CHAPTER 1

LABOUR LEGISLATION,
OBJECTIVES, PRINCIPLES, CLASSIFICATION,
EVOLUTION OF LABOUR LEGISLATION IN INDIA

General Introduction

The law relating to labour in India deals mainly with the regulation of the contract of
employment under which the servant, or the employee, undertakes to work for his
master, or the employer, for hire or reward. Under the concepts of law, which, under
British rule, were imported into India from the common law of England, this
relationship was treated mainly as a contractual relationship. The Indian Contract
Act, 1872 is based mainly on the law of contract as interpreted by courts of law in
England. In interpreting the provisions of this Act, the courts in India borrowed
heavily from the case law of English courts.

The central doctrine, which runs through the law of contract, is that the parties are
free to make their own contracts. The relationship between master and servant is a
voluntary relationship into which the parties may enter on terms laid down by
themselves within the limitations imposed only by the general law of contract.The
law of contract, however, assumes that there is equal freedom in the parties to enter
into a contract, but shuts its eyes to the inequality inherent in the employment
relationship. It ignores the superior economic strength and the bargaining power of
the employer vis-a- vis the person who has to make a living getting employment, or
perhaps starves.

In India, legislation relating to labour has grown mainly in the twentieth century. Till
the First World War, such legislation was scanty. In the inter- war years, that is,
between 1919 and 1939, some essential legislation for the protection of labour was
introduced. But the law relating to labour, as we know it today, is mostly the product
of the legislation passed after, or soon before India achieved political independence
in 1947.

The main source of labour law in India is legislation, but it is supplemented by

judgments of courts, delivered particularly in the sphere of adjudication of industrial
disputes.

The earliest attempt of the government, or the state, to intervene in the field of
labour, was through certain protective measures to provide for the health and the
safety of the Indian worker, and to regulate hours of work in factories and other
places of employment. Improvements have been made in this respect from time to
time and are a continuing process. Such legislation may be conveniently dealt with
under the heading of legislation relating to health, welfare, working conditions and
hours of work including leave and holidays of the Indian worker. The next important
 heading under which labour legislation can be dealt with is 'social security' under
which we shall consider Acts like the Workmen's Compensation Act, the Employees'
State Insurance Act, Maternity Benefit Act, and legislation dealing with retrial
benefits.

Legislation and judicial decisions relating to wages, bonus allowances, fringe

benefits, regulation of contract labour and other such matters would be another
branch of the labour code of India. Lastly, we shall examine legislation and case law
relating to trade unions and trade or industrial disputes, which have assumed greater
and greater importance, as

the state has sought to encourage trade unions and regulate industrial conflict by
providing machinery for settlement, arbitration and adjudication of industrial
disputes, and imposed restrictions on strikes and lock out, and the ordinary common
law right of the employer to hire and fire employees, taking disciplinary action
against them or change their conditions of service at his sweet will.

History of Labour Legislation in India:

Labour legislation in India has a history of over 125 years. Beginning with the
Apprentice Act, passed in 1850, to enable children brought up in orphanages to find
employment when they come of age, several labour laws covering all aspects of industrial
employment have been passed.

The labour laws regulate not only the conditions of work of industrial
establishments, but also industrial relations, payment of wages, registration of trade
unions, certification of standing orders, etc. In addition, they provide social security
measures for workers. They define legal rights and obligations of employees and
employers and also provide guidelines for their relationship.

In India, all laws emanate from the Constitution of India. Under the Constitution,
labour is a concurrent subject, i.e., both the Central and State governments can enact
labour legislation, with the clause that the State legislature cannot enact a law which is
repugnant to the Central law. A rough estimate places the total number of enactments in
India to be around 160.
The Apprentice Act of 1850 was followed by the Factories Act of 1881 and the first
State act was the Bombay Trade Disputes (and Conciliation) Act, 1934, followed by the
Bombay Industrial Disputes Act, 1938, which was amended during the war years. This was
replaced by the BIR Act, 1946.

The Central Government at this time introduced the Industrial Employment
(Standing Orders) Act, 1946. In 1947, the government replaced the Trade Disputes Act with
 the Industrial Disputes Act, which was later modified. This law is the main instrument for
government intervention in industrial disputes.

After Independence, many laws concerning social security and regulation of labour
employment were enacted, such as the ESI Act, 1948, EPF and Miscellaneous Provisions
Act, 1952, Payment of Gratuity Act, 1972, Equal Remuneration Act, 1976. Etc.

Objectives:
Labour Legislation in India are to
i. i. Protect workers from exploitation
i. ii. Strengthen industrial relations;
i. iii. Provide machinery for settling industrial disputes and welfare of
workers.

