UNIT-3 KMBHR03

The Factories Act 1948

✓ The Factories Act 1934 was passed replacing all the previous legislation in regard to factories.
This act was drafted in the light of the recommendations of the Royal Commission on Labour.
This Act has also been amended suitably from time to time.
✓ The experience of working of the Factories Act, 1934 had revealed a number of defects and
weakness which have hampered effective administration of the Act, and the need for
wholesale revision of the act to extend its protective provisions to the large number of smaller
industrial establishments was felt.
✓ Therefore, the Factories Act, 1948 consolidating and amending the law relating to labour in
factories, was passed by the Constituent Assembly on August 28, 1948. The Act received the
assent of Governor General of India on 23 September 1948 and came into force on April 1,
1949.
Objective of Factories Act, 1948
The main objectives of the Indian Factories Act, 1948are to regulate the working conditions in
factories, to regulate health, safety welfare, and annual leave and enact special provision in
respect of young persons, women and children who work in the factories.
1. Working Hours:
According to the provision of working hours of adults, no adult worker shall be required or allowed to
work in a factory for more than 48 hours in a week. There should be a weekly holiday.
2. Health:
✓ For protecting the health of workers, the Act lays down that every factory shall be kept clean
and all necessary precautions shall be taken in this regard. The factories should have proper
drainage system, adequate lighting, ventilation, temperature etc.
✓ Adequate arrangements for drinking water should be made. Sufficient latrine and urinals
should be provided at convenient places. These should be easily accessible to workers and
must be kept cleaned.
3. Safety:
✓ In order to provide safety to the workers, the Act provides that the machinery should be
fenced, no young person shall work at any dangerous machine, in confined spaces, there
should be provision for manholes of adequate size so that in case of emergency the workers
can escape.
4. Welfare:
✓ For the welfare of the workers, the Act provides that in every factory adequate and suitable
facilities for washing should be provided and maintained for the use of workers.
✓ Facilities for storing and drying clothing, facilities for sitting, first-aid appliances, shelters,
rest rooms’ and lunch rooms, crèches, should be there.
5. Penalties
The provisions of The Factories Act, 1948, or any rules made under the Act, or any order given in
writing under the Act is violated, it is treated as an offence. The following penalties can be imposed:-
(a) Imprisonment for a term which may extend to one year;
(b) Fine which may extend to one lakh rupees; or
(c) Both fine and imprisonment.
Applicability of Factories Act, 1948
The Act is applicable to any factory whereon ten or more workers are working, or were working on
any day of the preceding twelve months, and in any part of which a manufacturing process is being
carried on with the aid of power, or is ordinarily so carried on, or whereon twenty or more workers are
working, or were working on any day of the preceding twelve months, and in any part of which a
manufacturing process is being carried on without the aid of power, or is ordinarily so carried on; but
this does not include a mine, or a mobile unit belonging to the armed forces of the union, a railway
running shed or a hotel, restaurant or eating place.

Importance of Factories Act, 1948

The aim and object of the Act is essentially to safeguard the interests of workers, stop their
exploitation and take care of their safety, hygiene and welfare at their places of work
 Duties of Factory Manager
The Duties of Factory Manager are mentioned in the following Sections of Factory Act, 1948: –

