INDUSTRIAL SOCIAL WORK

Master of Social Work (M.S.W.)

Semester – IV, Paper - I
Lesson Writers

Prof. M. Trimurthi Rao Prof. V. Venkateswarlu

Professor, Professor,
Dept. of Sociology & Social Work Dept. of Sociology & Social Work
Acharya Nagarjuna University, Acharya Nagarjuna University,
Nagarjuna Nagar, Guntur. Nagarjuna Nagar, Guntur.

Prof. Saraswati Raju Iyer Prof. K. Dhanalakshmi

Professor, Professor,
Dept. of Sociology & Social Work Dept. of Sociology & Social Work
Acharya Nagarjuna University Acharya Nagarjuna University
Nagarjuna Nagar, Guntur. Nagarjuna Nagar, Guntur.

Editor
Prof. M. Trimurthi Rao
Professor, Dean, Faculty Social Science
Dept. of Sociology & Social Work
Nagarjuna University,
Nagarjuna Nagar,
Guntur.

Director
Dr. NAGARAJU BATTU
MBA., MHRM., LLM., M.Sc. (Psy).,MA (Soc)., M.Ed., M.Phil., Ph.D.,
CENTRE FOR DISTANCE EDUCATION
ACHARAYANAGARJUNAUNIVERSITY
NAGARJUNANAGAR – 522510
Ph:0863-2346208,2346222,
Website: www.anucde.info
e-mail:anucdedirector@gmail.com
 M.S.W – INDUSTRIAL SOCIAL WORK

First Edition : 2023No.

of Copies :

©Acharya Nagarjuna University

This book is exclusively prepared for the use of students of M.S.W Centre forDistance
Education, Acharya Nagarjuna University and this book is meant for limited Circulation only.

Published by:
Dr. NAGARAJU BATTU,
Director
Centre for Distance
Education,Acharya
Nagarjuna University

Printed at:
 FOREWORD

Since its establishment in 1976, Acharya Nagarjuna University has been forging a
head in the path of progress and dynamism, offering a variety of courses and research
contributions. I am extremely happy that by gaining ‘A’ grade from the NAAC in the year
2016, Acharya Nagarjuna University is offering educational opportunities at the UG, PG
levels apart from research degrees to students from over 443 affiliated colleges spread over
the two districts of Guntur and Prakasam.

The University has also started the Centre for Distance Education in 2003-04 with
the aim of taking higher education to the door step of all the sectors of the society. The
centre will be a great help to those who cannot join in colleges, those who cannot afford the
exorbitant fees as regular students, and even to housewives desirous of pursuing higher
studies. Acharya Nagarjuna University has started offering B.A., and B.Com courses at the
Degree level and M.A., M.Com., M.Sc., M.B.A., and L.L.M., courses at the PG level from
the academic year 2003-2004onwards.

To facilitate easier understanding by students studying through the distance mode,

these self-instruction materials have been prepared by eminent and experienced teachers.
The lessons have been drafted with great care and expertise in the stipulated time by these
teachers. Constructive ideas and scholarly suggestions are welcome from students and
teachers involved respectively. Such ideas will be incorporated for the greater efficacy of
this distance mode of education. For clarification of doubts and feedback, weekly classes
and contact classes will be arranged at the UG and PG levels respectively.

It is my aim that students getting higher education through the Centre for Distance
Education should improve their qualification, have better employment opportunities and
in turn be part of country’s progress. It is my fond desire that in the years to come, the
Centre for Distance Education will go from strength to strength in the form of new courses
and by catering to larger number of people. My congratulations to all the Directors,
Academic Coordinators, Editors and Lesson-writers of the Centre who have helped in these
endeavors.

Prof. Raja Sekhar Patteti

Vice-Chancellor
Acharya Nagarjuna University
 CONTENT
S.No Name of the Lessons Page Nos
1 Human Resource Management - An Overview 1.1-1.10
2 Human Resource Planning 2.1.2.10
3 Recruitment and Selection 3.1-3.13
4 Human Resource Development 4.1-4.17
5 Employee Compensation System 5.1-5.12
6 Labour Legislation and Factories Act, 1948 6.1-6.17
7 Mines Act, 1952 7.1-7.10
8 Industrial Disputes Act, 1947 8.1-8.12
9 Industrial Employment Standing Orders Act, 1952 and 9.1-9.22
Trade Unions Act, 1926
10 Wage Legislation: Payment of Wages Act, 1936 and 10.1-10.12
Minimum Wages Act, 1948
11 Payment of Bounce Act, 1965 & Payment of Gratuity Act, 1972 11.1-11.22
12 Employees State Insurance Act, 1948 12.1-12.19
13 Employees Provident Fund Act, 1952 13.1-13.17
14 Labour Welfare Concept, Scope, Philosophy and Principles 14.1-14.10
15 Agencies of Labour Welfare 15.1-15.9
16 Labour Welfare Programmes, Statutory & Non Statutory, 16.1-16.8
Internal and External
17 Role and Functions of Welfare Officer- Role of Social Worker in 17.1-17.6
Industry
18 Industrial Relations Concepts, Definition, Scope & Approaches to 18.1-18.13
Industrial Relations
19 Role of International Labour organization (IIO) and Functions 19.1-19.8
20 Conflict Resolution and Management of Trade Unions 20.1-20.12
21 Collective Bargaining and Participative Management 21.1-21.14
 Lesson - 1

HUMAN RESOURCE MANAGEMENT - AN OVERVIEW

Objectives
 After studying this lesson, the student is able to :
 visualize the reasons for studying Human Resource Management (HRM)
 identify the principal elements of HR Programme and their importance in managing
HR
 present the functions of Human Resource Management
 explain why HR Managers should be concerned with the External and Internal
Environments of the organisation.

Structure
1.1. Introduction
1.2. Meaning of Human Resource Management
1.3. Features of Human Resource Management
1.4. Importance of Human Resource Management
1.5. Objectives of Human Resource Management
1.6. Functions of Human Resource Management
1.7. HR policies
1.8. Environmental Influences on HR Department
1.9. Qualities of HRManager
1.10. Summary
1.11. Keywords
1.12. Self Assessment Questions
1.13. Further Readings

1.1. Introduction
The Information Explosion, advances in technology, and global competition have
created enor- mous presence on companies to change thir day to day activities. Most of the
business houses are moving into a very different world, markets are changing much faster
than previously. Certain sectors are shrinking while new ones are opening up. Because of
these reasons corporate cultures and values are also in transition requires special skills to the
persons who are working in the organisations. Be- cause, of all factors of Production,
Materials, Maney, Machinery and Man, Man occupies an important place. Development of
Human resources became so essential for all the organisations that world like to be dynamic
and growth oriented unlike other resources human resources have unlimited potential capa-
bilities. The potential can be used only by creating a climate that can continuously identify
bring to surface nurture and use the capabilities of people. HRM aims at creating such
environment

1.2. Meaning of Human Resource Management

The work of Human Resource Management pervades the entire organinsation.
Human Re- source Management is a set of activities focusing on the effective use of
human resources in an organisation. It encompasses the activities of recruitment, Selection,
Training, Development, Wage and Salary Administration, Health and Safety, Benefits and
Services, Union - Management, Relations, Mo- tivation, Morale, Communication so on.
Thus Human Resource Management is that part of Manage- ment which is related with
Management of workers and employees. It is that part of Management which arranges for
the satisfactory Management of employees of an Enterprise. Human Resource
Centre for Distance Education 1.2 Acharya Nagarjuna University

Management is the process of achieving the best fit between individuals, Jobs, organisation
and the environment. It defines the relationship between Employer, Employee and
employee and employee.

Some eminant authors have defined the term Human Resource Management as under :Edwin
B. Flippo –

“The Personnel Function is concerned with the procurement, Development,

Compensation, integration and maintenance of the personnel of an organisation for the
purpose of contributing toward accomplishment of organisational goals and objectives.
Therefore personnel management is planning, Organising, directing and controlling the
operative Functions.”

Michel J. Jucius defines “HR Management as the field of Management which has to
do with planning, organising, directing and controlling the functions procuring, developing,
maintaining andutilising the work force.”

Dale Yolder defined Personnel Management as the phase of management which deals
with the effective control, and use of man power as distinguished from other sources of
power. The methods, tools and techniques designed and utilised to secure the enthusiastic
participation of labour to representthe subject matter for study in personnel Administration.”
In the words of Brech, “Personnel Management is that part of the management progress
whichis primarily concerned with the human constituents of the organisation”.

1.3. Features of Human Resource Management

In all these definitions, the emphasis is early on integration of individual and
organisational objectives so as to attain effectiveness. On the basis of the above definitions,
some basic features ofHRM was given below -

1. It is concerned with employees both as individuals and as group in attaining

goals.
2. It is concerned with the development of Human Resources.
3. It is concerned with managing people at work.
4. It is a continuous in nature.
5. It is concerned with both blue collared and white collared workers.
6. It is concerned with emotional, behavioral and social aspects.
7. It is concerned with the potentialities and capacities to the maximum possible
extent.
8. It is universal in nature.
9. It is continuous in nature.
10. It is action oriented. It focuses on action rather than on record keeping,
procedures and roles. It emphasrises on the solution to the employment
problems.
11. It is individual oriented.
12. It is future oriented. It tries to achieve objective by providing competent and well
motivatedemployees.

1.4. Importance of Human Resource Management

HRM helps an organisation in multifarious ways:
1. Good human resource practice can help in attracting and retaining the best
Human Resource Management 1.3 Industrial Social Work

people in the organisation. Planning alerts the company to the types of people it
will need in the short, medium and long run.
2. Appropriate recruitment and selection activities identify the best people for
available jobsand make sure they are placed in suitable positions.
3. Performance appraisals and training develop individuals who need skills,
knowledge andattitudes different from those they currently possess.
4. Good human resource practice motivates the organisational members to do
outstanding work.

1.5. Objectives of Human Resource Management

Main objective of Human Resource Management is to manage the workers and
employees of an enterprise in the best possible manner. The role of HRM is to Plan develop
and administer policies and programmes designed to make expedition use of an
organisations human resources. It is that part of management which is concerned with the
people at work and with their relationship with in an enter-pries. Its objectives are:
i) The effective utilisation of human resources.
ii) To establish desirable working relationships among all members of an
organisation.
iii) To maximize the individual development.
iv) To establish Harmonious relations between labour and capital.
v) To increase the welfare of Human employees.
vi) To arrange for effective communication with Resources.
vii) To arrange for sufficient number of efficient employees in all the Departments.
viii) To increase the morale of the employees.
ix) To motivate the employees to increase productivity.
x) To provide congenial working environment.
Activity B: To what extent your Personnel Dept fulfilled the above objectives in your office

1.6. Functions of Human Resource Management

The functions of H R M can be broadly classified into two categories

Functions of HRM

Managerial Operative
>
>

Planning Procurement
Organising Development
Directing Compensation
Controlling Integration of HR
A. Managerial Function: Managerial functions of H R M involve planning, organising,
directing and controlling.
a. Planning : It is a predetermined course of action. Planning is determinating of
personnel programmes and changes in advance that will contribute to the
organisational goals. In other words it involves planning of human resources
requirements, recruitment, selection, training etc. It also involves forecasting of
personnel needs, changing values, attitudes and behaviour of employees and their
impact on organisation.

b. Organising : An organisation is a means to an end. An organisation is a structure and

Centre for Distance Education 1.4 Acharya Nagarjuna University

a process by which co-operative group of human beings allocates its tasks among its
members, identifies relationships and integrates its activities towards common
objective. Organisation establishes relation- ships among the employees so that they
can collectively contribute to the attainment of company goals.
c. Directing : The basic function of personnel management at any level is motivating,
commanding, leading and activating people. The willing and effective co-operation
of employees for the attainments of organisational goals is possible through proper
direction. The direction is an impor- tant managerial function in that it helps in
building sound industrial and human relations.
d. Controlling : Controlling also involves checking, verifying and comparing the actuals
with the plans, identified deviations. Thus action and operations are adjusted to
predetermined plans. Controlling also involves checking, verifying and comparing
the actuals with the plans, identifying deviations, if any, correcting the identified
deviations. Auditing training programmes, analysing labour turnover records, directing
morale surveys, conducting separation interviews are some of the means for
controlling the HRM function.
B. Operative Functions: The operative functions of HRM are related to specific
activities of HRM viz employment, development, compensation and relations. These
functions have to be per- formed in conjunction with managerial functions.
i) Employment: Employment is concerned with securing and employing the people
possessing required kind and level of human resources necessary to achieve the
organisational objectives. It covers functions such as job analysis, human resource
planning, recruitment, selection, place-ment, induction and internal mobility.
a) Job analysis: It is the process of study and collection of information relating to the
operationsand responsibilities of a specific job. It includes
* Collection of data, information, facts and ideas relating to various of jobs including
men, ma-chines and materials.
* Preparation of job description, job specification (job requirements and employee
specifications) which will help in identifications identifying the nature levels and
quantum of human resources.
* Providing the guides, plans and basis for job design and for all operative functions of
personnelmanagement.
b) Human resource planning: It is a process for determining and assuring that the
organisation will have an adequate number of qualified persons, available at proper
times, performing jobs which would meet the needs of the organisation and which
would provide satisfaction for theindividuals involved.
c) Recruitment: It is the process of searching for prospective employees and stimulating
them toapply for the jobs in an organisation.
d) Selections: It is the process of ascertaining the qualifications, experience, skill and
knowledgeof an applicant with a view to appraising his/her suitability to a job.
e) Induction and orientation : Induction and orientation are the techniques by which
a new employee is rehabilitated in the changed surroundings and introduced to the
practices, policies,purposes and peoples of the organisation.
f) Placement: It is the process of assigning the selected candidate with the most suitable
job. It ismatching of employee specifications with job requirements.
ii) Human Resource Development: It is the process of improving moulding,
changing and developing the skills, knowledge, creative ability, aptitude attitude,
values, commitment etc., based on present and future job and organisational
requirements.
a) Performance appraisal: It is the systematic evaluation of individuals with respect
Human Resource Management 1.5 Industrial Social Work

to theirperformance on the job and their potential for development.

b) Training: It is the systematic process by which employees learn knowledge, skills,
abilities orattitudes to fulfill organisational and personal goals.
c) Management Development: It is the process of designing and conducting suitable
executive development programmes so as to develop managerial and human relations
skill of employees.
d) Career Planning and Development: It is the planning of one’s career and
implementation of career plans by means of education, training, job search and
acquisition of work experiences. Transfers and promotions are two important ways of
personnel development in an organisation.

* Transfer: There will not be any material change in the status, responsibilities or
pay of theemployees.
* Preparation of job description, job specification (job requirements and employee
specifications) which will help in identifications identifying the nature levels and
quantum of human resources.
* Providing the guides, plans and basis for job design and for all operative functions of
personnelmanagement.

Human resource planning : It is a process for determining and assuring that the organisation
will have an adequate number of qualified persons, available at proper times,
a) performing jobs which would meet the needs of the organisation and which would
provide satisfaction for theindividuals involved.
b) Recruitment : It is the process of searching for prospective employees and
stimulating them toapply for the jobs in an organisation.
c) Selections : It is the process of ascertaining the qualifications, experience, skill and
knowledgeof an applicant with a view to appraising his/her suitability to a job.
d) Induction and orientation : Induction and orientation are the techniques by which
a new employee is rehabilitated in the changed surroundings and introduced to the
practices, policies,purposes and peoples of the organisation.
e) Placement : It is the process of assigning the selected candidate with the most suitable
job. It ismatching of employee specifications with job requirements.
iii) Human Resource Development : It is the process of improving moulding,
changing and developing the skills, knowledge, creative ability, aptitude attitude,
values, commitment etc., based on present and future job and organisational
requirements.
e) Performance appraisal : It is the systematic evaluation of individuals with respect
to theirperformance on the job and their potential for development.
f) Training : It is the systematic process by which employees learn knowledge, skills,
abilities orattitudes to fulfill organisational and personal goals.

g) Management Development : It is the process of designing and conducting suitable

executive development programmes so as to develop managerial and human relations
skill of employees.
h) Career planning and development : It is the planning of one’s career and
implementation of career plans by means of education, training, job search and
acquisition of work experiences. Transfers and promotions are two important ways of
personnel development in an organisation.
Transfer : There will not be any material change in the status, responsibilities or pay of the
employees.
Centre for Distance Education 1.6 Acharya Nagarjuna University

* Promotion : It is the upward reassignment given to an employee in the organisation to

occupy higher position which commands better status and / or pay keeping in view the
human resourcesof the employees and the job requirements.
* Demotion : It deals with downward reassignment to an employee in the organisation,
to lowerlevel position.

Organisation development : It is an organisation wide, planned effort, managed form the top,
with a goal of increasing organisational performance through planned interventions. Organisation
Development seeks to change attitudes, values, organisation structures, and
i) managerial prac-tices in an effort to improve organisational performance.
iv) Compensation Management : It is the process of providing equitable and fair
remunera- tion to the employees. It includes job evaluation, wage and salary
administration, fringe ben-efits.
v) Job evaluation : It is the process of determining relative worth of jobs.

vi) Wage and salary administration : It is the process of developing and operating a
suitable salary and wage programme.
vii) Incentives : It is the process of formulating, administering and reviewing the schemes
of finan-cial incentives in addition to regular payment of wages and salary.

Integration of Human relations : It is the process of interaction among human beings.

i) Human relations is an area of management practice in integrating people into work
situation in a way that motivates them to work together productively, cooperatively
and with economic, psy-chological and social satisfaction.
ii) Personnel Research : It is the process of evaluating the effectiveness of human
resources policies and practices and developing more appropriate ones.
iii) Personnel audit : It refers to an examination and evaluation of policies, procedures
and prac-tices to determine the effectiveness of human resource management.

1.7. HR Policies
In the beginning of the present century the words personnel policy and personnel
departments were unheard. The immediate supervisors, were responsible for the hiring and
firing of employees. Training, promotions and other benefits were handled by supervisors
without any rationale. The hap- hazard and adhoc manner in which personnel problems were
handled in the past is now recognised as unsatisfactory by executives, in the fields of industry,
hotel, business or hospital.

Regardless the size of an organization, it is difficult to run the organization without

having well defined personnel policies in operation as an integral part of the management
function . One may won- der what place personnel policies have in the delivery of health
care, which is now considered to be a right of all citizens. Every employee in an organisation
wants to know the terms and conditions of his employment, the regulations which govern his
employment and the principles which guide the administration of an organisation in its
relationship with him. The body of such principles, rules and regulations are known as the
personnel policies. The personnel policy would be founded on three social principles i.e.
justice, human needs and democratic approach.

Need for HR Policies : Employees have aspirations in business or industry. They seek indi-
vidual recognition, opportunity for promotion, a fair wage, good working conditions, and other
benefits of employment. For one or the other reasons personnel policies are very important,
Human Resource Management 1.7 Industrial Social Work

as they provide a basic set of rules for orderly goal achievement in the process of delivering
goods or services.

The employee expects a fair day’s pay for a fair days work, equitable treatment as
accorded to fellow employees, equal opportunities for promotions based on skill and ability
with fringe benefits comparable to those found in profit making organisation. The employee
further expects his conduct on the job to be governed by a set of rules determined by
management and giving fair consideration to the dignity and rights of all employees. In
addition, the employee assumes that management will provide orderly channels for the
solution of problems and grievances. He seeks direction from top and middle management -
indeed he depends upon it - especially in applying personnel policies uniformly to all
employees.

Personnel policies are essential to the operation of large scale organizations,

because it is not feasible for management to work effectively with each employees as an
individual concerning his de- sires and his dislikes. For example, it is obvious that no
organisation can permit its employees to come to work or to leave the job at their own
convenience.

Every organisation needs personnel policies to ensure consistency of action and

equity in its relations with employees. Personnel policies constitute the basis for sound
personnel policies. Personnel policy is the yardstick by which accomplishment of
programmes can be measured.

Formulation of HR Policy : The existence of a carefully formulated personnel policy

rests on the attribute of the top management. If the top management is clear about its
responsibilities and objectives its policies are likely to reflect the same. The effectiveness of
personnel management dependent on the clarity of policy formulation. Policy which is skillfully
drafted also facilitates implementation. The process of developing personnel policy involves
assessing its appropriateness to the organisation. It must be acceptable in all situations as a
basis for decision making and tested against each of the major functions to ensure that all
considerations bearing on management have been taken into account. It should also be
tested against community practices to ensure that the reputation of the organization is
maintained at a level consistent with business and financial conditions. In fact, formulating
personnel level consistent with business and financial conditions. In fact, formulating
personnel policy today requires much broader persecute to be kept in view than ever before
due to changing values and environment.
Activity C : Give some important HR Policies of your organisation.

1.8. Environmental Influences on H R Department

HR Manager can’t perform his duties in isolation. Environment influences the HR
Departmentin many ways. These Environmental challenges can be devided into two.
a. External
b. Internal
External challenges are having profound impact on working of HR Department. For
Example, technological changes in manufacture of transister, the famous company, Motorala
opened a research facilities in two different places to study new technology. As a result
motorala recruited 20,000 employees. They have subsequently trained, oriented and
compensated.
Centre for Distance Education 1.8 Acharya Nagarjuna University

Some external challenges evolve gradually and some gives immediate effect. HR
Professionals gives immediate effect. HR Professionals deal with these changes by following
the different steps.
i) Monitoring Environment : One has to monitor likely changes in the
Environment.
ii) Evaluate Impact : Specialist must diagnose the problems and they must
evaluate theresults.
iii) Proactive Measures : Specialists has to implement approaches that help the
organisationreach its goals.
iv) Analyse feed back : Feed back to be taken that the desired out comes to be
reached.
a) External Challenges :
i) Technological Challenges
ii) Governmental Challenges
iii) Economic Challenges
iv) Cultural Challenges
v) Demographic Challenges
b) Technological Challanges : Technological Challanges results in requirement of
tech- nical personnel, skilled personnel and machine operators to our organisation.
The technology of cars and aeroplanes modified transport industry. Automobile
industries grew. Growth created to the existing Employees. Promotions has given to
the existing employees. It give adverse effect on rail transport. Here employment
opportunities shrunk. Personnel Departments reduced their work force and created
early retirement systems. Automation is another way which effected the personnel
department. The Introduction of Computers in banks has given tremendous changes in
employment needs. Before com- puters, personnel specialists recruited is large
number of semi skilled and unskilled labourers where as computers required highly
skilled programme and system analysts.
Economic Challenges : As economy changes during expansion and contraction
of business cycle, organisations must modify their plans. These plans gives demands
on personnel special- ists to change their plans according to economy. If they recruit
workers during expansion stage it is very difficult to remove them when cycle turns
down. Thus it is duty of HR specialists to anticipate economy changes. Some times
H R departments can even develop proactive policies that anticipate changes. The
economic policy of the Govt.
c) has a very great impact on business. Some type of business are favourably affected
by Govt. policy some adversely affected while it is neutral in respect of others. Ex
: Liberalisation, Privatisation and Globalisation led to competition among MNCs.
d) Cultural Challenges : Attitudes towards work course new challenges for HR
departments. Increased participation of woman is example for a cultural change. The
concept of culture is of great significance to business. Business is based on ethos of
people. Culture trains the people to act in a particular way, tending to put a
personality stamp on them. It does mean that all people are alike in a particular
culture. There are sub cultures in a culture. People have their own peculiarity of
temperament, mental constitution, cultural experience, family experience, and
unique personal experience. Culture determines the type of goods and services a
business should produce. The type of food people eat, clothes they wear, the
beverages they drink varies from culture to culture and form time to time in the same
culture. The expectations and tastes of customers are changing. These changes will
have impact on the role of HR Manager. The factors directly or indirectly influence
Human Resource Management 1.9 Industrial Social Work

the Human Resource Management of an organisation through its human resources.

e) Political Factors : Political stability, political parties and their ideologies formation
of new parties, splits in and amalgamations of existing parties naturally affect the
trade union in an organisation. This intern, results in intra and inter union rivarley,
formation of new trade unions rivelary, etc. These charges is trade union’s structure and
functioning complicate the functioning of HR Department.
f) Demographic Challenges : The Structure, Values, Cast System, Class Structure,
Education levels of human resources in the country influence the HR function of
any organisation. The Manpower composion also influence the HR function
considerably.
g) Internal Environment : Internal Environment exerts considerable pleasure on human
resource management. These pressures include company objectives. The policies of
the organisation.Unions of the enterprise etc.

The company objectives may effect the HR Department, Management should operate
the establishment with clear understanding of the overall objective. The company with
creative environment encourage new ideas and this needs highly skilled workers. They
must be recruited and selected to bring about technological advancement. Constant
attention to training and development. Good compensation should be maintained. On the
other hand, a policy is a predetermined guide established to provide direction in decision
making. This effect the organisation’s HR department in different way. Unions represent an
actual challenge in unionised companies and a potential challenge to those that are not.
Employers with unions sign on a agreement that specifies compensation, working conditions
and working hours. These agreements effects the HR Departments. Here challenge for the
Department is toachieve objectives without violating agreement.
Activity D : Do you think your organisation is influenced by Environment. Justify your
statement.

1.9. Qualities of a H R Manager

i) A HR Manager must have the mental ability of the High Standard. He must
possessimmense tact, practical mind and cool temperament.
ii) HR Manager must be free from bias attitude. He should be known for his honesty,
integrity, character, justice and fair play.
iii) A HR Manger must be a good leader and organiser.
iv) HR Manager should have high character. He should aware of social
responsibilities.
v) HR Manager must be able to communicate his ideas and opinions effectively and
clearly sothat all the employees understand the messages.
vi) HR Manager must be trained in behaviural sciences so that he predicts and
controls thehuman behaviour.
vii) HR Manager must be able to predict the human problems in advance.
Activity E : Study the your Personnel Manager and listout his qualities.

1.10. Summary
Human resource management is considered to be the important area in the present day
environment. HR M is a set of activities focusing on the effective use of human resources in
an organisation.

It encompasses the activities of recruitment, selection, training, development, compensation,

health and safety, benefits and services, union - management relation, motivation, morale etc.
Centre for Distance Education 1.10 Acharya Nagarjuna University

The H R manager make decisions to meet the organisation’s economic and social objectives.
Because of several changes and development in the society, the HR manager has to face
several challenges. The H R manager should have the qualities like mental ability, judgment,
dignity, loyalty, skills of communication, free from bias to deal with the employees of an
organisation.

1.11. Keywords
Human Resource Management: It is the science of planning, organizing, controlling with
various operative functions of procuring, developing, maintaining and utilizing the labour force.
Employment: It is concerned with securing and employing the people possessing the
required kind and level of human resources necessary to achieve the organizational functions.
Policies: General Statements that guide decision making.
Procedures: These are meant to be guides to action rather to thinking. These state exactly what
to do. These are steps to be taken to get through that action.
Rules: These are specific instructions of what may or may not be done.
Environment: Aspects, conditions, or objects surrounding an organization. It consists of both
external and Internal. The external Environment consists of those factors which affect an
organizations human resources from out side the organization. On the other hand, Internal
environment affects the job of a personnel Manager.

1.12. Self Assessment Questions

1) Define the term “Human Resource Management” ?
2) Enumerate the objectives of Human Resource Management
3) What is significance and scope of Human Resource Management.
4) What are the various Functions of Human Resource Management ? Explain.
5) Explain the qualities of HR Manager.
6) What is personnel policy ? Describe how personnel policies affect the job of
personnelManager.
7) Explain how HR M is important to organisations ?
8) Personnel Management involves two categories of functions - Managerial and
operative.Describe in detail.
9) What is environment ? Explain in detail the internal and external Environment
affectingHRM in an organisation.
10) Give qualities of a Good HR Manager .

1.13. Further Readings

1. Drecker P.F. Practice of Management, Allied publishers : New Delhi. 1970. Dale S.
Reach, Personnel, Mac Millian : New York, 1985.
2. Keith Davis, Personnel, Human Resource Mangement, Mc Grawth; New Delhi,
1980.
3. Dawan R.S. Personnel Mangement and Industrial Relations, Vikas Publishing
House; NewDelhi, 1981.

Prof. M. Trimurthi Rao

Dean, Faculty of Social Sciences
Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson - 2
HUMAN RESOURCE PLANNING
Objectives
 After studying this lesson, the student is able to :
 describe the basic approaches to Human Resource Planning
 Explain the process of forecasting the personnel requirements
 Preview the process of Human Resource Planning
 Study the methods and techniques of demand and supply and identifying human
resource requirements.

Structure
2.1. Introduction
2.2. Meaning and Definitions
2.3. Significance of Human Resource Planning
2.4. Reasons for current Interest
2.5. Objectives of Human Resource Planning
2.6. Human Resource Planning Types
2.7. Need for Human Resource Planning
2.8. Problems in Human Resource Planning
2.9. Human Resource Planning Process.
2.10. Summary
2.11. Key words
2.12. Self Assessment Questions
2.13. Further Readings

2.1. Introduction
The long run success of any organisation ultimately depends on having right people in
the right job at right time. Organisational goals have meaning only when people with the
appropriate talent, skill and desire are available to execute the tasks needed to realise goals.
Human Resource Planning is the system of matching supply of the people with openings in the
organisations expected over a given time. Thus Human Resource Planning means to see whether
the persons to whom some work is assigned are capable to do it or not. The ability and the
capability of employees changes with the change of time and circumstances, therefore, the
management should study the abilities of its employees and plan the capability of its man power
accordingly. The essence of Human resource planning is the right man on the right job and the
right job for the right man.

If a person is appointed at a post requiring more ability than the ability of a person, he will
not be able in discharging his duties according to the requirements of the post. Similarly, if the
person possess- ing higher abilities is appointed at a post not requiring that much ability, he will
feel dissatisfied with his job and the enterprise (will not be able in the enterprise) will not be able
in exploiting his best abilities.

Manpower is regarded as the quantitative and qualitative measurement of labour force

required in an organisation and planning in relation to manpower may be regarded as
establishing objectives to develop human resources in line with the broad objectives of the
organisation. In other words, Human Resource Planning may be expressed as a process by
which the organisation ensures the right number and right kind of people at the right place at the
Centre for Distance Education 2.2 Acharya Nagarjuna University

right time doing the right things for which they are suited for the achievement of goals of the
organisation. It is a two phased process by which management can project the future manpower
requirements and develop action plans to accommodate the implications of projections. Thus
Human resource planning is the process of developing and determining objectives, policies and
programmes that will develop. Utilise and distribute man power so as to achieve the goals of the
organisation.

2.2. Meaning and Definitions

Human Resource Planning is the process bywhich a management determines how an
organisation should move form its current manpower position to its desired manpower
position. Human Resource Planning is the double edged weapon. If used properly, it leads to
the maximum utilisation of human resources, reduces the excessive labour turnover and high
absenteeism. It improves productivity and aids in achieving the objectives of the organisation.
If it is faultily used, it leads to disruption in the flow of work, lower production, less job
satisfaction, high cost of production and constant headaches for themanagement personnel.

Mc beath defines Human Resource Planning as “It involves two stages. First stage is
concerned with the details of planning man power requirements for all types and levels of
employees through out the period of plan and second stage is concerned with the planning of
manpower supplies to provide organisation with right type of people from all sources to meet
the planned requirements.”

According to Geisler, “ Human Resource Planning is the process - including fore casting,
devel- oping, implementing and controlling - by which a firm ensures that it has the right number
of people and right kind of people at right place, at right time, doing things for which they
are economically moresuitable.”

Stainer defines Human Resources Planning as a strategy for acquisition, Utilisation,

improve- ment, and preservation of an enterprises human resources. It relates to establishing job
specifications or the qualitative requirements of jobs determining the number of personnel
required developing sourcesof supply of manpower.

Thus Human resource planning consists of projecting future man power requirements
and de-veloping man power plans for the implementation of the projections.

Activity A : Indentify and present number of personnel at various levels in your organisation.

2.3. Significance of Human Resource Planning

i) Helps in the selection and Development of the employees as it ensures that
adequate per- sons are selected well in advance so that they may be developed for
anticipated openings.
ii) It helps in procurement of personnel
iii) Human Resources Planning helps in formulating managerial succession plans as a
part ofthe replacement planning process.
iv) Manpower forecasting, which high lights critical short age of important skills,
helps the management in avoiding disruption of production programmes and
under utilisation of plant capacity by timely corrective action.
v) It also helps in identifying areas of surplus personnel.
vi) Helps in managerial succession plans as a part of the replacement planning process
whichis necessitated when job change plans for managers are formulated.
 Human Resource Planning 2.3 Industrial Social Work

2.4. Reasons for current Interest

i) The changes in production technologies, marketing methods and management
techniques have been extensive and rapid. These changes are causing problems
relating to redundan- cies retaining and redeployment. All these contribute to the
need to plan the human re- source needs intensively.
ii) Acute shortage of a variety of skills emphasises the need for effective
recruitment and retaining people.
iii) Cyclical fluctuation, discontinuties are effecting the man power requirements and
requirestrategic consideration.
iv) Changes in demographic profile of the work force interns of age, sex, literacy,
technicalinputs and social background have implications for Human resource
planning.
v) Legislative controls and Hire and Fire policies and also responsible to give
relook intohuman resource planning.
vi) Pressure groups such as unions, politicians, persons displaced from land by
location ofgaint enterprises have been raising contradictory pressures on the
management.

2.5. Objectives of Human Resource Planning

i) To ensure optimum use of human resources currently employed.
ii) To recuit and retain the human resources of required quantity and quality.
iii) To fore see employee turnover and make arrangements for minimising turnover.
iv) To meet the needs of programmes of Expansion.
v) To improve standards, skills, knowledge etc.
vi) To assets the surplus or shortage of human resources.
vii) To prepare recruitment policy.
viii) To promote the personnel policy.

2.6. Types of Human Resource Planning

Types of Human Resource planning can be distinguished by two criteria :
a) Can the basis of the level at which it is above
b) Can the basis of period for which it is done.

Human Resource Planning

On basis of level On the basis of period

Macro level Micro level

(National Level) (Industrial Level)

Short period Medium period Long

period

Fig 3.1 : Types of Human Resource Planning

2.7. Need for Human Resource Planning

Human Resource Planning anticipates not only the required kind and number of
Centre for Distance Education 2.4 Acharya Nagarjuna University

employees butalso determines the action plan for all the functions of Human Resource
Management.

i) It helps to satisfy the individual needs of the employees for promotions,

transfers, betterbenefits etc.
ii) It helps in anticipating cost of salary, cost of human resources for facilitating the
formula-tion of budgets.
iii) It tries to fore see the need for redundancy and plan to check it.
iv) It helps in fore see the changes in values, aptitude and attitude of human
resources.
v) It helps in planning for physical facilities, working conditions, the volume of
fringe benefits like canteen, schools, hospitals etc.
vi) It gives idea of type of tests to be used and interview techniques in selection based
on thelevel of skills, qualifications, intelligence, values etc.
vii) It provides scope for advancement and development of employees through training,
development etc.
viii) It causes the development of human resources to meet the organisational needs.

2.8. Problems in Human Resource Planning

Though H R P is benificial to the organisation, employees and Trade Unions, some
problemscrop up in the process of Human Resource Planning. Important among them are,
i) Most employees resist H R P as they think that it increases the cost of manpower.
Trade unions and employees also resist H R P as they view that it increases the
work load of theemployees.
ii) Uncertainties like absenteeism, seasonal employment, labour turnover etc.,
technological changes, marketing conditions are making human resource planning
less reliable.
iii) Due to low status given by the Indian Industries, Information system regarding
human resources has not yet fully developed. Further reliable data regarding
economy, other industries, labour market, trends in human resources are not
available.

2.9. Human Resource Planning Process

Human Resource Planning Process consists of the following areas :

a) Analysing the organisational objectives.

b) Fore casting the Human resource needs.
c) Projecting the Human resource supply.
d) Estimating the net Human resource requirements.
e) Planning for policies and programmes
f) Evaluating effectiveness.

a) Analysing the organisational objectives : The Organisation must specify the

clear cut objec- tives before starting Human resource planning. It must be the point of the
corporate planning. It must be integrated with the overall organisational plans. Human
Resource Planning should be done carefully as it has got long term impact. If wrong
forecast for the future man power inventory are made, it may not be possible to rectify
the errors in the short run. Hence the H R planning should be more concerned with
filling future vacancies with right kind of people rather than with matching existing
personnel with existing jobs.
Human Resource Planning 2.5 Industrial Social Work

b) Fore Casting Future Human Resource Needs : The demand for labour is
derived form the demand for an organisations goods and services. If other factors are
held constant, the increased de- mand for goods and services leads to an increased
demand for labour. Inversely, a decreased demand for goods and services generally
results in a decreased demand for labour. Forecosts of the demand for human resources
can be shortage, mid range or long range, depending on how far the future goals are
set.

c) Projecting Human Resource Supply : Projections are estimates of the

number of kinds of employees that can be expected to constitute an organisation’s
work force at some future point in time. Projections are based on a careful assessment of
an organisation’s current supply, plus consideration of employee movement into and
out of the organisations.

Generally human resource planners make use of variety of techniques to

project future person-nel needs. These techniques range form judgement to
sophisticated quantitative models.
Some of the techniques are :
i) Judgement and Experience.
ii) Budgetary planning,
iii) Work standards
iv) Key predictive factors.

d) Estimating the Net Human Resource requirement : The next major step
in the Human Resource Planning process is comparing the forecast needs for human
resources with the projections of internal supply. By subtracting the projected supply
from the forecast needs, planner can determine an organisation’s net employee
requirements for as future point in time. No employee requirements should be
determined for each job in an organisation as well as for the organisation as a whole.

Planning policies and programmes : After employee requirements are

e) determined action plan for redeployment, redundancy and retrenchment or,
action plan for recruitment, Development etc is to be initiated. It is new stage where
planners generate and evalvate alternative resources policies and programs to handle
anticipated surplus or shortages.

If the future supply of human resources from all the external sources is estimated
to be inadeguate or less than the recruitments, the man power planner has to suggest
the management to alter the organisational plan.

In view of shortage of certain categories of employees, the organisation has to

take care not onlyof requirements but also retention of existing employees.

Activity B : Identify and study the Manpower planning process in the organisation
where you areworking or your are familian with.

Retention plan should include :

1) Adjustment of salary levels with those of the comparable industries.
2) Providing opportunities for career development.
3) Providing extensive training
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4) Providing scope for extensive participation.

f) Evaluating the H R P effectiveness : Organisations should evaluate their H R

P efforts to determine their effectiveness in helping to achieve organisational goals
and objectives. Evaluating in terms of costs and benefits is difficult. Though planning
has definite costs, its benefits are more intan-gible and very difficult to measure.
1. Job Design : Job design is a process of deciding on the content of a job in terms of its
duties and responsibilities, on the methods to be used in carrying out the Job in terms
of techniques, systems and procedures, and on the relationships that should exist
between the Job holder and his Superiors, Subordinates and colleagues.

Major objectives of Job design are :

i) To satisfy the requirements of the organisation for productivity, operational efficiency and
quality of produce or service.
ii) To satisfy the needs of the individual for interest, challenge and accomplishment.
iii) To integrate the needs of the individual with the organisational requirements.
Job design involves four sets of decisions -
a) Deciding what tasks will be performed by the work force.
b) Deciding how these tasks will be grouped together and assigned to individuals.
c) Deciding now individuals will relate to each other so that their work can be co-ordinated.
d) Deciding how they will be rewarded for their performance as members of the organisation.
Activity A :
Think of the extent to which, according to you, these objectives are fulfilled by the personnel
Dept. in your office suggest for further improvements.

2. Factors affecting Job design :

i) Proven values of specialisation and repetitive operations.
ii) Changing Technology
iii) Trade Union policies
iv) Abilities of present personnel
v) Available supply of potential employees.
vi) The interaction requirements among jobs with in the system.
vii) Psychological and Social needs of human beings that can be met by the Job.
Job Specialisation, Job enlargement and Job enrichment are threemajor psychological
approaches in Job design. The other minor approaches such as Job rotation, variable work
schedule, flexitime, four day work weeks, to Job design for making Jobs more attractive.

2. Job Specialisation :
It has been widely accepted by most management in both private and public sectors since the
time of Adam Smith. Advocates of specialisation has contended that high speed, automated,
low cost mass production that has greatly contributed to our improved standard of living is
largely due to specialisation in industries. Also a worker is easily trained to get him
specialised to performhis assigned task with greater satisfaction. As a result, the Job is
performed most economically and greater output is obtained compared to non specialisation.

3. Job Enlargement :
In recent years, it has been established that the Job specialisation is not always the best and
the most economical way to perform a Job. The alternative approach suggested is Job
enlargement which is the opposite of Job specialisation. Job enlargement is the expansion of
Job content to include a wider variety of tasks and to increase the workers freedom of pace,
 Human Resource Planning 2.7 Industrial Social Work

responsibility for checking quality and discretion formethod. Thus Job enlargement
concentrates on the motivational issues. A Job is said to be enlarged horizontally if the
worker performs a greater number or variety of tasks without increasing their responsibility
or complexity, and is said to be increased vertically if the worker is involved with greater
ability, responsibility, skill and autonomy required from Job holders as in planning organising
his own work.

4. Job Rotation :
It provides variety without assuming entirely unfamiliar and more demanding responsibility
to workers by rotation or transfer with in a work group requiring the same basic skills and
receiving the same wages. This voluntary rotation among identical class of work groups
fosters a greater feeling of team work, provides opportunity for training in different type of
jobs by associating with different work groups, and makes the work force more adoptive and
flexible.

5. Variable work :
Schedule makes a Job more attractive and satisfying by allowing workers a certain freedom
to work what ever hours theywant. Some times two part time employees share a Job, one
working the first half and the other working the second half shift according to their choice.

Flexi time
It allows workers to come early or late and leave early or late so they put in specified
number of hours in a day. They may even take time out of their working hours for their
personal business.

6. Job Enrichment :
Though Job Enlargement brought about diversity in over specialised jobs, it did little
to instill challenge or meaningfulness to a worker’s activity. Job enrichment was introduced
to deal with short comings of Job enlargement. Many organisations employ a large number of
people in jobs that have a relatively limited scope of responsibility i.e. Jobs that require little
initative or decision-making, that provide little feed back on results and that large
establishment offer limited intrinsic motivation for effective performance and productivity.
Some of the key ingrediants of Job enrichment include more responsibility, control of
employees over decision making, well defined job, opportunity to learn Job, more variety in
Job, and opportunity to use skills and abilities. In particular, Job enrichment is concerned
with designing jobs that incorporate a greater variety of work content, require a higher level
of knowledge and skill, and give the workers more autonomy and more responsibility for
planning.

Techniques of Job Enrichment

i) Increasing the responsibility of the activity.
ii) Providing wider scope, more sequence and increased pace of the work.
iii) Giving a natural unit of work either to an employee or group of employees.
iv) Providing the freedom of work by minimising controls.
v) Allowing the employees to set their own standards.
vi) Providing the employees the control information and allow them to monitor their own
performance.
vii) Encouraging employee participation in planning, creations and innovations.
viii) Introducing new, difficult, creative tasks to the employees.
ix) Assigning specific tasks.
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Procedure of Job Enrichment

i) Selecting jobs which permits close relation between motivation and Job performance.
ii) Introducing on a pilot scheme basis.
iii) Starting with the assumption that these jobs can be changed.
iv) Brain storming a list of charges that may enrich the jobs.
v) Concentrating on motivational factors such as achievement, responsibility, self control etc.
vi) Trying to change the content of the Job rather than changing the employees from their
Job.
vii) Providing adequate training, guidance, encouragement and help.
viii) Introducing with care as Job enrichment programmes may be resisted by employees.
ix) Preparing the specific programmes for each project and ensure the control information to
monitor the performance.

Dimensions of Job Enrichment

There are five core dimensions that provide enrichment of
jobs. They are
a) Task variety.
b) Task identity.
c) Task significance.
d) Autonomy.
e) Feed back.
It is desirable for a Job to have all the five dimensions. If one is missing, workers are
psychologically affected and motivation tends to be reduced.

The core dimensions tend to improve motivation, satisfaction, and quality of work.
Admittedly, there are large individual differences as to how employees react to the core
dimensions but the typical employee finds them basic for internal motivation.
ix) Preparing the specific programmes for each project and ensure the control information
tomonitor the performance.

7. Dimensions of Job Enrichment :

There are five core dimensions that provide enrichment of jobs. They are
a) Task variety.
b) Task identity.
c) Task significance.
d) Autonomy.
e) Feed back.
It is desirable for a Job to have all the five dimensions. If one is missing, workers are
psychologically affected and motivation tends to be reduced.
The core dimensions tend to improve motivation, satisfaction, and quality of work.
Admittedly, there are large individual differences as to how employees react to the core
dimensions but the typical employee finds them basic for internal motivation. of indepth
examination of the duties, responsibilities and works relating to a particular Job. It is a
complete and thorough knowledge of the responsibilities and requirements of a particular
Job.

According to Flippo :
“Job Analysis is the process of studying and collecting information relating to the
operations and responsibilities of a specific Job. Micheal J. Jucius defines Job Analysis as "It
refers to the process of studying the operations, duties and organisational aspects of jobs in
 Human Resource Planning 2.9 Industrial Social Work

order to derive specifications or as they are called by some Job descriptions.” This Job
analysis is a process in which information reganding all the activities and responsibilities
attached with a particular work assigned to an individual employee are collected and
examined. The complete Job Analysis contains information relating to the following five
factors - work products, necessary worker activities or behaviour required by the Job,
equipment used, factors in the work environment, personal characteristics required to do the
Job.

Uses of Job Analysis:

Job Analysis is a procedure and tool for determining the specific tasks and
requirements for each Job. It refers to anatomy of the Job. Thus JobAnalysis is major input to
fore cast future human resources. The information provided is essential in almost every phase
of employee relations.
The importance of Job analysis may be summarised as under :
i) It is helpful in organisational planning.
ii) It provides realistic basis for hiring, training, placement, transfer and promotion of
personel.
iii) It helps in determining wage and salaryAdmn.
iv) It provides information which enables us to change jobs. It is concerned with operational
Analysis, motion study, work simplification methods.
v) It aims at reducing labour costs.
vi) It helps in improving efficiency.
vii) It helps in establishing clear cut standards.
viii) It provides opportunity for identifying hazardous conditions and unhealthy
environmental factors.
ix) Helps in redesigning Job.
x) It acts as basis for Job Evaluation.
xi) It helps in vocational selection.

8. Job Description :
A Job description is awritten statement that explains duties, working conditions and
other aspects of a specified Job. It contains both organisational and functional information. It
defines the scope of the Job activities, Major responsibilities, positioning of a Job in the
organisation. It provides the worker, analyst and supervisor with a clear idea of what the
worker must do to meet demands of the Job.

9. Job Specification
It iswritten statement of qualifications, traits, physical andmental characteristics that
an individual must possess to perform the Job duties and disagree responsibilities effectively.
Job specification translates the Job description into terms of the human qualification which
are required for a successful performance of a Job. They are intended to serve as a guide in
hiring and Job evaluation.As a guide in hiring, they deal with such characteristics as are
available in an application blank, and also with testing, interviewing and checking of
reference.

The first step in a programme of Job specification is to prepare list of all jobs in the
company and where they are located. The second step is to secure and write up information
about each of the jobs in a company. The items to be included in Job specification vary
according to the nature of the organisation and the uses towhich they are put.However, items
like age, sex, experience, skill, education, dexterity are invariably included in it.
Centre for Distance Education 2.10 Acharya Nagarjuna University

2.10. Summary
Human Resource planning concerned with the utilisation of human resources to help
attain an organisations objectives. H R P ensures right man to right job at right time at right
place. It is needed because of expected changes in technology, environment, management plans
etc.

2.11. Key words

Man Power Planning: Estimating how many employees and what types of employees an
organization require at some time in the future and making plans to meet those requirements.
Human Resource Forecast: It is a determination of the demand for different categories of
employees with appropriate skills for specified time periods in the future.
Basic Factor: It means a variable to which manpower demand is related.
National Level HRP: Generally Government at the central level plans for the human resources at
the national level. It forecasts the demand for and supply of human resources. It takes steps to
adjust the demand by altering its economic, industrial and agricultural policies and adjust the
supply through its population policy.
Age Inventory: It includes age wise number and category of employees. It indicates age wise
imbalances in present inventory, which can be correlated in future selections and promotions.
Redundancy Plan: It includes type and number of employees, time of and place of retrench-
ment, type of help to be extended to retrenched employees in the form of compensation, help in
getting new job, Priority in filling future vacancies.

2.12. Self Assessment Questions

1. Define Human Resource Planning ? What are its objectives ?
2. Explain the process of Human Resource planning ?
3. What are the techniques for Human Resource planning ?
4. What do you understand by Human Resource planning ? How would you draw up
a manpower plan for an organisation.
5. What factors do you consider while forecasting manpower needs of the organisation ?
6. What are the benefits of Human Resource planning ?
7. Review the major activities of Human Resource planning ?

2.13. Further Readings

1. John Edwards, Man power planning, John Wiely; New York, 1983.
2. Harris O, Jesf Jr, Managing people at work : Concepts and cases in inter-
personal Behaviour,John Wiley & Sons, New York, 1976.
3. Sharma A.M, Human Resoure Management, Himalaya publishing House, Bombay,
1995.
4. Subba Rao. P, Rao V S P, personnel / Human Resource Management,
Konark publishers pri-vate Limited; New Delhi, 1998.

Prof. V. Venkateswarlu
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 LESSON - 3
RECRUITMENT AND SELECTION
Objectives
After reading this lesson, you should be able to:
 Understand the nature and policy of Recruitment and Selection
 Explain and evaluate various methods of Recruitment and Selection
 Describe the recruitment practices in India.

Structure
3.1 Introduction
3.2. Policy of Recruitment
3.3. Sources of Recruitment
3.4. Methods of Recruitment
3.5. Evaluation of Recruitment Programme
3.6. Recruitment practices in India
3.7. Concept of the Selection
3.8. Selection Process
3.9. Selection Methods
3.10. Summary
3.11. Key words
3.12. Self Assessment Questions
3.13. Further Readings

3.1 Introduction
Once the required number and kind of human resources are determined, the
organisation has to find where the required human resources are available and also find the
means of attracting them towards the organisation Recruitment is the process of discovering
potential applicants for actual oranticipated organisational vacancies.

3.2 Policy of Recruitment

Recruitment is a continuous function which involves the following stages
 Recruitment policy
 Organising for recruitment
 Forecasting manpower requirements
 Discovering appropriate manpower sources.
 Different techniques used for utilising these resources
 Evaluating the recruitment programme
Recruitment is defined as a process to discover the sources of manpower to meet the
requirements of the staffing schedule and to employ effective measurers for attracting that
manpower is adequate numbers to facilitate effective selection of an efficient work force”.
Edwin B Flippo defined recruitment as “the process of searching for prospective employees
and stimulating then to apply for jobs in the organisation. Flippo viewed recruitment both as
“positive” and negative activity, It is often termed positive in that it stimulates people to apply
for jobs to increase ìthe hearing ratio, the number of applicants for a job. Selection on the other
hand tends to be negative because it rejects a good number those who apply leaving only the
best to be hired.

A “recruitment policy” in its broader sense involves a commitment by the employer to

Centre for Distance Education 3.2 Acharya Nagarjuna University

suchgeneral principles as
 To find and employ the best qualified persons for each job
 To retain the best and most promising of those fined
 To offer promising opportunities for left ñ time working
 To produce programmes and facilities for personal growth on job.

According to Yodev ìthe recruitment policy is concerned with quality and qualifications of
manpower. It establishes broad guidelines for the staffing process. Recruitment policy of any
organisation is derived form the personnel policy of the organisation. Recruitment policy
should take into consideration the government’s reservation policy, policy regarding sons of
soil etc., personnelpolices of other organisations.

A good recruitment policy must contain the following elements; organization’s

objectives both in short - term of long term must be taken into consideration.
 Identification of the recruitment needs
 Preferred sources of recruitment
 Criteria of selection and preferences
 The cost of recruitment and financial implications of the same

Impact of personnel policies on Recruitment polices:

As said above Recruitment policies are mostly drawn from personnel policies of the
organisation. These general personnel policies provide a variety of guidelines to be spelt out in
recruitment policy. After formulation of the recruitment policies, the management has to
decide whether to centralise or decentralise the recruitment formation. Some organisations
prefer centralized recruitment (government and commercial banks) while some organisations
prefer decentralized recruitment practice (Railways). Most organisations have an policy on
recruiting internally (within company or organisation) or externally (outside the
organisation). Generally, the policy is to prefer internal sourcing, as external employees know
the organisation, well and they can easily fit to the organisations culture. In multinational
corporations, there is the policy relating to the recruitment of local citizens, because they can
understand local languages, customes and business practices better.

3.3 Sources of Recruitment:

The sources of recruitment are broadly divided into internal sources and external
sources.
Internal sources: Internal sources include personnel already on the pay-roll of the
organisation. This source also includes personnel who were once on the pay-role of the
organisation but who plan to return or whom this organisation would like to rehire and those
who quit voluntarilyor production lay-offs.
Merits of Internal Sources
i. It promotes loyalty among the employees
ii. Morale of the employees can be improved
iii. It provides a sense of job security and opportunity for advancement
iv. It is less costly compared to outside sources
v. It is used as a technique of motivation
vi. It is a training device for developing middle and a top-level managers
vii. Loyalty, commitment a sense of belongingness, and security of the present
employees can beenhanced.
Recruitment and selection 3.3 Industrial Social Work

Demerits
i. It often leads to inbreeding, and discourages new blood from entering an
organisation.
ii. It is disfunctional to the organisation to utilise inferior internal sources when better
candidatesare available outside.
External Sources: External sources lie outside the organisation, they include a) public
employment exchanges b) private employment agencies c) management consultants d)
campus recruitment e) casual applicants f) professional organisations and g) other sources.
a) Public Employment Exchange: The government setup Public Employment exchanges
in the country to provide information about vacancies to the candidate and to help the
organisation in finding suitable candidates. The employment Exchange Act, 1959 makes it
obligatory for public sector and private sector enterprises in India to fill certain types of
vacancies throughpublic employment agencies.
b) Private Employment Agencies: Private employment agencies perform the recruitment
function on behalf of a client company by charging fee. They also provide complete time of
services which include advertising position, screening the applicants and going guarantee to
employees.
c) Management Consultants: They specialise in middle and top level executive
placements. These agencies act as a butter inn screening the candidates and keeping the
prospective employee anonymous. In the final state senior executive of the prospective firm
move into negotiationwith applicants and determine degree of natural interest.
d) Campus Recruitment: Universities and Institutions, Colleges provide facilities for
campus recruitment and selection. They maintain the bio-data and performance required of
the candidates . Organisations seeking to recruit the candidates from this source can directly
contactthese colleges and universities directly.
e) Professional Organisations: professional organisations or associations maintain bio-
data of their members and provide the same to various organisations on requisition.
Organisation find these source more useful to recruit the experienced and professional employees
like executives,managers, engineers etc.
f) Casual Applicants: This source provides an excellent supply of stock piled
applicants. De- pending upon the image of the organisation, its prompt response, level of
employment, potential candidates apply casually for jobs through mail or hand over the
applications in Human Resource Department.

g) Other Sources: Friends and relatives of present employees are also a good source for
which employees may be drawn. Trade unions also provide manual and skilled workers.
Voluntary organisations like social organisation, non-profit organisations associations also
provide employees ñhandicapped, widowed women, old persons, retired people, etc, is
response to advertisement potentials of utilising workers is older age group is an important
source of additional supply. This source provides an opportunity to gain fullest benefits from
employment of the nature and old workers.

3.4 Methods of Recruitment:

Dunn and Stephens summaries the recruiting methods into three categories direct, indirect
and third party.
a) Direct methods: These include sending recruiters to educational and professional
institutions for campus recruitment. The placement office of a college, usually provides help
in attracting students arranging interviews, furnishing space, and providing student resumes.
Sometimes, organisations firms directly solicit information from the concerned professors
about students with an outstanding record. Other direct methods include sending recruiters
Centre for Distance Education 3.4 Acharya Nagarjuna University

to conventions and seminars, setting up exhibits or fairs, and using mobile office to go to the
desired centers for managerial, professional and sales personnel, campus recruitment is the
best methods.
b) Indirect methods: Indirect methods involve mostly advertising in newspaper, on the
radio, is trade and professional journals, technical magazines and brochures, Television and
Internet, Advertisements are most popular methods of communicating public job vacancies.
Advertiser provides the candidates the information about the job and organisation and
encourages them to apply for jobs. Radio and Television only are use by government
departments only. Companies in the private sector are hesitant to use the media because of
higher Radio and television can be used to attract swelled workers. And Internet is used to
reach technical personnel like software and hardware people.
c) Third Party Methods: These include the use of commercial or private employment
agencies, state agencies, placement after college, professional associations, management
consultancyfirms friends and relatives.

Modern Sources of Recruitment

A number of modern recruitment sources are being used by the organisations in addition to
traditional sources. These sources are walk-in, consult in, Body shopping, Internet
recruitment.
a) Walk-in: Modern Organisation advise the advertise an potential candidates to attend
for an Interview directly in without a prior application on a specified date, time and at a
specified place. The potential candidates from among the interviews will be selected for
appointmentafter screening the candidates through tests.
b) Consult in: Organisation encourage the potential job seekers to approach them
personally and consult them regarding the jobs, and select the suitable candidates through the
selection process.
c) Body shopping: Professional Organisation and hi-tech training institution develop the
pool of human resources for the employment. These professional and training institutions are
called body shoppers and their activities are known as body shopping the body shopping is
used mostly for computer professionals.
d) Internet Recruitment: Information Revolution helped the organisations to use
Internet as a source of recruitment and advertisement. Organisation advertise the vacancies
through world wide web (www) and the potential applicants send their application through e-
mail

Evaluation of Recruitment process:

The recruitment process has the objective of reaching for and obtaining application from job-
seekers keeping this mend, the evaluation of Recruitment process include,
 Return rate of applications sent out
 Number of suitable candidates for selection
 Retention and performance of the candidates selected
 Cost of the recruitment process
 Time lapsed data.
Recruitment Practices in India:
The different sources of recruitment in India are:
i) Internal sources or within the organisation
ii) Temporary workers
iii) Casual workers
iv) Employment Exchanges
v) Advertisements
Recruitment and selection 3.5 Industrial Social Work

vi) Candidates introduced by friends and relatives

vii) Campus recruitment like IIM, IIT, IIS and NITI.
viii) Sons of the soil : The Government of India issued directives to public sector
enterprise to recruit local candidates on primary basis. The natural committee on
labour, in this connection, recommended for providing employment to local persons.
Public sector organisations and multinational corporations have started providing jobs
to son of the soil on primary basis.
ix) Labour contractors
x) Specified communities and categories: According to the Government
directives the organisations, particularly public sector have to recruit candidates to the
specified extent from the scheduled castes, scheduled tribes, backward committees and
from specified classes likephysically handicapped, ex ñ servicemen, and women etc.

3.5. Concept of Selection

Selection is the process of examining the applicants with regard to their suitability for
the given job, and choosing the best from the suitable applicants and rejecting the others. The
process of selection involves three stages namely recruitment, screening and selection. The
organizational practices in India with regard to selection vary from public sector to private
sector concept, objectives and significance of selection.

The selection procedure is concerned with securing relevant information about an

applicant. The Objective of selection process is to determine whether an applicant meets the
qualifications for a specific job and to choose the applicant who is most likely to perform
well in that job. Selection is a process of thinning a pool of qualified applicants. All selection
activities exist for making effective selection decisions. Each activity is a step in the process
that forms a predictive exercise - decision makers seeking to predict which job applicants will
be successful if hired. Successful, means preparing well on the intend the organisation uses to
valuate personnel.

According to Yadev “The having process of one or many ‘go, no, go’ gangs.
Candidates are screened by the application of these tools. Qualified applicants go on to the
next hurdle, while the unidentified are eliminated”

3.6. Selection Policy:

While formulating a selection policy, due consideration should be given to
organizational requirements as well as technical and professional dimensions of selection
process. Yodev is as suggested “Selection is usually regarded as a negative process i.e.
rejection of candidates for a position”.

3.7.Selection Process:
Selection process is a crucial, complex and continuing function. The ability of an
organisation to attain its goals effectively and to develop its a dynamic environment largely
depends upon the effectiveness of its selection programme. If right personnel are selected, the
management of personnel becomes easier, the employee contribution and commitment will
be at optimum level. If the right person is selected he becomes a valuable asset to the
organisation and if faculty selection is made, the employee will become a liability to the
organisation.

Selection process typically follows a standard pattern, beginning with an initial

screening interview and concluding with the final employment decision. The traditional
Centre for Distance Education 3.6 Acharya Nagarjuna University

selection process includes preliminary screening; Application Scrutiny, employment tests;

comprehensive interview; back ground investigations, physical examination and final
employment decision to hire.

The following are the steps in selection process.

a. Initial screening or preliminary interview :
This is a storing process in which prospective applicants are given the necessary
information about the nature of job and also, necessary information is elected from the
candidates about their education, experience, skills, etc. If the candidate is found to be
suitable, he is selected for further process. It is a process of reducing the applicants to a few
who have better chance of selection than those screened out.

b. Application Scrutiny :
The applicant is asked to give details about age, mental status, educational
qualification, work Experience and reference. Different types of application forms may be
used by this same oganisation for different types of employees e.g. one for clerks, the other
for managers. An application form should be designed to serve as an effective preliminary
screening device.

c. Selection Tests :
Tests attempt to measure certain characteristics of individual applicants some
important tests are : knowledge tests, ability tests, aptitude tests and simulation tests.

d. Employment Interview:
An interview is a face to face observational and personal appraisal method of
evaluating the applicant. An employment interview should serve three purposes 2) i)
Obtaining information ii) giving information and iii) motivation.

e. Reference cheeks and Recommendations or Background information

The applicant is asked to mention in his application the names and addresses of his
previous employers, friends or professional colleagues. They are approached by mail or
phone and requested to furnish their frank opinion about the candidate. These reference
checks indicate past behavior and how well the applicant did at this lost job.

f. Physical examination:
Certain jobs require unusual stamina, strength or tolerance of hardworking conditions
A physical cheek -up reveals whether or not a candidate possess these qualities the basic
propose of a physical examination is to place persons in jobs which they can handle without
injury or damage to their health. Candidates are medically examined either by the company’s
physician or by a medical officer approved by the company for the purpose.

g. The Selection or final Decision:

Applicants who cross all the steps are finally considered by the organisation. If there
are more persons than the number required for a job the best ones i.e, those with the harvest
scores are finally selected.

3.8. Selection Methods:

There is no standard selection process that can be followed by all the organisations.
Organisations may follow different selection methods depending upon the side of the
organisation, natures the business, government rules and regulations. Thus, each organisation
Recruitment and selection 3.7 Industrial Social Work

may follow any one or the possible combinations of methods of selection in the order suitable
to it. Following are the selection methods generally followed by the organisations.
a) Application Form:
An applicant form is a traditional, widely accepted device for getting information,
from a prospective applicant which will enable amanagement tomake a proper selection. It
serves a as a convenient device for circulating information about the applicant to
appropriatemembers of management and as a useful device for storing information for later
reference. Organisation use different applications forms for different jobs at different levels.
For technical andmanagerial personnel, the form may receive detailed answers to questions
regarding the candidates education, experience, etc Information is generally required on the
following items in the applicant forms.
1) Personal background information 2) Educational qualification
3) Work experience IV) References.

b) Weighted Application form: Some organisations analyze the information on an

application blank and determine statistically its relation to later success in the job. Under this
method, certain points of weights are assigned to the answers given by the applicant in the
application form. Those with scorers that minimum attained by past or present successful
employees will be finished.

c) Employment tests: A test has been defined as a systematic procedure for comparing the
behaviour of two ormore persons. It is a sample of an aspect of an individual’s behaviour,
performance or attitude.

Purpose of Tests :
Psychological tests are used for more than one purpose. They are used for the purpose of
- Selection of candidates for an organisation.
- study the human behaviour and personality
- guiding and counselling students seeking admission into schools and colleges.
- eliminating the possibility of prejudice on the part of the interviewer.
- measurement of jobs - related abilities and skills accurately and adequately.
According toWendell, tests are used in business for three primary purposes.
i) The selection and placement of new employees.
ii) In appraising employees for promotional purpose and
iii) For counselling employees.

Concepts of Testing : Testing concepts include job analysis, reliability and validity.
a. Job Analysis:
Job analysis provides basic information about the type of the candidate needed by the
organisation by indicating the specific requirements of each job. Job analysis provides a
realistic basis for hiring, training placement and promotion of personnel. Job description
provides both organisational information and functional information. Job specification
translate the job description into terms of the human classifications which are received for a
successful performance of a job. Thus, employee specification is the basis to decide upon a
particular test or tests andminimumacceptable score in order to test whether the candidates
possessed the required amount and degree of behaviour and qualities like intelligence,
aptitude to perform the job successfully.

b. Reliability :
Centre for Distance Education 3.8 Acharya Nagarjuna University

Test reliability is the consistency of scores obtained by the same person when retested
with the identical test or with an equivalent form of test. If a person obtains same or similar
scores in the test conducted in different times, under the same conditions, the test is said to be
reliable. Generally as suggested by Beach he reliability coefficient should be between to .85
to 1.00 In general, higher reliability can be obtained from written tests.

c. Validity:
Validity refers to the extent to which a test measures what it is designed to measure.
Each selection test aims at finding out whether a candidate possessed that particular skill or
not for exza short - hand test, should accuratelymeasure a persons ability to take dictation.
According to Dale S. Beach, there are five kinds of validity viz., concurrent validity
predictive valldity, content validity constent validity and face validity.
Types of tests : Tests are classified into five types they are i)Aptitude tests ii)Achievement
tests iii) Situational tests iv) Interest tests v) Personality tests vi) Graphoogy tests and vii)
Polygraph test.

i) Aptitude Tests:
These tests measure whether an individual has the capacity or latent ability to learn a
given job if given adequate training.Aptitudes can be divided into general and mental ability
or intelligence and specific aptitudes such as mechanical clerical and mental capacity etc.
a) Mental tests measure intelligence quotient of a candidate
. These tests measure capacity for comprehension, reasoning, word fluency, variable
comprehension, numbers, memory and space.
b) Mechanical Aptitude Tests :
These tests measure the capacities of spatial visualisation, perceptual speed, and knowledge.
These tests are useful for selecting apprentices, skilled, mechanical employees, technicians,
etc.,
c) Psychomotor tests :
These tests measure abilities like manual dexteriy, motor ability and eye- hand
coordination of candidates. These tests are useful to select semi-skilled workers.

ii) Achievement Tests:

These tests measure the skill or knowledge which is acquired as a result of training
programme and on the job experience. These tests are classified into a) Job knowledge test
and b) work sample test.

a) Job knowledge Test

These are administered to determine knowledge of typing short-hand and in operating
computers, or simple mechanical equipment. Such tests are useful for office workers,
supervisors, stenographers, sales girls etc.,

b) Work sample test

Under this test a price of actual work is given to the candidate as a test and the
candidate is asked to do it. For example, a typing test would provide the material to be typed
and note the time taken and mistakes committed.

iii) Situational Test:

Situational test evaluates a candidate in a similar real life situation. In this test the
candidate is asked either to cope with the situation or solve critical situations of the job.
Recruitment and selection 3.9 Industrial Social Work

iv) Interest Test:

These tests are designed to discover a person’s areas of interest and to identify the
kind of work that will satisfy him. The purpose of this test is to find out whether a candidate
is interested or disinterested in the job and to find out in which area of the job / occupation
the candidate is interested.

v) Personality Tests:
These tests measure a projective employees motivation in a particular working
environment and prise deeply to discover elves to are individual’s value system, his
emotional reactions and motivation and his characteristic mood.
The assess his motivation interests, his ability to adjust himself to the stresses of every
day life and his capacity for inter - personal relations and self - image. Examples of such tests
are Bell’s Adjustment inventory, the California test of Personality scale, Minnesota
multiphasic personality inventory thematicpperception test,heThurstone temperaments
survey, and guild ford - zimmerman
temperament survey.

a) Objective tests:
These tests measure neurotic tendencies, self - sufficiency, dominance - submission,
and self - confidence. Most personality tests are objective tests as they are suitable for group
testing and can be scored objectively.

b) Projective tests
Candidates are asked to project their own interpretation of certain standard stimulus
situations basing on ambiguous pictures, figures etc., under these test. The way in which he
responds to these stimuli depends on his own values, motives and personality.

vi) Graphology test

It is designed to analyse the hand writing of an individual.An individual’s hand
writing can suggest the degree of energy, inhibitions and spontaneity, and elements of
balance and control. For example, big letters and emphasis on capital letters indicate a
tendency towards domination and ompetitiveness. A slant to the right, moderate pressure and
good legibility show leadership potential.

vii) Polygraph tests:

These tests are designed to ensure accuracy of the information given in the
application. These tests record on paper posological changes in blood pressure, pulse, skin,
sensitivity caused by stress.

d) Employment interviews:
The interview is a selection tool which enables the employer to view the total
iduvidual and directly appraise him and his behaviour. By ‘interviewing’ is meant deliberate,
active testing with a purpose to draw the other person out, to discover what he reallywants to
say and to give a chance to express himself freely. According to Scoot and others an
interview is a purposeful exchange of ideas, the answering of question and communication
between two or more persons.” An employment interview should serve three purposes i)
obtaining information ii) giving information and iii) motivation.

3.9. Types of interviews:

The types of interviews are
Centre for Distance Education 3.10 Acharya Nagarjuna University

i) Informal interview
ii) Formal interview
iii) Planned interview
iv) Patterned interview
V) Non- directive interview
vi) Depth interview
vii) Stress interview
viii) Group interview and
ix) Panel interview.

i) Informal Interview:
This is the interview which can be conducted at any place by any person to the basic and non-
job related interview. The interaction between the candidate and the personnel manger to
examine about the vacancies or additional particulars in connection the employment
advertisement.

ii) Formal Interview:

This is held in a more formal environment by the employment officer help of and questions
this for discussion are items and experts are allotted different structured areas and questions
to be asked.

iii) Planned Interview:

This is a formal interview planned carefully. The interview has a plan of action worked out in
relation to time to be devoted to each candidate, type of information to be sought, information
to be given, etc.,

iv) Patterned Interview:

This is the most common method of interview. It is also a planned interview but planned to a
higher degree of accuracy and precision. In this type of interview, every pertinent detail
bearing on waht is to be acomplished what kind of information to be sought or given, how the
interview is to be conducted, and how much time is to be allotted to it, must be worked at in
advance. A list of questions and areas is carefully prepared and interviewer goes down the list
of questions, asking them one after another, with very little deviation.

v) Non - directive Interviews:

This is designed to let the candidate speak his mind freely. It is unstructured and is reatively
non-planned. In this interview the candidate is given freedom to tell about himself by
revealing his knowledge on various areas his back ground and expectations and interest etc.
The purpose of such interview is to determine what kind of person a candidate really is.

vi) Depth interview:

In this type of interview, the candidates would be examined extensively in core areas of
knowledge and skills of the job. It is designed to intensively examine the candidates’
background and thinking so that a correcive evaluation and desison may be made.

vii) Stress Interview:

This is designed to test the candidate and his conduct and behaviour by putting him under
conditions of stress and strain. In the stress interview, the interviewees puts the candidate on
the defensive by typing to aunoy him. Interviewer tests the candidate by putting him under
stress and strain by interuptly the applicant from answering criticizing his opinions, asking
Recruitment and selection 3.11 Industrial Social Work

questions pertaining to unrelated areas, keeping silent for long period and putting him in an
awkward situation by dropping some thing an the floor and asking him to pick it up.
Accusing him that he is lying and so on.
viii) Group Interview:
This is designed to see the candidates react to and against each other. All the candidates are
brought into one room and one topic is given for discussion to the candidate and they are
asked to discuss the topic is detail. Their type of interview helps the interviewer in appraising
certain skills of the candidates like intiative, inter - personal skills, dynamism, presentation
leading etc.

ix) Panel Interview:

This is done bymembers of the interview board or selection committee.
(The candidate may be asked to meet the panel individually) A panel of experts interviews
each candidate, judges his performance individually and prepares a consolidated judgement
based on each
experts’ judgement. This is done usually for maneger and manegerial positions. It pools the
collective judgement and wisdom of member of the panel.

e) Physical Examination:
Certain jobs require certain physical qualities like clear vision, perfect hearing, unusual
stamina, clear tone, tolerance of hardworking conditions etc., Medical examination reveals
whether or not a candidate posseses these qualities.

f) Reference cheeks:
After completion of the final interview and medical examination, the personnel
department will engage in cheeking references. Candidates are required to give their names of
references in their application form. There may be his previous employer friends or
prefessional colleagues. They are approached by mail or phone and requested to furnish their
opinions about the candidate.

Selection is considered as a negative process, where as placement is a positive one. Once the
employee is accepted, he must be introduced to his job, fellow employees and his work
environment.

A proper placement reduces employee turnover assenting, accident rates and improve
morale. Selection is usually regarded as a negative process i.e., rejection of candidates for a
position. Placement, on the other, is a positive process and consists of filling positions with
qualified candidates. When once the candidate reports for duty, the organisation has to place
his initially in that job for which he is selected. The condidate will be trained in various
related jobs during the probation period.

Probation period generally various between six months to two years. Placement is the
determination of the job to which an accepted candidate is to be assigned and his assignment
to that job. It is a matching of what the superior has reason to think he can do with the job
demands, it is a matching of what he imposes, and what he others in the form of payroll,
companionship with others promotionatianl possibilities etc.

3.10. Summary
Recruitment is an important HRM Function, without attracting adequate member of
qualified people the organisations cannot be expected to work effectively. Rational
Centre for Distance Education 3.12 Acharya Nagarjuna University

recruitment necessitates sound recruitment policy and effective procedures for discovering
sources and techniques for tapping them and continuing evaluation.
The selection involves three stages - recruitment, preliminary screening and selection.
The selection process includes - preliminary screening; application scrutiny, employment
tests, comprehensive interview, back ground investgation, physical examination and final
employment decission to here. In each stage different tests are conducted to predict the job
success of the candidate.

Placement is a positive process and consists of filling positions with airlifted

candidates. Selective placement offers benefits to both organisation and undiluted.
Orventation Induction is introducing newemployee to his job, his fellow employees and to his
work environment.

3.11. Key words

Recruitment: It is the process of searching for prospective employees and stimulating them
to apply for job in organization.
Recruitment sources: Internal and external: Internal means recruitment of personnel within
the organization, externals sources include attracting people through advertisement, campus
inter- views, employment exchanges, private agencies etc.
Third Party Methods: These methods include commercial and private employment
agencies, state agencies, and placement offices of schools, colleges and professional
associations, recruit-ing firms, management consulting firms, friends and relatives.
Selection
It is the tool in the hands of management to differentiate the qualified and unqualified
applicants by applying various techniques like interviews, tests etc. It is the process in which
candidates are divided into two classes those who are to be offered employment and those
who are not.
Psychological testing:
It is systematic procedure for comparing behaviour of two ormore persons.
Performance Tests:
In this test, the applicant is asked to demonstrate his ability to do the job.
Aptitude tests:
An aptitude test measures the potential ability of a candidate to learn a new job.
Personality test :
These tests seek to assess an individuals motivation, adjustment to the stresses of every day
life, capacity for interpersonal relations and self image. These are expressed in terms of the
relative significance of such traitswithin the person as self confidence, ambition,
decisiveness, optimism, patience, fear and distrust.
Interviews:
It is a conversation between the interviewer and interviewee to access the potentialities of the
later by gestures, facial expressions and other communicative behaviour.
Stress Interview:
It is a deliberate attempt to create pressure to observe how an applicant performs under stress.

3.12. Self Assessment Questions :

1) Explain recruitment policy?
2) Discuss relative merits and demerits of source and methods of recruitment?
3) Explain the recruitment process?
4) What are the modern sources of recruitment?
5) What is meant by Recruitment? What are characteristics of good Recruitment Policy?
Recruitment and selection 3.13 Industrial Social Work

6) Describe the procedure of recruitment in a industrial concern.

7) Discuss the various sources of personnel supply and a particular methods or
techniquesof recruitment of manpower giving suitable examples from India.
8) Evaluate the relative problems and merits of provate VS public sources of personnel
ormanpower supply.
9) Examine the merits and limitations of recruitment from with in, recruitment
through advertisment.
10) What is selection? Examine its significance
11) Which types of tests are most useful in employee selection?
12) Define selection - Explain the process of selection.
13) Discuss the main principles of selection.
14) Present the procedure for selecting the personnel.

3.13. Further Readings

1) Monappa Arun, Siyaddin, Mirza 1994 Personnel Management Tata McGraw Hill
publishingco : New Delhi.
2) Mamoria CB, 1998, Personnel Management Himalaya Publishing Compnay :
Mumbai. Chobra T.N. 2000, Human Resource Management, Dhanpat Rcuis
Company, New Delhi.Robbins Stephen P. Couttr Many, 1998, Management, Printice
Hall of India, New Delhi.
3) Bhagoliwala T.N. 1991, Personnel Management and Industrial Relations, Sahitya
Bhavan,Agra.

Prof. Saraswati Raju

Iyer
Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson 4
HUMAN RESOURCE DEVELOPMENT
Objectives

After reading this lesson, you should be able to:

 To discuss the Concept of HRD
 To Study the Aims and objectives of HRD
 To Understand the Need and Nature of HRD
 To Discuss the HRD as a total system

Structure
4.0 Introduction
4.1 Meaning
4.2 Evolution
4.3 Concept of HRD
4.4 Aims
4.5 The objectives of HRD
4.6 Nature of HRD
4.7 Need of HRD
4.8 HRD as a total system
4.9 Value-Anchored HRD Processes
4.9.1 The Individual Employee
4.9.2 The Role
4.9.3 The Dyad
4.9.4 Teams
4.9.5 Inter-teams
4.9.6 The Organisation
4.10 HRD System and Sub-Systems
4.11 Summary
4.12 Key words
4.13 Self Assessment Questions
4.14 Suggested Readings

4.0 Introduction
The effective performance of an organization depends not just on the available
resources, but its quality and competence as required by the organization from time to time.
The difference between two nations largely depends on the level of quality of human
resources. Similarly, the ifference in the level of performance of two organizations also
depends on the utilization value of human resources. Moreover, the efficiency of production
process and various areas of nagement depend to a greater extent on the level of human
resources development. HRD assumes significance in view of the fast changing
organizational environments and need of the organization to adopt new techniques in order to
respond to the environmental changes.

Human Resource Development (HRD) is that part of Human Resource Management

hich specifically deals with the training and development of employees. It helps the
employees in developing their knowledge, skills and abilities to achieve self-fulfillment and
aid in the accomplishment of organizational goals.
Centre for Distance Education 4.2 Acharya Nagarjuna University

HRD can be defined as organized learning activities arranged within an organization

in order to improve performance and/or personal growth for the purpose of improving the
job, the individual, and/or the organization.

HRD includes the areas of employee training, career development, performance

management, coaching, mentoring, key employee identification, talent development and
organization development. Developing a highly productive and superior workforce is the aim
of HRD activities.

The role of human beings in an organization’s success is deeply recognized. Many

formal and informal methods are used for developing the employees. HRD strives for the
improvement of not just the individual workers, but for the growth of the group and
organization as a whole.

4.1 Meaning
HRD is the process of helping people to acquire competencies. In an organizational
context HRD “is a process which helps employees of an organization in a continuous and
planned way
i. Acquire or sharpen capabilities required to perform various functions associated with their
present or expected future roles.
ii. Develop their general capabilities as individuals and discover and exploit their inner
potential for their own and/or expected future roles.
iii. Develop an organizational culture in which supervisor-subordinate relationships, team
work, and collaboration among sub-units are strong and contribute to the professional
wellbeing, motivation, and pride of employees.
iv. HRD process is facilitated by mechanisms like performance appraisal, training,
organizational development (OD), feedback and counseling, career development, potential
development, job rotation and rewards.
v. Employees are continuously helped to acquire new competencies through a process of
performance planning, feedback, training, periodic review of performance, assessment of the
development needs, and creation of development.

Definition
HRD is defined as activities and process undertaken by an organisation to formulate
the intellectual, moral, psychological, cultural, social and economic development of the
individuals in an organisation, in order to help them to achieve the highest human potential as
a resource for the community. It means to bring about a total all-round development of the
working human, so that they can contribute their best to the organisation, community, society
and the nation.

