UNIT-V: LABOUR LEGISLATION

LABOUR LEGISLATION:
The term "labour legislation" or "labour laws" is used to denote that body of laws which deal with
employment and non-employment wages, working conditions, industrial relations, social security and
labour welfare of industrially employed persons. Any enlightened state would intervene in the conduct
of industry and impose statutory obligations mostly on the employers and also, to a lesser degree, on
the workers in order to maintain industrial peace and good relations between management and workers
and to secure to the better working conditions a minimum wage, compensation in case of accidents
medical facilities provision for future etc.
The origin and growth of labour legislation may be ascribed mostly to the development of organised
industry where a large number of workers including women and children are employed under conditions
which tend to be detrimental to their health, safety and welfare and against which they are often unable
to protect themselves.
Need for Labour Legislation:
It proceeds from two basic concepts:
(1) The relationship between workers and employers is one of partnership in the maintenance of
production and the building up of the national economy.
(2) The community as a whole as well as individual employer are under an obligation to protect the
well-being of workers and to secure to them their due share in the gains of economic development.
OBJECTIVES OF THE LABOUR LEGISLATIONS:
Labour legislation in India has sought to achieve the following objectives:

(1) Establishment of justice- Social, Political and Economic

(2) Provision of opportunities to all workers, irrespective of caste, creed, religion, beliefs, for the
development of their personality.
(3) Protection of weaker section in the community.
(4) Maintenance of Industrial Peace.
(5) Creation of conditions for economic growth.
(6) Protection and improvement of labour standards.
(7) Protect workers from exploitation:
(8) Guarantee right of workmen to combine and form association or unions.
(9) Ensure right of workmen to bargain collectively for the betterment of their service conditions.
(10) Make state interfere as protector of social well-being than to remain an onlooker.
(11) Ensure human rights and human dignity
PRINCIPLES OF LABOUR LEGISLATION:
Labour Legislation is based on certain fundamental principles.
1. Social Justice-In an industrial set-up, social justice means an equitable distribution of profits and
benefits accruing from industry between industrialists and workers and affording protection to the
workers against harmful effect to their health, safety and morality. Mere compliance with and
enforcement of legal rights may be unfair and cause hardship to the workers as workers-employer
contracts are generally one-sided and directed by the employers. The Workmen's Compensation Act,
1923 and the Minimum Wages Act, 1948, for example, are attempts at securing social justice to the
workers. The provisions of the Factories Act, 1948, fixing hours of work, overtime, leave privileges,
welfare facilities and safe working conditions are also directed towards the same end.

Social justice is the signature tune of the Constitution of India and this note is nowhere more vibrant
than in industrial jurisprudence [Per Krishna Iyer, J. in Punjab National Bank v.Ghulam Dastagir. AIR
(1978) SC 481].
The Preamble to our Constitution also lays down the objective of establishing 'Justice—Social,
Economic and Political'
2. Social equity—Another principle on which Labour Legislation is based is social equity. Legislation
based on social justice fixes a definite standard for adoption for the future, taking into consideration the
events and circumstances of the past and the present. But with the change of circumstances arid ideas
there maybe a need for change in the law. This power of changing the law is taken by the Government
by making provisions for True-making powers in the Acts in regard to certain specified matters. The
rules may be modified or amended by the Government to suit the changed situation. Such legislation is
based on the principle of social equity.
3. International uniformity—International uniformity is another principle on which labour laws are
based. The important role played by the International Labour Organisation (in short, I.L.O.) in this
connection is praiseworthy. I.L.O. is an international agency which was founded in 1919 soon after the
First World War.

The main aims of the I.L.O.

(i) to remove injustice, hardship and deprivation of large masses of toiling people all over the world;
and
(ii) to improve their living and working conditions and thus establish universal and lasting peace based
upon social justice.

4. National economy—In enacting labour legislation, the general economic situation of the country has
to be born in mind lest the very objective of the legislation be defeated. The state of national economy
is an important factor in influencing labour legislation in the country.
Factories Act 1948:
Definitions
According to Section 2 (m) of Factories Act, 1948, Factory means any premises including the
precincts thereof

 whereon ten or more persons are employed or were employed for wages on any day of the
preceding twelve months, and in any part of which a manufacturing process is being
carried on with the aid of power or is ordinarily so carried on, or
 whereon twenty or more persons are employed or were employed for wages on any day
of the preceding twelve months, and in any part of which a manufacturing process is being
carried on without the aid of power or is ordinarily so carried on.

