CHAPTER:-1

CONCEPT OF INDUSTRIAL RELATIONS

UNIT-I Unit-1
Definition
Importance& Concept of industrial
of industrial relations,
relations, Factors affecting
Approaches industrialrelations,
to industrial relations.Impact of
Technological changes on industrial relations. Trade Unions: Nature of Trade Unions,
Trade Union movement in India, Reasons for employees to join trade Unions, Problems of
Trade Unions & Remedies. Quality Circles, history of QC, Organization structure of QC,
Benefits and Problems of QC.
 Definition of Industrial Relations
According to C,B. Kumar "Industrial relations are broadly
concerned with bargaining between employees and trade unions on
wages and other terms of employment. The day-to-day relations within a
plant also constitute one of the important elements and impinge on the
broader aspects of industrial relations.

According to Ordway Teed and Metcalfe "Industrial

relations are the composite result of the attitudes and
approaches of employers and employees to each other with
regard to planning, supervision, direction and co-ordination of
the activities of an organization with a minimum of human
effort and friction, with an animating sprit of a co operation
and with proper regard for the genuine well-being of all
members of the organization.

According to Allan Flanders "The subject of industrial

relations deals with certain regulated institutionalized
relationship in industry.

According to the ILO, "Industrial relations deal with either

the relationships between the state and employers; and
workers' organizations or the relations between the
occupational organizations themselves.' The ILO uses the
expression to denote such matters as "freedom of association
and the protection of the right to organize and the right of
collective bargaining; collective agreements, conciliation and
arbitration; and machinery for co-operation between the
authorities and the occupational organizations at various levels
of the economy.
 The following points emerge from an analysis of the above
definitions
i. Industrial relations are the relations which are the
outcome of the "employment relationship" in an
industrial enterprise. Without the existence of the two
parties, the employer and the workmen, this relationship
cannot exist. It is the industry which provides the setting
for industrial relations.

ii. This relationship lays emphasis on the need for

accommodation by which the parties involved develop
skills and methods of adjusting to, and co-operating
with, each other.
iii. Every industrial relations system creates a complex of
rules and regulations to govern the work place and the
work community with the main purpose of achieving
and maintaining harmonious relations between labour
and management by solving their problems through
collective bargaining.
iv. The government/state evolves influences and shapes
industrial relations with the help of laws, rules,
agreements,awards of courts,and emphasis
On Usages, customs, traditions, as well as the
implementation of its policies, and interference through executive and
judicial machinery.

IMPORTANCE OF INDUSTRIAL RELATIONS

The healthy industrial relations are key to the progress.

Their significance may be discussed as under -

1. Uninterrupted production - The most important benefit of

industrial relations is that this ensures continuity of production.
This means, continuous employment for all from manager to
workers. The resources are fully utilized, resulting in the
maximum possible production.

2. Reduction in Industrial Disputes - Good industrial

relation reduce the industrial disputes. Disputes are reflections
of the failure of basic human urges or motivations to secure
adequate satisfaction or expression which are fully cured by
good industrial relations. Strikes, lockouts, go-slow tactics,
"gherao" and grievances are some of the reflections of
industrial unrest which do not spring up in an atmosphere of
industrial peace. It helps promoting co-operation and
increasing production.

3. High morale - Good industrial relations improve the

morale of the employees. Employees work with great zeal with
the feeling in mind that the interest of employer and
employees is one and the same, i.e. to increase production.

4. Mental Revolution - The main object of industrial relation

is a complete mental revolution of workers and employees.
The industrial peace lies ultimately in a transformed outlook
on the part of both. It is the business of leadership in the ranks
of workers, employees and Government to work out a new
relationship in consonance with a spirit of true democracy.
Both should think themselves as partners of the industry and
the role of workers in such a partnership should be recognized.
On the other hand, workers must recognize employer's
authority.

5. New Programmes - New programmes for workers

development are introduced in an atmosphere of peace such as
training facilities, labor welfare facilities etc. It increases the
efficiency of workers resulting in higher and better production
at lower costs.

6-. Reduced Wastage - Good industrial relations are

maintained on the basis of cooperation and recognition of each
other. It will help increase production. Wastages of man,
material and machines are reduced to the minimum and thus
national interest is protected.

Thus, from the above discussion, it is evident that good

industrial relation is the basis of higher production with
minimum cost and higher profits. It also results in increased
efficiency of workers.

OBJECTIVES OF INDUSTRIAL RELATIONS

The primary objective of industrial relations is to bring about

good and healthy relations between the two partners in
industry labour and management. It is around this objective
that other objectives revolve. According to Kirkland, "the state
of industrial relations in a country is intimately connected with
the form of its political government, and the objectives of an
industrial organization may change form economic to political
ends." He divides these objectives into four:

a. Improving the economic condition of workers in the

existing state of industrial management and political
government;
b. Control by the state over industries to regulate
production and industrial relation;
c. Socialization or nationalization of industries by making
the state itself an employer; and
d. Vesting the proprietorship of industries in the workers.
 The Labour-management Committee of the Asian Regional
Conference of the ILO has recognized certain fundamental
principles as the objectives of social policy in governing
industrial relations with a view to establishing harmonious
labour-management relations. They are:

i. Good labour-management relations develop when

employers and trade unions are able to deal with their
mutual problems freely, independently and responsibly.
desirous of and
bargaining; resolving their problems
in resolving through collective
these problems
ii. The workers and employers organizations should be
desirous of associating with government agencies in
considering the general public, social and economic
measures affecting employers and workers relations.

In brief, the committee laid stress on the need on the part of the
management for acquiring a fuller understanding of the human factor in
production.

The objectives of industrial relations are:

a) To safeguard the interest of labour as well as of

management by securing the highest level of mutual
understating and goodwill between all sections in
industry which take part in the process of production;

b) To avoid industrial conflicts and develop harmonious

relations, which are essential for the productive
efficiency of workers and the industrial progress of the
country;
c) To raise productivity to a higher level in an era of full
employment by reducing the tendency to higher and
frequent absenteeism;
d) To establish and maintain industrial democracy based on
labour partnership, not only for the purpose of sharing
the gains of organization but also participating in
 managerial decisions so that the individual's personality
may be fully developed and he may grow into a civilized
citizen of the country;
e) To bring down strikes, lockouts by providing better and
reasonable wages and fringe benefits to the workers, and
improved living conditions;

f) To bring about government control over such units and

plants as are running at losses or where production has
to be regulated in the public interest; and

g) To ensure that the state endeavors to bridge the gap

between the unbalanced, disordered and maladjusted
social order (which has been the result of industrial
development) and the need for re shaping the complex
social relationships emerging out of technological
advances by controlling and disciplining its members,
and adjusting their conflicting interests protecting some
and restraining others and evolving a healthy social
order.

The most important fact to be noted is that the one thread

which runs through the whole fabric of industrial relations and
which is necessary for success is that "labour is not a
commodity of commerce but a living being who needs to be
treated as a human being, and that employees differ in mental
and emotional abilities, sentiments and traditions."

SCOPE AND ASPECTS OF INDUSTRIAL RELATIONS

The concept of industrial relations has a very wide meaning and

connotation. In the narrow sense, it means that the employer-
employee relationship is confined to the relationship that emerges
out of the day-to-day association of management and labour.
 In its wider sense, industrial relations include the relationship

between an employee and an employer in the

course of the running of an industry and may project it self into

spheres which may transgress into the areas of quality control. However,
the term industrial relations are generally understood in the narrow
sense.

An industry is a social world in miniature. The association of

various persons, workmen supervisory staff management and
employer creates industrial relationships. This association
affects the economic, social and political life of the whole
community. In other words, industrial life creates series of
social relationships which regulate the relations and working
together of not only workmen and management but also of the
community and the industry. Industrials relations are,
therefore, inherent in an industrial life. These include:

i. Labour relations, i.e., relations between union and

management
(also known as labour-management relations);
ii. Employer-employee relations, i.e., relations between
management and employees
iii. Group relations, i.e., relations between various groups
of workmen; and
iv. Community or public relations, i.e., relations between
industry and society.
 FACTORS AFFECTING INDUSTRIAL RELATIONS

It can be affected, broadly, by the following factors-

INSTITUTIONAL FACTORS

It included items like state policy, labour laws, collective bargaining

agreements, labour unions, employer’s organizations etc.

ECONOMIC FACTORS

It includes economic organisations(socialist, communist, capitalist) type of

Ownership, company (domestic or MNC), the source of labor supply,
disparity of wages between groups, level of unemployment. These
variables influences industrial relations.

ORGANISATIONAL STRUCTURE
The organizational structure formalizes relationship within the
organization. It has geographical, hierarchical and operational
dimensions. Those dimensions, depending upon the size and
nature, complicate the relationship in terms of communication,
conduct, control and coordination.

The set of rules and procedures prescribed in the organization for

harmonious working and warmth in climate helps canalize efforts
and reduce discords/ conflicts. It provides roles for all the players in
the organization and their norms of behaviors.

Power distance and delegation of decision making also contributes

to a great extent towards maintenance of Industrial relations.

LEADERSHIP STYLE

Behaviors and functional styles of the leaders in the organization

bear a great influence on the climate. Every leader, in his/her own
unique way influences the functioning of the formal structures by
informal and formal interventions.
 A leader having reverence for his followers will develop team spirit
if he leads by example. Industrial climate is a very delicate factor
that can be destroyed easily but built with difficulty. It is as fragile
as a glass bangle. In the present times carrot is not so enticing and
the stick not so threatening in public organizations in India.

INDIVIDUAL BEHAVIOR
Industrial relations ultimately depend upon the individuals
constituting the organization because every individual is the creator
of the climate around him.

Individuals perceive situations differently at times as individuals and

as groups. Experience, exposure, skills, orientation, background,
achievement of individuals makes them behave differently in
responding to situations or in creating situations.

LEGAL AND POLITICAL ENVIRONMENT

Industrial relations in an organization is effected by the legal and

constitutional framework which determine the rights and privileges,
powers and immunities, roles and domains, territories and
boundaries of the different players to Industrial relations.

In fact, rarely individuals or groups will give up their rights, and

dominance or authority to someone else. All over the world and
also in India, the system and structures for Industrial relations arose
out of the political necessity of governments to develop a good
social order and increase development and productivity.

Legislations were enacted and machinery created for the same. All
organizations have to adhere to the law and establish structures
accordingly.It includes, court, tribunals and conciliators / arbitrators,
agencies of the government.

TECHNICAL AND ECONOMIC ENVIRONMENT

 The changes taking place in the technical and economic field puts
pressures on the organization and affects its operational and
financial strategies and employment and IR policies.

As a result of such pressures and changes, organization redefine

their work domains and costs, which in turn leads to changes in
working conditions, hours, compensation etc. and also in the
employers mindset of the degree of his willingness to
accommodate the individual and collective interest of the workers/
employees. Vis-a-vis the interest of manager, employer and the
organization as a whole.

Changes in technical and economic environment continuously

affect the attitudes, mindsets, strategies, mannerisms, elasticity
and accommodating spirit of the parties involved in Industrial
relations.

ALTERNATE AND SYSTEMATIC APPROACHES TO THE STUDY OF

INDUSTRIAL RELATIONS

1.Systems Approach to the Industrial Relation

(Dunlop'sapproach)
2. The Pluralist Approach
3. The Marxist Approach
4. Sociological Approaches
5. Gandhian Approaches
6. Psychological Approaches
7. HRM-HRD Approaches

1. SYSTEMS APPROACH TO INDUSTRIAL

RELATIONS
(Dunlop's approach)

The systems approach views the Industrial relations as a

system in itself with the following elements -
Participants -The actors taking part in the Industrial Relations
process. There 3 actors.

❖ Workers and their organizations/representative ❖

Managers and their organization/representatives

❖ The government and its specialized agencies for

enactment and implementation of laws, rules and
policies.

❖ All the participants have their own, goals, interest's

values and beliefs.

The Environment constituting the technological, economic

and social (power distribution) sub systems in which the
organization operates. The environment influences the
relations between employer and employee.
 Ideology - All the participants have their own sets of beliefs
and values, which shape the interaction between them, and
consequently the output of such a relationship. In the words of
Dunlop an ideology is a "set of ideas and beliefs commonly
held by the actors that helps to build or integrate the system
together as an entity".

The Structure - The structure consists of rules and procedures

established for the interaction of the actors in Industrial
relations, collective bargaining procedures, conflict resolutions
and grievance settlement practices.

According to Dunlop, his framework of industrial relations

would be applicable at three levels i.e.

❖ at the enterprise or plant level

❖ at the national level and
❖ in totality of economic development

He applied his framework to coal and construction industries

and as a national system equated it with the systems in
Yugoslavia.

Dunlop defines an Industrial relations system as " at any one

time in its development is regarded as comprised of certain
actors, certain contexts and an ideology that finds the industrial
relations system together, and a body of rules created to govern
the actors at the workplace and the work community.

Some authors have criticized Dunlop's model on the following

frailties -

❖ It concentrates on the structures and ignores the

processes
 ❖ It does not take care of nature and development of
conflict but tries to take care of conflict resolution

❖ It focuses on the web of rules for formal interaction and

ignores the informal rules, processes and behavior

❖ It does not explain the process of conversion of inputs

into outputs.

❖ It provides no articulation between the plant level

❖ It makes no provision for the role of individual or their
personalities in industrial relations

THE PLURALIST APPROACH

Flanders, Clegg and Fox are some of the important exponents

of the pluralist approach to the study of Industrial Relations.

This approach views the organization as consisting of different

conflicting interest groups or stakeholders like
employees, shareholders, consumer's community, managers,
government etc. It emphasizes on the need for management to
regulate and balance the interests and interaction of all the
partners to Industrial relations.

They view industrial relations as some sort of job regulation

also, as viewed in the systems approach.
Flanders (1970) evolved his pluralist approach to union
management relations drawing from the works of other
preceding authors and emphasized on the following aspects of
Industrial relations-
 • Job regulation through rule making
• Involvement of trade union in job regulation
• Acceptance of trade union to have economic, social and
political purposes.
• Containment of conflict through institutionalization and
regulation of the structure and process of union
management relations.
• Job regulation through collective bargaining

The institution of job regulation is characterized by Flanders as

internal and external. He considers the internal institutions as
part of the Industrial relation system and collective agreements
as something external, since he viewed unions as an external
organization.

The pluralist approach has been criticized for being too narrow
to provide a comprehensive framework for the analysis of
Industrial relations. It overemphasizes the significance of the
process of collective bargaining and gives insufficient weight
to deeper psychological and social influences on individual
behavior. It gives importance to institutions and power
structures ignoring other facets of the environment.

The systems approach takes a wider look at rule making,

whereas the pluralist views it through the pigeonhole of
collective bargaining only.
THE MARXIST APPROACH

All Marxist literature is based on the class conflict between haves and
has notes, between the controller and the controlled and between the
exploiter and the exploited. The Marxian approach to industrial
relations, also, therefore derives its strength from the class conflict
analysis of industrial relations. According to some Marxists, Industrial
Relations are basically market relations.

It views industrial relations as a struggle between worker and owners,

employer and employees, between capital and labour, with a view to
exert greater influence on each other. Lenin (1978) was of the view that
social democratic consciousness amongst workers will have to be
brought from outside i.e. the conviction to combine in unions, fight the
employers and strive to compel the government to pass necessary
legislation.

But the Marxists viewed a broader role for the working class as a
struggle against all forms of exploitative structures and processes, to
establish a new social order.

As was said, the trade unions now play, not a progressive but a
reactionary role. The workers say to themselves
that trade unions are bad but without them, it might be still worse.

Michel's, R (1959) came to the conclusion that few people exercise

control and decision-making in trade unions to the apathy (and
detriment) of individual rank and file membership.

Marxists hold that if Industrial relations is mere job regulation then why
do conflicts never cease. They hold that conflicts will never cease till
capital accepts labour as an equal partner and is prepared to share
power. He holds that the processes, which operate in reaching
agreements, are more important than the institutions established for the
same.

5 SOCIOLOGICAL APPROACH

A human being has been acknowledged to be a social animal and a

corporate organization in the eyes of law is a legal citizen.
Organizations are composed of human beings and deal with other
organization and institutions consisting of a different set of human
beings.

Hence the interaction between institutions and organization, towards

furtherance of each other's goals and objectives, involves interaction
between human beings at different levels, as individuals and as groups,
big and small. Such interacting individuals and groups have different
personalities, emotions, skills, likes and dislikes, attitudes and behavior,
wants and needs, interests and desires which may, at some stage and
situations, be in conflict. The type of interaction and relationship
between them, the strength and fruitfulness of the interaction will
depend upon the value system, customs, norms, attitudes, mindsets etc.

Study of Industrial relations can therefore be seen as analysis of

individual and group behavior in the context of social dynamics, within
organizations. The sociological aspects of human relationships like
group dynamics, migration, family norms and status, stress and
strain, delinquency therefore affect industrial relations.

From the point of view of sociology, industrial relations is becoming

more complex and hence it calls for scanning of such factors both at
macro and micro level to deal with the dynamics of the system.

Weber, Max (1968) a well-known social scientist defined "sociology as

a service concerning itself with the interpretative understanding of
social action and thereby with a casual explanation of its course and
consequence." Recognition of diversity and its systematic management
is the key to future organizational survival and success. Diversity has
major implications for how people work together and what work means
to them.

6. GANDHIAN APPROACH

The father of our nation, Mohandas Karamchand Gandhi, himself a

great labour leader, carried his own, different approach towards
employer- employee relations.
He had great faith in the goodness of man and insisted on recognizing
each individual worker as a human being and in recognizing the rights
of the worker as well as the
employer/ owner. He believed in the concept of cooperation, non -
violence and trusteeship -Gandhiji laid great emphasis on mutual
respect and concern by the participants to Industrial relations. His
philosophy entailed peaceful coexistence of capital and labour and
called for the resolution of conflict in non-violent ways.

Gandhiji accepted the workers right to strike, but only in extreme

situation when employers fail to respond to all kinds of moral appeals.
Even strike, if it takes place should be peaceful and non violent.

He enunciated the principle of trusteeship, implying that the owner of

wealth is actually the custodian and keeps the wealth as a trustee of
society, to which it actually belongs, and the individual workers are
expected to be co-trustees too.

Gandhiji advocated the following rules to be observed for resolution of

disputes-
• Workers should seek redressale of reasonable demands only,
through collective action.
• If strike necessary it should be peaceful.
• Strikes to be resorted to when all measures have failed.
• If direct settlement fails, workers should resort to voluntary
arbitration.
• Means and ends are equally important.
 V.V.Giri a former labour leader and President of India advocated
mutual settlement of disputes, collective bargaining and voluntary
arbitration instead of compulsory arbitration.

The Ghandhian approach is based on the premise of fair play and basic
goodness, of reasonable moral and ethical standards. Few scholars have
attempted to relate ethics and morality to the functioning of the
Industrial Relations system.

Good industrial relations can be maintained only when both labour and
management realize their moral responsibility in contributing to the
said task through mutual cooperation and greatest understanding of
each other.

A tripartite study group, constituted at the behest of National

commission on labour observed that the labour management relations
exist within the social, economic and political structures of society.

The goal of labour management relations may be stated as

maximum productivity, adequate understanding of employers,
workers and governments of each others roles, commitment to
industry on the part of labour and union both, sound unionism,
efficient institutionalized mechanisms for handling industrial
disputes and willingness among the parties to cooperate as partners
in the industrial relations system.

7 PSYCHOLOGICAL APPROACH

The psychologist study Industrial relations as an outcome of the

relationship between human beings in the form of worker, manager or
owner.

They hold the relationship to be arising out of fulfillment or non-

fulfillment of certain promises or expectation between the parties
concerned (which they connote as psychological contract) as a result of
exchanges and transactions taking place between them. They also view
the problem of industrial relations as deeply routed in the perception,
attitudes, and interest of the participants.

Mason Harei (1964) studied the perception and attitudes of "union

leader" and "Executives" by administering TAT (Thematic
Apperception Test) to both the groups and concluded.
Both view the individual person, (whether manager or worker) in a
different light when seen in the role of labour representative or
manager.
(1) The management and labour see each other as less appreciatively
of others position.
(2) Labour & management see each other as less dependable.
(3) Management and labour see each other as deficient in

appreciating the others need.

Difference of opinion, interest and lack of trust affect the resolution of

conflicts greatly. In many conflicts the personalities of the actors also
play dominant parts as also inter personal relations between the
participants.

8. HRM -HRD APPROACH

The human relations approach to the study of industrial relations lays

stress on the policies and techniques to improve employee morale,
efficiency and job satisfaction.

It encourages small work-groups to exercise considerable control over

its immediate environment. The human relations school was founded by
Elton Mayo and later, propagated by Roethlisberger and others.
 When human resources are not properly managed the problem of
human relations surface. It can be managed by appreciating the
dynamics of human behavior,
both at individual and group level. This approach tends to satisfy
individual and collective needs of workers - economic, physiological,
safety, security, social and psychological, as a step to harmonies the
interactions and exchanges at the workplace.

Chapter-2

Trade Unions
Trade Unions: Objectives, Function, Formation, Regulation, Rights and Liabilities!

“A trade union is a combination of persons. Whether temporary or permanent, primarily

for the purpose of regulating the relations between workers and employers or between
workers for imposing restrictive conditions on the conduct of any trade or business and
includes the federations of two or more trade unions as per Sec. 2 (6) Trade Unions Act,
1926.
“A Trade Union is an organization of workers, acting collectively, who seek to protect
and promote their mutual interests through collective bargaining”.

Objectives:
Following are the objectives of trade unions:

1. Ensure Security of Workers:

This involves continued employment of workers, prevent retrenchment, lay off or lock-
outs. Restrict application of “fire” or dismissal or discharge and VRS.

2. Obtain Better Economic Returns:

This involves wages hike at periodic intervals, bonus at higher rate, other admissible
allowances, subsidized canteen and transport facilities.
3. Secure Power To Influence Management:
This involves workers’ participation in management, decision making, role of union in
policy decisions affecting workers, and staff members.

4. Secure Power To Influence Government:

This involves influence on government to pass labour legislation which improves
working conditions, safety, welfare, security and retirement benefits of workers and their
dependents, seek redressal of grievances as and when needed.

Functions of a Trade Union:

The important basic functions of unions listed by National Commission on labour are:
(i) To secure fair wages to workers.
(ii) To safeguard security of tenure and improve conditions of service.
(iii) To enlarge opportunities for promotion and training.
(iv) To improve working and living conditions.
(v) To provide for educational, cultural and recreational facilities.
(vi) To co-operate in and facilitate technological advance by broadening the
understanding of workers on its underlying issues.
(vii) To promote identity of interests of workers with their industry.
(viii) To offer responsive co-operation in improving levels of production and
productivity, discipline and high standards of quality and
(ix) To promote individual and collective welfare.

Trade Union as an Organization:

Most of the workers are members of any one of the trade unions.
There are many reasons of membership and some of which are given below:
(a) Security of employment and protection against calamity of accident, death and secure
social security cover after retirement.
(b) Meeting companionship and affiliation need and improve one’s influence with
management.
(c) To get a common platform—to air one’s views, aims ideas and feelings and obtain
recognition and status among fellow workers.
(d) Make use of the “principle of unity” for the purpose of securing good working
conditions, high economic compensations, better career prospects and welfare needs.
(e) Restrict management actions which are against the interest of workers.

Shortcomings of Trade Unions:

Trade union movement in our country suffers from the following weaknesses:
1. Uneven Growth:

Trade unions are concentrated in large scale industry sector and in big industrial centers.
There is very little trade union activity in small sector, agricultural labour and domestic
sector. Trade unionism has touched only a portion of the working class in India.
1. Small Size:

Most of the unions have low membership though the number of unions and union
membership are increasing, average membership is inadequate.
2. Weak Financial Position:

The average yearly income of unions is very low and inadequate. The subscription rates
are low and many members do not pay the subscription in time. Due to their financial
weakness, most of the unions are not in a position to undertake welfare programmes for
workers.
3. Political Leadership:

Trade unions are under the leadership and control of political parties and outsiders.
Politicians exploit unions and workers for their personal and political gains. Thus, the
political leadership is very harmful to the trade union movement in India.
4. Multiplicity of Unions:

There exist several unions in the same establishment or industry. The existence of rival
unions with conflicting ideology is greatly responsible for unhealthy growth of trade
union movement. In some cases employers encourage split in unions to undermine their
bargaining power.
5. Problem of Recognition:

Employers are under no obligation to give recognition to any union.

6. Absence of Paid Office-Bearers:

Most of the unions do not have full-time paid office-bearers. Union activists working on
honorary basis devote only limited time and energy to union activities. Union officers
lack adequate knowledge and skill due to lack of proper training, weak financial position
and political leadership are the main reasons for this state of affairs.
7. Apathy of Members:

Majority of workers do not take keen interest in union activities. The attendance at the
general meetings of unions is very poor.
8. Opposition from Employers:

Trade unions in India have to face opposition from employers. Many employers try to
intimidate or victimize labour leaders, start rival union and bribe union officials.
9. Inter-Union Rivalry:

Multiple unions create rivalry. Unions try to play down each other in order to gain greater
influence among workers. Employers take advantage of infighting. Inter-union rivalry
weakens the power of collective bargaining and reduces the effectiveness of workers in
securing their legitimate rights.

Employer’s Organizations:
Under the trade union Act the term trade unions also includes employer’s organizations.
But strictly speaking, an employer’s association means formal body of employers only.

The objectives of an employer’s association are:

(i) To promote collective bargaining.

(ii) To develop healthy and stable industrial relations.

(iii) To bring employer’s viewpoint to the notice of the Govt, and

(iv) To represent employers at national and international forums.

There are at present more than 800 registered associations of employers in India. These
are of three types:

1. Local associations to promote the interests of employers in a particular industry or city,

e.g., Indian Jute Mills Association.

2. Regional associations such as the Southern India’s Mill Owners’ Association which
serve the needs of employers in a particular region.

3. National or apex associations which co-ordinate the efforts of local and regional
associations. These are federations to which local and regional associations are affiliated.
FICCI, CII, are examples of these federations. These federations perform several
functions such as advice, education, communication, representation.

Organization Structure:
Organizational structure of National Trade Unions consists of 4 levels as given below:

1. Conventions/sessions

2. General council (President, VP, Secretary-General, etc.)

3. Provincial bodies (at state level chairman, secretariats)

4. Local bodies (affiliated unions)

National convention/conferences are hold at periodic intervals, say annually or bi-

annually. This is the highest policymaking body. This is presided over by the president of
the union attended by the delegates such as chairmen of state units, representatives of
specialized services, legal experts and delegates from international bodies and special
invitees. Office bearers are also elected by this conference.

General council consists of president, vice-president, secretary and other office bearers. It
carries out policy decisions taken by convention. Various standing committees are set up
on rendering study, analysis and recommendations on various aspects like legislative
measure, Research and publications, international services etc.

State units are headed by chairman of state/regional areas. State units also liaise with
National Headquarters; keep a close watch of faithful implementation of labour
legislation and practices. It assists/influence state government to pass labour friendly
legislation and executive/administration actions.

It is also responsible for membership of various unions representing workers in industrial

undertakings (units) and/or representing trade and industrial units affiliated to the central
trade union. These state units get themselves attached to State/Provincial/HQ/Regional
unions/Units.
Headquarters (HQ) unions are responsible for welfare of its members and membership
drive. As bargaining agents they are involved in collective bargaining with Central
Government/ and or State government and assist passing legislative measures.

How Trade Union Objectives are achieved?

The objectives of a trade union are achieved by a pursuit of traditional methods. These
are:

(i) The organization of a trade union on the basis of the craft or industry in which its
members are employed, such as general unions and professional employee’s
organizations.

(ii) Collective bargaining, which is the essence of industrial relations, for it is through
collective bargaining that the terms and conditions of employment are determined and
under which work is performed’ satisfactorily.

(iii) Grievance processing and handling procedures, under which grievances are
redressed or dealt with by a correction of situation or by channelling up of these “up the
line”.

(iv) Arbitration, by which unsettled or unresolved disputes can be settled by an outside

agency.

(v) Political pressure exercised through legislators who are capable of bringing about
changes in labour laws; and

(vi) Mutual insurance through common contributions to meet the financial needs of
workers when there are stoppages of work.

Characteristics of Trade Union:

1. A union normally represents members in many companies throughout the industry or

occupation.

2. A union is fundamentally an employer regulating device. It sharpens management

efficiency and performance while protecting the interests of the members.

3. A union is a part of the working class movement.

4. A union is a pressure organisation originating in the desire on the part of a group with
relatively little power to influence the action of a group with relatively more power.

5. A union is a political institution in its internal structure and procedures.

Trade Union Movement in India:

Trade union movement in our country has a century-long history. The first quarter of the
present century saw the birth of the trade union movement, but the seeds of the
movement were sown much earlier.
In the twenties, soon after the World War I, working class in our country realised the
effectiveness of labour strike as a means of obtaining concessions, higher wages and
better working conditions. Many strikes were declared consequently and most of them
were successful. This success led to the formation of several unions.

The AITUC was set up in 1920 with the objectives of representing worker’s interests, to
co-ordinate the activities of all labour organisations in the country, and to spread the
message about the need for union movement. Hundreds of unions came into being in big
and small industries. Their number, as well as membership, increased considerably.

A landmark in the history of labour movement was the enactment of the Trade Unions
Act 1926. The Act gave a legal status to the registered trade unions and conferred on
them and their members a measure of immunity from civil suits and criminal
presentation. Registration of union gave them respectability before employers and the
general public.
Towards the end of 1920s, there was a split in the union movement, the split being
caused by the leader’s ideological differences. The AITUC was captured by the
communists. The moderates formed a new organisation, called All India Trade Union
Federation. Ideological differences and splits had their effect on strikes too. Majority of
the strikes failed.
Unlike 1920s, the 1930s were not favourable to the trade union movement. The
presentation of the communists involved in the Meerut conspiracy case and the failure of
the Bombay textile strike of 1929 brought a downfall in trade union activities.
Meerut Conspiracy Case (1929)
This was immense political significance for the Indian working class movement because
it was conspiracy of British Government against the rise of Communism in India. During
this case 31 labour leader included three Englishmen were arrested on the charge of
conspiracy.

Muzafr Ahamed, S.A Dange, S.V Ghate, Dr. G Adhikari, P.C.Joshi, S.S.Mirajkar,
Shaukat Usmani, Philip Stratt etc. were arrested on the charge of conspiracy to
overthrow the British Government of India through strikes and other militant methods.
It is interesting to note that the accused in the Meerut Case gained the sympathy of the
nationalists.

Economic depression of the period also added to the dull phase of union movement.
Retrenchments and strikes were common, the latter being mostly ineffective. There were
further splits in the movement, but just before the World War II some unity was
achieved.
The unity was shattered during the World War II because of ideological differences and
mounting cost of living. Industrial unrest increased and the Govt, banned strikes and
lockouts invoking the Defense of India Rules. Luckily workers realized the need for an
organized movement to secure relief. This realization led to an increase in the number of
unions.

The aftermath of independence was not good for unions. The hopes of workers to secure
better facilities and wages from the national government were not realized. There was
large scale unrest and strikes and lock outs multiplied.
The disunity in the trade union ranks was aggravated by the starting of three central labor
organizations, namely the INTUC in 1947, the Hind Mazdoor Sabha (HMS) in 1948, and
the United Trade Union Congress (UTUC) in 1949.
As years went by, more unions and central organizations came into being the movement
became deeply entrenched .

Trade Union Formation:

Or
Types of trade unions
Or
Structure of Trade Unions

Trade unions are formed on different criteria.

Some of the criteria are:

(1) Craft basis, (2) Industrial Unions, (3) General grouping based on place and (4)
Federations.

1. Craft Unions:
In this organisation the labour class is grouped based on particular trade or occupation.
This category is mainly amongst the white collared employees. The measures are mostly
in horizontal system and craft conscious rather than class conscious.
This will have lot of commonality in thinking and approach to problems resolution. The
bank employees’ union, doctors’ union, lawyers’ association, teachers’ association come
under this category.
2. Industrial Unions:
A particular category of industry will have their own unions. All crafts and trades coming
under that industry are part of the union. Textile mill unions, steel industry unions, mill
mazdoor sangh, grini kamgar unions are some of the examples of industrial unions in
India.
They form a strong force in collective bargaining. They cover all welfare of similar
industry workers in a city or industrial town. Industrial unions are more vocal, volatile
and indulge in agitation and strikes. Similarly these industries face more lockouts and
arbitration for disputes redressal.
3. General Union:
This is a conglomerate group of different industry employees forming a union. This
happens normally in industrial towns, ancillary units, and SSI units in a city or suburb.
Examples are Peenya industrial workers’ union, Thane industry employees’ unions and
Jamshedpur labour union.
4. Federations:
These are apex bodies at national level. All trade unions like craft union, industrial
unions and general union become members of federations to have bigger identity. Central
trade unions as federations help smaller unions and support at national level to address
their cause.

Important Central Trade Unions of India

Name Year Approx.
members
(lakhs)

1.AITUC
-A11 India Trade Union Congress 1920 30

2.INTUC
-Indian National Trade Union Congress 1947 55

3.HMS-
Hind Mazdur Sabha 1948 45

4.BMS-
Bharathiya Mazdur Sabha 1955 41

5.HMKP-
Hind Muzdur Kisan Parishat 1962 16

6.CITU-
Center lndian Trade Union 1970 24

7.UTUC-
United Trade Union Congress 1971 8

Reasons For Joining Trade Unions :-

Workers organize themselves into a trade union due to the following reasons:-

1. Greater Bargaining Power

2. Economic Security

3. Sense of Security
4. Sense of Participation

5. Sense of Belongingness
6. Platform for self expression

7. Betterment of relationships
8. Leadership

9. Check on Arbitrary Actions

1. Greater Bargaining Power:-

An individual worker is not in a position to secure good pay and proper working
conditions from employer. He joins union because union has greater bargaining
power to get these economic benefits.
2. Economic Security
 Unions protect their members from various economic hazards such as illness,
accidental injury, unemployment. They contact employers to pay compensation
and retirement benefits.

3. Sense of Security:-

Workers form a trade union to secure for them security of service. Unions take
political action to get legislative protection against dismissal. They also resist any
attempt of the employer to retrench workers.
4. Sense of Participation:-

Workers can gain recognition as equal partners with employer by joining unions.
They can participate in management of industry. They can influence decisions,
affecting their interests through collective bargaining.

5. Sense of Belongingness:-
An ordinary worker has little sense of belonging in modern industry. By joining a
union he can associate with fellow workers and gain social respect. He can also
discuss his problems with leaders of trade union. Trade unions generate a spirit of
self reliance and self respect among trade workers.

6. Platform for self expression:-

Workers join unions to communicate with management. Union serves as a
platform through which a worker can make his voice heard by the employer.
7. Betterment of relationships

Another reason for workers to join unions is the need for an adequate machinery
to maintain proper relations between management and labor. Union provides this
machinery through collective action.
8. Leadership

Some workers join trade unions to fulfill their potential ambitions. They use the
union as an outlet to become leaders. They may rise in their potential career by
obtaining an office of the union.

9. Check on Arbitrary Actions

If workers are not united, an employer may adopt arbitrary policies and
procedures to exploit them. Workers form union to ensure rational and uniform
personnel policies and their unbiased implementation on the part of management.

Measures for strengthening Trade Unions or Remedies of trade unions:-

Some of the steps that can be taken to make trade union successful are:-

o Strong Base
o Financial Stability
o One union in One Industry
o Internal Leadership
o Recognition of Unions
o Paid officials

1. Strong Base:-
In order to develop a strong trade union movement, it is essential to
widen the unionism to unorganized sector and small towns. Workers in
household, small scale and domestic sectors should form trade unions.

2. Financial Stability:-
To improve the financial condition of the unions the minimum
subscription should be raised. National commission on labor suggested
the check off system under which each worker would individually
authorize the employer to deduct membership fee from his wage / salary
and the employer pay the collections to the union. This will reduce the
chances of defaults in payment.

3. One union in One Industry:-

The principle of one union in one industry should be adopted to avoid
multiple unions and inter-union rivalry. A provision may be made in the
trade unions act that where more than one set of persons claims to be
the office bearers of the same union , the matter should be decided by
the central organization to which the union is affiliated or by labor
Courts.
4. Internal Leadership:-
Leaders of union should be developed from within the rank and file of
the workers. This will help to eliminate party politics and outsiders.
There should be no ban on non members holding executive positions in
a union but the limit of the outsiders in the executives of the union
should not exceed 25 percent.

5. Recognition of Unions:-
It should be made obligatory for employers to recognize the union in all
undertaking employing 100 or more workers. A trade union seeking
recognition as a bargaining agent should have a membership of at least
30 percent of workers in the establishment.

6. Paid Officials:-
Full time paid officials should be appointed to manage the affairs of
trade union. These officials should be competent and sincere. They
should be men of integrity, able to evaluate workers aspirations and
strong enough to negotiate with employers on equal basis. They should
be paid well.
Chapter-3

Quality Circles

Quality Circle –
Meaning
Quality circle is a people building philosophy based on the premise that an employee
doing a particular job is biggest expert of that field and thus is in a better position to
identify, analyze and resolve the work related problems through their innovative and
unique ideas. In fact, it is a practical application of McGregor’s Theory ‘Y’ that if given
the right environment and decision making power, people will enjoy and take pride in
their work thus leading to enrichment of their work life.