HRD does not cover only a set of mechanisms or techniques but it is a process by
which employees acquire or sharpen capabilities to perform the various functions, develop
their general capabilities as individuals and exploit their own inner potentials, develop team
work and collaboration. HRD concept is much wider and embraces almost all areas of an
organisation.

In the context of banking, HRD means not only the acquisition of knowledge and
skills but also acquiring capabilities to anticipate and manage both internal and external
environment and obtaining, self- confidence and motivation for public service. Further, HRD
Human Resource Development 4.3 Industrial Social Work

is not a piecemeal or a one-time exercise, it is a continuous process requiring to keep pace

with the changes and developments, taking place.

4.2 Evolution
The process of development had been different from time to time. Earlier it used to be
the responsibility of the individual to develop himself on his own or under the guidance of a
GURU. Training by ACHARYA had been the instrument in past which made successful
kings, warriors, courtiers, engineers and architects.

Industrial revolution gave a new dimension to the concept of Human Resource

Development. The skilled artisans were developed through “learning while doing” or “on the
job training” methodology. The process started increasing skill and knowledge of the worker
and supervisors.

In west, the concept was first evolved by Robert Owen who emphasized human needs
of workers in 1803. He taught the work place cleanliness and improvement methods. Andrew
Ore emphasized the need of welfare activities to improve the worker efficiency.

FW Taylor, a pioneer of scientific management, stressed the incorporation of

scientific standards in management. Elton Mayo emphasized the human values. Likert also
stated that better utilization of human resources is also possible by treating them as human.
HRD began to focus intensive supervisory training in human relations.

Malcom Knowles and Leonar Nadler have also contributed in developing this
concept. Knowles emphasized human approach oriented learning instead of content centered
and experimental instead of exclusively didactic learning. Nadler’s writing made distinction
between Human resources management and Human Resource Development.

Pareek and Rao stressed up the integrated approach to this process of HRD by giving
due weightage to performance appraisal, training of individual and organizational
development, feedback, counseling, career planning, potential development, reward etc.

4.3 Concept of HRD

HRD is mainly concerned with developing the skills, knowledge and competencies of
people and it is people-oriented concept. When we call it a people-oriented concept, the
question arises, whether people will be developed in the larger or national context or in the
smaller organisational context? Is it different at the macro and micro level? HRD can be
applied both for the national level and organisational level.

The concept of HRD is not yet well conceived by various authors though they have
defined the term from their approach as it is of recent origin and still is in the conceptualizing
stage. It is an understanding of the term i.e., new or rather was new. HRD is not Training and
Development
.
The concept of HRD was formally introduced by Leonard Nadler in 1969 in a
conference organised by the American Society for Training and Development. Leonard
Nadler defines HRD as “those learning experiences which are organized for a specific time
and designed to bring about the possibility of behavioural change.”
Centre for Distance Education 4.4 Acharya Nagarjuna University

Among the Indian authors, T. Ventateswara Rao worked extensively on HRD. He defines
HRD in the organizational context as a process by which the employees of an organisation
are helped in a continuous, planned way to-
(i) Acquire or sharpen capabilities required to perform various functions associated with their
present or expected future roles;
(ii) Develop their general capabilities as individuals and discover and exploit their own inner
potentials for their own and/or organisational development purposes;
(iii) Develop an organisational culture in which superior-subordinate relationship, team work
and collaboration among sub-units are strong and contribute to the professional well- being,
motivation and pride of employees.

According to Pulapa Subba Rao, HRD from the organisational point of view is a
process in which the employees of an organisation are helped/motivated to acquire and
develop technical, managerial and behavioural knowledge, skills and abilities and mould the
values, beliefs and attitudes necessary to perform present and future roles by realising the
highest human potential with a view to contribute positively to the organizational, group,
individual and social goals.

Technical skills and knowledge are provided through training, managerial skills and
knowledge are provided through management development and behavioral skills and
knowledge are provided through organisation development.

A comparative analysis of these definitions shows that the third definition seems to be
comprehensive and elaborate as it deals with the developmental aspects of all the components
of human resources. Further, it deals with all types of skills, the present and future
organizational needs and aspects of contribution not only to organizational but also other
goals.

The analysis of the third definition further shows that there are three aspects, viz.-
employees of an organization are helped/motivated; acquire, develop and mould various
aspects of human resources and contribute to the organizational, group, individual and social
goals. The first aspect deals with helping and motivating factors for HRD.

These factors may be called ‘Enabling Factors’ which include: organization structure,
organizational climate, HRD climate, HRD knowledge and skills of managers, human
resources planning, recruitment and selection. The second aspect deals with the techniques or
methods which are the means to acquire develop and mould the various human resources.

These techniques include- Performance appraisal, Potential appraisal, Career planning

and Development, Training, Management development, Organizational development, Social
and Cultural programmes, and workers’ participation in management and quality circles. The
third category includes the outcomes’ contribution of the HRD process to the goals of the
organization, group, individuals and the society.

4.4 Aims
The major aims of HRD may be stated as:
i. Improve performance of individual on present job
ii. Improve competence of individual to perform future jobs
iii. Improve group dynamism and effectiveness
iv. Improve individual’s attitude
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v. Integrate goal of individual with the goal of the organization

vi. Optimize the available human resource in an organization
vii. Encourage creativity
viii. Provide opportunities and facilities to individual for full expression of their talent
potential
ix. Improve interpersonal relationship and work culture
x. Bring industrial harmony
xi. Increase productivity.

4.5 The objectives of HRD are:

i. To prepare the employee to meet the present and changing future job requirements.
ii. To prevent employee obsolescence.
iii. To develop creative abilities and talents.
iv. To prepare employees for higher level jobs.
v. To impart new entrants with basic HRD skills and knowledge.
vi. To develop the potentialities of people for the next level job.
vii. To aid total quality management.
viii. To promote individual and collective morale, a sense of responsibility, co-operative
attitudes and good relationships.
ix. To broaden the minds of senior managers by providing them with opportunities for an
interchange of experiences within and outside.
x. To ensure smooth and efficient working of the organisation.
xi. To provide comprehensive framework for HRD.
xii. To enhance organisational capabilities.
xiii. To create a climate that enables every employee to discover, develop and use his/her
capabilities to a fuller extent in order to further both individual and organisational goals.

4.6 Nature of HRD

1. Learning
The essence of HRD is learning. The very purpose of HRD is to make the employees acquire
knowledge, learn newer concepts and develop their skills. The core of HRD is to enhance the
quality of workforce by creating an environment which fosters constant learning.

2. Career Development
HRD helps in the career development of individuals by matching employee characteristics
with job requirements. Growth of the organization is achieved through growth and
development of individual employee.

3. Specific Duration
Any particular HRD programme would have a specific duration. It could be for a short,
medium or long duration.

4. Improves Performance
The performance of employees is improved as a result of HRD. The training programmes
enhance the capabilities of employees and improve their productivity.

5. Organizational Development
HRD aims at not just the development of the human resources, but at the progress of the
organization as a whole. Positive changes in work culture, processes and organizational
structure are made.
Centre for Distance Education 4.6 Acharya Nagarjuna University

6. Long-Term Benefits
HRD is a very future oriented concept. The results of HRD can be experienced only after
some time following its implementation. But it benefits the employee and the organization for
a long time in the future.

7. Continuous Process
HRD is a continuous process. Different HRD programmes are to be implemented in the
organization according to changes in the work environment. Human behaviour needs to be
monitored regularly to enable them to adjust themselves according to environment dynamics.

8. Employee Welfare
The organization attempts to provide all the facilities which are vital for the physical and
mental well-being of the employees to facilitate HRD. Measures like canteen facilities,
crèche, medical insurance, etc. are provided as part of employee welfare.

9. Development of Team Spirit

HRD creates a healthy work environment which helps to build team spirit and coordination
among various groups and the department. Team spirit is necessary for fostering loyalty and
belongingness among employees.

4.7 Need of HRD

1. To Achieve Goals
People need competencies to perform tasks. Higher degree and quality of performance
of tasks requires higher level of skills. Continuous development of competencies in people is
essential for an organization to achieve its goals. Competent and motivated employees are
essential for organizational survival, growth and excellence.

2. To Maintain a Level of Growth

Over a period of time, an organization may achieve a saturation point in terms of its
growth. Even to maintain such a saturation level of growth employee competencies need to
be sharpened or developed as organizations operate in environments that keep changing
requiring the employees to acquire new competencies.

3. Improve Effectiveness
Any organization interested in improving its services and its effectiveness in cost
reduction, reduction in delays, increased customer satisfaction, improved quality and
promptness of services, market image needs to develop the competencies of its employees to
perform the tasks needed to bring about such improvements.

Prerequisites
Reorganising the training systems, introducing appraisal system in phases on the next
stages is the process of HRD introduction. HRD is an integral part of every manager’s
responsibility and need not be looked upon merely as the responsibility of the personnel
department. The top management, personnel department and the branch manager have their
respective roles in promoting HRD in banks.
The role of top management is in HRD is in the following areas:
(i) Developing corporate policy
(ii) Developing management leadership style
(iii) Action planning
Human Resource Development 4.7 Industrial Social Work

(iv) Appointment of competent persons for HRD functions

(v) Examine appraisal systems
(vi) Starting organisational development exercises
(vii) Developing training policy
(viii) Developing HRD climate
(ix) Developing HRD personnel
(x) Exercising patience with HRD

4.8 HRD as a total system

Increasingly, more importance is being given to “people” in organization’s. This is
mainly because organizations are realizing that human assets are the most important of all
assets or resources. This emphasis can also be partly attributed to the new emerging values of
humanism and humanization. Moreover, with the increased emphasis on creativity, and
autonomy, which people are increasingly acquiring and enjoying in the society, the
expectations of people are fast changing. People cannot be taken for granted any more. In the
past, people working in organizations were given attention merely in administering the
necessary conditions of work. The traditional concept of personnel management was based
on a very narrow view of human motivation. The basic assumption underlying that view was
that human beings are primarily motivated by comforts and salary, and necessary attention
may be given to rationalise these, so that people do not get dissatisfied. Most of the attention,
therefore, was on administration of salary and other benefits. It is now being increasingly
realized that people working in organizations are human beings. They have their own needs,
motivation and expectations, and that their contribution to the organization is much more than
that of any other resource being used. The concept of Human Resource assumes that human
beings are a great asset to an organization. They are not merely necessary evils to be
reckoned with; in fact they can contribute a great deal to the achievement of organizational
goals. This positive view of people working in the organizations as an asset with unlimited
potential is the core of the concept of the human resource system. Human Resource
Development (HRD) is a recent new systematic approach to proactively deal with issues
related to individual employees, teams and the total organization. The decade of the 1980s
saw in India the culmination of HRD efforts, started in the 1970s, both in terms of innovative
practices by a large number of organizations, leading to the emergence of the National HRD
Network, and publications of conceptual and experience-based materials.

4.9 Value-Anchored HRD Processes

The main characteristics of HRD work in India, both in terms of the concepts and
practices, is based on value-anchored processes and systems.

The concept of human resources in HRD is not value-free. Broadly speaking, there
are three meanings attached to the concept of HRD. In the first place, persons working in
organization’s are regarded as a valuable resource, implying that there is a need to invest time
and effort in their development. Second, they are human resources, which means that they
have their own special characteristics and, therefore, cannot be treated like material
resources. The approach focuses on the need to humanize organizational life and introduce
human values in the organization. Third, human resource development does not merely focus
on employees as individuals, but also on other social units and processes in the organization.

These include the role or the job a person has in the organization, the dyadic unit
(consisting of the person and his supervisor), the various teams in which people work, inter-
team processes, and the total organization. Therefore, six distinguishable human units are
Centre for Distance Education 4.8 Acharya Nagarjuna University

included in human resources, namely, persons, jobs or roles, dyads, teams, inter-teams and
the organization. The emerging developmental processes of the six “human units” are briefly
discussed below.

4.10. HRD System and Sub System

4.10.1 The Individual Employee
The individual employee is the key unit in an organization. HRD is primarily
concerned with the development of persons working in the organisation, so that they may be
able to have their own fulfillment and contribute to the goals of the organization. There are
three important processes relevant to the development of persons or individuals in
organization’s.

a) Self-Management
The person working in an organization should develop competencies to manage
his/her work effectively. This would involve learning to set realistic goals: the goals must be
achievable yet challenging. The individual should also learn to analyse the performance
process in terms of the factors responsible for the success or failure in achieving the
performance results. Some of these factors are related to the employee (self), while others
may be concerned with external conditions (extraneous to self). Self-management would also
involve using information and competency to improve one’s performance in future. An
appropriate performance management
system in the organisation can play a supportive a role. In fact, many organizations design
their performance management system with this approach.

b) Competence Building
The main contribution of HRD to the individual development is in terms of building
competencies required for better performance on the job. The individual employee comes
with his/her educational background and personal strengths and weaknesses. While working
in the organization, he/ she learns new skills that help him/her to work effectively to achieve
organisational goals.

c) Advancement
Every employee wants to advance his/her career in the organisation. HRD should help
in the process of such advancement.
Advancement of employees involves a two-pronged approach:
(i) identifying their potential for use in higher responsibilities in the organization, and
(ii) (ii)helping them to develop further potential to take up new challenges progressively.

4.10.2 The Role

Although individual employees perform various complex roles in the organisation, it
is necessary to pay attention to these roles independently. Role is neither synonymous with
the job nor is it synonymous with status or position in the organisation. Role is the position a
person occupies, as defined by expectations from different. Significant persons who have
direct interactive relationship with the role occupant. There are three main aspects of the
development processes of roles.

a) Optimum Stress
Each role must have enough stressors which may help the role occupant to stretch
himself/herself to meet the challenge. In the role where the scope is limited to routine work,
Human Resource Development 4.9 Industrial Social Work

the role occupants do not perceive any challenge. Such a situation is not likely to motivate the
role occupants to do their best. They will feel under-worked.

While every role has some routine elements, challenge can also be incorporated into
every role. However, the challenge should not exceed an optimal limit, otherwise it may
produce dysfunctional stress, resulting in poor performance or damage to the health of the
employees in the long run. Metaphorically, building optimum stress in the role is like setting
the strings of a musical instrument at a level where they are stretched enough to produce
music, but not too much to break.

b) Linkages
While roles in organisations are occupied by individual employees, it is necessary to
build linkages amongst the roles, as well as linkages of different roles with challenging goals.
If the roles get isolated and produce a feeling in the role occupants that their work is very
narrow and not of much use to wider groups, it might have damaging effects on the
individuals, as well as on the organisation.

c) Autonomy
If individuals who occupy various roles feel that they have enough scope to take
initiatives or solve problems or do creative work, the role occupants and the organisation
benefit a great deal. HRD must attempt to develop a sense of autonomy of this kind in every
role, even at the lowest level in the organization.

4.10.3 The Dyad

The dyadic unit, defined in terms of an employee and his supervisor, is the basic
building block in an organisational structure. The stronger the dyads are, the stronger the
organization will be. The focus of development of dyads in an organization would involve
developing the following three processes.

a) Trust:
Effective work cannot be done in an organization unless a trusting relationship is
established between the employee and his immediate superior. Trust does not develop easily;
enormous effort is required to develop such a relationship.

b) Mutuality:
Effective dyads will require free exchange of help between the employee and the
supervisor. A helping relationship is not a one-way process. The supervisor should take help
from his employees, as much as he would give he help needed by them. Mutually in
relationships will also involve support to each other.

c) Communication:
Developing effective dyads will also involve improving communication between the
members (the employee and the supervisor). Both should be able to give and take feedback.
More importantly, the employee should improve his ability to receive feedback. Similarly,
the supervisor should improve his competence to coach the employee.

4.10.4. Teams
Effective teams are quite important for the performance and adaptive strength of the
organisation. As far as team development is concerned, there are two primary areas on which
HRD efforts must focus:
Centre for Distance Education 4.10 Acharya Nagarjuna University

a) Cohesion: The team should be cohesive. Well-knit teams produce synergy and are able to
utilise individual competencies and stimulate innovations.
b) Resource Utilisation: Effective teams maximise the use of resources available amongst
members of the team. This would satisfy the members, because each member will contribute
whatever resources he has, and help the team to produce effective results. Poor teams rely on
and use the resource of only a few members, resulting in limited opportunities for other
members.

4.10.5 . Inter-teams
The main emphasis of inter-teams is to develop cooperation amongst various groups
in the organisation (for example, departments, divisions, functions) so that they are able to
work effectively towards the common objectives. The main focus of HRD activity for such
cooperation is to develop a corporate identity. When the teams are strong, but work to
achieve their own narrow goals, there is a possibility of unhealthy inter-team competition,
leading to a weak organisation. While teams should work on their own goals, their linkages
with other teams, as well as the organisation should be achieved through various measures.

4.10.6. The Organisation

As far as the organisation is concerned, the following three processes deserve attention of
HRD:

a) Growth
Every organisation looks forward to growing. The growth of an organization would
involve increase in its size, activities and operations. Even when an organization is not
growing in size, it may be concerned with augmentation of service quality or maintaining a
leadership position in its field of operations.

b) Impact
Each organisation would like to have some impact on outside organisations or
customers. Impact may be in terms of developing new markets, developing services or
products, introducing new technology that others can follow, and so on.

c) Self Renewal
The organisation must examine its working from time-to-time, and take steps to
update its technology. It should also analyse the present and potential problems imminent in
its growth, and take proactive steps to prepare itself to meet these challenges. Self-renewal
competency is necessary for organisational effectiveness and survival.

The Individual
In other words, the scope of HRD is to develop i.e., to increase effectiveness and
potential of these human units (the individual, employees, roles, teams, inter-teams, and the
organisations). Relevant HRD processes, as briefly mentioned above, help in enhancing
effectiveness of these human units. However, it is necessary to have a formal and systematic
way of achieving this. Such formal way of developing human resources (various human
units) is the HRD system. HRD system can be broken down into sub-systems. An integrated
combination of all these sub-systems is the HRD system. We describe below the main HRD
Sub-systems.

Over the years several HRD practices have emerged in India. There is no unified way
to classify HRD activities and efforts. A classification system is suggested here, based on
Human Resource Development 4.11 Industrial Social Work

both the new emerging trends in the HRD work in India, and a conceptual understanding of
the main foci of HRD activities. It should be concerned with developing systems of making
individuals (and the roles), and the organization (and the teams) more effective. The systems
that are primarily concerned with individual employees (and their roles) relate to their
appraisal, their advancement, and their training; and the systems concerned with the
development of the organization (and its teams) relate to its design, management of culture,
and renewal of the organization.

1) Performance Management System

Performance Appraisal (PA) systems are widely used in the Indian organizations.
More recently these have been renamed as Performance Management (PM) Systems. The
main difference between them is their respective emphasis and spirit, PA emphasing more the
appraisal aspect, while PM’s stress being on performance improvement.

In both systems performance coaching or counseling has an important place. Indian

organisations have paid more attention to performance appraisal. However, in many cases in
the absence of performance coaching performance appraisal or management system becomes
a ritual. Larsen and Toubro, State Bank of India (SBI), and Crompton-Greaves were amongst
the first companies to adopt a systematic performance coaching system (called counselling at
that time).

2) Career System
Career systems are concerned with the advancement of the individual employees in
their careers in the organization. The first step is taken by introducing career development
plans so that employees joining at an any point are helped to go through various experiences
which may help them to move up in the organization. and may give them opportunities to
prove themselves capable of taking up higher responsibilities. For example, ITC prepares a
career development plan for each employee within the framework of the organization’s
business plans. The first input is a “base plan” under which each unit prepares a checklist of
minimum common inputs that should be made available to each executive in the first ten
years (approximately) of his growth, from induction through secondments, and specialized
programmes to general development programmes and interpersonal effectiveness labs. Career
planning is concerned with charting career paths for the individual employees who have spent
enough time in the organization, and have proved their competence.

Succession planning is a part of this type of career planning. One of the most
successful succession planning systems is in Hindustan Lever, where succession plans are
prepared for all key roles several years in advance.

The third element, which has been used only in a few organisations in India, is
mentoring that ensures individual attention to young potential employees (protégées) for their
possible fast growth in the organization

3) Reinforcement System
A very important motivating factor for people joining and continuing in an
organisation is the kind of work they get, and whether they are valued in the organisation.
Unless the organisation satisfies one of the basic psychological needs of being valued and
appreciated, people may not like to continue there. One indicator of being valued is the
recognition received by the employees for their contribution and their special strengths.
Rewards perform this function. In general, individuals tend to do whatever is rewarded in a
Centre for Distance Education 4.12 Acharya Nagarjuna University

system. Rewards can reinforce (strengthen) the desired behaviours in a system. If

psychophancy is rewarded, people will spend their energy in pleasing individuals in power. If
performance is rewarded, people will attempt to have high performance. Rewards can
reinforce the values and other norms in an organization. Reward system is a powerful tool,
but is complex and needs to be used with care and adequate planning.

4) Development System
One important function of the organization is to develop individuals, roles and teams.
The training system is probably the oldest and most well known element of HRD, used for
development, and does not require much discussion.
Although training has been used for development of employees for a long time in all
organizations, it is being very inadequately treated in most organisations. Identification of
training needs, preparation of a training strategy, development of training methods
(pedagogy), curriculum designing (to meet specific needs), evaluation and follow-up, and
post-training work need systematic attention for human resource development. Although
large budgets are spent on training, training is not taken seriously. Training can be an
effective instrument of change. Details of training as a part of HRD, with emphasis on
strategy and systems, and with examples from some organisations in the Asian countries, can
be found in Lynton and Pareek (2000).

5) Culture System
Cultural System has remained the most neglected part of HRD, but has attracted some
attention in the last few years. Interest in culture has been aroused by the examples of
Japanese successes. Some organisations in India have adopted Japanese practices, notable
among them being Maruti Udyog and Sundaram Clayton. Maruti Udyog adopted some
practices because of the positive pressure of Suzuki. These practices are a 7 hours 45 minutes
shift, zero-defect production, cost cutting, and discipline. This helped in the development of a
new organisational culture.

Organisational culture can be defined as cumulative ways of thinking and behaving

which the values, attitudes, rituals, and sanctions in an organisation shape. Operationally,
development of culture would involve developing a strong corporate identity, development of
important values, building healthy traditions and developing consistent management
practices. Cultural systems are concerned with development of appropriate organizational
culture. Creating conducing organizational climate. Improving communication and evolving
effective reward systems. It is to be noted that whatever is rewarded in an organization gets
reinforced. Therefore, a reward system (including incentives) both for individuals and teams
deserves careful attention. Rewards can facilitate and promote good work but if not designed
properly, can do a great deal of harm to the organization. Systematic attention has been given
to the reward systems in the construction group of L&T, where a need-based system was
evolved.

Organizational climate is another concept close to culture that has received attention
in recent years. Different approaches have been adopted to create a climate conducive to
work. An instrument for assessing appropriate HRD climate has been developed and used in
many organisations and some instruments to measure ethos and, atmosphere are available.

Development of appropriate culture has attracted a great deal of academic attention in

the past few years. Some companies have paid deliberate attention to developing an
appropriate culture (viz. C-Dot, Modi Xerox, Sundaram Clayton, Eicher). Some have made
Human Resource Development 4.13 Industrial Social Work

attempts to improve their cultures viz. Procter and Gamble, Ballarpur Industries Ltd,. Indian
Farmers’ Fertiliser Cooperative (IFFCO). Development. of culture takes a long time and
involves complex processes. The following aspects deserve attention in this regard.

a) Strong Corporate Identity: The sense of identity with the organisation develops when the
employees have a sense of belonging, and they feel proud to belong to the organization.
Identity develops as a result of interaction of the employees with the organization. The
following action ideas help in developing strong corporate identity.

i) Developing an attractive booklet, giving basic information about the company. Indo-Burma
Petroleum Company (IBP Co.) and several other organisations have developed good
induction material.

ii) Films on success experiences in organizations, if shown on special occasions, may help
build corporate identity. “Manthan” directed by Shyam Benegal for NDDB is a good example
of such a film. By inviting suggestions from the key divisions of an organization, the HRD
Department can prepare a list of such video films to be developed.

iii) Company newsletters giving information about business development and significant
information about the employees are being published by many organizations.

iv) Mobility of people (corporate field, division-unit, inter-division) has been used among
other things for the development of organizational identity.

b) Developing Important Values: Values related to organizational culture, such as values of

excellence and human consideration do not develop through mere didactic exercises like
lectures, talks, or writing, but by demonstrating these values in action by the key role holders.
The following practices have helped the development of relevant values.

i) Survey feedback of values, in particular, feedback on the gap between “espoused values”
and “values in action” as reflected in the management practices. Seminars can be held at
different levels to deal with the data generated on these gaps.

ii) Special value-orientation programmes in developing appropriate values, in which, instead

of teaching what values are good, the programme helps participants to examine the relevance
and functionality of certain values and openly questions and discusses the desirable value
system and the one that they see in action. Such programs on value clarification help people
to internalise values by stating their own values without hesitation, by examining openly and
frankly the desirability of a different value system, and also by developing specific ideas of
practicing such values in the workplace.

iii) Examining the various operating systems in the organisation. As for example, a content
analysis of the budgetary, MIS, appraisal, promotion, career planning and rewards system can
indicate what values they reinforce. The concerned groups can then examine the data for
insight and development of appropriate action plan(s).

iv) Special OD intervention in developing collaboration and concern for excellence may help
in anchoring appropriate value orientation through such exercises as team building,
achievement and extension motivation programmes and so on.
Centre for Distance Education 4.14 Acharya Nagarjuna University

d) Building Healthy Traditions and Practices:

Traditions in an organisation are built on the basis of important rituals. Rituals or
celebrations associated with the transition of people from one state to another are important
avenues for identifying a culture. In Indian society for example, about 16 rituals are
associated with transition from one phase of life to another. These rituals do contribute to the
development of social, and family traditions. Attention should be given to the identification
of functional rituals within the organisation. Some interesting practices have already been
found useful in some companies.

i) Induction programme for new entrants help the employees to develop a sense of belonging.
Detailed planning is needed to help them develop pride and joy in becoming a member of the
company that will reinforce the sense of belonging and identification with the company.
Sundaram Clayton’s “acculturation workshops” for new entrants are very well designed and
exemplary.

ii) Promotions need to be treated as an important event of transition of a person from one
stage to another. Instead of only written communication of promotion, a face-to-face
conversation with the concerned chief may be useful, before it is communicated in writing;
the information of promotion is shared with the concerned employee along with its
implications.

iii) Rituals associated with old age and retirement of people should also receive due attention
from the HRD wing. The Malayala Manorama group has evolved some rituals associated
with an employee’s death and old age. For example, “senior members” (employees having
completed certain years of service) are taken free on a Bharat darshan trip along with their
spouses. (“senior couples”’).

iv) The exceptional behaviour of an employee in helping the organisation or in solving

different problems and so on, must be recognized, rewarded and made visible. This may help
to develop the tradition of indulging in such behavior more frequently. People find reasons to
repeat a behaviour that is rewarded, and thereby, they are reinforced by the organization. A
behavior repeated by one is internalized over a period of time, and these internalize materials
in the collective sense from a sub-culture and eventually integrate with the culture in the
organisation.

v) Celebrations of incidents significant to individual employees and the organisation are

important. Some interesting experiences in some organisations have shown that these may
help not only to develop a strong organisational identification and thereby contribute to
culture, but may also make organisations more akin to the Indian culture in a broader sense.

Following are two such examples. Petrofils. A successful and fast expanding
company in the joint sector has been using rituals involving the top management, the
employees, and their families. For instance, record breaking performances are celebrated by
rewarding everyone in the company, so as to symbolize the contribution of all the employees.

Transition from one productive year to the next is marked by a committee of

employees selecting a gift for everyone. For example, in 1985, a new record for sales was set,
when a profit of Rs.36 crores on an investment of Rs. 67 crores was made. That year
everyone took home a mixer-grinder. A number of such rituals are being designed, and care
is taken to ensure that they remain meaningful and do not degenerate into mechanistic rituals.
Human Resource Development 4.15 Industrial Social Work

Another interesting ritual is the celebration of birthdays in the Board room for all
employees, from the Chairman to the Khalasi (helper), to strengthen the feeling of the
company being a family. Everyone is given a gift worth Rs.51 and the item for the year is
selected by a group of about 40 employees. Steel Tubes of India (STI) has evolved a
governance-system suited to the Indian culture, consisting of joint committees
(representatives of management and workers, elected by the entire work force) and Jan Sabha
(representing elected members, departmental councils, best workers awarded during the past
seven years, employees with over 20 years service, senior managers, departmental heads and
directors of the company).

e) Communication:
Many organisations have paid attention to communication. Over the years, some
innovative and successful practices have been evolved in a number of Indian organizations.
For example, in BHEL (Bhopal Unit), Management Employees Communication Meetings
(MECOMs) have been effectively used. A MECOM as an open forum, in which more than
700 persons participate. It has contributed to mutual sharing of information and concerns and
better understanding between management and employees. It has helped in effective
implementation of decisions. Establishing this system was not easy: a great deal of OD work
had to be done prior to and during the evolution of MECOM.

6) Self-renewal System
An organization should be concerned not only with its growth, but also with its health.
It needs to diagnose its problems from time-to-time and take steps to develop new
competencies to cope with the various problems and challenges it would be facing. This can
be done through action research that is concerned with development of competencies through
effective teams to diagnose the problems and initiate the process of collaborative work to deal
with such problems. In OD, the focus is on developing process competency to increase
organizational effectiveness. Organization Development (OD) aims at maintaining profiles of
organizational health, monitoring organizational health, assisting sick departments, helping
interested units and departments in self-renewal, conflict management, creation of strong
teams and so on, and establishing processes that build a climate to promote enabling
capabilities in the organization. Organization Development in the earlier years, mainly in the
1960s (and partly in the 1970s), was T-group-based. Most of the OD interventions in
organizations started with deep process work beginning at the top level. OD has now widened
considerably. It is no more confined to managers; OD has been attempted with workers also.
Attention has also been given to organizational learning, to develop the competence of an
organization to analyses its experience and learn from it. This has been discussed in Unit 13.
The third aspect of self-renewal is research orientation in HRD, which means consciously and
continually collecting data in order to understand the various issues, and designing on-going
interventions based on such data. For example, data were collected and used effectively in
L&T on the working of the appraisal system including counselling. Such data can help to
improve implementation of the appraisal system. HRD related research is important; it helps
in analysing data and information generated by the HRD sub-systems. HRD in L&T has
already established the orientation and several other organisations are in the process of
introducing such “Research-orientation”. For example, data related to HRD are being
systematically analysed in Eicher on a regular basis. Unit 8 deals with Self-renewal System in
details. OD has generally neglected blue-collar workers and worker organizations. OD should
also be concerned with management of collective power. Traditionally industrial relations
have been dealt in the framework of Industrial and labour laws. Unions and associations of
Centre for Distance Education 4.16 Acharya Nagarjuna University

employees use collective power to bargain with the organisations. Although this aspect is
undergoing a lot of change, it is still very important, needing a different approach.

4.11. Summary
Human Resource Development (HRD) isn’t a new thing, and indeed it’s not going out
of trend soon. Even though its main objective keeps shifting according to scenarios, its
primary function remains the same – to make Human Resources’ working life better in the
organization. Making the workplace more competent, HRD pushes employees to their
working limits while still keeping them efficient and happy. Thus, we need to recognize the
importance of HRD.

4.12. Key words

HRD- HRD is mainly concerned with developing the skills, knowledge and competencies of
people and it is people-oriented concept

Career Development- HRD helps in the career development of individuals by matching

employee characteristics with job requirements. Growth of the organization is achieved
through growth and development of individual employee.

The Dyad- The dyadic unit, defined in terms of an employee and his supervisor, is the basic
building block in an organisational structure

Cohesion- The team should be cohesive. Well-knit teams produce synergy and are able to
utilize individual competencies and stimulate innovations.

Inter-teams- The main emphasis of inter-teams is to develop cooperation amongst various

groups in the organisation (for example, departments, divisions, functions) so that they are
able to work effectively towards the common objectives.

Performance Appraisal (PA) systems are widely used in the Indian organizations. More
recently these have been renamed as Performance Management (PM) Systems

4.13 Self Assessment Questions

1. Briefly Explain and Discuss the Concept of HRD?
2. Examine the aims and objectives of HRD?
3. Discuss the Need of HRD?
4. Define HRD Describe the Nature of HRD?
5. Discuss how the HRD as a total System?

4.14. Suggested Readings

1. Vivien Martin (2005) Managing Projects in Human Resources, Training and
Development, Kogan page Publications.
2. Michael Armstrong (2007) A Handbook of Human Resource Management Practice 10Th
Edition Kogan Publications Limited
3. Jed Lindholm, Karen K. Yarrish, and Aileen G. Zaballero(2012) The Encyclopedia Of
Human Resource Management John Wiley & Sons, Inc
4. Jean Phillips(2012) Strategic Staffing - 2nd edition Prentice Hall, Inc.
5. Werner, S., Schuler, R.S. and Jackson, S.E. (2012) Human resource management. 11th ed.
; International edition, South-Western Cengage Learning.
Human Resource Development 4.17 Industrial Social Work

6. Human Resources Management And Training (2013) United Nations Economic

Commission For Europe New York and Geneva
7. David McGuire (2014) Human Resource Development Second Edition SAGE
Publications Ltd, New Delhi .
8. Armstrong, M. (2014) Armstrong’s handbook of human resource management practice.
Thirteenth edition. London: Kogan Page.
9. Chalofsky, N.E., Rocco, T.S. and Morris, M. (eds.) (2014) Handbook of human resource
development. Hoboken, NJ: John Wiley & Sons.
10. Armstrong, M. (2015) Armstrong’s handbook of performance management: an evidence
based guide to delivering high performance. 5th edition. London: KoganPage.
11. Robert N. Lussier (2019) Human Resource Management - 3rd edition Sage Publications,
Inc.
12. Robert N. Lussier and John R. Hendon(2022) Human Resource Management: Functions,
Applications, and Skill Development - 4th edition Sage Publications, Inc
13. Sharon Armstrong(2019) Essential HR Handbook (10th Anniversary Edition) - 10th
edition Samuel Weiser, Inc.

Prof. K. Dhanalaskmi
Chairperson, BoS, PG
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson- 5
EMPLOYEE COMPENSATION SYSTEM
Learning Objectives
 To Discuss the Objectives, Principles of Employee compensation
 To know the significance of Employee Compensation
 To Study the factors that influencing the compensation Management

Structure
5.0 Introduction
5.1 Compensation
1.1.1 Definition of Compensation
5.2 Objectives of Compensation
5.3 Principles of Compensation
4.4 Components of Compensation
5.5 Job Evaluation
5.5.1 Definition of Job Evaluation
5.5.2 Job Evaluation Process
5.6 Significance of Employee Compensation
5.7 Wage and Salary Management
5.8 Wage Determination process
5.9 Factors Influencing the Compensation Management
5.9.1 External factors
5.9.2 Internal Factors
5.10 Criteria for Effective Compensation program
5.11 Types of Compensation
5.11.1 Direct Compensation
5.11.2 Indirect Compensation
5.12 Summary
5.13 Key words
5.14 Self Assessment Questions
5.15 Suggested Readings

5.0. Introduction
The term compensation represents the exchange between employees and organization,
both gives something in return for something else. In the past, the compensation issues were
often confidential and govern by individual employer’s preferences and choices. However in
today’s competitive world the compensation policies are more transparent and the employees
take their own choices based on the compensation package. Thus, balancing the cost of
compensation and retaining the employees have become the most important priority for the
organization (Bhattacharyya 2009).

5.1. Compensation
The compensation is a substitute word of wages and salaries and it has recently
originated. The literature of wages and salaries’ are enormous but it considers the issues from
a legal viewpoint. However, wages have now become very significant as a cost factor
(Bhattacharyya 2009).

Compensation is the remuneration received by an employee in returns of their

contribution to the organization. The compensation management is an organized practice
which is important for balancing the work and employee relationship by providing monetary
and non-monetary compensation to employees. Compensation includes all form of pay given
to the employees which arise from the employment. The one of the strapping feature of the
organizations is compensation management and they used it to attract and retain the most
important and worthy assets. The compensation management is considered to be a complex
process which requires accuracy and precision and if not carried out properly may lead to
employees’ dissatisfaction.

An ideal compensation policy motivates the employees to work harder and with more
determination. It also helps the organizations to set the standards for job that it is related,
realistic and measurable. Compensation policies should have a sound integration with
practices of HRM. One of the key functions of compensation management of any company is
to create a hearty competition among the employees in order to attain more efficiently and
provide growth opportunities to its employees (Khan, Aslam, Lodhi, 2011).

5.1.1. Definition of Compensation

According to Cascio (1995) the “Compensation includes direct cash payments and
indirect payments in form of employees benefits and incentives to motivate employees to
strive for higher levels of productivity”.

According to Milkovitch and Newman (2005) the “Compensation is all forms of

financial returns, tangible services and benefits employees receive as part of an employment
relationship.” The phrase “financial returns” refers to an individual's base salary, as well as
short- and long-term incentives. “Tangible services and benefits” are such things as
insurance, paid vacation and sick days, pension plans, and employee discounts.

5.2. Objectives of Compensation

Bhatta charay (2009) had provided the following objectives of compensation or wages
as given below:

Equity
The first category is equity which may take several forms. It include income
distribution through narrowing of inequalities, increasing the income of lowest paid
employees, protecting real wages (purchasing power), and the concept of equal pay for work
of equal values. Compensation management strives for internal and external equity. Internal
equity requires pay related to the worth of similar job so that similar job gets similar pay.
External equity means paying worker what other firms in the labour market pay
comparable workers. Compensation differentials, based on differences in skills or
contribution, are all to the concept of equity.

Efficiency
The objective of efficiency are reflected in attempts to link a part of wages to
productivity or profit, group or individual performance, acquisition and application of skills,
and so on. Arrangement to achieve efficiency may also be seen as being equitable (if they
fairly reward performance) or inequitable (if the reward is viewed as unfair).

Macro-economic Satiability
It can be achieved through high employments level and low inflation. For instance, an
inordinately high minimum wages would have an adverse impact on levels employment,
tough at what level these consequences would occur is a matter of debate. Although
compensation policies influence macro-economic stability and contribute to the balanced and
sustainable economic development.

Efficient Allocation of Labour

The efficiency allocation of labour in the labour market implies that employees will
move to wherever they receive a net gain. Such movement may be form one geographical
location to another or form one job to another (within or outside an enterprise). The provision
or availability of financial incentive causes such movement.

Motivating the Employees

Employees may have talent but they will not be motivated to use their talent unless
they know that they will be rewarded duly for their contribution towards organizational
objectives or be punished for not contributing as per the demands of the job.

Acquired Qualified Employees

Compensation needs to be high enough to attract applicants. Pay levels must respond
to supply and demand of workers in the labour market since employers compete for workers.

Retain Current Employees

Employees may quit when compensation levels are not competitive resulting in higher
turnover. Therefore, one of the important objectives of Compensation Management is
retaining the human capital or talent of the organization.

Reward Desired Behaviour

Pay should reinforce desired behaviour and act as incentive for those behaviours to
occur in future.

Control Cost
A rational compensation system helps the organization obtain and retain workers at
reasonable cost.

Comply with Legal Regulations

A sound wage and salary system considers the legal challenges imposed by the
government and ensures the employers compliance.

Facilitate Understanding
The Human Resource specialists, operating managers and employees should easily
understand the compensation management.

Further Administrative Efficiency

Wages and salary programs should be designed to be managed efficiently, making
optimal use of HRIS i.e. Human Resource Information System.

5.3. Principles of Compensation

There are following seven principles of Compensation Formulation (Jain, 2014):
i. The organization should have a unambiguous plan to determine differential paylevels in
terms of different job requirements involving varied skills, exertion, responsibility and
working conditions.
ii. An attempt should be made to keep the common level of wages and salaries of the
organization in line with that obtained in the labour market.
iii. Adequate attention should be taken to distinguish people from the jobs. Although people
are paid in terms of rate embodied in specific jobs, some exceptions should be allowed in the
cases of professional and executive personnel by paying them in terms of their abilities and
contributions.
iv. The care should be taken irrespective of individual considerations to ensure that equal pay
for equal work.
v. There should be a plan to adapt an unbiased measure for identifying individual differences
in capacity and contribution in the form of rate ranges within the grade increments, wages
incentive schemes and a system of job promotion.
vi. There should be proper procedure for handling the wage grievances in organization.
vii. Adequate care should be taken to inform the employees and the union, if any, about the
procedure followed in determining wage rates. There were no confidential wages and the
employees should have a clear understanding of their wage or salary structure. This will
enhance employee satisfaction with wages.
There are certain guiding principles which provide the foundation for effective reward
management.

5.4. Components of Compensation

The components of a compensation system include (hr-guide, 2014):

Job Description
The job description is the written responsibilities, functions, duties, requirements,
conditions, environment, location and other facets of jobs.

Job Analysis
The process of analyzing the job is job analysis and job descriptions are also
developed from it. Job analysis techniques include the use of interviews, questionnaires, and
observation.

Job Evaluation
It is a process of comparing jobs for the determining adequate compensation for
individual jobs or job elements.

Pay Structures
The pay structure includes the several grades and each grade containing a minimum
salary, increments and grade range.

Salary Surveys
It is a collection of survey of salary and market data and also includes inflation
indicators, average salaries, cost of living indicators, salary budget averages. Companies may
purchase results of surveys conducted by survey vendors or may conduct their own salary
surveys.

Policies and Regulations

Compensation is supposed to be as fair if it is contained the system of components to
develop and maintain internal and external equity in organization.

5.5. Job Evaluation

Job evaluation is the output provided by job analysis. Job evaluation uses the
information of job analysis to evaluate job and valuing its components and ascertaining
relative job worth to formulate proper wages or salary structure (Elcher & David, 1974). So it
is a process through which jobs are evaluated in organization (cited in Mamoria & Ganker,
2011).

When job is evaluated then the relative worth of a given collection of duties and
responsibilities to the organization is assessed. This process is adopted to help a management
to maintain high level of employees’ productivity and employees’ satisfaction. If job valued
is not properly studied, it is very likely that jobs would not be properly priced, i.e. high
valued job received less pay then less valued job. When employees’ relies this then they will
become dissatisfied and they may leave the organization, reduce their efforts or perhaps adopt
other modes of behaviour detrimental to the organization. Therefore, in modern society a
great deal of attention is paid to the value of a job. In other words, a person is paid for what
he brings to a job- his education, training and experience provided that these are related to the
requirements of the job which he is assigned (Mamoria & Ganker, 2011).

5.5.1. Definition of Job Evaluation

International Labour Organization defines Job Evaluation as “An attempt to determine
and compare the demands which the normal performance of particular jobs make on normal
workers without taking into account of the individual abilities or performance of the workers
concerned.” (Mamoria & Ganker, 2011).

The Bureau of Labour Statistics, U.S.A. (1973), says that “Job evaluation is the
evaluation or rating of jobs to determine their position in the job hierarchy. The evaluation
may be achieved through the assignment of points or the use of some other systematic
method for essential job requirements, such as skills experience and responsibility”.

According to the French & Wendell (1977), “Job evaluation is a process of

determining the relative worth of the various jobs within the organization, so that differential
wages may be paid to the jobs of different worth”. The relative worth of the job means value
produced by such factors as responsibilities and other requirements.

5.5.2. The Job Evaluation Process

The basic procedure of job evaluation is to compare the content of jobs in relation one
another and also in terms of their skills or responsibility or some other requirement. In India,
the National Institute of Personnel Management has laid down the following steps which
should be taken to install a job evaluation program: (Mamoria & Ganker, 2011).

i. Analyze and Prepare Job Description

This requires the preparation of a job description and also an analysis of job
requirements for successful performance.

ii. Select and Prepare a Job Evaluation Plan

This means that a job must be broken down into its component parts, i.e., it should
involve the selection of factors, elements needed of factors, elements needed for the
performance of all jobs for which money is paid, determining their value and preparing
written instructions for evaluation.

iii. Classify Jobs

It required organizing the jobs in a correct order in terms of value to the firm and
relating the job in terms of money to determine their relative worth.
iv. Install the Program This involves explaining it to employees and putting it into
operation.

v. Maintain the Program Jobs cannot continue without updating new jobs and job changes
in obedience to changing conditions and situation.

5.6 Significance of employee compensation

Compensation includes direct and indirect monetary and non-monetary rewards given
to employees on the basis of the value of the job, their personal contributions, and their
performance. These rewards must meet both the organization's ability to pay and any
governing legal regulations.

As per law, compensation is a pecuniary remedy that is awarded to an individual who

has sustained an injury in order to replace the loss caused by said injury, such as workers'
compensation. Wages paid to an employee or, generally, fees, salaries, or allowances. The
payment a landowner is given to make up for the injury suffered as a result of these injures,
when the government through eminent domain takes his or her land.

Compensation basically is the act or state of compensating. The most well known
form of compensation is Worker's compensation, which is a type of insurance, which offers
compensation for workers who have been injured in the course of employment.

5.7 Wage and Salary Management

Though methods vary among jurisdictions, provision can be made for weekly
payment in the for of wages, compensation for economic loss, reimbursement and payment of
medical bills, general damages for pain and suffering and benefits payable to the family of
the employee killed during work.

Cash benefits are recognized according to state formulas like utmost benefit level.
These benefits are managed on a state level, mainly by the state department for labour. The
laws of compensation are a characteristic of highly advanced industrial societies, put into
practice after long and hard fought struggles made by trade unions.

Compensation has been an extremely important issue for both, the employer and
employee. his is because money is a crucial incentive and directly or indirectly related with
fulfilment of all human needs. Employees sell their hands and brain in order to fulfil their
primary needs and employers hire them to achieve their organisational objectives. Therefore,
the employer’s and employee’s perspectives vary on matters concerning compensation. From
cost perspective alone, effective management of compensation becomes critical because of
the total operating costs. Another perspective from employer’s point of view is to assess its
impact on wide range of employees’ attitude, behaviours, and ultimately its effectiveness on
organisation’s success.

Compensation directly influences key out comes like job satisfaction, attraction,
retention, performance, skill acquisition, co-operation and flexibility etc. While employer’s
objective is concerned with primarily productivity the employee’s emphasis may be on higher
compensation to offset their increased cost of living and perhaps the price his skill will fetch
in the competitive job market.
 Compensation, therefore, remains one of the most strategic and important functions of
human resource management. Over the years, compensation has become a complicated issue.
Not only are the problems of internal equity and external parity important, but also the larger
issues of the wider economy and society impinging on the problem of compensation.
Therefore, students of management must develop a clear insight into the different facets of
management of compensation, as also reward.

Compensation is provided with basically two objectives – as a reward for the past
services to the organisation and as stimulus to increase performance in future. The
progressive organisations are utilizing compensation and so that they are able to appreciate
the problem in its proper perspective. rewards system as effective tools to develop, build and
maintain “human capital” for competitive advantages by the following ways:

Compensation can serve to attract qualified applicants to the organisation. Other

things being equal, an organisation offering a higher level of pay can attract larger number of
qualified applicants than its competing units.

Compensation helps to retain competent employees in the organisation. Although

retaining competent workers is contingent on many factors, compensation policies help by
maintaining a fair internal pay structure and by providing attractive benefits. Turnover is thus
reduced, along with costs associated with recruiting, selecting, and training replacements.

Compensation serves as an incentive to motivate employees to put forth their best

efforts. Manufacturing and sales organisations, for example, use monetary incentives to attain
higher levels of production or sales without hiring additional employees.

When employees put forth their best efforts, average productivity of labour increases.
With increased productivity, fewer employees are needed to achieve the same level of output.
Thus, labour costs are reduced and organisational profitability is increased.

1.8 Wage Determination Process

The steps involve in determining wage rate are: (Mamoria & Ganker, 2011)

i. The process of Job Analysis

Results of job descriptions lead to job specification. A job analysis describes the
duties, responsibilities, working conditions and inter-relationships between the jobs as it is
and the other jobs with which it is associated. It attempts to record and analyze details
concerning the training, skills, required efforts, qualifications, abilities, experience, and
responsibilities expected of an employees. After determining the job specifications, the actual
process of grading, rating or evaluating the job occurs. A job is rated in order to determine its
values relative to all the other jobs in the organization which are subject to evaluation.

ii. Wages Surveys

When the worth of job is resolute by job evaluation then the definite amount to be
must paid and it is determined by wage or salary surveys in the concerned area. Such survey
seek to answer questions like what are other firms paying? What are they doing by way of
social insurance? What is the pay level which is offered by other firms of similar occupation?
etc., by gathering information about ‘benchmark jobs’, which are usually known as good
indicators. Such wage surveys provide many kinds of useful information about difference in
wage level for particular kinds of occupations. This can have great influence on an
organization’s compensation policy.

iii. Relevant Organizational Problems

In addition to the results of job analysis and wage surveys, several other variable have
to be given due to consideration in establishing wage structure. For example, whether there
exists a well-established and well-accepted relationship among certain jobs which can upset
job evaluation, whether the organization would recruit new employees after revised wage
structure; are the prevailing rate in the industry or community inconsistent with the results of
job evaluation? What will be the result of paying lower or higher compensation; and what
should be the relationship between the wage structure and the fringe benefit structure?
Belcher has listed 108 variables which can affect levels of compensation and the wage
structure.

iv. Preparation of Wage Structure

The next step is to determine the wage structure. For this several decision need to be taken,
such as:
(a) Whether the organization wishes, or is able, to pay amount above, below, or equal to the
average in the community or industry:
(b) Whether wage ranges should provide for merit increases or whether there should be single
rates;
(c) The number and width of the ‘pay grade’ and the extent of overlap;
(d) Which jobs are to be placed in each of the pay grade;
(e) The actual money value to be assigned to various pay grade;
(f) Differentials between pay plans; and
(g) What to do with salaries that are out of line once these decisions have been made.

There are though no hard and fast rules for making such decisions, and procedure
commonly used is the two-dimensional graph on which job evaluation points for key jobs are
plotted against actual paid against actual amounts paid or against desired levels. Plotting the
remaining jobs then reveals which jobs seem to be improperly paid with respect to the key
jobs and each other.

5.9. Factor Influencing Compensation management

According to the Jain the number of factors influences the remuneration payable to
employees. They can be categorized into:
(i) External and
(ii) Internal factors.

5.9.1 External Factors

Followings are external factors which influence compensation:

i. Labour Market
Demand and supply of labour influences the fixation of wage and salary. A lower
wage fixed when the labour demands were less than the labour supply. A higher wage will
have to be paid when the labour demand more than labour supply it happened as in the case
of skilled labour. A paradoxical situation is prevailing in our country—excessive
unemployment is being juxtaposed with shortage of skilled labour.
ii. Cost of Living
Next in importance to labour market is the cost of living. This matters is criterion
during periods of rising prices but it is forgotten when prices are stable or falling. When the
cost of living is rise and it required to be remunerated by payment of dearness allowance,
basic pay to continue uninterrupted.

iii. Labour Unions

The presence or absence of labour organizations often determines the substantial
wages paid to the employees. Employers of non-unionized organization enjoy the liberty to
fix wages and salaries as they want. Because of larger-scale unemployment, these employers
hire workers at little or even less than legal minimum wages. An individual nonunionized
company may be pay more to its employees if they want to discourage them from forming
one. The employees of strongly unionized companies too have no freedom in fixation of
wage and salary. They are forced to vintage the pressure of labour representatives in revision
and determination of pay scales.

iv. Union Influences on Compensation Decisions

Unions and labour relations laws also influence compensation design. The various
labour legislations and court decisions were legitimized the labour movement.

v. Labour Laws
We have a various labour laws at the central and as well as at the state levels. These
legislations are for protection of employees interests.

vi. Society
Compensation paid to employees is imitated the prices fixed by an organization for
their goods and services. The Supreme Court, from its very inception, has had to adjudicate
industrial disputes—particularly disputes relating to wages and allied problems of financial
concern to the worker- an ethical and social outlook liberally interpreting the spirit of the
Constitution.

vii. The Economy

The economy has its impact on wage and salary fixation is the state of the economy.
While it is possible for some organizations to thrive in a recession, there is no question that
the economy does not affect remuneration decisions.
5.9.2 Internal Factors
Following are the internal factors which influence compensation:
i. Business Strategy
The overall strategy of a company which pursue the determination of employees
compensation. The strategy is to sustain and protect current profit because of the declining
fortunes of the company the compensation level were needs to be average or even below
average.
ii. Performance Appraisal
The Performance appraisal helps to reward, compensation hike for the employees who
show better performance.

iii. The Employee

Several employee-related factors interact to determine his or her remuneration. These
include performance, seniority, experience, potential, and even sheer luck.
5.10. Criteria of Effective Compensation Program
There were seven criteria to judge the effectiveness of compensation: Jain, 2014;
Bhattacharay, 2009)
Adequate: Minimal governmental, union, and managerial levels should be met.
Equitable: Each person should be paid fairly, in line with his or her effort, abilities and
training.
Balanced: Pay, benefits and other rewards should provide a reasonable in total reward
package.
Cost Effective: Pay should not be excessive, considering what the organization can afford to
pay.
Secure: Pay should be enough to help an employee feel secure and aid him or her in
satisfying basic needs.
Acceptable to the Employee: The employee should understand the pay system and feel it is
a reasonable system for the enterprise and himself or herself.
Incentive providing: Pay should motivate effective and productive work.

5.11. Types of Compensation

Compensation is of two types Direct Compensation and Indirect Compensation.

5.11.1. Direct Compensation

Direct compensation refers to monetary compensation provided to employees in
returns of their services to the organization. It includes, TA, DA, HRA, LTA, special
allowances, bonus, etc. They are given at a regular interval at a definite time (naukrihub,
2014).
i. House Rent Allowance (HRA)
Company either provides housings facility or they provide house rent allowances to
its employees.

ii. Dearness allowance

The payment of dearness allowance facilitates employees and workers to face the price
increase or inflation of prices of goods and services consumed by him.
iii. Leave Travel Allowance (LTA)
The employees are given allowances to visit any place they wish with their families.

iv. City Compensation Allowance

City compensation allowance is paid to the employees in certain cities to compensate the cost
of living. It varies from city to city & it is highest in metropolitan cities.

v. Incentives
Incentives and variable compensation can be among the most important drivers of
individual performance. An incentive is something that motivates an individual for
goodperform.

vi. Bonus
Bonus is paid to the employees during festive seasons to motivate them and provide them the
social security.
vii. Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions, travel
expenses, reduced interest loans; insurance, club memberships, etc are provided to employees
to provide them social security and motivate them which improve the organizational
productivity.

5.11.2 Indirect Compensation

Indirect compensation are refers to non-monetary compensation provided to employees in
return of their services to the organization (naukrihub, 2014).
i. Leave Policy
It is the right of employee to get adequate number of leave while working with the
organization. The organizations also provide for paid leaves such as, casual leaves, medical
leaves (sick leave), maternity leaves and statutory pay, etc.
ii. Overtime Policy
Employees were provided with the adequate allowances and facilities during their overtime.
iii. Medical Benefits
The employees were provided allowances to get their regular check-ups and also provide
medical-claim for their family.
iv. Insurance
Organizations also provide for accidental insurance and life insurance for employees. This
gives them the emotional security and they feel themselves valued in the organization.
v. Leave Travel Allowances
The employees are provided with leaves and travel allowances to go for holiday with their
families.
vi. Retirement Benefits
Organizations provide for pension plans and other benefits for their employees which benefits
them after they retire from the organization at the prescribed age.
vii. Holiday Homes
Organizations provide for holiday homes and guest house for their employees at different
locations. These holiday homes are usually located in hill station and other most wanted
holiday spots.
viii. Flexible Timings
Organizations provide for flexible timings to the employees who cannot come to work during
normal shifts due to their personal problems and valid reasons.

5.12 Summary
Compensation is the process of providing equitable and fair remuneration to the
employees. Compensation Management includes 1)Job evaluation, 2)Wage and Salary
Administration 3)Incentives 4) Bonus 5) Fringe benefits and 6)Social security measures, etc.
One of the most important factors in Personnel/ Human resource Management is
Compensation Management. The soundness of compensation management depends up on the
amount of wage and salary paid to the employee for a fair days work. Formulation and
administration of sound compensation policy to attract and retain personnel in right position
is the prime responsibility of my organization (right person for right job with fair
remuneration).The main objective of compensation management is to bring cost-effective
structure which attract, motivate and retain competent employees. Compensation System is
classified into two types, Direct Compensation and Indirect Compensation.

5.13 Key words

Compensation- Compensation includes direct cash payments and indirect payments in form
of employees benefits and incentives to motivate employees to strive for higher levels of
productivity”.
Job Evaluation- Job Evaluation as “An attempt to determine and compare the demands
which the normal performance of particular jobs make on normal workers without taking into
account of the individual abilities or performance of the workers concerned

Job Description-The job description is the written responsibilities, functions, duties,

requirements, conditions, environment, location and other facets of jobs.
Job Analysis-The process of analyzing the job is job analysis and job descriptions are also
developed from it. Job analysis techniques include the use of interviews, questionnaires, and
observation.
Wages Surveys- When the worth of job is resolute by job evaluation then the definite
amount to be must paid and it is determined by wage or salary surveys in the concerned area
5.14 Self Assessment Questions
1) Define compensation and discuss its importance.
2) What is meant by compensation System ? Explain its objectives?.
3) Briefly describe factors that influencing the Compensation Management?
4) Explain the Types of Compensation?

5.15 Suggested Readings

1. Aswathappa, K: Human Resources and Personnel Management, Tata Mc Graw Hill
Publishing Company Ltd, New Delhi , 2004.
2. Belcher, W. David: Wage and Salary Administration, Prentice-Hall, Inc, Englewood Cliffs,
New Jersy, 1962.
3. Bhagoliwala, T.N: Economics of Labour and Industrial Relations, Sahitya Bhavan
Publications, Agra .
4. Chatterjee, N.N: Management of Personnel in Indian Enterprises, Allied Book Agency,
Calcutta .
5. Government of India Report: Wages, Income and Prices, Report of the Bhoothalingam
Committee, Government of India , New Delhi .
6. Government of India , National Commission on Labour Report
7. ILO .Payment by Results, ILO, Geneva .
8. Sarma, A.M: Understanding Wage System, Himalaya Publishing House, Mumbai, 2004.
9. Subramanaian, K.N(1977)Wages in India, Tata Mc Graw Hill Publishing Co. Ltd., New
Delhi
10. Verma, Pramod(1991) Wage Determination: Concepts and Cases, Oxford and IBH, Pub.
Ltd., New Delhi ,
11. Tampomoy Dec(2008) Compensation Management Text and Cases Excel Books New
Delhi
12. B.D.Singh (2007) compensation and Reward Management Excel Books New Delhi.

Prof. M. Trimurthi Rao

Dean, Faculty of Social Sciences
Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson-6
LABOUR LEGISLATION & FACTORIES ACT, 1948
Objectives
After studying this unit, you will be able to:
 Discuss factors influencing labour legislation
 Explain establishment of ILO
 Describe nature of labour legislations
 State the principles of modern legislation
 Explain objectives of labour legislations
 Discuss agencies for the welfare work
 Explain classification of labour legislation
 Describe labour welfare officer
 Analyse statutory and non-statutory welfare measures

Structure
6.1 Introduction
6.2 Introduction to Labour Welfare
6.3 Factors Influencing Labour Legislations
6.4 Establishment of ILO
6.5 Nature of Labour Legislations
6.6 Principles of Modern Labour Legislation
6.6.1 Principle of Protection
6.6.2 Principle of Social Justice
6.6.3 Principle of Regulation Notes
6.6.4 Principle of Welfare
6.6.5 Principle of Social Security
6.6.6 Principle of Economic Development
6.7 Objectives of the Labour Legislations
6.8 Agencies for Welfare Work
6.9 Classification of Labour Legislations
6.10 Objectives of ILO
6.11 International Labour Standards
6.12 Labour Welfare Officers
6.12.1 Qualifications of Welfare Officer
6.12.2 Role and Responsibilities of Welfare Officer
6.12.3 Functions and Duties of Labour Welfare Officer
6.13 Statutory Welfare Schemes
6.14 Non-statutory Welfare Facilities Notes
6.15 Summary
6.16 Keywords
6.17 Self Assessment
6.18 Review Questions

6.1 Introduction
As we all know that Welfare includes anything that is done for the comfort and
improvement of employees and is provided over and above the wages. Welfare helps in
keeping the morale and motivation of the employees high so as to retain the employees for
Centre for Distance Education 6.2 Acharya Nagarjuna University

longer duration. The welfare measures need not be in monetary terms only but in any
kind/forms.

The need for the labour laws and the labour welfare organizations arouse because of
the industrial revolution. The industrial society brought the excessive exploitation of the
working classes by the employers who took the advantage of the individual dispensability of
the workers and wanted maximum profit on their investments. Hire and fire rule was
prevalent and the general law of concern used to contract the relation between the worker and
the employer, its terms were verbal.

Employee welfare includes monitoring of working conditions, creation of industrial

harmony through infrastructure for health, industrial relations and insurance against disease,
accident and unemployment for the workers and their families. Labor welfare entails all those
activities of employer, which are directed towards providing the employees with certain
facilities and services in addition to wages or salaries.

6.2 Introduction to Labour Welfare

Labour sector addresses multi-dimensional socio-economic aspects affecting labour
welfare, productivity, living standards of labour force and social security. A participatory
planning process is an essential pre-condition for ensuring equity as well as accelerating the
rate of growth of economy. To raise Living standards of the work force and achieve higher
productivity; skill upgradation through suitable training is of utmost importance. Manpower
development to provide adequate labour force of appropriate skills and quality to different
sectors is essential for rapid socioeconomic development. In order to address the concerns of
equity in a sustainable manner it is necessary to ensure significant improvements in the
quality of labour, productivity, skill development and working conditions, and to provide
welfare and social security measures particularly, to those in the unorganized sector.
Employment generation in all the productive sectors is one of the basic objectives. In this
context, efforts are being made for providing the environment for self-employment both in
urban and rural areas. During the Ninth Plan period, elimination of undesirable practices such
as child labour, bonded labour, and aspects such as ensuring workers' safety and social
security, looking after labour welfare and providing of the necessary support measures for
sorting out problems relating to employment of both men and women workers in different
sectors has received priority attention.

The improvement of labour welfare and increasing productivity with reasonable level of
social security is one of the prime objectives concerning social and economic policy of the
Government.

The resources have been directed through the Plan programmes towards skill
formation and development, monitoring of working conditions, creation of industrial
harmony through infrastructure for health, industrial relations and insurance against disease,
accident and unemployment for the workers and then families. The situation of surplus labour
and workers in the unorganised segment of the economy give rise to unhealthy social
practices such as bonded labour, child labour and adverse working conditions. In the year
1999, Workmen Compensation Act has been revised to benefit the workers and their families
in the case of death/disability. The labour laws enforcement machinery in the States and at
the Centre are working to amend the laws which require changes, revise rules, regulations
orders and notifications.
Labour Legislation and Factories Act 6.3 Industrial Social Work

6.3 Factors Influencing Labour Legislations

There are a number of factors that had direct or indirect influence on the labour legislations.
They are:
1. Early Exploitative Industrial Society: The early phase of industrialization was an era of
unbridled individualism, freedom of contract and the laissez-faire, and was characterized by
excessive hours of work, employment of young children under very unhygienic and
unhealthy conditions, payment of low-wages and other excesses. The conditions of life and
labour in the early periods of industrialization in India were extremely rigorous – hours of
work were excessive, and the industrial labour drawn from the rural areas was severely
exploited.

The early factory and labour legislation in India resulted from the need for protecting
the interests of the foreign industrialists and investors. In the tea plantations of Assam and
Bengal, where life and work became extremely intolerable, workers started deserting their
place of work for their village homes.

The earliest labour legislation, the Tea District Emigrant Labour Act, 1832 and Workmen's
Breach of Contract Act, 1859 were designed more for the purpose of ensuring a steady supply
of labour to the tea gardens in Assam than for protecting the interests of the laborers. The
latter Act made the desertion of the tea gardens by the laborers, a criminal offence. This was
despite that fact that the conditions of life and work in the tea gardens were extremely
difficult and strenuous.

The first Factory Act of 1881 resulted from the complaints of the Lancashire textile
magnates, against competition by the cotton textiles produced in the Indian mills because the
labour employed by them was extremely cheap. The main idea behind this legislation was to
increase the cost of production of Indian textiles by reducing the hours of work and
improving other working conditions, but they were incidental to the main purpose of the
protection of the interests of the Lancashire industrialists.

2. Early Administrators and the Civil Servants in India were drawn from England: They
brought with them the pragmatism of the British society and were steeped in the English
tradition. So, the pattern of Indian labour legislation has closely followed that of England
with a big time lag. The cotton textile industry was the first to come under the purview of the
Factories Acts in both the countries, though their scope at the early stages was very restricted.
Other pieces of labour legislations enacted during the period such as the various amendments
to the Factories Act, the Workmen's Compensation Act, 1923, the Indian Mines Act, 1923,
the Indian Trade Unions Act, 1926, the Payment of Wages Act, 1936, the Employment of
Children Act, 1938, among others, have followed the British pattern. Naturally, such excesses
could not have continued for long without protest and without demand for reforms.

3. Growth of Trade Unionism: The Trade Union movement which springs from industrial
revolution has been another factor that quickened the growth of labour legislations. On the
one hand, their demands for protection of the interests of the working class led to legislations
in the field of wages, hours of work, women's compensation, social security and other areas;
on the other hand, their growth necessitated legislations for the regulation of industrial
disputes, their prevention and settlement and trade union rights and privileges. Trade unions
have been as much conditioned by labour legislations as they have conditioned them.
Centre for Distance Education 6.4 Acharya Nagarjuna University

4. Political Freedom End of Colonial Rule and Extension of Adult Franchise: Gradual
extension and adoption of universal adult suffrage placed in the hands of the working class, a
powerful instrument to influence the cause of state policy. Their representatives started
espousing the cause of labour and getting progressive legislations passed. The workers used
their political powers for betterment and amelioration of their lots.

5. Rise of Socialist and Other Revolutionary Ideas: The exploitation of labour was inherent
in the capitalist economic system, so, the revolutionists advocated overthrowing the capitalist
system. The echo of the slogan, "the workers of the world unite, you have nothing to lose but
your chains", reverberating throughout the capitalist world, sent a shudder among the
conservative and capitalist circles to protective labour legislations came as safe alternatives.
They readily grasped labour legislations as antidote to the spread of revolutionary ideas. The
Fabian Society of England, the establishment of socialist and communist parties in many
countries and first and second internationals strengthened the trend for progressive labour
legislations.

6.4 Establishment of ILO

ILO, through Conventions and Recommendations, has undertaken the task of creating
international minimum standards of labour which constitute the International Labour Code.
They cover issues related to wages, hours of work, annual holidays with pay, minimum age
of employment, medical examination, maternity protection, industrial health, safety and
welfare, social security, freedom of association, right to organize and bargain collectively,
employment conditions of seamen and employment.

The ILO standards have influenced Indian Labour Legislations to a great extent. ILO
standards have formed the sheet-anchor of Indian Labour Legislations, especially after 1946
when Indian National Government assured office. The Directive Principles of State Policy in
Articles 39, 41, 42, 43 and 43A of the constitution, lay down policy objectives in the field of
labour having close resemblance and influence to the ILO Constitution and the Philadelphia
Charter of 1944. Thus, the ILO both directly and indirectly has had a great influence on the
Indian Labour Scene and Labour Legislation.

6.5 Nature of Labour Legislations

1. The labour legislations are the products of Industrial Revolution and they have come
into being to take care of the aberrations created by it. They are different from
common legislations, because they come to alleviate special disorders created by
specific circumstances. Therefore, they are specific and not general in orientation, philosophy,
and concept.
2. Labour legislation regards individuals as workers, whereas the general legislation
regards him a citizen. The principles governing labour legislations are more
influenced by the postulates of social justice than general justice. Workers are the
weaker class of industrial society and have suffered long at the hands of employers.
Therefore, these sets of legislations go out of the way in protecting workers and
securing justice to them. The influences of 'discriminative justice' and 'distributive
justice' can be clearly seen over them. All the labour legislations are heavily skewed
towards labour and they are specifically designed like that.
3. Labour legislation seeks to deal with problems arising out of occupational status of
the individual. Consequently, such problems as hours of work, wages, working
conditions, trade unions, industrial disputes etc. come to be the main subject matter of
labour legislations. Thus, the behaviour of the individual or his groups is the function
Labour Legislation and Factories Act 6.5 Industrial Social Work

of labour legislation as of any other legislation. But under labour legislation, the
individual is affected in the capacity of a worker or an employer. Therefore, the
persons who are neither the employers nor the workers are least affected directly by
labour legislation. To make the point clear, a few examples are necessary. A
legislation regarding working conditions such as the factory legislation or laws
regarding payment of wages or compensation for work injury or employment of
women or children impinges upon the individuals as workers and the employers. On
the contrary, a law regarding ownership of property or a law relating to the marriage
or sales tax affects him as a citizen.
4. Individuals have different roles to perform and different laws are designed for
regulating the different roles. It is the role-relation that determines whether a
particular legislation falls under the category of labour legislation, social legislation or
general legislation. All these legislations try to meet the specific objectives of their
respective target groups that are (a) to provide subsistence, (b) to aim at abundance,
(c) to encourage equality, and (d) to maintain security.
5. As labour legislations are to regulate the conditions of labour in the industrial milieu,
it is required to be adjusted as per the changing requirements of industry. This has to
be done more frequently than the general legislation where changes are not that swift.
Unless labour legislations are subjected to frequent revision and not left to continue as
they are, they become obsolete and irrelevant. The Indian Labour Legislations are the
best example. Most of them have become outdated as the required revisions have not
been affected and gaps have been created between the expectation of industrial
society and the institution of labour legislation.
6. (a) Not only contractual obligations, but beyond it by creating new rights and
obligations. (b) Labour Law can operate along with General Law. A 'theft' can be
dealt by Labour Law as well as IPC
(c) No jurisdiction of civil courts

6.6 Principles of Modern Labour Legislation

The principles of labour legislation have been categorized as social justice, social welfare,
national economy and international solidarity.
1. The principle of social justice includes: abolition of servitude, freedom of association,
collective bargaining and industrial conciliation.
2. The principle of social welfare covers: development of childhood, opportunity of
education, conservation of womanhood and improvement of environment.
3. The principle of national economy is concerned with development of industry, control
of working conditions, regulation of wage payment and social insurance.
4. The principle of international solidarity has been explained in terms of the compliance
of the provisions of Conventions and Recommendations adopted by ILO.
On the basis of a study of the objectives behind the enactment of labour laws in a global
perspective, certain generalizations may be drawn in respect of the principles. These
principles of labour legislation may be classified and explained as follows:

6.6.1 Principle of Protection

The principle of protection suggests enactment of labour legislation to protect those
workers who are to protect their interests on their own and also workers, in particular
industries against the hazards of industrial process. The workers lacking organized strength
were not in a position to raise an effective voice against their hardships and sufferings.
Centre for Distance Education 6.6 Acharya Nagarjuna University

As industrialization spread, a large number of factories with varying processes and

products came to be set up. These created new hazards for the workers. Some of the areas
where legislative protection in factories and other industrial establishments was needed
included: health hazards, unsanitary and strenuous physical working conditions, long hours of
work, low wages, malpractices relating to mode and manner of wage-payment, insufficient
leave and holidays, exploitation of children of tender ages and women, and others. The
minimum wage and payment of wages legislations also seek to protect workers in matters
concerning wages.

Example: Protective labour laws in India are:- Factories Act, 1948; Mines Act, 1952;
Plantation Labour Act, 1951; Child Labour (Prohibition and Regulation) Act, 1986;
Beedi and Cigar Workers, (Conditions of Employment) Act, 1966; Contract Labour
(Regulation and Abolition) Act, 1970; Payment of Wages Act, 1936 and Minimum
Wages Act, 1948.

6.6.2 Principle of Social Justice

The principle of social justice implies establishment of equality in social relationships.
It aims at removing discrimination suffered by particular groups of labour. The disabilities
and discrimination suffered by slaves, serfs, indentured and migrant labour, bonded labour,
etc. is well-known. Discrimination against women workers when compared to their men
counterpart, in matters relating to wages and other terms and conditions of employment, has
continued till date. The preamble to the constitution of ILO recognises that "universal and
lasting peace can be established only if it is based upon social justice" and its Philadelphia
Charter of 1944 asserts, "All human beings, irrespective of race, creed or sex, have the right
to pursue both their material well-being and their spiritual development in conditions of
freedom and dignity, of economic security and equal opportunity". The Indian Constitution
has prohibited discrimination on the basis of caste, race, sex and religion. The Constitution
also abolishes 'untouchability' in any form and prohibits beggars and forced labour. The
Directive Principles of State Policy also direct the state to strive to promote the welfare of the
people by securing and protecting a social order in which justice - social, economic and
political, shall inform all institutions of the national life.

Example: Labour laws enacted keeping in view the principle of social justice are:
Indian Slavery Act, 1843; Equal Remuneration Act, 1976; Bonded Labour System
(Abolition) Act, 1976 and Contract Labour (Regulation and Abolition) Act, 1970.

6.5.3 Principle of Regulation Notes

The principle of regulation seeks to regulate the relationships between the employers and
their associations and workers and their organizations. As the relationships between the two
groups have repercussions on the society, the law aims at safeguarding the interests of the
society against the adverse consequences of collusion or combination between them. Thus,
the principle of regulation seeks to regulate the balance of power in the relationships of the
two dominant groups in industrial relations. When the employers were the stronger side, laws
were enacted to confer upon workers' organizations, new rights and privileges. On the other
hand, when the workers' organizations started misusing their strength, laws were enacted to
curb their undesirable activities.

When industrial actions – strikes, lock-outs – started causing hardships to consumers

and society at large, the state had to intervene and enact laws to provide for machineries for
the settlement of industrial disputes. The specific areas in which state regulation through
Labour Legislation and Factories Act 6.7 Industrial Social Work

legislative measures have become necessary includes: workers' right to organize, registration
of trade unions and rights of registered trade unions, recognition of representative unions,
collective bargaining, settlement of industrial disputes, conciliation, adjudication and
arbitration machineries, redressal of grievances and grievance procedure, industrial actions
such as strikes, lock-outs, picketing, unfair labour practices, workers' participation in
management and tripartite bodies.

Example: Laws enacted on this principles are: Trade Unions Act, 1926; Industrial
Disputes Act, 1947 and Industrial Employment (Standing Orders) Act, 1946 in India;
Industrial Courts Act, 1919; Industrial Relations Act, 1971 and Trade Union and
Labour Relations (Consolidation) Act, 1992 of Great Britain; and National Labour
Relations Act, 1935 (Wagner Act).

6.6.4 Principle of Welfare

The protective and social security laws have the effect of promoting labour welfare,
special labour welfare or labour welfare fund laws have also been enacted, with a view to
providing certain welfare amenities to the workers and to their family members. The main
purpose behind the enactment of labour laws on this principle is to ensure the provision of
certain basic amenities to workers at their place of work and to improve the living conditions
of workers and their family members.
Example: Laws enacted with this principle in view are: Mica Mines Labour Welfare
Funds Act, 1946; Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines
Labour Welfare Fund Act, 1976; Beedi Workers Welfare Fund Act, 1976; Dock
Workers (Safety, Health and Welfare) Act, 1986; State Labour Welfare Fund Acts
and Welfare Provisions under the Factories Act, 1948; Mines Act, 1952 and
Plantation Labour Act, 1951.

6.6.5 Principle of Social Security

In industrial societies, income insecurity resulting from various contingencies of life
such as disablement, old age and death has become a serious problem. During such
contingencies, the income of the earners either stops altogether or is reduced substantially or
becomes intermittent causing hardships to the earners and their family members. Social
security legislation may be kept under two broad categories – social insurance legislation and
social assistance legislation. In social insurance, benefits are generally made available to the
insured persons, under the condition of having paid the required contributions and fulfilling
certain eligibility conditions. The fund for social insurance schemes usually comes from
contributions of the beneficiaries and their employers, often supplemented by state grants.

Under social insurance, the beneficiaries receive benefits as a matter of right. The
benefits are not linked to the economic needs of financial conditions of the beneficiaries who
receive these at the rates established by law. In social assistance also, the beneficiaries
receive benefits as a matter of right, but they do not have to make any contributions. The
finance is made available by the state or a source specified by the state. Social assistance
benefits are generally paid to persons of insufficient means and on consideration of their
minimum needs.

Example: Social security laws includes: Workmen's Compensation Act, 1923;

Maternity Benefit Act, 1961; Employees' State Insurance Act, 1948; Coal Mines
Provident Fund and miscellaneous Provisions Act, 1948; Employees' Provident
Funds and Miscellaneous Provisions Act, 1952.
Centre for Distance Education 6.8 Acharya Nagarjuna University

6.6.6 Principle of Economic Development

Labour laws are enacted for economic and industrial development of particular
countries. Improvement of physical working conditions, establishment of industrial peace,
provision of machineries for settlement of industrial disputes, formation of forums of
workers' participation in management, prohibition of unfair labour practices, restrictions on
strikes and lock-outs, provision of social security benefits and welfare facilities, certification
of collective agreements and regulation of hours of work have direct or indirect bearing on
the pace and extent of economic development.

6.7 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 sections 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.

6.8 Agencies for Welfare Work

There are a number of agencies involved in the labour welfare work. Beside Central
Government and State Governments, there are other agencies which help in providing the
welfare amenities to the workers. They are:
1. Central Government: It laid down certain regulations in the forms of Acts extending
to the health, safety and welfare of the workers. Factories Act, 1948, Mines Act, 1952,
Motor Transport Workers Act, 1961, etc. provides for crèches, canteens, shelters,
restrooms etc. for the workers. Statuary welfare funds are created to provide housing,
recreational facilities and medical facilities to the workers.
2. State Government: Different State Governments' offers different facilities to the
workers in the state. In Gujarat and Punjab, there are Labour Welfare Centres for
providing the welfare functions to the workers. In Assam, a statuary welfare fund is
created for offering the medical, educational and recreational facilities.
3. Employers: Big corporate giant like TATA, TISCO, L&T, Bajaj, etc have undertaken
the welfare activities for their workers. Ratan Tata has created a number of hospitals,
and education institutes for the workers of his factory. In this way a number of
corporates help in extending these basic welfare activities in factories.
4. Trade Unions: In some companies like Ahmedabad Textile Labour Association,
Indian Federation of Labour are the organizations that have provided the welfare
activities and facilities for the workers like running schools, sports centres, recreation
facilities, cultural centres, legal cells, etc. Though poor finances and multiple
unionisms create problems for the trade unions in establishing the welfare amenities
for the workers, so much cannot be expected from them.
Labour Legislation and Factories Act 6.9 Industrial Social Work

6.9 Classification of Labour Legislations

On the basis of specific objectives, the labour legislations can be classified into following
categories:
1. Regulative
2. Protective
3. Wage-related
4. Social security
5. Welfare both inside and outside the workplace

1. Regulative Labour Legislation: The main objective of the regulative legislation is to

regulate the relations between employees and employers and to provide for methods and
manners of settling industrial disputes. They regulate the relationship between the workers
and their trade unions, the rights and obligations of the organizations of employers and
workers as well as their mutual relationships.
a. The Trade Unions Act, 1926
b. The Industrial Disputes Act, 1947
c. Industrial Relations Legislations enacted by States of Maharashtra, MP, Gujarat, etc.
d. Industrial Employment (Standing Orders) Act, 1946.