According to Section 2 (k) of Factories Act, “manufacturing process” means any process for
 making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning,
breaking up, demolishing, or otherwise treating or adapting any article or substance with
a view to its use, sale, transport, delivery or disposal, or
 pumping oil, water, sewage or any other substance; or;
 generating, transforming or transmitting power; or 38
 composing types for printing, printing by letter press, lithography, photogravure or other
similar process or book binding;
 constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels;
 preserving or storing any article in cold storage;

FACTORIES ACT 1948:

The Factories Act, 1948, has been promulgated primarily to provide safety measures
and to promote the health and welfare of the workers employed in factories. The object thus
brings this Act, within the competence of the Central Legislature to enact. State
Governments/Union Territory Administrations have been empowered under certain
provisions of this Act, to make rules, to give effect to the objects and the scheme of the Act.
Applicability: This Act applies to factories, which qualify the definition of “Factory” under
the section 2(m) of the Act or to those industrial establishments, to whom section 85 have
been made applicable by the State Government, by notification in the Official Gazette. This
applies to any premises wherein 10 or more persons with the aid of power or wherein 20 or
more workers without aid of power are/were working on any day in the preceding 12 months,
wherein manufacturing process is being carried on.

PROVISIONS OF HEALTH FOR EMPLOYEES UNDER COMPANIES ACT, 1948

The main focus of Factories Act is towards the Health benefits to the workers. Health Chapter
of the Act contains specification from Section 11 to 20. Detailed information of the sections
of is provided as under:
Section 11: This section basically specifies the issues of cleanliness at the workplace. It is
mentioned in the provision that every factory shall be kept clean and free from effluvia arising
from any drain, privy or other nuisance. This includes that there should be no accumulation
of dirt and refuse and should be removed daily and entire area should be kept clean.

Section 12: This section specifies on disposal of wastes and effluents. That every factory
should make effective arrangements for the treatment of wastes and effluents due to the
manufacturing process carried on therein, so as to render them innocuous and for their
disposal.

Section 13: This section focuses on ventilation and temperature maintenance at workplace.
Every factory should work on proper arrangements for adequ ate ventilation and circulation
of fresh air.

Section 14: This section details on the proper exhaustion of dust and fume in the Factory. In
this it is mentioned that factory which deals on manufacturing process should take care of
the proper exhaustion of dust, fume and other impurities from its origin point.

Section 15: This section specifies regarding the artificial humidification in factories. In this
the humidity level of air in factories are artificially increased as per the provision prescribed
by the State Government.

Section 16: Overcrowding is also an important issue which is specified in this section. In this
it is mentioned that no room in the factory shall be overcrowded to an extent that can be
injurious to the health of workers employed herein.

Section 18: This section specifies regarding arrangements for sufficient and pure drinking
water for the workers. There are also some specified provisions for suitable point for drinking
water supply. As in that drinking water point should not be within 6 meters range of any
washing place, urinal, latrine, spittoon, open drainage carrying effluents. In addition to this
a factory where there are more than 250 workers provisions for cooling drinking water during
hot temperature should be made.

Section 19: This section provides details relating to urinals and latrine construction at
factories. It mentions that in every factory there should be sufficient accommodation for
urinals which should be provided at conveniently situated place. It should be kept clean a nd
maintained. There is provision to provide separate urinals for both male and female workers.

Section 20: This section specifies regarding proper arrangements of spittoons in the factory.
It is mentioned that in every factory there should be sufficient number of spittoons situated
at convenient places and should be properly maintained and cleaned and kept in hygienic
condition.

PROVISIONS OF SAFETY FOR EMPLOYEES UNDER FACTORIES ACT, 1948:

The Factories Act, 1948 also provides provisions relating to safety measures for the
workers employed herein. This is to ensure safety of workers working on or around the
machines. The detailed information on each provision relating to safety measures is as under:
Section 17: Under section it has been described that there should be proper arrangement of
lighting in factories. In every part of the factory where workers are working or passing should
be well equipped with lighting arrangement either by natural sources or artificial sources.

Section 21: This section specifies that fencing of machinery is necessary. That any moving
part of the machinery or machinery that is dangerous in kind should be properly fenced.

Section 23: This section prescribes that employment of young person on dangerous
machinery is not allowed. In the case where he is been fully instructed in the usage of the
machinery and working under the supervision he might be allowed to work on it.

Section 24: This section provides provision of striking gear and devices for cutting off power
in case of emergency. Every factory should have special devices for cutting off of power in
emergencies from running machinery. Suitable striking gear appliances should be provided
and maintained for moving belts.

Section 28: This section prohibits working of women and children on specific machinery. As
per this section women and children should not be appointed for any part of factory working
on cotton pressing.

Section 32: In this section it has been specified that all floors, stairs, passages and gangways
should be properly constructed and maintained, so that there are no chances of slips or fall.

