Unit 1:

Industrial Jurisprudence

A new branch of jurisprudence began to emerge during the evolution of the 20th Century called
‘Industrial Jurisprudence’. The development in industrial relations began back during the Industrial
Revolution and was at boom during the post-independence period. Increased labour and industrial
legislation are proof of the growth and evolution of industrial jurisprudence. The judiciary has also
played a significant role in deciding upon the matters of industrial relations. The jurisprudence has
shaped and shifted the belief of master-servant to industrial relations. Restraints have been laid
down on the employer’s sole will to remove an employee. The hiring and firing process of employees
is now subjected to many conditions to safeguard the interests of employees as well. The revolution
has been seen in the concept of, the one who invests money is no more a master and the one who
puts in the labour is no more a servant. The employer may hire the employee but cannot fire solely
on his will. The laws are aimed at protecting the rights of the labour and workers. The industries are
moving from the contract to status and status means the political, social, and economic juristic
status.

It was after independence that industrial jurisprudence took its shape and changed the attitude of
the government towards the working class. Industrial jurisprudence plays a vital role in shaping the
developed and developing country’s industries. It contains an exhaustive study of human relations
and problems arising from the large-scale development of factories. Since independence in 1954, the
need to bring the labour policy was highly felt. The policy shall focus on the self-reliance of workers.
On the other hand, the Industrial Revolution was also taking place resulting in the growth of the
factory system and varying circumstances of the labour system.

Labour history and policy in India

One must have witnessed the iconic Amitabh Bachchan in the movie Kaala Patthar, where coal
workers were exploited by the contractors and no one came to their aid unless Amitabh Bachchan
revolted. Fortunately, in the 21st century, there is a belief that we have developed safety valves for
our workforce to protect them from tyranny. This article will take you through the development of
labour law and its eventual evolution.

What are Labour Laws

Labour laws are a set of laws that govern the rights and liabilities of persons employed in an
organization and that of the organization as well. They act as a medium between workers,
organizations, and the collectivity of workers i.e trade unions. They can be divided into two
categories, one that governs the relationship between the employer, employee, and the trade
unions; and the second deals with the individual rights of employees. They define rights and
liabilities of workers, trade unions, and employers as well, Labor law entails within its ambit the
following:

 Industrial relations – This covers within its ambit the unfair labor practices and working of
trade unions.

 Workplace safety – This covers the safety requirements and redressal mechanisms in case of
any untoward incident.

 Employment standards – This covers the layoff procedures, working hour regulations,
minimum wages including a provision regarding leaves.
Requirement of Labour Law

Labour law works on a basic premise that industries are promoters of development and it is in the
best interest of the nations to let them function in a congenial environment, but on the flip side
protection of the nation’s workforce is the sole responsibility of the nation’s governments. Labour
laws are also required to assure the workers that their interests will be protected in case of
infringement of their rights.

History of Labour Laws

Labour laws can be traced back to varied parts of the world. European scholars laid emphasis on the
importance of the guilds and apprenticeship systems prevalent in medieval times. On the other
hand, Asian scholars trace labour laws back to the Babylon code (18th century BCE); and on the laws
of the Manu as well, Meanwhile American authors guide us towards the law of the Indies enunciated
in Spain in the 17th century for its ramping society.

They were developed as the result of the industrial revolution during the 18th century. It became
essential to stop the unfair treatment meted out to the workers, as the rate at which the industries
were going at the cost of labour was a disaster, on the flip side with the french revolution in the
picture, society was moving towards social justice so as the cumulative result of conflict, labour laws
were brought in the 18th century, but in the true sense, they received acceptance in the 20th
century.

Deliberations are undertaken by countries to establish effective Labor Laws

Britain – Whitley commission advocated for industrial councils to be set up throughout the world. A
conference was held in February 1918 attended by the delegates of Britain, France, Belgium, and
Italy which championed the cause for establishing an International labour rights body and easing the
diplomatic procedure to benefit the labour.

America – American Federation of Labor published an apolitical report that advocated for
strengthening the collective bargaining process and improving the lives of persons currently engaged
in industries.

The build-up to the International Labour Organization

At the end of WWI, two viewpoints emerged to make amends for the future. The International
Federation of Trade Unions (IFTU) called for a meeting in Berne and it advocated changes for the
future and had a look at the changes that were made in the past. The Americans boycotted this
meeting, however, some consensus was achieved and certain demands such as ending wage labour
and establishing socialism, along with these demands the IFTU also advocated for establishing an
international body associated with the league of nations that would enforce labour legislation
around the world.

The British advocated for establishing an international parliament that would help in the
implementation of labour laws in countries associated with the league of nations. Each nation would
be represented by two of its delegates in the parliament. An office would be created to collect data
on labour issues. Some of the members from the American side were not convinced about the
concept of labour office and recommended that the office should only be empowered to make
recommendations and enforcement should be the forte of the league of nations. The British
vehemently opposed this idea, but the American proposal was adopted. The American side made
certain proposals that were also accepted are as follows:
 1. Labour should be treated as human beings and not commodities.

2. The right to minimum wages should be protected.

3. There should be no wage disparity between men and women.

4. Equal pay for equal work.

5. The right to form associations is inherent and should be protected.

6. Child labour below the age of 14 should be abolished.

7. An eight-hour workday or a 40-hour workweek should be the norm across the globe.

8. Six-day working should be an established norm.

9. Foreign workers to be treated on par with domestic workers.

10. Condition of factories should be made habitable and congenial work environments should be
pushed.

The final report was submitted by the Commission on 4th March and was adopted on 11th April. The
report was an integral amalgamation of the Treaty of Versailles. The first International labour
conference began on 29th October 1919 in Washington DC and adopted the international labour
conventions which dealt with the following issues:

 Maximum working hours;

 Benefits for women during the period of maternity;

 Prohibition of women to work in the night; and

 Regulating working hours for the young.

The French socialist, Albert Thomas, became the Director-General. The ILO became a part and parcel
of the United Nations after the League of Nations was abolished.

Labor Laws in India

Labor Laws in India can be further divided into:

During the British raj

The laws were incorporated to benefit the prospects of the business and to adhere to certain norms
established by the International Labour Organization. Here is a list of laws passed during that time:

Factories Act, 1883 – This Act was incorporated by the British to fix certain working conditions such
as 8 hours of working hours, the prohibition of women in night employment, and the abolition of
child labour. This Act also stipulated for overtime wages,

 Trade Disputes Act, 1929– This Act was passed to regulate the relations between the
employer, employees, and the unions of employees. Provisions were inculcated to curb the
rights of unions to conduct strikes and of employers to declare a lockout. This was done to
make sure industrial progress is not halted.

After Independence
Independent India was formed on the idea of social justice. Following are certain enactments
keeping in mind the larger objective:

 Factories Act, 1948 – This Act deals with provisions such as working hours, safety, and safety
of women workforce.

 Minimum Wages Act, 1948 – This Act ascertains the minimum wages that have to be paid to
skilled and unskilled workers. The minimum wages have to be proportional to the work
undertaken.

 Industrial Disputes Act, 1947 – This is one of the most important legislations that intends to
promote industrial peace and harmony and to promote growth. This piece of legislation
intends to solve industrial disputes through arbitration and adjudication.

 Child Labor Prohibition Act- This Act was brought in to fulfil the constitutional objective to
prevent exploitation. The act prevents children below 14 years old from being employed in
hazardous jobs.

The interesting point to note is that the labour laws find a mention in the concurrent list of the
Constitution, which means both state and centre can draft and implement laws regarding the same.
There are 200 state laws, 40 central laws, still, that daunting image of a child sleeping on a bag that is
being dragged on by a worker will haunt us in the coming times. An attempt has been made by the
central government to combine the various laws into codes. Following is the list of codes:

Code on wages

The aim of the code was to consolidate various laws on wages and to ease out the payment of
wages. The followings Acts are being combined into one:

1. Payment of Wages Act, 1936;

2. Minimum Wages Act, 1948;

3. Payment of Bonus Act, 1965; and

4. Equal Remuneration Act, 1976.

Certain changes that are being introduced are that Section 6 of the Code empowers the central and
the state governments as well to fix minimum wages for all employees covered by the code, unlike
the Minimum Wages Act, 1948, which provided for fixation of minimum wages mentioned in the
schedule of the Act. Moreover, under Section 9 of the Code, the central government will fix the floor
wages considering the working conditions of the workers and the state government cannot fix
minimum wages below what the centre has envisaged under the floor rates.

Code on industrial relations

This code offers certain relaxations, retrenchment, strikes, and lockouts. The followings are the acts
brought under this code:

1. Trade Unions Act, 1926;

2. Industrial Employment (Standing Orders) Act, 1946;

3. The Industrial Disputes Act, 1947.

Certain changes that are being made is that the definition of the industry, mentioned in the Industrial
Disputes Act under Section 2(p), has been modified and the exceptions mentioned under
Section 2(j) have been deleted. Such as hospitals and dispensaries, educational, scientific, research
or training institutions, khadi or village industries. Any activity that is considered as a profession
practised by an individual or body of the individual. Definition of the industrial dispute under
Section 2(k) is also expanded to include within its ambit, discharge, dismissal, retrenchment, or
termination of workers.

Code on social security

This code prescribes social security for workers. It has replaced the following Acts:

1. The Employees Provident Fund Act, 1952;

2. The Employees State Insurance Act, 1948;

3. The Maternity Benefit Act, 1961;

4. The Payment of Gratuity Act, 1972;

5. The Employees Exchange (Compulsory Notification Of Vacancies) Act, 1959;

6. The Employees Exchange (Compulsory Notification of Vacancies) Act, 1959;

7. The Cine Workers Welfare Fund Act, 1981;

8. The Unorganized Workers Social Security Act, 2008; and

9. Employees Compensation Act, 1923.

One of the scintillating features of the code is that now it includes within its ambit gig workers,
platform workers, and unorganized workers. This code envisages protecting the gig workers as well.
They are defined as a person who performs work in an unconventional setup and earns from the
relationship outside that of employer-employee This will probably cover workers who are working for
food delivery and e-commerce delivery services. Platform workers refer to those workers who also
cannot be confined to the employee-employer relationship and are employed by organizations to
access other organizations via internet platforms to solve specific problems or provide specific
services.

The code on occupational safety, health, and working conditions

This code prescribes standards for working conditions, health, and safety of working conditions. The
code replaces 13 of the previous laws. Some of them are listed below:

1. The Factories Act, 1948;

2. The Mines Act, 1952;

3. Building and Other Construction Workers (Regulation of Employment and Conditions of

Service) Act, 1996; and

4. The Contract Labour (Regulation and Abolition) Act, 1970.

The code empowers the state government as well to exempt any new factory from the provisions of
the new code. The government has also processed mechanisms to ease out-licensing for contracting
firms to hire across the country. And introducing gender parity, The government has granted access
to women to work in positions as they were prohibited earlier.

Conclusion

Through the course of the article, we have tracked the development of labour laws and have given a
brief overview of the latest amendments introduced by the Indian government. With the COVID-19
pandemic wreaking havoc on the economies around the world, labour laws need to be modified
albeit precaution that they do not transform into a tool for harassment and exploitation.

Classification of Labour and Industrial Laws.

Labour law is also commonly known as ‘the law of employment’. The growth and development of
labour laws can be traced back to the establishment of the International Labour Organisation, the
only tripartite U.N. agency, in 1919. It brings together governments, employers and workers of 187
member States to set labour standards, develop policies and devise programmes promoting decent
work for all women and men.[1] It is devoted to promoting social justice and internationally
recognized human and labour rights, pursuing its founding mission that social justice is essential to
universal and lasting peace.[2] India has been the permanent member of the governing body of ILO
since 1922. This has been a major reason behind the progressive labour legislation in India.

Moreover, labour policy in India has been evolving in response to specific needs of the situation to
suit requirements of planned economic development and social justice and has two fold objectives,
namely maintaining industrial peace and promoting the welfare of labour.[3] Labour law cover three
aspects.

 Industrial Relations

 Workplace Health and safety

 Employment standards

Legislating Power

Both the Central government and the State government are vested with the power to legislate on the
matters concerning labour laws. The Central government has the power to legislate with respect to
the entries mentioned in the Union List of Schedule VII of the Constitution.

 Regulation of labour and safety in mines and oilfields[4],

 Industrial disputes concerning Union employees[5], and

 Union agencies and institutions for professional, vocational or technical training.[6]

On the other hand, both the Central Government and State Governments have the power to legislate
with respect to the entries mentioned in the Concurrent List of Schedule VII of the Constitution.

 Trade unions, industrial and labour disputes[7],

 Social security and social insurance, employment and unemployment[8], and

 Welfare of labour including conditions of work, provident funds, employers’ liability,

workmen’s compensation, invalidity and old age pensions and maternity benefits[9].
For instance, the central legislation includes the Trade Unions Act, 1926, the Factories Act, 1948, the
Payment of Wages Act, 1936, etc. and the State legislation includes the Shop & Establishment Acts
(of respective States), Labour Welfare Fund Act (of respective States), etc.

Classification of Labour Laws

There are more than a hundred legislations dealing with labour law in India. Therefore, the
classification of labour laws becomes important for the purpose of understanding them. One way of
classifying them is on the basis of enactment and enforcement. The other way of classifying is on the
basis of the purpose and the objective of the legislation.

The former type of classification is as listed below.

 The labour laws enacted by the Central Government, the responsibility of enforcement of
which lies solely on the Central Government.

 The laws enacted by the Central Government, the responsibility of enforcement of which lies
on both the Central Government and the State Government.

 The laws enacted by the State Government and enforced by them only.

 The laws enacted and enforced by various State Governments which apply to respective
states.[10]

The other type of classification can be done by dividing the legislation under broad categories.

 Laws dealing with industrial relations.

 Laws dealing with remuneration- payment, deduction and related issues.

 Laws dealing with the social security of the employees.

 Laws dealing with nature and conditions of service and employment such as the issue of
working hours, weekly holidays, the interval between working hours, etc.

 Laws dealing with the issues of gender equality and women empowerment.

 Laws dealing with social evils and prohibiting them such as bonded labour, child labour, etc.

 Laws dealing with employment and training of the employees.

For the purpose of having an overview of the labour laws, we shall be dealing with the latter type of
classification.

Laws dealing with Industrial relations

The Industrial Disputes Act, 1947

This an important legislation dealing with the issues of industrial dispute, closure, lock-out, strike,
retrenchment, lay-off, etc. Prior to this Act, the Trade Disputes Act, 1929 solved the industrial
disputes. However, there were some inherent defects in the Act which was sought to be removed by
enacting a fresh legislation i.e. the Industrial Disputes Act, 1947. The Act provides for an elaborate
mechanism to get the industrial disputes resolved. There are various authorities under the Act for
the same which includes Conciliation officers, Boards of Conciliation, Labour Courts, Tribunals, and
National Tribunals. The main features of the Act have been discussed in the subsequent points.

 The industrial dispute has to be referred for conciliation at the first instance.
  The dispute may be referred to the industrial tribunal either by the parties or by the State
government. The parties refer the dispute by an agreement with respect to the same.

 Strike and lockouts are regulated by the Act. The Act lays down certain circumstances in
which they are prohibited.

 The Act also provides for compensation to the workmen in case of lay-off or retrenchment or
transfer/closure of an undertaking.

The Trade Unions Act, 1926

Trade Unions are vital to the smooth functioning of the industry. The Trade Unions collectively assert
the demands of the workmen and make it easy for the workmen to negotiate with the employer. This
is commonly called ‘collective bargaining’. The Trade Unions Act, 1926 provides for the establishment
of the Trade Unions and lays down provisions with respect to the registration of such Trade Unions
and their rights and liabilities. The Act places no restriction on the objects which the Trade Unions
can take up. Trade Unions which do not get registered are not governed by the provisions of the Act.

Laws dealing with remuneration- payment, deduction and related issues

Payment of Wages Act, 1936

This Act came against the backdrop of the great injustice that was being done to the employees with
respect to the payment of wages. There were many cases of abuse such as the wages were denied or
delayed, arbitrary deductions were made, heavy fines were imposed and more often than not
payment was done in kind rather than in cash. Thus, the Act was enacted to regulate the payment of
wages by certain regulations such as fixing responsibility for such payment, fixing wage-period, and
time of payment of wages, etc. It has provision for authorized deductions from the wages and levying
of fines under certain circumstances. There are penalties for the employer in case of non-compliance
of the provisions of the Act.

Minimum Wages Act, 1948

The objective of this Act is to provide minimum wages to the workers employed in the employments
mentioned in the Schedule I of the Act such as employment in any rice mill, flour mill or dal mill or
employment in any tobacco manufactory, etc. The appropriate government is empowered under the
Act to fix minimum wages and revise them regularly. It also lays down provision for overtime wages.
There are penalties under this Act too for non-compliance of the provisions by the employer.

Laws dealing with the social security of the employees

Employee’s Compensation Act, 1923

The Act provides for the compensation to workmen or their dependents in case of accidents arising
out of or in the course of employment. Such accidents may either result in death or disablement
(permanent/temporary) of the workmen. It also includes compensation for occupational diseases i.e.
the diseases contracted from the employment. The Act lays down a detailed list of the persons falling
under the category of ‘dependents’ and the method to calculate the amount of compensation in
different circumstances. Thus, the Act is a comprehensive legislation dealing with all the facets of
compensation and the related issues.

Employees’ State Insurance Act, 1948

The Act lays down provisions for benefits to employees such as sickness benefit, maternity benefit,
disablement benefit, medical benefit and funeral benefit. Out of these, medical benefit is extended
to the family members of the employee too and the funeral benefit is paid to the eldest surviving
member of the family or in his absence, to the person who actually incurs the expenditure on the
funeral. It is to be noted that all the benefits under this Act are paid in cash. The Act also provides for
the establishment of Corporation, Committee, and Council etc. to implement the provisions of the
Act effectively.

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, Labour Welfare Fund Act (of
respective States), Payment of Gratuity Act, 1972 are some other laws which fall under this category.

Laws dealing with nature and conditions of service and employment

Factories Act, 1948

The Act regulates the working conditions of the workers employed in factories. It lays down
provisions to ensure adequate safety measures are implemented in the factories for the health and
welfare of the workers. The Act outlines the general duties of the occupier for the same and the
duties of the manufacturers, etc. who import or supply any article for use in a factory. Furthermore,
there is a separate chapter in the Act dealing with hazardous processes in factories. There are
separate provisions dealing with working hours of adults, annual leave with wages, etc. It regulates
the employment of women and children and prohibits the employment of children below fourteen
years of age.