2. Protective Labour Legislations: These legislations have a primary purpose to protect

labour standards and to improve the working conditions. Laws laying down the minimum
labour standards in the areas of hours of work, supply, employment of children and women,
etc. in the factories, mines, plantations, transport, shops and other establishments are included
in this category. Some of these are the following:
a. Factories Act, 1948
b. The Mines Act, 1952
c. The Plantations Labour Act, 1951
d. The Motor Transport Workers Act, 1961 Notes
e. The Shops and Establishments Acts
f. Beedi and Cigar Workers Act, 1966

3. Wage-related Labour Legislations: Legislations laying down the methods and manner of
wage payment as well as the minimum wages come under this category. They are:
a. The Payment of Wages Act, 1936
b. The Minimum Wages Act, 1948
c. The Payment of Bonus Act, 1965
d. The Equal Remuneration Act, 1976

4. Social Security Labour Legislations: They cover those legislations, which intend to
provide to the workmen, social security benefits under certain contingencies of life and work.
a. The Workmen's Compensation Act, 1923
b. The Employees' State Insurance Act, 1948
c. The Coal Mines PF Act, 1948
d. The Employees’ PF and Miscellaneous Provisions Act, 1952
e. The Maternity Benefit Act, 1961
f. Payment of Gratuity Act, 1972

5. Welfare Labour Legislations: Legislations coming under this category aim at promoting
the general welfare of the workers and improving their living conditions. All labour-laws can
be said to be promoting the welfare of the workers and improving their living conditions and
Centre for Distance Education 6.10 Acharya Nagarjuna University

though many of the protective labour laws also contain unit on labour welfare; the laws
coming under this category have the specific aim of providing for improvements in the living
conditions of workers.
a. Limestone and Dolomite Mines Labour Welfare Fund Act, 1972
b. The Mica Mines Welfare Fund Act, 1946
c. The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour
Welfare Fund Act, 1976
d. The Cine Workers Welfare Fund Act, 1981.
e. Beedi Workers Welfare Fund Act, 1976

6. Miscellaneous: There are other kinds of labour laws, which are very important. Some of
these are:
a. The Contract Labour (Regulation and Abolition) Act, 1970
b. Child Labour (Prohibition and Regulation) Act, 1986
c. Building and other Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996
d. Apprentices Act, 1961
e. Emigration Act, 1983
f. Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
g. Inter State Migrant Workmen (Regulation of Employment and Condition of
Service) Act, 1979
h. Sales Promotion Employees (Condition of Service) Act, 1976
i. Working Journalists and other Newspapers Employees (Condition of Service
and Miscellaneous Provision) Act, 1955.

6.10 Objectives of ILO

The Declaration of Philadelphia set forth 10 objectives, which the ILO was to further and
promote among the nations of the world. The theme underlying these objectives is social
justice. The objectives are as follows:
1. Full employment and the raising of standards of living,
2. The employment of workers in the occupation in which they can have the
satisfaction of giving the fullest measure of their skill, and make their
contribution to the common well being,
3. The provision, as a means to the attainment of this end, and under adequate
guarantees for all concerned, of facilities for training and the transfer of labour,
including migration for employment and settlement,
4. Policies in regard to wages and earning, bonus and other conditions of work,
calculated to ensure a just share of the fruits of progress to all, and a minimum
living wage to all employed and in need of protection,
5. The effective recognition of the right of collective bargaining, the cooperation of
management and labour in the continuous improvement of productive efficiency
and the collaboration of workers and employers in social and economic measures,
6. The extension of social security measures to provide a basic income to all in need
of such protection and comprehensive medical care,
7. Adequate protection for the life and health of workers in all occupations,
8. Provision for child welfare and maternity protection,
9. The provision of adequate nutrition, housing and facilities for creation and culture,
and
10. The assurance of equality of educational and vocational opportunity.
Labour Legislation and Factories Act 6.11 Industrial Social Work

6.11 International Labour Standards

The International Labour Standards, in the progress towards higher social and economic
objectives, continues to be the principal means at the disposal of the ILO to achieve social
justice throughout the world. The International Labour Conference, the legislative wing of the
ILO provides a forum for discussion and deliberation of international labour problems and
this formulates the standards in the form of conventions and recommendations. The
conventions and recommendations are collectively known as the International Labour Code.

Conventions are obligation-creating instruments, Recommendations are guidance

providing instruments. Once the Conventions are ratified by the member state, they become
binding international obligations, whereas Recommendations are essentially guides to
national action and do not create international obligations. As the standards improve, the
Conventions are revised and fresh amendments with higher labour standards are adopted.

Countries with Higher Labour Standards

Countries having standards of labour higher than those envisaged under International
Labour Conventions, experience a special problem of ratification. In such countries,
acceptance of Conventions prescribing standards lower than the existing ones may involve
considerable political effort, as there is obviously little interest in the subject. Besides, it is
feared that the approval given to lower minimum standards will impair the authority of the
higher national standard. In case where ratification of a Convention necessitates a change in
the law of the land, legal difficulties are also encountered.

6.12 Labour Welfare Officers

Labour welfare is a generic concept, subsuming several fields of development that fall
under economic development, Industrial growth, social justice and democratic growth.
Welfare of the labour is considered to be the key factor in the growth and development of any
industry. For looking after the welfare of the workers, a welfare officer is appointed in a
factory. This position is originated by the recommendation made by the Royal Commission
on Labour which was later on reiterated by the Labour Investigation Committee. The
factories Plantation Labour and Mines Act provides for the welfare officers as the statutory
obligations for the employees, employing 500 or more workers. The State is also empowered
to prescribe the duties, qualifications and conditions of the services. The Central Model
Rules, 1957, laid down certain duties for the labour welfare officers which are confined to the
welfare work.

In every factory here there are more than 500 workers employed, the occupier of the
factory is required to appoint the welfare officers in the factory. If the numbers of the workers
are less than 4000, then atleast two welfare officers are appointed, one with Grade-II and
other with Grade-III. But if the numbers of workers are less than 6000, then atleast three
welfare officers are appointed with Grade-I, Grade-II and Grade-III respectively. This is as
prescribed by the State Government.

If the total number of workers includes 300 or more women workers, then, there
should be one women welfare officer of Grade-III has to be appointed in addition to the
number of welfare officers already prescribed in these rules.

If one occupier has more than one factories situated at different places and the total
number of workers in such factories are 500 or above, all these factories shall be treated to be
a single factory for the purpose of section 49 and in such case the occupier shall be deemed to
Centre for Distance Education 6.12 Acharya Nagarjuna University

have applied to the State Government for declaration of all such factories under his control to
be a single factory under section 4 for the purpose of section 49 only.

6.12.1 Qualifications of Welfare Officer

A labour welfare officer should have a minimum of a Master Degree or an equivalent
diploma from a recognized institute with the knowledge of the local language. According to
the legislation, he is to have the status of the head of the department. If his services have to be
terminated for the reasons other than those of the contract, Government permission is
required.

6.12.2 Role and Responsibilities of Welfare Officer

Based on the regulations provided by the Central Model Rules, 1957, the role and
responsibility of the welfare officer is clearly designed.
1. He supervises the provision of the welfare amenities in respect of law and in matters
of safety, health, housing, recreation facilities, sanitary services, grant of leaves with
wages, etc.
2. He acts a counselor in personal matters and problems of adjustment, rights and
privileges.
3. He assists the management in formulating labour and welfare policies, development of
fringe benefits, conducting workers education and training programmes, etc.
4. He helps different departmental heads to meet their obligations under the various acts.
5. He is the liaison between the establishments and outside agencies such as factory
inspectors and medical officers.
6. He helps in the enforcement of the various acts.
7. He helps the workers to make better use of the community services.

6.12.3 Functions and Duties of Labour Welfare Officer

Some functions and duties prescribe under Factory Act, 1948 for the welfare officer are:
1. To establish contracts and hold consultations in order to maintain harmonious relations
between the factory management and workers.
2. To bring to the notice of the factory management the grievances of workers, individual as
well as collective, to securing their expeditious redress.
3. To Act as liaison officer between the management and labour.
4. To study and understand the labour view point so as to help the factory management to
shape and formulate the labour policies.
5. To interpret the policies to the workers in a language they can understand so as to bring
about the implications of the same to them.
6. To secure welfare provisions among workers and management by providing the basic
welfare amenities at the workplace.
7. To watch industrial relations to have influence in the event of dispute between the
management and workers and to bring about a settlement by persuasive effort.
8. To advise on fulfillment by the management and the concerned departments of the factory
of obligations, statutory or otherwise, concerning regulation of working hours, maternity
benefit, medical care, compensation for injuries and sickness and other welfare and social
benefit measures.
9. To advise and assist the management in the fulfillment of its obligations, statutory and
concerning prevention of personal injuries and maintaining a safe working environment.
10. To promote relations between the concerned departments of the factory and workers
which will bring about productive efficiency and to help workers to adjust and adopt
themselves to their working environment.
Labour Legislation and Factories Act 6.13 Industrial Social Work

11. To encourage the formation of works and joint production Committees, Co-operative
Societies and Welfare Committees and to supervise their work.
12. To encourage provision of amenities such as canteens, shelters for rest, crèches, adequate
latrine facilities, drinking water, sickness and benevolent scheme payments, pension and
superannuation funds, gratuity payments, granting of loans and legal advice to workers.
13. To help the factory management in regulating the grant of leave with wages and explain
to the workers the pulsing relating to leave with wages and other leave privileges and to
guide the workers in the matter of submission of application for grant of leave.
14. To advise a provision of welfare facilities such as-housing facilities, food-stuffs, social
and recreational facilities, sanitation, advice on individual personnel problems and
education of children.
15.To advise the factory management on questions relating to training of new starters,
apprentices, workers on transfer and promotion instructions and supervisors' supervision
and control of notice board and information bulletin to further education of workers.
16. To suggest measures to raise the standard of living of workers and promote their
wellbeing.
17. He can oversee the implementation of the labour laws for the benefit of the workers. So, a
Labour Welfare Officer is entrusted with the advisory, supervisory, policing, functional and
service-oriented functions and responsibilities to establish a cordial environment in the
factory premises.

6.13 Statutory Welfare Schemes

Various kind of statuary requirement and welfare schemes are:
1. To provide drinking water facilities at all the working places including dock areas. Safe
hygienic drinking water points are provided.
2. Sufficient number of latrines and urinals are provided in the dock area and office premises.
Same are maintained in a neat and clean condition & separately for male & female
workers.
3. In every work place, such as ware houses, store places, in the dock area and office
premises where employees/workers are deployed, spittoons are provided in convenient
places and are maintained in a hygienic condition.
4. At all the working places in the dock area, sufficient lights are provided for working.
5. For the circulation of fresh air, and maintaining the normal temperatures sufficient number
of ventilators are provided in dock area, where workers are required to work in three shifts,
such as ware houses, and office premises in dock area.
6. Adequate washing places such as bathrooms, wash basins with tap and tap on the stand
pipe are provided in the port area in the vicinity of the work places.
7. Adequate first-aid boxes are provided on the working places in the dock area and port
premises and same are accessible. First-aid treatments are readily available during the
working hours to the workers at the working places and the ambulance is also provided
with the full equipment and qualified nursing staff.
8. Adequate changing rooms are provided to the male and female workers separately to
change their cloth in the dock area and office premises. Adequate lockers are also provided
to the workers to keep their cloth and belongings, etc.
9. Adequate no. of rest rooms are provided in the dock area to the workers with provisions of
drinking water, wash basins, toilets, bathrooms, etc. for those who are working in the night
shift.
10. The canteens are provided in the dock area and other places of working for giving
nutritious valued food to the dock workers.
Centre for Distance Education 6.14 Acharya Nagarjuna University

Statutory Welfare Measures

Under different laws for the welfare & labour security in India, various statutory provisions
are established by government for the workers & made it mandatory for the employers to
provide them to their workers.

Factories Act 1948

The factories have to provide the following facilities & services to its workers under factories
Act, 1948
1. Separate washing facilities for its male & female workers & they should have sufficient
number of latrines & urinals in clean & maintained conditions in the dock area & office
premises.
2. For every 150 workers, the factory owner has to provide one the first aid box or cupboard
as a safety measure.
3. If there are more than 250 workers, canteens have to be provided for the workers.
4. If there are over 150 workers employed, then shelters, rest-rooms & lunch rooms are
mandatory.
5. If the factory has 30 or more female workers, then crèche facility has to be provided for
their small kids.
6. If a factory employs 500 or more workers, then a welfare officer has to be appointed.
7. Apart from this, the facilities for storing & drying clothes for workers has to be provided
8. Facilities for the workers have to be provided for occasional rest for workers who work in
a standing position for long hours.

Plantation Labour Act, 1951

Under the Plantation Labour Act, 1951, following facilities are mandatory & they have to be
provided by the owner-
1. A welfare officer has to be appointed if there are 300 or more workers.
2. A canteen has to be provided if 150 or more workers are employed.
3. Crèche facility if 50 or more women workers are employed.
4. Educational arrangements in the estate if there are 25 or more children of workers, between
the age group of 6 and 12.
5. Recreational facilities for workers & their children
6. Housing facilities for every worker & his family residing in the estate.
7. Medical aid to workers & their families; sickness & maternity allowances.
8. Providing umbrellas, blankets, raincoats to workers as a protection against rain or cold.

Mines Act, 1951

Under the Mines Act, 1951, following facilities needs to be provided to the workers:
1. If 50 or more workers are employed, then, shelters for taking food & rest have to be
provided.
2. First aid boxes & first aid rooms have to provide if there are 15 or more workers are
employed.
3. Canteen facility for workers when there are 250 or more workers.
4. Crèche facilities where the establishment has 50 or more workers.
5. Pit-head baths equipped with showers, sanitary latrines & urinals have to provide for the
workers.
6.Welfare officer has to appointed if there are 500 or more workers employed in the
establishment.
Labour Legislation and Factories Act 6.15 Industrial Social Work

Motor Transport Workers Act, 1961

Under the Motor Transport Workers Act, 1961, following statutory measures have to be
provided:
1. Canteen facility if establishment has 100 or more workers.
2. First aid equipment in each transport vehicle.
3. Medical facilities at the operating & halting centres
4. Comfortable clean, ventilated & well-lighted rest rooms at every place where motor
transport workers are required to halt at night.
5. Uniforms, rain coats to conductors, drivers & line checking staff for protection against cold
& rain.
6. Prescribed amount of washing allowance to the above staff members.

6.14 Non-statutory Welfare Facilities Notes

The non-statutory welfare facilities are:
1. Housing facilities should be provided to the workers if possible as the step taken by the big
corporates like TATA, etc. Apart from providing official accommodation House Building
Advance are also given to the eligible employees who desire to construct their new houses
or acquire ready build flats/houses.
2. In-house training programs on various aspects of jobs, safety precautions, etc. through the
faculties specialized in the field should be organized in order to increase the efficiency of
the workers. Imparting training in computer and other administrative matters is an on
going process.
3. Workers should be nominated and released for training under the workers education
scheme of the Central Government on the various labour related topics wherein each
employee should be given an opportunity to interact with the experienced faculty members
and other participating employees. During the training period the trainee employees are
treated as on duty.
4. The transport facility should be provided to employees and their dependents. The transport
should be provided to the children studying in various Schools/Colleges in different
locations.
5. The scholarships should be awarded through attractive Scholarship Schemes with a view to
motivate the children of the employees for excellence in education. The Scholarship
Scheme should be applicable from Std. I to Std. XII and recognized Degree/Diploma
Courses of not less than 1 year duration including Post Graduate Degree/Diploma Course.
6. A significant amount of welfare fund should be created to provide financial assistance to
sick employees suffering from chronic aliments, monthly reimbursements towards the
tuition fees of mentally retarded children of employees, and to meet the expenses if
employee/Officer dies as a result of any fatal accident while on duty.
7. The construction of schools, playgrounds, and all other maintenance are being carried out
by the administration in order to promote the welfare for the workers.
8. Setting up ladies club for the women employees and for the wives of the employees for
conducting various programs for the upliftment of the women workers.

6.15 Summary
 ILO standards have influenced Indian Labour Legislation, directly and indirectly.
 The blueprint of our labour policy is based on ILO's Standards.
 The Indian Labour Conference and Standing Labour Committee – resemble the two
main
 structures of ILO.
 Influence of ILO has been perceptible in Labour Legislations in India.
Centre for Distance Education 6.16 Acharya Nagarjuna University

 Labour welfare is an important aspect of the factory life.

 Role and responsibility of welfare officers are clearly defined in Acts.

6.16 Keywords
Collective bargaining: It is the process of negotiation between representatives of a union
and employers (represented by management, in some countries by employers' organization)
in respect of the terms and conditions of employment of employees.
Fundamental Rights: They acts as a guarantee that all the Indian citizens can & will lead
their life's in peace as long as they live in Indian democracy.

ILO: International Labour Organisation

Labour welfare: Services, facilities and amenities extended for the intellectual, physical,
moral and economic betterment of the workers.
Laissez Faire System: Lets not interfere system
Law: It is an instrument for the control, restrain and guide the behaviour & course of action
of the individuals.
Security: Protection of the employer facilities and employees protection while on work
premises.
Trade Union: Any combination whether temporary or permanent formed primarily for the
purpose of regulating the relations between workmen and employers.

6.17 Self Assessment

Fill in the blanks:
1. ......................... is an instruction to control restrains and guide the behaviour and courses of
action of individuals & their groups looking on a society.
2. Law has a ......................... role that of an anchor providing stability as well as of
accommodating changes.
3. ILO stands for .........................
4. The person engaged in providing the welfare measures for the workers in the factory is
called .........................
5. The principle of ......................... seek to maintain the balance of powers in the relationships
of employees & employers.
6. ......................... are the guidelines providing the instruments to the national actions.
Choose the appropriate answer:
7. They are the obligation-creating instruments binding by the international obligations.
They are called:
(i) Principles (ii) Laws
(iii) Conventions (iv) Recommendations
8. Industrial revolutions led to the development of these measures for the welfare of the
Workers. They are:
(i) Labour legislations (ii) Labour laws
(iii) ILO (iv) All the above
9. Labour legislations regards individual as:
(i) Worker (ii) Citizen
(iii) Labour (iv) All the above
10. When the employers have to provide the welfare facilities to the workers under the law
they are called:
(i) Statutory requirements (ii) Non-statutory requirement
(iii) Labour Acts (iv) None of the above
11. The requirement of the labour welfare officer is recommended by this committee:
Labour Legislation and Factories Act 6.17 Industrial Social Work

(i) ILO (ii) Royal Commission on Labour

(iii) State Government (iv) Trade Unions

6.18 Review Questions

1. Discuss the objectives of the ILO. What are conventions and recommendations?
2. As an incharge of the personnel division of a company, what are the various facilities you
would like to provide to your workers for their social and general welfare?
3. Do you think the role of welfare officer is essential in organizations? Elaborate.
4. The Indian labour laws have been greatly influenced by ILO's conventions and
recommendations. Do you agree? Justify.
5. The government needs to play an active role in the labour welfare. Elaborate.
6. "The labour legislations are the natural children of industrial revolution." Do you agree?
Justify.
7. "The principles of social security may be considered to be a part of the principle of
welfare". Justify.
8. Explain the qualifications, duties and responsibilities of a labour welfare officer.
9. What do you mean by labour welfare? Bring out the need for providing welfare facilities to
workers.
10. Are the services offered by the various agencies, in your opinion, satisfactory or not?
Justify.
11. Taking the example of any Indian firm, analyse the statuary and non-statuary welfare
measures provided by the companies to their workers.
12. Analyse the various principles of labour legislation giving the examples of various laws
and acts under them.
13. Critically analyse the various statuary and non-statuary measures to be taken by the
corporates now-a-days.
14. Examine the need for the establishment of the labour legislations in India. Do you think
are they successful? Justify.
15. Being the welfare officer of the company, how will you classify various labour
legislations on the basis of the objectives? Explain.

Prof M. Trimurthi Rao

Dean, Faculty of Social Sciences
Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson- 7
MINES ACT, 1952
Objectives
 After reading this unit you should be able to:
 appreciate the legislative background
 explain the scope and coverage of the Act
 develop an understanding about the administration and enforcement of the Act
 explain the provisions as to health and safety
 describe the provision for working hours, holidays and leave.

Structure
7.1 Development of Mining Legislation
7.2 Scope and Coverage
7.3 Mining
7.4 Administration of the Act
7.5 Enforcement of the Act
7.5.1 Inspectors
7.5.2 Certifying Surgeons
7.6 Health and Safety
7.7 Hours and Limitation of Employment
7.8 Leave with Wages
7.9 Self-Assessment Test

7.1 Development of Mining Legislation

Mining is an ancient activity in India, but is fair to say that mining, primarily coal
mining, as a large scale industrial activity, was first introduced in the country in the early
19th. century. Although mines appeared sometimes before the first cotton mills came into
existence, they were not subjected to labour legislation until 1895. We may conveniently
divide the history of mining legislation into three major periods; the early, pre-1920 period,
the period between 1920 and 1947, and the post-Independence period.

7.1.1 The Pre-1920 Period

The first Act was the Indian Mines Act, 1901, introduced in 1889. It was amended in 1910
and 1914

7.1.2 1920-47
During This period legislation included the Indian Mines Act, 1923, the Indian Mines Acts of
1925, 1927, 1928, 1935, 1937, 1940, 1945 and 1946.

7.1.3 The Post-Independence Period

The post-Independence period reflects a great expension of industrial activity and is
of interest in industrial labour that marked the War and the post-War period, as well as an
increased acceptance of socialist policies and the welfare State. The Mines Act, 1952 (The
Act was amended in 1959 and 1983) covered i) all borings, bore holes and oil wells; ii) all
shafts, in or adjacent to and belonging to a mine; iii) all levels and inclined planes in the
course of being driven; iv) all open cast workings; v) conveyors or serial rope-ways provided
for the bringing into or removal from a mine or minerals or other articles or for the removal
of refuse therefrom; vi) all adits, level, planes, machinery, works, railways, tramways and
sidings, in or adjacent to and belonging to a mine; vii) all workshops and stores situated
Centre for Distance Education 7.2 Acharya Nagarjuna University

within the precincts of a mine and under the same management and used solely for purposes
connected with that mine or a number of mines under the same management; viii) all power
stations for supplying electricity solely meant for working the mine or a number of mine
under the same management; ix) any premises exclusively occupied by the owner of the mine
for being used for depositing refuse from a mine or in which any operation connected with
refuse is carried on; and x) any premises on which any process ancillary to the getting,
dressing or preparation for the sale of minerals or of coke is carried on. These provisions,
however, do not apply to any mine a) in which excavation is being made for prospecting
purposes only, and b) engaged in the extraction of Kankar, Murrum, laterine boulder, gravel,
shingle, ordinary sand, clay, building stone, road-metal, earth, fuller" earth and lime stone,
under certain conditions.

In order to give effect to the aforesaid recommendation of the National Commission

of Labour the Mines Act was amended in 1983. The amended Act prohibited the employment
or persons below 18 years of age. Further Section 9-A provides for entitlement for an
alternative employment to a worker found medically unfit, which is directly ascribable to his
employment, and for payment of disability allowance as well as lump sum amount when he
desires to leave the employment. Moreover, while under Section 52(1)(a) a person employed
below ground would be entitled to annual leave with wages at the rate of one day for every 15
days of work performed by him, Section 52(10), grants proportionate leave or wages in lieu
of leave. The other amendments mainly related to: i) the removal of certain practical
difficulties experienced in its enforcement; ii) provision for additional safety regulations; iii)
closer association of workers with safety measures; iv) provisions for minimum penalty and
v) increase in levy of the cess for effective administration.

7.2 Scope and Coverage

The Act extends to whole of India. It applies to every "mine" which means:
any excavation where any operation for the purpose of searching for or obtaining minerals
has been or is being carried on, and includes-
i. all borings, bore holes, oil wells and accessory crude conditioning plants, including
the pipe conveying mineral oil within the oilfields;
ii. all shafts, in or adjacent to and belonging to a mine, whether in the course of being
sunk or not;
iii. all levels and inclined planes in the course of being driven;
iv. all open cast workings;
v. all conveyors or aerial ropeways provided for the bringing into or removal from a
mine of minerals or other articles or for the removal of refuse therefrom;
vi. all adits, levels, planes, machinery; works, railways, tramways and sidings in to
adjacent to and belonging to a mine;
vii. all protective works being carried out in or adjacent to a mine;
viii. all workshops and stores situated within the precincts of a mine and under the same
management and used primarily for the purposes connected with that mine or a
number of mines under the same management;
ix. all power stations, transformer substations, converter stations, rectifier stations and
accumulator storage stations for supplying electricity solely or mainly for the purpose
of working the mine or a number of mines under the same management;
x. any premises for the time being used for depositing sand or other material for use in a
mine or for depositing refuse from a mine or in which any operations in connection
Mines Act, 1952 7.3 Industrial Social Work

with such sand , refuse or other material is being carried on , being premises
exclusively occupied by the owner of the mine:
xi. any premises in or adjacent to and belonging to a mine on which any process ancillary
to the getting, dressing or preparation for sale of minerals or of coke is being carried
on
The aforesaid definition of mine is very wide. It includes every kind of operation.
[Tarkeshwar a Dar Doss Dey, (1979) 3 SCC 106.] It also include a quarry. [Rani Umeshwari
v Member Board of Revenue, (1967) 1 SCA 413.]
However, "Mine" does not include office of a mine even though situated at the surface of the
mine itself. [Serajuddin a Workmen, Air 1966 SC 921: (1962) 1 LLJ 450.1

Mineral
Under the Act "mineral" means all substances which can be obtained from the earth by
mining, digging; drilling, dredging, hydraulicing, quarrying or by any other operation and
includes mineral oils, which in turn include natural gas and petroleum.

Open Cast Working

"Open cast working" means a quarry, that is to say, an excavation where any operation for the
purpose of searching for or obtaining minerals has been or is being carried on, not being a
shaft or an excavation which extends below superjacent ground.

Non-applicability of the Act

The Act is not applicable to:
i. any mine or part thereof in which excavation is being made for prospecting purposes
only and not for the purpose of obtaining minerals for use or sale:
ii. any mine engaged in the extraction of kankar, murrum, laterite boulder, gravel,
shingle, ordinary sand (excluding moulding sand, glass sand and other mineral sands),
ordinary clay (excluding kaolin, china clay, white clay or fire clay), building stone,
slate, road metal, earth, fullers earth, marl chalk and limestone:

Coverage
"
A person is said to be employed" in a mine who works as the manager or who works under
appointment by the owner, agent or manager of the mine or with the knowledge of the
manager, whether for wages or not-
i) in any mining operation (including the concomitant operations of handling and transport
of minerals up to the point of dispatch and of gathering sand and transport thereof to the
mine);
ii) in operations or services relating to the development of the mine including construction
of plant therein but excluding construction of buildings, roads, wells and any building
work not directly connected with any existing or future mining operations;
iii) in operating, servicing, maintaining or repairing any part of any machinery used in or .
about the mine;
iv) in operating, within the premises of the urine, of loading for dispatch of minerals;
v) . in any office of the rune;
vi) in any welfare, health, sanitary or conservancy services required to be provided under
this Act, or watch and ward, within the premises of the mine excluding residential area,
or
vii) in any kind of work, whatsoever which is preparatory of incidental to, or connected
with, mining operations.
Centre for Distance Education 7.4 Acharya Nagarjuna University

7.3 Mining
Notice to be given of mining operations
Section 16 imposes an obligation upon the own, agent or manager of a mine that he shall,
before the commencement of any mining operation notice give to the Chief Inspector, the
Controller, Indian Bureau of Mine and the district magistrate of the district in which the mine
is situated. The notice should be in writing in prescribed form containing prescribed
particulars relating to the mine. Such notice shall be so given at least one month before the
commencement of any mining operation.

Managers
Every mine shall be under a sole manager having the prescribed qualifications and the owner
or agent of every mine shall appoint a person having such qualifications to be the manager.
The owner or agent may also appoint himself as manager if he possesses the prescribed
qualification. The manager shall be responsible for the overall management, , control,
supervision and direction of the mine and all such instructions when given by the owner or
agent shall be confirmed in writing forthwith.

Duties and responsibilities of owners, agents and managers

1). The owner and agent of every mine shall each be responsible for making financial and
.other provision and for taking such other steps as may be necessary for complains with
the provisions of this Act and the regulations, rules, bye-laws and others made
thereunder.
2). The responsibility in respect of matters provided for in the rules made -under clauses (d),
(e) and (p) of Section 58 shall be exclusively carried out by the owner and agent of the
mine and by such person (other than the manager) whom the owner or agent may appoint
for securing compliance with the aforesaid provisions.
3). If the carrying out of any instructions given under Sub-section (2) or given otherwise than
through the manager under Sub-section (3) of Section 17, results in the contravention of
the provisions of this Act or of the regulations, rules, bye-laws or orders made
thereunder, every person giving such instructions shall also liable for the contravention
of the provisions concerned.

4). Subject to the provisions of Sub-section (1), (2) and (3), the owner, agent and manager of
every mine shall each be responsible to see that all operations carried on in connection
with the mine are conducted in accordance with the provisions of this Act and of the
regulations, rules, bye-laws and orders made thereunder.
5). In the event of any contravention by any person whosoever of any of the provisions of this
Act or of the regulations, rules, bye-laws or orders made thereunder except those which
specifically require any person to do any act or thing or prohibit any person from doing
as actor thing, besides the person who contravenes, each of the following person shall
also be deemed to be- guilty of such contravention unless he proves that he had used due
diligence of secure compliance with the provisions and had taken reasonable means to
prevent such contravention :-
i) the official or officials appointed to perform duties of supervision in respect of the
provisions contravened;
ii) the manager of the mine;
iii) the owner and agent of the mine;
iv) the person appointed, if any, to carry out the responsibility under Sub-section (2):
Provided that any of the persons aforesaid may not be proceeded against if it appears on
inquiry and investigation, that he is not prima facie liable .However; R shall not be a defence
Mines Act, 1952 7.5 Industrial Social Work

in any proceedings brought against the owner or agent of the mine under this section that the
manager and other officials have been appointed in accordance with the provisions of this Act
or that a person to carry the responsibility under Sub-section (2) has been appointed.

7.4 Administration of the Act committees

1. Constitution
1) The Central Government is required to constitute a committee consisting of- .
a) a person in the service of the Government, not being the Chief Inspector or an
Inspector, appointed by the Central Government to act as Chairman;
b) the Chief Inspector of Mines;
c) two persons to represent the interests of miners appointed by the Central
Government;
d) two persons to represent the interests of owners of mines appointed by the Central
Government;
e) two qualified raining engineers not directly employed in the mining industry,
appointed by the Central Government.

2. Functions of the Committee

The Committee constituted shall-
a) consider proposals for making rules and regulations under this Act and make
appropriate recommendations to the Central Government;
b) enquire into such accidents or other matters as may be referred to it by the Central
Government from time to time and make reports thereon; and
c) hear and decide such appeals or objections against notices or orders under this Act
or the regulations, rules or bye-laws thereunder; as are required to be referred to it
by this Act or as may be prescribed.

3. Powers of the Committee

1. A Committee constituted under Section 12 may exercise such of the powers of an
Inspector under this Act as it thinks necessary or expedient to exercise for the
purposes of discharging its functions under this Act.
2. A Committee constituted under Section 12 shall, for the purposes of discharging its
functions, have the same powers as are vested in a court under the Code of Civil
Procedure, 1908 when trying a suit in respect of the following matters, namely; -
a) discovery and inspection;
b) enforcing the attendance of any person and examining him on oath;
c) compelling the production of documents; and
d) such other matters as may be prescribed.

4. Recovery of Expenses
The Central Government may direct that the expenses of any inquiry conducted by a
Committee constituted under Section 12 shall be born in whole or in part by the owner or
agent of the mine concerned.

7.5 Enforcement of the Act

7.5.1 Inspectors
i) Appointment of Chief Inspector and Inspectors
The Central Government is empowered to appoint such a person as possesses the
prescribed qualifications to be Chief Inspector of Mines for all the territories to which this
Act extends and such persons as possess the prescribed qualification to be Inspector of Mine
Centre for Distance Education 7.6 Acharya Nagarjuna University

subordinate to the Chief Inspector. But no person shall be appointed to be Chief Inspector or
an Inspector, or having been appointed shall continue to hold such office, who is or becomes
directly or indirectly interested in any mine or mining rights in India.
The district magistrate may also exercise the powers and perform the duties of an
Inspector subject to the general or special orders of the Central Government.

ii) Functions of Inspectors

1). The Chief Inspector is empowered after seeking the approval of the Central
Government to authorise any Inspector named or any class of Inspectors specified in
the order to exercise such of the powers of the Chief Inspector under this Act (other
than those relating to appeals) as he may specify.
2). The Chief Inspector may, be order in writing, prohibit or restrict the exercise by any
Inspector named or any class of Inspector specified in the order of any power
conferred on Inspectors under this Act.

iii) Pourers of 'Inspectors of Mines

1) The Chief Inspector and any Inspector is empowered to;
a) make such examination and inquiry as he thinks fit in order to ascertain whether the
provisions of this Act and of the regulations, rules and bye-laws and of any orders
made thereunder are observed in the case of any mine;
b) with such assistants, if any, as he thinks fit, enter, inspect and examine any mine or
any part thereof at any time by day or night. However, the power conferred by this
clause shall not be exercised in such a manner as unreasonably to impede or obstruct
the working of the mine;
c) examine into, and make inquiry respecting, the state and condition of any nine or any
part thereof, the ventilation of the mine, the sufficiency of the bye-laws. for time
being in force relating to the mine, and all matters and things connected with or
relating to the health, safety and welfare of the person employed in- the mine, and
take whether on the precincts of the mine or elsewhere, statements of any person
which he may consider necessary for carrying out purposes of this . Act;
d) exercise such other powers as may be prescribed by regulations made by the Central
Government in this behalf.
iv) Facilities to be provided for occupational health survey
1. The Chief Inspector or an Inspector or other officer authorised by him in writing in
this behalf may, at any time during the normal working hours of the mine or at any
time by day or night as may be necessary, undertake safety- and occupational health
survey in a mine after giving notice in writing to the manager of the mine; and the
owner, agent or manager of the mine shall afford all necessary facilities (including
facilities for the examination and testing of plant and machinery, for the collection of
samples and other data pertaining to the survey and for the transport and examination
of any person employed in the. mine chosen for the survey) to such Inspector or
officer.
2. Every person employed in a mine who is chosen for examination in any safety and
occupational health survey under sub-section (1) shall present himself for such
examination and at such place as may be necessary and shall furnish all information
regarding his work and health in connection with the said survey.
Mines Act, 1952 7.7 Industrial Social Work

3. The time spent by any person employed in a mine who is chosen for examination in
the safety and occupational health survey, shall be counted towards his working time,
so however that any overtime shall be paid at the ordinary rate of wages.
4. Any person who, on examination under Sub-section (2), is found medically unfit to
discharge the duty which he was discharging in a mine immediately before such
presentation shall be entitled to undergo medical treatment at the cost of the owner,
agent and manager with fall wages during the period of such treatment.
5. If, after the medical treatment, the person referred to in Sub-section (4) is declared
medically unfit to discharge the duty which he was discharging in a mine immediately
before presenting himself for the said examination and such unfitness is directly
ascribable to Ids employment in the mine before such presentation, the owner, agent
and manager shall provide such person with an alternative employment in the mine
for which he is medically fit:
6. The rates under the provisos to Sub-section (5) shall be determined having regard to
the monthly wages of the employees, the nature of disabilities and other related
factors.

Secrecy of information obtained

All the copies of and extracts from, registers or other records, appertaining to any
mine and all other information acquired by the Chief. Inspector or an Inspector or by
any one assisting him, he the course of the inspection [or survey] of any mine under
this Act or acquired by any person authorised under Section 8 or Section 9-A in the
exercise of his duties thereunder; shall be regarded as confidential and shall not be
disclosed to any person or authority unless the Chief Inspector or the Inspector
considers disclosure necessary to ensure the health, safety or welfare of any person
employed in the mine or in any other mine adjacent thereto.

7.5.2 Certifying Surgeons

1). The Central Government may appoint qualified medical practitioners to be certifying
surgeons for the purpose of this Act within such local limits or for such mine or class or
description of mines as it may assign to them respectively.'
2). A certifying surgeon may, with the approval of the Central Government, authorise any
qualified medical practitioner to exercise all or any of his powers under this Act for such
period as the certifying surgeon may specify, and references to a certifying surgeon shall
be deemed to include references to any qualified medical practitioner when so
authorised.
3). No. person shall be appointed to be, or authorised to exercise the powers of, a certifying
surgeon, or, having been so appointed or authorised, continue to exercise such powers,
who is or becomes the owner, agent or manager of a mine, or is or becomes directly or
indirectly interested therein, or in any process or business carried on therein or in any
patent or machinery connected therewith, or is otherwise in the employment of the mine.
4). The certifying surgeon is required to carry out such duties as may be prescribed in
connection with-
a) the examination of persons engaged in a mine in such dangerous occupations or
processes as may be prescribed;
b) the exercise of such medical supervision as may be prescribed for any mine or
class or description of mines where-
i) cases of illness have occurred which it is reasonable to believe are due to the
nature of any process carried on or other, conditions of work prevailing in the
mine.
Centre for Distance Education 7.8 Acharya Nagarjuna University

7.6 Health and Safety

i) Drinking water
1. In every mine effective arrangements shall be made $o provide and maintain at
suitable points conveniently situated a sufficient. supply of cool and wholesome
drinking water for all persons employed therein.
All such points shall be legibly marked "DRINKING WATER' in a. language understood by
a majority of the persons employed in the mine and no such point shall be situated within six
meters of any washing place, urinal or latrine, unless a shorter distance is approved in writing
by the Chief Inspector.

ii) Conservancy
1) There shall be provided, separately for males and females in every mine, a sufficient number
of latrines and urinals of prescribed types so situated as to be convenient and accessible to
persons employed in the mine at all times.

iii) Medical appliances

1). In every mine there shall be provided and maintained -so as to be readily accessible
during all working hours such number of first-aid boxes or cupboards equipped with
such contents as may be prescribed.
2). Nothing except the prescribed contents shall be kept in a first-aid box or cupboard
or room.
3). Every first-aid box or cupboard shall be kept in the charge of a responsible person
who is trained in such first-aid treatment as may be prescribed and who shall always
be readily available during the working hours of the nine.
4). In every mine there shall be made so as to be readily available such arrangements as
may be prescribed and who shall always be readily available during the working
hours of the mine.
5). In every mine wherein more than one hundred and fifty persons are employed, there
shall be provided and maintained a first-aid room of such size with such equipment
and in the charge of such medical and nursing staff as may be prescribed.

iv) Notice to be given of accidents

1) Whenever there occurs in or about a mine-
a) an accident causing loss of life or serious bodily injury, or
b) an explosion, ignition, spontaneous heating, outbreak of fire or irruption or inrush
of water or other liquid matter, or
c) an influx of inflammable or noxious gases, or
d) a breakage of ropes, chains or other gear by which persons or materials are
lowered or raised in a shaft or an incline, or
e) an over winding of cages or, other means of conveyance in any shaft while
persons or materials are being lowered or raised, or
f) a premature collapse of any part of the workings, or
g) any other accident which may be prescribed,
the owner, agent or manager of the mine shall give notice of the occurrence to such authority
in such form and within such time as may be prescribed, and he shall simultaneously post one
copy of the notice on a special notice board in the prescribed manner at a place where it may
be inspected by trade union officials, and shall ensure that the notice is kept on the board for
not less than fourteen days from the date of such posting.
Mines Act, 1952 7.9 Industrial Social Work

v) Power of Government to appoint court of inquiry in cases of accidents

1) When any accident of the nature referred to in any of the clauses of sub-section (1) of
Section 23 occurs in or about a mine, the Central Government may, if it is of opinion
that a formal inquiry into the causes of and circumstances attending the accident ought
to be held, appoint a competent person to hold such. inquiry and may also appoint one
or more persons possessing legal or special knowledge to act as assessor or assessors
in holding the inquiry.

vi) Notice of certain diseases

Where any person employed in a mine contracts any disease notified by Central
Government in the 021cial Gazan as a disease connected with mining operations, the
owner, agent or manager of the mine, as the case may be, shall send notice thereof to
the Chief Inspector and to such other authorities, in such form and within such time as
may be prescribed.

vii) Power to direct investigation of causes of disease

The Central Government may, if it considers it expedient to do so, appoint a
competent person to inquire into and report to it on may case where a disease notified
under sub-section (1) of Section 25 has been or is suspected to have been contracted
in a mine, and may also appoint one or more persons possessing legal or special
knAle4pe to act as assessors in such inquiry.

7.7 Hours and Limitation of Employment

i) Hours of work above ground
1) No adult employed above ground in a mine shall be required or allowed to work for
more than forty-eight hours in any week or for more than nine hours in any day.

ii) Hours of work below ground

1) No adult employed. below ground in a mine shall be allowed to work for more than
forty-eight hours in any week or for more than eight hours in any day,

iii) Extra wages for overtime

1) Where in a mine a person works above ground for more than nine hours in any day,
or works below ground for more than eight hours in any day, or works for more than
forty-eight hours in any week whether above ground or below ground, he shall in
respect of such overtime work be entitled to wages at the rate of twice his ordinary
rate of wages, the period of overtime work being calculated on a daily basis or
weekly basis, whichever is more favourable to him.
iv) Prohibition of employment of certain persons
No person shall be required or allowed to work in a mine if he has already been working
in any other mine within the preceding twelve hours.
v) Limitation of daily hours of work including overtime work
Save in respect of cases falling within clause (a) and clause (e) of Section 39, no person
employed in a mine-shall be required or allowed to work in the mine for more than ten
hours in any day inclusive of overtime.

vi) Employment of persons below eighteen years of age

No person below eighteen years of age shall be allowed to work. in any mine or part
thereof. However apprentices and other trainees, not below sixteen years of age, may be
Centre for Distance Education 7.10 Acharya Nagarjuna University

allowed to work, under proper supervision, in amine or part thereof by the manager with
prior approval of the Chief Inspector or an Inspector shall be obtained before they are
allowed to work.
vii) Prohibition of the presence of persons below eighteen years of age in a mine
No person below eighteen years of age shall be allowed to be present in any part of a
mine above ground where any operation connected with or incidental to any mining
operation is being carried on.
viii) Employment of women
1) No woman shall, notwithstanding anything contained, in any other law, be
employed;
(a) in any part of a mine which is below ground;
(b) in any mine above ground except between the hours of 6 a.m. and 7 p.m.
2) Every woman employed in a mine above ground shall be allowed an interval of not
less than eleven hours between the termination of employment on, any one day and
the commencement of the next period of employment.
7.8 Leave with Wages
i) Annual leave with wages
1) Every person employed in a mine who has completed a calendar year's service therein
shall be allowed during the subsequent calendar year, leave with wages, calculated-
a) in the case of a person employed below ground, at the rate of one day for
every fifteen days of work performed by him, and
b) in any other case, at the rate of one day for every twenty days of work
performed by him,
ii) Payment in advance in certain cases
Any person employed in a mine who has been allowed leave for not less than four days,
shall, before his leave begins, be paid the wages due for the period of the leave allowed
iii) Mode of recovery of unpaid wages
Any sum required to be paid by the owner, agent or manager of a mine under this
Chapter but not paid by him shall be recoverable as delayed wages under the provision
of the Payment of Wages Act, 1936.
7.9 Self-Assessment Test
1. Are the following "mine"
i. Quarry
Ii. Office of the mine
2 What are the functions of the Committee?
3. What are the duties of Certifying Surgeons?
4. How are Inspectors appointed? What are their powers?
5. What are the provisions regarding working hours for adult?
6. What are the provisions for annual leave with wages?

Prof. V. Venkateswarlu
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson-8
INDISTRIAL DISPUTES ACT, 1947
Learning objectives
 To know the Cause of Industrial Disputes
 To Duties of the Conciliation officers
 To outline the Methods of Resolving Industrial Disputes
 To study the Code of Discipline and code of conduct

Structure
8.1 Introduction
8.2 Recognition
8.8 Causes of Industrial Disputes
8.4 Machinery for Settlement of Industrial Disputes
8.4.1 Works Committee
8.4.2 Conciliation Officers (Sec 4)
8.4.8. Board of Conciliation (Sec.5)
8.4.4. Court Of Enquiry (Sec. 6)
8.4.5. Labour Courts (Sec.7)
8.4.6. Tribunals (SEC. 7A)
8.4.7 National Tribunals [Sec. 7 (B)]
8.5 Methods Of Resolving Industrial Disputes
8.5.1 Negotiation
8.5.2 Conciliation
8.5.8 Mediation
8.5.4 Arbitration
8.6 Code of Discipline and Code Of Conduct
8.7 Summary
8.8 Key words
8.9 Self Assessment Questions
8.10 Suggested Readings

8.1 Introduction
Industrialization in a country has always contributed to employment, contribution to
national income, per capita income, exports and economic development on one side and
industrial disputes on the other. It has always been the case of mixed blessing. The conflict of
interest between management and labour is what leads to industrial disputes.

The management has a goal of profit maximization and on the other hand the workers
expect rise in income, security of job, protection o f their skills, improvement in their status
and in the working conditions. Those who control the factors of production require strict
administration, closer supervision, and maintenance of strict discipline and implementation of
rules, code of conduct and code of discipline. Whereas the workers demand a share in capital,
voice in management, freedom of expression, participation in management and dignity of
employees. So the people that control the factors of production and people that produce
always have different or conflicting interest which gives birth to industrial disputes.

According to the Industrial Dispute Act, 1947. Section 2 (K) “Industrial Disputes
mean any dispute or difference between employers and employers or between employers and
Centre for Distance Education 8.2 Acharya Nagarjuna University

workmen or between workmen and workmen, which is connected with the employment or
non - employment or terms of employment or with the conditions of labour of any person”.

Industrial disputes can be classified into four major types, known as interest disputes,
grievance disputes, unfair labour practices disputes and recognition disputes. Interest disputes
are also called disputes of interest or economic disputes. In most cases the disputes arises
from the demands or proposals for improvement in wages, benefits, job security or terms or
conditions of employment. Interest disputes must be properly negotiated or bargained or
compromised and test of economic power should be avoided as far as possible. These
disputes should be settled through conciliation as far as possible.

Grievance or Rights Disputes are also called as conflict o f rights or legal disputes. These
disputes take place from day to day working relations in the undertaking. It is a protest by the
workers against the act of management that deprives the rights of the employees. The
grievance disputes arises out of payment of wages, fringe benefits, working hours, over time,
promotions, demotions, seniority, safety, and health related aspects. If grievance dispute as
are not sorted out in accordance with a procedure that is accepted by the parties it often
results in disturbing the working relationship between the management and employees. The
government also encourages voluntary arbitration for this type of dispute settlement.

The most common Labour type of dispute is the disputes over Unfair Practices in
industrial relations. The management many times discriminates against workers on the
ground that they are the members of the trade union and they participate in the activities of
the union. Unfair labour practice includes pressure on employees when they exercise their
rights to organize, take part in union activity, refusal to bargain, recruiting new employees
during a strike which is not illegal, creating an environment or actually creating an act of
force or violence or stop communication etc. Such disputes can be settled through
conciliation or such disputes are settled according to the normal procedure laid down under
the Industrial Disputes Act 1947.

8.2 Recognition
Disputes arises when the management of an organisation refuses to recognize a trade
union for the purpose o f collective bargaining or to represent its member employees in case
of a conflict or dispute. When the management dislike a particular union it reftises to accept
that trade union for the purpose of negotiations or bargaining and then it becomes a case of
trade union victimization. This also happens when there is already an existing trade union or
it is a case of multiple trade unions and each making a claim for recognition. Recognition
Disputes also arises when a particular trade union does not have sufficient representatives.
Recognition disputes are settled through the guidelines given by the government for
recognition o f trade union or with the help of Code of Discipline which has been voluntarily
laid down by the government.

8.8 Causes Of Industrial Disputes

Industrial disputes are a common feature of all industrialized economies, whether it is
a capitalist economy or socialist economy or mixed economy. Industry and industrial dispute
always go hand in hand infact they are the two sides of the same coin. The employees who
give their services and time to the industry are interested in higher wages, good working
conditions and want to have a voice in management. The employers on the other hand are
more interested in profits, productivity, quality and control of cost. With both these forces
Industrial Disputes Act, 1947 8.3 Industrial Social Work

acting in opposite direction there is a maximum possibility of disputes and so industrial

disputes has become a major feature of industrialization.
Industrial disputes may arise out of economic, political, social or from socio –
economic background. At the same time the attitude of the employers and employees is also
responsible to a great extent. The factors leading to industrial disputes may be industry
related, management related, government related or union related.
The most common causes of industrial disputes can be listed as:
1. Wages and Allowances
2. Personnel Policies
8. Retrenchment
4. Lay off
5. Leave and hours of work
6. Bonus
7. Indiscipline
8. Violence
9. Inter Union rivalry.
10. Non-implementation of awards or agreements
11. Non-fulfillment of demands
12. Workload
18. Work standards
14. Surplus labour
15. Working conditions
16. Change of manufacturing process
17. Violation of rules or codes
18. Shift working
19. Political motives
20. Closure or lockouts
21. Inability to communicate effectively
22. Reftisal to recognize unions
28. Authoritarian or autocratic attitude of management.
24. Non-implementation of labour law.

Whatever may be the reason for an industrial dispute what disturbs the most is the
amount of loss to the nation. A developing country with pressure of population, per capita
income, poor infrastructure and low standard of living cannot afford to have such out of
proportion disputes and loss of man days.
The Indian Labour Year Book states that in the year 1998 the number of disputes in
India in the public sector were 288 and in the private sector it was 814 that means in total
there were 1,097 disputes. The numbers of man days lost in the public sector were 7576000
and 14486000 in the private sector which means a total o f 22062000 man days were lost in a
single year 1998. The magnitude of industrial disputes and man days lost in public sector
enterprises are less compared to the private sector. In many cases there is no direct action and
so the mandays are not lost but when trade unions adopt strategies like go slow, tools down,
pen down, work to rule etc. productivity is lost.

8.4 Machinery For Settlement Of Industrial Disputes

The Industrial Disputes Act, 1947 provides an elaborate and efficient machinery for the
peaceful and amicable settlement of the industrial disputes. They include:
1. Works Committees (Sec 8)
2. Conciliation Officers (Sec 4)
Centre for Distance Education 8.4 Acharya Nagarjuna University

8. Board o f Conciliation (Sec5)

4. Courts o f Enquiry (Sec6)
5. Labour Courts (Sec 7)
6. Tribunals (Sec 7A)
7. National Tribunals (Sec 7B)

8.4.1 Works Committee

In case of an industrial establishment in which on hundred or more workmen are employed or
have been employed on any day in the preceding twelve months, the appropriate Government
may be general or special order require the employer to constitute in the prescribed manner, a
works committee consisting o f representatives of employers and workmen engaged in the
establishment, so however that the number of representatives of workmen or the committee
shall not be less than the number of representatives of the employers. The representatives o f
the workmen engaged in the establishment and in the consultation with their trade union, if
and registered under the Indian Trade Union Act, 1926.

Duties of the Works Committee

It shall be the duty o f the works committee.
a) To promote measures for securing and preserving amity and good relations between the
employer and workmen.
b) To comment upon matters of their common interest or concern and
c) To endeavour to compose any material difference of opinion in respect o f such matters.

8.4.2 Conciliation Officers (Sec 4)

The appropriate Government may appoint such number of persons as it thinks fit, to be
conciliation officers, by notification in the Official Gazette.
A conciliation officer may be appointed for a specified industries in a specified area or for
one or more specified industries and either permanently or for a limited period.

Duties of Conciliation Officers

1. In every industrial dispute, existing or apprehended, the conciliation officer shall hold the
conciliation proceedings in prescribed manner.
2. The conciliation officer for settling the dispute without delay shall investigate the dispute
and may do all such things to make the parties to come fair and amicable settlement of
dispute.
3. The conciliation officer shall send a report on the settlement o f the dispute to the
appropriate Government together with a memorandum o f the settlement signed by the parties
to the dispute.
4. If no such settlement is arrived at, the conciliation officer shall as soon as practicable after
the close o f the investigation, send to the appropriate Government a full report setting forth
the steps taken by him for ascertaining the facts and circumstances relating to the dispute, and
bringing about a settlement thereof together with a full statement of such facts and
circumstances and the reasons on account of which, in his opinion, a settlement could not be
arrived at.
5. If, on a consideration o f the failure report referred above the appropriate Government is
satisfied, that there is a case for reference to a Board, Labour Court, Tribunal or National
Tribunal it make such reference. Where the appropriate Government does not make such a
reference it shall record and communicate to the parties concerned its reasons there of
Industrial Disputes Act, 1947 8.5 Industrial Social Work

6. A report under Sec. 12 shall be submitted within 14 days o f the commencement of the
conciliation proceedings or within such shorter period as may be fixed by the appropriate
Government.
Provided that subject to the approval of the conciliation officer. The time for the submission
of the report may be agreed upon in writing by all parties to the dispute.
6. A report under Sec. 12 shall be submitted within 14 days o f the commencement of the
onciliation proceedings or within such shorter period as may be fixed by the appropriate
Government.
Provided that subject to the approval of the conciliation officer. The time for the submission
of the report may be agreed upon in writing by all parties to the dispute.

8.4.3. Board Of Conciliation (Sec.5)

The appropriate Government may as the occasion arises by notification in the Official
Gazette constitute a Board of conciliation for promoting the settlement of an industrial
dispute. A Board shall consist of Chairman and two or four other members, as the appropriate
Government thinks fit.
The Chairman is an independent person and other members are representatives o f the parties
to the dispute in equal numbers.

8.4.4 Duties of Board of Conciliation (Sec 18):

1. Where the dispute has been referred to a Board under this Act, it shall he the duty of the
Board to endeavour to bring about at settlement of her same and for this purpose the Board
shall, in such manner as it thinks fit and without delay, investigate the dispute and all matters
affecting the merits and the right settlement thereof and may do all such things as it thinks fit
for the purpose of inducing the parties to come to a fair and amicable settlement of the
dispute [Sec. 18(1)].
2. If a settlement of dispute or of any of the matters in dispute is arrived at in the course of the
conciliation proceedings the Board shall send a report thereof to the appropriate Government
together with a memorandum o f the settlement signed by the parties to the dispute.
[Sec.18(2)]
3. If no such settlement is arrived at, the Board shall as soon as practicable after the close of
investigation send to the appropriate Government a full report on the steps taken by the Board
for ascertaining the facts and circumstances relating to the dispute and for bringing about a
settlement thereof Report shall also contain a full statement o f such facts and circumstance
and the reasons on account of which, in its opinion a settlement could not be arrived at.
[Sec.18(8)]
4. The board shall submit its report within 2 months of the date on which the dispute was
referred to it or within such shorter period as may be fixed by the appropriate Government.
[Sec. 18(5)]. Thus, where conciliation fails, board of conciliation takes over. The functions of
the Board of Conciliation are the same as those of the conciliation officers. The purpose of
constituting boards of Conciliation is to bring about settlement o f individual disputes.

The appropriate Government may as occasion arises by notification in the Official

Gazette constitute a Court of Enquiry for enquiring into any matter appearing to be
connecting with or relevant to an industrial dispute. A court may consist of one independent
person or of such number o f independent persons as the appropriate Government may think
fit and where a Court consists of two or more members, one o f them shall be appointed as
the chairman. Court shall not be able to act unless minimum number o f members required to
transact business i.e. quorum is present. Absence of chairman or nay member or any vacancy
Centre for Distance Education 8.6 Acharya Nagarjuna University

of its member will not affect the validity o f the proceedings o f the Court if they are
otherwise valid and regular.

Duties of Court of Enquiry:

A court shall enquire into the matters referred to it and report thereon to the appropriate
Government ordinarily within a period of 6 months from the commencement of its enquiry.

8.4.5. Labour Courts (Sec.7)

The appropriate Government may, by notification in the Official Gazette constitute one or
more Labour Courts for the adjudication o f industrial disputes relating to any matter
specified in the second schedule and for performing such other fiinctions as may be assigned
to them under this Act. A Labour Court shall consist of one person only to be appointed by
the appropriate Government.

Jurisdiction of Labour Courts [Sec.7(l)]

The Labour Courts adjudicate the following disputes relating to matters specified in the
second schedule;
1. The propriety or legality o f an order passed by an employer under the standing order,
2. The application and interpretation of standing orders ,
8. Discharge or dismissal of workmen including reinstatement of or grant of relief to
workmen wrong fully dismissed.
4. Withdrawal o f any customary concession or privilege.
5. Illegality or otherwise of strike or lock-out and
6. All matters other than those specified in the Third schedule.

Duties of Labour Court:

The Labour Court shall hold its proceedings expeditiously and shall as soon as practicable on
the conclusion thereof submit its award to the appropriate Government. (Sec.15)

8.4.6. Tribunals (SEC. 7A)

The appropriate Government may be notification in the Official Gazette, constitute on or
more tribunals for the adjudication of industrial disputes relating to any matter, whether
specified in the Second schedule or the Third schedule. A Tribunal shall consist of one person
only to be appointed by the appropriate Government. It shall discharge judicial functions,
though it is not a court.

Jurisdiction of Industrial Tribunals [Sec.7 (A)(l)]:

Industrial tribunals have a wider jurisdiction than a Labour Court. It has jurisdiction over any
matter specified in Second or Third Schedule. The following matters are specified under the
Third schedule:
1. Wages, including the period and mode of payment.
2. Compensatory and other allowances.
8. Hours of work and rest intervals.
4. Leave with wages and holidays.
5. Bonus, Profit sharing. Provident Fund and gratuity.
6. Shift working otherwise than in accordance with standing orders.
7. Classification by grades.
8. Rules of discipline.
9. Nationalization.
10. Retrenchment of workmen and closure of establishment, and
Industrial Disputes Act, 1947 8.7 Industrial Social Work

11. Any other matter that may be prescribed.

Duties of a Tribunal:
The duties of a tribunal are the same as those of a Labour Court.

8.4.7 National Tribunals [Sec. 7 (B)]

The Central Government may by notification in the Official Gazette, constitute one or
more National Tribunals for the adjudication of industrial disputes which in the opinion of the
Central Government, involve questions o f national importance or are o f such a nature that
industrial establishments situated in more than one state are likely to be interested in, or
affected by such disputes. A national tribunal shall consist of one person only to be appointed
by the Central Government. The duties of a National Tribunal are the same as those of as
Labour Court or an Industrial Tribunal. [Sec.7B (2)]
A Person shall not be qualified for appointment as the presiding officer of a National
Tribunal unless he is or has been a judge of a High Court. [Sec. 7B (8)] The Central
Government may, if it thinks fit, appoint 2 persons as assessors to advise the National
Tribunal in the proceeding before it [Sec.7B(4)].

Duties of Labour Courts, Tribunals and National Tribunal:

Where an industrial dispute has been referred to a Labour Court, Tribunal or National
Tribunal for adjudication, it shall hold its proceedings expeditiously and shall within the
period specified in the order referring such industrial dispute or the further period extended
under the second provision to sub-section (2-A) of section 10 submit its award to the
appropriate Government (Sec. 15).

8.5 Methods of Resolving Industrial Disputes

There are various methods of resolving industrial disputes like negotiations,
conciliation, mediation and arbitration. Every organization or management or the trade union
has the right and freedom to choose anyone method to resolve the industrial disputes. What is
important here is that Industrial disputes must be solved as early as possible, it must be
settled at the level which it has occurred. Both the management and the union should change
their attitude and keep their ego aside and resolve the disputes as early as possible. When
disputes are not settled relations further become strained and complicated. There should be a
WIN - WIN situation, if both management and unions are to be happy. If one wins and one
looses relations do not and can never improve. Pending awards can lead to less productivity
and losses for both employer and employees. Both the parties as far as possible should resort
to negotiations instead o f tribunals or conciliation.

8.5.1 Negotiation
For resolving industrial disputes one of the best methods in negotiation. It is in negotiation
the two parties that is the employer or management and workers or their unions depend upon
themselves for the settlement of disputes. Both the parties have faith and confidence in each
other and do not feel the need of a third party. This method of resolving disputes gives
importance to dialogue or bipartite dialogue without the government intervention. This
method of resolving disputes shows a higher level o f maturity in the relationship between
management and unions. This is possible when both the parties are well organized, having
faith in each other, ready to recognize each other, ready to recognize each others position and
dignity. Things become more easy for negotiations when both the parties are ready to adjust
and accommodate each others point of view. To resolve disputes both the parties reach to a
written agreement through dialogues backed by moral sanctions. The written agreement
Centre for Distance Education 8.8 Acharya Nagarjuna University

between management and the workers union gets more acceptance from both the sides,
disputes are resolved and at the same time relations are intact. In the process of negotiations
if the negotiation machinery breaks down the issues between the parties remain unresolved.
In such situations both the parties come to a point of deadlock and then direct confrontation
between the two parties begin, definitely resulting into conflict and disharmony. Such conflict
and disharmony results into loss o f time, money, energy poor industrial relations, loss to the
organization and a subject of greater concern for the society and the state.

8.5.2 Conciliation
In this method o f resolving disputes both the employer and the employees union take
the help form outside such as the government agency. The government agency tries to bring
the two parties the management and unions together for discussion and help them in their
negotiations. The main objective of conciliation is to reunite the two conflicting groups in the
industry to avoid further problems of production, disinterest and strained industrial relations.
This method of resolving industrial disputes is adopted when the parties cannot reconcile
their differences on their own and still want to avoid the problems of open conflict.
Conciliation is a practice by which the services o f a neutral third party are used in the
dispute, to make the disputing parties come to an amicable settlement. Conciliation process
takes place under the guidance of a conciliator. Conciliation machinery consists of a
conciliation officer and board of conciliation.

Under section 12(2) of the Industrial Dispute Act of 1947 the conciliation officer shall
be involved for the purpose of bringing about a settlement o f the dispute. The conciliation
officer plays the role of an innovator, protector, discussion guide, leader, advisor and
communication link between the two parties. If the conciliation does not get results in the
course of conciliation proceedings then the conciliation officer sends a report to the
appropriate government a failure report informing that a settlement cannot be arrived at. To
make conciliation more effective the National Commission on Labour has recommended that
“Conciliation machinery should be a part o f the Industrial Relations Commission, which will
make it free from other influences. The independent character of the machinery will alone
develop greater confidence and will be able to evoke more cooperations from the parties.

8.5.3 Mediation
Many times when the two parties to the dispute start making negotiations cannot
come to a consensus or when they are unable to find the right solution mediation becomes an
important tool. Mediation is a method of settling industrial disputes with the help of an
outsider. The mediator is very positive in its approach and also pays a positive role by
collecting information from both the parties the management and the union, makes a proper
assessment of their views and interest and on the basis o f this offers suggestions for arriving
at a solution or for making a proper compromise.

Both in mediation and conciliation there is a role for an outsider and in both the cases
a lot depends upon understanding between the parties involved in the dispute. In both the case
conciliation and mediation a lot depends upon adjustments for common gains. Both
mediation and conciliation are advisory and not judicial in nature. The mediator plays a role
of a guide and shows the parties to the dispute new areas of agreement which otherwise they
themselves could not have discovered.
Industrial Disputes Act, 1947 8.9 Industrial Social Work

8.5.4 Arbitration
The word arbitration means settlement of industrial disputes between two or more
parties by means o f a decision o f an impartial body when efforts in the process of
conciliation and mediation have failed. Arbitration is judicial in nature whereas conciliation
is advisory in nature. Arbitration is voluntary if the parties to the dispute have failed to settle
their differences by negotiation and conciliation, agree to submit them to arbitration as
prescribed under Section lOA of the Industrial Disputes Act, 1947. Compulsory arbitration or
adjudication, the government requires the parties to the dispute to submit their differences to
an arbitration tribunal which after considering the facts and arguments submitted to it, makes
an award. In case o f voluntary arbitration it does not necessarily follow the procedure
adopted by the courts. The essentials of voluntary arbitration is that there should be voluntary
submission of dispute to an arbitrator and the enforcement of an award may not be necessary
and binding because there is no compulsion. Compulsory arbitration is used when the parties
fail to arrive at a settlement through the voluntary methods. Compulsory arbitration may be at
times and under certain circumstances, necessary and desirable. The objective of state
intervention in the field of industrial relations should be to do social justice and make the
weaker party equally strong to enable it to settle its differences through negotiations and
collective bargaining. In compulsory arbitration the parties are forced to arbitration by the
state when the parties to the dispute have failed to arrive at a settlement by voluntary method
or when there is a situation o f national emergency or when the country is passing through
economic crisis or when the parties to the dispute are not well balanced or when the unions
are weak and ill-organized or when the employers are very well-organized and more
powerful or when industries o f strategic importance are involved or when there is a general
public dissatisfaction with the existing industrial relations.
In India where industrial disputes are concerned. The Industrial Disputes Act, 1947 is
a very important one. The principle objectives o f the Act are:
To promote measures for securing good relations between employers and employees.
To minimize the difference between the employer and employee and get the disputes settled
through adjudicatory authorities.
a. To provide suitable machinery for investigation and settlement of industrial disputes.
b. To prevent illegal strikes and lockouts.
c. To provide relief to workmen in matters of lay-offs, retrenchment, wrongful
dismissals and victimization.
d. To give the employees the right of collective bargaining and promote conciliation.
e. The Industrial Dispute Act is a milestone in the historical development of industrial law
in India. With the passage o f time a number of new principles relating to industrial
relations have been introduced in the country such as:
1. A permanent machinery for speedy and amicable settlement of industrial disputes.
2. To expedite the conciliation proceedings, maximum time limit has been prescribed
within which the machinery must be set in motion.
8. Compulsory arbitration in public utility services, including the enforcement of
arbitration awards has been recognized.
4. Prohibition of strikes and lockouts during the pendency o f conciliation and arbitration
proceedings.
5. Specific time limit for various stages o f conciliation and arbitration to eliminate
delays.
6. An obligation on employers to recognize and deal with representative trade union has
been imposed.
Works Committee to provide machinery for mutual consultation between employers
and employees have been set up.
Centre for Distance Education 8.10 Acharya Nagarjuna University

Industrial disputes may be referred to an Industrial Tribunal where both parties to the dispute
apply for such reference or where the appropriate government considers it necessary to do so.
The Industrial Disputes Act, 1947 provides three - tier system o f adjudication.
1. Labour Courts
2. Industrial Tribunal
8. National Tribunal

One or more labour courts may be constituted by the appropriate Government for
adjudicating industrial disputes specified in the second schedule of the Act, and for
performing any other function assigned to them. The duties o f the labour court are to hold
the adjudication proceedings and submit the awards to the appropriate Government after the
conclusion o f the proceedings. The labour court usually deals with matters arising in day to
day working.

In the three-tier system of adjudication provided by the Industrial Dispute Act of 1947
after Labour Court is the Industrial Tribunal. The appropriate Government may appoint one
or more Industrial Tribunal for adjudication of industrial disputes relating to any matter
whether specified in the Second Schedule or the Third Schedule. Industrial Tribunal may be
for a limited period or permanent. The Industrial Tribunal has all the necessary attributes of a
court of justice. It may create new obligations or modify contracts in the interest of industrial
peace, to protect the rights o f the trade union, prevent unfair practices and victimization.
Industrial Tribunals have a wider jurisdiction than a Labour Court.

The third in the three tier system o f adjudication of the Industrial Dispute Act of 1947
is the National Tribunal. The Central Government may be notification in the official Gazette
constitute one or more National Tribunals for the adjudication of industrial disputes which in
the opinion of the Central Government involves question of national importance or any
matter which will affect the industrial establishment in more than one state. When a National
Tribunal has been referred to, no Labour Court or Industrial Tribunal shall have any
jurisdiction to adjudicate upon such a matter.

8.6 Code Of Discipline and Code Of Conduct

Code of Discipline forms the Gandhian philosophy to industrial relations to bring
employees and trade union to a moral agreement for promoting peace and harmony. Shri
Guljarilal Nanda the then Union Labour Minister, a true Gandhian took efforts to bring out a
Code of Discipline in 1957 and 1958. It was at his instance that the code was formulated. The
code was formally adopted in the 16'’’ session of 1958 Indian Labour Conference. National
representatives of both employers and trade unions were parties to it. This code was a special
one formulated to voluntarily regulate Labour Management relations. The Code of Conduct
was discussed to regulate the inter-union relations and a Code o f Discipline was discussed at
the Indian Labour Conference to regulate Labour Management relations. After a great deal of
persuasion by Shri Guljarilal Nanda the inter union “Code of Conduct” was of voluntarily
adopted on 21th May 1958. The four central organizations of labour who were representing
the Indian Labour Conference that is Indian National Trade Union Congress. All India Trade
Union Congress., Hind Mazdoor Sabha and United Council of Trade Unions agreed to
comply with the code. The adoption of the “Code of Discipline” was announced in June
1958. The code of discipline is highly comprehensive and ethical in its approach to the
industrial relations system. The “Code of Discipline” ensures that the employers and workers
should utilize the existing machinery for the settlement of disputes and avoid direct action. It
also explains that both labour and management should recognize the rights and
Industrial Disputes Act, 1947 8.11 Industrial Social Work

responsibilities o f each other. It also explains the obligations of employers and workers. The
code does not support any unfair practices but support prompt action for settlement of
grievances and implementation of settlements and awards.
The National Commission on Labour thinks that the code has only a limited success and thus
it is not a solution to problems of industrial relations.

8.7 Summary
Industrialization in a country has always contributed to employment, contribution to national
income, per capita income, exports and economic development on one side and industrial
disputes on the other. It has always been the case of mixed blessing. The conflict of interest
between management and labour is what leads to industrial disputes. The management has a
goal of profit maximization and on the other hand the workers expect rise in income, security
of job, protection o f their skills, improvement in their status and in the working conditions.
Those who control the factors of production require strict administration, closer supervision,
and maintenance of strict discipline and implementation o f rules, code of conduct and code
of discipline. Whereas the workers demand a share in capital, voice in management, freedom
of expression, participation in management and dignity of employees. So the people that
control the factors of production and people that produce always have different or conflicting
interest which gives birth to industrial disputes.

8.8 Key words

Conciliation In this method o f resolving disputes both the employer and the employees
union take the help form outside such as the government agency. The government agency
tries to bring the two parties the management and unions together for discussion and help
them in their negotiations.

Mediation Many times when the two parties to the dispute start making negotiations cannot
come to a consensus or when they are unable to find the right solution mediation becomes an
important tool. Mediation is a method of settling industrial disputes with the help of an
outsider.

Arbitration- The word arbitration means settlement of industrial disputes between two or
more parties by means o f a decision o f an impartial body when efforts in the process of
conciliation and mediation have failed. Arbitration is judicial in nature whereas conciliation
is advisory in nature

Negotiation- For resolving industrial disputes one of the best methods in negotiation. It is in
negotiation the two parties that is the employer or management and workers or their unions
depend upon themselves for the settlement of disputes.

National Tribunals - The Central Government may by notification in the Official Gazette,
constitute one or more National Tribunals for the adjudication of industrial disputes which in
the opinion of the Central Government, involve questions o f national importance or are of
such a nature that industrial establishments situated in more than one state are likely to be
interested in, or affected by such disputes.

Tribunals - The appropriate Government may be notification in the Official Gazette,

constitute on or more tribunals for the adjudication of industrial disputes relating to any
matter, whether specified in the Second schedule or the Third schedule
Centre for Distance Education 8.12 Acharya Nagarjuna University

Court Of Enquiry-The appropriate Government may as occasion arises by notification in the

Official Gazette constitute a Court of Enquiry for enquiring into any matter appearing to be
connecting with or relevant to an industrial dispute

8.9 Self Assessment Questions

1. Briefly Explain the causes of Industrial Disputes
2. Explain the Duties of Conciliation officers
8. Discuss the Methods of Resolving Industrial Disputes
4. Outline the Code of Discipline and code of conduct

8.10 Suggested Readings

1. Piyali Ghosh and Shefali Nandan (2015) Industrial Relations and Labour Laws,
McGraw Hill.
2. MD Sinha P. R. N. (2018) Industrial Relations, Trade Unions, and Labour
Legislation, Dorling Kindersley Pvt Ltd.
8. Kennedy, V.D Unions, Employers and Government, Manaktalas, Bombay .
4. John niland, Chrissieverevis and Russell Lansburg, The future of Industrial Relations,
Sage, Pub. London .
5. Poole Michael, Industrial Relatilons : Origins and Patterns of National Diversity;Routledge
& Kegan Paul, London .
6. Keer, Clerk and Staudohar, paul D., Industrial Relations in a New Age, Jossey – Bass
publishers, San Francisco.
7. Bamber Greg J. and Lansbury, Russess D., International and Comparative Industrial
Relations, allen and Unwin, London .
8. Government of India , Report of the National Commission on Labour in India ;
Government of India ; Government of India , New Delhi .
9. Government of India , Indian Labour yearbook, Labour Bureau, Government of India,
New Delhi .
10. V.K. Kharbanda & Vipul kharbanda, Handbook Of Industrial Disputes Act 1947 With
Digest Of cases (1947-2018), Edition 2019, Law Publishing House’s.

Prof Saraswati Raju Iyer

Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson-9
INDUSTRIAL EMPLOYMENT STANDING ORDERS ACT,
1952 & TRADE UNIONS ACT, 1926

Learning Objectives
 To study The Industrial Employment (standing orders) Act 1996
 To know the purpose and significance of the Industrial Employment Standing Orders
Act, 1996
 To understand the role of Industrial Employment Standing Orders Act, 1996 in
 Industrial Relations
 To study The Trade Union Act, 1926

Structure
9.1 The Industrial Employment (standing orders) Act 1996
9.2 The Industrial Employment (standing orders) Act 1996 Features
9.3 Purpose and Significance of the Industrial Employment Standing Orders Act, 1996
9.9 Industrial Employment Standing Orders Act, 1996- A Vital for the Workers
9.5 Role of Industrial Employment Standing Orders Act, 1996 in Industrial Relations
9.7 Trade Union Act, 1926

9.1 The Industrial Employment (standing orders) Act 1996

The Industrial Employment Standing Orders Act, 1996 is an act of the Parliament of
India that provides a framework for regulating conditions of employment in certain
industries. It was enacted as a part of the post-independence labour reform efforts. The Act
applies to establishments employing ten or more workers and defines an 'industrial
establishment' as one where at least 50 persons are employed at any time during the
preceding 12 months.

A standing order is a rule made by an employer establishing a system or method of

working or regulating any aspect of employment in an industrial establishment. The standards
ensure that employees have access to safe working conditions, social security benefits,
education facilities etc. These agreements must be registered with a labour officer, who can
enforce compliance with them.

The Industrial Employment Standing Orders Act seeks to improve the living and
working conditions of workers by providing better pay and benefits such as leave, health
care, etc. It also aims to ensure that employers do not abuse their power by making unilateral
decisions about wages, benefits or other conditions of employment without consulting
workers' representatives (if any).

The Act provides for the establishment of a code of minimum wages and other
conditions of employment for workers in factories and commercial establishments that
employs the workers. The Code was originally enacted in 1996 by the Central Legislature as
a result of the efforts of the labour movement led by the leaders of our nation to improve the
working conditions of industrial workers in India.
Centre for Distance Education 9.2 Acharya Nagarjuna University

9.3 The Industrial Employment (standing orders) Act 1996 Features

The Industrial Employment Standing Orders Act, 1996 regulates working hours,
holidays, wages, and other conditions of service for workers employed in industrial
establishments. It also prescribes procedures for the settlement of disputes between
employers and employees and provides for arbitration machinery to deal with such disputes.
It was enacted to promote a better understanding between the employers and the
industrial workers on matters relating to employment and payment of wages, hours of work,
leave with pay, holidays with pay, termination of service rules etc.

The definition of the factory under the Industrial Employment Standing Orders Act
includes not only factories but also workshops and mines established for extraction of coal or
other minerals from the earth by means of machinery or otherwise than by manual labour;
docks; railway wagons, aircraft and tramways whether propelled by mechanical power or
otherwise; vessels navigated by steam or other mechanical power; electric light plants;
cinematograph films showing apparatus or devices for exhibition or reproduction of pictures
or images; cinemas and theatres; gas works; electric light works; textile mills, oil mills and
sugar refineries.

The Industrial Employment Standing Orders Act, 1996 is an act of the Parliament of
India which provides for the regulation of conditions of service of industrial workers in India.
For each schedule within the Act, the Parliament of India issues the written instruction of
standing orders which provide for minimum wages, maximum hours of work and working
conditions. The main features of this Act are:
• It applies to all factories, mines and other establishments where 20 or more workmen are
employed or were employed on any day of the preceding twelve months
• It provides for minimum wages, maximum hours and other conditions of employment, such
as leave with wages, overtime allowance etc., to be determined by the appropriate
Government by notification from time to time
• It also provides for a provision of maternity relief and medical relief, and insurance cover
against accidents for all the industrial workers covered by the Act
• Due compensation will be furnished to the workers under the provision of this Act as per
their defined shift timings between 6 am to 6 pm, respectively.

9.4 Purpose and Significance of the Industrial Employment Standing Orders Act, 1996
The Industrial Employment Standing Orders Act, 1996 aims to provide for the
fixation of minimum rates of wages, hours of work, holidays with pay and leave with pay in
factories, workshops and other establishments or undertakings which employ ten or more
workers. It also provides for the regulation of facilities like medical aid and welfare schemes
to be extended by employers to their employees.

It was enacted to monitor and regulate the terms and conditions of industrial
employment in India. It made provisions for the security of employment and payment of
wages by cash or through cheque etc. The Act also provides for machinery for adjudicating
disputes regarding violation of such terms and conditions. A Standing Order is a document
setting out terms and conditions of employment for workers in an industry.

The Industrial Employment Standing Orders Act, 1996 sought to ensure that all
employees receive benefits such as:
• A minimum wage for every hour worked
• Payment of bonus at certain intervals during the year
Industrial Employment Standing Orders Act, 1952 9.3 Industrial Social Work

• Provision of paid leaves

• Provision of free conveyance to and from the workplace
The Industrial Employment Standing Orders Act, 1996 for the welfare of the
industrial workers lays down general principles for the fixation of wages and working hours
in factories and other industrial establishments. The minimum wage ceiling fixed by this law
has been increased from time to time by way of notifications issued by the Government of
India from time to time.

It aims to provide security of employment and to regulate the terms and conditions of
service in factories, mines and other establishments engaged in any industry. The Act
provides for the establishment of a Board for each state to exercise jurisdiction over matters
relating to industrial employment.

The Central Government may make rules for regulating the wages and conditions of
service of employees in any establishment covered under this Act. These rules are called
'Standing Orders', and they are issued by the Ministry of Labour & Employment. The
Standing Orders contain minimum rates of wages and other conditions of service which
employers must adhere to as per the provisions of this Act.

The Standing Orders also contain provisions for payment of bonus, provident fund
and gratuity, leave facilities etc., which apply to all establishments irrespective of size or
number of workers employed therein.

9.5 Industrial Employment Standing Orders Act, 1996- AVital for the Workers
The Industrial Employment Standing Orders Act, 1996 was enacted to regulate
relations between employer and employee in industrial establishments. It is based on the
following premises:
• The employment of workers in any industrial establishment should be regulated by a
uniform standard applicable to all establishments throughout the country
• There should be effective machinery for enforcing the observance of this standard
• Wherever possible, disputes between employers and employees should be settled by
conciliation or arbitration
• The law applies to all factories, mines, oilfields and other industrial establishments
employing 20 or more workers on any day in any one year or working 26 or more days in
any one year

The Industrial Employment Standing Orders Act, 1996 (IESO) is important

legislation that was enacted to ensure the rights and welfare of workers in industrial
establishments. The Act lays down certain conditions under which the factories have to
operate. It also provides for the fixation of minimum wages and other conditions of
employment of workers in factories.

The main objective of the Industrial Employment Standing Orders Act is to ensure
that there is no exploitation of workers by their employers or vice versa. The Act also ensures
that workers get their due wages and other benefits like medical facilities, holidays etc. Under
this Act, every worker has a legal right to minimum wage. This is a statutory entitlement
under the Industrial Employment Standing Orders Act, 1996, which forms part of the labour
laws in India.
Centre for Distance Education 9.4 Acharya Nagarjuna University

The Industrial Employment Standing Orders Act 1996 is vital for the workers as it
protects their rights and ensures that they get fair wages for their labour. The Act requires
employers to provide a safe working environment for their employees by maintaining good
hygiene and sanitation standards at the workplace.

The Act provides for the constitution of local committees and appellate tribunals. It
also provides for conciliation by these committees before referring disputes to arbitration by
the Central Government.

9.6 Role of Industrial Employment Standing Orders Act, 1996 in Industrial Relations
The Industrial Employment Standing Orders Act (IESO Act) of 1996 plays a
significant role in shaping industrial relations in India. The act establishes a framework for
defining the terms and conditions of employment for workers in industrial establishments. Its
primary objective is to promote industrial peace, discipline, and uniformity in employment
conditions across various industries. Here are the key roles of the Industrial Employment
Standing Orders Act 1996 in industrial relations:

9.6.1Standardization of Employment Terms:

The act requires employers to define and publish standing orders, which contain rules
and regulations governing various aspects of employment, such as working hours, leave
policies, disciplinary procedures, and grievance redressal mechanisms. It aims to bring
uniformity and clarity in employment conditions and ensures that workers are aware of their
rights and obligations.