Section 34: This section specifies that no person in any factory shall be employed to lift,
carry or move any load so heavy that might cause in injury. State Government may specify
maximum amount of weight to be carried by workers.

Section 35: This section provides specification regarding safety and protection of eyes of
workers. It mentions that factory should provide specific goggles or screens to the workers
who are involved in manufacturing work that may cause them injury to eyes.

Section 36: As per this section it is provided that no worker shall be forced to enter any
chamber, tank, vat, pit, pipe, flue or other confined space in any factory in which any gas,
fume, vapour or dust is likely to be present to such an extent as to involve risk to persons
being overcome thereby.

Section 38: As per this section there should be proper precautionary measures built for fire.
There should be safe mean to escape in case of fire, and also necessary equipment and
facilities to extinguish fire.

Section 45: This section specifies that in every factory there should be proper maintained
and well equipped first aid box or cupboard with the prescribed contents. For every 150
workers employed at one time, there shall not be less than 1 first aid box in the factory. Also
in case where there are more than 500 workers there should be well maintained ambulance
room of prescribed size and containing proper facility.
PROVISIONS RELATING TO LABOUR WELFARE:

Some of the provisions relating to the Labour Welfare as mentioned in the Factories Act,
1948 are: (1) Washing Facilities (2) Facilities for storing and drying clothing (3) Facilities for sitting
(4) First aid appliances (5) Canteens (6) Shelters, rest rooms and lunch rooms (7) Creches and (8)
Welfare officers

(1) Washing Facilities (Sec. 42):

In every factory (a) adequate and suitable facilities shall be provided and maintained for the use of
workers; (b) separate and adequately screened facilities shall be provided for the use of male and
female workers; (c) such facilities shall be easily accessible and shall be kept clean.

(2) Facilities for storing and drying clothing (Sec.43):

In every factory provision for suitable place should exist for keeping clothing not worn during
working hours and for the drying of wet clothing.

(3) Facilities for sitting (Sec.44):

In every factory, suitable arrangements for sitting shall be provided and maintained for all workers
who are obliged to work in a standing position so that the workers may take advantage of any
opportunity for rest which may occur in the course of work. If in any factory workers can efficiently
do their work in a sitting position, the Chief inspector may require the occupier of the factory to
provide such seating arrangements as may be practicable.

(4) First aid appliances (Sec.45):

Under the Act, the provisions for first-aid appliances are obligatory. At least one first-aid box or
cupboard with the prescribed contents should be maintained for every 150 workers. It should be
readily accessible during all working hours.

Each first-aid box or cupboard shall be kept in the charge of a separate responsible person who holds
a certificate in the first-aid treatment recognised by the State Government and who shall always be
readily available during the working hours of the factory.

In every factory wherein more than 500 workers are ordinarily employed there shall be
provided and maintained an ambulance room of the prescribed size containing the prescribed
equipment. The ambulance room shall be in the charge of properly qualified medical and nursing
staff. These facilities shall always be made readily available during the working hours of the factory.

(5) Canteens (Sec.46):

In every factory employing more than 250 workers, the State government may make rules
requiring that a canteen or canteens shall be provided for the use of workers. Such rules may provide
for (a) the date by which the canteen shall be provided, (b) the standards in respect of constitution,
accommodation, furniture and other equipment of the canteen; (c) the foodstuffs to be served therein
and charges which may be paid thereof; (d) the constitution of a managing committee for the canteens
and representation of the workers in the management of the canteen; (e) the items of expenditure in
the running of the canteen which are not to be taken into account in fixing the cost of foodstuffs and
which shall be borne by the employer; (f) the delegation to the Chief inspector, of the power to make
rules under clause (c).

(6) Shelters, rest rooms and lunch rooms (Sec.47):

In every factory wherein more than 150 workers are ordinarily employed, there shall be a
provision for shelters, rest room and a suitable lunch room where workers can eat meals brought by
them with provision for drinking water.

Where a lunch room exists, no worker shall eat any food in the work room. Such shelters or
rest rooms or lunch rooms shall be sufficiently lighted and ventilated and shall be maintained in a
cool and clean condition.

(7) Creches (Sec.48):

In every factory wherein more than 30 women workers are ordinarily employed there shall
be provided and maintained a suitable room or rooms for the use of children under the age of six
years of such women.

Such rooms shall provide adequate accommodation, shall be adequately lighted and
ventilated, shall be maintained in clean and proper sanitary conditions and shall be under the charge
of women trained in the care of children and infants.

The State government may make rules for the provision of additional facilities for the care of
children belonging to women workers including suitable provision of facilities:—
(a) For washing and changing their clothing
(b) of free milk or refreshment or both for the children, and
(c) for the mothers of children to feed them at the necessary intervals.