The Industrial Employment (Standing Orders) Act, 1946

This is another important legislation which was enacted to resolve the friction between the
employers and the workmen. This Act requires the employer to formally define the conditions of
employment under him. The Act contains a schedule which contains the list of the matters to be
provided in standing orders. The employer is under an obligation to make the standing orders known
to the workmen. Further, the Act also regulates the duration and modification of such orders.

Shops and Commercial Establishments Act (of respective States), Contract Labour (Regulation and
Abolition) Act, 1970, The Plantation Labour Act, 1951, The Mines Act, 1952 are other laws dealing
with the nature and conditions of work.

Laws dealing with the issues of gender equality and women empowerment

Equal Remuneration Act, 1976

Equal pay for equal work has constitutional recognition as contained in the Fundamental Rights[11]
and the Directive Principles of State Policy.[12] The Act provides for the payment of equal
remuneration to both men and women for performing same work or work of similar nature, failing
which the employer is penalised. Thus, it prevents discrimination against women in the matters of
payment of remuneration.

Maternity Benefits Act, 1961

Prior to the enactment of this Act, there were different State Acts and three central Acts dealing with
the provisions of maternity benefit. The Act was enacted to reduce the disparities in different laws
and provide for maternity protection to the women employed in all establishments except those to
which Employees’ State Insurance Act, 1948 apply. The Act prohibits the employer from employing
women during certain periods and the right of such women to be paid the maternity benefit.
Laws dealing with the prohibition of social evils

Child Labour (Prohibition & Regulation) Act, 1986

The Act is in consonance with various articles of the Constitution.[13] It distinguishes between
‘adolescent’ and ‘children’ and prohibits the engagement of children in all occupations and the
engagement of adolescents in hazardous occupations. Further, the Act also provides for the
regulation of conditions of work of adolescents in such employment where they are permitted to
work. These regulations are with respect to the working hours, holidays, health and safety.
Moreover, the Act also lays down penalties for not complying with the provisions of the Act.

Sexual Harassment at the Workplace (Prevention, Prohibition and Redressal) Act, 2013

This is one of the most recent legislation and was enacted to incorporate the guidelines laid down by
the Supreme Court.[14] It provides for protection of women against sexual harassment at workplace.
There are provisions in the Act dealing with the prevention and redressal of such complaints. This Act
is in consonance with the spirit of Article 21 of the Constitution which includes the right of a woman
to dignity, life and liberty.

Bonded Labour System (Abolition), Act, 1976, the Beedi and Cigar Workers (Conditions of
Employment) Act, 1966 are the other Acts which fall under this category.

Laws dealing with employment and training of the employees

Apprentices Act, 1961

The wave of Industrial revolution generated the need of trained employees and thus, the need for
training apprentices. The Act is a comprehensive legislation dealing with the qualification of being
engaged as an apprentice, obligations of apprentices, their payment, their working conditions and
working hours, employer’s liability, etc.

Conclusion

There are various labour laws which deal with different labour and industrial issues. The Acts have
been enacted with the objective of social and economic justice. They also embody the constitutional
spirit contained in various Articles.

 The Articles contained in Part III of the Constitution such as Article 16, 19, 23 and 24

 The Articles contained in Part IV of the Constitution such as Article 39, 41, 42, 43, 43A and 54

The provisions laid down in various conventions and treaties which India has ratified have also been
incorporated in these Acts time and again.

However, they fail to achieve the objectives completely because of certain reasons.

 The penalties given under the various Acts are inadequate so as to create a deterrent in the
mind of an offender.

 There are so many legislations that the workmen or the employees are more often than not
unaware of their rights under these laws.

Definitions, BI-Partite Forums,

A bipartite forum is a place where workers and management can discuss and consult on issues
related to industrial relations, workers' welfare, and enterprise sustainability. Bipartite forums are
different from unions and do not replace their function.

Here are some other things to know about bipartite forums:

 Purpose

Bipartite forums are used to preserve and secure harmonious industrial relations between workers
and employers. They are also used to resolve disputes that arise from individual grievances.

 Examples

The Industrial Code, 2020 provides for bipartite forums such as the Works Committee and Grievance
Redressal Committee.

 Minimum number of workers

The Works Committee requires at least 100 workers, while the Grievance Redressal Committee
requires at least 20 workers.

 Bipartite agreements

These agreements are binding on both parties and are usually easy to implement because both
parties voluntarily agree to the settlement.

For resolving industrial disputes and addressing grievances, the Code has provided two bipartite
forums, which include;

Works committee

Section 3 provides for the constitution of the works committee. The main purpose of this committee
is to enhance protective measures and ensure positive relations between the employer and the
workers. If an industrial establishment employs 100 or more workers in the preceding 12 months, the
appropriate government, by general or special order, may need to establish a work committee.

The work committee consists of representatives of both the employers and the workers engaged in
the establishment. Further, it states that the number of representatives of workers in a committee
shall not be less than the number of representatives of the employer.

Grievance Redressal Committee

The Code also provides for the establishment of Grievance Redressal Committees under Section 4 for
resolving disputes arising from individual grievances. If an industrial establishment has 20 or more
workers, one or more Grievance Redressal Committees must be formed, each comprising a
maximum of 10 members. It shall consist of an equal number of members, representing both the
employer and the workers.

Unit 2:

Trade Unions

The Trade Unions Act of 1926 defines a trade union as an association of workers that regulates the
relationship between workers and employers, or between workers and workers. The act also covers
federations of two or more trade unions.
The act aims to register trade unions in India and define the law that applies to them. The act
protects the rights of trade union members and provides some civil and criminal liability protection.

Here are some things that trade unions do:

 Negotiate agreements with employers on pay and conditions

 Discuss major changes to the workplace

 Discuss members' concerns with employers

 Accompany members in disciplinary and grievance meetings

 Provide members with legal and financial advice

 Provide education facilities and consumer benefits

The act allows the registrar to cancel a trade union's registration certificate if:

 The trade union applies to be verified

 The registrar is satisfied that the trade union obtained the certificate through fraud or deceit

 The trade union has ceased to exist

 The trade union has contravened any provision of the act

Standing Orders, Notice of Change

For many years, the concept of bonded labourers was prevalent in India. The exploitation of workers
or employees was not a new problem in India. The employees had to face many problems such as
unnecessary salary deductions, non-payment of wages, and lack of uniform rules for recruitment or
dismissals. The employees regularly had to face such ill-treatment and misbehaviour.

The Industrial Employment (Standing Orders) Act, 1946 (hereinafter referred to as “Act”) was
brought to encounter the problems above-mentioned. The Act makes it necessary for the employer
in the industrial establishment to define employment terms and conditions well in advance. It
establishes a uniform set of rules and regulations for the potential agreements to be faced regularly.
In furtherance of this Act, the Industrial Employment (Standing Orders) Central Rules,
1946 (hereinafter referred to as “standing order Rules”) was also formulated by the Indian
Government to provide model standing order and additional rules related to standing order.

What is a standing order

A standing order in the Indian labour laws provides clear rules and regulations in terms of the
employment. It makes the communication between the employer and employee crystal clear. It
covers all the subjects of employment whether it is regarding leaves, payment of wages or
termination. Under Section 2(g) of the Industrial Employment (Standing Orders) Act,1946 the
standing orders are interpreted as rules relating to matters set out in the Schedule .

In the case of Union Of India vs K.Suri Babu on 29 November (2023), the Supreme Court held that the
standing order being the special laws overruled all other laws. The service conditions are regulated
by the Standing Order as far as disciplinary actions are concerned.

Nature of standing order in Labour Law

The nature of the Standing Order has been a debatable topic, with several different arguments and
conflicting judgments. It is difficult to decide the category of the standing order. The debate is
whether the standing order is “award” or is “contract”. The nature of standing order can be claimed
as under:

Statutory nature

The standing orders are binding on the workmen, employees, trade unions and the employer of the
industrial establishment. The entire process of certifying a standing order is rule-making process. The
standing orders operate more as a statutory nature.

In the case of Bagalkot Cement Co. Ltd vs R. K. Pathan & Ors (1962), the Supreme Court of India has
held that standing order deals with the terms of employment and making the terms precise and
definite. These standing orders when certified become statutory in nature. This was followed in many
subsequent judgments.

Contractual nature

The standing orders are implied contracts between the employer and the workmen. They are bound
to follow them when certified. However, the standing orders specify the rights and liabilities of the
employer and employees, raising arguments over its contractual nature.

In the case of The Buckingham And Carnatic Co. vs Venkatiah (1963), the Supreme Court held that
the certified standing orders are binding on the employer and employees as private contracts. After
the certification of the standing order, they must be followed as terms and conditions of the
contract.

Apart from this, there have been arguments in favour of terming standing order as “awards”.
However , describing standing orders as statutory, contractual or an award is difficult in itself. The
nature of standing order may be interpreted depending upon the matter in dispute.

Matter to be provided in standing order

The Schedule of the Act provides for matters to be set out in standing order for all the industrial
establishments. The Schedule includes matters such as the classification of workmen’s, tickets,
working hours, terms for leaves, etc. This makes uniform terms of employment. However, it should
be noted that matters for standing order will not be limited to those given in Schedule, rather any
additional matter can be prescribed.

The matters mentioned in the Schedule are as follows:

Classification of workmen

The standing order of an industrial establishment must specify whether the workmen are temporary
workers or permanent workers. Further, it must specify the nature i.e. probation, apprentice
or badlis workers. This particular specification helps in determining the rules and wages applicable to
those categorised workmen.

Manner of intimation

The changes in the wages, working period or hours, any kind of new rules applicable or any change in
pay rates how the intimation must be specified in standing orders. For example: the circular would be
stuck at the general assembly point where it comes to employees’ notice easily, or notice can be
provided individually, these are certain ways that can be used for intimation.
Working shifts, attendance and leave provisions

The standing orders must also include the rules regarding the working shifts, and latecomers, set
procedures for entering the workplace and applying for leaves. Conditions, in regard to the same,
must also be prescribed.

Rights and liabilities

In case any industrial unit or section has been closed or is temporarily closed or stopped in use, then
in such a case the rights and liability of the workers and employer must be mentioned in the standing
order.

Termination, suspension, or dismissal

The standing order must mention the acts or omission which is misconduct resulting in dismissal or
suspension; the notice by the employer for these matters must be mentioned in standing order.

Redressal mechanism

In case of any kind of unfair treatment or wrongful act by the employer to the workmen, the
redressal mechanisms for the benefit of the workers must be specified in the standing orders.

Model standing order in Labour Law

Model standing orders are the guidelines provided by the government, which may be used by the
employers for drafting standing orders for their respective industrial establishments. The provisions
regarding model standing order is provided in Rule 3 of the Industrial Employment (standing order)
Central Rules,1946 –

 Rule 3(1) of the Industrial Employment (standing order) Central Rules,1946 mentions that
Schedule provides the Model standing Order for all the industrial establishments, other than
the industrial establishments relating to the coal mines.

 Rule 3(2) of the Industrial Employment (Standing Order) Central Rules,1946 specifies that
Model Standing orders for the industrial establishments relating to the coal mines are
provided in Schedule 1A of the Industrial Employment (Standing Order) Central Rules, 1946.

To know more about model standing order, click here.

Model standing order under Schedule of the rules

The Schedule of the Industrial Employment (Standing Orders) Central Rules, 1946 provides for the
model standing orders for the industrial establishments, other than the industrial establishments
relating to the coal mines. It covers the following matters:

 It specifies the classification of workmen.

 The Schedule provides the rules for publication of notices regarding the wages, shifts,
working days, holidays, and wage rates.

 The Schedule specifies the provisions relating to leaves, casual leaves, payment of wages and
for stoppage of wages.

 The rules for termination of employment are prescribed in the Schedule.

  The Schedule provides the fines for the misconducts; the misconducts which are specified in
the Standing orders.

 The Schedule prescribes the liabilities of the employer in case the employer does not follow
the provisions mentioned in the Industrial Employment (Standing Orders) Act, 1946.

Additional matters set out for coal mines under Schedule 1A of the rules

Rule 2A of the Industrial Employment (Standing Order) Central Rules, 1946 prescribes certain matters
which must be specified in the standing orders of industrial establishments relating to the coal
mines. The matters given in Schedule 1A of the rules will apply to coal mines. These matters are as
follows:

 Medical aids to be provided in case of any accidents.

 The travel facilities via railway.

 Methods of filling vacancies and matters regarding transfers.

 Liability of the manager in the coal mine.

 Provisions for service certificates.

 Matters regarding exhibition and supply of the Standing order.

Additional matters for all the industrial establishments under Schedule 1B of the rules

There are certain matters which must be specified in the standing orders of all the industrial
establishments regardless of whether they are related to coal mines or not. Under Schedule 1B of
the Industrial employment (Standing Order) Central Rules, 1946 such matters have been provided
which are as follows:

 Service records which includes the service cards, certificates, records of the residential
address and age of the workmen

 Issuing letter of confirmation

 Specifying age of retirement

 Provisions regarding the transfer of the workman

 Medical aid in accident and medical examination

 Employee’s secrecy and exclusive service towards the industrial establishment.

The Industrial Employment (Standing Orders) Act, 1946

The Industrial Employment (Standing Orders) Act, 1946 received its assent on 23rd April 1946. The
object of the act was to have uniform standing orders addressing various matters in the course of
employment.

Applicability of the Act

The Industrial Employment (Standing Order) Act,1946 applies to the whole of India under Section
1(2) of the Act. As per Section 1(3) of the Act, It applies to every industrial establishment
wherein one hundred or more workmen are employed or were employed on any day of the
preceding 12 months. In addition to this, the appropriate government may apply this Act to such
establishments who have less than a hundred workmen by giving notice (for not less than two
months) of its intention to apply the Act.

In the case of New Delhi Municipal Corporation v, Mohd. Shamim, (2003) the department raised an
objection that Mohd. Shamim is working in the electricity department, which does not come under
the purview of the Industrial Employment (Standing Order) Act,1946. The Delhi High Court has held
that, under Section 2(e) of the Act, the industrial establishment may include such employers who
generate, transmit and distribute electricity.

When the Act does not apply

There are certain exceptions under the applicability of the Industrial Employment (Standing Order)
Act,1946. Those exceptions are as follows:

 Under Section 1(4) of the Act, it is stated that the industries where Bombay Industrial
Relation Act,1946 applies, on such industries, standing order Act will not be applicable.

 Further, in any such industries where the Madhya Pradesh Industrial Employment (Standing
Order) Act,1961 is applicable in such industries the Industrial Employment (Standing Order)
Act,1946 shall not apply. However, if such industries are governed and are controlled by the
Central Government then the Industrial Employment (Standing Order) Act,1946 becomes
applicable.

 Section 13B of the Act states that the Act does not apply to any industrial establishment and
workmen employed in those industries if following Rules applicable to them:

 The Fundamental and Supplementary Rules;

 Civil Services (Classification, Control, and Appeal) Rules;

 Civil Services (Temporary Services) Rules;

 Revised Leave Rules;

 Civil Service Regulations;

 Civilians in Defence Service (Classification, Control, and Appeal) Rules; or

 Indian Railway Establishment Code; or

 Under any other rules and regulations prescribed by the appropriate government in the
official gazette.

The objective of the Industrial Employment (Standing Order) Act,1946

The objectives of the Industrial Employment (Standing Order) Act, of 1946 are as follows:

 It provides the established rules for certifying the standing orders under the Act.

 It recognizes the terms of employment, resulting in fewer chances of exploitation of the

workmen.

 It leads to fewer disagreements and disputes between the administration of the industry and
the trade unions or workers.

 The rights and obligations of the employer and the workmen are well-defined.
  The act does prevent the unnecessary demands of the workmen and trade unions.

 Most disputes are settled by arbitration or conciliation.

Penalties provided under the Act

The Act provides for the penalties resulting from failure to comply with the provisions given in the
Act. Under Section 13 of the Act, the penalties and procedure is specified as under:

Penalties

In case of violation of Section 3 which deals with submission of draft standing order and Section 10 of
the Act which specifies the duration and modification of the standing orders, a penalty of above
Rupees 5000 will be imposed. In continuance of the offence, a fine of Rupees 200 on an everyday
basis till the offence is committed.

If the employer or his establishment does not comply with the certified order under this Act, then he
shall be punishable by Rupees 100 and, in continuance of the offence, Rupees 25 on an everyday
basis till the offence is committed.

Procedure

It should be noted that no prosecution for an offence under this Act shall be instituted except the
prior sanction of the appropriate government. Once a prosecution is initiated with approval of
appropriate government, then the offence underlined shall be triable by the competent court. For
the offence under this Act, the Metropolitan Magistrate or Judicial Magistrate Second Class can try
offences.

Standing orders under Industrial Relations Code, 2020

The Industrial Relations Code, 2020 amends and consolidates various current laws in relation to
industrial disputes, trade unions, employment terms, etc. It is considered to be a huge reform with
respect to the labour laws. The Industrial Relations Code, 2020 have revised and introduced
definitions and concepts. The Industrial Relations Code, 2020 have made changes in the following:

 Trade unions

 Strikes and lockouts

 Standing orders

 Layout and retrenchment

 Re-skilling Funds

 Power of government and dispute mechanism

Major provisions with respect to the standing orders are as follows:

 The new laws bring change in the applicability of the Act, which says that standing orders
shall be applicable to such establishments, which shall have 300 hundred or more employees
on a day preceding twelve months.

 These establishments have to prepare the draft standing orders in accordance with the
model standing order within 6 months of commencement of the Code with consultation of
the negotiating unions and its members.
  Majority of the provisions in relation to standing orders in the Code have taken reference
from the old statute itself.

Conclusion

The labour sector in India is one of those sectors which are mostly exploited. The malpractices of the
employers bring the labourers to workless or foodless days. The establishment of proper procedure
of the standing order ensures a protective sphere in between the workmen and the unfair,
malpractices of the employers.

This labour law empowers the workmen with their rights to work with dignity and freedom. This Act
makes the employer answerable and under pressure to abide by the given laws. However, its strict
implementation is also essential for safeguarding the rights of the workmen.

Frequently Asked Questions (FAQs)

What is the Model Standing Order?

These are the set of rules, regulations, and obligations drafted by the Central Government. This
model standing order covers various terms of employment including the working hours, holidays,
terminations, etc. It is even applied to the industries until they receive their certified standing order.
Mostly, the certified standing orders must be in accordance with the model standing order
prescribed by the government.

When can the CSO be modified?