By solving their work related problems, the employees reduce the rejection rate, rework
and thus their mental tensions are reduced, enabling them to work with total commitment
and dedication.

It is a voluntary group of employees, who are doing the same or similar type of job,
meet together on a regular’ basis to identify, analyze and solve their work related
problems leading to improvement in their work, performance and- enrichment of
their work life. The number of circle members could vary from 5 to 15 but the ideal size
of a circle is 7 or 8 members. The number of members should be such that the circle is
effective.

History of Quality Circle:-

Quality Circle – History of Quality Circle from Second World War to Present
The quality circles owe their origin to Dr. Kaoru Ishikawa, a Japanese Scientist, who
conceptualized and implemented quality circles for improving productivity in Japan. The
Japanese realized that the involvement of their employees at the gross roots level would
give the necessary fillip to achieve better quality standards. A massive training
programme was organised for workers, foremen and supervisors, to improve the quality
of work as well as to improve the productivity of the organisation.

The Second World War devastated all industries and Japaneses had to build up their
economy from the scratch. To improve the image of the nation, Gen. Douglas McArthur,
in command of the allied forces in Japan at that time, requested the United States
Government to send management experts to help the Japanese rejuvenate their industries.

An eminent expert on Statistical Quality Control Techniques of the United States, Dr.
Edward Deming, was sent to Japan from 1948-1950 to train the Japanese management
personnel. Then during 1954-55, another famous management consultant, Dr. Juran
visited Japan to lecture on ‘Quality Management’. He preached that quality begins at the
stage of designing and ends after satisfactory services to the customers. ‘Total Quality’
becomes more important for the success of any organisation rather than quality during
the stage of only manufacture.

The Japanese Government was deeply satisfied with the achievements of Dr. Deming and
Dr. Juran and it followed various programmes on Quality Control, statistics and other
related subjects. The image of Japanese industries improved with these programmes. The
Quality Circle movement started gathering momentum. Many people were involved, and
most of them were supportive to the movement. The nation strived to improve its quality
image and productivity.

Thus the concept of quality circles was evolved and adopted in Japan in the early 1960s
as a result of compulsion of circumstances at that time. Much of the success of the
Japanese industry can be traced to the efforts of Japanese Union of Scientists and
Engineers (JUSE).

With the successful execution of quality circles in Japan and U.S.A., many other
countries also adopted Quality Circles as a tool to improve their quality of work life.
Now many countries of the world (like Norway, Sweden, Brazil, Canada, France, U.K.,
Singapore, Korea, Taiwan, Holland, China, Russia) have accepted quality circles as a
very effective instrument for improving the total performance of any organisation.

Quality Circle –
Features:
The key features of quality circles are as under:

1. People Building Philosophy – A quality circle is a homogeneous group. The

number of employees in a quality circle is between six to ten and they generally
come from a particular area. It consists of small group of persons who normally
work at the same place and perform similar work.

2. Voluntary Group – No coercion or pressure is brought on any member to join or not to

join. Nor can any member be barred from joining quality circles. Quality circles are
voluntary associations of persons having common cause.

3. Participative Program – Quality circles represent collective effort. Every one working
in the organisation must get a chance to say what is in his mind. Everyone should have
interest and value for the projects chosen for quality circles.

4. Supportive Management – Quality circles need the encouragement to grow and

mature. Management must be willing to give support, advice and also some commitment
in the beginning.
5. To Improve the Performance – Collective and participative efforts must result in the
improvement of quality, productivity and performance. Cost and wastage must be
reduced as a result of quality circles. The whole organisation must gain both
quantitatively as well as qualitatively.

6. Enrichment of Worklife – Apart from team culture and attitudinal changes, the quality
circles must result in improved working environment, happier relations and greater job
satisfaction.

7. To Identify and Resolve Work Related Problems – Members of quality circles identify
their problems through brainstorming sessions. Then they start analysing the problems
through statistical quality control techniques and problem solving methods.

8. The focus is on quality related problems.

Quality Circle –
Objectives
The important objectives of quality circles are:

(i) To develop, enhance and utilise human resources effectively;

(ii) To improve quality of products/services, productivity and reduce cost of production

per unit of output;

(iii) To satisfy the workers’ psychological needs for self-urge, participation, recognition
etc., with a view to motivating them.

(iv) To improve various supervisory skills like leadership, problem solving, inter-
personal and conflict resolution; and

(v) To utilise individual imaginative, creative and innovative skills through participation,
creating and developing work interest, including problem solving techniques etc.

(vi) To make use of the knowledge and skills of the workers.

(vii) To develop good relations between workers and managers and create cordial
industrial relations.

Quality Circle –
Organisation Structure OR
(Role of Different Elements of Quality Circle)

The typical organisation structure of quality circles consists of non-members and

members. The hierarchy in an organisation is at seven levels starting with non-members,
members, leader/deputy leader, facilitator, departmental/steering committee, coordinating
agency and the top management.

They meet on regular basis to identify the work centre problems and develop solutions to
these problems. Normally quality circles meet in a free period i.e., at the lunch hour or
after the factory hours. The meetings are loosely structured and often begin with a
brainstorming session to identify, analyse and resolve work problems being experienced
by the work centre.

The structure of quality circles is put in a simple ‘pyramid form’ and the role of different
elements of quality circles is being discussed below:

1. Non-Members:
Quality circle is a voluntary association of persons and all the employees working in the
organisation may not be initially volunteer to join the quality circles. So non- members
(the employees who have not joined quality circles) do not involve themselves in the
small group activities, but they are also important for the success of quality circles.

For any problem identified and resolved by the quality circles, it would become difficult
for them to implement their own suggestions without the cooperation of the non-
members. Non-members should be enthused to participate in quality circle activities and
gradually change their attitudes and get inclined to join the quality circles for the
betterment of their own accomplishments as well as the organisational goals.

2. Members:
Members are the heart of the quality circle program and proper use of their untapped
brainpower is the key to its success. Membership is strictly voluntary and anyone who
wishes to join should be welcomed. Members for quality circles can come from all parts
of the society. There is no restriction on the membership. But the workers, foremen and
supervisors are best suited for the formal membership of quality circles.

Members undergo a formal training and start meeting regularly to discuss work-related
problems. They not only identify, analyse and solve the problems but also ensure
implementations of the recommendations, even if it calls for interaction with other
agencies or levels of management.

The main activities of circle members include:

i. Regular attendance of meeting,

ii. Active participation in the discussion,

iii. Identification of issues deterring improvement,

iv. Analysis of issues/problems

v. Submission of suggestions for improving quality and solving problems arising in work
related areas.

3. Leader/Deputy Leader:
The quality circle leader is elected by the circle members. He is responsible for the circle
activities. Quality circle leaders are not expected to do all the work themselves but to
involve all the members and sharing the task of getting things accomplished. If the leader
is absent, then deputy leader ensures that all the meetings and other activities go on
uninterruptedly.

Normally members themselves choose their hierarchical supervisor as their leader.

Leaders help keeping the circle meetings on the right track by applying quality circle
techniques to solve quality problems. The leader should have more positive and
constructive attitude in order to get better response from the members. A healthy
approach would be to have leaders and deputy leaders by rotation.

To have a high degree of individual involvement and participation, leaders should assign
tasks to different members and give them necessary guidance. The leader ensures that
every circle member is involved in circle activity with a high degree of enthusiasm and
involvement. He also ensures disciple and decorum during the meetings and evolves
consensus decision-making process. In short, “leader is one who knows the way, shows
the way and goes the way.”

The main functions of the leader are:

i. Conducting meetings regularly

ii. Generating enthusiasm for circle activities.

iii. Acting as link between members and facilitators.

iv. Keeping the meetings on the right track.

v. Training members in problem solving techniques.

(iv) Facilitator – Facilitator is an important link between the quality circle leader and the
steering committee.

4. Facilitator:
The facilitator is the coordinator, who really makes the program of quality circle going.
He is the senior officer of the department where quality circles are working. He has a
crucial role to play in making the quality circle operation a success. He is the one who
has got the authority to take decisions himself on the basis of the recommendations made
by the quality circles.
By virtue of being high in the organisation hierarchy, he ensures the proper
implementation of the recommendations. Moreover, facilitator is the personification of
the top management’s commitment and support to the activities of the quality circles.

Facilitator acts as a guide, counsellor, teacher and a catalyst to his group by extending
support to the operations of quality circles. He also lends assistance and support to the
leaders/deputy leader whenever required and helps in training the members. He should be
able to develop confidence in the minds of quality circle members so that they can
always bank upon him for any assistance that may be required.

The main duties of a facilitator are:

(a) Serving as a quality circle coordinator.

(b) Training members, leaders and management.

(c) Initiating the setting up of quality circles by persuading the supervisors.

(d) Providing feedback to the steering committee regarding the proceedings and results of
the quality circles.

(e) Helping the quality circles in preparing the presentations, visual aids etc.

(f) Acting as an evaluator and reviewer of the quality circle operations and programs.

(g) He should be successful in acting as a co-coordinator, coach, promoter, teacher and

innovator.

(v) Coordinating Agency – The quality circle structure does not mean a separate
department to look after its activities, a great deal of coordination is called for convening
steering committee meetings, arranging management presentations, formulating budgets
and disseminating relevant information on circles to the parties etc.

5. Coordinating Agency:
The coordinating agency organises the activities of the quality circles and ensures the
continuity of its operations. Anyone who is committed to the concept of quality circle
and is dynamic in approach could act as coordinating agency.

The co-ordinating agency organises the training programmes for the members as and
when new circles are formed. It coordinates and evolves a consensus for norms to assess
the performance of different quality circles and of different divisions. It also prepares a
budget for the functioning of quality circles and submits the same to the Steering
Committee for adoption.
The main functions of the co-coordinating agencies are:

(a) Preparing agenda and convening meetings for the steering committee.

(b) Presenting the report of quality circle activities to the steering committee.

(c) Maintain statistics of the operations of the quality circles.

(d) Co-ordination training programs and arranging seminars work shops

(e) Conventions and top management presentations frequently.

(vi) Steering Committee – This body is at the highest level that would be responsible for
formulating the objectives and supplying the resources for the quality circle activities.

Departmental/Steering Committee:

Committees are formed to establish and approve the policies and programs of quality
circles. The committee comprises of heads of major functions as members and the Chief
Executive of the organisation as the chairman. The departmental/steering committee
gives the approval to start the program and offer basic guidelines for the operation of
quality circles. The committee also ensures proper implementation of circle projects and
promote quality circle activities.

The steering committee’s function is to keep quality circles effective and on target. It
ensures that the company does and will continue to support all circle activities and
solutions. The doors for better communication between the management and the people
actually doing the work gets open by the activities of the departmental committees. The
employees get an opportunity to see how the management operates and help in the
decision-making and problem-solving process within the organisation.

The steering committee/departmental committee takes an overview of the operations of

quality circles as a whole. The committee seeks to identify the problem areas and suggest
remedial action, on the basis of the report from the facilitator. The committee also takes
decisions and gives policy guidelines for the healthy propagation of the concept of
quality circles.

The committee also sanctions major programmes and financial support to give thrust to
the promotion of the quality circles.

The main functions of the steering committee are:

(a) Providing training to the quality circle leaders.

(b) Arrangements of meeting halls and associates in the meetings.

(c) Providing budget for quality circle activities.

(d) Making quality circle activities as part of the organizational goals.

The steering committee would take part in the top management presentation given by the
quality circles and respond to circles recommendations expeditiously, they may also
participate in annual social get- together.

7. Top Management:
The involvement of top management in setting and implementing the quality circle
program is very essential. No quality circle program can be successfully implemented
without the support of top management. The program facilitator should invite top
management to the program and present the best completed projects. He will involve the
top management in the achievements of circle to gain its support and involvement.

The primary role of the top management is to extend visible support to the movement of
quality circle by attending the major functions such as annual conventions, seminars;
messages in newsletters etc. The top management should preside over its meetings for
constantly overseeing the progress of the movement and sanction funds for the quality
circles.

Quality Circle – Benefits

Benefit Derived from the Program of Quality Circles

More specifically, following benefits are derived from quality circles:

1. Self-Development:

Every person who joins the quality circle program gets training to enhance his knowledge
and skills. Training helps them to improve their abilities and promote success in other
areas of life also. Quality circles are formed in those areas where people can work in a
group.

2. Job Satisfaction:

People get a sense of pride when opportunities are given to them to use their ideas and
brain power. They get a sense of achievement and satisfaction when their ideas are
considered and executed. They work with more enthusiasm while performing their jobs.

3. Reduction of Waste:
Quality can be achieved by cutting down the waste in material, labour and time. By
working together and helping each other, these wastages can be avoided. By
reducing/avoiding the waste, the cost of operations can be brought down considerably.

In today’s inflationary conditions, where cost of material and wages are rapidly
increasing, it becomes imperative to reduce the cost and waste. Costly items can be
referred to quality circles and they can be asked to reduce the cost without reduction in
quality.

4. Improvement of Quality:

A quality circle is one of the best answers to solve problems and improve the quality
image. Improving quality is a never-ending job. There is always a scope for further
improvement. Consumers constantly demand better quality and a business has to come
up to the expectations of consumers in order to survive and grow in the competing
market. Quality always matter whether the deal is with the people, the process, the
machine or the material. The basic idea underlying the establishment of quality circles is
to improve the quality by the involvement of everyone participating in the organisation.

5. Improvement of Communication:

Good communication is very important for a working life. Quality circles improve
communication through group activities which take place frequently. Poor
communication can cause dissatisfaction and undue tension. It can lead to
misunderstandings and confusion due to the mis-interpretation of the messages. In
quality circles, people become more open-minded, they talk more about their problems
and develop a positive working atmosphere.

6. Improve Participation:

Membership in a quality circle means a participative environment—an interaction with

the work group. Participation encourages commitment of the employees in producing
quality goods. The involvement of everyone working in the organisation gets involved
and improve the operations of the enterprise. Everyone from top to bottom works
towards a common goal i.e., success through quality.

7. Improvement in Productivity:

Quality circles have proved to be a valuable tool for increasing the productivity and
improving the work quality by enhancing worker’s participation and job- satisfaction.
Reduction of costs and elimination of waste/rejects also contribute towards the
improvement in productivity. Japan, Germany and France are ahead of many industrial
nations due to their adoption of quality circles as a means to improve their productivity.

8. Problem Solving Opportunities:

An excellent opportunity to solve many work problems is provided by quality circle
programs. People get a chance to get together and think about their problems and then try
to solve them through this program. People get more satisfaction when the ideas
generated by them are used to resolve the organisational problems and conflicts.

9. Team Spirit:

A sense of team-spirit is inculcated among the group members working in the quality
circles. While working with each other, a feeling of togetherness is created. They start
helping each other. They start talking about business and other problems during lunch
time. The teams become a strong force to combat growing competition and inflationary
problems.

10. Reducing Absenteeism and Grievances:

Various studies have proved that there has been a remarkable reduction in absenteeism in
the quality circle departments. People start enjoying the work and they prefer to come to
the job rather than sitting at home. By linking all kinds of people together, the grievances
of many employees get reduced. They start spending their time and energy on higher
productivity and better quality by setting aside their minor differences. Thus quality
circles help many companies in reducing their absenteeism and industrial grievances.

Problems with Quality Circles

• Inadequate Training:-
The workers in India have a low level of education. They also lack leadership
qualities. To overcome this hurdle, Workers' Education Program should be
initiated.
• Unsure of Purpose:-
Members of quality circles are not properly communicated that for what purpose
quality circles are formed so it loses their interest as they don’t the significance of
quality circle and their role in the quality circle.
• Not truly Voluntary:-
Sometimes it is obligation to be part of quality circles even if workers are not
interested. Workers are pressurized to become a part of quality circles and due to
this it loses its voluntary nature.
• Lack of Management Interest:-
The top management may not be committed to the concept of quality circle. The
employees may not be allowed to hold meetings of quality circles during the
working hours. The management should allow the workers to hold quality circle
meetings periodically during the working hours.
• Quality Circles are not really empowered to make decisions:-
 The workers will feel disheartened if their suggestions are turned down without
any reason. The suggestions of each quality circle should be given due weightage.

UNIT-II
Concept of collective bargaining, Prerequisites for collective bargaining, the collective bargaining process,
Principles of Collective Bargaining, Essential conditions for the success of collective bargaining, Collective
Bargaining and Labour Management Co-Operation in India. Grievance Management – causes of grievance – effects
of grievance, Negotiation and Collective Settlements, Grievance redressal procedure.

Unit-2
Concept of collective bargaining, Prerequisites for collective bargaining, the collective bargaining process, Principles
of Collective Bargaining, Essential conditions for the success of collective bargaining, Collective Bargaining and
Labour Management Co-Operation in India. Grievance Management – causes of grievance – effects of grievance,
Negotiation and Collective Settlements, Grievance redressal procedure.

Unit-2
Ch-1
Definition of Collective Bargaining:
Industrial disputes between the employee and employer can also be settled by
discussion and negotiation between these two parties in order to arrive at a
decision.
This is also commonly known as collective bargaining as both the parties eventually
agree to follow a decision that they arrive at after a lot of negotiation and discussion.

According to Beach, “Collective Bargaining is concerned with the relations between

unions reporting employees and employers (or their representatives).

It involves the process of union organization of employees, negotiations administration

and interpretation of collective agreements concerning wages, hours of work and other
conditions of employees arguing in concerted economic actions dispute settlement
procedures”.

According to Flippo, “Collective Bargaining is a process in which the representatives of a

labor organization and the representatives of business organization meet and attempt to
negotiate a contract or agreement, which specifies the nature of employee-employer
union relationship”

According to an ILO Manual in 1960, the Collective Bargaining is defined

as:
“Negotiations about working conditions and terms of employment between an
employer, a group of employees or one or more employers organization on the other,
with a view to reaching an agreement.”

It is also asserted that “the terms of agreement serve as a code defining the rights and
obligations of each party in their employment relations with one another, if fixes large
number of detailed conditions of employees and during its validity none of the matters
it deals with, internal circumstances give grounds for a dispute counseling and
individual workers”.

Forms of Collective Bargaining:

The working of collective bargaining assumes various forms. In the first place,
bargaining may be between the single employer and the single union, this is known as
single plant bargaining. This form prevails in the United States as well as in India.

Secondly, the bargaining may be between a single firm having several plants and
workers employed in all those plants. This form is called multiple plants bargaining
where workers bargain with the common employer through different unions.

Thirdly, instead of a separate union bargaining with separate employer, all the unions
belonging to the same industry bargain through their federation with the employer’s
federation of that industry. This is known as multiple employer bargaining which is
possible both at the local and regional levels. Instances in India of this industry-wide
bargaining are found in the textile industry.

Essential Pre-Requisites for Collective Bargaining:

Effective collective bargaining requires the following prerequisites:
(i) Existence of a strong representative trade union in the industry that believes in
constitutional means for settling the disputes.

(ii) Existence of a fact-finding approach and willingness to use new methods and tools
for the solution of industrial problems. The negotiation should be based on facts and
figures and both the parties should adopt constructive approach.

(iii) Existence of strong and enlightened management which can integrate the different
parties, i.e., employees, owners, consumers and society or Government.

(iv) Agreement on basic objectives of the organization between the employer and the
employees and on mutual rights and liabilities should be there.

(v) In order that collective bargaining functions properly, unfair labour practices must
be avoided by both the parties.

(vi) Proper records for the problem should be maintained.

(vii) Collective bargaining should be best conducted at plant level. It means if there are
more than one plant of the firm, the local management should be delegated proper
authority to negotiate with the local trade union.

(viii) There must be change in the attitude of employers and employees. They should
realize that differences can be resolved peacefully on negotiating table without the
assistance of third party.

(ix) No party should take rigid attitude. They should enter into negotiation with a view
to reaching an agreement.

(x) When agreement is reached after negotiations, it must be in writing incorporating all
term of the contract.

It may be emphasised here that the institution of collective bargaining represents a fair
and democratic attempt at resolving mutual disputes. Wherever it becomes the normal
mode of setting outstanding issues, industrial unrest with all its unpleasant
consequences is minimised.

Main Features of Collective Bargaining:

Some of the salient features of collective bargaining are:
1. It is a Group Action:
Collective bargaining is a group action as opposed to individual action. Both the parties
of settlement are represented by their groups. Employer is represented by its delegates
and, on the other side; employees are represented by their trade union.

2. It is a Continuous Process:
Collective bargaining is a continuous process and does not end with one agreement. It
provides a mechanism for continuing and organised relationship between management
and trade union. It is a process that goes on for 365 days of the year.

3. It is a Bipartite Process:
Collective bargaining is a two party process. Both the parties—employers and employees
— collectively take some action. There is no intervention of any third party. It is mutual
given-and-take rather than take-it-or-leave-it method of arriving at the settlement of a
dispute.

4. It is a Process:
Collective bargaining is a process in the sense that it consists of a number of steps. The
starting point is the presentation of charter of demands by the workers and the last step
is the reaching of an agreement, or a contract which would serve as the basic law
governing labour-management relations over a period of time in an enterprise.

5. It is Flexible and Mobile and not Fixed or Static:

It has fluidity. There is no hard and fast rule for reaching an agreement. There is ample
scope for compromise. A spirit of give-and-take works unless final agreement acceptable
to both the parties is reached.

6. It is Industrial Democracy at Work:

Collective bargaining is based on the principle of industrial democracy where the labour
union represents the workers in negotiations with the employer or employers. Industrial
democracy is the government of labour with the consent of the governed—the workers.
The principle of arbitrary unilateralism has given way to that of self-government in
industry. Actually, collective bargaining is not a mere signing of an agreement granting
seniority, vacations and wage increase, by sitting around a table.

7. It is Dynamic:
It is relatively a new concept, and is growing, expanding and changing. In the past, it
used to be emotional, turbulent and sentimental, but now it is scientific, factual and
systematic.

8. It is a Complementary and not a Competitive Process:

Collective bargaining is not a competitive process i.e., labour and management do not
cooperate while negotiating for the same object. It is essentially a complementary
process i.e., each party needs something which the other party has, namely, labour can
put greater productive effort and management has the capacity to pay for that effort and
to organise and guide it for achieving the enterprise’s objectives.

The behavioural scientists have made a good distinction between “distributive

bargaining” and “integrative bargaining”. The former is the process of dividing up the
cake which represents what has been produced by the joint efforts of management and
labour.

In this process, if one party wins something, the other party, to continue the metaphor
of the cake, has a relatively smaller size of the cake. So it is a win-lose’ relationship. The
integrative bargaining, on the other hand, is the process where both the parties can win
—each party contributing something for the benefit of the other party.

9. It is an Art:
Collective bargaining is an art, an advanced form of human relations.

Means of Collective Bargaining:

Generally, there are four important methods of collective bargaining, namely,
negotiation, mediation, conciliation and arbitration for the settlement of trade disputes.
In this context R.F. Hoxie said that arbitration is often provided for in collective
bargaining under certain contingencies and for certain purposes, especially when the
parties cannot reach agreement, and in the interpretation of an agreement through
negotiation.

Conciliation is a term often applied to the art of collective bargaining, a term often
applied to the action of the public board which attempts to induce collective bargaining.

Mediation is the intervention usually uninvited, of some outside person of body with a
view of getting conciliation or to force a settlement, compulsory arbitration is extreme
mediation. All these things are aids or supplement to collective bargaining where it
breaks down. They represent the intervention of outside parties.

Applicability
In case of Arbitration, parties need to have an Arbitration agreement only then they can
resolve their dispute via arbitration. Under Section 7 of the 1996 Act, the agreement
must be writing to be enforceable. Also, consent of both the parties is also necessary it
can be oral or written. An Arbitrator is appointed in cases involving major disputes,
where the parties are unreasonable or in cases when specific area specialization is
required.

While in case of Mediation or Conciliation no such agreement is required. Generally, the

court sends matter which suits or can be resolved via Mediation and Conciliation or if
the matter is such that the parties don’t want to bring the information in public then to
keep it private they go for mediation and conciliation. A conciliator or Mediator is
appointed in cases involving minor disputes.

Procedure
In case of Arbitration the Arbitrator take his decision based on the facts, side stories and
evidence of the case which may or may not be favorable to one party. Arbitrator
conducts the proceeding strictly by legal restriction and is bound to follow the neutral
approach in resolving the dispute.

In the case of Mediation, the mediator has the liberty to select any suitable method of
resolve the dispute as there are no strict guidelines to follow.
While in case of conciliation the conciliator is bound to follow the process given under
the Arbitration and Conciliation Act (Sections 61 to 81).

Cost
The Process of Arbitration as compared to mediation and conciliation, it more costly
and lengthy process. In case of Arbitration, each part pays for its own expenses or
Arbitrator. On the other hand, in case of conciliation and mediation, the cost of process
and mediator and conciliator is equally divided among the parties.

Judgment
An Arbitrator is a judge of the dispute and provides resolution measures which are
binding on the parties unless parties beforehand agreed that the outcome of the
proceeding won’t be binding.

In the case of mediation, a mediator does not deliver any judgment. A mediator is a
mere facilitator who assists in developing option and dialogue between the parties to
achieve a mutual agreement favorable for both the parties.

While in case of conciliation, the role of a conciliator is more than that of a mediator as a
conciliator is considered has a pro-active role and is not merely a facilitator. A
conciliator can as per Section 67(4) of the 1996 act can make a proposal for settlement
between the parties when there is scope for settlement which is presented to parties and
the parties have an issue then the conciliator has the right to reform the settlement
proposal.

Constituents of Collective Bargaining:

There are three distinct steps in the process of collective bargaining:
(1) The creation of the trade agreement,

(2) The interpretation of the agreement, and

(3) The enforcement of the agreement.

Each of these steps has its particular character and aim, and therefore, each requires a
special kind of intellectual and moral activity and machinery.

1. The Creation of the Trade Agreement:

In negotiating the contract, a union and management present their demands to each
other, compromise their differences, and agree on the conditions under which the
workers are to be employed for the duration of the contract. The coverage of collective
bargaining is very uneven; in some industries almost all the workers are under
agreement, while in others only a small portion of the employees of the firms are
covered by the agreement.

2. The Interpretation of the Agreement:

The administrative process is the day-to-day application of the provisions of the
contract to the work situation. At the time of writing the contract, it is impossible to
foresee all the special problems which will arise in applying its provisions. Sometimes, it
is a matter of differing interpretations of specific clause in the contract, sometimes; it is
a question of whether the dispute is even covered by the contract. Nevertheless, each
case must somehow be settled. The spirit of the contract should not be violated.

3. Enforcement of the Agreement:

Proper and timely enforcement of the contract is very essential for the success of
collective bargaining. If a contract is enforced in such way that it reduces or nullifies the
benefits expected by the parties, it will defeat basic purpose of collective bargaining. It
may give rise to fresh industrial disputes. Hence, in the enforcement of the contract the
spirit of the contract should not be violated.

However, new contracts may be written to meet the problems involved in the previous
contract. Furthermore, as day-to-day problems are solved, they set precedents for
handling similar problems in future. Such precedents are almost as important as the
contract in controlling the working conditions. In short, collective bargaining is not an
on-and-off relationship that is kept in cold storage except when new contracts are
drafted.

Importance of Collective Bargaining:

The collective bargaining advances the mutual understanding between the two parties
i.e., employees and employers.

The role of collective bargaining may be evaluated from the following point
of view:
(1) From Management Point of View:
The main object of the organisation is to get the work done by the employees at work at
minimum cost and thus earn a high rate of profits. Maximum utilization of workers is a
must for the effective management. For this purpose co-operation is required from the
side of the employees and collective bargaining is a device to get and promote co-
operation. The labour disputes are mostly attributable to certain direct or indirect
causes and based on rumors, and misconceptions. Collective bargaining is the best
remedial measure for maintaining the cordial relations.

(2) From Labour and Trade Union Point of View:

Labour has poor bargaining power. Individually a worker has no existence because
labour is perishable and therefore, the employers succeed in exploiting the labourers.

The working class in united form becomes a power to protect its interests against the
exploitation of the employers through the process of collective bargaining.
The collective bargaining imposes certain restrictions upon the employer. Unilateral
action is prevented. All employees are treated on equal footings. The conditions of
employment and rates of wages as specified in the agreement can be changed only
through negotiations with labour. Employer is not free to make and enforce decisions at
his will.

Collective bargaining can be made only through the trade unions. Trade unions are the
bargaining agents for the workers. The main function of the trade unions is to protect
the economic and non- economic interests of workers through constructive programmes
and collective bargaining is one of the devices to attain that objective through
negotiations with the employers, Trade unions may negotiate with the employer for
better employment opportunities and job security through collective bargaining.

(3) From Government Point of View:

Government is also concerned with the process of collective bargaining. Government
passes and implements several labour legislations and desires it to be implemented in
their true sense. If any person violates the rules and laws, it enforces them by force.

Collective bargaining prevents the Government from using the force because an
amicable agreement can be reached between employer and employees for implementing
the legislative provisions. Labour problems shall be minimised through collective
bargaining and industrial peace shall be promoted in the country without any force.

Collective bargaining is a peaceful settlement of any dispute between worker and

employers and therefore it promotes industrial peace and higher productivity resulting
an increase in the Gross National Product or the national income of the country.

Main Hindrances for Collective Bargaining:

The main objective of developing collective bargaining technique is to improve the
workers-management relations and thus maintain peace in industries. The technique
has developed in India only after India got independence and got momentum since
then.

The success of collective bargaining lies in the attitude of both management and
workers which is actually not consistent with the spirit of collective bargaining in India.
There are certain problems which hinder the growth of collective bargaining in India.

The following factors or activities act as hindrances to effective collective

bargaining:
(1) Competitive Process:
Collective bargaining is generally becoming a competitive process, i.e., labour and
management compete each other at negotiation table. A situation arises where the
attainment of one party’s goal appears to be in conflict with the basic objectives of the
other party.
(2) Not Well-Equipped:
Both the parties—management and workers—come to the negotiation table without
doing their homework. Both the parties start negotiations without being fully equipped
with the information, which can easily be collected from company’s records. To start
with, there is often a kind of ritual, that of charges and counter charges, generally
initiated by the trade union representatives. In the absence of requisite information,
nothing concrete is achieved.

(3) Time to Protest:

The immediate objective of the workers’ representatives is always some kind of
monetary or other gains, accrue when the economy is buoyant and the employer has
capacity to pay. But in a period of recession, when demand of the product and the
profits are falling, it is very difficult for the employer to meet the demands of the
workers, he might even resort to retrenchment or even closure collective bargaining is
no answer to such a situation.

(4) Where Prices are Fixed by the Government:

In industries, where the prices of products are fixed by the Government, it becomes very
difficult for the employer to meet the demands of workers which would inevitably lead
to a rise in cost of the products produced. Whereas the supply price to the consumers
cannot be increased. It will either reduce the profits of the firm or increase the loss. In
other words, it will lead to closure of the works, which again is not in the interest of the
workers.

(5) Outside Leadership:

Most of the Indian trade unions are led by outsiders who are not the employees of the
concerned organisations. Leader’s interests are not necessarily to be identical with that
of the workers. Even when his bonafides are beyond doubt, between him and the
workers he leads, there cannot be the degree of understanding and communication as
would enable him to speak on behalf of the workers with full confidence. Briefly, in the
present situation, without strong political backing, a workers’ organisation cannot often
bargain successfully with a strong employer.

(6) Multiplicity of Trade Unions:

One great weakness of collective bargaining is the multiplicity of trade unions. In a
multiple trade union situation, even a well recognised, union with long standing, stable
and generally positive relationship with the management, adopts a militant attitude as
its deliberate strategy.

In Indian situation, inter-union rivalries are also present. Even if the unions combine,
as at times they do for the purpose of bargaining with the employer they make
conflicting demands, which actually confuse employer and the employees.

(7) Appointment of Low-Status Executive:

One of the weaknesses of collective bargaining in India is that the management deputes
a low-status executive for bargaining with the employees. Such executive has no
authority to commit anything on behalf of the management. It clearly indicates that the
management is not at all serious and the union leaders adopt other ways of settling
disputes.

(8) Statutory Provisions:

The constraints are also imposed by the regulatory and participative provisions as
contained in the Payment of Wages Act, the Minimum Wages Act, and Payment of
Bonus Act etc. Such provisions are statutory and are not negotiable.

(9) Fresh Demands at the Time of Fresh Agreement:

At the time when the old agreement is near expiry or well before that, workers
representatives come up with fresh demands. Such demands are pressed even when the
industry is running into loss or even during the period of depression. If management
accepts the demand of higher wages and other benefits, it would prefer to close down
the works.

(10) Agreements in Other Industrial Units:

A prosperous industrial unit in the same region may agree with the trade unions to a
substantial increase in wages and other benefits whereas a losing industry cannot do
that. There is always pressure on the losing industries to grant wages and benefits
similar to those granted in other (relatively prosperous) units in the same region.

Scope of Collective Bargaining:

Collective bargaining broadly covers subjects and issues entering into the conditions
and terms of employment. It is also concerned with the development of procedures for
settlement of disputes arising between the workers and management.

A few important issues around which collective bargaining enters in this

developing country are as follows:
“Recognition of the union has been an important issue in the absence of any compulsory
recognition by law. In the under-developed countries in Asia, however, on account of
the tradition concept of management functions and the immaturity of the industrialist
class there is much resistance from the employers to recognise the status of the unions.”

Bargaining upon wage problems to fight inflation or rising cost of living and to resist
wage cuts during depression has resulted in several amicable agreements. But, no
statistics are available for such amicable settlements. Therefore, Daya, points out, “It
has been customary to view collective bargaining in a pattern of conflict; the
competitively small number of strikes and lock-outs attract more attention than the
many cases of peaceful settlement of differences.”
Another issue on which bargaining takes place is seniority, but in India, it is of less
importance than in western countries. But, in India, lay-off, retrenchment, dismissal,
rationalisation and participation in the union activities have been important issues for
collective bargaining.

Regarding bargaining on hours of work, it has recognized that “in one form or another
subject of working time will continue to play an important part in collective bargaining;
although the crucial battles may be well fought in the legislative halls.”

Overtime work, holidays, leave for absence and retirement continue to be issues for
bargaining in India, although they are not regarded as crucial.

The union security has also been an issue for collective bargaining, but it could not
acquire much importance in the country, although stray instances are found. The Tata
Workers union bargained with M/s Tata Iron and Steel Co. Ltd., Jamshedpur, on
certain issues, one of which was union security and in the resulting agreement some of
the union security clauses were also included.

The production norms, technical practices, details of working rules, standards of

performance, allowance of fatigue, hiring and firing, protection of life and limb,
compensation for overtime, hours of work, wage rates and methods of wage payments,
recognition of unions, retrenchment, union security, holidays and competence of
workmen form the subjects of negotiations and agreements through collective
bargaining. Customary practices are evolving procedures to extend the area of collective
bargaining. Collective bargaining has been giving official sanction to trade experiences
and agreements.

Collective bargaining, thus, covers the negotiation, administration, interpretation,

application and enforcement of written agreement between employers and unions
representing their employees setting forth joint understanding, as to policies and
procedures governing wages, rates of pay, hours of work and other conditions of
employment.
Collective Bargaining in the Post- Independence Period:
Before Independence, the collective bargaining as it was known and practised was
virtually unknown in India. It was accepted, as a matter of principle, for usage in union
management relations by the state.

Though it was emphasised in the First Five Year Plan that the State would encourage
mutual settlement, collective bargaining and voluntary arbitration; to the utmost extent
and thereby reduce number of intervention of the state in union management relations.

However, because of the imperatives of political and economic factors, the State was not
prepared to encourage voluntary arbitrations and negotiations and the resulting show of
strength by the parties. The State, therefore, armed itself with the legal powers which
enabled it to refer disputes to an arbitrator or an adjudicator if the two parties fail to
reach a mutually acceptable agreement.

This move of compulsory arbitration and adjudication was opposed by several labour
leaders because they believed that this would destroy the picture of industrial relations
in India. Dr. V.V. Giri expressed his views on this point at the Indian Labour Conference
in 1952, “Compulsory arbitration” he declared, “has cut at the very root of trade union
organisation…If the workers find that their interests are best promoted only by
combining, no greater urge is needed to forge a band of strength and unity among them.
But compulsory arbitration sees to it that such a band is not forged… It stands there is a
policeman looking out for signs of discontent, and at the slightest provocation, takes the
parties to the court for a dose of costly and not wholly satisfactory justice.”

Despite this controversy, collective bargaining was introduced in India for the first time
in 1952, and it gradually gained importance in the following years. The information,
however, on the growth of collective bargaining process is very meager, and the progress
made in this respect has not been very conspicuous, though not negligible. The data
released by the Labour Bureau show that the practice of determining the rates of wages
and conditions of employment has spread to most of the major segments of the national
economy.

A sample, study covering the period from 1956 to 1960 conducted by the Employer’s
Federation of India has revealed that collective bargaining agreements have been
arrived in respect of disputes ranging from 32 to 49 percent. Most of the collective
bargaining agreements have been entered into at plant level. In this connection, the
National Commission on Labour has thrown ample light on the progress of collective
agreement.

