Introduction to Labour Policy:

Labour has a vital role in increasing productivity and management has to help create
conditions in which workers can make their maximum contribution towards this objective.

In free India, the labour movement and trade unions should be in a position to assume larger
responsibilities in the context of new scenario and challenges which are coming up on the
advent of 21st century. One of the main tasks in the Five Year Plans is to evolved practical
ways in which they can make an increasing contribution to national development and national
policy.

Economic progress of a country is bound up with industrial place. Industrial relations are,
therefore, not a matter between employers and employees alone, but a vital concern of the
community which may be expressed in measures for the protection of its larger interests.

The National Commission on Labour, however, preferred to describe its approach as one in
quest of industrial harmony rather than industrial peace as according to it the concept of
industrial peace is somewhat negative and restrictive. It emphasises absence of strife and
struggle.

A quest for industrial harmony is indispensable when a country plans to make economic
progress. It may sound platitudinous but it is nevertheless true that no nation can hope to
survive in the modern technological age, much less become strong, great and prosperous,
unless it is wedded to industrial development and technological advance.

Economic progress is bound up with industrial harmony for the simple reason that industrial
harmony inevitably leads to more cooperation between employers and employees, which
results in more productivity and thereby contributes to all round prosperity of the country.
Healthy industrial relations, on which industrial harmony is founded, cannot therefore, be
regarded, as a matter in which only the employers and employees are concerned; it is of vital
significance to the community as a whole.

That is how the concept of industrial harmony involves the cooperation not only of the
employers and employees but also of the community at large. This cooperation stipulates that
employees and employers recognise that though they are fully justified in safeguarding their
respective rights and interests, they must also bear in mind the interests of the community.

If this be the true scope of the concept of industrial harmony, it follows that industrial
harmony should and ought to emphasise the importance or raising productivity but the
resulting accelerated rate of growth will lead to the good of the community as a whole. That
is the true significance of the doctrine of industrial harmony in its three dimensional aspect.

The term Labour Law 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.
The need for labour legislation arises because of:

(i) The relationship between the workers and employers, is one of partnership in the
maintenance of the production and building up of the national economy,

(ii) The community as a whole as well as individual employers 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.

The object of Labour Legislation, therefore, is two-fold namely:

(i) To improve the service conditions of industrial labour so as to provide for them the
ordinary amenities of life.

(ii) To bring about industrial peace which could in its turn accelerate productive activity of
the country resulting in its prosperity?

Labour Legislation is necessary for the following reasons:

(i) The individual workers are economically weak. They cannot bargain with the employers
for the protection of their rights and even for subsistence wages. As such legislation for
protection of labour against long hours of work, unhygienic working conditions, low wages
and exploitation is needed.

(ii) In order to increase the bargaining power of labour, legislation is necessary to encourage
the formation of trade unions.

(iii) In order to avoid industrial disputes which lead to strikes and lockouts, labour legislation
is needed.

(iv) The workers are exposed to certain risks in factories, mines and other establishments. As
such in order to make provision for their health, safety and welfare, legislation is needed.

(v) To protect children and women from taking to work under hazardous conditions and at
odd hours and in hazardous process, laws are necessary.

Labour Legislation has grown up as one of the most important social institution in India. A
quest for industrial harmony is indispensable when a country plans to make economic
progress. It may should platitudinous but it is nevertheless true that no nation can hope to
survive in the modern technological age, much less become strong, great and prosperous.

Unless it is wedded to industrial development and technological advance. Economic progress

is bound up with industrial harmony for the simple reason that industrial harmony inevitably
leads to more cooperation between employers and employees, which results in more
productivity and thereby contributes to all round prosperities of the country.

Healthy industrial relations, therefore on which industrial harmony is founded, cannot be

regarded as a matter in which only the employers and employees are concerned; it is of vital
importance to the community as a whole. That is how the concept of industrial harmony
involves the cooperation not only of the employers and the employees, but also of the
community at large.

Industrial harmony is a product of goodwill and understanding between labour and

management and if for whatever reasons, one or the other side fails to observe the rules of the
game, the laws should be such as to take care of the offenders impartially.

Salient Features of Labour Legislation:

Labour legislation is based on certain fundamental principles:

1. Social Equity:

Another principle on which labour legislation is based on 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 and ideas there may be a need for the change in the law. This power of
changing the law is taken by the Government by making provisions for rule making powers
in the Acts in regard to certain specified matters.

2. 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.