The CSO can be modified as per Section 10 of the Industrial Employment (Standing Orders) Act,
1946. The standing order can be modified only when there is an agreement between the employer
and the workmen or trade unions, etc. before the expiry period of six months from the last
modification came into operation.

Notice of change

No employer, who proposes 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 workmen 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 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.

Simplified Act

Simplified Explanation of Section 9A - Notice of Change

If an employer wants to change the working conditions of an employee regarding any issue listed in
the Fourth Schedule of the Industrial Disputes Act, 1947, they must:

 (a) Inform the affected employees about the proposed change in advance, in the way that
the law requires.

 (b) Not make the change until at least 21 days have passed since the notice was given.

However, the employer does not need to give notice if:

 (a) The change is being made because of an agreement or court decision.

 (b) The employees affected are governed by certain government service rules or any other
rules that the government has announced in the Official Gazette.

Explanation using Example

Imagine a manufacturing company where the management decides to change the shift timings for
their workers from a 9 AM - 5 PM schedule to a 12 PM - 8 PM schedule. This change in shift timing is
a condition of service that is specified in the Fourth Schedule of The Industrial Disputes Act, 1947.

According to Section 9A of the Act, before implementing this change, the employer must:

1. Provide a notice to all the workers who will be affected by the shift change, explaining the
nature of the change in a manner prescribed by the law.

2. Wait for at least twenty-one days after giving the notice before making the change effective.

If the employer fails to follow these steps, they would be in violation of Section 9A. However, if the
shift change was the result of an agreement (settlement) reached between the management and the
workers' union, or if the workers are governed by specific service rules that are exempt as per the
provided exceptions, then the notice requirement would not apply.

Voluntary Reference Disputer to Arbitration

Arbitration is a form of ADR where disputes are resolved by one or more arbitrators appointed by the
parties. Unlike traditional litigation, arbitration is usually faster, more flexible and confidential. The
arbitrator’s decision, known as an award, is binding on the parties and enforceable in a court of law.
Arbitration can be either mandatory or voluntary. In mandatory arbitration, parties are compelled to
arbitrate by law or contract, whereas in voluntary arbitration, parties choose arbitration out of their
own free will.

Meaning of Voluntary Arbitration

Voluntary arbitration is a dispute resolution process where parties involved in a conflict mutually
agree to submit their dispute to an independent and impartial third party, known as an arbitrator, for
a final and binding decision. Unlike mandatory arbitration, where parties are compelled by law or
contract to arbitrate, voluntary arbitration is based on the free will of the parties.

It is commonly used in labour disputes, where both employers and employees prefer a private, cost-
effective and faster resolution method. The arbitrator’s decision, called an award, is enforceable in a
court of law, but the process itself is less formal and more flexible than traditional court litigation,
allowing for a more amicable settlement.

Historical Evolution of Voluntary Arbitration in Labour Law

The concept of arbitration has a long history, dating back to ancient times when communities used it
to resolve disputes. In the labour sector, arbitration became more formalised during the industrial
revolution as labour disputes grew more frequent and complex. In India, the need for an effective
dispute resolution mechanism led to the development of the Industrial Disputes Act, 1947, which
incorporated provisions for voluntary arbitration.

Before the enactment of the Industrial Disputes Act, arbitration was not widely used in labour
disputes. The Act’s introduction of Section 10A marked a significant shift, allowing parties to
voluntarily refer their disputes to arbitration, thereby reducing the burden on labour courts and
tribunals.

Legislative Framework: Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947, is the cornerstone of labour law in India, providing mechanisms for
the resolution of industrial disputes through various means, including voluntary arbitration. Section
10A of the Act specifically deals with voluntary arbitration, offering parties an alternative to
approaching labour courts or tribunals.

Section 10A: Voluntary Reference of Disputes to Arbitration

Under Section 10A of the Industrial Disputes Act, 1947, parties to an industrial dispute may refer the
matter to arbitration by mutual agreement. The section lays down specific conditions for voluntary
arbitration:

 Existence or Apprehension of a Dispute: An industrial dispute must either exist or be

apprehended.

 Written Agreement: The agreement to arbitrate must be in writing and specify the
arbitrator(s).

 Pre-Arbitration Reference: The reference to arbitration must be made before the dispute has
been referred to a labour court, tribunal or national tribunal.

 Odd Number of Arbitrators: The arbitrator(s) must be in an odd number to avoid a tie in
decision-making.

Once the arbitration agreement is executed, it must be submitted to the appropriate government,
which is responsible for publishing it in the Official Gazette. This publication is crucial as it gives the
arbitration proceedings a statutory backing and ensures transparency.

The Process of Voluntary Arbitration

Voluntary arbitration is a relatively straightforward process compared to litigation. The steps typically
involved include:

Agreement to Arbitrate

The first step is the mutual agreement between the parties to resolve their dispute through
arbitration. This agreement is usually formalised in writing and includes the appointment of the
arbitrator(s) and the terms of reference for the arbitration.

Appointment of Arbitrator(s)

The parties select one or more arbitrators. The arbitrator(s) should be neutral, impartial and have the
requisite expertise to resolve the dispute.
Submission of Dispute

The parties present their case to the arbitrator(s), including evidence, witness testimonies and legal
arguments.

Hearing

The arbitrator(s) conduct hearings, where both parties have the opportunity to present their case,
cross-examine witnesses and submit documents.

Award

After considering the evidence and arguments, the arbitrator(s) render an award. The award is
binding on both parties and is enforceable in a court of law.

Enforcement

If either party fails to comply with the award, the other party can seek enforcement through the
appropriate court.

Significance of Voluntary Arbitration in Labour Law

Voluntary arbitration plays a vital role in labour law for several reasons:

1. Preservation of Industrial Harmony: By resolving disputes amicably, voluntary arbitration helps

maintain peaceful labour-management relations, which is crucial for productivity and economic
stability.

2. Speedy Resolution: Unlike litigation, which can be time-consuming, arbitration is relatively quicker,
enabling disputes to be resolved promptly, thus minimising disruption in the workplace.

3. Confidentiality: Arbitration proceedings are private, which means sensitive information does not
become public. This is particularly important in labour disputes where the reputation of the
employer or employee could be at stake.

4. Flexibility: The parties have the freedom to choose their arbitrator(s) and tailor the arbitration
process to suit their needs, making it a more flexible option compared to court procedures.

5. Cost-Effectiveness: Arbitration is generally less expensive than litigation, as it avoids the high costs
associated with court proceedings, including legal fees, court fees and prolonged hearings.

Challenges in Voluntary Arbitration

Despite its advantages, voluntary arbitration faces several challenges:

1. Reluctance of Parties: In some cases, one or both parties may be reluctant to opt for arbitration,
preferring to take the dispute to court instead. This can be due to a lack of trust in the arbitration
process or a belief that a court may offer a more favorable outcome.

2. Enforceability Issues: While the arbitration award is binding, enforcement can sometimes be
problematic, especially if one party refuses to comply. Although courts can enforce the award, the
process can still be cumbersome.

3. Lack of Awareness: In many cases, parties may not be fully aware of the benefits of voluntary
arbitration or the procedures involved, leading to underutilisation of this dispute resolution method.
4. Limited Scope for Appeal: One of the features of arbitration is that the award is generally final,
with limited scope for appeal. While this can be an advantage in terms of finality, it can also be a
disadvantage if the award is perceived as unjust.

5. Selection of Arbitrator(s): The success of voluntary arbitration heavily depends on the choice of
arbitrator(s). If the arbitrator(s) lack the necessary expertise or are biased, the process can lead to an
unfair outcome.

Judicial Review of Arbitration Awards

While the arbitration award is binding, it is subject to judicial review under certain circumstances. In
India, the award can be challenged in a high court under Article 226 (writ jurisdiction) or Article 227
(supervisory jurisdiction) of the Constitution. Grounds for challenging an arbitration award include:

 Lack of Jurisdiction: If the arbitrator(s) exceed their jurisdiction or decide matters not
referred to them.

 Violation of Natural Justice: If the arbitration process violates the principles of natural justice,
such as denying a party the opportunity to present their case.

 Illegality: If the award is contrary to the law or public policy.

Several landmark judgements have shaped the judicial approach to arbitration awards in India. For
instance, in Engineering Mazdoor Sabha v. Hind Cycles Ltd. (1963), the Supreme Court held that an
arbitral award under Section 10A of the Industrial Disputes Act is open to judicial review. Similarly,
in Rohtas Industries Ltd. v. Rohtas Industries Staff Union (1976), the court expanded the scope of
judicial intervention in arbitration awards.

Voluntary Arbitration vs. Mandatory Arbitration

It is essential to distinguish between voluntary and mandatory arbitration. While both aim to resolve
disputes outside the courts, the key difference lies in the consent of the parties:

 Voluntary Arbitration: Both parties mutually agree to arbitrate the dispute. The process is
consensual and the parties have control over the choice of arbitrator(s) and the arbitration
procedure.

 Mandatory Arbitration: Arbitration is imposed on the parties by law or contract, regardless of

their willingness to arbitrate. This type of arbitration is often used in consumer contracts,
employment agreements and certain commercial disputes.

Mandatory arbitration has faced criticism for potentially disadvantaging weaker parties, such as
employees or consumers, who may be forced into arbitration without fully understanding its
implications. In contrast, voluntary arbitration is seen as more equitable, as it relies on the mutual
consent of both parties.

Role of the Government in Voluntary Arbitration

While voluntary arbitration is primarily a private dispute resolution mechanism, the government
plays a crucial role in supporting and regulating the process. Under the Industrial Disputes Act, the
government is involved in the following aspects:

 Publication of Arbitration Agreements: The government ensures that arbitration agreements

are published in the Official Gazette, giving them legal recognition.
  Issuance of Notifications: The government may issue notifications under Section 10A(3A) to
allow non-parties to the arbitration agreement, who are interested in the dispute, to present
their case before the arbitrator(s).

 Enforcement of Awards: The government can enforce arbitration awards, ensuring that the
parties comply with the arbitrator’s decision.

 Regulation of Strikes and Lockouts: During arbitration proceedings, the government can
prohibit strikes and lockouts to prevent disruptions in industrial activities.

Case Studies: Voluntary Arbitration in Practice

To understand the practical application of voluntary arbitration in labour law, it is helpful to examine
case studies where this method has been successfully used to resolve disputes:

1. Raza Textile Labour Union v. Maharaja Shri Umaid Mills Ltd. (1958)

In this case, the court quashed decisions made by an arbitrator who had acted beyond his
jurisdiction. The case highlights the importance of adhering to the terms of reference in arbitration
agreements and the role of judicial review in ensuring fairness.

2. Vaikuntam Estate v. Arbitrator (1967)

The Madras High Court quashed an interim award where the arbitrator exceeded the terms of
reference. The case underscores the importance of defining the scope of arbitration clearly in the
agreement.

3. Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha (1980)

The Supreme Court ruled that amendments to the Industrial Disputes Act extended the application
of Article 136 to arbitration awards under Section 10A. The case illustrates the evolving judicial
approach to arbitration awards in labour disputes.

Conclusion

Voluntary arbitration is a valuable tool in labour law, offering a practical and efficient means of
resolving industrial disputes. Its advantages, including speed, cost-effectiveness, confidentiality and
flexibility, make it an attractive alternative to litigation. However, its success depends on the
willingness of parties to engage in the process, the competence and impartiality of arbitrators and
the availability of a supportive legal framework.

As industries continue to evolve and labour relations become more complex, voluntary arbitration is
likely to play an increasingly important role in maintaining industrial harmony. By addressing the
challenges associated with voluntary arbitration, such as reluctance to participate, enforceability
issues and the need for greater awareness, stakeholders can ensure that this dispute resolution
method is utilised to its full potential.

In conclusion, voluntary arbitration in labour law represents a balanced approach to dispute

resolution, offering parties the opportunity to resolve conflicts in a manner that is fair, efficient and
mutually acceptable. By fostering a culture of cooperation and trust, voluntary arbitration can
contribute to a more harmonious and productive industrial environment.

Mechanism for Resolution of Industrial Disputes

The mechanism for resolution of the industrial disputes is given under Chapter VII of the Industrial
Relations Code, 2020. We’ll be dealing with this topic section-wise.

Section 43 of this code says that an appropriate government can appoint the conciliation officers, for
the settlement of the dispute between the employee and employers.

Essential provisions under the Industrial Relations Code, 2020

The essential provisions under the Industrial Relations Code, 2020 are listed below:

Section 44: Constitution of Industrial Tribunal

1. When an appropriate government forms the Industrial tribunal then there should be 2
members in it (one Judicial Member and one Administrative Member).

2. When the central government makes a tribunal, then for the purpose of the provident fund
that dispute will also come to the tribunal here under this chapter.

3. For the purpose to pass any order of the tribunal, the bench to be formed may be of 2
members; which means one Administrative Member and one Judicial Member or of only one
member, which can be either Administrative Member or Judicial Member.

4. For becoming an Administrative Member one should be at least Joint Secretary of the
Government of India or of the State Government; or any position equivalent to this rank.

5. Salary and the allowances which are to be paid to Administrative Member or Judicial
Member can’t vary in disadvantage, which means it can’t decrease but can only increase.

6. Clause 7 talks about the procedure of the Tribunal, they are as follows, in case of:

o Applications and of standing orders;

o Discharge or dismissal or reinstatement;

o The illegality of strike or lockout;

o Retrenchment;

o Dispute of trade union.

So, in these cases, the bench which will form should be of an Administrative Member and Judicial
Member. Here, it’s compulsory to have both of these members. Other than these matters stated
above, the dispute can be decided by either an Administrative Member or a Judicial Member. The
reason behind this is that the matters in dispute which are mentioned in points a-e are the core
matters and thus, require more attention for the smooth settlement of the dispute.

1. The presiding officer between the Administrative Member and Judicial Member will be the
Judicial Member.

2. In the National Industrial Dispute or the International Industrial Tribunal, there comes a
vacancy then the new member who is joining in that vacancy has to continue from there
itself where the proceeding was stopped, they are not supposed to start the proceeding
from the very beginning.

3. If the appropriate government thinks that there is a requirement for the supporting staff for
the Administrative and Judicial Members then they can accordingly appoint them.
Section 45: Finality of the constitution of Tribunal

When the new members are appointed where there was any vacancy and there is any defect in the
constitution, then it can’t be challenged in any manner before the tribunal.

Section 46: National Industrial Tribunal (NIT)

1. The central government will appoint one or more NIT, and if it thinks that the industrial
dispute is of National importance and because of that one or more state’s establishment will
be affected, then that matter will go to the National Industrial Tribunal.

2. In that National Industrial Tribunal, there should be two members, one Administrative
Member, and one Judicial Member.

3. The eligibility of the Judicial Member should either be of a practicing Judge of the High Court
or has been a practicing Judge of the High Court.

4. The eligibility of the Administrative Member is that he should be of a secretory rank either in
the Central or the State government or any rank equivalent to the rank of a Secretary.

5. The Judicial Member will be the presiding officer in the case of a National Industrial Tribunal
dispute.

Section 47: Decision of Tribunal or National Industrial Tribunal

1. The decision to be made in tribunal or the NIT shall be by the consensus of the members.

2. If in the situation when both the Administrative Member and the Judicial Member have
different opinions and are not able to reach the decision then, in this case, they may transfer
the case to the Appropriate Government.

o In the case of Judicial Member, the appropriate government is either the Central
Government or the State Government

o In the case of Administrative Member, the appropriate government is only Central

Government

3. When the case is transferred to the appropriate government, then the appropriate
government may appoint the Judicial Member who is not related to this case, and ask for his
opinion and after that, the appropriate government can make the decision.

Section 48: Disqualification for the members of Tribunal or NIT

1. If he is not an independent person: Here an independent person means, the person who is
not connected with that industrial dispute. The reason behind this is that if there would not
be an independent person then the decision made will be biased and justice won’t be
delivered.

2. If the member attains the age of 65 years.

Section 49: Procedures and powers of arbitrators, conciliation officers, Tribunal and NIT

1. The powers mentioned in CPC, like enforcing the attendance, production of the documents,
issue the commission and record the evidence, impose costs, summon, etc., so, all these
powers which a civil court enjoys will also be enjoyed by the tribunals, arbitrators,
conciliation officers, officers of Tribunal and NIT.
 2. All these officers have the power to do an inquiry and also visit the establishment of that
premises (only for the purpose of the inquiry), before giving reasonable notice of their
coming.

3. All the inquiry and investigation done here under this section will be called the ‘Judicial
Proceedings’, under Section 193 and 228 of IPC.

4. If the appropriate government thinks fit then can also appoint the expert or the assessor.

5. The conciliation officers and members of the Industrial Tribunal will be called the ‘Public
Servant’, under Section 21 of IPC.

6. These tribunals can pass the cost recovery orders.

7. The tribunal and the Industrial Tribunal will be deemed to be the Civil Court, for the matters
under Section 345, 346, 348 of the Criminal Procedure Code.

8. If any award is made or any order is passed or any settlement is made under Tribunal or NIT,
then it can be executed just like rules given under Order XXI of Code of Civil Procedure.

Section 50: Powers of the Tribunal and NIT to give appropriate relief in case of discharge or dismissal
of workers

1. When an application is received by the Tribunal or NIT, and they think that or have reason to
believe that dismissal or discharge of the person is unjust then they can either set aside it or
can give relief such as lesser punishment.

2. If there is a pendency of the Industrial Dispute, then in that duration of the pendency, the
tribunal can grant the interim relief.

3. Proviso says that, if an order is passed by the tribunal under Section 50, then they will set
aside the matter only on the grounds that are already on record, not the fresh evidence.

Section 51: Transfer of pending cases

1. After the commencement of this code, the previous pending cases,

o In the Labor court, the Tribunal under the Industrial Dispute Act, 1947 will be
transferred to the tribunal having the corresponding jurisdiction under this code.

o The National Tribunal under the Industrial Dispute Act, 1947 shall be transferred to
NIT having the corresponding jurisdiction.

2. Now, when the case is transferred it can start “de novo”, or from where it was pending
before the transfer, as it may be deemed fit.

Section 52: Adjustment of services of presiding officers under repealed Act

The presiding officers are qualified under the Code; also they can become Judicial Member of
tribunal or Industrial Tribunal and they can serve for their remaining period.

Section 53: Conciliation and adjudication of a dispute

1. When in the case where an industrial dispute exists or is apprehended to exist, then the
conciliation officer can hold the proceeding under section 62
 o The limitation is that the conciliation officer will not hold the proceedings after two
years from the date of the dispute.

