has Court of Karnataka that during the pendency of proceeding under Section 33(2)(b) of

discretion to refer dispute at any time, if it is of opinion that an industrial dispute the Act for ‘approval’ of the imposition of penalty of dismissal from service against a

exists or is apprehended and that it considers expedient to do so in the interests of workman. Whether the Appropriate Government is competent to refer the dispute for

maintaining industrial peace in the concerned industry. The interpretation of the term adjudication relating to dismissal under Section 10(1) of the Act? It was held that any

“at any time” under Section 10 of the Act gives rise to four questions namely, decision under Section 33 is not final and therefore cannot yield to a remedy provided

(i) Whether the conciliation proceedings are a condition precedent in the under Section 33(2)(b) proceedings. Therefore, notwithstanding that a proceeding

making of the order of reference? under Section 33 is pending, a dispute can be referred to adjudication under Section
10(1) of the Act.
The Act casts a duty on Conciliation Officer to hold conciliation
(iii) Whether once having refused to make a reference the Appropriate
proceedings and try to promote settlement between the parties and the procedure for
Government can subsequently make a reference of the same matter?
promoting settlement cannot come in the way of the Appropriate Government making
reference for adjudication. The significance of the words “at any time” is that the Refusal of the Government to refer dispute for adjudication on a previous
reference can be made at any time even before or during the pendency or after the occasion does not prevent it from reconsidering the matter afresh at a later date and
conciliation proceedings. In other words, though as a matter of practice conciliation deciding to refer the same under Section 10(1) of the Act. The Supreme Court in
proceedings by a conciliation officer are held before the Government decides to refer Western India Match Co. v. Western India Match Co. Workers Union stated that the
a dispute for adjudication it is not a condition precedent. In Western India Match Co. words “at any time” do not admit any period of limitation and that previous refusal is
Ltd. v. Western Match Co. Workers Union, Shelat, J.M. JJ observed that,“Ordinarily no bar for a subsequent reference. The Court explained the law on this aspect in the
the question of making a reference would arise after the conciliation proceedings have following words: “When the Government refuses to make reference it does not
been gone through and the conciliation officer has made a failure report. But the exercise its power, on the other hand it refuses to exercise its power. Consequently,
Government need not wait until such a procedure has been completed. In an urgent
the power to refer cannot be said to have been exhausted when it has declined to make threat to direct action may become imminent and the Government may as well
a reference at an earlier stage”. consider the decision and make the reference”.

The Court further pointed out that the Government may reconsider the matter This holding of the Court seems to confer on the Government the power to
either because some new facts had come to light or because it had misunderstood the refer the dispute after a previous refusal and for such a reference the Government
existing facts or for any other relevant consideration with regard to too old claims or need not have any fresh material before it and the only paramount consideration is the
the extraneous consideration like, pressure from unions etc. The Court said, “there is maintenance of industrial peace. But such a blanket power may result in some absurd
no reason to think that the Government would not consider the matter properly or situations or may put the employer in an embarrassing situation when he had already
allow itself to be stampeded into making references in cases of old or stale disputes or arranged the affairs of his business on the basis of the Government’s refusal to make a
reviving such disputes on the pressure of unions”. reference. It is also possible that such unlimited power may be abused or exercised
due to some extraneous factors like, political pressure.
Later in Binny Ltd. v. Their workmen, the Supreme Court upheld the validity
of a reference by the Government though the Government refused to refer the same on In Mahavir Jute Mills Ltd. v. Shibbanlal Sexena, the Supreme Court itself
two earlier occasions. In Avon Services (production) Agencies Ltd. v. Industrial noted that between the dismissal of 800 workmen, which was the subject matter of
Tribunal, Haryana, the Supreme Court clarified the nature of power of the dispute and the hearing of the appeal by special leave nearly twenty years have
Appropriate Government when it subsequently refers the dispute after initial refusal elapsed and an embarrassing situation had arises for the employer, as the workmen
and about the need for any fresh material before the Government justifying the change employed in the place of the dismissed workmen had already put in twenty years of
on its opinion. It was observed by Desai, J. that, “Merely because the Government service. Despite these facts, the Court upheld the order of reference following the
rejects a request for reference or declines to make a reference, it cannot be said that ratio of WIMCO case. In view of such possibilities, O. P. Malhotra suggests, that: “It
the industrial dispute has ceased to exist, nor could it be said to be review of any is therefore desirable that when the Government subsequent to its refusal to make a
judicial or quasi judicial order or determination. The industrial dispute may reference decides to refer the same dispute for adjudication, it must state reasons,
nevertheless continue to remain in existence and if at a subsequent stage the showing that new facts had came to light or there was misunderstanding as to the
Appropriate Government is satisfied that in the interest of industrial peace and for existing facts or there was any other relevant consideration including the threat to
promoting industrial harmony it is desirable to make a reference the Appropriate peace in the order of reference. Alternatively these reasons may be stated in the
Government does not lack power to do so under Section 10(1), nor it is precluded counter affidavit in reply to the writ petition challenging the order of reference”.
from making a reference on the only ground that on an earlier occasion it had declined
Further, a considerable contention is that in making a reference the
to make a reference”.
Government is performing an administrative function and not a judicial or a quasi
The Supreme Court also held that “A refusal of the Appropriate Government judicial function and audi alterem partem is not invokable has become untenable in
to make a reference is not indicative of an exercise of power under Section 10(1), the the light of the path breaking decision of the Supreme Court in State of Orissa v.
exercise of power would be a positive act of making a reference. Refusal to make a Binapani Devi, kraipak v. UOI, Mohinder Singh Gill v. Chief Election Commissioner.
reference does not tantamount to saying that the dispute, if at all existed stands The Supreme Court has observed that, “the dichotomy between administrative and
resolved. On the contrary, the refusal to make a reference not compelling the parties quasi-judicial functions vis-a-vis the doctrine of natural justice is presumably
to come to dispute reasoning authorities would further accentuate the feelings and a obsolescent after kraipak case in India, In Binapani, the Supreme Court held that even
an administrative order, which involves civil consequences must be made consistently Authorities to whom Reference can be made by the Appropriate Government
with the principles of natural justice”.
Although a reference under Section 10(1) may be made to a Board of
(iv) Whether there is any limitation in making the order of reference? Conciliation to promote settlement or to a Court of Inquiry for inquiring into matter
The power of the Appropriate Government to make a reference to the Labour but as the present study is concerned with Adjudication, hence, the detailed provisions
Courts and Industrial Tribunals are administrative in character. No time limit is pertaining to power of reference to a Labour Court, Industrial Tribunal and National
prescribed and the power to make a reference can be exercised by it at any time. All Tribunal for the purpose of investigation and settlement of Industrial disputes are
that matters is that there should be an industrial dispute existing or even apprehended. discussed herewith.
The words “at any time” do not admit any such limitation. That is the express (i) Labour Court
intention of the legislature and there should be no such restrictions imposed on the
The Appropriate Government Under Section 10(1)(c) may refer a dispute, if it
Government’s power. The laws of limitation which might bar any Civil Court from
relates to any matter specified in the Second Schedule to the Labour Court for
giving a remedy in respect of lawful rights cannot be applied by Industrial Tribunals.
adjudication. The Second Schedule matters are all disputes of rights nature or also
However, it is only reasonable that the Government shall refer disputes within a
known as legal disputes when workmen raise disputes with regard to their existing
reasonable time after the fact of the existence of the dispute is brought to its notice,
legal rights, the reference of such disputes by the Government should be a matter of
either through the parties directly or through the failure report of the Conciliation
routine, unless the claims of workmen are found to be frivolous or vexatious.
Officer and incase of delay there should be sufficient explanation for it.
The Appropriate Government’s power to make a reference is unbridled. But Although, as a general rule, the matters enumerated in Third Schedule are
any discretionary power cannot be regarded as absolute because absolute discretion is referred to Industrial Tribunals, the first proviso to Section 10(1) (d) provides that,
ground to breed arbitrariness and which shrikes at the roots of Article 14 of the where the dispute relates to any matter specified in the Third schedule and is not
Constitution, which forbids discriminatory actions. The discretionary authority, is likely to affect more than one hundred workmen, the Appropriate Government has the
therefore, is obliged to act fairly, justly and in good faith. In Shalimar Work Ltd. v. Its discretion to refer such a dispute to a Labour Court for adjudication.
workmen, the Supreme Court pointed out that though there is no period of limitation (ii) Industrial Tribunal
prescribed in making a reference of dispute even so it is only reasonable that the The Appropriate Government may refer a dispute Under Section 10(1) (d),
disputes should be referred as soon as possible after they have arisen and after whether it relates to any matter specified in the Second or Third Schedule, to a
conciliation proceedings have failed particularly so when dispute relate to discharge Tribunal for adjudication. The Third schedule matters like wages, allowances, bonus,
of workmen wholesale. In the case of Western India Watch Company v. Western India hours of work etc. are all interest disputes and they can be referred only to Industrial
Watch Company workers Union the Supreme Court even went a step forward and Tribunals. Thus the Tribunals enjoy greater Jurisdiction than the Labour Courts.
held that while considering the expediency to refer or not to refer an industrial (iii) National Tribunal
dispute, the Government would consider the question of delay etc. properly and will Sec 10 (1A) provides that Central Government may refer the dispute to a
not allow itself to be tempted into making references in case of old or stale disputes or National Tribunal for adjudication, where it is of opinion that any industrial dispute
review such disputes on the pressure of Union. exists or is apprehended and the dispute involves any question of national importance
or is of such a nature that industrial establishments situated in more than one State are
likely to be interested in, or affected by, such dispute and that the dispute should be
adjudicated by a National Tribunal, then, the Central Government may, whether or
not it is the Appropriate Government in relation to that dispute, at any time, by order same relief can be granted, the mistake may be considered as clerical, which can be
in writing, refer the dispute or any matter appearing to be connected with, or relevant corrected by an amendment. But if the same relief cannot be granted, then it means
to, the dispute, whether it relates to any matter specified in the Second Schedule or the that the original notification has been cancelled and another notification has been
Third Schedule. issued in its place, which the Appropriate Government is not competent to do.
The only requirement of Section 10(1) is that the order of reference should be
Constitutional Validity of Section 10(1)
in writing. No form is prescribed under the rules for making such order. It is sufficient
if the existence of a dispute and the fact that the dispute is referred to the Tribunal are In Nirmala Textile Finishing Mills Ltd. v. Industrial Tribunal, Punjab, the
clear from the order. Since the Jurisdiction of the Tribunal is confined to the points Constitutional validity of Section 10(1) of the Act was upheld by the Supreme Court.
specified in the order of reference and matters incidental there to as per Section 21 of It held that, “the provisions of Section 10 are not unconstitutional, as there is no
the Act and it is necessary that the order of reference should be carefully drafted infringement of the fundamental rights guaranteed under Articles 14, 19(1)(f) and (g)
without giving room for unnecessary litigation. of the Constitution. It was observed that the discretion conferred on the Government
In Express News Papers Ltd. v. Their workmen, it was observed that “order of was not unfettered or unguided, because the criteria for the exercise of such discretion
reference hastily drawn or drawn in a casual manner often give rise to unnecessary are to be found within the terms of Act itself”.
disputes and they prolong the life of industrial litigation, which must always be In A. Sundarambal v. Governor of Goa, Daman and Diu, it was held that “the
availed”. Therefore, it is necessary that the Government must bestow great case so as refusal of the Government to refer a dispute for adjudication would not amount to
to formulate the points of dispute clearly and should be so worded as to avoid infringement of Article 14 of the Constitution merely because the Appropriate
ambiguity. Government had in an earlier case referred the case of similar employer for
Appropriate Government power to withdraw, cancel, supersede or amend the adjudication because of the repetition of an error, if there is one, is not needed for
order of reference complying with the principles of equality before law. If in law the Government
justified in refusing a reference, the applicability of Article 14 does not arise at all”.
On the question whether the power of reference under Section 10 of the Act
The Circumstances in which the Power of Reference is Mandatory
carries with it the power to cancel or supersede the reference, the Supreme Court in
In order to protect the interest of public and to avoid the dislocation of services
State of Bihar v. D.N. Ganguly, ruled that the Government has no such express or
by the public utility services in case of sudden strikes or lockouts the Act contains
implied power to either cancel or withdraw a reference after it has made the order of
some special provisions in which the Government imperatively has to refer the
reference. The Court did not approve the contention of the Government that as per the
industrial disputes for adjudication i.e., under Section 20(1), second proviso to
provisions of the General Clauses Act a power to make order includes in it a power to
Section 10(1) and Section 10(2).
cancel the order.
According to Section 20(1) of the Act, Conciliation proceedings shall be
The Appropriate Government acting under Section 10 will have power to add deemed to have commenced on the date on which the notice of strike or lockout under
or amplify or correct any clerical or typographical errors. But the Government under Section 22 is received by the Conciliation Officer.
the guise amending or correcting cannot supersede the reference already made. The Under second proviso to Section 10(1), “where the dispute relates to a public
cardinal principle in determining the question, whether the amendment amounts to a utility service and notice of strike or lockout under Section 22 is given, the
mere correction of a clerical error or introduction of fresh material, whether the relief Appropriate Government shall unless it considers that the notice has been frivolously
claimed by the aggrieved party in the original notification can be granted in the or vexatiously given or that it would be inexpedient so to do, make a reference under
proceedings which are to take place in pursuance of the amended notification. If the
this Section notwithstanding that any other proceedings under this Act in respect of industrial dispute or its expediency to refer. The only requirement is that Government
the dispute may have commenced”. should satisfy itself that the parties to the application represent the majority of each
party. Thus, in dealing with this class of cases the only point on which the
As per the proviso it is mandatory for the Government to make a reference
Government has to be satisfied is that the persons applying represent the majority of
subject to the two exceptions specified in the proviso itself. Since conciliation
each party; once that test is satisfied the Government has no option but to make a
proceedings are compulsory in case of public utility services on receipt of notice of
reference as required by the parties.
strike or lockout, practically in all such disputes the Government will have to either
When on both sides of the dispute there are associations or unions, the
refer the dispute or record its reasons for refusing to make a reference and
requirement of majority on both sides arises. But if the dispute is between a single
communicate the same to the parties concerned under Section 12(5). Although the
employer and his workmen, the question of majority with respect to the employer
word used in this proviso is “shall” instead of “May” used in the main provision, the
does not arise and the Government will have to be satisfied only with respect to the
Government has still the power to consider the question of expediency of making a
majority of workmen. In other words the trade union which makes such an application
reference even in case of public utility services and therefore it is difficult to
will have to be a representative of majority of the workmen of that establishment. The
distinguish this proviso with the main provision of the Section. In both cases the
Appropriate Government before making a reference under this provision may hold
Government has to consider the question of expediency before making a reference.
such inquiry as it thinks necessary to satisfy itself about the representative character
But the proviso by using the term ‘shall’ it has controlled the wide discretion of the
of the union, which is a party to the application.
Government in case of public utility services as compared to other industries.
Central Government Power to refer Industrial Disputes
Thus, it is clear that in regard to cases falling under this proviso an
The following special powers have been conferred on Central Government, for
responsibility is imposed on the Government to refer the dispute unless of course it is
settlement of industrial dispute namely:
satisfied that the notice is frivolous or vexatious or that considerations of expediency
(i) Power under third proviso to Section 10(1)
required that a reference should not be made. The proviso also makes it clear that
The Third proviso to Section 10(1), “where the dispute in relation to which the
reference can be made even if other proceedings under the Act have already
Central Government is the Appropriate Government, it shall be competent for that
commenced in respect of the same dispute. Thus, so far as discretion of the
Government to refer a dispute to Labour Court or an Industrial Tribunal, as the case
Government to exercise its power of referring an industrial dispute is concerned it is
may be constituted by the State Government.” According to this proviso, inserted by
very wide under Section 10(1) but is limited under the second proviso to Section
1982 Amendment, it is not necessary that the Central Government shall refer disputes
10(1).
only to Labour Courts and Industrial Tribunals constituted by it, Instead, it may refer
Section 10(2) of the Act provides “where the parties to an industrial disputes the disputes to a Labour Court or an Industrial Tribunal constituted by any State
apply in the prescribed manner, whether jointly or separately, for a reference of the Government. This is aimed at facilitating the Central Government not to constitute
dispute to a board, Labour Court, Tribunal or National Tribunal, the Appropriate separate adjudicatory authorities in areas where the dispute are not many in number,
Government if satisfied that the persons applying represent the majority of such party, but all the same refer them to the authorities constituted by state Governments in
shall make a reference accordingly”. those areas.
Where the parties apply for a reference the discretion of the Government is (ii) Power under Section 10 (1-A)
divested and it will be under an obligation to refer such dispute for adjudication. In Under Section 10 (1-A), Central Government may, at any time, refer any
such cases, the Government need not consider the question of existence of an industrial dispute, if it is of opinion that the dispute involves questions of national
importance or is of such a nature that industrial establishments situated in more than retains in its hands the ultimate control of deciding which disputes should go for
one state are likely to be interested in, or affected by such dispute and that the dispute adjudication through its reference under Section 10 of the Act.
should be adjudicated by a National Tribunal, whether or not the Central Government Parties to the industrial dispute have no freedom to take their grievances to the
is the Appropriate Government in relation to such dispute and also whether the adjudication directly, even in case of disputes of legal nature which includes dismissal
dispute relates to any matter specified in Second Schedule or Third Schedule. For discharge, termination or retirement of workmen. The discretion vested in the hands
adjudication of dispute of national importance or dispute in respect of interstate of Appropriate Government to refer dispute for adjudication will defeat the very
industrial establishments, the Central Government has been empowered to invoke this purpose of peaceful settlement of disputes through adjudication there by maintaining
provision to refer such disputes to a National Tribunal for adjudication. To invoke this industrial peace and harmony, which results in large scale industrial unrest. Over the
provision, the Central Government need not be the Appropriate Government in years it has been experienced that adjudication system is the only effective remedy
relation to such disputes. available to the aggrieved party. Therefore, it is quite objectionable as a matter of
Under Section 10(6), upon such reference being made by the Central policy to deny free access to these authorities for the parties concerned.
Government no Labour Court or Industrial Tribunal shall have jurisdiction to The Government in the year 1978 proposed Industrial Relations Bill and Trade
adjudicate upon any matter contained in the reference to the National Tribunal. In any Unions and Industrial Disputes (Amendment) Bill for liberalization of Government
such matter referred to National Tribunal is pending in any proceedings before a policy which enable the industrial workmen to approach Labour Courts directly in
Labour Court or Tribunal, such proceeding before the Labour Court or Tribunal shall cases of all individual disputes. But unfortunately the Bills could not be enacted into
be deemed to have been quashed. It shall also not be lawful for the Appropriate law and absolute power of the reference in the hands of Government continued. So
Government to refer any matter under adjudication before a National Tribunal to any necessary changes in law with regard to individual disputes under Section 2-A of the
Labour Court or Tribunal for adjudication during the pendency of proceedings in Act are imperative as recommended by the Ramanujan Committee, 1990 and the
relation to such matters before the National Tribunal. Second National Commission on Labour, 2002 regarding changes in law, on
The analysis of both Sections 10(1-A) and 10(6) reveals that the Central following lines, namely:
Government has an overriding power of reference to a National Tribunal, even with (i) Individual workmen should have direct access to Labour Courts in case of all
respect to disputes which are already pending adjudication by a Labour Court or individual disputes, which are by their very nature rights disputes.
Tribunal. Once the Central Government shall be divested of its functions under the (ii) A provision must be made for the recognition of a bargaining agent in each
Act and thereafter the Central Government shall be deemed to be the Appropriate industrial establishment and such agent should be given the option of taking
Government in relation to that dispute for all legal purposes. interests disputes directly to Tribunals for adjudication; and
(iii) Compulsory reference of industrial disputes for adjudication if there is no
Process of reference making by the Government under Section 10-Defective?
settlement through collective bargaining or voluntary arbitration. With some
The following defects have been found in the Act, namely, of these changes the proposed Labour Management Relations Bill was
1. No direct access to the Authorities under the Act: recommended by Second NCC in 2002.

The Policy of the Government insists, the intervention of the Government in 2. Delay in reference results in delayed Justice

the settlement of industrial disputes through conciliation and adjudication. The The object behind enactment of industrial law and providing separate dispute

Government intervention in the adjudication is extensive because the Government resolution mechanism is to provide speedy settlement and ensure speedy justice it is
contrary to the projected goal of the Act of expeditiousness in industrial justice, the
reference decision takes unduly longtime after the submission of the failure report.
Apart from prolonging the dispute resolution process, the delay in reference leads to of Jammu and Kashmir, reveals that the average time taken by the Appropriate
the exertion of extraneous pressure on the political executive for prejudicial exercise Government to refer the dispute after receiving failure report from Conciliation
of the reference power. The disputant parties perceive the conciliation officer Officer was 9 months. Four out of Twenty cases it is between 15 to 20 months and in
recommendation as most instrumental in reference decisions, but the actual exercise Faridabad it reveals that out of 26 references 13 took more than 90 days, 6 references
of these decisions shows an attempt on the part of the Appropriate Government to took more than 150 days and the reference of one dispute APL (9), took 452 days
serve its own objective through its power. after the failure report.
The Government reference involves in it, conciliation of the dispute first by It is already discussed in the earlier, where the Supreme Court had directed the
the Conciliation Officer and the time specified under Section 12 (6) for completion of Government to refer the dispute for adjudication of the matter which was pending
the conciliation proceedings is 14 days but in practice the conciliation proceedings are before it for more than a decade.
prolonged beyond a reasonable time; many times lasting up to 6 months or more. The It is submitted that, if the objective of vesting reference making discretion in
conciliation officer does this without officially commencing the conciliation on his the Government was to ensure and facilitate speedy resolution of Labour issues,
records. In addition to this delay, after receipt of the failure report from the Parliament has committed a stupendous error as well as miscalculation in this regard
Conciliation Officer, the Appropriate Government very often takes a pretty longtime because on an average, the time spent by the Labour Department in making reference
before a reference is made. of an industrial dispute after receipt of the failure report of the Conciliation Officer
An empirical study conducted in Kolhapur District of Maharastra State and the was highly unreasonable and in some matters the Government does not make a
data collected through opinion survey reveals that the average time taken for reference reference at all and the aggrieved workmen are made to continue groping in the dark
of disputes is 10 to 12 months, another study by a labour law consultant in the State of to hanker after the elusive social justice as envisaged for them under the Act. Hence,
U.P. and he found that the time taken by the Government in many cases is more than recommendations of Second NCL providing for direct approach of parties to the
a year. He mentioned it is an irony that the Appropriate Government invariably takes Labour Court, Conciliation, Arbitration or to Labour Relations Commissions in
more than a year in making a reference after the Conciliation Officer submits his respect of all matters specified in Second Schedule of the I.D. Act is significant one.
report. As such it needs serious considerations by the law making authority.
Yet in another study conducted by a Trade Union Leader at Dhanabad Coal 3. Discriminatory treatment by Government in exercise of power of
mines he found that the delay was quite unreasonable on the basis of his empirical reference under Section 10(1) of the Act
investigation he found on verification of 50 references randomly, which were made The answer to above question is ‘yes’ because of the following reasons:
by the Central Government to the Industrial Tribunal at Dhanabad with respect to coal (i) Inexpensive and quick resolving of industrial conflicts and thereby
mines which is a public utility service for adjudication under Section 10 (1) of the providing speedy justice to the working class is the reason for the creation
Act, it was found that 15 months to 3 year was ordinarily taken for getting the dispute of special procedure for the settlement of industrial disputes under the
referred from the date of dispute raised by the union before the Conciliation Officer Industrial Disputes Act, 1947. The reference making power has been
till it was referred to Industrial Tribunals. The Central Government itself took one to vested in the Government under the Act to ensure speedy settlement of
two years to make reference from the date of the receipt of the failure report by industrial disputes.
Conciliation Officers.
It is submitted that if the objective of vesting reference making discretion in
Various empirical studies conducted in different States revealed that the
the Government was to ensure and facilitate speedy resolution of labour issues,
Government had taken 6 to 24 months for making a reference after receiving the
parliament has committed a stupendous error as well as miscalculation in this regard.
failure report from Conciliation Officer. A study conducted by researcher in the State
because on an average, the time spent by the labour department in making reference reference of even a genuine dispute for adjudication or at any rate
of an industrial dispute after receipt of the failure report of the conciliation officer is deferring its reference.
about 9 to 12 months. While in some others, the Government does not make a
Further, our low paid administrative staff is known for its corrupt proclivity.
reference at all and the aggrieved workmen are made to continue groping in the dark
These persons (i.e. those belonging to the lower echelon of administration) do not
to hanker after the elusive social justice as envisaged for them under the Act.
hesitate as regards accepting a bribe from which ever source it may happen to come to
(ii) The power of the Government of referring industrial disputes for them. A shrewd and affluent employer in contrast to the economically weak
adjudication is prone to be exercised in a discriminatory manner. It is well employees can easily win their sympathies by offering them a paltry sum of money.
known that various trade unions in the country have been affiliated with They (administrative staff personnel) in their term may go the whole hog in scuttling
different political parties. In such circumstances, it is quite natural that a the reference of a dispute for adjudication. If their tactics work, they can easily dupe
trade union affiliated to the political party in power shall get favored and mislead their superiors and thereby succeed in circumventing the reference of a
treatment from the Government formed by such party in respect of dispute for adjudication.
reference of disputes of that trade union for adjudication. On the contrary,
(v) It is true that final determination of an industrial dispute is made by the
a trade union having alliance with a political party opposed to the party in
Labour Court or Industrial Tribunal to which the dispute is referred for
power is apt to get step-motherly treatment from the Government in
adjudication. But is it to suggest that the Labour Court or Industrial
matters of referring disputes for adjudication. Although outwardly these
Tribunal can adjudicate upon a dispute without its being referred to it?
apprehensions appear to be hollow and banal remarks only, these are real
What would be the fate of the industrial disputes which are not referred by
sometimes (if not often) in the world of reality.
the Government for adjudication? Can a labour Tribunal adjudicate upon
(iii) We have adopted the concepts of mixed economy and Social Welfare
such disputes?
State, for the economic development of the country as well as social uplift
of the people. Under such a dispensation, the State is bound to be a major On the contrary, the final adjudication of an industrial dispute is defendant on
employer, as most of the development and public undertakings are to be its being referred by the Government for adjudication. Consequently, referring a
controlled and carried on by the Government. As a result, the state dispute or refusal to refer it by the Government for adjudication affects as much the
agencies would happen to be party to most of the industrial disputes with rights and interests of the parties to the dispute as the final determination of a dispute
their employees which may be adjudicated by the Labour Courts and made by the Industrial Tribunals or Labour Court. This being so, the Government
Industrial Tribunals. In those cases at least where an agency of the state is ought to accord hearing to the aggrieved parties before it decides to exercise or not to
a party to a dispute, the Government cannot be expected to conduct itself exercise its power under Sections 10(1) and 12(5) of the Act.
with necessary measure of impartiality and fairness while exercising its
Again, it would be in the interest of justice and helps in controlling the
discretion whether such dispute is to be referred for adjudication or not.
absolute discretion of the Government, if the Government complies with the
(iv) Referring of industrial disputes by the Government for adjudication tends
principles of natural justice while exercising its power under Section 10(1) and 12(5).
to breed corruption and favoritism, allegations of this kind may seem to be
It would also make the exercise of this discretion consists with principles of the rule
mendacious and stale on their face value. But, in the world of reality such
of law; one of its main objective is to control the exercise of unregulated discretionary
things cannot be entirely dismissed as untrue. Particularly there is a real
power. Alternately if adjudication of disputes is to be made really expeditious under
danger of political influence being wielded in some cases installing the
the Act discretion of the Government concerning referring of industrial disputes for 5. Un-canalized Discretionary power under Section 10
adjudication must be ended. As already noticed earlier, the discretionary power conferred on the
Government is wide and un-canalized. It is true that if an Appropriate Government
Hence, the First National Commission on Labour observed that, “There have
makes an improper or malafide use of this power the aggrieved party can take
been complaints of political pressure and interference. And this aspect cannot be
recourse to writ proceedings under Article 226. But where does all this lead to?. The
entirely ignored in framing our recommendations. To get rid against this and to do
elusive concepts of social and economic justice would inevitably elude the destitute
away with existing exclusive discretionary power of the Government the first NCL
workers if they are constrained to resort to writ proceedings for every malafide and
recommended for Independent Industrial Relations Commissions which are to be
supercilious act of the Appropriate Government concerning the referring of disputes
entrusted with the function of deciding to make references of interests disputes for
for adjudication. It is more so in view of the courts repeated pronouncements to the
adjudication upon the failure of bipartite negotiations. As regards legal or rights
effect that malafide is easier to allege than to establish and the onus of proving it is on
disputes, the NCL favoured the retention of Labour Court, where proceedings
the person making such allegation.
instituted by parties asking for the enforcement of rights under the aforesaid
Therefore, malafide being a very tenuous and slippery ground for invoking the
categories will be entertained by Labour Courts. Even the Second NCL also has
jurisdiction of a court, the aggrieved workers will for all practical purposes be left
recommended for direct access to parties for adjudication in respect of matters
without any remedy for the cause of discretion by the Government. As a result, they
specified in second schedule of the Act and minimizes the role of Government in
would be driven into a position of helplessness, which may result in giving vent to
settlement of disputes.
their pent-up anger and spite against the unreasonable callous attitude of their
4. Lack of expatriation
employer as well as that of the Government towards their grievances in the shape of
The question of reference is ultimately decided under the present system by
taking recourse to a direct action like strike or sometimes even if an aggrieved party is
the bureaucratic or political administration which lacks expert knowledge on labour
able to canvass successfully against an improper exercise of reference making power
problems. By the stretch of any imagination, bureaucrats and politicians cannot be
by the Government before a court of law, what would be the outcome of that? On an
treated as better repertories of expertise in labour matters than well trained and
average a High Court takes 3 to 5 years to dispose of a writ petition. In any case it
experienced presiding officers of Labour Courts and Tribunals. It is more so in view
does not take less than three years for this purpose. If in a particular case, three years
of the fact that top official positions in the Labour Department, as in other
are needed to make a reference of dispute for adjudication, how can this be reconciled
departments of the Government, are manned by different bureaucrats and politicians
with the objects of speedy settlement of industrial disputes and dispensation of social
on different occasions. This process undeniably does not make for the conserving of
justice to the working class as enshrined in the Act.
necessary expertise in industrial and labour matters. This is in stark contrast with the
devoted and constant engrossment of labour adjudicators with the study of varies case Right to remedy vis-a-vis discretionary Power
law and legal enactment in the era labour law. The IRCs consisting of experts in the
The adjudication machinery has extra-ordinary powers to grant appropriate
area as recommended by the first NCL would be more appropriate body to exercise
relief to the workmen, which the ordinary Civil Courts do not have. Further, it is
such power and the recommendations of second NCL i.e. aggrieved worker in case of
established law that the Civil Courts have no jurisdiction to entertain cases where the
individual disputes and by an recognized union in case of collective disputes within a
enforcement of a right or an obligation relates to those created by the Industrial
period of one year from the date of the cause of action arose. These are matters of
dispute Act. The Act, in addition to conferring many benefits on workmen in cases of
serious consideration by law making Authority.
lay off, retrenchment, transfer of ownership or closure of an establishment, now
empowers the adjudicators with appellate jurisdiction to interfere with the managerial
discretion to punish a workmen by discharge or dismissal ,which power is considered Finally the recommendations of First, Second NCL and Ramanujan
essential for ensuring the all essential job security of industrial workmen. Therefore, it Committee, 1990 for constitution of IRCs and LRCs who shall decide the question of
is absolutely essential that for enforcement of all rights created by the Act and other adjudication of interests disputes and for direct reference of rights disputes by the
related laws; the workmen should be able to approach the adjudicatory authorities parties to the Labour Court will be taken into consideration.
without the requirement of Government reference. In view of the above discussion, it may concluded that the exclusive
There is an obvious inconsistency in the policy of the Act, which confers Governmental discretion to refer the industrial disputes for adjudication should be
certain crucial rights on workmen and places the enjoyment of these rights at the done away and incase of disputes by the workmen be given direct access to Labour
disposal of the Government which is often the party against whom the rights are Courts and in case of recognized unions also have the option of taking the disputes
sought to be enforced. If the Government refuses to make reference, the aggrieved directly for adjudication, while the Government may continue to have the power to
workmen are left with no remedy except to move the writ Court and very few among refer disputes for adjudication in public interest for ensuring industrial peace.
the ordinary workmen’s can even think of reaching the precincts of High Court for the
Prohibit the Continuance of strikes and lockouts after the order of reference.
cost of litigation, which is not within the reach of any common man in this country. It
is significant to note that such a situation is not conducive to the maintenance of The right to strike or cessation of work is not the fundamental right recognized
industrial peace and harmony. There is almost unanimity among researchers, by the constitution and would not come within the ambit article 19 (1) (c) of the
academicians and industrial relations experts that it is high time that this exclusive Constitution. However, strikes and lockouts are weapons in the armory of labour and
discretionary power of the Government is done away with. the employer in the process of collective bargaining all over the world and regulated
After an exhaustive analytical study of Section 10 of the Act conducted by by the Act. Compulsory adjudication system is seen as an alternative to strikes and
wadegaonkar, researcher concluded that, “it is now time to do away with this sole lockout with a view to achieve the purpose of the Act. The rights of the workmen to
prerogative of the Government to initiate the industrial adjudication. It would be strike and the right of the employer to lockout have been subjected to restrictions
desirable to give a right to move the Labour Courts and Tribunals to the individual imposed by the Act, namely,
parties as regards the items under schedule II of the Act; these are items with which (i) Sections 22 and 23 prohibited the commencement of strike and lockouts in
individual workmen are vitally connected. As regards the items under schedule III it the circumstances stated therein.
would be appropriate to give the right to move the adjudicating authority to the (ii) Section 23(b) prohibits any strikes and lockouts in any establishment
employer and the representative union of the employer as these is items with which during the pendency of adjudication proceedings and for a period of two
the workmen are connected as group”. months after the conclusion of such proceedings.
In the light of another empirical study conducted by professor P.G. Krishnan (iii) Once the award of the adjudication comes into operation strikes and
of Delhi University a suggestion was made to the following effect. It is desirable that, lockouts are prohibited by Section 23(1) during the period from which the
“the reference system as an intermediate stage is done away with and the parties be award is in operation in respect of any of the matters covered by the
enabled to take the matters directly before the adjudicatory machinery. In this regard a award; and
new Section 10-B is to be enacted it must provide that where the Government fails to (iv) If there is already strike and lockout in existence, the Appropriate
make a reference within fifteen days of the submission of the failure report of the Government by referring the concerned disputes for adjudication will
conciliation officer the parties are entitled to take the dispute before any of the acquire power to prohibit the continuance of any such strike or lockout.
adjudicating authorities competent to deal with it under the Act. In that case the Section 10(3) of the Act lays down “where an industrial dispute has been
dispute must be deemed to have been validly referred to that authority”. referred to a Board, Labour Court Tribunal or National Tribunal under this Section,
the Appropriate Government may by order prohibit the continuance of any strike or Power to include similar establishments in a reference
lockout in connection with such dispute which may be in existence on date of
The Appropriate Government under Section 10(5) of the Act, empowered to
reference”.
include in an order of reference, either at the time of reference or thereafter but before
The object of Section 10(3) of the Act is to ensure the investigation and
submission of award, any industrial establishment, group or class of establishments of
settlement of disputes in peaceful atmosphere. Continuance of a strike or lockout even
a similar nature which are likely to be interested in or affected by such dispute.
though commenced before the order of reference, during the pendency of adjudication
Whether or not at the time of such inclusion any dispute exists or is apprehended in
proceedings is not conducive for effective adjudication of dispute. Therefore the
such establishments.
power conferred on the Government to prohibit the continuance of any strike or
lockout that may have been in existence on the date of reference and Section 24 of the Compulsory Adjudication:
Act declares that the strikes and lockouts continued in contravention of an order made
Constitute the Dispute Resolution Mechanism
by the Government under Section 10(3) shall become illegal.
The language used in the Sub-Section (3) of Section 10 gave risk to In addition to constituting other industrial relations machinery like
interpretational difficulties. However, the Supreme Court in Delhi Administration v. Conciliation officer, Board of Conciliation and Court of Inquiry, the Appropriate
Workmen of Edward Keventers, reversing the decision of the Delhi High Court, held Government has the power to constitute the adjudication machinery i.e. Labour Court
that the Appropriate Government could prohibit Strikes or lockout only in respect of and Industrial Tribunal and the Central Government has the power to constitute
the demands which were referred for adjudication. The strike in respect of those National Tribunal.
demands, the Government can prohibit the continuance of the strike under this (i) Labour Courts
provision only if it had referred all the demands for adjudication. In other words, if According to Section 7(1) of the Act, “The Appropriate Government may by
the Government does not refer all those demands for adjudication, it cannot prohibit notification in the official gazette constitute one or more Labour Courts for the
the strike in respect of the demands which were not referred. The words “such adjudication of industrial disputes relating to any matter specified in the second
disputes which may be in existence on the date of reference” are read together as schedule and for performing such other functions as may be assigned to them under
relating to the disputes referred. It was held that the words “which may be in existence the Act”. Sec 7(2) states that “A Labour Court shall consist of one person to be
on the date of reference” do not relate to strike or lockout but to the disputes. The appointed by the Appropriate Government”.
Kerala High Court took the view that the power under Section 10(3) is of a quasi- Thus, under this provision both the Central and State Governments as
judicial nature and therefore an order there under cannot be passed by the Appropriate Government have power to constitute one or more Labour Courts,
Government without giving the notice and hearing to those who would be affected by mainly, for the adjudication of matters prescribed in Second Schedule which are
the order. generally rights disputes. If for any reason there occurs a vacancy in the office of the
On the other hand the Delhi and A.P., High Courts were of the opinion that presiding officer of a Labour Court, the Appropriate Government shall appoint
this power of the Government was purely administrative and therefore there was no another to fill the vacancy.
need for the compliance with the principles of Natural Justice. The Supreme Court in (ii) Industrial Tribunal
Nirmala Textile Finishing Mills Ltd. v. Industrial Tribunal Punjab, upheld the According to Sec 7-A (1) of the Act “The Appropriate Government may, by
Constitutional validity of this provision on the ground that the power is not arbitrary notification in the official Gazette constitute one or more Industrial Tribunals for the
because it provides for the exercise of discretion for attaining the object of the Act adjudication of industrial dispute relating to any matter, whether specified in the
Viz., peaceful settlement of industrial disputes. Second Schedule or the Third Schedule and for the forming such other functions as
may be assigned to them under the Act”. The Industrial Tribunal like the Labour jurisdiction of Industrial Tribunals constituted by the respective State
Court shall consist of only one person to be appointed as the presiding officer of the Governments.
Tribunal.
Awards and Settlement:
The Appropriate Government also has power, if it so thinks fit to appoint two
persons as assessors to advise the Tribunal in the proceedings before it. Under this The Industrial Dispute Act, 1947 which extends to the whole of India came
Section the Appropriate Government has the power to constitute Industrial Tribunals into operation on the first day of April 1947. As per Preamble of the said Act, it is
for a limited time or for a particular case or number of cases or for particular area. In enacted to make a provision for the investigation and settlement of the dispute and
other words, the Appropriate Government may constitute Tribunals on an ad-hoc certain other purposes such as recovery of money from the employer in terms of
basis as and when the disputes arise and the Government decides to refer them to the Settlement or Award by making an application to the appropriate government. The
Tribunal. purpose and aim of the Industrial Disputes Act 1947 is to minimize the conflict
(iii) National Tribunal between labour and management and to ensure, as far as possible, Economic and
According to Sec 7-B (1) of the Act, “The Central Government may by Social Justice. The act has made comprehensive provisions both for this settlement of
notification in the official gazette, constitute one or more National Tribunals for disputes and prevention of disputes in certain Industries.
adjudication of industrial disputes, which in the opinion of the Central Government
Method of settlement of Industrial Dispute:
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 In the interests of the industry in particular and the national economy in
by such disputes. A National Tribunal shall consist of one person only to be appointed general, cordial relations between the employer and employees should be maintained.
by the Central Government. Further, only a person who is or has been a judge of a To ensure cordial labour management relations and to achieve industrial harmony, the
High Court can be appointed as the presiding officer of a National Tribunal. The following methods of settlement of industrial disputes are provided under the Act.
Central Government may also appoint, if it so thinks fit, two persons as assessors to
1. Collective Bargaining:
advise the National Tribunal in the proceedings before it”.
This power of the Central Government to constitute National Tribunal is an Collective Bargaining or Negotiation is one of the methods for settlement of
overriding power and under Section 10 (1-A) of the Act the Central Government has an industrial dispute. It plays significant role in promoting labour management
power to refer such disputes to a National Tribunal whether or not the Central relations and in ensuring industrial harmony Collective Bargaining is a
Government is the Appropriate Government in relation to such disputes. process/Method by which problems of wages and conditions of employment are
The object of this provision is twofold: namely, settled amicably, peacefully and voluntarily between labour and management. In
(i) To get the disputes of national importance adjudicated upon by a collective bargaining, the parties to the dispute I.e., the employer and the
higher Tribunal, as only a person who is or has been a judge of a High employees/workmen settle their disputes by mutual discussions and agreements
Court can be appointed as the presiding officer; and without the intervention of a third party. Such settlements are called "bipartite
(ii) As the Central Government need not be the Appropriate Government settlement". Therefore, settlement of labour disputes by direct Negotiation or
in respect of industrial disputes relating to all India establishments, the settlement through collective bargaining is always preferable as it is the best way for
reference to National Tribunal can avoid reference by different State the betterment of labour disputes. Collective Bargaining is recognized as a right of
Governments and it also overcomes the limitations of territorial social importance and greater emphasis is placed on it by India's five year plans. The
term 'Collective Bargaining' was coined for the first time by Sidney and Webb in their to statutory bodies such as Labour Court or Industrial Tribunal or National Tribunal.
famous book 'Industrial Democracy' published in 1897. Section 7, 7-A and 7-B of the Industrial disputes Act, 1947 provide for the
constitution of Labour Court, Industrial Tribunal and Labour Tribunal respectively.
It means Negotiation between an employer and group of workers to reach
agreement on working conditions. N. W. Chamberlain (in his 'Source Book on Definition of Award
Labour: 1958 p. 327) described collective bargaining as "the process whereby
Section 2(b) of the Industrial Dispute Act, 1947 defines Award as follows -
management and Union agree on the terms under which workers shall perform their
According to Section 2(b) of the Industrial Disputes Act, 1947 Award means an
duties". In simple word, collective bargaining means "Bargaining between an
interim or a final determination of any Industrial Dispute or of any question relating
employer or group of employers and a bonafide Labour Union".
thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and
2. Conciliation: includes arbitration award made under section 10A.

