Labour and Industrial Law

31/07/2021 (Saturday)
Introduction to labour law- Two judgments which have reflected the
extremities in time and perception.
1. Dred Scott v. Sanford US SC Judgment (1856)
The plaintiff was an African American, who was a slave to a physician in the US
Army. By virtue of being in the army, he used to get transferred regularly and, in
this process, he moved to Missouri. Must be kept in mind that each state in the US
is an independent sovereign. They have their own independent constitutions.
Dred Scott moved with his master to Illinois, meaning he was freed from his master
in Illinois. He was free from his slavery by application of law. Then they moved to
Missouri where slavery was not prohibited. Once they were in Missouri, Dred Scott
applied for his freedom.
‘All men’ does not include African origin humans as they are of inferior nature- this
is what the SC said. The SC also said that once he came to Missouri, he returned to
slavery.
2. Lochner v. New York (1905) [198 US 45]
The city of New York came up with a law that bakery workers shall not be given
work for more than 60 hours a week or more than 10 hours a day. Certain
bakery owners were prosecuted were prosecuted for engaging their workers beyond
threshold. They challenged their prosecution and the legislation on the ground of
the 14th Amendment of US Constitution. 14th Amendment is similar to the
triangle of 14, 19 and 21 in India (In the US, the original portion of the Constitution
cannot be amended; however, fresh matter can be added to it; the addition can only
be subsequent to what already existed in the beginning).
The bakery owners said that the law which restricted the working hours was
contrary to the liberty granted to them under 14th Amendment. The liberty they
claimed was that they had liberty to do business in the manner in which they like
and there couldn’t be any state regulation on the business. They were free to enter
into contracts with anyone they desire, without state interference (including
contract with slaves). They said they are free to use the property in the manner
in which they like.
The SC again favoured businesses and said that the law was affecting/contravening
the liberty of the bakery owners for the purpose of entering into contracts with slaves
and US SC struck down that law.
Project Topic: You are required to do an empirical research in the area nearby and
look for the child labour issues in your area. Secondly, you then need to see what
are the provisions under the law for the issues you have actually identified and then
give solutions to the problems identified.
07 Aug. (Saturday)
In India, in 1843, a British Act of Parliament (The Indian Slavery Act), it was
brought in with the objective of declaring the law regarding the condition of slavery
within the limits of the East India Company. This law was to be applicable only to
the East India Company. Roughly 13 years after this law, the Dred Scott judgment
was delivered.
Provisions of the 1843 Act: No execution of any decree for (1) enforcement of
demand of rent or (2) demand of revenue. The decree shall not be executed
against/for sale or cause to be sold any person.
No right arising of an alleged property in the person shall be enforced by civil or
criminal law. Further, all individuals were to be treated equally; if certain act has
been committed against free individual, and if that act becomes a crime then such
act if committed, against slaves, shall also be crime (this was important because
prior to the 1843 Act, a criminal offence could’ve been committed against a person
but it wouldn’t be an offence against the slave).
Factories Act was brought into India in 1883. This act stipulated 8 hours for
working of labour; it also abolished child labour; Restrictions on employment of
women at night; introduction of overtime pay.
Workmen’s Compensation Act 1923 (19 Aug | Thursday)
In 1923 during the industrial revolution, many factions came in support of
labourers. There was criticism regarding working conditions in which the workmen
performed their work. Thus, a legislation was sought to be passed to provide some
social security to the workers.
The Workmen’s Compensation Act is an act in the nature of- (a) social security (b)
welfare legislation (the purpose is also to compensate the workman in case of injury
which could be permanent/temporary or partial/complete); the person will be
compensated to the extent of the loss in the earning capacity due to such injury.
The necessity of the legislation was due to increase in use of complex machines
which resulted into increase in accidents involving workmen during the course of
their employment. The workman will be compensated for injury, which may be
partial or total. Total disability is not a reduction but a total loss in earning capacity.
Both these disabilities can be temporary or permanent.
Nature (X) Partial Total
Temporary Capacity to earn is Capacity to earn is
reduced for a specific completely lost for specific
time. time.
Permanent Capacity to earn is Capacity to earn is lost for
reduced for life. life.
The object of the Act is to impose an obligation upon the employer to pay
compensation for injury which may result due to accident. The accident must arise
out of and during the course of employment.
The injury could be caused due to an accident or an occupational disease- in both
circumstances, the requirement is that the injury must have arisen out of and
during the course of employment.
This compensation can be claimed by anyone who is dependent on the workman
and not specifically family members. A dependent could be a widow, minors
(legitimate or adopted), unmarried daughter, widowed mother, infirm son or anyone
who is completely dependant upon the earning of the workman. Definition of
‘dependant’ is under Sec. 2(d) of WC Act 1923.
Sec. 2(g) defines ‘partial disablement’ and Sec. 2(l) defines ‘total disablement’.
Partial disablement is reduction in the earning capacity.
Course of employment: (a) Point of time (b) Point of place (place where accident
occurred must be construed to be place of employment and the place of employment
does not have notional boundaries) and (c) Point of circumstances. These points are
to be tested to determine whether the accident could be said to be arising out of the
course of employment.
Exceptions: (1) If the period of temporary disability (total or partial) does not exceed
3 days, in such circumstances, compensation need not be awarded.
(2) If injury not resulting in death of workman, is caused by accident which can be
directly attributable to (a) workman or employee having influence of drinking or
drugs (b) wilful disobedience by the workman of the order expressly made or rules
framed, then in such cases the workman need not be awarded any compensation.
If this injury results in death, this exception is not applicable.
(3) Wilful removal or disregard of any safety guard or any other device which is for
the safety of the workman, then in such circumstances, compensation need not be
paid.
28.08.2021 (Saturday)
‘Arising out of and during the course of employment’- any kind of personal injury.
The personal injury must have causal connection with the employment. Quantum
of compensation will be determined as per S. 4 of the Act.
The exceptions discussed in last class, are in the nature of contributory negligence.
Under the common law, contributory negligence is a complete defence. Any other
defence apart from these exceptions in nature of contributory negligence are not
available to the employer.
[1933 PC 225]- Identical case decided by the SC in (2001) ILLJ 117 (SC) {State of
Rajasthan v. Ram Prasad & Anr.}- In this case, the workman Geeta died due to
lightning while working on a site of the employer. Employer took the defence that