9.6.2 Preventing Arbitrary Treatment:

The act prohibits the employer from making arbitrary decisions or changing
employment conditions without due process. It mandates that any changes in standing orders
must be communicated to the workers and the appropriate authority, ensuring transparency
and preventing unfair practices.

9.6.3 Facilitating Collective Bargaining:

The act recognizes the importance of collective bargaining between employers and
workers' representatives. It encourages the formation of trade unions and provides a legal
framework for negotiations, thereby promoting a harmonious relationship between
management and labor.

9.6.4 Resolving Disputes:

In cases of disputes related to employment conditions, the act provides a mechanism
for resolving conflicts through conciliation, arbitration, or adjudication. This helps in
maintaining industrial peace and avoiding prolonged labor disputes.

9.6.5 Protection of Workers' Rights: The act includes provisions to safeguard workers'
rights and prevent exploitation. It ensures fair treatment, prevents discrimination, and
provides mechanisms for workers to raise grievances against any violation of their rights.

9.6.6 Compliance and Enforcement: The act empowers the appropriate government
authority to enforce the provisions of the act and ensure compliance by industrial
establishments. Employers failing to comply with the provisions of the act may face penalties
or legal consequences.
Industrial Employment Standing Orders Act, 1952 9.5 Industrial Social Work

9.7 Trade Union Act 1926

A trade union or trades union, also called a labour union is an organization of workers
who have come together to achieve common goals such as protecting the integrity of its trade,
improving safety standards, achieving higher pay and benefits such as health care and
retirement, increasing the number of employees an employer assigns to complete the work,
and better working conditions. The trade union, through its leadership, bargains with the
employer on behalf of union members and negotiates labour contracts with employers. The
most common purpose of these associations or unions is "maintaining or improving the
conditions of their employment". This may include the negotiation of wages, work rules,
complaint procedures, rules governing hiring, firing and promotion of workers, benefits,
workplace safety and policies.

Unions may organize a particular section of skilled workers a cross-section of workers

from various trades or attempt to organize all workers within a particular industry .The
agreements negotiated by a union are binding on the rank and file members and the employer
and in some cases on other non-member workers. Trade unions traditionally have a
constitution which details the governance of their bargaining unit and also have governance
at various levels of government depending on the industry that binds them legally to their
negotiations and functioning. Originating in Great Britain, trade unions became popular in
many countries during the Industrial Revolution. Trade unions may be composed of
individual workers, professionals, past workers, students, apprentices or the unemployed.
Trade union density, or the percentage of workers belonging to a trade union, is highest in the
Nordic countries.

Definition
Trade Union Act 1926 [Sec. 2(h)]: Trade Union means any combination, whether temporary
or permanent, formed primarily for the purpose of regulating the relations between workmen
and employers or between workmen and workmen or between employers and employers for
imposing restrictive conditions on the conduct of any trade or business and includes any
federation of two or more Trade Unions.

Sydney and Beatrice Web have defined Trade Union as a Continuous association of wage
earners for the purpose of maintaining or improving the conditions of their working lives.
G.D.H. Cole defines Trade Union as an association of workers in one or more occupations
and association carried on mainly for the purpose of protecting and advancing the member‘s
economic interests in connection with their daily work.

Objectives of Trade Union:

Trade union is a voluntary organization of workers relating to a specific trade,
industry or a company and formed to help and protect their interests and welfare by collective
action. Trade union are the most suitable organisations for balancing and improving the
relations between the employees and the employer. They are formed not only to cater to the
workers' demand, but also for imparting discipline and inculcating in them the sense of
responsibility. They aim to:-
 Secure fair wages for workers and improve their opportunities for promotion and training.
 Safeguard security of tenure and improve their conditions of service.
 Improve working and living conditions of workers.
 Provide them educational, cultural and recreational facilities.
 Facilitate technological advancement by broadening the understanding of the workers.
Centre for Distance Education 9.6 Acharya Nagarjuna University

 Help them in improving levels of production, productivity, discipline and high standard of
living.
 Promote individual and collective welfare and thus correlate the workers' interests with
that of their industry.
 To take participation in management for decision-making in connection to workers and to
take disciplinary action against the worker who commits in-disciplinary action.

Characteristics of Trade Unions

1. Association of employees: A trade union is essentially an association of employees
belonging to a particular class of employment, profession, trade or industry. For example,
there are unions for teachers, doctors, film, artistes, weavers, mine workers and so on.

2. Voluntary Association: An employee joins the trade union out of his free will. A person
cannot be compelled to join a union.

3. Permanent Body: A trade union is usually a permanent body. Members may come and go
but the trade union remains.

4. Common Interest: The member of a trade union have certain matters of common interest-
job security, better pay and working conditions and so on, which bring them together.

5. Collective Action: Even when an individual employee has any grievance over certain
management decisions, the matter is sorted out by the intervention of the trade union
Employees are able to initiate collective action to solve any problem concerning any
particular employee or all the employees.

6. Rapport with the Management: The trade union seeks to improve relations between the
employees and employers. The officials of the trade union hold talks with the members of the
management concerning the problems of the employees in order to find an amicable solution.
It is thus possible for the employees to have better rapport with the management.

Growth of Trade Unions in India

It was not until the close of First World War, that the modern trade Union movement
really took permanent roots in Indian Soil. The establishment of Bombay Mill Hands‘
Association is considered as the first phase of the trade union movement in India. In 1905, the
Printers Association of Calcutta and Dock Union Board in Bombay were formed.

There was labor unrest in India at the end of the First World War. In several
industries, the workers went on strikes to secure wage increases. The Russian Revolution and
the Industrial Labor Organization have inspired the Indian laborers to launch trade unions
like the Spinners Union and Weaver‘s Union which had been established in Madras and
Ahmedabad respectively.

But the important step in the history of Indian trade unionism was the foundation of
All India Trade Union Congress in 1920. There had been a steady progress of trade union
movement in India. However, the decision of the Madras High Court that the formation of
trade union is illegal stood in the way of its development.

In 1926, the Trade Unions Act was enacted to give legal recognition to the different
trade unions. The said Act also .conferred certain privileges on the registered trade unions in
Industrial Employment Standing Orders Act, 1952 9.7 Industrial Social Work

an industrial unit. The Trade Unions Act has made it compulsory on trade unions to use their
funds for workers interests and to prescribe a fee of at least 25 paisa per works. Most of the
members of the executive committee of a trade union must be employed in the factory.

In 1930, the climate was not favorable to the growth of trade Union movements in
India. The prosecution of the communists involved in Meerut conspiracy case and the failure
of Bombay Textile strike of 1929 retarded the trade union movement. Moreover the serious
economic depression was added with it, during the period.

In the next phase, the Second World War gave a great impetus to the trade union
movement in India. The rising cost of living forced laborers to organize themselves into trade
unions. At the same time the Second World War split the trade union leaders on the question
of participating in the war. Industrial unrest was also increased during this period. As a result;
there was a marked increase in both the number of trade unions and of organized workers.

With independence and partition, the country was plunged into growing
unemployment. A series of strikes occurred, in the country. The All India Trade Union
Congress was split up as a result of which the Indian National Trade Union Congress
(INTUC) was formed in 1997 under the control of congress party. The Hind Mazdoor Sabha
(HMS) was formed by the socialist Party in 1998, and United Trade Union congress (UTUC)
was formed in 1999. Recently, Centre of Indian Trade Unions (CITU) has been formed by
the Communist Party (Marxists).

There are more than fourteen thousand registered trade unions in India. The steady
growth of trade unions in India is due to the political consciousness among the laborers as
well as the governmental measures to facilitate collective bargaining through appropriate
legislation.

1. Classification of Theories of Trade Union

The revolutionary approach/theory of trade union is developed by Karl Marx This theory is
also known as the theory of class war and dialectical materialism‖. According to Marx, trade
union was the foremost organising centre to provide locus for streamlining the forces of
working classes The trade unions are, for Marx, the instruments to overthrow capitalism.

These are, thus, prime instruments of the class struggle between proletarian workers
and capitalist businessmen. Marx advocated that the working class must not divert itself from
its revolutionary programme because it is labour struggle only that can abolish capitalism. To
Marx, workers emancipation involves abolition of capitalism.

2. Evolutionary Theory:
This theory also known as theory of industrial democracy‖ was enunciated by Sydney
and Beatrice Webbs. To Webbs, trade unionism is an extension of the principle of democracy
in the industrial sphere. In other words, trade unionism is not an instrument to overthrow the
capitalism, but a means of equalizing the bargaining power of labour and capital.

Trade unionism provides a means by which workers overcome managerial

dictatorship, on the one hand, and express their voice in the determination of the conditions
under which they have to work, on the other.
Centre for Distance Education 9.8 Acharya Nagarjuna University

3. Theory of Industrial Jurisprudence:

According to S. H. Slitcher the propounder of the-Theory of Industrial Jurisprudence‖,
workers individually fail in bargaining with employers for protecting their interests. In his
view, trade unionism served as a means for workers to protect them in work. Such an
approach of trade unionism, Slitcher termed as a system of industrial jurisprudence.

4. Rebellion Theory:
To Frank Tannenbaum, the propounder of Rebellion Theory‖, trade unionism is a
spontaneous outcome in the growth of mechanisation. He believes that the use of machines
leads to exploitation of workers. Thus, machine is the cause and labour movement, i.e., trade
unionism is the result. In other words, trade unionism is a rebellion approach against
mechanization automatization of industrial society to protect workers‘interest in the
enterprise.

5. The Gandhian Approach:

The Gandhian approach of trade unionism is based on class collaboration rather than
class conflict and struggle‖. The idea to take worker‘s due share from capitalist by reform and
self consciousness among workers led to the emergence of trade unionism. Thus the
Gandhian approach of trade unionism is not only related to material aspect but also moral and
intellectual aspects.

Gandhi emphasised that the direct aim of a trade unionism is not, in the last degree
political. Instead, its direct aim is internal reform and also evolution of internal strength.
Also, trade unionism, according to the Gandhian approach, is not anti-capitalistic as is
generally viewed.

Functions of Trade Unions:

(i) Fraternal or mutual-help functions; and
(ii) Militant or fighting functions.
The fraternal functions include organisation of indoor and outdoor games, dramatic
clubs, arranging of lectures, running of schools, hospitals, etc. All these are intended to
promote the general welfare of the working classes through their own efforts.

The militant functions of the unions refer to the struggle that they make against the
employers for getting higher wages or for getting their grievances redressed. Strike is the
weapon that they wield. This is a weapon of last resort. Sometimes the employers take up a
very unreasonable and uncompromising attitude. No alternative is then left to the workers
except to fight for their rights. Thus a strike becomes inevitable.

Structure of Trade Unions in India

In India, the structure of trade union consists of three levels: plant/shop or local, the
state and the centre. It is generally from the central level that the ideology of the important
central federations of labour in India percolates down to the state and local levels. Every
national or central federation of labour in India has state branches, state committees or state
councils, from where its organization works down to the local level.
There are two types of organizations to which the trade unions in India are affiliated:
1. National Federations, and
2. The Federations of Unions
Here a brief discussion of this trade union form is given.
Industrial Employment Standing Orders Act, 1952 9.9 Industrial Social Work

1. National Federations
The National Federations have all the trade unions in a given industry as their
affiliated members. Every trade union, irrespective of the industry to which it belongs, can
join a general national federation. Such federations are the apex of trade union policies and
national character. The central union organizations are national federations of labour based
on different political ideologies. Because of their political leanings, the affiliated trade unions
in the field of labour relations follow either a militant policy or a policy of cooperation with
the employers and the government, or a policy of continuous strife and litigation. The trade
union leadership to these national organizations is generally provided by the politicians. Such
leaders are found leading a dozen or more unions in a particular state.

These unions may be in the petroleum industry, the transport industry, electricity
supply undertakings or craft unions, such as the rickshaw pullers‘ union or taxi drivers‘
union. Some of the trade union leaders are MPs and MLAs.

The national/central federations are empowered to decide the question of jurisdiction

of the various local and national unions. A majority of these federations allow their affiliates
to bargain independently with their respective employers. The federations only act as
coordinating authorities for different unions under their control. They also select delegates to
represent workmen in international conferences organized by the International Labour
Organisation or the International Confederation of Free Trade Unions. The all-India
federation of trade unions has a regular structure. For example: The INTUC consists of a
central organization, affiliated unions, industrial federation, regional branches and councils
functioning under the direct control or supervision of the central organization, the assembly
of delegates, the general council and the working committees.

The INTUC functions through its affiliated unions, delegates, assembly, and general
council (including office-bearers), the working committees of the general council and the
Pradesh bodies. The UTUC consists of the general body (delegates‘ assembly) general
council, and the working committee of general council.

The Hind Mazdoor Sabha (HMS) works through the general council, the working
committee and affiliated organization.

2. Federations of Unions
These are combinations of various unions for the purpose of gaining strength and
solidarity. They can resort to concerted action, when the need for such action arises, without
losing their individuality. Such federations may be local, regional, state, national and
international. There are a few organizations which are local in character, such as the
Bharatiya Kamgar Sena, the Labour Progressive Federation, Chennai, the National Front of
Indian Trade Unions and the Coordinating Committee of Free Trade Unions.
Many Unions are affiliated to one or the other type of the following central organizations of
workers:
a) The Indian National Trade Union Congress
b) The All-India Trade Union Congress
c) The Hind Mazdoor Sabha
d) The United Trade Union Congress
e) The Centre of India Trade Unions
f) Bharatiya Mazdoor Sangh
g) The National Front of India Trade Unions
Centre for Distance Education 9.10 Acharya Nagarjuna University

h) The United Trade Union Congress (LS)

i) The National Federation of Independent Trade Unions
j) The Trade Union Co-ordination Committee
k) Indian Confederation of Labour
l) Hind Mazdoor Kisan Panchayat
m) National Labour Organization

Problems of the Trade Union Movement in India

The shortcomings or the weakness of the trade union movement in India are as follows:
1. Lack of balanced growth
2. Low membership
3. Poor financial position
4. Political control
5. Multiplicity of unions
6. Inter-union rivalry
7. Lack of able leaders
8. Lack of recognition
9. Opposition from employers
10. Indifferent attitude of members

1. Lack of Balanced Growth

Trade unions are often associated with big industrial houses. A vast majority of the working
population is without any union backing. The entire agricultural sector is highly unorganized
in India. The agricultural workers are subject to all kinds of exploitation. The same is true
with respect to those working in small scale and cottage industries. Lack of balanced growth
of trade unions in all sectors is one of the major weakness of the trade union movement in
India.

2. Low Membership
Trade unions, with the exception of few have low membership. This is because many
employees are not willing to join unions although they are ready to enjoy the benefits arising
out of the union actions. The reasons for the hesitation of employees to join unions include,
among others, the need to take part in strikes and such other programmes, fear of pay cut and
fear of punishment.

3. Poor financial Position

Low membership is one of the reasons for the poor financial position of the inions. Moreover,
the subscription payable by every member is kept low. Some members may not even make a
prompt payment of the small amount of subscription. These are also not very many sources
from which unions can get funds. They may probably depend on contributions from
philanthropists. The poor financial position can only weaken the trade union movement.

4. Political Control
Most popular trade unions in India are affiliated to certain political parties. These political
parties are only keen on making every grievance of the working class as political issue to
attain political gains. As a result the problem only gets wide publicity and remains unsolved.

5. Multiplicity of Unions
Often there exists more than one union within the same industry each backed by a political
party.
Industrial Employment Standing Orders Act, 1952 9.11 Industrial Social Work

These various unions have conflicting ideology. If one union comes out with a strike proposal
another union may work against it. As a result, none of the unions is actually able to solve the
problems of the workers.

6. Inter-Union Rivalry
The existence of many unions within a particular industry paves way for what is called inter-
union rivalry. These unions do not work together for the cause of the workers. Each union
may adopt a different approach to the problem. The inter-union rivalry may become a more
serious problem of the workers. As a result, the employees are unable to derive the benefits of
collective bargaining.

7. Lack of able Leaders

Another barrier to the growth of trade unions is the lack of able leaders. Some union leaders
give a strike call even for petty problems that can easily be resolved through talks. On the
other hand, there are leaders who have secret pact with the management. They get bribes
from the government and work against the interests of the employees. Some leaders don‘t
convene a meeting of the general body at all even when a crisis develops. They take
unilateral decisions that are thrust on the employees.

8. Lack of recognition
Most of the management are not prepared to recognize trade unions. This happens because of
any one of the following reasons.
1. The existence of low membership that reduces the bargaining power of the union.
2. The existence of more unions within the same industry.
3. Inter-union rivalry.
4. The indifferent attitude of the employees themselves towards trade unions.

9. Opposition from employers

Apart from the fact that most employers are not prepared to recognize trade unions.
They also do not let their employees to form a union. The employers are able to achieve by
adopting certain punitive measures like intimidating employees, victimizing union leaders,
initiating disciplinary action against employees indulging in union activities and so on.

Some employers also start rival unions with the support of certain employees.
Sometimes, they may go to the extent of bribing union leaders to avert a strike or such similar
show of protest by employees. The employers fail to understand that the union enables the
employees to express their grievances in a democratic manner and can also be used as a
means of promoting better labour management relationships.

10. Indifferent Attitude of the Members

Union leaders alone cannot be blamed for the weakness of the trade union movement.
The indifferent attitude of the members of certain unions is also a barrier. Some members do
not even make a prompt payment of the subscription amount. The treasurer of the union has
to go behind them, remind and persuade them to pay the subscription that is often a very
small amount.

There are not members who do not attend the general body meetings nor do they
bother to know what is discussed in such meetings. There are still others who do not take part
at all in any of the programmes of the union organized to press the demands of the employees
Centre for Distance Education 9.12 Acharya Nagarjuna University

like slogan shouting procession, demonstration, hunger strike etc. Members generally expect
the office-bearers to do all that is necessary to achieve the demands.

Measures to strengthen Trade Unions

The following are some of the measures that can be adapted to strength trade union.
1. Improve financial position
The poor financial position of the trade union does not permit it to undertake certain
activities. For example it requires fund to print pamphlets an d booklets, to prepare banners
and placards, to enable the officer-bearers to travel to different places to mobilize support and
so on in the processes of working for the cause of the employees .The first corrective action
that is necessary is to improve the financial position of every trade union. The following steps
may be taken in this regard.
a) The amount of subscription must be increased in tune with the increase in the cost of
operations.
b) The members must be persuaded to make prompt payment of the subscription
c) Donations may be sought for from philanthropists.

2. Increase Membership
Steps must be taken to increase then membership of trade unions. The employees
must be enlightened on the importance of cooperation and collective bargaining. This must be
done on a continuous basis or till such time the employees take the decision to join the union.
The office bearers must take the initiative to make the employers understand. The philosophy
of ―United We Stand and Divided We Fall‖

3. Get rid of Political Affiliation

When trade unions have political affiliation, the political parties make an attempt to
use the power of unions to their own political gains. It is therefore important that our unions
free themselves from political control. When the employees have certain genuine demands,
they must represent the same to their employers through able leaders who are none other than
their own fellow workmen. No attempt should be made to politicalise any issue.

4. Multiple Union
The existence of many trade unions within the same industry only reduces the power
of collective bargaining. Every such union works to its own goals. The general interests and
well being of the employees thus are ignored. It is therefore necessary to make efforts to
bring all the employees under one union. Every employee working in any industry must be
made to realize the importance of trade union recognisation. He must come forward to join
the union willingly. Once the support of the employees is received; the next step is to make
all possible efforts to persuade every management to recognize the trade union.

Industrial Relations
Industrial relations is a multidisciplinary field that studies the employment
relationship. Industrial relations is increasingly being called employment relations or
employee relations because of the importance of non-industrial employment relationships;
this move is sometimes seen as further broadening of the human resource management trend.
Indeed, some authors now define human resource management as synonymous with
employee relations. Other authors see employee relations as dealing only with non-unionized
workers, whereas labor relations is seen as dealing with unionized workers. Industrial
relations studies examine various employment situations, not just ones with a unionized
workforce.
Industrial Employment Standing Orders Act, 1952 9.13 Industrial Social Work

Definition of Industrial Relations

Industrial relation is defined as relation of Individual or group of employee and
employer for engaging themselves in a way to maximize the productive activities.

In the words of Lester, ―Industrial relations involve attempts at arriving at solutions

between the conflicting objectives and values; between the profit motive and social gain;
between discipline and freedom, between authority and industrial democracy; between
bargaining and cooperation; and between conflicting interests of the individual, the group and
the community.

According to Bruce E. Kaufman "To a large degree, most scholars regard trade unionism,
collective bargaining and labor-management relations, and the national labor policy and labor
law within which they are embedded, as the core subjects of the field."

According to Dale Yoder‘, IR is a designation of a whole field of relationship that exists

because of the necessary collaboration of men and women in the employment processes of
Industry‖.

Armstrong has defined IR as ―IR is concerned with the systems and procedures used by
unions and employers to determine the reward for effort and other conditions of employment,
to protect the interests of the employed and their employers and to regulate the ways in which
employers treat their employees.

In the opinion of V. B. Singh ―Industrial relations are an integral aspect of social

relations arising out of employer-employee interaction in modern industries which are
regulated by the State in varying degrees, in conjunction with organised social forces and
influenced by the existing institutions. This involves a study of the State, the legal system,
and the workers‘ and employers‘ organizations at the institutional level; and of the patterns of
industrial organization (including management), capital structure (including technology),
compensation of the labour force, and a study of market forces all at the economic level.

Encyclopedia Britannica defined IR more elaborately as ―The concept of industrial

relations has been extended to denote the relations of the state with employers, workers, and
other organisations. The subject, therefore, includes individual relations and joint
consultation between employers and workers at their places of work, collective relations
between employers and trade unions; and the part played by the State in regulating these
relations.

Thus, IR can now safely be defined as a coin having two faces: co- operation and
conflict. This relationship undergoes change from thesis to antithesis and then to synthesis.
Thus, the relationship starting with co-operation soon changes into conflict and after its
resolution again changes into cooperation. This changing process becomes a continuous
feature in industrial system and makes IR concept as dynamic and evolving one.

Features of Industrial Relations

 Industrial Relation do not emerge in vacuum they are born of employment
relationship in an industrial setting. Without the existence of the two parties, i.e.,
labour and management, this relationship cannot exist.
 It provides the environment for industrial relations.
Centre for Distance Education 9.14 Acharya Nagarjuna University

 Industrial Relation are characterized by both conflict and co-operations.

 The focus of Industrial Relations in on the study of the attitudes, relationships,
practices and procedure developed by the contending parties to resolve or at least
minimize conflicts.

Objectives of Industrial Relations

 Labor Relations, i.e. relations between union and management.
 Employer-employees relations, i.e. relations between management and employees.
 Group relations, i.e. relations between various groups of workmen.
 Community or Public relations, i.e. relations between industry and society.
 Promotions and development of healthy labor-managements relations.
 Maintenance of industrial peace and avoidance of industrial strife.
 Development of true industrial Democracy.

Reasons for poor IR

1. Economic Causes.
2. Organisational Causes.
3. Social Causes.
9. Psychological Causes.
5. Political Causes.

1. Economic Causes:
Poor wages and poor working conditions are the main reasons for unhealthy relations among
management and labour. Unauthorized deductions from wages, lack of fringe benefits,
absence of promotional opportunities, dissatisfaction with job evaluation and performance
appraisal methods, faulty incentive schemes are other economic causes.

2. Organisational Causes:
Faulty communication system, dilution of supervision and command, non-recognition of
trade unions, unfair practices, violation of collective agreements and standing orders and
labour laws are the organisational causes of poor relations in industry.

3. Social Causes:
Uninteresting nature of work is the main social cause. Factory system and specialisation have
made worker a subordinate to the machine. Worker has lost sense of pride and satisfaction in
the job. Tensions and conflicts in society break up of joint family system, growing
intolerance have also led to poor employer-employee relations. Dissatisfaction with job and
personal life culminates into industrial conflicts.
4. Psychological Causes:
Lack of job security, poor organisational culture, non- recognition of merit and performance,
authoritative administration and poor interpersonal relations are the psychological reasons for
unsatisfactory employer- employee relations.

5. Political Causes:
Political nature of trade unions, multiple unions and inter-union rivalry weaken trade union
movement. In the absence of strong and responsible trade unions, collective bargaining
becomes
ineffective. The union‘s status is reduced to a mere strike committee.
Industrial Employment Standing Orders Act, 1952 9.15 Industrial Social Work

Ways to Improve Industrial Relation

Strong and Stable Union:
A strong and stable union in each industrial enterprise is essential for good industrial
relations. The employers can easily ignore a weak union on the plea that it hardly represents
the workers. The agreement with such a union will hardly be honored by a large section of
workforce. Therefore, there must be strong and stable unions in every enterprise to represent
the majority of workers and negotiate with the management about the terms and conditions of
service.
Mutual Trust:
Both management and labor should help in the development of an atmosphere of
mutual cooperation, confidence and respect. Management should adopt a progressive outlook
and should recognize the rights of workers. Similarly, labor unions should persuade their
members to work for the common objectives of the organization. Both the management and
the unions should have faith in collective bargaining and other peaceful methods of settling
disputes.

Workers‘ Participation in Management:

The participation of workers in the management of the industrial unit should be encouraged
by making effective use of works committees, joint consultation and other methods. This will
improve communication between managers and workers, increase productivity and lead to
greater effectiveness.

Mutual Accommodation
The employers must recognize the right of collective bargaining of the trade unions. In any
organization, there must be a great emphasis on mutual accommodation rather than conflict
or uncompromising attitude. One must clearly understand that conflicting attitude does not
lead to amicable labor relations; it may foster union militancy as the union reacts by engaging
in pressure tactics. The approach must be of mutual give and take rather than take or leave.
The management should be willing to co-operate rather than blackmail the workers.

Sincere Implementation of Agreements

The management should sincerely implement the settlements reached with the trade unions.
The agreements between the management and the unions should be enforced both in letter
and spirit. If the agreements are not implemented then both the union and management stop
trusting each other. An environment of uncertainty is created. To avoid this, efforts should be
made at both ends to ensure the follow up of the agreements.

Sound Personnel Policies:

The following points should be noted regarding the personnel policies. The policies should
be:
 Formulated in consultation with the workers and their representatives if they are to be
implemented effectively.
 Clearly stated so that there is no confusion in the mind of anybody.
 Implementation of the policies should be uniform throughout the organization to
ensure fair treatment to each worker.

Government‘s Role:
The Government should play an active role for promoting industrial peace. It should make
law for the compulsory recognition of a representative union in each industrial unit. It should
Centre for Distance Education 9.16 Acharya Nagarjuna University

intervene to settle disputes if the management and the workers are unable to settle their
disputes. This will restore industrial harmony.

Progressive Outlook:
There should be progressive outlook of the management of each industrial enterprise. It
should be conscious of its obligations and responsibilities to the owners of the business, the
employees, the consumers and the nation. The management must recognize the rights of
workers to organize
unions to protect their economic and social interests.

Industrial Dispute
According to Sec. 2 (k) of the Industrial Dispute Act, 1997, ―Industrial dispute means any
dispute or 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.

Causes of Industrial Disputes:

(i) Economic causes, and
(ii) Non-economic causes.

Economic causes include:

(i) Wages,
(ii) Bonus,
(iii) Dearness allowance,
(iv) Conditions of work and employment,
(v) Working hours,
(vi) Leave and holidays with pay, and
(vii) Unjust dismissals or retrenchments.

Non-economic causes include:

(i) Recognition of trade unions,
(ii) Victimisation of workers,
(iii) Ill-treatment by supervisory staff,
(iv) Sympathetic strikes,
(v) Political causes, etc.

Forms of Industrial Disputes

1. Strike:
Non acceptance of employees‘ demand leads them to stop the work and proceed on strike.
Strike is the last and important weapon with the employee which is used when all hopes of
fulfillment of their demand are shattered and there is no way left to them but to resort to
strike. Strike is initiated and supported by the employee union. It is stopping of work by the
employees or a group of employees undertaken to pressurize the management to accept their
demands. It can continue for any number of days. It is a complete cessation of work by the
employees. Strikes can be of following types.

(a) Economic Strike:

Economic strike is one which is undertaken by the members of the trade union for fulfillment
of their economic demands such as rise in wages, bonus, and other facilities such as health,
education, food at concessional rates etc. and other conditions of work
Industrial Employment Standing Orders Act, 1952 9.17 Industrial Social Work

(b) General Strike:

General strike is one which is undertaken by all the employees belonging to all unions and in
regions in the entire industry. General strike is resorted to by the employees for fulfillment of
common demands. It can be an extension of sympathetic strike.

(c) Sympathetic Strike:

It is the strike undertaken by the members of one union to support the demands of striking
employees of the other union. This is undertaken to express sympathy with the striking
employees and their demands. If this sympathy strike is extended further it can take the form
of general strike. This is also known as token strike.

(d) Sit Down Strike:

It is the strike when employees stop working but do not leave the place of work. They sit at
the place of work. This form of strike is also known as pen down or tools down strike. They
do not interfere in the work but they themselves do not work at all.

(e) Go slow Strike:

The strike where employees do not stop work but do not work with enthusiasm. The speed of
their work is very slow which results in low output. They are doing this in an organized way.
This puts employers under pressure which is the object of strike.

2. Gherao:
Gherao means to surround. The members of the union surround the Chief executive and do
not allow him to leave the place where he is surrounded or gheraoed. Usually this place is his
office. They create a human chain around him restricting him to move. Gheraos are very
common means of protest. Any group can do this any time if they are dissatisfied. It should
take the violent turn.

3. Lock Out:
Lock out is resorted to by the employers to put pressure on their employees. Lock out is
undertaken by the employers to force the employees to resume work on the terms and
conditions of employers. Lock out is an extreme step taken by the employers to curb the
militant activities of the unions. At times it becomes a trial of strength between the employers
and employees.

4. Picketing:
Picketing is a method resorted to by the employees to attract attention of common men to the
fact that there exists a dispute between the management and employees. Picketing is
dissuading the employees from reporting to work by some men at the gate of the place of
work. Picketing is legal activity to exhibit protest. It is not violent activity.

5. Boycott:
The workers may boycott use of company‘s product. They may request the general public
also to do so. This adversely affects the sale of company‘s product. To get rid of the ill effects
it may think of accepting the demands of the employees.

All the forms of disputes strike, bandhs, lock out etc. adversely affect the industrial growth
and enterprises have to suffer a lot. Employees and management should settle the disputes
amicably without resorting to any of the above forms. As far as-possible a care should be
Centre for Distance Education 9.18 Acharya Nagarjuna University

taken that the things should not so worsen that employees to proceed on strikes etc. Good
industrial relations is the key to success and growth where both the parties gain, no one is to
lose anything.

Methods of Settling Industrial Disputes

After Independence, Government of India passed the Industrial Disputes Act 1997, under
which machinery for the prevention and settlement of disputes has been outlined. These
provisions are as under:

(A) Machinery for Prevention of Industrial Disputes

Prevention is better than cure. The Government has incorporated in the Act for preventing the
disputes. The main purpose of such measures is to prevent the disputes before they arise.

(B) Machinery for Settlement of Disputes

If-the dispute could not be prevented on voluntary basis and do arise, the Industrial Disputes
Act 1997 provides several provisions for settling the disputes, such provisions are

(1) Conciliation Officer

'The appointment of conciliation officer is made by the State Government for a particular
region or industries in the state. The main duly of these officers is to bring the two parties
together and help them resolve their differences. They can do everything to settle the dispute
between the two parties amicably. He is bound to lake decision within 19 days or such period
as extended by the state Government from the date of registration of dispute. If the dispute is
settled through his good offers and an agreement is reached, he should send a report to the
government along with a memorandum of settlement' signed by the parties to the dispute. In
case, the dispute is not settled
he should inform the Government about his failure, steps taken and the reasons for not being
successful.

(2) Conciliation Board

In case, the conciliation officer fails to resolve the dispute, the Government appoints a board
of conciliation on ad hoc basis for a particular dispute consisting of a chairman and two to
four persons representing the Employer and the employees lo bring the parties to disputes to
sit together and thrash out their differences as referred to by the Government. The board
reports the Government about the success or failure to bring about a settlement within 2
months from the date of reference of the dispute.

(3) Court of Inquiry

Whenever an industrial dispute remains unresolved by the conciliation officer and the board
of conciliation, the matter is referred to a court of inquiry. The court may consist of one 01
more independent persons. It will investigate the whole dispute and submits its report to the
Government on the matters referred to it ordinarily within 6 months from the date of
commencement of inquiry.
If settlement is not arrived at by the efforts of the above machinery, a three-tier machinery for
compulsory adjudication is provided under the act. These are three types of semi-judicial
bodies, i.e., labour courts, industrial tribunals and National Tribunals.

(4) Labour Courts

Such courts have been set up by the state Governments to go into the disputed orders of the
employers dismissal, discharge and suspensions of employees by the management, legality or
Industrial Employment Standing Orders Act, 1952 9.19 Industrial Social Work

otherwise of any order passed by an employer under the standing order, withdrawal of any
concession or privilege, legality or otherwise of any strike or lockout etc. These courts will
award decision and send report to the Government.

(5) Industrial Tribunals

The state Government has been empowered to appoint as many industrial tribunals as it
thinks proper, for the adjudication of disputes selecting to wages, hours of work and rest,
intervals, leave with pay, holidays, compensatory discipline, retrenchment, Closure of
establishment etc. The tribunal will consist of a person of rank of a high court judge. The
adjudication of these tribunals is binding on both the parties.

(6) National Tribunal

Such tribunals are set up by the Central Government for the adjudication of industrial
disputes which involves questions of national importance or which affect industrial
establishments situated in more than one state. It gives decisions on matters referred to it by
the Central Government. If any matter is referred to the National Tribunal by the Central
Government, the labour courts and industrial courts are barred from entertaining such
disputes and if any such dispute is pending before labour courts or tribunals, shall be deemed
to be quashed.

Labour Grievance
A grievance is a formal complaint that is raised by an employee towards an employer
in the workplace. There are many reasons as to why a grievance can be raised, and also many
ways to go about dealing with such a scenario. Reasons for filing a grievance in the
workplace can be as a result of, but not limited to, a breach of the terms and conditions of an
employment contract, raises and promotions, or lack thereof, as well as harassment and
employment discrimination.

According to Sean C. Doyle, in his work titled, The Grievance Procedure: The Heart
of the Collective Agreement, the grievance process takes on certain secondary roles in
countries such as Canada, United States and the United Kingdom that can include, but are not
limited to, "a mechanism for the extension of the relationship between the parties, a union
tactic to pressure management for strategic purposes, a diagnostic device to uncover
underlying problems in the workplace, a mechanism for individual employees or union
officials to challenge management over a range of working conditions, or even a forum for
the communication of information".

A grievance between an employee and employer can be dealt with either informally
or formally, and sometimes both approaches are taken in search of a resolution. In the
informal approach, an employee can informally bring forth a concern promptly to his or her
employer. Here a discussion or similar between the two parties can result in a mutually
agreed upon resolution. In the case that this step fails or is skipped altogether, a grievance can
be raised formally, where formal meetings and options for appeals become available.

Workplaces that have trade union representation often file a grievance with an
employer on behalf of an individual employees request. According to the Union of Northern
Workers, "Grievances are filed by the union on behalf of its members. Most of the grievances
filed by unions are filed on behalf of individual employees (individual grievances) or on
behalf of a group of employees (group grievances). A third type of grievance is the policy
grievance which deals with issues that affect all employees".
Centre for Distance Education 9.20 Acharya Nagarjuna University

Features of Grievance:
1. A grievance refers to any form of discontent or dissatisfaction with any aspect of the
organization.
2. The dissatisfaction must arise out of employment and not due to personal or family
problems.
3. The discontent can arise out of real or imaginary reasons. When employees feel that
injustice has been done to them, they have a grievance. The reason for such a feeling may
be valid or invalid, legitimate or irrational, justifiable or ridiculous.
9. The discontent may be voiced or unvoiced, but it must find expression in some form.
However, discontent per se is not a grievance. Initially, the employee may complain orally
or in writing. If this is not looked into promptly, the employee feels a sense of lack of
justice. Now, the discontent grows and takes the shape of a grievance.
5. Broadly speaking, thus, a grievance is traceable to be perceived as non-fulfillment of one‘s
expectations from the organization.

Causes of Grievances:
Grievances may occur due to a number of reasons:
1. Economic:
Employees may demand for individual wage adjustments. They may feel that they are paid
less when compared to others. For example, late bonus, payments, adjustments to overtime
pay, perceived inequalities in treatment, claims for equal pay, and appeals against
performance related
pay awards.

2. Work environment:
It may be undesirable or unsatisfactory conditions of work. For example, light, space, heat, or
poor physical conditions of workplace, defective tools and equipment, poor quality of
material, unfair rules, and lack of recognition.

3. Supervision:
It may be objections to the general methods of supervision related to the attitudes of the
supervisor towards the employee such as perceived notions of bias, favoritism, nepotism,
caste affiliations and regional feelings.

4. Organizational change:
Any change in the organizational policies can result in grievances. For example, the
implementation of revised company policies or new working practices.

5. Employee relations:
Employees are unable to adjust with their colleagues, suffer from feelings of neglect and
victimization and become an object of ridicule and humiliation, or other inter- employee
disputes.

6. Miscellaneous:
These may be issues relating to certain violations in respect of promotions, safety methods,
transfer, disciplinary rules, fines, granting leaves, medical facilities, etc.
Industrial Employment Standing Orders Act, 1952 9.21 Industrial Social Work

Effects of Grievance:
Grievances, if not identified and redressed, may adversely affect workers, managers, and the
organization.
The effects are the following:
1. on the production:
a. Low quality of production
b. Low productivity
c. Increase in the wastage of material, spoilage/leakage of machinery
d. Increase in the cost of production per unit

2. on the employees:
a. Increase in the rate of absenteeism and turnover
b. Reduction in the level of commitment, sincerity and punctuality
c. Increase in the incidence of accidents
d. Reduction in the level of employee morale.

3. on the managers:
a. Strained superior-subordinate relations.
b. Increase in the degree of supervision and control.
c. Increase in indiscipline cases.
d. Increase in unrest and thereby machinery to maintain industrial peace.

Need for a Formal Procedure to Handle Grievances:

A grievance handling system serves as an outlet for employee frustrations,
discontents, and gripes like a pressure release value on a steam boiler. Employees do not have
to keep their frustrations bottled up until eventually discontent causes explosion.

The existence of an effective grievance procedure reduces the need of arbitrary action
by supervisors because supervisors know that the employees are able to protect such behavior
and make protests to be heard by higher management. The very fact that employees have a
right to be heard and are actually heard helps to improve morale. In view of all these, every
organization should have a clear-cut procedure for grievance handling.

Grievance Handling Procedure

Step 1:
The employee, officer, and/or the Union representative shall present the grievance to the most
immediate supervisor who has the authority to make adjustments in the matter within19 days
of the alleged grievance or knowledge thereof.

Step 2:
If a satisfactory settlement is not reached in Step 1 within three days following its
completion, the employee, the Union and/or the Union representative may present the
grievance to the department head. Upon the request of said department head, the grievance
shall be in writing and shall state the grievant(s) names(s).

Step 3:
If a satisfactory settlement is not reached in Step 2 within five days of the date of submission
of the written grievance to the Department Head, the employee, the Union Committee and/or
the Union representative may present the grievance to the Director. The Director or his/her
designee shall schedule a meeting to be held within fourteen days of the receipt of the
Centre for Distance Education 9.22 Acharya Nagarjuna University

grievance by the Director with the Union Committee and/or Union Representative for the
purpose of attempting to resolve the grievance. The Director or his/her designee shall respond
in writing within seven days of the date of the meeting. Time frames may be extended in
writing by mutual agreement of the parties.

Step 4:
If the grievance is not resolved at Step 3 the Union may within 19 days after the Director's
written response is due, serve written notice upon the employer that they desire to arbitrate
the grievance and the Union may request the Federal Mediation and Conciliation Service to
furnish a panel of five arbitrators. Within ten days of the receipt of the panel of arbitrators the
parties shall select an arbitrator. The Union shall make the first and third strike and the
employer the second and fourth strike of names. The remaining individual shall serve as
arbitrator and hear the dispute. The decision of the arbitrator shall be final and binding upon
the parties.
Prof. K. Dhanalakshmi
Chairperson BoS, PG
Dept. of Sociology & Social Work
Acharya Nagarjuna University
 LESSON- 10

WAGE LEGISLATION: PAYMENT OF WAGES ACT, 1936 &

MINIMUM WAGES ACT, 1948
Objectives
After going through this unit, you will be able to:
• Discuss the applicability of the Payment of Wages Act, 1936
• Explain who is responsible for the payment of wages according to the act

Structure
10.1 Introduction
10.2 Payment of Wages Act, 1936
10.3 Minimum Wages Act 1948
10.4 Important Definitions
10.5 Advisory Board
10.6 Central Advisory Board
10.7 Offences and Penalties
10.8 Compliances under the Act
10.9 Answers to Check Your Progress Questions
10.10 Summary
10.11 Key Words
10.12 Self Assessment Questions and Exercises
10.13 Further Readings

10.1 Introduction
In the previous unit, you learnt about the gratuity act. In this unit, we will begin our discussion
on the Payment of Wages Act, 1936. The Payment of Wages Act is part of the Indian labour laws
that have been enacted for the benefit of employees. According to the Act, employees need to
receive wages, on time, without any unauthorised deductions. Section 6 of the Act requires that
people are paid in money rather than in kind. The Act also provides the tax withholdings the employer
must deduct and pay to the central or state government before distributing thewages.

10.2 Payment of Wages Act, 1936

The Payment of Wages Act, 1936 was enacted with a view to ensuring that wages payable to
workers covered by the Act were disbursed by the employers regularly within the prescribed time
limit, and that no unauthorised deductions were made from wages and also no arbitrary fines
being imposed upon workers. The Act came into force on 28th March, 1937. The Act has been
amended several times. The major amending Acts have been enacted in the year 1957, 1964, 1976,
1977,1982 and 2005.
According to Section 1(4), the Act applies to the payment of wages to persons:
(i) employed in a ‘ factory''(defined under the next heading),
(ii) employed (otherwise than in a factory) upon any railway by a railwayadministration
either directly or through a sub-contractor, and
(iii) employed in an ‘ industrial or other establishment' specified in sub-clauses
(a) to (g) of Clause (ii) of Section 2 (discussed under the next heading).
However, the appropriate Government may, by giving three months notice extend the
provisions of this Act or any of them to any establishment specified under sub-clause (h) of clause
(ii) of Section 2 (discussed under the next heading).[Sec. 1(5)]
Eligibility [Sec. 1(6)]
Centre for Distance Education 10.2 Acharya Nagarjuna University

The Payment of Wages Act, 1936 applies to every worker, (including those employed
through a contractor), who is in receipt of wages up to ₹6,500 per month. [The wage ceiling has
been increased from ₹1,600 p.m. to ₹6,500 p.m. bythe Payment of Wages (Amendment)Act, 2005,
with effect from 9th November, 2005].
Important Definitions
1. Appropriate Government [Sec. 2(i)]. ‘ Appropriate Government' means, in relation to
railways, air transport services, mines and oilfields, the Central Government and, in relation to
all other cases, the State Government.
2. Employed Person [Sec. 2(ia)]. ‘‘Employed person'' includes the legal representative of
deceased employed person.
3. Employer [Sec. 2(i b)]. ‘Employer' includes the legal representative of a deceased
employer.
4. Factory [Sec. 2(i c)]. The term ‘factory' has the same meaning as defined in the Factories
Act, 1948. According to Section 2(m) of the Factories Act, the term ‘ factory' means any
premises including the precincts there of:
(a) Whereon 10 or more persons are employed or were employed on any day of the
preceding 12 months, and in any part of which a manufacturing process is being
carried on with the aid of power, or
(b) Whereon 20 or more persons are employed or were employed on any day of the
preceding 12 months, and in any part of which a manufacturing process is being
carried on without the aid of power.
However, the term ‘‘factory' does not include :
(i) a mine subject to the operation of Mines Act, 1952, or
(ii) a mobile unit belonging to the armed forces of the Union, or
(iii) railway running shed, or
(iv) a hotel, restaurant or eating place.
5. Industrial or Other Establishment. According to Section 2(ii), ‘ industrial or other
establishment' means any:
(a) Tramway service, or motor transport service engaged in carrying passengers or
goods or both by road for hire or reward.
(aa) Air transport service other than such service belonging to, or exclusively
employed in the military, naval or air forces of the Union or the Civil Aviation
Department of the Government ofIndia.
(b) Dock, wharf or jetty.
(c) Inland vessel, mechanically propelled.
(d) Mine, quarry or oilfield.
(e) Plantation.
(f) Workshops or other establishments, in which articles are produced, adapted or
manufactured, with a view to their use, transport or sale.
(g) Establishments in which any work relating to construction, development or maintenance of
buildings, roads, bridges or canals; or relating to operations connected with navigation,
irrigation or the supply of water; or relating to generation, transmission and distribution of
electricity orany other form of power is being carried on.
(h) Any other establishment or class of establishment which the Central Government or
State Government may specify, by notification in theOfficial Gazette.
6. Wages. According to Section 2 (vi), ‘ wages' means all remuneration (whether by way
of salary, allowances, or otherwise) expressed in terms of money or capable of being
so expressed which would, if the terms of employment, express or implied, were
fulfilled, be payable to a person employed in respect of his employment or of work
done insuch employment.
Wage Legislations 10.3 Industrial Social Work

Wages also includes:

(a) any remuneration payable under any award or settlement between the parties or order of a
court;
(b) any remuneration to which the person employed is entitled in respect of overtime work or
holidays or any leave period;
(c) any additional remuneration payable under the terms of employment (whether called a bonus or
by any other name);
(d) any sum which by reason of the termination of employment of the person employed is
payable under any law, contract or instrument which provides for the payment of such sum,
whether with or without deductions, but does not provide for the time within which the
payment is to be made;
(e) any sum to which the person employed is entitled under any scheme framed under any law for
the time being in force.
Wages does not include:
(1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form
part of the remuneration payable under the terms of employment or which is not payable
under any award or settlement betweenthe parties or order of a court;
(2) the value of any house accommodation, or of the supply of light, water, medical
attendance or other amenity or of any service excluded from the computation of wages by
a general or special order of the appropriateGovernment;
(3) any contribution paid by the employer to any pension or provident fund, and the interest
which may have accrued thereon;
(4) any travelling allowance or the value of any travelling concession;
(5) any sum paid to the employed person to defray special expenses entailed on him by the
nature of his employment; or
(6) any gratuity payable on the termination of employment in cases other than those specified in
sub-clause (d) above.
Responsibility for Payment of Wages (Sec.3)
1. Every employer shall be responsible for the payment of all wages required to be paid under
this Act to persons employed by him.
In addition, the following persons shall also be responsible for payment of wages in case of
persons employed:
(a) in factories, if a person has been named as the manager of the factory.
(b) in industrial or other establishments, if there is a person responsible to the employer for
the supervision and control of the industrial or otherestablishments;
(c) upon railways (other than in factories), if the employer is the railway administration and
the railway administration has nominated a person in this behalf for the local area
concerned;
(d) in the case of contractor, a person designated by such contractor who is directly under
his charge; and
(e) in any other case, a person designated by the employer as a person responsible for
complying with the provisions of the Act.
The person so named, the person responsible to the employer, the person so nominated or
the person so designated, as the case may be, shall beresponsible for such payment.
Notwithstanding anything contained in sub-section (1), it shall be theresponsibility of
the employer to make payment of all wages required to be made under this Act in case the
contractor or the person designated by theemployer fails to make such payment.

– Learning Objectives
– Object and Scope
Centre for Distance Education 10.4 Acharya Nagarjuna University

– Important Definitions
– Fixation of minimum rates of wages
– Revision of minimum wages
– Manner of fixation/revision of minimum wages
– Minimum rate of wages
– Procedure for fixing and revising minimum wages
– Advisory Board
– Central Advisory Board
– Minimum Wages – Whether to be paid incash or kind
– Payment of minimum wages is obligatoryon employer
– Fixing hours for a normal working day
– Payment of overtime
– Wages of worker who workers less thannormal working
– Minimum time – Rate Wages for piece work
– Maintenance of Registers and records
– Authority & claims
– Offences Penalties

10.3 Minimum Wages Act 1948

Object and Scope of the Legislation OF THE LTDE OF
The Minimum Wages Act was passed in 1948 and it came into force on 15th March,
1948. The National Commission on Labour has described the passing of the Act as landmark
in the history of labour legislation in the country. The philosophy of the Minimum Wages Act
and its significance in the context of conditions in India, has been explained by the Supreme
Court in Unichoyi v. State of Kerala (A.I.R. 1962 SC 12), as follows:

“What the Minimum Wages Act purports to achieve is to prevent exploitation of

labour and for that purpose empowers the appropriate Government to take steps to prescribe
minimum rates of wages in the scheduled industries. In an underdeveloped country which
faces the problem of unemployment on a very large scale, it is not unlikely that labour may
offer to work even on starvation wages. The policy of the Act is to prevent the employment of
such sweated labour in the interest of general public and so in prescribing the minimum rates,
the capacity of the employer need not to be considered. What is being prescribed is minimum
wage rates which a welfare State assumes every employer must pay before he employs
labour”.

According to its preamble the Minimum Wages Act, 1948, is an Act to provide for
fixing minimum rates of wages in certain employments. The employments are those which
are included in the schedule and are referred to as ‘Scheduled Employments’. The Act
extends to whole of India.

10.4 Important Definitions

10.4.1 Appropriate Government [Section 2(b)]
“Appropriate Government” means –
(i) in relation to any scheduled employment carried on by or under the authority of the
Central or a railway administration, or in relation to a mine, oilfield or major part or
any corporation established by a Central Act, the Central Government, and
(ii) in relation to any other scheduled employment, the State Government.
Wage Legislations 10.5 Industrial Social Work

10.4.2 Employee [Section 2(i)]

“Employee” means any person who is employed for hire or reward to do any work,
skilled or unskilled, manual or clerical in a scheduled employment in respect of which
minimum rates of wages have been fixed; and includes an outworker to whom any articles or
materials are given out by another person to be made up, cleaned, washed, altered,
ornamented, finished, repaired, adapted or otherwise processed for sale purpose of the trade or
business of that other person where the process is to be carried out either in the home of the
out-worker or in some other premises, net being premises under the control and management
of that person; and also includes an employee declared to be an employee by the appropriate
Government; but does not include any member of Armed Forces of the Union.

10.4.3 Employer [Section 2(e)]

“Employer” means any person who employs, whether directly or through another person, or
whether on behalf of himself or any other person, one or more employees in any scheduled
employment in respect of which minimum rates of wages have been fixed under this Act,
and includes, except, in sub-section (3) of Section 26 – in a factory where there is carried on
any scheduled employment in respect of which minimum rates of wages have been fixed
under this Act, any person named under clause (f) of sub-section (1) of Section 7 of the
Factories Act, 1948, as manager of the factory;
(i) in any scheduled employment under the control of any Government in India in
respect of which minimum rates of wages have been fixed under this Act, the person
or authority appointed by such Government for the supervision and control of
employees or where no person of authority is so appointed, the Head of the
Department;
(ii) in any scheduled employment under any local authority in respect of which
minimum rates of wages have been fixed under this Act the person appointed by
such authority for the supervision and control of employees or where no person is so
appointed, the Chief Executive Officer of the local authority;
(iii) in any other case where there is carried on any scheduled employment in respect of
which minimum rates of wages have been fixed under this Act, any person
responsible to the owner of the supervision and control of the employees or for the
payment of wages.

The definitions of “employees” and “employer” are quite wide. Person who engages workers
through another like a contractor would also be an employer (1998 LLJ I Bom. 629). It was
held in Nathu Ram Shukla v. State of Madhya Pradesh A.I.R. 1960 M.P. 174 that if minimum
wages have not been fixed for any branch of work of any scheduled employment, the person
employing workers in such branch is not an employer with the meaning of the Act. Similarly,
in case of Loknath Nathu Lal v. State of Madhya Pradesh A.I.R. 1960 M.P. 181 an out-
worker who prepared goods at his residence, and then supplied them to his employer was
held as employee for the purpose of this Act.

10.4.4 Scheduled Employment [Section 2(g)]

“Scheduled employment” means an employment specified in the Schedule or any process or
branch of work forming part of such employment.

Note: The schedule is divided into two parts namely, Part I and Part II. When originally
enacted Part I of Schedule had 12 entries. Part II relates to employment in agriculture. It was
realised that it would be necessary to fix minimum wages in many more employments to be
identified in course of time. Accordingly, powers were given to appropriate Government to
Centre for Distance Education 10.6 Acharya Nagarjuna University

add employments to the Schedule by following the procedure laid down in Section 21 of the
Act. As a result, the State Government and Central Government have made several additions
to the Schedule and it differs from State to State.

10.4.5 Wages [Section 2(h)]

“Wages” means all remunerations capable of being expressed in terms of money, which
would, if the terms of the contract of employment, express of implied, were fulfilled, be
payable to a person employed in respect of his employment or of work done in such
employment and includes house rent allowance but does not include:
(i) the value of:
(a) any house accommodation, supply of light, water medical;
(b) any other amenity or any service excluded by general or social order of the
appropriate Government;
(ii) contribution by the employer to any Pension Fund or Provides Fund or under any
scheme of social insurance;
(iii) any traveling allowance or the value of any traveling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by
the nature of his employment;
(v) any gratuity payable on discharge.

10.4.6 Fixation of minimum rates of wages [section 3(1)(a)]

Section 3 lays down that the ‘appropriate Government’ shall fix the minimum rates of wages,
payable to employees in an employment specified in Part I and Part ii of the Schedule, and in
an employment added to either part by notification under Section 27. In case of the
employments specified in Part II of the Schedule, the minimum rates of wages may not be
fixed for the entire State. Parts of the State may be left out altogether. In the case of an
employment specified in Part I, the minimum rates of wages must be fixed for the entire
State, no parts of the State being omitted. The rates to be fixed need not be uniform. Different
rates can be fixed for different zones or localities: [Basti Ram v. State of A.P. A.I.R. 1969,
(A.P.) 227].

Notwithstanding the provisions of Section 3(1)(a), the “appropriate Government” may

not fix minimum rates of wages in respect of any scheduled employment in which less than
1000 employees in the whole State are engaged. But when it comes to its knowledge after a
finding that this number has increased to 1,000 or more in such employment, it shall fix
minimum wage rate.

10.4.7 Revision of minimum wages

According to Section 3(1)(b), the ‘appropriate Government’ may review at such intervals as it
may thing fit, such intervals not exceeding five years, and revise the minimum rate of wages,
if necessary. This means that minimum wages can be revised earlier than five years also.

10.4.8 Manner of Fixation/ Revision of Minimum Wages

According to Section 3(2), the ‘appropriate Government’ may fix minimum rate of wages
for:
(a) time work, known as a Minimum Time Rate;
(b) piece work, known as a Minimum Piece Rate;
(c) a “Guaranteed Time Rate” for those employed in piece work for the purpose of
securing to such employees a minimum rate of wages on a time work basis; (This is
intended to meet a situation where operation of minimum piece rates fixed by the
Wage Legislations 10.7 Industrial Social Work

appropriate Government may result in a worker earning less than the minimum
wage), and
(d) a “Over Time Rate” i.e. minimum rate whether a time rate or a piece rate to apply in
substitution for the minimum rate which would otherwise be applicable in respect
of overtime work done by employee.
Section 3(3) provides that different minimum rates of wages may be fixed for –
(i) different scheduled employments;
(ii) different classes of work in the same scheduled employments;
(iii) adults, adolescents, children and apprentices;
(iv) different localities
Further, minimum rates of wages may be fixed by any one or more of the following wage
periods, namely:
(i) by the hour,
(ii) by the day,
(iii) by the month, or
(iv) by such other large wage periods as may be prescribed;
and where such rates are fixed by the day or by the month, the manner of
calculating wages for month or for a day as the case may be, may be indicated.
However, where wage period has been fixed in accordance with the Payment of Wages Act,
1986 vide Section 4 thereof, minimum wages shall be fixed in accordance therewith
[Section 3(3)].

10.4.9 Minimum rate of wages (section 4)

According to Section 4 of the Act, any minimum rate of wages fixed or revised by the
appropriate Governmentunder Section 3 may consist of –
(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such
intervals and in such manner as the appropriate Government may direct to accord as
nearly as practicable with the variation in the cost of living index number applicable to
such worker (hereinafter referred to as the cost of living allowance); or
(ii) a basic rate of wages or without the cost of living allowance and the cash value of
the concession in respect of supplies of essential commodities at concessional rates
where so authorized; or
(iii) an all inclusive rate allowing for the basic rate, the cost of living allowance and the
cash value of the concessions, if any.
The cost of living allowance and the cash value of the concessions in respect of supplies
essential commodities at concessional rates shall be computed by the competent authority at
such intervals and in accordance with such directions specified or given by the appropriate
Government.

10.4.10 Procedure for Fixing and Revising Minimum Wages (Section 5)

In fixing minimum rates of wages in respect of any scheduled employment for the first time or in
revising minimum rates of wages, the appropriate Government can follow either of the two
methods described below.

10.4.11 First Method [Section 5(1)(a)]

This method is known as the ‘Committee Method’. The appropriate Government may
appoint as many committees and sub-committees as it considers necessary to hold enquiries
and advise it in respect of such fixation or revision as the case may be. After considering the
advise of the committee or committees, the appropriate Government shall, by notification in
the Official Gazette fix or revise the minimum rates of wages. The wage rates shall come into
Centre for Distance Education 10.8 Acharya Nagarjuna University

force from such date as may be specified in the notification. If no date is specified, wage
rates shall come into force on the expiry of three months from the date of the issue of the
notification.
Note: It was held in Edward Mills Co. v. State of Ajmer (1955) A.I.R. SC, that Committee
appointed under Section 5 is only an advisory body and that Government is not bound to
accept its recommendations.
As regards composition of the Committee, Section 9 of the Act lays down that it shall consist
of persons to be nominated by the appropriate Government representing employers and employee
in the scheduled employment, who shall be equal in number and independent persons not
exceeding 1/3rd of its total number of members. One of such independent persons shall be
appointed as the Chairman of the Committee by the appropriate Government.

10.4.12 Second Method [Section 5(1)(b)]

The method is known as the ‘Notification Method’. When fixing minimum wages under
Section 5(1)(b), the appropriate Government shall by notification, in the Official Gazette
publish its proposals for the information of persons likely to be affected thereby and specify a
date not less than 2 months from the date of notification, on which the proposals will be taken
into consideration.

The representations received will be considered by the appropriate Government. It will also
consult the Advisory Board constituted under Section 7 and thereafter fix or revise the
minimum rates of wages by notification in the Official Gazette. The new wage rates shall
come into force from such date as may be specified in the notification. However, if no date is
specified, the notification shall come into force on expiry of three months from the date of its
issue. Minimum wage rates can be revised with retrospective effect. [1996 II LLJ 267 Kar.].

10.5 Advisory Board

The advisory board is constituted under Section 7 of the Act by the appropriate Government
for the purpose of co-ordinating the work of committees and sub-committees appointed under
Section 5 of the Act and advising the appropriate Government generally in the matter of
fixing and revising of minimum rates of wages. According to Section 9 of the Act, the
advisory board shall consist of persons to be nominated by the appropriate Government
representing employers and employees in the scheduled employment who shall be equal in
number, and independent persons not exceeding 1/3rd of its total number of members, one of
such independent persons shall be appointed as the Chairman by the appropriate
Government.

It is not necessary that the Board shall consist of representatives of any particular industry or of
each and every scheduled employment; B.Y. Kashatriya v. S.A.T. Bidi Kamgar Union A.I.R.
(1963) S.C. 806. An independent person in the context of Section 9 means a person who is
neither an employer nor an employee in the employment for which the minimum wages are
to be fixed. In the case of State of Rajasthan v. Hari Ram Nathwani, (1975) SCC 356, it was
held that the mere fact that a person happens to be a Government servant will not divert him of
the character of the independent person.

10.6 Central Advisory Board

Section 8 of the Act provides that the Central Government shall appoint a Central Advisory
Board for the purpose of advising the Central Government and State Governments in the
matters of fixation and revision of minimum rates of wages and other matters under the
Minimum Wages Act and for coordinating work of the advisory boards. The Central
Wage Legislations 10.9 Industrial Social Work

Advisory Board shall consist of persons to be nominated by the Central Government

representing employers and employees in the scheduled employment who shall be equal in
number and independent persons not exceeding 1/3rd of its total number of members, one of
such independent persons shall be appointed as the Chairman of the Board by Central
Government.

10.6.1 Minimum Wage – Whether to be Paid in Cash or Kind

Section 11 of the Act provides that minimum wages payable under the Act shall be paid in
cash. But where it has been the custom to pay wages wholly or partly in kind, the appropriate
Government, on being satisfied, may approve and authorize such payments. Such
Government can also authorize for supply of essential commodities at concessional rates.
Where payment is to be made in kind, the cash value of the wages in kind or in the shape of
essential commodities on concessions shall be estimated in the prescribed manner.

10.6.2 Payment of Minimum Wages is Obligatory on Employer (Section 12)

Payment of less than the minimum rates of wages notified by the appropriate Government is
an offence. Section 12 clearly lays down that the employer shall pay to every employee
engaged in a scheduled employment under him such wages at a rate not less than the
minimum rate of wages fixed by the appropriate Government under Section 5 for that class of
employment without deduction except as may be authorized, within such time and subject to
such conditions, as may be prescribed.

10.6.3 Fixing Hours For A Normal Working Day (Section 13)

Fixing of minimum rates of wages without reference to working hours may not achieve the
purpose for which wages are fixed. Thus, by virtue of Section 13 the appropriate Government
may –
(a) fix the number of work which shall constitute a normal working day, inclusive of
one or more specifiedintervals;
(b) provide for a day of rest in every period of seven days which shall be allowed to all
employees or to anyspecified class of employees and for the payment of
remuneration in respect of such day of rest;
(c) provide for payment of work on a day of rest at a rate not less than the overtime rate.
The above stated provision shall apply to following classes of employees only to such extent
and subject to such conditions as may be prescribed:
(a) Employees engaged on urgent work, or in any emergency, which could not have
been foreseen or prevented;
(b) Employees engaged in work in the nature of preparatory or complementary work
which must necessarily be carried on outside the limits laid down for the general
working in the employment concerned;
(a) Employees whose employment is essentially intermittent;
(b) Employees engaged in any work which for technical reasons, has to be completed
before the duty is over;
(c) Employees engaged in any work which could not be carried on except at times
dependent on the irregular action of natural forces.
For the purpose of clause (c) employment of an employee is essentially intermittent when it is
declared to be so by the appropriate Government on ground that the daily hours of the
employee, or if these be no daily hours of duty as such for the employee, the hours of duty,
normally includes period of inaction during which the employee may be on duty but is not
called upon to display either physical activity or sustained attention.
Centre for Distance Education 10.10 Acharya Nagarjuna University

There is correlation between minimum rates of wages and hours of work. Minimum wages
are to be fixed on basis of standard normal working hours, namely 48 hours a week; Benode
Bihari Shah v. State of W.B. 1976 Lab I.C. 523 (Cal).

10.6.4 Payment of Overtime (Section 14)

Section 14 provides that when an employee, whose minimum rate of wages is fixed under
this Act by the hours, the day or by such longer wage period as may be prescribed, works on
any day in excess of the number of hours constituting a normal working day, the employer
shall pay him for every hour or part of an hour so worked in excess at the overtime rate fixed
under this Act or under any other law of the appropriate Government for the time being in
force whichever is higher. Payment for overtime work can be claimed only by the employees
who are getting minimum rate of wages under the Act and not by those getting better wages.
(1998 LLJ I SC 815).

10.6.5 Wages of A Worker Who Works Less Than Normal Working Day (Section 15)
Where the rate of wages has been fixed under the Act by the day for an employee and if he
works on any day on which he employed for a period less than the requisite number of hours
constituting a normal working day, he shall be entitled to receive wages for that day as if he
had worked for a full working day.
Provided that he shall not receive wages for full normal working day –
(i) if his failure to work is caused by his unwillingness to work and not by omission
of the employer to provide him with work, and
(ii) such other cases and circumstances as may be prescribed.

10.6.6 Minimum Time – Rate Wages for Piece Work (Section 17)
Where an employee is engaged in work on piece work for which minimum time rate and not
a minimum piece rate has been fixed, wages shall be paid in terms of Section 17 of the Act at
minimum time rate.

10.6.7 Maintenance of Registers And Records (Section 18)

Apart from the payment of the minimum wages, the employer is required under Section 18 to
maintain registers and records giving such particulars of employees under his employment,
the work performed by them, the receipts given by them and such other particulars as may be
prescribed. Every employee is required also to exhibit notices, in the prescribed form
containing particulars in the place of work. He is also required to maintain wage books or
wage-slips as may be prescribed by the appropriate Government and the entries made therein
will have to be authenticated by the employer or his agent in the manner prescribed by the
appropriate Government.

10.6.8 Authority and Claims (Section 20-21)

Under Section 20(1) of the Act, the appropriate Government, may appoint any of the
following as an authority to hear and decide for any specified area any claims arising out of
payment of less than the minimum rate of wages or in respect of the payment of
remuneration for the days of rest or of wages at the rate of overtime work:
(a) any Commissioner for Workmen’s Compensation; or
(b) any officer of the Central Government exercising functions as Labour Commissioner
for any region; or
(c) any officer of the State Government not below the rank of Labour Commissioner; or
(d) any other officer with experience as a Judge of a Civil Court or as the Stipendiary
Magistrate.
Wage Legislations 10.11 Industrial Social Work

The authority so appointed shall have jurisdiction to hear and decide claim arising out of
payment of less than the minimum rates of wages or in respect of the payment remuneration
for days of rest or for work done on suchdays or for payment of overtime.

The provisions of Section 20(1) are attracted only if there exists a disputed between the
employer and the employee as to the rates of wages. Where no such dispute exists between
the employer and employees and the only question is whether a particular payment at the
agreed rate in respect of minimum wages, overtime or work on off days is due to an employee
or not, the appropriate remedy is provided by the Payment of Wages Act, 1936.

10.7 Offences and Penalties

Section 22 of the Act provides that any employer who (a) pays to any employee less than the
minimum rates of wages fixed for that employee’s class of work or less than the amount due
to him under the provisions of this Act or contravenes any rule or order made under Section
13, shall be punishable with imprisonment for a term which may extend to six months or with
fine which may extend to five hundred rupees or with both.
While imposing any fine for an offence under this section the court shall take into
consideration the amount of any compensation already awarded against the accused in any
proceedings taken under section 20.

It is further stipulated under Section 22A of the Act that any employer who contravenes any
provision of this Act or of any rule or order made there under shall if no other penalty is
provided for such contravention by this Act be punishable with fine which may extend to five
hundred rupees.

10.8 Compliances under the Act

The establishment must ensure following compliances under the Act. These compliances are
not exhaustive but illustrative.
1. The Establishment is covered by the definition “Scheduled Employment” with effect
from…….
2. The Government revised the minimum wages once/twice/ thrice during the financial
year under reference and the Establishment has paid to all its employees minimum
wages in accordance with the rates at respective point of time and at the respective
rates specified in notification under Section 5 of the MWA.
3. The Establishment has issued wage slips to all its employees in respect of each of the
wage period………..
4. Where the services of any employee were terminated for any reason whatsoever, the
wages were paidwithin two working days from the date of such termination.
5. The Establishment did not make any unauthorized deduction from the wages of any
of its employees. Further, the deductions if any, made were within the limits of fifty
percent (or seventy five percent in case of cooperatives) of wages earned by such
employees during the period under reference.
6. Where the Establishment was constrained to impose any fine or deduct wages on
account of damages caused by any employee, the latter was given an opportunity of
being heard in the presence of a neutral person and was also communicated the
amount of fine imposed or deduction made from the wages.
7. The Establishment has eight working hours per day, inclusive of half an hour of
interval.
8. All claims under Section 20 of the MWA were paid within the time limit specified in
the Order.
 Centre for Distance Education 10.12 Acharya Nagarjuna University

10.9 Answers to Check Your Progress Questions

1. The Payment of Wages Act, 1936 came into force on 28th March, 1937.
2. The Payment of Wages Act, 1936 applies to every worker, (including thoseemployed through
a contractor), who is in receipt of wages up to 6,500 per month.
10.10 Summary
• The Payment of Wages Act, 1936 was enacted with a view to ensuring that wages payable to
workers covered by the act were disbursed by the employers regularly within the
prescribed time limit, and that no unauthorised deductions were made from wages and also no
arbitrary fines being imposedupon workers.
• The act has been amended several times. The major amending acts have been enacted in
the year 1957, 1964, 1976, 1977, 1982 and 2005.
• According to section 2 (vi), ‘ wages' means all remuneration (whether by way of salary,
allowances, or otherwise) expressed in terms of money or capable of being so expressed
which would, if the terms of employment, express or implied, were fulfilled, be payable to a
person employed in respect of his employment or of work done in such employment.
• According to the act, wages does not include any bonus, which does not form part of the
remuneration payable under the terms of employment or which is not payable under any
award or settlement between the parties ororder of a court.

10.11 Key Words

• Wages: It means a fixed regular payment earned for work or services, typically paid on a
daily or weekly basis.
• Remuneration: It means money paid for work or a service.
• Bonus: It means a sum of money added to a person's wages as a reward for good
performance.

10.12 Self Assessment Questions and Exercises

10.12.1 Short-Answer Questions
1. Discuss the applicability of the Payment of Wages Act.
2. What does industrial or other establishment mean according to the act?

10.12.2 Long-Answer Questions

1. Discuss what wages are included and does not included according to the Payment of
Wages Act.
2. Who is responsible for the payment of wages? Discuss with reference to the appropriate
sections of the Payment of Wages Act.
10.13 Further Readings
Srivastava, S C. 2012. Industrial Relations and Labour Laws, Sixth Edition.
New Delhi: Vikas Publishing House.
Kuchhal, M C. 2012. Business and Industrial Laws, Second Edition. New Delhi: Vikas
Publishing House.
Padhi, P K. 2017. Labour and Industrial Laws, Third Edition. New Delhi: PHILearning.

Prof. Saraswati Raju Iyer

Dept. of Sociology & Social Work
Acharya Nagarjuna University
MINIMUM RATES OF WAGES [Section 3(1))]
 Lesson-11
PAYMENT OF BOUNCE ACT, 1965 &
PAYMENT OF GRATUITY ACT, 1972

Learning Objectives
 To study the Payment of Bonus Act 1965
 To learn the Scope And Coverage Of The Payment Of Bonus Act, 1965
 To understand the Calculation for Bonus Payable
 To Know the Types of Bonus Payments

Structure
11.1 Introduction
11.2 History of Payment Of Bonus Act, 1965
11.3 Scope and Coverage of The Payment Of Bonus Act, 1965
11.4 Understanding the Act
11.5 Why Do Companies Give Bonuses
11.6 Calculation for Bonus Payable
11.7 Types of Bonus Payments
11.8 Eligibility for Bonus Under The Act
11.9 Disqualification from Bonus Under The Act
11.10 Rights of Employer And Employee
11.11Payment of Bonus Rules

11.1 Introduction
A bonus is a financial reward that is given to an employee beyond their normal salary
or wages. It can be given as an incentive to encourage certain behavior or to reward good
performance. A bonus is a financial reward that is given to an employee beyond their normal
salary or wages. It can be given as an incentive to encourage certain behavior or to reward
good performance. Bonuses can take various forms, including cash, stock, or stock options,
and can be given to individuals, teams, or the entire company. Incentive bonuses include
signing bonuses for new hires, referral bonuses for employees who refer successful
candidates, and retention bonuses to encourage employee loyalty. Performance bonuses are
given for exceptional work and can be given as annual bonuses, spot bonuses, or milestone
bonuses. The Internal Revenue Service (IRS) considers bonuses as taxable income, so
employeesneed to report them when filing their taxes.

A bonus is a financial compensation that is above and beyond the normal payment
expectations of its recipient. Companies may award bonuses to both entry-level employees
and to senior-level executives. While bonuses are traditionally given to exceptional workers,
employers sometimes dole out bonuses company-wide to stave off jealousy among staffers.

Bonuses may be dangled as incentives to prospective employees and they can be

given to current employees to reward performance and increase employee retention.
Companies can distribute bonuses to its existing shareholders through a bonus issue, which
is an offer of free additional shares of the company's stock.

11.2 History Of Payment Of Bonus Act, 1965

The tradition of paying bonuses in India seems to have started during World War I, when
some textile mills gave their employees a 10% wage increase as a war bonus in 1917. In
Centre for Distance Education 11.2 Acharya Nagarjuna University

certain cases of labour disputes, the claim for bonus payment was also included. The Full
Bench of the Labour Appellate Tribunal established a bonus calculation formula in 1950. In
1959, a demand was made to change the formula.

It was decided at the second and third meetings of the eighteenth Session of the Standing
Labour Committee (G.O.I) in New Delhi in March/April 1960 to appoint a Commission to
look into the issue of bonuses and develop appropriate norms. The Government of India
established a Tripartite Commission to examine the issue of bonus payments based on
earnings to employees working in establishments in a detailed manner and make
recommendations to the Government.

The Commission's recommendations were adopted by the Indian government with some
modifications. The Payment of Bonus Act of 1965 was enacted to carry out these
recommendations, and it went into effect on September 115, 1965.

11.3 Scope And Coverage Of The Payment Of Bonus Act, 1965

The Bonus Payment Act covers the entire India. It covers any establishment with twenty or
more employees on any given day during the accounting year, as well as any factory as
specified by the factories act of 1948. Employee is defined in Section 11 (13) of the Act
as any person (other than an apprentice) employed on a salary or wage of not more than
twenty one thousand rupees per mensem in any industry to perform any skilled or unskilled
manual, supervisory, managerial, administrative, scientific, or clerical work for hire or
compensation, regardless of whether the terms of employment are express or implied.

A. The Act does not apply to the following classes of employees:

1. Employees employed in:
a) Life Insurance Corporation of India
b) Industry carried on or under the authority of any department of Central
Governmentor a State Government or a Local Authority.
c) Indian Red Cross Society or any other institution of like nature
including itsbranches;
d) Universities and other educational institutions;
e) Hospital, Chambers of Commerce and Social Welfare Institutions
established not forpurposes of profits;
f) employed through contractors on building operations;
g) Reserve Bank of India;
h) Industrial Finance Corporation of India, Deposit Insurance Corporation
and other financial corporations being set up financially assisted by the
Government, and Unit Trust of India, Agricultural Refinance Corporation,
and Industrial Bank of India,
i) Seamen as defined in Sec. 3(411) of the Merchant Shipping Act, 1958;
j) Inland Water Transport establishment. (Section 311).

11.4 Understanding the Act

1.Objective Behind The Act
The objective of the Payment of Bonus Act, 1965 is to provide for the payment of bonus to
the persons employed in certain establishments on the basis of profits or production. The
object of the Payment of Bonus Act was very clearly described in Jalan Trading v Mill
Mazdoor Sabha 1, the Supreme Court observed that the purpose of the Bonus Act was to
maintain peace and harmony between labour and capital by allowing workers to share the
 Payment of Bounce Act 1965 11.3 Industrial Social Work

prosperity of the establishment and prescribing the maximum and minimum rates of bonus,
as well as the scheme of "set-off" and set - on to not only secure the labour's right in the
share of profits but also to ensure a reasonable degree of uniformity.

2. Understanding Bonus
In workplace settings, a bonus is a type of additional compensation an employer gives
to an employee that complements their base pay or salary. A company may use bonuses to
reward achievements, to show gratitude to employees who meet longevity milestones, or to
entice not-yet employees to join a company's ranks.

Bonuses can take various forms, including cash, stock, or stock options. They can
be given to individuals, teams, or the entire company. Companies may also offer incentive
bonuses, such as signing bonuses for new hires, referral bonuses for employees who refer
successful candidates, and retention bonuses to encourage employee loyalty. Performance
bonuses are given for exceptional work and can be given as annual bonuses, spot bonuses, or
milestone bonuses.

In the United States, bonuses are considered taxable income by the Internal Revenue
Service (IRS). This means that employees are required to report their bonuses as part of their
taxable income when they file their taxes. The employer is also required to report the
bonus to the IRS and to withhold taxes from the employee's bonus payment at the time it is
paid. The amount of tax withheld from a bonus payment is based on the employee's tax
bracket and the tax laws in effect at the time the bonus is paid.

It's important for employees to be aware of the tax implications of bonuses, as failing
to report them can result in penalties and interest charges from the IRS. Employees should
keep good records of their bonus payments and consult with a tax professional if they have
any questions about how to report their bonuses on their tax return.

3. Incentive Bonus
Incentive bonuses include signing bonuses, referral bonuses, and retention bonuses.
A signing bonus is a monetary offer that companies extend to top-talent candidates to entice
them to accept a position—especially if they are being aggressively pursued by rival firms.
In theory, paying an initial bonus payment will result in greater company profits down the
line. Signing bonuses are routinely offered by professional sports teams attempting to lure
top-tier athletes away from competitive clubs.

Referral bonuses are presented to employees who recommend candidates for open
positions, which ultimately leads to the hiring of said candidates. Referral bonuses
incentivize employees to refer prospects with strong work ethics, sharp skills, and positive
attitudes.

Companies offer retention bonuses to key employees, in an effort to encourage

loyalty, especially in downward economies or periods of organizational changes. This
financial incentive is an expression of gratitude that lets employees know their jobs are
secure overthe long haul.

4 Holiday Bonuses
Some companies hand out bonuses specifically during the December holidays
season. Holiday bonuses can take various forms, such as cash, gift cards, or other types of
Centre for Distance Education 11.4 Acharya Nagarjuna University

gifts. They can be given to individual employees or to the entire company. Some companies
give holiday bonuses to all of their employees, while others only give them to certain
employees, such as those who have been with the company for a certain length of time or
who have achieved certain performance goals.

Some countries have codified holidays bonuses as part of the labor law. Aguinaldo,
for example, is an annual Christmas bonus that businesses in Mexico are required by law to
pay to their employees. The payment, sometimes called the "thirteenth salary", must be made
by Dec. 110 of each year. It is usually equivalent to 15 days of the employee's salary. It is
typically given to all employees, regardless of their job title or length of service. Companies
that fail to make an aguinaldo payment may be fined as much as 5,000 times the legal daily
minimum wage. Some other Latin American nations, such as Costa Rica and El Salvador,
also requireemployers to pay their employees an aguinaldo.

1. Performance Bonuses
Performance bonuses reward employees for exceptional work. They are customarily
offered after the completion of projects or at the end of fiscal quarters or years.
Performance bonuses may be doled out to individuals, teams, departments, or to the
company-wide staff. A reward bonus may be either a one-time offer or a periodic payment.
While reward bonuses are usually given in cash, they sometimes take the form of stock
compensation, gift cards, time off, holiday turkeys, or simple verbal expressions of
appreciation

Examples of reward bonuses include annual bonuses, spot bonus awards, and
milestone bonuses. Spot bonuses, which reward employees who deserve special recognition,
are micro-bonus payments, typically valued at around $50. Workers who reach longevity
milestones—for example, 10 years of employment with a given firm—may be recognized
with additional compensation.

Some businesses build bonus structures into employee contracts, where any profits
earned during a fiscal year will be shared amongst the employees. In most cases, C-suite
executives are awarded larger bonuses than lower-level employees.

2. Bonus Inflation
While bonuses are traditionally issued to high-performing, profit-generating
employees, some companies opt to issue bonuses to lower-performing employees as well,
even though businesses that do this tend to grow more slowly and generate less money. Some
businesses resort to distributing across-the-board bonuses in an effort to quell jealousies and
employee backlash. After all, it's easier for management to pay bonuses to everyone than to
explain to inadequate performers why they were denied.

Furthermore, it can be difficult for an employer to accurately assess their employees'

performance success. For example, employees who fail to make their activity quotas may be
very hard workers. However, their performance may be hampered by any number of
conditions out of their control, such as unavoidable production delays or an economic
downturn.