1. Right of Workers to be warned about imminent danger. (Section 41-H)

It shall be the duty of such occupier, agent, manager or the person in charge of the factory or process
to take immediate remedial action if he is satisfied about the existence of such imminent danger in the
factory where the worker is engaged in any hazardous process and send a report forthwith of the
action taken to the nearest Inspector.
2. Notice of periods of work for adults. (Section 61)
The manager of the factory shall display correctly and maintained in every factory in accordance with
the provisions of sub-section (2) of section 108, a notice of periods of work for adults, showing
clearly for every day the periods during which adult workers may be required to work, fix the periods
during which each relay of the group may be required to work, classify them into groups according to
the nature of their work indicating the number of workers in each group, shall draw up a scheme of
shifts where under the periods during which any relay of the group may be required to work.
3. Register of Adult Workers. (Section 62)
The manager of every factory shall maintain a register of adult workers, to be available to the
Inspector at all times during working hours, or when any work is being carried on in the factory.
4. Annual Leave with Wage. (Section 79)
For the purpose of ensuring the continuity of work, the occupier or manager of the factory, in
agreement with the Works Committee of the factory constituted under section 3 of the Industrial
Disputes Act, 1947 (14 of 1947), or a similar Committee constituted under any other Act or if there is
no such Works Committee or a similar Committee in the factory,
5. Notice of Certain Dangerous Occurrences. (Section 88A)
Notice of certain dangerous occurrences. —Where in a factory any dangerous occurrence of such
nature as may be prescribed occurs, whether causing any bodily injury or disability or not, the
manager of the factory shall send notice thereof to such authorities, and in such form and within such
time, as may be prescribed.
6. Notice of Certain Disease. (Section 89)
Where any worker in a factory contracts any disease specified in 1[the Third Schedule], the manager
of the factory shall send notice thereof to such authorities, and in such form and within such time, as
may be prescribed.
7. Safety and Occupational Health Survey. (Section 91-A)
The occupier or manager of the factory or any other person who for the time being purports to be in
charge of the factory, undertake safety and occupational health surveys, and such occupier or manager
or other person shall afford all facilities for such every, including facilities for the examination and
testing of plant and machinery and collection of samples and other data relevant to the survey.

8. Notice of Certain Accidents. (Section 88)

Where in any factory an accident occurs which causes death, or which causes any bodily injury by
reason of which the person injured is prevented from working for a period of forty-eight hours or
more immediately following the accident, or which is of such nature as may be prescribed in this
behalf, the manager of the factory shall send notice thereof to such authorities, and in such form and
within such time, as may be prescribed to the Chief Inspector.
Conclusion
✓ The present Factories Act in operation for the last 37 years has provided ample benefits to the
factory workers.
✓ It has considerably improved their working and employment conditions.
✓ The Government is actively considering the introduction of some vital amendments to the Act
to keep it in tune with time and make it more effective While dealing with the duties of the
Occupier and Factory Manager under Factories Act 1948, altogether we can conclude that the
Occupier and Factory Manager has a vital role to play in assuring the health, safety and
welfare of the workers as they are the backbone of the industrial sector.
 ✓ It is, however necessary that the workers and their representatives make themselves aware of
the various provisions of the Act and safeguard their interests on their own and force the
defaulting employer to be conscious of his legal obligations.