In its own words, “Most of the collective bargaining (agreements) has been at the plant
level, though in important textile centres like Bombay and Ahmedabad industry level
agreements have been (fairly) common… Such agreements are also to be found in the
plantation industry in the South, and in Assam, and in the coal industry. Apart from
these, in new industries—chemicals, petroleum, oil refining and distribution, aluminium
and electrical equipment, automobile repairing—the arrangement for the settlement of
disputes through voluntary agreements have become common in recent years. In the
ports and docks, collective agreements have been the role at individual centres. On
certain matters affecting all the ports, all India agreements have been reached. In the
banking industry, after the series of awards, employers and unions have, in recent years,
come closer to reach collective agreements. In the Life Insurance Corporation (LIC)
with the exception of the Employer’s decision to introduce automation which has
disturbed industrial harmony in some centres, there has been a fair measure of
discussion across the table by the parties for the settlement of disputes.”

The collective bargaining reached has been of three types:

(1) Agreement arrived at after voluntary direct negotiations between the parties
concerned. Its implementation is purely voluntary;

(2) Agreements between the two parties, though voluntary in nature, are compulsory
when registered as settlement before a conciliator; and

(3) Agreement which have legal status negotiated after successful discussion between
the parties when the matter of dispute is under reference to industrial tribunal/courts.

Many agreements are made voluntarily but compulsory agreements are not negligible.
However, collective bargaining and voluntary agreements are not as prominent as they
are in other industrially advanced countries. The practice of collective bargaining in
India has shown much improvement after the passing of some legislation like The
Industrial Disputes Act 1947 as amended from time to time. The Bombay Industrial
Relations Act 1946 which provided for the rights of workers for collective bargaining.
Since then, a number of collective bargaining agreements have been entered into.

Issues Involved in Collective Agreements:

A study conducted by the Employer’s Federation of India revealed that out of 109
agreements, ‘wages’ was the most prominent issue in 96 cases (88 percent) followed by
dearness allowance (59 cases) retirement benefits (53 cases), bonus (50 cases) other
issues involved were annual leave, paid holidays, casual leave, job classification,
overtime, incentives, shift allowance, acting allowance, tiffin allowance, canteen and
medical benefits.

A study of various collective agreements entered into in India, certain trends in

collective bargaining are noticeable.

These are:
(i) Most of the agreements are at plant level. However, some industry-level agreements
are also there;

(ii) The scope of agreements has been widening now and now includes matters relating
to bonus, productivity, modernisation, standing orders, voluntary arbitration, incentive
schemes, and job evaluation;

(iii) Long term agreements ranging between 2 to 5 years, are on increase;

(iv) Joint consultation in various forms has been provided for in a number of
agreements; and feasible and effective.

Reasons for the Growth of Collective Bargaining:

The growth of collective bargaining in India may be attributed to the
following factors:
(1) Statutory Provisions:
Which have laid down certain principles of negotiations, procedure for collective
agreements and the character of representation of the negotiating parties?

(2) Voluntary Measures:

Such as tripartite conferences, joint consultative boards, and industrial committees at
the industry level have provided an ingenious mechanism for the promotion of
collective bargaining practices.

(3) Several Governments Measures:

Like schemes for workers’ education, labour participation in management, the evolution
of the code of Inter-union Harmony, the code of Efficiency and Welfare, the Code of
Discipline, the formation of Joint Management Councils, Workers Committees and
Shop Councils, and the formulations of grievances redressal procedure at the plant level
— have encouraged the collective bargaining.

(4) Amendments to the Industrial Disputes Act:

The Amendments to the Industrial Disputes Act in 1964 provided for the termination of
an award or a settlement only when a proper notice is given by the majority of workers.
Agreements or settlements which are arrived at by a process of negotiation on
conciliation cannot be terminated by a section of the workers.

(5) Industrial Truce Resolution:

The Industrial Truce Resolution of 1962 has also influenced the growth of collective
bargaining. It provides that the management and the workers should strive for
constructive cooperation in all possible ways and throws responsibility on them to
resolve their differences through mutual discussion, conciliation and voluntary
arbitration peacefully.

Government Policy to Encourage Collective Bargaining:

Ever since independence, it has been the declared policy of the Central Government to
encourage trade unions development and the settlement of differences in industry by
mutual agreement.

Article 19 of the constitution guarantees for all citizens the right to form associations or
unions, only by reserving to the state powers in the interest of public order to impose
reasonable restrictions on the exercise of this right.

The Industrial policy Resolution of 1956 declared that, “in a socialist democracy labour
is a partner in the common task of development”, thus following out the resolution of
the Lok Sabha of 1954 which set India on the path towards a “‘socialistic pattern of
society.”

The Second Five Year Plan in 1956 was more specific and declared:
“For the development of an undertaking or an industry, industrial peace is
indispensable; obviously, this can best be achieved by the parties themselves. Labour
legislation and the enforcement machinery set up for its implementation can only
provide a suitable framework in which employees and workers can function.”

Has Government Discouraged Collective Bargaining?

It is obvious, that the declared policy of the government laid emphasis on the voluntary
settlement of differences in industry. But industrial legislation since independence and
government intervention to establish various standards of working conditions and
machinery for compulsory arbitration of disputes have limited the scope of collective
bargaining.

The areas that are covered by labour legislation are mainly physical working conditions
and terms of employment, and to the extent that these are prescribed by law the scope
of collective bargaining is limited.

The Industrial Employment (Standing Order) Act, 1948 makes compulsory the drawing
up conditions of employment relating to methods of paying wages, hours of work, over
time, shifts, holidays, termination of employment and disciplinary action, but not
through joint negotiation. There is no statutory requirement that employer should
discuss the draft standing orders with the union.

The Minimum Wages Act, also passed in 1948, has given statutory power to appropriate
government to fix minimum wages in certain scheduled employments. The object of this
legislation was to secure a minimum in those occupations or industries where the
worker were not sufficiently organised to be able to negotiate reasonable wages for
themselves.

If the government was committed to support the principle of collective bargaining, why
no attempt was made to encourage it by legislation? The Trade Union Amendment Act,
passed in 1947, did not in fact provide for the compulsory recognition by the employers
of representative trade unions, but this act was never notified and so never came into
force.

It is arguable that some legislative action to compel recognition of the more stable
unions might have helped to create a better climate for encouragement of voluntary
settlement in industry.

The attitude of the management and unions was commonly “Let the issue go to the
tribunal”, with the result that little real effort was made towards mutual settlement and
conciliation officers found little response to their efforts at meditation. References to the
adjudication piled up, the industrial tribunals were overwhelmed with cases, and
lengthy delays and general frustration resulted.

From the above facts, it looks that the Government has discouraged the Development of
Collective Bargaining in India. But the truth is that, the Government intention has never
been to discourage it. In fact, the labour in India is not very well organised and it is not
expected that it would be able to get its due share through collective bargaining.

Hence, the government has tried to protect in the interests of labour by passing the
various acts such as the Factory Act of 1948. Employees State Insurance Act, 1948 and
Minimum Wages Act. Hence, the cases involving industrial disputes should be to
compulsory arbitration.

Khandubhai Desai, the then Labour Minister, stated in July 1956 that voluntary
agreement to refer questions to arbitration was the best solution. But he added complete
laissez-faire is out of date. Society cannot allow workers or management to follow the
law of jungle. Therefore, as a last resort, the government has taken powers to refer
disputes to adjudication.

It has, further, been argued that in a planned economy, the relations between the labour
and management have also to be on planned basis.

They cannot be allowed to upset the production target just because one of the parties
would not like to settle the disputes in fair manner.

Therefore, the Government of India under Industrial Disputes Act 1947 has
created the following seven different authorities for the prevention and
settlement of disputes:
1. Workers Committees.

2. Conciliation Officer.

3. Board of Conciliation.

4. Court of Enquiry.

5. Labour Courts.

6. Industrial Tribunals.

7. National Tribunals.

The important characteristic of the above machinery for the prevention and settlement
of disputes is that, there is full scope for the settlement of dispute through collective
bargaining and if it is not settled by Works Committees, Conciliation Officer, Board of
Conciliation, only then, it is referred to Court of Enquiry and Labour Courts. The
decision of the Labour Courts, Industrial Tribunal and National Tribunal is binding on
both the parties.

Advantages of Collective Bargaining:

Perhaps the biggest advantage of this system is that, by reaching a formal agreement,
both sides come to know exactly what to expect from each other and are aware of the
rights they have. This can decrease the number of conflicts that happen later on. It also
can make operations more efficient.
Employees who enter collective bargaining know they have some degree of protection
from employer retaliation or being let go from the job. If the employer were dealing with
just a handful of individuals, he might be able to afford to lose them. When he is dealing
with the entire workforce, however, operations are at risk and he no longer can easily
turn a deaf ear to what his employees are saying.
Even though employers might need to back down a little, this strategy gives them the
benefit of being able to deal with just a small number of people at a time. This is very
practical in larger companies where the employer might have dozens, hundreds or even
thousands of workers on his payroll. Working with just a few representatives also can
make the issues at hand seem more personal.
Agreements reached through these negotiations usually cover a period of at least a few
years. People therefore have some consistency in their work environment and policies.
This typically benefits the company’s finance department because it knows that fewer
items related to the budget might change.
On a broad scale, using this method well can result in more ethical way of doing
business. It promotes ideas such as fairness and equality, for example. These concepts
can spill over into other areas of a person’s life, inspiring better general behavior
towards others.
Disadvantages of Collective Bargaining:
A major drawback to using this type of negotiation system is that, even though everyone
gets a say in what happens, ultimately, the majority rules, with only a few people
determining what happens too many. This means that a large number of people,
particularly in the general workforce, can be overshadowed and feel like their opinion
doesn’t really matter. In the worst case scenario, this can cause severe division and
hostility in the group.
Secondly, it always requires at least two parties. Even though the system is supposed to
pull both parties together, during the process of trying to reach an agreement, people
can adopt us-versus-them mentality. When the negotiations are over, this way of
looking at each other can be hard to set aside, and unity in the company can suffer.
Collective bargaining can also be costly, both in terms of time and money.
Representatives have to discuss everything twice—once at the small representative
meetings, and again when they relay information to the larger group. Paying outside
arbitrators or other professionals quickly can run up a fairly big bill, and when someone
else is brought in, things often get slower and more complex because even more people
are involved.
Some people point out that these techniques have a tendency to restrict the power of
employers. Employees often see this as a good thing, but from the company’s
perspective, it can make even basic processes difficult. It can make it a challenge to deal
with individual workers, for example.
The goal of the system is always to reach a collaborative agreement, but sometimes
tensions boil over. As a result, one or both parties might feel they have no choice but to
muscle the other side into giving up. Workers might do this by going on strike, which
hurts operations and cuts into profits. Businesses might do this by staging lockouts,
which prevents members’ of the workforce from doing their jobs and getting paid,
negatively effecting income and overall quality of living.
Lastly, union dues are sometimes an issue. They reduce the amount of take-home pay a
person has, because they usually are deducted right from his paycheck. When things are
good in a company and people don’t feel like they’re getting anything from paying the
dues, they usually become unhappier about the rates.

Unit-2
Ch-2
Grievances
A grievance is a sign of employee’s discontent with job and its nature. The employee
has got certain aspirations and expectations which he thinks must be fulfilled by the
organisation where he is working. When the organisation fails to satisfy the employee
needs, he develops a feeling of discontent or dissatisfaction.
According to J.M. Jucius, “A grievance is any discontent or dissatisfaction whether
expressed or not, whether valid or not, arising out of anything connected with the
company which an employee thinks, believes or even feels to be unfair, unjust or
inequitable”.

Causes of Grievances
Wrong placement:-
Placement is the process of placing or assigning a individual a job or
responsibility which matches his qualification and experience. But if there is
mismatch between job requirements and qualification, experience and interest of
the individual then a condition of wrong placement arises. Wrong placement cost
employee as well as organization.
Due to wrong placement an employee cannot utilize his full potential effectively
and efficiently. Gradually employee will start losing interest in job and it can
cause turnover absenteeism and high accident rates. Wrong placed employee can
be counseled and performance can be done as per expectations or above
expectations of the organization. But even after counseling employee
performance is below expectation or not as per expectation then the employee
will have grievances. Grievances related to wrong placement of employee should
be resolved in effective and timely manner.

Training and Development:-

Training is the process of imparting new knowledge/skill to employee for
performing job in effective and efficient manner. Development is long term
process and it sharpen the skills of employees in such manner that it gives them
opportunity for career growth in the organization. Training improves morale of
the employees but if the employees are not trained then it reduces their chances
of internal promotion. Employees who have potential but not promoted due to
lack of particular skill or knowledge have chances of grievances.
 Grievances related to training can be only resolved by providing training to the
employees as it will give them chances of personal growth. Trained employees
have up-to-date knowledge and skills which will further boost their career.

Wage and Salary:-

Compensation is the most important thing for an employee. To compensate an
employee according to their qualification, skills and experience is very important.
Wages and salaries should also be in accordance with the prevailing rates in the
similar industry. Employees who are underpaid can never give their 100 percent
on job. Such employees lose interest in job and there are chances that they may
soon leave the organization.
Methods of payment should be fair enough. There are many provisions related to
wages. The Payment of wages act , 1936, The minimum wages act 1948, The
equal remuneration act ,1976, The industrial dispute act, 1947 aimed at to ensure
the prompt and regular wages payment. Labor turnover due to wages and salary
is the primary reason.
Incentive Plans:-
It is a kind of extra or additional pay given for extraordinary performance.
Incentives terms and conditions must be clear and
understood by the employees for whom it is made. Incentives are for
hardworking and sincere employees who contribute above expectations.
Incentives helps in improving productivity as it is kind of motivational tool for
workers to gain monetary benefits in return for their work. But if incentives plans
are not simple and there are such terms and conditions which are very confusing
and not easily understood by employee it becomes duty of the employer to make
it clear. Incentives once promised and not given to employees give rise to
grievances.

Performance Appraisal:-
The performance of the employee is assessed to check whether they are
performing at par, above or below the expectations. Depending upon their
performance level the employees are promoted, transferred, demoted or given
hike in existing salary or wages. As appraisal report is prepared firstly by the
immediate supervisor so it is very important that he should be fair and
experienced in judging the performance of the employee and no biasness should
come. While judging the performance of the employee personal grudges if any
should not come in between. When employee meets each and every criteria of
getting promotion in terms of his tenure in the organization and performance
level and not promoted then it give birth to grievances. So proper care must be
taken while judging the performance of the employees as it is about their career.
Health and Safety:-
The mental and physical health of the employees can only be preserved by
providing them working environment which ensures their safety. Physical
working conditions like cleanliness, drinking water, disposal of wastes and
effluents, overcrowding, temperature and ventilation, lighting, freedom from
noise, working space and seating arrangement, dust control should be checked
properly. If these working conditions are not provided to workers it can cause
grievances. Occupation hazards and disease also must be considered. Any
occupation involving any hazard to individual health must have preventive
measures. Otherwise employees will feel neglected regarding their health from
employer side which can cause grievances.
Employee welfare:-
Employee welfare is a kind of economic benefits for employees other than regular
wages. Employee welfare includes housing facilities, education, transportation,
recreation, consumer cooperative stores etc. The various provisions concerning
employee welfare are The Factories Act, 1948, The Plantation Labor Act, 1951,
 The Mines Act, 1952, The Motor Transport Workers Act, 1961, The Contract
Labor (Regulation and Abolition) Act, 1970 which provides various measures.
Various agencies for employee welfare are The Central Government, State
Government, employers, trade unions and various other agencies. If the
employee welfare facilities are not provided to workers it may result in low
morale. Low morale and low job satisfaction can result in grievances.
Workers participation in management:-
Workers participation in management means to involve workers representative
in decision making. When workers are involved in decision making which is
going to effect them it is advisable to involve them. The benefit of involving them
in the decision making is that they will not resist changes, will feel sense of
belongingness with the organization and will try their best to achieve the targets
as targets are decided involving them. Organization where workers are not
involved in deciding the targets the morale and motivation of the workers will be
low. Grievances can arise in such organizations where workers are not involved
in decision making.
Discipline:-
Employees have to behave in responsible and orderly manner while working in
organization. Discipline develops cooperation in the workers. Due to discipline
workers follows the rules and regulations of the company willingly. The workers
who do not follow rules and regulations of the organizations have to go through
penalties/punishments. These penalties can be minor or major depending upon
the intensity of indiscipline on the part of employee. Minor punishment involves
oral warning, fines, suspension while major punishment includes demotion,
discharge, withholding increments etc. When employee feels that his punishment
is not in accordance with the act of indiscipline he can have grievances.
Leave policy:-
To maintain the balance between work and family organizations have leave
policies so that employees can fulfill their social needs. Casual leaves, Earned
leave, maternity leave (under maternity benefit act 1961), medical leave etc. are
provided. There are statutory provisions related to minimum leaves with which
employee is entitled. Grievances can arise if the leaves are not provided to them
as when required.
Personal Disturbances:-
Stress:- Stress is a condition of pressure which causes hardship. Grievances can
arise not only because of some external circumstances; it can be due to internal
thinking pattern of individual. Sometimes nature of the job is such that stress is
inevitable in it. An individual should know how to tackle it. Physical environment
at the workplace, roles in the organization, career development, change are kind
of organizational stressors. Whereas individual own personality characteristics
can also cause stress. Individual stressors are biographical variables, needs and
values, life stages of individual, introversion, flexibility/rigidity. Due to
individual and organizational stressors employee can have grievances.
Trade unions:-
Trade union is a kind of association among workers for protecting their interests
and to have healthy and congenial relationships with each other and with
employer as well. Workers join trade unions to get recognition and to express
themselves in better manner. Sometimes Trade unions have limitations of small
size, weak financial position, political leadership, multiplicity of unions, inter
union rivalry because of which employers refuses to recognize such unions.
Employer has no obligation to recognize trade unions. They can deny recognition
of trade unions on the ground that they have very few workers associated with it.
Such practice on the part of employer to not recognize the trade union can cause
grievances.

Steps Involved in Employee Grievance Procedure

Grievances are but natural in organisations. However like disciplinary problems,
grievances also benefit none. Hence, there is a need for handling or redressing
grievances. For this, most large organisations in India have, therefore, evolved a formal
grievance procedure which enables an organisation to handle grievances satisfactorily.
As a matter of fact, there are several substantive reasons for having a formal grievance
procedure in an organisation.

The important ones are listed as follows:

(i) It provides an established and known method of processing grievances and keeps this
open.

(ii) It brings grievance to the knowledge of management so that it can know and
understand them to take necessary action for their settlement.

(iii) It gives an assurance to the employee that there is a mechanism available to

consider his or her grievance in a dispassionate and detached manner.

(iv) Venting his grievance and being heard gives the employee a feeling of being cared
for. This not only gets it off his chest”, but also helps him improve his morale and
productivity.

(v) Involving several levels of organisation in the grievance procedure provides help on
two dimensions. Firstly, the supervisor who is the first level in the grievance process
cannot be by-passed by the worker. Secondly, involvement of several hierarchical levels
in the grievance machinery releases exclusive reliance on the supervisor who can’t
jeopardize the interest of the employee. The supervisor knows his is a placatory role.

(vi) Involvement at
various levels makes them know the kinds of issues that concern workers and managers.

(vii) Lastly, it checks the managers from taking arbitrary and biased actions against the
workers as they know that their actions are subject to challenge.

According to Michael Armstrong’, a formal grievance procedure provides the following

benefits:

(i) A channel for an aggrieved employee to express and present his grievance.

(ii) An assurance for dispassionate handling of one’s grievance.

(iii) An assurance about the availability of some machinery for prompt handling of
grievance.

(iv) A means by which an aggrieved employee can release his feelings of discontent or
dissatisfaction with his job.
Grievance which indicates discontent and dissatisfaction among employees adversely
affects their productivity. In other words, by not initiating timely action to deal with
grievance, the organisation tends to lose the productive efforts of the discontented
employee. It is indeed unrealistic to assume that an aggrieved or dissatisfied employee
will put his or her best efforts on the job. The redressal of the employees’ grievances,
therefore, assumes importance.

The procedure the management applies to deal with the employees grievances can be
stated as follows:

1. Timely Action:
The first and foremost requisite in grievance handling is to settle them immediately as
and when they arise. Or say, grievances need to be nipped in the bud. Sooner the
grievance is settled, lesser will be its effects on employees’ performance. This requires
the first line supervisors be trained in recognizing and handling a grievance properly
and promptly.

2. Accepting the Grievance:

The supervisor should try to recognize and accept the employee grievance as and when
it is expressed. It must be noted that acceptance does not necessarily mean agreeing
with the grievance, it simply shows the willingness of the supervisor to look into the
complaint objectively and dispassionately to deal with the grievance. Evidences suggest
that more the supervisor shows his or her concern for the employees, lesser is the
number of grievances raised by the employees.

3. Identifying the Problem:

The grievance expressed by the employee maybe at times simply emotionally, over-
toned, imaginary or vague. The supervisor, therefore, needs to identify or diagnose the
problem stated by the employee.

4. Collecting the Facts:

Once the problem is identified as a real problem, the supervisor should, then, collect all
the relevant facts and proofs relating to the grievance. The facts so collected need to be
separated from the opinions and feelings to avoid distortions of the facts. It is useful to
maintain the facts for future uses as and when these are required.

5. Analysing the cause of the Grievance:

Having collected all the facts and figures relating to the grievance, the next step involved
in the grievance procedure is to establish and analyse the cause that led to grievance.
The analysis of the cause will involve studying various aspects of the grievance such as
the employees past history, frequency of the occurrence, management practices, union
practices, etc.. Identification of the cause of the grievance helps the management take
corrective measures to settle the grievance and also to prevent its recurrence.

6. Taking Decision:
In order to take the best decision to handle the grievance, alternative courses of actions
are worked out. These are, then, evaluated in view of their consequences on the
aggrieved employee, the union and the management. Finally, a decision is taken which
is best suited to the given situation in the organisation. Such decision should serve as a
precedent both within the department and the organisation.

7. Implementing the Decision:

The decision, whatsoever taken, must be immediately communicated to the employee
and also implemented by the competent authority. McGregor’s “Hot- stove Rule” should
be strictly followed while implementing the decision. The decision, thus, implemented
should also be reviewed to know whether the grievance has been satisfactorily resolved
or not.

In case, it is not resolved, the supervisor once again needs to go back to the whole
procedure step by step to find out an appropriate decision or solution to resolve the
grievance.

However, if the grievance is not resolved at the internal level, the grievance is, then,
referred to an arbitrator who is acceptable to the employee as well as the management.
The arbitrator follows a quasi-judicial process where both the parties present evidence.
Based on the evidences so produced, the matter is cross-examined in thread-bare. The
arbitrator then thinks, applies his mind and arrives at a decision. The decision taken by
arbitrator is final and binding on both the parties.

The Indian Institute of Personnel Management, Kolkata has listed the following five
steps contained in a grievance procedure:

1. The employee should raise his or her grievance with the immediate supervisor.

2. If the decision taken by the supervisor is not acceptable to the aggrieved employee, he
or she should be made known to whom next in the echelon of management, he or she
should refer the grievance.

3. The grievance should be handled promptly and dispassionately.

4. Only the grievance raised by the employee having understood the instructions issued
to him or her employer will register the protest and set the grievance handling
procedure in motion.

5. If the aggrieved employee still remains dissatisfied, there will be no direct action by
the either party which might prejudice the case or raise doubts while the grievance is
being investigated.
Let us consider a unit level works grievance procedure as followed in the Tata Iron and
Steel Company (TISCO).

The procedure consists of the following stages:

Stage 1:
The worker fills in a grievance form and submits the same to the shift incharge for
information and consideration.

Stage 2:
In case, he is not satisfied with the decision, he goes to the departmental head for the
settlement of his grievance.

Stage 3:
If the aggrieved employee is still dissatisfied, he forwards it to the appropriate chairman
of the zonal works committee (ZWC). Each zonal works committee consists of five
management and five union representatives. Their decision is final and binding on both
the parties. The individual grievances considered by the zonal committee pertain to
promotion, suspension, discharge and dismissal.

Stage 4:
If the zonal committee either does not reach to a unanimous decision or the decision is
not accepted by the employee, the grievance is, then, forwarded to the central works
committee. This committee consists of representatives of top management and union
officials. Here also, the unanimity of principle operators and the decision taken by the
committee is binding on both the parties.

Stage 5:
If this committee also does not reach to an unanimous decision, the matter is referred to
the Chairman of the company. His or her decision is final and is binding on both the
parties.

The stage at which the grievance is settled indicates the climate or the spirit that
prevails in the organisation. Obviously, lower the level of settlement, the quicker the
redressal of a grievance. The concerned officer, be the supervisor or manager, remains
in a position to “give and take” at initial lower stages such as stage 1. Gradually, he or
she comes under the glare of publicity; his or her position becomes harder at the
subsequent stages.

Viewed from an aggrieved employee’s point, the delay in the settlement of grievance
would intensify his or her anxiety and dissatisfaction. Which, in turn would affect his or
her morale and productivity. The colleagues would also get affected. For the
organisation, the delay in settlement is a loss of goodwill that might have been built up
over the period.
Grievance procedure is necessary for any organisation due to the following
reasons:
(i) Most grievances seriously disturb the employees. This may affect their morale,
productivity and their willingness to cooperate with the organisation. If an explosive
situation develops, this can be promptly attended to if a grievance handling procedure is
already in existence.

(ii) It is not possible that all the complaints of the employees would be settled by first-
line supervisors, for these supervisors may not have had a proper training for the
purpose, and they may lack authority. Moreover, there may be personality conflicts and
other causes as well.

(iii) It serves as a check on the arbitrary actions of the management because supervisors
know that employees are likely to see to it that their protest does reach the higher
management.

(iv) It serves as an outlet for employee gripes, discontent and frustrations. It acts like a
pressure valve on a steam boiler. The employees are entitled to legislative, executive and
judicial protection and they get this protection from the grievance redressal procedure,
which also acts as a means of upward communication.

The top management becomes increasingly aware of employee problems, expectations

and frustrations. It becomes sensitive to their needs, and cares for then well-being.
This is why the management, while formulating plans that might affect the employees
for example, plant expansion or modification, the installation of labour-saving devices,
etc., should take into consideration the impact that such plans might have on the
employees.

(v) The management has complete authority to operate the business as it sees fit
subject, of course, to its legal and moral obligations and the contracts it has entered into
with its workers or their representative trade union. But if the trade union or the
employees do not like the way the management functions, they can submit their
grievance in accordance with the procedure laid down for that purpose.

A well-designed and a proper grievance procedure provide:

(i) A channel or avenue by which any aggrieved employee may present his grievance;
(ii) A procedure which ensures that there will be a systematic handling of every
grievance;

(iii) A method by which an aggrieved employee can relieve his feelings of dissatisfaction
with his job, working conditions, or with the management; and

(iv) A means of ensuring that there is some measure of promptness in the handling of
the grievance.
3. Key Features of a Good Grievance Handling Procedure:

Torrington & Hall refer to four key features of a grievance handling procedure, which
are discussed below:

(a) Fairness:
Fairness is needed not only to be just but also to keep the procedure viable, if employees
develop the belief that the procedure is only a sham, then its value will be lost, and other
means sought to deal with the grievances. This also involves following the principles of
natural justice, as in the case of a disciplinary procedure.

(b) Facilities for Representation:

Representation, e.g., by a shop steward, can be of help to the individual employee who
lacks the confidence or experience to take on the management single-handedly.

(c) Procedural Steps:

Steps should be limited to three. There is no value in having more just because there are
more levels in the management hierarchy. This will only lengthen the time taken to deal
with matter and will soon bring the procedure into disrepute.

(d) Promptness:
Promptness is needed to avoid the bitterness and frustration that can come from delay.
When an employee ‘goes into procedure/ it is like pulling the communication cord in
the train. The action is not taken lightly and it is in anticipation of a swift resolution.
Furthermore, the manager whose decision is being questioned will have a difficult time
until the matter is settled.

Essential Pre-requisites of a Grievance Handling Procedure:

Every organisation should have a systematic grievance procedure in order to redress the
grievances effectively. As explained above, unattended grievances may culminate in the
form of violent conflicts later on.

The grievance procedure, to be sound and effective should possess certain pre-
requisites:

(a) Conformity with Statutory Provisions:

Due consideration must be given to the prevailing legislation while designing the
grievance handling procedure.

(b) Unambiguity:

Every aspect of the grievance handling procedure should be clear and unambiguous. All
employees should know whom to approach first when they have a grievance, whether
the complaint should be written or oral, the maximum time in which the redressal is
assured, etc. The redressing official should also know the limits within which he can
take the required action.

(c) Simplicity:

The grievance handling procedure should be simple and short. If the procedure is
complicated it may discourage employees and they may fail to make use of it in a proper
manner.

(d) Promptness:
The grievance of the employee should be promptly handled and necessary action must
be taken immediately. This is good for both the employee and management, because if
the wrong doer is punished late, it may affect the morale of other employees as well.

(e) Training:

The supervisors and the union representatives should be properly trained in all aspects
of grievance handling before hand or else it will complicate the problem.

(f) Follow up:

The Personnel Department should keep track of the effectiveness and the functioning of
grievance handling procedure and make necessary changes to improve it from time to
time.

4. Basic Elements of a Grievance Handling Procedure:

The basic elements of a grievance redressal procedure are:

(i) The existence of a sound channel through which a grievance may pass for redressal if
the previous stage or channel has been found to be inadequate, unsatisfactory or
unacceptable. This stage may comprise three, four or five sub-stages.

(ii) The procedure should be simple, definite and prompt, for any complexity or
vagueness or delay may lead to an aggravation of the dissatisfaction of the aggrieved
employee.

(iii) The steps in handling a grievance should be clearly defined.

These should comprise:

(a) Receiving and defining the nature of the grievance:

(b) Getting at the relevant facts, about the grievance;

(c) Analysing the facts, after taking into consideration the economic, social,
psychological and legal issues involved in them;

(d) Taking an appropriate decision after a careful consideration of all the facts; and

(e) Communicating the decisions, to the aggrieved employee.

(iv) Whatever the decision, it should be followed up in order that the reaction to the
decision may be known and in order to determine whether the issue has been closed or
not.

5. Errors in the Grievance Handling Procedure:

I. Stopping too soon, the search for facts:

II. Expressing the opinion of the management before all the pertinent facts have been
uncovered and evaluated;

III. Failing to maintain proper records;

IV. Resorting to an executive fiat instead of discussing the facts of the grievance of the
employee;

V. Communicating the decision to the grievance in an improper way; and

VI. Taking a wrong or hasty decision, which the facts or circumstances of the case do not
justify.

Measures to Avoid the Errors:

Managements should try to avoid the errors in the grievance procedure by following the
measures indicated hereunder:

a. Helpful attitude and support of the management.

b. Belief on the part of all concerned in the practice of the procedure.

c. Introduction of the procedure with the concurrence of employees and trade unions.

d. Following the simple, fair and easily comprehensible procedures.

e. Formulating the clear policies and procedures of the company.

f. Delegation of appropriate authority to the parties concerned.

g. Functioning of the personnel department in the advisory capacity.

h. A fact-oriented and issue-oriented rather than employee-oriented procedure.

i. Respect the decisions taken at all levels.

j. Adequate publicity to the procedure.

k. Periodic evaluation and review of the procedure.

As already discussed, there are valid reasons to have the grievances processed through
machinery or a procedure.

6. Objectives of a Grievance Handling Procedure:

Jackson (2000) lays down the objectives of a grievance handling procedure as follows:

1. To enable the employee to air his/her grievance.

2. To clarify the nature of the grievance.

3. To investigate the reasons for dissatisfaction.

4. To obtain, where possible, a speedy resolution to the problem.

5. To take appropriate actions and ensure that promises are kept.

6. To inform the employee of his or her right to take the grievance to the next stage of
the procedure, in the event of an unsuccessful resolution.

7. Benefits of a Grievance Handling Procedure:

According to Jackson (2000), further benefits that will accrue to both the employer and
employees are as follows:

1. It encourages employees to raise concerns without fear of reprisal.

2. It provides a fair and speedy means of dealing with complaints.

3. It prevents minor disagreements developing into more serious disputes.

4. It saves employers time and money as solutions are found for workplace problems. It
helps to build an organizational climate based on openness and trust.

Unit-3
Meaning & causes of Industrial Conflicts, Types of Industrial Conflicts. Strikes &
Lockouts, Machinery for resolving Industrial Disputes under Law. Meaning of workers
participation in management, concepts and objectives of workers participation in
management, growth and development of workers participation in management, types
of workers participation in management.

Ch-1
Industrial Dispute

Definition: An industrial dispute can be viewed as friction or disagreement between two

or more parties involved, due to the difference in their perceptions, opinions, mindsets,
attitudes and values. In an organization, the parties engage in such disputes can be:
Employer and employee;
employee and employee or;
employer and employer.
On a massive level, conflicts can even arise between the government and the public.
Industrial disputes are sometimes observed as a result of poor industrial relations in the
organization.

Types of Industrial Disputes:-

Based on the objective behind an industrial dispute, we can distinguish it into the
following four broad categories:
Types of Industrial Disputes

Interest Disputes:-

The interest here refers to gains. Therefore, the conflicts concerning the economic or
non-economic interests of the employees, such as increasing the remuneration, working
conditions, job security and other benefits are called interest disputes.
Recognition Disputes:-

The trade unions often enter into a dispute with the management during negotiation or
collective bargaining for the benefit of its member employees.
Sometimes, for these negotiations, the management denies identifying the trade unions.
Even when there are many trade unions in an organization, each one of them struggles
to get recognized by the management.
Grievance Disputes or Rights Disputes:-

The conflicts concerning the employee’s rights and legal issues with the management
are termed as grievance disputes. It includes promotions, work duration, leaves allowed,
over time, fringe benefits, safety and security
Unfair Labour Practices Disputes:-

The disputes over the unethical treatment of the management towards the labour such
as discriminating them for holding membership of trade union, restricting
communication, employing new workers during strikes and denial to bargain are called
unfair labour practices disputes.

Causes of Industrial Disputes

What are the reasons behind industrial disputes?

Even the smallest of the reasons can contribute to the raising of conflicts in an
organizational setup if it impacts the respondent to a great extent.
Causes of Industrial Disputes:-
Economic Causes:-
The ultimate aim of the labour is to earn their livings and meet their economic ends.
Whereas, for the business, it is generating profits. Therefore, on the non-fulfilment of
these needs, industrial disputes can take place between the management and the labour.

It includes demanding a higher wage, increasing the profits, bonus and allowances,
replacing machinery, improving working conditions, duration and other necessary
facilities.

Managerial Causes:-

Lack of administrative support and attention towards labour leads to industrial

disputes. Following are the various managerial causes of industrial disputes:

Retrenchment or layoff of the workers without any reason;

the inefficiency of the management to initiate leadership in the organization;
Poorly built and dissatisfying recruitment policies and practices;
the employer does not comply with the agreement and codes such as code of discipline
and collective bargaining;
the management does not acknowledge the trade unions as a representative of the union
members, i.e., the workmen.

Government Machinery:-

At times, the government lacks a suitable strategy to address industrial disputes. Some
of the drawbacks of the government machinery which lead to industrial conflicts are as
follows:

The need for growth and development is not considered seriously;

difficulties in dealing with industrial culture and climate challenges;
the employers meagrely apply this settlement machinery;
there is a low level of trust of the employers and the employees, over the government’s
settlement machinery.

Voluntary Arbitration:-

The word arbitration refers to the settlement of any dispute mutually with the help of an
arbitrator.
Thus, in voluntary arbitration, there is a third party involved in the settlement process.
Its decision can be biased or unacceptable by either of the parties, which can result in
further conflicts.

Wage Boards:-

The Indian government has set up wage boards for determining the suitable wages of
the workmen or labourers.
When the workmen are dissatisfied with their remuneration, there arises a condition of
an industrial dispute.

Joint Management Councils (JMC):-

The government created Joint Management Councils, which consist of equal

representatives of both the parties to deal with the worker’s problems, but the idea
failed due to lack of efficiency and progress.

Other Causes
The various other causes of industrial disputes are stated below:

Weak and multiple trade unions result in more conflicts;

influence of the political party in power, supporting a particular trade union leads to
conflicts;
the adverse effect of the relationship with the central and state governments, unstable
political conditions and everyday responsibilities results in industrial disputes;
in some organizations, collective bargaining is not allowed since the workmen are not
even permitted to make trade unions;
other reasons can be corruption, role conflicts, etc.

Outcomes of Industrial Disputes

The consequences of an industrial dispute are hazardous to the employer, employees,

organization, society and the economy.

However, it is taken as a useful tool by the workers, to raise their voice and put up their
demands in front of the management or employers. It empowers the labours and
protects their rights of speech in the organization.
Following are some of the essential ways in which the industrial disputes takes shape in
the organization and are carried out by the employees as well as the employer
sometimes:

Outcomes of Industrial Disputes

Strikes
It is a way through which a group of workmen exercise pressure on the management by
stopping the work and protesting against the employers to get their demands fulfilled.

Following are the different types of strikes:

Primary Strikes:
The strikes which are directly projected against the employers are called as primary
strikes. Some of the most common primary strikes are as follows:

Gherao:
Gherao refers to physically encircling the managers by the workmen to create a
restricted area where no one can move in or out. The targeted managers are humiliated
through; abuses also they are restricted move in or out.