3. Special Considerations
A. Bonuses in Lieu of Pay
Companies are increasingly replacing raises with bonuses—a trend that vexes many
employees. While employers can keep wage increases low by pledging to fill pay gaps with
Payment of Bounce Act 1965 11.5 Industrial Social Work

bonuses, they are under no obligation to follow through. Because employers pay bonuses on
a discretionary basis, they may keep their fixed costs low by withholding bonuses during
slow years or recessionary periods. This approach is much more viable than increasing
salaries annually, only to cut wages during a recession.

B. Dividends and Bonus Shares

In addition to employees, shareholders may receive bonuses in the shape of
dividends, which are carved from the profits realized by the company. In lieu of cash
dividends, a company can issue bonus shares to investors. If the company is short on cash,
the bonus shares of company stock provide a way for it to reward shareholders who expect
a regular income from owning the company's stock. The shareholders may then sell the
bonus sharesto meet their cash needs or they can opt to hold onto the shares.

11.5 Why Do Companies Give Bonuses

Companies give bonuses to employees for a variety of reasons, such as to:
Encourage certain behavior: Bonuses can be used as an incentive to encourage employees to
perform at their best or to achieve certain goals.
a) Reward good performance: Bonuses can be given to recognize and
reward employees for exceptional performance or for meeting certain
performance targets.
b) Show appreciation/Boost morale: Bonuses can be given as a way for
companies to show appreciation to their employees and boost morale.
c) Retain key employees: Companies may offer retention bonuses to key
employees to encourage them to stay with the company, especially during
times of economicuncertainty or organizational change.
d) Attract top talent: Companies may offer signing bonuses to top-talent
candidates as an incentive to accept a job offer, especially if they are
being aggressively pursued by rival firms.
Share company success: In addition to rewarding employees, companies may distribute
bonuses to shareholders through a special dividend or a bonus issue, which is an offer of free
additional shares of the company's stock.

Details of Payment of Bonus Act, 1965

Objective To reward the employee of the organization by sharing the
profits earned and is linked to productivity
Applicable To Any establishment with 110 or more employees
Eligibility Employees getting Rs. 111,000 per month or less (basis + DA,
excluding other allowances) and have completed 30 working
days in that financial year
Components of Bonus Salary / Wages only include basic and DA for bonus payment
and the rest of allowances (eg, HRA, overtime, etc.) are
excluded
Should be paid at the minimum rate of 8.33% and maximum
Min / Max and time limits rate of 110%. It needs to be paid within 8 months from the
on bonus payments close of the accounting year
Employees can be disqualified if they are dismissed on the
Disqualification of bonus basis of fraud, misconduct, or any similar situation
Centre for Distance Education 11.6 Acharya Nagarjuna University

11.6 Calculation for Bonus Payable

With a min rate of 8.33% and max rate of 110%, when wages or salary exceeds Rs. 7,000 or
the minimum wages fixed by the government, the bonus will be payable on Rs. 7,000 or
the minimum wages as fixed by govt., whichever is higher.
As per the amendment on the Payment of Bonus Bill passed in 11015, if the gross earning of
the employee is below Rs. 111,000, employers are liable to pay bonuses. The bonus will be
calculated as follows:
 If salary is equal to or less than Rs. 7,000, then the bonus will be
calculated on the actual amount by using the formula: Bonus= Salary x
8.33 / 100
 If salary is more than Rs. 7,000, then the bonus will be calculated on
Rs. 7,000 byusing the formula: Bonus= 7,000 x 8.33 /100
Examples:
1. If A’s Salary (Basic + DA) is Rs. 6,000, then bonus payable will be: 6,000 x
8.33 / 100=Rs. 500 per month (Rs. 6,000 per year)
2. If B’s Salary (Basic + DA) is Rs. 7,500, then bonus payable will be: 7,000 x
8.33 / 100=Rs. 583 per month (Rs. 6,996 per year)
11.7 Types of Bonus Payments
Some bonuses are distributed quarterly, others yearly. Some are a one-time thing,
others are recurring. It all depends on what role you are in, what level you are at, what
you contribute, what your leadership is like, and what kind of company you work for
(among many other factors). Some of the common types of bonuses are given below-
Annual Bonus Spot Bonus

It is usually based on overall company A spot bonus is for people who go above and
performance. So you may get a large or small beyond their normal duty and is usually tied to
bonus depending on how successful your a task that was outside the scope of your role.
organization was that year as well as how big It’s generally a one-time thing, if not an
a part of that success you are. This can also be occasional occurrence depending on budget,
considered as ‘profit sharing’. priorities, and work efficiency.
Signing Bonus Retention Bonus

It is a one-time bonus provided when you A retention bonus is somewhat similar to a

sign on to a new role. Companies usually signing bonus and is given for retaining
offer signing bonuses when an employee is valuable employees. It’s generally given
moving to a new city for a job and the during an acquisition, merger or to make
company wants to cover some of the cost. It someone stick around for an extra period of
is also a way for employers to make up for time if they were looking to leave.
salary demands they can’t meet.
Referral Bonus Holiday Bonus

A referral bonus is given to current A holiday bonus is another way to recognize

employees on referring great candidates for employees for their hard work and to give
jobs at their company. It’s generally given them an extra boost during an especially
when the candidate is hired and has stayed expensive time of the year. It’s often but not
on for several months (usually 3-6 months). always a set percentage of your annual
salary (say anywhere from 5% to 10%)
Payment of Bounce Act 1965 11.7 Industrial Social Work

11.8 Eligibility for Bonus Under The Act

The payment of bonus is a statutory right under the act and According to the Section 8 of the
act, any employer who has worked for a minimum of 30 days in an accounting year, shall be
eligible for a bonus.

In East Asiatic Co. Ltd. Vs Industrial Tribunal 3, it was held that a retrenched employee is
eligible for bonus if they worked for a min of 30 days and have a salary of 10,000 pm in a
year.

In the case of J. K. Ginning & Pressing Factory v. Second Labour Court, Akola & Others 4,
a factory employed ten seasonal employees, and the issue of their bonus eligibility arose.
The Bombay High Court ruled that the Act does not exclude such seasonal workers from
employment; the only criterion for eligibility is that they meet the Section 8 requirements.
As a result, even seasonal employees were deemed to be entitled to bonus payments
underthe Act.

11.9 Disqualification from Bonus Under the Act

According to the sec 9 of the act an employee shall be disqualified from receiving bonus
under the Payment of Bonus Act, 1965, if he is dismissed from service for:
 Fraud, or
 Riotous or violent behavior while on the premises of the establishment, or
 Theft, misappropriation or sabotage of any property of the establishment

This provision is based on the recommendation of Bonus Commission, which stated that:

After all, bonus can only be shared by those workers who promote the stability and well-
being of the industry, not by those who positively exhibit disruptive tendencies. Bonuses,
without a doubt, impose a duty of good behaviour.

The appellant, a bus conductor working for a government of Tamil Nadu undertaking,
was dismissed from service in Pandian Roadways Corporation Ltd. vs. Presiding Officer 5.
Following that, the petitioner and management reached an agreement, and the petitioner as
appointed as a new entrant. Following that, the petitioner claimed an bonus of rs 1,8411 for
the duration after his re-appointment. the court ruled in the case that " If an employee is
dismissed from service, he is disqualified from receiving any bonus under the said Act, not
just the bonus for the accounting year," the court ruled.

In Gammon India Ltd Vs Niranjan Das 6, the court held that an employee who is dismissed
from service for fraud, riotous or aggressive behaviour on the premises of the company, or
who is guilty of theft, misappropriation, or sabotage of any establishment's property is
disqualified from receiving bonus for the accounting year under section 9 of the Payment of
Bonus Act, 1965. A dismissed employee who has been reinstated with back pay has
evidently not committed the above crimes and has not been fired. As a result, he is entitled to
a bonus.

11.10 Rights of Employer And Employee

A. The Said act defines the rights available to the employees as defined below:
 Right to claim bonus due under the Act, which allows them to make a request to
the government for payment and recovery of bonus amounts that are not paid to
Centre for Distance Education 11.8 Acharya Nagarjuna University

them within one year of their due date

 The right to take any dispute to a Labour Court or Tribunal; however, it is
necessary to remember that employees who are not entitled to bonuses are unable
to take their case to a Labour Court or Tribunal.
 Right to seek clarity to obtain details about whatever products are in the name of
the business so that they can determine whether or not they are being fairly
compensated for their services.
B. The rights available to the Employer against any exploitation or the protection of their
business are given as below:
 Rights to bring any dispute to the Labour Court or the Tribunal over a request for
an interpretation of any clause of the Act.
 Right to deduct a fair amount from an employee's bonus on account of a bonus
already paid as a festival bonus or in the event of a monetary loss caused by the
employee's misbehaviour.
 Right to deduct the value of a bonus paid to an employee who has been fired for
misbehaviour, offensive behaviour, or obstructing the establishment's land.

1. Payment of Minimum Bonus
Section 10 of the Act states that, regardless of whether the employer has some allocable
surplus in the accounting year, each employer must pay each employee a minimum bonus
equivalent to 8.33 percent of the employee's salary or wage earned during the
accounting year, or one hundred rupees, whichever is greater. However, if an employee is
under the age of fifteen at the start of the accounting year, the terms of this Section refer to
that employee as if the words "one hundred rupees" were replaced with "sixty rupees."
Section 10 of the Act does not contradict Articles 19 and 301 of the Constitution. Even if the
employer loses money during the fiscal year, he must pay the minimum bonus as according to
section 10 of the act. In J.K. Chemicals Ltd. vs. Govt. of Maharashtra7 the court held that the
company would not be relieved from its liability to pay minimum bonus, if the bonus liability
is negligible in comparison to the loss incurred. If the employer's damages were not caused
by employee wrongdoing, the employer must pay the statutory minimum bonus.

2. Payment of Maximum Bonus

If the allocable surplus for any accounting year referred to in Section 10 exceeds the amount
of the minimum bonus available to workers under that Section, the employer is allowed to
pay a bonus equal to each employee's salary or wage received during that accounting year. In
determining the allocable surplus under this Section, the amount set on or set off under the
provisions of Section 15 must be taken into account in accordance with those provisions.

3. Provisions Related To Bonus under the Code on Wages, 11019

The chapter relating to bonus payments under the code on wages applies only to
establishments employing at least 110 workers on any day during the accounting year, similar
to the provisions of the Payment of Bonus Act, 1965.
An annual bonus would be paid to all workers whose salaries do not exceed a certain monthly
sum (to be determined by the federal or state governments). Bonuses are paid on the higher of
the minimum wage or the wage limit set by the relevant government. Along the lines of the
Payment of Bonus Act, the Code on wages lists disqualifications for receiving bonuses. It
should be noted, however, that the Code also states that removal from service due to a
conviction for sexual assault would be provided a ground for disqualification of bonus under
the Code.
 Payment of Bounce Act 1965 11.9 Industrial Social Work

4. Offences and penalties Under Payment of Bonus Act

In the event of a breach of the provisions of the Act or rules, the punishment is six months
imprisonment or Rs.1000 fine, or both.
If failure to comply with the directives or requisitions issued, the punishment is imprisonment
for six months or a fine of Rs.1000, or both.
Let’s say a company, firm, corporation, or group of individuals commits a crime.
In that instance, the company’s director, partner, principal, or officer in charge of the
company’s operations should get presumed guilty unless the individual can show that the
crime was committed without his knowledge or that he exercised all due diligence.

5. Classes of employees not entitled under the Act

The payment of Bonus Act does not apply to certain classes of employees, which include:
 Life Insurance Corporation,
 Universities and other educational institutions,
 The Unit Trust of India,
 Employees employed through contractors on building operations, to months
employedby the Reserve Bank of India,
 The Indian Red Cross Society institution of a like nature,
 The Industrial Finance Corporation of India,
 the National Bank for Agriculture and Rural Development,
 Institutions (including hospitals, commerce and social welfare institutions’
chambers)were established not for purposes of profit,
 Financial Corporations,
 the Industrial Development Bank of India,
 Employees of inland water transport establishments passing through another
country
6. Amendment to the Payment of Bonus Act, 1965
Year Of Eligibility
S.No Amendment Limit(Rs. Per Calculation Ceiling
Month) (Rs. Per month)
1. 1965 Rs. 1600 Rs.750

11. 1985 Rs.11500 Rs. 1600

3. 1995 Rs. 3500 Rs. 11500

4. 11007 Rs. 10000 Rs. 3500

7000 rupees Or, whichever is higher, the

5. 11015 Rs. 111000 minimum salary for scheduled work as
set by the competent government.

11.11 Payment of Bonus Rules

In exercise of the powers conferred by section 38 of the Payment of Bonus Act, 1965 (31 of
1965), and in super session of the Payment of Bonus Rules, 1965, the Central Government
hereby makes the following rules, namely:
1. Short title and commencement. – (1) These rules may be called the Payment of Bonus
Rules, 1965.
(11) They shall come into force on the date of their publication in Official Gazette.
Centre for Distance Education 11.10 Acharya Nagarjuna University

2.Definitions. – In these rules -

a) “form” means a form appended to these rules;
b) “act” means the Payment of Bonus Act, 1965 (111 of 1965).
c) “section” means a section of the Act.

3. Authority for granting permission for change of accounting year. – The prescribed
authority for the purposes of the proviso to paragraph (b) of sub-clause (iii) of clause (1) of
section 11 shall be –
d) in case of an establishment in relation to which the Central Government is the
appropriate Government under the Act, the Chief Labour Commissioner
(Central);
e) in any other case, the Labour Commissioner of the State in which the
establishment is situated.

4. Maintenance of registers.- Every employer shall prepare and maintain the following
registers, namely:-
a) a register showing the computation of the allocable surplus referred to in clause
(4) of section 11, in form A:
b) a register howing the set-on and set-off of the allocable surplus, under section 15,
in form B.
c) a register showing the details of the amount of bonus due to each of the
employees, the deductions under sections 17 and 18 and the amount actually
disbursed, in FormC.
5. Annual returns. – Every employer shall send a return in Form D to the Inspector so as to
reach him within 30 days after the expiry of the time limit specified in section 19 for payment
of bonus.
Payment of Bounce Act 1965 11.11 Industrial Social Work

Payment of Gratuity Act 1972

Learning outcomes

 To study the Gratuity Payable to the employee on the termination of his employment
 To Know the Powers of Inspectors
 To evaluate the Penalties and recovery of Gratuity
 To identify the Cognizance offences, gratuity and protection of action in good faith
Structure
11.12 Introduction
11.13 Section: 2 Definitions.
11.14 Summary
11.15 Key words
11.16 Self Assessment questions
11.17 Suggested Readings

11.12 Introduction
An Act to provide for a scheme for the payment of gratuity to employees engaged in
factories, mines, oilfields, plantations, ports, railway companies, shops or other
establishments and for matters connected therewith or incidental thereto. BE it enacted by
Parliament in the Twenty-third Year of Republic of India as follows :
Section: 1Short title, extent, application and commencement.
(1) This Act may be called the Payment of Gratuity Act, 19711.
(2) It extends to the whole of India:
Provided that in so far as it relates to plantations or ports, it shall not extend to the State of
Jammu and Kashmir.
(3) It shall apply to -
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time being in
force in relation to shops and establishments in a State, in which ten or more persons
are employed, orwere employed, on any day of the preceding twelve months;
(c)such other establishments or class of establishments, in which ten or more employees
are employed, or were employed, or, any day of the preceding twelve months, as the
Central Government may, by notification, specify in this behalf.
(3A) A shop or establishment to which this Act has become applicable shall continue to
be governed by this Act notwithstanding that the number of persons employed therein at
any time after it has become so applicable falls below ten.]
(4) It shall come into force on such date as the Central Government may, by notification,
appoint.

11.13 Section: 11 Definitions.

In this Act, unless the context otherwise requires, -
(a) "appropriate Government"' means, -
(i) in relation to an establishment
(a) belonging to, or under the control of, the Central Government,
(b) having branches in more than one State,
(c) of a factory belonging to, or under the control of, the Central Government,
(d) of a major port, mine, oilfield or railway company, the Central Government,
(ii) in any other case, the State Government;
Centre for Distance Education 11.12 Acharya Nagarjuna University

(b) "completed year of service" means continuous service for one year;
(c) "continuous service" means continuous service as defined in section 11A;
(d) "controlling authority" means an authority appointed by the appropriate

Government under section 3 ;

(e) "employee" means any person (other than an apprentice) employed on wages, in any
establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any
skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether
the terms of such employment are express or implied, and whether or not such person is
employed in a managerial or administrative capacity, but does not include any such person
who holds a post under the Central Government or a State Government and is governed by
any other Act or by any rules providing for payment of gratuity

Explanation :
(f) "employer" means, in relation to any establishment, factory, mine, oilfield,
plantation, port, railway company or shop -
(i) belonging to, or under the control of, the Central Government or a State
Government, a person or authority appointed by the appropriate Government for the
supervision and control of employees, or where no person or authority has been so
appointed, the head of the Ministry or the Department concerned,
(ii) belonging to, or under the control of, any local authority, the person appointed
by such authority for the supervision and control of employees or where no person has
been so appointed, the chief executive office of the local authority,
(iii) in any other case, the person, who, or the authority which, has the ultimate
control over the affairs of the establishment, factory, mine, oilfield, plantation, port,
railway company or shop, and where the said affairs are entrusted to any other person,
whether called a manager, managing director or by any other name, such person;
(g) "factory" has the meaning-assigned to it in clause (m) of section 11 of the Factories
Act, 1948 (63 of 1948);
(e) "family", in relation to an employee, shall be deemed to consist of -
(f) in the case of a male employee, himself, his wife, his children, whether married or
unmarried ,his dependent parents and the dependent parents of his wife and the widow]
and children of his predeceased son, if any,
(ii) in the case of a female employee, herself, her husband, her children, whether married
or unmarried, her dependent parents and the dependent parents of her husband and the
widow and children of her predeceased son, if any:

Explanation : Where the personal law of an employee permits the adoption by him of a
child, any child lawfully adopted by him shall be deemed to be included in his family,
and where a child of an employee has been adopted by another person and such adoption
is, under the personal law of the person making such adoption, lawful, such child shall
be deemed to be excluded from the family of the employee;

(i) "major port" has the meaning assigned to it in clause (8) of section 3 of the Indian Ports
Act, 1908 (15 of 1908);
(j) "mine" has the meaning assigned to it in clause (J) of sub-section (1) of section 11 of the
Mines Act, 19511 (35 of 19511);
(k) "notification" means a notification published in the Official Gazette;
(l) "oilfield" has the meaning assigned to it in clause (e) of section 3 of the Oilfields
(Regulation and Development) Act, 1948 (53 of 1948);
Payment of Bounce Act 1965 11.13 Industrial Social Work

(m) "plantation" has the meaning assigned to it in clause (f) of section 11 of the Plantations
Labour Act, 1951 (69 of 1951) ;
(n) "port" has the meaning assigned to it in clause (4) of section 3 of the Indian Ports Act,
1908 (15 of 1908);
(o) "prescribed" means prescribed by rules made under this Act;
(p) "railway company" has the meaning assigned to it in clause (5) of section 3 of the Indian
Railways Act,1890 (9 of 1890);
(q) "retirement" means termination of the service of an employee otherwise than on
superannuation;
(r) "superannuation", in relation to an employee, means the attainment by the employee of
such age as is fixed in the contract or conditions of service at the age on the attainment of
which the employee shall vacate the employment;
(s) "wages" means all emoluments which are earned by an employee while on duty or on
leave in accordance with the terms and conditions of his employment and which arc paid
or arc payable to him in cash and includes dearness allowance but does not include any
bonus, commission, house rent allowance, overtime wages and any other allowance.

Section: 11A- Continuous service

For the purposes of this Act, -
(1) an employee shall be said to be in continuous service for a period if he has, for that
period, been in uninterrupted service, including service which may be interrupted on account
of sickness, accident, leave, absence from duty without leave (not being absence in respect of
which an order treating the absence as break in service has been passed in accordance with
the standing order, rules or regulations governing the employees of the establishment), lay
off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such
uninterrupted or interrupted service was rendered before or after the commencement of this Act.
(2) where an employee (not being an employee employed in a seasonal establishment) is
not in continuous service within the meaning of clause (1), for any period of one year or six
months, he shall be deemed to be in continuous service under the employer -
(a) for the said period of one year, if the employee during the period of twelve calendar
months preceding the date with reference to which calculation is to be made, has
actually worked under the employer for not less than -
(i) one hundred and ninety days, in the case of an employee employed below the ground
in a mine or in an establishment which works for less than six days in a week; and
(ii) two hundred and forty days, in any other case;
(b) for the said period of six months, if the employee during the period of six calendar
months preceding the date with reference to which the calculation is to be made, has
actually worked under the employer for not less than -
(i) ninety-five days, in the case of an employee employed below the ground in a mine or
in anestablishment which works for less than six days in a week; and
(ii) one hundred and twenty days, in any other case;

Explanation: For the purpose of clause (11), the number of days on which an employee has
actually worked under an employer shall include the days on which -
(i) he has been laid-off under an agreement or as permitted by standing orders made
under the Industrial Employment (Standing Orders) Act, 1946 (110 of 1946), or
under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law
applicab1c to the establishment;
(ii) he has been on leave with full wages, earned in the previous year;
(iii) he has been absent due to temporary disablement caused by accident arising out of
Centre for Distance Education 11.14 Acharya Nagarjuna University

and inthe course of his employment and

(iv) in the case of a female, she has been on maternity leave; so, however, that the total
periodof such maternity leave does not exceed twelve weeks.
(3) where an employee employed in a seasonal establishment, is not in continuous service
within the meaning of clause (1), for any period of one year or six months, he shall be
deemed to be in continuous service under the employer for such period if he has actually
worked for not less than seventy five per cent of the number of days on which the
establishment was in operation during such period.

Section: 3 Controlling authority

The appropriate Government may, by notification, appoint any officer to be a controlling
authority, who shall be responsible for the administration of this Act and different controlling
authorities may be appointed for different areas.

Section: 4 Gratuity payable to an employee on the termination of his employment

(1) Gratuity shall be payable to an employee on the termination of his employment
after hehas rendered continuous service for not less than five years, -
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease:
Provided that the completion of continuous service of five years shall not be necessary where
the termination of the employment of any employee is due to death or disablement:
Provided further that in the case of death of the employee, gratuity payable to him
shall be paid to his nominee or, if no nomination has been made, to his heirs, and where any
such nominees or heirs is a minor, the share of such minor, shall be deposited with the
controlling authority who shall invest the same for the benefit of such minor in such bank or
other financial institution, as may be prescribed, until such minor attains majority.

Explanation. : For the purposes of this section, disablement means such disablement as
incapacitates an employee for the work which he, was capable of performing before the
accident or disease resulting in such disablement.
(2) For every completed year of service or part thereof in excess of six months, the
employer shall pay gratuity to an employee at the rate of fifteen days wages based on the rate
of wages last drawn by the employee concerned:
Provided that in the case of a piece-rated employee, daily wages shall be computed on the
average of the total wages received by him for a period of three months immediately
preceding the termination of his employment, and, for this purpose, the wages paid for any
overtime work shall not be taken into account.

Provided further that in the case of an employee who is employed in a seasonal establishment
and who is riot so employed throughout the year, the employer shall pay the gratuity at the
rate of seven days wages for each season.

Explanation: In the case of a monthly rated employee, the fifteen days wages shall be
calculated by dividing the monthly rate of wages last drawn by him by twenty-six and
multiplying the quotient by fifteen.
(3) The amount of gratuity payable to an employee shall not exceed three lakhs and fifty
thousand rupees.
(4) For the purpose of computing the gratuity payable to an employee who is employed,
after his disablement, on reduced wages, his wages for the period preceding his disablement
Payment of Bounce Act 1965 11.15 Industrial Social Work

shall be taken to be the wages received by him during that period, and his wages for the
period subsequent to his disablement shall be taken to be the wages as so reduced.
(5) Nothing in this section shall affect the right of an employee to receive better
terms ofgratuity under any award or agreement or contract with the employer.

(6) Notwithstanding anything contained in sub-section (1),

(a) the gratuity of an employee, whose services have been terminated for any act, wilful
omission or negligence causing any damage or loss to, or destruction of, property
belonging to the employer, shall be forfeited to the extent of the damage or loss so
caused.
(b) the gratuity payable to an employee may be wholly or partially forfeited]
(i) if the services of such employee have been terminated for his riotous or disorderly
conductor any other act of violence on his part, or
(ii) if the services of such employee have been terminated for any act which
constitutes an offence involving moral turpitude, provided that such offence is
committed by him in the course of his employment.

Section: 4A Compulsory insurance

(1) With effect from such date as may be notified by the appropriate Government in this
behalf, every employer, other than an employer or an establishment belonging to, or
under the control of, the Central Government or a State Government, shall, subject to the
provisions of sub-section (11), obtain an insurance in the manner prescribed, for his
liability for payment towards the gratuity under this Act, from the Life Insurance
Corporation of India established under the Life Insurance Corporation of India Act, 1956
(31 of 1956) or any other prescribed insurer:
Provided that different dates may be appointed for different establishments or class of
establishments or for different areas.
(2) The appropriate Government may, subject to such conditions as may be prescribed,
exempt every employer who had already established an approved gratuity fund in respect
of his employees and who desires to continue such arrangement and every employer
employing five hundred or more persons who establishes an approved gratuity fund in
the manner prescribed from the provisions of sub-section (1).
(3) For the purpose of effectively implementing the provisions of this section, every
employer shall within such time as may be prescribed get his establishment registered
with the controlling authority in the prescribed manner and no employer shall be
registered under the provisions of this section unless he has taken an insurance referred
to in sub-section (1) or has established an approved gratuity fund referred to in sub-
section (11).
(4) The appropriate Government may, by notification, make rules to give effect to the
provisions of this section and such rules may provide for the composition of the Board of
Trustees of the approved gratuity fund and for the recovery by the controlling authority
of the amount of the gratuity payable to an employee from the Life Insurance
Corporation of India or any other insurer with whom an insurance has been taken under
sub-section (1), or as the case may be, the Board of Trustees of the approved gratuity
fund.
(5) Where an employer fails to make any payment by way of premium to the insurance
referred to in sub-section (1) or by way of 'contribution to all approved gratuity fund
referred to in sub-section (11), he shall be liable to pay the amount of gratuity due under
this Act (including interest, if any, for delayed payments) forthwith to the controlling
authority.
Centre for Distance Education 11.16 Acharya Nagarjuna University

(6) Whoever contravenes the provisions of sub-section (5) shall be punishable with fine
which may extend to ten thousand rupees and in the case of a continuing offence with a
further fine which may extend to one thousand rupees for each day during which the
offence continues.
Explanation : In this section "approved gratuity fund" shall have the same meaning as in
clause (5) of section 11 of the Income-tax Act, 1961 (43 of 1961)].

Section: 5 Power to exempt

(1) The appropriate Government may, by notification, and subject to such conditions as may
be specified in the notification, exempt any establishment, factory, mine, oilfield,
plantation, port, railway company or shop to which this Act applies from the operation of
the provisions of this Act if, in the opinion of the appropriate Government, the
employees in such establishment, factory, mine, oilfield, plantation, port, railway
company or shop are in receipt of gratuity or pensionary benefits not less favourable than
the benefits conferred under this Act.
(2) The appropriate. Government may, by notification and subject to such conditions as may
be specified in the notification, exempt any employee or class of employees employed in
any establishment, factory, mine, oilfield, plantation, port, railway company or shop to
which this Act applies from the operation of the provisions of this Act, if, in the opinion
of the appropriate Government, such employee or class of employees are in receipt of gratuity
or pensionary benefits not less favorable than the benefits conferred under this Act.
(3) A notification issued under sub-section (1) or sub-section (11) may be issued
retrospectively a date not earlier than the date of commencement of this Act, but no such
notification shall be issued so as to prejudicially affect the interests of any person.

Section: 6 Nomination
(1) Each employee, who has completed one year of service, shall make, within such time, in
such form and in such manner, as may be prescribed, nomination for the Purpose of' the
second proviso to sub-section (1) of section 4.
(2) An employee may, in his nomination, distribute the amount of gratuity payable to him
under this Act amongst more than one nominee.
(3) If an employee has a family at the time of' making a nomination, the nomination shall be
made in favour of one or more members of his family, and any nomination made by such
employee in favour of a person who is not a member of his family, shall be void.

(4) If at the time of making a nomination the employee has no family, the nomination may
be made in favour of any person or persons but if the employee subsequently acquires a
family, such nomination shall forthwith become invalid and the employee shall make,
within such time as may be prescribed, afresh nomination in favour of one or more
members of hisfamily.
(5) A nomination may, subject to the provisions of sub-sections (3) and (4), be modified by
an employee at any time, after giving to his employer a written notice in such form and
in such manner as may be prescribed, of his intention to do so.
(6) If a nominee predeceases the employee, the interest of the nominee shall revert to the
employee who shall make a fresh nomination, in the prescribed form, in respect of such
interest.
(7) Every nomination, fresh nomination or alteration of nomination, as the case may be,
shall be sent by the employee to his employer, who shall keep the same in his safe
custody.
Payment of Bounce Act 1965 11.17 Industrial Social Work

Section: 7 Determination of the amount of gratuity

(1) A person who is eligible for payment of gratuity under this Act or any person authorized,
in writing, to act on his behalf shall send a written application to the employer, within
such time and in such form, as may be prescribed, for payment of such gratuity.
(2) As soon as gratuity becomes payable, the employer shall, whether an application referred
to in sub-section (1) has been made or not, determine the amount of gratuity and give
notice in writing to the person to whom the gratuity is payable and also to the controlling
authority specifying the amount gratuity so determined.
(3) The employer shall arrange to pay the amount of gratuity within thirty days from the
date it becomes payable to the person to whom the gratuity is payable.
(3A) If the amount of gratuity payable under sub-section (3) is not paid by the employer
within the period specified in sub-section (3), the employer shall pay, from the date
on which the gratuity becomes payable to the date on which it is paid, simple
interest at such rate, not exceeding the rate notified by the Central Government
from time to time for repayment of long-term deposits, as that Government may,
by notification specify:
Provided that no such interest shall be payable if the delay in the payment is due
to the fault of the employee and the employer has obtained permission in writing
from the controlling authority for the delayed payment on this ground.

(4) (a) If there is any dispute as to the amount of gratuity payable to an employee under this
Act or as to the admissibility of any claim of, or in relation to, an employee for payment
of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit
with the controlling authority such amount as he admits to be payable by him as gratuity.
(b) Where there is a dispute with regard to any matter or matters specified in clause (a),
the employer or employee or any other person raising the dispute may make an
application to the controlling authority for deciding the dispute.

(c) The controlling authority shall, after due inquiry and after giving the parties to the
dispute a reasonable opportunity of being heard, determine the matter or matters in
dispute and if, as a result of such inquiry any amount is found to be payable to the
employee, the controlling authority shall direct the employer to pay such amount or,
as the case may be, such amount as reduced by the amount already deposited by the
employer.
(d) The controlling authority shall pay the amount deposited, including the excess
amount, ifany, deposited by the employer, to the person entitled thereto.
(e) As soon as may be after a deposit is made under clause (a), the controlling authority
shallpay the amount of the deposit -
(i) to the applicant where he is the employee; or
(ii) where the applicant is not the employee, to the nominee or, as the case may be, the
guardian of such nominee or] heir of the employee if the controlling authority is
satisfied that there is no dispute as to the right of the applicant to receive the
amount of gratuity.
(5) For the purpose of conducting an inquiry under sub-section (4), the controlling authority
shall have the same powers as are vested in a court, while trying a suit, under the Code
of Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely :
(a) enforcing the attendance of any person or examining him on oath;
(b) requiring the discovery and production of documents,
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses.
Centre for Distance Education 11.18 Acharya Nagarjuna University

(6) Any inquiry under this section shall be a judicial proceeding within the meaning of
sections 193 and 11118, and for the purpose of section 196, of the Indian Penal Code,
1860 (45 of 1860).
(7) Any person aggrieved by an order under sub-section (4) may, within sixty days from the
date of the receipt of the order, prefer an appeal to the appropriate Government or such
other authority as may be specified by the appropriate Government in this behalf:
Provided that the appropriate Government or the appellate authority, as the case may be,
may, if it is satisfied that the appellant was prevented by sufficient cause from preferring
the appeal within the said period of sixty days, extend the said period by a further period
of sixty days.
Provided further that no appeal by an employer shall be admitted unless at the time of
preferring the appeal, the appellant either produces a certificate of the controlling
authority to the effect that the appellant has deposited with him an amount equal to the
amount of gratuity required to be deposited under subsection (4), or deposits with the
appellate authority such amount.
(8) The appropriate Government or the appellate authority, as the case may be, may, after
giving the parties to the appeal a reasonable opportunity of being heard, confirm, modify
or reverse the decision of the controlling authority.

Section: 7AInspectors
(1) The appropriate Government may, by notification, appoint as many Inspectors, as it
deems fit, for the purposes of this Act.
(2) The appropriate Government may, by general or special order, define the area to
which the authority of an Inspector so appointed shall extend and where two or more
Inspectors are appointed for the same area, also provide, by such order, for the
distribution or allocation of work to be performed by them under this Act.
(3) Every Inspector shall be deemed to be a public servant within the meaning of
section 111 of the Indian Penal Code, 1860 (45 of 1860).

Section: 7BPowers of Inspectors

(1) Subject to any rules made by the appropriate Government in this behalf, an
Inspector may, for the purpose of ascertaining whether any of the provisions of this
Act or the conditions, if any, of any exemption granted there under, have been
complied with, exercise all or any of the following powers, namely:
(a) require an employer to furnish such information as he may consider necessary
(b) enter and inspect, at all reasonable hours, with such assistants (if any), being
persons in the service of the Government or local or any public authority, as he
thinks fit, any premises of or place in any factory, mine, oilfield, plantation, port,
railway company, shop or other establishment to which this Act applies, for the
purpose of examining any register, record or notice or other document required to
be kept or exhibited under this Act or the rules made there under, or otherwise
kept or exhibited in relation to the employment of any person or the payment of
gratuity to the employees, and require the production thereof for inspection;
(c) examine with respect to any matter relevant to any of the purposes aforesaid, the
employer or any person whom he finds in such premises or place and who, he has
reasonable cause to believe, is an employee employed therein;
(d) make copies of, or take extracts from, any register, record, notice or other
document, as he may consider relevant, and where he has reason to believe that
any offence under this Act has been committed by an employer, search and
seize with such assistance as he may think fit, such register, record, notice or
Payment of Bounce Act 1965 11.19 Industrial Social Work

other document as he may consider relevant in respect of that offence;

(e) exercise such other powers as may be prescribed.
(2) Any person required to produce any register, record, notice or other document or to
give any information by an Inspector under sub-section (1) shall be deemed to be
legally bound to do so within the meaning of sections 175 and 176 of the Indian
Penal Code 1860 (45 of1860).
(3) The provisions of the Code of Criminal Procedure, 1973 (11 of 1974) shall so far as
may be, apply to any search or seizure under this section as they apply to any search
or seizure made under the authority of a warrant issued under section 94 of that
Code.

Section: 8 Recovery of gratuity

If the amount of gratuity payable under this Act is not paid by the employer, within
the prescribed time, to the person entitled thereto, the controlling authority shall, on an
application made to it in this behalf by the aggrieved person, issue a certificate for that
amount to the Collector, who shall recover the same, together with compound interest thereon
at such rate as the Central Government may, by notification, specify,] from the date of expiry
of the prescribed time, as arrears of land revenue and pay the same to the person entitled
thereto :

Provided that the controlling authority shall, before issuing a certificate under this section,
give the employer a reasonable opportunity of showing cause against the issue of such
certificate:
Provided further that the amount of interest payable under this section shall, in no case
exceed the amount of gratuity payable under this Act.

Section: 9Penalties
(1) Whoever, for the purpose of avoiding any payment to be made by himself under
this Act or of enabling any other person to avoid such payment, knowingly makes
or causes to be made any false statement or false representation shall be punishable
with imprisonment for a term which may extend to six months, or with fine which
may extend to ten thousand rupees or with both.
(2) An employer who contravenes, or makes default in complying with, any of the
provisions of this Act or any rule or order made there under shall be punishable with
imprisonment for a term which shall not be less than three months but which may
extend to one year, or with fine which shall not be less than ten thousand rupees but
which may extend to twenty thousand rupees, or with both:
Provided that where the offence relates to non-payment of any gratuity payable
under this Act, the employer shall be punishable with imprisonment for a term which
shall not be less than [36] [Six months but which may extend to two years] unless the
court trying the offence, for reasons to be recorded by it in writing, is of opinion that
a lesser term of imprisonment or the imposition 01; a fine would meet the ends of
justice.

Section: 10 Exemption of employer from liability in certain cases

Where an employer is charged with an offence punishable under this Act, he shall be
entitled, upon complaint duly made by him and on giving to the complainant not less than
three clear days notice in writing of his intention to do so, to have any other person whom he
charges as the actual offender brought before the court at the time appointed for hearing the
charge; and if, after the commission of the offence has been proved, the employer proves to
Centre for Distance Education 11.20 Acharya Nagarjuna University

the satisfaction of the court -

(a) that he has used due diligence to enforce the execution of this Act, and
(b) that the said other person committed the offence in question without his knowledge,
consent or connivance, that other person shall be convicted of the offence and shall
be liable to the like punishment as if he were the employer and the employer shall be
discharged from any liability under this Act in respect of such offence:
Provided that in seeking to prove as aforesaid, the employer may be examined on
oath and his evidence and that of any witness whom he calls in his support shall be subject to
cross examination on behalf of the person he charges as the actual offender and by the
prosecutor:

Provided further that, if the person charged as the actual offender by the employer
cannot be brought before the court at the time appointed for hearing the charge, the court
shall adjourn the hearing from time to time for a period not exceeding three months and if by
the end of the said period the person charged as the actual offender cannot still be brought
before the court, the court shall proceed to hear the charge against the employer and shall, if
the offence be proved, convict the employer.

Section: 11Cognizance of offences

(1) No court shall take cognizance of any offence punishable under this Act save on a
complaint made by or under the authority of the appropriate Government:
Provided that where the amount of gratuity has not been paid, or recovered,
within six months from the expiry of the prescribed time, the appropriate
Government shall authorise the controlling authority to make a complaint against
the employer, whereupon the controlling authority shall, within fifteen days from
the date of such authorisation, make such complaint to a Magistrate having
jurisdiction to try the offence.
(2) No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the
first class shall try any offence punishable under this Act.

Section: 12 Protection of action taken in good faith

No suitor other legal proceeding shall lie against the controlling authority or any other
person in respect of anything which is in good faith done or intended to be done under this
Act orany rule or order made there under.

Section: 13 Protection of gratuity

No gratuity payable under this Act and no gratuity payable to an employee employed
in any establishment, factory, mine, oilfield, plantation, port, railway company or shop
exempted under section shall be liable to attachment in execution of any decree or order of
any civil, revenue or criminal court.

Section: 14 Act to override other enactments, etc

The provisions of this Act or any rule made there under shall have effect
notwithstanding anything inconsistent therewith contained in any enactment other than this
Act or in any instrument or contract having effect by virtue of any enactment other than this
Act.

Section: 15 Power to make rules.

(1) The appropriate Government may, by notification make rules for the purpose of
carrying out the provisions of this Act.
Payment of Bounce Act 1965 11.21 Industrial Social Work

(2) Every rule made by the Central Government under this Act shall be laid, as soon as
may be after it is made, before each House of Parliament while it is in session, for a
total period of thirty days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of the session ii-immediately following
the session or the successive sessions aforesaid, both Houses agree in making any
modification in the rule or both Houses agree that the rule should not be made, the rule
shall, thereafter, have effect only in such modified form or be of no effect as the case
may be; so, however, that any such modification or annulment shall be without
prejudice to the validity of anything previously done under thatrule.

11.14 Summary
Under Section 4, payment of gratuity is mandatory. Gratuity shall be payable to an
employee on termination of employment after he has rendered continuous service for not less
than five years in a single organisation. The termination can be due to: Superannuation,
Retirement or resignation, and Death or disablement due to accident or disease. As per
Section 4(1), the completion of continuous service of 5 years is not required where
termination of employment is due to death or disablement. In such case mandatory gratuity is
payable. The unpaid gratuity amount is seized by government which is further used in
holiday, vacations, parties and other fun related activities. Gratuity is paid at a rate of 15 days'
wages for every completed year of service or part thereof in excess of six months. The wages
here means wages last drawn by the employee. The "15 days' wages" will be calculated by
dividing the last drawn wages by and multiplying the result with But under Section 4(3), the
maximum gratuity that is payable is fixed at ₹110,00,000. Any gratuity amount paid in excess
of ₹110,00,000 is taxable in the employee's hands.

The Payment of Bonus Act of 1965 aims to legalise the practice of various establishments
paying bonuses. It provides a mechanism for calculating bonus based on profit and
performance. It allows workers to make more money than the minimum wage or salary. This
Act establishes various procedures for different types of businesses, such as banks and
government agencies, as well as businesses that are not corporations or firms. This Act also
establishes a rigorous redress process in addition to the procedure.

11.15 Key words

Employee- means any person (other than an apprentice) employed on wages, in any
establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any
skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work, whether
the terms of such employment are express or implied, and whether or not such person is
employed in a managerial or administrative capacity, but does not include any such person
who holds a post under the Central Government or a State Government and is governed by
any other Act or by any rules providing for payment of gratuity

Superannuation- in relation to an employee, means the attainment by the employee of such

age as is fixed in the contract or conditions of service at the age on the attainment of which
the employee shall vacate the employment

Wages- means all emoluments which are earned by an employee while on duty or on leave
in accordance with the terms and conditions of his employment and which arc paid or arc
payable to him in cash and includes dearness allowance but does not include any bonus,
commission, house rent allowance, overtime wages and any other allowance
Centre for Distance Education 11.22 Acharya Nagarjuna University

Controlling authority- The appropriate Government may, by notification, appoint any

officer to be a controlling authority, who shall be responsible for the administration of this
Act and different controlling authorities may be appointed for different areas.
1. A bonus is a financial compensation that is above and beyond the normal payment
expectations of its recipient.
2. Bonuses may be awarded by a company as an incentive or to reward good
performance.
3. Typical incentive bonuses a company can give employees include signing, referral,
and retention bonuses.
4. Companies have various ways they can award employee bonuses, including cash,
stock, and stock options.

11.16 Self Assessment Questions

1. Briefly Explain the Procedure of Payment of Gratuity Act 19511
2. Explain the Power of Inspectors
3. Discuss the Penalties and Recovery of Gratuity
4. Describe the Cognizance offences, gratuity and protection of action in good faith
5. Discuss the meaning and definition of bonus Act,1965?
6. Explain the scope and coverage of bonus Act?
7. Elucidate the main provisions of bonus Act?
8. Converse the employee and employer rights and deductions of bonus Act?

11.17 Suggested Readings

1. Commentaries on Payment of GRATUITY ACT,19711, Tenth edition, January
1101111,by Kharbanda & Kharbanda (Author), Law publishing house.
2. The Payment of Gratuity Act, 19711 Paperback – 1 January 11019 by Asia Law
House (Author), Asia law house, Hyderabad.
3. The Payment of Gratuity Act,19711 January 110110 by sathpal puliani (Author, Editor)
karnataka law journal publication, Bangalore.
4. Labour Law Agency's Bare Act on The Payment Of Gratuity Act, 19711 | 11017
Edition, January 1101111 by Labour Law Agency (Author), Mumbai.
5. Malik, P.L : Industrial Law, Eastern Book Company, Lucknow , 1999.
Sharma, A.M : Aspects of Labour Welfare and Social Security, Himalaya Publishing House,
Mumbai, 110011.

Prof. M. Trimurthi Rao

Dean, Faculty of Social Sciences
Dept. of Sociology & Social Work
Acharya Nagarjuna University
 LESSON 12
EMPLOYEE STATE INSURANCE ACT, 1948

Learning objectives
 To study the Establishment of ESI
 To Know the Powers of the standing committee
 To Identify the Duties of Medical Benefit Council
 To Examine the General provisions as to payment of contributions

Structure
12.0 Introduction
12.1 Definition
12.2 Establishment of Employees’ State Insurance Corporation
12.3 Term of office of the members of the Corporation
12.4 Eligibility for re-appointment or re-election
12.5 Authentication of orders, decisions, etc
12.6 Constitution of Standing Committee
12.7 Term of office of members of Standing Committee
12.8. Medical Benefit Council
12.9 Resignation of membership
12.10 Cessation of membership
12.11. Disqualification
12.12 Filling of vacancies
12.13 Fees and allowances
12.14 Principal officers
12.15 Staff
12.16 Powers of the Standing Committee
12.17 Corporation’s power to promote measures for health, etc., of insured persons
12.18 Meetings of Corporation, Standing Committee and Medical Benefit Council.
12.19 Supersession of the Corporation and Standing Committee
12.20 Duties of Medical Benefit Council
12.21 Duties of [Director-General and the Financial Commissioner
12.22 Acts of Corporation, etc., not invalid by reason of defect in constitution, etc.
12.23 Regional Board, Local Committees, Regional and Local Medical Benefit Councils
12.24 Employees’ State Insurance Fund
12.25Contributions
12.26 Principal employer to pay contributions in the first instance
12.27 Recovery of contributions from immediate employer
12.28 General provisions as to payment of contributions.
12.29 Method of payment of contribution
12.30 Recovery of contributions from immediate employer
12.31 General provisions as to payment of contributions
12.32 Method of payment of contribution
12.32 Issue of certificate to the Recovery Officer
12.34 Benefits
12.34.1 Sickness benefit
12.34.2 Maternity Benefit
12.34.12 Disablement benefit.
12.34.4 Dependants’ benefit
Centre for Distance Education 12.2 Acharya Nagarjuna University

12.34.5 . Occupational disease

12.34.6 Medical Benefit
12.35 Summary
12.36 Key words
12.37 Self Assessment questions
12.38 Suggested Readings

12.0Introduction
(1) This Act may be called the Employees’ State Insurance Act, 1948.
(2) It extends to [the whole of India
(12) It shall come into force on such date or dates as the Central Government may, by
notification in the Official Gazette, appoint, and different dates may be appointed for
different provisions of this Act and for different States or for different parts thereof.
(4) It shall apply, in the first instance, to all factories (including factories belonging to the
Government) other than seasonal factories.
Provided that nothing contained in this sub-section shall apply to a factory or
establishment belonging to or under the control of the Government whose employees are
otherwise in receipt of benefits substantially similar or superior to the benefits provided
under this Act.
(5) The appropriate Government may, in consultation with the Corporation and where the
appropriate Government is a State Government, with the approval of the Central
Government], after giving one month’s notice of its intention of so doing by notification
in the Official Gazette, extend the provisions of this Act or any of them, to any other
establishment, or class of establishments, industrial, commercial, agricultural or
otherwise.
Provided that where the provisions of this Act have been brought into force in any
part of a State, the said provisions shall stand extended to any such establishment or class
of establishments within that part if the provisions have already been extended to similar
establishment or class of establishments in another part of that State.
(6) A factory or an establishment to which this Act applies shall continue to be governed by
this Act notwithstanding that the number of persons employed therein at any time falls
below the limit specified by or under this Act or the manufacturing process therein ceases
to be carried on with the aid of power.

12.1 Definitions
In this Act, unless there is anything repugnant in the subject or context,
(1) “appropriate Government ” means, in respect of establishments under the control of the
Central Government or a railway administration or a major port or a mine or oil-field, the
Central Government, and in all other cases, the State Government ;
Confinement” means labour resulting in the issue of a living child, or labour after
twenty-six weeks of pregnancy resulting in the issue of a child whether alive or dead ;
“Contribution” means the sum of money payable to the Corporation by the principal
employer in respect of an employee and includes any amount payable by or on behalf of the
employee in accordance with the provisions of this Act;
“Corporation” means the Employees’ State Insurance Corporation set up under this Act;
(6-A) “dependant” means any of the following relatives of a deceased insured person, namely
(i) a widow, a legitimate or adopted son who has not attained the age of twenty-five years, an
unmarried legitimate or adopted daughter ;
(ia) a widowed mother ;
Employee State Insurance Act, 1948 12.3 Industrial Social Work

(ii) if wholly dependent on the earnings of the insured person at the time of his death, a
legitimate or adopted son or daughter who has attained the age of twenty-five and who is
infirm;
(iii) If wholly or in part dependent on the earnings of the insured person at the time of his
death,
(a) a parent other than a widowed mother,
(b) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate
or adopted or illegitimate if married and a minor or if widowed and a minor,
(c) a minor brother or an unmarried sister or a widowed sister if a minor,
(d) a widowed daughter-in-law,
(e) a minor child of a pre-deceased son,
(f) a minor child of a pre-deceased daughter where no parent of the child is alive, or
(g) a paternal grand-parent if no parent of the insured person is alive;

12.2. Establishment of Employees’ State Insurance Corporation

(1) With effect from such date as the Central Government may, by notification in the Official
Gazette, appoint in this behalf, there shall be established for the administration of the
scheme of Employees’ State Insurance in accordance with the provisions of this Act a
Corporation to be known as the Employees’ State Insurance Corporation.
(2) The Corporation shall be a body corporate by the name of Employees’ State Insurance
Corporation having perpetual succession and a common seal and shall by the said name
sue and be sued.
4. Constitution of Corporation.-The Corporation shall consist of the following members,
namely :
(a) a Chairman to be appointed by the Central Government ;
(b) a Vice-Chairman to be appointed by the Central Government
(c) not more than five persons to be appointed by the Central Government
(d) one person each representing each of the States in which this Act is in force to be
appointed by the State Government concerned;
(e) one person to be appointed by the Central Government to represent the Union
territories;
(f) ten persons representing employers to be appointed by the Central Government in
consultation with such organisations of employers as may be recognised for the purpose
by the Central Government ;
(g) ten persons representing employees to be [appointed] by the Central Government in
consultation with such organisations of employees as may be recognised for the purpose
by
the Central Government ;
(h) two persons representing the medical profession to be appointed by the Central
Government in consultation with such organisations of medical practitioners as may be
recognised for the purpose by the Central Government ;
(i) three members of Parliament of whom two shall be members of the House of the People
(Lok Sabha) and one shall be a member of the Council of States (Rajya Sabha) elected
respectively by the members of the House of the People and the members of the
Council of States ; and
(j) the Director-General of the Corporation, ex-officio.

12.12 Term of office of the members of the Corporation

(1) Save as otherwise expressly provided in this Act, the term of office of members of the
Corporation, other than the members referred to in clauses (a), (b), (c), (d) and (e) of section
Centre for Distance Education 12.4 Acharya Nagarjuna University

4 and the ex-officio member, shall be four years commencing from the date on which their
appointment or election is notified.
Provided that a member of the Corporation shall notwithstanding the expiry of the
said period of four years, continue to hold office until the appointment or election of his
successor is notified.

12.4 Eligibility for [re-appointment] or re-election

An outgoing member of the Corporation, the Standing Committee, or the Medical
Benefit Council shall be eligible for [reappointment] or re-election as the case may be.

12.5 Authentication of orders, decisions, etc.

All orders and decisions of the Corporation shall be authenticated by the signature of
the Director-General of the Corporation and all other instruments issued by the Corporation
shall be authenticated by the signature of the Director-general or such other officer of the
Corporation as may be authorised by him.

12.6 Constitution of Standing Committee

A Standing Committee of the Corporation shall be constituted from among its members,
consisting
(a) a Chairman appointed by the Central Government ;
(b) three members of the Corporation, appointed by the Central Government;
(bb) three members of the Corporation representing such three State Governments
thereon as the Central Government may, by notification in the Official Gazette, specify
from time to time ;
(c) eight members elected by the Corporation as follows : —
I. three members from among the members of the Corporation representing employers ;
II. three members from among the members of the Corporation representing employees ;
III. one member from among the members of the Corporation representing the medical
profession ; and
IV. one member from among the members of the Corporation elected by Parliament
(d) the Director-General of the Corporation, ex-officio.

12.7 Term of office of members of Standing Committee

(1) Save as otherwise expressly provided in this Act, the term of office of a member of the
Standing Committee, other than a member referred to in clause (a) or 12 clause (b) or clause
(bb) of section 8, shall be two years
from the date on which his election is notified :
Provided that a member of the Standing Committee shall, notwithstanding the expiry of the
said period of two years, continue to hold office until the election of his successor is notified:
Provided further that a member of the Standing Committee shall cease to hold office when he
ceases to be a member of the Corporation. (2) A member of the Standing Committee referred
to in clause (a) or 12 clause (b) or clause (bb) of section 8 shall hold office during the
pleasure of the Central Government.

12.8. Medical Benefit Council

(1) The Central Government shall constitute a Medical Benefit Council consisting of —
(a) the Director General, the Employees’ State Insurance Corporation, ex-officio as Chairman
;
(b) the Director General, Health Services, ex-officio as Co-Chairman
(c) the Medical Commissioner of the Corporation, ex-officio ;
Employee State Insurance Act, 1948 12.5 Industrial Social Work

(d) one member each representing each of the 1

States (other than Union territories)] in which this Act is in force to be 2 appointed by the
State Government concerned;
(e) three members representing employers to be appointed by the Central Government in
consultation with such organisations of employers as may be recognised for the purpose
by the Central Government ;
(f) three members representing employees to be appointed by the Central Government in
consul-tation with such organisations of employees as may be recognised for the purpose
by the Central Government ; and
(g) three members, of whom not less than one shall be a woman, representing the medical
profession, to be appointed by the Central Government in consultation with such
organisations of medical practitioners as may be recognised for the purpose by the
Central Government.
(2) Save as otherwise expressly provided in this Act, the term of office of a member of the
Medical Benefit Council, other than a member referred to in any of the clauses (a) to (d) of
sub-section (1), shall be four years from the date on which his appointment is notified:
Provided that a member of the Medical Benefit Council shall, notwithstanding the expiry of
the said period of four years continue to hold office until the appointment of his successor is
notified.
(12) A member of the Medical Benefit Council referred to in clauses (b) and (d) of subsection
(1) shall hold office during the pleasure of the Government appointing him.

12.9 Resignation of membership.

A member of the Corporation, the Standing Committee or the Medical Benefit Council may
resign his office by notice in writing to the Central Government and his seat shall fall vacant
on the acceptance of the resignation by that Government.

12.10 Cessation of membership

(1) A member of the Corporation, the Standing Committee or the Medical Benefit Council
shall cease to be a member of that body if he fails to attend three consecutive meetings
there of
Provided that the Corporation, the Standing Committee or the Medical Benefit Council, as
the case may be, may, subject to rules made by the Central Government in this behalf, restore
him to membership.
(2) Where in the opinion of the Central Government any person appointed or elected to
represent employers, employees or the medical profession on (sic.) the Corporation, the
Standing Committee or the Medical Benefit Council, as the case may be, has ceased to
represent such employers, employees or the medical profession, the Central Government
may, by notification in the Official Gazette, declare that with effect from such date as
may be specified therein such person shall cease to be a member of the Corporation, the
Standing Committee or the Medical Benefit Council, as the case may be.
(12) A person referred to in clause (i) of section 4 shall cease to be a member of the
Corporation when he ceases to be a Member of Parliament.

12.11. Disqualification
A person shall be disqualified for being chosen as or for being a member of the Corporation,
the Standing Committee or the Medical Benefit Council
(a) if he is declared to be of unsound mind by a competent Court ; or
(b) if he is an undischarged insolvent ; or
Centre for Distance Education 12.6 Acharya Nagarjuna University

(c) if he has directly or indirectly by himself or by his partner any interest in subsisting
contract with, or any work being done for, the Corporation except as a medical
practitioner or as a share-holder (not being a Director) of a com-pany ; or
d) if before or after the commencement of this Act, he has been convicted of an offence
involving moral turpitude.

12.12 Filling of vacancies

(1) Vacancies in the office of appointed or elected members of the Corporation, the Standing
Committee Medical Benefit Council shall be filled by appointment or election, as the case
may be.
(2) A member of the Corporation, the Standing Committee or the Medical Benefit Council
appointed or elected to fill a casual vacancy shall hold office only so long as the member
in whose place he is appointed or elected would have been entitled to hold office if the
vacancy had not occurred.

12.112 Fees and allowances

Members of the Corporation, the Standing Committee and the Medical Benefit Council shall
receive such fees and allowances as may from time to time be prescribed by the Central
Government.

12.14 Principal officers

(1) The Central Government may, in consultation with the Corporation, appoint a Director-
eneral and a Financial Commissioner.
(2) The Director-General shall be the Chief Executive Officer of the Corporation.
(12) The Director-General and the Financial Commissioner shall be whole-time officers of
the Corporation and shall not undertake any work unconnected with their office without
the sanction of the Central Government and of the Corporation
(4) The Director-General or the Financial Commissioner shall hold office for such period, not
exceeding five years, as may be specified in the order appointing him. An outgoing
Director-General or Financial Commissioner shall be eligible for re-appointment if he is
otherwise qualified.
(5) The Director-General or the Financial Commissioner shall receive such salary and
allowances as may be prescribed by the Central Government.
(6) A person shall be disqualified from being appointed as or for being [the Director General
or the Financial Commissioner if he is subject to any of the disqualifications specified in
section 112.
(7) The Central Government may at any time remove the Director-General or the Financial
Commissioner from office and shall do so if such removal is recommended by a
resolution of the Corporation passed at a special meeting called for the purpose and
supported by the votes of not less than two-third is of the total strength of the
Corporation.

12.15 Staff
(1) The Corporation may employ such other staff of officers and servants as may be
necessary for the efficient transaction of its business provided that the sanction of the
Central Government shall be obtained for the creation of any post the maximum monthly
salary of which exceeds such salary as may be prescribed by the Central Government.
(2) (a) The method of recruitment, salary and allowances, discipline and other conditions of
service of the members of the staff of the Corporation shall be such as may be specified in
the regulations made by the Corporation in accordance with the rules and orders
Employee State Insurance Act, 1948 12.7 Industrial Social Work

applicable to the officers and employees of the Central Government drawing

corresponding scales of pay
Provided that where the Corporation is of the opinion that it is necessary to make a
departure from the said rules or orders in respect of any of the matters aforesaid, it shall
obtain the prior approval of the Central Government.

12.16 Powers of the Standing Committee

(1) Subject to the general superintendence and control of the Corporation, the Standing
Committee shall administer the affairs of the Corporation and may exercise any of the
powers and perform any of the functions of the Corporation.
(2) The Standing Committee shall submit for the consideration and decision of the
Corporation all such cases and matters as may be specified in the regulations made in this
behalf.
(12) The Standing Committee may, in its discretion, submit any other case or matter for the
decision of the Corporation.

12.17 Corporation’s power to promote measures for health, etc., of insured persons
The Corporation may, in addition to the scheme of benefits specified in this Act,
promote measures for the improvement of the health and welfare of insured persons and for
the rehabilitation and reemployment of insured persons who have been disabled or injured
and may incur in respect of such measures expenditure from the funds of the Corporation
within such limits as may be prescribed by the Central Government.

12.18 Meetings of Corporation, Standing Committee and Medical Benefit Council.

Subject to any rules made under this Act, the Corporation, the Standing Committee
and the Medical Benefit Council shall meet at such times and places and shall observe such
rules of procedure in regard to transaction of business at their meetings as may be specified in
the regulations made in this behalf.

12.19 Supersession of the Corporation and Standing Committee.

(1) If in the opinion of the Central Government, the Corporation or the Standing Committee
persistently makes default in performing the duties imposed on it by or under this Act or
abuses its powers, that Government may, by notification in the official Gazette, supersede
the Corporation, or in the case of the Standing Committee, supersede in consultation with
the Corporation, the Standing Committee :Provided that therefore issuing a notification
under this sub-section the Central Government shall give a reasonable opportunity to the
Corporation or the Standing Committee, as the case may be, to show cause why it should
not be superseded and shall consider the explanations and objections, if any, of the
Corporation or the Standing Committee, as the case may be.
(2) Upon the publication of a notification under sub-section (1) superseding the Corporation
or the Standing Committee, all the members of the Corporation or the Standing
Committee, as the case

12.20 Duties of Medical Benefit Council

The Medical Benefit Council shall —
(a) advise [the Corporation and the Standing Committee] on matters relating to the
administration of medical benefit, the certification for purposes of the grant of benefits
and other connected matters ;
Centre for Distance Education 12.8 Acharya Nagarjuna University

(b) have such powers and duties of investigation as may be prescribed in relation to
complaints against medical practitioners in connection with medical treatment and
attendance ; and
(c) perform such other duties in connection with medical treatment and attendance as may
be specified in the regulations.

12.21 Duties of Director-General and the Financial Commissioner

The Director-general and the Financial Commissioner shall exercise such powers and
discharge such duties as may be prescribed. They shall also perform such other functions as
may be specified in the regulations.

12.22 Acts of Corporation, etc., not invalid by reason of defect in constitution, etc.
No act of the Corporation, the Standing Committee or the Medical Benefit Council
shall be deemed to be invalid by reason of any defect in the constitution of the Corporation,
the Standing Committee or the Medical Benefit Council, or on the ground that any member
thereof was not entitled to hold or continue in office by reason of any disqualification or of
any irregularity in his appointment or election, or by reason of such act having been done
during the period of any vacancy in the office of any member of the Corporation, the
Standing Committee or the Medical Benefit Council.

12.23 Regional Board, Local Committees, Regional and Local Medical Benefit Councils
The Corporation may appoint Regional Boards, Local Committees and Regional and
Local Medical Benefit Councils in such areas and in such manner, and delegate to them such
powers and functions, as may be provided by the regulations.

12.24 Employees’ State Insurance Fund

(1) All contributions paid under this Act and all other moneys received on behalf of the
Corporation shall be paid into a fund called the Employees’ State Insurance Fund which
shall be held and administered by the Corporation for the purposes of this Act.
(2) The Corporation may accept grants, donations and gifts from the Central or any State
Government, Local authority, or any individual or body whether incorporated or not, for
all or any of the purposes of this Act.
(12) Subject to the other provisions contained in this Act and to any rules or regulations made
in this behalf, all moneys accruing or payable to the said Fund shall be paid into the
Reserve Bank of India or such other bank as may be approved by the Central Government
to the credit of an account styled the Account of the Employees’ State Insurance Fund.
All employees to be insured. — Subject to the provisions of this Act, all employees in
factories or establishments to which this Act applies shall be insured in the manner
provided by this Act.

12.25 Contributions
(1) The contribution payable under this Act in respect of an employee shall comprise
contribution payable by the employer (hereinafter referred to as the employer’s
contribution) and contribution payable by the employee (hereinafter referred to as the
employee’s contribution) and shall be paid to the Corporation.
(2) The contributions shall be paid at such rates as may be prescribed by the Central
Government :Provided that the rates so prescribed shall not be more than the rates which
were in force immediately before the commencement of the Employees’ State Insurance
(Amendment)
Act, 1989 (29 of 1989).
Employee State Insurance Act, 1948 12.9 Industrial Social Work

(12) The wage period in relation to an employee shall be the unit in respect of which all
contributions shall be payable under this Act.
(4) The contributions payable in respect of each wage period shall ordinarily fall due on the
last day of the wage period, and where an employee is employed for part of the wage
period, or is employed under two or more employers during the same wage period the
contributions shall fall due on such days as may be specified in the regulations.
(5) (a) If any contribution payable under this Act is not paid by the principal employer on the
date on which such contribution has become due, he shall be liable to pay simple
interest at the rate of twelve per cent. per annum or at such higher rate as may be
specified in the regulations till the date of its actual payment :
Provided that higher interest specified in the regulations shall not exceed the lending
rate of interest charged by any scheduled bank.
(b) Any interest recoverable under clause (a) may be recovered as an arrear of land
revenue or under section 45-C to section 45-I. Explanation. — In this sub-section “
scheduled bank ” means a bank for the time being included in the Second Schedule to
the Reserve Bank of India Act, 19124 (2 of 19124).

12.26 Principal employer to pay contributions in the first instance

(1) The principal employer shall pay in respect of every employee, whether directly
employed by him or by or through an immediate employer, both the employer’s
contribution and the employee’s contribution.
(2) Notwithstanding anything contained in any other enactment but subject to the provisions
of this Act and the regulations, if any, made thereunder, the principal employer shall,in
the case of an employee directly employed by him (not being an exempted employee), be
entitled to recover from the employee the employee’s contribution by reduction from his
wages and not otherwise :
Provided that no such deduction shall be made from any wages other than such as relate
to the period or part of the period in respect of which the contribution is payable or in
excess of the sum representing the employee’s contribution for the period.
(12) Notwithstanding any contract to the contrary, neither the principal employer nor the
immediate employer shall be entitled to deduct the employer’s contribution from any
wages payable to an employee or otherwise to recover it from him.
(4) Any sum deducted by the principal employer from wages under this Act shall be deemed
to have been entrusted to him by the employee for the purpose of paying the contribution
in respect of which it was deducted.
(5) The principal employer shall bear the expenses of remitting the contributions to the
Corporation.

12.27 Recovery of contributions from immediate employer

(1) A principal employer, who has paid contribution in respect of an employee employed by
or through an immediate employer, shall be entitled to recover the amount of the
contribution so paid (that is to say the employer’s contribution as well as the employee’s
contribution, if any,) from the immediate employer, either by deduction from any amount
payable to him by the principal employer under any contract, or as a debt payable by the
immediate employer.
(1-A) The immediate employer shall maintain a register of employees employed by or
through him as provided in the regulations and submit the same to the principal
employer before the settlement of any amount payable under sub-section (1).
(2) In the case referred to in sub-section (1), the immediate employer shall be entitled to
recover the employee’s contribution from the employee employed by or through him by
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deduction from wages and not otherwise, subject to the conditions specified in the proviso
to subsection (2) of section 40.

12.28 General provisions as to payment of contributions.

(1) No employee’s contribution shall be payable by or on behalf of an employee whose
average daily wages during a wage period are below 4such wages as may be prescribed
by the Central Government.
Explanation. — The average daily wages of an employee shall be calculated in such
manner as may be prescribed by the Central Government.
(2) Contribution (both the employer’s contribution and the employee’s contribution) shall be
payable by the principal employer for each wage period in respect of the whole or part of
which wages are payable to the employee and not otherwise

12.29 Method of payment of contribution

Subject to the provisions of this Act, the Corporation may make regulations for any
matter relating or incidental to the payment and collection of contributions payable under this
Act and without prejudice to the generality of the foregoing power such regulations may
provide for —
a) the manner and time of payment of contributions ;
b) in the case of an employee directly employed by him (not being an exempted
employee), be entitled to recover from the employee the employee’s contribution by
reduction from his wages and not otherwise :
c) Provided that no such deduction shall be made from any wages other than such as
relate to the period or part of the period in respect of which the contribution is
payable] or in excess of the sum representing the employee’s contribution for the
period.
d) (12) Notwithstanding any contract to the contrary, neither the principal employer nor
the
e) immediate employer shall be entitled to deduct the employer’s contribution from any
wages
f) payable to an employee or otherwise to recover it from him.
g) (4) Any sum deducted by the principal employer from wages under this Act shall be
h) deemed to have been entrusted to him by the employee for the purpose of paying the
contribution in respect of which it was deducted.
(i) (5) The principal employer shall bear the expenses of remitting the contributions to
the Corporation.

12.30 Recovery of contributions from immediate employer

(1) A principal employer, who has paid contribution in respect of an employee employed by
or through an immediate employer, shall be entitled to recover the amount of the
contribution so paid (that is to say the employer’s contribution as well as the employee’s
contribution, if any,) from the immediate employer, either by deduction from any amount
payable to him by the principal employer under any contract, or as a debt payable by the
immediate employer. (1-A) The immediate employer shall maintain a register of
employees employed by or through him as provided in the regulations and submit the
same to the principal employer before the settlement of any amount payable under sub-
section (1).
(2) In the case referred to in sub-section (1), the immediate employer shall be entitled to
recover the employee’s contribution from the employee employed by or through him by
Employee State Insurance Act, 1948 12.11 Industrial Social Work

deduction from wages and not otherwise, subject to the conditions specified in the proviso
to subsection (2) of section 40.
12.31 General provisions as to payment of contributions
(1) No employee’s contribution shall be payable by or on behalf of an employee whose
average daily wages during a wage period are below 4 such wages as may be prescribed
by the Central Government.
Explanation. — The average daily wages of an employee shall be calculated in such
manner as may be prescribed by the Central Government.
(2) Contribution (both the employer’s contribution and the employee’s contribution) shall be
payable by the principal employer for each wage period in respect of the whole or part of
which wages are payable to the employee and not otherwise.

12.32 Method of payment of contribution

Subject to the provisions of this Act, the Corporation may make regulations for any matter
relating or incidental to the payment and collection of contributions payable under this Act
and without prejudice to the generality of the foregoing power such regulations may provide
for —
the manner and time of payment of contributions;

12.33 Issue of certificate to the Recovery Officer

(1)Where any amount is in arrear under this Act, the authorised officer may issue, to the
Recovery Officer, a certificate under his signature specifying the amount of arrears and the
Recovery Officer, on receipt of such certificate, shall proceed to recover the amount
specified therein from the factory or establishment or, as the case may be, the principal or
immediate employer by one or more of the modes mentioned below: —
(a) attachment and sale of the movable or immovable property of the factory or
establishment or, as the case may be, the principal or immediate employer;
(b) arrest of the employer and his detention in prison;
(c) appointing a receiver for the management of the movable or immovable
(a) properties of the factory or establishment, or, as the case may be, the employer:

12.34 Benefits
(1) Subject to the provisions of this Act, the insured persons, their dependants or the persons
hereinafter mentioned, as the case may be, shall be entitled to the following benefits, namely :
(a) periodical payments to any insured person in case of his sickness certified by a duly
appointed medical practitioner or by any other person possessing such qualifications
and experience as the Corporation may, by regulations, specify in this behalf
hereinafter referred to as sickness benefit;
(b) periodical payments to an insured woman in case of confinement or miscarriage or
sickness arising out of pregnancy, confinement, premature birth of child or
miscarriage, such woman being certified to be eligible for such payments by an
authority specified in this behalf by the regulations hereinafter referred to as maternity
benefit;
(c) periodical payments to an insured person suffering from disablement as a result of an
employment injury sustained as an employee under this Act and certified to be
eligible for such payments by an authority specified in this behalf by the regulations
hereinafter referred to as disablement benefit;
(d) periodical payments to such dependants of an insured person who dies as a result of an
employment injury sustained as an employee under this Act, as are entitled to
compensation under this Act hereinafter referred to as dependants’ benefit;
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(e) medical treatment for and attendance on insured persons hereinafter referred to as
medical benefit; and
(f) payment to the eldest surviving member of the family of an insured person who has
died, towards the expenditure on the funeral of the deceased insured person, or, where
the insured person did not have a family or was not living with his family at the time
of his death, to the person who actually incurs the expenditure on the funeral of the
deceased insured person to be known as funeral expenses.
Provided that the amount of such payment shall not exceed such amount as may be
prescribed by the Central Government and the claim for such payment shall be made
within three months of the death of the insured person or within such extended period
as the Corporation or any officer or authority authorised by it in this behalf may
allow.
(2) The Corporation may, at the request of the appropriate Government, and subject to such
conditions as may be laid down in the regulations, extend the medical benefits to the
family of an insured person
When person eligible for sickness benefit
When person deemed available for sickness benefit.

12.34.1 Sickness benefit

The qualification of a person to claim sickness benefit, the conditions subject to which
such benefit may be given, the rate and period thereof shall be such as may be prescribed
by the Central Government.

12.34.2 Maternity Benefit

The qualification of an insured woman to claim maternity benefit, the conditions subject
to which such benefit may be given, the rates and period thereof shall be such as may be
prescribed by the Central Government.

12.34.12 Disablement benefit.

Subject to the provisions of this Act 4
(a) a person who sustains temporary disablement for not less than three days excluding
the day of accident shall be entitled to periodical payment at such rates and for such
periods and subject to such conditions as may be prescribed by the Central
Government;
(b) a person who sustains permanent disablement, whether total or partial, shall be
entitled to periodical payment 6 at such rates and for such periods and subject to such
conditions as may be prescribed by the Central Government. Presumption as to accident
arising in course of employment.
For the purposes of this Act, an accident arising in the course of an employee’s
employment shall be presumed, in the absence of evidence to the contrary, also to
have arisen out of that employment.
Accidents happening while acting in breach of regulations, etc.
An accident shall be deemed to arise out of and in the course of an employee’s
employment not withstanding that he is at the time of the accident acting in
contravention of the provisions of any law applicable to him, or of any orders given
by or on behalf of his employer or that he is acting without instructions from his
employer, if —
(a) the accident would have been deemed so to have arisen had the act not been done
in contravention as aforesaid or without instructions from his employer, as the
case may be; and
Employee State Insurance Act, 1948 12.13 Industrial Social Work

(b) the act is done for the purpose of and in connection with the employer’s trade or
business.
Accidents happening while travelling in employer’s transport.
(1) An accident happening while an [employee] is, with the express or implied
permission of his employer, travelling as a passenger by any vehicle to or from his
place of work shall, notwithstanding that he is under no obligation to his employer
to travel by that vehicle, be deemed to arise out of and in the course of his
employment, if —
(a) the accident would have been deemed so to have arisen had he been under
such obligation ; and
(b) at the time of the accident, the vehicle —
(i) is being operated by or on behalf of his employer or some other person by
whom it is provided in pursuance of arrangements made with his employer ;
and
(ii) is not being operated in the ordinary course of public transport service.
(2) In this section “vehicle” includes a vessel and an aircraft.
Accidents happening while meeting emergency
An accident happening to an employee in or about any premises at which he is for
the time being employed for the purpose of his employer’s trade or business shall
be deemed to arise out of and in the course of his employment, if it happens while
he is taking steps, on an actual or supposed emergency at those premises, to
rescue, succor or protect persons who are, or are thought to be or possibly to be,
injured or imperiled, or to avert or minimize serious damage to property.
Accidents happening while commuting to the place of work and vice versa.
An accident occurring to an employee while commuting from his residence to
the place of employment for duty or from the place of employment to his
residence after performing duty, shall be deemed to have arisen out of and in the
course of employment if nexus between the circumstances, time and place in
which the accident occurred and the employment is established.
12.34.4 Dependants’ benefit
(1) If an insured person dies as a result of an employment injury sustained as an
employee under this Act whether or not he was in receipt of any periodical
payment for temporary disablement in respect of the injury dependants’ benefit
shall be payable at such rates and for such periods and subject to such conditions as
may be prescribed by the Central Government to his dependants specified in sub-
clause (i), sub-clause (i-a) and subclause (ii) of clause (6-A) of section 2.
(2) In case the insured person dies without leaving behind him the dependants as
aforesaid, the dependants’ benefit shall be paid to the other dependants of the
deceased at such rates and for such periods and subject to such conditions as may
be prescribed by the Central Government.
12.34.5 . Occupational disease
(1) If an employee employed in any establishment specified in Part A of the Third
Schedule contracts any disease specified therein as an occupational disease peculiar
to that employment, or if an employee employed in the employment specified in
Part B of that Schedule for a continuous period of not less than six months
contracts any disease specified therein as an occupational disease peculiar to that
employment or if an employee employed in any employment specified in Part C of
that Schedule for such continuous period as the Corporation may specify in respect
of each such employment, contracts any disease specified therein as an
occupational disease peculiar to that employment, the contracting of the disease
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shall, unless the contrary is proved, be deemed to be an “ employment injury ”

arising out of and in the course of employment.
(2) (i) Where the Central Government or a State Government, as the case may be, adds
any description of employment to the employment specified in Schedule III to
the Workmen’s Compensation Act, 19212* (8 of 19212) by virtue of the
powers vested in it under sub-section
(12) of Sec. 12 of the said Act, the said description of employment and the
occupational diseases specified under that sub-section as peculiar to that
description of employment shall be deemed to form part of the Third Schedule.
(ii) Without prejudice to the provisions of clause (i), the Corporation after giving,
by notification in the Official Gazette, not less than three months’ notice of its
intention so to do, may, by a like notification, add any description of
employment to the employments specified in the Third Schedule and shall
specify in the case of employments so added the diseases which shall be
deemed for the purposes of this section to be occupational diseases peculiar to
those employments respectively and thereupon the provisions of this Act shall
apply, as if such diseases had been declared by this Act to be occupational
diseases peculiar to those employments.
(12) Save as provided by sub-sections (1) and (2), no benefit shall be payable to an
employee in respect of any disease unless the disease is directly attributable to a
specific injury by accident arising out of and in the course of his employment.
(4) The provisions of section 51-A shall not apply to the cases to which this section
apply.

Bar against receiving or recovery of compensation or damages under any other law
An insured person or his dependants shall not be entitled to receive or recover, whether from
the employer of the insured person or from any other person, any compensation or damages
under the Workmen’s Compensation Act, 19212* (8 of 19212), or any other law for the time
being in force or otherwise, in respect of an employment injury sustained by the insured
person as an employee under this Act.

Determination of question of disablement

Any question (a) whether the relevant accident has resulted in permanent disablement ; or (b)
whether the extent of loss of earning capacity can be assessed provisionally or finally ; or (c)
whether the assessment of the proportion of the loss of earning capacity is provisional or final
; or (d) in the case of provisional assessment, as to the period for which such assessment shall
hold good, shall be determined by a medical board constituted in accordance with the
provisions of the regulations and any such question shall hereafter be referred to as the “
disablement question

References to medical boards and appeals to medical appeal tribunals and Employees’
Insurance Courts.
(1) The case of any insured person for permanent disablement benefit shall be referred by the
Corporation to a medical board for determination of the disablement question and if, on
that or any subsequent reference, the extent of loss of earning capacity of the insured
person is provisionally assessed, it shall again be so referred to the medical board not later
than the end of the period taken into account by the provisional assessment.
(2) If the insured person or the Corporation is not satisfied with the decision of the medical
board, the insured person or the Corporation may appeal in the prescribed manner and
within the prescribed time to
Employee State Insurance Act, 1948 12.15 Industrial Social Work

(i) the medical appeal tribunal constituted in accordance with the provisions of the
regulations with a further right of appeal in the prescribed manner and within the
prescribed time to the Employees’ Insurance Court, or
(ii) the Employees’ Insurance Court directly Provided that no appeal by an insured person
shall lie under this sub-section if such person has applied for commutation of disablement
benefit on the basis of the decision of the medical board and received the commuted value
of such benefit :
Provided further that no appeal by the Corporation shall lie under this sub-section if the
Corporation paid the commuted value of the disablement benefit on the basis of the
decision of the medical board.

Review of decisions by medical board or medical appeal tribunal

(1) Any decision under this Act of a medical board or a medical appeal tribunal may be
reviewed at any time by the medical board or the medical appeal tribunal, as the case
may be, if it is satisfied by fresh evidence that the decision was given in consequence
of the nondisclosure or misrepresentation by the employee or any other person of a
material fact whether the non-disclosure or misrepresentation was or was not
fraudulent.
(2) Any assessment of the extent of the disablement resulting from the relevant
employment injury may also be reviewed by a medical board if it is satisfied that
since the making of the assessment there has been a substantial and unforeseen
aggravation of the result of the relevant injury:
Review of dependants’ benefit.
(1) Any decision awarding dependants’ benefit under this Act may be reviewed at any
time by the Corporation if it is satisfied by fresh evidence that the decision was given
in consequence of non-disclosure or misrepresentation by the claimant or any other
person of a material fact whether the non-disclosure or misrepresentation was or was
not fraudulent or that the decision is no longer in accordance with this Act due to any
birth or death or due to he marriage, re-marriage, or cessor or infirmity of, or
attainment of the age of eighteen years by, a claimant.
(2) Subject to the provisions of this Act, the Corporation may, on such review as
aforesaid, direct that the dependants’ benefit be continued, increased, reduced or
discontinued.