(8) Welfare officers (Sec 49):

In every factory wherein 500 or more workers are ordinarily employed, the occupier shall employ in
the factory such number of welfare officers as may be prescribed under Sec. 49(1). The State
government may prescribe the duties, qualifications and conditions of service of such officers.
Industrial Disputes Act, 1947
The main purpose of the Industrial Disputes Act, 1947 is to ensure fair terms between
employers and employees, workmen and workmen as well as workmen and employers. The
objective of the Industrial Disputes Act is to secure industrial peace and harmony by providing
machineryand procedure for the investigation and settlement of industrial disputes by negotiations.

Industrial Disputes Act, 1947:

An Act to make provision for the investigation and settlement of industrial disputes, and for
certain other purposes.

Industrial Dispute-Sec. 2 (k)

Industrial Dispute is “any dispute of difference between employers and employers or

between employers and workmen; or between workmen and workmen, which is connected with
the employment or non-employment or the terms of employment or with the conditions of labour
of any person”.
Industrial dispute as defined under Sec. 2(k) exists between-
Parties to the dispute who may be
 Employers and workmen
 Employers and Employers
 Workmen and workmen

a) There should be a factum of dispute not merely a difference of opinion.

b) It has to be espoused by the union in writing at the commencement of the dispute. Subsequent
espousal will render the reference invalid. Therefore date when the dispute was espoused is very
important.
c) It affects the interests of not merely an individual workman but several workmen as a class who
are working in an industrial establishment.
The dispute may be in relation to any workman or workmen or any other person in whom
theyare interested as a body

Objectives of Industrial Dispute Act:

1. To encourage good relations between labour and industries, and provide a medium of settling
disputes through adjudicator authorities.
2. To provide a committee for dispute settlement between industry and labor with the right of
representation by a registered trade union or by an association of employers.
3. Prevent unauthorized strikes and lockouts.
4. Reach out to labour that has been laid-off, unrightfully dismissed, etc.
5. Provide labour the right to collective bargaining and promote conciliation.
 The Act also lays down:

 The provision for payment of compensation to the workman on account of closure or lay
off or retrenchment.
 The procedure for prior permission of appropriate Government for laying off or retrenching
the workers or closing down industrial establishments
 Unfair labour practices on part of an employer or a trade union or workers.

Applicability:

The Industrial Disputes Act extends to whole of India and applies to every industrial
establishment carrying on any business, trade, manufacture or distribution of goods and services
irrespective of the number of workmen employed therein.

Authorities Under The Act And Their Duties

The Industrial Dispute Act, 1947 makes provision for the investigation and settlement of
disputesthat may hamper the peace of the industry. It ensures harmony and cordial relationship
between the employers and employees. The Act provides self-contained code to compel the parties
to resort to industrial arbitration for the resolution of disputes. It also provides statutory norms
besides helping in the maintaining of cordial relation among the employers and employees,
reflecting socio-economic justice.

The act provides for the following authorities for Investigation and Settlement of industrial
disputes:
(i) Works Committee
(ii) Conciliation officer
(iii) Boards of Conciliation
(iv) Court of Inquiry
(v) Labour Court
(vi) Labour Tribunals
(vii) National Tribunals

Let us discuss these authorities in detail:

1. Works Committee (Section 3):

The works committee is a committee consisting of representatives of employers and workmen
(section3). The works committee is a forum for explaining the difficulties of all the parties.The
main objective of the works committee is to solve the problems arising in the day-to-dayworking
of a concern and to secure industrial harmony. The function of the working committee is to
ascertain the grievances of the employees and to arrive at some agreement. The committee is
formed by general or special order by the appropriate Government in an industrial establishment
in which 100 or more workmen are employed or have been employed on any day in the preceding
12 months. It consists of the representatives of employers and workmen engaged in the
establishment.
2. Conciliation officer (Section 4):

`For promoting and settlement of industrial disputes the appropriate Government may by
notification in the official Gazette, appoint such number of conciliation officer as it thinks fit. The
main objective of appointing conciliation officer is to create congenial atmosphere withinthe
industry and reconcile the disputes of the workers and the employers. He may be appointed for a
specified area or for specified industries in a specified area or for one or more specified industries
and either permanently or for a limited period.

The duty of the conciliation officer is not judicial but administrative. He has to hold conciliation
proceedings, investigate the disputes and do all such things as he thinks fit for the purpose of
inducing the parties to arrive at a fair settlement of the disputes. The conciliation officer is entitled
to enter an establishment to which the dispute relates, after reasonable notice and also to call for
and inspect any document which he consider relevant. He has to send a report and memorandum
of settlement to appropriate Government. The report by the conciliation officer has to be submitted
within 14 days of the commencement of the conciliation proceeding or shorter period as may be
prescribed by the appropriate Government. The conciliation officer has the power to enter the
premises as well can call for and inspect documents.