the lightning was an act of God. The employer had taken all measures to avoid any
untoward incident on the site but the accident took place because of act of God. It
was argued that lightning had no causal connection with the employment. It cannot
be said that such lightning could have arisen out of or during the course of
employment. The SC said that her presence on the site was due to her
employment. Had she not been employed; she would not have been present at
the place where lightning struck. Thus, she was entitled to receive compensation.
Law provision: Section 3- Employer’s liability for compensation.
Class Problem: Driver of a petrol tanker found a leakage in the tanker which he
reported to the owner of the tanker. The owner in order to check the leakage,
instructed the driver to remove all the petrol from the tanker and to fill the tanker with
water. On tanker, there was a permanent marking, which said “no fire in and around
10 feet of the tanker”. On the next day, the owner instructed the driver to get inside
the tanker and check the leakage. Driver went inside but since there was darkness,
in order to verify the leakage, he lit the matchstick. The tanker caught fire and driver
sustained serious injuries. The appropriate authority granted compensation in favour
of driver for injuries sustained. The employer preferred an appeal before the
appropriate authority.
Sol. No alcohol or drug influence/there is no disobedience of any order or rule/ but
given that there is a permanent marking on the tanker saying that there should be
no fire.
The problem is loosely based on the case of R.B. Mundra and Co. v. Mr. Bhanwari
[AIR 1970 Raj 111]- the difference here was that the driver actually succumbed to
his injuries.
30.08.2021 (Monday)
Class Problem: A workman was employed in the lorry/truck belonging to the
employer. This lorry is used to carry quarry material. The duty was to load the truck
with the quarry material, travel in the truck and lastly unload the material at the
material at the destination. One day when the truck was plying on the road with the
quarry material, the workman saw a rabbit crossing the road. Workman felt that the
rabbit would come under the wheels of the truck. In order to avoid this mishap, the
workman took the stone and tried to hit the rabbit to make it move away. While doing
so, the workman fell out of the truck and received serious injury but not in the nature
of permanent total disablement. You need to identify if workman is eligible for
compensation or not.
Case: Smt. Koduri v. Polongi Atchamma (1969) Lab IC 1415 (AP)- Facts modified
to the extent that in this case, the employee actually died. In this case, it was held
that there could be no compensation as the act resulting in accident had no
connection with the employment. Hitting a wild rabbit was not part of service of the
workman for which he was employed. The Court observed that there has to be a
causal connection between the accident and the work for which the employee is
employed.
Case: M. Mackenzie v. IM Issak (AIR 1970 SC 1906)- Initially an investigation
was done by the Commissioner and found no medical evidence to suggest that death
of the seaman was caused by accident arising out of his employment. The SC held
that the Commissioner did not commit any error of law in reaching to the above
finding. Accordingly, no compensation was payable.
Case: Trustees Port of Bombay v. Yamunabai (AIR 1952 Bom. 382)- Bomb placed
in a workshop exploded and caused injury to a workman. Held that the workman
was not responsible for placing the bomb and injury was caused by virtue of his
employment at that workplace. The injury was a result of an accident arising out of
his employment. In a different case, the same thing was also held where an aircraft
crashed on a factory premises.
Case: Public Works Department v. Kaunsa Gokul (1967) ILLJ 344 (MP)- Court
held that accident would not have happened had he not been engaged in the
employment. A workman was found dead at considerable distance from the place
while other members of his gang were working on the road. Held that death of Gokul
was an accident arising out of his employment because the accident would not have
happened had he not been engaged in that employment. The accident arose because
of the nature of the employment that exposed him to particular danger.
04.09.2021 (Saturday)
Ravuri Kotayya v. Dasari- AP HC discussed the test of injury arising out of and
during the course of employment.
Doctrine of Notional Extension: Difficulty arises when the accident does not coincide
with working hour during his duty. If the worker has not yet started performing his
duty and gets injured, that poses a tricky situation. As a rule, the employment of a
worker does not commence until he has reached the place of employment and does
not continue when he has left the place of employment, the journey to and from the
place of employment being excluded. It is however settled now, that this is subject
to the theory of notional extension of the employer’s premises so as to include an
area which the workman passes and repasses in going to and leaving from the actual
place of work. The moment from when the workman mentally decides to go for
his work (mental aspect of the workman; whether he had mentally started his
job or not); if this is shown, the Court may grant compensation despite his presence
not being marked for the day on the roll. The moment he is mentally prepared for job,
he is said to be in job and he will remain so, till the time he reaches his house i.e.,
until he relaxes himself mentally that he is back home.
Ex.: a man is going back home from work and stops to take vegetables and meets
with an accident. The moment he steps down to get vegetables, it implies that his
duty has ended and the tasks he is performing are now personal in nature.
There is no uniform rule to identify if a workman is on duty or not; this varies from
case-to-case basis.
11.09.2021 (Saturday)
Indian Factories Act, 1881- The object of the British law was to break competition
in textile industries. Under the 1881 Act, child labour was abolished or restricted;
overtime wages were to be paid; working hours was limited; woman workers were to
be appointed for specified purpose and not during night hours.
Factories Act 1948 has specified objects and reasons which are to provide health,
safety and welfare of workers and factories; to regulate working conditions, working
hours, leave, holidays, overtime, child employment, women employment, adolescent
employment.
Section 2(m) defines the meaning of factory. Important to keep in mind any day in
the preceding 12 months. 10 or more workers working in a premises for
manufacturing process with the aid of power. Then that premises would become
factory if they were working there on any day in the preceding 12 months. If the
work is without the aid of power, there must be 20 or more workers. Power means
electrical energy or any other mechanically transmitted energy which is not
generated by human or animal agency.
Worker is defined under section 2(l)- A person employed directly or indirectly,
with or without the knowledge of his principal employer, with remuneration or
without remuneration but must be involved in manufacturing process.
Manufacturing process is defined under Section 2(k).
DISPUTE RESOLUTION UNDER INDUSTRIAL DISPUTES ACT | 17.10.2021
In-house mechanism: This is not mentioned under the Act; this name is for purpose
of understanding- it is a mechanism to resolve disputes within the establishment
within the workers and the employers. Works committee is the first of its kind and
another is Grievance redressal mechanism. They are the two types of modes of