THE PAYMENT OF WAGES ACT, 1936

Object and scope of the Act
The main objects of the payment of wages Act are:
o To make sure, regular and timely payment of wages to the employees,
o To check unlawful deductions being made from wages and illogical fines being
imposed on the employed persons.
The scope of the Act extends to the whole of India.
Application of the Act
The act applies to the payment of wages to persons employed in any factory, to persons employed (otherw
isethan a factory) upon any railway by railway administration, or to persons employed in an industrial or o
therestablishment specified under Section 2 of the Act.
The State Government may, after giving three months’ noticeof its intention of so
doing, by notification in the Official Gazette, extend the provisions of this Act or any of them
to thepayment of wages to any class of persons employed in any establishment or class of
establishments specified by the CentralGovernment or a State Government under section2(ii)
Actshall be applicable if the wages for the wage period to an employed person do
not exceed Rs. 6000 or such higher sumwhich the central government may stipulate.
Important Definitions
Section 2: Employed person
Employed person includes the legal representative of a deceased employed person. - Section 2(i)
Employer
Employer includes the legal representative of a deceased employer. The liability of the
employer’s legalrepresentative for the payment of wages due to the employed persons is
limited to the extent of the value of theproperty inherited by him. Section 2(ia)
Factory
Factory means a factory as defined in section 2(m) of the Factories Act, 1948 and
includes any place to which theprovisions of that Act have been applied.
Industrial and other establishments
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;
(b) Air transport service other than such service belonging to, or exclusively employed
in the military, naval or airforces of the Union or the Civil Aviation Department of
the Government of India;
(c) Dock, wharf or jetty;
(d) Inland vessel, mechanically propelled;
(e) mine, quarry or oil-field;
(f) Plantation;
(g) Workshop or other establishment, in which articles are produced, adapted, with a view
to their use, transport or sale;
(h) establishment in which any work relating to the construction, development or maintenance of b
uildings,roads, bridges or canals, or relating to operations connected with navigation, irrigation,
or to the supply ofwater or relating to thegeneration, transmission and distribution of electricity or an
y other form of power is being carried on.
(i) any other establishment or class of establishments which the Central Government
or a StateGovernment may, having regard to the nature thereof, the need for
protection of persons employed thereinand other relevant circumstances, specify,
by notification in the Official Gazette.
Wages
Wages means all remuneration (whether by way of salary, allowances, or otherwise)
expressed in terms of money orcapable of being so expressed which would, if the terms of
employment, express or implied, were fulfilled, be payable to aperson employed in respect
of his employment or of work done in such employment, and 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 o
r by anyother 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, butdoes 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 enforce,
Section 3: Responsibility for payment of wages
Every employer shall be responsible for the payment to persons employed by him of all
wages required to be paid under this Act.
The following persons shall also be responsible for the payment of wages:
(a) In factories, if a person has been named as the manager of the factory of the
Factories Act, 1948.
(b) In industrial or other establishments, if there is a person responsible to the employer
for the supervision andcontrol of the industrial or other establishments; and
(c) Upon railways (otherwise than in factories), if the employer is the railway administrati
on and therailway administration has nominated a person in this behalf
for the local area concerned.
Section 4: Fixation of wage-periods
It is required under that:
(1) Every person responsible for the payment of wages under section 3 shall fix periods in respect
of which such wages shall be payable.
(2) No wage-period shall exceed one month. Payment of wages can be made on daily,
weekly, fortnightly or monthly basis.
Section 5: Time of payment of wages
Specifies that the wages of every person employed upon or in:
(a) Any railway, factory or industrial or other establishment upon or in which less than
one thousand persons areemployed, shall be paid before the expiry of the seventh day,
(b) Any other railway, factory or industrial or other establishment, shall be paid before
the expiry of the tenth day, after the last day of the wage-period in respect of which
the wages are payable.
(1) Where the employment of anyperson is terminated by or on behalf of the
employer, the wages, earned by him shall be paid before the expiry of thesecond working
day from the day on which his employment is terminated. Where the employment of any
person in anestablishment is terminated due to the closure of the establishment for any
reason other than a weekly or otherrecognised holiday, the wages earned by him shall be
paid before the expiry of the second day from the day on whichhis employment is so
terminated.
Section 5(4) All payments of wages shall be made on a working day.