Picketing: Picketing is the process of putting up signboards, play cards and banners by
the workmen to display their protest or dispute in front of the public. To involve
maximum workers in the strike, some union members are made to stand at the factory
gate to influence others too.
Boycott: As the name suggests, boycott refers to interrupting business operations. It
requests the other labourers to temporarily pull back their co-operation with the
management and contribute to the strike.
Stay Away Strike: In a stay-away strike, the workmen organize a protest in the form
of demonstrations, marches, rallies, apart from the workplace.
Pen Down Strike: It is also known as the sit-down strike or tools down strike. Though
the workmen come to the workplace daily and also avails the work facilities, they sit idle
and stop working.
Token Strike: A token strike is a short form of protest where the workmen stop their
work for a definite period. It is usually for as short as 24 hours, to hamper a day’s
production or so and get their demands fulfilled by the management.
Lightning Strike: The lightning strike is that form of strikes where the workmen call
off the work immediately without giving any prior information or warning to the
management. It is also termed as a catcall strike.
Go Slow Strike: This is another harmful way of protesting against the management
where the workmen secretly plan to decrease their work speed so that the production is
hampered. However, in front of the management, they pretend to be highly committed
towards their job.
Work to Rule: In this type of strike, the employees strictly follow their job rules or
contract and stops performing any additional task, other than what all is mentioned in
their agreement.
Hunger Strike: One of the most common forms of a strike is the hunger strike. The
workmen go on fasting for an indefinite period and sit nearby the workplace or the
employer’s house to project their demands.
Secondary Strikes: The other name for the secondary strike is the sympathy strike. In
this, the force is applied against the third person having sound trade relations with the
organization to indirectly incur a loss to the employer and the business. The third
person does not have any other role to play in such a strike.

Other Strikes: There are undoubtedly other forms of strike too, which takes place on a
vast level involving and affecting a large number of people. These are as follows:

General Strike: The strikes which are conducted on a mass level, i.e., in the whole
country or state or city instead of just a single organization for fulfilment of a demand
unanimously like job permanency or an increase in pay, etc.
Political Strike: Any law or act proposed by the government for making changes to
the working terms or conditions when unaccepted by the workers is protested through
political strike on a massive level.
Particular Strike: The protest against a specific issue or person within a city, state or
country and take up a colossal form is termed as a particular strike.
Bandhs: Bandh is adopted in countries like Nepal and India where a specific
community or a political party calls for a general strike across the city or state or
country. It is a form of civil disobedience and sometimes become violent, even involving
stone attacks or arson attacks at times.

Lockouts

This form of an industrial dispute is raised by the employers to impose specific terms
and conditions on the workers. It is very different from layoff, retrenchment,
termination or prohibition of employees.

In lockouts, the employer temporarily closes down the workplace or stops the work or
takes action like suspending the workers to force them to follow the new terms and
conditions.

Unit-3

Ch-2
WORKERS PARTICIPATION IN MANAGEMENT

WORKERS PARTICIPATION IN MANAGEMENT

I) INTRODUCTION AND MEANING
Workers participation in management refers to the participation of non-
managerial employees in the decision-making process of the organisation.
Workers participation gives employees the mental and psychological satisfaction
and thereby increase their involvement in the affairs of the organization. Workers
participation in management is the most accepted principle of industrial relations
in modern industry throughout the world and in India too. In the words of Keith
Davis “Participation is a mental and emotional involvement of a person in a group
situation which encourages to contribute to group goals or objectives and share
responsibilities.”

According to the British lnstitute of Management Workers participation in

management is the practice in which employees take part in Management
decisions and it is based on the assumption of commonality of interest between
employer and employee in furthering the long term prospects of the enterprise
and those working in it.

Sawtell defined participation as any or all the processes by which the employees
other than managers contribute positively towards the reaching of managerial
decisions which affect their work.

Workers participation is a system where the workers get the rights to participate
in decisions on issues which are of concern to the workers like wages, working
conditions, safety, welfare, sharing of gain, production related aspects, incentives
and allowances were considered to be legitimate areas of workers concern and
therefore workers should be consulted when these are determined.

Workers participation in management is one of the important aspects of

industrial democracy. It is distribution of social power in industry so that the
power is shared among all those who are engaged in work rather than power
being concentrated only in the hands of a few managers. Participation is a system
of communication and

Consultation either formal or informal by which employees can express their

opinions and ideas and contribute to managements decisions. Workers
participation is a method of providing opportunities for all the members of the
organisation to contribute his mental ideas along with his physical efforts towards
the improvement of organisational effectiveness as well as enhancing his own
economic welfare. Better participation and greater responsibility in the decision
making process on part of the general workers will perhaps develop their
organisational loyalty, confidence, trust involvement and a sense of responsibility
towards supervisors, managers and the organisations in general.

Participation has to be done at different levels of management.

a) At the shop floor level.
b) At the department level and
c) At the hoard level.

The decision making at these different levels would assume different levels would
assume different patterns in regard to policy formulation and execution. When
workers participate in decision-making and they have to commit themselves for
the implementation of decisions made. They become more responsible and
involved.

Workers participation in management is a humanitarian approach to the labour

class giving them new set of values giving them a social status, base and a place in
the industrialized society.

II) OBJECTIVES OF WORKERS PARTICIPATION IN MANAGEMENT

The objectives of workers participation in management may vary from country to
country, state to state, and from industry to industry depending upon the quality
of manpower, level of technology, level of competition socio-economic status,
political philosophy, attitude of the working class and the industrial relations
scene. Though there are so many factors governing the objectives of workers
participation some common objectives are:
1. To prevent workers from exploitation by the management or by the owners of
the organisation.
2. To have democracy in the organization.
3. To have proper development of the working class.
4. To resolve conflicts and differences between management and employees in a
democratic manner.
5. To create in employees a sense of participation in industry.
6. To encourage suggestions from employees.
7. To improve the working and living conditions of employees.
8. To promote better understanding between labours and management on the
various issues of the organisations.
9. To give employees a better understanding of their role in the working of the
industry.
10. To give the employees an opportunity for self expression leading to industrial
peace, good relations and increased co-operation.

III) LEVELS OF PARTICIPATION

There is no hard and fast rule as to which level of management, workers
participation in management should be introduced. In fact participation is
possible at all levels of management. The only difference is that of degree and
nature of application. For example, it may be light or not so vigorous at the top
level and may be very strong and vigorous at a lower level. A lot depends upon the
nature of work, nature of functions, quality of manpower, strength of workers,
attitude of trade unions, attitude of management and the organisational culture.
There are other factors which are also responsible for the application of workers
participation in management like the government policy on labour, Industrial
Acts, phases of trade cycle, economic and political stability and situation. Workers
participation is more of a balancing situation. When there is more use of authority
in decision making participation in management will be negligible but when the
use of authority is in small proportion, participation will be maximum. In
between the two elements more use of authority and less use of authority the
nature of participation will also depend upon the type of issues, attitude of
employees, management culture and the past experience of management.

Broadly speaking there are five levels of workers participation in management.

1. INFORMATION PARTICIPATION LEVEL
Information participation ensures that the employees are in a position to receive
information and express their views pertaining to the matters of general and
economic importance. The management depends upon the joint committee for
informing the workers about the business conditions and also informs them about
the various changes put into effect in the working of the organisation.

2.ASSOCIATIVE PARTICIPATION LEVEL

In this level of participation members have the right to receive information
discuss and give suggestions on the general and economic conditions of the
organisation like production, markets, finance and technology affecting the
position of the organisation or organisations profit and loss account. The workers
have the right to receive information and discuss important matters like change in
the methods of production, expansion of business or closing of a particular unit.
The workers not only receive information and discuss the issues but when
suggestions are made it is binding on the management.

3.CONSULTATIVE PARTICIPATION LEVEL

In such level of participation workers are consulted on the matters of employee
welfare such as work, safety, health and training. It involves a higher degree of
sharing of views of the workers and giving them an opportunity to express their
feelings and opinions. In this level of participation it is the managements
prerogative to accept the suggestions of the workers given at the participative
forum. Workers suggestions are only of advisory nature.

4.ADMINISTRATIVE PARTICIPATION LEVEL

Administrative participation gives a greater degree of sharing of authority and
responsibility of management functions. The issues taken at this level are welfare,
safety, training, preparing work schedules, working hours, incentives, holidays
and rewards for valuable suggestions. In this level of participation alternatives
are given by the management and the workers select the best from those decided
for smooth implementation and efficient administration.
5. DECISIVE PARTICIPATION LEVEL
This is the highest form of participation where decisions are taken jointly on the
matters relating to production, welfare, economic, financial and administrative
policies. Delegation of authority and responsibility of managerial functions to the
workers is maximum at this level of participation. When participation is done at
this level it speaks of democracy and the democratic style of management. It also
shows the faith and trust between management and the employees.

IV) FORMS OF WORKERS PARTICIPATION IN INDIA

FORMS OF WORKERS PARTICIPATION IN INDIA

Works Joint Unit Shop Workers

Committee Production Council Council Participation
Committee In Share
Capital

Joint Joint Plant Workers

Management Council Council Representation
Council On the Board
I. WORKS COMMITTEE
The works committee started in India because of the Industrial Dispute Act 1947.
It was this act which stated that “in case of any industrial establishment in which
100 or more workers are employed or have been employed on any day in the
preceding twelve months the appropriate government may by general or special
order require the employer to constitute in the prescribed manner a Works
Committee consisting of representatives of employers and workman”. The
objective of the works committee is to create cordial relations between the
management and the workers. The Works Committee does not perform any
administrative function it is an advisory body. It is not expected to deal with
matters relating to wages, allowances, bonus, etc.

II. JOINT MANAGEMENT COUNCIL

For the success of Industrial Planning it was necessary to set up Joint
Management Council in the industrial undertaking which will have
representatives of Management Technicians and Workers.

Joint Management Council can discuss issues related to lighting, ventilation,

temperature, sanitation, drinking water, canteens, dinning and rest rooms,
medical and health services, safe working conditions, administration of welfare
funds and recreational activities.

The governments Industrial Policy resolution of 1956 stated that in a socialist

democracy labour is a partner in a common task of development and should
participate in it with enthusiasm, there should be joint consultation and workers
and technicians should wherever possible be associated with management.

The objective of the Joint Management Council were to promote cordial relations
between management and labour to build trust and understanding and also to
increase productivity, secure effective welfare and other facilities to train workers
and share responsibilities and in general to function as a consultative body. The
Third Five year Plan desired that the Joint Management Council’s become a
normal feature of the industrial system, and integrate private enterprises into a
socialist order.
III).IOINT PRODUCTION COMMITTEE
Joint Production Committee consists of equal number of representatives of
management and unions. Generally the following functions are entrusted to the
committee.
i) To study operational results as well as current and long term departmental
production problems.
ii) To advice management on steps necessary at the departmental level to
promote and rationalize production.
iii) To improve methods of production and productivity.
iv) To reduce cost and reduce defective work. To improve quality of products.
v) To improve the upkeep and care of machinery, tools and instruments.
vi) To promote efficient use of safety devices.
vii) To improve the working conditions and ensure better functioning of the
department.

IV)JOINT COUNCILS
At every division, department or branch employing 100 or more people there
shall be a joint council. Every organisation shall decide the number of councils to
he set up for different departments or services rendered in consultation with the
recognized union or workers. Only those who are actually engaged in the
organisation or service shall be the member of the joint council the tenure of the
council shall be two years. The joint council shall meet whenever considered
necessary but atleast once in a quarter. Every decision of the joint council shall be
binding on the management and the workers and shall be implemented within
one month unless otherwise stated in the decision.

The Joint councils are concerned with matters related to the unit councils. The
joint councils shall review and settle issues which are not settled by the unit
councils. The work of the joint councils shall also be related to the development of
the skills of the workers, improvement of working conditions, preparation of
schedules of working hours and holidays, recognition and appreciation of
suggestions received from the workers and discuss any matter related to the
improvement of performance of the organisation.
V) UNIT COUNCILS
Motivated by the success of the Joint Councils in the manufacturing and mining
units a new scheme of worker's participation in management in commercial and
service organisations in the public sector, having large scale dealings with public
was announced on 5t January 1977, for units employing at least 100 people. The
organizations include hotels, hospitals, sea transport, road transport, air
transport railways ports, docks, research institutions banks, insurance
companies, post and telegraph offices, food corporation, State Electricity Boards,
State Trading Corporation, Mines, and Minerals Trading Corporation and
Irrigation systems.

The unit council shall have representatives of workers and management for
organisations having employed 100 or more workers. These unit councils are
formed to discuss day to day problems and find solutions. Unit council shall
consists of equal number of representatives of the management and workers. The
actual number of members shall he decided by the management in consultation
with the recognized trade union. The total number of members shall not exceed
12. Every decision of the unit council shall be implemented by the parties
concerned within a month, unless otherwise stated in the decisions itself. A unit
council once formed shall function for a period of three years. The council shall
meet at least once a month.

The functions of the unit councils are:

1. To create conditions for maximum efficiency and better customer service.
2. To identify the areas of inferior service and take action to eliminate them.
3. To study absenteeism problem and recommend steps to reduce it.
4. To suggest improvements in the working conditions such as light, dust, noise and
ventilation.
5. To ensure proper flow of communication between management and workers.
6. To recommend and improve safety, health and welfare measures.
7. To discuss any other matter which has bearing on the performance for
ensuring better customer service.
VI. PLANT COUNCIL
The Plant Council is applicable to all central Public Sector undertakings, except
those which are given specific exemption from the operation of the scheme by the
government. It has one Plant Council for the whole unit. Each Plant Council shall
have not less than six members and not more than eighteen members. The
members of the council are only those who are actually engaged in the unit and
the members of the council shall have a tenure for a period of three years. The
members of the plant council shall meet at least once in a quarter. Every decision
of this council shall be on the basis of consensus and not by voting and it shall be
binding on both the employer and the employees. The decision of this council
shall be implemented within a month unless otherwise stated in the decision
itself.

The Plant Council ntirmally deals with operational areas, Economic matters,
Financial aspects, Personnel matters, Welfare and Environmental aspects.

VII. SHOP COUNCILS

Every industrial unit employing 500 or more workers the employers shall
constitute a Shop Council. Shop Council shall have equal numher of
representatives of employers and workers. All the members of the shop council
shall be from the unit concerned. The total number of members of the Shop
Council shall not be more than 12. Every decision of the Shop Council shall be
implemented by the parties concerned within a period of one month unless
otherwise stated in the decision itself. A council once formed shall function for a
period of three years. The council shall meet as frequently as necessary but at
least once a month.

VIII. WORKERS REPRESENTATION ON BOARD OF MANAGEMENT

On the recommendations of the Administrative Reforms Commission made in its
report on public sector undertakings, the Government of India accepted in
principle that representatives of workers should be taken on the Board of
Directors of Public Sector enterprises. The representatives of workers on the
board should be those actually working in the enterprise. Worker’s
Representation on Board shall be limited to companies which
employ 1000 or more persons. (Does not include casual or badli workers). If 51%
of the workers vote through secret ballot in favour of participation, the company is
under legal binding to introduce this scheme. However any company can
voluntarily introduce this participation scheme. In this scheme the worker
Director will he elected by all the workers of the company through secret ballot.
The workers who gets elected as a director is given training in the various
important aspects of business. The workers director participates in all the
functions of the board. They may also review the working of the shop and plant
councils and take decisions on matters not settled by the council. It has been
observed that this scheme has failed to develop good relations based on faith,
trust, understanding and cooperation. This scheme has also not helped much in
decision making.

IX. WORKER’S PARTICIPATION IN SHARE CAPITAL

Workers Participation in Share Capital is the outcome of the Sachar Committee.
The Sacher Committee had in its report to the government observed that majority
of the organizations are in favour of workers participation in Share Capital and
that future issues of shares the companies should reserve a portion of the new
shares exclusively for the workers. These shares in the first instance must be
offered to the employees of the company, failing that they should he offered to the
existing shareholders or the public. Due to this scheme workers get an
opportunity to have a share in the capital of the organisation where he is working.
He therefore gets the status of the employee and also the status of the employee
and also the owner of the company. When an employee is a part of ownership of
the capital there is a sense of belonging and a sense of responsibility. This scheme
owns to improving industrial relations and a feeling of being together.

V. MEASURES TO MAKE THE SCHEME OF WORKERS PARTICIPATION

IN MANAGEMENT MORE MEANINGFUL
1. The first most important aspect to make the scheme of workers participation
more meaningful is the trade union movement in our country should he
strong. Instead of having small, fragmented and unorganized unions we
should have one, strong organized union which understands the problems of
the organisation the problems of
 the employers and the problems of the employees. So that it can give better
solutions to the scheme and improve participation.

2. To make the scheme of worker’s participation in management a success the

education of worker’s become very important. When the employees get
appointed on various committees and councils they must understand the laws,
the bye laws, the various amendments made by the government and
commissions and the objective behind these acts and laws. They must not only
understand for themselves but should be able to explain to the others
employees in the organisations. In the absence of adequate knowledge they
will not be able to participate meaningfully and shall not be able to take proper
decisions.

3. For effective working of the scheme there should he proper and quick
implementation of policies and decisions made by the councils and forums.
Any delay may lead to loss of interest of the employees, loss of faith,
dissatisfaction and frustration. This will only lead to the failure of the scheme.

4. One important measure to make the scheme of workers participation in

management a success is the responsibility on the management to make the
atmosphere of work more congenial. The environment for work should be
highly motivating for the employees. If industrial relations are poor even the
implementation of the scheme becomes difficult but if industrial relations are
good, there is maximum co-operation from the employees. So efforts should
he taken to develop and maintain good industrial relations.

5. There should be maximum faith and trust between the employer and the
employee and both should have faith in the scheme of workers participation,
in management. Faith and trust between employer and employee develops a
bnnd between each other and good relations are developed. Faith and trust
improves communication which is very essential for good industrial relations.
The management and the workers should not implement the scheme for the
sake of implementation of workers participation
 they should have confidence in the scheme and should accept it in total.
Participation in the scheme should be real and the goals and targets set should
not be unrealistically high.

6. The method of workers participation in management should he used in the

organisation as a complementary to collective bargaining and not a substitute
to the method of collective bargaining. The management should design a
proper system so that it can take advantages from both collective bargaining
and workers participation.

7. To make workers participation more effective the management should design

a proper system of evaluation for the working of council’s at different levels.
The scheme should he assessed periodically and if required modifications
should he made to make the scheme more beneficial for the employer’s and
the employees.

8. Management and workers should have a constructive attitude towards the

schemes of workers participation. They should assume that workers
participation schemes as highly valuable and powerful tool for increasing
productivity, removing differences, educating workers and for increasing
labour management co-operation.

VI. HISTORICAL REVIEW OF WORKERS PARTICIPATION IN INDIA

Workers Participation in Management has a long history in India. This scheme
was suggested first by Mahatma Gandhi in 1920 in the textile mills of
Ahmedabad. According to Mahatma Gandhi both workers and shareholders
contribute to the prosperity. There should be a strong relationship of friendship,
trust and co-operation. He was of the opinion that “Capital and Labour should
support each other and bring peace and harmony to the organisations. The idea
of Mahatma Gandhi still remains to be the most accepted one in our country. The
year 1920 may be regarded as the starting point of workers participation in India.
In 1958 TISCO had established joint committees for workers to come and
participate in the various affairs of the company.
The Royal Commission observed that the working of the works committee was
very disappointing and the same was with the working of the joint committees
which were present in the railway. The Commission found out some reasons for
the poor performance of committees and councils. The main reasons were
unorganized labour unions, poor quality of labour and poor education of workers.
The management also felt that these committees would interfere with the rights
and responsibilities of the management and so did not accepted this easily. Even
the trade unions felt that these committees and councils were working against
them.

The first most important step taken in this direction was the Industrial Dispute
Act 1947 which gave importance to works committee. The Industrial Policy of
1948 had suggested that the labour should be involved in all matters related to
industrial production. The First Five Year Plan of 1951 also called for the
constitution of joint committees at all levels. It also gave importance to works
committee for the settlement of differences between workers and management
on the spot for improving industrial relations.

The Second Five Year Plan had given more details of the philosophy of worker—
management relationship. It stated that in the socialist society it is important that
the workers should be made to feel that he is helping to build a progressive state.
The creation of industrial democracy is therefore important for the establishment
of a socialist society. This plan also gave importance to the formation of councils
of management consisting of representatives of the management and workers as
it increases the association of labour and management. It should be the
responsibility of the management to supply information to the employees, for
them to work effectively. The council should discuss and make suggestions for
improvement in the working of the establishment.

The Industrial Policy Resolution of 1956 also gave importance to the need for
workers participation in management. It also stated the importance of joint
consultation between workers, technicians and management and expected that
the public sector enterprises should set example in this respect. The aim of the
government in giving importance to
 Workers Participation was to create a socialist society where workers can
share managerial powers.

A study group on workers participation in management was also set up in

1956. The study group consisted of members representing the government,
employers and workers. The study group examined the system of workers
participation in various countries like U.K., France, Germany, Belgium,
Sweden and Yugoslavia. The study groups was in favour of the joint
management councils and gave a report in May 1957. The recommendations
were also discussed at a seminar on La1x›ur Management Co-operation in
New Delhi in 1955 which gave a Model Agreement between management and
labour for the establishment of joint management council for three important
functions. First to fulfill its function as an advisory body. Second to receive
information. Third to fulfill administrative responsibility.

The Third Five Year Plan also gave importance to Workers Participation for the
establishment of industrial democracy.

The Fourth Five Year Plan urged the extension of workers participation to public
sector undertakings and emphasized its importance as an essential functional link
in the development of industrial relations.

SACHAR COMMITTEE ON WORKERS PARTICIPATION

In June 1977 a high powered committee was set up by Government of India under
the chairmanship of Rajinder Sachar. The committee was set up to suggest
measures by which workers participation in the share capital and management of
companies can be brought about. The committee submitted its report on August
1975.

The main recommendations of the committee were,

1. Participation shall be limited to companies which employ 1000 or more
workers (excluding casual and badli workers).
2. The participation at the Board level should be introduced if atleast 51% of the
workers vote in favour of such participation. However any company can
voluntarily introduce this participation scheme.

3. The Worker Directors will be elected by the workers through secret ballot at
the companies premises.

4. The Workers Director must be from amongst the workers employed by the
company and not an outsider.

5. For the success of this scheme training is a must and it shall be the
responsibility of the government to organize training programmes.

6. The pressure of Workers Directors on Board would not lead to any breach in
the confidentiality of the information.

7. The committee did not favors a two-tier representation that is Supervisory Board
and
the Smaller Management Board

VARMA COMMITTEE ON WORKERS PARTICIPATION IN INDUSTRY

The Janta Government set up a committee in September 1977 under the
chairmanship of Ravindra Varma the then Union Minister for Labour. The report
of the committee was submitted in 1979 and the important recommendations
were:
a) A three tier system of participation. At the shop floor, plant level and
corporate or board level should be adopted.
b) Legislation on workers participation covering all undertakings employing 500
or more workers, whether public or private should be introduced.
c) There should be provisions for extending the scheme to units employing
atleast 100 workers.
d) The representatives for the purpose of participation should be elected by secret
ballot.
e) Not less than 10% of all new shares to be issued in future by a company should
be reserved exclusively for the workers of the company.
THE SIXTH PLAN
The Sixth Plan was also in favour of workers participation in management. It
stated that workers participation in management should be an integral part of the
industrial relations system. Workers Participation should transform the attitude
of employers and workers and establish a co-operative culture and a stable
industrial base. It is necessary to provide training facilities to workers and
managerial personnel so as to motivate them in making the scheme of workers
participation a success.

THE PARTICIPATION OF WORKERS IN MANAGEMENT BILL 1990

A proposal for formulating a statute on workers participation in management was
prepared by the government. The proposal took the form of a bill known as
“Participation of Workers in Management Bill 1990” which was introduced in the
Rajya Sabha on 30th May 1990. The bill provided meaningful participation of
workers in management from shop floor to the beard level in all industrial
establishments defined under Industrial Disputes Act 1947. This bill of 1990 was
more statutory in nature and aimed at legislative backing.

WORKING OF SCHEMES IN INDIAN INDUSTRIES

In India a few public undertakings have introduced the scheme on experimental
basis. A great enthusiasm has been shown by the banking industry. One director
on the Board of each nationalized bank is appointed by the Central Government
from among the employees of that bank. who is a worker and is chosen out of a
panel of three employees furnished to the government by the representative union
within the prescribed period. Workers’ representatives have been appointed on
the Boards of Management of a few public undertakings on a trial basis in
Hindustan Antibiotics Ltd., the Hindustan Organic Chemicals Ltd., the National
Coal Mines Development Corporation has always had a nominated workers’
representatives on the board.

Due to lack of proper research it is difficult to comment. In the absence of healthy

labour management relations, schemes such as the Joint Management Councils,
Work Councils and Shops Councils have failed miserably, it is futile to think of the
scheme for the representation of workers on the Board of Management of an
enterprise which needs more participation. A study of the scheme in the
nationalized banks conducted by the National Labour Institute has shown that it
has not succeeded in fostering a congenial relationship based on mutual trust,
respect, understanding and co-operation.
EVALUATION OF WORKERS’ PARTICIPATION IN MANAGEMENT
SCHEME
In India though the concept of participative management is supported in
principle by all the parties — government, employees and employers. From time
to time, the government has come out with a variety of schemes which best serve
the national interests; but it is disheartening to note that all the schemes have
failed miserably.

“The workers” representatives are more concerned with the enlargement of their
amenities and facilities. Many factors that are responsible to the failure of the
scheme as under:-
1. Failure to imbibe the spirit of participation by the parties: One of the
major factors responsible for its failure is the inability of the parties to imbibe
the spirit of participation. The employer looks upon bipartite bodies the shop
council, plant council and joint management councils as substitute for trade
unions, while employees consider it as their rival. The attitude has generated
hostility, apathy, and at times even jealously, among them, with the result that
the spirit of participation has suffered death ab initio.
2. Ideological Differences between Employees and Employers
Regarding the Degree of Participation: There is basic difference
between employees and employers regarding the level of participation by
workers. The workers’ participation

at the Board level should be introduced gradually in stages, while the

employees feel that the scheme should he simultaneously introduced at all
levels. The various schemes have been accepted but not whole heartedly.
3. More number of Participative Forms: The existence of many joint
bodies — the works committee, joint-management council, shop council,
unit council, plant
councils, canteen committee, safety committee, suggestion committee, etc.
each with an ill defined role and functions. It has many times created
confusion, duplication of efforts and resulted in a waste of time and
energy. The resultant effect has been the improper functioning of the
scheme.
4. Unhappy Industrial Relations: The economic history of the country
has shown that the industrial climate has not been free from labour unrest.
The government has imposed participative schemes on industries in such a
climate when, its out come has been a total failure.
5. Weak Trade Unionism: Compared to strong trade unionism in
developed countries like the USA, UK, Germany, Japan etc., the trade
union movement in India is fragmented, poorly organized, driven by
 intense inter-union rivalry, and run by various political philosophies. In
such a state of affairs, it is futile to think of effective workers’ participation
in management through their own elected representatives.
6. Workers illiteracy: The workers’ representatives on various
participative bodies are by and large, illiterate. In the absence of adequate
knowledge on their part of the concept, rationale and benefit of the
participative schemes, they cannot actively participate meaningfully in
their working. The result is that either they fail to arrive at any decision or
bank on outsiders for guidance who invariably persuade them not to
except that forum to solve their problems. This fact is reflected in workers’
inability to accept the scheme.
7. Delays in the implementation of the decisions of participative
bodies: One of the major difficulties in the effective working of the
participative scheme is that there are tremendous delays in the
implementation of the decision taken by the various participative forums.
This many times generates apathy or dissatisfaction and frustration
among the workers. This leads to their loss interest in the participative
scheme.
 93

8. Non Cooperative attitude of working class: The litigation minded

workers’ representatives on the various participative forums many times
raise those issues which are beyond the scope of those forums or bodies. This
attitude tempts employers not to use the schemes while dealing with workers’
problems. Hence this fact, has had a dampening effect on the working of the
schemes. If the employee show non- cooperation the employer’s also behave in
the same fashion and in the process the scheme fails to show results.

SUGGESTIONS FOR EFFECTIVE WORKING OF THE SCHEME

The following suggestions can be made for effective working of the workers
participation in management.
1 . There must be total identity of approach on the part of both the parties to the
working
of schemes at different levels. There must be complete agreement on the
manner in which the various participative schemes should function. Once
the areas are clearly spelt out the side-tracking of the important questions
is avoided and the scheme can yield desirable results.
2. The work environment should be congenial enough to motivate workers to
give whole-hearted co-operation with a view to ensuring its efficient
operation. An environment of industrial conflicts flowing from bad
interpersonal relations will generate frustration and alienation among
workers which will have dampening consequences on the working of
scheme. Therefore, efforts should be taken to cultivate a healthy work
environment.
3. There should be publicity given to the workers participation so that the idea of
participation may find its root in the minds of these who are to implement the
scheme. Necessary lectures, discussions, film, show, conferences, seminars
and other methods of propaganda may be employed profitably to create
enthusiasm about the scheme among the management personnel as well as
the workers.
4. Both the workers and management should have complete faith in the
efficacy of the scheme and should pool their talents and resources, and
demonstrate their will to work for the achieving of their goals.
5. The participation should he real. The issues related to major strategies,
product diversification, the evaluation of costs, the human resources
development and the expansion of markets should also be brought under
the jurisdiction of the participating bodies. These bodies should meet
frequently and their decisions should be strictly adhered to and
implemented in time.
6. The system of participation must be complementary to the collective
bargaining process.
7. The form, coverage, extent and levels of participation should he in the
interest of the parties concerned.
S. The objective to be achieved should not be unrealistically high, vague or
ambiguous but be achievable, clear and taught to all participants.
9. The participative schemes should be evolutionary: Therefore, to begin
with, each should be introduced at the shop floor and plant levels. Till
these schemes get going and become successful the scheme of workers’
involvement at the Board level should be avoided.
10. For the effectiveness of workers participation scheme, participation must be
based on mutual trust and confidence. Hence attempts to enforce it by law
or compulsion would defeat its basic purpose.
11. The programmes for training and education should be developed
comprehensively for this purpose, “labour education should he concerned
with not the head alone, not the heart alone, not the hands alone, but with
all the three, it should make workers think, feel and act.” Labour is to be
educated for enabling them to think, clearly, rationally and logically, to
enable them to feel deeply and emotionally, and to act in a responsible
way. The management at different levels is also required to be trained and
oriented to give it a mesh thinking on the issues concerned.
12. Development of trade union on proper lines: The trade union movement
should be developed on sound lines, so that the workers may enjoy real
involvement in the different participative forums. By legislative means the
proliferation of unions in industries should be restricted.
13. As distrust and suspension, may create obstacle in the effective working of the
participative scheme, will go by the board.
14. There must be a free flow of information between labour and
management throughout the enterprise. This will help the
labour and management to work co-operatively and
constructively, in attaining the goals of the enterprise.
15. The decision taken at different participatory forums must be
sincerely done in a stipulated period of time so as to get faith in
the utility of the scheme.
16. The management should design a proper system so that the
effectiveness of the schemes may be assessed periodically, and,
if required, the changes may be made to make the scheme more
advantageous for all the parties.

CONCLUSION
The scheme of workers’ participation in management although has
not indicated proper results. it should be made to work at least in
increasing the production and productivity of labour by giving the
workers a warm feeling that the worker is an integral and
important part of the organisation and so creating a climate in
which he may get proper opportunities to show his value in
contributing his share to the production targets. Joint consultation
should form a part of labour management decisions on important
issues affecting production as well as the very working lives of the
employees. Management should develop a constructive attitude
and should regard trade unions not as an obstacle to be overcome
but as very valuable and powerful instrument which, if properly
handled, it increase the production and productivity. Both
employers and unions should continuously make the experiment
in proper spirit. The government should take responsibility for the
provision of a satisfactorily workers’ education programme so that
 they can be equipped properly for their tasks. The scheme has
bright prospects.

Unit-4
Emergence and
Emergence andObjectives
Objectivesof of
Labour Laws
Labour , An ,overview
Laws of Factories
An overview Act , Act ,
of Factories
Industrial Disputes Act ,Payment of wages Act, Payment of Bonus
Industrial Disputes Act ,Payment of wages Act, Payment of Bonus Act, ESIAct,
Act,ESI
Payment
Act, of Gratuity
Payment Act, Minimum
of Gratuity Wage Act,
Act, Minimum PF Act.
Wage AnPF
Act, introduction to The
Act. An introduction
Industrial Relations Code-2019.
to The Industrial Relations Code-2019.

Ch-1
ORIGIN OF LABOUR LEGISLATIONS
Introduction
The origin of labour legislation is the history of continuous and relentless
struggle for emancipation of working class. The struggle was between two
unequals. The contract between capital and labour could never be struck on
equitable terms. The social scientists interpreted this struggle in different
ways. The point, however, was to change it. The change contemplated was
one of transforming a slave into partner and thereby bridle the power of
capital to impose its own terms on the workmen.
Various factors helped this process to take place. The struggle was not easy.
Numerous forces, directly and indirectly, hastened the pace facilitating the
passing of labour friendly legislation.
Factors Influencing Labour Legislations

Early Exploitative Industrial Society

The origin of labour legislation lies in the excesses of the early
industrialism that followed Industrial Revolution. The early phase of
industrialisation was characterised by excessive hours of work, employment
of young children under very unhygienic and unhealthy conditions,
payment of low- wages and other excesses. Naturally, such excesses could
not have continued for long without protest and without demand for
reforms. The early Factories Acts flowed from these excesses and
manifested the desire of the community in general to protect its weaker
section against exploitation. The workers had very little legal protection
available. Therefore, it can be safely said that the labour legislations are the
natural children of industrial revolution.
Impact of Contemporary Events

a) Along with Industrial Revolution,

Revolutionary thinking of Rousseau,
J.S.Mill, the French Revolution, Hegel,
Marx & Engels and Russian Revolution
greatly influenced the thought processes
and hastened the pace of labour
jurisprudence.
b) The world wars made it possible for the
labourers to realise their importance that
unless they produce, it will be difficult for
warring nations to win. Therefore, they
must stake their claims for better quality
of work life.
c) The revolution in science, technology, the
communication and telecommunication
also helped in bringing the world, closer.
It became easier for the working classes
of counterparts in the developed world.

The Growth of Trade Unionism

The Trade Union movement, which itself springs from industrial

revolution has been another factor which has 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.
Growth of Political Freedom and Extension of 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.
Rise of socialist and other revolutionary ideas
In his analysis of capitalism, Marx showed that the exploitation of
labour was inherent in the capitalist economic system. Therefore, he
advocated the overthrow of 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. 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.
The Growth of Humanitarian Ideas and the Concept of Social
Welfare and Social Justice

The humanitarian ideas and role of humanitarians, the philanthropic and

social reformers influenced the shape of labour legislation. Early
Factories Acts were made possible because of the efforts of the
humanitarians .
Researches in Social Sciences like Sociology, Psychology and
Anthropology gave a powerful push to the movement of social reforms,
social change, social justice and labour legislations.
Establishment of I.L.O.

The establishment of the I.L.O in 1919 has been a very potent factor in
conditioning the course of labour legislation all over the world. The
acceptance of the principle that "labour is not a commodity" and the
slogan that "Poverty anywhere constitutes a danger to prosperity
everywhere", have influenced the course of labour legislations in all the
countries. The ILO, through persistent investigation of workers' living
conditions has continuously established the need for ameliorative labour
legislation. It has initiated proposals for labour legislations, subjected
them to elaborate discussions and reviews and has adopted Conventions
and Recommendations. The ILO by trying to establish uniform labour
standards in so far as the diverse conditions and uneven economic
developments of the world permit, has done a singular service in the
field of labour legislation.
We have plethora of labour legislations immediately after independence -
 The Factories Act, 1948
 The E.S.I. Act, 1948
 The Minimum Wages Act, 1948
 Mines Act, 1952
 Employees P.F.& Miscellaneous Provisions Act, 1952
 Plantation Labour Act, 1951
 Payment of Bonus Act, 1965
 OBJECTIVES OF THE LABOUR LEGISLATIONS

Different Objectives

Labour legislation in India has sought to achieve the following objectives:

(1) Establishment of justice- Social, Political and Economic
(2) Provision of opportunities to all
workers, irrespective of caste, creed,
religion, beliefs, for the development of
their personality.
(3) Protection of weaker section in the community.
(4) Maintenance of Industrial Peace.
(5) Creation of conditions for economic growth.
(6) Protection and improvement of labor 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

Unit-4

Ch-2

Payment of Wages Act 1936

“wages” means

all remuneration (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, 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;

Provisions of Payment of Wages Act 1936

1) Provision for timely payment of wages

Wages needs to be paid-

1. Before the expiry of the 7th day after the last day of the wage period,
where there are less than 1000 workers employed and in rest case on the
10th day;
2. In current coin or currency notes and by cheques or by crediting the
wages in the employee’s bank account after obtaining his written
authority;
3. On a working day;
4. Before the expiry of the second day, to the person whose employment is
terminated.