resolution which take place within the establishment itself. Works committee is
under Sec. 3 and Grievance redressal mechanism is under Sec. 9C of the Act.
Conciliation: An officer is appointed by the Central Government as a conciliation
officer. There is a Board of conciliation as well. Conciliation officer is appointed u/s
4 and the Board is under Sec. 5. Duty of board is to resolve disputes amicably by
talks.
Voluntary Arbitration: Parties may agree by way of agreement, to refer the dispute to
the arbitrator. The only caveat is that the agreement must be executed prior to
reference of dispute by the appropriate government to the courts (courts include all
sorts of courts established under this Act). Covered under Sec. 10-A of the Act.
Adjudicating Process: Three types of courts: labour court, industrial tribunal,
national industrial tribunal. Labour court established under Sec. 7 and the
tribunals are established under Sec. 7A and 7B of the Act.
Reference u/s 10 of ID Act- No party can approach conciliator directly. The dispute
is required to be referred to the appropriate government, which is usually
represented by the labour commissioner. Issues will be raised before the appropriate
government and the appropriate government will refer upon considering the nature
of the dispute for its resolution either to conciliating officer, board of conciliation,
labour court or industrial tribunal. If the dispute is concerned with Schedule II, it
will be referred to the labour court. If dispute is concerned with Sch. II and III then
it is referred to Industrial Tribunal. But if this dispute is affecting less than 100
workmen, then appropriate government may refer the dispute to labour court.
All these bodies are not acting as appellate bodies over one another. They are
independent adjudicatory bodies. They can only adjudicate disputes which are
referred to them.
National Industry Tribunal- Only central government may refer disputes to the
National Industrial Tribunal. If Central Government finds that the dispute is of
national importance, or general public importance or its adjudication affects more
than one state or more than one state is interested in the dispute’s adjudication
process, then in these three circumstances, without prejudice whether central
government is appropriate government or not, may refer such disputes to the
National Industrial Tribunal.
Suppose prior to dispute being referred by the central government to the National
Industrial Tribunal, the dispute has been referred by the appropriate government
either to labour court or industrial tribunal as the case may be, then upon reference
by central government of the dispute to the national tribunal, the adjudication
process by labour court or industrial tribunal gets quashed automatically. Once the
reference is made to the National Tribunal, the same reference cannot be made
elsewhere by the central government.
Constitution of the Labour Court- Covered under Sec. 7 of the Act. It says that
the appropriate government may constitute labour court. This can be done by
notification in official Gazette. There could be one or more labour court and the
presiding officer shall be a person who has held the post of judicial officer for not less
than 7 years.
Sec. 3- Works Committee must be compulsory in an establishment where more than
100 workers are working. There must also be equal representation of employers and
workmen. Function is to promote amity between employer and workmen and
endeavour to compose any material difference of opinion between employer and
workmen.
Function of Grievance Redressal Machinery under Sec. 9C of the Act: Wherever
there are twenty or more workers working then there shall be grievance redressal
mechanism. GRM shall be represented by equal number of workmen and employers.
The chairman shall be selected from member representing employer and workmen
alternatively. Total number of members of GRM shall not exceed six. It is desired if
practicable, to have representation of women in GRM. This GRM shall complete
proceedings before them within 30 days. Pendency of proceedings before GRM shall
not affect right of workmen to raise industrial dispute for the same matter.
Conciliation officer: These officers are to be appointed by the appropriate
government for specified area and its duty is to mediate and promote settlement of
industrial disputes. Boards of conciliation are covered under Sec. 5. The Board is
also appointed by appropriate government and it shall consist of chairman and 2/4
other members other than chairman. Duty of the board is to settle industrial dispute
by way of mediation process.
Court of Inquiry (Sec. 6): Court on inquiry shall have all powers of the civil courts
like enforcing attendance, compelling the production of documents, issuing
commissions, examination of witness, other incidental powers.
24.10.2021 (Sunday)
Life of the Settlement/Award: Ordinarily in civil disputes, the life of the award is
in perpetuity. This means that the award would have binding effect on parties and
their successors in perpetuity. Under labour courts, this life is limited.
Example: Payment of Rs. 500 p.m. as bonus amount which employer will pay to the
workmen for the period for which the workman has worked with establishment. This
workman will be eligible to get 500x13 for 13 months. After 10 years, however, this
payment of bonus dispute will not be said to be settled. Because after 10 years,
rupees 500 will lose their value.
Life of the settlement is for the period agreed upon by the parties to the
settlement. If there is a period mentioned in the settlement, then such period would
be the operation period of the settlement. If no period is mentioned in the settlement
deed, then it would be six months from the date of settlement. Even after completion
of the specified period, or six months period, as be the case, the settlement will
continue to operate. Even after completion of the period, the settlement continues to
operate but either of the parties can serve notice of termination of settlement and on
completion of two months period, from the date of service of settlement termination
notice, the settlement will cease to operate. On completion of six months or
specified period, the settlement is eligible for termination by notice. There is
no restriction on sending a notice prior to end of the period. Settlement will however
continue till the period specified or till 6 months as is the case. Merely by sending a
notice in the third month, will not cease the settlement in the fifth month. Such
notice will not have any value. The notice must mention time post the
settlement period.
This settlement could be done by any of the modes mentioned earlier. It all
eventually comes down to a settlement deed. A tribunal does not settle. It
adjudicates. So, in that case, the rules regarding ‘award’ become applicable. Life of
the award is one year from the date on which it is passed. In certain cases,
appropriate government may increase the period of one year. This is terminated in
the same manner as a settlement. There must be a notice for intention of
termination of award by either of the party and two months after service of that
notice.
Sec. 25-B: Continuous Service: It is an uninterrupted service. A person who has
worked for 240 days in a year with the establishment, uninterruptedly. In order to
claim regular employment right, he needs to show that he was in a continuous
service. Further, if the work is below ground level, then 190 days.
Sec. 17-B: When order of reinstatement is passed by the labour court and it is
challenged before the HC or the SC, then the employer is required to pay the
employee last drawn salary each month till pendency of challenge.
08.11.2021 (Monday)
Payment of Gratuity Act