Conciliation is a process, by which a third party persuades the parties to the Ingredients of Award –
industrial dispute to come to an amicable settlement. Such third party is called
To constitute Award under Section 2(b) of the Industrial Dispute Act, 1947 the
'Conciliation Officer' of Board of Conciliation. Sections 4 and 5 of the act provide for
following ingredients are to be satisfied-
the appointment of Conciliation Officer and the constitution of the Board of
a) An Award is an interim or final determination of an industrial dispute.
Conciliation respectively.
b) It is an Interim or final determination of any question relating to such dispute.
3. Voluntarily Arbitration: c) Such interim or final determination is made by any Labour Court, Industrial
Tribunal or National Industrial Tribunal.
The expression 'Arbitration' simply means "the settlement or determination of
d) Award of Arbitrators under section 10A is an award.
a dispute outside the court". Parties to the dispute, without going to the Court of law,
may refer the dispute/Matter to a person in whom they have faith, to suggest an
What is Settlement?
amicable solution. Such person, who acts as a mediator between the disputants to
According to Section 2 (p) of the Industrial Dispute Act, 1947 Settlement
settle the dispute is called "Arbitrator". The decision given by the parties, which is
means a settlement arrived at in the course of conciliation proceeding and includes a
binding on the parties, is called "Award". Therefore Arbitration is a judicial process
written agreement between the employer and workmen arrived at otherwise than in
under which one or more outsiders render a binding decision based on the merits of
the course of conciliation proceeding where such agreement has been signed by the
the dispute. Section 10-A of the industrial dispute act, 1947 confers on parties, power
parties thereto in such manner as may be prescribed and a copy thereof has been sent
to enter into Arbitration agreement. The agreement must be in prescribed form and
to an officer authorized in this behalf by the appropriate Government and the
must specify the name/names of the arbitrator or arbitrators.
conciliation officer.
4. Adjudication: Procedure for Settlement of Industrial Disputes The Industrial Disputes Act,
1947 provides procedure for settlement of industrial disputes, which must be followed
When an industrial dispute could not be settle either through bipartite
in all public utility service, has been defined in section 2 (n) of the Act so as to
negotiations or through the Conciliation machinery or through the voluntary
include any railway, postal, telegraph or telephone service that supplies power, water
Arbitration, the final stage resorted to, for settlement of an industrial dispute is
and light to the public, any system of public conservancy or sanitation, any section of
Adjudication or compulsory Adjudication, which envisages Governmental reference
an industrial establishment on the working of which the safety of the establishment or
the workmen employed therein depend and any industry which keeping in view the justify a further reference. The Government has to arrive at a prima facie conclusion
public emergency has been declared as such by the appropriate Government. As laid that the nature of the dispute justifies a further reference. If in the opinion of the
down in the Act a dispute should first go through the process of conciliation before it Government, there is a scope of arriving at a settlement by further conciliation efforts,
could be referred to the appropriate authorities for adjudication33. Where any it may refer the case to the Board of Conciliation.
industrial dispute exists or is apprehended, the Conciliation Officer may or where the
Collective Bargaining as a method of Settlement of Industrial Disputes
dispute relates to a public utility service and a notice under Section 22 has been given
shall hold conciliation proceedings in prescribed manner. Collective bargaining as such is one of the most developed in Indian history
since independence, and deserves the attention of all who are concerned with the
Conciliation proceedings can be stated in case of dispute that actually exists or
preservation of industrial peace and implement of industrial productivity. In the
when there is reasonable ground to apprehend that an industrial dispute is likely to
laissez faire the employers enjoyed unfettered rights to hire and fire. They had much
come into existence unless something is done to prevent or where both parties to
superior bargaining power and were in a position to dominate over the workmen.
dispute approach the Government separately for conciliation. Conciliation
There are some routine criticism of the adjudicatory Awards and Settlement i.e.,
proceedings are deemed to have been started from the date on which a notice issued to
delay, and expensive. Therefore the parties to the industrial dispute are coming
the parties to appear before the conciliation officer who may meet them jointly or
closure to the idea that direct negotiations provide better approach to resolving key
separately. The Conciliation Officer must submit his report to the Government within
deference over wages and other conditions of employment.
fourteen days of the starting of conciliation proceedings. During this period he tries to
bring about a fair and amicable settlement between the parties to dispute. If a The system of collective bargaining as a method of settlement of industrial
settlement arrived at, the Conciliation Officers will send a report to the Government dispute has been adopted in industrially advanced countries. The common law
along with a memorandum of settlement duly signed by both parties. This settlement emphasis to individual contract of employment is shafted to collective agreement
come into force from the date agreed upon by the parties to dispute or in its absence negotiated by and with reprehensive groups. The Industrial Disputes Act, 1947 which
the date on which it was signed by them and is binding for a period of six months provides for the machinery for the settlement of industrial disputes.
unless agreed upon otherwise, and after the period afore said, until expiry of two
On whom Awards and Settlements are binding
months from the date on which a notice in waiting of the intention to terminate the
settlement is given by one of the parties to the other party or parities to the settlement. According to Section 18 of the Industrial Disputes Act, 1947 Awards and
Such a settlement is binding on all parties to the industrial dispute, to the employer, Settlements are binding on the following persons - A settlement arrived at by
his heirs, successors or assignees and to the workmen employed in the establishment agreement between the employer and workman otherwise than in the course of
on the date of the dispute and all the persons who subsequently become employed conciliation proceeding shall be binding on the parties to the agreement. Subject to the
therein. If no settlement is reached by the parties, the conciliation officer will submit provisions of sub-section (3), an arbitration award which has become enforceable
his report to the appropriate Government stating the reasons for which he thinks no shall be binding on the parties to the agreement who referred the dispute to
settlement could be arrived at as well as the facts of the case. arbitration.

Action by the Government: A settlement arrived at in the course of conciliation proceedings and an award
of a Labour Court, Tribunal or National Tribunal shall be binding onAll parties to the
On receipt of the report from the Conciliation Officer, the Government will
industrial dispute; All other parties summoned to appear in the proceedings as parties
come to a decision on whether the circumstances and the facts of the case as such to
to the dispute, unless the Board, arbitrator Labour Court, Tribunal or National
Tribunal, as the case may be, records the opinion that they were so summoned without the award was that of a Labour Court or to a Tribunal, if the award was that of a
proper cause; Where a party referred to in clause (a) or clause (b) is an employer, his Tribunal or of a National Tribunal, for decision whether the period of operation
heirs, successors or assigns in respect of the establishment to which the dispute should not, by reason of such change, be shortened and the decision of Labour Court
relates; All persons who were employed in the establishment or part of the or the Tribunal, as the case may be on such reference shall be final.
establishment on the date of the dispute and all persons who subsequently become
A settlement is an agreement reached among the parties to a workers'
employed in that establishment or part.
compensation claim. This includes you, your employer and the workers'
Period of operation of Awards and Settlement compensation insurer (unless your employer is self-insured). This is a type of
contract, and it may bar you from seeking further compensation for your injury.
Section 19 of the Industrial Disputes Act 1947 provides for the period of
operation of Award and Settlement. A settlement shall come into operation on such An award, on the other hand, is granted to you by the workers' compensation
date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on court. This may include medical benefits or other types of workers' compensation
the date on which the memorandum of the settlement is signed by the parties to the awards based on the specifics of your injury. For example, a judge can order - or an
dispute. insurance company can admit for - temporary and permanent disability benefits. This
isn't a settlement. You don't have to sign away any rights to get these benefits.
Such settlement shall be binding for such period as is agreed upon by the
parties, and if no such period is agreed upon, for a period of six months from the date If you need help determining whether you received an award or a settlement,
on which the memorandum of settlement is signed by the parties to the dispute, and we can help. We can review your situation and help you understand your legal
shall continue to be binding on the parties after the expiry of the period aforesaid, options. We can also advise you before you accept an award or settlement. At every
until the expiry of two months from the date on which a notice in writing of an stage of your case, we will work to ensure that you receive the full and fair benefits
intention to terminate the settlement is given by one of the parties to the other party or you need under Colorado's workers' comp laws.
parties to the settlement.
According to Section2 (p) of the Industrial Dispute Act, 1947 Settlement
An award shall, subject to the provisions of this section, remain in operation means a settlement arrived at in the course of conciliation proceeding and includes a
for a period of one year from the date on which the award becomes enforceable under written agreement between the employer and workmen arrived at otherwise than in
section 17A. Provided that the appropriate Government may reduce the said period the course of conciliation proceeding where such agreement has been signed by the
and fix such period as it thinks fit: Provided further that the appropriate Government parties thereto in such manner as may be prescribed and a copy thereof has been sent
may, before the expiry of the said period, extend the period of operation by any period to an officer authorized in this behalf by the appropriate Government and the
not exceeding one year at a time as it thinks fit so, however, that the total period of conciliation officer.
operation of an award does not exceed three years from the date on which it came into
operation.

Where the appropriate Government, whether of its own motion or on the

application of any party bound by the award, considers that since the award was
made, there has been a material change in the circumstances on which it was based,
the appropriate Government may refer the award or a part of it to a Labour Court, if
 UNIT III Historical Background:
Strikes came into existence in the wake of the Industrial Revolution. With the
STRIKE AND LOCK-OUT
invention of machinery to supplant human labour, unemployment, lowering of wages
Introduction: in a competitive market, supply of labour in excess of demand - became the order of
the day.
Strike and lock-out are two powerful weapons in the hands of the workers and
the employers. Strike signifies the suspension or stoppage of work by the worker The first known strike was in the 12th century B.C., in Egypt. Workers under
while in case of lock-out the employer compels persons employed by him to accept Pharaoh Ramses III stopped working on the Necropolis until they were treated better.
his terms or conditions by shutting down or closing the place of business. Strike is The use of the English word ‘strike’ first appeared in 1768 when sailors in support of
recognized as an ordinary right of social importance to the working class to ventilate demonstrations in London, “struck or removed the topgallant sails of merchant ships
their grievances and thereby resolve industrial conflict. at port thus, thus crippling the ships.

Skillful use of these weapons, whether threatened or actual, may help one As the 19th century progressed, strikes became a fixture of industrial relations
party to force the other to accept its demand or at least to concede something to them. across the industrialized world, as workers organized themselves to bargaining for
But reckless use of them results in the risk of unnecessary stoppage of work hurting better wages and standards with their employees.
both parties badly creating worse tensions, frictions and violations of law and order.
The 1974 railway strike in India was the strike by workers of Indian Railways
From the point of view of the public, they retard the nation’s economic development.
in 1974. The 20 days strike by 17 lakh workers is the largest known strike in India.
India cannot tolerate frequent stoppage of work for frivolous reasons that often
The strike was held to demand a raise in pay scale, which had remained stagnant over
accompany it.
many years, in spite of the fact that pay scales of other government owned entities had
For these reasons, the Industrial Disputes Act seeks to regulate and restrict risen over the years.
strikes and lock-outs so that neither the workmen nor employers may hold the nation
Strikes became common during the Industrial Revolution, when mass labor
to ransom.
became important in factories and mines. In most countries, strike actions were
Definitions of Strike: quickly made illegal, as factory owners had far more political power than workers.
Strike as defined in clause (q) of Section 2 of the Act means: However, most western countries partially legalized striking in the late 19th or early 20th
1. Cessation of work by a body of persons employed in any industry acting in centuries. Strike means the stoppage of work by a body of workmen acting in concert
combination; or with a view to bring pressure upon the employer to concede to their demands during an
2. A concerted refusal of any number of persons who are or have been industrial dispute.
employed in any industry to continue to work or to accept employment; or
Indian Iron & Steel Ltd. v. Its Workmen it was held that mere cessation of
3. A refusal under a common understanding of any number of persons who are
work does not come within the preview of strike unless it can be shown that such
or have been employed in any industry to continue to work or to accept employment.
cessation of work was a concerted action for the enforcement of an industrial demand.
Thus the definition given in the act postulates three main things or ingredients:
(a) Plurity of workmen; Cessation of work or refusal to work is an essential element of strike. This is
(b) Combination or concerted action; the most significant characteristic of the concept of strike. There can be no strike if
(c) Cessation of work or refusal to do work. there is no cessation of work. The cessation of work may take any form. It must
however be temporary and not forever and it must be voluntary. No duration can be In T.K. Rangarajan v Tamil Nadu, the Tamil Nadu government terminated the
fixed for this in fact duration for cessation of work is immaterial. Cessation of work services of all employees who resorted to strike. The Apex Court held that
even for half an hour amounts to strike. Government staffs have no statutory, moral or fundamental right to strike. In 2005,
the Supreme Court reiterated that lawyers have no right to go on strike or give a call
Buckingham & Carnatak Co. Ltd. v. Workers of Buckingham& Carnatak Co.
for boycott and not even a token strike to espouse their causes.
Ltd. On the 1st November, 1948 night shift operators of carding ad spinning
department of the Carnatak Mill stopped wok some at 4 p.m. some at 4:30 p.m. and In Dharma Singh Rajput v. Bank of India, it was held that right to strike as a
some at 5 p.m. The stoppage ended at 8 p.m. in both the departments. By 10 p.m. the mode of redress of the legitimate grievance of the workers is recognized by the
strike ended completely. The cause for the strike was that the management of the Industrial Disputes Act. However, this right is to be exercised after complying with
Mills had expressed inability to comply with the request of the workers to declare 1st the conditions mentioned in the Act and also after exhausting the intermediate and
November, 1948 as a holiday for solar eclipse. Supreme Court held it strike. salutary remedy for conciliation.

Concerted action is another important ingredient of strike. The workers must Causes of Strikes:-
act under a common understanding. The cessation of work by a body of persons
In the early history of labor troubles the causes of strikes were few. They arose
employed in any industry in combination is a strike. Stoppage of work by workers
chiefly from differences as to rates of wages, which are still the most fruitful sources
individually does not amount to strike. In Ram Sarup & Another v. Rex held that
of strikes, and from quarrels growing out of the dominant and servient relations of
Mere absence from work is not enough but there must be concerted refusal to work, to
employers and employees. While labor remained in a state of actual or virtual
constitute a strike.
servitude, there was no place for strikes. With its growing freedom "conspiracies of
The object of an industrial strike is achievement of economic objectives or workmen" were formed, and strikes followed. The scarcity of labor in the fourteenth
defence of mutual interests. The objects of strikes must be connected with the century, and the subsequent attempts to force men to work at wages and under
employment, non employment, terms of employment or terms and conditions of conditions fixed by statute, were sources of constant difficulties, while the efforts to
labour because they are prominent issues on which the workers may go on strikes for continue the old relation of master and servant with its assumed rights and duties, a
pressing their demands and such objects include the demands for codification of relation law recognizes to this day, were, and still are, the causes of some of the most
proper labour laws in order to abolish unfair labour practices prevalent in a particular bitter strikes that have ever occurred.
area of industrial activity. The strike may also be used as a weapon for betterment of
Strikes are caused by differences as to:
working conditions, for achievement of safeguards, benefits and other protection for
themselves, their dependents and for their little ones. 1. Rates of wages and demands for advances or reductions i.e. Bonus, profit
sharing, provident fund and gratuity.
In B. R. Singh v Union of India it was held that the strike is a form of
2. Payment of wages, changes in the method, time or frequency of payment;
demonstration. Though the right to strike or right to demonstrate is not a fundamental
3. Hours of labor and rest intervals;
right, it is recognized as a mode of redress for resolving the grievances of the workers.
4. Administration and methods of work, for or against changes in the methods of
Though this right has been recognized by almost all democratic countries but it is not
work or rules and methods of administration, including the difficulties
an absolute right.
regarding labor-saving machinery, piece-work, apprentices and discharged
employees;
 5. Trade unionism. In Sasa Musa Sugar Works Pvt. Ltd. v/s Shobrati Khan & Ors held that Go-
6. Retrenchment of workmen and closure of establishment. 7. Wrongful Slow strike is not a “strike” within the meaning of the term in the Act, but is serious
discharge or dismissal of workmen. misconduct which is insidious in its nature and cannot be countenanced.

Kinds of Strike: In addition to these three forms of strike which are frequently resorted to by
There are mainly three kinds of strike, namely general strike, stay-in-strike the industrial workers, a few more may be cited although some of them are not strike
and go slow. within the meaning of section 2(q).
1. General Strike:
i. Hunger Strike: In Hunger Strike a group of workmen resort to fasting on or
In General Strike, the workmen join together for common cause and stay away
near the place of work or the residence of the employer with a view to coerce
from work, depriving the employer of their labour needed to run his factory. Token
the employer to accept their demands. Piparaich Sugar Mills Ltd. v/s Their
Strike is also a kind of General Strike. Token Strike is for a day or a few hours or for
Workmen Certain employees who held key positions in the mill resorted to
a short duration because its main object is to draw the attention of the employer by
hunger strike at the residence of the managing Director, with the result that
demonstrating the solidarity and co-operation of the workers. General Strike is for a
even those workmen who reported to their duties could not be given work.
longer period. It is generally resorted to when employees fail to achieve their object
Held: That concerted action of the workmen who went on Hunger Strike
by other means including a token strike which generally proceeds a General Strike.
amounted to “strike” within the meaning of this sub-section.
The common forms of such strikes are organized by central trade unions in railways,
ii. Sympathetic Strike: A Sympathetic Strike is resorted to in sympathy of
post and telegraph, etc. Hartals and Bundhs also fall in this category.
other striking workmen. It is one which is called for the purpose of indirectly
2. Stay-in-Strike:
aiding others. Its aim is to encourage or to extend moral support to or
It is also known as ‘tools-down-strike’ or ‘pens-down-strike. It is the form of indirectly to aid the striking workmen. The sympathizers resorting to such
strike where the workmen report to their duties, occupy the premises but do not work. strike have no demand or grievance of their own.
The employer is thus prevented from employing other labour to carry on his business. In iii. Work to rule: Here the employees strictly adhere to the rules while
Mysore Machinery Manufacturers v/s State Court held that where dismissed workmen performing their duties which ordinarily they do not observe. Thus strict
were staying on premises and refused to leave them, did not amount to strike but an observance of rules results in slowing down the tempo of work causes
offence of criminal trespass. In Punjab National Bank Ltd. v/s their workmen Court held inconvenience to the public and embarrassment to the employer. It is no strike
that Refusal under common understanding to continue to work is a strike and if in because there is no stoppage of work at all.
pursuance of such common understanding the employees entered the premises of the
Definition of Lock-Out:
bank and refused to take their pens in their hands would no doubt be a
strike under section 2(q). “Lock-Out” has been defined in section 2 (1) to mean the closing of a place of
3. Go-Slow: employment, or the suspension of work, or the refusal by an employer to continue to
employ any number of persons employed by him. India witnessed lock-out twenty-
In a ‘Go-Slow’ strike, the workmen do not stay away from work. They do
five years after the "lock-out" was known and used in the arena of labour management
come to their work and work also, but with a slow speed in order to lower down the
relations in industrially advanced countries.
production and thereby cause loss to the employer.
 Strike is a weapon in the hands of the labour to force the management to political parties involvement in management of workers, union may be provoked for
accept their demands. Similarly, Lock-Out is a weapon in the hands of the unjustified demands that may be unaffordable by the management, which may
management to coerce the labour to come down in their demands relating to the ultimately lead to lockout of the factory.
conditions of employment. Lock-Out is the keeping of labour away from works by an
1. Disputes or clashes between workers and the management.
employer with a view to resist their claim.
2. Unrest, disputes or clashes in between workers and workers.
There are four ingredients of Lock-Out:- 3. Illegal strikes, regular strikes or continuous strikes by workers.
4. Continuous or accumulated financial losses of factory or industry.
1. Lock out is a
5. If any company involves in any fraudulent or illegal activities.
i. temporary closing of a place of employment by the employer, or
6. Failure in maintaining proper industrial relations, industrial peace and
ii. suspension of work by the employer, or
harmony.
iii. refusal by an employer to continue to employ any number of persons
employed by him; Prohibition of Strikes and Lock-outs:
2. The above mentioned acts of the employer should be motivated by coercion.
Section 22 of the Industrial Disputes Act, 1947, deals with the prohibition of
3. An industry as defined in the Act; and
strikes and lock-outs. This section applies to the strikes or lock-outs in industries
4. A dispute in such industry
carrying on public utility service. Strike or lock-out in this section is not absolutely
Lock-Out has been described by the Supreme Court as the antithesis of strike.
prohibited but certain requirements are to be fulfilled by the workmen before resorting
Shri. Ramchandra Spinning Mills v. State of Madrasheld that if the employer shuts
to strike or by the employers before locking out the place of business.
down his place of business as a means of reprisals or as an instrument of coercion or
as a mode of exerting pressure on the employees or generally speaking when his act is Conditions laid down in section 22(1) are to be fulfilled in case of strike and
what may be called an act of belligerency there would be a lock-out. conditions as laid down in section 22(2) are to be fulfilled in case of any lock-out by
In case of Lock-Out the workmen are asked by the employer to keep away the employer. The intention of the legislature in laying down these conditions was to
from work, and, therefore they are not under any obligation to present themselves for provide sufficient safeguards against a sudden strike or lock-out in public utility
work. So also Lock-Out is due to and during an industrial dispute. services lest it would result in great inconvenience not only to the other party to the
dispute but to the general public and the society.
Causes:
Section 22(1): No person employed in public utility service shall go on strike
A lockout is generally used to enforce terms of employment upon a group of
in breach of contract:
employees during a dispute. A lockout can act to force unionized workers to accept
changed conditions such as lower wages. If the union is asking for higher wages, or a) Without giving to the employer notice of strike within six weeks before
better benefits, an employer may use the threat of a lockout or an actual lockout to striking; or
convince the union to back down. Lock-Outs may be caused by internal disturbances, b) Within fourteen days of giving such notice; or
when the factory management goes in to financial crisis or got succumbed into c) Before the expiry of the date of strike specified an any such notice as
financial debts, disputes between workers and workers, disputes between workers and aforesaid; or
management or may be caused by ill-treatment of workers by the management. d) During the pendency of any conciliation proceedings before a Conciliation
Sometimes lockouts may be caused by external influences, such as unnecessary Officer and seven days after the conclusion of such proceedings.
 These provisions do not prohibit the workmen from going on strike but require Union of workmen by at least seven representatives of workmen duly authorized in
them to fulfill the conditions before going on strike. These provisions apply to a this behalf at a general meeting specifically held for the purpose.
public utility service only and not to a non- public utility service.
The object of giving notice of strike is to enable the other party to make
With regards to Notice of Strike, notice within six weeks before striking is not amends or to come to terms or redress the grievance or to approach the authorities to
necessary where there is already a lock-out in existence. Secondly, notice may be intervene and stop, if it is possible the threatened action.
given by the Trade Union or representatives of the workmen to do so. Thirdly, a
Section 22(5) provides that Notice of lock-out shall be given in such manner
notice of strike shall not be effective after six weeks from the date it is given. The
as may be prescribed. Section 22(6) deals with intimation of notices given under sub-
strike can take place only when 14 days have passed but before 6 weeks have expired
section (1) or (2) to specified authorities. If on any day an employer receives from any
after giving such notice.
person employed by him any such notice as is referred to in sub-section (1), he shall
Section 22(2): No employer carrying on any public utility service shall lock- within five days report to the Appropriate Government or to such authority as that
out any of his workmen: Government may prescribe, the number of notices received on that day. Similarly, if
any employer gives any notice as is referred to in subsection (2), to any person
a) Without giving them notice of lock-out as herein after provided within six
employed by him, he shall report this fact within five days to the to the Appropriate
weeks before locking out; or
Government or to such authority as that Government may prescribe.
b) Within fourteen days of giving such notice; or
c) Before the expiry of the date of lock-out specified in any such notice as General prohibition of Strikes and Lock-outs:
aforesaid; or
The prohibition against strikes and lock-out contained in Section 23 is general
d) During the pendency of any conciliation proceeding before a Conciliation
in nature. It applies to both public utility as well as non-public utility establishments.
Officer and seven days after the conclusion of such proceedings.
A strike in breach of contract by workmen and lock-out by the employer is prohibited
Section 22(3): Notice of strike or lock-out as provided by sub-sections (1) and
in the following cases:
(2) many in certain cases be dispensed with
(i) During the pendency of conciliation proceedings before a Board and
(1) No notice of strike shall be necessary where there is already in existence a
seven days after the conclusion of such proceedings;
lock-out in the public utility service concerned.
(ii) (During the pendency of conciliation proceedings before a Labour
(2) No notice of lock-out shall be necessary where there is already in existence Court, Tribunal or National Tribunal, and two months after the
a strike in the public utility service concerned. conclusion of such proceedings;
(iii) During the pendency of arbitration proceedings before an arbitrator
Sub-section (3) is in the nature of an exception of sub-sections (1) and (2) of
and two months after the conclusion of such proceedings, where a
section 22. In Bhaskaran v Sub-Divisional Officer held that posts and Telegraphs
notification has been issued under sub-section (3-A) of section 10-
Department, being Public Utility Service, cannot declare lock-out without notice and
A, or
that the employees of the department cannot go on strike without notice.
(iv) During any period in which a settlement or award is in operation in
Notice of strike shall be given by such number of persons to such person or respect of the maters covered by such settlement or award.
persons in such manner as may be prescribed by the President or Secretary or office- The object of these provisions seems to ensure a peaceful atmosphere to
bearer of a registered Trade Union or federation. Where there is no registered Trade enable a conciliation or adjudication or arbitration proceeding to go on smoothly. This
section because of its general nature of prohibition covers all strikes and lock-outs In Maharashtra General Kamgar Union v. Balkrishna Pen P. Ltd. Court held
irrespective of the subject-matters of dispute pending before the authorities. However that when a strike is commenced before the expiry of 14 days notice, it will be illegal
a conciliation proceeding before a conciliation officer is no bar to a strike or lock-out but only for the unexpired notice period and thereafter, the strike would be legal.
under this section, it is only a conciliation proceeding before a Board which is Prohibition of financial aid to Illegal Strikes and Lock-outs:
mentioned in this Act.
Section 25 of the Act prohibits financial aid to illegal strikes and lock-outs.
The provisions of section 23 shall apply to all industrial establishments.
The provisions of this section are attracted only if the strike or lock-out is illegal and
Section 23 applies to both public utility service as well as non-public utility service,
not otherwise. It says that no person shall knowingly spend or apply any money in
while Section 22 applies to public utility service alone. Section 23 does not prohibit a
direct furtherance or support of an illegal strike or lock-out.
strike or lock-out during the pendency of conciliation proceeding before a conciliation
officer, Section 22 does so. This section has the following ingredients:

Illegal Strikes and Lock-outs: (i) Spending or applying money;

(ii) Money spent or applied in direct furtherance or support of an illegal
According to Section 24(1) Strike or lock-out shall be illegal if it is:
strike or lock-out;
(1) Commenced or declared in contravention of section 22 in a public utility
(iii) The strike or lock-out must actually be illegal;
service;
(iv) Knowledge on the part of the person expending or applying money that
(2) Commenced in contravention of section 23 in any industrial establishment
the strike or lock-out is illegal.
( including both public utility and non-public utility service);
Thus for prosecuting a person for the contravention of Section 25, the
(3) Continued in contravention of an order made by the appropriate
prosecution must prove:-
Government under section 10(3) or sub-section (4-A) of section 10-A of the Act.
(a) That the strike or lock-out was illegal;
Strike or lock-out in contravention of the provisions of Section 22 or Section
(b) That the accused had the knowledge that the strike or lock-out was illegal
23 of the Act is declared illegal by Section24 of the Act. A strike or lock-out which
and that the money spent by him was direct furtherance or support of the same.
commenced as legal under Section 22 & 23 can be continued unless an order under
(c) That the money was spent by the accused.
Section 10(3) has been passed prohibiting the continuance of an existing strike or lock-
It is only spending of money in support of a strike which is prohibited under
out. Sub-section (2) of Section 24 of the Act lays down that continuance of strike or
this section. Therefore, helping the strikers by way of providing clothes or any other
lock-out is deemed to be illegal only if an order prohibiting it is passed under Section
sort of help is not punishable under this Act. Section 28 provides penalty for giving
10(3). Sub-section (3) of Section 24 of the Act provides that a lock-out declared in
financial aid to illegal strikes and lock-outs. Punishment may extend to six months’
consequence of an illegal strike or a strike declared in consequence of an illegal lock-out
imprisonment or one thousand rupees fine or both.
shall not be deemed to be illegal.
Thus Strike and lock-out shall not be deemed to be illegal if:- Punishment for Illegal Strikes:
(i) At the commencement they are not in contravention of the provisions
If a strike is illegal the party guilty of the illegality is liable to punishment
of this Act;
under Section 26 of the Act. Section 26(1) prescribes penalty which can be imposed
(ii) Their continuance has not been prohibited by the appropriate
on any workman who commences, continues or otherwise acts in furtherance of a
Government under section 10(3) of the Act;
(iii) A lock-out is declared in consequence of an illegal strike or vice versa.
strike which is illegal under this act. Thus to penalize a workmen under Section 26(1) The strike does not put an end to the employer-employee relationship and an
two conditions must be fulfilled, namely, employer cannot discharge a workman for a mere participation in a strike which is not
illegal.
1. A workman must commence, continue or in some other manner act in
furtherance of a strike and In Bank of India v/s T. S. Kelewala the supreme Court held that where the
2. such strike must be illegal under the act. contract or standing orders or the service rules/regulations are silent on the issue of
workers’ entitlement to wages during the strike period, the management has the power
Any workman found guilty of participating in an illegal strike shall be
to deduct wages for absence of duty when the absence is concerted action on the part
punishable with imprisonment of a term which may extend to one month or with a
of the employees and the absence is not disputed, irrespective of the fact whether the
maximum fine of rupees fifty or with both. Section 26(2) provides that an employer
strike was legal or illegal.
shall be punishable with imprisonment extending to one month or with a maximum
fine of rupees one thousand or with both if, (1) Such employer commences, continues If the strike is illegal, the workmen are not entitled to wages or compensation
or otherwise acts in furtherance of a lock-out; and (2) Such lock-out is illegal under and they are also liable to punishment by way of discharge or dismissal. The Supreme
the act. Court in the case of India General Navigation and Railway Co. Ltd., and Anr. v/s
Their Workmen held that “It is difficult to understand how a strike in respect of a
Even though the workers have a right to go a strike but it is not their
public utility service, which is clearly illegal, could at the same time be justified.
fundamental right. In case of illegal strike the guilty party has to undergo punishment.
These two conclusions cannot in law exist, the law has not made any distinction
A distinction has been tried between illegal but justified strikes and illegal and
between an illegal strike which may be said to be justified and one is not justifiable”.
unjustified strikes. For instance a strike may be illegal but it might have been taken
recourse for good reasons and carried on in orderly and peaceful manner. It was further observed by the Supreme Court that in case of an illegal strike
the only question of practical importance would be the quantum of punishment. To
In Crompton Greaves v The Workers It was held that the workers will be
decide the quantum of punishment a clear distinction has to be made between violent
entitled to wages for the strike period when the strike is legal as well as justified. A
strikers and peaceful strikers.
strike is legal if it does not violate any provisions of the Act. A strike cannot be said
to be unjustified unless the reasons for it are entirely perverse or unreasonable. In a Violent strikers are those who obstruct the loyal workmen from carrying on
case a question was raised “whether the employer can dismiss a workman for joining the work or take part in violent demonstrations and act in defiance of law and order;
a strike which is not illegal but unjustified”. It was held that the right to strike is Peaceful strikers are those workmen who are silent participants in the strike.
recognized by implication. A strike may be unjustified for many reasons, for
The first category of strikers is to be dealt with more severely and the
example:-
punishment of dismissal, discharge or termination has to be imposed upon them. It
a) demands may be unreasonable, would neither be in the interest of industry nor the workmen to effect wholesale
b) demands may be made with extraneous motives, dismissal of all striking workmen.
c) steps taken by employer to redress the alleged grievances though
In Chandramalai Estate Ernakulam v/s Its Workmen held that Strike is the last
negotiation or conciliation.
weapon. There may, however, be the circumstances where the demand is of such
urgent nature that it cannot be reasonably expected from the workmen to wait till after
asking the Government to make a reference; in such a case the strike even before such legal the workmen are entitled to wages. A strike is legal or illegal, justified or
request has been made will be justified. unjustified is question of fact which is to be judged in the light of the fact which is to
be judged in the light of the facts and circumstances of each case. It has been held by
In Swadeshi Industries Ltd. v/s Their Workmen held that Strike for securing
the Supreme Court that in order to entitle the workmen to wages for the period of
improvement on matters relating to wages, dearness allowance, bonus, provident
strike, the strike should be legal as well as justified. M/s Crompton Greaves v/s The
fund, gratuity, leave and holiday may prima facie be considered to be justified
Workers The Supreme Court has observed that it is well settled that in order to entitle
because it is the primary object of a Trade Union to secure better conditions of
the workmen to wages for the period of the strike, the strike should be legal as well as
employment of the workmen. In Syndicate Bank v/s Umesh Nayak etc., When there is
justified. A strike is legal if it does not violate any provision of the statute. Again a
a machinery for settlement of disputes but employees or employers resort to strike or
strike cannot be said to be unjustified unless the reasons for it are entirely perverse or
lock-out without having recourse to the prescribed means, strike or lock-out is
unreasonable. It is also well settled that the use of force or violence or acts of
unjustified and when there is a breach of rules, it would be illegal. Therefore, the
sabotage resorted by the workmen during a strike disentitles them to wages for the
strike or lock-out as a weapon has to be used sparingly for redressal of urgent and
strike period. Syndicate Bank v/s Umesh Nayak Whether strike is legal and justified
pressing grievance when either no means are available or the available means have
this question is to be determined by the adjudication under the Act. Primarily High
failed. The justness or otherwise of the action of the employer or employees has,
Court is not the forum for getting findings on the issues regarding justifiability and
therefore, to be examined on the anvil of the interest of the society which action tends
legality of strike.
to affect.
2. Trade Union Immunities and illegal strikes: -
In Iron and Metal Traders Pvt. Ltd., Bombay v/s M.S. Haskiel & Others, many
strikers were instated but the respondents were singled out by the management for The illegality or unjustifiability or unreasonableness of the strike will not
drastic treatment. The Tribunal found the action of the employer as discriminatory deprive the labour union of its immunities granted by the Trade Union Act as was
and therefore ordered reinstatement of three workers and awarded compensation to clearly held in Rohtas Industries Ltd., v. Rohtas Industries Staff Union.
seven in lieu of reinstatement. The management filed appeal to the Supreme Court
3. Whether workers are entitled to wages during illegal lock-out: -
and the Supreme Court held the approach of the Tribunal to be fair, just and
unreasonable. In Krishna Sugar Mills v. State of U.P., this questioned was discussed. The
mill was closed for two days consequent to the alleged assault of officers by some
It must also be noted that whenever an action of forfeiture is taken against an
workmen who created a panicky situation. The Tribunal held that the closure was lock-
employee on the ground that he participated in an illegal strike and absented himself
out which was illegal and unjustified and so workers are entitled to wages during the
from duty it is necessary that he should be given an opportunity of being heard.
lock-out period. The matter was agitated before the High Court which held that the
Without observing the principle of natural justice no action of forfeiture should be
lock-out may be sometimes not at all connected with economic demands; it may be
taken.
resorted to as a security measure. In this case such a lock-out was declared without
Impact of Illegal Strike & Illegal Lock-out: giving notice as was required and that it was unjustified also being a retaliatory
measure. So the company was liable to pay wages during the lock-out period.
1. Wages during illegal strike:

The effect of an illegal strike is that the workmen cannot claim wages for the
period during which an illegal strike continues. It is pointed out that if the strike is
4. Can the employer dispense with the service of workers consequent to a Lock-outs', on the contrary, are reactionary by any measures; because their
strike: - object is to frustrate this progressive tend in human affairs. To hold down wages to a
minimum, workers denied of equal opportunities for the education of their children,
The employer-employee relationship is not terminated by participation in
and no savings to fall back upon in evil times, is surely unjustifiable, and may be
strike or by declaration of lock-out. The purpose of strike is to redress the legitimate
rightly called reactionary.
grievance of the strikers. This right is recognized by the law and the violation of this
right cannot put an end to the contract of employment by any unilateral process. A strike signals the transfer of power from the employer to the union. While
the employer has a right to employ and retrench workers, in the case of a strike, the
5. Disciplinary action against striking workmen: -
right to not come to the place of work is with the union. This transfer of right also
Normally participation in illegal strike amounts to misconduct on the part of means higher bargaining power for the union. A strike is also used by the union to
the workmen for which even punishment of dismissal can be given. In Model Mills unite its members and send a strong signal to the management. In this case, strike also
Ltd., v. Dhermodas, the Supreme Court upheld the right of employer to dismiss from becomes an effective tool for the union to regain any lost support among the workers.
services the workmen participating in illegal strike under the provisions of the
A lockout declared because of the poor financial condition of the company has
standing orders of the company.
an obvious advantage for the employer because it lets him cut his financial losses.
Though under the Constitution of India, the right to strike is not a fundamental During this period, an employer does not have to pay the labour costs and other
right as such, it is open to a citizen to go on strike or withhold his labour. It is a variable costs.
legitimate weapon in the matter of industrial relations. In both lock-out and strike, a
However A lockout is the last step an employer would take. This is because a
labour controversy exists which is deemed intolerable by one of the parties, but lock-
lockout means loss of production, which in turn means financial losses for the
out indicates that the employers rather than the employees have brought the matter in
company. So except it is a case of financial distress, the employer would like to
issue.
continue working.
Strike may be justified or unjustified, legal or illegal. It depends on the
A lockout also means deterioration in the relationship between the employer
circumstances of each case. It is usually associated with collective bargaining by
and the union/workmen. If the workmen decide to contest the reasons on which the
workers and is permissible under Industrial dispute Act, 1947. Lock-out is a weapon
employer has declared a lockout, there are chances that the employer might have to
of coercion in the hands of the employer with a motive to coerce the workmen which
end up paying wages for the period of lockout along with other benefits which will
is due to an industrial dispute and continues during the period of dispute. However
have a huge financial implication on the company.
strikes and lock-outs are prohibited during the pendency of conciliation adjudication
and arbitration proceedings. LAY-OFF