2) Responsibility for payment of wages

Every employer shall be responsible for the payment of all wages required to be
paid under this Act to persons employed by him and incase of persons
employed-

1. In the case of contractor, a person designated by such contractor who is

directly under his charge;
2. A person designated by the employer as a person responsible for
complying with the provisions of the Act

 Deductions from wages

The following mentioned are the main deductions that are allowed under the
Act-

1. Fines;
2. Deduction for the actual period of absence
3. Deduction for the damage or loss of goods expressly entrusted to the
employed person;
 4. Deduction for house accommodation;
5. Deduction for the amenities and service supplied by employer with
agreement to the employee;
6. Deduction for recovery of advances and interest, and adjustment of
overpayment;
7. Deductions for recovery of loans from any fund constituted for the
welfare of labour as agreed between employer and employee;
8. Deduction for income tax;
9. Deduction on orders of a court or other authority;
10. Deduction for subscription and repayment of advance from any
Provident Fund;
11. Deduction for payments to cooperative societies as agreed between
employer and employee;
12. Deduction of premium for LIC policy on written authorization of the
employed person; or any other investment for Post Office Saving
Schemes;

However, as mentioned in section 7 of the Act, the total amount of deductions

should not exceed 75% of wages of the employee in any wage period if whole
or part of the deductions is meant for the payments to cooperative societies. In
other cases it should not exceed 50%.

 Fines

Incase of fines that need to be imposed on the employee it should only be for
the acts and omissions that are mentioned in the list of which has been approved
by the appropriate Government. Fines should not exceed 3% of the wages in a
month. This needs to be recovered within 90 days of the date of act or omission,
be imposed after a proper show cause procedure and cannot be imposed on an
employee of less than 15 years of age.

Employers have compulsorily to maintain following registers in the prescribed

forms-

1. Register of wages;
2. Register of fines;
3. Register of deduction for damages or loss
4. Register of advances.

Unit-4
Ch-3
An overview of Factories Act
1. OBJECTIVE

The main objective of the Act is not only to ensure adequate safety measures but
also to promote health and welfare of the workers employed in factories as well
as to prevent haphazard growth of factories.

2. COVERAGE OF THE ACT

The coverage of the Act is confined to the: -

o factories using power and employing 10 or more workers on any

working day of the preceding twelve months;

o factories not using power and employing 20 or more workers on

any working day of the preceding twelve months; and the

o factories specially notified under Section 85 of the Factories Act

by the State Govts./Union Territories.

3. IMPORTANT CONCEPTS AND DEFINITIONS

(a) Factory means any premises including the precincts thereof:-

i) Wherein 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

ii) Wherein 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.

(b) Worker means a person (employed directly or through any agency

including a contractor) with or without the knowledge of the principal
employer, whether for remuneration or not in any manufacturing process, or in
cleaning any part of the machinery or premises used for a manufacturing
process, or in any kind of work incidental to or connected with the
manufacturing process, or the subject of manufacturing process (but does not
include any member of the armed forces of the Union).

(c) Manufacturing process means any process for: -

i) Making, altering, repairing, ornamenting, finishing, packing, oiling, washing,
cleaning, breaking up, demolishing or otherwise treating or adapting any article
or substance with a view to its use, sale, transport, delivery or disposal or

ii) Pumping oil, water, sewage or any other substance or

iii) Generating, transforming or transmitting power or

iv) Composing types for printing, printing by letter press, lithography,

photogravure of other similar process or book binding,

v) Constructing, reconstructing, repairing, refitting, finishing or breaking up

ships or vessels,

vi) Preserving or storing any article in cold storage.

(d) Hazardous Process means any process or activity in relation to an industry

specified in the First Schedule where, unless special care is taken, raw materials
used therein or the intermediate or finished products, by- products, wastes or
effluents thereof would cause material impairment of the health of the persons
engaged in or connected therewith, or results in the pollution of the general
environment. Provided that the State Government may, by notification in the
Official Gazette, amend the First Schedule by way of addition, omission or
variation of any industry specified in the said Schedule.

(e) Fatal Injury means injury resulting from industrial accident which caused
death to the worker.

(f) Non-Fatal Injury means injury resulting from industrial accident, which
prevented injured worker from attending to work for a period of 48 hours or
more immediately following the injuries.

(g) Adult means a person who has completed his eighteenth year of age.

(h) Adolescent means a person who has completed his fifteenth year of age but
has not completed his eighteenth year.

(i) Child means a person who has not completed his fifteenth year of age.

(j) Average Daily Number of Workers Employed The average daily number
of workers employed is calculated by dividing the aggregate number of
attendance on working days (that is, mandays worked) by the number of
working days in the year. Attendance on separate shifts (e.g. night and day
shifts) should be counted separately. Days on which the factory was closed for
whatever cause and days on which the manufacturing process was not carried on
should not be treated as working days. Partial attendance for less than half a
shift on a working day should be ignored, while attendance for half a shift or
more on such day should be treated as full attendance.

(k) Mandays Worked Mandays Worked means total Number of attendance

during a calendar year.

(l) Average Number of Hours Worked per week The Average number of
hours worked per week means the total actual hours worked by all workers
during the year excluding the rest intervals but including overtime worked,
divided by the product of average number of workers employed daily in the
factory and 52 weeks. In case the factory has not worked for the whole year, the
number of weeks during which the factory worked should be used in place of
52.

4. RELEVENT PROVISIONS UNDER THE ACT

ANNUAL LEAVE WITH WAGES

The Act provides that every worker who has worked for a period of at least 240
days during a calendar year shall be allowed during the subsequent year leave
with wages at the rate of (a) one day for every twenty days worked in the case
of adults, and (b) one day for every fifteen days worked in the case of children.
The leave is exclusive of holidays that occur during or at either end of the leave
period. Provision is also made for proportionate leave with wages for a worker
who is discharged or dismissed before he has rendered 240 days service. There
is also a provision that any days of lay off by agreement or contract or as
permissible under the Standing Orders; maternity leave period for female
workers for days not exceeding 12 weeks and leave earned in the previous year
in which leave is enjoyed may be counted as days on which workers have
worked in a factory for the purpose of computation of period of 240 days or
more.

The provisions relating to Health, Safety & Welfare are explained.

Health
Section 11:
Cleanliness:- Section 11 requires the employer or occupier of the factory to
maintain cleanliness by keeping the factory free from effluvia arising from any
drain or other nuisance. Effluvia has not been defined in the Act but it means the
disagreeable vapors arising from decaying matter and for this purpose the dirt
and refuse arising out of the manufacturing process shall not be allowed to be
accumulated and therefore effective methods for sweeping the floors and
benches of the workrooms, stair case, passages should be adopted to dispose of
such effluvia. The above mentioned premises should be cleared at least once in
a week and disinfected whenever necessary. Section 11 makes elaborate
provisions for maintaining whole premises including, walls, partition, ceilings,
doors and windows to be cleaned and painted or varnished at least once in 5
years. To ensure proper implementation of these provisions, it is also required
that the employer shall maintain a register to enter the dates on which such
processes have been carried out [Clauses (a) to (e)]. However an alternative
provision is also made under sub-section (2) that if, by the very nature of
operations carried out in a factory, it is not practicably possible for the employer
to comply with the requirements of sub-section (1) above, the State Government
may, by order, exempt such factory or part of the factory, from all or any of the
provision of sub-section (1) and specify alternative methods for keeping the
factory in a clean state. (Sec. 11)

Section 12:
Disposal of Waste and Effluents:- Section 12 requires for treatment for
disposal of wastes and effluents due to manufacturing process so as to render it
innocuous by making approved method prescribed by the concerned authority.
The word ‘innocuous’ is again not defined in the Act but etymologically it
means ‘harmless’.

Section 13:
Ventilation and Temperature is to be maintained in any work room through
adequate ventilation and circulation of air. The temperature in the work room
should be secured to provide comfort to workers and prevent injury to their
health. The Chief Inspector of Factories may prescribe proper measuring
instruments and suitable measures for maintaining suitable temperature and
ventilation in the work room.

Section 14:
Dust and Fumes are required to be prevented by suitable measures to give off
any dust or fumes likely to be injurious to the workers. Measures should be
taken to prevent inhalation and accumulation of such injurious dust and fumes
by providing exhaust appliances. It is further required that no stationary internal
combustive engine shall be operated unless the exhaust is conducted into open
air.

Section 15:
Artificial Humidification is required to be regulated by prescribed standards of
humidification and adequate ventilation and cooling the air in the work room.

Section 16:
Over-crowding in the work room should be avoided and sufficient elbow-room
should be provided for the workers to work comfortably without congestion. It
is required that at least 9.9 cubic metres space should be provided for each
worker, if the factory is in existence at the time of commencement of this Act,
and a space of at least 4.2 cubic metre per worker should be provided in every
factory started after the commencement of the Act.

Section 17:
Lighting should be provided in a suitable manner, by natural or artificial
methods or by both. All glazed windows and sky lights should be kept clean and
there should not be any glare or reflection from any smooth or polished surface.
The lighting should not form shadows so as to cause strain to eyes or cause
accident.

Section 18:
Drinking Water should be made available at all convenient places and all such
points shall be legibly marked “drinking water” and no such drinking water
should be situated within six metres of any washing place, urinal, latrine,
spittoon etc. The water should be wholesome, free from any contamination and
during hot weather cool drinking water should be provided to workers.

Section 19:
Latrines and Urinals should be provided at convenient places and then should
be separate latrines and urinals for male and female workers. All latrines and
urinals should be kept clean and maintain by prescribed sanitary types and rules.

Section 20:
Spittoons should be provided at suitable places and sufficient manner. There
should be maintained properly and no person shall spit within the premises of
the factory except in the spittoons. The provision shall be made for penalty in
case of violation of this rule.

Safety

Safety of the worker from any injury or occupational disease is the prime
purpose to create conducive and safe environment of work. Therefore
provisions are made under Sections 21 to 41 of the Factories Act as under-

Section 21: Fencing of Machinery:- it is laid down that in every factory proper
fencing should be provided to every moving part of a prime mover and every
flywheel connected to prime mover or engine. Every electric motor, rotary
converter, part of transmission and every dangerous part of other machinery
should be securely fenced by safeguards to prevent any accident, particularly
when such machinery is in motion or use. It may be noted that most of the
accidents takes place due to non-compliance of this provision in many cases
under the Employee's Compensation Act are arising due to the violation of these
security measures.

Section 22: Work on or near machinery in motion:- Whenever it is necessary

to examine any part of machinery, while the machinery is in motion, for the
purpose of repair, lubrication or adjusting operation, such examination or
operation shall be carried out only by specially trained adult male worker
wearing tight fitting clothing and whose name shall be recorded in the
prescribed register.

Further during such examination or operation such worker shall not handle a
belt at a moving pulley without following the instructions given under clauses
(i) to (vii) of this section.

Further no woman or young person shall be allowed to clean or lubricate any

prime mover or transmission machinery.

Section 23: Employment of Young Persons on Dangerous Machines:- This

section prohibits the employer from requiring any young person to work at any
machine unless he has been fully instructed as to the dangers arising in
connection with the machine. Precautions should be observed to ensure that
such person has received sufficient training at the machine and that he is
working under adequate supervision by a person who has thorough knowledge
and experience of the machine.

Section 24: Striking gear and devices for cutting power:- To avoid or atleast
to mitigate injury to the persons working at the dangerous machines or prime
mover, it is required that the whole process should be provided with suitable
striking gear and other mechanical devices to disconnect the power immediately
whenever necessary to avoid accident or injury. Similarly when a device, which
can be inadvertently shift from ‘off to ‘on’ position is provided in a factory to
cut-off power, arrangements shall be made for locking the device in safe
position.

Section 25: Self-acting machines:- Wherever self-acting machines are put in

operation at least a distance of space of 45 centimetres should be provided from
any fixed structure and no person should be able to pass through near to the
machine within the prescribed distance of space.
Section 26: Casing of New Machinery:- In all machinery driven by power and
installed in a factory, every set screw, bolt or key or any revolving shaft, spindle
wheel or pinion shall be encased and effectively guarded to prevent danger.

Sections 27 to 41:- The other Sections from Section 27 to 41 of this Chapter on

safety provide for prohibition of employment of women and children near
cotton-opener (Section 27) and safety measure for hoists and lifts, lifting
machines, revolving machinery, pressure plant, excessive weights, protection of
eyes, protection against dangerous fumes, protection from explosive or
inflammable dust or gas, precaution in case of fire etc. and ensure safety of the
workers.

Hazardous Processes

This Chapter IV-A relating to Hazardous Processes is provided by an

amendment in the year 1987 making provisions under Sections 41-A to 41-H. It
requires that the State Government shall constitute a Site Appraisal Committee
for the purpose of advising to consider application for grant of permission to the
initial location of a factory involving a hazardous process. It requires
compulsory disclosure of information by the occupier of such factory where
such hazardous processes is involved, in a manner prescribed for taking
measures to overcome such hazards arising from the exposure or handling,
transportation, storage or processes, so that they could be checked by Chief
Inspector or local authority. It also requires for emergency standards, workers’
participation in safety management. Section 41-H confers a right on workers to
warn about imminent danger and imposes responsibility on the occupier in
relation to such hazardous processes. The Central Government may appoint
Inquiry Committee in the event of any occurrence of an extraordinary situation
involving hazardous process in a factory (Section 41-D). In case the employer
fails to provide safety measures as required by this Chapter or such measures
are inadequate, the Central Government may direct the Director-General of
Factory Advice Service and Labour Institute or any other institute specialised in
the matter relating to standards of safety of hazardous process, to lay down
emergency standards for enforcement of suitable standards.

Welfare

Chapter V contains provisions for welfare of the workers in the factory and they
are incorporated under Sections 42 to 50 of the Factories Act, 1948
Section 42: Washing Facilities:- It lays down that in every factory adequate
and suitable facilities should be provided for washing separately for male and
female workers. All such washing facilities shall be easily accessible and kept
clean.

Section 43: Facilities for storing and drying clothing require that there should
be adequate facilities for keeping clothing not worn during working hours and
for the drying of the wet-clothing.

Section 44: Facilities for sitting should be provided particularly where the
workers are required to work in standing position, so that they may take
advantage of any opportunity for rest which may occur in the course of their
work.

Section 45: First-Aid Appliances should be provided and maintained so as to

be readily accessible in case of requirement. The contents of such First Aid
Boxes should be maintained properly.

Section 46: Canteen:- The State Government may make rules that in any
specified factory wherein more than 250 workers are ordinarily employed, a
canteen shall be provided and maintained by the occupier for the use of workers.
The food-stuff, furniture, accommodation and equipment in the canteen shall be
of prescribed standard and nature.

Section 47: Shelters, rest-room and lunch room:- In every factory where
more than 150 workers are employed, adequate and suitable shelters or rest-
room and lunch rooms should be provided with facility of drinking water. Such
rest-room or shelter shall be well ventilated and maintained in a clean condition.

Section 48: Creches:- It is provided that in every factory where more than 30
women workers are ordinarily employed, there shall be provided a suitable
room for the use of children under the age of 6 years of such women. The
creches should also be well ventilated and maintained in clean conditions. The
furniture, construction and accommodation should be as per prescribed rules.

Additionally provision shall be made for the care of children belonging to

women workers along with the facility for changing and washing the clothing of
such children.

Section 49: Welfare Officers:- In every factory when 500 or more number of
workers are employed, the occupier shall employ in the factory such number of
Welfare Officers as may be prescribed. The State Government may prescribe
their qualifications and duties.

Unit-4

Ch-4

The Industrial Disputes Act, 1947 1

THE INDUSTRIAL DISPUTES ACT, 1947

[14 OF 1947]
[11th March, 1947]
An Act to make provision for the investigation and settlement of
industrial disputes, and for certain other purposes.
WHEREAS it is expedient to make provision for the investigation and
settlement of industrial disputes, and for certain other purposes hereinafter
appearing;
It is hereby enacted as follows:
CHAPTER-I
PRELIMIN
ARY
1. Short title, extent and commencement.- (1) This Act may be called
The Industrial Disputes Act, 1947.
1[(2) It extends to the whole of India.]
2[***]
(3) It shall come into force on the first day of April, 1947.
2. Definitions.-

Sec. 2
1[2[(aaa)] “average pay” means the average of the wages payable
to a workman-
(i) in the case of monthly paid workman, in the three
complete calendar months,
(ii) in the case of weekly paid workman, in the four
complete weeks,
 (iii) in the case of daily paid workman, in the twelve full
working days, preceding the date on which the
average pay becomes payable if the workman had
worked for three complete calendar months or four
complete weeks or twelve full working days, as the
case may be, and where such calculation cannot be
made, the average pay shall be calculated as the
average of the wages payable to a workman during
the period he actually worked;]
3[(b) “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 10- A;]

7(J) “INDUSTRY” MEANS ANY BUSINESS, TRADE,

UNDERTAKING, MANUFACTURE OR CALLING OF
EMPLOYERS AND INCLUDES ANY CALLING, SERVICE,
EMPLOYMENT, HANDICRAFT, OR INDUSTRIAL
OCCUPATION OR AVOCATION OF WORKMEN;
(k) “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

Sec. 2

employment or non-employment or the terms of

employment or with the conditions of labour, of any person;
1[(ka) “industrial establishment or undertaking” means an
establishment or undertaking in which any industry is
carried on:
Provided that where several activities are
carried on in an establishment or undertaking and
only one or some of such activities is or are an
industry or industries, then,-
(a) if any unit of such establishment or undertaking
carrying on any activity, being an industry, is
severable from the other unit or units of such
establishment or undertaking, such unit shall be
deemed to be a separate industrial establishment
 or undertaking;
(b) if the predominant activity or each of the
predominant activities carried on in such
establishment or undertaking or any unit thereof is
an industry and the other activity or each of the
other activities carried on in such establishment or
undertaking or unit thereof is not severable from
and is, for the purpose of carrying on, or aiding the
carrying on of, such predominant activity or
activities, the entire establishment or undertaking
or, as the case may be, unit thereof shall be
deemed to be an industrial establishment or
undertaking;]
2[(kk) “insurance company” means an insurance company as
defined in section 2 of the Insurance Act, 1938 (4 of
1938), having branches or other establishments in more
than one State;
3[(kka) “khadi” has the meaning assigned to it in clause (d) of
Section 2 of the Khadi and Village Industries Commission
Act, 1956 (61 of 1956);
4[(kkb) “Labour Court” means a Labour Court constituted under
Section 7];
5[(kkk) “lay-off” (with its grammatical variations and cognate
expressions) means the failure, refusal or inability of an
employer on account of shortage of coal, power or raw
materials or the accumulation of stocks or the breakdown of
machinery 6[or natural calamity or for any other connected
reason] to give employment to a workman whose name is
borne on the muster rolls of his industrial establishment and
who has not been retrenched;
Explanation.- Every workman whose name is borne on
the muster rolls of the industrial establishment and who
presents himself for work at the establishment at the time
appointed for

Sec. 2

the purpose during normal working hours on any day and is

not given employment by the employer within two hours of
his so presenting himself shall be deemed to have been laid-
off for that day within the meaning of this clause:
Provided that if the workman, instead of being given
 employment at the commencement of any shift for any day
is asked to present himself for the purpose during the
second half of the shift for the day and is given employment
then, he shall be deemed to have been laid-off only for one-
half of that day:
Provided further that if he is not given any such
employment even after so presenting himself, he shall not
be deemed to have been laid-off for the second half of the
shift for the day and shall be entitled to full basic wages and
dearness allowance for that part of the day;]
(l) “lock-out” means the 1[temporary closing of a place of
employment] or the suspension of work, or the refusal by
an employer to continue to employ any number of persons
employed by him;
2[(la) “major port” means a major port as defined in clause (8) of
section 3 of the Indian Ports Act, 1908 (15 of 1908);
(lb) “mine” means a mine as defined in clause (j) of sub- section
(1) of Section 2 of the Mines Act, 1952 (35 of 1952);]
3[(ll) “National Tribunal” means a National Industrial Tribunal
constituted under Section 7-B;]

4 [(lll) “office bearer”, in relation to a trade union, includes any

member of the executive thereof, but does not include an
auditor;]
(m) “prescribed” means prescribed by rules made under this Act;
(n) “public utility service” means-
(i) any railway service 5[or any transport service for
the carriage of passengers or goods by air;]
6[(ia) any service in, or in connection with the working of,
any major port or dock;]
(ii) any section of an industrial establishment, on the
working of which the safety of the establishment or
the workmen employed therein depends;
(iii) any postal, telegraph or telephone service;
(iv) any industry which supplies power, light or water to
the public;
(v) any system of public conservancy or sanitation;
(vi) any industry specified in the 7[First Schedule] which
the appropriate Government may, if satisfied that
public
Sec. 2

emergency or public interest so requires, by

notification in the Official Gazette, declare to be a
public utility service for the purposes of this Act, for
such period as may be specified in the notification:
Provided that the period so specified shall not, in the
first instance, exceed six months but may, by a like
notification, be extended from time to time, by any period
not exceeding six months, at any one time, if in the opinion
of the appropriate Government, public emergency or public
interest requires such extension;
(o) “railway company” means a railway company as defined in
Section 3 of the Indian Railways Act, 1890 (9 of 1890);1
2[(oo) “retrenchment” means the termination by the employer of
the service of a workman for any reason whatsoever,
otherwise than as a punishment inflicted by way of
disciplinary action, but does not include-
(a) voluntary retirement of the workman; or
(b) retirement of the workman on reaching the age of
superannuation if the contract of employment
between the employer and the workman
concerned contains a stipulation in that behalf; or
3[(bb) termination of the service of the workman as a result
of the on-renewal of the contract of employment
between the employer and the workman concerned
on its expiry or of such contract being terminated
under a stipulation in that behalf contained therein;
or]
(c) termination of the service of a workman on the
ground of continued ill-health;]
4[(p) “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 5[an officer authorised in this behalf by] the
appropriate Government and the conciliation officer;]
(q) “strike” means a cessation of work by a body of persons
employed in any industry acting in combination, or a
concerted refusal, or a refusal under a common
understanding, of any number of persons who are or have
 been so employed to continue to work or to accept
employment;
6[(qq) trade union” means a trade union registered under the Trade
Unions Act, 1926 (16 of 1926);]

1[(r) “Tribunal” means an Industrial Tribunal constituted under

Section 7-A and includes an Industrial Tribunal constituted
before the 10th day of March, 1957, under this Act;]
2[(ra) “unfair labour practice” means any of the practices
specified in the Fifth Schedule;
(rb) village industries” has the meaning assigned to it in clause (h)
of Section 2 of the Khadi and Village Industries
Commission Act, 1956 (61 of 1956);]
3[(rr) “wages” means all remuneration capable of being expressed
in terms of money, which would, if the terms of
employment, expressed or implied, were fulfilled, be
payable to a workman in respect of his employment, or of
work done in such employment, and includes-
(i) such allowances (including dearness allowance) as
the workman is for the time being entitled to;
(ii) the value of any house accommodation, or of
supply of light, water, medical attendance or other
amenity or of any service or of any concessional
supply of foodgrains or other articles;
(iii) any travelling concession;
4[(iv) any commission payable on the promotion of sales or
business or both;]
but does not include-
(a) any bonus;
(b) any contribution paid or payable by the employer
to any pension fund or provident fund or for the
benefit of the workman under any law for the time
being in force;
(c) any gratuity payable on the termination of his service;]
5[(s) “workman” means any person (including an apprentice)
employed in any industry to do any manual, unskilled,
skilled, technical, operational, clerical or supervisory work
for hire or reward, whether the terms of employment be
express or implied, and for the purposes of any proceeding
under this Act in relation to an industrial dispute, includes
any such person who has been dismissed, discharged or
 retrenched in connection with, or as a consequence of, that
dispute, or whose dismissal, discharge or retrenchment has
led to that dispute, but does not include any such person-
(i) who is subject to the Air Force Act, 1950 (45 of
1950), or the Army Act, 1950 (46 of 1950), or the
Navy Act, 1957 (62 of 1957); or
(ii) who is employed in the police service or as an
officer or other employee of a prison, or
(iii) who is employed mainly in a managerial or
administrative capacity, or

Sec. 5

(iv) who, being employed in a supervisory capacity,

draws wages exceeding one thousand six hundred
rupees per mensem or exercises, either by the
nature of the duties attached to the office or by
reason of the powers vested in him, functions
mainly of a managerial nature.]
1[2A. Dismissal etc., of an individual workman to be deemed to be
an industrial dispute.- Where any employer discharges, dismisses,
retrenches or otherwise terminates the services of an individual workman,
any dispute or difference between that workman and his employer connected
with, or arising out of, such discharge, dismissal, retrenchment or termination
shall be deemed to be an industrial dispute notwithstanding that no other
workman nor any union of workmen is a party to the dispute.]
CHAPTER II
AUTHORITIES UNDER
THIS ACT
3. Works Committee:- (1) In the case of any industrial establishment
in which one hundred or more workmen are employed or have been
employed on any day in the preceding twelve months, the appropriate
Government may by general or special order require the employer to
constitute in the prescribed manner a Works Committee consisting of
representatives of employers and workmen engaged in the
establishment, so however that the number of representatives of
workmen on the Committee shall not be less than the number of
representatives of the employer. The representatives of the workmen
shall be chosen in the prescribed manner from among the workmen
engaged in the establishment and in consultation with their trade union,
if any, registered under the Indian Trade Unions Act, 1926 (16 of 1926).
(2) It shall be the duty of the Works Committee to promote measures for
securing and preserving amity and good relations between the employer and
workmen and, to that end, to comment upon matters of their common interest
or concern and endeavour to compose any material difference of opinion in
respect of such matters.
4. Conciliation Officers:- (1) The appropriate Government may, by
notification in the Official Gazette, appoint such number of persons as it
thinks fit, to be Conciliation Officers, charged with the duty of mediating
in and promoting the settlement of industrial disputes.
(2) A Conciliation Officer may be appointed for a specified area or for
specified industries in a specified area or for one or more specified industries
and either permanently or for a limited period.
5. Board of Conciliation:-(1) The appropriate Government may as
occasion arises by notification in the Official Gazette, constitute a Board
of Conciliation for promoting the settlement of an industrial dispute.
(2) A Board shall consist of a Chairman and two or four other
members, as the appropriate Government thinks fit.
(3) The Chairman shall be an independent person and the other
members shall be persons appointed in equal numbers to represent the
parties to the dispute and any person appointed to represent a party shall
be appointed on the recommendation of that party :
Provided that, if any party fails to make a recommendation as aforesaid
within the prescribed time, the appropriate Government shall appoint such
persons as it thinks fit to represent that party.

(4) A Board, having the prescribed quorum, may act notwithstanding

the absence of the Chairman or any of its members or any vacancy in its
number :
Provided that, if the appropriate Government notifies the Board that the
services of the Chairman or of any other member have ceased to be available,
the Board shall not act until a new chairman or member, as the case may be,
has been appointed.
6. Courts of Enquiry:- (1) The appropriate Government may as
occasion arises by notification in the Official Gazette, constitute a Court of
Inquiry for enquiring into any matter appearing to be connected with or
relevant to an industrial dispute.
(2) A Court may consist of one independent person or of such
number of independent persons as the appropriate Government may
think fit and where a Court consists of two or more members, one of
them shall be appointed as the Chairman.
(3) A Court, having the prescribed quorum, may act, notwithstanding
 the absence of the Chairman or any of its members or any vacancy in its
number:
Provided that, if the appropriate Government notifies the Court that the
services of the Chairman have ceased to be available, the Court shall not act
until a new Chairman has been appointed.
1[7. Labour Courts.- (1) The appropriate Government may, by
notification in the Official Gazette, constitute one or more Labour Courts for
the adjudication of industrial disputes relating to any matter specified in the
Second Schedule and for performing such other functions as may be assigned
to them under this Act.
(2) A Labour Court shall consist of one person only to be appointed
by the appropriate Government.
(3) A person shall not be qualified for appointment as the presiding
officer of a Labour Court, unless-
2[(a) he is, or has been, a Judge of a High Court; or
(b) he has, for a period of not less than three years, been a
District Judge or an Additional District Judge;
(c) 3 [***]
4[(d) he has held any judicial office in India for not less than
seven years; or
5[(e) he has been the Presiding Officer of a Labour Court
constituted under any Provincial Act or State Act for not
less than five years.]
7A. Tribunals.- (1) The appropriate Government may, by notification in
the Official Gazette, constitute one or more Industrial Tribunals for the
adjudication of industrial disputes relating to any matter, whether specified in
the Second Schedule or the Third Schedule 6[and for performing such other
functions as may be assigned to them under this Act].
(2) A Tribunal shall consist of one person only to be appointed by the
appropriate Government.

Sec. 9

A person shall not be qualified for appointment as the presiding

(3)
officer of a Tribunal unless-
(a) he is, or has been, a Judge of High Court ; or
1[(aa) he has, for a period of not less than three years, been a
District Judge or an Additional District Judge; 2[***]
(b) 3[***]
 The appropriate Government may, if it so thinks fit, appoint two
(4)
persons as assessors to advise the Tribunal in the proceeding before it.
7B. National Tribunals.- (1) The Central Government may, by
notification in the Official Gazette, constitute one or more National Industrial
Tribunals for the adjudication of industrial disputes which, in the opinion of
the Central Government, involve questions of 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.
(2) A National Tribunal shall consist of one person only to be
appointed by the Central Government.
(3) A person shall not be qualified for appointment as the Presiding

Officer of a National Tribunal 4 [unless he is, or has been, a Judge of a

High Court.]
(4) The Central Government may, if it so thinks fit, appoint two
persons as
assessors to advise the National Tribunal in the proceeding before it.
7C. Disqualifications for the presiding officers of Labour Courts,
Tribunals and National Tribunals.- No person shall be appointed to, or
continue in, the office of the Presiding Officer of a Labour Court, Tribunal or
National Tribunal, if-
(a) he is not an independent person; or
(b) he has attained the age of sixty-five years.
5[8. Filling of vacancies.- If, for any reason a vacancy (other than a
temporary absence) occurs in the office of the presiding officer of a Labour
Court, Tribunal or National Tribunal or in the office of the Chairman or any
other member of a Board or Court, then, in the case of a National Tribunal,
the Central Government,and in any other case, the Appropriate Government,
shall appoint another person in accordance with the provisions of this Act to
fill the vacancy, and the proceeding may be continued before the Labour
Court, Tribunal, National Tribunal, Board or Court, as the case may be, from
the stage at which the vacancy is filled.
9. Finality of orders constituting Boards, etc.- (1) No order of the
Appropriate Government or of the Central Government appointing any
person as the Chairman or any other member of a Board or a Court or as
the presiding officer of a Labour Court, Tribunal or National Tribunal shall
be called in question in any manner; and no act or proceeding before any
Board or Court shall be called in question in any manner on the ground
merely of the existence of any vacancy in, or defect in the constitution of,
such Board or Court.
 (2) No settlement arrived at in the course of a conciliation
proceeding shall be invalid by reason only of the fact that such settlement
was arrived at after the expiry of the period referred to in sub-section (6)
of Section 12 or sub section (5) of Section 13, as the case may be.
(3) Where the report of any settlement arrived at in the course of
conciliation proceeding before a Board is signed by the Chairman and all
the other members of the Board, no such settlement shall be invalid by
reason only of the casual or unforeseen absence of any of the members
(including the Chairman) of the Board, during any stage of the
proceeding.]
1[CHAPTER II-A
NOTICE OF
CHANGE
9A. Notice of change.- No employer, who purposes to effect any change
in the conditions of service applicable to any workman in respect of any
matter specified in the Fourth Schedule, shall effect such change,-
(a) without giving to the workman likely to be affected by such
change a notice in the prescribed manner of the nature of
the change proposed to be effected; or
(b) within twenty-one days of giving such notice:
Provided that no notice shall be required for effecting
any such change—
(a) where the change is effected in pursuance of any
2[settlement or award]; or
(b) where the workmen likely to be affected by the change are
persons to whom the Fundamental and Supplementary
Rules, Civil Services (Classification, Control and Appeal)
Rules, Civil Services (Temporary Service) Rules, Revised
Leave Rules, Civil Service Regulations, Civilians in Defence
Services (Classification, Control and Appeal) Rules or the
Indian Railway Establishment Code or any other rules or
regulations that may be notified in this behalf by the
appropriate Government in the Official Gazette, apply.
9B. Power of Government to exempt.- Where the appropriate
Government is of opinion that the application of the provisions of Section 9A
to any class of industrial establishments or to any class of workmen
employed in any industrial establishment affect the employers in relation
thereto so prejudicially that such application may cause serious repercussion
on the industry concerned and that public interest so requires, the appropriate
Government may, by notification in the Official Gazette, direct that the
provisions of the said section shall not apply, or shall apply, subject to such
conditions as may be specified in the notification, to that class of industrial
establishments or to that class of workmen employed in any industrial
establishment.
3[CHAPTER II-B
REFERENCE OF CERTAIN INDIVIDUAL DISPUTES TO
GRIEVANCE SETTLEMENT AUTHORITIES
9C. Setting up of Grievance Settlement Authorities and reference of
certain individual disputes to such authorities.- (1) The employer in
relation to every industrial establishment in which fifty or more workmen are
employed or
Sec. 10

have been employed on any day in the preceding twelve months, shall
provide for, in accordance with the rules made in that behalf under this Act,
a Grievance Settlement Authority for the settlement of industrial disputes
connected with an individual workman employed in the establishment.
(2) Where an industrial dispute connected with an individual
workman arises in an establishment referred to in sub-section (1), a
workman or any trade union of workmen of which such workman is a
member, refer, in such manner as may be prescribed such dispute to the
Grievance Settlement Authority provided for by the employer under that
sub-section for settlement.
(3) The Grievance Settlement Authority referred to in sub-section (1)
shall follow such procedure and complete its proceedings within such
period as may be prescribed.
(4) No reference shall be made under Chapter III with respect to any
dispute referred to in this section unless such dispute has been referred
to the Grievance Settlement Authority concerned and the decision of the
Grievance Settlement Authority is not acceptable to any of the parties to
the dispute.]
CHAPTER III
REFERENCE OF DISPUTES TO BOARDS, COURTS OR TRIBUNALS
10. Reference of disputes to Boards, Courts or Tribunals.- (1)
1[Where the appropriate Government is of opinion that any industrial
dispute exists or is apprehended, it may at any time], by order in writing,-
(a) refer the dispute to a Board for promoting a settlement
thereof; or
(b) refer any matter appearing to be connected with or
relevant to the dispute, to a Court for inquiry; or
2[(c) refer the dispute or any matter appearing to be connected
with, or relevant to, the dispute, if it relates to any matter
specified in the Second Schedule, to a Labour Court for
adjudication; or
(d) refer the dispute or any matter appearing to be connected
with, or relevant to, the dispute, whether it relates to any
matter specified in the Second Schedule or the Third
Schedule, to a Tribunal for adjudication:
Provided that where the dispute relates to any matter specified in the
Third Schedule and is not likely to affect more than one hundred workmen,
the appropriate Government may, if it so thinks fit, make the reference to a
Labour Court under Clause (c);]
 3[Provided further that] where the dispute relates to a public utility
service and a notice under Section 22 has been given, the appropriate
Government shall, unless it considers that the notice has been frivolously or
vexatiously given or that it would be inexpedient so to do, make reference
under this sub-section notwithstanding that any other proceedings under this
Act in respect of the dispute may have commenced:
4[Provided also that where the dispute in relation to which the Central
Government is the appropriate Government, it shall be competent for the

Government to refer the dispute to a Labour Court or an Industrial Tribunal,

as the case may be, constituted by the State Government;]
1[(1-A) Where the Central Government is of opinion that any industrial
dispute exists or is apprehended and the dispute involves any question of
national importance or is of such a nature that industrial establishments
situated in more than one State are likely to be interested in, or affected by,
such dispute and that the dispute should be adjudicated by a National
Tribunal, then, the Central Government may, whether or not it is the
appropriate Government in relation to that dispute, at any time, by order in
writing, refer the dispute or any matter appearing to be connected with, or
relevant to, the dispute, whether it relates to any matter specified in the
Second Schedule or the Third Schedule, to a National Tribunal for
adjudication.]
(2) Where the parties to an industrial dispute apply in the prescribed
manner, whether jointly or separately, for a reference of the dispute to a
Board, Court, 2[Labour Court, Tribunal, or National Tribunal], the
appropriate Government, if satisfied that the persons applying represent
the majority of each party, shall make the reference accordingly.
3[(2-A) An order referring an industrial dispute to a Labour Court,
Tribunal or National Tribunal under this section shall specify the period
within which such Labour Court, Tribunal or National Tribunal shall submit
its award on such dispute to the appropriate Government:
Provided that where such industrial dispute is connected with an
individual workman, no such period shall exceed three months:
Provided further that where the parties to an industrial dispute apply in
the prescribed manner, whether jointly or separately, to the Labour Court,
Tribunal or National Tribunal for extension of such period or for any other
reason, and the presiding officer of such Labour Court, Tribunal or National
Tribunal considers it necessary or expedient to extend such period, he may
for reasons to be recorded in writing, extend such period by such further
period as he may think fit:
Provided also that in computing any period specified in this sub-section,
the period, if any, for which the proceedings before the Labour Court,
Tribunal or National Tribunal had been stayed by any injunction or order of a
Civil Court shall be excluded:
Provided also that no proceedings before a Labour Court, Tribunal or
National Tribunal shall lapse merely on the ground that any period specified
under this sub-section had expired without such proceedings being
completed.]
Voluntary reference of disputes to arbitration:- (1) Where any
industrial dispute exists or is apprehended and the employer and the
workmen agree to refer the dispute to arbitration, they may, at any time
before the dispute has been referred under Section 10 to a Labour Court or
Tribunal or National Tribunal, by a written agreement, refer the dispute to
arbitration and the reference shall be to such person or persons (including the
presiding officer of a Labour Court or Tribunal or National Tribunal) as an
arbitrator or arbitrators as may be specified in the arbitration agreement.
2[(1A) Where an arbitration agreement provides for a reference of the
dispute to an even number of arbitrators, the agreement shall provide for the
appointment of another person as umpire who shall enter upon the reference,
if the arbitrators are equally divided in their opinion, and the award of the
umpire shall prevail and shall be deemed to be the arbitration award for the
purposes of this Act.]
(2) An arbitration agreement referred to in sub-section (1) shall be in
such form and shall be signed by the parties thereto in such manner as
may be prescribed.
(3) A copy of the arbitration agreement shall be forwarded to the
appropriate Government and the Conciliation Officer and the appropriate
Government shall, within 3[one month] from the date of the receipt of
such copy, publish the same in the Official Gazette.
4[(3A) Where an industrial dispute has been referred to arbitration and
the appropriate Government is satisfied that the persons making the reference
represent the majority of each party, the appropriate Government may, within
the time referred to in sub-section (3), issue a notification in such a manner as
may be prescribed; and when any such notification is issued, the employers
and workmen who are not parties to the arbitration agreement but are
concerned in the dispute, shall be given an opportunity of presenting their
case before the arbitrator or arbitrators.]
(4) The arbitrator or arbitrators shall investigate the dispute and
submit to the appropriate Government the arbitration award signed by
the arbitrator or all the arbitrators, as the case may be.
5[(4-A) Where an industrial dispute has been referred to arbitration and a
notification has been issued under sub-section (3-A), the appropriate
Government may, by order, prohibit the continuance of any strike or lock out
in connection with such dispute which may be in existence on the date of
reference.]
(5) Nothing in the Arbitration Act, 1940 (10 of 1940) 6, shall apply to
arbitrations under this section.]