3. Boards of Conciliation (Section 5):

The appropriate Government may by notification in the official Gazette, constitute a Board of
Conciliation for the settlement of industrial disputes. The Board shall consist of a chairman and 2
or 4 other members in equal numbers representing the parties to the disputes as the appropriate
Government thinks fit. The Chairman shall be an independent person. A person is independent•
for the purpose of appointment to a Board, Court or Tribunal if he is uncommitted with the
dispute or with any industry directly affected by such dispute.

He may be a shareholder of a company connected with or likely to be affected by such disputes.

But in such a case he must disclose to the Government the nature and intent of his share [Section
2(i)]. Where the appropriate Government is of the opinion that any industrial disputes exist in an
industry, it may refer by order in writing to the Board of Conciliation for settling industrial
disputes.

The Board of Conciliation has to bring about a settlement of the dispute. He has to send a report
and memorandum of settlement to appropriate Government. He has to send a full report to the
Appropriate Government setting for the steps taken by the Board in case no settlement is arrived
at. The Board of Conciliation has to communicate the reasons to the parties if no further reference
is made. The Board has to submit its report within 2 months of the date on which the dispute was
referred to it within the period what the appropriate Government may think fit. The report of the
Board shall be in writing and shall be signed by all the members of the Board.
4. Court of Inquiry (Section 6):

The appropriate Government may by notification in the official Gazette, constitute a court of
inquiry into any matter appearing to be connected with or relevant to settlement of industrial
disputes having an independent person or of such independent persons as the appropriate
Government may think fit. The court consists of two or more members one of whom shall be
appointed by the Chairman. Within a period of 6 months, the court has to send a report thereon to
the appropriate Government from the commencement of its any inquiry. This period is not
mandatory and it may be extend.

It has the same powers as are vested in a Civil Court under the Code of Civil Procedure
1908, in the following matters-
a. enforcing the attendance of any person and examining him on oath,
b. compelling the production of documents and material objects,
c. issuing commissions for the examination of witnesses,
d. in respect of such other matters as may be prescribed.

The report of the Court must be signed by all the members. A member can submit a note of
dissent. The Report together with the dissenting note must be published by the appropriate
Government within 30 days from its report. A court of enquiry has no power to improve any
settlement upon the parties.
5. Labour Court (Section 7):

The appropriate Government may by notification in the official Gazette, constitute one or
more labour court for adjudication of industrial disputes relating to any matters specified in the
SecondSchedule. A labour court consists of one person only to be appointed by the appropriate
Government.

The main function of the labour court is to hold its proceedings expeditiously and submit its award
as the proceeding concludes.

A person shall be presiding officer of a labour court unless:

a. he is or has been, a Judge of the High court,
b. he has for a period of not less than three years, been a District Judge or an Additional District
Judge or
c. he has held any judicial office in India for not less than seven years; or
d. he has been the presiding officer of a Labour Court constituted under any provincial Act or
State Act for not less than five years.
e. He must be an independent person and must not have attained the age of 65 years.

6. Labour Tribunals (Section 7- A):

The appropriate Government may by notification in the official Gazette, constitute one or more
Industrial Tribunals for adjudication of industrial disputes. A Tribunal shall consist of one person
to be appointed by the appropriate Government. The Appropriate Government may appoint two
 persons as assessors to advise the Tribunel. The person shall be not qualified unless:

a. he is, a Judge of the High court,

b. he has for a period of not less than three years, been a District Judge or an Additional District
Judge.
c. The appropriate Government may, if it so thinks fit, may appoint two persons as assessors to
advise the Tribunal in the proceeding before it.

The functions of the Tribunals are very much like those of a body discharging judicial functions,
although it is not a Court. Its power is different from that of a Civil Court. The proceedings before
an Industrial Tribunal are quasi-judicial in nature with all the attributes of a Court of Justice. The
Government is empowered under Section 7-A of the Act to constitute for a limited time which
comes to an end automatically on the expiry of the said period for any particular case. The
duties of Industrial Tribunal are identical with the duties of Labour Court, i.e. on reference
of any industrial disputes; the Tribunal shall hold its proceedings expeditiously and submit its
award to the appropriate Government.

7. National Tribunals ( Section 7 B)

The Central Government may, by notification in the official Gazette, constitute one or more
National Industrial Tribunals for the adjudication of industrial disputes. National Industrial
Tribunals are involve only incase of the questions of national importance or if they are of such a
nature that industrial establishments situated in more than one State are likely to be interested in,
or affected by, such industrial disputes. It consists of one person only to be appointed by the Central
Government.