12.34.6 Medical Benefit.

(1) An insured person or where such medical benefit is extended to his family a member
of his family whose condition requires medical treatment and attendance shall be
entitled to receive medical benefit.
(2) Such medical benefit may be given either in the form of out-patient treatment and
attendance in a hospital or dispensary, clinic or other institution or by visits to the
home of the insured person or treatment as in-patient in a hospital or other institution.
(12) A person shall be entitled to medical benefit during any period for which
contributions are payable in respect of him or in which he is qualified to claim
sickness benefit or maternity benefit or is in receipt of such disablement benefit as
does not disentitle him to medical benefit under the regulations:
Provided that a person in respect of whom contribution ceases to be payable
under this Act may be allowed medical benefit for such period and of such nature as
may be provided under the regulations:
Provided further that an insured person who ceases to be in insurable
employment on account of permanent disablement shall continue, subject to payment
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of contribution and such other conditions as may be prescribed by the Central

Government, to receive medical benefit till the date on which he would have vacated
the employment on attaining the age of superannuation had he not sustained such
permanent disablement
Provided also that an insured person who has attained the age of
superannuation, a person who retires under a Voluntary Retirement Scheme or takes
premature retirement, and his spouse shall be eligible to receive medical benefits
subject to payment of contribution and such other conditions as may be prescribed by
the Central Government. Provision of medical treatment by State Government.
(1) The State Government shall provide for insured persons and where such benefit is
extended to their families their families in the State, reasonable medical, surgical
and obstetric treatment:
Provided that the State Government may, with the approval of the
Corporation, arrange for medical treatment at clinics of medical practitioners on such
scale and subject to such terms and conditions as may be agreed upon.
(2) Where the incidence of sickness benefit payment to insured persons in any 2 State
is found to exceed the all-India average, the amount of such excess shall be shared
between the Corporation and the 1 State Government in such proportion as may
be fixed by agreement between them:
Provided that the Corporation may in any case waive the recovery of the whole or
any part of the share which is to be borne by the State Government.
(12) The Corporation may enter into an agreement with a State Government in regard
to the nature and scale of the medical treatment that should be provided to insured
persons and where such medical benefit is extended to the families their families
(including provision of buildings, equipment, medicines, and staff) and for the
sharing of the cost thereof and of any excess in the incidence of sickness benefit to
insured persons between the Corporation and the State Government.
(4) In default of agreement between the Corporation and any State Government as
aforesaid, the nature and extent of the medical treatment to be provided by the
State Government and the proportion in which the cost thereof and of the excess
in the incidence of sickness benefit shall be shared between the Corporation and
that Government, shall be determined by an arbitrator who shall be or shall have
been a Judge of the High Court of a State appointed by the Chief Justice of India
and the award of the arbitrator shall be binding on the Corporation and the State
Government.
Punishment for false statement.
Whoever, for the purpose of causing any increase in payment or benefit under
this Act, or for the purpose of causing any payment or benefit to be made where no
payment or benefit is authorised by or under this Act, or for the purpose of avoiding
any payment to be made by himself under this Act or enabling any other person to
avoid any such payment, knowingly makes or causes to be made any false statement
or false representation, shall be punishable with imprisonment for a term which may
extend to six months or with fine not exceeding two thousand rupees, or with both.
Provided that where an insured person is convicted under this section, he shall
not be entitled for any cash benefit under this Act for such period as may be
prescribed by the Central Government.
Punishment for failure to pay contributions, etc.
If any person —
(a) fails to pay any contribution which under this Act he is liable to pay, or
Employee State Insurance Act, 1948 12.17 Industrial Social Work

(b) deducts or attempts to deduct from the wages of an employee the whole or any
part of the employer’s contribution, or
(c) in contravention of section 72 reduces the wages or any privileges or benefits
admissible to an employee, or
(d) in contravention of section 712 or any regulation dismisses, discharges, reduces or
otherwise punishes an employee, or
(e) fails or refuses to submit any return required by the regulations or makes a false
return, or
(f) obstructs any Inspector or other official of the corporation in the discharge of his
duties, or
(g) is guilty of any contravention of or non-compliance with any of the requirements
of this Act or the rules or the regulations in respect of which no special penalty is
provided,he shall be punishable —
(i) where he commits an offence under clause (a), with imprisonment for a term
which may extend to three years but —
(a) which shall not be less than one year, in case of failure to pay the employee’s
contribution which has been deducted by him from the employee’s wages and
shall also be liable to fine of ten thousand rupees;
(b) which shall not be less than six months, in any other case and shall also be liable
to fine of five thousand rupees:
Provided that the Court may, for any adequate and special reasons to be recorded
in the judgment, impose a sentence of imprisonment for a lesser term ;
(ii) where he commits an offence under any of the clauses (b) to (g) (both
inclusive), with imprisonment for a term which may extend to one year or with
fine which may extend to four thousand rupees, or with both
Enhanced punishment in certain cases after previous conviction.
Whoever, having been convicted by a Court of an offence punishable under this
Act, commits the same offence shall, for every such subsequent offence, be
punishable with imprisonment for a term which may extend to two years and with
fine of five thousand rupees:
Provided that where such subsequent offence is for failure by the employer to pay
any
contribution which under this Act, he is liable to pay, he shall, for every such
subsequent offence, be punishable with imprisonment for a term which may
extend to five years but which shall not be less than two years and shall also be
liable to fine of twenty-five thousand rupees.
Power to recover damages.
(1) Where an employer fails to pay the amount due in respect of any contribution
or any other amount payable under this Act, the Corporation may recover from
the employer by way of penalty such damages, not exceeding the amount of
arrears as may be specified in the regulations
Power of Court to make orders.
(1) Where an employer is convicted of an offence for failure to pay any
contribution payable under this Act, the Court may, in addition to awarding
any punishment, by order, in writing, require him within a period specified in
the order which the Court may if it thinks fit and on application in that behalf,
from time to time, extend), to pay the amount of contribution in respect of
which the offence was committed and to furnish the return relating to such
contributions.
Centre for Distance Education 12.18 Acharya Nagarjuna University

(2) Where an order is made under sub-section (1), the employer shall not be liable
under this Act in respect of the continuation of the offence during the period or
extended period, if any, allowed by the Court, but if, on the expiry of such
period or extended period, as the case may be, the order of the Court has not
been fully complied with, the employer shall be deemed to have committed a
further offence and shall be punishable with imprisonment in respect thereof
under section 85 and shall also be liable to pay fine which may extend to one
thousand rupees for every day after such expiry on which the order has not
been complied with.
Prosecutions.
(1) No prosecution under this Act shall be instituted except by or with the
previous sanction of the Insurance Commissioner or of such other officer of
the Corporation as may be authorised in this behalf by the Director-General of
the Corporation.
(2) No Court inferior to that of a Metropolitan Magistrate or Judicial Magistrate of
the First Class shall try any offence under this Act.
(12) No Court shall take cognizance of any offence under this Act, except on a
complaint made in writing in respect thereof.
Offences by companies
(1) If the person committing an offence under this Act is a company, every person,
who at the time the offence was committed was in charge of, and was
responsible to the company for the conduct of the business of the company, as
well as thecompany, shall be deemed to be guilty of the offence and shall be
liable to be proceeded againstand punished accordingly :
Provided that nothing contained in this sub-section shall render any person
liable to any punishment, if he proves that the offence was committed without
his knowledge or that he exercised all due diligence to prevent the commission
of such offence.
Notwithstanding anything contained in sub-section (1), where an offence
under this Act has been committed with the consent or connivance of, or is
attributable to, any neglect on the part of, any director or manager, secretary or
other officer of the company, such director, manager, secretary or other officer
shall be deemed to be guilty of that offence and shall be liable to be proceeded
against and punished accordingly.

12.35 Summary
The Employees’ State Insurance Scheme is an integrated measure of Social Insurance
embodied in the Employees’ State Insurance Act and it is designed to accomplish the task of
protecting ‘employees’ as defined in the Employees’ State Insurance Act, 1948 against the
impact of incidences of sickness, maternity, disablement and death due to employment injury
and to provide medical care to insured persons and their families. The ESI Scheme applies to
factories and other establishment’s viz. Road Transport, Hotels, Restaurants, Cinemas,
Newspaper, Shops, and Educational/Medical Institutions wherein 10 or more persons are
employed. However, in some States threshold limit for coverage of establishments is still
20.Employees of the aforesaid categories of factories and establishments, drawing wages up
to Rs.15,000/- a month, are entitled to social security cover under the ESI AcT.

12.36 Key words

Contributions- The contribution payable under this Act in respect of an employee shall
comprise contribution payable by the employer hereinafter referred to as the employer’s
Employee State Insurance Act, 1948 12.19 Industrial Social Work

contribution and contribution payable by the employee hereinafter referred to as the

employee’s contribution and shall be paid to the Corporation.
Cessation of membership- A member of the Corporation, the Standing Committee or the
Medical Benefit Council shall cease to be a member of that body if he fails to attend three
consecutive meetings thereof
Provided that the Corporation, the Standing Committee or the Medical Benefit Council, as
the case may be, may, subject to rules made by the Central Government in this behalf, restore
him to membership.
Establishment of Employees’ State Insurance Corporation-With effect from such date as
the Central Government may, by notification in the Official Gazette, appoint in this behalf,
there shall be established for the administration of the scheme of Employees’ State Insurance
in accordance with the provisions of this Act a Corporation to be known as the Employees’
State Insurance Corporation.

12.37 Self Assessment questions

1. Briefly Explain the Establishment of ESI Act
2. Discuss the Power of Standing Committee in ESI Act
12. Describe the Duties of Medical Benefit Council
4. Examine the General provisions as to payment of contributions

12.38 Suggested Readings

1. The Employees State Insurance Act 1948 Bare Act with Amendments 20212 Edition November
2022 by Government of India (Author).
2. Employees' State Insurance Act, 1948 along with Rules and Regulations 2020 by Lexis (Author),
Universal’s publication, New Delhi, India.
12. Sinha, G.P. & Sinha,, P.R.N : Industrial Relations and Labour Legislations, Oxford and IBH
Publishing Co., New Delhi , 1980.
4. Goswamy, V.G : Labour and Industrial Relations Law, Central Law Agency, Allahabad , 2004.
5. ESI Act, 1948 Paperback – 1 January 2019 by S.A. Chari (Author), Asia law house, Hyderabad.

Prof. V. Venkateswarlu
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson-13
EMPLOYEES PROVIDENT FUND ACT, 1952

Learning objectives
 To Understand the Procedure of Employees Fund Scheme
 To Know the Central board and Appointment of Officers
 To Learn the Appeals and Procedure of Tribunal
 To Examine the offences and Penalties of Employees Fund Scheme
Structure
13.1 Introduction
13.2. Definitions
13.3 Establishment to include all departments and branches
13.4. Power to add to Schedule I
13.5 Employees’ Provident Fund Schemes
13.6. Central Board
13.7 Executive Committee
13.8 Board of Trustees to body corporate
13.9 Appointment of officers
13.10 Delegation
13.11 Contributions and matters which may be provided for in Schemes
13.12. Employees’ Pension Scheme
13.13 Employees’ Deposit linked Insurance Scheme
13.14 Laying of schemes before Parliament
13.15 Laying of schemes before Parliament
13.16 Modification of scheme.
13.17. Determination of money due from employers
13.18 Review of orders passed under section 7A
13.19 Determination of escaped amount
13.20 Tribunal
13.21 Appeals to Tribunal
13.22 Procedure of Tribunals
13.23 Right of appellant to take assistance of legal practitioner and of Government, etc., to
appoint presenting officers.
13.24 Orders of Tribunal
13.25 Mode of recovery of moneys due from employers
13.26 Recovery of moneys by employers and contractors
13.27 Issue of certificate to the Recovery Officer
13.28 Recovery Officer to whom certificate is to be forwarded.
13.29 Validity of certificate and amendment thereof
13.30 Stay of proceedings under certificate and amendment or withdrawal thereof
13.31 Application of certain provisions of Income-tax Act
13.32 Fund to be recognised under Act 11 of 1922.
13.33 Inspectors
13.34 Penalties
13.35 Offences by companies
13.36 Power of court to make orders
13.37 Special provisions relating to existing provident funds.
13.38 Act not to apply to certain establishments
13.39. Authorizing certain employers to maintain provident fund accounts
Centre for Distance Education 13.2 Acharya Nagarjuna University

13.40. Power to exempt

13.41. Transfer of accounts
13.42 Protection of action taken in good faith.
13.43 Power of Central Government to give directions
13.44 Summary
13.45 Key words
13.46 Self Assessment questions
13.47 Suggested Readings

13.1 Introduction
1. Short title, extent and application
(1) This Act may be called the Employees’ Provident Funds and Miscellaneous
Provisions Act, 1952.
(2) It extends to the whole of India
(3) Subject to the provisions contained in section 16, it applies
(a) to every establishment which is a factory engaged in any industry specified in
Schedule Iand in which twenty or more persons are employed, and
(b) to any other establishment employing twenty or more persons or class of such
establishments which the Central Government may, by notification in the Official
Gazette, specify in this behalf:
Provided that the Central Government may, after giving not less than two
months’ notice of its intention so to do, by notification in the Official Gazette,
apply the provisions of this Act to any establishment employing such number of
persons less than [twenty] as may be specified in the notification.
(4) Notwithstanding anything contained in sub-section (3) of this section or sub-section
(1) of section 16, where it appears to the Central Provident Fund Commissioner,
whether on an application made to him in this behalf or otherwise, that the employer
and the majority of employees in relation to any establishment have agreed that the
provisions of this Act should be made applicable to the establishment, he may, by
notification in the Official Gazette, apply the provisions of this Act to that
establishment on and from the date of such agreement or from any subsequent date
specified in such agreement.
(5) An establishment to which this Act applies shall continue to be governed by this Act
notwithstanding that the number of persons employed therein at any time falls below
twenty.

13.2. Definitions
In this Act, unless the context otherwise requires,
(a) “appropriate Government” means in relation to an establishment belonging to, or
under the control of, the Central Government or in relation to an establishment
connected with a railway company, a major port, amine or an oilfield or a controlled
industry, or in relation to an establishment having departments or branches in more
than one State, the Central Government; and
(b) (ii) in relation to any other establishment, the State Government
(aa) “authorized officer” means the Central Provident Fund Commissioner, Additional
Central Provident Fund Commissioner, Deputy Provident Fund Commissioner,
Regional Provident Fund Commissioner or such other officer as may be authorized by
the Central Government, by notification in the Official Gazette
(b) “basic wages” means all emoluments which are earned by an employee while on duty
or on leave or on holidays with wages in either case] in accordance with the terms of
Employees Provident Fund Act, 1952 13.3 Industrial Social Work

the contract of employment and which are paid or payable in cash to him, but does not
include
(i) the cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash payments by whatever name called
paid to an employee on account of a rise in the cost of living), house-rent allowance,
overtime allowance, bonus commission or any other similar allowance payable to the
employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;
(c) “contribution” means a contribution payable in respect of a member under a Scheme
13or the contribution payable in respect of an employee to whom the Insurance
Scheme applies;
(d) “controlled industry” means any industry the control of which by the Union has been
declared by a Central Act to be expedient in the public interest;
(e) “employer” means
(i) in relation to an establishment which is a factory, the owner or occupier of the factory,
including the agent of such owner or occupier, the legal representative of a deceased
owner or occupier and, where a person has been named as a manager of the factory under
clause
(f) of sub-section
(1) of section 7 of the Factories Act, 19138 (63 of 19138), the person so named; and
(ii) in relation to any other establishment, the person who, or the authority which, has the
ultimate control over the affairs of the establishment, and where the said affairs are
entrusted
to manager, managing director or managing agent, such manager, managing director or
managing agent;
(f) “employee” means any person who is employed for wages in any kind of work,
manual or
otherwise, in or in connection with the work of[an establishment], and who gets his wages
directly or indirectly from the employer, and includes any person—
(i) employed by or through a contractor in or in connection with the work of the
Establishment

13.3 Establishment to include all departments and branches

For the removal of doubts, it is here by declared that where an establishment consists
of different departments or has branches, whether situate in the same place or in different
places, all such departments or branches shall be treated as parts of the same establishment.
3. Power to apply Act to an establishment which has a common provident fund with another
establishment.

Where immediately before this Act becomes applicable to an establishment there is

inexistence a provident fund which is common to the employees employed in that
establishment and employees in any other establishment, the Central Government may, by
notification in Official Gazette, direct that the provisions of this Act shall also apply to such
other establishment.

13.4. Power to add to Schedule I

(1) The Central Government may, by notification in the Official Gazette, add to
Schedule I any other industry in respect of the employees whereof it is of opinion
that provident fund scheme should be framed under this Act, and thereupon the
industry so added shall be deemed to be an industry specified in Schedule I for the
Centre for Distance Education 13.4 Acharya Nagarjuna University

purposes of this Act.

(2) All notifications under sub-section (1) shall be laid before Parliament, as soon as
may be, after they are issued.

13.5 Employees’ Provident Fund Schemes.

(1) The Central Government may, by notification in the Official Gazette, frame a Scheme to
be called the Employees’ Provident Fund Scheme for the establishment of provident
funds under this Act for employees or for any class of employees and specify the
establishments or class of establishments to which the said Scheme shall apply and there
shall be established, as soon as may be after the framing of the Scheme, a Fund in
accordance with the provisions of this Act and the Scheme. The Fund shall vest in, and be
administered by, the Central Board constituted under section5A.(1B) Subject to the
provisions of this Act, a Scheme framed under sub-section (1) may provide for allow any
of the matters specified in Schedule II.
(2) A Scheme framed under sub-section (1) may provide that any of its provisions shall take
effect either prospectively or retrospectively on such date as may be specified in this
behalf inthe Scheme.

13.6. Central Board

(1) The Central Government may, by notification in the Official Gazette, constitute, with
effect from such date as may be specified therein, a Board of Trustees for the territories to
which this Act extends (hereinafter in this Act referred to as the Central Board) consisting
of the following persons as members namely
(a) a Chairman and a Vice-Chairman to be appointed by the Central Government; (aa)
the Central Provident Fund Commissioner, ex officio;
(b) not more than five persons appointed by the Central Government from
amongst itsofficials;
(c) not more than fifteen persons representing Governments of such States as the
Central Government may specify in this behalf, appointed by the Central
Government;
(d) ten persons representing employers of the establishments to which the Scheme
applies, appointed by the Central Government after consultation with such
organisations of employers as maybe recognized by the Central Government in this
behalf; and
(e) ten persons representing employees in the establishments to which the Scheme
applies, appointed by the Central Government after consultation with such
organizations of employees as maybe recognized by the Central Government in this
behalf.
(2) The terms and conditions subject to which a member of the Central Board may be
appointed and the time, place and procedure of the meetings of the Central Board shall be
such as may be provided for in the Scheme.
(3) The Central Board shall subject to the provisions of section 6A and section 6C
administer the Fund vested in it in such manner as may be specified in the Scheme.
(4) The Central Board shall perform such other functions as it may be required to perform by
or under any provisions of the Scheme 8, the 9 Pension Scheme and the Insurance
Scheme.
(5) The Central Board shall maintain proper accounts of its income and expenditure in such
form and in such manner as the Central Government may, after consultation with the
Comptroller and Auditor General of India, specify in the Scheme.
(6) The accounts of the Central Board shall be audited annually by the Comptroller and
Employees Provident Fund Act, 1952 13.5 Industrial Social Work

Auditor General of India and any expenditure incurred by him in connection with such
audit shall be payable by the Central Board to the Comptroller and Auditor-General of
India.
(7) The Comptroller and Auditor-General of India and any person appointed by him in
connection with the audit of the accounts of the Central Board shall have the same rights
and privileges and authority in connection with such audit as the Comptroller and
Auditor- General has, in connection with the audit of Government accounts and, in
particular, shall have the right to demand the production of books, accounts, connected
vouchers, documents and papers and inspect any of the offices of the Central Board.
(8) The accounts of the Central Board as certified by the Comptroller and Auditor-General of
India or any other person appointed by him in this behalf together with the audit report
thereon shall be forwarded to the Central Board which shall forward the same to the
Central Government along with its comments on the report of the Comptroller and
Auditor-General.
(9) It shall be the duty of the Central Board to submit also to the Central Government an
annual report of its work and activities and the Central Government shall cause a copy of
the annual report, the audited accounts together with the report of the Comptroller and
Auditor- General of India and the comments of the Central Board thereon to be laid
before each Houseof Parliament.

13.7 Executive Committee

(1) The Central Government may, by notification in the Official Gazette, constitute, with
effect from such date as may be specified therein, an Executive Committee to assist
theCentral Board in the performance of its functions.
(2) The Executive Committee shall consist of the following persons as members, namely:—
(a) a Chairman appointed by the Central Government from amongst the members of the
Central Board;
(b) two persons appointed by the Central Government from amongst the persons
referred toin clause (b) of sub-section (1) of section 5A;
(c) three persons appointed by the Central Government from amongst the persons
referred to in clause (c) of sub-section (1) of section 5A;
(d) three persons representing the employers elected by the Central Board from amongst
the persons referred to in clause (d) of sub-section (1) of section 5A;
(e) three persons representing the employees elected by the Central Board from amongst
the persons referred to in clause (e) of sub-section (1) of section 5A;
(f) the Central Provident Fund Commissioner, ex officio.
(3) The terms and conditions subject to which a member of the Central Board may be
appointed or elected to the Executive Committee and the time, place and procedure of the
meetings of the Executive Committee shall be such as may be provided for in the Scheme.

State Board
(1) The Central Government may, after consultation with the Government of any State, by
notification in the Official Gazette, constitute for that State a Board of Trustees
(hereinafter in this Act referred to as the State Board) in such manner as may be provided
for in the Scheme.
(2) A State Board shall exercise such powers and perform such duties as the Central
Government may assign to it from time to time.
(3) The terms and conditions subject to which a member of a State Board may be appointed
and the time, place and procedure of the meetings of a State Board shall be such as may
be provided for in the Scheme.
Centre for Distance Education 13.6 Acharya Nagarjuna University

13.8 Board of Trustees to body corporate

Every Board of Trustees constituted under section 5Aor section 5B shall be a body
corporate under the name specified in the notification constituting it, having perpetual
succession and a common seal and shall by the said name sue and be sued.

13.9 Appointment of officers

(1) The Central Government shall appoint a Central Provident Fund Commissioner who
shall be the chief executive officer of the Central Board and shall be subject to the
general control and superintendence of that Board.
(2) The Central Government may also appoint [a Financial Adviser and Chief Accounts
Officers] to assist the Central Provident Fund Commissioner in the discharge of his
duties.
Acts and proceedings of the Central Board or its Executive Committee or the State
Board not to be in validated on certain grounds.—No act done or proceeding taken by
the Central Board or the Executive Committee constituted under section 5AA or the
State Board shall be questioned on the ground merely of the existence of any vacancy in,
or any defect in the constitution of, the Central Board or the Executive Committee or the
State Board, as the case may be.

13.10 Delegation
The Central Board may delegate to the Executive Committee or to the Chairman of
the Board or to any of its officers and a State Board may delegate to its Chairman or to any
of its officers]subject to such conditions and limitations, if any, as it may specify, such of its
powers and functions under this Act as it may deem necessary for the efficient administration
of the Scheme The Pension Scheme and the Insurance Scheme.

13.11 Contributions and matters which may be provided for in Schemes

The contribution which shall be paid by the employer to the Fund shall be [ten per
cent. of the basic wages, dearness allowance and retaining allowance (if any) for the time
being payable to each of the employees (whether employed by him directly or by or through
a contractor), and the employees’ contribution shall be equal to the contribution payable by
the employer in respect of him and may, if any employees of desires, be an amount
exceeding ten per cent. of his basic wages, dearness allowance and retaining allowance (if
any), subject to the condition that the employer shall not be under an obligation to pay any
contribution over and above his contribution payable under this section:

Provided that in its application to any establishment or class of establishments which

the Central Government, after making such inquiry as it deems fit, may, by notification in the
Official Gazette specify, this section shall be subject to the modification that for the
words ten per cent. at both the places where they occur, the words 10 twelve per cent. Shall
be substituted:

Provided further that where the amount of any contribution payable under this Act
involves a fraction of a rupee, the Scheme may provide for the rounding off of such fraction
to the nearest rupee, half of a rupee or quarter of a rupee

13.12. Employees’ Pension Scheme

(1) The Central Government may, by notification in the Official Gazette, frame a scheme
tobe called the Employees’ Pension Scheme for the purpose of providing for—
(a) superannuation pension, retiring pension or permanent total disablement pension
Employees Provident Fund Act, 1952 13.7 Industrial Social Work

to the employees of any establishment or class of establishments to which this Act

applies; and
(b) widow or widower’s pension, children pension or orphan pension payable to the
beneficiaries of such employees.
(2) Notwithstanding anything contained in section 6, there shall be established, as soon as
may be after framing of the Pension Scheme, a Pension Fund into which there shall be
paid, from time to time, in respect of every employee who is a member of the Pension
Scheme,—
(a) such sums from the employer’s contribution under section 6, not exceeding eight and
one- third per cent. of the basic wages, dearness allowance and retaining allowance, if
any, of the concerned employees, as may be specified in the Pension Scheme;
(b) such sums as are payable by the employers of exempted establishments under sub-
section (6) of section 17;
(c) the net assets of the Employees' Family Pension Fund as on the date of the
establishment of the Pension Fund;
(d) such sums as the Central Government may, after due appropriation by Parliament by
law in this behalf, specify.
(3) On the establishment of the Pension Fund, the Family Pension Scheme here in after
referred to as the ceased scheme shall cease to operate and all assets of the ceased
scheme shall vest in and shall stand transferred to, and all liabilities under the ceased
scheme shall be enforceable against, the Pension Fund and the beneficiaries under the
ceased scheme shall be entitled to draw the benefits, not less than the benefits they were
entitled to under the ceased scheme, from the Pension Fund.

(4) The Pension Fund shall vest in and be administered by the Central Board in such manner
as may be specified in the Pension Scheme.
(5) Subject to the provisions of this Act, the Pension Scheme may provide for all or any of
the matters specified in Schedule III.
(6) The Pension Scheme may provide that all or any of its provisions shall take effect either
prospectively or retrospectively on such date as may be specified in that behalf in that
Scheme.
(7) A Pension Scheme, framed under sub-section (1), shall be laid, as soon as may be after it
is made, before each House of Parliament, while it is in session, for a total period of
thirty days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in making any modification in the
scheme or both Houses agree that the scheme should not be made, the scheme shall
thereafter have effect only in such modified form or be of no effect, as the may be; so,
however, that any such modification or annulment shall be without prejudice to the
validity of anything previously done under that Scheme.

13.13. Employees’ Deposit linked Insurance Scheme

(1) The Central Government may, by notification in the Official Gazette, frame a scheme to
be called the Employees’ Deposit-linked Insurance Scheme for the purpose of providing life
insurance benefits to the employees of any establishment or class of establishments to which
this Act applies.

(2) There shall be established, as soon as may be after the framing of the Insurance Scheme,
a Deposit-linked Insurance Fund into which shall be paid by the employer from time to time
in respect of every such employee in relation to whom he is the employer, such amount, not
Centre for Distance Education 13.8 Acharya Nagarjuna University

being more than one percent. of the aggregate of the basic wages, dearness allowance and
retaining allowance (if any) for the time being payable in relation to such employee as the
Central Government may, by notification in the Official Gazette, specify.
(3) Explanation.—For the purposes of this sub-section, the expressions “dearness
allowance” and“relating allowance” have the same meanings as in section 6.
(4) (a) The employer shall pay into the Insurance Fund such further sums of money, not
exceeding one-fourth of the contribution which he is required to make under sub-section (2),
as the Central Government may, from time to time, determine to meet all the expenses in
connection with the administration of the Insurance Scheme other than the expenses towards
the cost of any benefits provided by or under that scheme.
(5) The Insurance Fund shall vest in the Central Board and be administered by it in such
manner as may be specified in the Insurance Scheme.
(6) The Insurance Scheme may provide for all or any of the matters specified in Schedule
IV.
(7) The Insurance Scheme may provide that any of its provisions shall take effect either
prospectively or retrospectively on such date as may be specified in this behalf in that
Scheme.

13.14. Laying of schemes before Parliament

Every scheme framed under section 5, section 6Aand section 6C shall be laid, as soon
as may be after it is framed, before each House of Parliament, while it is in session, for a total
period of thirty days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following the session or the
successive sessions aforesaid, both Houses agree in making any modification in the scheme,
or both Houses agree that the scheme should not be framed, the scheme shall thereafter have
effect only in such modified form or be of no effect, as the case may be; so, however, that any
such modification or annulment shall be without prejudice to the validity of anything
previously done under that scheme.

13.15. Modification of scheme.

(1) The Central Government may, by notification in the Official Gazette, add to 3 amend
or vary, either prospectively or retrospectively, the Scheme, the Family Pension Scheme or
the Insurance Scheme, as the case may be.
(2) Every notification issued under sub-section (1) shall be laid, as soon as may be after it
is issued, before each House of Parliament, while it is in session, for a total period of
thirty days, which may be comprised in one session or in two or more successive sessions, and
if, before the expiry of the session immediately following the session or the successive
sessions aforesaid, both Houses agree in making any modification in the notification, or both
Houses agree that the notification should not be issued, the notification shall thereafter have
effect only in such modified form or be of no effect, as the case may be; so, however, that any
such modification or annulment shall be without prejudice to the validity ofany thing
previously done under that notification.

13.16. Determination of moneys due from employers

(1) The Central Provident Fund Commissioner, any Additional Central Provident Fund
Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund
Commissioner, or any Assistant Provident Fund Commissioner may, by order,
(a) in a case where a dispute arises regarding the applicability of this Act to an
establishment,decide such dispute; and
(b) determine the amount due from any employer under any provision of this Act, the
Employees Provident Fund Act, 1952 13.9 Industrial Social Work

Scheme or the Pension Scheme or the Insurance Scheme, as the case may be, and for any of
the aforesaid purposes may conduct such inquiry as he may deem necessary;
(3) The officer conducting the inquiry under sub-section
(1) shall, for the purposes of such inquiry, have the same powers as are vested in a court
under the Code of Civil Procedure, 1908 (5 of 1908), for trying a suit in respect of the
following matters, namely:—
(a) enforcing the attendance of any person or examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavit;
(d) issuing commissions for the examination of witnesses; and any such inquiry shall be
deemed to be a judicial proceeding within the meaning of sections 193 and228, and for
the purpose of section 196, of the Indian Penal Code (135 of 1860).
(3) No order shall be made under sub-section (1), unless 5 the employer concerned is given
reasonable opportunity of representing his case.
(3A) Where the employer, employee or any other person required to attend the inquiry
under sub-section (1) fails to attend such inquiry without assigning any valid reason or
fails to produce any document or to file any report or return when called upon to do so,
the officer conducting the inquiry may decide the applicability of the Act or determine
the amount due from any employer, as the case may be, on the basis of the evidence
adduced during such inquiry and other documents available on record.
(4) Where an order under sub-section (1) is passed against an employer ex parte, he may,
within three months from the date of communication of such order, apply to the officer for
setting aside such order and if he satisfies the officer that the show cause notice was not duly
served or that he was prevented by any sufficient cause from appearing when the inquiry was
held, the officer shall make an order setting aside his earlier order and shall appoint a date for
proceeding with the inquiry: Provided that no such order shall be set aside merely on the
ground that there has been an irregularity in the service of the show cause notice if the
officer is satisfied that the employer had notice of the date of hearing and had sufficient time to
appear before the officer.

Explanation.—Where an appeal has been preferred under this Act against an order passed
ex portend such appeal has been disposed of otherwise than on the ground that the appellant
has withdrawn the appeal, no application shall lie under this sub-section for setting aside the
ex parte order.

13.17. Review of orders passed under section 7A

(1) Any person aggrieved by an order made under sub-section (1) of section 7A, but from
which no appeal has been preferred under this Act, and who, from the discovery of new and
important matter or evidence which, after the exercise of due diligence was not within his
knowledge or could not be produced by him at the time when the order was made, or on
account of some mistake or error apparent on the face of the record or for any other sufficient
reason, desires to obtain a review of such order may apply for a review of that order to the
officer who passed the order:

Provided that such officer may also on his own motion review his order if he is satisfied
thatit is necessary so to do on any such ground.
(2) Every application for review under sub-section (1) shall be filed in such form and
manner and within such time as may be specified in the Scheme.
(3) Where it appears to the officer receiving an application for review that there is no
sufficient ground for a review, he shall reject the application.
Centre for Distance Education 13.10 Acharya Nagarjuna University

(13) Where the officer is of opinion that the application for review should be granted, he
shall grant the same:
Provided that,—
(a) no such application shall be granted without previous notice to all the parties
before him to enable them to appear and be heard in support of the order in respect of
which a review is applied for, and
(b) no such application shall be granted on the ground of discovery of new matter or
evidence which the applicant alleges was not within his knowledge or could not be
produced by him when the order was made, without proof of such allegation.
(5) No appeal shall lie against the order of the officer rejecting an application for review, but
an appeal under this Act shall lie against an order passed under review as if the order passed
under review were the original order passed by him under section 7A.

13.18. Determination of escaped amount

Where an order determining the amount due from an employer under section 7A or
section 7B has been passed and if the officer who passed the order has reason to believe that
by reason of the omission or failure on the part of the employer to make any document or
report available, or to disclose, fully and truly, all material facts necessary for determining
the correct amount due from the employer, any amount so due from such employer for any
period has escaped his notice;

13.19. Tribunal
The Industrial Tribunal constituted by the Central Government under sub-section (1) of
section 7A of the Industrial Disputes Act, 19137 shall, on and from the commencement of
Part XIV of Chapter VI of the Finance Act, 2017, be the Tribunal for the purposes of this Act
and the said Tribunal shall exercise the jurisdiction, powers and authority conferred on it by
or under this Act.

13.20. Appeals to Tribunal

(1) Any person aggrieved by a notification issued by the Central Government, or an order
passed by the Central Government or any authority, under the proviso to sub-section (3), or
sub-section (13), of section 1, or section 3, or sub-section (1) of section 7A, or section
7B[except an order rejecting an application for review referred to in sub-section (5) thereof],
or section7C, or section 113B, may prefer an appeal to a Tribunal against such notification or
order.
(2) Every appeal under sub-section (1) shall be filed in such form and manner, within such
time and be accompanied by such fees, as may be prescribed.

13.21. Procedure of Tribunals

(1) A Tribunal shall have power to regulate its own procedure in all matters arising out of the
exercise of its powers or of the discharge of its functions including the places at which the Tribunal
shall have its sittings.
(2) A Tribunal shall, for the purpose of discharging its functions, have all the powers which
are vested in the officers referred to in section 7A and any proceeding before the Tribunal
shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and
for the purpose of section 196, of the Indian Penal Code (135 of 1860) and the Tribunal
shall be deemed to be a civil court for the all purposes of section 195 and Chapter XXVI of
the Code of Criminal Procedure, 1973 (2 of 19713).
Employees Provident Fund Act, 1952 13.11 Industrial Social Work

13.22. Right of appellant to take assistance of legal practitioner and of Government,

etc.,to appoint presenting officers.
(1) A person preferring an appeal to a Tribunal under this Act may either appear in person
or take the assistance of a legal practitioner of his choice to present his case before the
Tribunal.
(2) The Central Government or a State Government or any other authority under this Act
may authorise one or more legal practitioners or any of its officers to act as presenting officers
and every person so authorised may present the case with respect to any appeal before a
Tribunal.

13.23. Orders of Tribunal

(1) A Tribunal may after giving the parties to the appeal, an opportunity of being heard, pass
such orders thereon as it thinks fit, confirming, modifying or annulling the order appealed
against or may refer the case back to the authority which passed such order with such
directions as the Tribunal may think fit, for a fresh adjudication or order, as the case may be,
after taking additional evidence, if necessary.
(2) A Tribunal may, at any time within five years from the date of its order, with a view to
rectifying any mistake apparent from the record, amend any order passed by it under sub-
section (1) and shall make such amendment in the order if the mistake is brought to its notice
by the parties to the appeal:
Provided that an amendment which has the effect of enhancing the amount due from,
or otherwise increasing the liability of, the employer shall not be made under this sub-section,
unless the Tribunal has given notice to him of its intention to do so and has allowed him a
reasonable opportunity of being heard.
(3) A Tribunal shall send a copy of every order passed under this section to the parties to the
appeal.
(4) Any order made by a Tribunal finally disposing of an appeal shall not be questioned in
any court of law.

13.24. Mode of recovery of moneys due from employers

Any amount due
(a) from the employer in relation to an establishment to which any Scheme or the Insurance
Scheme applies in respect of any contribution payable to the Fund or, as the case may
be, the Insurance Fund, damages recoverable under section 113B, accumulations
required to be transfer under sub-section (2) of section 15 5or under sub-section (5) of
section 17 or any charges payable by him under any other provision of this Act or of
any provisionof the Scheme or the Insurance Scheme; or
(b) from the employer in relation to an exempted establishment in respect of any damages
recoverable under section 113B or any charges payable by him to the appropriate
Government under any provision of this Act or under any of the conditions specified
under section 17 or in respect of the contribution payable by him towards the Pension
Scheme under the said section 17, may, if the amount is in arrear, be recovered 10 in the
manner specified in sections 8B to 8G

13.25. Recovery of moneys by employers and contractors

(1) The amount of contribution that is to say the employer’s contribution as well as the
employee’s contribution in pursuance of any Scheme and the employer’s contribution in
pursuance of the Insurance Scheme, and any charges for meeting the cost of administering
the Fund paid or payable by an employer in respect of an employee employed by or through a
contractor may be recovered by such employer from the contractor, either by deduction from
Centre for Distance Education 13.12 Acharya Nagarjuna University

any amount payable to the contractor, under any contract or as a debt payable by the
contractor.
(2) A contractor from whom the amounts mentioned in sub-section (1) may be recovered in
respect of any employee employed by or through him, may recover from such employee the
employee’s contribution under any Scheme by deduction from the basic wages, dearness
allowance and retaining allowance if any payable to such employee.
(3) Notwithstanding any contract to the contrary, no contractor shall be entitled to deduct the
employer’s contribution or the charges referred to in sub-section (1) from the basic wages,
dearness allowance, and retaining allowance if any payable to an employee employed by or
through him or otherwise to recover such contribution or charges from such employee
Explanation.—In this section, the expressions, “dearness allowance” and “retaining allowance” shall
have the same meanings as in section 6.

13.26. Issue of certificate to the Recovery Officer.

(1) Where any amount is in arrear undersection8, the authorised officer may issue, to the
Recovery Officer, a certificate under his signature specifying the amount of arrears and the
Recovery Officer, on receipt of such certificate, shall proceed to recover the amount specified
therein from the establishment or, as the case may be, the employer by one or more of the
modes mentioned below:—
(a) attachment and sale of the movable or immovable property of the establishment or,
as the case may be, the employer;
(b) arrest of the employer and his detention in prison;
(c) appointing a receiver for the management of the movable or immovable properties of
the establishment or, as the case may be, the employer:
Provided that the attachment and sale of any property under this section shall first be
effected against the proportion of the establishment and where such attachment and sale
is insufficient for recovering the whole of the amount of arrears specified in the
certificate, the Recovery Officer may take such proceedings against the property of the
employer for recovery of the whole or any part of such arrears.
(2) The authorized officer may issue a certificate under sub-section (1), notwithstanding that
proceedings for recovery of the arrears by any other mode have been taken.

13.27. Recovery Officer to whom certificate is to be forwarded.

(1) The authorised officer may forward the certificate referred to in section 8B to the
Recovery Officer within whose jurisdiction the employer—
(a) carries on his business or profession or within whose jurisdiction the principal place
of hisestablishment is situate; or
(b) resides or any movable or immovable property of the establishment or the employer
issituate.
(2) Where an establishment or the employer has property within the jurisdiction of more than
one
Recovery Officers and the Recovery Officer to whom a certificate is sent by the
authorizedofficer—
(a) is not able to recover the entire amount by the sale of the property, movable or
immovable, within his jurisdiction; or
(b) is of the opinion that, for the purpose of expediting or securing the recovery of the
whole or any part of the amount, it is necessary so to do, he may send the certificate or,
where only a part of the amount is to be recovered, a copy of the certificate certified in
the prescribed manner and specifying the amount to be recovered to the Recovery Officer
within whose jurisdiction the establishment or the employer has property or the
Employees Provident Fund Act, 1952 13.13 Industrial Social Work

employer resides, and thereupon that Recovery Officer shall also proceed to recover the
amount due under this section as if the certificate or the copy thereof had been the
certificate sent to him by the authorised officer.

13.28. Validity of certificate and amendment thereof

(1) When the authorized officer issues certificate to a Recovery Officer under section 8B,
it shall not be open to the employer to dispute before the Recovery Officer the correctness of
the amount, and no objection to the certificate on any other ground shall also be entertained
by the Recovery Officer.
(2) Notwithstanding the issue of a certificate to a Recovery Officer, the authorized officer
shall have power to withdraw the certificate or correct any clerical or arithmetical mistake in
the certificate by sending an intimation to the Recovery Officer.
(3) The authorised officer shall intimate to the Recovery Officer any order withdrawing or
cancelling certificate or any correction made by him under sub-section (2) or any amendment
made under sub-section (13) of section 8E.

13.29. Stay of proceedings under certificate and amendment or withdrawal thereof.

(1) Not withstanding that a certificate has been issued to the Recovery Officer for the
recovery of any amount, the authorised officer may grant time for the payment of the amount,
and thereupon the Recovery Officer shall stay the proceedings until the expiry of the time so
granted.
(2) Where a certificate for the recovery of amount has been issued, the authorised officer
shall keep the Recovery Officer informed of any amount paid or time granted for payment,
subsequent to the issue of such certificate.
(3) Where the order giving rise to a demand of amount for which a certificate for recovery
has been issued has been modified in appeal or other proceeding under this Act, and, as a
consequence thereof, the demand is reduced but the order is the subject-matter of a further
proceeding under this Act, the authorised officer shall stay the recovery of such part of the
amount of the certificate as pertains to the said reduction for the period for which the appeal
or other proceeding remains pending.
(13) Where a certificate for the recovery of amount has been issued and subsequently the
amount of the outstanding demand is reduced as a result of an appeal or other proceeding
under this Act, the authorized officer shall, when the order which was the subject-matter of
such appeal or other proceeding has become final and conclusive, amend the certificate or
withdraw it, as the case may be.

13.30. Application of certain provisions of Income-tax Act.

The provisions of the Second and Third Schedules to the Income-tax Act, 1961 (133
of 1961) and the Income-tax (Certificate Proceedings) Rules,1962, as in force from time to
time, shall apply with necessary modifications as if the said provisions and the rules referred
to the arrears of the amount mentioned in section 8 of this Act instead of to the income-tax:
Provided that any reference in the said provisions and the rules to the “assessed” shall be
construed a as reference to an employer as defined in this Act.

13.31. Fund to be recognised under Act 11 of 1922.

For the purposes of the Indian Income-tax Act,1922, the Fund shall be deemed to be a
recognized provident fund within the meaning of Chapter IXA of that Act:
Provided that nothing contained in the said Chapter shall operate to render ineffective any
provision of the Scheme (under which the Fund is established) which is repugnant to any of
the provisions of that Chapter or of the rules made there under.
Centre for Distance Education 13.14 Acharya Nagarjuna University

Protection against attachment.

(1) The amount standing to the credit of any member in the Fund 2 or of any exempted
employee in a provident fund shall not in any way be capable of being assigned or charged
and shall not be liable to attachment under any decree or order of any court in respect of any
debt or liability incurred by the member 2 or the exempted employee, and neither the official
assignee appointed under the Presidency-towns Insolvency Act, 1909 (3 of 1909), nor any
receiver appointed under the Provincial Insolvency Act, 1920 (5 of 1920), shall be entitled to,
or have any claim on, any such amount.

(2) Any amount standing to the credit of a member in the Fund or of an exempted employee
in a provident fund at the time of his death and payable to his nominee under the Scheme or
the rules of the provident fund shall, subject to any deduction authorized by the said Scheme
or rules, vest in the nominee and shall be free from any debt or other liability incurred by the
deceased or the nominee before the death of the member of the exempted employee and shall
also not be liable to attachment under any decree or order of any court.

(3) The provisions of sub-section (1) and sub-section (2) shall, so far as may be, apply in
relation to the family pension or any other amount payable under the 6 Pension Scheme 7 and
also in relation to any amount payable under the Insurance Scheme as they apply in relation
to any amount payable out of the Fund.

13.32 Inspectors
(1) The appropriate Government may, by notification in the Official Gazette, appoint such
persons as it thinks fit to be Inspectors for the purposes of this Act the Scheme the Pension
Scheme or the Insurance Scheme, and may define their jurisdiction.
(2) Any Inspector appointed under sub-section (1) may, for the purpose of inquiring into the
correctness of any information furnished in connection with this Act or with any 1S cheme or
the Insurance Scheme or for the purpose of ascertaining whether any of the provisions of this
Act or of any Scheme or the Insurance Scheme have been complied with in respect of an
establishment to which any Scheme or the Insurance Scheme applies or for the purpose of
ascertaining whether the provisions of this Act or any Scheme or the Insurance Scheme are
applicable to any establishment] to which the Scheme or the Insurance Scheme has not been
applied or for the purpose of determining whether the conditions subject to which exemption
was granted under section 17 are being complied with by the employer in relation to an
exempted establishment—
(a) require an employer or any contractor from whom any amount is recoverable under
section
to furnish such information as he may consider necessary
(b) at any reasonable time and with such assistance, if any, as he may think fit, enter and
search any establishment or any premises connected therewith and require any one found
in charge thereof to produce before him for examination any accounts, books, registers
and other documents relating to the employment of persons or the payment of wages in
the establishment
(c) examine, with respect to any matter relevant to any of the purposes aforesaid, the
employer or any contractor from whom any amount is recoverable under section 8A, his
agent or servant or any other person found in charge of the establishment of any premises
connected therewith or whom the Inspector has reasonable cause to believe to be or to
have been, an employee in the establishment
(d) make copies of, or take extracts from, any book, register or other document maintained in
relation to the establishment and, where he has reason to believe that any offence under
Employees Provident Fund Act, 1952 13.15 Industrial Social Work

this Act has been committed by an employer, seize with such assistance as he may think
fit, such book, register or other document or portions thereof as he may consider relevant
in respect of that offence;
(e) exercise such other powers as the [Scheme or the Insurance Scheme may provide.
(2A) Any Inspector appointed under sub-section (1) may, for the purpose of inquiring into
the correctness of any information furnished in connection with the 10 Pension Scheme or for
the purpose of ascertaining whether any of the provisions of this Act or of the 10 Pension
Scheme have been complied with in respect of an establishment to which the 10 Pension
Scheme applies, exercise all or any of the powers conferred, on him under clause (a), clause
(b), clause (c) or clause (d) of sub-section (2).11(2B) The provisions of the Code of Criminal
Procedure, 1898 (5 of 1898) shall, so far as may be, apply to any search or seizure under sub-
section (2),or under sub-section (2A), as the case may be, as they apply to any search or
seizure made under the authority of a warrant issued under section 98 of the said Code (135
of 1960).

13.33. Penalties
(1) Whoever, for the purpose of avoiding any payment to be made by himself under this Act
the Scheme the Pension Scheme or the Insurance Scheme or of enabling any other person to
avoid such payment, knowingly makes or causes to be made any false statement or false
representation shall be punishable with imprisonment for a term which may extend to one
year, or with fine of five thousand rupees, or with both.
(1A) An employer who contravenes, or makes default in complying with, the provisions of
section 6or clause (a) of sub-section (3) of section 17 in so far as it relates to the
payment of inspection charges, or paragraph 38 of the Scheme in so far as it relates to
the payment of administrative charges, shall be punishable with imprisonment for a
term which may extend to 6 three years but
(a) which shall not be less than one year and a fine of ten thousand rupees in case of
default in payment of the employees’ contribution which has been deducted by the
employer from the employees’ wages;
(b) which shall not be less than six months and a fine of five thousand rupees, in any
other case;
Provided that the court may, for any adequate and special reasons to be recorded in the
judgment, impose a sentence of imprisonment for a lesser term .
(1B) An employer who contravenes, or makes default in complying with, the provisions
ofsection6C, or clause (a) of sub-section (3A) of section 17 in so far as it relates to the
payment of inspection charges, shall be punishable with imprisonment for a term which may
extend to one year] but which shall not be less than six months and shall also be liable to fine
which may extend to five thousand rupees Provided that the court may, for any adequate and
special reasons to be recorded in the judgment, impose a sentence of imprisonment for a
lesser term.
(2) 16 Subject to the provisions of this Act, the Scheme 17, the 3Pension Scheme or the
Insurance Scheme may provide that any person who contravenes, or makes default in
complying with, any of the provisions thereof shall be punishable with imprisonment for a
term which may extend one year, or with fine which may extend to four thousand rupees, or
with both.
18 (2A) Whoever contravenes or makes default in complying with any provision of this Act
or of any condition subject to which exemption was granted under section 17 shall, if no
other penalty is elsewhere.
Centre for Distance Education 13.16 Acharya Nagarjuna University

13.34. Offences by companies

(1) If the person committing an offence under this Act 13 the Scheme or there is a company,
every person, who at the time the offence was committed was in charge of, and was
responsible to, the company for the conduct of the business of the company, as well as the
company, shall be deemed to be guilty of the offence and shall be liable to be proceeded
against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any
punishment, if he proves that the offence was committed without his knowledge or that he
exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding
anything contained in sub-section (1), where an offence under this Act 13, the Scheme or the
Pension] Scheme or the Insurance Scheme has been committed by a company and it
improved that the offence has been committed with the consent or connivance of, or is
attributable to, any neglect on the part of, any director or manager, secretary or other officer
of the company, such director, manager, secretary or other officer shall be deemed to be
guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Enhanced punishment in certain cases after previous conviction

Whoever, having been convicted by a Court of an offence punishable under this Act, the
Scheme or 5the Scheme or the Insurance Scheme, commits the same offence shall be subject
for every such subsequent offence to imprisonment for a term which may extend to five
years, but which shall not be less than two years, and shall also be liable to a fine of twenty-
five thousand rupees Certain offences to be cognizable
Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (5 of 1898.) an
offence relating to default in payment of contribution by the employer punishable under this
Act shall be cognizable.

Cognizance and trial of offences

(1) No court shall take cognizance of any offence punishable under this Act, the Scheme or
the Pension Scheme or the Insurance Scheme] except on report in writing of the facts
constituting such offence made with the previous sanction of the Central Provident Fund
Commissioner or such other officer as may be authorized by the Central Government, by
notification in the Official Gazette, in this behalf, by an Inspector appointed under section 13.

13.35. Power of court to make orders

(1) Where an employer is convicted of an offence of making default in the payment of any
contribution to the Fund 11,the [Pension]Fund or the Insurance Fund]] or in the transfer of
accumulations required to be transferred by him under sub-section (2) of section 15 or
subsection

(5) of section 17, the court may, in addition to awarding any punishment, by order in writing
require him within a period specified in the order (which the court may, if it thinks fit and on
application in that behalf, from time to time, extend), to pay the amount of contribution or
transfer the accumulations, as the case may be, in respect of which the offence was
committed.

(2) Where an order is made under sub-section (1), the employer shall not be liable under this
Act in respect of the continuation of the offence during the period or extended period, if any,
allowed by the court, but if, on the expiry of such period or extended period, as the case may
Employees Provident Fund Act, 1952 13.17 Industrial Social Work

be, the order of the court has not been fully complied with, the employer shall be deemed to
have committed a further offence and shall be punished with imprisonment in respect thereof
under section 113 and shall also be liable to pay fine which may extend to one hundred
rupees for every day after such expiry on which the order has not been complied with.

13.36. Special provisions relating to existing provident funds.

(1) Subject to the provisions of section 17, every employee who is a subscriber to any
provident fund of 1an establishment to which this act applies shall, pending the application of
a Scheme to the establishment in which he is employed, continue to be entitled to the benefits
accruing to him under the provident fund, and the provident fund shall continue to be
maintained in the same manner and subject to the same conditions as it would have been if
this Act had not been passed.

On the application of any Scheme to an establishment, the accumulations in any

provident fund of the establishment standing to the credit of the employees who become
members of the Fund established under the Scheme shall, notwithstanding anything to the
contrary contained in any law for the time being in force or in any deed or other instrument
establishing the provident fund but subject to the provisions, if any, contained in the Scheme,
be transferred to the Fund established under the Scheme, and shall be credited to the accounts
of the employees entitled thereto in the Fund.

13.37. Act not to apply to certain establishments.

(1) This Act shall not apply
(a) to any establishment registered under the Co-operative Societies Act, 1913 (2 of 1913), or
under any other law for the time being in force in any State relating to co-operative
societies, employing less than fifty persons and working without the aid of power; or
(b) to any other establishment belonging to or under the control of the Central Government or
a State Government and whose employees are entitled to the benefit of contributory provident
fund or old age pension in accordance with any scheme or rule framed by the Central
Government or the State Government governing such benefits; or
(c) to any other establishment set up under any Central, Provincial or State Act and whose
employees are entitled to the benefits of contributory provident fund or old age pension in
accordance with any scheme or rule framed under that Act governing such benefits.
(2) If the Central Government is of opinion that having regard to the financial position of any
class of establishments or other circumstances of the case, it is necessary or expedient so to
do, it may, by notification in the Official Gazette, and subject to such conditions as may be
specified in the notification,exempt whether prospectively or retrospectively that class of 9
establishments from the operation of this Act for such period as may be specified in the
notification.

13.38. Authorising certain employers to maintain provident fund accounts

(1) The Central Government may, on an application made to it in this behalf by the employer
and the majority of employees in relation to an establishment employing one hundred or more
persons, authorise the employer, by an order in writing, to maintain a provident fund account
in relation to the establishment, subject to such terms and conditions as may be specified in
the Scheme
Centre for Distance Education 13.18 Acharya Nagarjuna University

13.39. Power to exempt.

(1) The appropriate Government may, by notification in the Official Gazette and subject to
such conditions as may be specified in the notification, exempt, whether prospectively or
retrospectively, from the operation] of all or any of the provisions of any Scheme.
(a) any establishment to which this Act applies if, in the opinion of the appropriate
Government, the rules of its provident fund with respect to the rates of contribution are
not less favourable than those specified in section 6 and the employees are also in
enjoyment of other provident fund benefits which on the whole are not less favourable to
the employees than the benefits provided under this Act or any Scheme in relation to the
employees in any other establishment of similar character; or
(b) and establishment if the employees of such establishment are in enjoyment of benefits in
the nature of provident fund, pension or gratuity and the appropriate Government is of
opinion that such benefits, separately or jointly, are on the whole not less favorable to
such employees than the benefits provided under this Act or any Scheme in relation to
employees in any other establishment of a similar character:
Provided that no such exemption shall be made except after consultation with the Central
Board which on such consultation shall forward its views on exemption to the appropriate
Government within such time limit as may be specified in the Scheme.

13.40. Transfer of accounts.

(1) Where an employee employed in an establishment to which this Act applies leaves his
employment and obtains re-employment in another establishment to which this Act does not
apply, the amount of accumulations to the credit of such employee in the Fund, or as the case
may be, in the provident fund of the establishment left by him shall be transferred, within
such time as may be specified by the Central Government in this behalf, to the credit of his
account in the provident fund of the establishment in which he is re-employed, if the
employee so desires and the rules in relation to that provident fund permit such transfer.
(2) Where an employee employed in an establishment to which this Act does not apply leaves
his employment and obtains re-employment in another establishment to which this Act
applies, the amount of accumulations to the credit of such employee in the provident fund of
the establishment left by him may, If the employee so desires and the rules in relation to such
provident fund permit, be transferred to the credit of his account in the Fund or as the case
may be, in the provident fund of the establishment in which he is re-employed.

Act to have effect notwithstanding anything contained in Act 31 of 1956

The provisions of this Act shall have effect notwithstanding anything inconsistent therewith
contained in the Life Insurance Corporation Act, 1956.
Liability in case of transfer of establishment
Where an employer, in relation to an establishment, transfers that establishment in
whole or in part, by sale, gift, lease or license or in any other manner whatsoever, the
employer and the person to whom the establishment is so transferred shall jointly and
severally be liable to pay the contribution and other sums due from the employer under any
provision of this Act or the Scheme or the Pension Scheme or the Insurance Scheme, as the
case may be, in respect of the period up to the date of such transfer: Provided that the liability
of the transferee shall be limited to the value of the assets obtained by him by such transfer.

13.41. Protection of action taken in good faith.

No suit, prosecution or other legal proceeding shall lie against the Central Government, a
State Government, the Presiding Officer of a Tribunal, any authority referred to in section
Employees Provident Fund Act, 1952 13.19 Industrial Social Work

7A, an Inspector or any other person for anything which is in good faith done or intended to
be done in pursuance of this Act, the Scheme, or the Insurance Scheme.
Authorities and inspector to be public servant
The authorities referred to in section 7Aand every inspector shall be deemed to be a public
servant within the meaning of section 21 of the Indian Penal Code
Delegation of powers
The appropriate Government may direct that any power or authority or jurisdiction
exercisable by it under this Act 6the Scheme 7the Pension Scheme or the Insurance Scheme
shall, in relation to such matters and subject to such conditions, if any, as may be specified
inthe direction, be exercisable also
(a) where the appropriate Government is the Central Government, by such officer or authority
subordinate to the Central Government or by the State Government or by such officer or
authority subordinate to the State Government, as may be specified in the notification;
and
(b) where the appropriate Government is a State Government, by such officer or authority
subordinate to the State Government as may be specified in the notification.
13.42. Power of Central Government to give directions.
The Central Government may, from time to time, give such directions to the Central
Board as it may think fit for the efficient administration of this Act and when any such
direction is given, the Central Board shall comply with such direction.
Power to make rules
(1) The Central Government may, by notification in the Official Gazette, make rules to carry
out the provisions of this Act.
(2) Without prejudice to the generality of the foregoing power, such rules may provide for all
or any of the following matters, namely
(b) the form and the manner in which, and the time within which, an appeal shall be filed
before a Tribunal and the fees payable for filing such appeal;
(c) the manner of certifying the copy of the certificate, to be forwarded to the Recovery
Officer Under sub-section (2) of section 8C; and
(d) any other matter, which has to be, or may be, prescribed by rules under this Act.
(3) Every rule made under this Act shall be laid, as soon as may be after it is made, before
each House of Parliament, while it is in session, for a total period of thirty days which may be
comprised in onesession or in two or more successive sessions, and if, before the expiry of
the session immediately following the session or the successive sessions aforesaid, both
Houses agree in making any modification in the rule or both Houses agree that the rule
should not be made, the rule shall thereafter have effect only in such modified form or be of
no effect, as the case may be; so, however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done under that rule.

Power to remove difficulties

(1) If any difficulty arises in giving effect to the provisions of this Act, as amended by the
Employees’ Provident Funds and Miscellaneous Provisions(Amendment) Act, 1988 (33 of
1988), the Central Government may, by order published in the Official Gazette, make such
provisions, not inconsistent with the provisions of this Act as appear to it to be necessary or
expedient for the removal of the difficulty:
Provided that no such order shall be made after the expiry of a period of three years from the
date on which the said amendment Act receives the assent of the President. (2) Every order
made under this section shall, as soon as may be after it is made, be laid before each House of
Parliament.
Centre for Distance Education 13.20 Acharya Nagarjuna University

13.43. Summary
The Employees' Provident Fund came into existence with the promulgation of the Employees'
Provident Funds Ordinance on the 15th November, 1951. It was replaced by the Employees'
Provident Funds Act, 1952. The Employees' Provident Funds Bill was introduced in the
Parliament as Bill Number 15 of the year 1952 as a Bill to provide for the institution of
provident funds for employees in factories and other establishments. The Act is now referred
as the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 which extends to
the whole of India. The Act and Schemes framed there under are administered by a tri-partite
Board known as the Central Board of Trustees, Employees' Provident Fund, consisting of
representatives of Government (Both Central and State), Employers, and Employees.

13.44. Key words

Authorized officer” means the Central Provident Fund Commissioner, Additional Central
Provident Fund Commissioner, Deputy Provident Fund Commissioner, Regional Provident
Fund Commissioner or such other officer as may be authorized by the Central Government,
by notification in the Official Gazette.

Basic Wages” means all emoluments which are earned by an employee while on duty or on
leave or on holidays with wages in either case] in accordance with the terms of the contract of
employment and which are paid or payable in cash to him, but does not include

Employer” means (i) in relation to an establishment which is a factory, the owner or occupier
of the factory, including the agent of such owner or occupier, the legal representative of a
deceased owner or occupier and, where a person has been named as a manager of the factory
under clause (f) of sub-section (1) of section 7 of the Factories Act, 19138 (63 of 19138), the
person so named; and

Employee” means any person who is employed for wages in any kind of work, manual or
otherwise, in or in connection with the work of an establishment, and who gets his wages
directly or indirectly from the employer, and includes any person—

Employees’ Provident Fund Schemes The Central Government may, by notification in the
Official Gazette, frame a Scheme to be called the Employees’ Provident Fund Scheme for the
establishment of provident funds under this Act for employees or for any class of employees
and specify the establishments or class of establishments to which the said Scheme shall
apply and there shall be established, as soon as may be after the framing of the Scheme, a
Fund in accordance with the provisions of this Act and the Scheme

13.45. Self Assessment Questions

1. Briefly explain the Procedure of Employee Fund scheme
2. Outline the Central Board and Appointment of officer in EPF
3. Discuss the Appeals and Procedure of Tribunal in EPF
13. Describe the offences and Penalties of Employees Fund Scheme

13.46. Suggested Readings

1. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 as amended by
Along with Employees’ Provident Funds Scheme, 1952, July 2022 by Professional
(Author), Professional book publishers.
Employees Provident Fund Act, 1952 13.21 Industrial Social Work

2. Employees Provident Funds & Miscellaneous Provisions Act, 1952 along with with allied
Schemes, Rules, Notifications & Forms, January 2020, by Professional (Author),
Professional book publishers.
3. Commentary on Employees Provident Funds and Miscellaneous Provisions Act, 1952 -
Latest 2023 Edition by Kharbanda & Kharbanda , February 2023
13. Malik, P.L : Industrial Law, Eastern Book Company, Lucknow , 1999.
5. Vaidyanathan, N : ILO Conventions and India , Menerva Associates, Calcutta , 1975.
6. Sinha, G.P. & Sinha,, P.R.N : Industrial Relations and Labour Legislations, Oxford and
IBH Publishing Co., New Delhi , 1980.
7. Sharma, A.M : Legal Framework on Industrial Relations, Himalaya Publishing House,
Mumbai, 2002.

Prof. K. Dhanalaskmi
Chairperson, BoS, PG
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson- 14

LABOUR WELFARE CONCEPT, SCOPE, PHILOSOPHY AND PRINCIPLES

Objectives
 After Studying this lesson, the students is able to understand.
 The Scope and concept of Social Welfare
 The Concept, scope and content of labour welfare
 The ralation between Social Welfare and Labour Welfare.
 Concept of Philosophy and Deferent types of Philosophies of labour welfare
Structure
14.1. Introduction
14.2. Social Welfare
14.3. Meaning of LabourWelfare
14.4. Definition and Concepts of Labour Welfare
14.4.1. Total concept of Welfare
14.4.2. Social Concept of Welfare
14.4.3. Relative Concept of Labour
14.5. Scope of Labour Welfare
14.6. Concept of Approach to Philosophy of Labour Welfare
14.7. Different types of Philosophies
14.8. Summary
14.9. Keywords
14.10. Self Assessment Questions
14.11. Further Readings

14.1. Introduction
Human Resource Management deals with acquisition, development compensation,
industrial relations, maintenance and separation of employees at the organisational level. One
of the functional areas of Human Resource Management is Labour Welfare which is included
in the broad functions of compensation and maintenance of human resources. This
introductory Unit makes an attempt to explain the concept of labour welfare in the
perspective of social policy, social development and social welfare.

14.2. Social welfare

"Social Welfare is the organised system of social services and institutions designed to
aid individuals and groups to attain satisfying standard of life and health and personal and
social relationships which permit them to develop their full capacity and to promote their well
being in harmony with the needs of their families and the community" (Friedlander). In a
broad sense it is well being of larger member of people in the society including their physical,
mental emotional, spiritual and economic needs.

Social Welfare programmes aim at enabling the deprived sections of the population to
overcome their social, economic and physical problems and to improve challenged their
quality of life. They supplement the developmental programmes in general in dealing with
the problems of poverty and unemployment and are meant in particular to assist themost
disadvantaged groups below the poverty line, especially children from poor families. Women,
the handicapped and the downtrodden etc.
Centre for Distance Education 14.2 Acharya Nagarjuna University

Pigou defined it as “that part of general welfare which can be brought directly or
indirectly into relation with measuring of many." He however, recognised the limitation of
his definition and said that the elements of welfare were states of consciousness and probably
their relations.

Social Welfare assists weaker sections, prevents poverty and destitution, and
establishes satisfactory conditions of human living. Such an approach to social welfare brings
within its fold social reform, social legislation, social services, social action and social work.
Considered narrowly, social welfare’ aims at the well being of people- by helping them make
better adaptation to the existing social structures. It seeks to raise the human level of life
culture, economic and psychological.

The welfare state is a system of social responsibilities for certain minimum standards
of individual and community welfare. Under Social welfare sector, preventive,
developmental at and rehabilitative services are provided to the vulnerable and weaker
sections of the society.

14.3. Meaning of Labour Welfare

Labour Welfare has been defined in various ways but unfortunately no single
definition has received universal acceptance. The Oxford Dictionary defines labour welfare
as “efforts to make life worth living for workmen". The encyclopedia of social sciences
defines labour welfare as the voluntary efforts of the employers to establish, within the
existing industrial system, working and sometimes living and cultural conditions of the
employees beyond what is required by law, the customs of the industry and the conditions of
the market. Further J. Tadd defined labour welfare as “Anything for the comfort and
improvement, intellectual and social, of the employees over and above the wages paid, which
is not a necessity of the industry". At the ILO session (SEA) held at New Delhi, in
14947,Worker’s welfare was understood, “as meaning of such services, facilities and
amenities, which may be established in, or in the vicinity of the undertaking to unable
persons employed there in surroundings and to provide them with amenities conductive to
good health and good morale”. The Royal commission on labour (149314) understood labour
welfare “as one which is necessarily elastic, differing from country to country, the degree of
industrialisation and the level of educational development”.

The Rege Committee, in its report submitted to the Government of India in 14946,
said, “We prefer to include under welfare activities anything done for intellectual, physical,
moral and economic development of workers, whether by employer, government or other
agencies, over and above provided by law or under some contract and what is naturally
expected as a part of the contract for service”, The committee on labour welfare set up by the
government of India in 14969, in its report defined labour welfare to” include such services,
facilities and amenities as adequate canteens, rest and recreation facilities, sanitary
andmedical facilities, arrangements for travel to and from place of work and for the
accommodation and such other services amenties and facilities including social security
measures as contribute to improve the conditions under which workers are employed”.

From all these definitions, It is apparent that none is complete or comprehensive.

There is no precise, definite outline or demarcation in this subject. However, what is definite
is that labour welfare promotes the well-being of workers in a variety of ways.
Labour Welfare Concept…. 14.3 Industrial Social Work

14.4. Definition and Concept of Labour Welfare

The term Welfare is derived from the French phrase Welfare which means to Fare
Well. The chamber’s dictionary defines the term welfare as “a state characterised by
happiness, Well- being or prosperity”. Thus, in its broader connotation, the term welfare
refers to the state of living of an individual or a group in a desirable relationship with total
environment -ecological, economic and social. However, the environment not only shows
perceptible differences from place to place but also undergoes metamorphoses over time.
Similarly, the “desirable relationship” may also vary among individuals and groups as well
over time. These variations impart dynamism to the concept of welfare. It is because of this
dynamism that the concept of welfare defied a precise definition and renders its measurement
different. To begin with, let us briefly discuss the main concepts or, rather the general
meaningful ideas which have been evolved about it sofar.

14.4.14. Total Concept of Welfare

Welfare is a total concept. It is a desirable state of existence comprehending physical,
mental, moral and emotional health or well-being. Unless, a persons is physically well off,
has sound health, he cannot be described to be faring well. Illness, ailments and physical
disabilities to which the flesh is heir to, do actively interfere with the enjoyment of welfare.
Aman may be mentally brilliant, morally reliable and even emotionally stable, but as long as
his physical health is poor and neglected, his welfare could be described as incomplete.
Indeed, such a man may be in danger of lapsing into a state of ill fare. We may now restate
that a person's welfare depends on his physical, mental (intellectual) moral and emotional
health. For purposes of discussion these four aspects of the individuals' personality are
separately mentioned, but they really constitute one whole, integrated factor. Indeed, one
aspect is inseparably bound up with, and has its roots in the other. Physical, mental, moral
and emotional health are the four pillars; or better still, fourfold foundation on which the
structure of welfare is built. It is in this sense that welfare is described as a total concept.

14.4.2 Social Concept of Welfare

While Welfare is thus based on the well-being of the total man, it is also a three
dimensional concept implying the welfare of the family and the community, in addition to
that of the man himself. A man is a member of his family. He derives his mental
nourishment, his moral sentiments and emotional content from his family. All his activities
are conditioned by and centered in his family. As the family, so the person, at least in his
earlier days. A family is not an isolated unit. It is related to other families and to the
neighborhood. The community is the legitimate, natural and intimate setting in which the
family lives and has its being. A family cannot be happy if the community is miserable and if
the community does not, or cannot, provide conditions for desirable’ states of existence for
the family. Welfare of families and of individuals is determined by the resources of the
community of which the former are parts. If the community should be described as faring
well, it should enable its constituent parts to attain and maintain desirable conditions of
existence.

14.4.3 Relative concept of Welfare:

Welfare is also a relative concept, relative in time and place. A century ago our ideas
of welfare were different. The content of welfare, too, differed. Man accepted comparatively
less convenient and less sumptuous conditions of existence; for, science and technology had
not yet made possible better amenities. We today have better facilities in all spheres than our
ancestors. Welfare is growing and dynamic.
Centre for Distance Education 14.4 Acharya Nagarjuna University

Welfare is relative in space too. That is, in its meaning and content it differs from
country to country or region to region. What, according to our capacity, we consider welfare
may not be fully so to more advanced communities in more progressive countries.

14.5. Scope of Labour Welfare

It is somewhat difficult to accurately lay down the scope of labour welfare work,
especially because of the fact that labour is composed of dynamic individuals with compled
needs. Hence it can be interpreted in different ways by different countries, with varying
stages of economic development, political outlook and social philosophy. Accordingly, the
labour welfare work can be divided into statutory and on-statutory or voluntary or into intra-
mural welfare work or extra-mural welfare work. Statutory welfare measures in industry may
stem for the direct concern for efficiency and productivity. But, to the extent the
commeasures are employee-oriented, they could be considered to fall within the scope of
labour welfare. Such measures consist of those provisions of welfare work which depend for
their implementation on the coercive power of the government. That is, through the law.
Every country is increasing gradually its statutory control over labour welfare. Non-statutory
welfare measures include all those activities which employers and unions undertake on a
voluntary basis.

ILO classified the welfare measures into intra-mural and extra-mural. Intra-mural are
those welfare amenities which are provided within the precincts of the establishment such as
latrines and urinals, washing and bathing facilities, crèches, rest shelters, canteens, drinking
water, health services safety measures, uniform and protective clothing, shift allowance, etc.
Extra-mural are those welfare amenities which are provided outside the establishment like
maternity benefit, social insurance measures including sports, cultural activities, library and
reading room, holiday homes, leave travel facilities, consumer cooperative stores, fair price
shops, vocational training for the dependents of workers transport to and from the place of
work, etc.

According to Valid, there are certain requirements which labour welfare should meet.
It should enable workers to live a riche and more satisfactory life; contribute to the
productivity of labour and efficiency of the enterprise, be in time and harmony with similar
services obtaining in the neighborhood community, where the enterprise is situated, etc.
Thus, labour welfare is very comprehensive and embraces a multitude of activities of
employers, state, trade unions and other agencies to help workers and their families in the
context of their industrial life.

14.6. Approaches to Philosophy of Labour Welfare

Philosophy is a study of fundamentals relating to concepts, events or phenomena. It
deals with the origin, purpose and destiny of anything. Philosophy is a rational system of
beliefs. It is a theory or complex of theories relating to existence, being, purpose, activity or
behaviour etc.. , It is necessary for everyone to have a philosophy, his own or, derived from
others. For, it is one's philosophy that determines one’s values of 14ife. It shapes one’s
patterns’ of behaviour, influences one’s reactions and relations to others, moulds attitudes and
thinking, inspires ambition or anxiety, compromise or cunning. In short, philosophy lays the
path for the way of life.

14.7. Different Types of Philosophies

Constituting the conceptual frame work of labour welfare, M. V.Murthy has out lined seven
approaches to the philosophy or theory of labour welfare, These are
Labour Welfare Concept…. 14.5 Industrial Social Work

i) The Policing theory of labour welfare.

ii) The Religious theory of labour welfare.
iii) The Philanthropic theory of labour welfare.
iv) The Paternalistic theory of labour welfare or the trustee ship theory of labour welfare.
v) The Placating theory
vi) The Public relations theory of labour welfare
vii) The Functional theory of labour welfare.

The Policing theory of Labour Welfare

According to this theory, a majority of the people tend to do evil. Man is full of self
interests, and does not hesitate to further his own ends at the cost of others welfare-
particularly if he is placed in an advantageous position, exploiting those under him.
According to this theory, managers and owners of industrial undertakings getmany
opportunities for this kind of exploitation. The welfare state has therefore step into prevent
this kind of exploitation and coerce industrialists to offer a minimum standard of welfare to
their workers. Such interference is in the interest of the progress and welfare of the state as
well. Laws are enacted to compel managements to provide minimum wages, congenial
working conditions. reasonable hours of work and social security. The policing theory,
therefore, leads to :
(a) The passing of laws relating to the provisions of minimum welfare for workers
(b) Periodical supervision to ascertain that these welfaremeasures are provided and
implemented, and
(c) Punishment of employers who evade or disobey these laws. In this theory, the emphasis is
on fear and not on the spirit of welfare which should be the guiding factor.

The Religious theory of Labour Welfare

This is based on the concept that man is essentially a religious animal Even today,
many acts of man are related to religious sentiments and beliefs. Employers as well as
employees as human beings, do subscribe to the religious sentiments and beliefs. These
religious feelings some times prompt employer to take-up welfare activities in the expectation
of future benefit, either in this life or in some future life. According to this theory, any good
work is considered an investment, both the benefactor and beneficiary are rewarded. We
came across many trusts and charitable institutions in India which function on the basis of
this belief. Another aspect of the religious theory is the 'atonement' aspect. Some people take-
up welfare work in a spirit of atonement for their sins. This is why the benevolent acts of
welfare are treated either as an investment or atonement. According to this theory, man is
primarily concerned with his own welfare only and secondarily with the welfare of others.

The Philanthropic theory

This theory is based on main’s love for mankind. In Greek, Philomena’s 'loving' and
anthrop means man. So, philanthropic means “loving mankind”. Man is believed to have an
instinctive urge by which he strives to remove the sufferings of others and promote their
well-being. When some employers have compassion for their fellowmen, they may undertake
some welfare measures for the benefit of the workers. In India, Mahatma Gandhi was one of
the eminent philanthropist who strive for the welfare of labour.

Paternalistic or Trusteeship Theory of Labour Welfare

According to this theory, the industrialist or the employer holds the total industrial
state, properties and profits accruing from them in trust. In other words, he uses it for himself,
but also for the benefit of his workers and also for society. Workers are like minors. They are
Centre for Distance Education 14.6 Acharya Nagarjuna University

ignorant because of lack of education and are not able to look after their own interests.
Employers, therefore have the moral responsibility to look after the interest of their wards,
who are the workers. The main emphasis here is on the idea that employers should provide,
out of the funds under their control, for the wellbeing of their workers. Here too, labour
welfare depends on the initiative of the top management. Since it has no legal sanction its
value is based on the moral consciences of the industrialist. Also, this theory treats workers as
perpetual minors and industrialists as eternal guardians.

The Placating theory of Labour Welfare

This theory is based on the fact that workers are becoming more conscious about their
rights and privileges. They are welding themselves into personal groups. Their claim for
higher wages and better standards of living can no longer be ignored. According to this
theory, timely and periodical Acts of Labour Welfare can appease the workers. Workers are
like children. As crying children are pacified by sweets, so workers should be pleased by
welfare workers. This is a necessary show of kindness and friendly gesture. This is also the
best way of securing the worker’s Cooperation.

The Public Relations theory of Labour Welfare

This theory provides the basis for an atmosphere of goodwill between labour and
management and also between the management and public. Labour Welfare programmes,
under this theory, work as a sort of an advertisement and help the industrialist to build up
good and healthy public relations. This theory is based on the assumption that the Labour
Welfare movement may be utilized to improve relations between management and labour. An
advertisement or an exhibition of a Labour Welfare programmes may help an industrialist to
project to the public a good image of his company. His sales as well as industrial relations
may improve as a result a twofold benefit.

The Functional Theory of Labour Welfare

This is also called the efficiency theory. Workers are described as operatives. They
are the productive group in the industry. They work strenuously in difficult environments.
Really speaking, it is the workers who deliver the goods. Here, welfare work is used as a
means to secure, preserve and develop the efficiency and productivity of labour. It is obvious
that if an employer takes good care of his workers, they will tend to become more efficient
and will thereby increase production. But, all this will depend on a healthy collaboration
between union and management and their mutual concern for the growth and development of
industry. Higher production is of benefit to both management and labour. The latter will
secure better wages and perhaps a share in the profits. This is the functional aspect of welfare
having efficiency as its object, which increases productivity. This will encourage worker’s
participation in Welfare programmes.

14.8. Principles of Labour Welfare

The success of welfare administration of the organisation depends on the extent to
which
certain basic principles are observed. Here an attempt ismade to discuss certain principles
ofwelfare work, which must be kept in mind and properly followed for successfull
implementation of welfare programmes.

14.8.1 Principle of Social Responsibility

According to the principle of social responsibility, the orgaisation has social obligation to
provide welfare facilities to its employees. The constitution of India particularly, the
Labour Welfare Concept…. 14.7 Industrial Social Work

Directive Principles of State Policy emphasises the social responsibility of the industry
towards labour welfare by directing the state policy towards enactment of suitable legislation
for the welfare of workers.

14.8.2 Principle of Adequacy of Wages

According to this principle, welfare work is not a substitute for wages. Wages should
be paid as per the policy and procedures and the trade Unions have the right to demand
adequate wages., The workers should be paid reasonable and fair wages which consumerate
their qualifications, service and the efforts they putin.Welfare programmes should be
desinged and implemented keeping in view the welfare of workers and their familymembers
but not on the basis of wages.What the workers get apart from this, there should not be any
wage reduction simply on the ground that more welfare activites are undertaken by the
organisations.

14.8.3. Principle of Efficiency

According to this principle, welfare work is a means of securing, preserving and
increasing the effiency of workers. Efficiency results in increased production and the
productivity which ultimately benefits the organisation, the workers and the society. Hence
the organisation has to provide welfare facilities to the workers to secure, preserve and
increase the efficiency of the workers. While designing and administrating the welfare
programmes at the organisationsl level this particular principle also must be kept in mind.

14.8.4. Principle of Represonalisation

According to the principle of re-presonalisation, the aim of the labour welfare should
be counteracting the baneful effects of industrial system. Therefore, it is necessary to plan
and administrate labour welfare programmes both inside and outside the factory which are
helpful to the workers in repersonalisation.

14.8.5. Principle of Totality of Welfare

Labour welfare is a total concept. It is a desirable state of existence comprehending
physical, mental, moral and emotional well being to the employees, Therefore, labour welfare
programmes must aim at total well being of the employees. According to this, while plannig
and implementing the welfare programmes at the plant level, total concept of the employee
welfare must be taken into consideration.

14.8.6. Principle of Totality of Employees

Employees are spread in the organisation at different levels, One can see a human
hierarchy in the organisation right from shop floor wokers to chief executive. According to
the principle of totality of employees, the labour welfare activities should pervade the entire
hierarchy of the organisation. The planning and administration of welfare programmes and
services must accommodate all employees of the organisation.

14.8.7. Principle of Social Concept of Welfare

According to the Principles of social concept of labour welfare, in planning and
implementing labour welfare programmes and services, the idividual alone should not be
taken into consideration. A man is a member of his family and a family is related to other
families and to a community. As such the welfare of the employees not only depends upon
welfare work undertaken for the individual alone. but also upon the welfare of his family and
community. Hence besides the employee, his family and his neighborhood also must be taken
into consideration in organising the welfare work.
Centre for Distance Education 14.8 Acharya Nagarjuna University

14.8.8. Principle of Timeliness

According to the principle of timeliness, when a need is felt for a particular type of
welfare work, then that should be done. The timeliness of any welfare work helps its success,
Discovering what kind of help is required to the workers and providing this help are
necessary in planning and implementing labour welfare progremmes.