Strikes are said to be revolutionary as it seeks to obtain better living conditions The freedom of contract theory, emerged out of the laissez-faire principle,
for the workers who form the majority in the industrial community. Better wages, authorised the employer to discharge his workmen due to breakdown of machinery or
better homes and healthy living condition better education these are the healthy such other reasons beyond the control of the employer. This invariably exposed the
objectives for the attainment of which labour resorts to strikes. Hence, strikes may workmen to frequent risk of involuntary unemployment. This absolute power of the
justly be described as contributing towards a revolutionary process in man's progress employer to discharge his workmen gradually began to disappear with the erosion of
towards social order. ' the laissez-faire philosophy and the introduction of more State interventions in
industrial relations. Consequently, the employer lost his privilege to sever the Section (kkk) prescribes Lay-off as the failure ,refusal or inability to provide
contract of service and that he can utmost only lay-off temporarily the workers on the employment to the workmen by the employer on account of shortage of coal ,power
occurrence of such eventualities. This means that there will be only a suspension of or raw material, or the accumulation of stock, or the breakdown of machinery, or
employer-employee relationship and does not involve any complete severance of natural calamity, or any other connected reasons.
such relationship.
Although the employer is willing to provide employment to the workmen, but
Historical Background of Lay-off Compensation:- is unable to do so because of unavoidable circumstances which are beyond the
control of the employer. The section provides that a workman who is so deprived of
All disputes relating to lay-off prior to the incorporation of its definition in the
employment must be such whose name is borne on the muster rolls of his industrial
Act were decided in accordance with the judicial pronouncements as there existed no
establishment and the workman must not have been retrenched.
definition of term “lay-off” formerly in the Act.
Application of Chapter VA.-
After independence , due to modernization in textiles mills, often there was
Section 25-A makes it clear that the provisions of Sections 25-C to 25-E shall
retrenchment and lay-off of Workmen without any compensation payment in
not apply to:
majority of the managements, although few of them paid compensation, thus there
(i) Industrial establishments in which less than fifty workmen on an
was no uniformity norms for compensation in such circumstances which resulted in
average per working day have been employed in the preceding
the deteriorating economic conditions of the labour class and the stake of National
calendar month; or
economic development and social security of the society necessitated for the
(ii) Industrial establishments which are of a seasonal character or in
enactment of the social/beneficial legislation like the present Act.
which work is performed only intermittently.
Originally the Industrial Dispute Act did not provide for lay-off and Hence, the provisions relating to lay-off will not be applicable to industrial
retrenchment. The explosive situations due to enormous accumulation of stocks, establishments with less than 50 workers in the preceding calendar month or in case
particularly in the textile mills, with the consequence of probable closure, large scale of seasonal character or with intermittent works, industrial establishment for this
lay-off and retrenchment in many mills provoked to introduce some effective purpose is defined to mean:
measures to prevent large scale industrial unrest in the country. The ordinance (i) A factory as defined in the Factories Act, 1948; or
promulgated for this purpose in 1953 was replaced by the Industrial Disputes (ii) A “mine” as defined in the Mines Act, 1952; or
(Amendment) Act, 1953 which commenced retrospectively from 24th October, 1953. (iii) A “plantation” as defined in the Plantation Labour Act, 1951.
Thus, Chapter VA was introduced into the Act to regulate lay-off, retrenchment,
Lay-off differs from Lock-outs.-
transfer and closure of undertakings. The provisions under this Chapter have much
impact on some of the rights and privileges of the employers who are subjected to The Supreme Court in Kairbetta Estate v Rajamanickam, 10 discussed the
certain new liabilities and restrictions in the event of lay-off, retrenchment, transfer or concept of lay-off and lock-out and observed that both are different. The main points
closure of undertakings. In 1976, a new Chapter VB, was added to the Industrial of difference between them are:-
Disputes Act incorporating more stringent conditions against lay-off, retrenchment
i) That lay-off generally occurs in a continuing business whereas lock-
and closure of certain establishments.
out is a closure of the business even though temporarily.
 ii) In case of lay-off the employer is unable to give employment due to stringent restrictions while the right to receive compensation is absolute in
the reasons specified such as shortage of coal, power, raw materials, retrenchment. The right to receive lay-off compensation is subject to certain more
or accumulation of stock or break down of machinery, etc. In lock- stringent restrictions while the right to receive retrenchment compensation is subject
out the employer deliberately closes the place of business and lock/- to less stringent restrictions.
outs the whole body of workmen for reasons which have no
Right of workmen laid off for compensation.-
relevance to the causes applicable to lay-off
iii) In the case of lay-off employer is liable to pay compensation whereas Section 25-C of the Industrial Dispute Act lays down the conditions and extent
in lock-out no such liability is imposed upon the employer if the lock- of compensation to workers who are laid off. The provision which was introduced in
out is justified and legal. 1953 underwent a recast in 1956 and in 1965. After the 1965 amendment to Section 25-
iv) Lock-out is resorted to by the employer as a weapon of collective C the conditions for lay-off compensation are the following:
bargaining whereas lay-off is invariably caused by economic and
1. The establishment must have employed fifty or more workmen in an average
trade reasons.
during the calendar month preceding the lay-off;
v) The Act imposes certain prohibition and penalties against lock-out
2. The industrial establishment in question must not be of a seasonal character or
whereas layoff does not have such thing.
in which work is performed intermittently;
Distinction Between Lay-off and Retrenchment. 3. The claimant should come within the definition of workman;
4. He should not be badli workman; or casual workman;
Term lay-off has been defined in Section 2(kkk) and the term retrenchment’ in
5. His name must be borne on the muster roll and he should not have been
Section(oo). In case of lay-off there is failure, refusal or inability of the employer to
retrenched;
give employment to a workmen for a temporary period while in retrenchment the
6. He must have completed not less than one year of continuous service;
workman is deprived of his employment permanently. Lay-off is on account of one or
7. Each one year continuous service must be under the same employer;
more reasons mentioned in Section2(kkk) while in retrenchment the termination is on
8. Lay-off compensation must be half of basic wages and dearness allowance;
the ground of service of labour.
9. Maximum period for entitlement of lay-off compensation is forty-five days
The reasons of lay-off are entirely different as compared to reasons of during any period of twelve months;
retrenchment. In lay-off the labour force is not surplus but in retrenchment it is 10. No right to lay off compensation for more than forty-five days during 12
surplus which has to be retrenched. In lay-off the relationship of employment is not months if there is an agreement to that effect;
terminated while in retrenchment it is terminated. In lay-off relationship of 11. In the absence of a contrary agreement, lay-off compensation is payable for
employment is only suspended while in retrenchment it is terminated. Consequences subsequent periods beyond 45 days during the same 12 months; if such
of both are different to each other and are governed by different norms. Lay-off is for subsequent period is/are not less than one week or more at a time;
trade reasons beyond the control of the employer i.e it is not intentional act while 12. Beyond 45 days the employer can escape liability of resorting to retrenchment
retrenchment is permanent with the intention to dispense with surplus labour. In lay- after payment of retrenchment compensation; xiii) Finally, the lay off in
off there is no severance of relationship of employer and employee while in question should not be by way of mala fide or victimization or with other
retrenchment, the relationship of employer and employee is severed at the instance of ulterior motives.
the employer. The right to receive lay-off compensation is subject to certain more
Badli workmen.– i) Has been in employment for twelve calendar months; and
ii) He has actually worked for not less than: a) 190 days in the case of
‘Badli workmen’ as stated in the explanation to Section 25C is a substituted
employment below ground in a mine; b) 240 days in any other case.
workman. He is employed in the place of another whose name is borne in the muster
Both the conditions in (i) and (ii) must be simultaneously complied with.
roll. The badli workman’s name should not find a place in the muster roll. Such a
Hence, employment for 12 calendar months but with less than 190 or 240, as the case
workman ceases to be a badli workman for the purpose of section 25-C on his
may be, actual days of work by a workman will not be satisfying this provision.
completion of one year’s continuous service in the establishment. Consequently, a
Similarly, a workman who has put in more than 190 or 240 days actual work but that
badli workman who has completed one year continuous service is entitled to get work
in less than 12 calendar months will not be in conformity with the provision. Before a
from the employer. If the employer fails to give him work, the badli workman would
workman can be considered to have completed one year of continuous service in an
be entitled to get lay-off compensation, if he has completed one year’s continuous
industry it must be shown first that he was employed for a periods of not less than 12
service with that employer.
calendar months and, next that during those 12 calendar months had worked for not
Continuous service- less than 240 days. Where the workman has not at all been employed for a period of
12 calendar months, it becomes unnecessary to examine whether the actual days of
A workman who has completed a minimum of one year’s continuous service
work numbered 240 days or more.
with the same employer alone is entitled to lay-off compensation under Section 25C.
Continuous service of six months.
In 1964 section 25B was amended to its present form. Section 25C(I) defines
Under Section 25-B(2)(B) a worker must:
continuous service and Section 25B(2) defines ‘continuous service of one year’ while
i) Have been in employment for a period of six calendar months; and
sub-clause (b) of section28B(2) defines ‘continuous service of six months’.
ii) ii) Have actually worked for not less than 95 days in the case of his
Continuous service means uninterrupted service. However, interruption on employment in underground mine or 120 days in any other case to
account of any of the following reasons will still deem such service to be constitute continuous service for a period of six months.
uninterrupted. Such instances are: Right of workmen laid off for compensation where chapter V-A is applicable
A workman with one year’s continuous service is entitled to lay-off
a) Sickness;
compensation for all days of lay-off except weekly holidays. The amount of
b) Authorized leave;
compensation payable to each workman shall be half the total of basic wages and
c) Accident;
dearness allowance. Lay-off compensation payable under Section 25C is not wages
d) Strike which is not illegal;
within the meaning of the term ‘wages’ in the Payment of Wages Act, 1936. This is
e) Lock-out; and
by way of temporary relief to a workman who is forced to undergo involuntary
f) Cessation of work which is not due to any fault on the part of the workman.
unemployment, of course for reasons stated in the definition clause of “lay-off”. The
Participation in illegal strike: A workman taking part in illegal strike ipso facto
employer, for reasons beyond his control, is unable to provide work and hence as a
does not affect his continuity in service, unless that workman is actually dismissed
social security measure and in the general social interest a duty is imposed upon the
from service on this score.
employer to give compensation to the workman who is deprived of his opportunity to
Continuous service of one year.-
work and hence forced to lose wages.
Under Section 25B(2)(a) of the Act a person can be said to be in continuous
service for a period of one year if that worker:-
Period of lay off compensation to as the specified authority), obtained on an application made in this behalf, unless
Lay-off compensation is payable for all days of layoff. However, the such lay-off is due to shortage of power or to natural calamity, and in the case of a
maximum period for which compensation payable is 45 days during any period of 12 mine, such lay-off is due also to fire, flood, excess of inflammable gas or explosion
calendar months. In the absence of a contrary agreement, if the layoff exceeds 45 days An application for permission under sub-section (1) shall be made by the
during a period of 12 months, then the workman is entitled to the same rate of employer in the prescribed manner stating clearly the reasons for the intended lay-off
compensation for such period beyond the 45 days, whether in continuation of it or and a copy of such application shall also be served simultaneously on the workmen
subsequently, on other occasions. However, such period lay-off beyond the 45 days concerned in the prescribed manner.
should be for minimum of one week or more to entitle the compensation thereof. But Where the workmen (other than badli workmen or casual workmen) of an
in such situations the employer may either: industrial establishment, being a mine, have been laid-off under sub-section (1) for
i) Go on paying on lay-off compensation for such subsequent periods; or reasons of fire, flood or excess of inflammable gas or explosion, the employer, in
ii) Retrench the workmen after the expiry of 45 days of lay-off on paying relation to such establishment, shall, within a period of thirty days from the date of
the retrenchment compensation as in Section 25F. commencement, of such lay-off, apply, in the prescribed manner, to the appropriate
Workmen not entitled to compensation in certain cases Government or the specified authority for permission to continue the lay-off.
Under Section 25E no compensation shall be paid to a workman who has been Where an application for permission under sub-section (1) or subsection (3)
laid off- has been made, the appropriate Government or the specified authority, after making
(i) if he refuses to accept any alternative employment in the same such enquiry as it thinks fit and after giving a reasonable opportunity of being heard
establishment from which he has been laid-off, or in any other to the employer, the workmen concerned and the persons interested in such lay-off,
establishment belonging to the same employer situate in the same may, having regard to the genuineness and adequacy of the reasons for such lay-off,
town or village or situate within a radius of five miles from the the interests of the workmen and all other relevant factors, by order and for reasons to
establishment to which he belongs, if, in the opinion of the be recorded in writing, grant or refuse to grant such permission and a copy of such
employer, such alternative employment does not call for any special order shall be communicated to the employer and the workmen.
skill or previous experience and can be done by the workman, Sub sec (5) provides that Where an application for permission under sub-
provided that the wages which would normally have been paid to the section (1) or subsection (3) has been made and the appropriate Government or the
workman are offered for the alternative employment also; specified authority does not communicate the order granting or refusing to grant
(ii) (ii) if he does not present himself for work at the establishment at permission to the employer within a period of sixty days from the date on which such
the appointed time during normal working hours at least once a day; application is made, the permission applied for shall be deemed to have been granted
(iii) if such laying-off is due to a strike or slowing-down of production on the expiration of the said period of sixty days.
on the part of workmen in another part of the establishment. Sub sec (6) provides that An order of the appropriate Government or the
Prohibition of lay-off in industries where chapter V-B is applicable- specified authority granting or refusing to grant permission shall, subject to the
Sec 25M (1) No workman (other than a badli workman or a casual workman) provisions of subsection (7), be final and binding on all the parties concerned and
whose name is borne on the muster rolls of an industrial establishment to which this shall remain in force for one year from the date of such order.
Chapter applies shall be laid-off by his employer except 3[with the prior permission Sub sec (7) provides that The appropriate Government or the specified
of the appropriate Government or such authority as may be specified by that authority may, either on its own motion or on the application made by the employer or
Government by notification in the Official Gazette (hereafter in this section referred any workman, review its order granting or refusing to grant permission under sub-
section (4) or refer the matter or, as the case may be, cause it to be referred, to a workman. Until 1953 there was no statutory provision in India to give immunity or
Tribunal for adjudication: Provided that where a reference has been made to a protection from the risk of such involuntary unemployment. In 1953 some provisions
Tribunal under this sub-section, it shall pass an award within a period of thirty days were incorporated in the Industrial Disputes Act and in 1976 some more amendments
from the date of such reference. were introduced.
Sub sec (8) provides that Where no application for permission under sub- Definition
section (1) is made, or where no application for permission under sub-section (3) is Section 2(oo) of the Act defines retrenchment as termination by the employer
made within the period specified therein, or where the permission for any lay-off has of the service of a workman for any reason whatsoever, otherwise than as punishment
been refused, such lay-off shall be deemed to be illegal from the date on which the inflicted by way of disciplinary action. But it does not include
workmen had been laid-off and the workmen shall be entitled to all the benefits under (a) voluntary retirement of the workman;
any law for the time being in force as if they had not been laid-off. (b) retirement on reaching the age of superannuation;
Sub sec (9) provides that Notwithstanding anything contained in the foregoing (bb) termination of the service of the workman as a result of the non-renewal
provisions of this section, the appropriate Government may, if it is satisfied that of the contract of employment between the employer and the workman concerned on
owing to such exceptional circumstances as accident in the establishment or death of the expiry of the contract being terminated under a stipulation contained therein; or
the employer or the like, it is necessary so to do, by order, direct that the provisions of (c) termination of services on ground of continued ill health
sub-section (1), or, as the case may be, sub-section (3) shall not apply in relation to “For any reasons whatsoever”:
such establishment for such period as may be specified in the order. In Sundarmany’s case the bank, employed respondent as a temporary
Sub sec (10) provides that the provisions of Section 25-C (other than the employee because the permanent cashier was away. When the permanent cashier
second proviso thereto) shall apply to cases of lay-off referred to in this section. joined duty, Sundarmany’s services were dispensed with. The High Court held this
Explanation.- was nothing but discharge of Sundarmany as surplus employee. The bank appealed
For the purposes of this section, a workman shall not be deemed to be laid-off before the Supreme Court and Justice Krishna Iyer gave a very wide content to the
by an employer if such employer offers any alternative employment (which in the definition of retrenchment. The words “for any reason whatsoever” was interpreted to
opinion of the employer does not call for any special skill or previous experience and mean whatsoever be the reason every termination spells retrenchment. The Court
can be done by the workman) in the same establishment from which he has been laid- observed that had the bank known the laws, half a month’s pay would have concluded
off or in any other establishment belonging to the same employer, situate in the same the story and the bank was ordered to reinstatement the employee.
town or village, or situate within such distance from the establishment to which he In Hindustan Steel case, the workmen were timekeepers for a number of years
belongs that the transfer will not involve undue hardship to the workman having on the fixed term. Their services have been extended from time to time. Later,
regard to the facts and circumstances of his case, provided that the wages which consistent with the economic policy, the employer chose not to renew the contract.
would normally have been paid to the workman are offered for the alternative The Supreme Court held that such termination is retrenchment falling within
appointment also. Sundarmany’s case. The Court discussed the impact of a composite order which
implied the single order covering an appointment and termination of services. In cases
RETRENCHMENT: of composite order the absence of an independent order terminating the services will
Retrenchment is a permanent measure to remove surplus staff because of some not affect the coverage of retrenchment.
basic change in the nature of the business. It results in a complete severance of Above decisions were reiterated in Delhi Cloth & General Mills v Sambu
employeremployee relationship. It is a case of involuntary unemployment to the Nath, which held that striking off the name of a workman from the rolls amounted to
retrenchment. In Santosh Gupta v State Bank of India 1980, the appointment of an constitute retrenchment. But if such age of superannuation is not
employee of the Bank in 1973 was terminated after a year in 1974 on the ground that mentioned either in the contract of employment or invalid standing
she did not pass the test which would have enabled her to be confirmed in the service. orders, it will not be treated as termination on superannuation under
The Supreme Court held this as retrenchment under section 25-F. The management this clause
contended that the termination was not due to discharge of surplus labour and 3. Termination on non-renewal of service contract or on expiry of fixed term
therefore, section 25-F and section 2(oo) would not attract. Rejecting this argument contract- When the employment was for a stipulated time period under a
the court observed that section 2(oo) is so comprehensive to cover termination for any contract then the non-renewal of the contract of employment on the expiry of
reason whatsoever except those not expressly included in section 25-F or not the stipulated period would not amount to retrenchment.
expressly approved for by other provisions of the Act such as section 25-FFF. The 4. Continued ill health-Termination owing to the continued ill health of the
object of the above provisions is to compensate the workman for loss of employment, workman is not covered in retrenchment. Ill health contemplated not only
until he finds alternate employment. physical but mental ill health as well. ‘Continued ill health’ includes any
Termination of casual worker’s service is not retrenchment- physical defect or infirmity incapacitating a workman for future work for an
Termination of casual worker engaged for particular urgent work on indefinite period. The question whether a workman is suffering continued ill
completion of such work will not amount to retrenchment. Where the workman was health is a question of fact which may be proved or disproved on either side.
engaged on casual basis without a written service contract or letter of appointment, for Condition for valid retrenchment
doing a particular urgent work, his service automatically came to an end when the i. He is given one month’s notice of it with reasons, or one month wages in lieu
work was over and there was no retrenchment. Therefore, the question of complying of such notice. Provided no such notice is necessary if it is under an agreement
with the procedure for retrenchment does not arise in such case. Further, in such a specifying the date of termination of service;
case merely because the workman was required repeatedly for doing the urgent work ii. He is paid compensation equivalent to 15 days average pay for every
and thus had to work for considerable time, the termination of service would not completed year of company’s service or any part of it exceeding six months;
amount to retrenchment. Unlike in Sundarmany’s case or in the Hindustan Steel Ltd and
case where the contract of employment was for a specific period that came to an end iii. Notice is served on the appropriate government or on such notified authority.
by efflux of time in terms of the agreement between the parties, the context and facts Retrenchment Compensation –
in the instant case are quite different. Under Section 25-F(b), payment of compensation is a mandatory condition
Exclusion from the definition of retrenchment precedent for the validity and operative effect of the retrenchment. If the
1. Voluntary retirement- Being an act of the employee in terminating the compensation under Section 25-F(b) is not offered within the notice period under Sec
services by abandoning or resigning from the service such as voluntary 25-F(a), such notice though initially valid would become inoperative and void and no
retirement will not be covered by the definition. effect could be given to the notice. Notice or wages in lieu of notice under clause (a)
2. Superannuation-To attract termination of service on superannuation it is of Sec 25-F and payment of retrenchment compensation calculated in the manner set
necessary that:- out in clause (b) of Section 25-F are conditions precedent for retrenchment. Hence,
i. There must be stipulation on the point of retrenchment in the contract these clauses operate as a prohibition against retrenchment until those conditions are
of employment between the employer and employee; and fulfilled.
ii. The stipulation must be with regard to the age of superannuation.
Termination of service on satisfaction of these two conditions will not
 In order to be entitled to the compensation, the workmen should have put in (a) The workman has been given three months notice in writing stating reasons
minimum of one year continuous service during a period of twelve calendar months; for retrenchment and the period of notice has expired or the workman has been paid
190 days work in the underground mine or 240 days work in other cases. wages for that notice period;
Rate of compensation (b) No such notice is required if the retrenchment is under an agreement which
Under Section 25-F (b), the workman is entitled to 15 days average pay for specify the date of termination of service;
every completed year of continuous service, or any part thereof in excess of six (c)The workman has been paid compensation equivalent to 15 days average
months continuous service. Under the second proviso to Section 25-C the employer pay for every completed year of service or any part thereof in excess of six months;
has right to set off any amount paid to be workman as lay-off compensation during and
the preceding twelve months as against the compensation payable for retrenchment. (d) Notice in the prescribed manner has been served on the appropriate
In case of death of the workman, his legal heirs are entitled to the retrenchment Government.
compensation. The appropriate Government on receipt of notice should hold an enquiry after
Notice to the appropriate Government which it may grant or refuse in writing the permission for retrenchment. In case the
Sec 25-F (c) lays down the third condition namely, to give notice of the appropriate Government does not communicate the permission or the refusal within
retrenchment to the Government. However, previous notice to the government under three months from the date of service of notice seeking permission, the workman is
section 25-F(C) is only directory and not mandatory. In Bombay Union of Journalists deemed to be validly retrenched after expiry of three months.
v State of Bombay17, the Supreme Court held that sec 27-F(a) and (b) are mandatory Section 25-N (7) further empowers the appropriate Government to withdraw
whereas under section 25-F(e) previous notice to the government will not render the by order of a dispute involving questions of retrenchment as well in an establishment
retrenchment invalid. Notice under Section 25-F(e) was only to give information to covered by Chapter VB pending before a Conciliate officer or the Central or State
the Government so as to keep informed about the conditions of employment of Government, if the appropriate Government is of opinion that such retrenchment is
different industries within its region. not in the interest of industrial peace or that such retrenchment is by way of
Remedy against violation of Section 25-F victimization. The Government has to transfer such dispute to an authority specified
As the right or obligation dispute pertaining to Section 25-F cannot be raised by that Government by notification in the official Gazette. The order passed by such
straight away in writ proceedings. The Supreme Court laid down that the remedy authority is final and binding on the employer and the workman. Sec 25N(b) being
provided by way of making a reference under Section 10 of the Industrial Disputes mandatory, if the compensation is found to be insufficient, the retrenchment would be
Act is the exclusive remedy which should be availed of in respect of rights and void ab initio in the absence of bona fide action of the employer or waiver of the
obligations which are the creation of the Industrial Disputes Act itself. workman.
The Impact of 1976 and 1984 amendment on Retrenchment Penalty:
Under Section 25-N inserted by the 1976 amendment the following conditions Sec 25-Q provides punishment of imprisonment to an extent of one month, or
are required for valid retrenchment, an establishment employing 100 or more workers fine up to Rs. 1,000/-, or with both for violation of the requirement of giving notice to
on an average per working day in the preceding 12 months. Government and the permission thereafter under Section 25N (1)(c) or for the
(i) No workman employed in such establishment shall be retrenched who has violation of sub-section (4) of Section 25-N of the Act.
been in the company’s continuous service for not less than one year until:- RETRENCHMENT PROCEDURE
Section 25-G incorporates the well recognized principle of retrenchment in
industrial law, namely, the “last come first go” or “first come last go.” The Section
becomes applicable only if all the conditions laid down herein are fully and say, those who fall in the same category shall suffer retrenchment only in accordance
cumulatively satisfied they are:- with the principle of ‘last come first go’. Where the seniority list of particular
(i) The person claiming protection should be a workman as defined in workmen is the same, there is a telling circumstance to show that they fall in the same
section 2(s); category. Grading for purposes of scales of pay and like considerations will not create
(ii) He should be a citizen of India; new categorization. If grades for scales of pay, based on length of service, etc. are
(iii) The “industrial establishment” employing such workman must be an evolved, that process amounts to creation of separate categories.
“industy” under sec 2(j) Effect of departure from ‘last come first go’ rule
(iv) He should belong to a particular category of workmen in that A retrenchment violating the ‘last come first go’ rule will be declared invalid
establishment; and unless such deviation is supported by valid and justifiable reasons. Normally the
(v) There should not be an agreement between the employer and the workman so improperly and illegally detained is entitled to reinstatement and also for
workman contrary to the procedure of “last come first go.” payment of remuneration for the period during which the workman remained
Given all the above conditions, the employer shall “ordinarily” retrench the unemployed.
workman who was the last person in that category. However, the employer can Re-employment of retrenched workman-Section 25-H
deviate from this procedure on justifiable reasons which should be recorded. The rule under section 25-H provides that after effecting retrenchment, if the
Last come first go employer proposes to take into his employment any person. i) He shall give an
The principle of “last come first go” is statutorily incorporated in Section 25- opportunity to the retrenched workmen who offer themselves for re-employment; and
G. If a case for retrenchment is made out, it would normally be for the employer to ii) These retrenched workmen have preference over the new applicants. Thus, Section
decide which of the employees should be retrenched. However, this rule is not 25-H imposes a statutory obligation on the employer to give preference to retrenched
intended to deny the freedom of the employer to depart from it for sufficient and valid workmen when he subsequently employs any person.
reasons. The rule “last come first go” is intended to afford a very healthy safeguard Conditions to apply Section 25-H
discrimination of workmen in regard to retrenchment. The departure from the The preferential right of employment secured by Section 25-H to a retrenched
ordinary industrial rule of retrenchment without any justification, may itself, in a workman will be available only if the following conditions are satisfied:-
proper case, lead to the inference that the impugned retrenchment is the result of (i) The workman should have been ‘retrenched’ prior to the re-
ulterior consideration and hence it is mala fide and may amount to unfair labour employment in question. In other words, if that workman’s
practice and victimization. The rule of ‘last come first go’ has to be complied with for termination of employment was not due to retrenchment, but due to
the validity of the retrenchment. some other eventualities like dismissal, discharge or superannuation,
Departure from the rule “last come first go” etc., he cannot claim the preferential right of re-employment under
The rule is that the employers shall retrench the workman who came last, first, this section.
popularly as ‘last come first go’. It is not inflexible rule and extraordinary situations (ii) He should be a citizen of India.
may justify variations. For instance, a junior recruit who has a special qualification (iii) He should offer himself for re-employment failing which he will
needed by the employer may be retained even though another who is one up is forfeit the right. The offer is made in response to the notice given by
retrenched. But there must be valid reason for this deviation. The burden is on the the employer under Rule 76 of the Industrial Disputes (Central)
management to substantiate the special ground for departure from the rule. Section 25- Rules, 1957 or corresponding State Rules.
G insists on the rule “last come first go” being applied category wise. This is to
 (iv) The workman should have been retrenched from the same category advantage of this judicial dictum a number of employers declared their undertakings
of service in the industrial establishment in which the re- as closed on one pretext or the other, throwing thereby a number of workmen out of
employment is proposed. employment without paying them a single penny as compensation. Therefore section
It is not the designation, but the nature of the work that will decide the 25-FFF was inserted,9 with a view to provide for involuntary unemployment, to
category of the post. Thus, a workman who was designated as assistant storekeeper, create a sense of security in a worker and to raise the position and status of labour.
but who was substantially doing clerical work was retrenched. Subsequently, the Prior to 1953 the only provision of the Act, which in those days, used the word
management employed three persons as clerks in that establishment. It was held that “closure” was section 2(1) of the Industrial Disputes Act, invariably led Tribunal to
Section 25-H is violated as the retrenched workman is not given preferential re- hold that closure came within the ambit of the definition of “lock-out”, particularly
employment. because, unlike the 1929 definition, the 1947 - definition had no restrictive qualifying
THE LAW RELATING TO CLOSURE OF UNDERTAKING clause. The Labour Appellate Tribunal, the High Courts and the Supreme Court on
The law relating to investigation and settlement of industrial disputes namely, other hand, (impressed by the Constitutional guarantee of the right to carry on any,
the Industrial Disputes Act, 1947, originally does not contain the provisions relating trade, profession business or vocation) were at pains to emphasize that lock-out was
to closure of an industry. The provisions relating to law of closure were inserted in the the” closing of the business itself”. Realizing the difficulty of maintaining this
year 1957 in view of the Supreme Court judgment. Subsequently over a period of distinction in cases of temporary closures, and even independently of such difficulty,
years the law relating to closure, has undergone series of amendments from time to there developed a marked tendency to enquire into the reasons for the closure, and
time and thus was consolidated to the present position in the year 1982. This decisions-makers entered into detailed investigation of the bona fide of management
particular area in the law relating to investigation and settlement of industrial disputes action.
has undergone a close judicial scrutiny starting from later seventies. It is a unique law Definition of Closure
in India unlike in any industrialized country in the world. According to Section 2(cc) of the Industrial Disputes Act, Closure of an
It is in the fitness of things that the right to security in the event of industry means the permanent closing down of a place of employment or part thereof.
unemployment has, though late, found legislative recognition in our country. The The term closure was used in the Act even prior to the insertion of this
security of employment is necessary from the point of view of the workmen as well as definition clause but was not defined as such. This led to divergence in judicial view
the industry. If a worker sticks to his job he becomes more efficient by experience and as to when the closing down of a part of an establishment constituted closure and
an efficient worker is sure to augment the production in the industry. The protection when it was an act of retrenchment. This controversy is resolved by the express terms
to workmen in India had been made possible by an amendment of the Industrial of the definition clause itself. It is now made clear that closure arises even if a part of
Disputes Act, 1947 in the year 1957. T the place of employment is permanently closed down.
he impact of the decision of the Supreme Court in Hariprasad Shivshankar No industrialist will like to close down an earning industry, unless there are
Shuka v. A.D. Diwelkar, and Barsi Light Railway Co., Ltd., v. Jogelkar, made the compelling circumstances to do so. Various kinds of situations, such as labour trouble
policy makers feel the necessity for this amendment. In Barsi Light case the Supreme of unprecedented nature, recurring loss, paucity of adequate number of suitable
Court has held that such industry workers whose services were terminated by an persons for the purpose of management, non-availability of raw-materials, and
employer, on real and bona fide closure of business or in case of transfer of ownership insurmountable difficulty in the replacement of damaged or worn-out machinery may
of undertaking from one employer to another, were not entitled to any relief under the arise in any industry, ultimately forcing its closure.
Industrial Disputes Act, 1947, because their case was not covered by retrenchment
within the meaning of section 25-F of the Industrial Disputes Act, 1947. Taking
Closure in Case where chapter V-A is Applicable (iv) in a case where the undertaking is engaged in mining operations,
Sixty days' notice to be given of intention to close down any undertaking.- exhaustion of the minerals in the area in which such operations are
Sec 25FFA (1) An employer who intends to close down an undertaking shall carried on,
serve, at least sixty days before the date on which the intended closure is to become shall not be deemed to be closed down on account of unavoidable circumstances
effective, a notice, in the prescribed manner, on the appropriate Government stating beyond the control of the employer within the meaning of the proviso to this
clearly the reasons for the intended closure of the undertaking: subsection. Notwithstanding anything contained in sub-section (1), where an
Provided that nothing in this section shall apply to- undertaking engaged in mining operations is closed down by reason merely of
(a) an undertaking in which – exhaustion of the minerals in the area in which such operations are carried on, no
(i) less than fifty workmen are employed, or workman referred to in that sub-section shall be entitled to any notice or
(ii) less than fifty workmen were employed on an average per working day in compensation in accordance with the provisions of Section 25-F, if-
the preceding twelve months, a) the employer provides the workman with alternative employment with effect
(b) an undertaking set up for the construction of buildings, bridges, roads, from the date of closure at the same remuneration as he was entitled to
canals, dams or for other construction work or project. receive, and on the same terms and conditions of service as were applicable to
(2) Notwithstanding anything contained in sub-section (1), the appropriate him, immediately before the closure;
Government may, if it is satisfied that owing to such exceptional circumstances as b) the service of the workman has not been interrupted by such alternative
accident in the undertaking or death of the employer or the like it is necessary so to employment; and
do, by order, direct that provisions of sub-section (1) shall not apply in relation to c) the employer is, under the terms of such alternative employment or otherwise,
such undertaking for such period as may be specified in the order. legally liable to pay to the workman, in the event of his retrenchment,
Compensation to workmen in case of closing down of undertaking compensation on the basis that his service has been continuous and has not
Sec 25FFF (1) provides that Where an undertaking is closed down for any been interrupted by such alternative employment.
reason whatsoever, every workman who has been in continuous service for not less Procedure for closing down an undertaking where Chapter V-B is applicable:
than one year in that undertaking immediately before such closure shall, subject to the (1) An employer who intends to close down an undertaking of an industrial
provisions of sub-section (2), be entitled to notice and compensation in accordance establishment to which this Chapter applies shall, in the prescribed manner, apply, for
with the provisions of Section 25-F, as if the workman had been retrenched: prior permission at least ninety days before the date on which the intended closure is
Provided that where the undertaking is closed down on account of unavoidable to become effective, to the appropriate Government, stating clearly the reasons for the
circumstances beyond the control of the employer, the compensation to be paid to the intended closure of the undertaking and a copy of such application shall also be
workman under clause (b) of Section 25-F shall not exceed his average pay for three served simultaneously on the representatives of the workmen in the prescribed
months. manner: Provided that nothing in this sub-section shall apply to an undertaking set up
Explanation.- for the construction of buildings, bridges, roads, canals, dams or for other construction
An undertaking which is closed down by reason merely of- work.
(i) financial difficulties (including financial losses); or (2) Where an application for permission has been made under sub-section (1),
(ii) accumulation of undisposed of stocks; or the appropriate Government, after making such enquiry as it thinks fit and after giving
(iii) the expiry of the period of the lease or licence granted to it; or a reasonable opportunity of being heard to the employer, the workmen and the
persons interested in such closure may, having regard to the genuineness and
adequacy of the reasons stated by the employer, the interests of the general public and which shall be equivalent to fifteen days' average pay for every completed year of
all other relevant factors, by order and for reasons to be recorded in writing, grant or continuous service or any part thereof in excess of six months.
refuse to grant such permission and a copy of such order shall be communicated to the Penalty for closure.- Sec 25 R
employer and the workmen. (1) states that any employer who closes down an undertaking without
(3) Where an application has been made under sub-section (1) and the complying with the provisions of sub-section (1) of Section 25-O shall be punishable
appropriate Government does not communicate the order granting or refusing to grant with imprisonment for a term which may extend to six months, or with fine which
permission to the employer within a period of sixty days from the date on which such may extend to five thousand rupees, or with both.
application is made the permission applied for shall be deemed to have been granted (2) Any employer who contravenes an order refusing to grant permission to
on the expiration of the said period of sixty days. close down an undertaking under sub-section (2) of Section 25-O or a direction given
(4) An order of the appropriate Government granting or refusing to grant under Section 25-P shall be punishable with imprisonment for a term which may
permission shall, subject to the provisions of sub- section (5) be final and binding on extend to one year, or with fine which may extend to five thousand rupees, or with
all the parties and shall remain in force for one year from the date of such order. both, and where the contravention is a continuing one, with a further fine which may
(5) The appropriate Government may, either on its own motion or on extend to two thousand rupees for every day during which the contravention continues
application made by the employer or any workman, review its order granting or after the conviction.
refusing to grant permission under sub-section (2) or refer the matter to a Tribunal for Transfer of undertakings: Compensation to workmen in case of transfer of
adjudication: Provided that where a reference has been made to a Tribunal under this undertakings. Sec 25 FF
sub-section, it shall pass an award within a period of thirty days from the date of such Where the ownership or management of an undertaking is transferred, whether
reference. by agreement or by operation of law, from the employer in relation to that
(6) Where no application for permission under sub-section (1) is made within undertaking to a new employer, every workman who has been in continuous service
the period specified therein, or where the permission for closure has been refused, the for not less than one year in that undertaking immediately before such transfer shall
closure of the undertaking shall be deemed to be illegal from the date of closure and be entitled to notice and compensation in accordance with the provisions of Section 25-
the workmen shall be entitled to all the benefits under any law for the time being in F, as if the workman had been retrenched: Provided that nothing in this section shall
force as if the undertaking had not been closed down. apply to a workman in any case where there has been a change of employers by reason
(7) Notwithstanding anything contained in the foregoing provisions of this of the transfer, if-
section, the appropriate Government may, if it is satisfied that owing to such a) the service of the workman has not been interrupted by such transfer;
exceptional circumstances as accident in the undertaking or death of the employer or b) the terms and conditions of service applicable to the workman after such
the like it is necessary so to do, by order, direct that the provisions of sub-section (1) transfer are not in any way less favorable to the workman than those
shall not apply in relation to such undertaking for such period as may be specified in applicable to him immediately before the transfer; and
the order. c) the new employer is, under the terms of such transfer or otherwise, legally
(8) Where an undertaking is permitted to be closed down under sub-section (2) liable to pay to the workman, in the event of his retrenchment, compensation
or where permission for closure is deemed to be granted under sub-section (3), every on the basis that his service has been continuous and has not been interrupted
workman who is employed in that undertaking immediately before the date of by the transfer.
application for permission under this section, shall be entitled to receive compensation
Notice of change Sec 9-A (b) for any misconduct connected with the dispute, discharge or punish,
No employer, who purposes to effect any change in the conditions of service whether by dismissal or otherwise, any workmen concerned in such dispute, save with
applicable to any workman in respect of any matter specified in the Fourth Schedule, the express permission in writing of the authority before which the proceeding is
shall effect such change,- pending.
(a) without giving to the workman likely to be affected by such change a (2) During the pendency of any such proceeding in respect of an industrial
notice in the prescribed manner of the nature of the change proposed to be effected; or dispute, the employer may, in accordance with the standing orders applicable to a
(b) within twenty-one days of giving such notice: Provided that no notice shall workman concerned in such dispute or, where there are no such standing orders, in
be required for effecting any such change— accordance with the terms of the contract, whether express or implied between him
(a) where the change is effected in pursuance of any settlement or award; or and the workman
(b) where the workmen likely to be affected by the change are persons to (a) alter, in regard to any matter not connected with the dispute, the conditions
whom the Fundamental and Supplementary Rules, Civil Services (Classification, of service applicable to that workman immediately before the commencement of such
Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave proceeding; or
Rules, Civil Service Regulations, Civilians in Defence Services (Classification, (b) for any misconduct not connected with the dispute, discharge or punish
Control and Appeal) Rules or the Indian Railway Establishment Code or any other whether by dismissal or otherwise, that workman:
rules or regulations that may be notified in this behalf by the appropriate Government Provided that no such workman shall be discharged or dismissed, unless he
in the Official Gazette, apply. has been paid wages for one month and an application has been made by the employer
Power of Government to exempt: Sec 9-B to the authority before which the proceeding is pending for approval of the action
Where the appropriate Government is of opinion that the application of the taken by the employer.
provisions of Section 9A to any class of industrial establishments or to any class of (3) Notwithstanding anything contained in sub-section (2) no employer shall,
workmen employed in any industrial establishment affect the employers in relation during the pendency of any such proceeding in respect of an industrial dispute, take
thereto so prejudicially that such application may cause serious repercussion on the any action against any protected workman concerned in such dispute-
industry concerned and that public interest so requires, the appropriate Government (a) by altering, to the prejudice of such protected workman, the conditions of
may, by notification in the Official Gazette, direct that the provisions of the said service applicable to him immediately before the commencement of such proceeding;
section shall not apply, or shall apply, subject to such conditions as may be specified or
in the notification, to that class of industrial establishments or to that class of (b) by discharging or punishing, whether by dismissal or otherwise such
workmen employed in any industrial establishment. protected workman, save with the express permission in writing of the authority
Conditions of service, etc. to remain unchanged under certain circumstances before which the proceeding is pending. Explanation. For the purposes of this sub-
during pendency of proceedings.- Sec 33 section, a “protected workman” in relation to an establishment, means a workman,
During the pendency of any conciliation proceedings before a conciliation who being a member of the executive or other office bearer of a registered trade union
officer or a Board or of any proceeding before an arbitrator or a Labour Court or connected with the establishment, is recognized as such in accordance with rules
Tribunal or National Tribunal in respect of an industrial dispute, no employer shall, made in this behalf.
(a) in regard to any matter connected with dispute, alter, to the prejudice of the (4) In every establishment, the number of workmen to be recognized as
workmen concerned in such dispute, the conditions of service applicable to them protected workmen for the purposes of sub-section (3) shall be one per cent of the
immediately before the commencement of such proceedings; or total number of workmen employed therein subject to a minimum number of five
protected workmen and a maximum number of one hundred protected workmen and workman himself or any other person authorised by him in writing in this behalf, or,
for this aforesaid purpose, the appropriate Government may make rules providing for in the case of the death of the workman, his assignee or heirs may, without prejudice
the distribution of such protected workmen among various trade unions, if any, to any other mode of recovery, make an application to the appropriate Government for
connected with the establishment and the manner in which the workmen may be the recovery of the money due to him, and if the appropriate Government is satisfied
chosen and recognized as protected workmen. that any money is so due, it shall issue a certificate for that amount to the Collector
(5) Where an employer makes an application to a conciliation officer, Board, who shall proceed to recover the same in the same manner as an arrear of land
an arbitrator, a Labour Court, Tribunal or National Tribunal under the proviso to sub- revenue: Provided that every such application shall be made within one year from the
section (2) for approval of the action taken by him, the authority concerned shall, date on which the money became due to the workman from the employer : Provided
without delay, hear such application and pass, within a period of three months from further that any such application may be entertained after the expiry of the said period
the date of receipt of such application] such order in relation thereto as it deems fit: of one year, if the appropriate Government is satisfied that the applicant had sufficient
Provided that where any such authority considers it necessary or expedient so cause for not making the application within the said period.
to do, it may, for reasons to be recorded in writing extend such period by such further (2) Where any workman is entitled to receive from the employer any money or
period as it may think fit. Provided further that, no proceedings before any such any benefit which is capable of being computed in terms of money and if any question
authority shall lapse merely on the ground that any period specified in this sub-section arises as to the amount of money due or as to the amount at which such benefit should
had expired without such proceedings being completed. be computed, then the question may, subject to any rules that may be made under this
Act, be decided by such Labour Court as may be specified in this behalf by the
Special provision for adjudication as to whether conditions of service etc.
appropriate Government within a period not exceeding three months:
changed during pendency of proceeding. Sec 33A
Provided that where the presiding officer of a Labour Court considers it
Where an employer contravenes the provisions of Section 33 during the
necessary or expedient so to do, he may, for reasons to be recorded in writing, extend
pendency of proceedings before a conciliation officer, Board, an arbitrator, a Labour
such period by such further period as he may think fit.
Court, Tribunal or National Tribunal any employee aggrieved by such contravention,
(3) For the purposes of computing the money value of a benefit, the Labour
may make a complaint in writing in the prescribed manner,-
Court may, if it so thinks fit, appoint a Commissioner who shall after taking such
(a) to such conciliation officer or Board, and the conciliation officer or Board
evidence as may be necessary, submit a report to the Labour Court and the Labour
shall take such complaint into account in mediating in, and promoting the settlement
Court shall determine the amount after considering the report of the Commissioner
of, such industrial dispute; and
and other circumstances of the case.
(b) to such arbitrator, Labour Court, Tribunal, or National Tribunal and on
(4) The decision of the Labour Court shall be forwarded by it to the
receipt of such complaint, the arbitrator, Labour Court, Tribunal or National Tribunal
appropriate Government and any amount found due by the Labour Court may be
as the case may be, shall adjudicate upon the complaint as if it were a dispute referred
recovered in the manner provided for in sub-section (1).
to or pending before it, in accordance with the provisions of this Act and shall submit
(5) Where workmen employed under the same employer are entitled to receive
his or its award to the appropriate Government and the provisions of this Act shall
from him any money or any benefit capable of being computed in terms of money,
apply accordingly.
then, subject to such rules as may be made in this behalf, a single application for the
Recovery of money due from an employer: Sec 33C
recovery of the amount due may be made on behalf of or in respect of any number of
(1) Where any money is due to a workman from an employer under a
such workmen.
settlement or an award or under the provisions of Chapter V-A or Chapter V-B, the
 THE INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946 the employer to define and publish uniform conditions of employment. This is more
The Industrial Employment (Standing Orders) Act, 1946 was enacted to than the HR Policy / code of conduct / handbook, of an organization. It is basically a
require employers in industrial establishments to define with sufficient precision the terms on employment – Entry & Exit to the premises, Hours of work, Rates of wages,
conditions of employment under them, and to make the said conditions known to Shift schedules, Leave and Attendance, Misconduct provisions, process of termination
workmen employed by them. The Act not only requires the employers to lay down or separation, etc.
conditions of service but also requires that the conditions of service must be clearly
Provisions of Standing Order regulates the conditions of employment,
laid down so that there may not be any confusion or uncertainty in the minds of the
grievances, misconduct etc. of the workers employed in industrial undertakings.
workmen, who are required to work in accordance therewith.
Unsolved grievances may become industrial disputes.
Application of the Act:
This Act may be called the Industrial Employment (Standing Orders) Act, If the classification of employees – Temporary, Casual, Permanent, Badli,
1946. It extends to the whole of India. It applies to every industrial establishment Probationary etc, can be mentioned in the draft with conditions, then it will not cause
wherein one hundred or more workmen are employed, or were employed on any day any challenges to the establishment while appointing such types of employees.
of the preceding twelve months:
The employer of every industrial establishment is required to submit to the
Provided that the appropriate Government may, after giving not less than two
Certifying Officer, draft standing orders proposed by him for adoption in his
months’ notice of its intention so to do, by notification in the Official Gazette, apply
industrial establishment for certification under Section 3 of the Act. The Certifying
the provisions of this Act to any industrial establishment employing such number of
Officer is empowered to modify or add to the draft as is necessary to render the draft
persons less than one hundred as may be specified in the notification.
standing orders certifiable under the Act. It is important to note that, draft standing
Nothing in this Act shall apply to
orders submitted to the Certifying Officer are to be accompanied by a statement
a) any industry to which the provisions of Chapter VII of the Bombay Industrial
giving prescribed particulars of the workmen employed in the industrial establishment
Relations Act, 1946 (Bombay Act 11 of 1947) apply; or
including the name of the trade union, if any, to which the workmen belong
b) any industrial establishment to which the provisions of the Madhya Pradesh
Industrial Employment (Standing Orders) Act, 1961 (Madhya Pradesh Act 26 As per the provisions of the Act, the Appropriate Government is to set out
of 1961) apply: model standing orders. The draft standing orders framed by an employer should as far
Provided that notwithstanding anything contained in the Madhya Pradesh as practicable be in conformity with model standing orders. Any industrial
Industrial Employment (Standing Orders) Act, 1961 (Madhya Pradesh Act 26 of establishment can accept the model standing orders; the model standing orders are
1961), the provisions of this Act shall apply to all industrial establishments under the temporarily applicable to an industrial establishment which comes under the
control of the Central Government. provisions of the Act and whose standing orders are not finally certified.

Objective of the Standing Order: An employer who fails to submit draft standing orders or an employer who

There was no uniformity in the conditions of service of workers until this act does any act in contravention of the standing orders finally certified under the

was brought, which led to friction between workers and Management. An Industrial provisions of the Act shall be punished with fine as specified in Section 13 of the Act.

worker has the right to know the Terms & condition which he is expected to follow.
The Industrial Employment (Standing Orders) Act, 1946, which, inter alia, requires
Definition of Standing Order: Sec 2 (g) ii. in any industrial establishment under the control of any department of any
The Industrial Employment Act, 1946 defines the meaning of ‘Standing Government in India, the authority appointed by such Government in this
Orders’ in section 2 (g). These are the rules which relate to the matters explained in behalf, or where no authority is so appointed, the head of the department;
the Schedule. Under this section, the employer has to make a draft of standing orders iii. in any other industrial establishment, any person responsible to the owner for
for submission to the certifying officers regarding the matters prescribed in the the supervision and control of the industrial establishment;
Schedule. Definition of Industrial establishment: Sec 2(e)
According to the Schedule annexed to the ISO, the following matters should “Industrial establishment” means
be provided for in the standing orders of an industrial establishment: i. an industrial establishment as defined in clause (ii) of Section 2 of the
1. Classification of workmen e.g. whether permanent, temporary, apprentices, Payment of Wages Act, 1936, or
probationers, or badlis. ii. a factory as defined in clause (m) of Section 2 of the Factories Act,
2. Manner of intimating to workmen periods and hours of work, holidays, pay- 1948, or
days and wage rates. iii. a railway as defined in clause (4) of Section 2 of the Indian Railway
3. Shift working. Act, 1890, or
4. Attendance and late coming. iv. the establishment of a person who, for the purpose of fulfilling a
5. Conditions of, procedure in applying for, and the authority which may grant contract with the owner of any industrial establishment, employs
leave and holidays. workmen;
6. Requirement to enter premises by certain gates, and liability to search. Definition of Workman: Sec 2(i)
7. Closing and reporting of sections of the industrial establishment, temporary “The expression as used in this Act is the same as is used in Section 2 (s) of
stoppages of work and the rights and liabilities of the employer and workmen the Industrial Disputes Act, and includes any person including an apprentice
arising there from. employed in any industry to do any skilled or unskilled, manual, supervisory,
8. Termination of employment, and the notice to be given by employer and technical, operational or clerical work for hire or reward whether the terms of
workmen. employment are expressed or implied and includes any person who has been
9. Suspension or dismissal for misconduct, and acts or omissions which dismissed, discharged or retrenched in connection with an industrial dispute or where
constitute misconduct. dismissal, discharge or retrenchment has led to the dispute, but doesn’t include any
10. Means of redress for workmen against unfair treatment or wrongful exactions such person:
by the employer or his agents or servants. (i) Who is subject to the Army Act, 1950 or the Air Force Act, 1950 or
11. Any other matter which may be prescribed. the Navy Act, or
Definition of Employer: Sec 2(d) (ii) Who is employed in the Police Service or as an officer of prison or
“Employer” means the owner of an industrial establishment to which this Act (iii) Who is employed mainly in a managerial or administrative capacity or
for the time being applies, and includes- (iv) Who being employed in supervisory capacity, draws wages exceeding
i. in a factory, any person named under clause (f) of sub-section (1) of Section 7 1100 rupees per mensem.
of the Factories Act,1948, as manager of the factory; Certifying Officer: Sec 2 (c)
“Certifying Officer” means a Labour Commissioner or a Regional Labour
Commissioner, and includes any other officer appointed by the appropriate
Government, by notification in the Official Gazette, to perform all or any of the Conditions for certification of standing orders:
functions of a Certifying Officer under this Act.
Sec 4 provides that, Standing orders shall be certifiable under this Act if--