2. Whenever the conciliation officer starts the settlement, the main purpose is to come for a
fair and amicable settlement on behalf of both the parties and the dispute settles.

3. In case when the settlement is done, then after that a memorandum of settlement is created
and a report of that will be given to the appropriate government, with the signatures of the
parties.

4. In case there is no settlement then, in that case, the conciliation officer, to the concerned
parties and also to the appropriate government send the full report stating:

o Steps were taken by him for the settlement of the dispute;

o Facts of the case;

o Reasons for the non-settlement.

5. The time limit for sending the report is from the date of the start of the conciliation
proceeding up to 45 days.

o Proviso says that, if the conciliation officer has received the notice under Section 62,
then the conciliation officer has to submit the report within 14 days to the
concerned parties and the appropriate government.

o If the parties are not satisfied, then the parties are required to apply in the tribunal,
then they have to apply within 90 days from the date of receipt of the report.

Section 54: Reference to and function of NIT

1. Central Government can transfer the matter of the industrial dispute to the NIT, when:

i. There is a matter of national importance.

ii. When there is interest in the establishment of one or more states.

2. Now, when the case is transferred, then it’s the duty of the NIT to conduct the proceedings
and pass the order accordingly.

Section 55: Forms of the award and its communication and commencement

1. An award of the Tribunal or NIT is awarded then it should be in writing and should be also
signed by the members of the tribunal or NIT.

2. If an award is of arbitration or tribunal then that award should be communicated to the

parties and the appropriate government.

3. An award will be enforceable on the expiry of 30 days from the date of communication
mentioned under subclause (2).

Unit 3:

Strikes and lock-outs

Strike and lockout are dynamic, complex and deeply intertwined with labour laws and regulations.
Their outcomes can significantly impact the lives of workers, the health of businesses and the
stability of industries.

Therefore, it is essential for all parties involved—employees, employers, labour authorities and the
legal system—to navigate these labour actions with care, understanding and a commitment to
fairness.

Ultimately, whether it is the call for improved working conditions through a strike or the assertion of
management’s position via a lockout, these actions serve as mechanisms to address workplace issues
and advance the interests of those involved.

In the ever-evolving landscape of labour relations, strikes and lockouts remain pivotal instruments for
shaping the future of work.

Concept of Strike and Lockout in Labour Law

Strike in Labour Law

Definition of Strike

Section 2(q) of the Industrial Disputes Act, 1947 defines a strike as “a group of workers in an industry
stopping work together, or a joint refusal by any number of workers, who are or have been
employed, to continue working or accept employment.”

Essentials of a Strike

According to this definition, a strike must include the following:

In State of Bihar vs. Deodas Jha (AIR 1958, Pat. 51), it was decided that the duration of a strike
doesn’t affect its definition; even a short stoppage or refusal to work can be considered a strike.

In Kameswar Prasad vs. State of Bihar (AIR 1962, SC 1166), the Supreme Court clarified that the right
to strike is not a fundamental right. Instead, it’s a means for workers to express their grievances to
employers and seek resolution.

Legal Status of Strike in Labour Law

Section 22 of the ID Act prohibits strikes in Public Utility Services and Section 23 generally restricts
strikes in any industrial establishment, making strikes mostly illegal. However, Section 24(3) specifies
that a strike in response to an illegal lockout won’t be illegal. There are also situations when a strike
can be considered legal. Section 20(1) outlines that conciliation proceedings begin when a notice is
received by the conciliation officer or when the dispute is referred to the Board.

During the period between 14 days after issuing a strike notice and before six weeks pass from that
date, a legal strike can occur in Public Utility Services, provided the dispute hasn’t been referred yet.

Another scenario in which a strike becomes legal is as follows: If a new strike notice is issued on the
same matter as a previous dispute for which the conciliation officer reported a failure, the union can
proceed with a legal strike after the mandatory 14-day cooling-off period unless the government
refers it to the Labour Court or Industrial Tribunal. The failure of previous conciliation proceedings on
the same grounds applies to the fresh strike notice.
In non-public Utility Services, there’s no specific time window. Unless the establishment’s Standing
Orders prohibit or regulate strikes or ongoing negotiations or conciliation proceedings, workers can
engage in a strike without prior notice.

One might question the general prohibition on strikes in any industrial establishment under Section
23. The answer lies in the fact that this prohibition applies only when it breaches a contract.

A strike is illegal if it:

 Violates the Contract of Employment.

 Occurs in Public Utility Services.

 Doesn’t follow the notice requirement of Section 22(1).

 Begins during an Award or settlement period.

 Begins during or within 7 days of completing Conciliation Proceedings.

 Begins during or within Two months of completing Adjudication Proceedings.

Is Strike a Fundamental Right?

Although the Constitution guarantees the right to form a union and the right to freedom of speech
and expression under Articles 19(1)(c) and 19(1)(a), respectively, the right to strike is not derived
from these provisions. However, peaceful demonstrations are permitted.

Lockout in Labour Law

Definition of Lockout

Section 2(I) of The Industrial Disputes Act, 1947 defines a lockout as the “temporary closure of a
workplace, the suspension of work, or an employer’s refusal to continue employing any number of
workers during their period of employment.” A lockout is when an employer temporarily closes a
workplace or stops work. It’s different from permanently closing a business. Before 1860, a lockout
was referred to as a “turn-off.” A lockout serves as the employer’s counterpart to a strike.

Essentials of a Lockout

To constitute a lockout in labour law, the following conditions must be met:

 Temporary closure of the workplace by the employer or the suspension of work by the
employer or the employer’s refusal to continue employing any number of workers.

 These actions should be motivated by coercion.

 It should relate to an industry as defined in the Act.

 There should be a dispute in the industry.

Legal Status of Lockout

A lockout declared in violation of Section 10(3), Section 10A(4A) (i.e., declaring a lockout when an
industrial dispute has been referred) is considered illegal. Additionally, a lockout declared without
complying with Section 22 and 23 (i.e., issuing a notice before the lockout) is illegal (Section 24(1)).
However, a lockout declared in response to an illegal strike is considered legal (Section 24(3)). A legal
lockout can become a powerful tool for an employer in critical situations.
Section 2(1) defines the term “lockout.” However, the current definition is incomplete. The term was
originally and correctly defined in the Trade Dispute Act, 1929. The present Act has adopted the
current definition from the Trade Dispute Act but has omitted the words “when such closure,
suspension, or refusal occurs as a result of a dispute and is intended to compel those persons or to
assist another employer in compelling persons employed by him to accept terms or conditions of, or
affecting employment.”

In the case of General Labour Union (Red Flag) v/s B. V. Chavan And Ors on 16 November 1984, the
Supreme Court of India ruled that imposing and continuing a lockout that is deemed illegal under the
Act is an unfair labour practice.

In Sri Ramchandra Spinning Mills v/s State of Madras, the Madras High Court included the deleted
portion in the definition to interpret the term “lockout.” According to the Court, even if a flood, fire,
or natural disaster causes the closure of the workplace or the suspension of work or the employer
refuses to continue employing previous workers, it would still be considered a lockout, subjecting the
employer to penalties under the Act. This demonstrates that the current definition does not fully
convey the concept of a lockout.

Lockout, When Legal

The Act treats strike and lockout on the same basis, treating one as the counterpart of the other.
Therefore, the provisions of the Act that prohibit strikes also prohibit lockouts.

The reasons for banning or prohibiting lockouts are the same as those for banning or prohibiting
strikes. This is because employers and employees are not discriminated against in their respective
rights in the field of industrial relations between the two. As such, a lockout, if not in conflict with
Section 22 and 23, may be considered legal or not legal. Sections 24(1)(iii), 10(3) and 10A(4A)
similarly govern lockouts.

A lockout in response to an illegal strike is not deemed illegal. However, if a lockout is illegal, Section
26(2), 27 and 28 come into play to address the situation. The Act does not provide specific guidelines
for settling claims arising from illegal lockouts. Courts have adopted the approach of assigning blame
between the employer and employees. This once again highlights the concept of the justifiability of a
lockout.

The Difference Between Strike and Lockout

Initiators of the Actions

One of the most critical difference between strike and lockout lies in who initiates these actions. A
strike is typically initiated by employees or labour unions representing them. Employees collectively
cease work or jointly refuse to continue working to address grievances, advocate for better working
conditions, or assert their labour rights. This collective action represents the workers’ unified stance
in the workplace.

In contrast, a lockout is initiated by employers. Employers use lockouts as a strategic move to gain an
advantage during labour disputes or negotiations. Lockouts involve the temporary closure of the
workplace, the suspension of work, or the refusal to continue employing a group of workers.
Employers employ this tool with the intention of pressuring employees to accept specific terms or
conditions. Lockouts reflect the exercise of authority by management.

Purpose of the Actions

The difference between strike and lockout also extends to their underlying purposes:

Strikes are initiated to address grievances or disputes related to wages, benefits, working conditions,
or other employment terms. Employees strike with the goal of compelling their employer to address
these issues, advocating for fairness and justice in the workplace.

Lockouts, on the other hand, are strategically employed by employers to gain an upper hand in
labour negotiations. The purpose of a lockout is to pressure employees into accepting the employer’s
terms, often with the aim of achieving a more favourable outcome in negotiations. Lockouts are a
means for employers to assert their stance and protect their interests.

Duration and Temporary Nature

Both strikes and lockouts are temporary in nature, but their impacts differ:

Strikes involve a temporary cessation of work by employees. During a strike, employees may engage
in activities such as picketing or other forms of protest to convey their message. However, the intent
is not to permanently shut down the workplace but to achieve specific goals or concessions.

Lockouts, similarly temporary, entail the temporary closure of the workplace or the suspension of
work. Employers employ lockouts as a short-term measure to disrupt employees’ activities and
pressure them to accept certain terms or conditions. The workplace closure during a lockout is not
permanent.

Collective vs. Employer-Centric Action

The nature of strike and lockout underscores the collective versus employer-centric dynamics:

Strikes represent collective actions by employees, demonstrating solidarity and unity among workers.
Strikes underscore the power of employees when they come together to advocate for their rights
and interests.

Lockouts are centred on employers’ actions. Employers exercise their authority to impose a lockout
as a strategic manoeuvre to influence labour negotiations or disputes. Lockouts place employers in a
position of control.

Legal Implications of Strike and Lockout in Labour Law

Both strikes and lockouts are subject to legal regulations, but their legality is contingent on different
criteria:

Strikes are subject to legal regulations governing their conduct. Violations of these regulations can
lead to strikes being declared illegal, making workers vulnerable to penalties or consequences.

Lockouts, too, are subject to legal oversight. Employers must adhere to legal requirements when
imposing lockouts and violations of these requirements can result in lockouts being declared illegal.

Strike vs Lockout

Here’s a table summarising the key difference between strike and lockout:

Aspect Strikes Lockouts

Initiator Employees or labour unions initiate Employers initiate

 Pressure employer to address grievances
Purpose Pressure employees to accept employer’s terms
or demands

Duration Temporary cessation of work Temporary workplace closure, not a permanent shutdown

Collective Action Collective action by employees Employer-centric action

Motivation Employee grievances Labour disputes, often related to negotiations

Subject to legal regulations; violations Subject to legal regulations; violations can lead to legality
Legal Regulations
can lead to legality challenges challenges

Laws on Strike and Lockout

General Restriction on Strike and Lockout (Section 23)

This rule applies to all industrial places, including public utility services. Workmen can’t strike against
their work contract and employers can’t impose a lockout as follows:

The difference between Section 22(1) and (2) and Section 23 is that in the former, a notice of strike
or lockout is required, but in the latter (Section 23), it isn’t needed.

Illegal Strike and Lockout (Section 24)

According to Section 24(1), a strike or lockout is considered illegal when:

Prohibition of Financial Support for Illegal Strike and Lockout (Section 25)

No one should knowingly provide money to support any illegal strike or lockout directly.

Penalties for Illegal Strikes or Lockouts (Sections 26-31)

Section 26 outlines penalties for both strike and lockout. However, before imposing a penalty under
this act, it must be proven beyond a reasonable doubt that:

In Madurantakam Co-op Sugar Mills vs. Vishwanathan, (2005) 3 SCC 193, an employer charged all the
workers who participated in an illegal strike with allegations of misconduct, instigation and
participation in an illegal strike. Some workers justified their actions, while others apologised. The
employer sent warning letters to those who apologised but didn’t fire them, whereas they fired
those who didn’t apologise. The apex court ruled that workers can’t be dismissed since they didn’t all
stand on the same footing and the same view can’t be applied.

In Mgmt. Oriental Tpt. Ltd vs. S. T. Ramkrishna, 2006I LLN 598, when workers in an establishment
went on strike and were referred to the adjudication tribunal at the intervention of authorities, they
were charged with using offensive language and violent acts. They were found guilty in a domestic
inquiry and then dismissed. The employer sought approval under section 33(2) of the act, but it was
rejected by the tribunal. Later, the high court of Karnataka held that the use of offensive language
was not related to the strikes or any connected matter. The application was rejected and remanded
for fresh consideration.

Penalties for Instigation (Section 27)

Anyone who encourages, incites, or lures others to take part in illegal strikes or lockouts commits a
crime and can be punished with imprisonment for up to six months, a fine of up to one thousand
rupees, or both.

Penalties for Providing Financial Aid to Illegal Strike and Lockout (Section 28)

Anyone who encourages, incites, or lures others to take part in illegal strikes or lockouts commits a
crime and can be punished with imprisonment for up to six months, a fine of up to one thousand
rupees, or both.

Penalties for Other Offences (Section 31)

In Bharat Petroleum Corporation Ltd. vs. Petroleum Employee’s Union and Others, (2003) III
L.L.J.229(Mad), the High Court of Madras determined that parties to a contract were bound by
conciliation proceedings and had to await a decision. As the conciliation proceedings were ongoing,
the prohibition in Section 22(1)(d) of the Industrial Disputes Act, 1947 came into effect. Thus, the
respondent’s strike was considered illegal under Section 24.

The Supreme Court, in India General Navigation and Railway Company Ltd and Another vs. Their
Workmen (AIR 1960, SC 219), held that when there’s an illegal strike, the workers wouldn’t be
entitled to any wages or compensation and they could be subject to punishment through discharge
or dismissal.

Conclusion

Strike and lockout, both are powerful tools in the realm of labour relations, each serving as a means
for employees and employers to assert their interests and leverage negotiations. While both actions
disrupt workplace operations, they differ fundamentally in their initiation, purpose and legal
implications.

The difference between strikes and lockouts is not merely procedural; they represent a fundamental
distinction in perspective. Strikes embody the collective will of workers, seeking to balance the scales
of power in the workplace. Lockouts, conversely, reflect the employer’s exercise of authority, often
with the aim of achieving a favourable outcome in negotiations.

Lay-off, Retrenchment and Closure & its Special Provision

The Industrial Disputes Act of 1947 is a significant piece of legislation that deals with employment-
related matters, including the concept of layoff and retrenchment.

Importantly, regardless of whether an employee is laid off or retrenched, the loss of employment is
not attributed to the employee’s actions or fault. These employment actions are initiated by
employers due to various operational and economic factors. The Industrial Disputes Act provides a
legal framework to ensure that layoffs and retrenchments are carried out fairly and with appropriate
procedures to protect the rights and interests of both employers and employees.

Definition of Layoff

A “layoff” means when an employer doesn’t offer a job to a worker whose name is on the worker list
for their industrial business. This happens when the employer can’t provide work due to reasons like
not having enough electricity, coal, materials, having too many goods in stock, machines breaking
down, natural disasters or other good reasons. This definition is in Section 2(kkk) of the Industrial
Disputes Act, 1947.
Requirements for a Layoff

To have a layoff:

1. The employer can’t provide work to the workers.

2. This inability to provide work should be due to a lack of electricity, coal, materials, excess stock,
machine breakdown, a natural disaster or other valid reasons.

3. The worker’s name should be on the employer’s list of workers for their industrial business.

4. The worker shouldn’t have been fired.

If a worker’s name is on the employer’s list and they show up for work but aren’t given work within
two hours, they are considered laid off for that day. Similarly, if a worker is asked to work during the
second part of their shift and gets work, they are seen as laid off for the first part of the day. If they
show up for work during the second part of the day and still don’t get work, they are considered laid
off for the whole day.

Definition of Retrenchment

Retrenchment, as defined in Section 2(oo) of the Industrial Disputes Act, 1947, means letting go of an
employee for reasons other than as a punishment for disciplinary actions. However, it doesn’t
include voluntary retirement, retirement at the specified age in the employment contract,
termination due to ongoing illness or the natural conclusion of an employment contract.

Requirements for Retrenchment

For a retrenchment to take place:

1. The employer must provide the employee with a written notice explaining the reasons for
retrenchment or they must pay the employee their salary for the notice period, as per this Section.

2. When an employee is let go, the employer must give them compensation equivalent to 15 days’
average wages for each year they’ve continuously worked.

3. A notice of the reduction in the workforce must also be given to the relevant government.

Difference Between Layoff and Retrenchment

Layoff and retrenchment are two distinct employment actions with important implications for both
employers and employees. While they may appear similar at first glance, they differ in several
significant aspects.

In this comprehensive discussion, we will explore the key differences between layoff and
retrenchment, considering various aspects such as purpose, nature, duration and impact on both
parties involved.

1. Purpose

Layoff: Layoff is typically initiated as a temporary measure in response to short-term challenges faced
by the employer, such as seasonal fluctuations, economic downturns or unforeseen circumstances
like the COVID-19 pandemic. The primary purpose of a layoff is to reduce labour costs during a
temporary period.
Retrenchment: Retrenchment, on the other hand, is a permanent action taken by the employer to
restructure the workforce for long-term efficiency gains. It aims to permanently reduce the number
of employees to align with operational needs.

2. Nature

Layoff: A layoff is a temporary suspension of employment. During a layoff, employees remain

connected to the employer and there is an expectation of reemployment when conditions improve.

Retrenchment: Retrenchment results in a permanent termination of employment. The employment

relationship ceases and there is no expectation of rehiring the affected employees.

3. Impact on Employees

Layoff: Employees experiencing a layoff face temporary disruption in work and income. However,
they retain the expectation of returning to their jobs.

Retrenchment: Employees subjected to retrenchment face permanent job loss, leading to a

prolonged period of uncertainty regarding future employment prospects.

4. Impact on Employers

Layoff: Employers use layoffs as a cost-cutting measure during temporary economic downturns. It
allows them to reduce labour costs temporarily while retaining the option to rehire when the
situation improves.