Section 6: Wages to be paid in current coin or currency notes

All wages shall be paid in current coin or currency notes or in both.
The employer may, after obtaining the written authorisation of the employed person,
pay him the wages either bycheque or by crediting the wages in his bank account.
Section 7: Deductions which may be made from wages
Any loss of wages resulting from the imposition, for good and sufficient cause, upon a
person employed of any of the following penalties, namely:-
(i) The withholding of increment or promotion (including the stoppage of increment at
an efficiency bar);
(ii) The reduction to a lower post or time scale or to a lower stage in a time scale; or
(iii) Suspension;
The Authorised deductions may be of the following kinds only, namely:
(a) fines;
(b) deductions for absence from duty;
(c) deductions for damage to or loss of goods expressly entrusted to the employed
person for custody, orfor loss of money for which he is required to account,
where such damage or loss is directly attributable tohis neglect or default;
(d) deductions for house-
accommodation supplied by the employer or by government or any housing board set upunder any law
(e) Deductions for such amenities and services supplied by the employer as the State
Government or any officer
(f) deductions for recovery of advances of whatever nature (including advances for
travelling allowance orconveyance allowance), and the interest due in respect
thereof, or for adjustment of over-payments ofwages;
(g) deductions of income-tax payable by the employed person;
(h) deductions required to be made by order of a court or other authority competent
to make such order;
(I) deductions, for payment of insurance premia on Fidelity Guarantee Bonds;
(J) deductions for recovery of losses sustained by a railway administration on account of acceptance by
theemployed person of counterfeit or base coins or mutilated or forged currency notes;
(K) deductions for recovery of losses sustained by a railway administration on account of the failure of
theemployed person to invoice, to bill, to collect or to account for
the appropriate charges due to that administrationwhether in respect of fares, freight, demurrage, wha
rfage or in respect of sale of food in catering establishments orin respect of sale of commodities in grain s
hops or otherwise;
(L) deductions for recovery of losses sustained by a railway administration on account of any rebates
or refunds incorrectly granted by the employed person where such
loss is directly attributable to his neglect or default;
Section 8: Fines
(1) No fine shall be imposed on any employed person save in respect of such acts and omissions on his
part as the employer, with the previous approval of the State
Government or of the prescribed authority, may have specified by notice under sub-section (2).
(2) A notice specifying such acts and omissions shall be exhibited in the prescribed
manner on the premises in whichthe employment is carried on or in the case of
persons employed upon a railway (otherwise than in a factory), at theprescribed place or places.
(3) No fine shall be imposed on any employed person until he has been given an
opportunity of showing cause againstthe fine, or otherwise than in accordance with
such procedure as may be prescribed for the imposition of fines.
(4) The total amount of fine which may be imposed in any one wage-period on any
employed person shall not exceed anamount equal to three per cent of the wages
payable to him in respect of that wage-period.
(5) No fine shall be imposed on any employed person who is under the age of fifteen years.
(6) No fine imposed on any employed person shall be recovered from him by instalments or after the expi
ry of sixtydays from the day on which it was imposed.
(7) Every fine shall be deemed to have been imposed on the day of the act or omission
in respect of which it was imposed.
(8) All fines and all realisations thereof shall be recorded in a register to be kept by the
person responsible for thepayment of wages under section 3.
Section 9: Deductions for absence from duty
(1) Deductions may be made under section 7(2)(b) only on account of the absence of an employed pers
on from the placeor places where, by the terms of his employment, he is required to work, such absence b
eing for the whole or any partof the period during which he is so required to work.
(2) The amount of such deduction shall in no case bear to the wages payable to the
employed person in respect of thewage-period for which the deduction is made in
a larger proportion than the period for which he was absent bears to thetotal period, within such wage-
period, during which by the terms of his employment, he was required to work.
Section 10: Deductions for damage or loss
(1) A deduction under clause (c) or clause (o) of sub-section (2) of section 7 shall not
exceed the amount of the damageor loss caused to the employer by the neglect
or default of the employed person.(1A) A deduction shall not be made under clause (c) or clause (
m) or clause (n) or clause (o) of sub-section (2) of section 7 until the employed person has been
given an opportunity of showing cause againstthe deduction or otherwise than in
accordance with such procedure as may be prescribed for the making ofsuch deduction.
(2) All such deduction and all realisations thereof shall be recorded in a register to be
kept by the personresponsible for the payment of wages under section 3 in such
form as may be prescribed.
Section 11 : Deductions for services rendered
A deduction under clause (d) or clause (e) of sub-section (2) of section 7 shall not be made from the
wages of an employed person, unless the house-accommodation amenity
or service has been accepted by him, as a term ofemployment or otherwise, and such
deduction shall not exceed an amount equivalent to the value of the house-accommodation
amenity or service supplied and, in the case of deduction under the said clause (e), shall be subject to
such conditions as the State Government may impose.
Section 12 : Deductions for recovery of advances
Deductions under clause (f) of sub-
section (2) of section 7 shall be subject to the following conditions, namely:
(a) Recovery of an advance of money given before employment began shall be made
from the first payment ofwages in respect of a complete wage-period, but no
recovery shall be made of such advances given for Travelling-expenses;
Section 12-A: Deductions for recovery of loans
Deductions for recovery of loans granted under clause (fff) of sub-
section (2) of section 7 shall besubject to any rules made by the State Government regulating the ext
ent to which such loans may be grantedand the rate of interest payable thereon.
Section 13: Deductions for payments to co-operative societies and insurance schemes
Deductions under clause (j) [and clause (k)] of sub-section (2) of section 7 shall be
subject to such conditions as the State Government may impose.
 Section 13-A: Maintenance of registers and records
(1) Every employer shall maintain such registers and records giving such particulars of
persons employed by him, the workperformed by them, the wages paid to them, the deductions made
from their wages, the receipts given by them and such other
particulars and in such form as may be prescribed.
(2) Every register and record required to be maintained under this section shall, for the
purposes of this Act, be preservedfor a period of three years after the date of the
last entry made therein.