Procedure for certification of Draft Standing order: a) provision is made therein for every matter set out in the Schedule which is
Submission of draft standing orders: applicable to the industrial establishment, and
Sec 3 of the states that, within six months from the date on which this Act b) the standing orders are otherwise in conformity with the provisions of this Act
becomes applicable to an industrial establishment, the employer shall submit to the ; and it shall be the function of the Certifying Officer or appellate authority to
Certifying Officer five copies of the draft standing orders proposed by him for adjudicate upon the fairness or reasonableness of the provisions of any
adoption in this industrial establishment. Provision shall be made in such draft for standing orders.
every matter set out in the Schedule which may be applicable to the industrial Different set of Standing Orders:
establishment, and where Model standing orders have been prescribed shall be, so far
Once the standing orders are certified, they constitute the conditions of the
as is practicable, in conformity with such model. The draft standing orders submitting
service binding upon the management and the employees serving already and in
under this section shall be accompanied by a statement giving prescribed particulars
employment or who may be employed after certification.” This implies that different
of the workmen employed in the industrial establishment including the name of the
set of standing orders cannot exist in respect of distinct sections of workmen or the
trade union, if any, to which they belong. Subject to such conditions as may be
employer(s), for that would frustrate the intent of the legislature by rendering the
prescribed, a group of employers in similar industrial establishments may submit a
conditions of employment as indefinite & diversified, just as existed prior to the
joint draft of standing orders under this section.
enactment of the said Act.
In S.K. Sheshadri v H.A.L and others, (1983) Karnataka High Court held that,
as long as the Standing Orders fall within the Schedule to the Act, irrespective of the Certification of standing orders
fact that they contain additional provisions which are not accounted for in the MSOs, The procedure for certification of Standing Order, as prescribed under Section
the Standing Orders would not be deemed to be invalid or ultra vires of the Act. The 5 of the Act, is threefold:
MSOs only serve as a model for framing the Standing Orders.
In Hindustan Lever v Workmen, (1974) the issue relating to the ‘transfer of 1. The Certifying Officer to send a copy of the Draft Standing Order to the
workmen or trade union, along with a notice calling for objections, that shall
workmen’ was highlighted by concurring that, the Manager is vested with the
be submitted to him within 15 days of receiving such notice.
discretion of transfer of workmen amongst different departments of the same
2. Upon receipt of such objections, the employer and workmen to be given an
company, so far as the terms of the contract of employment are not affected. Further,
opportunity of being heard, after which the Certifying Officer shall decide and
if the transfer is found to be valid, the onus of proving it to be invalid lies on the
pass an order for modification of the Standing Order.
workmen in dispute.
3. Finally, the Certifying Officer shall certify such Standing Order, and thereby,
In Management of Continental Construction Ltd. v Workmen of Continental
within seven days, send a copy of it annexed with his order for modification
Construction, (2003) the employer’s right to terminate the service of a probationer
passed under Section 5(2).
was recognized by declaring that, if a person is an employee on probation, it is an
inherent power of the employer to terminate during/ at the end of the probationary
period, provided, that even while acting in accordance with the CSO, the employer’s
action be fair and consistent with the principles of natural justice.
Appeals: expiry of six months from the date on which the standing orders or the last
modifications thereof came in to operation.
Any related party aggrieved by the order of the Certifying Officer may, under
sec 6, appeal to the ‘appellate authority’ within 30 days, provided that its decision, of Subject to the provisions of sub-section (1), an employer or workman or a
confirming such Standing Order or amending it, shall be final. The appellate authority trade union or other representative body of the workmen] may apply to the Certifying
shall thereafter send copies of the Standing Order, if amended, to the related parties Officer to have the standing orders modified, and such application shall be
within seven days. accompanied by five copies of the modifications proposed to be made, and where
such modifications are proposed to be made by agreement between the employer and
Date of operation of standing orders: the workmen or a trade union or other representative body of the workmen, a certified
Sec 7 provides that, Standing orders shall, unless an appeal is preferred under copy of that agreement shall be filed along with the application. The foregoing
Section 6, come into operation on the expiry of 30 days from the date on which provisions of this Act shall apply in respect of an application under sub-section (2) as
authenticated copies thereof are sent under sub-section (3) of Section 5 or where an they apply to the certification of the first standing orders.
appeal as aforesaid is preferred, on the expiry of 7 days from the date on which copies
In the case of The Management of M/s. Gem Properties Pvt. Ltd. High Court
of the order of the appellate authority are sent under sub-section (2) of Section 6.
held that “Any Standing Orders finally certified under the Act shall not except on
Register of standing orders: agreement between the employer and the workmen be liable to modification until the
expiry of six months from the date on which the standing orders or last modification
Sec 8 of the Act states that, a copy of all standing orders as finally certified
thereof came into operation.”
under this Act shall be filed by the Certifying Officer in a register in the prescribed
form maintained for the purpose, and the Certifying Officer shall furnish a copy there The object of providing time limit was to give a fair deal. Certain decided
of to any person applying there for on payment of the prescribed fee. cases reveal that an application for alteration may be accepted where there is change
of circumstances or the working of the certified standing orders resulted in hardship,
Posting of standing orders:
anomaly, inconvenience or some fact not given at the time of certification or it is felt
Sec 9 of the Act states that, the text of the standing orders as finally certified by the applicant that the alteration will be more beneficial to the concerned parties or
under this Act shall be prominently posted by the employer in English and in the it is found in the interest of industry/employees. The application for alteration in
language understood by the majority of his workmen on special boards to be standing orders must be made to the certifying officer.
maintained for the purpose at or near the entrance through which the majority of the
In the “Industrial Employment (Standing Orders) Act, 1946,” only the
workmen enter the industrial establishment and in all departments thereof where the
employer was conferred upon the right to apply for modification. But the amendment
workmen are employed.
in 1956, allowed both the employee and the employer to apply for modification of the
Modification or Alteration in ‘standing orders’ standing orders. The word ‘workman’ in some cases led to doubt whether a trade
union can also exercise this right. Therefore, to clarify this doubt, an amendment was
Sec 10 of the Act provides that, Standing orders finally certified under this Act
made in 1982 which permitted not only the employer and the employees but also the
shall not, except on agreement between the employer and the workmen or a trade
representatives of the employees or the trade unions to apply for alteration of the
union or other representative body of the workmen be liable to modification until the
standing orders. In case of a ‘trade union’ that must be registered under the Trade
Unions Act. If a minority union applies for modification that can be objected by the Electricity Distribution Co.v. Their Employee Union with regard to the age of
majority union. superannuation: “Once the standing orders are certified and come into operation, they
become binding on the employer and all the workmen presently employed as also
Judicial Response Regarding Binding Nature and Effect of Standing Orders duly
those employed thereafter in the establishment conducted by that employer. It cannot
certified:
possibly be that such standing orders would bind only those who are employed after

In the Act, no provision, regarding its binding nature and any effect on they come into force and not those who were employed previously but are still in

standing orders, has been made. Therefore, the decisions of the courts have been employment when they come into force. It further said: if the standing orders were to

varying from time to time. Somewhere, the decisions show that the nature of the bind only those who are subsequently employed, the result would be that would be

standing orders is binding on both the employer and the employee whereas in some different conditions of employment for different classes of workmen, one set of

cases, the court has decided that these are not binding. In the case of “Guest Keen conditions for those who are previously employed and another for those employed

Williams (Pvt.) the court held that, the standing orders when they were certified subsequently, and where they are modified, even several sets of conditions of service

became operative and bound the employer and all the employees.” depending upon whether a workman was employed before the standing orders are
certified or after, whether he was employed before or after a modification is made to
Again in Tata Chemicals,”the High Court held that: “the standing order when any one of them and would bind only a few who are recruited after and not the bulk of
finally certified under the Act becomes operative and binds the employer and the them, who though in employment, were recruited previously. Such a result could
workmen by virtue of the provisions of the Act and not by virtue of any contract never have been intended by the legislature, for that would render the conditions of
between the employer and the workmen. The court added further: the rights and service of workmen as indefinite and diversified, as before the enactment of the Act.”
obligations created by the standing orders derive their force not form the contract
between the parties but from the provisions of the Act. They are statutory rights and The Supreme Court reiterated its aforesaid view in the case of Bharat

obligation and not contractual rights and obligations.” Petroleum Corporation Ltd. v. Maharashtra General Kamgar Union and held that:
“Once the standing orders are certified, they constitute the conditions of the service
However, in the case of Co-operative Central Bank Ltd., the Supreme Court binding upon the management and the employees serving already and in employment
held that: “There is no specific provision in the Act dealing with the binding nature or who may be employed after certification.”
and effect of standing orders. In the absence of any provision, courts have held that a
standing order certified under Industrial Employment (Standing Orders) Act is Payment of subsistence allowance:

binding upon the employers and employees of the industry concerned. However, the
Sec 10 A (1) provides that where any workman is suspended by the employer
decided case reveals that even though they are binding, they don’t have such force of
pending investigation or inquiry into complaints or charges of misconduct against
laws as to be binding on industrial tribunals adjudicating on industrial dispute.”
him, the employer shall pay to such workman subsistence allowance-

Therefore, the binding nature of the certified standing orders has been a matter (a) at the rate of fifty per cent of the wages which workman was

of controversy in a number of cases decided by the High Courts and the Supreme entitled to immediately preceding the date of such suspension, for

Court. the first ninety days of suspension; and

(b) at the rate of seventy-five per cent of such wages for the remaining
The Supreme Court made a departure to its decision given in the case of Guest period of suspension if the delay in the completion of disciplinary
Keen Williams (Pvt.) Ltd. v. P J Serling and held in the case of Salem Erode
 proceedings against such workman is not directly attributable to the 1) Domestic enquiries need not be conducted in accordance with the
conduct of such workman. technical requirements of criminal trials, but they must be fairly
conducted and in holding them, considerations of fair play and
If any dispute arises regarding the subsistence allowance payable to a
natural justice must govern the conduct of the enquiry officer.
workman under sub-section (1), the workman or the employer concerned may refer
2) If an officer himself sees the misconduct of a workman, it is
the dispute to the Labour Court, constituted under the Industrial Disputes Act, 1947,
desirable that the enquiry should be left to be held by some other
within the local limits of whose jurisdiction the industrial establishment wherein such
person who does not claim to be an eye-witness of the impugned
workman is employed is situate and the Labour Court to which the dispute is so
incident.
referred shall, after giving the parties an opportunity of being heard, decide the
3) Domestic enquiries must be conducted honestly and bona fide with a
dispute and such decision shall be final and binding on the parties.
view to determine whether the charge framed against a particular

Notwithstanding anything contained in the foregoing provisions of this employee is proved or not, and so, care must be taken to see that

section, where provisions relating to payment of subsistence allowance under any these enquiries do not become empty formalities.

other law for the time being in force in any State are more beneficial than the 4) If an officer claims that he had himself seen the misconduct alleged

provisions of this section, the provisions of such other law shall be applicable to the against an employee, in fairness steps should be taken to see that the

payment of subsistence allowance in that State. task of holding an enquiry is assigned to some other officer.
5) It is desirable that the conduct of domestic enquiries should be left to
Certifying Officers and appellate authorities to have powers of Civil Court: such officers of the employer who are not likely to import their
personal knowledge into the proceedings which they are holding as
Sec 11 states that, every Certifying Officer and appellate authority shall have
enquiry officers.
all the powers of a Civil Court for the purposes of receiving evidence, administering
6) It is necessary to emphasise that in domestic enquiries, the employer
oaths,, enforcing the attendance of witnesses, and compelling the discovery and
should take steps first to lead evidence against the workman charged,
production of documents, and shall be deemed to be a Civil Court within the meaning
give an opportunity to the workman to cross-examine the said
of Sections 345 and 346 of the Code of Criminal Procedure, 1973. Clerical or
evidence and then should the workman be asked whether he wants to
arithmetical mistakes in any order passed by a Certifying officer or appellate
give any explanation about the evidence led against him.
authority, or errors arising therein from any accidental slip or omission may, at any
7) It is not fair in domestic enquiries against industrial employees that at
time, be corrected by that Officer or authority or the successor in office of such officer
the very commencement of the enquiry, the employee should be
or authority, as the case may be.
closely cross-examined even before any other evidence is led against
MISCONDUCT AND DOMESTIC ENQUIRY
him.
According to the Schedule annexed to the Standing Order Act, the standing
8) It is not in right spirit that a workman is called on any day without
orders of an industrial establishment must provide for “Suspension or dismissal for
previous intimation and is put to enquiry straightaway. Such a course
misconduct, and acts or omissions which constitute misconduct”.
should ordinarily be avoided in holding domestic enquiries in
In the matter of: Associated Cement Co. Ltd. V/s The Workmen & Anr.,
industrial matters.
(1964) 3 SCR 652, it was held that:
9) The rule that witness should not be disbelieved on the ground of an
inconsistency between his statement and another document unless he
 is given a chance to explain the said document, cannot be treated as a UNIT - IV
technical rule of evidence, the principle on which this rule is
CONCEPT AND IMPORTANCE OF SOCIAL SECURITY
premised is one of natural justice.
In Tata Oil Mills Co. Ltd. V/s Its Workmen, AIR 1965 SC 155, the Supreme Like other socio-economic concepts, the connotation of the term “social
Court held that, findings properly recorded in domestic enquiries which are conducted security” varies from country to country with varying political ideologies. For
fairly, cannot be re-examined by industrial adjudication unless the said findings are example, social security in the socialist countries implies complete protection to every
either perverse, mulish, or are not supported by any evidence. In Kusheshwar Dubey citizen of this country from the cradle to the grave.
V/s Bharat Coking Coal Ltd & Ors, it was observed that, it is desirable that if the
In other countries which are relatively less regimented ones, social security
incident giving rise to a charge framed against a workman in a domestic enquiry is
refers to measures of protection afforded to the needy citizens by means of schemes
being tried in a criminal Court, the employer should stay the domestic enquiry
evolved by democratic processes consistent with resources of the State.
pending the final disposal of the criminal case.

In general sense, social security refers to protection provided by the society to

Punishments: Kinds of Punishments:
its members against providential mishaps over which a person has no control. The
Following are the different types of punishment may be imposed in case of
underlying philosophy of social security is that the State shall make itself responsible
misconduct committed by the workman, namely
for ensuring a minimum standard of material welfare to all its citizens on a basis wide
1) Dismissal
enough to cover all the main contingencies of life. In other sense, social security is
2) Discharge
3) With holding increments primarily an instrument of social and economic justice.
4) Demotion to a lower grade
5) Suspension
All the industrial countries of the world have developed measures to promote
6) Fine
7) Warning or censure the economic security and welfare of individual and his family. These measures have
come to be called as social security. Social security is dynamic concept and an
indispensible chapter of a national programme to strike at the root of poverty,
unemployment and diseases. Social security may provide for the welfare of persons
who become incapable of working by reason of old age, sickness and invalidity and or
unable to earn anything for their livelihood.

Definition of social security:

According to a definition given in the ILO publication’, “Social security is the
security that society furnishes through appropriate organization against certain risks to
which its members are exposed. These risks are essentially contingencies of life
which the individual of small means cannot effectively provide by his own ability, or
foresight alone or even in private combination with his fellows”.
 William Beveridge has defined social security as “a means of securing an intellectual and moral well-being of the community by rendering available
income to take the place of earnings when they are interrupted by unemployment, resources which are used up by avoidable disease and idleness.
sickness or accident to provide for the retirement through old age, to provide against Importance of Social Security
loss of support by death of another person or to meet exceptional expenditure Social security is basically related to the high ideals of human dignity and
connected with birth, death, or marriage. The purpose of social security is to provide social justice.
an income up to a minimum and also medical treatment to bring the interruption of The importance of social security for the employee as well as the society is
earnings to an end as soon as possible.” incredibly high:
a) Social Security is the main instrument of bringing about social and economic
Social Security: characteristics of the social security program
justice and equality in the society.

The main characteristics of the social security program are as follows: b) Social Security is aimed at protecting employees in the event of contingencies.

1. Social Security Schemes are providing social assistance and social insurance This support makes the employees feel psychologically secured. This

to employees who have to face challenges of life without regular earning due enhances their ability to work.

to some contingencies in their life. c) Money spent on social security is the best investment which yields good

2. These Schemes are implemented by enactments of law of the country. harvest. The workforce maintenance is very essential not only for the

3. They generally are relief providers to employees who are exposed to the risks organization but also for the country at large.

of economic and social security. This protection is provided to them by d) In a welfare state, social security is an important part of public policy. In

members of the society of which he is a part. countries where social security is not given adequate consideration in public

4. These Schemes have a broad perspective. They not only provide immediate policy, the government remains unsuccessful in maintaining equality and

relief to the employees who have suffered on account of contingencies, but justice.

also provide psychological security to others who may face the same problems India is a Welfare State as envisaged in her constitution. Article 41 of the

in times to come. Indian Constitution lays down, “The State shall within the limits of its economic

Objectives of Social Security: capacity and development make effective provision securing the right to work, to

The objectives of social security can be sub-summed under three, categories: education and to public assistance in case of unemployment, old age, sickness, and

1. Compensation: Compensation ensures security of income. It is based on this disablement and other cases of unserved wants.”

consideration that during the period of contingency of risks, the individual and Thus, social security constitutes an important step towards the goal of Welfare

his/her family should not be subjected to a double calamity, i.e., destitution State, by improving living and working conditions and affording people protection

and loss of health, limb, life or work. against the various kinds of hazards.

2. Restoration: It connotates cure of one’s sickness, reemployment so as to Social security benefits are provided in India through legislations. Workmen’s

restore him/her to earlier condition. In a sense, it is an extension of Compensation Act, 1923 enforces the employer to provide compensation to a

compensation. workman for any personal injury caused by an accident, for loss of earnings etc. The
Employees’ State Insurance Act, 1948 enforces the employers to provide sickness
3. Prevention: These measures imply to avoid the loss of productive capacity benefits, maternity benefit to women employees, disablement benefit, dependent’s
due to sickness, unemployment or invalidity to earn income. In other words, benefit, funeral benefit and medical benefits.
these measures are designed with an objective to increase the material,
 The Employees Provident Fund and Miscellaneous Provisions Act, 1952 maternity protection and general aspects of social security.32 ILO deals with
enforces the employer to provide provident fund, deposit-linked insurance etc. The following social security areas and activities at international level:
Maternity Benefit Act, 1961 provides for medical benefits, maternity leave etc. The
1. Manpower Organization and Vocational Training:
Payment of Gratuity Act, 1952 provides for the payment of gratuity at the time of
retirement. The ILO as well as the United Nations made concerted efforts in the post
Social security legislations in India suffer from the defects like duplication. second world war period in the manpower field to stimulate the most effective and
For example. Employees’ State Insurance Act and Maternity Benefit Act provide for productive use of human resources in the whole process of economic and social
maternity benefits. In addition, different administrative authorities implement the law, development. The ILO manpower experts have been made available to developing
resulting from overlapping. Hence, the Study Group (1957-58) appointed by the countries seeking help in assessing their manpower needs and in organizing
Government of India suggested an integrated social security scheme in India. vocational training programmes for meeting skill shortage.
This integrated social security scheme should provide for medical care,
2. Women Workers:
insurance against sickness, maternity benefits unemployment insurance, employment
injury, and old age pension. This scheme should be enforced by a single agency in The ILO constitution specifically provides for the protection of women
order to avoid overlapping and duplication. workers. The first Session of the International Labour Conference held in Washington
India is a welfare state and social security is an essential component of in October 1919, adopted international standards protecting expectant mothers and
government policy. limiting the amount of night work by women. In 1937, the Conference laid down the
Social security benefits in India are provided in two major way: ILO’s aims in regard to women workers, namely
1. Social Insurance:
a) the guarantee of all civil and political rights;
In this scheme, a common fund is established with periodical contributions
b) full opportunities to improve their education;
from workers, according to their nominal paying capacity. The employers and state
c) better conditions for finding employment;
provide the portion of the finance. Provident fund and group insurance are example of
d) equal pay for equal work;
this type.
e) legal protection against dangerous working conditions;
2. Social Assistance:
f) legal maternity protection; g. the same trade union rights as that of
Under this, the cost of benefits provided is financed fully by the government
men.
without any contributions from workers and employers. However, benefits are paid
3. Social Security:
after judging the financial position of the beneficiary. Old age pension is an example.
Influence of I.L.O. The ILO has done the pioneering work in the field of social security. One of
United Nation and ILO have made many efforts regarding social security at the most important instruments adopted by the ILO is the Social Security (Minimum
international level by number of Conventions and Recommendations. ILO takes part Standards) Convention, 1952. Currently, the organization’s main object is to extend
in vocational training, women workers conditions and social security for improving social security to agriculture and plantation workers.33 ILO also established the
the working conditions of workers at international level. A number of International Social Security Association (ISSA). The ILO is the UN’s agency with a
recommendations and conventions deal with workmen’s compensation, sickness mandate to improve standards , conditions and social security of workers throughout
insurance, invalidity, old-age, and survivor’s insurance , unemployment provisions, the world. The ILO’s most important function is to adopt Conventions and
Recommendations, which set minimum labour standards internationally. The
principles embodied in the conventions, if adopted and ratified, impose a duty to request to the International Labour Office and to other Members information on
comply on the ratifying states. national policies, laws and regulations relating to emigration and immigration;
information on special provisions concerning migration for employment and the
International Conventions Relating to the Social Security:
conditions of work and livelihood of migrants for employment information
The ILO Conventions have been greatly adored by the working class all over concerning general agreements and special arrangements on these questions
the world for their beneficial, humanitarian and missionary influence. The principal concluded by the Member. Members are required to establish, an adequate and free
means of action in the ILO is the setting up the International Labour Standards in the service to assist migrants for employment, and in particular to provide them with
form of Conventions and Recommendations. Conventions are international treaties accurate information.
and are instruments, which create legally binding obligations on the countries that
Equal Remuneration Convention, 1951:
ratify them.
This Convention was held on June 6, 1951 at Geneva and decided upon the
ILO has number of Conventions relating to social security of workers Main
adoption of certain proposals with regard to the principle of equal remuneration for
Conventions are given below—
men and women workers for work of equal value. The purpose of this Convention is
Workmen’s Compensation (Accidents) Convention, 1925: that the ordinary, basic or minimum wage or salary and any additional emoluments
whatsoever payable directly or indirectly, whether in cash or in kind, by the employer
The ILO adopted Convention relating to workmen’s compensation as early as
to the worker and arising out of the worker's employment and rates of remuneration
1921 followed by other conventions on the same subject in the year 1925. It provides
established without discrimination based on sex. Where such action will assist in
for the payment of compensation for employment injury to all employees except those
giving effect to the provisions of this Convention measures shall be taken to promote
employed in agriculture, ships and fishermen. Each Member of the International
objective appraisal of jobs on the basis of the work to be performed. The methods to
Labour Organization which ratifies this Convention undertakes to ensure that
be followed in this appraisal may be decided upon by the authorities responsible for
workmen who suffer personal injury due to an industrial accident, or their dependants,
the determination of rates of remuneration, or, where such rates are determined by
shall be compensated on terms at least equal to those provided by this Convention.
collective agreements, by the parties thereto. Differential rates between workers
Workmen’s Compensation (occupational diseases) Convention, 1925: which correspond, without regard to sex, to differences, as determined by such
objective appraisal, in the work to be performed shall not be considered as being
The list of occupational diseases established in the international and national
contrary to the principle of equal remuneration for men and women workers for work
legal system has played important roles in both prevention and compensation for
of equal value.
workers’ diseases. Since the first establishment of the ILO list of occupational
diseases in 1925, the list has played a key role in harmonizing the development of The Social Security (Minimum Standards) Convention, 1952:
policies on occupational diseases at the international level.
It covers all nine branches54 of social security and sets minimum standards for
Migration for Employment Convention (Revised), 1949: these nine branches. It is considered as a tool for the extension of social security
coverage and provides ratifying countries with an incentive for doing so by offering
This Convention was revision of the Migration for Employment Convention,
flexibility in its application, depending on their socio-economic level. It came into
1939 and was held on June 8, 1949. Each Member of the International Labour
force on April 27, 1955. By May 2009, 44 countries had ratified the Convention. The
Organization for which this Convention is in force undertakes to make available on
Convention has been ratified by India in 1964. The 1952 ILO Convention on Social (g) Maternity benefit: This benefit includes pregnancy, confinement and their
Security (Minimum Standard) has divided social security into nine components: consequences resulting in the suspension of earnings. Provision should be for medical
care, including pre-natal confinement, post-natal care and hospitalization if necessary.
a) Medical care: It covers pregnancy, confinement, and its consequences and any
Periodical payment limited to 12 weeks should be made during the period of
disease which may lead to a morbid condition. The need for pre-natal and post-natal
suspension of earnings.
care, in addition to hospitalization, was emphasized. A morbid condition may require
general practitioner care, provision of essential pharmaceuticals and hospitalization. (h) Invalidism benefit: This benefit, in the form of periodical payments should cover
the needs of workers who suffer from any, disability arising out of sickness or
(b) Sickness benefit: It includes incapacity to work following morbid condition
accident and who are unable to engage in any gainful activity. This benefit should
resulting in loss of earnings. This calls for periodical payments based on the
continue till invalidism changes into old age, when old age benefits would become
convention specification. The worker need not be paid for the first three days of
payable.
suspension of earnings and the payment of benefit may be limited to 26 weeks in a
year. (i) Survivor’s benefit: It means periodical payments to the family following the death
of its breadwinner and should continue till the entire period of contingency. The role
(c) Unemployment benefit: It covers the loss of earning during a worker’s
of the International Labour Organization in creating international standards of social
unemployment period. When he is capable and available for work but remains
insurance and in the promotion of social security has been significant. Through its
unemployed because of lack of suitable employment. This benefit may be limited to
Conventions and Recommendations, the ILO has exerted its influence to extend the
13 weeks payment in a year, excluding the first seven days of the waiting period.
range and classes of persons protected and the contingencies covered, and has
(d) Old-age benefit: This benefit provides for the payment-the quantum depending improved the efficacy of the benefits assured.
upon an individual’s working capacity during the period before retirement of a certain
Discrimination (Employment and Occupation) Convention, 1958:
amount beyond a prescribed age and continues till death.
The General Convention of ILO convened this Convention on June 4, 1958 at
(e) Employment injury benefit: It covers the following contingencies resulting from
Geneva. The main objective of this convention is that there shall be no discrimination
accident or disease during employment:
in the field of employment and occupation, and Considering that the Declaration of
i. Inability to work following a morbid condition, leading to suspension of Philadelphia affirms that all human beings, irrespective of race, creed or sex, have the
earning; right to pursue both their material well-being and their spiritual development in
ii. Total or partial loss of earning capacity which may become permanent; conditions of freedom and dignity, of economic security and equal opportunity,
iii. Death of the breadwinner in the family, as a result of which family is deprived discrimination constitutes a violation of rights enunciated by the Universal
of financial support. Medical care and periodical payment corresponding to an Declaration of Human Rights. Each Member for which this Convention is in force
individual’s need should be available. shall undertake and practice the following by methods appropriate to national
conditions –
(f) Family benefit: It means responsibility for the maintenance of children during an
entire period of contingency. Periodical payment, provision of food, housing, a. to seek the co-operation of employers' and workers' organisations and
clothing, holidays or domestic help in respect of children should be provided to a other appropriate bodies in promoting the acceptance and observance
needy family. of this policy;
 b. to enact such legislation and to promote such educational programmes The Invalidity, Old-Age and Survivors' Benefits Convention, 1967 and the
as may be calculated to secure the acceptance and observance of the Invalidity, Old-Age and Survivors' Benefits Recommendation, 1967
policy;
It covers old-age benefit, invalidity benefit and survivor's benefit. The
c. to repeal any statutory provisions and modify any administrative
coverage for payment of compensation in case of invalidity, death or old age is 50%
instructions or practices which are inconsistent with the policy;
for industrial employees, 25% for all employees including agriculture. This
d. to pursue the policy in respect of employment under the direct control
Convention has got parts namely; General provisions, invalidity benefit, old-age
of a national authority;
benefit, survivals benefit, standards to be complied with by periodical payments,
e. (e) to ensure observance of the policy in the activities of vocational
common provisions, miscellaneous and final provisions. It has total 54 Articles. Each
guidance, vocational training and placement services under the
Member which has ratified this Convention may subsequently notify the Director-
direction of a national authority;
General of the International Labour Office that it accepts the obligations of the
f. to indicate in its annual reports on the application of the Convention
Convention in respect of one or more of Parts II to IV not already specified in its
the action taken in pursuance of the policy and the results secured by
ratification.
such action.
Occupational Safety and Health Convention, 1981
The Equality of Treatment (Social Security) Convention, 1962:
The General Conference of the International Labour Organisation,
It has decided upon the adoption of certain proposals with regard to equality of
convened this Convention at Geneva on June 3, 1981 and decided certain proposals
treatment of nationals and non-nationals in social security. The General Conference of
with regard to safety and health and the working environment for the workers. This
the International Labour Organization, having been convened at Geneva by the
Convention applies to all branches of economic activity. It covers all branches in
Governing Body of the International Labour Office, and having met in its Forty-sixth
which workers are employed, including the public service. The term workers covers
Session on 6 June 1962, and decided upon the adoption of certain proposals with
all employed persons, including public employees.
regard to equality of treatment of nationals and non-nationals in social security. By
May 2009, 37 countries had ratified the Convention. Vocational Rehabilitation and Employment (Disabled Persons) Convention,
1983:
The Employment Injury Benefits Convention, 1964:
The General Conference of the International Labour Organization, convened
It applies to employment injury benefits to the workers. This Convention
at Geneva by the Governing Body of the International Labour Office on June 1, 1983,
provides for payment of cash and medical benefits in cases of employment injury and
and noting the existing international standards contained in the Vocational
at least 75% of expenses involved for all employees. The General Conference of the
Rehabilitation (Disabled) Recommendation, 1955, and the Human Resources
International Labour Organization, convened at Geneva by the Governing Body of the
Development Recommendation, 1975, and since after the adoption of the Vocational
International Labour Office, had decided upon the adoption of certain proposals with
Rehabilitation (Disabled) Recommendation, 1955, significant developments have
regard to benefits in the case of industrial accidents and occupational diseases, By
occurred in the understanding of rehabilitation needs. The scope and organization of
May 2009, 24 countries had ratified this Convention. A Member State whose
rehabilitation services, and the law and practice of many Members on the questions
economic and medical facilities are insufficiently developed may avail itself by a
covered that Recommendation. The year 1981 was declared by the United Nations
declaration accompanying its ratification of the temporary exceptions provided for in
General Assembly, the International Year of Disabled Persons, with the theme "full
the Articles.
participation and equality" and that a comprehensive World Programme of Action The Maternity Protection Convention, 2000 and the Maternity Protection
concerning Disabled Persons is to provide effective measures at the international and Recommendation, 2000
national levels for the realization of the goals of "full participation" of disabled
This Convention revised a 1952 ILO Convention (C103), which in turn was a
persons in social life and development. These developments made it appropriate to
revision of the original 1919 ILO Convention (C3). The revision was aimed at gaining
adopt new international standards on the subject which take account, in particular, of
more ratification by easing the requirements of the 1952 convention. It covers
the need to ensure equality of opportunity and treatment to all categories of disabled
maternity benefit to women workers. This Convention provides comprehensive
persons, in both rural and urban areas, for employment and integration into the
protection to pregnant working women in case unemployment is due to child birth. By
community.
May 2009, 17 countries had ratified the Convention.
The Employment Promotion and Protection against Unemployment Convention,
Safety and Health in Agriculture Convention, 2001:
1988 and the Employment Promotion and Protection against Unemployment
Recommendation, 1988: The purpose of this Convention was to wider the term agriculture. According
to this Convention agriculture covers agricultural and forestry activities carried out in
It relates to unemployment benefit. It is a revision of the Unemployment
agricultural undertakings including crop production, forestry activities, animal
Provision Convention of 1934. It provides standards in the field of employment and
husbandry and insect raising, the primary processing of agricultural and animal
unemployment protection, notably for the promotion of full, productive and freely
products by or on behalf of the operator of the undertaking as well as the use and
chosen employment, the principles of equality of treatment and non-discrimination,
maintenance of machinery, equipment, appliances, tools, and agricultural
the methods of providing unemployment benefit.
installations, including any process, storage, operation or transportation in an
Safety and Health in Mines Convention, 1995: agricultural undertaking, which are directly related to agricultural production. The
term agriculture does not cover subsistence farming; industrial processes that use
According to this Convention workers have a need for, and a right to,
agricultural products as raw material and the related services; and the industrial
information, training and genuine consultation on and participation in the preparation
exploitation of forests.
and implementation of safety and health measures concerning the hazards and risks
they face in the mining industry, and recognizing that it is desirable to prevent any The Maritime Labour Convention, 2006:
fatalities, injuries or ill health affecting workers or members of the public, or damage
The Maritime Labour Convention, 2006 is an international labour Convention
to the environment arising from mining operations, and the need for co-operation
adopted by the International Labour Organization (ILO). It provides international
between the International Labour Organization, the World Health Organization, the
standards for the world’s first genuinely global industry. Widely known as the
International Atomic Energy Agency and other relevant institutions and noting the
“Seafarers’ Bill of Rights,” was adopted by government, employer and workers
relevant instruments, codes of practice, codes and guidelines issued by these
representatives at a special ILO International Labour Conference in February 2006. It
organizations and Having decided upon the adoption of certain proposals with regard
is a unique feature of this Convention as it aims both to achieve decent work for
to safety and health in mines.
seafarers and to secure economic interests through fair competition for quality ship
owners.
Work in Fishing Convention, 2007: 2. If the injury, not leading in death or permanent total disablement, is caused
This Convention addresses such matters as minimum age for work on a fishing by an accident which is directly attributable to:
vessel, medical standards, work agreements, occupational safety and health, and The employee having at the time of the accident is under the influence of
social security. drink or drugs;
Domestic Workers Convention, 2011: The willful disobedience of the employee to an order if the rule is expressly
given or expressly framed, for the purpose of securing the safety of
Recognizing and considering the significant contribution of domestic workers
employees; or
to the global economy, which includes increasing paid job opportunities for women
The willful removal or disregard by the employee of any safety guard or
and men workers with family responsibilities, greater scope for caring for ageing
other device which has been provided for the purpose of securing the safety
populations, children and persons with a disability, and substantial income transfers
of employees.
within and between countries, and considering that domestic work continues to be
Nature of Liability
undervalued and invisible is mainly carried out by women and girls, many of whom
Imagine what will happen if an employee who is working putting in great
are migrants or members of disadvantaged communities and who are particularly
benefits gets to know that he/she will not be getting any benefits. After all, people
vulnerable to discrimination in respect of conditions of employment and of work, and
tend to do something to get something in return. When the principle of vicarious
to other abuses of human rights.
liability is applied, the employer is liable to pay compensation irrespective of his/her
EMPLOYEES COMPENSATION ACT, 1923 negligence. Employer anticipates it as damages payable to the employees but it is
actually a relief for them. An Employer becomes liable when employees have
Every employee needs a secured job and wants to get compensation for the sustained injuries by any accident or unavoidable situations during the course of
expenses he has incurred. This is a requirement that needs to be fulfilled by the employment. The question arises: Will an employee who is a part-time worker would
company whether it is small scale or large scale. After all, a company’s success still be entitled to the benefits of the Act? Yes, the employer will still get the benefits
depends on its employees. Therefore, the protection of employees’ and their safety is of the Act.
a top priority of a company. This article is all about how much compensation is given, Who may get the compensation? To what extent the employers are liable?
under what conditions, who is entitled to claim compensation and a lot more. To be eligible for the Employees’ Compensation Act’s benefits there are some
requirements which need to be fulfilled:
Characteristic features of the Act
1. You must be an employee of the Company or Organization.