Retrenchment: Retrenchment is typically implemented for long-term efficiency gains. Employers

permanently reduce the workforce to align with operational needs and reduce overhead costs.
However, they may lose skilled workers.

5. Legal Framework

Layoff: The legal framework for layoffs often ensures that employees receive recall rights. Layoff
terms are typically outlined in employment contracts or collective bargaining agreements.

Retrenchment: Retrenchment is subject to stricter legal regulations in many countries due to its
permanent nature. Legal requirements may include notice periods, severance pay and justifiable
reasons for termination.

6. Employer-Employee Relationship

Layoff: During a layoff, the employer-employee relationship remains intact. Employees expect to
return to their jobs when the layoff period ends.

Retrenchment: In cases of retrenchment, the employment relationship ceases to exist. Employees

are not expected to return to the same employer.

7. Industrial Establishment Impact

Layoff: During a layoff, the industrial establishment may temporarily halt operations or reduce
production capacity due to decreased workforce availability.

Retrenchment: In retrenchment, the industrial establishment continues its regular operations

without the terminated workers, aiming for more efficient and cost-effective operations.

8. Employee Recall
 Layoff: Layoffs often include provisions for employee recall. Employers can rehire employees when
business conditions improve without the need for a new hiring process.

Retrenchment: In retrenchment, there is typically no provision for employee recall, as the

termination is permanent.

Here is a table summarising the key differences between layoff and retrenchment:

Aspect of Difference Layoff Retrenchment

Temporary, in response to short-

Purpose Permanent, for long-term efficiency gains
term issues

Temporary suspension of
Nature Permanent termination of employment
employment

Temporary disruption, expectation Permanent job loss, prolonged

Impact on Employees
of return uncertainty

Long-term efficiency gains, possible loss

Impact on Employers Temporary cost reduction
of skilled workers

Subject to stricter regulations, including

Often includes recall rights, outlined
Legal Framework notice periods and justifiable reasons for
in contracts or agreements
termination

Employer-Employee
Remains intact during a layoff Ceases to exist in retrenchment
Relationship

Industrial Establishment Temporary halt or reduced Continues regular operations with fewer
Impact production capacity workers for efficiency

Provision for rehiring employees

Employee Recall Typically no provision for employee recall
when needed

Conclusion

Layoff and retrenchment are distinct employment actions governed by the Industrial Disputes Act of
1947 in India. Layoff is a temporary suspension of employment, often used in response to short-term
challenges, while retrenchment is a permanent termination aimed at long-term operational
efficiency. Layoffs are typically subject to specific regulations, allowing for recall of employees, while
retrenchment involves legal provisions for notice periods and justifiable reasons.

Both actions are crucial tools for employers to manage their workforce, but they serve different
purposes and have varying implications for employees and employers. Understanding the differences
between layoff and retrenchment to understand the basic concepts related to labour laws.
Definition of Closure in Labour Law (Section 2(cc))

“Closure” means permanently shutting down a workplace or a part of it.

According to Industrial Disputes Act, 1947, “Closure” is when a workplace or part of it is permanently
shut down. The employer must follow a specific process outlined in the law when closing the
establishment.

However, Closure in Labour Law procedures do not apply to projects for building construction, like
buildings, bridges, roads, canals, dams or other construction work.

Application of Closure in Labour Law

If an employer plans to close their establishment, they must apply at least ninety days in advance to
the appropriate government. They also need to give a copy of the application to the workers’
representatives.

The government will review the application, providing a fair chance for both the employer and
workers to be heard. After the review, the government may approve or deny the closure. If there’s no
response within sixty days, permission is considered granted and there’s a provision for a review of
the decision.

Provisions of Closure in Labour Law

Section 25(O) of the Industrial Disputes Act, 1947 allows the closure of a business without prior
permission if certain conditions are met. Here are the key points:

Conditions for Closure in Labour Law:

An employer can close a business without seeking prior permission if it has less than 50 workers and
compensates the workers with 15 days’ average pay for each completed year of service.

Notice to Authorities and Workers:

The employer must notify the government authority and workers at least 60 days in advance or
provide wages instead of notice.

Compensation Procedure:

Compensation must be paid at the time of closure or within 15 days from the notice, whichever
comes first.

Penalty for Non-compliance:

Failure to comply with Section 25(O) can result in imprisonment for up to six months, a fine of up to
Rs. 5,000 or both.

Note: Section 25(O) applies only to businesses with less than 50 workers. For those with 50 or more,
prior government permission is needed under Section 25(N) of the Industrial Disputes Act.

Undertakings Covered under Section 25(O)

According to Section 25(O) of the Industrial Disputes Act, 1947, an employer can shut down a
business without needing permission from the government if it meets these conditions:

 The business has fewer than 50 workers.

  The employer provides compensation to the workers equal to 15 days’ average pay for each
completed year of continuous service.

This means that only businesses with less than 50 workers fall under the scope of Section 25(O). It’s
crucial to understand that the term ‘workmen’ includes not only permanent employees but also
contractual, casual and temporary workers who have worked for more than one year in the
establishment.

Additionally, it’s worth noting that certain types of businesses are exempt from the Industrial
Disputes Act and therefore, they are not covered by Section 25(O). For instance, establishments
involved in agricultural or horticultural operations, fishing or animal husbandry are exempt. Similarly,
government-owned or controlled establishments are exempt unless they are engaged in commercial
activities.

Procedure for Closure of an Undertaking

The steps for closing an establishment under the Industrial Disputes Act, 1947, depend on the
number of workers employed and the reason for closure. Here are the general procedures:

Closure with Less Than 50 Workers (Section 25(O))

 Less than 50 workers: If the establishment has fewer than 50 workers, the employer can
close it without government permission. However, the employer must pay compensation
equal to 15 days’ average pay for each completed year of service.

 Notice: The employer must inform the appropriate government authority and workers at
least 60 days in advance.

Closure with 50 or More Workers (Section 25(N))

50 or more workers: If there are 50 or more workers, the employer needs prior permission from the
government. Notice to the government and workers is required 60 days in advance. The government
decides based on the employer’s reasons and worker interests.

Voluntary Retirement Scheme (VRS)

The employer may propose a VRS, offering a package with compensation, pension and benefits. Both
parties must agree and terms are formalised in an agreement.

Conciliation Process

If disputes arise, the Industrial Disputes Act allows a conciliation process. A conciliation officer may
be appointed to mediate and reach a settlement.

Undertakings Excluded from Prior Permission

Certain establishments are exempt from obtaining government permission before Closure in Labour
Law. Here are the exclusions:

 Less than 100 workers (Section 25FFA): Establishments with fewer than 100 workers can
close without prior government permission. A 60-day notice to the government and workers
is required.
  Natural disasters: In Labour Law, Closure due to natural calamities, like floods or
earthquakes, can occur without prior government permission. Prompt notice to the
government and workers is essential.

 Financial challenges: Closure due to financial difficulties is allowed without prior

government permission. Compensation must be paid and a 60-day notice to the government
and workers is required.

Seasonal Work (Exempted from Industrial Disputes Act)

 Seasonal work: Establishments engaged in seasonal work, such as agriculture, are exempt
from Industrial Disputes Act provisions. They don’t need prior permission but must comply
with notice and compensation requirements.

 Important Note: Even if exempt, establishments must follow notice and compensation rules
specified in the Industrial Disputes Act.

Grant and Refusal of Permission for Closure in Labour Law

According to the Industrial Disputes Act, 1947, if an employer intends to close down an
establishment with 50 or more workers, prior permission from the government authority is required.
Here’s the process for granting or refusing permission:

Grant of Permission of Closure in Labour Law

 Approval Criteria: The government authority reviews the reasons provided by the employer
for Closure in Labour Law. If satisfied and if the employer complies with all Industrial
Disputes Act requirements, permission may be granted.

 Notice Requirement: The employer must notify the government authority and workers at
least 60 days in advance if permission is granted.

Refusal of Permission of Closure in Labour Law

 Denial Criteria: If the government authority is unsatisfied with the reasons or if the employer
doesn’t comply with Act requirements, permission may be refused.

 Legal Recourse: In case of refusal, the employer can seek resolution through the Labour
Court or Industrial Tribunal. These bodies may either support the government’s decision or
order the employer to reinstate workers with back wages.

In summary, the grant or refusal of closure permission is at the discretion of the government
authority. It depends on the employer’s reasons and consideration of workers’ interests. Employers
must follow Industrial Disputes Act procedures to protect workers’ interests during Closure in Labour
Law.

Deemed Grant of Permission of Closure in Labour Law

According to the Industrial Disputes Act, if an employer wants to close an establishment with 50 or
more workers, they must seek prior permission from the government authority. If the government
authority does not respond within specified time limits, the permission is deemed to be granted.
Here are the time limits:

Establishments with Less Than 100 Workers

Decision within 60 days: For establishments with less than 100 workers, the government must
communicate its decision within 60 days of receiving the application.

Establishments with 100 or More Workers

Decision within 90 days: For establishments with 100 or more workers, the government must
communicate its decision within 90 days of receiving the application.

If the government authority fails to communicate its decision within these time limits, permission for
Closure in Labour Law is deemed to have been granted. However, it’s crucial to note that even if
permission is deemed, the employer must still adhere to notice and compensation requirements
outlined in the Industrial Disputes Act.

Appeal Against Closure in Labour Law

Under the Industrial Disputes Act, 1947, if the government authority denies permission for closing an
establishment, the employer can appeal to the Labour Court or Industrial Tribunal within 60 days of
receiving the order. This appeal is also applicable if permission is granted but with unacceptable
conditions. Here’s the appeal process:

Filing of Appeal

The employer must submit an appeal to the Labour Court or Industrial Tribunal within 60 days from
receiving the government authority’s order. The appeal should follow the prescribed format and
include necessary documents.

Notice to Other Party:

The employer needs to notify the other party (workmen or their representatives) within 7 days of
filing the appeal.

Appeal Hearing on Closure in Labour Law

The Labour Court or Industrial Tribunal is required to conduct the appeal hearing within 45 days of
filing. Both the employer and the workmen or their representatives have the chance to present their
cases and provide evidence.

Decision:

The Labour Court or Industrial Tribunal can either uphold the government authority’s decision or
order the employer to reinstate workmen with back wages. The decision is final and binding on both
parties.

Illegal Closure:

An illegal closure occurs when an employer shuts down an establishment without following
procedures outlined in the Industrial Disputes Act, 1947. This is a serious violation with legal
consequences:

Reinstatement with Back Wages

Workmen affected by an illegal closure are entitled to reinstatement with full back wages. The
Labour Court or Industrial Tribunal may order the employer to reinstate the workmen.

Penalties:
The employer may be liable to pay a penalty if found guilty of illegal closure. This penalty can be up
to three months’ wages of the affected workmen.

Criminal Prosecution:

In severe cases, the employer may face criminal prosecution for an illegal closure. Penalties for such
offences may include imprisonment and/or fines.

Illegal closures have serious consequences, emphasising the importance of complying with the
Industrial Disputes Act’s procedures and requirements to ensure fair treatment of workmen.

Conclusion

Closure in labour law refers to the permanent shutdown of a workplace or part thereof. It is
governed by the Industrial Disputes Act. The law establishes specific procedures for closure based on
the number of workmen employed and the reasons behind the closure. If an establishment has 50 or
more workmen, the employer must seek prior permission from the appropriate government
authority.

The closure process includes provisions for grant and refusal of permission, with an avenue for
appeal. Illegal closure, without adherence to mandated procedures, carries severe consequences.
Closure in labour law is pivotal for maintaining a balance between employer interests and the rights
of workmen, ensuring a fair and regulated approach to workforce management.

Special Provision relating to Lay-Off

Section 25-M 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 [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],

(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 subsection (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.

(10) The provisions of section 25C (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.

Reasonable restrictions-
In order to prevent hardship to the employees and to maintain higher tempo of production and
productivity, section 25M of the Industrial Disputes Act, 1947 puts some reasonable restrictions on
the employer’s right to lay-off, retrenchment and closure. Section 25-M makes it clear that no
workmen whose name is borne on the muster rolls of his employer shall be laid off without previous
permission of such authority as may be specified by the appropriate government unless such lay off
is due to shortage of power or natural calamity and in case of a mine it is due to fire, flood, etc.

Constitutional Validity of Section 25-M

In Papnasam Labour Union V. Madhura Coats Ltd. And another the constitutionality of Section 25-M
of Industrial Disputes Act, 1947 was challenged on the ground that the section as amended by the
Amendment Act of 1976 imposed unreasonable restrictions in so far as it required prior permission
to be obtained to effect lay-off and as such it was ultra vires and void. It was held that the object of
Section 25-M is to prevent avoidable hardship to the employees resulting from lay-off and maintain
higher production and productivity by preserving industrial peace and harmony. It was further
pointed out that the legislature has taken care in exempting the need for prior permission to lay-off
in Section 25-M if such lay-off is necessitated on account of power of failure or natural calamities
because such reasons being grave, sudden and explicit, no further scrutiny is called for. Therefore, in
the greater public interest for maintaining industrial peace and harmony and to prevent
unemployment without just cause, the restriction imposed under sub-section (2) of Section 25-M
cannot be held arbitrary, unreasonable or far in excess of the need for which such restriction has
been sought to be imposed. Criminal cases need not be pursued, not only within the ambit of
Section 482 of Criminal Procedure Code but in special facts of the case will also secure the ends of
justice.

Special Provision Relating To Retrenchment

Section 25-N Condition 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 the 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.
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.]

The infirmity in retrenchment by reference to section 25N cannot be ventured to be found out
without laying factual foundation attracting applicability of the provision.

It is incumbent on the management to prove that the copies of the application as required by section
25N read with rule 76A of the Industrial Disputes Rules, 1957, were served on the concerned
workman.

Constitutional Validity of Section 25-N

In Workmen of Meenakshi Mills Ltd., etc. V. Meenakshi Mills Ltd. And another, the Supreme Court
held that Section 25-N of the Act as constitutionally valid on the ground that the restrictions imposed
on the right of employer to retrench workmen is in interest of the general public. It does not infringe
Article 19(1) (g) of the Constitution and duty to pass a speaking order and affording opportunity to
the parties concerned with judicial power while functioning under sub-section (2) of Section 25-N
and hence no appeal lies to Supreme Court against an order passes under sub-section (2) of Section
25-N.

In Uttaranchal Forest Development Corporation and Another v. Jabar Singh and Others, the
services of the respondent workman were retrenched by notices in compliance with Section 6-N of
the U.P. Industrial Disputes Act, 1947. Labour Court gave an award holding the retrenchment as valid.
The award was challenged in the High Court and the Court directed reinstatement with back-wages.
The question for consideration was whether the corporation was an industrial establishment within
Section 25-L of the Industrial Disputes Act, 1947 and if so whether the retrenchment was not valid
for non-compliance of Section 25-N of the Industrial Disputes Act, 1947.

The Supreme Court observed that the process of cutting tress by axe and changing the shape by saw
and conversion of tress into logs for purpose of sale and disposal fell within the scope of
manufacturing process under Section 2-K of the Factories Act, 1948.

The establishment of appellant was therefore, held, to be an industrial establishment under Section
25-L of the Industrial Disputes Act, 1947 and Section 25-N was applicable.

The appellant did not comply with the two requirements of Section 25-N of the Industrial Disputes
Act, 1947 namely giving three month notice or wages in lieu of notice and taking permission from
the appropriate government. The retrenchment notices were therefore illegal and workmen were
held entitled to be reinstatement with full back wages and continuity of service.

SPECIAL PROVISION RELATIONG TO CLOSURE

Section 25-O 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 the 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 subsection (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.]

In S. G. Chemicals and Dyes Trading Employees Union v. S. G. Chemicals and Dyes Trading Limited
and Others, the respondent company was engaged in business of pharmaceuticals etc. and was
operating in Bombay through three Divisions situated at different places. The pharmaceuticals, the
Dyes, and the Marketing and Sale Divisions situated at Worly, Trombay and Churchgate respectively.
The registered officer of the Company was situated at Churchgate. The Company gave notice to the
Government under Section 25-FFA (1) of its intention to close down its Marketing and Sales Division
employing 90 workmen at Churchgate. Copies of the said notice were sent to the Commissioner of
Labour, Maharashtra and the Union. Pursuant to this notice the Division of Churchgate was closed
down and the Company agreed to pay compensation under Section 25-FFF of the Industrial Disputes
Act, 1947. The Union protested against the termination of the services of the workmen and
complained that the closure was contrary to the provisions of Section 25-O of the Industrial Disputes
Act, 1947 and the Company had committed unfair labour practice under the Maharashtra
Recognition of Trade Unions and Prevention of the Unfair Labour Practice Act, 1971. The union
contended that for the purpose of Section 25-O all the workmen working in all three divisions of the
Company should be taken into consideration as there was functional integrity amongst all the three
Divisions. It was held that the Section 25-O applies to the closure of undertaking of an industrial
establishment and not to the closure of an industrial establishment. It also does not require that an
undertaking of an industrial establishment should also be an ˜industrial establishment.

˜Undertaking™ means part of an ˜industrial establishment. Undertaking and industrial

establishment. Undertaking and industrial establishment taken together constitute one
establishment. Section 25-O would apply to the closure of an undertaking provided the condition laid
down in Section 25-K is fulfilled. Further undertaking of an industrial establishment need not to be a
factory. Consequently it was held that the closure of the Churchgate division was illegal as it was in
contravention of the provisions of Section 25-O and the workmen whose services were terminated
on account of such illegal closure are entitled to receive their full salary.

Applicability of Section 25-O

This section deals with the permission for closure of undertaking.
In Hindalco Industries Ltd v Union of India and Others, it was held that even though the closure of an
undertaking was not a planned and voluntary closure by the company Section 25-O of the Industrial
Disputes Act, 1947 would be applicable. It was also pointed out that even if an undertaking is closed
for reasons beyond its control Section 25-o would be applicable and the conditions imposed in the
order of the government granting permission for the closure were valid and binding on the appellant
company.

Absorption in Service
In Managing Director, Karnataka Forest Development Corporation Ltd. v. Workmen of Karnataka
Pulpawood Ltd. And others, the private respondents were the workmen of a joint sector company.
The State Government granted necessary permission to close down the company. The matter
regarding closure of the company was not in dispute. Only the impugned order of the High Court
directing the absorption of respondent’s workmen into service of the appellant corporation is
challenged in this appeal.
Allowing the appeal it was held that in the event of undertaking being closed down, the only right
which assures in favour of the workmen is to obtain compensation as provided. Both merger of two
undertakings and the closure of one undertaking do not stand together. As such if the workmen think
that any other right has accrued to them, they have to approach appropriate forum and civil writ
petition is not maintainable.