WORKMEN COMPENSATION ACT

✓ To provide for the payment of compensation to the workmen for injury or accident.
✓ This Act is one of the earliest Acts having come into force from 1st July, 1924. It extends to
whole of India.
✓ The salient features the Act in brief are as under.
Employer's Liability for Compensation:
a) A workman is entitled to get compensation from his employer if he is injured while on duty and
during the course of his employment with his employer.
b) If a workman dies due to the accident while of duty and during the course of his employment with
his employer, his dependents are entitled to receive the amount of compensation from his employer.
c) Occupational diseases: If workman contacts occupational diseases enlisted in Schedule III of
this Act, while on duty and during the course of his employment with his employer, the said
disease shall be deemed to be an injury by accident. The workman or if dead, his dependents are
entitled to receive the amount of compensation from his employer.
d) Amount of Compensation:
(1) Temporary Disablement:
Where the disablement is temporary i.e. workman not being able to attend to duty for more than 3
days on account of injury is entitle to get compensation at the rate of a half monthly payment of the
sum equivalent to twenty five percent of monthly wages of the workman. E.G. if workman's wages
are Rs.500/- per month he will receive Rs.125/- for a fortnight i.e. 15 days or Rs. 8.33 p. per day and
so on depending on his wages. If the disablement continues for more than 28 days there from days to
be counted from the date of injury.
(2) Permanent total disablement:
The permanent total disablement is listed in Schedule I of the Act. Where the disablement is
permanent and total the amount of compensation will be equivalent of fifty percent of the monthly
wages of the injured workman multiplied by the relevant factor or an amount of twenty four thousand
rupees
(Rs. 24,000/-) whichever is more.
(3) Death:
Where death results from an injury an amount equal to forty percent of the monthly wages of the
deceased workman multiplied by the relevant factor or an amount of twenty thousand rupees
(Rs. 20,000/-) whichever is more.
NOTE:
1) For purpose of sub clause (2) & (3) above 'relevant factor' in relation to workman mean the
factor specified in schedule IV of the Act against the age of the workman.
2) Where the monthly wages of a workman exceed Rs.1,000/- his monthly wages for the purpose of
clause (2) & (3) shall be deemed to be Rs. 1,000/- only.
e) If Permanent partial disablement results from the injury :- such percentage of the
compensation which would have been payable in the case of permanent total disablement after
determining the loss of earning capacity caused by that injury

Recovery of Compensation:
1. If the employer fails to pay the compensation to a workman of fails to deposit the amount of
compensation with the commissioner for Workmen's Compensation, or the Labour Court concerned,
them the injured workman, either himself or through his representative, should send a notice of his
claim or his employer mentioning therein the time, date, place and nature of accident, wage rate of the
workman and the amount of compensation. In case of death of a workman , any of his dependents or
his/her representative can send such notice with detailed information. A copy of the same should be
sent to the Commissioner for Workmen's Compensation or the Labour Court concerned.
2. If the employer fails to settle the claim, the workman himself or any of the dependents of the
deceased workman should file the application before the concerned court having jurisdiction to
entertain the claim. This has to be done in form 'F' by the injured workman and in form 'G' by the
dependent of the daceased workman.
3. The court fee is @ Rs.1/- per every Rs. 500/- or less amount of claim and paise 50 for claim of half
monthly wages for temporary disablement.
4. Amount payable under this Act cannot be assigned or charged or be liable to attachment or be
passed to any person other than the workman by operation of law nor shall any claim be set-off
against the same. Only the amount which is paid towards half monthly wages during the period of
disablement can be deducted from the amount of final settlement of claim.
5. The Court has power to award interest on the amount of compensation, cost and penalty.
6. If the employer fails to pay or deposit the amount of compensation awarded by the Court or
admitted by the employer, them on application by the workman to the concerned court for recovery of
the same, the court shall write to the collector and the same will be recovered as arrears of Land
Revenue.