Sec. 11
CHAPTER IV
PROCEDURE, POWERS AND DUTIES OF AUTHORITIES
11. Procedure and power of conciliation officers, Boards, Courts
and Tribunals:- 1[(1) Subject to any rules that may be made in this behalf,
an arbitrator, a Board, Court, Labour Court, Tribunal or National Tribunal
shall follow such procedure as the arbitrator or other authority concerned
may think fit].
(2) A conciliation officer or a member of a Board, 2[or Court or the
presiding officer of a Labour Court, Tribunal or National Tribunal] may, for
the purpose of inquiry into any existing or apprehended industrial
dispute, after giving reasonable notice, enter the premises occupied by
any establishment to which the dispute relates.
(3) Every Board, Court, 3[Labour Court, Tribunal and National
Tribunal] shall have the same powers as are vested in a Civil Court under
the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit, in
respect of the following matters, namely-
(a) Enforcing the attendance of any person and examining him
on oath;
(b) Compelling the production of documents and material
objects;
(c) Issuing commissions for the examination of witnesses;
(d) In respect of such other matters as may be prescribed;
and every inquiry or investigation by a Board, Court, 4[Labour Court,
Tribunal or or National Tribunal] shall be deemed to be a judicial proceeding,
within the meaning of Sections 193 and 228 of the Indian Penal Code (45 of
1860).
(4) A Conciliation Officer 5[may enforce the attendance of any person
for the the purpose of examination of such person or call for] and inspect
any document which he has ground for considering to be relevant to the
industrial dispute 6[or to be necessary for the purpose of verifying the
 implementation of any award or carrying out any other duty imposed on
him under this Act, and for the aforesaid purposes, the conciliation officer
shall have the same powers as are vested in a Civil Court under the Code
of Civil Procedure, 1908 (5 of 1908) 7[in respect of enforcing the
attendance of any person and examining him or of compelling the
production of documents].]
8[(5) A Court, Labour Court, Tribunal or National Tribunal may, if it so
thinks fit, appoint one or more persons having special knowledge of the
matter under consideration as assessor or assessors to advise it in the
proceeding before it.
[(6) All conciliation officers, members of a Board or Court and the
presiding officers of a Labour Court, Tribunal or National Tribunal shall be
deemed to be public servants within the meaning of Section 21 of the Indian
Penal Code (45 of 1860).

18 Sec. 11A

[(7) Subject to any rules made under this Act, the costs of, and incidental
to, any proceeding before a Labour Court, Tribunal or National Tribunal shall
be in the discretion of that Labour Court, Tribunal or National Tribunal and
the Labour Court, Tribunal or National Tribunal, as the case may be, shall
have full power to determine by and to whom and to what extent and subject
to what conditions, if any, such costs are to be paid, and to give all necessary
directions for the purposes aforesaid and such costs may, on application
made to the appropriate Government by the person entitled, be recovered by
that Government in the same manner as an arrear of land revenue].
1[(8) Every 2[Labour Court, Tribunal or National Tribunal] shall be
deemed to to be a Civil Court for the purposes of 3[Sections 345, 346 and
348 of the Code of of Criminal Procedure, 1973 (2 of 1974)]].
4[11A. Powers of Labour Courts, Tribunals and National Tribunals
to give appropriate relief in case of discharge or dismissal of workmen.-
Where an Industrial dispute relating to the discharge or dismissal of a
workman has been referred to a Labour Court, Tribunal or National Tribunal
for adjudication and, in the course of the adjudication proceedings, the
Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied
that the order of discharge or dismissal was not justified, it may, by its award,
set aside the order of discharge or dismissal and direct reinstatement of the
workman on such terms and conditions, if any, as it thinks fit, or give such
other relief to the workman including the award of any lesser punishment in
lieu of discharge or dismissal as the circumstances of the case may require:
Provided that in any proceeding under this section the Labour Court,
Tribunal or National Tribunal, as the case may be, shall rely only on the
materials on record and shall not take any fresh evidence in relation to the
matter].
12. Duties of conciliation officers:- (1) Where any industrial dispute
exists or is apprehended, the conciliation officer may, or where the
dispute relates to a public utility service and a notice under Section 22 has
been given, shall, hold conciliation proceedings in the prescribed manner.
(2) The Conciliation Officer shall, for the purpose of bringing about a
settlement of the dispute, without delay, investigate the dispute and all
matters affecting the merits and the right settlement thereof and may do
all such things as he thinks fit for the purpose of inducing the parties to
come to a fair and amicable settlement of the dispute.
(3) If a settlement of the dispute or of any of the matters in dispute is
arrived at in the course of the conciliation proceedings the conciliation
officer shall send a report thereof to the appropriate Government 5[or an
officer authorised in this behalf by the appropriate Government] together
with a memorandum of 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 of 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
for bringing about settlement

Sec. 13 19

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 of the report referred to in sub-section (4),
the appropriate Government is satisfied that there is a case for reference
to a Board, 1[Labour Court, Tribunal or National Tribunal],it may make
such reference. Where the appropriate Government does not make such
a reference it shall record and communicate to the parties concerned its
reasons therefor.
(6) A report under this section shall be submitted within fourteen
days of the commencement of the conciliation proceedings or within such
shorter period as may be fixed by the appropriate Government:
2[Provided that, 3[subject to the approval of the conciliation officer] the
time for the submission of the report may be extended by such period as may
be agreed upon in writing by all the parties to the dispute].
 13. Duties of Board:- (1) Where a dispute has been referred to a
Board under this Act, it shall be the duty of the Board to endeavour to
bring about a settlement of the 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.
(2) If a settlement of the 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 of the settlement signed by the parties to the dispute.
(3) If no such settlement is arrived at, the Board shall, as soon as
practicable after the close of the investigation, send to the appropriate
Government a full report setting forth the proceedings and steps taken by
the Board for ascertaining the facts and circumstances relating to the
dispute and for bringing about a settlement thereof, together with a full
statement of such facts and circumstances, its finding thereon, the
reasons on account of which, in its opinion, a settlement could not be
arrived at and its recommendations for the determination of the dispute.
(4) If, on the receipt of a report under sub-section (3) in respect of a
dispute relating to public utility service, the appropriate Government
does not make a reference to a 4[Labour Court, Tribunal or National
Tribunal] under Section 10, it shall record and communicate to the parties
concerned its reasons therefor.
(5) The Board shall submit its report under this section within two

months of the date 5[on which the dispute was referred to it] or within
such shorter period as may be fixed by the appropriate Government:
Provided that the appropriate Government may from time to time extend
the time for the submission of the report by such further periods not
exceeding two months in the aggregate:
Provided further that the time for the submission of the report may be
extended by such period as may be agreed on in writing by all the parties to
the dispute.

14. Duties of Courts:- A Court shall inquire into the matters referred
to it and report thereon to the appropriate Government ordinarily within
a period of six months from the commencement of its inquiry.
1[15. Duties of Labour Courts, Tribunals and National Tribunals:-
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, 2[within the period specified in the order referring such industrial
dispute or the further period extended under the second proviso to sub-
section (2-A) of Section 10], submit its award to the appropriate
Government.]
16. Form of Report or Award:- (1) The report of a Board or Court
shall be in writing and shall be signed by all the members of the Board or
Court, as the case may be:
Provided that nothing in this section shall be deemed to prevent any
member of the Board or Court from recording any minute of dissent from a
report or from any recommendation made therein.
(2) The award of a Labour Court or Tribunal or National Tribunal shall
be in writing and shall be signed by its presiding officer.]
17. Publication of reports and awards:- (1) Every report of a Board
or Court together with any minute of dissent recorded therewith, every
arbitration award and every award of the Labour Court, Tribunal or
National Tribunal shall, within a period of thirty days from the date of its
receipt by the appropriate Government, be published in such manner as
the appropriate Government thinks fit.
(2) Subject to the provisions of Section 17-A, the award published
under sub-section (1) shall be final and shall not be called in question by
any Court in any manner whatsoever.
17A. Commencement of the award:- (1) An award (including an
arbitration award) shall become enforceable on the expiry of thirty days from
the date of its publication under Section 17:
Provided that-
(a) if the appropriate Government is of opinion, in any case
where the award has been given by a Labour Court or
Tribunal in relation to an industrial dispute to which it is a
party; or
(b) if the Central Government is of opinion, in any case where
the award has been given by a National Tribunal,
that it will be inexpedient on public grounds affecting national economy or
social justice to give effect to the whole or any part of the award, the
appropriate Government, or as the case may be, the Central Government
may, by notification in the Official Gazette, declare that the award shall not
become enforceable on the expiry of the said period of thirty days.
(2) Where any declaration has been made in relation to an award
under the proviso to sub-section (1), the appropriate Government or the
Central Government may, within ninety days from the date of publication
of the award under Section 17, make an order rejecting or modifying the
award, and shall, on the first available opportunity, lay the award
together with a copy of the order before the Legislature of the State, if
the order has been made by a State
Government, or before Parliament, if the order has been made by the Central
Government.
(3) Where any award as rejected or modified by an order made under
sub- section (2) is laid before the Legislature of a State or before
Parliament, such award shall become enforceable on the expiry of fifteen
days from the date on which it is so laid; and where no order under sub-
section (2) is made in pursuance of a declaration under the proviso to
sub-section (1), the award shall become enforceable on the expiry of the
period of ninety days referred to in sub- section (2).
(4) Subject to the provisions of sub-section (1) and sub-section (3)
regarding the enforceability of an award, the award shall come into
operation with effect from such date as may be specified therein, but
where no date is so specified, it shall come into operation on the date
when the award becomes enforceable under sub-section (1) or sub-
section (3), as the case may be.]
1[17B. Payment of full wages to workman pending proceedings in
higher Courts.- Where in any case, a Labour Court, Tribunal or National
Tribunal by its award directs reinstatement of any workman and the employer
prefers any proceedings against such award in a High Court or the Supreme
Court, the employer shall be liable to pay such workman, during the period of
pendency of such proceedings in the High Court or the Supreme Court, full
wages last drawn by him, inclusive of any maintenance allowance admissible
to him under any rule if the workman had not been employed in any
establishment during such period and an affidavit by such workman had been
filed to that effect in such Court:
Provided that where it is proved to the satisfaction of the High Court or
the Supreme Court that such workman had been employed and had been
receiving adequate remuneration during any such period or part thereof, the
Court shall order that no wages shall be payable under this section for such
period or part, as the case may be.
18. Persons on whom settlements and awards are binding.- 2[(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) 3[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.]
4[(3) A settlement arrived at in the course of conciliation proceedings
under this Act 5[or an arbitration award in a case where a notification has
been issued under sub-section (3A) of Section 10A] or 6[an award 7[of a
Labour Court, Tribunal or National Tribunal] which has become enforceable]
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, 1[arbitrator,] 2[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) where a party referred to in clause (a) or clause (b) is
composed of workmen, all persons who were employed in
the establishment or part of the establishment, as the case
may be, to which the dispute relates on the date of the
dispute and all persons who subsequently become
employed in that establishment or part.
19. Period of operation of settlements and awards.- (1) A settlement
3[***] 3[***] 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
4[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.
5[(3) An award shall, subject to the provisions of this section, remain in
operation for a period of one year 6[from the date on which the award
becomes enforceable under Section 17A]:
Provided that the appropriate Government may reduce the said period
and
fix such period as it thinks fit:
Provided further that the appropriate Government may, before the expiry
of the said period, extend the period of operation by any period not exceeding
one year at a time as it thinks fit, so, however, that the total period of
operation of any award does not exceed three years from the date on which it
came into operation.
(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 7[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 8[Labour
Court or the Tribunal, as the case may be], on such reference shall 9[***]
be final.

(5) Nothing contained in sub-section (3) shall apply to any award

which by its nature, terms or other circumstances does not impose, after
it has been given effect to, any continuing obligation on the parties bound
by the award.
(6) Notwithstanding the expiry of the period of operation under sub-
section (3), the award shall continue to be binding on the parties until a
period of two months has elapsed from the date on which notice is given
by any party bound by the award to the other party or parties intimating
its intention to terminate the award.
1[(7) No notice given under sub-section (2) or sub-section (6) shall have
effect, unless it is given by a party representing the majority of persons
bound by the settlement or award, as the case may be.]
20. Commencement and conclusion of proceedings.- (1) A
conciliation proceeding shall be deemed to have commenced on the date
on which a notice of strike or lock-out under Section 22 is received by the
conciliation officer or on the date of the order referring the dispute to a
Board, as the case may be.
(2) A conciliation proceeding shall be deemed to have concluded-
(a) where a settlement is arrived at, when a memorandum of
the settlement is signed by the parties to the dispute;
(b) where no settlement is arrived at, when the report of the
conciliation officer is received by the appropriate
Government or when the report of the Board is published
under Section 17, as the case may be; or
(c) when a reference is made to a Court, 2[Labour Court,
Tribunal or or National Tribunal] under Section 10 during
the pendency of conciliation proceedings.
 (3) Proceedings 3[before an arbitrator under Section 10-A or before a
Labour Labour Court, Tribunal or National Tribunal] shall be deemed to
have commenced on the date of the 4[reference of the dispute for
arbitration or adjudication, as the case may be,] and such proceedings
shall be deemed to have concluded 5[on the date on which the award
becomes enforceable under Section 17-A.]
21. Certain matters to be kept confidential.- There shall not be
included in any report or award under this Act any information obtained
by a conciliation officer, Board, Court, 6[Labour Court, Tribunal, National
Tribunal or an arbitrator], in the course of any investigation or inquiry as
to a trade union or as to any individual business (whether carried on by a
person, firm or company) which is not available otherwise than through
the evidence given before such officer, Board, Court, 7[Labour Court,
Tribunal, National Tribunal or an arbitrator], if the trade union, person,
firm or company in question has made a request in writing to the
conciliation officer, Board, Court 8[Labour Court, Tribunal, National
Tribunal, or arbitrator] as the case may be, that such

Sec. 22

information shall be treated as confidential; nor shall such conciliation officer

or any individual member of the Board, 1[or Court or the presiding officer of
the Labour Court, Tribunal or National Tribunal or the arbitrator] or any
person present at or concerned in the proceedings disclose any such
information without the consent in writing of the secretary of the trade union
or the person, firm or company in question, as the case may be:
Provided that nothing contained in this section shall apply to a
disclosure of any such information for the purposes of a prosecution under
Section 193 of the Indian Penal Code (45 of 1860).
CHAPTER-V
STRIKES AND LOCK-
OUTS
22. Prohibition of strikes and lock-outs.- (1) No person employed in
a public utility service shall go on strike in breach of contract-
(a) without giving to the employer notice of strike, as
hereinafter provided, within six weeks before striking; or
(b) within fourteen days of giving such notice; or
(c) before the expiry of the date of strike specified in any such
notice as aforesaid; or
(d) during the pendency of any conciliation proceedings
 before a conciliation officer and seven days after the
conclusion of such proceedings.
(2) No employer carrying on any public utility service shall lock-out
any of his workmen-
(a) without giving them notice of lock-out as hereinafter
provided, within six weeks before locking-out; or
(b) within fourteen days of giving such notice; or
(c) before the expiry of the date of lock-out specified in any
such notice as aforesaid; or
(d) during the pendency of any conciliation proceedings
before a conciliation officer and seven days after the
conclusion of such proceedings.
(3) The notice of lock-out or strike under this section shall not be
necessary where there is already in existence a strike or, as the case may
be, lock-out in the public utility service, but the employer shall send
intimation of such lock-out or strike on the day on which it is declared, to
such authority as may be specified by the appropriate Government either
generally or for a particular area or for a particular class of public utility
services.
(4) The notice of strike referred to in sub-section (1) shall be given by
such number of persons to such person or persons and in such manner as
may be prescribed.
(5) The notice of lock-out referred to in sub-section (2) shall be given
in such manner as may be prescribed.
(6) If on any day an employer receives from any person employed by
him any such notices as are referred to in sub-section (1) or gives to any
persons employed by him any such notices as are referred to in sub-
section (2), he shall within five days thereof report to the appropriate
Government or to such authority as that Government may prescribe, the
number of such notices received or given on that day.

23. General prohibition of strikes and lock-outs.- No workman who

is employed in any industrial establishment shall go on strike in breach of
contract and no employer of any such workman shall declare a lock-out-
(a) during the pendency of conciliation proceedings before a
Board and seven days after the conclusion of such
proceedings;
(b) during the pendency of proceedings before 1[a Labour
Court, Tribunal or National Tribunal] and two months after
 the conclusion of such proceedings; 2[***]
3[(bb) during the pendency of arbitration proceedings before an
arbitrator and two months after the conclusion of such
proceedings, where a notification has been issued under
sub- section (3-A) of Section 10-A; or]
(c) during any period in which a settlement or award is in
operation in respect of any of the matters covered by the
settlement or award.
24. Illegal strikes and lock-outs.- (1) A strike or a lock-out shall be
illegal
if
 (i) it is commenced or declared in contravention of Section 22 or
Section 23; or
(ii) it is continued in contravention of an order made under sub-
section (3) of Section 10 4[or sub-section (4-A) of Section 10-A]
(2) Where a strike or lock-out in pursuance of an industrial dispute has

already commenced and is in existence at the time of the reference of the

dispute to a Board, 5[an arbitrator,] 6[a Labour Court, Tribunal or National
Tribunal], the continuance of such strike or lock-out shall not be deemed to
be illegal, provided that such strike or lock-out was not at its commencement
in contravention of the provisions of this Act or the continuance thereof was
not prohibited under sub- section (3) of Sec.10 7[or sub- section 4(A) of
Section 10-A].
(3) A lock-out declared in consequence of an illegal strike or a strike
declared in consequence of an illegal lock-out shall not be deemed to be
illegal.
25. Prohibition of financial aid to illegal strikes and lock-outs.- No
person shall knowingly expend or apply any money in direct furtherance
or support of any illegal strike or lock-out.
8[CHAPTER V-A
LAY-OFF AND RETRENCHMENT
25A. Application of Sections 25-C to 25-E.- (1) Sections 25-C to 25-E
inclusive 9[shall not apply to industrial establishments to which Chapter V-B
applies,] or
(a) to industrial establishments in which less than fifty
workmen on an average per working day have been
employed in the preceding calendar month; or

(b) to industrial establishments which are of a seasonal

character or in which work is performed only
intermittently.
(2) If a question arises whether an industrial establishment is of a
seasonal character or whether work is performed therein only
intermittently, the decision of the appropriate Government thereon shall
be final
1[Explanation.- In this section and in Sections 25-C, 25-D and 25-E,
“industrial establishment” means-
(i) a factory as defined in clause (m) of Section 2 of the
Factories Act, 1948 (63 of 1948); or
(ii) a mine as defined in clause (f) of Section 2 of the Mines
Act, 1952 (35 of 1952); or
 (iii) a plantation as defined in clause (f) of Section 2 of the
Plantations Labour Act, 1951 (69 of 1951).]
2[25B. Definition of continuous service.- For the purposes of this
Chapter,--
(1) a workman shall be said to be in continuous service for a period if
he is, for that period, in uninterrupted service, including service which
may be interrupted on account of sickness or authorised leave or an
accident or a strike which is not illegal, or a lock-out or a cessation of
work which is not due to any fault on the part of the workman;
(2) where a workman is not in continuous service within the meaning
of clause (1) for a period of one year or six months, he shall be deemed to
be in continuous service under an employer-
(a) for a period of one year, if the workman, during a 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 a
workman employed below ground in a mine; and
(ii) two hundred and forty days, in any other case;
(b) for a period of six months, if the workman, during a period
of six 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) ninety-five days, in the case of a workman
employed below ground in a mine; and
(ii) one hundred and twenty days, in any other case.
Explanation.- For the purpose of clause (2), the number of days on
which a workman 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 (20 of 1946), or under this Act
or under any other law applicable to the industrial
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 and in the course of his
employment; and
 (iv) in the case of a female, she has been on maternity leave;
so, however, that the total period of such maternity leave
does not exceed twelve weeks.]
1[25C. Right of workmen laid off for compensation.- Whenever a
workman (other than a badli workman or a casual workman) whose name is
borne on the muster-rolls of an industrial establishment and who has
completed not less than one year of continuous service under an employer is
laid-off, whether continuously or intermittently, he shall be paid by the
employer for all days during which he is so laid- off, except for such weekly
holidays as may intervene, compensation which shall be equal to fifty per
cent of the total of the basic wages and dearness allowance that would have
been payable to him had he not been so laid-off:
Provided that if during any period of twelve months, a workman is so
laid-off for more than forty-five days, no such compensation shall be payable
in respect of any period of the lay-off after the expiry of the first forty-five
days, if there is an agreement to that effect between the workman and the
employer:
Provided further that it shall be lawful for the employer in any case
falling within the foregoing proviso to retrench the workman in accordance
with the provisions contained in Section 25-F at any time after the expiry of
the first forty- five days of the lay-off and when he does so, any
compensation paid to the workman for having been laid-off during the
preceding twelve months may be set off against the compensation payable for
retrenchment.
Explanation.-”Badli workman” means a workman who is employed in
an industrial establishment in the place of another workman whose name is
borne on the muster rolls of the establishment, but shall cease to be regarded
as such for the purposes of this section, if he has completed one year of
continuous service in the establishment.]
25D. Duty of an employer to maintain muster rolls of workmen.-
Notwithstanding that workmen in any industrial establishment have been
laid- off, it shall be the duty of every employer to maintain for the purposes
of this Chapter a muster-roll, and to provide for the making of entries therein
by workmen who may present themselves for work at the establishment at the
appointed time during normal working hours.
25E. Workmen not entitled to compensation in certain cases.- No
compensation shall be paid to a workman who has been laid off-
(i) if he refuses to accept any alternative employment in the
same establishment from which he has been laid-off, or in
any other establishment belonging to the same employer
situate in the same town or village or situate within a
radius of five miles from the establishment to which he
belongs, if, in the opinion of the employer, such alternative
 employment does not call for any special skill or previous
experience and can be done by the workman, provided
that the wages which would normally have been paid to
the workman are offered for the alternative employment
also;
(ii) if he does not present himself for work at the
establishment at the appointed time during normal
working hours at least once a day;

(iii) if such laying-off is due to a strike or slowing-down of

production on the part of workmen in another part of the
establishment.
25F. Conditions precedent to retrenchment of workmen.- No
workman employed in any industry who has been in continuous service for
not less than one year under an employer shall be retrenched by that
employer until-
(a) the workman has been given one month's notice in writing
indicating the reasons for retrenchment and the period of
notice has expired, or the workman has been paid in lieu of
such notice, wages for the period of the notice:
1[***]
(b) the workman has been paid, at the time of retrenchment,
compensation which shall be equivalent to fifteen days'
average pay 2[for every completed year of continuous
service] or any part thereof in excess of six months; and
(c) notice in the prescribed manner is served on the
appropriate Government 3[or such authority as may be
specified by the appropriate Government by notification in
the Official Gazette.]
4[25FF. Compensation to workmen in case of transfer of
undertakings.- Where the ownership or management of an undertaking is
transferred, whether by agreement or by operation of law, from the employer
in relation to that undertaking to a new employer, every workman who has
been in continuous service for not less than one year in that undertaking
immediately before such transfer shall be entitled to notice and compensation
in accordance with the provisions of Section 25-F, as if the workman had
been retrenched:
Provided that nothing in this section shall apply to a workman in any
case where there has been a change of employers by reason of the transfer, if-
(a) the service of the workman has not been interrupted by
such transfer;
 (b) the terms and conditions of service applicable to the
workman after such transfer are not in any way less
favourable to the workman than those applicable to him
immediately before the transfer; and
(c) the new employer is, under the terms of such transfer or
otherwise, legally liable to pay to the workman, in the
event of his retrenchment, compensation on the basis that
his service has been continuous and has not been
interrupted by the transfer.]
5[25FFA. Sixty days' notice to be given of intention to close down
any undertaking.- (1) An employer who intends to close down an
undertaking shall serve, at least sixty days before the date on which the
intended closure is to become effective, a notice, in the prescribed manner,
on the appropriate Government stating clearly the reasons for the intended
closure of the undertaking:

Sec. 25FFF

Provided that nothing in this section shall apply to-

(a) an undertaking in which -
(i) less than fifty workmen are employed, or
(ii) less than fifty workmen were employed on an
average per working day in the preceding twelve
months,
(b) an undertaking set up for the construction of buildings,
bridges, roads, canals, dams or for other construction work
or project.
(2) Notwithstanding anything contained in sub-section (1), the
appropriate Government may, if it is satisfied that owing to such
exceptional circumstances as accident in the undertaking or death of the
employer or the like it is necessary so to do, by order, direct that
provisions of sub-section (1) shall not apply in relation to such
undertaking for such period as may be specified in the order].
125FFF. Compensation to workmen in case of closing down of
undertaking.- (1) Where an undertaking is closed down for any reason
whatsoever, every workman who has been in continuous service for not less
than one year in that undertaking immediately before such closure shall,
subject to the provisions of sub-section (2), be entitled to notice and
compensation in accordance with the provisions of Section 25-F, as if the
workman had been retrenched:
Provided that where the undertaking is closed down on account of
unavoidable circumstances beyond the control of the employer, the
compensation to be paid to the workman under clause (b) of Section 25-F
shall not exceed his average pay for three months.
2[Explanation.-An undertaking which is closed down by reason merely
of-
(i) financial difficulties (including financial losses); or
(ii) accumulation of undisposed of stocks; or
(iii) the expiry of the period of the lease or licence granted to it;
or
(iv) in a case where the undertaking is engaged in mining
operations, exhaustion of the minerals in the area in which
such operations are carried on,
shall not be deemed to be closed down on account of unavoidable
circumstances beyond the control of the employer within the meaning of the
proviso to this sub- section.]
3[(1-A) Notwithstanding anything contained in sub-section (1), where an
undertaking engaged in mining operations is closed down by reason merely
of exhaustion of the minerals in the area in which such operations are carried
on, no workman referred to in that sub-section shall be entitled to any notice
or compensation in accordance with the provisions of Section 25-F, if-
(a) the employer provides the workman with alternative
employment with effect from the date of closure at the
same remuneration as he was entitled to receive, and on
the same terms and conditions of service as were
applicable to him, immediately before the closure;
(b) the service of the workman has not been interrupted by
such alternative employment; and
(c) the employer is, under the terms of such alternative
employment or otherwise, legally liable to pay to the
workman, in the event of

Sec. 25G

his retrenchment, compensation on the basis that his service

has been continuous and has not been interrupted by such
alternative employment.
(1-B) For the purposes of sub-sections (1) and (1-A), the expressions
“minerals” and “mining operations” shall have the meanings respectively
assigned to them in clauses (a) and (d) of Section 3 of the Mines and
Minerals (Regulation and Development) Act, 1957 (67 of 1957).]
(2) Where any undertaking set-up for the construction of buildings,
bridges, roads, canals, dams or other construction work is closed down on
account of the completion of the work within two years from the date on
which the undertaking had been set up, no workman employed therein shall
be entitled to any compensation under clause (b) of Section 25-F, but if the
construction work is not so completed within two years, he shall be entitled
to notice and compensation under that section for every 1[completed year of
continuous service] or any part thereof in excess of six months.]
25G. Procedure for retrenchment.- Where any workman in an
industrial establishment, who is a citizen of India, is to be retrenched and he
belongs to a particular category of workmen in that establishment, in the
absence of any agreement between the employer and the workman in this
behalf, the employer shall ordinarily retrench the workman who was the last
person to be employed in that category, unless for reasons to be recorded the
employer retrenches any other workman.
25H. Re-employment of retrenched workmen.- Where any workmen
are retrenched and the employer proposes to take into his employ any
persons, he shall, in such manner as may be prescribed, give an opportunity
2[to the retrenched workmen who are citizens of India to offer themselves for
re- employment, and such retrenched workmen] who offer themselves for re-
employment shall have preference over other persons.
25I. [Recovery of moneys due from employers under this Chapter.-
Repealed by the Industrial Disputes (Amendment and Miscellaneous
Provisions) Act, 1956 section 19 w.e.f. 10-3-1957.
25J. Effect of laws inconsistent with this Chapter.- (1) The provisions
of this Chapter shall have effect notwithstanding anything inconsistent
therewith contained in any other law including standing orders made under
the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946):
3[Provided that where under the provisions of any other Act or Rules,
orders or notifications issued thereunder or under any standing orders or
under any award, contract of service or otherwise, a workman is entitled to
benefits in respect of any matter which are more favourable to him than those
to which he would be entitled under this Act, the workman shall continue to
be entitled to the more favourable benefits in respect of that matter,
notwithstanding that he receives benefits in respect of other matters under
this Act.]
(2) For the removal of doubts, it is hereby declared that nothing
contained in this Chapter shall be deemed to affect the provisions of any
other law for the time being in force in any State in so far as that law
provides for the settlement of

industrial disputes, but the rights and liabilities of employers and workmen in
so far as they relate to lay-off and retrenchment shall be determined in
accordance with the provisions of this Chapter.]
1[CHAPTER V-B
SPECIAL PROVISIONS RELATING TO LAY-OFF,
RETRENCHMENT AND CLOSURE IN CERTAIN
ESTABLISHMENTS
25K. Application of Chapter V-B.- (1) The provisions of this Chapter
shall apply to an industrial establishment (not being an establishment of a
seasonal character or in which work is performed only intermittently) in
which not less than 2[one hundred] workmen were employed on an average
per working day for the preceding twelve months.
(2) If a question arises whether an industrial establishment is of a
seasonal character or whether work is performed therein only
intermittently, the decision of the appropriate Government thereon shall
be final.
25L. Definitions.- For the purposes of this Chapter,-
(a) “industrial establishment” means-
(i) a factory as defined in clause (m) of Section 2 of the
Factories Act, 1948 (63 of 1948);
(ii) a mine as defined in clause (j) of sub-section (1) of
Section 2 of the Mines Act, 1952 (35 of 1952); or
(iii) a plantation as defined in clause (f) of section 2 of
the Plantations Labour Act, 1951 (69 of 1951);
(b) notwithstanding anything contained in sub-clause (ii) of
clause
(a) of Section 2,-
(i) in relation to any company in which not less than
fifty- one per cent of the paid-up share capital is
held by the Central Government, or
(ii) in relation to any corporation not being a
corporation referred to in sub-clause (i) of clause
(a) of section 2] established by or under any law
made by Parliament,
the Central Government shall be the appropriate Government.
25M. Prohibition of lay-off.- (1) No workman (other than a badli
workman or a casual workman) whose name is borne on the muster rolls of
an industrial establishment to which this Chapter applies shall be laid-off by
his employer except 3[with the prior permission of the appropriate
Government or such authority as may be specified by that Government by
notification in the Official Gazette (hereafter in this section referred to as the
specified authority), obtained on an application made in this behalf, unless
such lay-off is due to shortage of power or to natural calamity, and in the
case of a mine, such lay-off is due also to fire, flood, excess of inflammable
gas or explosion].
4[(2) An application for permission under sub-section (1) shall be made
by the employer in the prescribed manner stating clearly the reasons for the
intended lay-off and a copy of such application shall also be served
simultaneously on the workmen concerned in the prescribed manner.

(3) Where the workmen (other than badli workmen or casual

workmen) of an industrial establishment, being a mine, have been laid-off
under sub-section (1) for reasons of fire, flood or excess of inflammable
gas or explosion, the employer, in relation to such establishment, shall,
within a period of thirty days from the date of commencement, of such
lay-off, apply, in the prescribed manner, to the appropriate Government
or the specified authority for permission to continue the lay-off.
(4) Where an application for permission under sub-section (1) or
sub- section (3) has been made, the appropriate Government or the
specified authority, after making such enquiry as it thinks fit and after
giving a reasonable opportunity of being heard to the employer, the
workmen concerned and the persons interested in such lay-off, may,
having regard to the genuineness and adequacy of the reasons for such
lay-off, the interests of the workmen and all other relevant factors, by
order and for reasons to be recorded in writing, grant or refuse to grant
such permission and a copy of such order shall be communicated to the
employer and the workmen.
(5) Where an application for permission under sub-section (1) or
sub- section (3) has been made and the appropriate Government or the
specified authority does not communicate the order granting or refusing
to grant permission to the employer within a period of sixty days from the
date on which such application is made, the permission applied for shall
be deemed to have been granted on the expiration of the said period of
sixty days.
(6) An order of the appropriate Government or the specified
authority granting or refusing to grant permission shall, subject to the
provisions of sub- section (7), be final and binding on all the parties
concerned and shall remain in force for one year from the date of such
order.
(7) The appropriate Government or the specified authority may,
either on its own motion or on the application made by the employer or
any workman, review its order granting or refusing to grant permission
under sub-section (4) or refer the matter or, as the case may be, cause it
to be referred, to a Tribunal for adjudication:
 Provided that where a reference has been made to a Tribunal under this
sub-section, it shall pass an award within a period of thirty days from the date
of such reference.
(8) Where no application for permission under sub-section (1) is
made, or where no application for permission under sub-section (3) is
made within the period specified therein, or where the permission for any
lay-off has been refused, such lay-off shall be deemed to be illegal from
the date on which the workmen had been laid-off and the workmen shall
be entitled to all the benefits under any law for the time being in force as
if they had not been laid-off.
(9) Notwithstanding anything contained in the foregoing provisions
of this section, the appropriate Government may, if it is satisfied that
owing to such exceptional circumstances as accident in the establishment
or death of the employer or the like, it is necessary so to do, by order,
direct that the provisions of sub-section (1), or, as the case may be, sub-
section (3) shall not apply in relation to such establishment for such
period as may be specified in the order.]
1[(10) The provisions of Section 25-C (other than the second proviso
thereto) shall apply to cases of lay-off referred to in this section.