Gratuity not payable if employee has worked less than 5 years.

Quantum of Gratuity: Gratuity is majorly counted for number of years of completed
services. Minimum eligibility is 5 years for claiming gratuity. For purpose of
counting number of years, any period in excess of 6 months would be deemed to be
a year’s service. If services are rendered for less than 6 months, that period will not
be counted.
Eg. If someone has worked for 8 years, 7 months and 4 days, for such person, the
computation will be based on 9 years.
G= 15 days wages (last drawn) x No. of years of service (Y)
Calculating 15 days wages: If salary is being made on monthly basis, then it is
presumed that monthly salary is being paid for 26 days of work rather than 30 days.
For calculating 15 days wages, salary must be divided by 26, which will give one
day’s wages. This must be multiplied by 15 to get 15 days of wages.
Exact formula for Gratuity: {(Salary/26) x 15} x Y
There is another method for calculating Gratuity in case of piece-rated wages. In
case of piece-rated wages, three months of average wages have to be taken and
divided by 3 to get one month’s wages. The one-month wage will then be divided by
26 to get one day’s wages and then multiplied by 15 further multiplied by number
of years of completed service. Otherwise as practice, take the salaries of the last
three months.
There is a different calculation for seasonal workers. Instead of 15 days wages, 7
days wages would need to be paid.
Employees Provident Fund Act 1952
The meaning of ‘provident’ is preparing for future. This Act is dealing with the
employees’ funds which can help employees in the future and help in unseen
circumstances. It is for the protection of industrial workers in future after he retires
or for his dependants in case of his early death. The statute requires that the
employer shall contribute ten percent (10%) of the wage amount towards PF corpus.
The employer is required to pay contribution to the PF corpus over and above the
wage. The employee on the other hand, is also required to contribute 10% of his
wages towards PF. Payment of PF is responsibility of the employer. i.e., when wages
are due, employer is liable to make contribution from his end and also deduct
employee’s share from his wages and deposit it in the corpus. In such case,
employee’s carry home would be wages-employee’s PF contribution.
If the employer says that he is paying 500 as both employer’s contribution and
employee’s contribution, he cannot say that his carry home would be lessened by
1000.
CTC meaning is Cost to Company. CTC value includes all contributions. The CTC
amount includes all allowances etc. which includes all the contributions. CTC is
basically the cost of the employee to the company.
Industrial Employment (Standing Order) Act, 1946 | 14.11.2021 (Sunday)
Rule/Regulation/Direction/Norms/Customs etc. of an industrial establishment.
Standing rules that each employee needs to follow are the standing orders. They
govern each and every part of the administration of employment. These are
applicable without discrimination for all purposes. Standing Orders require
employers of the industrial establishment to formally define conditions of
employment. These conditions are to be made known to the employee.
The purpose of standing orders is to ensure harmonious relationship between
employer and employees. Second is to regulate conditions of recruitment,
discharge, disciplinary action, leave, holidays etc. The conditions of services are
being regulated uniformly across the entire establishment whereby no dispute
would arise on account of arbitrariness or discrimination by employer towards
employees. Whatever is being prepared by employer cannot be said to be
applicable standing order. Only certified standing orders shall be applicable.
Certification of standing orders: It is required that industrial establishment within
six months of the Act becoming applicable to it, shall submit draft of standing order
to certifying authority or certifying officer. These draft standing orders must be
submitted stating that industrial establishment is willing to adopt the draft
submitted as SO. This is governed under S. 3 of the Act. It is required that the
draft must contain the conditions proposed to be imposed in the
establishment and a statement giving particulars of the workmen including the
name of trade union. SO could be submitted by group of employers who are in
similar industrial establishment.
Process and certification:
➢ Certifying officer shall forward draft to the concerned trade union and if there is
no Trade Union, it must be forwarded to the workmen of the establishment with
notice calling upon objections if any within 15 days. In case Certifying Authority
(a) rejects draft or part of draft; (b) reject objection or part of objection of
 employee; in both cases, certifying officer is required to provide opportunity of
being heard to the respective affected party.
➢ After this, Certifying Authority may certify draft fully or he may reject the draft
fully. He may partly certify and partly reject or he may modify the draft. If after
this, employer/employee aren’t satisfied, then appeal can be preferred before
Appellate authority under the Act within 30 days of the order of the certifying
officer. Provision of appeal is covered under Sec. 6 of the Act. Process of
Certification is covered under Sec. 5 of the Act.
➢ Effective date of SO- Date on which SO comes into force; in case no appeal is
preferred from the order of certifying officer, then upon expiry of 30 days of the
order of certifying officer. If appeal is preferred, the order of CO may be
upheld, set aside or modified, in case of (1) and (3), the SO shall come into
effect on expiry of 7 days from the order of appellate authority.
➢ After coming into effect, standing order must be displayed at a
prominent/conspicuous place of the establishment in English and language
understood by majority of the employees.
➢ Duration of SO: Once certified, an SO cannot be modified for six months. Post
six months expiry, it can be modified by agreement between employer and
employee or trade union as the case may be. This modification is to be certified