Transfer of Assets:
The Act specifies that compensation is the first charge on assets transferred by employer.
Limitation for Filing Claim:
The application for recovery of claim should be filed within two years from the date of accident.
However, the Court has power to condone the delay in filing an application.
Commissioners:
Commissioners under the Act are appointed by the Government. They carry certain powers relating
to recording of evidence, registering of agreements etc.

Appeals:
Workman's appeal against the order of the Commissioner for Workmen's Compensation or by the
Presiding Officer of the Labour Court concerned lies to the High Court.
Where an employer makes an appeal, the Commissioner may and if so desired by the High Court,
shall, pending the decision of the appeal, withhold payment of any sum in deposit with him.
The Commissioner may recover as arrears of land revenue, any amount payable by any person under
this Act, whether under an agreement for the payment of compensation or otherwise, and the
Commissioner shall be deemed to be a public officer within the meaning of the Revenue Recovery
Act, 1980.
Schedule I
List of injuries deemed to result in Permanent Total disablement.
Sehedule II
List of persons who subject to the provisions of section 2(1) (h), are included in the definition of
' workman '.
Schedule III
List of occupational diseases.
Schedule IV
Amount of compensation payable in certain cases.
SCHEDULE IV
Factors for working out lump sum equivalent of compensation amount in case of permanent
disablement and death.
The Industrial Disputes Act,
Introduction -

The Industrial Disputes Act, 1947 which extends to the whole of India came into operation on 1st
April 1947, It was enacted with the purpose of providing permanent machinery for the settlement
of industrial dispute which had become common features due to the industrial unrest in the wake
of post-war problems arising out of constant strife between the employers and employees.

2) Main features of the Industrial Disputes Act -

Main features of the Industrial Disputes Act, 1947 are as follows -

(1) The Industrial Disputes Act was passed in 1947 and it came into force from 1st April 1947.
(2) The Industrial Disputes Act, 1947 is applicable to the industries and certain categories of
industrial workers
(3) The Industrial Disputes Act lays down a comprehensive machinery for the prevention and
settlement of industrial disputes
(4) The Industrial Disputes Act embodies both substantive and procedural law aimed at promoting
industrial peace and preventing industrial disputes.
(5) The main object of the Act is to harmonize the relations between employer and employees so as
to maintain industrial peace and hence ensure Social Justice.
(6) It empowers the government to make a reference of the dispute to an appropriate authority
viz., Labour Court, Industrial Tribunal and National Tribunal depending upon the nature of the
dispute besides making a reference by the government on the request of the parties.
(7) The Award given by the above authorities bind the parties for a specified period not exceeding 1
year. The award is normally enforced by the government concerned.
(8) The right to strike by the workers and Lockout by the employers has been subjected to the
restrictions as laid down in the Act and such rights are not absolute rights.
(9) It incorporates inter alia the provisions for the investigation and settlement of Industrial
Disputes.
(10) The act is a piece of legislation calculated to ensure Social justice to both the employers and the
employees and advance the progress of the industry by bringing about harmony and cordial
relationship between the parties.
2) What is award -
The judgment of an arbitrator is called his Award. Award (Judgement) of Arbitrators under section
10A is an Award.
3) Definition of Award -According to Section 2(b) of the Industrial Disputes Act, 1947 ‘Award’ means
an interim or a final determination of any Industrial Dispute or of any question relating thereto by
any Labour Court, Industrial Tribunal or National Industrial Tribunal and includes an
arbitration award made under section 10A.
4) Ingredients of Award -To constitute Award under Section 2(b) of the Industrial Dispute Act, 1947
the following ingredients are to be satisfied -
(a) An Award is an interim or final determination of an industrial dispute.
(b) It is an Interim or final determination of any question relating to such dispute.
(c) Such interim or final determination is made by any Labour Court, Industrial Tribunal or
National Industrial Tribunal.
(d) Award (Judgement) of Arbitrators under section 10A is an Award.
5) What is Settlement -
According to Section 2 (p) of the Industrial Dispute Act, 1947 “Settlement” means a settlement
arrived at in the course of conciliation proceeding and includes a written agreement between the
employer and workmen arrived at otherwise than in the course of conciliation proceeding where
such agreement has been signed by the parties thereto in such manner as may be prescribed and a
copy thereof has been sent to an officer authorised in this behalf by the appropriate Government
and the conciliation officer.