Explanation.- For the purposes of this section, a workman shall not be

deemed to be laid-off by an employer if such employer offers any alternative
employment (which in the opinion of the employer does not call for any
special skill or previous experience and can be done by the workman) in the
same establishment from which he has been laid-off or in any other
establishment belonging to the same employer, situate in the same town or
village, or situate within such distance from the establishment to which he
belongs that the transfer will not involve undue hardship to the workman
having regard to the facts and circumstances of his case, provided that the
wages which would normally have been paid to the workman are offered for
the alternative appointment also.
1[25N. Conditions precedent to retrenchment of workmen.- (1) No
workman employed in any industrial establishment to which this Chapter
applies, who has been in continuous service for not less than one year under
an employer shall be retrenched by that employer until,-
(a) the workman has been given three months' notice in
writing indicating the reasons for retrenchment and the
period of notice has expired, or the workman has been
paid in lieu of such notice, wages for the period of notice;
and
(b) the prior permission of the appropriate Government or
 such authority as may be specified by that Government by
notification in the Official Gazette (hereafter in this section
referred to as the specified authority) has been obtained
on an application made in this behalf.
(2) An application for permission under sub-section (1) shall be made
by the employer in the prescribed manner stating clearly the reasons for
the intended retrenchment and a copy of such application shall also be
served simultaneously on the workmen concerned in the prescribed
manner.
(3) Where an application for permission under sub-section (1) has
been made, the appropriate Government or the specified authority, after
making such enquiry as it thinks fit and after giving a reasonable
opportunity of being heard to the employer, the workmen concerned and
the person interested in such retrenchment, may, having regard to the
genuineness and adequacy of the reasons stated by the employer, the
interests of the workmen and all other relevant factors, by order and for
reasons to be recorded in writing, grant or refuse to grant such
permission and a copy of such order shall be communicated to the
employer and the workmen.
(4) Where an application for permission has been made under sub-
section
(1) and the appropriate Government or the specified authority does not
communicate the order granting or refusing to grant permission to the
employer within a period of sixty days from the date on which such
application is made, the permission applied for shall be deemed to have
been granted on the expiration of the said period of sixty days.
(5) An order of the appropriate Government or the specified
authority granting or refusing to grant permission shall, subject to the
provisions of sub- section (6), be final and binding on all the parties
concerned and shall remain in force for one year from the date of such
order.
(6) The appropriate Government or the specified authority may,
either on its own motion or on the application made by the employer or
any workman, review

its order granting or refusing to grant permission under sub-section (3) or

refer the matter or, as the case may be, cause it to be referred, to a Tribunal
for adjudication:
Provided that where a reference has been made to a Tribunal under this
sub-section, it shall pass an award within a period of thirty days from the date
of such reference.
(7) Where no application for permission under sub-section (1) is
 made, or where the permission for any retrenchment has been refused,
such retrenchment shall be deemed to be illegal from the date on which
the notice of retrenchment was given to the workman and the workman
shall be entitled to all the benefits under any law for the time being in
force as if no notice had been given to him.
(8) Notwithstanding anything contained in the foregoing provisions of
this section, the appropriate Government may, if it is satisfied that owing
to such exceptional circumstances as accident in the establishment or
death of the employer or the like, it is necessary so to do, by order, direct
that the provisions of sub-section (1) shall not apply in relation to such
establishment for such period as may be specified in the order.
(9) Where permission for retrenchment has been granted under sub-
section
(3) or where permission for retrenchment is deemed to be granted under
sub- section (4), every workman who is employed in that establishment
immediately before the date of application for permission under this
section shall be entitled to receive, at the time of retrenchment,
compensation which shall be equivalent to fifteen days' average pay for
every completed year of continuous service or any part thereof in excess
of six months.]

1[25O. Procedure for closing down an undertaking.- (1) An employer

who intends to close down an undertaking of an industrial establishment to
which this Chapter applies shall, in the prescribed manner, apply, for prior
permission at least ninety days before the date on which the intended closure
is to become effective, to the appropriate Government, stating clearly the
reasons for the intended closure of the undertaking and a copy of such
application shall also be served simultaneously on the representatives of the
workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to an undertaking
set up for the construction of buildings, bridges, roads, canals, dams or for
other construction work.
(2) Where an application for permission has been made under sub-
section (1), the appropriate Government, after making such enquiry as it
thinks fit and after giving a reasonable opportunity of being heard to the
employer, the workmen and the persons interested in such closure may,
having regard to the genuineness and adequacy of the reasons stated by
the employer, the interests of the general public and all other relevant
factors, by order and for reasons to be recorded in writing, grant or refuse
to grant such permission and a copy of such order shall be communicated
to the employer and the workmen.
(3) Where an application has been made under sub-section (1) and
 the appropriate Government does not communicate the order granting or
refusing to grant permission to the employer within a period of sixty days
from the date on which such application is made the permission applied
for shall be deemed to have been granted on the expiration of the said
period of sixty days.

(4) An order of the appropriate Government granting or refusing to

grant permission shall, subject to the provisions of sub- section (5) be final
and binding on all the parties and shall remain in force for one year from
the date of such order.
(5) The appropriate Government may, either on its own motion or
on application made by the employer or any workman, review its order
granting or refusing to grant permission under sub-section (2) or refer the
matter to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this
sub-section, it shall pass an award within a period of thirty days from the date
of such reference.
(6) Where no application for permission under sub-section (1) is
made within the period specified therein, or where the permission for
closure has been refused, the closure of the undertaking shall be deemed
to be illegal from the date of closure and the workmen shall be entitled
to all the benefits under any law for the time being in force as if the
undertaking had not been closed down.
(7) Notwithstanding anything contained in the foregoing provisions
of this section, the appropriate Government may, if it is satisfied that
owing to such exceptional circumstances as accident in the undertaking
or death of the employer or the like it is necessary so to do, by order,
direct that the provisions of sub-section (1) shall not apply in relation to
such undertaking for such period as may be specified in the order.
(8) Where an undertaking is permitted to be closed down under sub-
section
(2) or where permission for closure is deemed to be granted under sub-
section (3), every workman who is employed in that undertaking
immediately before the date of application for permission under this
section, shall be entitled to receive compensation which shall be
equivalent to fifteen days' average pay for every completed year of
continuous service or any part thereof in excess of six months.] 25P.
Special provisions as to restarting of undertakings closed down
before commencement of the Industrial Disputes (Amendment) Act,
1976.- If the appropriate Government is of opinion in respect of any
undertaking or an industrial establishment to which this Chapter applies
and which closed down before the commencement of the Industrial
 Disputes (Amendment) Act, 1976 (32
of 1976),-
(a) that such undertaking was closed down otherwise than on
account of unavoidable circumstances beyond the control
of the employer;
(b) that there are possibilities of restarting the undertaking;
(c) that it is necessary for the rehabilitation of the workmen
employed in such undertaking before its closure or for the
maintenance of supplies and services essential to the life of
the community to restart the undertaking or both; and
(d) that the restarting of the undertaking will not result in
hardship to the employer in relation to the undertaking,
it may, after giving an opportunity to such employer and workmen, direct, by
order published in the Official Gazette, that the undertaking shall be restarted
within such time (not being less than one month from the date of the order)
as may as specified in the order.
25Q. Penalty for lay-off and retrenchment without previous
permission.-Any employer who contravenes the provisions of Section 25M
or
36 Sec. 25R

1[***] of Section 25-N shall be punishable with imprisonment for a term

which may extend to one month, or with fine which may extend to one
thousand rupees, or with both.
25R. Penalty for closure.- (1) Any employer who closes down an
undertaking without complying with the provisions of sub-section (1) of
Section 25-O shall be punishable with imprisonment for a term which may
extend to six months, or with fine which may extend to five thousand rupees,
or with both.
(2) Any employer who contravenes 2[an order refusing to grant
permission to close down an undertaking under sub-section (2) of Section
25-O or a direction given under Section 25-P] shall be punishable with
imprisonment for a term which may extend to one year, or with fine which
may extend to five thousand rupees, or with both, and where the
contravention is a continuing one, with a further fine which may extend to
two thousand rupees for every day during which the contravention continues
after the conviction.
(3) 3[***]
25S. Certain provisions of Chapter V-A to apply to an industrial
establishment to which this Chapter applies.- The provisions of Sections
25B, 25D, 25FF, 25G, 25H and 25J in Chapter V-A shall, so far as may be,
apply also in relation to an industrial establishment to which the provisions of
this Chapter apply.]
4[CHAPTER V-C
UNFAIR LABOUR
PRACTICES
25T. Prohibition of Unfair Labour Practice.- No employer or
workman or a trade union, whether registered under the Trade Unions Act,
1926 (16 of 1926) or not shall commit any unfair labour practice.
25U. Penalty for committing unfair labour practices.- Any person
who commits any unfair labour practice shall be punishable with
imprisonment for a term which may extend to six months or with fine which
may extend to one thousand rupees, or with both.]
CHAPTER VI
PENALTIES
26. Penalty for illegal strikes and lock-outs.- (1) Any workman who
commences, continues or otherwise acts in furtherance of, a strike which
is illegal under this Act, shall be punishable with imprisonment for a term
which may extend to one month, or with fine which may extend to fifty
rupees, or with both.
 (2) Any employer who commences, continues, or otherwise acts in
furtherance of a lock-out which is illegal under this Act, shall be punishable
with imprisonment for a term which may extend to one month, or with fine
which may extend to one thousand rupees, or with both.
27. Penalty for instigation etc.- Any person who instigates or incites
others to take part in, or otherwise acts in furtherance of, a strike or lock-
out which is illegal under this Act, shall be punishable with imprisonment
for a term
Sec. 33 37

which may extend to six months, or with fine which may extend to one thousand
rupees, or with both.
28. Penalty for giving financial aid to illegal strikes and lock-outs.- Any
person who knowingly expends or applies any money in direct furtherance or
support of any illegal strike or lock-out shall be punishable with imprisonment
for a term which may extend to six months, or with fine which may extend to
one thousand rupees, or with both.
1[29. Penalty for breach of settlement or award.- Any person who commits a
breach of any term of any settlement or award, which is binding on him under this
Act, shall be punishable with imprisonment for a term which may extend to six
months, or with fine, or with both 2[and where the breach is a continuing one, with
a further fine which may extend to two hundred rupees for every day during which
the breach continues after the conviction for the first] and the Court trying the
offence, if it fines the offender, may direct that the whole or any part of the fine
realised from him shall be paid by way of compensation, to any person who, in its
opinion, has been injured by such breach.]
30. Penalty for disclosing confidential information.- Any person who
wilfully discloses any such information as is referred to in Section 21 in
contravention of the provisions of that section shall, on complaint made by or on
behalf of the trade union or individual business affected, be punishable with
imprisonment for a term which may extend to six months, or with fine, which
may extend to one thousand rupees, or with both.]
3[30A. Penalty for closure without notice.- Any employer who closes down
any undertaking without complying with the provisions of Section 25FFA shall be
punishable with imprisonment for a term which may extend to six months, or with
fine which may extend to five thousand rupees, or with both.]
31. Penalty for other offences.- (1) Any employer who contravenes the
provisions of Section 33 shall be punishable with imprisonment for a term which
may extend to six months, or with fine which may extend to one thousand
rupees, or with both.
(2) Whoever contravenes any of the provisions of this Act or any rule made
thereunder shall, if no other penalty is elsewhere provided by or under this Act for
such contravention, be punishable with fine which may extend to one hundred
rupees.
CHAPTER VII
MISCELLANEOUS
32. Offences by companies, etc.- Where a person committing an offence
under this Act is a company or other body corporate, or an association of
persons (whether incorporated or not), every director, manager, secretary,
agent or other officer or person concerned with the management thereof shall,
unless he proves that the offence was committed without his knowledge or
consent, be deemed to be guilty of such offence.

1[33. Conditions of service, etc. to remain unchanged under certain

circumstances during pendency of proceedings.- During the pendency of any
conciliation proceedings before a conciliation officer or a Board or of any
proceeding before 2[an arbitrator or] a Labour Court or Tribunal or National
Tribunal in respect of an industrial dispute, no employer shall,
(a) in regard to any matter connected with dispute, alter, to the
prejudice of the workmen concerned in such dispute, the
conditions of service applicable to them immediately before the
commencement of such proceedings; or
(b) for any misconduct connected with the dispute, discharge or
punish, whether by dismissal or otherwise, any workmen
concerned in such dispute,
save with the express permission in writing of the authority before which the
proceeding is pending.
(2) During the pendency of any such proceeding in respect of an industrial
dispute, the employer may, in accordance with the standing orders applicable to
a workman concerned in such dispute 3[or, where there are no such standing
orders, in accordance with the terms of the contract, whether express or implied
between him and the workman]-
(a) alter, in regard to any matter not connected with the dispute, the
conditions of service applicable to that workman immediately
before the commencement of such proceeding; or
(b) for any misconduct not connected with the dispute, discharge or
punish whether by dismissal or otherwise, that workman:
Provided that no such workman shall be discharged or dismissed, unless he has
been paid wages for one month and an application has been made by the employer
to the authority before which the proceeding is pending for approval of the action
taken by the employer.
(3) Notwithstanding anything contained in sub-section (2) no employer shall,
during the pendency of any such proceeding in respect of an industrial dispute,
take any action against any protected workman concerned in such dispute-
(a) by altering, to the prejudice of such protected workman, the
conditions of service applicable to him immediately before the
commencement of such proceeding; or
(b) by discharging or punishing, whether by dismissal or otherwise
such protected workman,
save with the express permission in writing of the authority before which the
proceeding is pending.
Explanation.- For the purposes of this sub-section, a “protected workman” in
relation to an establishment, means a workman, who being 4[a member of the
executive or other office bearer] of a registered trade union connected with the
establishment, is recognized as such in accordance with rules made in this behalf.
(4) In every establishment, the number of workmen to be recognized as
protected workmen for the purposes of sub-section (3) shall be one per cent of
the total number of workmen employed therein subject to a minimum number
of

five protected workmen and a maximum number of one hundred protected workmen
and for this aforesaid purpose, the appropriate Government may make rules
providing for the distribution of such protected workmen among various trade
unions, if any, connected with the establishment and the manner in which the
workmen may be chosen and recognised as protected workmen.
(5) Where an employer makes an application to a conciliation officer, Board,
1[an arbitrator], a Labour Court, Tribunal or National Tribunal under the proviso
to sub-section (2) for approval of the action taken by him, the authority
concerned shall, without delay, hear such application and pass, 2[within a period
of three months from the date of receipt of such application] such order in
relation thereto as it deems fit]:
3[Provided that where any such authority considers it necessary or expedient
so to do, it may, for reasons to be recorded in writing extend such period by such
further period as it may think fit:
Provided further that no proceedings before any such authority shall lapse
merely on the ground that any period specified in this sub-section had expired
without such proceedings being completed.]
4[33A. Special provision for adjudication as to whether conditions of
service etc. changed during pendency of proceeding.- Where an employer
contravenes the provisions of Section 33 during the pendency of proceedings
5[before a conciliation officer, Board, an arbitrator, a Labour Court, Tribunal or
National Tribunal] any employee aggrieved by such contravention, may make a
complaint in writing 6[in the prescribed manner,-
(a) to such conciliation officer or Board, and the conciliation officer or
Board shall take such complaint into account in mediating in, and
promoting the settlement of, such industrial dispute; and
(b) to such arbitrator, Labour Court, Tribunal, or National Tribunal
and on receipt of such complaint, the arbitrator, Labour Court,
Tribunal or National Tribunal as the case may be, shall adjudicate
upon the complaint as if it were a dispute referred to or pending
before it, in accordance with the provisions of this Act and shall
submit his or its award to the appropriate Government and the
provisions of this Act shall apply accordingly.]
7[33B. Power to transfer certain proceedings- (1) The appropriate
Government may, by order in writing and for reasons to be stated therein, withdraw
any proceeding under this Act pending before a Labour Court, Tribunal, or National
Tribunal and transfer the same to another Labour Court, Tribunal or National
Tribunal, as the case may be, for the disposal of the proceeding and the Labour
Court, Tribunal or National Tribunal to which the proceeding is so transferred may,
subject to special directions in the order of transfer, proceed either de novo or from
the stage at which it was so transferred:

Provided that where a proceeding under Section 33 or Section 33A is pending

before a Tribunal or National Tribunal, the proceeding may also be transferred to a
Labour Court.
(2) Without prejudice to the provisions of sub-section (1), any Tribunal or
National Tribunal, if so authorized by the appropriate Government, may transfer any
proceeding under Section 33 or Section 33A pending before it to any one of the
Labour Courts specified for the disposal of such proceedings by the appropriate
Government by notification in the Official Gazette and the Labour Court to which
the proceeding is so transferred shall dispose of the same.
 1[33C. Recovery of money due from an employer.- (1) Where any money is
due to a workman from an employer under a settlement or an award or under the
provisions of 2[Chapter V-A or Chapter V-B], the workman himself or any other
person authorised by him in writing in this behalf, or, in the case of the death of the
workman, his assignee or heirs may, without prejudice to any other mode of
recovery, make an application to the appropriate Government for the recovery of the
money due to him, and if the appropriate Government is satisfied that any money is
so due, it shall issue a certificate for that amount to the Collector who shall proceed
to recover the same in the same manner as an arrear of land revenue:
Provided that every such application shall be made within one year from the
date on which the money became due to the workman from the employer :
Provided further that any such application may be entertained after the expiry
of the said period of one year, if the appropriate Government is satisfied that the
applicant had sufficient cause for not making the application within the said period.
(2) Where any workman is entitled to receive from the employer any money
or any benefit which is capable of being computed in terms of money and if any
question arises as to the amount of money due or as to the amount at which
such benefit should be computed, then the question may, subject to any rules
that may be made under this Act, be decided by such Labour Court as may be
specified in this behalf by the appropriate Government 3[within a period not
exceeding three months:]
4[Provided that where the presiding officer of a Labour Court considers it
necessary or expedient so to do, he may, for reasons to be recorded in writing,
extend such period by such further period as he may think fit.]
(3) For the purposes of computing the money value of a benefit, the Labour
Court may, if it so thinks fit, appoint a Commissioner who shall after taking such
evidence as may be necessary, submit a report to the Labour Court and the
Labour Court shall determine the amount after considering the report of the
Commissioner and other circumstances of the case.
(4) The decision of the Labour Court shall be forwarded by it to the
appropriate Government and any amount found due by the Labour Court may
be recovered in the manner provided for in sub-section (1).
(5) Where workmen employed under the same employer are entitled to
receive from him any money or any benefit capable of being computed in terms
of money, then, subject to such rules as may be made in this behalf, a
single

application for the recovery of the amount due may be made on behalf of or in
respect of any number of such workmen.
Explanation.- In this section “Labour Court” includes any Court constituted
under any law relating to investigation and settlement of industrial disputes in force
in any State.]
34. Cognizance of offences- (1) No Court shall take cognizance of any
offence punishable under this Act, or of the abetment of any such offence, save
on complaint made by or under the authority of the appropriate Government.
(2) No Court inferior to that of 1[a Metropolitan Magistrate or a Judicial
Magistrate of the first class] shall try any offence punishable under this Act.
35. Protection of persons.- (1) No person refusing to take part or to
 continue to take part in any strike or lock-out which is illegal under this Act shall,
by reason of such refusal or by reason of any action taken by him under this
section, be subject to expulsion from any trade union or society, or to any fine or
penalty, or to deprivation of any right or benefit to which he or his legal
representatives would otherwise be entitled, or be liable to be placed in any
respect, either directly or indirectly, under any disability or at any disadvantage
as compared with other members of the union or society anything to the
contrary in the rules of a trade union or society notwithstanding.
(2) Nothing in the rules of a trade union or society requiring the settlement
of disputes in any manner shall apply to any proceeding for enforcing any right
or exemption secured by this section, and in any such proceeding the Civil Court
may, in lieu of ordering a person who has been expelled from membership of a
trade union or society to be restored to membership, order that he be paid out
of the funds of the trade union or society such sum by way of compensation or
damages as that Court thinks just.
2[36. Representation of parties.- (1) A workman who is a party to a dispute
shall be entitled to be represented in any proceeding under this Act by-
(a) 3[any member of the executive or other office bearer] of a
registered trade union of which he is a member;
(b) 4[any member of the executive or other office bearer] of a
federation of trade unions to which the trade union referred to in
clause (a) is affiliated;
(c) where the worker is not a member of any trade union, by 5[any
member of the executive or other office bearer] of any trade
union connected with, or by any other workman employed in the
industry in which the worker is employed and authorized in such
manner as may be prescribed.
(2) An employer who is a party to a dispute shall be entitled to be
represented in any proceeding under this Act by-
(a) an officer of an association of employers of which he is a
member;

(b) an officer of a federation of associations of employers to which

the association referred to in Clause (a) is affiliated;
(c) where the employer is not a member of any association of
employers, by an officer of any association of employers
connected with, or by any other employer engaged in, the
industry in which the employer is engaged and authorised in such
manner as may be prescribed.
(3) No party to a dispute shall be entitled to be represented by a legal
practitioner in any conciliation proceeding under this Act or in any proceeding
before a Court.
(4) In any proceeding 1[before a Labour Court, Tribunal or National
Tribunal] a party to a dispute may be represented by a legal practitioner with the
consent of the other parties to the proceedings and 2[with the leave of the
Labour Court, Tribunal, or National Tribunal as the case may be.
 3[36A. Power to remove difficulties.- (1) If, in the opinion of the appropriate
Government, any difficulty or doubt arises as to the interpretation of any provision
of an award or settlement, it may refer the question to such Labour Court, Tribunal
or National Tribunal as it may think fit.
(2) The Labour Court, Tribunal or National Tribunal to which such question is
referred shall, after giving the parties an opportunity of being heard, decide such
question and its decisions shall be final and binding on all such parties.]
4[36B. Power to exempt.- Where the appropriate Government is satisfied in
relation to any industrial establishments or undertaking or any class of industrial
establishment or undertakings carried on by a department of that Government that
adequate provisions exist for the investigation and settlement of industrial disputes
in respect of workmen employed in such establishment or undertaking or class of
establishments or undertakings, it may, by notification in the Official Gazette,
exempt, conditionally or unconditionally such establishment or undertaking or class
of establishments or undertakings from all or any of the provisions of this Act.]
37. Protection of action taken under the Act.- No suit, prosecution or other
legal proceeding shall lie against any person for anything which is in good faith
done or intended to be done in pursuance of this Act or any rules made
thereunder.
38. Power to make rules.- (1) The appropriate Government may, subject to
the condition of previous publication, make rules for the purpose of giving effect
to the provisions of this Act.
(2) In particular and without prejudice to the generality of the foregoing
power, such rules may provide for all or any of the following matters, namely:-
(a) the powers and procedure of conciliation officers, Boards, Courts
5[Labour Courts, Tribunals, and National Tribunals] including rules
as to the summoning of witnesses, the production of documents
relevant to the subject-matter of an inquiry or

investigation, the number of members necessary to form a quorum

and the manner of submission of reports and awards;
1[(aa) the form of arbitration agreement, the manner in which it may be
signed by the parties, 2[the manner in which a notification may be
issued under sub-section (3-A) of section 10A] the powers of the
arbitrator named in the arbitration agreement and the procedure to
be followed by him;
(aaa) the appointment of assessors in proceedings under this Act;]
3[(ab) the constitution of Grievance Settlement Authorities referred to
in Section 9C, the manner in which industrial disputes may be
referred to such authorities for settlement, the procedure to be
followed by such authorities in the proceedings in relation to
disputes referred to them and the period within which such
proceedings shall be completed:]
(b) the constitution and functions of and the filling of vacancies in
Works Committees, and the procedure to be followed by such
Committees in the discharge of their duties;
(c) the allowances admissible to members of Court 4[and Boards
and presiding officers of Labour Courts, Tribunals and National
 Tribunals] and to assessors and witnesses;
(d) the ministerial establishment which may be allotted to a Court,
Board, 5[Labour Court, Tribunal or National Tribunal] and the
salaries and allowances payable to members of such
establishment;
(e) the manner in which and the persons by and to whom notice of
strike or lock-out may be given and the manner in which such
notices shall be communicated;
(f) the conditions subject to which parties may be represented by
legal practitioners in proceedings under this Act before a Court,
6[Labour Court, Tribunal or National Tribunal];
(g) any other manner which is to be or may be prescribed.
(3) Rules made under this section may provide that a contravention thereof
shall be punishable with fine not exceeding fifty rupees.
7[(4) All rules made under this section shall, as soon as possible after they are
made, be laid down before the State Legislature or, where the appropriate
Government is the Central Government, before both the Houses of Parliament.]
8[(5) Every rule made by the Central Government under this section shall be 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 9[two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid]

The Industrial Disputes Act, 1947 Schedule 39

both Houses agree in making any modifications 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.]
1[39. Delegation of powers.- The appropriate Government may, by notification
in the Official Gazette, direct that any power exercisable by it under this Act or rules
made there under shall, in relation to such matters and subject to such conditions, if
any, as may be specified in the direction, be exercisable also,--
(a) where the appropriate Government is 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.]
2[40. Power to amend Schedules.- (1) The appropriate Government may, if it
is of opinion that it is expedient or necessary in the public interest so to do, by
notification in the Official Gazette, add to the First Schedule any industry, and on
any such notification being issued, the First Schedule shall be deemed to be
amended accordingly.
(2) The Central Government may, by notification in the Official Gazette, add
 to or alter or amend the Second Schedule or the Third Schedule and on any such
notification being issued, the Second Schedule or the Third Schedule, as the case
may be, shall be deemed to be amended accordingly.
(3) Every such notification shall, as soon as possible after it is issued, be laid
before the Legislature of the State, if the notification has been issued by a State
Government, or before Parliament, if the notification has been issued by the
Central Government.

Unit-4
Ch-5
The Payment of Bonus Act, 1965

Core of the The Payment of Bonus Act, 1965

{Eligibility: any employee who draws salary or wage up to Rs. 21,000 is eligible
for claiming bonus
Bonus calculation purpose: according to the 2015 Amendment, Ceiling amount
( maximum limit ) of Rs. 7000 is considered as wage or salary for calculation of
bonus.
percentage for Calculation of bonus: 8.33% minimum or 20% maximum.}

The Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965 is the principal act for the payment of bonus to the
employees which was formed with an objective for rewarding employees for their
good work for the organization. It is a step forward to share the prosperity of the
establishment reflected by the profits earned by the contributions made by capital,
management and labour with the employees.
1. Objective

To improve statutory liability to pay bonus [reward for good work] in case of profits or
losses.
To prescribe formula for calculating bonus
To prescribe Minimum & Maximum percentage bonus
To provide of set off/set on mechanism
To provide redressal mechanism
This Bonus Act is applicable to every establishment which has over 20 employees on
any given day, in an accounting year.
The conditions which are to be satisfied for the payment of Bonus are:
 An employee has to have worked for at least 30 days in that company.
 According to the Bonus Act, a minimum of 8.33% up to 20% of his basic
(earned) wages is to be paid to the employee.

2. Definitions.

Section(1)
"accounting year" means-
(i) in relation to a corporation, the year ending on the day on which the books and
accounts of the corporation are to be closed and balanced;

(ii) in relation to a company, the period in respect of which any profit and loss account
of the company laid before it in annual general meeting is made up, whether that
period is a year or not;

(iii) in any other case-

(a) the year commencing on the 1st day of April; or

(b) if the accounts of an establishment maintained by the employer thereof are closed
and balanced on any day other than the 31st day of March, then, at the option of the
employer, the year ending on the day on which its accounts are so closed and balanced

(4) "allocable surplus" means-

(a) in relation to an employer, being a company (other than a banking company)]
which has not made the arrangements prescribed under the Income-tax Act for the
declaration and payment within India of the dividends payable out of its profits in
accordance with the provisions of section 194 of that Act, 67% of the available surplus
in an accounting year;

(b) in any other case, 60% of such available surplus;

(11) "corporation" means any body corporate established by or under any Central,
Provincial or State Act but does not include a company or a co-operative society;

(12) "direct tax" means-

(a) any tax chargeable under-

(i) the Income-tax Act;

(ii) the Super Profits Tax Act, 1963 (14 of 1963);
(iii) the Companies (Profits) Surtax Act, 1964 (7 of 1964);
(iv) the agricultural income-tax law; and

(b) any other tax which, having regard to its nature or incidence, may be declared by
the Central Government, by notification in the Official Gazette, to be a direct tax for
the purposes of this Act;

The Payment of Bonus (Amendment) Bill, 2015

Section 2 (13) "employee" means any person (other than an apprentice) employed on
a salary or wage not exceeding 21,000/- rupees per month in any industry to do any
skilled or unskilled manual, supervisory, managerial, administrative, technical or
clerical work for hire or reward, whether the terms of employment be express or
implied; (2007 amendment)

[Employees eligible for bonus: The Act mandates payment of bonus to employees’
whose salary or wage is up to Rs 21,000 per month.]
For calculation purposes Rs.7,000 per month maximum will be taken even if an
employee is drawing up to Rs.7,000 per month. (Sec. 12)

(15) "establishment in private sector" means any establishment other than an

establishment in public sector;

(16) "establishment in public sector" means an establishment owned, controlled or

managed by-

(a) a Government company as defined in section 617 of the Companies Act, 1956 (1 of
1956);

(b) a corporation in which not less than forty per cent of its capital is held (whether
singly or taken together) by-

(i) the Government; or

(ii) the Reserve Bank of India; or
(iii) a corporation owned by the Government or the Reserve Bank of India;

Payment of Bonus Act not to apply to certain classes of employees. [Section 32]
Life Insurance Corporation ,
The Indian Red Cross Society or any other institution of a like nature,
Universities and other educational institutions ,
Institutions (including hospitals, chambers of commerce and society welfare
institutions) established not for purposes of profit,
Employees employed through contractors on building operations,
Employees employed by the Reserve Bank of India,
The Industrial Finance Corporation of India,
Financial Corporations,
the National Bank for Agriculture and Rural Development,
the Unit Trust of India,
the Industrial Development Bank of India,

Eligibility for bonus. [Sec 8] (2007 amendment)

An employee will be entitled only when he has worked for 30 working days in that
year.
Calculation of bonus with respect to certain employees. [Sec 12] (2015
amendment)
Where the salary or wage of an employee exceeds Rs.7,000/- per mensem, the bonus
payable to such employee under Sec.10, or as the case may be, under Sec.11, shall be
calculated as if his salary or wage were Rs.7,000/- per mensem.

The Government has decided to enhance the eligibility limit for payment of bonus
3500/- per month
 Examples of calculation of bonus

 If the Basic salary of the employee is less than or equal to Rs 7,000

Rahul is working as an engineer in a Company in Bangalore. His basic salary is Rs.

6,500 per month.

Formula: Basic Salary*8.33% = Bonus per month

6500*8.33% = 541.45 (6497.4 per annum)

 If the Basic salary of the employee is higher than Rs 7,000

Siddharth is working as a Sales officer in one of the shops in Delhi. His basic salary is
Rs. 18,000 per month.

Formula: Basic Salary*20% = Bonus per month

7,000*20% = 1400 per month

Disqualification for bonus. [Sec 9]

An employee shall be disqualified from receiving bonus under this Act, if he is
dismissed from service for
Fraud; or (b) Riotous or violent behaviour while on the premises of the establishment;
or
Theft, misappropriation or sabotage of any property of the establishment.

Payment of minimum bonus. [Sec 10]

Bonus should be paid along with the salary
Every year, every employer shall be bound to pay bonus to every employee.
a minimum bonus which shall be 8.33% cent of the salary or wage earned by the
employee during the accounting year or 100/- rupees, whichever is higher.
Bonus shall be payable in case of profits or losses in the accounting year.

In Jalan Trading Co. v. Mill Mazdoor Sabha (AIR 1967 SC 691), the Supreme Court
observed that the power of Parliament to fix minimum bonus cannot be questioned,
because the object of the Act is to make an equitable distribution of surplus profits
between the three factors of production.

Section 36 - Power of exemption of bonus payment by government

In certain circumstances payment of minimum bonus can be exempted by the

appropriate government by taking consideration into relevant circumstances of concern
factory or establishment which is in losses. Payment of bonus exemption by the
appropriate government may be given for a certain period only.

In Phoenix Mills v State of Maharashtra, it was held that where the mill applied for
exemption under section 36 and the minister refused such exemption with out taking
into account relevant factors, such order is not a proper order.

Here are the relevant factors may be, the reasons for occurrence of losses to company,
reasons and ingenuity in consecutive occurrence of losses, the reasons must be
justifiable, there should not be intention to avoid payment of bonus by creating fake
losses.

Payment of Maximum Bonus [Sec 11]

In case the allocable surplus amount [Section 2(4)] exceeds the minimum bonus
(8.33%) payable amount to employees, the employer is bound to pay extra percentage
of bonus.
But maximum of 20% of bonus is payable to the every employee on the wage or salary
earned during the year.

Proportionate, reduction in bonus in certain cases [Sec 13]

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

Computation of number of working days. [Sec 14]

An employee shall be deemed to have worked in an establishment in any accounting
year also on the days on which -

(a) He has been laid off

(b) He has been on leave with salary or wage;

(c) He has been absent due to temporary disablement caused by accident arising out of
and in the course of his employment; and

(d) The employee has been on maternity leave with salary or wage, during the
accounting year.
CALCULATIONS FOR BONUS PAYMENT

Computation of gross profits [Sec 4].

There few differences in computation of gross profits in case of banking company and
other than banking companies. For accurate computation of the gross profits in case of
banking companies refer to First schedule and for other companies but not banking
companies refer to Second schedule. But over view for computation of gross profits is
mentioned below

Net profit (P&L a/c) +Add following items

Income tax
provision for: Bonus to employees, Depreciation, Direct taxes,
Bonus paid to employees in respect of previous accounting years
The amount, if any, paid to, or provided for payment to, an approved gratuity fund
The amount actually paid to employees on their retirement or on termination of their
employment for any reason
Donations
annuity due
Capital expenditure (other than capital expenditure on scientific research
capital losses
capital losses (other than losses on sale) of Capital assets on which depreciation has
been allowed for income-tax or agricultural income-tax).
Losses of, or expenditure relating to, any business situated outside India.

Deduct

(a) Capital receipts and capital profits (other than profits on the sale of assets on which
depreciation has been allowed for income-tax or agricultural income-tax).

(b) Profits of, and receipts relating to, any business situated outside India.

(c) Income of foreign concerns from investments outside India.

(d) Expenditure or losses (if any) debited directly to reserves, other than -

i. Capital expenditure and capital losses (other than losses on sale of capital assets on
which depreciation has not been allowed for income-tax or agricultural income-tax) ;

ii. Losses of any business situated outside India.

(e) In the case of foreign concerns proportionate administrative (over head) expenses
of Head Office allocable to Indian business.

(f) Refund of any direct tax paid for previous accounting years and excess provision, if
any, of previous accounting years relating to bonus, depreciation, taxation or
development rebate or development allowance, if written back.

Computation of Available surplus [Section 5]

Available surplus = gross profit [derived as per First Schedule or Second Schedule of
this act] – (minus) Depreciation, investment allowance or development allowance
[Section 6] - (minus) direct taxes payable [Section 7] - (minus) further sums as are
specified in respect of the employer in the Third Schedule of this act consist of
dividend payable (preference shares), reserves and % of paid up equity share capital
[investment].

Allocable surplus [sec 2 (4)]

Allocable surplus= 67% of the available surplus (other than banking companies) or
60% of the available surplus (banking companies and companies linked with abroad)

Payment of bonus calculated on the allocable surplus which is derived by the above
calculation

Set-On and Set-Off Of Allocable Surplus [Sec 15]

Set-On (In case of huge profits,)

Excess allocable surplus remain after paying the maximum bonus of 20% on the wage
or salary of the employee, Should be carried forward to the next following year to be
utilized for the purpose of payment of bonus in case of the shortage of the allocable
surplus or losses occur. This is called as Set-On
Set-Off (in case of losses occur)
When there are no profits (available surplus or allocable surplus) or the amount falls
short or deficiency for payment of minimum bonus to employees 8.33%, such
deficiency amount should be adjusted to the current accounting year from the Set-On
amount which was carried forward in case of excess allocable surplus in the previous
year. This is called as Set-Off.

Special provisions [Sec 16]

In case of new establishments up to 5 years, employees’ bonus is payable only in case
of profits only but not in losses by the management or employer.
Condition that the Profits are remaining amounts after deducting expenses,
depreciation and taxes.
Deduction of certain amounts from bonus payable. [sec 18]
Employee is found guilty of misconduct causing financial loss to the employer, then, it
shall, be lawful for the employer to deduct the amount of loss from the amount of
bonus payable by him to the employee under this Act in respect of that accounting year
only and the employee shall be entitled to receive the balance, if any.

Time limit for payment. [Sec 19]

Bonus should be paid within a period of 8 months from the close of the accounting
year.
Maximum extended period for payment of bonus is 2 years, but with the permission of
the government only

Recovery of bonus due from an employer [Sec 21]

If any amount is due to employee as bonus from his employer, he can write and apply
to the government for the recovery of the bonus from the employer.
application shall be made within one year from the date on which the money became
due to the employee from the employer
Reference of dispute under this Act. [Sec 22]
Where any dispute arises between an employer and his employees with respect to the
bonus payable under this Act such dispute shall be deemed to be an industrial dispute
within the meaning of the Industrial Dispute Act, 1947. All disputes shall be referred to
the Labour courts or the industrial tribunals

Maintenance of registers, records, etc. [Section 26]

Every employer shall prepare and maintain such registers, records and other documents
in such form and in such manner as may be prescribed.
Inspectors. [Sec 27]
The Government may, by notification in the official Gazette, appoint such persons as it
thinks fit to be Inspectors for the purpose of this Act and may define the limits within
which they shall exercise jurisdiction.

Powers;
Inspector can any reasonable time can enter in the premises and inspect or examine the
records, accounts, books, registers and any other documents.
Employer is having duty to furnish any information asked by the inspector.

Offences and Penalties [Sec 28 & 29]

For contravention of the provisions of the Act or rules the penalty is imprisonment
upto 6 months or fine up to Rs.1000, or both.
In case of offences by companies, every person who, at the time the offence was
committed, was in charge of, and was responsible to, the company for the conduct of
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: 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.

Special provision with respect to payment of bonus linked with production or

productivity. [Section 31A]
Any agreements made between the employee and employee regarding the nonpayment
of bonus is not valid. If any such agreement is made in between the employer and
employee, government permission is needed.
Employees are not entitled receive bonus excess than 20% of their wage or salaries

Unit-4
Ch-6
ESI Act 1948
What is ESI Scheme?
Employees’ State Insurance (ESI) Scheme of India is a social security scheme which is
encompassed in the Employees’ State Insurance Act, 1948.

This scheme is designed to provide protection to employees, as defined in the Employees’ State
Insurance Act, against the events of sickness, maternity, disablement and death on account of
employment injury and extend medical care to persons insured under the Act and their families.