Constitutionality of old Section 25-O

In Excel Wear v. Union of India, it was held that Section 25-O of the Industrial Disputes Act, 1947 as a
whole and Section 25-R in so far as it relates to the awarding of punishment for infraction of the
provisions of Section 25-O are constitutionally bad and invalid for violation of Article 19(1) (g) of the
Constitution. It was further held that it is true that Chapter V-B deals with certain comparatively
bigger undertaking and of few types only. But with all this difference it has not made the law
reasonable. It may be a reasonable classification for saving the law from violation of Article 14, but
certainly it does not make the restriction reasonable within the meaning of Article 19 (6). Similarly,
the interest of ancillary industry cannot be protected by compelling an employer to carry on the
business if he cannot pay even the minimum wages to the labourer.

Within the meaning of Article 19(1) (g) includes right to close down the business and the fact that
the citizen cannot exercise this right as much as the permission of the State Government is required
under Section 25-O before closing down the business, infringes the right given under Article 19(1)
(g). The Supreme Court judgment in Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd would
equally apply to the provisions of Section 25-O as amended by the Act 46 of 1986. The right to close
a business is an integral part of the fundamental right to carry on business and is guaranteed by
Article 19(1) (g) of the Constitution.
Constitutionality of amended Section 25-O

In Orissa Textile and Steel Ltd. v. State of Orissa and Others, the constitutional validity of Section 25
as amended in 1982 was considered. This Section was struck down being unconstitutional inExcel
Wear v Union of India.

In Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd, the constitutional validity of Section 25-
N was upheld by the Supreme Court. Therefore, there had been difference of opinion among the
High Courts on the validity of Section 25-O. it was held by the Supreme Court in the present case that
the amended Section 25-O was not ultra vires the Constitution and it was saved by Article 19(6) of
the Constitution on the following grounds-
(i.) Section 25-o had been enacted to give effect to the directive principles of the Constitution and
was in the interest of general public.
(ii.) Under the amended Section the order granting or refusing permission for closure has to be in
writing and reasons are to be recorded.
(iii.) Even after permission to close being given, the employer had still to give notice and
compensation as specified in Section 25-N.
(iv.) The other defect that no time limit has been fixed while refusing permission to close was now
cured by sub-sections (3), (4) and (5) of amended Section 25-O.
(v.) The restrictions imposed under the amended section were reasonable and in the interest of
general public.
(vi.) As far refusal in case of reasons being genuine is concerned the interest of general public or
other factors might still justify refusal of permission, requiring that business be continued for some
time.
(vii.) The phrase “in the interest of general public” was not vague but was of a definite concept.
(viii.) There was no excessive delegation of power to the executive as the guidelines had been set out
in Section 25-O.
(ix.) There is no substantive vice as the reason for refusal now shall be given in writing after inquiry
and giving opportunity of hearing. Thus, power of government was quasi-judicial.
(x.) Section 25(o) was not discriminatory between, say, a firm of lawyers and a factory or mine.
(xi.) The argument that the reasons gives inExcel Wear case, for striking down Section 25-O had been
considered inMeenakshi Mills, case and as such it was not open to the present bench to reconsider
those reasons was not acceptable to the Supreme Court. It observed that it was the duty of the
Constitution Court to form its own opinion about a given case instead of relying upon the gloss
placed on that case by some other decision.

Section 25-P Special provision as to restarting of undertaking closed down before commencement
of 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 be specified in the order.

Penalty
Section 25-Q Penalty for lay-off and retrenchment without previous permission-
Any employer, who contravenes the provisions of section 25-M or 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.

Section 25-R 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 [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 25P], 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.

It was held inExcel Wear v. Union of India, that Section 25-R in so far as it relates to the awarding of
punishment for violation of provisions of Section 25-O are constitutionally bad and invalid for
violation of Article 19(1) (g) of the Constitution.

Section 25-S Certain provisions of Chapter VA to apply to industrial establishment to which this
Chapter applies-

The provisions of sections 25B, 25D, 25FF, 25G, 25H and 25J in Chapter VA shall, so far as may be,
apply also in relation to an industrial establishment to which the provisions of this Chapter apply.

Worker Re-Skilling Fund; Unfair Labour Practices, Offences and Penalties

The Industrial Relations Code, 2020, a new piece of legislation that the Central Government
combined numerous previous labour regulations into, was put into effect on September 29, 2020.
The Industrial Relations Code aims to create a framework to safeguard employees’ rights to form
unions, to lessen hostilities between employers and employees, and to include mechanisms for
resolving labour disputes.

The Trade Unions Act of 1926, The Industrial Employment (Standing Orders) Act of 1946, and The
Industrial Disputes Act of 1947 were the previous laws governing trade unions, employment
conditions in industrial establishments or undertakings, and the swift resolution of industrial
disputes. The Code is intended to consolidate and amend those laws.

The Code aims to help businesses and workers alike. It seeks to streamline the procedure for
resolving disputes, protect fixed-term employees, require standing orders from all major industrial
businesses, create a fund for retraining laid-off workers, and boost fines to deter non-compliance.
By creating a single bargaining body and granting employers more discretion over operational
choices, it adopts a business-friendly strategy to advance industrial peace.

The Code was developed to promote labour reforms and ease company operations while
safeguarding the rights of employers and employees. The ultimate objective of the Code is to bring
about industrial peace and harmony, as well as to advance industry development by fostering a
positive and amicable interaction between employers and employees.

Worker’s Reskilling Fund

The Industrial Relations Code, 2020, suggests creating a re-skilling fund for employees affected by
layoffs or unit closures. For the first time, the code adds a new requirement for companies to follow
when making layoffs. Employers will now be compelled to contribute once to a government fund for
reskilling, which will be used to provide laid-off workers with training. The necessary payment is
equal to 15 days’ worth of the worker’s income for each employee who is laid off. This is in addition
to whatever additional payments the company is required to make to the employee in the event of a
layoff.

The goal of Section 83 in Chapter XI of the law is for the relevant government to create a worker’s
reskilling fund in order to compensate any industry’s laid-off workers.

Realization of the Right to Social Security of Unorganized Workers in India

What is Reskilling?

Retraining is the process of acquiring new abilities required for doing a completely different
profession. Reskilling has taken off among governments and non-profit groups as a way to help
employees who have been left behind find new occupations. To satisfy workforce needs and survive
in a dynamic economy, firms must adopt this strategy as well. Through reskilling, specific people
could be able to change positions within their existing company or go to a different one. In 2020,
87% of CEOs expect to encounter talent gaps, and fewer than half of them have a solution in
mind, according to McKinsey & Company. By 2025, the World Economic Forum (WEF) predicts that
more than 40% of workers worldwide would need to reskill.13 According to Gartner, 33% of the
abilities listed in the typical job description from 2017 will be obsolete by 2021.

Employees in positions that are no longer needed offer a perfect talent pool that is prepared to be
taught for new duties for businesses that react quickly. The working culture is already well-known to
these employees. They might not even need to go through a drawn-out onboarding process. All of
this has significant financial effects. Companies that don’t fill their talent gaps run the danger of
losing customers or worse. On the other side, those that place a strong focus on retraining can gain
from their efforts.

Benefits Of Reskilling

For Organizations

Avoid layoffs and rehiring: Many businesses experience layoffs as a result of the loss of outmoded
jobs and the changing nature of company. However, layoffs typically come with severance costs and
can be bad for employee morale. Rehiring for new roles also has an own set of costs. Businesses that
reskill employees in open roles can avoid these problems.

Retraining employees also aids in lowering employee turnover. According to IBM, employees who
have access to training are 42% more likely to work for a firm long-term. Reducing turnover benefits
businesses’ financial lines as well as their cultures.

For Workers

 To develop new abilities that may aid in changing career choices or obtaining new
employment. Adjust to a workforce that is changing as a result of automation and
digitalization.

 Present Code: – In an interview with Business Standard, Labour and Employment Minister
Santosh Kumar Gangwar stated, “The employees deserve help in the case of layoff. The 2020
IR Code includes provisions for a worker reskilling fund to assist laid-off employees in
upgrading their skills and finding new employment. Additionally, the state governments have
the authority to impose other sources to replenish this fund.16 As a result, the Code includes
provisions for people who have been laid off to retrain for the first time in order to seek
employment again.
Problems with Reskilling Fund: –

15 DAYS COMPENSATION

K R The new labour code’s retrenchment compensation, according to professor and labour
economist Shyam Sundar of XLRI, was “paltry,” he claimed, considering that certain state
governments, including Rajasthan’s, were providing workers with more severance pay. Additionally,
the idea to demand workers provide evidence of payment and pursue restitution with interest will
result in a state with strict rules and little confidence in its citizens. Additionally, the workers’
available cash won’t be enough to effectively reskill them.

He emphasised that if the amount of retrenchment compensation given for reskilling were more like
when the government first proposed the IR Code in 2015, it had suggested increasing worker
retrenchment compensation for each completed year of service by three times, from 15 days’ wages
to 45 days. The suggestion in the code, nevertheless, was withdrawn after it was submitted and later
accepted in Parliament. Furthermore, the government should boost retrenchment benefits to at
least 30 days of pay for each year that has been completed, as suggested by the Parliamentary
Standing Committee.

Cost Increase

Rituparna Chakraborty, executive vice-president of Team Lease and co-founder, added that the
reskilling fund “would increase employers’ costs, especially for micro, small and medium enterprises
(MSMEs) and the fund might not necessarily give the desired benefits for employees to take up new
employment in a different sector or industry.”

Every time the government implements a new financial programme, the way the money are
managed must be transparent. We already have a number of corpus funds in the nation, including
the social security fund, ESI (workers’ state insurance), and EPF (employees’ provident fund). Now
the government is adding another fund. MSMEs would be worst hurt, and I hope the government
can effectively monitor and use the monies.

Conclusion

The Indian Government has taken a positive step in addressing the issue of reskilling laid-off workers
whose skills have become or will soon become outdated due to technological changes by including
the Workers Reskilling Fund for the first time in the newly drafted Industrial Relations Code, 2020.
The retrenched employees can benefit greatly from this provision if it is applied in accordance with
the letter of the law and with clear regulations that remove any business restraints.

We need to take into consideration the type of sector, the economic and technological needs of
every company are evolving at an unprecedented rate in the 21st century. Disruptive occurrences like
the COVID-19 epidemic have only accelerated this tendency, too. Companies and individuals that
don’t adapt quickly run the danger of falling behind as a result of these developments. Due to the
requirement to reskill at least 1 billion people by 2030, the World Economic Forum recently said that
the world is experiencing a reskilling emergency.

Unfair Labour Practices in Labour Law

The relationship between employers and employees is fundamental to the functioning of any
industrialised society. This relationship is governed by a complex set of laws and regulations designed
to ensure fairness, protect workers’ rights and promote industrial harmony. One of the most
significant areas of concern within labour law is the concept of unfair labour practices, which can be
perpetrated by both employers and employees. These practices are actions that violate the principles
of fairness and equity that underpin labour relations and are strictly regulated by laws such as the
Industrial Disputes Act, 1947.

Unfair Labour Practices: Meaning

Unfair labour practices refer to actions taken by employers or trade unions that violate the rights of
workers or employers, often with the intent to undermine the collective bargaining process or to
create an unfair advantage. These practices are detrimental to the harmonious relationship between
employers and employees and are prohibited under various labour laws.

The Industrial Disputes Act, 1947, is the cornerstone of labour law in India, providing a legal
framework for addressing industrial disputes, protecting workers’ rights and promoting fair labour
practices. The Fifth Schedule of the Act, introduced by the Industrial Disputes (Amendment) Act,
1982, specifically enumerates unfair labour practices by both employers and workers.

The Legal Framework on Unfair Labour Practices: Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947, was enacted to make provisions for the investigation and
settlement of industrial disputes. It applies to the entire country and covers all industries,
irrespective of size. The Act outlines various forms of unfair labour practices and provides
mechanisms for the resolution of disputes arising from such practices.

Key Provisions

 Section 2(ra): Defines unfair labour practices.

 Section 25-T: Prohibits the commission of unfair labour practices by employers, workers or
trade unions.

 Section 25-U: Prescribes penalties for those found guilty of committing unfair labour
practices, including imprisonment for up to six months or a fine of up to one thousand
rupees or both.

The Fifth Schedule of the Act is pivotal, as it details the specific actions that constitute unfair labour
practices on the part of employers, trade unions of employers, workmen and trade unions of
workmen.

Unfair Labour Practices by Employers

Employers hold significant power in the employment relationship and unfair labour practices by
employers often stem from an abuse of this power. The Fifth Schedule of the Industrial Disputes Act,
1947, outlines specific unfair labour practices by employers, which include the following:

Interference with Workers’ Rights to Unionise

Employers are prohibited from interfering with, restraining or coercing workers in their right to
organise, form, join or assist a trade union. Specific examples of such interference include:

 Threatening Workmen with Dismissal: Employers cannot threaten workers with discharge or
dismissal if they join a trade union.

 Threatening Lock-out or Closure: Employers are prohibited from threatening a lock-out

or closure if a trade union is organised.
  Undermining Trade Union Efforts: Employers cannot grant wage increases at crucial periods
of trade union organisation to undermine the efforts of the trade union.

Dominating or Supporting a Trade Union

Employers are also prohibited from dominating, interfering with or contributing support, whether
financial or otherwise, to any trade union. This includes:

 Active Interest in Organising a Union: An employer cannot take an active interest in

organising a trade union of their workmen.

 Showing Partiality: Employers are forbidden from showing partiality or granting favours to
one of several trade unions attempting to organise their workmen.

Establishing Employer-Sponsored Trade Unions

The establishment of trade unions controlled or sponsored by employers is considered an unfair

labour practice, as it undermines the independence and effectiveness of genuine trade unions.

Discrimination Based on Union Membership

Employers are prohibited from discriminating against workmen based on their union membership or
activities. This includes:

 Punishing Union Activities: Discharging or punishing a workman because they urged other
workmen to join or organise a trade union.

 Discriminatory Promotions and Demotions: Refusing to promote or demoting workmen due

to their union activities or giving unmerited promotions to create discord among workers.

 Victimising Office-Bearers: Discharging office-bearers or active members of the trade union

on account of their trade union activities.

Unjust Dismissal

Unjust dismissal is one of the most severe forms of unfair labour practice by employers. The Act
prohibits:

 Victimisation: Dismissing workers by way of victimisation.

 Lack of Good Faith: Dismissing workers not in good faith but as a colourable exercise of the
employer’s rights.

 False Implications: Dismissing workers by falsely implicating them in criminal cases on false
or concocted evidence.

 Untrue Allegations: Dismissing workers on untrue or trumped-up allegations of absence

without leave.

 Ignoring Natural Justice: Dismissing workers in utter disregard of the principles of natural
justice or with undue haste.

Abolishing Regular Work

Employers are prohibited from abolishing the work of a regular nature being done by workmen and
assigning it to contractors as a measure of breaking a strike.
Malafide Transfers

Transferring workers with malicious intent, such as to punish them for union activities, under the
guise of following management policy, is an unfair labour practice.

Good Conduct Bonds

Employers cannot insist upon individual workmen who are on a legal strike to sign a good conduct
bond as a precondition to allowing them to resume work.

Favouritism and Partiality

Showing favouritism or partiality to one set of workers regardless of merit is prohibited, as it creates
discord and undermines the unity of the workforce.

Prolonged Casual Employment

Employing workers as casuals or temporaries for extended periods to avoid granting them the status
and benefits of permanent workers is an unfair labour practice.

Retaliation Against Workers

Discharging or discriminating against workers for filing charges or testifying against the employer in
any inquiry or proceeding relating to an industrial dispute is prohibited.

Recruitment During Strikes

Recruiting new workers during a strike that is not deemed illegal under the Act is an unfair labour
practice.

Failure to Implement Agreements

Failing to implement awards, settlements or agreements reached with workers is prohibited under
the Act.

Use of Force or Violence

Employers must not engage in or encourage acts of force or violence against workers.

Refusal to Bargain Collectively

Employers are required to bargain in good faith with recognised trade unions and refusing to do so is
considered an unfair labour practice.

Illegal Lock-outs

Proposing or continuing a lock-out deemed illegal under the Act is an unfair labour practice and is
subject to penalties.

Unfair Labour Practices by Trade Unions and Workmen

While much focus is often placed on unfair labour practices by employers, it is equally important to
recognise that trade unions and workmen can also engage in unfair practices that disrupt industrial
harmony and violate labour laws. The Industrial Disputes Act, 1947, also outlines unfair labour
practices on the part of workmen and their trade unions.

Supporting Illegal Strikes

Trade unions are prohibited from advising, supporting or instigating strikes that are deemed illegal
under the Act. Illegal strikes disrupt the normal functioning of industries and can lead to severe
economic consequences.

Coercion in Union Membership

Trade unions must not coerce workers to join or refrain from joining a union. This includes:

 Picketing: Trade unions cannot picket in such a manner that non-striking workmen are
physically debarred from entering the workplace.

 Use of Force or Violence: Unions are prohibited from indulging in acts of force or violence or
holding out threats of intimidation against non-striking workers or managerial staff.

Refusal to Bargain Collectively

Just as employers are required to bargain collectively in good faith, trade unions are also obligated to
do so. Refusal to engage in collective bargaining with the employer is considered an unfair labour
practice.

Coercive Activities

Unions are prohibited from engaging in coercive activities that disrupt the industrial peace, such as:

 Go-Slow Tactics: Encouraging or instigating workers to reduce their pace of work

intentionally.

 Squatting on Premises: Occupying work premises after working hours as a form of protest.

 Gherao: Surrounding the managerial or other staff to press for demands.

Demonstrations at Employers’ Residences

Staging demonstrations at the residences of employers or managerial staff is considered an unfair

labour practice and is prohibited.

Damage to Employer’s Property

Inciting or participating in willful damage to the employer’s property is an unfair labour practice and
can result in legal penalties.

Violence and Intimidation

Unions must not engage in violence or intimidation against workers who choose to attend work
during strikes or against managerial staff.

Mechanisms for Addressing Unfair Labour Practices

Addressing unfair labour practices requires a robust legal and institutional framework that provides
avenues for workers and employers to seek redress. The Industrial Disputes Act, 1947, outlines
several mechanisms for the resolution of industrial disputes, which often arise from unfair labour
practices.