The “Employees Compensation Act, 1923” is an Act to provide payment in the 2. You must have been injured at the workplace or the job was as such that

form of compensation by the employers to the employees for any injuries they have you have been injured.

suffered during an accident. Earlier this Act was known as the Workmen
Doctrine of added peril
Compensation Act, 1923. When the employer is not liable to pay compensation-
When an employee performs something which is not required in his duty, and
which involves extra danger, the employer cannot be held liable to pay compensation
1. If the injury does not end in the entire or partial disablement of the
for the injuries caused. In Devidayal Ralyaram v. Secretary of State it was ruled that
employee for a period exceeding three days.
the doctrine of added peril was used as defense and the employer was not liable for Lung cancer caused by asbestos dust and Diseases due to effect of extreme
the compensation. climatic conditions.
For Example in Miners are at a risk of developing a disease called silicosis.
Adjudication of Compensation Sometimes miners also develop lung diseases due to exposure to dust. The people
The adjudication is done by the commissioner in calculation of the amount of who work in agricultural lands, develop diseases through spraying of pesticides.
compensation. The quantum of compensation is calculated from the date of the These pesticides are toxic in nature and are health hazards to many farmers.
accident. There are thousands of workplaces where occupation itself is dangerous in
Self-inflicted Injury nature. Provided that the employer shall not be liable:
If a worker inflicts an injury to himself or herself it is a self-inflicted injury. a. if any injury does not result in the total or partial disablement of the employee
The injury may be intentional or accidental but the employer is not liable for such for a period exceeding three days;
injuries. There are some types of jobs that have a high risk for self-inflicted injuries b. if any injury does not result in death or permanent total disablement caused by
which include- an accident which is directly attributable to-
i. if the employee is under the influence of drink or drugs at that time,
Law enforcement
ii. the willful disobedience of the employee to an order expressly given,
Medical employees
or to a rule expressly framed, for the purpose of securing the safety of
Farmers
employees,
Teachers
iii. the willful removal by the employee of any safety guard or other
Salespeople
devices which he knew to have been provided for the purpose of
Contributory negligence
securing the safety of employees.
Employees owe a duty to their employers to carry out their work with
reasonable care so as to avoid accidents and injury. Employers are vicariously liable Part A of Schedule III
for the negligence of their employees but are entitled to claim a contribution or
If an employee contracts any disease that is mentioned in occupational
indemnity from their negligent employee in appropriate circumstances. So if there is
diseases or the employee is employed for a continuous period of six months (this does
negligence on the part of both employee and the employer then the employer will be
not include the service period) and not less than that, the employer shall not be liable
liable to pay compensation to the extent of his own negligence, not of the employee.
to pay the compensation as the disease will be deemed to be injury and it shall be
Hence, the compensation amount may reduce as the employer will not be liable for
considered as out of course of employment.
the negligence of the employee.
Employer’s liability for Compensation Section 3:
Part B of Schedule III
There are certain occupations which expose employees to particular diseases
that are inherent-
1. Diseases caused by phosphorus or the toxic substance present, all include
Infra-red radiations;
exposure to risk concerned.
Skin diseases due to chemical or leather processing units;
2. Diseases caused by mercury or toxic substances found exposure to the risk
Hearing impairment caused by noise;
concerned.
 3. Diseases caused by benzene or the toxic substances found which pose risk him to avoid going out. As Rahul had to incur expenses on visiting the doctor and
to the concerned. medicines, he approached his employer for compensation.
4. Diseases caused by nitro and amino toxic substances of benzene involve
risk to the concerned. The company had bought a workplace compensation insurance policy from the
insurance company. The Company KLM Consultant considered it as an occupational
These diseases are considered occupational diseases, and they are deemed to disease and approached the employee’s compensation insurance company to recover
be out of the course of employment and therefore the employer will not be liable to its legal liability and hence pay the compensation to Rahul.
pay the compensation. After checking all the documents submitted by Rahul, the insurer considered it
as an occupational disease and agreed to settle the claim. The insurer covered medical
Part C of Schedule III
expenses incurred by Rahul on his treatment.

If an employee contracts a disease that is mentioned as an occupational disease

Under Section 3(3) The Central Government or the State Government gives a
which is specific to that employment, during a continuous period that is less than the
notification in the Official Gazette which species the diseases which will be deemed
period mentioned under this part of Schedule 3 is known as occupational diseases. It
to be occupational diseases under the provisions of sub-section(2) and in the case of
will be deemed that the disease has arisen out of and in the course of the employment,
notification by the state government, these diseases are declared by the Act. Section
the contracting of such disease will be deemed to be an injury by accident within the
3(4) No compensation will be payable to an employee unless the disease is directly
meaning of this Section:
attributable to a specific injury that arises out of or in the course of employment.

Pneumoconiosis is a disease caused by sclerogenic mineral dust (silicosis, Employment

anthracosilicosis, asbestosis) and silico-tuberculosis if silicosis is an essential factor in Underemployment, an employee is one who works under the employer and
causing the resultant incapacity or death, such diseases are considered as occupational has to work as per the terms of the company or the employer.
diseases.
Personal injury
For instance, an office of KLM Consultant was located in a new place. The A personal injury can be compensated only in some circumstances. Injury
new place had large areas, and a new wallpaper was also placed, the area painted, and sustained by the employee must be a physical injury. In the case of Richmond Adult
a new carpet was also laid. Employees worked in cubicles. However, within a month Community College v McDougall (2008), M has suffered injuries mentally,
of shifting, one of the employees, Rahul Sharma complained of skin allergy. At the psychological disorders as he was offered a job as a database assistant in a college.
new workplace, there were no windows in the cubicle where Rahul had shifted. A But when it learned about the medical history and the psychological disability M was
photocopy machine was near to his cubicle. Since his shifting, he started complaining suffering from, the college withdrew the offer. M brought a disability discrimination
of unpleasant odors, a feeling of excessive tiredness and irritation in eyes, nose, and claim from the college. The tribunal accepted that m was suffering from mental
throat. Also, some paint boxes were kept at the office which was still not removed impairment but she was not disabled within the meaning of Section 1 of the Disability
even after his complaining. He also complained about the increasing noise and Discrimination Act, 1995.
distraction there. The rashes which started a week ago with itching and redness now Accident
turned more grievous and had spread from the initial location of the hand to surfaces The Act provides that compensation is provided to employees and their
of the wrists. Due to his allergic condition, Rahul had to visit a doctor who advised dependants only if the injuries from the accident includes occupational diseases. The
accident must occur in the course of employment the Act also applies to railway 1. When the injury occurred, the employee must have been engaged in the
servants and persons employed in any such capacity as specified in Schedule 2 of the business of the employer. Also, he must not be doing something for his
Employees Compensation Act. The people employed in factories, mines, plantations, personal benefit.
vehicles, construction works, and certain other hazardous occupations come under 2. The accident must occur where the employer was performing his
Schedule II. duties.
A fatal accident is one where there is death or a high risk of loss of life of the 3. The injuries occurred because of the risk incidental to the duties of the
employee. In the case of a fatal accident, the employee might die or suffer severe work or services or if the nature or condition of employment is
disablements and injuries. On the other hand, non-fatal accidents are those accidents inherent.
that do not have a high probability of death. In the case of non-fatal accidents, the
employee or the workman might suffer disabilities or any type of personal injury. Notional extension of Employer’s Premises
When there is a causal connection between the accident and the place where
Both fatal and non-fatal accidents are covered by the Employees the employee is working, compensation is payable for the disability or death of the
Compensation Policy, provided such accidents result in the mentioned contingencies person according to the Employees Compensation Act. This is the Doctrine of
in the act. Fatal accidents are taken as those which result in death, or permanent total Notional Extension of the workplace. The theory of this doctrine was executed in
disablement, permanent partial disablement or fatal injuries. If any of these some cases:
contingencies occur, the employees’ compensation policy would pay the claim faced
by the company. In the case of non-fatal accidents though, the covered contingencies Moondra & Co. V/s Mst. Bhawani there was a truck driver who was told by
might not occur. The employee or worker might not face any type of disablement or his employer to drive a petrol tanker. The driver found a leak in the tank and sought
injury from such accidents. If the employee or workman suffers from a type of permission from the employer to look for the source of the leakage. While searching
disablement and the disablement does not last for more than 3 days, the claim would he lit a matchstick and the tank caught fire. The driver received burn injuries and died.
not be paid. As a result, in several employees’ compensation policies, non-fatal It was held by the court that the family members of the deceased would be entitled to
accidents are usually not covered unless they cause a disablement which lasts for compensation since the accident took place at the workplace and in the course of
more than 3 days. employment.

In Lister v Romford Ice and Cold Storage Company Limited, House of Lords Willful disobedience of orders or safety devices, etc.

upheld the decision of the Court of Appeal that an employee owed a duty in contract If the employee disobeys the order expressly given or denies to obey any rules.

to his employer to take reasonable care in the use of a vehicle at work. In the event The rules are made for the safety of the workmen but if they disobey the accident

that the employer was liable to pay damages arising from the employee’s negligence, might happen. The accident can take place if the employee willfully disregards the

the employer could bring a claim to recover that loss from his employee. safety guards or any other device. If the employee knew that he has been provided
safety for the purpose of securing employees and still disregards it is said to be done

Arising out of and in the course of employment willfully.

Three factors determine whether the act is arising out of or in the course of
employment:
Compensation under Agreement Liability of Insurance Company or owner of vehicle

A compensation agreement ensures that an individual will get paid for the The question is whether the insurance coverage is available to the insured
services he or she has provided to a company as an employee. A compensation employer-owners? The owner of motor vehicles, in relation to their liabilities under
agreement ensures that an individual will get paid for the services he or she provides the Employment Compensation Act on account of motor accident injuries caused to
to a company as an employee. their employees would include additional statutory liability foisted on the insured
employers under Section 40 of the Compensation Act.
The question of compensation and negligence of employee
Amount of compensation Section 4
The question of compensation and negligence of employees is explained
1. Where death results from the injury-In case the employee dies, an amount
above in contributory negligence. When there is negligence on the part of the
equal to fifty percent of the monthly wages multiplied by a factor as per given
employer and employee, the employer is liable to pay compensation only to the extent
in the Schedule 4 of the act or rupees eighty thousand is given whichever is
of his negligence. He will not be liable to pay the full amount of compensation. So in
more.
the case of negligence of the employee, he will get only a part of compensation.
2. Where permanent total disablement results from the injury- In case the
employee has total disablement the amount given is sixty percent or rupees
Alternative Remedy under Section 3(5)
ninety thousand whichever is more.
Any right to compensation cannot be conferred by an employee in respect of 3. Where permanent partial disablement results from injury- In the case of
injuries,if he has instituted a suit for damages in a civil court, in respect of any injury permanent partial disablement, the compensation provided is equal to
against any employer. No suit for damages shall be maintainable by an employee in disability as sixty percent or rupees ninety thousand.
any court of law.
Compensation to be paid when due and penalty for default Section 4-A
Liability of Insurance Company
When the employer does not accept liability for compensation to the extent
If any claim is due to the insurance company, the company cannot escape
claimed, he shall be bound to make a payment may be provisional and such payment
liability arising out of claim simply because notice was not issued to the company.
shall be deposited to the employee or the commissioner. The commissioner can direct
For instance, if a notice is issued to the owner of the vehicle it is sufficient to get
the employer to pay interest in addition to the amount at the rate of twelve percent per
insurance from the company. In the case of Ram Karan v. Vijayanand the petition was
annum. The rate of interest can also increase which may be specified by the Central
filed by Ram Karan under section 482 of the code of criminal procedure because he
Government.
had been illegally deprived of the benefits of the premature release. It was a violation
of Articles 14, 19 and 21 of the Constitution of India. It was held that he was entitled Method of calculating Wages Section 5:
to be released as per the rules.
The basis for the calculation of compensation is the monthly wage system. It
means the amount of wages deemed to be payable for a month. A case dealing with
the method of calculating wages was Zubeda Bano v. Maharashtra Road Transport
Corporation, 1990. Batta does not amount to wages for computing compensation. It is
paid to workman per day to cover special expenses incurred by him due to the nature under a legal disability. The compensation may be deposited to the
of his work. commissioner and a direct payment will not be allowed by the employer to
the employee.
Another case was New ‘India Assurance Co. Ltd., Hyderabad v. Kotam Appa 2. In the case of a deceased employee, an employer can make payment to any
Rao, 1995, when the employer has been giving service to the employer during a dependant advances. The compensation will amount to equal to three
continuous period of not less than twelve months preceding the accident, and when months’ wages of the employee and the amount shall not exceed the
the employer is liable to pay compensation, the employee will be liable one-twelfth of compensation payable to the dependant. If the amount exceeds, it may be
the total wages. The employer is required to pay the compensation which is due for deducted by the commissioner from the compensation and repaid to the
payment to employees in the last twelve months of that period. employer.
3. An amount not less than ten rupees which is payable may be deposited with
Review Section 6: the commissioner on behalf of that person.
4. The receipt of the commissioner will be sufficient discharge of the amount
1. Any half monthly payment can be reviewed by the commissioner under
if any compensation is deposited with him.
this act if there is an agreement between the parties or if there is an order
5. When any compensation is deposited with the commissioner and he is
given by the commissioner. A certificate of a qualified medical practitioner
payable to any person, he may if the person to whom the compensation is
will be accompanied that there is a change in the condition of the employee
to be payable is not a woman or a person with a legal disability then he
subject to the rules and regulations under the Act.
may pay the money to the person who is entitled to get the compensation.
2. Any half monthly payment may be reviewed, can be continued, increased,
6. When any lump sum amount is deposited with the commissioner and he is
decreased or ended under the act or if the accident is found which resulted
payable to a woman or a person who is legally disabled, such amount can
in permanent disablement. Such an employee may get less amount because
be invested for the benefit of any other woman or a person with a
he had already received by way of half monthly payments.
disability. The commissioner may direct the amount in such cases.

Communication of Payments Section 7:

Compensation not to be assigned, attached or charged Section 9:

Commutation of half- monthly payments- Any right to receive half- monthly

Compensation not to be assigned, attached or charged, save as provided by
payment agreement between the parties is commutation of payments. If the parties do
this Act, no lump sum or half- monthly payment payable under this Act shall in any
not agree and the payment continues for not less than six months then on the
way be capable of being assigned or charged or be liable to attachment or pass to any
application of either party, the Commissioner will redeem the payment of a lump sum
person other than the workman by operation of law, nor shall any claim be set off
amount which was agreed by the parties.
against the same.

Distribution of Compensation Section 8:

Notice and claims of the accident Section 10:
Rights of heirs of dependents
1. Compensation will not be provided to the employee whose injury has A claim for compensation cannot be entertained by a commissioner unless the
resulted in death and lump sum payment will also be not provided who is notice of the accident is given in a certain manner.
Power to acquire statements from employers regarding fatal accidents Section The incorporation of words “assessment of loss of earning capacity by the
10A: qualified medical practitioner” in Section 4(1)(c)(ii) has some purpose and it is not a
case of ambiguity.
When a commissioner receives information about the death of an employee,
because of an accident that is arising out of or in the course of employment, he can
If there’s no provision that the Commissioner to see the compensation and he ignores
send a registered post or a notice to the employer of the employee, to submit a notice
the medical practitioner’s report, there is no question of avoiding it by Commissioner
within thirty days of service. The statement or notice shall be in a prescribed form
unless he desires a second report from the Medical Board; New Asian nation
mentioning the circumstances under which the death took place. Also stating that
Assurance Co. Ltd. v. Sreedharan, 1995.
whether the employer is liable or not to deposit compensation on the death of the
employee.
Contracting Section 12:

Reports of fatal accidents and serious bodily injuries Section 10B: When a person (principal) is in the course of some business or trade, with any

A notice is required to be given to any authority when any law is in force for other person (contractor) for the execution of any work, the principal will be liable to

the time being, if any accident occurs on the premises of the employer which results pay the amount to the employee who has been employed in the business. The

in the death of employee or serious bodily injury the person on behalf of employer is principal is liable because compensation has to be claimed from the principal and the

required to give a notice within seven days of the death. This person shall send a amount of wages will be calculated by the employer.

report to the commissioner giving details of the death or serious bodily injury. It will
be done only when it is provided by the state government that instead of sending the When the principal will be liable to pay he will be indemnified by the

report to the commissioner it is sent to another authority to whom a notice can be contractor or any other person from whom the employee can claim compensation. The

given. “Serious bodily injury” means injury to a limb or permanent loss of sight or agreement between the principal and the contractor about the right amount and

hearing or fracture of limbs or the insured person is absent from work for more than indemnity will be settled by the commissioner.

twenty days.
If the accident occurred at a different place that is either on the premises of the
workplace or any other place, the employee will not be able to recover compensation
Medical Examination Section 11:
from the employer. Other than this no other constraint is there and employees can
When an employee brings to the notice that he has met with an accident, recover compensation from the contractor instead of principal.
before the expiry of three days he will be examined free of charge by a qualified
medical practitioner. If the employee refuses to submit himself or herself for Remedies of employer against a stranger Section 13:
examination or in any way obstructs the same, his right to compensation shall be
When an employee recovers compensation as he suffered any injury and
suspended. If the employer voluntarily leaves without having been examined in the
creates a legal liability of some other person other than the person by whom the
place where he is employed, his right to compensation shall be suspended until he
compensation was paid, the other person will be entitled to be indemnified by the
returns and offers himself for examination.
person who is liable to pay damages.
Insolvency of employer Section 14: for the seaman to give any notice of the accident for compensation for the injuries
suffered.
1. When an employer enters into a contract with any insurer in respect of any
liability to an employee, and if the employer becomes insolvent or makes a In such cases the death of the seaman or the master, the claim for compensation may
composition or scheme or arrangement with his creditors in this event the be made within one year without the notice after the news of death is received by the
company is insolvent. The employee can recover the amount of claimant. Also if the ship is deemed to have been lost, within eighteen months of the
compensation if the company is winding up and it is the case of insolvency. date on which the ship was or is deemed to have been lost.
2. If in any case in the case of insolvency, the contract of the employer with
the insurer is void or voidable due to any reason such as non compliance on Special provisions relating to captains and other members of the crew of
the part of the employer, if the contract is not void or voidable the insurer aircrafts Section 15-A:
may be entitled to prove in the proceeding or at the time of liquidation for
If the captain of the aircraft is serving and he is the employer but an accident
the amount to be paid to the employee.
occurs, any crew member or the captain it is not necessary for any crew member to
3. In case the liability of the insurer to the employee is less than the liability
give notice of the accident.
of the employer to the employee, the employee may prove for the balance
amount of the compensation in the insolvency proceedings or at the time of
In such cases the death of the seaman or the master, the claim for
liquidation.
compensation may be made within one year without the notice after the news of death
4. When the compensation is a half monthly payment, the amount due for the
is received by the claimant. Also if the ship is deemed to have been lost, within
said purpose will be taken in a lump sum amount. The amount payable will
eighteen months of the date on which the ship was or is deemed to have been lost.
be half monthly payment, if it be could be redeemable it will be proof.
5. The insolvency of the employer shall not be applied where a company has
When an injured captain or any other crew member of the aircraft or the ship is
wound up voluntarily merely for purposes of reconstruction of the
discharged from any depositions or testimony of a witness is taken by a judge or
company or amalgamation with another company.
magistrate the central government or any state government may enforce any

Compensation to be first charge on assets transferred by Employer Section 14-A: proceedings on the basis that the evidence is admissible:

When an employer transfers his assets or property before any amount is due to i. if the deposition or testimony of witness is authenticated by the signature of
him in respect of any compensation, and the liability accrued is now before the date in the Judge, Magistrate, or consular officer before it is made.
law it is the first charge on that part of the assets or property so transferred as it ii. if the person who is accused or he/she is the defendant is having the
consists of immovable property. opportunity by himself or his agent to cross-examine the witness.
iii. if the deposition or the testimony of the witness is or was made in the course
Special provisions relating to Masters and Seamen Section 15: of a criminal proceeding and the proceeding was made in the presence of the
person who is accused.
When the person injured in the aircraft is the master of the ship and he is the
employer, but the accident happened and commenced on the ship, it is not necessary
Special provisions relating to employees abroad of companies and motor vehicles Penalties Section 18-A:
Section 15-B: Penalties Arise when whoever-

The special provision related to employees abroad and motor vehicles will be Fails in maintaining a book that is required to maintain under sub Section
applied to the persons or employees who are recruited by the companies registered in 3 of Section 10
India and under the Motor Vehicles Act, 1998. The person fails to make a report that is needed to send under section 10B.
Fails to inform the employee of his rights to claim compensation needed
i. The notice of the accident and the compensation claimed may be served on the under Section 17A. He or she will be punished with fine which is not less
agent of the company. Or the notice may be served on the local agent or the than fifty thousand rupees that can be extended to one lakh rupees.
owner of the motor vehicle in the country of the accident. No prosecution can take place under this section.
ii. In case the employee dies, the provisions made in this section 15-B shall
apply. The claim for compensation may be made within one year after the COMMISSIONERS
news of the death of the claimant has been received.
Section 19: Reference to Commissioner
iii. Therefore, in case of any compensation claimed, the commissioner shall
entertain the claim. Although as provided in the section is not much preferred The question arises about the liability of any person under the act, who will
in due time. pay the compensation. A question arises about the person who is injured or not or how
much amount is to be given or the duration of the compensation. Also about the extent
Returns as to Compensation Section 16:
of the disability the person who is suffering and will get compensation. All such
issues are to be resolved by the commissioner.
The state government can direct any person who is employing an employee at
a specified class, specified time and authority that is specified in the notification of
Appointment of Commissioner Section 20:
official gazette. The state government may also direct to specify the number of
Commissioner means a commissioner for employee compensation appointed
injuries in respect of compensation and the amount that has been paid by the employer
under Section 20. The state government or the central government may appoint any
during the previous year as compensation.
person to be commissioner for workmen’s or employees’ compensation act in some
specified areas. Every commissioner is identified as a public servant in the Indian
Contracting out Section 17:
Penal Code.
If an employee has made a contract or agreement before or after the
commencement of the act, and if he voluntary ceases the right to compensation from 1. If the state government appoints more than one commissioner for any area,
a specific order may regulate the business.
the employer it shall be considered null and void. The employee cannot seek
compensation for any personal injury arising out of or in the course of employment 2. Any commissioner may choose a person or more persons who possess

and the liability will be reduced of any person who is entitled to pay compensation knowledge and assist him in holding the inquiry.

under this Act.

Venue of proceedings and transfer Section 21: Powers and Procedure of Commissioners Section 23:
He has the power to award compensation more than what is claimed by the
The provisions under the act will be subject to the commissioner as well if
employee if the facts warrant the award. A case dealing with the commissioner
there is a matter related to rules and regulations. The rules made under the act before
was Karnataka State Road Transport Corporation v. B.T. Somashekaraiah, 1994
the commissioner for the area where-

Appearance of Parties Section 24:

1. The accident happened that resulted in the injury.
A person may appear or become a witness for the purpose of examination, an
2. If the employee dies and if the dependent claims compensation it will reside.
application or act is required to be made by a person to a commission. It may be done
3. Employer’s office is registered.
on behalf of a legal practitioner or an official of the insurance company or registered

No matter should be processed before a commissioner other than the trade union or an inspector appointed under Section 8 of the Factories Act, 1948, or

commissioner who has jurisdiction in the area where the accident happened. It shall any other officer which is specified by the state government with the permission of

not happen without giving notice in the manner prescribed. If the employee is the the commissioner or a person who is authorised to do so.

mater of the ship or seaman or a captain or crew member of the aircraft or employee
Method of Recording Evidence Section 25:
in a motor vehicle, meets with an accident outside India, then such matter shall be
The commissioner makes a brief written message(memorandum) of the
done by the commissioner.
evidence of every witness as the examination process proceeds. The memorandum
should be in written form and duly signed by the commissioner. The form so signed
Form of Application Section 22:
by the commissioner must be in his own handwriting and it will be a part of the
No other application for any matter of the commissioner for dependants record.
should be made for compensation. Until and unless some question arises between the
parties there is no settlement as per agreement. Time limit for disposal of cases relating to compensation Section 25A:
The Commissioner can dispose of the matter relating to compensation under

The power of commissioner is required to further deposit in the cases which this Act within a period of three months from the date of reference and intimate the

talks about fatal accidents- Section 22-A decision in respect thereof within the said period to the employee.

When any amount is deposited by an employer as compensation payable in

Cost Section 26:
respect of an employee whose injuries resulted in his death, and the commissioner
All costs, incidental to any proceedings before a Commissioner, shall, subject
thinks that amount or sum was not sufficient, he may state a notice in writing giving
to rules made under this Act, be in the discretion of the Commissioner.
reasons, he may call upon the employer to show why he could not make a further
deposit within such time as stated in the notice. If the employer fails to satisfy the Power to submit cases Section 27:
Commissioner, the Commissioner may make an award determining the total amount
to be paid, and requires the employer to deposit the deficient amount. A commissioner can submit a Question related to law so that the High Court
can decide the compliance with the standards or rules if the High Court wants to do
so.
Registration of agreements Section 28: Can courts intervene on question of fact?

A memorandum should be sent by the employer to the commissioner when a Yes, the courts can intervene on the question of fact. This was done in the case
lump sum amount is payable as compensation due by the agreement either half of Mangala Ben vs Dilip Motwani It was first held that there is no substantial question
monthly payment or payment being payable to a woman or a person with a legal of law. In the opinion of the Court, the finding of the Commissioner does not prove
disability. The memorandum must be genuine and should be registered in the that the deceased was in the employment of the owner. The learned Commissioner
prescribed manner. However, a memorandum cannot be recorded before seven days further held that the claimant did not produce any evidence to prove that the deceased
after the communication has taken place between the commissioner and the concerned was employed for the purposes Dilip Motwani’s trade or business. He observed that in
parties. the absence of such evidence, the deceased cannot be held to be an employee. In the
opinion of the court, the Commissioner committed error of law in holding that the
Effect of failure to register agreement Section 29: burden lay on the claimant to prove that the deceased was employed for the purposes
of the respondent’s trade or business. The appellate court has no jurisdiction to
The employer will be liable to pay the full amount of compensation if the
entertain an appeal unless the same involves a substantial question of law, Nisan
registration of the agreement of memorandum is not sent to the commissioner as
Springs (Pvt) Ltd v. Om Jain, 1990.
required under the section. The employer will pay the compensation as he is liable to
pay under the provisions of the Act (Section 4) Until the commissioner directs to
Effect of death of claimant
deduct more than half of the amount to be paid to the employee as compensation.
If the injury of the employee results in his death, the employer shall give
Appeals Section 30: compensation in addition to the compensation that is deposited with the
An appeal may lie to the High Court by following the orders of the commissioner. A sum of five thousand rupees and not less than that will be given to
commissioner. the eldest surviving dependant of the employee. Provided further that no appeal by an
1. A lump sum amount as compensation is awarded as an order, and redemption employer under clause (a) shall lie unless the memorandum of appeal is accompanied
of half the monthly payment is away. by a certificate by the Commissioner to the effect that the appellant has deposited with
2. An order may refuse to allow gain of a half monthly compensation. him the amount payable under the order appealed against.
3. Distribution of compensation by order among the family members of the
deceased, or disallowing of any claim of a person. Review, Revision, Remand, and Writ

Substantial Question of Law

If an employee is not satisfied with the decision of the court regarding the
If there is difficulty in applying the facts to the law it will not amount to a
compensation, he can appeal for review by the court. Review can be made only after
substantial question of law. Reference case- Asmath Bedi(dead) v. Marimuthu. The
the decree is passed by the court or an order is made. If there is an error in the
period of limitation under section 30 is sixty days if a person makes an appeal. An
decision by the court appeal can be made for revision which can be done only by the
appeal lies against the order of commissioner who will compensate only when a
High Court. An employee can writ if he has been wrongly remanded. Remand means
substantial question of law. The scope in section 30 of the Act for appealing against
In custody of the court.
the order that is passed by the commissioner is very limited. An appeal shall not lie
against any order unless a substantial question of law.
Appeal not accompanied with certificate by the Commissioner under Proviso (3) 2. The state government prescribes some intervals where an employee is required
to submit himself to undergo certain medical examination of section 11.
If the appeal is not accompanied by a certificate by the commissioner that is
3. The state government prescribes a procedure that needs to be followed by the
payable and deposited with him then no appeal by the employer under clause (a) shall
commissioners. It is required when there is disposal of cases under the act and
lie against the law. The period of limitation under the section for the appeal will be
by the parties.
sixty days.
4. The state government regulates the transfer of matters. It also regulates cases
from one commissioner to another and also transfer of money in some cases.
Condonation of delay

If the appeal by the employee is delayed it is known as condonation of delay. Publication of rules Section 34:
An appeal is filed when the employee is not satisfied by the decision of the court and
The power to make rules in Section 32 will be subject to the conditions of the
want to appeal again for the decision. So when the employee gets delayed in
rules which are made after previous publication. Rules so published in the Official
appealing the suit it will be condoned.
Gazette will have an effect in the Act.

Withholding of certain payments pending decisions of appeal Section 30-A:

Rules to give effect to arrangements with other countries for the transfer of
The commissioner may withhold the payment of any amount which is money paid as compensation Section 35:
deposited with him when an employer appeals under section 30 and it is directed by
the High Court. The Central Government may make rules for transfer money to any foreign
country which is deposited with a commissioner under the act by a notification. A

Recovery Section 31: person who resides in a foreign country or is about to reside may be awarded the
money deposited under the law relating to employees. The amount related to fatal
The commissioner can recover any amount payable by any person as arrears of accidents shall not be transferred without the consent of the employer under the
land revenue. The commissioner will be deemed to be a public officer if there is an commissioner.
agreement for the payment of the compensation under the meaning of section 5 of
the Revenue Act, 1890. Rules made by the Central Government to be laid before Parliament Section 36:

Power of the State Government to make rules Section 32: Every rule made under the act by the Central government is laid before each
house of parliament while it is in session for thirty days. It may be done in one session
The state government has the power to make rules and regulations for the purpose of or in two sessions before the expiry of the session. The houses may make any
this act. These rules provide all the matters without prejudice namely: modifications in the rule or the houses may agree that the rule should not be made.

1. The state government prescribes certain intervals where an application may be

made under Section 6 is subject to conditions when not accompanied by a
medical certificate by a qualified practitioner.
 Appropriate Government Section 1

THE EMPLOYEES’ STATE INSURANCE ACT, 1948 The definition of “appropriate government” divides powers between the Central
and State governments effectively. The Central government is appropriate in cases of
The Employees’ State Insurance Act incorporates a number of sections, these
establishments that the Central government controls. It is the appropriate government for
sections provide for medical benefits and insurance for any employees working under
railway administration, major ports, mines, and oil fields as well. In all other cases, the
factories registered under the ESI Corporation. This is an exciting prospect from both
appropriate government is the relevant State government.
an employee’s and a legal perspective as the beginning of a formal social security
program in India.
Confinement Section 3
Application and scope of the Act
The Employees’ State Insurance Act, 1948 (ESI), enables the financial backing Pregnancy which leads to the birth of a living child is called “confinement”

and support to the working class in times of medical distress such as: under this Act. It can also mean the birth of a child (living or dead) after 26 weeks of
pregnancy.
1. Sickness.
2. Maternity Leave. Contribution Section 4
3. Disorders(mental or physical).
Principal employers under this Act have to pay a sum of money to the
4. Disability.
Employees State Insurance Act Corporation according to relevant provisions. This
5. Death.
money is basically later payable to employees by the ESI Corporation for their benefits.
It is a self-financed initiative, which serves as a type of social security scheme,
Every employer to whom the Act applies has to make this contribution.
to prevent the working class from any financial problems arising out of the above
medical issues.
Corporation Section 6
Constitutionality of the Act
This important definition describes the Employees State Corporation that this
The ESI Act serves as a constitutional instrument because of its practice of
Act has set up. This corporation has several important powers and duties.
providing insurance and medical insurance. While the ESI Act is mostly executed
through the ESI Corporation, the Central Government takes control of most of the
Dependant Section 6A
proceedings. This control by the Central Government largely contributes to the
constitutionality of the Act, because Insurance, be it public or private, is listed in the In case a worker under the Act dies during employment, the ESI Corporation
Seventh Schedule of the Indian Constitution as a Union List subject i.e. it can only be pays some money to his dependants. In order to understand who must receive this
legislated by the Central Government. money, we must know who these “dependants” are. According to the Act, dependants
are certain relatives of a deceased worker. These include his widow, a son below 25
Definitions
years of age, an unmarried daughter and his widowed mother. A son/daughter above 25
The Employees State Insurance Act contains several important definitions that years can also be a dependant if he/she is wholly dependant on the worker. In certain
explain the meaning of important provisions. cases, dependants can also be a minor illegitimate child, minor sibling, a parent other
than widowed mother, etc.
Employment Injury Section 8 Principal Employer Section 17
A principal employer is generally the owner or occupier of a factory to which the
An employee can receive financial support under this Act for specific injuries
Act applies. It can also include the owner’s managing agent or factory manager and legal
that occur in employment only. Hence, the Act refers to them as “employment injuries”.
representative of a deceased owner/occupier. In the case of departments of the Central
These injuries must be a result of an accident or occupational disease arising in the
government, the principal employer is the department’s head. In all other establishments,
course of employment. It is immaterial whether the workers contract these occupational
the person in charge of supervision and control is usually the principal employer.
diseases within India or outside.
CORPORATION, STANDING COMMITTEE & MEDICAL COUNCIL
Establishment of Employees’ State Insurance Corporation
Employee Section 9
The ESI Act exercises its function through the Employees’ State Insurance
This is a very important definition because only “employees” under the Act can Corporation, established via Section 3, a body created to maintain social security. It
claim compensation there under. An employee is basically a person who is employed for was established on 24 February, 1952. The corporation is supposed to grant relief to
wages in relevant factories/establishments. Furthermore, there are some additional the employees in case of medical emergencies.
requirements depending on the nature of the employee’s services. For example, an
employee may directly work permanently for the principal employer or may work Constitution of Corporation
temporarily on contract. The composition of the ESIC is defined in Section 4, and it is as follows:

Exempted Employee Section 10 1. The Director-General.