The person shall not be qualified for appointment as the presiding officer unless he is, or
has been, a Judge of a High Court. Beside these, the Central Government may, if it thinks fit,
appointtwo persons as assessors to advise the National Tribunal in the proceedings before it.

Employee State Insurance Act (1948):

The Employee State Insurance Act, [ESIC] 1948, is a piece of social welfare legislation
enacted primarily with the object of providing certain benefits to employees in case of sickness,
maternity and employment injury and also to make provision for certain others matters incidental
thereto.
The Act in fact tries to attain the goal of socio-economic justice enshrined in the Directive
principles of state policy under part 4 of our constitution, in particular articles 41, 42 and 43 which
enjoin the state to make effective provision for securing, the right to work, to education and public
assistance in cases of unemployment, old age, sickness and disablement.

Origin of Employee State Insurance Act

The Employee State Insurance act was promulgated by the Parliament of India in the year
1948.To begin with the ESIC scheme was initially launched on 2nd February 1952 at just two
industrial centers in the country namely Kanpur and Delhi with a total coverage of about 1.20 lakh
workers.
There after the scheme was implemented in a phased manner across the country with the
active involvement of the state governments.

Objectives of Employee State Insurance Act

The ESI Act is a social welfare legislation enacted with the object of providing certain
benefits to employees in case of sickness, maternity and employment injury. Under the Act,
employees will receive medical relief, cash benefits, maternity benefits, pension to dependents of
deceased workers and compensation for fatal or other injuries and diseases.

Applicability
The ESI Act extends to the whole of India

 It applies to all the factories including Government factories (excluding seasonal

factories), which employ 10 or more employees and carry on a manufacturing process
with the aid of power and 20 employees where manufacturing process is carried out
without the aid of power.
 The act also applies to shops and establishments. Generally, shops and establishments
employing more than 20 employees are covered by the Act.
 The act does not apply to any member of Indian Naval, Military or Air Forces.
 All employees including casual, temporary or contract employees drawing wages less than
Rs 10,000 per month are covered. The ceiling limit has been raised from Rs.7500 to
Rs.10000 with effect from 01.10.06.
 Apprentices covered under the Apprenticeship Act are not covered under this Act.
According to Apprenticeship Act 1961, “apprentice” means a person who is undergoing
apprenticeship training in pursuance of a contract of apprenticeship.
 Where a workman is covered under the ESI scheme,
 Compensation under the Workmen’s Compensation Act cannot be claimed in respect of
employment injury.
 No benefits can be claimed under the Maternity Benefits Act.

Areas Covered
The ESI Scheme is being implemented area-wise by stages. The Scheme is being
implemented in almost all union territories and states except Nagaland, Manipur, Tripura, Sikkim,
Arunachal Pradesh and Mizoram.

Benefits under the Scheme

Employees covered under the scheme are entitled to medical facilities for self and
dependants. They are also entitled to cash benefits in the event of specified contingencies resulting
in loss of wages or earning capacity. The insured women are entitled to maternity benefit for
confinement.

Where death of an insured employee occurs due to employment injury or occupational disease, the
dependants are entitled to family pension. Various benefits that the insured employees and their
dependants are entitled to, the duration of benefits and contributory conditions thereof are as under:
Medical benefits
 From day one of entering insurable employment for self and dependants such as spouse,
parents and children own or adopted.
 For self and spouse on superannuation subject to having completed five years in insurable
employment on superannuation or in case of having suffered permanent physical
disablement during the course of insurable employment.
Sickness benefits
 Sickness benefit is payable to an insured person in cash, in the event of sickness resulting
in absence from work and duly certified by an authorised insurable medical officer/
practitioner.
 The benefit becomes admissible only after an insured has paid contribution for at least 78
days in a contribution period of 6 months.
 Sickness benefit is payable for a maximum of 91 days in two consecutive contribution
period.
Maternity benefit
 Maternity benefit is payable to insured women in case of confinement
 Miscarriage or sickness related thereto.
 For claiming this an insured woman should have paid for at least 70 days in 2.
 consecutive contribution periods i.e. 1 year
 The benefit is normally payable for 12 weeks, which can be further extended up to 16
weeks on medical grounds.
 The rate of payment of the benefit is equal to wage or double the standard sickness benefit
rate.
 The benefit is payable within 14 days of duly authenticated claim papers.
Disablement benefit
 Disablement benefit is payable to insured employees suffering from physical disablement
due to employment injury or occupation disease

Obligations of Employers:
1. The employer should get his factory or establishments registered with the E.S.I. Corporation
within 15 days after the Act becomes applicable to it, and obtain the employers Code Number.
2. The employer should obtain the declaration form from the employees covered under the Act and
submit the same along with the return of declaration forms, to the E.S.I. office. He should arrange
for the allotment of Insurance Numbers to the employees and their Identity Cards.