3. International Uniformity:

International uniformity is another principle on which labour laws are based. The important
role played the International Labour Organisation (I.L.O) is praiseworthy. The main aims of
the I.L.O. are to remove injustice, hardship and privation of large masses of toiling people all
over the world and to improve their living and working conditions and thus establish
universal and lasting peace based upon social justice.

The basic principles of the Labour Policy of I.L.O. are as follows:

(a) Labour is not a commodity.

(b) Freedom of expression and of association is essential to continued progress.

(c) Poverty anywhere constitutes a danger to prosperity everywhere.

(d) War against want requires to be carried on with unending vigour within each nation and
by continuous effort is which the representatives of workers and employers enjoying equal
status with those of Governments; join with them in free discussion and democratic decisions
with a view to promoting of common welfare.
4. National Economy:

In enacting labour legislation, the general economic situation of the country has to be borne
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.

Legislation is essential to safeguard the interests of the labouring classes. In the absence of
legislation, factory worker is bound to be exploited by the employer. Labour legislation
provides essential safeguard to workers in matters of conditions of work, hours of work,
safety in the factories, minimum wages, bonus, and equal wages for men and women for the
same work.

The first enactment to be framed was Apprentices Act 1850. The object of this Act was to
better enable children, especially orphans and poor children brought up by public charity, to
learn trades, crafts, and employment, by apprenticing them to livelihood.

However, at that time the policy of the Government was to protect workers from the social
system, and so legislation was acted in 1859 and 1860 making workmen liable to criminal
penalties for branches of contract.

Public attention was drawn to the unsatisfactory working conditions in Indian factories and
the need for regulating or by law them the first time in 1874, when Major Moore, the Chief
Inspector of Bombay Cotton Department, pointed out in his report, that in Bombay Cotton
factories women and children were employed in large numbers, that many of the children
were hardly eight years old, all of them had to work from sunrise to sun set with only half an
hour’s recess and they had no periodically recurring day of rest.

Labour policy in India derives its philosophy and content from the Directive Principles of the
Constitution and has been evolving in response to specific needs of the situation to suit
requirements of planned economic development and social justice.

It has been envisaged that growth of the economy would not only increase production but
also absorb the backlog of unemployment and under-employment and a substantial
proportion of additional labour force. Seventh Plan laid emphasis on harnessing country’s
abundant human resources and improving their capabilities for development.

Different Plan Periods & Development of Labour Policy:

In the First Five Year Plan, the approach to labour problems rested on two considerations
namely the welfare of the working class and the country’s economic stability and progress,
workers’ right to form association, organisation and collective bargaining were recognised.

In order to govern relations between employers and workers, the Planning Commissions
recommended for certain norms, and standards. Works Committees were recommended for
the settlement of differences. During Second Five Year Plan, a code of discipline in industry
was accepted voluntarily by all the organisation of employers and workers which has been in
operation since the middle of 1958.

The code has laid down specific obligations for the management and workers with the object
of promoting constructive cooperation between their representatives all levels. As a result of
this new concept of such far-reaching aims, there has been considerable improvement in the
sphere of industrial relations.

The number of man-days lost declined significantly from 47 lacks during Jan-June 1958 to 19
lacks during July-December 1960. Besides, the inter-union rivalry has been mitigated to some
extent by the code of conduct which was drawn up and accepted by the representatives of
worker’s organisation. The code provides that every employee shall have the freedom and
right awards to join a union of his own choice.

During Second Five Year Plan, two significant steps were undertaken. Firstly a form of
workers’ participation in management was evolved. Joint management councils were
established on experimental basic. The Council has to bring about mutual consultation
between employers and workers over many important issues which affect industrial relations.

Secondly a scheme of workers’ education has been implemented. The scheme comprises
training of teacher- administration and worker teachers. This scheme has helped to raise the
self-confidence of workers and has increased their ability to take advantage of protective
labour laws.

Third Five Year Plan:

Under the Third Five Year Plan, labour policy was designed according to immediate and long
term need of a planned economy. India’s present labour policy is directed towards that
attainment of full employment and assisting standard of living of the people. The concept of
socialist society was kept in mind. Hence, as pointed out in the Third Five Year Plan, the
fruits of progress should be shared in an equitable manner.

The surplus that are generated a social product to which neither the employer not the working
class can lay an exclusive claim, their distribution has to be according to the worth of the
contribution of each, subject to the requirements of further development and his interest of all
the sections of society, in particular, the satisfaction of the basic needs of all its members.

Fourth Five Year Plan:

The labour policy in the Fourth Five Year Plan was evolved with reference to two basic
concepts:

(1) The relationship between workers and employers is one of partnership.