again and same process as seen for certification of SO u/S. 5 shall be
followed.
Penalty provisions are under S. 10. It talks of a fine of rupees 5000.
Trade Union Act 1926
The Workmen had no legs to claim his right against mighty establishment. One
must have locus to stand before court. Anyone who is a member of any trade union,
he can seek to protect his rights through trade union. Any employee being
member of any trade union, can seek to protect rights through the Trade
Union. The Union may represent the case of employee before employer; they may
also avail for other remedies like strike etc, as permitted under the Industrial
Disputes Act, for the protection of rights of any of their members. Trade Union is a
union of employees for regulating relation between workmen and employers or
workmen and workmen or employers and employers. Trade Union could be formed
by workers coming together of different establishments. Trade disputes include
industrial disputes between employer and employer; employee and employee and
employer and employee. Trade dispute also includes non-
employment/employment meaning thereby if someone is not getting
employed because of arbitrariness or discrimination, he himself is not an
employee but the trade union may agitate his case on his behalf. Scope of trade
disputes is wider than industrial disputes. Terms of employment (Standing
Order): Trade Unions have a say in the finalisation of SO. Condition of
work/labour is also a category of disputes under trade disputes.
Existence of Trade Union
Any union or organisation need not be registered. However, upon registration, trade
union gets certain benefits and some immunity. Sec. 13- Once the Union is
registered, it has perpetual succession and a common seal. Post registration, it will
become a body incorporated. Now that the body is in existence, it can acquire and
hold movable and immovable property, it has right and privileges, it is liable and it
can sue or be sued for its liabilities.
➢ Registration of Trade Union: Registrar under Sec. 3 is appointed by appropriate
authority who can register the Trade Union in each state. There may be
additional registrar, deputy registrar etc. who shall work upon the direction and
superintendence of registrar. Registration of Trade Union has to be through an
application (Sec. 4). This application must be by 7 or more persons who are
engaged in the trade or industry in connection to which trade union is to be
formed.
➢ Contents of the Application: Application must contain: (a) name of trade union
(b) rules or by-laws of TU (standing orders on which the TU will be governed) (c)
Fees and other requirement under the Act like format of application etc. are to
be provided. It should also contain name, occupation and addresses of members
of TU, details of other office bearers. If the TU is in existence for more than 1
year, then it must contain statement showing assets and liabilities of the TU. It
must also contain by-laws or the rule book.
➢ For Registration (Essentials): The Registrar must then see that (a) there must
be 100 or 10% whichever is less, members who are engaged in the establishment
to which TU is connected/represents. Ex. If there are 700 members, 10% would
be 70 members but if there are 1400 members, 100 members would be lesser
than 10% members (140 members); in second case, TU can be registered with
100 members and in first case, 70 members would suffice for registration. If there
are 6 or few members, TU cannot be registered by those members.
➢ If post application for TU registration, one-half of the persons who applied for the
registration, cease to be the member of the Union, then such application will
become invalid. Ex. If there are 7 workers and all of them become members of a
TU and if later 4 of them resign, in that case the application will fail
automatically. Upon making of application, registrar may approve and register;
may seek clarification; for some reason, refuse registration; he may even ask to
change the proposed name of the TU if he feels such name is deceiving or
confusing to the public or the members of TU. Sec. 8 requires that upon
satisfying technical requirement, TU shall get registered. Sec. 9 requires
certificate of registration shall be provided upon getting registered. The
certificate shall be conclusive evidence of TU getting registered.
➢ Once this registration is done, there is also a process for cancellation of
registration. Sec. 10 provides for cancellation. Registration can be cancelled
upon application for cancellation by TU itself; if the Registrar is satisfied that
registration has been obtained by fraud or mistake; TU ceases to exist (suppose
if establishment is closed, or has been transferred or moved etc.), then the
Registrar can suo motu cancel the registration; if the TU has violated any rules,
then upon notice of registrar, registration may be cancelled by communication
 of intent to cancel; Number of requisite workmen have ceased to exist, then TU
registration can be cancelled.
➢ Dissolution: Upon dissolution of TU, the notice of intimation of dissolution is to
be sent to Registrar within 14 days of dissolution.
➢ Sec. 11 makes provision for appeal from any order of the Registrar.
Payment of Minimum Wages
Payment of Wages was initially dealt with Payment of Wages Act 1936. This was
repealed along with 3 other laws in 2019. Purpose was that all four acts were similar
and so were the authorities; in order for better implementation and execution, these
were consolidated into a single Code (Code on Wages).
The topic deals with the minimum amount of wages which must be paid. Fixation
of minimum wages must be done by the appropriate government. The appropriate
government, if it is the establishment carried on by or authority of the central
government, the appropriate government would be central government. In relation
to any other establishment, the state government would be appropriate authority.
The Appropriate authority is under obligation to fix minimum wages. When the
employer employs workmen for work on wages, then that employer is required to
pay minimum wages to the employee, which should be fixed by appropriate
government.