2. Chairman, appointed by the Central Government.
There are certain employees who are not liable to pay a contribution to the ESI
3. Vice-Chairman appointed by the Central Government.
Corporation under this Act. These employees are called as exempted employees.
4. Not more than 5 persons nominated by the Central Government.
5. 1 person to represent each state.
Factory Section 12
6. 1 person representing the Union Territories.
A “factory” means any premises (or its precincts) wherein 10 or more employees 7. 10 persons representing employers.
work or have been working. These workers should be in employment for the preceding 8. 10 persons representing employees.
twelve months. Furthermore, some manufacturing process must take place on such 9. 2 persons representing the medical profession.
premises. Mines or railway running sheds, however, cannot come under the definition of 10. 3 members of parliament (2: Lok Sabha and 1: Rajya Sabha).
factories. Term of office of members of the Corporation
Section 5 the following members are appointed for up to a 4 year period:
Insured Person Section 14 1. Director-General.
2. Chairman.
An insured person under this Act is basically an employee to whom contribution
3. Vice-Chairman.
is payable. Furthermore, he can claim all other benefits under the Act.
4. The 5 people nominated by Central Government.
5. The members representing each state.
6. The members representing each Union Territory.
Eligibility for re-appointment or re-election 2. The Director-General of Health Services as co-Chairman.
3. The Medical Commissioner of ESIC.
An outgoing member of ESIC, the Standing Committee of ESIC, or the One member for each state appointed by State Government.
4.
Medical Benefit Council is automatically eligible for re-appointment or re-election Three members representing employers.
5.
into office as the case may be, at the pleasure of the appointing Central Government. Three members representing employees.
6.

7. Three members including one woman representing the medical profession.

Authentication of orders, decisions, etc.
Tenure of the members of the Medical Benefit council
The signature of the Director-General of ESIC is the only necessary The following members of the Medical Benefit Council are appointed for a
requirement to authenticate an outgoing order or a decision, there is no other way to period of 4 years, these are:
authenticate or enforce an order. The Director-General can also temporarily delegate 1. The Director-General of ESIC as Chairman.
his authority to any other officer. In this case, the signature of the authorised officer 2. The Director-General of Health Services as co-Chairman.
will also suffice to authenticate an order. 3. The Medical Commissioner of ESIC.
4. One member for each state appointed by State Government.
Constitution of Standing Committee Resignation of membership
The composition of the Standing Committee of ESIC is as follows: The resignation of a member of the Corporation is complete when a notice for
1. A chairman appointed by Central Government. the same, in writing, is delivered to the Central Government, and his seat shall fall
2. 3 members within the corporation representing 3 state governments. vacant upon acceptance of his resignation.
3. 3 members within the corporation representing employers. Cessation of Membership
4. 3 members within the corporation representing employees. A member of the ESIC shall cease to be a member of his respective body
5. 1 member within the corporation representing the medical profession. (Corporation, Standing Committee or Medical Council) upon failing to attend three
6. One MP belonging to the corporation. consecutive meetings. However, the same member can be restored by the concerned
7. The Director-General. body via the rules made by the Central Government. If in the opinion of the Central
Government, any employer, employee or medical representative fails to represent
Terms of office of members of Standing Committee
their qualification, they shall cease to be members of ESIC.
The following members are appointed for a two year period:
Disqualification
1. The Chairman.
A person can be disqualified as a member of ESIC if:
2. The 3 members representing the states.
1. If he is declared to be of unsound mind by a qualified court.
2. If he is an undischarged insolvent.
Medical Benefit Council
3. If at any time, he has been convicted of an offence regarding moral turpitude.

The Medical Benefit Council is an advisory body on matters related to the Filling of vacancies

administration of medical benefits under the ESI scheme. It consists of: Any vacancy in the office of ESIC shall be filled by appointment or election,
as the case may be. A member of ESIC can only hold the ex-member’s spot in the
1. The Director-General of ESIC as Chairman.
respective committee, if the original holder of that position was found to be eligible Corporation’s Power to promote measures for the health of insured persons
for the same. Otherwise, the position is void. ESIC, in its jurisdiction, may take initiatives that promote health and welfare
amongst its employees, while also promoting rehabilitation and re-employment for
Principal Officers past employees who were injured or disabled in the course of employment. The
funding and expenditure for such initiatives is at the discretion of the Central
The Principal Officers referred to under this Section are the Director-General Government.
and/or Financial Commissioner, to act as the CEO for ESIC. They serve as whole-
time officers and are not permitted to undertake any work outside of office Meetings
jurisdiction without the sanction of the Central Government. The time period for the ESIC, its Standing Committee, and its Medical Council shall meet periodically
appointment of any principal officer may not exceed 5 years. The operation of their to observe rules and procedures in regard to the efficient functioning of the
fees, disqualification, and cessation of seats operate in the same manner as that of corporation. Such observations can be specified as per the regulations in regard to the
their subordinates. meeting.
Supersession of the Corporation and Standing Committee
Staff The supersession of the Corporation and the Standing Committee occurs when
ESIC has the jurisdiction to employ staff of officers as may be necessary for there is a persistent failure to perform the duties prescribed to both parties. In such a
the optimum running of the corporation, however, according to the prerequisites case, the Central Government, via a notification in the Official Gazette, can take the
in Section 17, the sanction for creating any staff position has to be acquired from the place of the corporation, or with the consultation of the corporation, can take the place
Central Government. Their salary shall be prescribed by the Central government of the Standing Committee. The supersession of the corporation will take place by
within a particular range, which cannot be exceeded. The scale of pay will be rendering all of the seats of the corporation, previously occupied by the members, as
determined on the basis of their educational qualifications, method of recruitment, vacant. In the case of the Standing Committee, a new one shall be constituted
duties, and responsibilities, etc. immediately as per Section 8 of the ESI Act.
Duties of the Medical Benefit Council
Powers of the Standing Committee The Medical Council’s functions are as follows:
The Standing Committee, with its powers defined in Section 18, shall 1. Advise the other two ESIC bodies on matters relating to the implementation
administer the affairs of the Corporation and may exercise any of the powers and that would be beneficial in the medical field. It acquires certification for the
perform any of the functions of the Corporation, while authorised and under the grant of medical benefits.
jurisdiction of the corporation. The Standing Committee shall submit for the 2. Investigate against complaints lodged against medical practitioners with
consideration and decision of the Corporation all such cases and matters as may be relevance to the medical relief offered.
specified in the regulations made in this behalf. The Standing Committee also, in its Duties of Director General and the Financial Commissioner
discretion, may submit any other case or matter for the decision of the Corporation. The duties of the Director-General and Financial Commissioner are prescribed
by the ESI Act itself in accordance with the Central Government. These tasks may
concern various arenas from management to miscellaneous tasks.
Validity of the act of the Corporation 5. Payment of contributions to any State Government, local authority or any
private body or individual, towards the cost of medical treatment and
No act of any ESIC body shall be termed as invalid with respect to their own attendance provided to insured persons and their families, if required.
rules and regulations. Invalidity cannot be claimed on the eligibility or ineligibility of Administrative expenses
a particular member of that office. Administrative expenses are termed so, those expenses which cover the costs
of administration of ESIC, prescribed by the Central Government.
Regional Boards, Local Committees, Regional and Local Medical Benefit
Council Holding of Property
The Corporation may appoint Regional Boards, Local Committees and
Regional and Local Medical Benefit Councils in such areas and in such manner, and ESIC is subject to conditions prescribed by the Central Government, in terms
delegate to them powers and functions. of acquiring, hold, sell or transfer any property, movable or immovable, vested in or
Finance and Audit acquired by it, so as to fulfill the purposes of the corporation. The ESIC also has the
Employees’ State Insurance Fund ability to invest in property as and when required, under the jurisdiction of the Central
The Employees’ State Insurance Fund is the primary monetary source for the government. It can also delegate property for the benefit of its staff..
ESIC to perform its functions. All contributions paid under this Act and all other Budget Estimates
money received on behalf of the Corporation shall be paid into this fund to be held Every year, ESIC frames and projects a potential budget showcasing how
and administered by the Corporation. These could be in the form of grants, donations much expenditure it proposes to incur, and how it will discharge its liabilities during
or gifts by the government. the following year. This is then submitted to the Central Government for approval.
Accounts
Expenses of the fund The Corporation shall maintain correct accounts of its income and expenditure
The ESI Fund is responsible for maintaining the expenses of ESIC, which are in such form and in such manner as may be prescribed by the Central Government.
as follows: Audit
The Corporation prepares accounts regularly which are audited annually by
1. Payment of benefits and provision of medical treatment and attendance to the comptroller and Auditor-General of India, and any audit which leads to an
insured persons and their families, if required. expenditure will be payable to the above parties. Any person appointed by the
2. Payment of fees and allowances to members of the Corporation, the Standing Comptroller and Auditor-General to act on their behalf will temporarily have the same
Committee and the Medical Benefit Council, the Regional Boards, Local powers as the above parties and are authorised to demand the production of books,
Committees and Regional and Local Medical Benefit Councils. accounts, connected vouchers, and other documents and papers. They shall also be
3. Payment of salaries, leave and joining time allowances, travelling and authorised to inspect any offices of ESIC at any time. The accounts of the
compensatory allowances, gratuities and compassionate allowances, pensions, Corporation, before being forwarded to the Central Government, have to be verified
etc. by the Comptroller and Auditor-General, or any of their representatives. After
4. Establishment and maintenance of hospitals, dispensaries, and other verification, the accounts can be forwarded to the Central Government along with any
institutions and the provision of medical and other ancillary services for the comments on the report, given by the above parties.
benefit of insured persons and their families, if required.
Annual report 2. If a directly employed employee fails to pay his contributions, then the
The Corporation shall submit an annual report of its work and activities to the employer can recover that contribution only by deducting the wages of said
Central Government. employee.
3. The employer bears all the transfer costs of the payment to the Corporation.
Budget etc. to be placed before Parliament Recovery of contribution from the immediate employer
The annual report, the audited accounts of the Corporation along with the In the case of an employee who is indirectly employed under the principal
report of the Comptroller and Auditor-General of India, and the comments of the employer, via an immediate employer, the principal employer shall be entitled to
Corporation on such report under section 34 and the budget, as finally adopted by the recover the payment made on behalf of an indirect employee, from the immediate
Corporation, shall be placed before the Parliament. employer, as a debt payable to him. The immediate employer also has to prepare a list
Valuation of assets and liabilities of all the employees under him and submit the same to the principal employer, before
The Corporation shall, at intervals of three years, have a valuation of its assets paying his dues.General provisions as to payment of contribution. In case an
and liabilities made by a valuer appointed with the approval of the Central employee’s wage falls below the prescribed wage range prescribed by the Central
Government: Provided that it shall be open to the Central Government to direct a Government, the employee shall not be liable for his contribution and it shall not be
valuation to be made at such other times as it may consider necessary. payable.
Contributions Method of payment of contributions
All employees employed in the factories which meet ESIC prescribed rules The manner for payments which the Act provides regulations for, has been
(under Section 2) are insured for all the benefits offered by it. elaborated in the following conditions:
1. The nature and time of contribution being paid.
1. The contribution is a determinable amount of money payable by both the 2. Payment which involves the usage of stamps or other adhesives fixed upon the
employer and the employee, as per the situation, to the corporation. books of accounts, or any other documents.
2. The rates, while usually prescribed by the government, are not set in stone, 3. The evidence of the contributions, which reaches the Corporation, is to be
and are subject to change. Rates defined by the government are mostly set as dated.
the unit standard for the contribution payable by the employer. 4. The different entries in the books of accounts along with the details of the
3. In the case of the employee’s contribution, the wage period in relation to the insured persons.
respective employee shall be held as a unit to determine the compensation 5. The replacement of documents which have been lost, destroyed or defaced.
payable, and are normally due on the last day of the wage period.
4. Failure to pay contributions by the employer will make him liable to pay an
Employers to furnish returns and maintain registers in certain cases
interest rate of 12%.
According to the provisions given as per the ESI Act, the principal and
Principal employer to pay contribution in the first instance immediate employers are to submit all the investment profits, as well as any and all
details relating to their employees in any factory under their jurisdiction. In case of
1. The primary employer has to collectively pay the contribution, both his own failure to submit a return, that the corporation had reasonable cause to believe, should
and that of his employees, regardless of whether they are directly employed have been submitted, the corporation can require the employers to present all the
under him or are working through an immediate employer. details.
Social Security Officers and their functions Recovery of contributions

1. ESIC has the power to appoint persons as Social Security Officers. Their Any and all contributions which are payable under the provisions of ESI Act,
functions are mostly to serve a role in inspecting the function of the can be recovered, termed as ‘arrears of land revenue’.
corporation.
2. If required, he can acquire any information from any employer as he sees fit. Issue of certificate to the Recovery Officer

3. He can enter any corporation at any time and can get all the accounts, books
In lieu of Section 45B, where the contribution is to be recovered, an authorised
and other employment documents presented to him without any due notice.
officer of the corporation issues a certificate bearing his signature and the amount to
This can include information like wages, expenses, etc.
be recovered, to a Recovery Officer, who then proceeds to recover the amount
4. He can inspect and look into any matter regarding the employers and
specified from the factory where the default took place. He does this via:
employees as and when required under the jurisdiction of the court.
5. He can make copies or take extracts from any register or account back as per
1. Attachment or sale of the property of the factory, or the employer, as per the
his discretion.
situation.
2. The arrest of the employer and getting him detained in prison.
Determination of Contribution in certain cases
3. Appointing a receiver for the management of the property acquired, be it from

A Social Security offer is restricted from exercising his functions and the factory or the employer.

discharging his duties, if the accounting statements of the factory/establishment are

Recovery Officer to whom the certificate is to be forwarded
not submitted, or not maintained in accordance with Section 44 of the ESI Act. As
For the contribution certificate to be forwarded to the Recovery Officer, the
such, the Corporation may, with the available information, determine the
factory employer must be under the jurisdiction of the Officer in the following ways:
contribution(defined under Section 39) amount payable to employees. However, this
1. The location where the employer carries on his business and where the factory
procedure will not take place until after the person in charge has been given a
is located.
reasonable opportunity to be heard regarding the absence of such records.
2. The location where the employer resides or he has any personal property
situated within the Officer’s jurisdiction.
Appellate Authority
3. The inability to recover the amount solely through the sale of property alone.
In the scenario specified in Section 45A, once the employer in charge is heard,
and he is not satisfied with the verdict given by the corporation, he may prefer an The inability to recover the amount solely through the sale of property alone
appeal to an appellate authority as may be provided by regulation, within sixty days of
The analysis of the recovery amount, as per the certificate issued to the
the date of the verdict. He must also pay a sum of 25% of his calculated contribution,
Recovery Officer, operates on his word only. The factory or any authority related to it
in order to file the appeal. In case he is successful, the corporation will also refund the
cannot question the Officer on the correctness of the mount, and no objection shall be
contribution paid by him.
entertained. However, with a prior intimation, an arithmetical mistake can be
corrected by an authorised officer, along with any orders about withdrawal or
cancellation of a certificate.
Stay of proceedings under certificate and amendment or withdrawal thereof 1. Medical benefit.
2. Sickness benefit.
It is at the discretion of the Recovery Officer, within the boundaries of the ESI
3. Maternity benefit.
Act, to halt legal proceedings if the time he has allocated for the recovery of an
4. Dependants’ benefits.
amount, has expired. The Recovery Officer is also entitled to receive constant updates
5. Disablement benefits.
about the status of payment of any due amount. If, as a result of an appeal, the amount
6. Other benefits.
due is decreased, then the Recovery Officer temporarily halts the recovery of the now
Medical Benefits
decreased amount.
These benefits are guaranteed to the employee as soon as he/she is hired, with
the benefits extending to their family members as well. This benefit covers the
Other modes of recovery
payment of all treatment expenses in lieu of medical issues faced by the employee

Some of the other modes of recovery are elaborated within Section 45G. These Sickness Benefits

are rarer modes of recovery, due to the primary modes of recovery often being The employees covered by the ESI Act can avail periodical payments in case

preferred: of sickness as per Section 46(1)(a), as long as the medical condition is verified by the
appointed medical practitioner. The compensation is approximately 70% of their

1. The defaulting employer may be required to pay a sum which was deducted wages, with the upper limit for availing compensation being 91 days in a year. In a

from the arrears after the sale of the property. period of 6 months of employment, the employee must have been working for a

2. There might not be any penalty issued but the defaulting employer would be minimum of 78 days, else the benefit cannot be claimed.

required to pay the entire outstanding amount directly to the Director-General Maternity Benefits

of the Corporation. As per Section 46(1)(b) of the ESI Act, an insured woman can claim periodical

3. Any joint shareholders who held money with the defaulting employer might payments in case of occurrence of any of the following situations:

be forced to give up their shares to the Corporation until they are equal to the 1. confinement (labour leading to birth or birth after 26 weeks)

defaulting employer’s shares, as compensation. 2. miscarriage

3. sickness arising out of pregnancy
Application of certain provisions of the Income-tax Act 4. premature birth of child
The benefit is payable for three months, with an extension of one month, if
The arrears of the amount of contributors, which are to be sold to cover the required. The minimum work duration must be 70 days in the year preceding the year
remaining costs, can be affected by decisions from the Assessing Tax Officer or Tax of pregnancy.
Recovery Officer. They can make changes which shall apply to all the interests and Dependants’ Benefits
damages. Section 46(1)(d) prescribes periodical payments(often made monthly) to the
Benefits Available Under the Act: dependants/family members of the person who dies during the course of employment,
Section 46 of the ESI Act grants benefits to employees as social security in with the cause of death being an employment injury or an occupational hazard.
case of injury, which can be availed during the course of employment. There are 6 Compensation is generally 90% of the employee’s wages.
types of benefits that can be availed:
Disablement Benefits Scheme for other beneficiaries
In case an employee suffers an injury during the course of employment which Schemes implemented for beneficiaries may cover for a number of matters
results in their disablement. The nature of the disablement may be temporary or such as:
permanent. Unlike the other benefits, there is no minimum work contribution required
a) The time and nature of the usage of medical facilities.
to avail the disablement benefit, although eligibility for the same will be determined
b) The presentation of particulars and details about the beneficiary and his family
by the Medical Board. This determination also affects the amount of compensation
as per the needs of the Corporation.
granted, if any, with the general percentage of wages granted being around 90%.
c) Miscellaneous matters which may be necessary to fully implement the
Other Benefits
scheme.
‘Other benefits’ refer to the miscellaneous benefits apart from the five major
Power to amend schemes
benefits that can be availed by the employees. These are as follows:
Via a notification in the Official Gazette, the Central Government may add to,
1. Funeral Expenses: Compensation of Rs. 10,000 is granted to the eldest
amend, introduce variations, or rescind the scheme.
surviving member of an employee’s family to perform his last rites.
2. Vocational Rehabilitation: The benefit is payable to disabled employees Adjudication of Disputes and Claims
undergoing rehabilitation. Constitution of Employees’ Insurance Court
3. Old age medical care: This benefit is available for retired employees, or those Via a notification in the Official Gazette, an Employees’ Insurance Court will
who eft employment after suffering an injury, with general compensation be constituted by the State Government, with a set amount of judges as per the
being Rs. 120 p/m. decision of the State Government. The same court may be appointed for two or more
Scheme for other beneficiaries local areas, or two courts or more courts may be appointed for the same local area.
Section 53 of the ESI Act acts as a deterrent for employees, in order to prevent
them or their families from claiming benefits provided under the Act, so long as they
Power of Employees’ Insurance Court
are still insured under the reliefs offered by the ESI Act. Section 61 acts like an
extension to Section 53, in the sense that while Section 53 only bars employees from The Employees’ Insurance Court will function with the same powers as that of
receiving compensation under the Employees Compensation Act, Section 61 bars a Civil Court, in which, to enforce the provisions of the ESI Act, it can enforce
employees from receiving compensation from any other enactment so long as they are witness attendance, compel document and material evidence to be presented, it can
still insured under the ESI Act. administer an oath and can record evidence. All expenses incurred before a
proceeding are subject to the discretion and liability of the court itself.
Power to frame scheme
The Central Government holds the power to frame schemes for other Reference to High Court
beneficiaries and their family members, mostly for providing medical facilities in ESI An Employees’ Insurance Court, according to Section 81 may submit any
hospitals. However, this must be within the framework of the ESI Act and must be question of law for the decision of the High Court and if it does so, the answer to the
notified in the Official Gazette. question shall hold precedence before any judgment.
Appeal Commissioner or any other authorized authority such as the Director-General of the
Section 82 defines that no appeal can be laid down as against an order from Corporation. No court lower than a First Class Magistrate can try an offence under the
the Employees’ Insurance Court. However, appeals from the High Court can stand if ESI Act, and no Court will take cognizance of any offence reported under this Act.
they involve a substantial question of law.
Penalties and Punishments Offences by companies
Sections 84, 85, and 85A cover all the punishments for default listed within the Taking inference from the concept of business entity, where every company is
ESI Act. its own individual i.e. it is a separate legal entity of its own and can sue or be sued in a
1. False Statement: Any person caught increasing the payment or benefit to avoid court of law accordingly. As such, when an offence is said to have been committed by
payment by himself is known to make a false statement. Punishable with up to a company, all of its managerial employees, who were responsible for the company at
six months and/or with fine not greater than Rs. 2000. Insured persons the time, will be tried along with the company, deemed to be guilty of the same
convicted of this will not be entitled to cash benefits. offence. They are liable for punishment accordingly.
2. Failure to pay contribution: Persons failing to pay the contribution, unlawfully Comparative Analysis
deducts wages or benefits, unfairly punishes an employee, obstructs
The ESI is a later Act and has a wider coverage. It is more comprehensive. It
inspector’s duties, etc. can be punishable for up to three years, no less than one
also provides for more compensation than what a workman would get under the
year with a fine up to Rs. 10000.
Workmen’s Compensation Act. The benefits which an employee can get under the
3. Subsequent Punishment: If a person is found committing the same offence
ESI Act are more substantial than the benefits which he can get under the Employees
twice, he shall be punished with imprisonment for a term extending up to two
Compensation Act. The only disadvantage, if at all it can be called a disadvantage, is
years with a fine of Rs. 5000 for each subsequent offence.
that he will get compensation under the ESI Act by way of periodical payments and
Power to recover damages
not in a lump sum as under the Workmen’s Compensation Act. If the Legislature in its
If an employer fails to pay the contributions due in any aspect, whether it be
wisdom thought it better to provide for periodical payments rather than lump sum
from his side or his employee’s side, the Corporation can recover the deficit from him
compensation its wisdom cannot be doubted. Even if it is assured that the workmen
by way of penalty. However, this recovery of contribution will not take place until
had a better right under the Employees Compensation Act in this behalf it was open to
after the person in charge has been given a reasonable opportunity to be heard
the Legislature to take away or modify that right. While enacting the ESI Act the
regarding the failure to pay the contribution.
intention of the Legislature could not have been to create another remedy and a forum
Power of Court to make orders
for claiming compensation for an injury received by the employee by accident arising
Along with the power of the court to recover damages, it also has provisions to
out of and in the course of his employment.”
enforce judicial orders. If the defaulting employer fails to meet the time conditions for
payments that have been stated by the Court, the employer will be deemed to have
committed another offence, which can be punishable with imprisonment and/or fines.

Prosecution
Section 86 dictates that any sort of prosecution cannot take place under the
provisions of ESI Act unless it has previously obtained the sanction of the Insurance
 UNIT-V:
ESI Act, 1948 Employees Compensation Act, 1923
Objectives of the Act : To provide Objectives of the Act: To provide
THE PAYMENT OF WAGES ACT, 19936
benefits to the employees in case of compensation to workmen for injury
sickness, maternity and employment caused by accident or occupational
Object of the Act:
injury caused by accident or occupational disease.
disease.
The Payment of Wages Act regulates the payment of wages to certain classes
Act Covers: Employment injury or death Act Covers: Employment injury or death
caused by accident or occupational caused by accident or occupational of persons employed in industry and its importance cannot be under-estimated. The
disease, sickness and maternity. disease. Act guarantees payment of wages on time and without any deductions except those
Wage limit under the Act: Rs. 15,000 Wage limit under the Act at present: No authorized under the Act. The Act provides for the responsibility for payment of
p.m. wage limit.
Nature of Scheme Offered: Contributory Nature of Scheme Offered: Non wages, fixation of wage period, time and mode of payment of wages, permissible
wherein both the employer and the contributory and the employer has to pay deduction as also casts upon the employer a duty to seek the approval of the
employee contribute 4.75% and 1.75% of the entire compensation. Government for the acts and permission for which fines may be imposed by him and
wages, respectively.
also sealing of the fines, and also for a machinery to hear and decide complaints
Benefits covered under the Act: Covers six Benefits covered under the Act: Covers
benefits sickness benefit, medical benefit, disablement benefit and dependent’s regarding the deduction from wages or in delay in payment of wages, penalty for
maternity, benefit, disablement benefit only. malicious and vexatious claims. The Act does not apply to persons whose wage is Rs.
benefit, death benefit and other benefits
24,000/- or more per month. The Act also provides to the effect that a worker cannot
Who is responsible for making Who is responsible for making
payment: ESIC. payment: Employer contract out of any right conferred upon him under the Act.
Compensation is paid periodically. Compensation is paid as one time lump
sum payment in cash Application of the Act:
Rehabilitation and re- Rehabilitation and re-employment: No
employment: Provision for rehabilitation such provision under the Act. It extends to the whole of India. It applies in the first instance to the payment
and re-employment of insured persons of wages to persons employed in any factory to persons employed (otherwise than in a
who have been disabled. factory) upon any railway by a railway administration or either directly or through a
Nature of claim process: Easy and Nature of claim process: Complex and
sub-contractor by a person fulfilling a contract with a railway administration and to
convenient. time consuming.
Act administered through: ESI Act administered persons employed in an industrial or other establishment specified in sub-clauses (a)
Corporation, Standing. Committee, through: Commissioners. to (g) of clause (ii) of section 2.
Medical Benefit Council and Court.
The State Government may after giving three months' notice of its intention of
so doing by notification in the Official Gazette extend the provisions of this Act or
any of them to the payment of wages to any class of persons employed in any
establishment of class of establishments specified by the Central Government or a
State Government under sub-clause (h) of clause (ii) of section 2.
Definitions: person employed in respect of his employment or of work done in such employment,
and includes-
Some of the important definitions under the Act
a) any remuneration payable under any award or settlement between the parties
Employed person sec 2 (i) includes the legal representative of a deceased employed or order of a Court;
person b) any remuneration to which the person employed is entitled in respect of
overtime work or holidays or any leave period;
Employer sec 2 (ia) includes the legal representative of a deceased employer
c) any additional remuneration payable under the terms of employment (whether
Industrial or other establishments Sec 2 (i1) means any - called a bonus or by any other name);
a) tramway service or motor transport service engaged in carrying passengers or d) any sum which by reason of the termination of employment of the person
goods or both by road for hire or reward; employed is payable under any law, contract or instrument which provides for
b) air transport service other than such service belonging to or exclusively the payment of such sum, whether with or without deductions but does not
employed in the military naval or air forces of the Union or the Civil Aviation provide for the time within which the payment is to be made;
Department of the Government of India; e) any sum to which the person employed is entitled under any scheme framed
c) Dock wharf or jetty; under any law for the time being in force;
d) inland vessel mechanically propelled; but does not include—
e) mine quarry or oil-field; 1. any bonus (whether under a scheme of profit sharing or otherwise) which does
f) plantation; not form part of the remuneration payable under the terms of employment or
g) workshop or other establishment in which articles are produced adapted or which is not payable under any award or settlement between the parties or
manufactured with a view to their use transport or sale; order of a Court;
h) establishment in which any work relating to the construction development or 2. the value of any house-accommodation, or of the supply of light, water,
maintenance of buildings roads bridges or canals or relating to operations medical attendance or other amenity or of any service excluded from the
connected with navigation irrigation or to the supply of water or relating to the computation of wages by a general or special order of 1[the appropriate
generation transmission and distribution of electricity or any other form of Government
power is being carried on; 3. any contribution paid by the employer to any pension or provident fund, and
i) any other establishment or class of establishments which the Central the interest which may have accrued thereon;
Government or a State Government the nature thereof the need for protection 4. any travelling allowance or the value of any travelling concession;
of persons employed therein and other relevant circumstances specify by 5. any sum paid to the employed person to defray special expenses entailed on
notification in the Official Gazette. may having regard to the nature thereof the him by the nature of his employment; or
need for protection of persons employed therein and other relevant 6. any gratuity payable on the termination of employment in cases other than
circumstances specify by notification in the Official Gazette. those specified in sub-clause (d).
Wages Sec 2 (vi)
wages” means all remuneration (whether by way of salary, allowances or
otherwise) expressed in terms of money or capable of being so expressed which
would, if the terms of employment, express or implied, were fulfilled, be payable to a
Responsibility for payment of wages [Section 3] 2. 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
Every employer shall be responsible for the payment to persons employed by him
the 10th day after the last day of the wage period. (ex:- wages should be paid
of all wages required to be paid.
on starting of present month within 10 days i.e. before 10th date if wage is paid

1. In the case of the factory, manager of that factory shall be liable to pay the on 1st in previous month)

wages to employees employed by him. 3. For employees of port area, mines, wharf or jetty, wages of employees should

2. In the case of industrial or other establishments, persons responsibility of be paid before the expiry of the 7th day after the last day of the wage period.

supervision shall be liable for the payment of the wage to employees

If the employee is terminated or removed for the employment by the employer
employed by him.
the wage of that employee should be paid within 2 days from the day on which he was
3. In the case of railways, a person nominated by the railway administration for
removed or terminated. Except the payment of wage of the terminated employee, all
specified area shall be liable for the payment of the wage to the employees.
the wages of the employees should be paid by their employer on the working day
4. In the case of contractor, a person designated by such contractor who is
only.
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 Wages to be paid in current coin or currency notes:
employees shall be liable for the payment of the wages.
Sec 6 of the act states that, all wages shall be paid in current coin or currency
Fixation of wage-periods: notes or in both. However, the employer may, after obtaining the written authorization
of the employed person, pay him the wages either by cheque or by crediting the wages
Sec 4 provides that, every person responsible for the payment of wages under
in his bank account.
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, Deductions which may be made from wages:
fortnightly (for every 15 days) and monthly only. Wage period for payment of wages At the time of payment of the wage to employees, employer should make
to employees by employer should not exceed 30 days i.e. one month according to this deductions according to this act only. Employer should not make deductions as he
act. But wages cannot be paid for quarterly, half yearly or once in a year. like. Every amount paid by the employee to his employer is called as deductions.