(2) The employees are under obligation to protect the well-living of employees. Greater
emphasis was placed on collective bargaining.

Fifth Five Year Plan:

The labour supply projections contained in the Fifth Plan imply an increase in the labour
force about 18.26 million Hence the plan is oriented towards substantial employment
opportunities.
Sixth and Seventh Five Year Plan:

The labour policy adopted in the Sixth Plan was oriented towards the achievement of
the following objectives:

(i) To establish harmonious relations between employers and workers.

(ii) To accelerate the rate of industrial development and to create expanding opportunities for
employment.

(iii) To rise the living standard of workers in general and the weaker section in particular.

From time to time, suggestions have been made to review the working of labour policy. Since
independence the industrial scene has undergone radical changes. The structure of working
class has changed in several respects. Important changes are likely to take place in the future
and composition of labour movement in the years to come.

Having regard to those considerations in December 1966, the Government of India set up a
National Commission on Labour to study and make recommendations on various aspects of
labour including wages, working conditions, welfare, trade union development and labour-
management relations. The Commission submitted its report in August 1969. It made 300
recommendations. The Government accepted 200 recommendations out of 300 made by the
Commission.

A Tripartite Committee constituted under the scheme- Workers Participation in Management

and comprising representatives of some Central Ministries/State Governments, major public
sector undertakings and Central Trade Union Organisations, reviews progress of the scheme
from time to time and suggests remedial measures.

So far, 8 meetings of this committee have been held. A monitoring cell has also been created
in the Ministry of Labour to assist the Committee. Out of 203 Operational Central Public
Sector Enterprises, 109 have implemented the 1983 scheme at shop floor/plant levels.

As the Third Plan stated, “Labour policy in India has been evolving in response to the
specific needs of the situation in relation to industry and the working class and has to suit the
requirements of a planned economy”.

As a result of consultation between the representatives of the Government, the employers and
employees, a body of principles and practices has grown up and the legislation and other
measures adopted by the Government in this field represent the consensus of opinion of the
parties vitally concerned and thus acquire the strength and character of a national policy.

In the formulation of policies and in their implementation, the Government has set up joint
committees consisting of the representatives of the Government, the employers and the
employees and at the apex of this tripartite machinery is the Labour Conference.
Recent Developments of Labour Legislation:

The structure of industrial relations has been designed to secure industrial peace in industry,
promote production and labour productivity and give a fair deal to the workers. Conciliation
of disputes and adjudication through tribunals has been tried.

The system has helped in reducing industrial unrest and promoting security to working
classes but it has also created the spirit of litigation among the parties concerned. During the
Second Plan, the Government tried a new approach, viz. the Code of Discipline voluntarily
accepted by the parties concerned.

The stress was on the prevention of unrest by timely action in the appropriate stages. Besides,
the Code of Discipline makes it obligatory on the management and labour to promote
constructive co-operation between them, to avoid litigation, settle disputes and grievances by
mutual negotiations, conciliation and voluntary arbitration, facilitate free growth of trade
unions and eliminate all forms of coercion and violence in industrial relations. This new
concept of industrial relations with such far-reaching aims will take some time to be fully
implemented in practice.

Two aspects of labour policy evolved during the Second Plan deserve special mention,
because they hold great promise for the future. One was the workers’ participation in
management which was meant to give the workers a sense of belonging and to stimulate their
interest in higher productivity. This was done in an experimental fashion in 23 industries in
the form of Joint Management Councils.

Its main function was to bring about mutual consultation between employers and employees
over many important issues which affect industrial relations. The second was the programme
of workers’ education which was widely welcomed. The scheme was to train teacher-
administrators and worker-teachers. The latter, when they return to their industrial
establishments, would start unit-level classes for the rank and file of the workers.

Labour Policy and Third Plan:

Industrial relations during the Third Plan were based on the Code of Discipline which was
evolved during the Second Plan. The Third Plan aims at extending an awareness of the Code
to all constituents of the Central Employers’ and Employees’ organisations, so that the Code
would become more and more of a living force in the day-to-day conduct of industrial
relations.

The sanctions on which the Code of Discipline is based were reinforced, relying on the
consent of the parties concerned. The Third Plan also aimed at increased application of the
principles of voluntary arbitration in resolving differences between workers and employers.