Employer Wages Employee

Any person employed on
Person who employs
wages.
directly or through any Wages: All remunerations
person on his behalf or on paid by way of salary,
[Person: (a) Child (b)
behalf of any person. allowance, which can be
Adolescent (c) Adult;
expressed in monetary
Child is person less than
Of one or more employees terms and will include
14 years; adolescent is
and if the establishment basic pay, dearness
greater/equal to 14 but
is carried on by any allowance, retaining
less than 18 and adult is
department of central allowance and does not
person aged more than 18
government or the state include bonus, house
years]
government, then HOD accommodation
will be ‘employer’ (electricity, water,
Employee: Person
amenities etc.),
employed by
contribution of employer
establishment to do
In case this department is for pension or PF, House
skilled, semi-skilled,
of local authority, then Rent Allowance,
unskilled, manual,
Chief Officer or CEO remuneration paid on
operational, supervisory,
whosoever it may be, settlement of dispute,
managerial,
would be ‘employer’. overtime allowance,
administrative, technical,
gratuity, retrenchment
clerical on wages and this
If the establishment is a compensation.
employment is for hire or
factory, then occupier of
reward.
factory would be
employer.
The employment may be
on express terms or
If it is any other implied terms (exclude
establishment, then employees of armed
whosoever is responsible forces).
for the affairs of the
establishment will be
deemed to be employer
(can be managing
director, manager etc.)

If the appointment is by
contractor, employer will
be contractor.

If employer has died, then

LR would be the
employer.

➢ Sec. 5 says no employer shall pay to any employee; wages less than minimum
rate of wages notified by the appropriate government. Fixation of min. wage is
subject to floor wages. The min. wage is to be fixed as per procedure u/S. 8 of
the Wages Code 2019. Appropriate Govt. can fix min. wages for (a) time work (b)
piece work (in such case, the appropriate govt. is obliged to fix min. rate on time
work basis; so, the govt. needs to understand the time taken to complete one
piece of work and multiply it by the number of pieces).
➢ Min. wages can be fixed for hourly, daily or monthly basis.
➢ For fixing minimum wages, factors to be considered by appropriate govt. are
(covered under Sec. 6 of the Code on Wages):
a. Skill of workers under similar category.
b. Differentiation of min. wages is permitted for skilled, semi-skilled and highly
skilled workers.
c. The hazardousness of the work (temperature, humidity, underground work
etc.).
➢ Floor Wage: Floor Wage is to be fixed by central government and while fixing the
FW, the CG shall take into account, minimum living standards of a worker in
specified area.
21.11.2021 (Sunday)
Procedure for fixing minimum wage: This procedure is applicable for (a) fixing
minimum wage for the first time and for (b) revising minimum rate of wage. This is
to be done by the appropriate government.
Procedure 1: Fixation of Min. Wages by Committee
1. There shall be a committee to be appointed by appropriate government.
2. There can be one or more than one committee which appropriate government
may appoint by notification in official gazette.
3. Constitution of committee: The committee shall consist of persons- (a)
representing employers (b) representing employees (the number of such persons
shall be equal in number of the persons representing employer) (c) independent
persons (neither representing employee nor employer; and the number shall not
be less than 1/3rd of the total members of the committee).
4. Committee has to recommend the proposed minimum wage for the area under
consideration to the appropriate government.
5. Upon this recommendation of the committee, the appropriate government may
fix the minimum wage as recommended by the committee by way of notification
and upon such notification being issued, three months after notification, the
minimum wage shall come into force.
Procedure 2: By fixing minimum wages without Committee
1. The appropriate government needs to make publication of its proposal to fix min.
wage for the person who are likely to be affected by fixation of such min. wage.
2. The persons likely to be affected by fixation of proposed min. wage may prefer
objections before appropriate government.
3. The appropriate govt. may consider the objection and thereafter fix the
min. wage by notification.
4. This min. wage fixed by notification shall come into force immediately after 3
months from the notification.
Payment of Wages Act:
• The object of the Act is two-fold: whatever wage is to be paid by the employer; it
must be paid within the min. possible time from the date it becomes payable. It
was found earlier, that after completion of work, employers didn’t pay the wages
on time. This led to employees’ exploitation. It was thus made an obligation for
the employer to pay wages on time.
• The second object is to see that the payment of wages are being made under the
current currency/denomination of currency. It had been seen that wages were
being paid in kind rather than cash. However, the value and price of ‘kind’ used
to reduce in commodity market, which resulted majorly in losses to employees.
In order to avoid these situations, the government fixed that payment of wages
shall be made by way of current currency or current denomination.
• The third aspect of the law is to regulate deductions. It was found earlier that
the employer in order to avoid payment of complete wages, deducted certain
amount from wages payable to the employee. These deductions might not be
completely legal. In order to regulate deductions from the wages by the employer
and whether if they are done legally, the Payment of Wages Act makes the
necessary provisions.
Fixation of Wage Period: The period could be daily, weekly, fortnightly or monthly;
but no wage period shall exceed more than one month’s time.

Time Limit for Wage Payment

Wage period Time for payment
Daily basis At the end of shift
On the last working day of the week i.e.,
Weekly basis
before a week holiday
Before end of second day after the end
of the fortnight
Fortnightly basis
(Ex.: 1st-15th: Fortnight period; payment
has to be before 17th)
Payment to be made before expiry of
Monthly basis
seventh day of the succeeding month.