3. The employer should deposit the employees’ and his own contributions to the E.S.I. Account in
the prescribed manner, whether he has sufficient resources or not, his liability under the Act
cannot be disputed.
WORKMEN COMPENSARION ACT 1923:
The Workmen Compensation Act, 1923 is an enactment that was issued by the Central
Government and was implemented by various State Governments which gives social security to
workers. This security is offered by the law for people who work.
The Act was formed after it was noted that labourers were getting more exposed to danger
with the use of advanced and sophisticated machinery. The common law had it that the employer
would only take up the compensation responsibility if it is found that the industrial accident was a
result of his negligence.

Objective of The Workmen Compensation Act

• The Workmen Compensation Act of 1923 was formed majorly to give compensations to workmen
in the event of an accident.
• The Act has it that employers should have duties and obligations that include the welfare of
workers after an injury resulting from employment in the same way they have reserved the right
to make profits. The Act aims to see workmen have a sustainable life after an employment-related
accident.

Scope of the Act:

The Act is applicable only to those workmen working in industries as specified in the Act.
The Act affords protection to a workman from losses or injury caused by accident arising out of and
in the course of employment subject to certain exceptions as laid down in the Act.

Employers Liability for Compensation:

To make the employer pay compensation, the death or injury suffered by the workman must be
consequence of an accident arising out of and in the course of his employment is dependent upon the
following four conditions:
(1) The casual connection between the injury and the accident (i.e., personal injury is caused to
workman while on work);
(2) The injury and accident caused during the course of employment;
(3) The probability tenable to reason that the work contributed to the causing of personal injury; and
(4) The applicant proves that it was the work and the resulting strain which contributed to or
aggravated the injury.

Applicability of the Act:

The Act is applicable throughout India . The Act does not apply to those areas which are covered by
the Employees State Insurance Act, 1948.
The salient features of the Act are as follows:
I. Application:
It applies to:
(a) All railway servants not permanently employed in any administrative, district or sub- divisional
office of a railway and not employed in any capacity as is specified in Schedule II to the Act;
(b) Persons employed in any such capacity as isspecified in Schedule II to the Act. Schedule II
includes persons employed in factories, mines, plantations, mechanically propelled vehicles,
 construction works and certain other hazardous occupations. In all, there are 48 employments
listed in the Schedule; and
(c) Persons employed in employments added to Schedule II by the State Government in exercise of
the powers conferred on them under section 2(3) of the Act. In this connection, a statement
indicating the additions made so far by different State Governments is enclosed (Annex-I).

Contingencies in which Compensation is Payable:

Compensation is payable in case of temporary/permanent disablement or death as a result of
an employment injury. The contracting of any disease listed in Schedule III to the Act is deemed to
be an injury by accident.
Occupational Diseases:
If a workman employed in the employment specified in Schedule III of the Act contracts any
occupational disease peculiar to that employment he becomes eligible for payment of compensation
under the Act.

Settlement of Claims under the Act:

The claims for compensation broadly fall in three categories, namely (i) uncontested cases of
disablement; (ii) disputed cases of disablement and (iii) fatal cases.

Compensation:
(a) where death results an from the injury : an amount equal to fifty per cent. of the monthly
wages of the deceased *[employee] multiplied by the relevant factor; or an amount of *[one lakh
and twenty thousand rupees], whichever is more;
(b) where permanent total disablement results from the injury: an amount equal to sixty per
cent. of the monthly wages of the injured *[employee] multiplied by the relevant factor; *[one
lakh and twenty thousand rupees], whichever is more;
(c) where permanent partial disablement result from the injury: (i) in the case of an injury
specified in Part II of Schedule I, such percentage of the compensation which would have been
payable in the case of permanent total disablement as is specified therein as being the percentage
of the loss of earning capacity caused by that injury; and (ii) in the case of an injury not specified
in Schedule I, such percentage of the compensation payable in the case of permanent total
disablement as is proportionate to the loss of earning capacity (as assessed by the qualified
medical practitioner) permanently caused by the injury;
(d) where temporary disablement, whether total or partial, results from the injury: a half
monthly payment of the sum equivalent to twenty-five per cent. of monthly wages of the
*[employee], to be paid in accordance with the provisions of sub-section (2).
Payment of Bonus Act 1965

Payment of Bonus Act:

The payment of Bonus Act provides for payment of bonus to persons employed in certain
establishments of the basis of profits or on the basis of production or productivity and for matters
connected therewith.
It extends to the whole of India and is applicable to every factory and to every other establishment
where 20 or more workmen are employed on any day during an accounting year.