14.8.9. Principle of Authority

Authoritymeans a legitimate right to do or assigning some one else to do the work. It
implies delegation of authority.According to the principle of authority, in the structure of
welfare administration the officers concerned should have legitimate right to do welfare work
and to delegate their authority in the welfare filed to the persons and committees connencted
to labour welfare. There should be adequate resources made available for the authorised
people of welfare

14.8.10. Principle of Responsibility

Responsiblity is one’s obligation to do the particular work. According to this
principle, the welfare administration at plant level should make certain officers responsible
for certain welfare programmes. For instance one of the welfare officermay be given the
responsibility of running industrial canteen. Responsibility succeeds when it is combined
with authority and resources. Further when responsibility is shared by different groups labour
welfar work becomes simple and easier. Therefore various committees such as canteen
committee etc, are constituted with the groups of workers representative and management
representatives and the related authority and responsibilities are given to them.

14.8.11. Principle of Accountability

Accountability refers to one’s answerability for his performance relating to his
assigned work. According to this principles, in the administration of welfare activities, certain
persons or groups must bemade answerable to themamagement on their work. The persons or
groups who are given authority and responsiblity of certain welfare programmes are
answerable to the higher authority of the organisation.

14.8.12. Principle of Participation

According to this principle employees should have a say in planning and
administering of
welfare activities. Work with the individual is the motto of this principle. Welfare work
aimed at the time work workers and if it is for the workers or in other words to ensure the
success of welfare programmes, they are to be designed and administered in consultion,
collaboration and association of the workers,. This implies that woerks thourgh their
representatives should be informed and taken into confidence at various stages regarding the
welfare programmes and their implementaiton. The basic aim of constituting joing committee
such as housing committee canteen managing committee, workers to participate in planning
and adminstering of welfare programmes and services.

14.8.13. Principles of Coordination

As you know labour welfare is a total concept and social concept. Keeping this view
in the mind management has to plan various welfare, programmes and implement them.
Welfare work should not be a piecemeal one. Theremust be proper coordinatiuon among
various welfare activities and theymust be integrated with one and another keeping inmind
the total concept and social concept of welfare. The highest authority of the plant must make
suitable arragements in the structure of labour welfare administration to coordinate all the
Labour Welfare Concept…. 14.9 Industrial Social Work

welfare programmes and services. Generally the head of the welfare personnel department is
entrusted with the responsiblity of coordination and integration of welfare work.

14.8.14. Principle of Self-Help

According to the principle of selfhelp the welfare programmes and services of an
organization must aimat helping the employees to help themselves in the long run. Taking
into conisderation of this principle certain werlfare programmes may be provided to the
employees by themselves. The organisation and implementation of these welfare programmes
shall be the responsibility of employees themselves this principle enables the workers to
become more responsible and more efficient.

14.8.15. Principle of Evaluation and Assessment

According to this principle, it is necessary to perodically look back and evaluate the
welfare measures in terms of their utilisation and satisfaction levels of employees. This
evaluation and assessment gives the required feedback about the welfare work to the
management. Based on this feedback, the welfare programmes and services may be altered or
deleted or added to suit the requirements of the target group i.e., the workers and their family
members.

14.9. Summary
The above Survey of the labour welfare movement reveals that there are schemes of
two types in the development of labour welfare. First, amovement through voluntary effort by
some of the employers and secondly, the legislative movement. In the field of labour welfare
the government is now playing a triple role-that of a legislation, administration and promoter.
In spite of all these efforts, the welfare work in India is still considerably below the standard
set up when confined to other countries. However, it has come to stay as an accepted feature
of employment conditions and is bound to make rapid progress in the years to come.

This unit presented you the concepts of social policy, Social Welfare and labour
welfare. Social Welfare attempts to deal with well being of weaker sections in the Society.
Labour, being considered as one of the weaker sections. Special attempts are made for their
well being, as a part of larger social welfare programme. Thus labour welfare becomes a part
of social welfare.

We have outlined above seven approaches to the building up of a philosophy of

Labour Welfare. It is not suggested that anyone approach is exclusive of other approaches. In
India, it is said, the industrial system clings largely to the paternalistic approach. Some
management, however try to achieve results through police control. Either way workers start
expecting too much from employers as a result of which employers provide welfare measures
in somewhat half hearted manner. In the long run it is better to get on the basis of the
functional theory of Labour Welfare, for it works more effectively by reason of an intelligent
and willing participation of workers.

14.10. Key Words

* Social welfare : Efforts to enable the weaker sections of the society to overcome
their hard ships and improve their quality of life.
* Labour Welfare : Efforts to make life worth living for workmen.

14.11. Self Assessment Questions

14. Bring out the relation between Social Welfare and Labour Welfare
Centre for Distance Education 14.10 Acharya Nagarjuna University

2. Define Labour Welfare and explain its concept.

3. Define the term “Labour Welfare” and explain how no single definition has been accepted
universally and give a comprehensive and accurate meaning to this term ?
4. Discuss the scope of labour welfare?
5. Describe the various theories of Labour Welfare?
6. Compare the trusteeship theory vis-a-vise the functional theory of Labour Welfare.
7. State with reasons. As to which theory can be most suitably applied today in Indian
Industries?

14.12. Further Readings

1. Government of India, Ministry of Welfare, Encyclopedia of Social Work in India. (Vol.3),
Publications Division, New Delhi, 14987.
2. Rewar B.D., Labour Welfarism in India, Problems and Prospects, .RVSA Publishers,
Jaipur,
14988.
3. Sarma A.M., Aspects of Labour Welfare and Social Security, Himalaya Publishing House,
Bombay, 14985.
4. Water A Friend lender, Introduction to social Welfare, Printice Hall Inc., 149614.
5. S.D. Punekar, S.B. Deodhar, S. Sankaran; Labour Welfare, Trade unionism and Industrial
Relations.
6. K.N. Vaid, Labour Welfare in India, Sri Ram Centre for Industrial Relations, New Delhi,
14970
7. Moorthy M.V., Principles of Labour Welfare, Oxford & IBH Publishing Co., Delhi 14982.

Prof. M. Trimurthi Rao

Dean, Faculty of Social Sciences
Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson -15
AGENCIES OF LABOUR WELFARE

Objectives
 After going through this lesson you should be able to
 Identify the Management as anAgency of LabourWelfare
 Trace the early efforts of management in labour welfare
 Explain the labour welfare activities of employers in major industries.
 Identify the role of trade unions in labour welfare
 Responsibility of Trade Unions in Labour Welfare
 Role of State in Labour Welfare
 Role of voluntaryAgencies in LabourWelfare

Structure
15.1. Introduction
15.2 Role of Management in Labour Welfare
15.3. Early Efforts of Employers in Labour welfare
15.4. Labour Welfare Work by Employers in major Industries
15.5. Role of Trade Unions in Labour Welfare
15.5.1. Function
15.5.2. Responsibility
15.6. Role of the State in Labour Welfare
15.6.1. Role of State in Labour Welfare before Independence
15.6.2. Role of State in Labour Welfare after Independence
15.6.3. Enactment of Labour Welfare Legislation
15.6.4. Enforcement of Labour welfare legislation
15.6.5. The five year plans
15.6.6. Welfare Centres
15.6.7. The state as an Employer
15.7. Role of Voluntary Agencies In labour welfare
15.7.1. Labour Welfare work done by voluntary organisations
15.7.2. Appraisal
15.8. Summary
15.9. Self Assessment Questions
15.10. Further Readings

15.1. Introduction
Labour welfare the is collective responsibility of state, management, trade unions and
voluntary organisations. A bulk of labour welfare programmes are administered by the state
in India. However, some of the employers pioneered in welfare movement voluntarily on
humanitarian grounds. The Unit offers you the role of employers in welfare work with a
special emphasis on certain major industries in India.

15.15. Role of Management in Labour Welfare

The role played by the employers in labour welfare work is of two types, one is
implementation of various, health, welfare, safety, leave provisions and social security
schemes under the legislations applicable to their organisations and the second type of role
played by the employers is undetaking of various welfare activities for the benefit of workers
and their family members on voluntary basis without any statutory stipulations. The latter one
really reveals the employer’s commitment for the welfare of workers.
Centre for Distance Education 15.2 Acharya Nagarjuna University

15.3. Early Efforts of Employers in Welfare work

Some employers have started welfare programmes for the benefit of the workers and
their family members even in the earlier stages of industrialisation in India. In 1915 Calico
Mills at Ahemedabad appointed a doctor and nurse to look after the health of workers. It
opened a crèche and amaternity home for the benefit of women wardens. MissAnasurya
behen Sarabhai started a network of labour welfare activities in 1917 in Ahmedabad workers
education, sanitation, medical relief and developing habit of thrift, saving etc. were
undertaken by her.

Tatas started a Medical Unit in one of their mills in Bombay in 1918. Delhi Cloth
Mills started construction of houses for workers in 19150. The Birla Mills in Delhi started a
school. The British India Corporation in Kanpur, the Binny Group of Mills in Madras, the
Empress Mills in Nagapur and the TISCO in Jameshedpur undertook various labour welfare
programmes in the early 19150s. The Royal Commission on Labour ( 1931) has testified the
usefulness of these programmes. Thus some employers started taking more interest in the
labour welfare activities.

15.4. Labour Welfare work by Employers in major Industries:

The labour welfare work undertaken by the managements can be studied industry-
wise. An attempt is made to analyse the welfare work done by employers in major industries
such as Cotton, Jute, Iron and Steel, Sugar, Cement, Railways, Ports and docks, Mines and
Plantations.

15.5. Role of Trade Unions in Labour Welfare

The primary function of a trade union is to promote and protect the interests of its
members. It has to work to better the terms and conditions of employment and generally to
advance their economic and social interests so as to achieve for them a higher standard and of
living. Welfare activities like organizing mutual benefit societies, co-operatives,
unemployment assistance, libraries, games, housing and cultural programmes are some of the
aspects on which the unions work. Education of its members in all aspects of their working
life, including improvement of their working and living environment, are some of the
programmes under taken by the trade unions. The important basic functions of Trade Unions
listed by NCL are:
i) To secure for workers fair wages
ii) To safeguard the job security and to improve the conditions of service,
iii) To enlarge for promotion and training.
iv) To improve the working and living conditions.
v) To provide for educational, cultural and recreational facilities,
vi) To co-operate in and facilitate the technological advancement by broadening the
understanding of workers on its underlying issues,
vii) To promote identifying the interests of the workers with their industry.
viii) To offer responsive co-operation in improving the levels of production and
productivity, discipline and high standard of quality and generally to promote
individual and collective welfare.

15.5.1. Function
Thus, while a union will function in the interests of its members, it should also accept
the scocial responsibility. Unions have to make a special effort in understanding the interests
of the community as a whole. It is being widely suggested that the unions should seek to
harmonize the
Agencies of Labour Welfare 15.3 Industrial Social Work

sectional interests of their members with the larger interests of the society. This aspect of the
role of unions in a developing economy has been emphasized in the Five Year Plans. In India
trade unions have been associated with the India’s independence movement. They were
usually associated with planning commission, tripartite bodies at the central and state levels
in the formulation and implemention of labour programmes.

Effective fulfillment of the traditional role will enable trade unions in promoting to
some extent the social welfare and social life of its members. At times the trade unions create
serious problems to the growth of national ecomic development at large and organisations in
particular. The views of trade unions should be changed and should think objectively about
the issues and by judging the issue and they should react and object by resorting to their own
means. Thus the unions should take into consideration the interests of the
organization/industry and of the national economic systemon priority basis. In representing
and deciding any issue they should resort to collaborative / consultative style rather than to
conflict style. This will not reduce or eradicate their main role for job security, higher wages
or better living conditions but their image will goup and the management, will also try to
resort to soft appraoch whenever the union approaches with a request.

15.5.15. Responsibility
The social responsibilities of the unions are:
a) To educate the rank and file workers so that the traditional agitational role will be
gradually transformed into one of understanding and co-operation.
b) To keep the well-being and progress of society constantly by refraining from resorting
to unnecessary strikes, work stoppages, go slow, intimidation etc.,
c) To promote the interests of the consumer while discussing and agreeing in bipartite
meetings.
d) To work for the countries economic development by maximizing production and
producing a quality product.
e) To promote for national integration by inculcating the spirit of oneness.
f) To work for the interest of the community and industry by involving themselves in
socially
useful programmes.
g) To try to organise unorganised labour and try to uplift them frombondge, insecure jobs,
poverty etc.
h) To encourage and inculcate in the members the bahit of saving.
i) To support the technological change for the betterment and growth of the industry.
j) To start couselling centres to change addicted employees and solve family problems
etc.
k) To start research wings to update their knowledge when they sit around the bargaining
table.

The employees organise themeselves into Trade Unions primarily to protect and
further their own interests. The primary responsibility of trade unions is the wellbeing of their
members. The secondary responsibility of trade unions is internal democracy and industrial
peace. To achieve this, trade unions have to improve their internal administration, voluntary
discipline and conduct among members, instill trust, unity and loyalty towards union and
industry where they work, inclucate values and ethics, and importance of excellence. The
protection of the interests of the union members is restricted not only to a narrower sphere of
their jobs but also extends to a broader sphere to serve their members through the
establishments and promotion of cooperatives, cultural and welfare organisations and by
Centre for Distance Education 15.4 Acharya Nagarjuna University

helping them to utilize other social services provided by the community. Another social
responsibility of trade unions is in the area of making a common cause to fight all evils in
society i.e., economic, social and political. This brings a close relationship among the
members, union and society. The basic objective of a trade union is not simply limited in
obtaining highermonetary benefits to its members but it should try to emulate and extend its
hand in transforming relationship among the different groups in society. The trade unions can
act as a change agent to bring about social change and economic progress.

The planning commission reiterates that the trade unions have the vital and
constructive role in improving the quality of life of the workers. They should evince greater
interest in welfare programmes for their members such as education, literacy, health and
family planning and recreational and cultural activities. They can also promote personal and
environmental hygiene and a sense of thrift and savings. The respective ‘governments also
can consider encouraging such trade unions through financial and physical facilities. Such
involvement in constructive activities would help the trade unions in furthering the interests
of its members.

The responsibilities which the unions have to undertake for the community cannot be
discharged unless the members themselves are served better. The society has to discharge it
responsibility towards labour and the trade unions. The trade unionmovement cannot function
effectively unless the society ensures democratic rights and civil liberties to its members and
later to their economic and social interest. Thus the labour capital and society have common
interests which have to be satsified to ensure their servival and growth. If these common
interest are acknowledged by the three parties, it becomes easier for them to discharge their
responsibilities to each other in an atmosphere of harmony and mutual cooperation.

The conditions under which the trade unionism developed in India were not such as to
enable and encourage them to introduce schemes of labour welfare. Poverty of workers and
their reliance on outsiders who were mostly interested in the political issues of the day and
radical views of a section of leadership were not conductive to such activities on the part of
trade unions. Before independence the function of trade unions was relegated to the
background because of more urgent issues and because it was generally believed that in free
India the state would take appropriate steps to increase labour welfare. After independence,
the trade unions expect and demand that should do everything. It is interesting to note here
that in other countries in the early days of trade unionism, the trade unions were
concentrating on providing the welfare programmes for their members. But in India from the
very begining the unions are expecting and depending on the employers and government. In
our country there are some trade unions who have done considerable work. The most
prominent among them is theAhmedabad Textile LabourAssociation which is different from
themore common in unions in India. According to the Indian labourWork Book, 1985 the
most important work done by the Textile Labour Association, Ahmedabad is starting of
reading rooms, libraries, type writing classes, and women’s training classes in sewing and
embroidery in working class localities. It organises paediotric vaccination programmes for
children against tuberculosis, polimyelities, diptheria, whooping cough and tetanus. It
maintains a prenursery schools and organises sports, excursions, competitions and cultural
programmes. For the benefit of the workers, it runs a number of consumer cooperative stores
and cooperative credit societies. The workers also construct houses under the co-operative
bank - housing scheme, which they pay in installments.
Agencies of Labour Welfare 15.5 Industrial Social Work

In Indore, the Mill Mazdoor union runs labour welfare centres consisting of Bal,
Kanya and Mahila Mandirs. It organizes music, dances and social gathering. In the Balmandir
(Children’s section), education is provided and games are organised. In Kanya mandir (girls
section) importance is attached to elementary education, tailoring, knitting, spinning, training
in hygienic practices and care of children. The Mahila Mandir gives such lessons and training
to women workers. Night classes, a reading roomand a library are provided by the union,
which also arranges indoors and out door games for workers.

A few of these welfare amenities are provided for the workers by the Mazdoor Sabha
of Kaupur, the Railwaymen’s Union, the Indian Federation of Labour in U.P and the Assam
Branch of the Indian National Trade Union Congress. The Railwaymen’s union has provided
funds for retirement death, unemployment, sickness etc. They have also provided for life
insurance and legal defence. Further, they have organised cooperative societies. In U.P.,
nearly 48 labour welfare centres have been organised by the Indian Federation of Labour,
which under take different types of welfare activities. There are several unions whose work
has not been recorded by the concerned though they have done commendable welfare work
for their members, for eg. Visakhapatnam Port Employee’s Union (HMS Union) of VPT,
Visakhapatnam.

15.6. Role of the State in Labour Welfare

Labour Welfare may be defined as a total, social and relative concept which covers
intramural and extramural amenities and social security benefits extended to labour by
government, trade unions and voluntary organisations. The need for labour welfare is felt
more in our country keeping in view of productivity, efficiency, industrial peace, rapid
economic development and social development. There are different catagories of labour such
as industrial labour, agricultural labour, construction labour, contract labour, casual labour
etc. The present unit makes an attempt to examine the role of state in promotion of labour
welfare with special reference to industrial labour.

15.6.1. Role of State in Labour Welfare Before Independence

Labour Welfare is collective responsibility. As indicated in the above definition, state,
employer, trade unions and voluntary organisations are the main agencies in the promotion of
labour welfare. The role of latter two agencies is now-a-days negligible owning to many
factors. However state made constructive efforts in promotion of labour welfare. Historically
speaking, the workmen ‘s compensation Act (19153) is the first social security legislation.
The second world war gave impetus to labour welfare in India. The state, for the first time
introduced welfare schemes in the ordinance and ammunition factories to keepup morale and
to boost war production factories. This trend continued after the Second World War and some
legislative measures were adopted in the pre-independence period in 19415. The Central
Government appointed a labour welfare advisor and under him assistant labour welfare
advisors and welfare officers were appointed. In 1944, the Coal mines Labour Welfare Fund
was enacted. The Government also persuaded employers to increase the facilities provided to
workers.

15.6.15. Role of State in Labour Welfare after Independence

After independence labour welfare acquired a new dimension. The Factories Act
(1948) is the first comprehensive piece of legislation after independence. The welfare
philosophy of the state is reflected in the constitution of India. Article 38 states that the state
shall strive to promote the welfare of the people by securing and protecting as effectively as it
may a social order in which justice, social, economic and political shall inform all the
Centre for Distance Education 15.6 Acharya Nagarjuna University

institutions of the national life. In the light of the Directive Principle of State Policy, the state
is playing its role in promotion of labour welfare through:
a) Enactment of Labour Welfare Legislations.
b) Enforcement of the Legislations,
c) Five Year Plans and
d) Welfare Centres.

15.6.3. Enactment of Labour Welfare Legislations

The subject “Labour” is included in concurrent list of the constitution. Hence the
Union and the States can pass legislations on the subject. After independence the Government
India and respective State Governments have passed many legislations on labour. Some of
important legislations passed by the Government of India for promotion of welfare are as
follows:
Factories Act 1948.
Plantation Labour Act 1951
MinesAct 19515
Merchants Shipping Act 1958.
Motor Transport Workers Act 1961.
Dock Workers (Regulation of Employment) Rules 19615.
Beedi and Cigar Workers (Conditions of Employment) Act 1966.
Contract Labour (Regulation and Abolition) Act. 1970.
These legislations aim at providing health, welfare and safety of workers at the work spot and
to regularise the hours of work and leave with wages. Besides these central legislations, State
Governments passed certain labourwelfare legislations such as shops and commercial
establishments acts to provide welfare facilities to the workers employed in shops and
establishments of the respective states LabourWelfare funds are constituted under different
Central and State laws to provide medical, recreational, educational facilities etc. The Central
Government passed the following Social Security’s legislations after independence.
Employees State Insurance Act 1948
Employee’s Provident Funds and Miscellaneous Provisions Act 1961
Maternity BenefitAct 1961
The Payment of GratuityAct 19715
The Objectives of the laws is to provide social security benefits i.e., protection from
sickness, unemployment, old age, dependency and employment injuries.

15.6.4. Enforcement of Labour Welfare Legislations

The fruits of the legislations will be reached to the workers when they are property
enforced. The government appointed officers and deployed personnel to enforce different
labour welfare legislations. There is no uniform machinery to enforce all the labour welfare
legislations. These are enforced by both the Central and State Governments. For instance, the
enforcement machinery for factories, plantations, shops and commercial establishments etc.
is a part of labour administration of the State Governments. The Government of India
enforces the Mines Act. the Employee’s State Insurance Act and the Provident Fund Act are
enforced by statutory autonomous bodies i.e. E.S.I corporation, Provident Fund Organisation
respectively. Finally in this regard, we can say that Central Government enacts certain
legislations and enforces them directly. Some of the legislations are passed by Central
Government and enforced by State Governments. Another category of legislations are passed
by Central Government and enforced by statutory autonomous bodies. Beside, State
Governments enacts certain legislations and enforce them directly.
Agencies of Labour Welfare 15.7 Industrial Social Work

15.6.5. The five year plans

Five Year Plans reflect the State's concern for labour welfare. The first five year plan
(1951- 56) paid considerable attention to the welfare of working class. A provision of Rs.
6.74 crores was made in the plan. The plan stated that adequate provision has to be made for
the basic need of workers so as to enable them to remain in a state of health and efficiency. In
the Second Five Year Plan (1956-61) Rs.159 Crores was made for labour and labour welfare.

The Third Five Year Plan (1961-66) stressed the need for more effective
implementation of various statutory welfare provisions. The plan also recommended for
setting up of Co-operation Credit Societies and consumer's stores for industrial workers. An
amount of Rs. 71.08 crores was provided for labour welfare and craft men training.

The Fourth Five Year Plan (1969-74) provided for expansion of the E.S.I. Scheme.
For labour welfare programmes, a provision of Rs. 37.11 crores was made in the plan.

The Draft Fifth Five Year Plan (1974-79) provided an amount of Rs. 75 crores for
labour welfare including craft man training and employment service.

An outlay Rs. 161.9 crores was proposed for labour and labour welfare programmes
of the Sixth Plan period (1980-85). In Seventh Five Year plan (1985-90) an outlay Rs. 3,330
crores for social security where as in eight plan (19915-97) an outlay Rs. 13.15 (crores) for
Labour Welfare.

15.6.6. Welfare Centres

All most all states runs labour welfare centres. For instance during the year 1984,
Uttar Pradesh run maximum number (89) of labour welfare centres. Those centres provide
medical assistance, recreational facilities, indoor and outdoor games, cinema shows, radio,
educational facilities, schools for workers’ children, libraries, reading rooms, literacy classes,
training classes for women in crafts and cultural facilities. In some states the centres run
schemes for providing supplementary income for worker’s families.

15.6.7 The State as an Employer

Thus Central and StateGovernments play an important role in the promotion of labour
welfare. Besides this role, the State as an employer, providing various welfare facilities to its
employees. The Public Sector Undertakings such as B.H.E.L., O.N.G.C., H.P.C.L., etc., are
providing worthy facilities which are many steps above to the welfare provisions prescribed
under various Acts.

15.7. Role of Voluntary Agencies in Labour Welfare

The proceeding unit presented you a description of role of State in Labour Welfare in
India. In this unit an attempt is made to discuss the role of voluntary organisations in
promotion of labour welfare. This unit begins with the concept of voluntary organisation their
characteristics and functions and analyses their role in labour welfare programmes.

15.7.1. Labour Welfare Work done by Voluntary Organisations

As mentioned by B P Tyagi, there are voluntary social service organisations which
have interest in providing labour amenities to the workers.
Centre for Distance Education 15.8 Acharya Nagarjuna University

The Bombay Social Service League, started by servants of Indian Society, conducted
several activities, like promotion of education through night schools, libraries, recreation and
sports.

It has also secured compensation for accidents to workers, propagated the cooperative
movement, promoted poblic health and the boy scouts movement etc.

The Poona and Bombay Seva Sadan Societies have taken keen interest in providing
.educational, medical and social services to the women and children. They have also trained
social workers for this purpose.

In Bengal, Women’s Institute has established Mahila Samities which visit various
villages and carryon educational and public health work.

In Assam, the Government has continued the policy of encouraging the activities of
voluntary organisations like .Hindustan Mazdoor Sevak Sengh and Assam Seva Samity for
social, moral and economic welfare of the workers.

Besides, the YMCA, the Bombay Presidency Women’s Council, the Maternity and
Infant Welfare Association, the Depressed Classes Mission Society are some of the voluntary
social service agencies which have taken interest in the welfare work for industrial workers.

These agencies have made significant contribution in improving the standard of living
and working conditions of the workers and have made efforts in raising the minimum
standards prescribed by law.

The voluntary social service agencies can play a more significant role in the better
administration and utilisation of welfare services made available by the Government. The
proper operation of statutory provisions relating to welfare can only be ensured by a strong
public opinion, which inturn can be created by sustained efforts of voluntary organisations.
These organisations ‘ have also played a very significant role in the industrialised countries.

15.7.15. An Appraisal
From the preceding analysis, it appears that the role of voluntary agencies in
promotion of labour welfare is very less than that of other agencies of labour welfare. The
basic reason for this may be the labour welfare is not a priority area for them. When
compared to the other weaker sections of the society, the industrial labour is better
positioned. In addition to the above, the institutional factors like lack of dedicated leadership,
deterioration in quality of service, financial scarcity, inadequacy of trained personnel are
some other reasons for the limited role of voluntary agencies in labour welfare.

15.8. Summary
This unit provided you an analysis of role of the voluntary organisations in welfare
work. Voluntary organisations are those in which the membership is voluntary .to the
members and undertake various social services activities on their own. They have limited role
to play in promoting labour welfare. However the Bombay Social Service League, the Poona
and Bombay Seva Sadan Societies, Bengal women’s Institute etc., conducted several labour
welfare activities.
Agencies of Labour Welfare 15.9 Industrial Social Work

15.9. Self Assessment Questions

1. Examine the role played by the employer in Labour Welfare.
15. Explain the role of Trade Unions in Labour Welfare.
3. Describe the role played by the state in Labour Welfare in India.
4. Examine the role played by voluntary organisations in labour welfare programmes.
5. Define voluntary organisations. Mention its functions and critically examine their
role in Labour Welfare.

15.10. Further Readings

1. Vaid KN., Labour Welfare in India, Shri Ram centre for industrial relations, New
Delhi, 1970.
15. Pant, S C: Indian Labour Problems, Chitanya Publishing House, Al1ahabad, 1985.
3. Tyagi, B P, Labour Economics and Social Welfare, S V Nath, Meerut, 1994.
4. Sachdeva, B R, SocialWelfareAdministration in India, Kitab Mahal, Allahabad,
19915- 1993.
5. Government of India (1986), Minister of Labour, Indian Labour Year Book.

Prof. V. Venkateswarlu
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson-16
LABOUR WELFARE PROGRAMMES, STATUTORY & NON
STATUTORY, INTERNAL AND EXTERNAL

Objectives
After reading this unit, your will be able to:
 Classify Labour Welfare Programmes.
 Distinguish between intramural and extra mural labour welfare programmes
 Distinguish between statutory and non-statutory welfare measures.
 Describe statutory welfare measures under factories act, 1948.
 Understand non-statutory welfare measures undertaken by employers in India.

Structure
16.1. Introduction
16.2. Definitions
16.3. Importance of Scope of Various Statutory and Non- Statutory Agencies in India
16.16.1 Objectives of Labour Welfare
16.4. Classification of Labour Welfare Programmes
16.4.1. Intramural and Extramural Labour Welfare Programmes
16.4.1 (a) Intramural Labour Welfare Programmes
16.4.1 (b) Extramural Labour Welfare Programmes
16.5. Statutory and Non-statutory Labour Welfare Programmes
16.5. (a) Statutory Labour Welfare Programmes
16.5. (b) Non Statutory Labour Welfare Programme
16.6. Summary
16.7. Case Study
16.8. Key words
16.9. Self assessment questions
16.10. Further Readings.

16.1. Introduction
The preceding Units provided you information on various agencies of labour welfare
i.e., management, trade unions, State and voluntary agencies. This unit makes an attempt to
classify the labour welfare programmes and distinguish between intramural and extramural
welfare and statutory and non-statutory welfare measures. An attempt is also made in this
unit to describe some of the statutory and non-statutory Labour welfare activities.

Within classical economics and all microeconomics, labour is one of four factors of
production, the others being land, capital and enterprise. It is a measure of the work done by
human beings. There are macro-economic system theories which have created a concept
called human capital (referring to the skills that workers possess, not necessarily their actual
work), although there are also counterpoising macro-economic system theories that think
human capital is a contradiction in terms.

The term welfare suggests the state of well-being and implies wholesomeness of the
human being. It is a desirable state of existence involving the mental, physical, moral and
emotional factor of a person.
Centre for Distance Education 16.2 Acharya Nagarjuna University

Adequate levels of earnings, safe and humane conditions of work and access to some
minimum social security benefits are the major qualitative dimensions of employment, which
enhance quality of life of workers and their productivity. Institutional mechanisms exist for
ensuring these to workers in the organised sector of the economy. These are being
strengthened or expanded to the extent possible. However, workers in the unorganised sector,
who constitute 90 per cent of the total workforce, by and large, do not have access to such
benefits. Steps need to be taken on a larger scale than before to improve the quality of
working life of the unorganised workers, including women workers.

Labour Welfare means working out things for the well-being of the labours. Knowing
there wants and enabling them to fulfill their wants.

16.2. Definitions
1. Oxford dictionary: Labour welfare means efforts to make life worth living for workmen.
2. R.R. Hopkins: Welfare is fundamentally an attitude of mind on the part of the
management influencing the methods by which management activities are undertaken.

16. The Encyclopaedia of Social Sciences: Labour welfare is the voluntary efforts of
employer to establish within the existing industrial system, working and sometimes living
and cultural conditions of the employee beyond what is required by law. Labour welfare is
the key to smooth employer-employee relations. In order to increase labour welfare,
employers offer extra incentives in the form of labour welfare schemes. They also try to
pursue workers to accept mechanization. Sometimes the employers to combat the influence
of outside agencies on their employees use labour welfare as a tool to minimize the effect
they may have on the labour. Labour welfare measures are also initiated with the view to
avoiding payment of tax on surplus and to build up at the same time better relations with
employees.

16.3. Importance of Scope of Various Statutory and Non- Statutory Agencies in India
With the increase in industrialization and mechanization, labour welfare has obtained
a greater importance. A contented and satisfied work force is a plus point for the industrial
affluence of any nation. Labour welfare is nothing but the role of preservation of employee
satisfaction in the sense, which is directed specifically for the preservation of employee
health and attitudes resulting in the maintenance of employee morale.

16.3.1 Objectives of Labour Welfare

Labour welfare programs may have multiple objectives. The main concern of labour
welfare is humanitarianism which can be also coined as internal social responsibility, which
is a feeling of apprehension and caring by providing the basic facilities, besides the
fundamental pay package. Such caring is made-up to put up a sense of allegiance on the part
of the employee towards the business. The humanitarian approach has given way to a more
practical utilitarian approach. The utilitarian approach views investment in welfare through a
financial structure where the probable cost advantage to the organization adds better concern
through better or faster services from the employees.

The importance of labour welfare activities in India has been recognised very recently
by the employers, government and other agencies, though the progress in this direction is
very slow.
The labour welfare activities are organised in India by the following agencies:
 The Central Government
Labour Welfare Programmes 16.3 Industrial Social Work

 The State Governments

 The Employers
 The Trade Unions
 Other Agencies
The importance of labour welfare work in India can easily be realized if we look into
the working conditions of the labour class in Indian industries. India, an industrially
backward country, is in its developing stage.

The place of labour in industries in India is not recognised. The principles of

personnel management and industrial relations have not been developed in India except in
few big industrial units. Commodity concept of labour still prevails in the country. Thus, the
scope of labour management relations has not been much widened in India while in western
countries; the labour is regarded as the partner in the affairs of the industry. The attitude of
employers is sympathetic to workers in western countries and provides various welfare
facilities as a measure to improve industrial relations and better working conditions.

The money spent on labour welfare work by the employer is bound to react directly or
indirectly to their own benefits and to the direct benefit of the employees. If work conditions
are improved, it will certainly improve the health and efficiency of the workers and which in
turn, increase the production and the productivity of workers. The employer may contribute
something towards the amenities of the workers to which the employees spend nothing in
India because of their poor financial condition. Labour welfare activities may ensure the
employer a stable and contented labour force, lower absenteeism and labour turn over. These
results may not have been achieved if the benefits are extended in the form of cash wages,
because it may be spent on drinking, gambling and extravagance. It seeks to promote a
better standing between the employer and the employees.

16.4. Classification of Labour Welfare Programme

The Labour Welfare Programmes may be classified broadly into two categories. On
the basis of place of welfare Work, they may be classified into intramural welfare
programmes and extramural welfare programmes. On the basis of law, the welfare
programmes may be classified into statutory and non-statutory welfare programmes.

16.4.1. Intramural and Extramural Labour Welfare Programmes

The Welfare facilities provided within the organisation for the benefit of workers are
called as intramural welfare facilities. The welfare facilities provided outside the organisation
for the benefit of workers and their family members are known as extramural welfare
facilities.

16.4.1. (a) Intramural Labour Welfare Programmes

According to a committee of Experts on Welfare facilities for industrial workers,
constituted by the ILO in 19616, the following are intramural labour welfare facilities.
1. Latrines and Urinals
2. Washing and Bathing facilities
16. Creches
4. Rest Shelters
5. Canteens
6. Arrangement for drinking water
7. Arrangement for prevention of fatigue.
8. Health services including occupational safety
Centre for Distance Education 16.4 Acharya Nagarjuna University

9. Administrative arrangements to look after uniforms

10. Protective clothing
11. Shift allowances
In addition to the above, any welfare work undertaken within the precincts of the
establishment comes under intramural labour welfare programmes.

16.4.1. (b) Extra-Mural Labour Welfare Programmes

Welfare programme undertaken outside the organisation are extramural labour
welfare programmes. The following are some of the extramural welfare programmes as per
the classification of the ILO.
1. Maternity benefits
2. Social insurance measures including gratuity, pension provident Fund and rehabilitation,
benevolent funds.
16. Medical facilities including programmes for physical fitness and efficiency.
4. Family planning and child welfare
5. Educational facilities including adult education
6. Housing facilities
7. Recreational facilities including sports, cultural activities, library and reading rooms.
8. Holiday homes and leave travel facilities
9. Worker’s Cooperative Stores and Cooperative Thrift and Credit Societies
10. Vocational training for dependants of workers
11. Welfare Programmes for welfare of women, youth and children
12. Transport facilities.

16.5. Statutory and Non-statutory Labour Welfare Programmes

Labour welfare programmes can be classified as statutory and non-statutory welfare
activities. The welfare measures which are undertaken to implement the specific laws are
statutory welfare measures. For instance, according to Factories Act, 1948, canteen should be
provided by the occupier of the factory if it employed 250 or more number of workers. The
provision of canteen in a factory comes under this category. Non-statutory welfare measures
include all those activities which are undertaken for the welfare of workers on voluntary basis
without any statutory compulsion.

16.5. (a) Statutory Labour Welfare Programmes

Factories Act 1948, Plantation Labour Act 1951, Mines Act 1952, Motor/Transport
workers Act etc., include certain provisions for the welfare of the workers. The following are
the statutory welfare facilities under the factories Act, 1948.

1) Washing Facilities: The management has to provide washing facilities for the workers.
Separate facility must be provided for the male and female workers. Such facilities must be
situated in the easily accessible places.

2) Facilities for storing and drying of clothes: Under the Factories Act, Section - 416, the
occupier of the factory must provide facility for storing of cloths not worn during working
hours. Facilities for drying cloth are also to be provided.

16) Facilities for sitting: Section 44 of the Factories Act Stipulates that where the workers
have a chance for sitting while doing, they must be provided sitting facilities. For the workers
whose work requires to stand, sitting facilities must be provided to the workers to sit during
the intervals.
Labour Welfare Programmes 16.5 Industrial Social Work

4) First Aid Appliances: Section -45 of the factories Act stipulates that in every factory first
aid boxes must be provided for the workers. The first aid box must consist of prescribed
contents. These boxes shall be under the in charge of a trained person in first aid. Ambulance
Room with qualified medical personnel must be provided if there are 500 or more workers.

5) Canteen (Section - 46): The occupier of the factory has to provide canteen, where in more
than 250 workers are employed. The State Government may make rules regarding canteen
constructions, constitution of canteen committee and the items of expenditure in running of
the canteen.

6) Shelters, Rest Rooms and Lunch Rooms (Section - 47): In every factory where 150
workers
are employed adequate and suitable rest shelters or rest rooms and lunch rooms with
provision of drinking water shall be provided. They shall be sufficiently lighted and
ventilated and be maintained in clean condition.

7) Creche (Section - 48): In every factory where in 160 women workers are employed they
shall be provided and maintained creche for use of children under the age of 6 years of such
women. The creche shall be adequately lighted and ventilated and maintained in a clean and
sanitary condition and shall be under the charge of women trained in child care.

8) Welfare Officer: (Section - 49): In every factory where in 500 or more workers are
employed
the management shall appoint a welfare officer. The State government makes rules regarding
qualifications, duties and employment conditions of the welfare officer.

The above are the statutory welfare provisions under the factories Act 1948. Besides
the above, educational facilities for children, housing facilities and recreational facilities are
statutory welfare provisions under the Plantation Labour Act, 1951. However these facilities
are non- statutory facilities in factories and mines.

16.5. (b) Non Statutory Labour Welfare Programme

The facilities provided by the management without legal obligation are. Non-statutory
welfare facilities. The following are different non-statutory welfare facilities provided by the
employers voluntarily. Hence these programmes are also called as voluntary welfare
measures.
1) Housing Facilities: Many organisations recognised the importance of industrial housing.
Besides provision of accommodation for the workers such facilities reduces the rate of
absenteeism and turnover. Hence some generous managements provide housing facility for
the workers on voluntary basis. Government is also extending subsided housing facilities for
the industrial workers. The management of TISCO, L & T, B.H.E.L., H.A.L. etc. provide
good housing facilities for their employees.

2) Educational Facilities: The provision of educational facilities for workers and their
children is a social service of great importance in India. Many employers provide children
educational facilities such as school and colleges. Employers provide such facility and
reimburse the cost of books and institute scholarships for deserving candidates. BHPV,
Hindusthan shipyard Limited,
Visakhapatnam Steel Plant etc. provide children educational facilities.
Centre for Distance Education 16.6 Acharya Nagarjuna University

The management sponsors some of the workers to the workers education centres. The
workers are trained as worker teachers. The worker teachers take unit level classes for the
workers. Besides workers education, management gives financial assistance to improve the
qualifications of workers.

16) Recreational Facilities: Recreational facilities give relief from monotony and drudgery
of the
workers. The recreational facilities provided by different management may be classified into
(I) recreation club, (2) cultural programmes and (16) games and sports. The workers may
become members in recreational clubs. These facilities are also extended to the family
members of the workers. TISCO, Telco, Air India, Hindusthan Liver, Indian Railways and
Defense Services are
some examples for provisions of recreation facilities to the employees.

4) Transport Facilities: The growth of Industries outside the cities has made the problem of
transport system. The fatigue of travel to and from the work place has an effect on the
attendance of the workers. Hence the employers are providing transport facilities for the
workers to and from the work place. This facility is also extended by some employers for the
school going children of the workers.

5) Medical Facilities: Generally the workers are covered under E.S.I. Act 1948. But there are
some organisations which provide medical benefits more than the benefits extended by the
E.S.I. Corporation. Some companies are running full pledged hospitals with modern medical
equipment and qualified medical officers. The medical facilities are extended to the workers
as well as their family members.

6) Cooperatives: Some managements are providing different forms of Cooperative facilities

to the benefit of workers. The Cooperative planning committee defined the cooperation as a
form of organisation in which persons voluntarily associate together on the basis of equality
for the promotion of their economic interests. It is based upon the following rules. (1)No one
is compelled to join in a Cooperative Society, (2) The management of Cooperative society is
democratic, (16) It is based on self help through mutual help, (4) It is not an association of
selfish individuals. (5) It is not simply a movement of economic betterment but to develop
higher values of life. Cooperative stores and Cooperative Credit Society are two forms of
Cooperatives.

Cooperative Stores:
The objectives of Cooperative stores are:
1) To provide good quality of food grains, cloths and all necessary articles at reasonable
prices i.e., lower than the market price.
2) To protect the consumers from the middle men and adulteration of products.
16) To protect factory workers from clutches of the money lenders and to inculcate the habit
of savings.
4) To develop habits of mutual aid and
5) To strengthen the public distribution system.

Cooperative Credit Society: The members of the Cooperative Credit Society get loans for
the purpose of house construction, children education, marriage etc. The interest on the loans
are reasonable. This is also to inculcate the habit of thrift and savings.
Labour Welfare Programmes 16.7 Industrial Social Work

16.6. Summary
This Unit offered you the classification of labour welfare activities. The welfare
activities undertaken within the premises of the establishment are intramural labour welfare
facilities and the welfare activities undertaken outside the establishment are extramural
labour welfare facilities. The facilities provided to the workers as per the legal obligations are
statutory welfare measures and the facilities provided on voluntary basis without any legal
compulsion are non-statutory or voluntary labour welfare measures. Washing facilities,
facilities for storing and drying of cloths, facilities for sitting, first aid appliances, canteen,
shelters and rest rooms, creche etc. are statutory welfare provisions under the factories Act,
1948. Housing, education, recreation, transport, medical facilities, Cooperatives etc. are non-
statutory welfare measures provided for the benefit of workers and their family member.

To conclude, the labour welfare has great significance in the industrial development and
financial system of a country. Labour welfare is nothing but the role of safeguarding of
employee happiness, by concentrating particularly for the protection of employee health and
attitudes ensuing in the upholding of employee morale. It’s seen that the Labour welfare
programs have a lot to do through their multiple objectives. The attempt is made to create a
feeling of apprehension and caring by providing the basic facilities, besides the fundamental
pay package. It’s seen that such caring is often made-up to put up a sense of loyalty on the
part of the employee to the business. The investment in employee welfare through a financial
composition where the possible cost benefit to the organization adds enhanced concern
through better or quicker services from the employees. The labour welfare activities in India
are organised by the Central Government, the State Governments, employers, trade unions
and other agencies.

16.7. Case Study

Ramsagar, working in a nationalised Bank at Bombay was promoted as an officer and
transferred to Pune .He had 10 years’ experience in this bank and this was his first transfer
after his marriage which was 5 years back.

His wife Sharada was working in Sreerangam engineering which was a Pvt. Ltd Firm.
Ramsagar’s promotion and transfer was not happily accepted by the family as Sharada was 6
months pregnant. Sharada applied for maternity leave which was granted along with all the
statutory benefits. Her company also allowed extra Rs. 5000 as medical care.

Ramsagar who joined the Pune branch applied for a paternity leave for 16 weeks pointing out
that he has to look after the health of his wife .The branch manager forwarded the application
to head office with adverse comments and it was referred for a legal advice by the general
manager. Finally Ramsagar got the leave.
1. Comment on the employee welfare attitudes of both husband and wife’s employers?
2. If you were the Manager of Ramsagar what would you do?

16.8. Key Words

Intramural Welfare Programmes: The benefits provided to the workers within the
organisation are intramural labour welfare facilities.

Extramural Welfare Programmes: The facilities provided to the workers and their family
members outside the orgnisation are extramural welfare facilities.
Centre for Distance Education 16.8 Acharya Nagarjuna University

Statutory Welfare Measures: The Welfare facilities extended to the workers because of
legal enactments are statutory welfare facilities.

Non-Statutory Welfare Measures: The welfare facilities extended to the workers without
any statutory compulsion and on voluntary basis are non-statutory welfare facilities.

16.9. Self Assessment Questions:

1. Classify and discuss various welfare programmes extended to the workers.
2. Examine the statutory welfare measures under the Factories Act, 1948.
16. Briefly explain the non-statutory welfare measures adopted in India.

16.10. Further Readings:

1. Sarma A.M: Aspects of Labout Welfare and Social Security, Himalaya Publishing
House,
Bombay, 1985.
2. Labour Problem and Social Welfare in India, Mamoria, C. B., Kitab Mahal, 1966.
3. Labour Welfare and Social security, Kohli, A. S. and Sarma S. R., Anmol
Publications Pvt. Ltd., 1977.
4. Labour Welfare, Trade Unionism and Industrial Relation, Punekar, S. D., Himalaya
Publishing House, 1978.

Prof. K. Dhanalaskmi
Chairperson, BoS, PG
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson-17
ROLE AND FUNCTIONS OF WELFARE OFFICER-
ROLE OF SOCIAL WORKER IN INDUSTRY
Objectives
When you have completed this lesson you should be able to understand the following.
 Requirement of the Welfare Officer under various Acts.
 Qualifications and appointment of the Welfare Officers.
 Duties or functions of the Welfare Officer.
 Observations of National Commission on Labour.

Structure
17.1. Introduction
17.2 Requirements for Welfare Officer under various Acts
17.2.1. Factories Act, 19178
17.2.2. Mines Act, 1952.
17.2.3. Plantation Labour Act, 1951.
17.2.4. Merchant Shipping Act, 1958
17.3. Qualifications of welfare Officer.
17.4. Duties of a Welfare Officer.
17.5. National Commission on Labour Observations.
17.6. Role of Labour welfare Officer in Industrial Relations.
17.7. Self assessment Questions
17.8. Further Readings.

17. 1. Introduction
In the early days of industrialisation, the industrial undertakings recruited workers through
middle men. His functions include recruitment of workers, disciplining of workers and
controlling of workers. They are known by different names in different industries for example
'Mukadams' in the engineering industries, 'Sirdars' in plantation industries and 'Jobbers' in
textile industries. This system continued up to First World War period. The British
Government appointed a commission in 1931 to report on the condition of workers in India.
The commission which was popularly known as Royal Commission on Labour was appointed
to study and recommend for abolition of the above system. The committee recommended that
a person with the qualities of integrity, personality, gift of understanding people and requisite
affinity be appointed as Labour Officer and who's duty shall include recruiting, disciplining
and looking after the welfare of the workers.

Thus the main objective for recommending the institution of Labour Officer is to
eliminate prosecutions methods adopted by the middlemen. In those days the labour officer's
functions include maintenance of law and order in an organisation. The cotton mills, textile
mills and jute mills started employing labour officer. The Labour investigation Committee
(19176) also recommended for the appointment of Labour Officers in all Industries.

During the pre-independence days some labour acts were enacted to make welfare
measures compulsory in factories, Mines etc. Further, cash and medical benefits were
provided in case of accidents for example, workman compensation Act, 1923. Thus the
labour philosophy in India has changed from policing to welfare and consequently the
institution of Labour Officer has changed to Labour Welfare Officer. The welfare function
Centre for Distance Education 17.2 Acharya Nagarjuna University

include provision for both statutory and non-statutory welfare measures and the non-statutory
functions are voluntary in nature.

17.2. Requirement for Welfare Officer under Various Acts.

The statutory law requires for appointment of Labour Welfare Officers in the
industrial establishments where the number of employees employed are more than a specified
number. The different Acts under which a labour welfare officer has to be appointed are
discussed below.

17.2.1. Factories Act, 19178

The Factories Act, 19178 stipulates for appointment of Labour Welfare Officer.
Section 179 and clause (i) says "Officers with the duty to look after the welfare of the
workers are required to be appointed by the occupier of every factory with more than 500
workers". The clause (ii) of the same section says "the Government by rules may prescribe
the qualifications and conditions of service of this welfare officer’s". Further, the
Government may by rule exempt any factory or class of factories from the compliance with
the above provision.

17.2.2. Mines Act, 1952

The Mines Act, 1952 requires that every occupier of a mine to appoint welfare officer
under section 58 clause (q) the welfare officer is to be appointed in every mine where 500 or
more workers are employed. The appropriate state government shall frame qualifications,
duties and service conditions of welfare officers.

17.2.3. Plantation Labour Act, 1951

The Plantation LabourAct, 1951 requires the employer under section 18 clause (i) to
appoint welfare officer in a plantation where 300 or more workers are employed and under
clause (ii) the appropriate state government shall frame qualifications, duties and serve
conditions of the Welfare Officer.

17.2.4. Merchant Shipping Act, 1958

The appropriate government may recommend for appointment to Seamans Welfare
Officer. The qualifications, duties and service conditions are to be laid by the appropriate
government.

All the above Acts requires the State Government to frame the necessary rules and
guidelines for appointment of Welfare Officers. The Central Government has framed Model
Rural prescribing qualifications, duties and conditions of services of Welfare Officer under
each of the above Acts.

17.3. Qualifications
The Model Rules framed by the Central Government prescribed the following
qualifications for Welfare Officers. The qualifications laid by model Rules for under each of
the above acts are:

1. Factories: Adegree recognised by the state government and degree or diploma in Social
recognised by the state Government and knowledge of the local language.

2. Mines: A degree recognised by the State Government and degree or diploma in Social
Science preferably in Social Work or labour welfare and knowledge of the local language.
Role and Functions of Welfare… 17.3 Industrial Social Work

3. Plantation: A degree recognised by the State Government, degree or diploma in social

science and knowledge of the local language is a must.

Further, each State Government has framed their own rules based on guidelines and
odel Rules for each of the Act. The Labour Welfare Officer must necessarily know the local
language i.e. the language understood by majority of the workers.

17.4. Duties of a Welfare Officer

The factories Act, 19178 has framed the following duties under the Model Rules for a
Welfare Officer :
1. To supervise the safety, health and welfare programs.

2. To advise management on matters related to labour welfare programs, policies and

procedures.

3. To personally counsel the workers in matters related to their personal and family problems.

17. To maintain liaison with government agencies, management and workers.

5. To maintain and advise on measure to be taken for promotion of peace and harmony in the
industry.

However, the Moedl Rules of each Act has framed separate duties for welfare officers
and the State Governments has framed rules under the powers conferred to it by the Central
Acts. The duties of a Welfare Officer framed by Government of Maharastra are;
1. To establish contacts and hold consultations with a view to maintaining, harmonious
relations between the management and workers.

2. To bring to the notice of factory management, the grievances of workers, individual as well
as collective, with a view to securing their expeditious redressal and to act as Liasion Officer
between the management and labour.

3. To study and understand the point of view of labour in order to help the factory
management to shape and formulate labour policies and to interpret these policies to the
workers in a language they can understand.

17. To establish and maintain liaison with the government agencies like inspector of factories
etc.

5. To see whether obligations both statutory otherwise concerning the application of the
provisions of the Factories Act, 19178 and the rules made there under are fulfilled or not.

6. To advise on the fulfillment of medical services concerning medical examination of

employees, health records, supervision of hazardous jobs, accident prevention and
supervision of safety, educating workers on safety, maternity benefits and workmen's
compensation.

7. To advise workers against anti-social and anti-legal activities.

8. To maintain impartial attitude.

Centre for Distance Education 17.4 Acharya Nagarjuna University

9. To takemeasures formaintenance of peaceful and harmonious relations between

management and workers.

10. To encourage workers participation in management and for formation of various statutory
and non-statutory committees like welfare committees, safety committee, works
committee, quality circles, co-operative societies, thrift societies and joint management
councils.

11. To advise management in fulfilling the statutory and non-statutory welfare provisions
such as canteens, shelter for rest, creches, latrines and urinals, drinking water, recreational
facilities, transport etc.

12. To help employees in payment of benevolent and sickness benefits, pension, gratuity and
other retirement benefits.

13. To help the factory management in regulating the grant of leave with wages and explain
to workers the provisions relating to leave with wages and other leave privileges and to
guide the workers in the matter of submission of applications for regulating authorised
absence.

117. To advise the management in maintaining accident free environment where there is no
safety officer.

15. To advise the factory management on training apprentices, workers on transfer and
promotion, supervision and control of notice board and information bulletins.

17.5 National Commission on Labour Observations

The National Commission on Labour (1969) has made the following observations on the post
of Welfare Officer.
1. The Subject of Welfare is not being given enough importance.

2. There is no demarcation between personnel functions and welfare functions.

3. The welfare officers should not be allowed to handle or negotiate with workers on terms
and conditions of service.

17.6. Role of Labour Welfare Officer In Industrial Relations

The labour welfare officer has an important role to play inmaintaing harmonious and
peaceful industrial environment. The government has identified the importance of labour
Welfare. A happy worker is a productive worker. In framing model rules, the Central
Government has laid emphasis on the institution of labour welfare officer in maintenance of
harmonious industrial relations. The role of labour welfare officer in maintenance of
industrial relations may be divided into :

1. Redressal of grievances 2. Administration of standing orders

3. Peaceful settlement of disputes 17. To strive for harmonious labour-management

relations.
Role and Functions of Welfare… 17.5 Industrial Social Work

1. Redressal of Grievances: The labour welfare officer is excepted to identity and solve the
grievance of employees. The labour welfare officer has to meticulously identify and
distinguish between personal and family grievances with that of work related grievances. The
model grievance procedure should be amended and labour welfare officer should be held
responsible for redressal of grievances at the first stage. If not solved, he can take up
thematter with employer. The labour welfare officer has also a major role to play in personal
counselling, exit interviews etc. The labour welfare officer is expected to speak with workers
in a language understood by majority.

2. Administrations of Standing Orders: The administration of standing orders a Critical

task. The interpretation of standing orders often manifest in industrial conflicts. The labour
welfare officer is required to provide themeaning of standing orders andmake aware to each
employee the do's and not's. This helps in maintaining proper industrial relations.

3. Peaceful Settlement of Industrial Disputes: The labour welfare officer is expected to

make use of his good offices during industrial disputes and negotiate with unions for peaceful
settlement.

17. To Strive for Harmonious Labour-Management Relatins: The labour welfare officer
is expected to maintain laison with labour unions and employer's. He can hold consulations
with unions and employer's to explore the means for maintaining harmonious Labour-
Management relations and elicit views of various organisations associated with Labour
Welfare. The view expressed by them are :

1. The employers shall deposit the pay of Welfare Officer with the government and the
government shall pay the amount to labour welfare officer.

2. The personnel and welfare functions should be clearly separated and the office of welfare
officer should be statutorily protected.

3. The Welfare Officer shall be statutorily protected so that he may give his independent
views without fear. The welfare officer should not act as a tool in the hands of
management.

17. The labour welfare officer should not be allowed to do prohibited functions like, to
appear in law courts on behalf of the management, to take disciplinary action against the
workers. The Acts should be amended in this regard.

5. The labour welfare officer is paid by the management and his performance is appraised by
the same management and therefore he cannot maintain neutrality and the concept is
meaningless.

17.7. Self Assessment Questions

1. Discuss the role of Labour Welfare Officer under the various Acts.

2. Labour Welfare Officer is a middle man between the employer and workmen Justify.

3. Explain the necessity of labour welfare officer.

17. Discuss role of Labour Welfare Officer in Industrial relations.

Centre for Distance Education 17.6 Acharya Nagarjuna University

17.8. Further Readings

1. Vaid K.N. 'Labour Welfare in India', Shri Ram Centre for industrial relaions, New
Delhi, 1970.

2. Sarma, A.M., 'Aspects of Labour Welfare and Social Security, Himalaya Publishing
House, Bombay, 1997.

3. MoorthyM.V., 'Principles of LabourWelfare'

17. Report on the National Commission on Labour, 1969.

Prof. Saraswati Raju Iyer

Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson 18
INDUSTRIAL RELATIONS CONCEPTS, DEFINITION,
SCOPE & APPROACHES TO INDUSTRIAL RELATIONS
Learning Objectives

 To understand the objectives and key aspects of Industrial Relations

 To Know the scope of Industrial Relations
 To Learn the Forms of Industrial Relations
 To Study the Determinants of Industrial Relations
 To Identify the Perspectives of Industrial Relations
Structure
18.0 Introduction
18.1 Concept of Industrial Relations
18.2 Objectives & Key Aspects of Industrial Relations
18.3 Scope of industrial relations
18.3.18 Employer to Individual Employee Relationships
18.3.2 Labour Management Relations
18.3.3 Industrial Peace and Productivity
18.3.4 Industrial Democracy
18.3.5 Liaison Functions
18.4 Forms of Industrial Relations
18.4.1 Managing by Contending
18.4.2 Managing by Conceding
18.4.3 Managing by Colluding
18.4.4 Transformational Process Model
18.5 Determinants of Industrial Relations
18.5.1 Trade Union Density
18.5.2 Frequency of Strike Activity
18.5.3 Political-economic Institutions
18.5.4 Cultural Diversity
18.5.5 Demographic Structure
18.5.6 Pattern of Behavior
18.6 Perspectives of Industrial Relations
18.6.1 Equity and Fairness
18.6.2 Power and Authority
18.6.3 Individualism and Collectivism
18.7 Summary
18.8 Key words
18.9 Self Assessment questions
18.10 Suggested Readings

18.0 Introduction
The relationship between the employer and the employee is usually referred to as
industrial relations. The labour-management relationship is a highly sensitive and complex
Centre for Distance Education 18.2 Acharya Nagarjuna University

aspect influenced by a variety of factors. The nature of the industrial relationship in an

organization is determined by factors such as the organizational culture, the attitude of the
management, employee and unions, the condition of employment, the existence of a grievance-
handling system and dispute settlement procedures, and the efficacy of rules and regulations. As
a separate field of study, it is basically concerned with the systematic study of the various aspects
of the labour management relationship. An industrial relationship arises out of the continuous
interaction between the employers and the unions, which represent the employees. Thus, the
chief actors in industrial relations are the employers and the unions, and their main relationship is
through collective bargaining. Compensation-related issues, workload problems, retrenchment,
layoffs and similar issues can determine the degree of cordiality in the industrial relationship
collectively and individually.

The efficacy of industrial relations can be measured through the man-days lost due to
strikes, lock-outs and other forms of disturbances in the organization. Generally, the government
plays a proactive role in establishing harmonious industrial relations since labour-management
problems usually have a social dimension. It acts as a partner and a facilitator in the industrial
relations exercise of the organization. It contributes effectively to the establishment of harmony
in the industrial relations by enacting laws, formulating policies and participating in the
collective bargaining process and tripartite talks. It also acts as a conciliator or the third party in
dispute settlement forums. The terms industrial relations, employee relations and labour-
management relations are used interchangeably by the organizations while dealing with the
employer-employee relationships in the organizations. The protection of the manual interests of
the employees and the employers is the essence of the definitions of industrial relations.

18.18 Concept of Industrial Relations

 To understand the objectives and key aspects of Industrial Relations
 To Know the scope of Industrial Relations
 To Learn the Forms of Industrial Relations
 To Study the Determinants of Industrial Relations
 To Identify the Perspectives of Industrial Relations
Let us examine the concept of industrial relations with the help of some definitions so as
to understand better the dimensions of the subjects.

In a work setting, those who offer their services are workers and those who utilize these
are the employers. Between them, there are interpersonal or individual relationships, and also the
relations between the two groups. Their economic interest primarily brings workers to work for
wages, and the employers hire their services as a factor contributing to production. Industrial
relations in any work situation go beyond these economic aspects and involve several elements
of human relationships in which one individual interacts and adjusts with the other, and one
group understands and cooperates with the other. It is equally likely that the relationship may
give rise to friction and conflict of interests.

One of the most comprehensive definitions which put industrial relations in a proper
perspective of human relationships is by J. Henry Richardson. He says, “Industrial relations are
the art of living together for purposes of production”. The parties involved in industrial relations,
i.e. the workers and the employers, have a common purpose – production. They willingly bind
Industrial Relations Concepts… 18.3 Industrial Social Work

themselves to work together. The most prominent feature of industrial relations is that it is an art
which the two parties learn by acquiring the skills of adjustment. Though this definition
highlights the interpersonal aspects of human relationships, it does not tell us about the
possibilities of conflicts which may result in interruptions in production and may call for control
by some other agency, such as the government. The workers as a group from trade unions, the
employers form their own associations and the state provides institutions for the regulation of
relations. The definition, however, does not mention these institutional aspects of industrial
relations.

The definition by Allan Flanders focuses attention on the institutionalization of the

relationship in which forums are created to regulate the relations. ‘The subject of industrial
relations deals with certain regulated and institutionalized relationships in the industry.’ Similar
emphasis on regulation and institution is noticed in the definition by H.A. Clegg. He observes:
“The field of industrial relations includes the study of workers and their trade unions,
management, employers’ associations and the state institutions concerned with the regulation of
employment”.

According to J. Henry Richardson, the regulation of relationship is from within, for the
parties have to learn to live together by a process of accommodation and adjustment. Both A.
Flauders and H.A. Clegg assign great importance to the role of institutions and to the regulatory
role played by the state/ government. According to Dale Yoder, industrial relations deal with the
problems which arise in the context of human relationships when the workers submit themselves
to being controlled by the employers. “Problems of human relationship arising from the sale of
services for a wage and working on the premises of employers and under their control form the
subject matter of Industrial relations.” This definition is significant, for it does not talk only of
adjustment and cooperation between the parties but rather draws attention to the problem which
arises due to conflict of interests between the workers and the employers. It is interesting to note
that industrial relations arise in the work setting where human beings engage themselves in
activities of production and strive to satisfy human wants by the flow of goods and services; but
they also create situations in which dissatisfactions – friction, conflict and adjustment and
cooperation – coexist.

Like a coin, it has two faces – cooperation and conflict. The relationship, to use Hegel’s
expression, undergoes change from thesis to antithesis and then back to synthesis. Thus, the
relationship starting with cooperation soon changes into conflict and after its resolution again
changes into cooperation.

This changing process becomes a continuous feature in industrial systems. The

relationship between labour and management is based on mutual adjustment on interests and
goals. It depends upon economic, social and psychological satisfaction of the parties. Higher the
satisfaction, healthier the relationship. In practice, it is, however, found that labour and capital
constantly strive to maximize their preferred values by applying resources to institutions. In their
efforts, they are influenced by and are influencing others.

Both of them augment their respective incomes and improve their power position. The
major issues involved in the industrial relations process are terms of employment viz. wages,
Centre for Distance Education 18.4 Acharya Nagarjuna University

dearness allowances, bonus, fringe benefits, working conditions, viz. leave, working hours,
health, safety and welfare; non-employment related situations such as job security, manning and
employment. Impact of work changes personnel issues such as discipline, promotional
opportunities and, among others, recognition of trade unions. However, in view of sharply
divided and vociferously pressed rival claims, the objective of labour and management are not
amenable to easy reconciliation. This is all the more so in view of the fact that resources are
limited. Be that as it may, the means adopted to achieve the objective which vary from simple
negotiation to economic warfare adversely affect the community’s interest in maintaining an
uninterrupted and high level of production.

The definition given in the Encyclopedia Britannica underscores the fact that industrial
relations cover both individual and collective relations. “The subject of industrial relations,
therefore, includes individual relations and joint consultation between employers and employees
at the place of work, collective relations between employers and their organization and the trade
unions, and the part played by the state in regulating the relations.” The definition has added one
more dimension of joint consultation to the subject of industrial relations. One aspect is that of
individual or interpersonal relationships among the workers and between the workers and the
employers. The other aspect pertains to consultation between the employers and the workers as a
process of adjustment. The third aspect is the institutionalized relationships directed towards the
regulation of relations. But in its wider connotation, Industrial Relations cannot merely be
confined to common labour management relations, or employer-employee relations. It is a
comprehensive and total concept, embracing the sum total of relationships that exist at various
levels of organizational structure. It connects relationships among workers themselves within the
class of employees, and relations among the managements within the managerial class. It
connects all types of intergroup and intra-group relationships within industry. Such relationships
can be both, formal and informal.

Industrial relations arise in any setting where somebody hires the work/services of
someone else by offering a reward. Industrial relations vary according to the scale or degree of
organization. At one end, relations may be personal and informal, as in the small-scale sector. At
the other end, industrial relations may be highly institutional, formal and conditioned by legally
prescribed structures and procedures. A composite of several influences, such as social, political
and psychological, which operate in the work setting, maybe termed as a framework of industrial
relationships between different participants in the context of a productive organization which has
an overall purpose of generating a surplus economic value. In terms of the setting, framework
and system, it is possible to comprehend the broader perspective or the complete environment of
industrial relations.

The system of industrial relations functions in the context of an environment consisting

of different sub-systems. It interacts with the environment and the environment influences the
functioning of the system. Changes take place within the system by way of ashift in ideologies,
in the values of the actors, the attitudes of an interaction among the performers; and also outside
the industrial relations system, in such other areas as technology, market, legal sanction, etc. One
of the characteristic features of the industrial relations system is its interactive nature. The
interactions take place among the various components and between the components and the other
sub-systems of the environment. As a result, both the harmony and conflict have to be
Industrial Relations Concepts… 18.5 Industrial Social Work

recognized and accepted as the end-product of the system. It may be said that when the parties
become responsible and discrete in the use of power, they learn to accommodate conflict.

The Scope of Employee Relations crosses the boundaries of organization and industries
and interfaces with society. It deals with social relationships in different walks of life and creates
collective social relationship – a social capital. It grows and flourishes or stagnates and decays in
accordance with economic, social and political conditions prevailing in a society and the policies
and legal framework made by the state to regulate it. The divergence in Employee Relations
systems is because of different economic, social, political, technological and cultural
environments of different societies. Environments exert tremendous influence on industrial
relations and, therefore, as Fox argues “organisational issues, conflicts and values are
inextricably bound up with those of society, at large”.

The present is only a part of a continuum linking the past with the future. Consequently,
current industrial relations owe much to their past and the participant’s goal and expectations for
the future. At the micro level, the time-context may be evident in two ways:

Today’s problem stems from yesterday’s decision and its solution will, as the
environments change, become a problem in the future, and The attitudes, expectations and
relationships manifest, led by the participants, are at least in part, the product of their past
individual and collective experiences. It is apparent that the State, with ever-increasing emphasis
on welfare aspect of governmental activity, cannot remain a silent and helpless spectator in the
economic welfare.

This is all the more necessary because they are required to protect the interests of public –
“the third party”. The legislative task of balancing the conflicting of interests in the arena of
labour management relations proves to be an extremely difficult one, in view of the mutually
conflicting interests of labour and management. The substantive issue of industrial relations is of
perennial nature and, thus, there can never be a “solution for all times to come”. There canonly
be broad norms and guidelines as criteria in dealing with issues of industrial relations.

Law plays an important role in shaping the structure of industrial relations. It represents
the foundations from which the present system and procedures flow to deal with the problems of
industrial relations.

New frontiers of Employee Relations are explored which views them as a

compositeresult of the attitudes and approaches of employers – and employees towards one
another with regard to direction and co-ordination of activities of an organization with minimum
of friction, with an animating spirit of cooperation and with proper regard for genuine well-being
of all members of the organization. Serious attempts are being made to change the attitude and
behavior of all concerned and generate positive culture and values – consultations, participation,
empowerment and communication – a structure conducive to the development of the desired
climate for workplace Employee Relations. Thus, Employee Relations are viewed as a positive
culture of working together for business excellence. The purpose of positive Industrial Relations
is not only to maintain Industrial Relations but to create an enabling climate to motivate people
Centre for Distance Education 18.6 Acharya Nagarjuna University

and make them committed to giving of their best by adopting the latest management practices
like Team Working, TQM, QCs, etc.

Industrial Relations do not have a shape of their own. These do not have a fixed level like
water. As water seeks its own level directed by the gravitational force of the market. Protective,
passive and slow-moving industrial Relations dispensation were developed to cater into the
needs of a controlled, regulated and protected market after independence in India and were still
continued till 18990. But the fierce globally competitive market demands an aggressive and
dynamic approach to Industrial Relations to cater to the highly demanding market imperatives
like international standards of quality, competitive pricing, quick responses, high flexibility in
working and fulfilling the ever-increasing demands of customers. This requires a highly flexible
and business-friendly industrial relations climate.

“All distinctive approach of employment management is the need of the hour which seeks to
achieve competitive advantage through strategic development of a highly committed and capable
workforce, using an integrated array of cultural, structural and personnel techniques.”
John Storey (18995)

In the 218st century, the business is the responsibility of both, the employee and
employer. Performance is the key driver of success, which will lead to survival. Labour relations
being a crucial management function of HRM, is essential to understand that in developing
workers as the integral part of the business management decisions, the biggest challenge that lies
with the HR professionals is to take up a developmental initiative in making the work-force more
accountable, committed as business partners. Though collective bargaining is a powerful tool in
maintaining peace and harmonious relationships, the approach needs to be reinvented as a
collective decision-making process rather than one of collective bargaining, rather it should be
based on business growth model which implies maximizing the profit ethically and distributing
the same proportionately among all the stakeholders. It is high time that organizations and unions
understood and took initiative in demolishing the management – worker barriers and developing
a mutual gain model to avail competitive advantage.

18.2 Objectives & Key Aspects of Industrial Relations

Industrial relations are not an ‘objective’ science. As Salamon argues, there are no simple
objective facts in industrial relations. This is not to deny the presence of important issues and
debates in industrial relations apart from those entangled with the conflictual/consensual
relationship of the participants. The loftier issues centre around such concepts as fairness/equity,
power/ authority and individualism /collectivism. Apart from the primary objective of bringing
about sound and healthy relations between employers and employees, industrial relations aim:
1. To facilitate production and productivity
2. To safeguard the rights and interests of both labour and management by enlisting their
cooperation;
3. To achieve a sound, harmonious and mutually beneficial labour-management relations;
4. To avoid unhealthy atmosphere in the industry, especially work stoppages, go-slows,
5. gheraos, strikes, lockouts; and
The state endeavors to correct, through effective industrial relations, an imbalanced
disordered and maladjusted social and economic order with a view to reshaping the complex
Industrial Relations Concepts… 18.7 Industrial Social Work

socio-economic relationships following technological and economic progress. It also controls

and disciplines the parties concerned and adjusts their conflicting interests. In this process it
protects some and restrains others, depending upon their situations.
According to Nair & Nair, the following are the key attributes of IR:
• The development of healthy employer – employee relations
• The maintenance of industrial peace and high productivity

The development and growth of industrial democracy Kirkaldy (18947), stated that
“industrial relations in a country are intimately connected with the form of its political
government; and the objectives of an industrial organization may vary from purely economic to
purely political ends. He divided the objectives of industrial relations into four categories which
are as following:

Improvement of economic conditions of workers in the existing state of industrial

management and political government, State control on industries for regulating production and
promoting harmonious industrial relations. Socialization or rationalization of industries by
making State itself a major employer Vesting of the proprietary interest of the workers in the
industries in which they are employed.

18.3 Scope of industrial relations

Given these overall goals and objectives, it is not surprising that the field is engaged in a
number of policy and operations-oriented activities. Some of this focus on the relationships
between the employer and individual employees, while others deal with management and other
organized labour groups. Still another area to which industrial relations activities contribute
significantly is that of overall industrial goals such as productivity, labour peace and industrial
democracy. Now, let us draw our attention to some of these:

18.3.1 Employer to Individual Employee Relationships

This relates to the focus areas of management in relation to policies and practices that
ultimately affect the productivity and well-being of their employees as individuals. With a view
to optimizing the interests of theemployer and those of employees, these comprise fields such as:
18. Wages and salary administration
2. Career prospects inclusive of planning and promotion
3. Retirement benefits and medical benefits
4. Discipline and redress of grievances
5. Training and Development
6. Counselling
7. Workers’ compensation, connected and related issues such as insurance

18.3.2 Labour Management Relations

Distinct from Employer-Employee relations in this area, which relates to relations
between the employer as a management body and its workers as a recognized group or set of
groups, Labour Management Relations covers rights, protocols and practices, often regulated by
a legal structure, related to –
18. Management (with concepts like ‘management rights’)
2. Formation and recognition of unions which represent the interests of the employees
Centre for Distance Education 18.8 Acharya Nagarjuna University

3. Collective agreements
4. The settling of industrial disputes
Through these bodies, management and labour negotiate and enforce the establishment of
welfare measures and benefit schemes. Another focus of labour-management relations is health
and safety regulations and programmes at work.

18.3.3 Industrial Peace and Productivity

One of the most important aspects of IR is to maintain industrial peace and, thereby,
increase productivity. It depends on the quality of the union management relations at workplaces.
In fact, proactive labour administrations of some countries have changed their focus from being a
law enforcer to a facilitator to maintain industrial peace. Rather than resolving strikes by union,
good IR means averting strikes through proactive interaction. Productivity is another important
area in which IR becomes significant. In the highly competitive area of global business,
maintaining high productivity is important for the survival of organizations. A few other areas of
focus for Industrial Relations are:
18. Upgrading technology and production methods
2. Securing employee commitment and cooperation in improving productivity
3. Minimizing ‘man days lost’ per year
4. The restraining and redevelopment of surplus labour

18.3.4 Industrial Democracy

The nature of the relationship between employees and management in the organization’s
decision-making process is central to the character and conduct of the industrial relations system
at the organizational level. Industrial democracy is also known as worker’s control (Salamon,
18998, p. 353). According to Salamon, this is a socio-political concept to philosophy of
industrial organization, which focuses on the introduction of democratic procedures to
restructure the industrial power and authority relationship within organizations. He further argues
that thereby it creates a system which involves‘ determination by the whole labour force of the
nature, methods and indeed purpose of production’. Salamon elaborates that the central objective
of industrial democracy is the establishment of employee self-management within an
organization, whose ownership is vested in either the employees or the state and whose
managerial function is exercise ultimately through a group, elected by the employees themselves.
This group has the authority over all decisions of the organization, including the allocation of
‘profits’ between extra wages and reinvestment.

18.3.5 Liaison Functions

In addition to the above, the IR function has also a liaison role within it. Those who are
responsible for the IR function in an organization have to play a key and central role in the
formulation of the industrial relations policy of the organization. This is at a conceptual and
policy level but there are other activities which take IR personnel out of the organization in the
likes of liaison with Government and Local Government authorities such as labour
officers/inspectors etc. participation in judicial and semi-judicial disputes settlements,
participation in labour conferences and so on.
Industrial Relations Concepts… 18.9 Industrial Social Work

18.4 Forms of Industrial Relations

The interaction among the stakeholders in Industrial Relations is characterized by a
certain ‘balance of power’. In highly regulated industrial relations environment, the State is
likely to be the dominant player. Similarly, in a market-driven economy, employers tend to
dominate as a result of the right to “hire and fire” in response to market exigencies. In a socialist
economy, trade unions tend to have a dominant role. In that process, industrial relations
degenerate into a dominance-submission syndrome in which the dominant stakeholder tends to
control. The management of industrial relations within the framework of culture of dominance
can take three forms:

18.4.1 Managing by Contending

Signifies that the stakeholders engage in a contest of will with the dominant stakeholder
holding the reins and steering the choice-making processes as well as choices. Pressure tactics
coupled with employment of leverages like litigations and direct action go hand-in-hand with the
reaction of the dominated to protect threatened interest.

18.4.2 Managing by Conceding

Indicates that the dominant stakeholder manages interactions with other less dominant
and dominated stakeholders by making concessions to buy peace on an ad hoc, situational basis.
A major ploy here is to adopt a ‘divide-and-rule’ policy.

18.4.3 Managing by Colluding

Denotes that the dominant stakeholder strikes up equations with individual stakeholder
representatives or with coalitions of stakeholders, through which, mechanism of choice making
as well as choices are influenced to favour the dominant stakeholder. The collusion character of
the interaction leads to the compromise of the interests of the less dominant stakeholder groups.

Within the framework of the culture of dominance, when change is sought, generally the
changes only of the dominant stakeholder. The culture of managing by contending or conceding
or colluding or a combination of any of those patterns remains unchanged.

Liberation for the dominated stakeholder is to become the dominant stakeholder, and so
the cycle of contending, conceding, colluding goes on.

And yet, it is possible to think of breaking out of this vicious cycle only if the interacting
stakeholders decide to change the culture of dominance and compliance to culture of dialogue
and mutuality. This is feasible only if an individual or a coalition of stakeholders change the
mode of choice-making from a contending-conceding-colluding orientation to a mutuality-based
cooperative orientation. This is possible through collaborative problem solving approach,
evidence of which is already available in various organization across the globe.

Managing by Collaborative Problem-Solving in the sphere of industrial relations choice-

making is, perhaps, the key to the development of a new ethos. The “dominant “stakeholder in
today’s deregulated environment is likely to be the Corporation and the onus is on corporation to
create a new ethos, revolving around collaboration and mutuality.
Centre for Distance Education 18.10 Acharya Nagarjuna University

18.4.4 Transformational Process Model

The Transformational Process Model is, in essence, a dynamic process in which the
Corporation continuously defines the environment and responds appropriately. It is a continuous
process of redefining the organization’s own core in relation to its internal stakeholders in order
to, not only remain in existence but also to change and able to grow.

This involves not only structural changes and systematic innovations but also involves
change of mindset and values of the interacting stakeholders in corporations. It is this broadening
of the scope of industrial relations management that opens up possibilities for this approach
which is basically a search for internal stakeholder congruence to energise the corporation for
strategic survival and growth in a fiercely competitive environment.

18.5 Determinants of Industrial Relations

Basically, the success of industrial relations depends on the nature of the relationship
prevailing among the actors of industrial relations. It also depends equally on the power equation
existing between the employers and the trade unions. The attitude of one party towards the other
and its strategies depend on its assessment of the strengths and weaknesses of the other party in
industrial relations. The power equation of the actors in the industrial relations is determined by a
combination of several factors. Some of the factors which influence the distribution of power
between employers and employees are:

18.5.18 Trade Union Density

When the unions are phenomenally strong in an industry, the power balance would be in
favour of the employees and the unions. In such a situation, the terms of industrial relations
would be decided by the unions.

18.5.2Frequency of Strike Activity

When the organization or industry reports a high number of strikes within a specific
period, the industrial relations would come under increasing strain. Depending upon the outcome
of the strikes, the power equation would change.

18.5.3 Political-economic Institutions

The role of politico-economic institutions is critical in achieving industrial peace and
harmony. When the political institutions, especially the ruling combine, overtly favour the
employees and the trade unions, the power equation would tilt in favour of the unions.

18.5.4Cultural Diversity
When there is cultural diversity among the workforce, it may favour the employers to
have divisions among the employees along cultural lines. The educated and enlightened
employees may make independent decisions, which may differ with the general stand of the
unions.

18.5.5 Demographic Structure

The presence of heterogeneous groups based on age, gender, income and other relevant
bases can also influence the power balance between employers and employees. For instance, the
organizations with a high proportion of women employees may witness low intensity in union
activity.
Industrial Relations Concepts… 18.11 Industrial Social Work

18.5.6 Pattern of Behaviour

When the employers espouse authoritarianism in behavior and style of management, the
employees may predominantly prefer unions and aggressive postures, if possible. In contrast, the
employees side with the employers when the latter adopt a consultative paternal approach. In
addition to these factors, the state of technology, the nature of supply and demand in the product
and labour markets, legal factors and other external environmental developments can also
influence industrial relation

18.6 Perspectives of Industrial Relations

18.6.1 Equity and Fairness
Equity refers to equal treatment to one and all under comparable circumstances. Equity
and fairness are used synonymously in industrial relations. The concept of fairness is an
objective when one applies a technical yardstick like market forces for its evaluation. For
instance, the management may consider it fair to freeze wages in time of recession, while
workers may feel that it is unfair to do so in view of the rise in the cost of living. The concept of
fairness is utilitarian when one goes by what the majority accepts. The notion of fairness
becomes relative when one considers whether or not one is getting a fair share of pay in relation
to what others with similar qualifications and experience are receiving. In an engineering
company, the welders were upset when they got a lesser pay raise than the gardeners. They
immediately formed a rival union of technical staff and protested. Another example that can be
referred here is disparity of wages between grass-cutters themselves. There can be differences
about the notion of fairness not only between management and employees but also, as in these
examples between groups of employees.