Deduction which may be made from wages (Sec. 18 Code on Wages):

Notwithstanding anything contained in any law for the time being in force, there
shall be no deductions, except those which are authorised:
• Deduction of fines imposed: Fines imposed on employee which are statutorily
permitted.
• Deduction for absence from duty
• Deduction for damages or losses of goods entrusted to the employee for custody
• Deduction for house accommodation supplied by the employer
• Deduction for amenities and services supplied by the employer
• Deduction for recovery of advances (including principal or interest), loan, income
tax (TDS)
• Deduction for subscription(s) if any
These deductions affecting rights of the employee can be made only after providing
opportunity of hearing.
Employees State Insurance
The ESI is a social security legislation for the benefit of the employees. The Act deals
with times such as sickness, medical, maternity, disablement, death, dependents
and funeral expenses. The benefits available to employees under Workmen’s
Compensation Act and Workmen Provident Fund Act are specific if arising out of
employment etc. But the ESI is applicable to situations which may arise for
reasons other than employment. The ESI Act is in nature of social security for the
period/condition which is beyond the scope of employment.
This Act is applicable for establishments having 10 or more workers and are
applicable to employees whose salary or wages is less than 21,000 per month. A
corpus/fund is created under the authority of state insurance corporation. This
corpus is created for benefit of employees; the employer automatically comes into
picture and the statute requires that insurance corpus is to be created from the
contribution of employee and employer. This contribution from the employer was
4.75% of wages prior to 2019 Code and employees’ contribution was 1.75% of wages.
Post 2019, this contribution is 4% of wages for employer and 1% of wages for
employee. The 4% of employer’s contribution is over and above the wages payable.
So 10% of PF contribution + 4% Insurance contribution= 14% extra of wages
(employer). The employer will make his contribution of 4% of wages and also
deduct 1% of wages from wages payable to the employee and then, within 15
days of this deduction, he will deposit the premium of insurance of 5% of
wages with EPF corporation.
Revision Numerical Questions | 26.11.2021 (Friday)

Ques. Calculate the PF contribution: Consider that there is no other deduction other
than PF contribution. CTC: Salary of Y is Rs. 9,60,000 per annum. Find (a) amount
Y will get on hand per month (b) Contribution of employee towards PF per month.
Ans. Monthly salary= Rs. 9,60,000/12= Rs. 80,000
If wages are ‘x’, then CTC= x+ x/10
CTC= 11x/10= 80,000 (where ‘x’ are the wages)
X= Rs. 72,727.27
Contribution of the employee= x/10= Rs. 7272.72
Y’s in-hand salary= Rs. 72,727.27- Rs. 7272.72= Rs. 65,454.55
Ques. If workman T has worked with institution for 12 years 7 months and 13 days,
his last drawn wages was Rs. 7000. This wage incudes DA. He met with an accident
and died. The accident was not arising out of employment. Calculate (a) gratuity
amount (b) wages that T used to get after deducting ESI contribution (c) What is PF
employee contribution and what is ESI employee contribution.
Ans. Gratuity= (Salary/26) x 15 x Years of Service= (7000/26) x 15x13= Rs. 52,500.
Wages after deducting ESI contribution: 1% of wages for employee= 7000/100= Rs.
70 ESI contribution per month. So Salary= Wages-ESI Contribution= 7000-70=
Rs. 6930.
Employee PF contribution= Wages/10= 7000/10= Rs. 700.
Ques. Mr. S has basic wage of Rs. 13,000 per month. He is getting Rs. 1700 p.m.
towards dearness allowance and Rs. 1200 towards food concession. Calculate (a) PF
and (b) ESI contributions of employer (c) calculate amount that S will get in-hand
as monthly salary.
Ans. Total Wages= Rs. 14,700
PF contribution= 10% of Wages= Rs. 1470.
ESI contribution of employer= 14700/25= Rs. 588
ESI contribution of employee= Rs. 147
In hand salary= 14700-1470-147= Rs. 13083.
Maternity Benefit Act 1961 | Thursday | 02.12.21
The aim of maternity benefit law is to regulate employment of women during certain
periods, i.e., before and after childbirth. Prior to this Act, each state had different
benefits for women employees. The benefits given under this law are maternity
leave, wages (definition of wages herein is different than the definition of wages
studied till now), nursing breaks and bonuses.
• This Act is to protect the dignity of motherhood and also provides maintenance
of women and her child during the maternity period. These benefits are
applicable only to employed women when they are not working.
• Applicability of the Act: It applies on almost all nature of establishments with
a caveat that there must be 10 or more persons employed on any day in the
preceding 12 months. It applies to factories, mines, plantations or
establishment where 10 or more persons are employed on any day in
preceding 12 months. The Act is also applicable if persons are less than 10,
where the employment is related to exhibition of equestrian (horse riding). It is
also applicable in case of acrobatic performances (less than 10 workers).
• This Act doesn’t talk about the number of women required; this Act will be
applicable even if there are 10 males; it has nothing to do with the employment
of female members, and 10 workers are just the legislative threshold.
• Eligibility to claim maternity benefit: Section 5 of the Act requires that in
order to claim maternity benefit, the woman must’ve worked not less than 80
days in the 12 months immediately preceding the date of her expected delivery.
Revision Notes (Externals-Sem IX)

Industrial Disputes Act, 1947: Strike, Lay-off and Retrenchment:

Strike is legal unless barred by statute. Prohibition of Strike is covered under Sec.
23. Strikes under Public Sector Undertakings are covered under Sec. 22.
Prohibition of Lockout and Strike (Section 22): No person employed in public
utility services, can go on strike in breach of contract, until and unless notice is
given to the employer of the strike, within six weeks before striking.
• Strikes are done by workmen and lockouts are done by employers against the
workmen. Notice of strike or lockout within six weeks before the strike or lockout
and this cannot be done within 14 days of having given the notice.
• There cannot be a strike or lockout during the pendency of conciliation
proceedings and seven days after the conclusion of such proceedings.
• Receipt of notices has to be reported to government.
General prohibition regarding strikes and lockouts are covered under Sec. 23.
For specific periods after the conclusion of dispute resolution proceedings, no strike
or lockout can be called. Under S. 24, a strike or lockout is illegal if it is in
contravention of Sec. 22 and 23. 24(3) says that a strike in pursuance of an illegal
lockout or vice versa, will not be illegal. Sec. 25 says that financial aid must not
be provided to illegal strikes or lockouts.
Lay-off (Sec. 25C, Sec. 25E and Sec. 25M)
• Sec. 25A-Less than 50 workmen on an average per working day have been
employed in preceding calendar month.
• Sec. 25B- Continuous Service: Workman would be in uninterrupted service if
he is working continuously and includes leave which may be interrupted by
sickness, strike or lockouts etc.
• Sec. 25C talks about an employee who has been laid off and has the right to
have compensation for the time during which he is laid off. The compensation
value is 50% of the wages and the DA that would have been payable to the
employee.
• Sec. 25E specifies cases in which a workman is not entitled to compensation.
• Retrenchment procedure under Sec. 25G says that ordinarily employer must
retrench the workman who was last employed in the category of workmen.
Retrenchment: Covered under (Sec. 25F)
Factories Act, 1948: Chapter III (Health-S.11-20), Chapter IV (Safety-S.21-41),
Chapter V (Welfare-S.42-50).
Payment of Gratuity Act: Gratuity is a gift to the employee from the employer for
the services rendered by the employee to the employer.
• It is a lumpsum payment which is made to the employee by the employer on
leaving of employment.
• Superannuation is the age at which an employee is supposed to leave
employment- Gratuity is paid on termination of employment after rendering of
continuous service; termination is due to superannuation, death or disablement
or resignation- continuous service of 5 years is not necessary when the
termination is due to death or disablement.
• Sec. 4(2) states that every year of completed service in excess of six months,
employer shall pay gratuity to an employee at rate of 15 days wages based on
rate of wages last-drawn.
• The amount of gratuity should not exclude, such amount as notified by the
Central Government from time to time.
• If the legal heir or nominee is a minor, then the gratuity is to be deposited with
the Controlling Authority under the Act who shall deposit the said amount of
gratuity as term deposit with a nationalised bank.
• Who is the employer under the Gratuity Act? It is defined under Sec. 2(f) of
the Payment of Gratuity Act.
Important Case: Chintaman Rao v. State of MP (Factories Act 1948): It cannot be
disputed that the making of bidis is a manufacturing process. A contractor is a
person who in the pursuit of independent business, undertakes to do specific jobs
of work for other persons without submitting himself to their control in respect of
the details of the work. Essential condition of being a workman is that there should
be a relation between the two individuals as employer-employee. In this case, it was
held that the Sattedar was not in control of the bidi factory management and he can
manufacture them wherever he pleases. It was held that the Sattedars were not
workers within the purport of Section 2(1) of the Act. By extension, it was held that
there was no privity of contract between the management of the factory and the
workers of the Sattedars. Thus, they were all held to be non-workers. The test is
control over employees. Existence of right of employer to supervise and
control the work done by the employee. Independent contractor is not under the
control or supervision of the employer. DO NOT GET CONFUSED BY THE 1976
AMENDMENT.
Extra Numericals (Externals)
Q. Time is 13 years, 7 months and 12 days. Wages (inclusive of DA) are Rs.
14000 p.m. Calculate Gratuity.
A. Gratuity: Exact formula for Gratuity: {(Salary/26) x 15} x Y
{14000/26} x 15 x 14= Rs. 1,13,076.92
PF Contribution: If wages are taken as x, then CTC= 11x/10
Here Wages are already given, so PF=14000/10= Rs. 1400 is contribution.
ESI= Employer’s Contribution= x/25= 14000/25= Rs. 560
Q. Mr. A has served the establishment as a daily wage worker for 6 years, 3
months. He retired in 31st Dec, 2020. His wages for October were Rs. 8000,
Nov. it was Rs. 8200 and Dec. it was Rs. 8,800. Calculate Gratuity.
A. For any daily wage or piece wage worker, the average of the preceding three
months must be considered.
Here Average Salary of last three months preceding retirement is: Rs. 8333.33
Gratuity= {Last Salary/26} x 15 x Years of Service= 8333.33/26 x 15 x 6= Rs.
Rs. 28846.15
Q. Employee retired from service on 30th April 2021. His wages for Feb. were
Rs. 21,000, for March it increased to Rs. 21,500 and in April they increased
to Rs. 22,000. Calculate the Gratuity amount if he was working for 9 years.
A. Average wages need not be calculated because the worker is not a daily wage
worker. So last drawn salary is taken as Rs. 22,000.
So Gratuity= {22000/26} x 15 x Years= 12692.30 x 9= Rs. 114230.76.
Q. Mr. B retired on 31st October, 2021. He was getting Rs. 15,00,000 per
annum as CTC. Consider deduction of PF, ESI and Income Tax at 20%.
Calculate Wages, PF and ESI amounts.
A. Mr. B’s monthly salary is= 15,00,000/12= Rs. 125000
So, in the present case, the CTC= Wages + Employer’s PF + Employer’s ESI
If the wages are considered as ‘x’, then:
1,25,000= x + x/10 + x/25 = [50x + 5x + 2x]/50= 57x/50
Solving for ‘x’, we get: x= [1,25,000 x 50]/57= Rs. 1,09,649.12.
PF contribution= 10% of wages= Rs. 10964.91
ESI contribution of Employer= 4% of wages= Rs. 4385.96.
Q. CTC of Mr. Y is Rs. 80,18,320 p.a. ESI and EPF can be deducted from this
amount. Calculate Gratuity amount if Y resigns from his job after a period of
12 years.