Eligibility for Bonus

Every employee receiving salary or wages up to Rs. 10,000 p.m. and engaged in any kind of work
whether skilled, unskilled, managerial, supervisory etc. is entitled to bonus for every accounting year
if he has worked for at least 30 working days in that year.

Where an employee has not worked for all the working days in an accounting year, the minimum
bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than 8.33
per cent, of his salary or wage for the days he has worked in that accounting year, shall be
proportionately reduced.

However, employees of L.I.C., Universities and Educational institutions, Hospitals, Chamber

of Commerce, R.B.I., IFCI, U.T.I., IDBI, NABARD, SIDBI, Social Welfare institutions are not
entitled to bonus under this Act.

Calculation for Working Days in An Accounting Year

An employee shall be deemed to have worked in an establishment in any accounting year also on the
days on which:
 he has been laid off under an agreement or as permitted by standing orders under the Industrial
Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act,
1947 (14 of 1947), or under any other law applicable to the establishment;
 he has been on leave with salary or wage;
 he has been absent due to temporary disablement caused by accident arising out of and in the
course of his employment; and
 the employee has been on maternity leave with salary or wage, during the accounting year.

Disqualification for Bonus

Notwithstanding anything contained in the act, an employee shall be disqualified from receiving
bonus, if he is dismissed from service for fraud or riotous or violent behaviour while in the premises
of the establishment or theft, misappropriation or sabotage of any property of the establishment.
Minimum and Maximum Bonus Payable
Minimum Bonus
 The minimum bonus which an employer is required to pay even if he suffers losses during the
accounting year or there is no allocable surplus is 8.33 % of the salary or wages during the
accounting year, or
 Rs. 100 in case of employees above 15 years and Rs 60 in case of employees below 15 years, at
the beginning of the accounting year, whichever is higher
Maximum Bonus
If in an accounting year, the allocable surplus, calculated after taking into account the amount
‘set on’ or the amount ‘set of’ exceeds the minimum bonus, the employer should pay bonus in
proportion to the salary or wages earned by the employee in that accounting year subject to a
maximum of 20% of such salary or wages.

Time Limit for Payment

The bonus should be paid in cash within 8 months from the close of the accounting year or within
one month from the date of enforcement of the award or coming into operation of a settlement
following an industrial dispute regarding payment of bonus. However if there is sufficient cause
extension may be applied for.

Duties/Rights of Employer
Duties
 To calculate and pay the annual bonus as required under the Act To submit an annul return of
bonus paid to employees during the year, in Form D, to the Inspector, within 30 days of the
expiry of the time limit specified for payment of bonus.
 To co-operate with the Inspector, produce before him the registers/ records maintained, and such
other information as may be required by them.
 To get his account audited as per the directions of a Labour Court/ Tribunal or of any such other
authority.

Rights
An employer has the following rights:

 Right to forfeit bonus of an employee, who has been dismissed from service for fraud, riotous or
violent behaviour, or theft, misappropriation or sabotage of any property of the establishment.
 Right to make permissible deductions from the bonus payable to an employee, such as,
festival/interim bonus paid and financial loss caused by misconduct of the employee.
 Right to refer any disputes relating to application or interpretation of any provision of the Act, to
the Labour Court or Labour Tribunal

Rights of Employees
 Right to claim bonus payable under the Act and to make an application to the Government, for
the recovery of bonus due and unpaid, within one year of its becoming due.
 Right to refer any dispute to the Labour Court/Tribunal Employees, to whom the Payment of
Bonus Act does not apply, cannot raise a dispute regarding bonus under the Industrial Disputes
Act.
 Right to seek clarification and obtain information, on any item in the accounts of the
establishment.
Recovery of Bonus Due
 Where any bonus is due to an employee by way of bonus, employee or any other person
authorised by him can make an application to the appropriate government for recovery of the
money due.
 If the government is satisfied that money is due to an employee by way of bonus, it shall issue a
certificate for that amount to the collector who then recovers the money.
 Such application shall be made within one year from the date on which the money became due
to the employee.
 However the application may be entertained after a year if the applicant shows that there was
sufficient cause for not making the application within time.

Offences and Penalties

 For contravention of the provisions of the Act or rules the penalty is imprisonment upto 6
months or fine up to Rs.1000, or both.
 For failure to comply with the directions or requisitions made the penalty is imprisonment upto
6 months or fine up to Rs.1000, or both.
 In case of offences by companies, firms, body corporate or association of individuals, its
director, partner or a principal officer responsible for the conduct of its business, as the case
may be, shall be deemed to be guilty of that offence and punished accordingly, unless the
person concerned proves that the offence was committed without his knowledge or that he
exercised all due diligence.