6) On whom Awards and Settlements are binding- According to Section 18 of the Industrial Disputes
Act, 1947 Awards and Settlements are binding on the following persons -
(1) A settlement arrived at by agreement between the employer and workman otherwise than in
the course of conciliation proceeding shall be binding on the parties to the agreement.
(2) Subject to the provisions of sub-section (3), an arbitration award which has become enforceable
shall be binding on the parties to the agreement who referred the dispute to arbitration.
(3) A settlement arrived at in the course of conciliation proceedings and an award of a Labour
Court, Tribunal or National Tribunal shall be binding on-
(a) All parties to the industrial dispute;
(b) All other parties summoned to appear in the proceedings as parties to the dispute,
unless the Board, arbitrator Labour Court, Tribunal or National Tribunal, as the case may be, records
the opinion that they were so summoned without proper cause;
(c) Where a party referred to in clause (a) or clause (b) is an employer, his heirs, successors
or assigns in respect of the establishment to which the dispute relates;
(d) All persons who were employed in the establishment or part of the
establishment on the date of the dispute and all persons who subsequently become employed in
that establishment or part.
7) Penalty for breach of Settlement or Award - If any person who commits breach of any terms of a
settlement or Award is liable for punishment. The punishment provided for is imprisonment which
may extend to 6 months or with fine or with both.
8) Period of operation of Awards and Settlement
(1) A settlement shall come into operation on such date as is agreed upon by the parties to the
dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is
signed by the parties to the dispute.
(2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no such
period is agreed upon, for a period of six months from the date on which the memorandum of
settlement is signed by the parties to the dispute, and shall continue to be binding on the parties
after the expiry of the period aforesaid, until the expiry of two months from the date on which a
notice in writing of an intention to terminate the settlement is given by one of the parties to the
other party or parties to the settlement.
(3) An award shall, subject to the provisions of this section, remain in operation for a period of one
year from the date on which the award becomes enforceable under section 17A.
(4) Where the appropriate Government, whether of its own motion or on the application of any
party bound by the award, considers that since the award was made, there has been a material
change in the circumstances on which it was based, the appropriate Government may refer the
award or a part of it to a Labour Court, if the award was that of a Labour Court or to a Tribunal, if the
award was that of a Tribunal or of a National Tribunal, for decision whether the period of operation
should not, by reason of such change, be shortened and the decision of Labour Court or the Tribunal,
as the case may be on such reference shall be final.
3 COMMENTS
The objective of the Industrial Disputes Act is to secure industrial peace and harmony by providing
machinery and procedure for the investigation and settlement of industrial disputes by conciliation,
arbitration and adjudication machinery which is provided under the statute. The main and ultimate
objective of this act is “Maintenance of Peaceful work culture in the Industry in India” which is
 clearly provided under the Statement of Objects & Reasons of the statute. The laws apply only to the
organized sector.
The Act also lays down:
• The provision for payment of compensation to the workman on account of closure or lay off or
retrenchment.
• The procedure for prior permission of appropriate Government for laying off or retrenching the
workers or closing down industrial establishments
• Unfair labour practices on part of an employer or a trade union or workers.
The results were industrial unrest and fall in production. An attempt was made to achieve the
objective
(i) By improving the service conditions of industrial labour so as to provide for them the ordinary
amenities of life and
(ii) By that process to bring about industrial peace which would in turn increase the pace of
productive activities in the country and result in prosperity.
Principal objects of the Act are
(1) The promotion of measures for securing amity and good relations between the employer and
workmen;
(2) An investigation and settlement of industrial disputes between employers and employees,
employers and workmen and between workman and workmen, with a right of representation by a
registered Trade Union orFederation, of Trade Unions or association of employees or a federation or
association of employers;
(3) The prevention of illegal strikes and lockouts; and
(4) Relief to workers in the matters of layoff and retrenchment.