Collective Bargaining

Collective bargaining is the process by which workers, through their trade unions, negotiate with
employers on matters such as wages, working conditions and other terms of employment. It is an
essential mechanism for addressing disputes and ensuring that both parties’ interests are
represented.

The process of collective bargaining is most effective when both parties engage in good faith, seeking
to reach a mutually beneficial agreement. It is a cornerstone of industrial relations and plays a crucial
role in preventing and resolving unfair labour practices.

Conciliation

Conciliation is an alternative dispute resolution mechanism where a neutral third party, known as a
conciliator, assists the disputing parties in reaching an amicable settlement. The Industrial Disputes
Act, 1947, provides for the appointment of conciliation officers who facilitate negotiations and help
resolve disputes without resorting to litigation.

The conciliation process is often quicker and less costly than formal legal proceedings and can help
maintain a positive relationship between employers and employees.

Voluntary Arbitration

Voluntary arbitration is another alternative dispute resolution mechanism where the parties in
dispute agree to submit their conflict to an arbitrator, whose decision is binding. This process is
outlined in Section 10-A of the Industrial Disputes Act, 1947.

Arbitration is particularly effective in resolving disputes that cannot be settled through conciliation or
collective bargaining, providing a neutral and legally binding resolution.

Adjudication

When disputes cannot be resolved through collective bargaining, conciliation or arbitration, they
may be referred to statutory bodies such as Labour Courts, Industrial Tribunals or National Tribunals
for adjudication. These bodies have the authority to make legally binding decisions on industrial
disputes.

Sections 7, 7-A and 7-B of the Industrial Disputes Act, 1947, provide for the establishment of these
tribunals, which play a critical role in ensuring that unfair labour practices are addressed in
accordance with the law.

State Legislation on Unfair Labour Practices

In addition to the Industrial Disputes Act, 1947, several states in India have enacted their own
legislation to address unfair labour practices and manage industrial relations. Notable state laws
include:

Bombay Industrial Relations Act, 1946

The Bombay Industrial Relations Act, 1946, applies to the state of Maharashtra and governs
industrial relations and the settlement of labour disputes. The Act provides mechanisms for resolving
conflicts between employers and employees and aims to maintain industrial peace.

Madhya Pradesh Industrial Relations Act, 1960

This Act applies to the state of Madhya Pradesh and prohibits employers from penalising employees
for participating in trade union activities or legal strikes. It provides for the settlement of industrial
disputes and regulates employer-employee relations in certain matters.
Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971

This Act, also known as the MRTU & PULP Act, 1971, applies to Maharashtra and provides for the
recognition of trade unions, promotion of collective bargaining and prevention of unfair labour
practices. It was enacted to create a balanced relationship between employers and employees and to
ensure that workers’ rights are protected.

Landmark Judgments on Unfair Labour Practices

Several landmark judgments have shaped the interpretation and enforcement of laws related to
unfair labour practices in India. These cases have provided clarity on the application of the Industrial
Disputes Act, 1947 and have established important legal precedents.

S.G. Chemical and Dyes Trading Employees’ Union v. S.G. Chemicals and Dyes Trading Limited and
Another, 1986

In this case, the trade union filed a complaint against the company for closing its office without
paying employees their due wages. The Labour Court found the closure illegal and deemed the
termination of services as an unfair labour practice, ordering compensation and reinstatement for
the affected workers.

Regional Manager, SBI v. Mahatma Mishra, 2006

The respondent in this case was terminated without proper notice and the Labour Court ruled this as
an unfair labour practice. The court held that the termination was not casual and that the
management had engaged in unfair labour practices by not providing the respondent with due
process.

Eveready Flash Light Company v. Labour Court Bareilly, 1958

This case involved a worker who was terminated after being put on probation despite having been
tried and tested for his role. The Labour Court found this to be an unfair labour practice, as the
probationary period was used as a tactic to delay granting the worker permanent status.

Hind Construction and Engineering Co. Ltd. v. Their Workmen, 1965

The Supreme Court in this case ruled that the dismissal of workers for a single day of absence was
unjustifiably severe and amounted to victimisation, establishing the principle that disproportionate
punishment can constitute an unfair labour practice.

Gangadhar Pillai v. Siemens Ltd., 2007

In this case, the appellant challenged his termination as an unfair labour practice. The Supreme Court
held that intermittent engagement as a casual worker did not automatically grant permanent status
and the burden of proving unfair labour practices was on the workman.

Conclusion: Unfair Labour Practices

Unfair labour practices pose a significant challenge to maintaining fair and equitable labour relations.
The Industrial Disputes Act, 1947 and its Fifth Schedule provide a comprehensive legal framework for
identifying and addressing these practices. By prohibiting actions that undermine workers’ rights or
disrupt industrial harmony, the Act seeks to promote a balanced relationship between employers
and employees.
Mechanisms such as collective bargaining, conciliation, arbitration and adjudication play a crucial
role in resolving disputes and preventing the escalation of conflicts. Additionally, state legislations
such as the Bombay Industrial Relations Act, 1946 and the Maharashtra Recognition of Trade Unions
and Prevention of Unfair Labour Practices Act, 1971, complement the national legal framework by
addressing region-specific labour issues.

Unit 4: The Code on Wages

Definitions, Minimum Wages

The Minimum Wages Act 1948 is an essential piece of legislation in India. It sets the minimum wages
for all employees. The Act states that the government must fix the minimum wage for each category.

The minimum wages act, 1948, is the minimum amount that an organisation has to pay a particular
employee (skilled or unskilled) for a specific job at a particular time that any contract agreement or
collective agreement cannot reduce. The Minimum Wage Act was first implemented in 1948 and
took effect on 15 March. The Act also created the Tripartite Committee of Fair Wage. This committee
was formed to set the minimum wage guidelines in India. It defined the minimum wage and the
criteria for its calculation. It set the foundation for the wage fixation process in India. The salary
levels are determined based on the number of employees.

Purpose of Minimum Wage Act, 1948

The importance of the Minimum wage act 1948 is to prevent employee exploitation and ensure a
decent living for a worker. The Act provides that the government will fix the minimum wage rate and
revise it every five years. It appoints advisory committees to consider the proposals. The government
must follow the guidelines and implement them as soon as possible. In many cases, this means
announcing the changes to the law before the public.

 The Act was introduced in 1948, and it was amended in 2000

 The changes included a change in the floor level for minimum wages

 Currently, the minimum wage floor in India is 115, but the law also gives exceptions for
certain employees

 The lowest floors are in Andhra Pradesh, Kerala, and Gujarat

 In addition to this, the new law provides for higher minimum wages for workers with
disabilities

The act requires the government to consult with the committee and the representatives of the
people affected by the minimum wage.

 The committee determines the minimum rate of the act

 The government must publish it in the official newspapers and enforce it within three
months

 The government must inform the affected parties of the proposed minimum wage by
publishing the decision in a national daily

 In case of non-payment of wages, the authority must pay ten times the difference

The Objective of the Minimum Wages Act

The Minimum wage Act 1948 accommodates fixing wage rates (time, piece, ensured time, additional
time) for any industry.

1) While fixing hours for an ordinary working day according to the demonstration, ought to ensure
the accompanying:

 The number of hours to be fixed for an ordinary working day should have at least one
stretch/break

 One three-day weekend from a whole week ought to be given to the representative for rest

 Installation for the day chosen to be given for rest ought to be paid at a rate at the very least
the additional time rate

2) If a representative is engaged with work that classifies his service in at least two booked vocations,
the worker’s pay will incorporate a particular compensation pace of all work for the number of hours
devoted at each undertaking.

3) The business must keep records of all workers’ work, wages, and receipts.

4) Appropriate legislatures will characterise and dole out the errand of review and choose examiners
for the equivalent.

Fixation and Revision of Minimum rates

The Minimum Wages Act, 1948, for the most part, indicates the lowest pay permitted by law rates on
an everyday basis and stretches out to the whole nation. It is overhauled every five years, but there
is an arrangement to increment the dearness allowance every two years. ILC first suggested the
standards for fixing and amending minimum wages.

Update of the lowest pay permitted by law rates depends on a ‘typical cost for many everyday items
list’, and wages can be fixed for a whole state, some portion of the state, class or classes, and
occupations relating to these classifications. The obsession with wages depends on the standards
referenced and a compensation board (different for various industries).

Under the Minimum Wages Act, State and Central Governments can fix and reexamine the least
wages.

 The demonstration determines that the “suitable” government ought to improve the wages;
for example, if the wages to be fixed are according to any power of the Central Government
or Railway organisation, then the Central government fixes it

 Assuming that the compensation rate is to be fixed or amended for planned work, the
separate state legislatures set it

 The Centre fixes the National floor level Minimum Wage that is lower than most states’
individual least wages

 The vagueness and cross-over in the locale of government levels have caused discussions
and contentions

 One of such discussions spins around fixing wage paces of MGNREGA plot and a business
ensure drive by the Central Government

Conclusion
The minimum wage act 1948 is significant for employers and employees. It will help reduce the
chances of exploitation and help the worker provide for his family. In addition to this, the act
specifies that the government has the power to fix the minimum rate. Its regulations also require the
government to review the rates every five years. This process is very complicated, but the legislation
outlines the critical points. The law is necessary to reduce the risk of exploitation, and each citizen
must know about this act to have the perfect position in the company.

Payment of Wages, Payment of Bonus

Payment of Wages Act

The Payment of Wages Act, 1936, governs the payment of wages to specific groups of employees.
Know all about it here.

Share

The Payment of Wages Act of 1936 (Act) is primarily intended to help industrial workers who do not
earn a lot of money. It covers all employees who work in a factory, through a subcontractor, or
directly with the railway administration, and also those who operate in the industrial sector, as
defined in the Act. The limit was raised to INR 24,000 per month by the Indian government in 2017.
Therefore, employees with wages up to the ceiling limit are covered by the Act. If you are a citizen of
the country, you should definitely know about all the details of the payment of wages act, 1936.

The objective of the Payment of Wages Act, 1936

Wages and several other essential terms are defined in Section 2 of the Payment of Wages Act, 1936,
as follows:

 Appropriate Administration

 Appropriate government, according to section 2(i) of the Act, means:

 Railways, air transportation, mines, and oilfields are all under the federal government’s
control.

 In all other circumstances, the State Government is in charge.

The Act’s principal goal is to prohibit improper wage deductions and eliminate unnecessary wage
delays. Everyone who works in a factory, on a railway, or as a subcontractor on a railway, and
everyone who works in industrial or other facilities needs to follow the payment of wages Act. The
State Government may extend the provisions to any class of employees in any establishment or class
of establishments by issuing a notification. The Act provides for the regular and timely payment of
wages (on or before the 7th day or the 10th day once the wage period has exceeded 1000 workers)
and the prevention of improper deductions from wages and arbitrary fines.

Importance of Payment of Wages Act, 1936

The policy primarily targets individuals in the industry who earn less than INR 24000 per month. The
Act further stipulates that a worker cannot contract out of any privilege or right conferred upon him
by the Act. The major goal of the Act is to control the timely payment of a few types of employees
who operate in the industry. If there is a problem or a grievance, prompt and effective action may be
taken to resolve the claims and difficulties with the help of this act. There are provisions in the
statute for a remedy for wages earned while working in the office. Still, it does not include any
procedures for any form of investigation into the office if there is a dispute.
What does the legislation mean by wage period fixation?

The Payment of Wages Act, 1936 is applicable to each individual who works in the industry. The act
ensures the salary of the employees will be done within one month only. The salary term cannot
exceed one month under any circumstances. As a result, it is obvious that payment of wages under
the act can be chosen on a day-to-day, week-to-week, month-to-month, or fortnightly basis. It
indicates that wages should be paid on time and without delay, and if they aren’t, the employer or
their representatives will be held responsible.

What is the definition of deduction? What are the advantages to the employee?

A deduction is made for the employee’s loss, which would be applied to his salary. The government
permits these deductions for acts performed by employees in various industries. Deductions are
used to subtract a specified amount from an employee’s salary. As a result, when the employer pays
his employee’s salary, he deducts only what is required by law, not what is convenient for him. The
deductions are imperative based on the law and are beneficial to the employee. To get a better
understanding of the notion, consider what cannot be referred to as a deduction under the Payment
of Wages Act of 1936:

 If the company has halted the employee’s increment,

 If the employee has been placed on leave,

 If the person was demoted because of poor performance.

 Only when the organisation has reasonable grounds, can the grounds mentioned above be
used.

What does it mean to be fined? What are the different types of deductions that are allowed under
the act?

With the authorisation of the proper authority, fines can be imposed on both the employee and the
employer. The employer may impose a fine on the employee following the act’s rules and
regulations, and is done for the benefit of both the employer and the employee.

Fines should not be imposed on the worker until he clarifies and explains the demonstration or
omission he made. The total amount of the fine should not exceed 3% of his annual salary. This
increases the importance of the Payment of Wages Act, 1936.

Conclusion

The act has established various rules and regulations for the betterment and effective operation of
the industry. The legislation allows workers to work freely without fear of being hampered by pay or
salary delays. The code has paved the road for employees to work with dignity, and the necessary
mechanisms have been established. The act’s provisions aid in the development of trust between the
employer and the employee, allowing for optimum production to be attained through employee
motivation. The notion of wage payment and deductions under the code is critical to the industry’s
operating and producing intended output and ensuring that the benefit is supplied to the employee.

The Payment of Bonus

The Payment of Bonus Act, 1965 provides a statutory right to employees of an establishment to
share the profits of his/her employer. As per this Central Act, any employee who was drawing a
salary or wage not exceeding ten thousand rupees per month was eligible to be paid a bonus.
Section 2 (13) of the Act states that, “employee” means any person (other than an apprentice)
employed on a salary or wage not exceeding ten thousand rupees per mensem 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.

As per Section 12 of the Principal Act which lays down the ‘Calculation of bonus with respect to
certain employees’– Where the salary or wage of an employee exceeds three thousand and five
hundred rupees per mensem, the bonus payable to such employee under section 10 or, as the case
may be, under section 11, shall be calculated as if his salary or wage were three thousand and five
hundred rupees per mensem.

For the purposes of calculation of the bonus to be paid to an employee under the Principal Act, INR
3,500 (Indian Rupees Three Thousand Five Hundred) per month was the maximum amount taken
even if an employee was drawing up to INR 10,000 (Indian Rupees Ten Thousand Only) per month.

Amendments To The Principal Act

As per the Amendment, the words “ten thousand rupees” in Section 2 (13) have been substituted for
the words “twenty one thousand rupees”.

Further, in Section 12 of the Principal Act, for the words ”three thousand and five hundred rupees” at
both the places where they occur, the words ”seven thousand rupees or the minimum wage for the
scheduled employment, as fixed by the appropriate Government, whichever is higher” has been
substituted.

The following Explanation was inserted at the end, namely:- ‘Explanation.

For the purposes of this section, the expression ”scheduled employment” shall have the same
meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act, 1948 (11 of 1948).’

Payment of Bonus (Amendment) Bill, 2015 to enhance the monthly bonus calculation ceiling to Rs
7,000 per month from existing Rs. 3,500 was approved by Union Cabinet here,” a source said after
the Cabinet meeting. The amendment bill will be made effective from April 1, 2015. Now the bill will
be tabled in Parliament for approval.

The bill also seeks to enhance the eligibility limit for payment of bonus from the salary or wage of an
employee from Rs. 10,000 per month to Rs. 21,000. The Payment of Bonus Act 1965 is applicable to
every factory and other establishment in which 20 or more persons are employed on any day during
an accounting year. The bill also provides for a new proviso in Section 12 which empowers the central
government to vary the basis of computing bonus.

At present, under Section 12, where the salary or wage of an employee exceeds Rs. 3,500 per month,
the minimum or maximum bonus payable to employees are calculated as if his salary or wage were
Rs. 3,500 per month. The last amendment to both the eligibility limit and the calculation ceilings
under the said Act was carried out in 2007 and was made effective from April 1, 2006.

This amendment in the Act to increase wage ceiling and bonus calculation ceiling was one of
assurances given by the Centre after 10 central trade unions went on one-day strike on September 2.

The government had hinted at meeting workers’ aspirations on nine out of 12 demands submitted by
the unions.

Analysis
The Amendment has sought to make more employees eligible for bonus by raising the ceiling limit of
the monthly wages. The Amendment also increases the amount of bonus that would be received by
the eligible employee as against the Principal Act which provided that the bonus payable to an
employee will be in proportion to his or her salary or wage. However, if an employee’s salary is more
than INR 3,500 per month, for the purposes of calculation of bonus, the salary will be assumed to be
INR 3,500 per month. After the Amendment, this limit has been enhanced to INR 7,000 per month or
the minimum wage for the scheduled employment (whichever is higher).

Although the Amendment received the assent of the President of India on 31 December, 2015, the
Amendment shall be deemed to have come into force on the 1st day of April, 2014. Hence, it has a
retrospective effect. This would mean that the employees who have already been paid a bonus for
the financial year 2014-15, would now become eligible for arrears. The employees who draw a salary
between INR 10,000 and INR 20, 999 per month would be eligible for bonus starting from the
financial year 2014- 2015 due to the retrospective nature of the Amendment. The labor intensive
industries would have a significant impact as the differential/balance amount for the financial year
2014-105 would have to be provided in the current financial year to the employees. However, no
specific date for the payment has been provided for in the Amendment.

Registers

Every employer is required to maintain the following registers in the prescribed form:

1.Register showing the computation of allocable surplus (Form A)

2.Register showing the set-on and set-off of the allocable surplus (Form B)
3.Register showing the details of the amount of bonus payable to each of employees, the amount of
deductions if any, and the amount actually paid. (Form C)

Returns

The employer is also required to send an annual return to the Inspector appointed under the Act
within 30 days from the expiry of time limit specified in Section 19 for payment of bonus. (Form D)

Case Law: Shashikant Janardan Pimpalpure Vs Development Corpn. Of Vidarbha On 20 February,

1995

The respondent No. 1 Corporation filed reply to the application and contested the claim of the
petitioner. The respondent set up the defense that the petitioner was not employee of the
respondent Corporation, but was appointed in Carpet Weaving Center only and is on the rolls of that
establishment only. According to the respondent Corporation, Carpet Weaving Center was totally
separate and distinct from the Corporation and had no resemblance to the terms of employment of
the employees of the respondent Corporation. The Corporation set up the plea that since the Carpet
Weaving Center was a training center and an educational institution and has no profit
motive, bonus was not payable under the Payment of Bonus Act. The Corporation also set up the
defence that the said Training Center has not completed five years of service and on that ground
under Section 16 of the Payment of Bonus Act, the employee is not entitled to
the payment of bonus.