In other words, the ESI Scheme helps employees registered under the ESI Act, 1948 during the time
of their inability to work due to sickness, employment injury etc.
This help is extended by providing such employees financial assistance. Such assistance makes up
for the loss of salary for their incapacity to work and provide medical care to them as well as their
family members.

CHAPTER II:

CORPORATION, STANDING COMMITTEE AND MEDICAL BENEFIT

COUNCIL
ESTABLISHMENT OF EMPLOYEES’ STATE INSURANCE CORPORATION. [Section 3]

central government establishes the Corporation to be known as the Employees' State Insurance
Corporation. This corporation will be having following characteristics
separate corporate body.
Having perpetual succession. (no death)
Have a common seal.
Employees' State Insurance Corporation can sue. (file a suit in court on other)
Other can sue Employees' State Insurance Corporation.

THE CORPORATION SHALL CONSIST OF THE FOLLOWING MEMBERS. [Section 4]

(a) Chairman, Vice-Chairman to be appointed by the Central Government;

(b) not more than 5 persons to be appointed by the Central Government;

(c) one person each representing each of the States in which this Act is in force to be appointed by
the State Government concerned;

(d) one person to be appointed by the Central Government to represent the 3Union Territories;

(e) 10 persons representing employers to be appointed by the Central Government in consultation

with such organisations of employers.

(f) 10 persons representing employees to be appointed by the Central Government in consultation

with such organisations of employees.

(g) 2 persons representing the medical profession to be appointed by the Central Government in
consultation with such organisation of medical practitioners.
(h) 3 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

(i) The Director-General of the Corporation ex-officio.

TERM OF OFFICE OF MEMBERS OF THE CORPORATION. [Section 5]

Members referred to in clauses (f), (g), (h) shall be four years, commencing from the date on which
their appointment or election. The members of the Corporation referred to in clauses (a),(b),(c) and
(e)of Sectiontion 4 shall hold office during the pleasure of the government appointing them.

CONSTITUTION OF STANDING COMMITTEE. [Section 8]

Standing Committee of the Corporation shall be constituted from among its members, consisting of

(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 Gazette, specify from time to time;

(c) eight members elected by the Corporation as follows-

(ii) 3 members from among the members of the Corporation representing employers;
(iii) 3 members from among the members of the Corporation representing employees;
(iv) 1 member from among the members of the Corporation representing the medical profession;
and
(v) 1 member from among the members of the Corporation elected by Parliament;

(d) the Director General of the Corporation, ex officio

TERM OF OFFICE OF MEMBERS OF STANDING COMMITTEE. [Section 9]

a member of the Standing Committee shall cease to hold office when he ceases to be a member of
the Corporation.
the term of office of a member of the Standing Committee, other than a member referred to in clause
(a) or clause (b) or clause (bb) of Section 8, shall be two years from the date on which his election.
A member of the Standing Committee referred to in clause (a) or clause (b) or clause (bb) of Section
8 shall hold office during the pleasure of the Central Government.

MEDICAL BENEFIT COUNCIL. [Section 10](2010 AMENDMENT)

(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) one member each representing each of the States

(d) 3 members representing employers to be appointed by the Central Government in consultation

with such organisations of employers.

(e) 3 members representing employees to be appointed by the Central Government in consultation

with such organisations of employees.

(f) 3 members, of whom not less than one shall be a woman, representing the medical profession, to
be appointed by the Central Government.

DUTIES OF MEDICAL BENEFIT COUNCIL. [Section 22]

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;
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
perform such other duties in connection with medical treatment and attendance.

CESSATION OF MEMBERSHIP. [Section 12]

3 members of Parliament of whom 2 shall be members of the House of the People (Lok Sabha) and
one shall be a member of the Council of States (Rajya Sabha) shall cease to be a member of the
Corporation when he ceases to be a Member of Parliament.
Other members Membership of Employees' State Insurance Corporation, Standing Committee or
the Medical Benefit Council will be ended when that person ends representing such employers,
employees, or the medical profession.
Disqualification. [Section 13]

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-
if he is declared to be of unsound mind by a competent court; or
if he is an undischarged insolvent; or
If he a shareholder or a partner of company.
If he has been convicted of an offence involving moral turpitude.

FEES AND ALLOWANCES. [Section 15]

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.
CONTRIBUTIONS

ALL EMPLOYEES TO BE INSURED. [Section 38]

Factory or establishment having more than 10 employees should be insured under the
Employee State Insurance Act

CONTRIBUTION. [Section 39]

 Employer and employer liable for payment of the contribution to the Employee
State Insurance Corporation.

 The rate of contribution paid by employer and employee will be decided by the
central government.

 Currently, the employee’s contribution rate (w.e.f. 1.1.97) is 1.75% of the

wages and that of employer’s is 4.75% of the wages paid/payable in respect of
the employees in every wage period.

 If wage is received every month by employee, the Contribution to the ESI

Corporation should be made by employer and employee every month without
fail.

 @ 12% of interest per year should be paid If employer delays in payment of the
contribution to ESI corporation

PRINCIPAL EMPLOYER TO PAY CONTRIBUTIONS IN THE FIRST

INSTANCE. [Section 40]

 Employer should pay the contribution to ESI Corporation of behalf of his

employee.
  Employer may deduct employee contribution from employee wage for payment
of contribution to ESI Corporation.
 Employer may recover the employee contribution paid from the wage of the
employee which should not exceed the amount equivalent to employer
contribution.
 Employer will become responsible for the payment to the ESI contribution after
deduction of the employee contribution from the employee wage
 Employer should bear the expenses occurred in payment of contributions to the
Corporation.

GENERAL PROVISIONS AS TO PAYMENT OF CONTRIBUTIONS. [Section

42]

 No employee's contribution shall be payable by or on behalf of an employee

whose average daily wages during a wage period are below such wages as may
be prescribed by the Central Government.
 The average daily wages of an employee shall be calculated in such manner as
may be prescribed by the Central Government.

For Andhra Pradesh Employees in receipt of a daily average wage up to Rs.70/- are
exempted from payment of contribution.

METHOD OF PAYMENT OF CONTRIBUTION. [Section 43]

The ESI Corporation can make following rules and regulation in payment and
collection of contributions payable under this Act.

 The manner of payment of contribution

 The time of payment of contribution.
 Fixation of stamps for payment of contribution.
 Benefits distributed in the case of the insured persons by the corporation.
 Maintenance of books and cards of contribution of insured person by ESI
Corporation.
 The issue, sale, custody, production, inspection and delivery of books or cards
and the replacement of books or cards which have been lost, destroyed or
defaced.

EMPLOYERS TO FURNISH RETURNS AND MAINTAIN REGISTERS IN

CERTAIN CASES. [Section 44]

Every principal and immediate employer should submit to the Corporation or to such
officer of the Corporation as it may direct such returns in such form and containing
such particulars relating to persons employed by him.

Every principal and immediate employer shall maintain such registers or records in
respect of his factory or establishment

SOCIAL SECURITY OFFICERS, THEIR FUNCTIONS AND DUTIES.

[SECTION 45] (2010 amendment)
The Corporation may appoint such person as Social Security Officers, as it thinks fit,
for the purposes of this Act. The following are his functions and duties.

 Enquiring into the correctness of any of the particulars stated in any return
referred to in Section 44.
 Social Security Officers can demand any principal or immediate employer to
furnish to him such information as he may consider necessary for the purposes
of this Act.
 Social Security Officers can at any reasonable time enter any office,
establishment, factory or other premises for inspection of examine such
accounts, books and other documents relating to the employment of persons
and payment of wages or to furnish to him such information as he may consider
necessary.
 He can examine the employer, his agent or servant or any person found in such
factory, establishment, and office.
 He can make copies of, or take extracts from, any register, account book or
other document maintained in such factory, establishment, office or other
premises.
 He can do re-inspection whether the records and returns submitted under
Section 44 are correct or not.

[Section 45A] (2010 amendment)

If no records or particular of employed persons are not maintain as required under this
act by the his employer, social Security officer by order, determine the amount of
contributions payable in respect of the employees of that factory or establishment. No
order shall be passed by the Corporation in respect of the period beyond 5 years from
the date on which the contribution shall become payable.

ESI Benefits
The Employees’ State insurance Act, 1948 is one of the most important laws that provide
social security. It contains six kinds of ESI benefits that injured employees can avail. All
of these benefits must arise in the course of employment in order to enable workers to
access them.

ESI Benefits

Section 46 of the Act describes all benefits that an injured employee can avail. It is
important to note that a worker can avail these benefits in the course of employment only.

For example, if a worker suffers an injury, this injury must be an employment injury
only.

Section 2(8) says that an employment injury is a personal injury that an employee suffers.
Such injury must be the result of an accident or occupational disease that arises out of
employment.
Apart from benefits related to injuries and sickness, some ESI benefits can arise after
maternity as well.

The ESI act provides some compensation and financial support to employees during these
periods.

The following are some ESI benefits that employees can avail under the ESI Act

 Medical benefit
 Sickness benefit
 Dependants benefits
 Disablement benefits
 Maternity benefits
 Other benefits

1. Medical benefit

Every insurable employee under the Act gets medical benefits the day he becomes an
employee. This benefit extends to his family members as well. This medical benefit has
no ceiling in terms of expenditure on healthcare.

Hence, the ESI Corporation takes care of all treatment expenses as per its rules.

Apart from general healthcare benefits, retired and permanently disabled workers also get
an annual premium of Rs. 120. This benefit extends to the spouses of the workers as well.

2. Sickness benefit

Insurable employees under the Act can draw some cash compensation in case they fall
sick. This compensation is generally 70% of their wages during the period of sickness
for a maximum of 91 days in a year.

In order to avail this sickness benefit, a worker must pay his contribution for 78 days out
of 6 months. Hence, he cannot seek this benefit if he contributes for less than 78 days.

3. Maternity benefit

All female insurable employees can avail maternity benefits under the Act in cases of
pregnancy or confinement.

Confinement, in this case, means labour which results in the birth of a living child. It can
also mean birth after 26 weeks of pregnancy, whether the child is living or not.

This maternity benefit is generally payable to employees for three months. It may,
however, be extendable for one more month depending on medical advice.
The compensation amount in such cases is the full wage amount of the employees. This is
payable only if the employee makes a contribution for 70 days in the preceding year.

4. Dependants benefits

ESI benefits extend not only to the employees but to their dependents as well in case of
the employee’s death. Such death, however, must occur in the course of an employment
injury or an occupational hazard.

This compensation is generally 90% of the dead employee’s wages in the form of
monthly payments.

5. Disablement benefits

In case an employee suffers some disablement due to an employment injury, he can seek
disablement benefits. Such disablement may be either temporary or permanent.

In the case of temporary disablement, the compensation is generally 90% of the wage
amount until the disablement continues. The employee can claim this benefit irrespective
of whether or not he paid his contribution.

As far as permanent disablement is concerned, the compensation amount depends on 0n

the extent of the injury. The Medical Board first determines the extent of the employee’s
loss of earning capacity and then decides it.

6. Other benefits

Apart from these five basic ESI benefits, an insurable employee can avail the following
miscellaneous benefits also:

a) Funeral expenses: The dependents of a deceased employee receive Rs. 10,000 to

perform his last rites.

b) Vocational/physical rehabilitation: This is generally payable to permanently disabled

employees. They can avail of this benefit for undergoing vocational and physical
rehabilitation.

c) Old age medical care: This is payable for employees retiring on superannuation or
under VRS/ERS. Even persons who leave employment after suffering a permanent injury
and their spouses can avail this benefit. The compensation amount here is generally Rs.
120 per month.

Unit-4
Ch-7
Gratuity Act 1972
Gratuity – Meaning
The term Gratuity has been derived from the term Gratuitous which means present or
gift. It is the amount of money which employer pays to his employee on his
termination as a reward for his past services/employment.

Applicability of the Act [The Payment of Gratuity Act, 1972]

The Act applies to every
Factory
Plantation
Port
Mine
Oil Field
Railway Company
Educational Institutions
And the Act applies to every establishment in which 10 or more employees were
employed on any day of the preceding 12 months. Once the Act become applicable to
an establishment, the Act shall continue to applicable to such establishment even if the
no. of employees falls below 10 at any time in the future.

Eligibility to receive Gratuity

An employee has the right to receive the gratuity amount, if

He is employed in an establishment to which the Act applies(Sec.1);

He is an employee as per Sec. 2(e);
He has been in continuous service for not less than 5 years – subject to some
exceptions;

There is no requirement of continuous service of 5 years, if an employee is terminated

due to death or disablement due to accident or disease. In such a case, the gratuity
amount is payable to the nominee of the employee. Perhaps, if the nominee is a minor
person, then the amount of gratuity payable shall be deposited with the controlling
authority who shall invest the same for the benefits of the minor person, until he/she
attains majority.

If the employee’s services have been terminated due to any misconduct, the employer
has the right to reject payment of Gratuity to the employee. Gratuity is payable only to
the employees and not available for trainees/interns.

What is the maximum amount of gratuity?

The maximum amount of gratuity payable to an employee shall not exceed Rs.
20,00,000,(Amendment done in 2018 from 10 lakh to 20 lakh)

Continuous service
Completed year of service means continuous service for 1 year

If an employee is not in continuous service for 1 year, he shall be deemed to be in

continuous service for 1 year, if he has actually worked for not less than

– 190 days – If the employee was employed below the ground in a mine

– 190 days – If the employee was employed in an establishment which works for less
than 6 days in a week
– 240 days – In any other case.

If an employee is not in continuous service for 6 months, he shall be deemed to be in

continuous service for 6 months, if he has actually worked for not less than

– 95 days – If the employee was employed below the ground in a mine

– 95 days – If the employee was employed in an establishment which works for less
than 6 days in a week

– 120 days – In any other case.

If an employee of a seasonal establishment is not in continuous service of 1 year or 6

months, he shall be deemed to be in continuous service for such period, if he has
actually worked for not less than 75% of the no. of days on which the establishment
was in operation during such period.

While computing the days on which the employee has actually worked, the following
days shall be included:

Laid off period

The days during which he has been on leave with full wages
The days on which the female employee was on maternity leave and the total period of
maternity leave doesn’t exceed 12 weeks.
The days on which he was absent due to temporary disablement caused by an accident
during the course of his employment
Tax treatment of Gratuity
Gratuity can be received either by an employee or by his nominee in the event of death
or disablement of such employee. Gratuity received by an employee is taxable under
the head ” Income from Salaries” and if it is received by the nominee, then it is taxable
under the head “Income from other sources“. If the employee has not made any
nomination, then the legal heir of the deceased employee is eligible for gratuity
amount. Three situations arise for tax treatment of gratuity.

Situation 1: Government Employees

The entire amount of gratuity received by the Govt. employees is exempted from tax.

Situation 2: Employees covered under the Payment of Gratuity Act, 1972

The least of the following amount is exempted from tax

(i) 15 days salary (7 days in case of seasonal employment) based on the last drawn
salary, for each completed year of service. [Last drawn salary* No. of years of
continuous service*15/26]. Salary includes Basic Pay + Dearness Allowance. For the
purpose of computation of last drawn salary, the payment for overtime work should not
be included.

(ii) Rs. 10,00,000

(iii) Actual Gratuity amount received

Determination and Payment of Gratuity
Application for payment of gratuity.
WHO CAN MAKE AN APPLICATION FOR PAYMENT OF GRATUITY?
An employee who is eligible for payment of gratuity
Any person authorized in writing by such employee
Nominee of the employee (if the deceased employee had made nomination)
Legal heir of the employee ( if the deceased employee had not made any nomination)
TO WHOM THE APPLICATION FOR PAYMENT OF GRATUITY SHALL BE
MADE?
The application for payment of gratuity shall be made to an employer.

IN WHICH MANNER THE APPLICATION OF PAYMENT OF GRATUITY

SHALL BE MADE?
It shall be made in writing
It shall be made within 30 days from the date of gratuity becomes payable
If the date of superannuation or retirement is known in advance, the employee may
apply to the employer before 30 days of date of superannuation or retirement
DETERMINATION OF AMOUNT OF GRATUITY PAYABLE
As soon as the gratuity becomes payable, the employer has to ascertain the amount of
gratuity payable
The employer has to give notice to the person to whom the gratuity is payable and to
the controlling authority irrespective of the fact that the application for payment of
gratuity has been made or not.
And the notice must contains the amount of gratuity payable which is determined by
the employer
WHAT IS THE TIME LIMIT FOR PAYMENT OF GRATUITY?
The gratuity shall be payable within 30 days from the date of due. If the employer fails
to pay within 30 days, then he shall be liable to pay simple interest at the rate specified
by CG from time to time. But there are some exceptions to this case

If the delay in payment is due to the fault of the employee; and

The employer has obtained permission in writing from the controlling authority for
delayed payment on such ground.
If the above two conditions are satisfied, then the employer is not liable to pay any
interest.

Disputes as to gratuity
In case of dispute, the employer shall deposit with the controlling authority, such
amount as he admits to be payable by him. The controlling authority shall hold an
inquiry. Thereafter, the controlling authority shall determine the gratuity payable. If
any shortfall, the employer has to pay the balance amount.

APPEAL AGAINST THE ORDER OF CONTROLLING AUTHORITY

Any person aggrieved by an order of the controlling authority may prefer an appeal
against the order. The appeal may be filed within 60 days of receipt of the order of the
controlling authority. A further period of 60 days can be availed, if the applicant was
prevented by sufficient cause from filing the appeal against the controlling authority.

Appeal shall not be permitted unless the employer has deposited with the controlling
authority a sum of money equal to the amount of gratuity determined by the controlling
authority. Thereafter, the appellate authority may confirm, modify or reverse the
decision of the controlling authority.
 Recovery of gratuity
If the employers fails to pay the gratuity amount within 30 days, the controlling
authority is empowered to issue a certificate to the collector to recover the amount of
gratuity. The employer also liable to pay compound interest at the rate notified by the
Govt. However, the interest shall not exceed the amount of gratuity payable. The
gratuity so recovered shall be paid to the person entitled to payment of gratuity.

Nomination
Compulsory Nomination: Every employee who has completed 1 year of service is
compulsorily required to make a nomination. It must be made within 30 days of
completion of 1 year of service.

Nominee: If, at the time of making nomination, the employee has a family, then the
nomination must be made in favor of one or more members of the family(nomination
shall be void if it is made to 3rd parties who are not the members of the family. If , at
the time of making nomination, the employee doesn’t have a family, then the
nomination may be made in favor of other person. But if subsequently, the employee
acquires a family, then the nomination in favor of other person will be void and the
employee should make a fresh nomination within 90 days in favor of one or more
members of the family. If the nominee dies, then the employee shall make a fresh
nomination.

Modification of Nomination: The employee, at any time, may modify his nomination
at any time. For this purpose, the employee shall give a written notice to his employer.

Compulsory Insurance: Every employer shall take insurance against his liability
towards the payment of gratuity. The insurance shall be taken from LIC or any other
prescribed insurance company. However, the establishment belonging to or under the
control of Govt.(Both Central and State) are exempted from taking compulsory
insurance.

Exemptions: The exemptions may be given by AG(Appropriate Govt.). It can be given

only by way of notification in the Official gazette. It may be given from the operations
of all or any of the provisions of the Act. But, the conditions for exemptions is that the
employees are in receipt of gratuity not less favorable than the benefits provided under
the Act.
Calculation of payment of gratuity amount
Category 1: Employees covered under the Act
Example: If you had been drawing Rs 80,000 as your last basic salary with 10 years 4
months of employment tenure, then the gratuity amount you will receive as per the
formula is:

Gratuity = Rs 80,000 x (15/26) x 10 = Rs 4.62 lakhs

The 4 months is below 5, so is rounded off to 10. Months more than 5 are rounded off
to the next year.
 Category 2: Employees not covered under the Act
You can be paid a gratuity even if the organization is not covered under the Act. If that
is the case, the number of working days in a month changes to 30 days instead of 26
days.

Gratuity = Last drawn salary x (15/30) x Number of years of service

In the above example, if your organization is not covered under the Act, then the
calculation will be as follows –

Gratuity = Rs 80,000 x (15/30) x 10 = Rs 4.00 lakhs

The Payment of Gratuity Act, 1972 – Sections

Sections

Descriptions

Sec. 1 Applicability of the Act

Sec. 2 Definitions
Sec. 2(a) Appropriate Government
Sec. 2(h) Family
Sec. 2(g) Factory
Sec. 2(e) Employee ( As amended by the Payment of Gratuity (Amendment) Act,
2009 w.r.e.f. 03-04-1997
Sec. 2(f) Employer
Sec. 2(s) Wages
Sec. 2(r) Superannuation
Sec. 2(q) Retirement
Sec. 2(d) and 3 Controlling Authority
Sec. 2(A) Continuous service
Sec. 4 Eligibility for, and Amount of, Gratuity
Sec. 4(6) Reduction and Forfeiture of Gratuity
Sec. 7 Determination and Payment of Gratuity
Sec. 8 Recovery of Gratuity
Sec. 6 Nomination
Sec. 13Protection of Gratuity
Sec. 13A Validation of Payment of Gratuity
Sec. 4A Compulsory Insurance
Sec. 5 Exemption from Provisions of the Act
Sec. 7A and 7B Inspectors

Unit-4

ch-8

Minimum Wages Act 1948

It came to bring equality and justice to the blue-collar people. Pay fixing experts were
guided by the standards recommended by the Fair Wage Committee in the settlement of
issues identifying with wage problems in organized industries.
The Fair wage committee explained the core of minimum wages, but they didn’t say how
to evaluate the minimum wage. The 15th session of the Indian Labor Conference
explained the necessary physical requirements and health maintenance of the labors.

Scope and Objective of the Minimum Wages Act

1. To safeguard that the employee has a basic physical necessity, proper health,
and comfort.
2. Ensure that the labor gets fair wages.
3. To ensure that the labor lives a decent life and have a respectable name in
society.

Criteria for Fixing Minimum Wages

According to section 3 of the Minimum Wages Act 1948 “The Appropriate

Government” will fix minimum wages. Appropriate Government can include local, State
and Central Government. This section sets the rate according to hours, days, months or
any other wage period may be prescribed.

The rates to be fixed need not be uniform. Diverse rates can be fixed for various zones or
areas. If the wages are fixed according to section 4 of the Payment of the Wages Act,
1936, the fixing will be done according to the Act.

Minimum Wages are fixed according to the following criteria

1. Time Rate – The minimum rate is fixed according to the duration of the work
done by the labor.
2. Piece Rate – Here the minimum wage is fixed by the total number of pieces
manufactured in the factory.
3. Overtime Rate – Here the minimum rate is fixed by the overtime done by the
labor regardless of the time or piece rate.

Wage Committee

A wage committee shall be formed by the appropriate government, which shall consist of
members from both the employer and employee side. Therefore, an independent person
with having no interest in the employment scheme shall be appointed as the chairman of
the wage committee. The appointment process in the Minimum Wages Act is made in
this way so that there is no scope of discrimination to the labors.

Advisory Board

Section 7 of the Minimum Wages Act, the Advisory Board, which proposes
recommendations and changes to be brought in labor laws. The advisory board proposes a
recommendation to the State and Central Government in fixing the minimum wages.

According to Section 9 of the Act, it talks about the appointment of committees and
subcommittees. The included members are:
1. A person appointed by the Appropriate Government.
2. Employers and employees, who belong to the scheduled employment and they
shall be equal in number.
3. Independent persons and they shall not exceed one-third of the total number of
members. An independent person will be appointed as chairman of the committee.

Wages in Kind

Section 11 says that the wages shall be paid in cash. If somewhere, the payment is done
either wholly or partly and if it is a customary process, then in that the case, the
government through a notification in the official gazette shall enforce the payment partly
or wholly.

Sec 4. Minimum rate of wages

(1) Any minimum rate of wages fixed or revised by the appropriate government in
respect of scheduled employments under 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 workers (hereinafter referred to as the "cost of living allowance"); or

(ii) a basic rate of wages with or without the cost of living allowance and the cash
value of the concessions in respect of suppliers of essential commodities at concession
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.

(2) The cost of living allowance and the cash value of the concessions in respect of
supplied of essential commodities at concession rate shall be computed by the
competent authority at such intervals and in accordance with such directions as may be
specified or given by the appropriate government.

Sec-5. Procedure for fixing and revising minimum wages

(1) In fixing minimum rates of wages in respect of any scheduled employment for the
first time under this Act or in revising minimum rates of wages so fixed the appropriate
government shall either –

(a) 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 or

(b) 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 two months from
the date of the notification on which the proposals will be taken into consideration.

(2) After considering the advice of the committee or committee appointed under clause
(a) of sub-section (1) or as the case may be all representations received by it before the
date specified in the notification under clause (b) of that sub-section the appropriate
government shall by notification in the Official Gazette fix or as the case may be revise
the minimum rates of wages in respect of each scheduled employment and unless such
notification otherwise provides it shall come into force on the expiry of three months
from the date of its issue.

Sec -14. Overtime

(1) Where an employee whose minimum rate of wages is fixed under this Act by the
hour by the day or by such a 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 for part of an hour so worked in excess at the overtime
rate fixed under this Act or under any law of the appropriate government for the time
being in force whichever is higher.

(2) Nothing in this Act shall prejudice the operation of the provisions of section 59 of
the Factories Act 1948 (63 of 1948) in any case where those provisions are applicable.

Comment: "Overtime under Section 14 is payable to those employees who are getting
a minimum rate of wage as prescribed under the Minimum Wages Act, 1948. These
are the only employees to whom overtime under Section 14 would become payable. In
the present case the respondents cannot be described as employees who are getting a
minimum rate of wages fixed under the Minimum Wages Act, 1948. They are getting
much more and that too under the Madhya Pradesh Municipal Service (Scales of Pay
and Allowances) Rules, 1967. Therefore, Section 14 has no application to them. We
have not been shown any other provision under which they can claim overtime"
Municipal Council, Hatta v. Bhagat Singh. AIR 1998.

Sec 15. Wages of worker who works for less than normal working day

If an employee whose minimum rate of wages has been fixed under this Act by the day
works on any day on which he was employed for a period less than the requisite
number of hours constituting a normal working day he shall save as otherwise
hereinafter provided be entitled to receive wages in respect of work done by him on
that day as if he had worked for a full normal working day :

Provided however that he shall not be entitled to receive wages for a full normal
working day –

(i) in any case where his failure to work is caused by his unwillingness to work and not
by the omission of the employer to provide him with work and

(ii) in such other cases and circumstances as may be prescribed.

Sec -16. Wages for two or more classes of work

Where an employee does two or more classes of work to each of which a different
minimum rate of wages is applicable the employer shall pay to such employee in
respect of the time respectively occupied in each such class of work wages at not less
than the minimum rate in force in respect of each such class.
Sec -17. Minimum time rate wages for piece work

Where an employee is employed on piece work for which minimum time rate and not a
minimum piece rate has been fixed under this Act the employer shall pay to such
employee wages at not less than the minimum time rate.

Sec -18. Maintenance of registers and records

(1) Every employer shall maintain such registers and records giving such particulars of
employees employed by him the work performed by them the wages paid to them the
receipts given by them and such other particulars and in such form as may be
prescribed.

(2) Every employer shall keep exhibited in such manner as may be prescribed in the
factory workshop or place where the employees in the scheduled employment may be
employed or in the case of out-workers in such factory workshop or place as may be
used for giving out work to them notices in the prescribed form containing prescribed
particulars.

(3) The appropriate government may by rules made under this Act provide for the issue
of wage books or wage slips to employees employed in any scheduled employment in
respect of which minimum rates of wages have been fixed and prescribed to manner in
which entries shall be made and authenticated in such wage books or wage slips by the
employer or his agent.

Consequences of Non – Compliance

Non- compliance of the Minimum wages act, i.e not paying minimum wages is a
culpable offense. Hence, violation of fixing hours also attracts the penal provision.

Imprisonment up to 5 years and a fine up to 10,000 is the maximum punishment that can
be awarded. Section 22 of the Act defines the sanctions.

Unit-4
Ch-9
Provident fund Act- 1952
Provident fund is a welfare scheme for the benefits of the employees. Under this
scheme both the employee & employer contribute their part but whole of the amount is
deposited by the employer. Employer deducted the employee share from the salary of
the employee. The interest earned on this investment is also credited in pf account of
the employees. At the time of retirement, the accumulated amount is given to the
employees, if certain conditions are satisfied.

Applicability of the Act

It is applicable:
a) Every factory engaged in any industry specified in Schedule 1 in which 20 or more
persons are employed;
b) Every other establishment employing 20 or more persons or class of such
establishments which the Central Govt. may notify;
c) Any other establishment so notified by the Central Government even if employing
less than 20 persons.
Every employee, including the one employed through a contractor (but excluding an
apprentice engaged under the Apprentices Act or under the standing orders of the
establishment and casual laborers), who is in receipt of wages up to Rs.6,500 p.m.,
shall be eligible for becoming a member of the funds. The condition of three months’
continuous service or 60 days of actual work, for membership of the scheme.
What is EPFO?
Employees Provident Fund and Miscellaneous Provisions Act, 1952 is administered by
the Employees Provident Fund Organization (EPFO). EPFO is a statutory organization
that comes under the supervision of the Ministry of Labor Government of India.

Further, EPFO is governed by a Central Board of Trustees that consists of the

representatives from employees, employers and central or state government.

Three Important Components of EPF Act:

1: Employee Provident Fund, 1952(EPF):This scheme aims to promote retirement
savings.
2. Employee Pension Scheme, 1995 (EPS): This scheme aims to provide post
retirement pension.
3. Employee Deposit Linked Insurance Scheme, 1976 (EDLI): This scheme gives
life insurance to family members in case of sudden death.
Some Important Key Points:
1. For every employee, it is mandatory to contribute towards EPF and EPS if his/her
wages (Basic + DA) are under Rs. 15,000. If an employee is drawing wages over
15,000 per month, then he can ask for PF deductions from his salary. Those earning a
basic salary of more than Rs 15,000 a month will now contribute 10 per cent instead of
the mandatory 12 per cent contribution towards the PF for the next 3 months till
August 2020. Also, the contribution of the employer will be reduced to 10 per cent
from 12 per cent.
2. Both the employees and employers contribute 12%of the basic wages and dearness
allowance to the provident fund (PF) account. Thus, the total contribution to the PF
is 24% per month.
3. In the EPF account, entire 12%is contributed by the employee, while 3.67% is
contributed by the employer. The employer’s remaining contribution of 8.33% is
diverted to the Employee’s Pension Scheme. It is important to note that if the
employee salary exceeds Rs. 15000, the employer’s contribution towards EPS is
restricted to 8.33% of Rs 15000 per month.
4. Currently, Employee provident fund interest rate is 55% per annum (w.e.f. Feb
2018). The interest is decided by the Government with the consultation of Central
Board of Trustees of the EPFO.
5. The EPF also offers the nomination facility. An employee can nominate his mother,
father, spouse or children who are entitled to receive EPS money in the event of the
death of an employee. However, an employee cannot nominate his brother and
sister for EPF.
6. The employer also makes 0.50% of contribution towards the EDLI (Employees’
Deposit Linked Insurance) account of the employee.
7. The employer has to pay an additional charge for administrative accounts at a rate of
0.50% with effect from 1st June 2018. The minimum administrative charge is ₹ 500
and if there is no contribution for a specific month, the employer has to pay a fee of ₹
75 for that month.
EPF withdrawals Rules:
1. EPF can be completely withdrawn under any of the following circumstances:
a. When an individual retires from employment
b. When an individual remains unemployed for a period of 2 months or more
Note:
1. Individual is unemployed for more than 2 months has to be certified by a gazetted
officer.
2. Complete withdrawal of EPF while switching over from one job to another without
remaining unemployed for 2 months or more(i.e. During the interim period between
changing jobs), will be against the PF rules and regulations and therefore illegal.
2. Partial withdrawal of EPF can be done under certain circumstances and
subject to certain prescribed conditions which have been discussed in brief below:

Sl Particulars Limit for No of years Conditions

No of reason withdrawal of service
for criteria
withdrawal

Marriage Up to 50% of 7 years For the marriage of

1 employee’s share self, son/daughter,
of contribution to brother/sister
EPF

Education Upto 50% of 7 years For the education of

2 employee’s share either himself or his
of contribution to children after class
EPF 10

Purchase of For land – upto 24 5 years The asset i.e. land or

3 land / times of monthly the house should be
purchase or wages plus in the name of the
construction Dearness employee or spouse
of a house allowance or Jointly.
For house – upto
36 times of
monthly wages
plus Dearness
allowance

i. The property
should be registered
Upto a maximum in the name of the
Home loan of 90 %, from both 10 years employee or spouse
Sl Particulars Limit for No of years Conditions
No of reason withdrawal of service
for criteria
withdrawal

4 repayment employee’s or jointly

contribution and ii. Withdrawal
employer permitted subject to
contribution in furnishing of
Employee requisite documents
Provident Fund. as called for by the
EPFO relating to the
housing loan
availed,
iii. The
accumulation in the
member’s PF
account (or together
with the spouse),
including the
interest, has to be
more than Rs
20,000.

Renovation Up to 12 times of 5 years The property should

5 of house the monthly wages be registered in the
name of the
employee or spouse
or jointly.

A little Upto 90% of Once he For himself

6 before accumulated reaches 57
retirement balance with years ( as
interest per recent
amendment)
Tax Benefits:
1. The employer contribution to employee EPF is tax-free,
2. Employee contribution is tax-deductible under Section 80Cof the Income Tax
Act.
3. The money invested by employee in EPF, the interest earned and the money
eventually withdraw, by employee after the mandatory specified period (5
years) are exempt from Income Tax.

Post retirement benefits of EPF:

– Upon retirement, the employee receives the full amount in his EPF account.
– The employee also receives his/her pension from the EPS account provided that the
employee has completed over 10 years of service.
Unit-4

Ch-10

Introduction to The industrial Relations code 2019

As a part of the labour reform initiative, the labour ministry has decided to amalgamate
44 labour laws into four codes: (i) code on wages, (ii) code on industrial relations, (iii)
code on social security and safety, and (iv) code on health and working conditions.

The Code on Industrial Relations Bill, 2019 (IR Code), which aims to streamline
industrial relations and help India improve its ease of doing business index, was
introduced in the Lok Sabha by the Minister of Labour and Employment, Mr. Santosh
Kumar Gangwar, on November 28, 2019. The Union Cabinet chaired by the Prime
Minister, Mr. Narendra Modi, has given its approval for the introduction of the IR
Code in the Parliament. The IR Code is the third of four labour codes to receive the
approval from the Cabinet. It was subsequently referred to the Standing Committee on
December 23, 2019. The report by the Standing Committee is due in three months
from the date of referral i.e., by March 2020.

The IR Code seeks to amalgamate, simplify and rationalize the provisions of 3 central
enactments relating to industrial relations: (i) the Trade Union Act of 1926; (ii) the
Industrial Disputes Act of 1947; and (iii) the Industrial Employment (Standing Orders)
Act of 1946 (collectively, the "Enactments"). The Statement of objects and reasons of
the IR Code states that amalgamation of the three Enactments would "facilitate the
implementation and also remove the multiplicity of definitions and authorities without
compromising on the basic concepts of welfare and benefits to workers".

Key Features and Analysis

Under the IR Code, a trade union can be registered if seven or more members of a
trade union apply for registration. Trade unions having a membership of at least 10%
of the workers or 100 workers, whichever is less, will be registered. The central or
state governments are accorded the discretion to recognize a trade union or a federation
of trade unions as Central or State Trade Unions respectively.

The IR Code also provides for a negotiation union in an industrial establishment, for
carrying out negotiations with the employer. In the event an industrial establishment
has only one trade union, the employer is mandated to recognize such trade union as
the sole negotiating union of the workers. Where multiple trade unions exist, the trade
union with the support of at least 75% of the workers will be recognized as the
negotiating union by the central or state government.

The IR Code prohibits employers, workers and trade unions from committing any
unfair labour practices, as more particularly set out in Schedule 2 of the IR Code. This
Schedule 2, inter alia, includes: (a) restricting workers from forming trade unions, (b)
establishing employer sponsored trade union of workers, (c) coercing workers to join
trade unions, etc. Further, the definition of "strike" has been amended under the IR
Code to include "mass casual leave" within its ambit, and a requirement of providing a
14 days' notice for strikes and lockouts in any establishment has been inserted.

The IR Code mandates every industrial establishment with a minimum of 100 workers
to prepare standing orders on certain matters, as more particularly set out in Schedule 1
of the IR Code. The central government is given the onus to prepare model standing
orders on such matters basis which, every industrial establishment is required to
prepare standing orders for their respective establishment. These matters, inter alia,
relate to: (a) classification of workers, (b) manner of providing information to the
workers regarding working hours, holidays, pay days and wage rates, (c) termination
of employment, (d) suspension for misconduct, (e) grievance redressal mechanism for
workers, etc.

Under the IR Code, lay-off is defined as the inability of an employer, due to shortage
of coal, power, or breakdown of machinery, from giving employment to a worker. It
also provides for the employers to terminate the services of a worker i.e., retrenchment.
Employers of industrial establishments such as mines, factories and plantations with at
least 100 workers are mandatorily required to take prior permission of the central or
state government before lay-off, retrenchment or closure. The central or state
government, via issue of a notification, can modify the abovementioned threshold of
100 workers. A fine of INR 1,00,000, which may extend up to INR 10,00,000, is
leviable on any person who contravenes this provision.