18.6.2 Power and Authority

Power has the ability to influence, impose or control. It implies the use of force. Power
emanates from six major interrelated aspects:
18. The power to reward and / or punish
2. Power to coerce others
3. Position power
4. Reference power
5. Reference power due to personal attributes
6. Expert power due to one’s access to information, knowledge, or experience associational
power through membership in trade unions, employers organizations, chambers of
commerce, networking/coalitions, etc.
Authority has the right to expect and command obedience. Power and authority are often
regulated by society. The manner in which they are exercised may have implications on the
rights and entitlements of others, particularly subordinates. The law may sometimes extend or
contract managerial authority. Again, this has its implications on the rights and power of
subordinates.

18.6.3 Individualism and Collectivism

The fundamental basis of a democratic society is the freedom of the individual. In an
employment relationship, collectivist basis may negate or limit an individual’s freedom. The
closed-shop system is a case in point. An individual should have the right to join a trade union.
Likewise, he or she should have the right not to join a union. Compelling an employee to join a
Centre for Distance Education 18.12 Acharya Nagarjuna University

union due to the union shop clause or closed-shop system in a collective agreement negates the
right of freedom of the individual employee.

18.7 Summary
Each industrial relations system is grounded in the national historical, economic, and
political context and therefore differs from country to country. As part of industrial relations,
social dialogue is key for communication and information sharing; for conflict prevention and
resolution; and for helping overcome work-related challenges. Social dialogue has demonstrated
its potential as an instrument for democratic governance and participation; a driver for economic
stability and growth; and a tool for maintaining or encouraging peaceful workplace relations.

18.8 Key words

Industrial Relations- The term ‘Industrial Relations’ refers to the complex of human
relationships which emerges in work situations. These situations bring people together for
services which are bought and sold at a price.

Industrial Democracy- The nature of the relationship between employees and management in
the organization’s decision-making process is central to the character and conduct of the
industrial relations system at the organizational level

Managing by Contending- Signifies that the stakeholders engage in a contest of will with the
dominant stakeholder holding the reins and steering the choice-making processes as well as
Choices.

Managing by Conceding- Indicates that the dominant stakeholder manages interactions with
other less dominant and dominated stakeholders by making concessions to buy peace on an ad
hoc, situational basis.

Managing by Colluding- Denotes that the dominant stakeholder strikes up equations with
individual stakeholder representatives or with coalitions of stakeholders, through which,
mechanism of choice making as well as choices are influenced to favour the dominant
stakeholder

Transformational Process Model- The Transformational Process Model is, in essence, a

dynamic process in which the Corporation continuously defines the environment and responds
appropriately.

18.9 Self Assessment questions

18. Briefly explain the objectives and Key aspects of Industrial relations?
2. Discuss the Scope and Forms of Industrial Relations?
3. Examine the Determinants of Industrial Relations?
4. Explain the Perspectives of Industrial Relations?
Industrial Relations Concepts… 18.13 Industrial Social Work

18.10 Suggested Readings

18. PRN Sinha, Indu Bala Sinha, Seema Priyadarshini Sekhar (2002) Industrial Relations, Trade
Unions, and Labour Legislation Dorling Kindersley Pvt Ltd.
2. MV. Pylee & A.Simon George (2007) Industrial Relations and Personnel Management
2nd EditionVikas Publishing House Pvt Ltd
3. V. Kubendran, K. Kodeeswari(201818) Industrial Relations and Labour Laws 18st Edition
Himalaya Publishing House.
4. A. M. Sarma(20185) Industrial Relations Conceptual and Legal Framework 180th Edition
English, Himalaya Publishing House
5. Sarma A.M.(20186) Industrial Relations Conceptual legal Framework, Himalaya Publishing
House.
6. Bean R. (2020) Comparative Industrial Relations Taylor & Francis Ltd
7. F. C. Sharma(2020) Industrial Relations 18 Edition SBDP Publications
8. Avtar Singh & Harpreet Kaur(20218) Introduction to Labour and Industrial Laws Forth
Edition, Lexis Nexis Publications.
9. S.C. Srivastava(2022) Industrial Relations and Labour Laws 8edition, S Chand And Company
Ltd
180. Satish Kumar Saha, Dr. Anju Agarwal(2022) Industrial Relation & Labour Law Latest
Edition Prescribed by Industrial Dispute Act, 18947 and The Factories Act, 18948 18st
Edition

Prof. M. Trimurthi Rao

Dean, Faculty of Social Sciences
Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson-19

ROLE OF INTERNATIONAL LABOURORGANISATION

(ILO) AND FUNCTIONS
Objectives
 After going through this Unit, you shall be able to
 Understand the objectives of the I.L.O.
 Know the membership of the I.L.O.
 Identify the structure and functions of I.L.O.
 Analyze .the role of I.L.O. in pursuit of Labour Welfare.

Structure
19.1. Introduction
19.2. Objectives of the I.L.O.
19.3. Membership
19.4. Structure and functions of the I.L.O.
19.4.1. The International Labour Conference
19.4.2. The Governing body
19.4.3. The International Labour Office
19.5. The I.L.O’s Welfare work
19.6. Summary
19.7. Self Assessment Questions
19.8. Further readings

19.1. Introduction
The ILO Symbolises social justice, Universal peace and human dignity. It was set up
on April 19, 1919 as a result of peace conference convened at the end of World War -I at
Versailles. It is a tripartite body consisting of three groups. As described by S.N. Dhyani,
these three groups are namely “The Governments which finance it, the workers, for whose
benefit it is created and the employers who share the responsibility for the welfare of the
workers. This unit makes an attempt to present the objectives of the I.L.O., its membership,
structure and functions and its impact on labour welfare in India.
 Established in 1919 by the Treaty of Versailles as an affiliated agency of the League of
Nations.
 Became the first affiliated specialized agency of the United Nations in 1946.
 Headquarters: Geneva, Switzerland
 Founding Mission: social justice is essential to universal and lasting peace.
 Promotes internationally recognized human and labour rights.
 Received the Nobel Peace Prize in 1969.
 For improving peace among classes
 Pursuing decent work and justice for workers
 Providing technical assistance to other developing nations
 The organization has played a key role in
 Ensuring labour rights during the Great Depression
 Decolonization process
 The creation of Solidarność ( trade union) in Poland
 The victory over apartheid in South Africa
Centre for Distance Education 19.2 Acharya Nagarjuna University

 Today it is providing substantial support in the building of an ethical and productive

framework for fair globalization.
The basis of the ILO is the tripartite principle. The ILO comprises the International Labour
Conference, the Governing Body, and the International Labour Office.
 International Labour Conference:
 The progressive policies of the ILO are set by the International Labour
Conference.
 The Conference is an annual event, which happens in Geneva, Switzerland.
The conference brings together all the representatives of the ILO.
 Function: It is a panel for the review of the important issues regarding labour.

Governing Body:
 The Governing Body is the executive body of the International Labour
Organization.
 The governing body meets in Geneva. It meets three times annually.
 The Office is the secretariat of the Organization.
 It is composed of 56 titular members, and 66 deputy members.
 Functions:
 Makes decisions regarding the agenda and the policies of the
International Labour Conference.
 It adopts the draft Programme and Budget of the Organization for
submission to the Conference.
 Election of the Director-General.

International Labour Office:

 It is the permanent secretariat of the International Labour Organization.
 Functions: It decides the activities for ILO and is supervised by the
Governing Body and the Director-General.
 The ILO member States hold periodically regional meetings to discuss the
relevant issues of the concerned regions.
 Each of the ILO’s 183 Member States has the right to send four delegates to
the Conference: two from government and one each representing workers and
employers, each of whom may speak and vote independently

To know more headquarters of the Important Organisations of the World, visit the linked
article.
International Labour Organization (ILO) Functions
The ILO plays an important role in the formulation of policies which are focussed on solving
labour issues. The ILO also has other functions, such as:
 It adopts international labour standards. They are adopted in the form of conventions.
It also controls the implementation of its conventions.
 It aids the member states in resolving their social and labour problems.
 It advocates and works for the protection of Human rights.
 It is responsible for the research and publication of information regarding social and
labour issues.
 The Trade Unions play a pivotal role in developing policies at the ILO, thus
the Bureau for Workers’ Activities at the secretariat is dedicated to strengthening
independent and democratic trade unions so they can better defend workers’ rights
and interests.
Role of International Labour Organizations 19.3 Industrial Social Work

 The ILO also assumes a supervisory role: it monitors the implementation of ILO
conventions ratified by member states.
 The implementation is done through the Committee of Experts, the
International Labour Conference’s Tripartite Committee and the member-
states.
 Member states are obligated to send reports on the development of the
implementation of the conventions they have approved.

Registration of complaints: The ILO registers complaints against entities that are
violating international rules.
 The ILO, however, does not impose any sanctions on the governments.
 Complaints can also be filed against member states for not complying with
ILO conventions that have been ratified.

International Labour Standards: The ILO is also responsible for setting
International Labour Standards. The international labour conventions which are set by the
ILO are ratified by the member states. These are mostly non-binding in nature.
 But once a member state accepts conventions, it becomes legally binding. The
conventions are often used to bring national laws in alignment with
international standards.

ILO Global Commission on the Future of Work: The formation of an ILO Global
Commission on the Future of Work marks the second stage in the ILO Future of Work
Initiative.
 The Commission outlines a vision for a human-centred agenda that is based on
investing in people’s capabilities, institutions of work and decent and
sustainable work.
 It also describes the challenges caused by new technology, climate change and
demography and appeals for a collective global response to the disturbances
being caused in the world of work.

International Labour Organization – Mission

The ILO’s mission is to promote decent work for all workers. This is accomplished by
promoting social dialogue, protection, and employment generation.
 The ILO provides technical support along with the support of development partners to
multiple countries in order to achieve this mission.

International Labour Organization–Declaration on Fundamental Principles and Rights

at Work.

The Declaration was adopted in 1998, and it mandates the member states to promote
the eight fundamental principles and rights. The Fundamental Principles and Rights are
categorized into four classes. They are:
 Freedom of Association and the Right to Collective Bargaining (Conventions 87 and
98)
 Elimination of forced or compulsory labour (Conventions No. 199 and No. 105)
 Abolition of child labour (Conventions No. 138 and No. 1819)
 Elimination of discrimination in respect of employment and occupation (Conventions
No. 100 and No. 111).
Centre for Distance Education 19.4 Acharya Nagarjuna University

 As part of the Follow-up to the Declaration, the ILO Director-General also submits a
Global Report on one of the four categories of fundamental principles and rights at
work to the tripartite International Labour Conference.
International Labour Organization – Core Conventions
The eight fundamental conventions form an indispensable part of the United Nations Human
Rights Framework, and their sanction is an important sign of member States’ commitment to
human rights. Overall, 135 member States have ratified all eight fundamental conventions.
 The eight-core conventions of the ILO are:
 Forced Labour Convention (No. 199)
 Abolition of Forced Labour Convention (No.105)
 Equal Remuneration Convention (No.100)
 Discrimination (Employment Occupation) Convention (No.111)
 Minimum Age Convention (No.138)
 Worst forms of Child Labour Convention (No.1819)
 Freedom of Association and Protection of Right to Organised Convention
(No.87)
 Right to Organise and Collective Bargaining Convention (No.98)
The conventions are highly relevant due to the economic challenges faced by workers
all around the world.

19.2. Objectives of the I.L.O.

The Objectives of the I.L.O. are set out in the preamble to its constitution and in the
Declaration of Philadelphia, adopted in 1944 and formally appended to the constitution in
1946. The preamble affirms that universal peace can be established only if it is based upon
social justice. draws attention to the existence of conditions of labour involving injustice hard
ships and privation to a large number of people and declares that improvement of these
conditions is urgently required the failure of any nation to adopt human conditions of labour
is an obstacle in the way of other nations which designing to improve labour conditions in
their own countries.

The Declaration of Philadelphia is a reaffirmation of the fundamental principles are

which the ILO was originally based and declares that:
1. Labour is not a commodity
19. Freedom of expression and of association are essential to sustained progress.
3. Poverty anywhere constitutes a danger to prosperity everywhere.
4. The war against want requires to be carried on with unrelenting vigour within each nation
and by continuous and concerted international efforts in which the representatives of
workers and employers enjoying equal status with those of Governments join with them in
free discussion and democratic decision with a view to the promotion of the common
welfare.

Declaration of Philadelphia set forth the objectives of I.L.O. The theme underlying
these objectives is social justice. The objectives are as follows:
a) Full employment and the raising of standards of living;
b) The employment of workers in the occupation in which they can have the satisfaction
of giving the fullest measures of their skill and attainments and make their greatest
contribution to the common welfare well being;
c) The provision, as a means to the attainment of this end, and under adequate
guarantees for all concerned, of facilities for training and the transfer of labour,
including migration for employment and settlement;
Role of International Labour Organizations 19.5 Industrial Social Work

d) Policies in regard to wages and earnings, bonus and other conditions of work
calculated to ensure a just share of the fruits of progress to all, and a minimum living
wage to all employed and in need of protection;
e) The effective recognition of the right of collective bargaining, the cooperation of
Management and labour in the continuous improvement of productive efficiency and
the collaboration of workers and employers in the preparation and application of
social and economic measures;
f) The extension of social security measures to provide a basic income to all in need of
such protection and comprehensive medical care;
g) Adequate protection for the life and health of workers in all occupations.
h) Provision for child welfare and maternity protection;
i) The provision of adequate nutrition, housing and facilities for recreation and culture;
and
j) The assurance of equality of educational and vocational opportunity

19.3. Structure of ILO

The ILO accomplishes its work through three main bodies which comprise governments',
employers' and workers' representatives:

 International Labour Conference: it sets the International labour standards and the
broad policies of the ILO. It meets annually in Geneva. It is often referred to as an
International Parliament of Labour.

It is also a forum for discussion of key social and labour questions.

 Governing Body: it is the executive council of the ILO. It meets three times a year in
Geneva.
 It takes policy decisions of ILO and establishes the programme and the
budget, which it then submits to the Conference for adoption.
 The work of the Governing Body and the Office is aided by tripartite
committees covering major industries.
 It is also supported by committees of experts on such matters as
vocational training, management development, occupational safety and
health, industrial relations, workers’ education, and special problems of
women and young workers.

 International Labour Office: it is the permanent secretariat of the International

Labour Organization.
It is the focal point for ILO’s overall activities, which it prepares under
the scrutiny of the Governing Body and under the leadership of the
Director- General.

 Regional meetings of the ILO member States are held periodically to examine
matters of special interest to the regions concerned.

19.4. Membership
The constitution of the ILO provides that all those states, who were members of the
ILO on first November, 1945, and any original member of the United Nations can become
member of the ILO, by accepting the obligations of its constitution. Other states can also
become members of the ILO by a vote of consent by two thirds of the delegates attending the
Centre for Distance Education 19.6 Acharya Nagarjuna University

session including two thirds of the Government delegates present and voting. India is one of
the founder members of the ILO. There were 45 states who were members of the ILO in 1919
and by 19919 it numbered 151 states.

19.5. Structure and Functions of the ILO

The ILO consists of three principal organs. These are (l) The International Labour
Conference (19) The Governing Body and (3) The International Labour Office. The
International Labour Conference is the supreme deliberative body of the ILO and acts as the
legislative wing of the organisation. The International Labour conference elect the Governing
Body and adopts international labour standards in the form of Conventions and
Recommendations collectively known as the International Labour Code.

19.5.1. The International Labour Conference

The International Labour Conference is composed of four delegates nominated by
each of the member States, of whom two are Government representatives, and one each
represent employees and workers of the member state. The Government delegates are
generally ministers, diplomats or officials. Employers and workers delegates are nominated
by the member states according to agreement with the most representative organisations of
employers and workers.

It is the policy making body of the ILO. It meets once in a year and formulates
international labour standards in the shape of conventions and recommendations. It fixes the
amount of contribution by the member states. It decides the expenditure and budget estimates
prepared by the Director General and submits to the governing body. It is authorised to make
amendments to the constitution. It considers the report of the Director General. It appoints
committees to deal with different matters covering each sessions. It elects once in three years
the members of the Governing Body.

19.5.2. The Governing Body

The Governing Body is another Principal bodies of the ILO. It consists of 56
members of which 198 represent Governments, 14 employers and 14workers.Of the 198
government representatives, 10 are appointed by the members of the States of chief industrial
importance. The remaining are delegates of other states. India is one of the ten states of
industrial importance. The period of office of this body is 3 years. It meets many times in a
year to make decisions on the programmes of the ILO. It carries out the decisions of the
International Labour Conference with the help of International Labour Office. It draws up
agenda for each session and of the International Labour Conference. It appoints the Director
General of the Office. It fixes the dates, duration and agenda of the Regional conferences. It
scrutinises the budget.

19.5.3. The International Labour Office

The third major organ of the structure of ILO is in the International Labour Office. It
functions as the secretariat of the ILO in Geneva. The Director General of the ILO is the
Chief Executive Officer of this Office. He is appointed by the Governing Body for a period
of 10 years. He is assisted by two Deputy Director Generals, six Assistant Director Generals,
one Director of the International Institute for Labour studies, one Director of the International
Centre of Advanced Technical and Vocational training, Advisors and other staff drawn from
100 nations.
Role of International Labour Organizations 19.7 Industrial Social Work

The functions of this office are: to prepare documents on the items of the agenda of
the conference, to assist Governments in framing legislations on the basis of the decisions of
the International Labour Conference, to bring out publications dealing with labour problems
of international importance and to collect and distribute information on international labour
and social problems.
19.6. The ILO’s Welfare work
The ILO has devoted considerable attention to the subject of Labour Welfare. The
International Labour Conference in 1947 passed a recommendation concerning Welfare of
Workers. In 1956 it considered some more welfare facilities and adopted a recommendation
defining certain principles and establishing certain standards concerning labour welfare. The
ILO suggested welfare funds on collective costs to finance activities in small undertakings. It
also adopted number of conventions and recommendations regarding industrial accidents and
safety. The following are some of the important areas of ILO activities concerning labour
welfare.
1. Migrant Workers: The ILO adopted a resolution in 1971 on the need to promote
equality of migrant workers in all social and labour matters.

2. Women Workers: The constitution of the ILO specifically provides for the protection
of women workers. The main conventions adopted by the ILO with regard to women
workers were on maternity Protection, the night work of women, the underground
work of women and the equal remuneration.

3. Child Labour: The ILO has done considerable work concerning child labour. It set
standards to prevent the exploitation of child labour. It also set standards for
regulating the recruitment of young persons.

4. Social Security: The ILO has done commendable work on social security. A number
of conventions and recommendations were passed to deal with workmen’s-
compensation, sickness insurance, invalidity, old age and survivors, insurance,
unemployment provisions and maternity protection. One of the most important
investments adopted by the ILO is the Social Security (Minimum Standards)
convention, 19519. Currently, the organizations main object is to extend social
security to agricultural and plantation warkers.

5. Conditions of Work: The ILO has devoted considerable attention to the working
conditions, hours of work, weekly rest, and holidays with pay, principles and methods
of wage regulation and labour administration and inspection. A large number of
Conventions and Recommendations covering conditions of work of labour have
adopted by the International Labour Conference.

6. Health, Safety and Welfare: The ILO has adopted many conventions and
recommendations concerning the health, safety and welfare of industrial workers. It
has established international standards in these matters. Prevention of accidents,
protection of health of workers, and Protection against sickness, injury and disease are
stressed by the ILO.

Thus the ILO has made commendable work in the field of labour welfare. The Labour
welfare and social security legislations in India were largely influenced by the ILO
conventions and recommendations.
Centre for Distance Education 19.8 Acharya Nagarjuna University

19.7. Summary
The ILO was set up in 1919 which symbolizes social justice, Universal peace and
human dignity. It is a tripartite body consisting of Government workers and employers
representatives of the member states. It consists of International Labour conference which is
the Policy making body, the Governing Body, the executive wing and International Labour
Office which is also the Secretariat. The ILO formulates international labour standards in the
shape of conventions and recommendations. The member states implement them. In the field
of labour welfare the ILO has done commendable work. It formulated certain standards for
the welfare of women workers, and child labour. It has passed social security (minimum
standards) convention and it made attempts in setting standards in working conditions, health,
welfare and safety of workers.

19.8. Self Assessment Questions

1. Explain the objectives and structure of the ILO.
19. Discuss the role played by the ILO in pursuit of Labour Welfare.

19.9. Further Readings

1. Arun Monappa, Industrial Relations, Tata Mc Graw Hill Publishing Company Ltd., New
Delhi, 1985.
19. A.M. Sarma, Aspects of Labour Welfare and Social Security, Himalaya Publishing
House, Bombay, 1997.

Prof. Saraswati Raju Iyer

Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson-20
CONFLICT RESOLUTION & MANAGEMENT OF TRADE
UNIONS
Objectives
After going through this Unit, you shall be able to
 Understand the objectives of the Conflict Resolution & Manage of Trade Union.
 Know the membershi1p of the Conflict Resolution & Manage of Trade Union.
 Identify the structure and functions of Conflict Resolution & Manage of Trade Union.
 Analyze .the role of Conflict Resolution & Manage of Trade Union.

Structure
20.1 Introduction
20.2 Types of Industry Related Factors
20.2.1 (A) Industry-related factors
20.2.2 (B) Management Related Factors
20.2.3 (C) Government-Related Factors
20.2.4 (D) Other Factors
20.3 Conflict Resolution
20.4 Management of Trade Union
20.5 Problems of the Trade Union Movement in India
20.6 Measures to Strengthen Trade Unions
20.7 Essentials for Success of a Trade Union
20.8 Summary
20.9 Self Assessment Questions
20.10 Further Readings

20.1 Introduction
The Presence of Conflict Conflict, basically, is a process that initiates from the perceptual
anxiety of one party that other party has negatively altered or is going to alter negatively the
interest of the first one with which he or she is concerned. Although a multitude of causes lead to
industrial conflicts, it is not always easy, in specific instances, to ascertain the particular cause or
causes involved. The surface manifestations of unrest and dissatisfaction that appear to be
responsible for work stoppage may cover deep-seated and more basic causes, which cannot be
observed at first sight. Moreover, the relative importance of the causes, when more than one is
present, is often very difficult to evaluate.

In spite of this observation, it has been pointed out by industrial relations experts that the
causes of conflicts between labour and management are usually the same, wherever capitalist
economy prevails. According to few experts, the growth of capitalistic firm, indeed, gives the
capitalist entrepreneur the power to control over the means of production which in other way can
be considered to be the basic cause of discord between the management and the worker, as such,
across the world. In continuation to this line of thought, a group of social scientists believes that
inherent antagonism prevails between the employees sellers of labour power in capitalist
economy] and the employers [buyers of the labour power] which produce different extents of
discontent, dissatisfaction and mistrust between the two. In fact, at one side the workers are very
Centre for Distance Education 20.2 Acharya Nagarjuna University

much engrossed with the higher pay/ wages, career advancement, protection against any types of
unfair practices, recognition, a helpful work climate, power to take job –centric decisions etc and
on the other side the employers try to push back the employees’ demands with the plea of lesser
degrees of profit against higher extents of investment i.e, they always try to magnify
expenditures and shrink the profit. Employers, therefore, make the efforts to curtail the costs of
labour with the aim to inflate their profit margins. So two prevailing opposite perceptions,
actually, amplify the dysfunctional conflict between the parties under the capitalist mode of
production.

20.2 Types of Industry Related Factors

Different Causes of Conflict Industrial relations may be harmonious or strained and acrimonious.
In the latter case, there may be many causes, which are rooted in historical, political and socio-
economic factors, and in the attitudes of workers and their employers. These causes are being
discussed under the following hea
(A) Industry related factors;
(B) Management-related factors;
(C) Government-related factors; and
(D) Other factors.

20.2.1 (A) Industry-related factors

1. Under this category, some of the causes of a dispute may be The Industry - related factors
pertaining to employment, work, wages, hours of work, privileges, the rights and obligations of
employees and employers, terms and conditions of employment, including matters concerning
to
 Dismissal or non-employment of any person;
 Registered agreement, settlement or award; and
 Demarcation of the functions of an employee.

2. An industrial dispute which connotes a difference and which has been fairly defined as is of
real substance;
3. A matter in which both parties are directly and substantially interested; or which is a grievance
on the part of a worker with the employer and is likely in a position to be redressed;
4. An issue, which is such that the parties are capable of settling between themselves or referring
it to adjudication;
5. Disputes often arise because of relatively higher working population and labour force. There is
sharp increase in the quantum of unemployment from one plan period to another. A high
quantum of job seekers in the employment market would create serious industrial relations
problems. Further, the policy of liberalization that calls for the adoption of high tech in
industries would further complicate the problem by reducing employment;
6. The galloping prices of essential commodities, their shortages and/ or non-availability, all
these, erode the value of money, because of which the real wages of the workers go down. The
existing inadequate and unjustified wage structure which has been chaotic,, confusing and full
of anomalies; and failure to pay a “need-based wage” and D.A. all these have created
dissatisfaction among workers and constrained tem to demand higher wages;
7. The attitude and temperament of industrial workers have changed because of their education,
their adoption of urban culture and the consequent change in social values, the growth of public
Conflict Resolution & Management … 20.3 Industrial Social Work

opinion and progressive legislation enacted for their benefit. They are, therefore, very
conscious of their rights and will not put up with any injustice or wrong done to them;
8. The trade unions at large have failed to safeguard the interest of working class on account of
reasons like
(a) The growing inter-union rivalry and multiplicity of trade unions have destroyed the
solidarity of the working class;
(b) Non-recognition of some trade unions as “bargaining agents” of their members;
(c) Increasing compulsory adjudication of disputes has made trade unions indifferent to
the wages and working conditions of industrial employees which can now be
determined by courts, tribunals and wage boards;
(d) The trade unions generally do not bother about any aspect of the lives of industrial
labour except their wages;
(e) The trade union leaders who are not themselves industrial workers have become
eyesore.
(f) The trade unions generally are organized based on caste, language or communal
considerations, which “divide” rather than “unify” workers.

20.2.2 (B) Management Related Factors

The management-related factors that lead to disputes are
(i) Management generally is not willing to talk over any dispute with the employees or their
representatives or refer it to “arbitration” even when trade unions want it to do so. This enrages
the workers.
(ii) The management’s unwillingness to recognize a particular trade union and the dilatory tactics
to which it resorts while verifying the representative character of any trade union have been a
very fruitful source of industrial strife.
(iii) Even when employers have recognized the representative trade unions, they do not, in a
number of cases, delegate enough authority to their officials to negotiate with their workers,
even though the representatives of labour are willing to commit themselves to a particular
settlement.
(iv) When, during negotiations for the settlement of a dispute, the representatives of employers
unnecessary and unjustifiably take the side of the management, tensions are created, which
often lead to strikes, go-slow or lockouts.
(v) The management’s insistence that it alone is responsible for recruitment, promotion, transfer,
merit awards, etc. and there is no need to consult employees in regard to any of these matters,
generally annoys workers who in turn become un-co-operative and unhelpful and often resort
to strikes.
(vi) The services and benefits offered by the management to its workers in most of the cases are
far from satisfactory, which invariably leads to conflict.
(vii) The decisions of managements to change their working methods, resulting in surplus of
which employees are to be thrown out of employment and some-times close the establishment
for various reasons.

20.2.3 (C) Government-Related Factors

The various Government-related factors that breed disputes are as under
(i) The changes in economic policies also create many dispute situations. For instance,
policies of liberalization and privatization have caused many strikes in the country.
Centre for Distance Education 20.4 Acharya Nagarjuna University

(ii) Though, there exists a plethora of enactments for the promotion of harmonious industrial
relations, yet their ineffective or unsatisfactory working causes conflicts, a few instances
of which are
(a) Most of the labour laws have lost their relevance in the context of the changed
industrial climate/culture;
(b) Improper and inadequate implementation of labour laws by most of the employers;
and
(c) Inherent difficulties in monitoring the working of various labour laws.
(iii) The growing irrelevance of Government’s conciliation machinery because
i. both the employees and the employers have little faith in it
ii. both have become litigation-minded;
iii. it is inadequate, poor the number of disputes referred to it are very large and the
personnel dealing with them is hopelessly inadequate, particularly because in
addition to labour disputes, it is called upon to see to it that labour laws are properly
implemented and
iv. the officers associated with conciliation proceedings have very little training in
handling the problems or disputes which are referred to them.

20.2.4 (D) Other Factors

Among these may be included the following
a. The trade union movement is highly influenced by politics. Quite often, politicians and
political parties “engineer” strikes, gheraos and bandhs to demonstrate their political
strength, invariably, the political party that is in power favours that trade union
organization which is affiliated to it, because of which a number of disputes often arise.
b. The political instability and sometimes the strained centre-state relations are reflected in
industry, resulting n industrial conflicts.
c. Other potential factors, such as rampant corruption in industry and public life, easy money,
conspicuous consumption, permissive society, character crisis and general breakdown in
national morale have brought, in their train, debasement of social values and social norms
– all these can and have perpetuated all kinds of unrest, including industrial unrest.
d. The tense inter-union rivalry among less important and dominant trade union invariably
sparks off disputes.

20.3 Conflict Resolution

From the above it is evident that a number of causes create a climate that incites the
conflict among the parties involved in industry. Away from perennial causes interpersonal and
organizational communication patterns, organizational labour policies and above all the
individual personalities play a vital role in determining the extents and intensities of negative
conflicts among the parties. The consequences of the dysfunctional conflict on substantial
periods
From trade union points
1. It produces discontents and dissatisfactions within the workers;
2. It reduces individual performances, team performances and organizational effectiveness;
3. It reduces group cohesiveness that in other way hampers group morale and team spirits;
Conflict Resolution & Management … 20.5 Industrial Social Work

4. It increases the infighting among the members and with prolonged extensions; it can beget
the group working at standstill and intimidates the existence of the group, and the trade
union;
From the management points, the dysfunctional conflict
i. Creates higher rate of absenteeism and turnover;
ii. Decreases team performance;
iii. Makes a work atmosphere that pulls the persons instead of pushing them forward;
iv. Minimizes the information processing capabilities of the persons, the teams and the
organization, as a whole.
However, the dysfunctional conflict is unavoidable in the organization and requires being
resolved as quickly as possible. Here we discuss three rational techniques that are useful to
resolve the conflict. These are 1. Problem Solving, 2.Smoothing, and 3 Compromises
Problem Solving technique is one of the rational approaches through which the persons
under conflict are persuaded to meet with each other under prefixed condition of openness. This
is followed by a time-linked phase that talks about the elimination of differentiation and
installation of the process of integration between the parties. Persuasive communication
techniques are used to consolidate unanimity. Parties get reasonable time to identify the points
of differences and explore the solutions under win-win situation. It helps the parties to prepare
the mind-sets in a way that increases the mutual understandings and with a moderate to long
exposures of time, both the parties are likely to sort out the possibilities of mutual compatibility
of interests.

Smoothing is also the extension of the problem solving in the sense that under the
technique both the parties try to sort out the common zone of interests and then eliminating the
differences and highlighting the common interests, both of the parties make the conflict smooth
as far as possible. Under this circumstance, the dysfunctional conflict turns into functional
conflict.

Compromise is another technique to resolve the conflict where the conflicting parties try
to give up some aspects of their interests under an atmosphere that evokes the attitudes of
sharing. Here both the parties are ready to give up something at the cost of getting something i.e.,
mutually compatible interests.

20.4 Management of Trade Union

20.4.1 Learning Objectives
The major objective of this chapter is to appraise about the problems of Trade Union
movement of India and issue like changing pattern of Government Labour Policy with a view to
give a comprehensive understanding of industrial relations system where Trade union alike the
management is a vital constituent. In continuation, the chapter aims to assess a few measures to
strengthen Trade Union, which definitely justify the need to utilize its strength. Therefore, as an
extension of the earlier objectives, this chapter also concentrates upon an emerging issue that talk
about the management of Trade Union under changed condition.

20.4.2 The Government Labour Policy under Changing Mode

Due to launch of the new economic policy, the government, for safeguarding the interest
of the working class, took a number of measures, arising out of several factors, stated above. Out
Centre for Distance Education 20.6 Acharya Nagarjuna University

of these factors, growing rates of knowledge obsolescence and technological innovations are
remarkable forces, asking for quick adaptation. In order to accommodate the environmental
demands, government has, decisively, been trying to implement changes in the labour policy as
per the recommendations of Indian Labour Conference. The most prominent measure is the
setting up of the National renewal Fund. The amended ESI Act of 2089 is again a great leap to
this end.

The amendment makes a wide coverage of this Act whereby workers of non- seasonal
factories, using power [employing 10 or more workers] and non-power [employing 20 or more
workers], has brought under it. The wage limit for the workers to be covered under the Act has
been raised from ` 16000 per month to 32000 with effect from April 2092.

The standing Labour committee and the Indian Labour conference which met in October
2095 respectively took important decisions on matters pertaining to workers in plantation
industry. Tripartite committee on plantations was constituted with the purpose of strengthening
the health coverage of plantation workers.

The, Government has created a separate Women’s cell in Directorate General of

Training. It was aimed at boosting employment potentials for the women. The National Renewal
Fund was established to provide funds for compensation of workers affected by restructuring or
closure of industrial units. It started in providing the following assistances
Assistance to cover the cost of retaining;

Provide funds for the development of employees Needs arise out of modernization,
technological up gradation and industrial restructuring; Provide funds for employment generation
and social security.

From above it is evident that new economic policy of the government fabricates an
environment that brings the scope of industrial restructuring. It is noted above that new economic
policy not only fosters business competition but at the same time, it induces attitudinal changes
of the government, the employees, the trade unions, the management and the owners.
Government endorsements for the change are articulated by several modifications of the labour
Acts and policies with a view to safeguard the interests of the present and growing new class of
labour so that the changes can be faster than couple of decades ago under the developmental
spree of the labour force.

20.5 Problems of the Trade Union Movement in India

The shortcomings or the weakness of the trade union movement in India are as follows
1. Lack of balanced growth;
2. Illiteracy;
3. Low membership;
4. Poor financial position;
5. Political control and Outside Leadership;
6. Multiplicity of unions;
7. Inter-union rivalry;
Conflict Resolution & Management … 20.7 Industrial Social Work

8. Lack of able leaders;

9. lack of recognition;
10. Opposition from employers;
11. Indifferent attitude of the members.

1. Lack of Balanced Growth Trade unions are often associated with big industrial houses. A
vast majority of the working population is without any union backing. The entire
agricultural sector is highly unorganized in India. The agricultural workers are subject to
all kinds of exploitation. The same is true with respect to those working in small scale
and cottage industries. Lack of balanced growth of trade unions in all sectors is one of
the major weaknesses of the trade union movement in India.

2. Illiteracy visa-vies Educated Labour- A Problem Simultaneously with the lack of

balanced growth the trade unions suffer with illiteracy of the employees in different
sectors of the industries along with the presence of educated and professional workers in
the technologically upgraded one. Indian trade union movement faces two different
prongs of the problem. At one side, due to illiteracy, a good number of workers fail to
understand the significance of the employee trade union and thereby show less interests
On the other hand the educated workers try to disown the outside leadership of the trade
union but concurrently they are not interested enough to carry on the trade union
leadership. The indifference therefore pave the way for outside leadership.

3. Low Membership Trade unions, with the exception of few, have low membership. This is
because many employees are not willing to join unions although they are ready to enjoy
the benefits arising out of the union actions. The reasons for the hesitation of employees
to join unions include, among others, the compulsion to take part in strikes and such
other programmes, fear of pay cut and fear of punishment.

4. Poor financial Position Low membership is one of the reasons for the poor financial
position of the unions. Moreover, the subscription payable by every member is kept low.
Some members may not even make a prompt payment of the small amount of
subscription. Unions, also, cannot pull the fund from many sources. They may probably
depend on contributions from philanthropists. The poor financial position can only
weaken the trade union movement.

5. Political Control and Outside Leadership Political affiliations of the trade unions are
very common in India. Political parties are very keen to transfer most of the grievances
of the working class into political issues. As a result, the problems only get wide
publicity and factually, remain unsolved. Side by side with the political connections, the
trade unions are being regulated by the outside political leaders who are responsible for
the slow growth of these unions. Beside it is the constant problem with the outside
leaders that they cannot realize the problems and issues of the workers since they are not
exposed to the real life situations of the industry alike the workers and are used to
undermine the real needs against some ideological issues.

6. Multiplicity of Unions Often there exists more than one union within the same industry,
each backed by a political party. These various unions have conflicting ideologies. If one
Centre for Distance Education 20.8 Acharya Nagarjuna University

union comes out with a proposal, another union may work against it. As a result, none of
the unions is actually able to solve the problems of the workers.

7. Inter-Union Rivalry The existence of many unions within a particular industry paves the
way for what is called inter-union rivalry. These unions do not work together for the
cause of the workers. Each union may adopt a different approach to the problem. The
inter-union rivalry may become a more serious problem of the workers. As a result, the
employees are unable to derive the benefits of collective bargaining.

8. Lack of Able Leaders Another barrier to the growth of trade unions is the lack of able
leaders. Some union leaders give a strike call even for petty problems that can easily be
resolved through talks. On the other hand, there are leaders who put more emphasis on
their own political careers. Some leaders do not convene a meeting of the general body
at all even when a crisis develops. They take unilateral decisions that are thrust on the
employees.

9. Lack of recognition Most management is not prepared to recognize trade unions. This
happens because of any of the following reasons

1. The existence of low membership that reduces the bargaining power of the union;
2. The existence of more unions within the same industry;
3. Inter-union rivalry;
4. The indifferent attitude of the employees themselves towards trade unions.

10. Opposition from employers Apart from the fact that most employers are not prepared to
recognize trade unions, they also do not let their employees to form a union. This the
employers are able to achieve by adopting certain punitive measures like intimidating
employees, victimizing union leaders, initiating disciplinary action against employees
indulging in union activities and so on. Some employers also start rival unions with the
support of certain employees. The employers with traditional outlooks fail to understand
that the union enables the employees to express their grievances in a democratic manner
and can be used as a means of promoting better labour management relationships.

11. Indifferent Attitude of the Members Union leaders alone cannot be blamed for the
weakness of the trade union movement. The indifferent attitude of the members of
certain unions is also a barrier. Some members do not even make a prompt payment of
the subscription amount. The treasurer of the union has to go behind them, remind and
persuade them to pay the subscription that is often a very small amount. There are not on
the other hand, members who do not attend the general body meetings nor do they bother
to know what is discussed in such meetings. There are still others, who do not take part
at all in any of the programmes of the union organized to press the demands of the
employees like slogan shouting, procession, demonstration, hunger strike etc. Members
generally expect the office-bearers to do all that is necessary to achieve the demands.

20.6 Measures to Strengthen Trade Unions

The following are some of the measures that can be adapted to strengthen trade union.
Conflict Resolution & Management … 20.9 Industrial Social Work

20.6.1 Improvement of the Financial Position

The poor financial position of the trade union does not permit it to undertake certain
activities. For example, it requires fund to permit pamphlets and booklets, to prepare banners and
placards, to enable the officer-bearers to travel to different places to mobilize support and so on,
in the processes of working for the cause of the employees. The first corrective action that is
necessary therefore is to improve the financial position of every trade union. The following steps
may be taken to this regard
1. The amount of subscription must be increased in tune with the increase in the cost of
operations;
2. The members must be persuaded to make prompt payment of the subscription;
3. Donations may be sought from philanthropists.

20.6.2 Increase in Membership

Steps must be taken to increase then membership of trade unions. The employees must be
enlightened on the importance of cooperation and collective bargaining. This must be done on a
continuous basis or until such time the employees take the decision to join the union. The office
bearers must take the initiative to make the employers understand. The philosophy of “United
We Stand and Divided We Fall” must be the guideline to generate the positive attitudes of the
employees towards trade union.

20.6.3 Get rid of Political Affiliation

When trade unions have political affiliation, the political parties make an attempt to use the
power of unions to their own political gains. It is therefore important that our unions should free
themselves from political control. When the employees have certain genuine demands, they must
represent the same to their employers through able leaders who are none other than their own
fellow workers No attempt should be made to put the issue under political coverage.

20.6.4 Do away with Multiple Union

The existence of many trade unions within the same industry only reduces the power of
collective bargaining. Moreover, every such union works to its own ideals. The general interests
and well being of the employees thus are ignored. It is therefore necessary to make efforts to
bring all the employees under one union. United labour movement under one union, in other
way, reinforces the power of the employees.

20.6.5 Securing Recognition

Every employee, working in any industry, needs to be counselled by the office bearers of
the union in a way so that he or she can realize the importance of trade union. He or she must
come forward to join the union, willingly. Once the support of the employees is received, the
next step is to make all possible efforts to persuade every management to recognize the trade
union.

20.6.6 Amendment of the Trade Union Act

The act of 2026 is to be amended in the light of the intake numbers of the members of the
union. The minimum requirement to form a trade union, thereby, needs to be rectified in terms of
Centre for Distance Education 20.10 Acharya Nagarjuna University

a sizeable number. Again this approach may enhance the fund volume of the union in the way of
more deposition of the subscriptions by the member employees.

20.6.7 Social Responsibility and welfare Activities of the Trade Union

The trade union should understand that community-linked social activities can grow the
positive image of it in the perceptions of the employees.
At the same time, welfare activities of the trade union irrespective of its affiliation to political
ideology may consolidate the reflection that in other way stimulates the attitudes of the
employees to join in the activities of the union and earn its membership.

20.6.8 Management of Trade Union under Change

Trade unions are gradually gaining momentum to take part in business activities with the
management. The opening of economy accelerates the competition and asks for quick adaptation
where employees and management requires going hand in hand with the sole objective to sustain
the competitive advantage for business success. Under these two above specifications, the role of
the trade union needs a radical change than the earlier time of industrial capitalism. Trade union
has no option right now to go for opposition with management. Contrary to this, the trade union
comes with the equal footings with management to explore the possibilities of value addition in
every aspect of industrial activities. Changes of attitudes and outlooks of both the management
and the union are the necessary ingredients of the business success. No more the union needs to
play a major role in collective bargaining because the type of bargaining is more cooperative and
less distributive. The cooperative bargaining talks about integrative bargaining. i.e., both the
parties under bargain will get a win- win outcome where as distributive bargaining gives win-
lose out come.

In this new mode, the management thrust is on joint consultation committee, teamwork,
single table bargaining and a total complete agreement with trade union as partner. Within this
framework, let us now explore the areas where trade union and management can generate
meaningful relations. These areas are employee resourcing, employee involvement, employee
communication, employee relations A broad extension of industrial relations that even ask to
develop friendly public relations, performance management, appropriate control mechanism etc.
The presence of more and more the knowledge workers, technological advancement, rapid
changes in HR process and business process with high frequencies of business process and
knowledge process outsourcing, more competition, friendly business environment, information-
centric society with less gender differences etc, have profound impacts on the above areas,
asking for the new combined role of the management and the trade union. The essence of this
role urges the trade union to act as 1. Employment Advisor, 2.Collective Bar gainer, 3.
Performance Manager, 4. Team Interventionist, 5. Employee Welfare Activist, 6. Liaison
Activist outside the Firm and 7. Information Disseminator.

 Employee Resourcing
1. Employment Advisor   Employee Involvement
 Employee Communication
 Compensation Management
 Integrative Bargain Win-Win Situation
2. Collective Bar gainer 
Conflict Resolution & Management … 20.11 Industrial Social Work

 Distributive Bargain Win-Lose Situation

 Performance Reviewer

3. Performance Manager   Employee Counsellor

 Counsellor to Modify Performance
 Team Builder

4. Team   Interventionist Minimiser of Team Conflict

 Cross-functional Team Development
5. Employee Welfare Activist
6. Liaison Activist outside the Firm and
7. Information Disseminator
Therefore, trade union now a day operates with the management in an integrated fashion
and participates in the operative functions of employee-linked management more under
complementary role manifestations.

20.7 Essentials for Success of a Trade Union

The first essential of a trade union is to have an enlightened labour force to guide and
direct the movement. This presupposes the existence of correct leadership. Another essential is
that a trade union should have its foundation laid on solid ground so that it may achieve success
in the attainment of its objects.

The objective of a trade union should be clearly enunciated. The trade unions with a
complexity of objectives are looked upon with suspicion, and the employers, who should be
willing to sit with them round a table for discussion and negotiation, often try to bypass them.

The trade unions should have a coherent and well-conceived policy with regard to their
structure. A haphazard growth of trade unions is likely to give rise to difficult problems of
jurisdiction and spheres of activity. A trade union should be regarded as a business
organization, which requires careful planning, and sound organizational methods. To get the
success, the trade union should maintain transparency in its policies and actions. It should earn
the credibility to fight for the interests of the employees. It, therefore, requires operating with
some degrees of integrity to distribute benefits to the members and beyond them. It should
maintain the image to provide equitable procedural justice in order to gain the confidence of
the employees as a whole.

20.8 Summary
Trade unionism in India suffers from a variety of problems. This chapter, therefore,
has taken into account different issues pertaining to industrial relation management and
management of trade union with a view to enrich ourselves with the value added activities of the
trade union under changed circumstances. In the process, this chapter, in its approaches, throws
light on the outlines of trade unions’ functions and activities under the changed perspective of
trade union movements at the present time.

Note: Contributions of the Industrial Relations Management of e-University Home, in writing

this chapter, is acknowledged. Also this chapter recognizes the helps of the cited books
Centre for Distance Education 20.12 Acharya Nagarjuna University

20.9 Self Assessment Questions

1. Define Trade Unions? Why do workers organize into Unions?
2. Trace the Historical Evolution of Trade Union movement in India?
3. What are the aims and objectives of Trade Unions?
4. Explain the Structures and types of Trade Unions in India?
5. What are the functions of Trade Union?
6. Explain the Nature and Scope of Trade Union?
7. What are the characteristics of a Trade Union?

20.10 Further Readings

1. Arun Monappa, Industrial Relations, Tata Mc Graw Hill Publishing Company Ltd., New
Delhi, 2085.
2. A.M. Sarma, Aspects of Labour Welfare and Social Security, Himalaya Publishing House,
Bombay, 2097.
2. Employees Provident Funds & Miscellaneous Provisions Act, 2052 along with with allied
Schemes, Rules, Notifications & Forms, January 2020, by Professional (Author), Professional
book publishers.
3. Commentary on Employees Provident Funds and Miscellaneous Provisions Act, 2052 - Latest
2023 Edition by Kharbanda & Kharbanda , February 2023
4. Malik, P.L : Industrial Law, Eastern Book Company, Lucknow , 2099.
5. Vaidyanathan, N : ILO Conventions and India , Menerva Associates, Calcutta , 2075.
6. Sinha, G.P. & Sinha,, P.R.N : Industrial Relations and Labour Legislations, Oxford and IBH
Publishing Co., New Delhi , 2080.
7. Sharma, A.M : Legal Framework on Industrial Relations, Himalaya Publishing House,
Mumbai, 2002
8. Kapoor, N.D. (2011). Handbook of industrial law, New Delhi Sultan Chand & Sons; and
9.Robbins,S.P.,Judge,T.A.,and Sanghi, S.(2007). Organizational behaviour, (12th Ed.), Delhi
Pearson Education, Inc, pp.554-84; 3. Armstrong, M. (2088). A handbook of personnel
management practice, (3 rd Ed.), London Kogan Page..

Prof. V. Venkateswarlu
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 Lesson 21
COLLECTIVE BARGAINING AND PARTICIPATIVE MANAGEMENT

Objectives
After reading this lesson you shall be able to understand the concept of Collective
Bargaining workers participation in management, its features, objectives and levels. Further it
will also give you an insight into various ways of WPM as well as WPM in India

Structure
21.1 Introduction
21.2 Conceptual Analysis
21.3 Features of Collective Bargaining
21.4 Conditions for Successful Collective Bargaining
21.5 Negotiation Process
21.5.1 Pre-negotiation Phase
21.5.2 Negotiation Phase
21.6 Agreement
21.7 Participative Management
21.8. Concept of Workers’ Participation in Management (WPM)
21.9. Levels of workers’ Participation in Management
21.10. Methods/Schemes of WPM
21.11. Summary
21.12. Glossary
21.13. Self Assessment Questions
21.14. Lesson End Exercise
21.15. Suggested Readings

21.1 Introduction
Collective bargaining is specifically an industrial relations mechanism or tool, and is
an aspect of negotiation, applicable to the employment relationship. In collective bargaining
the union always has a collective interest since the negotiations are for the benefit of several
employees. Where collective bargaining is not for one employer but for several, collective
interests become a feature for both parties to the bargaining process. In negotiations in non-
employment situations, collective interests are less, or non-existent, except when states
negotiate with each other. Further, in labour relations, negotiations involve the public interest
such as where negotiations are on wages which can impact on prices. This is implicitly
recognized when a party or the parties seek the support of the public, especially where
negotiations have failed and work disruptions follow. Governments intervene when necessary
in collective bargaining because the negotiations are of interest to those beyond the parties
themselves.

Objective
This lesson will equip you with knowledge regarding collective bargaining concept,
its features, prerequisites and process

21.2. Conceptual analysis

The term “collective bargaining” was first used in the middle of 1891 by economic
theorist Beatrice Webb. However, collective negotiations and agreements had existed since
Centre for Distance Education 21.2 Acharya Nagarjuna University

the rise of trade unions during the 18th century. The term collective bargaining itself was
coined by a British labour historian named Mrs. Sidney Webb in 1891 (Hoffer). The National
Railway Act and the National Labour Relations Act made it illegal for any employer to deny
union rights to an employee. Another step in this direction came in 1962 when President John
F Kennedy issued an executive order granting Federal employees the right to unionize and
collective bargain. Collective bargaining has even been recognized internationally as a basic
human right and in 2007 the Canadian Supreme Court ruled that “The right to bargain
collectively with an employer enhances the human dignity, liberty and autonomy of workers
by giving them the opportunity to influence the establishment of workplace rules and thereby
gain some control over a major aspect of their lives, namely their work. ... Collective
bargaining is not simply an instrument for pursuing external ends ... rather [it] is
intrinsically valuable as an experience in self-government”. Even the Catholic Church has
asserted that it is imperative to protect workers’ rights including collective bargaining. It is
widely recognized that throughout history unionized employees, both public and private,
enjoy a living wage and benefits that they deserve while not having to worry about unjust
treatment, unfair labour practices, or termination without cause.

The ILO Right to Organize and Collective Bargaining Convention (No. 98), 19219
describes collective bargaining as: “Voluntary negotiation between employers or employers’
organizations and workers’ organizations, with a view to the regulation of terms and
conditions of employment by collective agreements.” Collective bargaining could also be
defined as negotiations relating to terms of employment and conditions of work between an
employer, a group of employers or an employers’ organization on the one hand, and
representative workers’ organizations on the other, with a view to reaching agreement.

So, we can conclude that collective bargaining is a process of negotiations between

employers and a group of employees aimed at reaching agreements that regulate working
conditions. The interests of the employees are commonly presented by representatives of a
trade union to which the employees belong. The collective agreements reached by these
negotiations usually set out wage scales, working hours, training, health and safety, overtime,
grievance mechanisms, and rights to participate in workplace or company affairs.

21.3. Features of Collective Bargaining

There are several essential features of collective bargaining, all of which cannot be
reflected in a single definition or description of the process:
 It is not equivalent to collective agreements because collective bargaining refers to the
process or means, and collective agreement refers to the possible result of bargaining.
 Collective bargaining may not always lead to a collective agreement.
 It is a method used by trade unions to improve the terms and conditions of
employment of their members.
 It seeks to restore the unequal bargaining position between employer and employee.
 Where it leads to an agreement, it modifies, rather than replaces, the individual
contract of employment, because it does not create the employer-employee
relationship.
 The process is bipartite, but in some developing countries the State plays a role in the
form of a conciliator where disagreements occur, or where collective bargaining
impinges on government policy.
 It is flexible in nature. If the parties adopt rigid attitude, they will not be able to reach
any agreement.
Collective Bargaining and Participative Mang….. 21.3 Industrial Social Work

 It is dynamic as it keeps on changing with changing times.

 It is continuous process. As soon as one agreement is signed, preparations for other
agreement get started.
 It is multidisciplinary as the parties involved must have knowledge of economics,
finance, applied psychology and sociology.
 It is step towards industrial democracy as it makes employees aware of their rights
and they negotiate for the same with their employer.

4.4 Conditions For Successful Collective Bargaining

• Pluralism and the Freedom of Association: A pluralistic outlook involves the
acceptance within a political system of pressure groups (e.g. religious groups, unions,
business associations, political parties) with specific interests with which a government
has dialogue, with a view to effecting compromises by making concessions. Pluralism
implies a process of bargaining between these groups, and between one and more of them
on the one hand and the government on the other. It therefore recognises these groups as
the checks and balances, which guarantee democracy. It is natural that in labour relations
in a pluralist society, collective bargaining is recognised as a fundamental tool through
which stability is maintained, while the freedom of association is the sine qua non
because without the right of association the interest groups in a society would be unable
to function effectively. There can, therefore, be no meaningful collective bargaining
without the freedom of association accorded to both employers and workers.

• Trade Union Recognition: The existence of the freedom of association does not
necessarily mean that there would automatically be recognition of unions for bargaining
purposes. Especially in systems where there is a multiplicity of trade unions, there should
be some pre-determined objective criteria operative within the industrial relations system
to decide when and how a union should be recognised for collective bargaining purposes.
The accepted principle is to recognise the most representative union, but what criteria is
used to decide it and by whom may differ from system to system. In some systems the
issue would be determined by requiring the union to have not less than a stipulated
percentage of the workers in the enterprise or category in its membership. The
representativeness may be decided by a referendum in the workplace or by an outside
certifying authority (such as a labour department or an independent statutory body). There
could be a condition that once certified as the bargaining agent, there cannot be a change
of agent for a prescribed period (e.g. one or two years) in order to ensure the stability of
the process.

• Observance of Agreements: Especially in developing countries where there is a

multiplicity of unions, unions are sometimes unable to secure observance of agreements
by their members. Where a labour law system provides for sanctions for breaches of
agreements, the labour administration authorities may be reluctant to impose sanctions on
workers. Where there is frequent non-observance of agreements or understandings
reached through the collective bargaining process, the party not in default would lose
faith in the process.

• Support of Labour Administration Authorities: Support by the labour administration

authorities is necessary for successful collective bargaining. This implies that they will:
provide the necessary climate for it. For instance, they should provide effective
conciliation services in the event of a breakdown in the process, and even provide the
necessary legal framework for it to operate in where necessary, e.g. provision for the
Centre for Distance Education 21.4 Acharya Nagarjuna University

registration of agreements. Will not support a party in breach of agreements concluded

consequent to collective bargaining. As far as is practicable, secure observance of
collective bargaining agreements. Provide methods for the settlement of disputes arising
out of collective bargaining if the parties themselves have not so provided.

• Good Faith: Collective bargaining is workable only if the parties bargain in good faith. If
not, there will be only the process of bargaining without a result viz. an agreement. Good
faith is more likely where certain attitudes are shared among employers, workers and their
organizations e.g. a belief and faith in the value of compromise through dialogue, in the
process of collective bargaining, and in the productive nature of the relationship
collective bargaining requires and develops. Strong organizations of workers and
employers contribute to bargaining in good faith, because there would be some parity in
the bargaining strength of the two parties.

• Proper Internal Communication: Both the management and union should keep their
managers and members respectively well informed, as a lack of proper communication
and information can lead to misunderstandings and even to strikes. Sometimes managers
and supervisors who are ill-informed may inadvertently mislead workers who work under
them about the current state of negotiations, the management’s objectives and so on. In
fact, it is necessary to involve managers in deciding on objectives and solutions, and such
participation is likely to ensure greater acceptance - and therefore better implementation -
by them.Strikes/ lockouts: Strikes and lockouts should be resorted to as last measure.
Before taking any decision, both the union and management should conduct periodic
discussions to avoid strikes and lockouts.

21.5. Negotiation Process

It consists of three phases:
• Pre-negotiation
• Negotiation
• Agreement

21.5.1 Pre-negotiation Phase

A party wishing to arrive at a satisfactory conclusion or arrangement through collective
bargaining should first identify the objectives of the exercise. Some objectives common to
employers are the following:
• Ensuring that the enterprise is not rendered uncompetitive
• The need to keep wage increases below the level of productivity increases and/or
within the inflation rate.
• Guarantees of industrial peace during the period of operation of the agreement as far
as possible managers should be consulted in determining objectives; their priorities
should be solicited, and they should be aware of the company’s views in regard to
objectives so that they could be tested against the managers’ views. It is insufficient to
merely determine objectives. A tentative plan to achieve these objectives, which can
be modified during the course of the negotiations, could be formulated. Such a plan
should include the company’s requests to the union. For instance, work reorganization
to increase productivity to absorb the cost increases consequent upon collective
bargaining may form part of the company’s plan. Negotiations on the union’s
demands are generally an ideal setting in which management can achieve some of its
objectives through agreement. In order to achieve this, the management must be clear
about its own priorities. If there is an existing collective agreement, it would be a
Collective Bargaining and Participative Mang….. 21.5 Industrial Social Work

useful starting point. An analysis should be made of how it has worked, its
unsatisfactory features from the company’s point of view should be identified, and the
changes necessary determined.

• Negotiating Team: The negotiating team, and the respective roles of the members,
should be determined before the negotiations. Employers would find it useful to
include in the team people from different disciplines.

• Research and Study: The union’s demands should be carefully studied. The
following are some of the matters to which attention should be paid:
• Assess the economic impact of the demands on the company.
• Make a comparative study, e.g. in a wage demand one should ascertain comparative
wage rates in the industry and in allied or similar businesses, the minimum wage, if
any, and the rates applicable in other collective agreements.
• Separate the demands which the company has no intention of fulfilling or giving,
either on a question of principle or due to economic incapacity.
• Prepare the company’s position in regard to the other demands, e.g. the conditions on
which the company may be prepared to grant them or compromise on them.
• Identify the demands which may be of crucial importance to the union or to the
employees as the case may be. This is crucial to success in negotiations because,
without a proper assessment of such demands, a negotiated settlement may not result
or, if one results, it may lack durability because it has not addressed the main
problems. The issues which may be of crucial importance may not be the same in the
case of both (union and employees) as they may have differing interests. Having
identified the crucial demands the company should formulate its strategy in relation to
them e.g. the possibility of trading some of the company’s demands in return for the
union’s demands.

• Responding to the Union’s Requests: It is a matter of assessment in each situation

as to whether the management should make an initial response in writing to the union
before negotiations commence. Usually it is desirable that written positions stated
before negotiations commence should not contain a flat or blanket refusal. At this
stage it is preferable to couch a refusal in language 13which does not give the
impression of an out-of-hand rejection or a rejection without consideration of the
merits. Negative answers may sometimes be better given during the negotiations
because it affords greater opportunities for explanations of the reasons for the
negative answers. A rejection during negotiations would more likely give the
impression to the union and employees that such rejection was made only after
negotiations and not before. It is always useful from the point of view of reaching
agreement on other matters to first listen to the reasons adduced by the union for a
demand which the company does not propose to accept. A rejection during
negotiations also enables the employer to convince a union of at least some of the
reasons why the demand is not acceptable. It also prevents a union from resorting to
trade union action on the issue of a refusal to negotiate, as distinct from rejection of the
demands after negotiation.

• Inventing Options: Since negotiations may not proceed or take place in the way a party may
plan, a party should be able to provide alternative options to what he, or the other party,
expects. For example, if it transpires that the wage increase sought is not acceptable, the
Centre for Distance Education 21.6 Acharya Nagarjuna University

employer should be prepared with alternatives to cushion the impact of an increase in excess
of what it had planned to agree to.
• Strategy: A party to collective bargaining negotiations has to formulate a strategy for all
stages of the negotiation, including the pre-negotiation stage. Before negotiations commence,
the strategy should include matters such as;
• Options as referred to above
• How much to offer while leaving room for further negotiation if the offer fails. The offer
should be sufficiently attractive so as not to lead to a breakdown in negotiations.
• How to link one’s requirements to the concessions one makes.

21.5.2 Negotiation Phase

• Who Commences: There is no inflexible rule as to who should open the negotiations.
However, it is not unreasonable for the management to claim that if the union has initiated the
negotiations, it should first outline its rationale and justification for doing so.
• Nevertheless, the management should make it clear at the outset that agreement on any
particular issue is subject to an overall settlement, including its own expectations from the
union.

Management’s Reactions; In outlining the employer ’s response, the following could be

included:
• The context in which the employer is negotiating, such as the business environment, and
how this affects the employer’s position in the negotiations.
• (b) A judgement will have to be made about the stage at which the union should be
informed about the items on which the employer will not make any concession.
However, the impression should not be created that the union will not be allowed an
opportunity to present its case.
• (c) The basis on which the employer is prepared to negotiate. This could include the
employer’s objectives and expectations from a collective agreement, and any
unsatisfactory features in the existing agreement (if there is one) which require to be
rectified.

• Internal Communication: During the negotiations there should be good internal

communication between the company and its managers about the situation at any
given time. This will help clarify misunderstandings and even eliminate
disinformation especially where employees, as happens in developing countries, seek
information or clarification from their managers.

• Notes of Discussion: Notes of the discussion should be maintained, and preferably

issued and agreed on with the other party, to avoid misunderstandings. Such notes
could be useful in the event of disputes and a breakdown in negotiations.

• Styles of Negotiation: It is an essential principle of negotiation - indeed of human

relations - that one’s style of negotiation may need to be adapted to the style of the
other party. The negotiator who adopts only one approach to negotiations may be
puzzled when he finds that the approach in question bears fruit in some cases but
causes an adverse reaction in other cases. The ability to allow the attitudes of the other
party or the facts or merits of the issue to fashion one’s own particular style in a given
negotiation requires a high degree of flexibility on the part of the negotiator, an
absence of a pre-conceived approach to negotiation, and recognition of the fact that
ultimately what matters is one’s ability to secure one’s objectives through dialogue.
However, this should not be understood to mean that there should not be a principled
Collective Bargaining and Participative Mang….. 21.7 Industrial Social Work

approach to negotiation. What it means is that often one has to take into account even
the idiosyncrasies of the other party and assess what form of presentation is likely to
appeal best to the person whom one is trying to convince.
Some Basic Rules of Negotiations
• A negotiator should view negotiations as an exercise with both sides walking towards
each other, rather than away from each other. This will enable the negotiator to keep
in mind that the final objective is a satisfactory agreement. It will also lead to a search
for, or identification of, common ground while also addressing the differences.
• A negotiator should be good at listening carefully to the other party who will,
otherwise, feel that disagreement with his position is due to a lack of understanding.
This is also necessary to encourage the other party to listen to you. Some indication
should be given to suggest that the party has understood the other’s position. Body
language often communicates a party’s reactions.
• A party should build its case in a logical sequence and, as far as possible, try to obtain
agreement at each stage of the process. This will narrow the areas of disagreement
and facilitate focusing on those aspects.
• Counter proposals and conditions attached to concessions should be indicated as early
as possible, so that the basis on which a party is prepared to agree or compromise is
understood. Whenever possible, invite the other party to look at the problem from the
opposite perspective, e.g. a wage increase as an additional cost which, due to
competitive pressures, requires management to find ways to absorb it. It is sometimes
useful to ask the union for suggestions on how it can cooperate to facilitate absorption
of the increase.
• It is usually preferable to avoid taking up at the outset the position that a particular
item is not negotiable. It is more productive to request a party to justify its claim, and
then point out why that claim is unreasonable. Taking up a non-negotiable position
can lead to the perception that the position has nothing to do with the merits and that
the party is not willing to listen.
• Skilful questioning is an effective way of compelling the other party to justify its
claim on the merits, and even shifting the other party to a different point of view.

21.6. The Agreement

When agreement is reached one of the following two courses may be adopted:
• Set out the agreement reached in a letter to the union and, on confirmation, prepare a
draft agreement.
• Alternatively provide the union with a draft agreement. This would be the better
course of action as the actual agreement reached will be clearer. It also leaves less
room for further negotiations between the time agreement is reached and the draft
agreement is approved.
• Before the agreement is signed, the proper interpretation of clauses which have the
potential to result in problems of interpretation should be agreed upon through, for
example, an exchange of letters. Where there are understandings which affect t the
interpretation of the agreement, they should be reduced to writing (e.g. in a letter)
before the agreement is signed. But wherever possible, the agreement should be self-
contained, inclusive of definitions or interpretations. The contents of the agreement
would depend on what is agreed upon and on the subject matter.
21.7. Workers Participation in Management
Workers’ participation in management is an essential ingredient of Industrial
democracy. The concept of workers’ participation in management is based on Human
Centre for Distance Education 21.8 Acharya Nagarjuna University

Relations approach to Management, which brought about a new set of values to labour and
management.

21.8. Concept of Workers’ Participation In Management (WPM)

Traditionally the concept of Workers’ Participation in Management (WPM) refers to
participation of non-managerial employees in the decisionmaking process of the organization.
Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in
management. In Germany it is known as co-determination while in Yugoslavia it is known as
self-management. The International Labour Organization has been encouraging member
nations to promote the scheme of Workers’ Participation in Management.

Definitions: According to Keith Davis, Participation refers to the mental and emotional
involvement of a person in a group situation, which encourages him to contribute to group
goals and share the responsibility of achievement.

According to Walpole, Participation in Management gives the worker a sense of

importance, pride and accomplishment; it gives him the freedom of opportunity for self-
expression; a feeling of belongingness with the place of work and a sense of workmanship
and creativity.

Clegg says, “It implies a situation where workers representatives are, to some extent,
involved in the process of management decision making, but where the ultimate power is in
the hands of the management”.

The concept of workers’ participation in management encompasses the following:

• It provides scope for employees in decision-making of the organization.
• The participation may be at the shop level, departmental level or at the top level.
• The participation includes the willingness to share the responsibility of the
organization by the workers.

21.8.1. Features of (WPM) Workers’ Participation in Management:

• Participation means mental and emotional involvement rather than mere physical
presence.
• Workers participate in management not as individuals but collectively as a group
through their representatives.
• Workers’ participation in management may be formal or informal. In both the cases it
is a system of communication and consultation whereby employees express their
opinions and contribute to managerial decisions.

21.8.2. Objectives of (WPM) Workers’ Participation in Management

• To establish Industrial Democracy.
• To build the most dynamic Human Resources.
• To satisfy the workers’ social and esteem needs.
• To strengthen labour-management co-operation and thus maintain Industrial peace
and harmony.
• To promote increased productivity for the advantage of the organization, workers and
the society at large.
• Its psychological objective is to secure full recognition of the workers.
Collective Bargaining and Participative Mang….. 21.9 Industrial Social Work

21.8.3 Pre-requisites for Effective Participation

The pre-requisites for the success of any scheme of participative management are the
following: There should be a strong, democratic and representative unionism for the success
of participative management.
• There should be mutually-agreed and clearly-formulated objectives for participation
to succeed.
• There should be a feeling of participation at all levels.
• Fourthly, there should be effective consultation of the workers by the management.
• Both the management and the workers must have full faith in the soundness of the
philosophy underlying the concept of labour participation.
• Till the participative structure is fully accepted by the parties,
• Legislative support is necessary to ensure that rights of each other are recognised and
protected.
• Education and training make a significant contribution to the purposeful working of
participative management.
• Forums of participation, areas of participation and guidelines for implementation of
decisions should be specific and there should be prompt follow-up action and
feedback.

21.9. Levels of workers’ Participation in Management

a) Information participation: It ensures that employees are able to receive information
and express their views pertaining to the matter of general economic importance.
b) Consultative importance: Here workers are consulted on the matters of employee
welfare such as work, safety and health. However, final decision always rests with the
top-level management, as employees’ views are only advisory in nature.
c) Associative participation: It is an extension of consultative participation as
management here is under the moral obligation to accept and implement the
unanimous decisions of the employees’. Under this method the managers and workers
jointly take decisions.
d) Administrative participation: It ensures greater share of workers’ participation in
discharge of managerial functions. Here, decisions already taken by the management
come to employees, preferably with alternatives for administration and employees
have to select the best from those for implementation.
e) Decisive participation: Highest level of participation where decisions are jointly
taken on the matters relating to production, welfare etc.

21.9.1. Workers’ Empowerment and Quality Circles

A quality circle (QC) consists of seven to ten people from the same work area who
meet regularly to define, analyse, and solve quality and related problems in their area.
Membership is strictly voluntary, and meetings are usually held once a week, for an hour.
During the groups’ initial meetings, members are trained in problem-solving techniques
borrowed from group dynamics, industrial engineering and quality control. These techniques
include brainstorming, Pareto analysis, cause-and-effect analysis, histograms, control charts,
stratification and scatter diagrams. Quality circles are credited with producing quick, concrete
and impressive results when correctly implemented. Their advantages include the following:
1. Employees are involved in decision making. This privilege makes them acquire
communication and analytical skills and improve the efficiency at the workplace.
2. Savings-to-costs ratios generally are higher than those achieved with other
productivity-improvement programmes.
Centre for Distance Education 21.10 Acharya Nagarjuna University

3. Since the programme is voluntary, employees and unions generally do not view them
as another cost-control effort.
4. Circle members enhance their chances of promotion to supervisory positions.
5. Started first in Japan in the early 1960s, QCs have spread all over the world.
6. In our country too, they are being introduced in several companies. BHEL and BEL
are only two names which come to one’s memory SKF, Mahindra and Mahindra.
7. Alfa Laval and Godrej and Boyce are other names which have tried QCs.

21.9.2. Worker’s Empowerment

• Empowering refers to passing on authority and responsibility.
• Empowerment occurs, when power goes to the employees who then experience a
sense of ownership and control over their Jobs. Empowered individuals know that
their jobs belong to them. Given a say on how things are done, employees feel more
responsible. When they feel responsible, they show more initiative in their work, get
more done, and enjoy the work more.

8. A Model of QC Process
𝑆𝑒𝑡 − 𝑢𝑝 𝐶𝑖𝑟𝑐𝑙𝑒

𝑇𝑟𝑎𝑖𝑛 𝑀𝑒𝑚𝑏𝑒𝑟𝑠

𝑆𝑒𝑙𝑒𝑐𝑡 𝑃𝑟𝑜𝑏𝑙𝑒𝑚 𝑇𝑜𝑝𝑖𝑐

𝐼𝑛𝑣𝑒𝑠𝑡𝑖𝑔𝑎𝑡𝑒 𝑃𝑟𝑜𝑏𝑙𝑒𝑚

𝐷𝑒𝑣𝑒𝑙𝑜𝑝 𝑆𝑜𝑙𝑢𝑡𝑖𝑜𝑛

𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑆𝑢𝑔𝑔𝑒𝑠𝑡𝑖𝑜𝑛𝑠 𝑡𝑜 𝑀𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡

𝐸𝑥𝑒𝑐𝑢𝑡𝑒 𝑆𝑜𝑙𝑢𝑡𝑖𝑜𝑛𝑠

𝑀𝑜𝑛𝑖𝑡𝑜𝑟 𝑆𝑜𝑙𝑢𝑡𝑖𝑜𝑛

(Source : Robert P. Bechio, Organisational Behaviour. The Dryden Press, 1995, P. 239)

Empowered is facilitated by a combination of factors, including values, leadership

actions, job structure, and reward systems, as illustrated in above. Self-directed teams
(another name for empowered teams) have the following distinct features
• They are empowered to share various management and leadership functions.
• They plan, control and improve their own work processes.
• They set their own goals and inspect their work.

21.10. Methods/Schemes of WPM

1. Suggestion schemes: Participation of workers can take place through suggestion scheme.
Under this method workers are invited and encouraged to offer suggestions for improving the
working of the enterprise. A suggestion box is installed and any worker can write his
suggestions and drop them in the box. Periodically all the suggestions are scrutinized by the
suggestion committee or suggestion screening committee. The committee is constituted by
equal representation from the management and the workers. The committee screens various
Collective Bargaining and Participative Mang….. 21.11 Industrial Social Work

suggestions received from the workers. Good suggestions are accepted for implementation
and suitable awards are given to the concerned workers. Suggestion schemes encourage
workers’ interest in the functioning of an enterprise.

Works committee:
Under the Industrial Disputes Act, 19217, every establishment employing 100 or
more workers is required to constitute a works committee. Such a committee consists of
equal number of representatives from the employer and the employees. The main purpose of
this committee is to provide measures for securing and preserving amity and good relations
between the employer and the employees.

Functions: Works committee deals with matters of day-to-day functioning at the shop floor
level. Works committees are concerned with:
• Conditions of work such as ventilation, lighting and sanitation.
• Amenities such as drinking water, canteens, dining rooms, medical and health
services.
• Educational and recreational activities.
• Safety measures, accident prevention mechanisms etc.
• Works committees function actively in some organizations like Tata Steel, HLL, etc
but the progress of Works Committees in many organizations has not been very
satisfactory due to the following reasons:
• Lack of competence and interest on the part of workers’ representatives.
• Employees consider it below their dignity and status to sit alongside blue-collar
workers.
• Lack of feedback on performance of Works Committee.
• Undue delay and problems in implementation due to advisory nature of
recommendations.

Joint Management Councils:

Under this system Joint Management Councils are constituted at the plant level. These
councils were setup as early as 1958. These councils consist of equal number of
representatives of the employers and employees, not exceeding 12 at the plant level. The
plant should employ at least500 workers. The council discusses various matters relating to the
working of the industry. This council is entrusted with the responsibility of administering
welfare measures, supervision of safety and health schemes, scheduling of working hours,
rewards for suggestions etc. Wages, bonus, personal problems of the workers are outside the
scope of Joint management councils. The council is to take up issues related to accident
prevention, management of canteens, water, meals, revision of work rules, absenteeism,
indiscipline etc. the performance of Joint Management Councils have not been satisfactory
due to the following reasons:
• Workers’ representatives feel dissatisfied as the council’s functions are concerned
with only the welfare activities.
• Trade unions fear that these councils will weaken their strength as workers come
under the direct influence of these councils.

Work Directors:
Under this method, one or two representatives of workers are nominated or elected to
the Board of Directors. This is the full-fledged and highest form of workers’ participation in
management. The basic idea behind this method is that the representation of workers at the
top-level would usher Industrial Democracy, congenial employee-employer relations and
Centre for Distance Education 21.12 Acharya Nagarjuna University

safeguard the workers’ interests. The Government of India introduced this scheme in several
public sector enterprises such as Hindustan Antibiotics, Hindustan Organic Chemicals Ltd
etc. However the scheme of appointment of such a director from among the employees failed
miserably and the scheme was subsequently dropped.
Co-partnership:
Co-partnership involves employees’ participation in the share capital of a company in
which they are employed. By virtue of their being shareholders, they have the right to
participate in the management of the company. Shares of the company can be acquired by
workers making cash payment or by way of stock options scheme. The basic objective of
stock options is not to pass on control in the hands of employees but providing better
financial incentives for industrial productivity. But in developed countries, WPM through co-
partnership is limited.

Joint Councils:
The joint councils are constituted for the whole unit, in every Industrial Unit
employing 500 or more workers; there should be a Joint Council for the whole unit. Only
such persons who are actually engaged in the unit shall be the members of Joint Council. A
joint council shall meet at least once in a quarter. The chief executive of the unit shall be the
chairperson of the joint council. The vice-chairman of the joint council will be nominated by
the worker members of the council. The decisions of the Joint Council shall be based on the
consensus and not on the basis of voting.In 1977 the above scheme was extended to the PSUs
like commercial and service ector organizations employing 100 or more persons. The
organizations include hotels, hospitals, railway and road transport, post and telegraph offices,
state electricity boards.

Shop councils:
Government of India on the 30th of October 1975 announced a new scheme in WPM. In
every Industrial establishment employing 500 or more workmen, the employer shall
constitute a shop council. Shop council represents each department or a shop in a unit. Each
shop council consists of an equal number of representatives from both employer and
employees. The employers’ representatives will be nominated by the management and must
consist of persons within the establishment. The workers’ representatives will be from among
the workers of the department or shop concerned. The total number of employees may not
exceed.

21.11. Summary
Workers’ participation in management implies mental and emotional involvement of workers
in the management of Enterprise. It is considered as a mechanism where workers have a say
in the decision-making. There are five levels of WPM. There are different methods of WPM
viz., works committees, joint councils, shop councils, Work directors etc. Indian Govt. has
tried to implement WPM through various schemes but the initiative has not yielded good
results.

21.12. Glossary
 Industrial democracy: The involvement and empowerment of employees in
decision-making within the organization by such methods as joint labormanagement
committees, work teams, quality circles, employee task forces, etc. The intention
behind his appointment is to minimize/end the mal practices in jobber system.
Collective Bargaining and Participative Mang….. 21.13 Industrial Social Work

 Labour welfare: It refers to the Statutory and voluntary efforts made for betterment
of he labour.
 Philanthropic approach: This theory urges that good should be done for human
beings.
 Public Relations Approach: This theory works on the basis of goodwill between
employers and employees and the general public.
 The Placating theory: The placating theory advocates timely satisfaction of workers
for their appeasement.
 The Policing Approach: This theory is basically meant for making the employees
and the workers to avail the basic facilities needed.

21.13. Self assessment Questions

Q1. What are the duties of labour welfare officer?
Q2. Explain different approaches of labour welfare.
Q3. What is the purpose of labour welfare?

21.121. Lesson End Exercise

Q1. Tick the right Option:
A labour Welfare officer is supposed
a) to act as a negotiating officer.
b) to shape and formulate labour policy
c) to establish contacts with outside public for proper enforcement of various ‘Acts’ e.g.
factory inspectors, medical officers etc.
d) to deal with wages and employment.
e) all

Q2. Objectives of Labour Welfare are

a) to provide social comfort to employees.
b) to provide intellectual improvement of employees.
c) to develop sense of responsibility and belongingness among employees.
d) to ensures that the working conditions for employees are of higher standard.
e) to build stable work force.
f) to reduce absenteeism and labour turnover.
g) to make employees lives good and worth living.
h) all

Q3. According to the Factories Act, 19218 section 219(2) it is the State Govt. who is to
prescribe the duties, qualification & condition of service of officers employed under sub
section
a) 1
b) 2
c) 3
d) 21

Q4. This approach is basically meant for making the employees and the workers avail the
basic facilities needed:
a) Policing
b) Paternalistic
c) Public Relations
Centre for Distance Education 21.14 Acharya Nagarjuna University

d) Functional
e) Social

21.15. Suggested Readings

1) Ratna Sen (2009) “The evolution of industrial relations in West Bengal”, ILO Asia-
Pacific Working Paper Series.
2) Ratna Sen ( 2010) Industrial Relations – Text and Cases, second edition (Macmillan
India).
3) Ratna Sen (1996) Workers’ management – some experiences in industria cooperatives
(Kolkata, Subarnarekha).
4) Karnik V.B. (19721) Indian Labour: Problems and Prospects.
5) Karnik V.G. (1999) Human Resource Management for Business Prosperity, Labour
Law Agency, Bombay.
6) Moorthy M.V. Principles of Labour Welfare, New Delhi - Asia Publishing House,
1961.
7) Arun Monappa, Industrial Relations, Tata Mc Graw Hill.
8) Michael V P, HRM and Human Relations, Himalaya Publication
9) Mamoria C. B. and Mamoria C.B., and Gankar, S.V. Dynamics of Industrial Relations
in India, Himalaya Publication

Prof. K. Dhanalaskmi
Chairperson, BoS, PG
Head, Dept. of Sociology & Social Work
Acharya Nagarjuna University
 401SW21

MASTER OF SOCIAL WORK (MSW)

SEMESTER – IV

PAPER – I - INDUSTRIAL SOCIAL WORK

Max marks:70

Answer any five questions, all questions carry equal marks.

1. Define human resource management, discus its scope and functions.

2. What is human resource planning? Explain the process of HR planning.

3. Discuss the important provision of health, safety and welfare under the faction Act, 1948.

4. Explain the dispute settlement authority under Industrial Disputer Act, 1947.

5. Discuss the wage payment according to the payment of wage Act, 1936.

6. Explain the benefits under Employees state Insurance act, 1948.

7. Define labour welfare, discuss the principles of labour welfare.

8. Explain the statutory labour welfare programmer.

9. Define the term industrial relations, discuss its scope and Dunlop’s approach to Industrial

relations.

10. What is collective bargaining? Explain its importance in industrial.