The first and foremost question which requires consideration is, whether an application
underSection 33-C(2) of the Act of 1947 is maintainable seeking payment of minimum bonus under
the Payment of Bonus Act. Admittedly, the petitioners are only seeking
minimum payment ofbonus under the Payment of Bonus Act. It is also admitted that before filing of
the application under Section 33-C(2) of the Act of 1947, there was no order for payment of bonus to
the present petitioner under the Payment of Bonus Act. Scope of Section 33-C(2) of the Act of 1947
is now well settled and does not require any debate. The right to the benefit which is sought to be
computed under Section 33-C(2) must be an existing one and that is to say, already adjudicated upon
or provided for and must arise in the course of and in relation to the relationship between the
industrial workmen and his employer.

Advisory Board, Payment of Dues, Claims and Audit

Advisory Board

The Central Advisory Board under the Code on Wages, 2019 advises the Central and State
Governments on wage-related matters. The board's composition and functions are outlined in the
Code on Wages (Central Advisory Board) Rules, 2021.

The Central Advisory Board is made up of:

 Employers

 An equal number of employees as employers

 Independent persons, not more than one-third of the total members

 Five representatives of state governments, nominated by the central government

The board's main role is to advise on the fixation and revision of minimum wages and other matters
under the Code. The board also helps shape fair wage policies and promote gender equality in the
workforce.

The Code on Wages, 2019 also includes other provisions, such as:

 A floor wage set by the central government based on worker living standards

 A prohibition on gender discrimination in wage payments for work of similar nature

 A requirement that employers pay at least the minimum wage

 A requirement that employees receive overtime pay for working more than a normal day

PAYMENT OF DUES, CLAIMS AND AUDIT

43. Every employer shall pay all amounts required to be paid under this Code to every employee
employed by him: Provided that where such employer fails to make such payment in accordance
with this Code, then, the company or firm or association or any other person who is the proprietor of
the establishment, in which the employee is employed, shall be responsible for such payment.
Explanation.––For the purposes of this section the expression "firm" shall have the same meaning as
assigned to it in the Indian Partnership Act, 1932.

44. (1) Subject to the other provisions of this Code, all amounts payable to an employee under this
Code shall, if such amounts could not or cannot be paid on account of his death before payment or
on account of his whereabouts not being known,—

(a) be paid to the person nominated by him in this behalf in accordance with the rules made under
this Code; or
(b) where no such nomination has been made or where for any reasons such amounts cannot be
paid to the person so nominated, be deposited with the such authority, as may be prescribed, who
shall deal with the amounts so deposited in the manner as may be prescribed.

(2) Where in accordance with the provisions of sub-section (1), all amounts payable to an employee
under this Code— (a) are paid by the employer to the person nominated by the employee; or (b) are
deposited by the employer with the authority referred to in clause (b) of sub-section (1), then, the
employer shall be discharged of his liability to pay those amounts.

45. (1) The appropriate Government may, by notification, appoint one or more authorities, not below
the rank of a Gazetted Officer, to hear and determine the claims which arises under the provisions of
this Code. (2) The authority appointed under sub-section (1), while deciding the claim under that
sub-section, may order, having regard to the circumstances under which the claim arises, the
payment of compensation in addition to the claim determined, which may extend to ten times of the
claim determined and endeavour shall be made by the authority to decide the claim within a period
of three months. (3) If an employer fails to pay the claim determined and compensation ordered to
be paid under sub-section (2), the authority shall issue a certificate of recovery to the Collector or
District Magistrate of the district where the establishment is located who shall recover the same as
arrears of land revenue and remit the same to the authority for payment to the concerned
employee. (4) Any application before the authority for claim referred to in sub-section (1) may be
filed by,–– (a) the employee concerned; or (b) any Trade Union registered under the Trade Unions
Act, 1926 of which the employee is a member; or (c) the Inspector-cum-Facilitator. (5) Subject to
such rules as may be made, a single application may be filed under this section on behalf or in
respect of any number of employees employed in an establishment. (6) The application under sub-
section (4) may be filed within a period of three years from the date on which claims referred to in
sub-section (1) arises: Provided that the authority referred to in sub-section (1) may, entertain the
application after three years on sufficient cause being shown by the applicant for such delay. (7) The
authority appointed under sub-section (1) and the appellate authority appointed under sub-section
(1) of section 49, shall have all the powers of a civil court under the Code of Civil Procedure, 1908, for
the purpose of taking evidence and of enforcing the attendance of witnesses and compelling the
production of documents, and every such authority or appellate authority shall be deemed to be a
civil court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure,
1973.

46. Notwithstanding anything contained in this Code, where any dispute arises between an employer
and his employees with respect to— (a) fixation of bonus or eligibility for payment of bonus under
the provisions of this Code; or

ic sector, then, such dispute shall be deemed to be an industrial dispute within the meaning of the
Industrial Disputes Act, 1947.

47. (1) Where, during the course of proceedings before— (a) the authority under section 45; or (b)
the appellate authority under section 49; or (c) a Tribunal; or (d) an arbitrator referred to in clause
(aa) of section 2 of the Industrial Disputes Act, 1947, in respect of any dispute of the nature specified
in sections 45 and 46 or in respect of an appeal under section 49, the balance sheet and the profit
and loss account of an employer, being a corporation or a company (other than a banking company),
duly audited by the Comptroller and Auditor General of India or by auditors duly qualified to act as
auditors of companies under section 141 of the Companies Act, 2013, are produced before it, then,
the said authority, appellate authority, Tribunal or arbitrator, as the case may be, may presume the
statements and particulars contained in such balance sheet and profit and loss account to be
accurate and it shall not be necessary for the corporation or the company to prove the accuracy of
such statements and particulars by the filing of an affidavit or by any other mode: Provided that
where the said authority, appellate authority, Tribunal or arbitrator, as the case may be, is satisfied
that the statements and particulars contained in the balance sheet or the profit and loss account of
the corporation or the company are not accurate, it may take such steps as it thinks necessary to find
out the accuracy of such statements and particulars. (2) When an application is made to the
authority, appellate authority, Tribunal or arbitrator, as the case may be, referred to in sub-section
(1), by any Trade Union being a party to the dispute or as the case may be, an appeal, and where
there is no Trade Union, by the employees being a party to the dispute, or as the case may be, an
appeal, requiring any clarification relating to any item in the balance sheet or the profit and loss
account, then such authority, appellate authority, Tribunal or arbitrator, may, after satisfying itself
that such clarification is necessary, by order, direct the corporation or, as the case may be, the
company, to furnish to the Trade Union or the employees such clarification within such time as may
be specified in the direction and the corporation or, as the case may be, the company, shall comply
with such direction.

48. (1) Where any claim, dispute or appeal with respect to bonus payable under this Code between
an employer, not being a corporation or a company, and his employees is pending before any
authority, appellate authority, Tribunal or arbitrator, as the case may be, as referred to in sub-section
(1) of section 47 and the accounts of such employer audited by any auditor duly qualified to act as
auditor of companies under the provisions of section 141 of the Companies Act, 2013, are produced
before such authority, appellate authority, Tribunal or arbitrator, then the provisions of section 47
shall, so far as may be, apply to the accounts so audited.

(2) When the authority, appellate authority, Tribunal or arbitrator, referred to in sub-section (1), as
the case may be, finds that the accounts of such employer have not been audited by any such
auditor and it is of opinion that an audit of the accounts of such employer is necessary for deciding
the question referred to it, then, such authority, appellate authority, Tribunal or arbitrator, may, by
order, direct the employer to get his accounts audited within such time as may be specified in the
direction or within such further time as it may allow by such auditor or auditors as it thinks fit and
thereupon the employer shall comply with such direction.

(3) Where an employer fails to get the accounts audited under sub-section (2), the authority,
appellate authority, Tribunal or arbitrator, referred to in sub-section (1), as the case may be, may,
without prejudice to the provisions of section 54, get the accounts audited by such auditor or
auditors as it thinks fit. (4) When the accounts are audited under sub-section (2) or sub-section (3),
the provisions of section 47 shall, so far as may be, apply to the accounts so audited. (5) The
expenses of, and incidental to, any audit under sub-section (3) including the remuneration of the
auditor or auditors shall be determined by the authority, appellate authority, Tribunal or arbitrator,
referred to in sub-section (1), as the case may be, and paid by the employer and in default of such
payment shall be recoverable by the authority referred to in sub-section (3) of section 45 from the
employer in the manner provided in that sub-section.

49. (1) Any person aggrieved by an order passed by the authority under sub-section (2) of section 45
may prefer an appeal, to the appellate authority having jurisdiction appointed by the appropriate
Government, by notification, for such purpose, within ninety days from the date of such order, in
such form and manner as may be prescribed: Provided that the appellate authority may entertain
the appeal after ninety days if it satisfied that the delay in filing the appeal has occurred due to
sufficient cause. (2) The appellate authority shall be appointed from the officers of the appropriate
Government holding the post at least one rank higher than the authority referred under sub-section
(1) of section 45. (3) The appellate authority shall, after hearing the parties in the appeal, dispose of
the appeal and endeavour shall be made to dispose of the appeal within a period of three months.
(4) The outstanding dues under the orders of the appellate authority shall be recovered by the
authority referred to in section 45, by issuing the certificate of recovery in the manner specified in
sub-section (3) of that section.

50. (1) Every employer of an establishment to which this Code applies shall maintain a register
containing the details with regard to persons employed, muster roll, wages and such other details in
such manner as may be prescribed. (2) Every employer shall display a notice on the notice board at a
prominent place of the establishment containing the abstract of this Code, category-wise wage rates
of employees, wage period, day or date and time of payment of wages, and the name and address of
the Inspector-cum-Facilitator having jurisdiction. (3) Every employer shall issue wage slips to the
employees in such form and manner as may be prescribed. (4) The provisions of sub-sections (1) to
(3) shall not apply in respect of the employer to the extent he employs not more than five persons
for agriculture or domestic purpose: Provided that such employer, when demanded, shall produce
before the Inspectorcum-Facilitator, the reasonable proof of the payment of wages to the persons so
employed. Explanation.—For the purposes of this sub-section, the expression "domestic purpose"
means the purpose exclusively relating to the home or family affairs of the employer and does not
include any affair relating to any establishment, industry, trade, business, manufacture or
occupation.

Inspector-Cum-Facilitator,

In the realm of labour regulation, the role of inspectors under the Code on Wages Act, 2019
(hereinafter referred to as “Wage Code”) marks a significant evolution from traditional enforcement
practices. Previously tasked mainly with routine compliance checks, inspectors now assume a more
proactive and multifaceted role aimed at ensuring robust adherence to wage-related laws across
India.

Under this comprehensive legislation, inspectors are empowered not only to conduct meticulous
inspections of workplaces but also to enforce stringent compliance with provisions governing wages,
minimum wage standards, and the timely payment of bonuses. This expanded mandate reflects a
shift towards greater transparency and accountability in labour practices, where inspectors serve as
vigilant guardians of worker rights and fair labour standards. By scrutinizing employment records,
wage registers, and adherence to statutory deductions, inspectors not only uphold the integrity of
the labour market but also foster a culture of compliance among employers. This transformation
underscores the Wage Code commitment to promoting equitable treatment and ensuring that every
worker receives due compensation in accordance with the law.

Role of Inspectors-cum-Facilitators

Appointment and Jurisdiction

Inspectors-cum-Facilitators are appointed by the appropriate government, which could be the

Central or State Government, depending on the applicability of the Code. The jurisdiction of each
Inspector-cum-Facilitator is defined by the appointing authority, covering specific geographical areas
or sectors.

1. Appointment Process: The appropriate Government, through notification, appoints

Inspectors-cum-Facilitators across various geographical limits within a state or for specific
 establishments, as designated. This ensures a broad coverage and effective oversight over
compliance with the Code.

2. Dual Role: Inspectors designated under the Wage Code fulfil a dual role involving both
inspection and facilitation. Their responsibilities encompass not just conducting inspections
but also providing guidance to employers and employees on compliance issues. This dual
function aims to enhance comprehension and ensure adherence to legal requirements
among all parties involved.

Powers and Duties

Under the Wage Code, inspectors cum facilitators are entrusted with several powers and duties to
enforce compliance and facilitate smooth implementation of wage-related regulations. Here are their
key powers and duties:

1. Inspection Powers:

 Conducting inspections of workplaces to verify compliance with provisions related to wages,

minimum wages, and bonus payments.

 Examining employment records, wage registers, and other relevant documents to ensure
accuracy and adherence to statutory requirements.

 Issuing notices, conducting inquiries, and taking necessary actions against employers found
violating the provisions of the Act.

2. Facilitation Responsibilities:

 Providing guidance and advice to employers on compliance matters related to wage

payments, minimum wage standards, and bonus calculations.

 Assisting employers in understanding their obligations under the Wage Code and helping
them implement necessary measures to comply with the law.

 Educating and informing employees about their rights regarding wages, bonuses, and timely
payment practices.

3. Dispute Resolution:

 Facilitating the resolution of wage-related disputes through mediation and conciliation

processes.

 Acting as mediators between employers and employees to achieve fair settlements and
avoid prolonged legal conflicts.

4.Educational Initiatives:

 Conducting training programs and workshops for employers and employees to enhance
awareness of their rights and responsibilities under the Act.

 Promoting understanding of the Wage Code, and its implications for labor relations and
compliance in the workplace.

5.Reporting and Compliance Monitoring:

  Monitoring and reporting on compliance levels among employers to ensure adherence to
wage-related laws.

 Keeping records of inspections, inquiries, and resolutions of disputes to maintain

transparency and accountability in enforcement activities.

Overall, inspectors cum facilitators under the Wage Code play a critical role in enforcing wage-related
regulations, promoting compliance, and facilitating fair practices in wage determination and payment
across various sectors of the economy. Their proactive efforts contribute to maintaining a balanced
and equitable work environment, ensuring that both employers and employees uphold the principles
of the Wage Code.

Legislative Framework and Implementation

1. Regulatory Framework: The Wage Code empowers the appropriate Government to

formulate rules for its effective implementation. These rules encompass various aspects,
including the specific powers delegated to Inspectors-cum-Facilitators under Section 51(5) of
the Wage Code, ensuring clarity and procedural consistency.

2. International Standards: By adhering to international labor inspection norms, India aims to

enhance the credibility of its labour regulatory framework. The incorporation of digital tools
and standardized inspection practices reflects a commitment to modernizing governance
practices in line with global expectations.

Contrasting Roles: Inspectors under Previous Laws vs. Inspectors cum Facilitators Inspectors under
Previous Laws:

1. Enforcement Focus: Inspectors primarily focused on enforcement and compliance with

specific labor laws related to wages, such as the Payment of Wages Act, Minimum Wages
Act, and Payment of Bonus Act.

2. Routine Inspections: They conducted regular inspections of workplaces to ensure employers

adhered to wage-related regulations, such as timely payment of wages, compliance with
minimum wage standards, and accurate recording of wage-related data.

3. Legal Actions: Inspectors had the authority to issue notices, conduct inquiries, and take legal
actions against employers found violating wage laws. Their role was largely punitive, aimed
at penalizing non-compliance.

4. Limited Advisory Role: Their interaction with employers and employees was primarily to
enforce compliance through inspections and legal actions. Advisory roles were limited to
explaining legal obligations during inspections.

Inspectors with Facilitation Duties under the Wage Code:

1. Dual Role of Inspection and Facilitation: Inspectors cum facilitators have a dual mandate of
both enforcement and facilitation. Besides conducting inspections, they are tasked with
assisting employers and employees in understanding and complying with wage-related laws.

2. Guidance and Education: They provide guidance to employers on complying with the Code,
including wage payment, minimum wage standards, and bonus calculations. They also
educate employees about their rights regarding wages and benefits.
 3. Dispute Resolution: Inspectors-cum-facilitators facilitate the resolution of wage-related
disputes through mediation and conciliation processes, aiming to achieve amicable
settlements between parties.

4. Promotion of Compliance: Their role extends beyond enforcement to promote voluntary

compliance through education, advisory services, and fostering dialogue between employers
and employees.

5. Advisory Services: They offer advisory services to employers and employees to improve
understanding of the Code’s provisions and encourage proactive adherence to wage laws.

Overall, inspectors under the Code on Wages Act, 2019, with facilitation duties represent a shift
towards a more proactive and supportive approach to labor regulation. Their dual role emphasizes
not only enforcement through inspections but also facilitation of compliance and dispute resolution,
aiming to foster a fair and transparent labor environment in line with the principles of the Act.

Offences and Penalties under Code on Wages, 2019

The following are the cases of Offences and Penalties under Code on Wages, 2019:

 When an employer provides a lower salary to an employee

If an employer pays an employee less than the amount owing to such employee, the
employer may be fined up to Rs. 50,000/- (Section 54 (1)(a)).

 Recurrence of offence covered by section 54(1)(a))

If the same violation under section 54 (1)(a) is committed again within 5 years, the employer
faces imprisonment for up to 3 months, a fine of up to Rs. 100,000/-, or both. (Section-54(1)
(b))

 When the Employer violates any other provisions/rules/orders

If an employer violates any other provisions/rules/orders, he may be fined up to Rs. 20,000/-
(Section 54 (1) (c)).

 Failure to maintain or improperly maintaining records

If records are not maintained or are not kept properly at the establishment, the employer
may be fined up to Rs. 10,000/- (Section 54(2)).

 Officers’ Appointment and Penalty Imposition

The competent government should select an official not lower than the rank of Under
Secretary to the Government of India/State to impose penalties in specific situations
specified by sections 54(1)(a), (c), (2), and Section 56 (7), Section-53.

 Company Law Violations

If a company commits an infraction under this code, any person who was in control of and
accountable to the company for the conduct of the company’s business at the time the crime
was committed, as well as the company, will be judged guilty of the offence and will be
penalised (Section-55).

 Combination of offences
Any offence committed under this law, excluding those punished by imprisonment alone or
imprisonment and fine must be compounded by a Gazetted Officer designated by the
competent government for an amount equal to half the maximum fine authorised for such
offence (Section 56).
 Cognizance of Offence
The court will take notice of an offence under this code based on a complaint submitted by
the appropriate government/authorized officer/employee/registered trade union/inspector-
cum-facilitator. The Metropolitan Magistrate/Judicial Magistrate First Class will hear cases
under this code (Section 52).