Time of payment of wages: The following are not called as the deduction

Sec 5 provides that, the wages of every person employed 1. Stoppage of the increment of employee.
2. Stoppage of the promotion of the employee.
1. In railway factory or industrial or other establishment, if there are less than
3. Stoppage of the incentive lack of performance by employee.
1000 employees, wages of employees should be paid before the expiry of the
4. Demotion of the employee
7th day after the last day of the wage period. (ex:- wages should be paid on
5. Suspension of the employee
starting of present month within 7 days i.e. before 7th date if wage is paid on
1st in previous month) The above said actions taken by the employer should have good and sufficient
cause.
 Deduction made by the employer should be made in accordance with this act 19. Deduction made if any contribution to the Prime Minister’s National Relief
only. The following are said to be the deductions and which are acceptable according Fund with the acceptance of employee,
to Sec 7(2) of the Act, namely 20. Deductions for contributions to any insurance scheme framed by the Central
1. Fines, Government for the benefit of its employees with the acceptance of employee.
2. Deductions for absence from duty,
The total amount of deductions from wages of employees should not exceed
3. Deductions for damage to or loss of goods made by the employee due to his
50%, but only in case of payments to co-operative societies, deduction from wages of
negligence,
employee can be made up to 75%.
4. Deductions for house-accommodation supplied by the employer or by
government or any housing board,
In Align Components Pvt. Ltd., and another Vs. Union of India and others
5. Deductions for such amenities and services supplied by the employer as the
(WRIT PETITION STAMP NO.10569 OF 2020) it is contended that though the
State Government or any officer,
Managements are willing to offer work to the workers and though the workers would
6. Deductions for recovery of advances connected with the excess payments or
be willing to perform the work, restrictions have been imposed on the continuance of
advance payments of wages,
the manufacturing activities so as to restrict the spread of Covid-19and as a
7. Deductions for recovery of loans made from welfare labour fund,
consequence of which, the Managements have been mandated to reduce/shut down
8. Deductions for recovery of loans granted for house-building or other
their manufacturing activities. In this backdrop, though these petitioners pray for
purposes,
exemption from paying monthly wages for the period of restriction of manufacturing
9. Deductions of income-tax payable by the employed person,
activities, the learned Advocate for the petitioners submits on instructions that these
10. Deductions by order of a court,
petitioners are willing to pay 50% of the gross wages or the minimum rates of wages
11. Deduction for payment of provident fund,
prescribed under the Minimum Wages Act, whichever is higher.
12. Deductions for payments to co-operative societies approved by the State
Government,
Court held that Apex Court is dealing with a similar cause of action, I would
13. Deductions for payments to a scheme of insurance maintained by the Indian
not be inclined to interfere with the impugned order and would expect the petitioners
Post Office
to pay the gross monthly wages to the employees, save and except conveyance
14. Deductions made if any payment of any premium on his life insurance policy
allowance and food allowance, if being paid on month to month basis in the cases of
to the Life Insurance Corporation with the acceptance of employee,
those workers who are not required to report for duties."
15. Deduction made if any contribution made as fund to trade union with the
acceptance of employee, “It is clarified that since the State of Maharashtra has partially lifted the lock

16. Deductions, for payment of insurance premia on Fidelity Guarantee Bonds down recently in certain industrial areas in the State of Maharashtra, the workers

with the acceptance of employee, would be expected to report for duties as per the shift schedules subject to adequate

17. Deductions for recovery of losses sustained by a railway administration on protection, from Corona Virus infections, by the employer. In the event such workers

account of acceptance by the employee of fake currency, voluntarily remain absent, the Management would be at liberty to deduct their wages

18. Deductions for recovery of losses sustained by a railway administration on for their absence subject to the procedure laid down in Law while initiating such

account of failure by the employee in collections of fares and charges, action. This would apply even to areas where there may not have been a lock down.”
Fines: Sec 8 4. 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
Fine should be imposed by the employer on employee with the approval of the
from their wage.
state government or prescribed authority. Employer should follow the rules mentioned
Deductions for damage or loss (Sec 10)
below for and before imposing of fine on the employee.
Employer should give an opportunity to the employee to explain the reason
1. Notice board of fines on employee should be displayed in the work premises
and cause for the damage or loss happened and deductions made by employer from
and it should contain activities that should not be made by employee.
the employee wage should not exceed the value or amount of damage or loss made by
2. Fine should not be imposed on the employee until he gives the explanation
the employee.
and cause for the act or omission he made.
All such deduction and all realizations thereof shall be recorded in a register to
3. Total amount of fine should not exceed 3% of his wage.
be kept by the person responsible for the payment of wages under section 3 in such
4. Fine should not be imposed on any employee who is under the age of 15
form as may be prescribed.
years.
Deductions for services rendered (Sec 11)
5. Fine should be imposed for one time only on the wage of the employee for the
act or omission he made. House-accommodation amenity or service provided by the employer should be
6. Fines should not be recovered in the way of installments from the employee. accepted by the employee, than only the employer can make deduction from the wage
7. Fine should be recovered within 60 days from the date on which fine were of the employee. Deduction should not exceed an amount equivalent to the value of
imposed. the house-accommodation amenity or service supplied.
8. Fine should be imposed on day act or omission made by the employee.
Deductions for recovery of advances (Sec 12)
9. All fines collected from the employee should be credited to common fund and
utilize for the benefit of the employees. 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
Deductions for absence from duty (Sec 9)
the wages /salary to the employee. But employer should not recover the advance
1. Deductions can be made by the employer for the absence of duty by the given for the travelling expense for the employee.
employee for one day or for any period. Deductions for recovery of loans (Sec 12A)
2. The amount deducted for absence from the duty should not exceed a sum
Deductions for recovery of loans granted for house-building or other purposes
which bears the same relationship to the wage payable in respect of the wage-
shall be subject to any rules made by the State Government regulating the extent to
period as this period of absence does to such wage-period. (Example: if the
which such loans may be granted and the rate of interest payable thereon.
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/- Deductions for payments to co-operative societies and insurance schemes (Sec
) 13)
3. Employee present for the work place and refuses to work without proper
reason shall be deemed to be absent from duty. 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 Claims arising out of deductions from wages or delay in payment of wages and
Government may impose. penalty for malicious or vexatious claims (Sec 15)
To hear and decide all claims arising out of deductions from the wages, or
Maintenance of registers and records (Sec 13A)
delay in payment of the wages, of persons employed or paid, including all matters,
Every employer should maintain such registers and records giving such incidental to such claims, there will be a officer mentioned below appointed by the
particulars of persons employed by him, the work performed by them, the wages paid appropriate government.
to them, the deductions made from their wages, the receipts given by them and such a) any Commissioner for Workmen's Compensation; or
other particulars and in such form as may be prescribed. b) any officer of the Central Government exercising functions as
i. Regional Labour Commissioner; or
Every register and record required to be maintained and preserved for a period
ii. Assistant Labour Commissioner with at least two years'
of three years after the date of the last entry made therein. It means for every
experience; or
transaction made within employer and employee should have 3 years of record.
c) any officer of the State Government not below the rank of Assistant Labour
Inspectors (Sec 14) Commissioner with at least two years' experience; or
d) a presiding officer of any Labour Court or Industrial Tribunal, constituted
The state government may appoint an inspector for purpose of this act. Every
under the Industrial Disputes Act, 1947 (14 of 1947) or under any
Inspector shall be deemed to be a public servant within the meaning of the Indian
corresponding law relating to the investigation and settlement of industrial
Penal Code, 1860. The inspector of this act is having powers mentioned below
disputes in force in the State; or
1. Inspector can make enquiry and examination whether the employers are
e) any other officer with experience as a Judge of a Civil Court or a Judicial
properly obeying the rules mentioned under this act.
Magistrate, as the authority to hear and decide for any specified area all claims
2. Inspector with such assistance, if any, as he thinks fit, enter, inspect and
arising out of deductions from the wages, or delay in payment of the wages, of
search any premises of any railway, factory or industrial or other
persons employed or paid in that area, including all matters incidental to such
establishment at any reasonable time for the purpose of carrying out the
claims:
objects of this Act.
Appropriate Government considers it necessary so to do, it may appoint more
3. Inspector can supervise the payment of wages to persons employed upon
than one authority for any specified area and may, by general or special order, provide
any railway or in any factory or industrial or other establishment.
for the distribution or allocation of work to be performed by them under this Act.
4. Seize or take copies of such registers or documents or portions thereof as
If any employer does opposite to the provisions of this act, any unreasonable
he may consider relevant in respect of an offence under this Act which he
deduction has been made from the wages of an employed person, or any payment of
has reason to believe has been committed by an employer.
wages has been delayed, in such case any lawyer or any Inspector under this Act or

Sec 14A provides that, every employer shall afford an Inspector all reasonable official of a registered trade union authorized to write an application to the authority

facilities for making any entry, inspection, supervision, examination or inquiry under appointed by government for direction of payment of wages according to this act.

this Act. Every such application shall be presented within 12 months from the date on which
the deduction from the wages was made or from the date on which the payment of the
wages was due to be made. Time of making an application can be accepted if there is
reasonable cause.
 After receiving of the application the authority shall give an opportunity to Punishable with fine which shall not be less than 1000/- rupees but which may
hear the applicant and the employer or other person responsible for the payment of extend to 7500/- rupees
wages and conducts the enquiry if necessary. It is found that there is mistake with
1. If Wage period exceed one month.
employer; authority shall order the employer for payment of the wage or refund to the
2. Failure in payments of wages on a working day.
employee of the amount deducted unreasonably or the payment of the delayed wages,
3. Wages not paid in form of current coin or currency notes or in both.
together with the payment of such compensation as the authority may think fit. There
4. Failure to maintain record for collected fines from employee.
will not be any compensation payable by employer if there is a reasonable and
5. Improper usage of fine collected from employees.
genuine cause in delay in the payment of wages.
6. Failure of employee to display notice containing such abstracts of this Act and
Powers of authorities appointed under Section 15 (Sec 18) of the rules made.

Every authority appointed under sub-section (1) of Section 15 shall have all Punishable with fine which may extend 3000/- rupees
the powers of a Civil Court under the Code of Civil Procedure, 1908), for the purpose
of taking evidence and of enforcing the attendance of witnesses and compelling the 1. Whoever obstructs an Inspector in the discharge of his duties under this Act
production of documents, and every such authority shall be deemed to be a Civil 2. Whoever willfully refuses to produce on the demand of an Inspector any
Court for all the purposes of Section 195 and of Chapter XXVI of the Code of register or other document
Criminal Procedure, 1973. 3. Whoever refuses or willfully neglects to afford an Inspector any reasonable
Appeal (Sec 17) facility for making any entry, inspection, examination, supervision, or inquiry
In the following situation the parties who ever dissatisfied can appeal to the authorized by or under this Act
district court
Whoever repeats the same offence committed before. Imprisonment for a term
a. If the application dismissed by above authorities
which shall not be less than one month but which may extend to 6 months and fine
b. Employer imposed with compensation exceeding 300/- rupees by the
which shall not be less than 3750/- rupees but which may extend 22500/-rupees.
authorities.
c. If the amount exceeding 25/- rupees withheld by the employer to single
unpaid employee. 50/- in case of many unpaid employees
Reasons for penalty

1. Delay in payment of wages

2. Un reasonable deductions
3. Excess deduction for absence of duty
4. Excess deduction for damage or loss to employer
5. Excess deduction for house-accommodation amenity or service
 THE FACTORIES ACT, 1948
Introduction: Definition of Manufacturing Process:
Section 2(k) defines “manufacturing process” means any process for-
Factories Act is one of the earliest labour welfare legislations. The object of
i. making, altering, repairing, ornamenting, finishing, packing, oiling, washing,
the act is to secure health, safely, welfare, proper working hours, and other benefits to
cleaning, breaking up, demolishing or otherwise treating or adapting any
workers. The Act requires that workers should work in healthy and sanitary
article or substance with a view to its use, sale, transport, delivery or disposal;
conditions and for that purposes. It provides that precaution should be taken for safety
or
of workers and prevention of accidents.
ii. pumping oil, water, sewage, or any other substance; or

Definition of Factory: iii. generating, transforming or transmitting power; or

iv. composing types for printing, printing by letter press, lithography,
Secton 2(m) defines the term “factory” means any premises, including the photogravure or other similar process or book-binding; or
precincts thereof, in any part of which manufacturing process is carried on with or v. constructing, reconstructing, repairing, refitting, finishing or breaking up ships
without the aid of power, provided that at least 10 or 20 persons respectively are or vessels; or
employed or were employed on any day of the preceding 12 months. vi. preserving or storing any article in cold storage.

Meaning of occupier of factory

Hazardous Process:
Section 2(n) defines the term “occupier of factory” means a person who has Section 2(cb) defines “hazardous process” means any process or activity in
ultimate control over affairs of factory. It includes a partner in case of a firm and relation to an industry specified in the First Schedule where, unless special care is
director in case of a company, that if a factory is run by a company, then only the taken, raw materials used therein or the intermediate or finished products, bye-
director of the company can be treated as occupier. The occupier shall ensure, as far products, wastes or effluents thereof would
as possible health, safety, and welfare of workers while they are working in a factory.
The name of the occupier of the factory is required to be informed to the Chief (i) cause material impairment to the health of the persons engaged in or

Inspector of Factories. The occupier will be held responsible if the provisions of the connected therewith, or

Factories Act, 1948 are not complied with. (ii) result in the pollution of the general environment:

Definition of Worker PROVISIONS REGARDING THE HEALTH OF WORKERS

Sections 11 to 20 of the Act contain certain provisions intended to ensure that

Section 2(l) defines “worker” means a person employed, directly or by or
the conditions under .which work is carried on in factories do not affect the health of
through any agency with or without the knowledge of the principal employer, whether
the workers injuriously. The summary of the provisions are explained below
for remuneration or not, in any manufacturing process, or in cleaning any part of the
1. Cleanliness :Sec 11
machinery or premises used for a manufacturing process, or in any other kind of work
Every factory shall be kept clean and free from dirt, and the outflow of drains
incidental to, or connected with, the manufacturing process, or the subject of the
etc. The floors must be cleaned. Drainage shall be provided. Inside walls, partitions
manufacturing process.
and ceilings must be repainted at least once in five years. When washable water paint
is used they must be painted once every three years and washed at least every period kept in a clean and sanitary condition in factories. Employing more than250 workers,
of six months. they shall be of prescribed sanitary types.
2. Disposal of wastes and effluents :Sec 12 PROVISIONS REGARDING THE SAFETY OF WORKERS
The waste materials produced from the manufacturing process must be Sections 21 to 40A, 40B and 41 of the Act lay down rules for the purpose of
effectively disposed off. securing the safety of workers. Summary of the provisions of the Factories Act
3. Ventilation and Temperature :Sec 13 regarding the safety of the workers are stated below: (Sections 2l to 41).
There must be provision for adequate ventilation by the circulation of fresh 1. Fencing to machinery
air: The temperature must be kept at a comfortable level. Hot parts of machines must All dangerous machinery must be securely fenced e.g., moving parts- of prime
be separated and insulated. movers and flywheels connected to every prime mover electric generators etc. (Sec
4. Dust and Fume :Sec 14 2l) Work on or near machinery in motion. Work on or near machinery in motion must
If the manufacturing process used gives off injurious or offensive dust and be carried out only by specially trained adult male workers wearing tightly fitting
fume steps must be taken so that they are not inhaled or accumulated. The exhaust c1othes.-Sec.22.
fumes of internal combustion engines must be conducted outside the factory. 2. Employment of young person’s on dangerous machines
5. Artificial humidification :Sec 15 No young person shall work at any dangerous machine' unless he has been
The water used for this purpose must be pure. It must be taken from some specially instructed as to the dangers and the precautions to be observed has received
source of drinking water supply. The State Government can frame rules regarding the sufficient training about the work and is under the supervision of some person having
process of humidification etc. thorough knowledge and experience of the machine. (Sec. 23)
6. Over Crowding :Sec 16 3. Striking gear and devices for cutting off power
There must be no overcrowding in a factory. In factories existing before the In every factory suitable devices for cutting off power in emergencies from
commencement of the Act there must be at least 350 c.ft of space per worker. For running machinery shall be provided and maintained in every workroom. (Sec. 24)
factories built afterwards, there must be at least 500 c.ft of space. In calculating the 4. Self-acting machines
space, an account is to be taken of space above14 ft. (or 5 metres) from the floor
Moving parts of a self-acting machine must not be allowed to come within 45
7. Lighting :Sec 17
cms. of any fixed structure which is not part of the machine. (Sec. 25)
Factories must be well lighted. Effective measures must be adopted to prevent
glare or formation of shadows which might cause eyestrain. 5. Casing of new machinery
8. Drinking water: Sec 18
In all machinery installed after the commencement of theAct. certain parts
Arrangements must be made to provide a sufficient supply of whole some drinking
must be sunk, encased or otherwise effectively guarded e.g.. set screw bolt toothed
water. All supply' points of such water must be marked "drinking water". No such
gearing etc. (sec. 26)
points shall be within 20 ft. (or 7.5 metres) of any latrine, washing place etc. Factories
6. Women and children near cotton Openers
employing more than 250 workers must cool the water during the hot weather.
Women and children must not be allowed to work near cotton openers, except
9. Latrines and Urinals: Sec 19
in certain cases. (Sec. 27)
Every factory must provide' sufficient number of latrines and urinals. There
must be separate provision for male and female workers. Latrine and urinals must be
 7. Hoists, lifts, chains etc effective screens or suitable goggles shall be provided for the protection of persons
Every hoist and lift must be so constructed as to be safe. There are detailed employed on, or in the immediate vicinity of the process. (sec 35)
rules as to how such safety is to be secured. There are similar provisions regarding
14. Precautions against dangerous fumes
lifting machines. Chains, ropes and lifting tackle. (Sec. 28and) 29.
8. Revolving machinery No person shall be allowed to enter any chamber tank etc. where dangerous
Where grinding is carried on the maximum safe working speed of revolving fumes are likely to be present unless it is equipped with a manhole or other means of
machinery connected therewith must be notified. Steps must be taken to see that the going out. In such space no portable electric light of more than 24 volts shall be used.
safe speed is not exceeded. (Sec. 30) Only a lamp or light of flame proof construction can be used in such space. For
9. Pressure plant people entering such space suitable breathing apparatus, reviving apparatus etc. shall
be provided. Such places shall be cooled by ventilation before any person is allowed
Where any operation is carried on at a pressure higher than the atmospheric pressure,
to enter.(secs. 36 and 36A)
steps must be taken to ensure that the safe working pressure is not exceed. (sec. 31)
15. Explosive or inflammable gas etc
10. Floors, stairs and means of access
Where a manufacturing process produces inflammable gas, dust, fume etc.
All floors, steps, stairs, passage and gangways shall be of sound construction
steps must be taken to enclose the machine concerned, prevent the accumulation of
and properly maintained. Handrails shall be provided where necessary. Safe means of
substances and exclude all possible sources of ignition. Extra precautionary measures
access shall be provided to the place where the worker wills carry on any work. (Sec.
are to be taken where such substances are worked at greater than the atmospheric
32)
pressure. (Sec. 37)
11. Pits, sumps openings in floors etc
16. Precaution in case of fire
In every factory fixed vessel, sump, tank, pit or opening in the ground or in a
Fire escapes shall be provided. Windows and doors shall be constructed to
floor which, by reasons of its depth, situation, construction or contents, is or may be a
open outwards. The means of exit in case of the fire shall be clearly marked in red
source of danger, shall be either securely covered or securely fenced.(sec 33)
letters. Arrangements must be made to give warning in case or fire -sec. 38
12. Excessive weights
17. Specifications of defectives etc. and safety of buildings and machinery
No person shall be employed in any factory to lift, carry or move any load so If any building or machine is in a defective or dangerous condition, the
heavy as to be likely to cause him injury. (2) The Government may make rules inspector of factories can ask for the holding of tests to determine how they can be
prescribing the maximum weights which may be lifted, carried or moved by adult made safe. He can also direct the adoption of the measure necessary to make them
men, adult women, adolescents and children employed in factories or in any class or safe. In case of immediate danger, the use of the building or machine can be
description of factories or in carrying on any specified process. (sec 34) prohibited. (Secs. 39 and 40)
18. Maintenance of Buildings
13. Protection of eyes
If the Inspector of Factories thinks that any building in a factory, or any part of
In respect of any such manufacturing process carried on in any factory as may it is in such a state of disrepair that it is likely to affect the health and welfare of the
be prescribed, being a process which involves- (a) risk of injury to the eyes from workers he may serve on the occupier or manager or both in writing specifying the
particles or fragments thrown off in the course of the process, or (b) risk to the eyes measures to be done before the specified date. (Sec. 4OA)
by reason of exposure to excessive light, the Government may by rules require that
Safety Officers: maintained shall not be less than one for every one hundred and fifty workers
ordinarily employed in the factory.(sec 45).
The State Government may notify to the occupier to employ a number of
5. Canteens
Safety Officers in a factory
That in any specified factory wherein more than two hundred and fifty
i. where in one thousand or more workers are ordinarily employed or
workers are ordinarily employed, a canteen or canteens shall be provided and
ii. where in any manufacturing process or operation which involves the risk of
maintained by the occupier for the use of the workers. (Sec. 46)
bodily injury, poisoning disease or any other hazard to health of the persons
6. Shelters
employed in the factory .-Sec. 40B.
In every factory where more than 150 workers are employed there must be
PROVISIONS REGARDING THE WELFARE OF WORKERS
provided adequate and suitable shelters or rest rooms and a lunch room (with drinking
1. Washing facilities
water supply) where workers may eat meals brought by them. Such rooms must be
In every factory adequate and suitable facilities for washing shall be provided sufficiently lighted and ventilated and must be maintained in a cool and clean
and maintained for the use of the workers therein; separate and adequately screened condition~. The standards may be fixed by the State Government. (Sec. 47)
facilities shall be provided for the use of male and female workers; such facilities 7. Creches
shall be conveniently accessible and shall be kept clean. The Government may, in In every factory where more than 30 women a employed, a room shall be
respect of any factory or class or description of factories or of any manufacturing provided for the use of the children (below 6 years) of such women. The room shall
process, prescribe standards of adequate and suitable facilities for washing. (Sec 42) be adequate size well lighted and ventilated, maintained in a clean and sanitary
2. Facilities for storing and drying of wet clothing condition and shall be in charge of a woman trained in the care of children and
The State Government may in respect of any factory or class or description of infants. The standards shall be laid down by the State Government. (Sec. 48)
factories, make rules requiring the provision therein of suitable places for keeping Welfare officers
clothing not worn during working hours and for the drying of wet clothing. (sec 43) Welfare officers must be appointed in every factory where 500 or more
3. Facilities for sitting workers are employed. The State Government may prescribe the duties, qualifications
In every factory suitable arrangements for sitting shall be provided and etc. of such officers. (Sec. 49)
maintained for all workers obliged to work in a standing position, in order that they WORKING HOURS OF ADULTS
may take advantage of any opportunities for rest which may occur in the course of
Weekly hours Sec: 51
their work. If, in the opinion of the Chief Inspector, the workers in any factory
engaged in a particular manufacturing process or working in a particular room are No adult worker shall be required or allowed to work in a factory for more
able to do their work efficiently in a sitting position, he may, by order in writing, than forty-eight hours in any week.
require the occupier of the factory to provide before a specified date such seating
Weekly holidays: Sec 52
arrangements as may be practicable for all workers so engaged or working. (Sec 44)
4. First aid appliances No adult worker shall be required or allowed to work in a factory on the first
day of the week, (hereinafter referred to as the said day), unless he has or will have a
There shall in every factory be provided and maintained so as to be readily
holiday for a whole day on one of the three days immediately before or after the said
accessible during all working hours first-aid boxes or cupboards equipped with the
day, and the manager of the factory has, before the said day or the substituted day.
prescribed contents, and the number of such boxes or cupboard to be provided and
 Whichever is earlier delivered a notice at the office of the Inspector of his Spread over
intention to require the worker to work on the said day and of the day which is to be The periods of work of an adult worker in a factory shall be arranged that
substituted, and displayed a notice to that effect in the factory. Provided that no inclusive of his intervals for rest under section they shall not spread-over more than
substitution shall be made which will result in any worker working for more than ten ten and half hours in any day. The Chief Inspector may for specified reasons increase
days consecutively without a holiday for a whole day. the spread over up to twelve hours. (Sec. 56)
RULES REGARDING EMPLOYMENT OF ADULTS NIGHT SHIFTS
Notices may be cancelled by a notice delivered at the office of the Inspector
Where a worker in a factory works on a. shift which extends beyond midnight
and a notice displayed in the factory not later than the day before the said day or the
his weekly holiday and compensatory holiday means a period of holiday for 24
holiday to be cancelled, whichever is earlier.
consecutive hours beginning when his shift ends, and
Where any worker works on the said day and has had a holiday on one of the --the following day for him shall be deemed to be the period. of 24 hours beginning
three days immediately before it, that said day shall, for the purpose of calculating his when such shift ends and the hours he has worked after midnight shall be counted in
weekly hours of work, be included in the preceding week. his previous day.(sec. 57)
Overlapping Shifts
Compensatory holidays: Sec 53
Work shall not be carried on in any factory by means of a system of shifts so
Where, as a result of the passing of an order or the making of a rule under the arranged that more than one relay of workers is engaged in work of the same kind at
provisions of this Act exempting a factory or the workers therein from the provisions the same time. The State Government or the Chief Inspector may grant exemption
of section 52, a worker is deprived of any of the weekly holidays for which provision from this rule. (See. 58).
is made in sub-section (1) of that section, he shall be allowed, within the month in Double Employment
which the holidays were due to him or within the two months immediately following No adult worker shall be required or allowed to work in any factory on any
that month, compensatory holidays of equal number to the holidays so lost. (2) The day on which he has already been working in any other factory, save in such
State Government may prescribe the manner in which the holidays for which circumstances as may be prescribed.(Sec. 60)
provision is made in sub-section (1) shall be allowed. Notice of Periods of Work
There must be displayed in every factory a notice showing periods of work of
Daily hours
adults, classification of workers in groups according to nature of their work, shifts and
Subject to the provisions of section 51, no adult worker shall be required or relays etc. Change made in the system of work must be notified to the Inspector
allowed to work in a factory for more than nine hours in any day: Provided that, before change. The manager of every factory must maintain a Register of Adult
subject to the previous approval of the Chief Inspector, the daily maximum hours Workers showing the name of each worker, the nature of his work, the group in which
specified in this section may be exceeded in order to facilitate the change of he is included, the relay in which he is allotted etc. The hours of work of an adult
shifts.(sec 54) worker- must correspond with the notice referred to above and the Register.- Sections
61, 62, 63.
Intervals for rest
No adult worker shall be required or allowed to work in any factory unless his
The periods of work of adult workers in a factory each day shall be so fixed name and other particulars have been entered' in the register of adult workers.-Sec. 62
that no period shall exceed five hours and that no worker shall work for more than (1A) added by the Factories (Amendment) Act, 1976.
five hours before he has had an interval for rest of at half an hour(sec 55).
Exemptions Provided that unless the certifying surgeon has personal knowledge of the place where
the young person proposes to work and of the manufacturing process in which he will
By sections 64 and 65, the State Government has been given power to exempt
be employed, he shall not grant or renew a certificate under this sub-section until he
for limited periods certain factories from compliance with some of the provisions
has examined such place.
relating to hours of work and employment. Such exemptions are necessary in special
cases, for example in the case of workers engaged in urgent repairs or in preparatory A certificate of fitness granted or renewed shall be valid only for a period of
and complementary work. twelve months from the date thereof; may be made subject to conditions in regard to
the nature of the work in which the young person may be employed, or requiring re-
In some industries work if of an intermittent character and the enforcement of
examination of the young person before the expiry of the period of twelve months.
all the rules stated above will create hardship. The nature of the work in certain
industries requires exceptional treatment, e.g., workers engaged in engine rooms and A certifying surgeon shall revoke any certificate granted or renewed under sub-
boilers or in the printing of newspapers. section if in his opinion the holder of it is no longer fit to work in the capacity stated
therein in a factory. Where a certifying surgeon refuses to grant or renew a certificate or
EMPLOYMENT OF YOUNG PERSONS
a certificate of the kind requested or revokes a certificate, he shall, if so requested by
Prohibition of employment of young children (sec 67-68) any person who could have applied for the certificate, or the renewal thereof, state his
reasons in writing for so doing. Where a certificate under this section, with reference
No child who has not completed his fourteenth year shall be required or
to any young person is granted or renewed subject to such conditions. The young person
allowed to work in any factory. Non-adult workers to carry tokens.- A child who has
shall not be required or allowed to work in any factory except in accordance with those
completed his fourteenth year or an adolescent shall not be required or allowed to
conditions. Any fee payable for a certificate under this section shall be paid by the
work in any factory unless- (a) a certificate of fitness granted with reference to him
occupier and shall not be recoverable from the young person, his parents or guardian.
under section 69 is in the custody of the manager of the factory, and (b) such child or
adolescent carries while he is at work a token giving a reference to such certificate. Effect of certificate of fitness granted to adolescent (sec 70)

Certificates of fitness (sec 69) An adolescent who has been granted a certificate of fitness to work in a
factory as an adult who while at work in a factory carries a token giving reference to
A certifying surgeon shall, on the application of any young person or his
the certificate, shall be deemed to be an adult for all the purposes.
parent or guardian accompanied by a document signed by a manager of a factory that
such person will be employed therein if certified to be fit for work in a factory, or on No female adolescent or male adolescent who has attained the age of
the application of the manager of the factory in which any young person wishes to seventeen years but who has been granted a certificate of fitness to work in a factory
work, examine such person and ascertain his fitness for work in a factory. as an adult, shall be required or allowed to work in any factory except between 6 a.m.
and 7 p.m.
The certifying surgeon, after examination, may grant to such young person, in
the prescribed form, or may renew a certificate of fitness to work in a factory as a Provided that the State Government may, by notification in the Official
child, if he is satisfied that the young person has completed his fourteenth year, that Gazette, in respect of any factory or group or class or description of factories,-
he has attained the prescribed physical standards and that he is fit for such work; a
certificate of fitness to work in a factory as an adult, if he is satisfied that the young
person has completed his fifteenth year, and is fit for full day's work in a factory:
 i. vary the limits laid down in this sub-section so, however, that no such section The periods shown in the notice required by sub-section it shall be fixed
shall authorise the employment of any female adolescent between 10 p.m. and beforehand in accordance with the methods laid down for adult workers in section 61,
5 a.m.; and shall be such that children working for those periods would not be in
ii. grant exemption from the provisions of this sub- section in case of serious contravention of the provisions. The provisions of sub-sections (8), (9) and (10) of
emergency where national interest is involved. section 61 shall apply also to the notice required by sub-section (1) of this section.
iii. An adolescent who has not been granted a certificate of fitness to work in a
Register of child workers: Sec 73
factory as an adult under the aforesaid clause shall, notwithstanding his age, be
deemed to be a child for all the purposes of this Act. The manager of every factory in which children are employed shall maintain
Working hours for children: Sec 71 a register of child workers, to be available to the Inspector at all times during working
hours or when any work is being carried on in a factory showing
No child shall be employed or permitted to work,
i. in any factory for more than four and a half hours in any day; during of at least a) the name of each child worker in the factory,
twelve consecutive hours which shall include the interval between 10 p.m. and b) the nature of his work,
6 a.m. c) the group, if any, in which he is included,
ii. The period of work of all children employed in a factory shall be limited to d) where his group works on shifts, the relay to which he is allotted, and
two shifts which shall not overlap or spread over more than five hours each; e) the number of his certificate of fitness granted under section 69.
and
No child worker shall be required or allowed to work in any factory unless his
iii. each child shall be employed in only one of the relays which shall not except
name and other particulars have been entered in the register of child workers. No
with the previous permission in writing of the Chief Inspector, be changed
child shall be employed in any factory otherwise than in accordance with the notice of
more frequently than once in a period of thirty days.
periods of work of children displayed in the factory and the entries made before hand
iv. The provisions of section 52 shall apply also to child workers, and no
against his name in the register of child workers of the factory. (sec 74).
exemption from the provisions of that section may be granted in respect of any
child. Power to require medical examination: Sec 75
v. No child shall be required or allowed to work in any factory on any day on
Where an Inspector is of the opinion that any person working in a factory
which he has already been working in another factory.
without a certificate of fitness is a young person, or that a young person working in a
vi. No female child shall be required or allowed to work in any factory except
factory with a certificate of fitness is no longer fit to work in the capacity stated
between 8 a.m. and 7 p.m.
therein, he may serve on the manager of the factory a notice requiring that such
person or young person, as the case may be, shall be, examined by a certifying
Notice of periods of work for children: Sec 72
surgeon, and such person or young person shall not, if the Inspector so directs, be
There shall be displayed and correctly maintained in every factory in which
employed, or permitted to work, in any factory until he has been so examined and has
children are employed in accordance with the provisions of sub- section (2) of section
been granted a certificate of fitness or a fresh certificate of fitness, as the case may be,
108 a notice of periods of work for children, showing clearly for every day the periods
under section 69, or has been certified by the certifying surgeon examining him not to
during which children may be required or allowed to work.
be a young person.
Labour Law Reforms However, the Industrial Relations Code introduces a new form of short-term labour – fixed
term employment.
The central government proposes to replace 29 existing labour laws with four Codes. The
objective is to simplify and modernize labour regulation.
Trade Unions: There are several registered trade unions but no criteria to ‘recognise’
unions which can formally negotiate with employers. The Industrial Relations Code creates
The major challenge in labour reforms is to facilitate employment growth while protecting
provisions for recognition of unions.
workers’ rights. Key debates relate to the coverage of small firms, deciding thresholds for
prior permission for retrenchment, strengthening labour enforcement, allowing flexible
Simplification and updation: The Codes simplify labour laws to a large extent but fall
forms of labour, and promoting collective bargaining.
short in some respects. Further, the Code on Social Security creates enabling provisions to
notify schemes for ‘gig’ and ‘platform’ workers; however, there is a lack of clarity in these
Further, with the passage of time, labour laws need an overhaul to ensure simplification and
definitions.
updation, along with provisions which can capture the needs of emerging forms of labour
(e.g., gig work). This note discusses these challenges and the approaches taken by the four
Delegated Legislation: The Codes leave several key aspects, such as the applicability of
Codes.
social security schemes, and health and safety standards, to rule-making. The question is
whether these questions should be determined by the legislature or be delegated to the
Coverage: Most labour laws apply to establishments over a certain size (typically 10 or
government.
above). Size-based thresholds may help firms in reducing compliance burden. However,
one could argue that basic protections related to wages, social security, and working
Labour falls under the Concurrent List of the Constitution. Therefore, both Parliament and state
conditions should apply to all establishments. Certain Codes retain such size-based
legislatures can make laws regulating labour. The central government has stated that there are over
thresholds.
100 state and 40 central laws regulating various aspects of labour such as resolution of industrial
disputes, working conditions, social security and wages.[1] The Second National Commission on
Retrenchment: Establishments hiring 100 or more workers need government permission
Labour (2002) (NCL) found existing legislation to be complex, with archaic provisions and
for closure, layoffs or retrenchments. It has been argued that this has created an exit barrier
inconsistent definitions.[2] To improve ease of compliance and ensure uniformity in labour laws,
for firms and affected their ability to adjust workforce to production demands. The
the NCL recommended the consolidation of central labour laws into broader groups such as (i)
Industrial Relations Code raises this to 300, and allows the government to further increase
industrial relations, (ii) wages, (iii) social security, (iv) safety, and (v) welfare and working
this limit by notification.
conditions.

In 2019, the Ministry of Labour and Employment introduced four Bills on labour codes to
Labour enforcement: Multiplicity of labour laws has resulted in distinct compliances,
consolidate 29 central laws. These Codes regulate: (i) Wages, (ii) Industrial Relations, (iii) Social
increasing the compliance burden on firms. On the other hand, the labour enforcement
Security, and (iv) Occupational Safety, Health and Working Conditions. While the Code on Wages,
machinery has been ineffective because of poor enforcement, inadequate penalties and rent-
2019 has been passed by Parliament, Bills on the other three areas were referred to the Standing
seeking behaviour of inspectors. The Codes address some of these aspects.
Committee on Labour. The Standing Committee submitted its reports on all three Bills.[3] The
government has replaced these Bills with new ones in September 2020. This note discusses some of
Contract labour: Labour compliances and economic considerations have resulted in
the key issues related to labour laws and the provisions in the four new Codes. This note should be
increased use of contract labour. However, contract labour have been denied basic
protections such as assured wages. The Codes do not address these concerns fully.
read in conjunction with our Legislative Briefs on the four Codes, and the note on the three new
Bills.