Policy Regarding Trade Unions:

Trade unions have to be accepted as an essential part of the apparatus of the industrial and
economic administration of the country. For this, there has to be considerable re-adaptation in
the outlook, functions and practices of trade unions according to the changed conditions and
circumstances in which India is placed now. The Government looks that at present trade
unions are handicapped by insufficient resources and a non-progressive leadership.
According to the Code of Discipline, a trade union will have to be recognised by the
management, provided the former has at least 15 per cent of the workers engaged in the
establishment enrolled as members for a continuous period of six months. In case there are
several unions, the union with the largest membership will be recognised. Once a union is
recognised as such, there should be no change in its position for a period of two years.

Policy Regarding Wages:

A just or even an economically sound wage policy should encourage increase of national
income and secure to the wage earner a legitimate share in that increase. The purpose of the
Government’s wage policy, as clearly stated by the Second Plan, is “to bring wages into
conformity with the expectations of the working class in the future pattern of society.”

The First Plan:

The First Plan stated that all wage adjustments should conform to the broad principles of
social policy and the disparities of income should be reduced to the utmost extent. The
immediate aim was to restore the pre-war real wage level, as the first step towards the living
wage.

The First Plan insisted on avoiding any wage rise which would raise the cost of production
and set in motion wage-price spiral; for in such a case, gains to the workers would prove
illusory since they would, in all probability, get cancelled by a rise in the price level.

But soon after Independence, the Government assumed responsibility for securing a
minimum wage for certain sections of workers—both in industry and in agriculture—who
were economically weak and who stood in need of protection. Towards this end, the
Minimum Wages Act was passed in 1948 to provide for the fixation and revision of wage
rates in certain occupations. But the Government was aware that the Act was not effective in
many cases.

The Second Plan:

The Second Plan proposed to give labours a fair wage. Fair wage was distinguished from
minimum and living wage. For instance, minimum wage must provide to the worker and his
family not only sustenance but also something more to preserve his efficiency. Living wage
should enable the worker to provide for himself and for his family not only the bare essentials
of food, clothing and housing but also a measure of comfort, etc.

On the other hand, fair wage was somewhere midway between the minimum and the living
wage and it would be determined with reference to the capacity of the industry to pay the
wage and the prevailing rate of wages in the same or similar industry.

Government’s policy was to link the wage-rise with the rise in productivity. The Second Plan
specifically stated: “Earnings beyond the minimum wage should be necessarily related to
results.”
Third Five Year Plan:

The Government is continuing the wage policy as enunciated by the Second Plan. The Third
Plan has accepted the system of wage boards and also proposes that the unanimous
recommendations of a wage board in an industry should be implemented fully. In the
determination of wages, the need-based minimum wage should be used.

Apart from the minimum wages, adequate incentives should be provided for the acquisition
and development- of skills and for improvements in output and quality. The Third Plan
proposed to appoint a Commission to study the problems connected with bonus claims and to
evolve guiding principles and norms for the payment of bonus.

Working Conditions Safety and Welfare:

The Government has evolved a comprehensive code to ensure satisfactory working

conditions, safety of persons and the provision of a variety of facilities to promote the welfare
of the workers. But the implementation of the statutory provisions has not been effective.

The Third Plan calls upon all State Governments to strengthen the inspectorates provided for
the administration of factory laws. Emphasis is placed on the safety of persons in factories
and mines and appropriate machinery is being devised. Special Welfare funds are being
constituted for financing welfare measures for workers in coal and other mines.

The Government is interested in encouraging workers’ cooperatives in the field of credit,

housing, distribution of consumer goods, etc. The Government feels that trade unions and
voluntary organisations should take initiative and evince interest in starting and running such
cooperatives.

The Third Plan points out that despite the operation of the subsidised Industrial Housing
Scheme, for some years, housing of industrial workers has not made much progress and in
many cases it has actually deteriorated. The Third Plan calls for a new approach to the
problem of industrial housing so that workers would have decent living conditions within a
reasonable period of time.

Employment and Training Schemes:

In a developing economy, the demand for skilled workers would increase continuously and
the Government has various schemes to meet such demand. By the end of the Second Plan,
there were 166 industrial training institutes with 42,000 training seats. The Third Plan has
proposed to increase the number of these institutes to a total of 318 with an additional 58,000
training seats.

The annual training capacity would be raised to 1 lakh. The Government has also made
adequate provisions for “in-plant training” facilities. It has also introduced a voluntary
apprentice training scheme; the Third Plan has proposed to convert this voluntary scheme
into a compulsory one.

The Third Plan has set a target of 14,000 seats for apprentice training scheme. It has also set a
target of 15,000 seats in the programme of evening classes for industrial workers. One
hundred employment exchanges would be set up during the Third Plan period and the
objective is to open one employment exchange in each district.