Types of Labour Legislation in India:

A list of Labour Legislation in India:

Labour Laws may be classified under the following heads:
Laws related to Industrial Relations such as:

Trade Unions Act, 1926

Industrial Employment Standing Order Act, 1946.
Industrial Disputes Act, 1947.
Laws related to Wages such as:
Payment of Wages Act, 1936
Minimum Wages Act, 1948
Payment of Bonus Act, 1965.
Working Journalists (Fixation of Rates of Wages Act, 1958
Laws related to Working Hours, Conditions of Service and
Employment such as:
Factories Act, 1948.
Plantation Labour Act, 1951.
Mines Act, 1952.
Working Journalists and other Newspaper Employees' (Conditions of
Service and Misc. Provisions) Act, 1955.
 Merchant Shipping Act, 1958.
Motor Transport Workers Act, 1961.
Beedi & Cigar Workers (Conditions of Employment) Act, 1966.
Contract Labour (Regulation & Abolition) Act, 1970.
Sales Promotion Employees Act, 1976.
InterState Migrant Workmen (Regulation of Employment and
Conditions of Service) Act, 1979.
Dock Workers (Safety, Health & Welfare) Act, 1986. 19. Building &
Other Construction Workers (Regulation of Employment &
Conditions of Service) Act, 1996.
Building and Other Construction Workers Welfare Cess Act, 1996
CineWorkers and Cinema Theatre Workers (Regulation of
Employment) Act, 1981
Dangerous Machines (Regulation) Act, 1983
Dock Workers (Regulation of Employment) Act, 1948
Dock Workers (Regulation of Employment) (Inapplicability to Major
Ports) Act, 1997
Employment of Manual Scavengers and Construction of Dry Latrines
(Prohibition) Act, 1993
Industrial Employment (Standing Orders) Act, 1946
Mines and Mineral (Development and Regulation Act, 1957
Plantation Labour Act, 1951
Private Security Agencies (Regulation) Act, 2005
Laws related to Equality and Empowerment of Women such
as:
Maternity Benefit Act, 1961
Equal Remuneration Act, 1976.
Laws related to Deprived and Disadvantaged Sections of the
Society such as:
 Bonded Labour System (Abolition) Act, 1976
Child Labour (Prohibition & Regulation) Act, 1986
Children (Pledging of Labour) Act, 1933.
Laws related to Social Security such as:
Workmen's Compensation Act, 1923.
Employees' State Insurance Act, 1948.
Employees' Provident Fund & Miscellaneous Provisions Act, 1952.
Payment of Gratuity Act, 1972.
Employers' Liability Act, 1938
Beedi Workers Welfare Cess Act, 1976
Beedi Workers Welfare Fund Act, 1976
Cine workers Welfare Cess Act, 1981
Cine Workers Welfare Fund Act, 1981
Fatal Accidents Act, 1855
Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines
Labour Welfare Cess Act, 1976
Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines
Labour Welfare Fund Act, 1976
Limestone and Dolomite Mines Labour Welfare Fund Act, 1972
Mica Mines Labour Welfare Fund Act, 1946 29
Personal Injuries (Compensation Insurance) Act, 1963
Personal Injuries (Emergency Provisions) Act, 1962
Unorganised Workers' Social Security Act, 2008
.
Principles of Labour Legislation
1. 1. Principle of Protection:
The principle of protection suggests enactment of labour legislation to protect those
workers who are not able to protect their interests on their own and also workers, in
particular industries against the hazards of industrial processes.
1. 2. Principle of Social Justice:
The principle of social justice implies establishment of equality in social
relationships. It aims at removing discrimination suffered by particular groups of labour.
History is replete with examples where certain groups of society or labour have been
subjected to various sorts of disabilities as compared to other groups or workers in general.

1. 3. Principle of Regulation:
The principle of Regulation generally seeks to regulate the relationships between
the employers and their associations, on the one hand, and workers and their
organisations, on the other. As the relationships between the two groups have
repercussions on the society, the laws enacted on this principle also aim at safeguarding
the interests of the society against the adverse consequences of collusion or combination
between them. Thus, the principle of regulation seeks to regulate the balance of power in
the relationships of the two dominant groups in industrial relations.

1. 4. Principle of Welfare:
Although the protective and social security laws have the effect of promoting labour
welfare, special labour welfare or labour welfare fund laws have also been enacted, with a
view to providing certain welfare amenities to the workers, and often to their family
members also.

The main purpose behind the enactment of labour laws on this principle is to ensure
the provision of certain basic amenities to workers at their place of work and also, to
improve the living conditions of workers and their family members.

5. Principle of Social Security:

Lord William Beveridge, the pioneer in initiating a comprehensive social security
plan mentioned five giants in the patch of social progress namely, want, sickness,
ignorance, squalor, and idleness.


One of the outstanding measures to mitigate the hardship is to make available
social security benefits under the coverage of legislation. Social security legislation may be
kept under two broad categories social insurance legislation and social assistance
legislation. In social insurance, benefits are generally made available to the insured
persons, under the condition of having paid the required contributions and fulfilling certain
eligibility conditions.


In social assistance also, the beneficiaries receive benefits as a matter of right, but
 they do not have to make any contributions. The finance is made available by the state or a
source specified by the state. Social assistance benefits are generally paid to persons of
insufficient means and on consideration of their minimum needs.

6. 6. Principle of Economic Development:

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

6. 7. Principle of International Obligation:

This principle postulates enactment of labour laws with a view to giving effect to the
provisions of resolutions, adopted by international organisations like ILO, UN and similar
other bodies. In general, the countries ratifying the resolutions or agreements are under the
obligation to enforce them. One of the instruments of doing so is the enactment of laws.

Problems of Labour Legislation:

In order to protect industrial workers, there are many labour laws in the country
which cover all aspects of labour. The problem therefore is not the lack of labour laws but
that of implementing these. It has been found that their implementation has been
unsatisfactory in public as well as private sectors.

Another problem with regard to labour legislation is that in the absence of an
all-India code labour laws have a tendency to overlap and become repetitive.

National Commission on Labour:

The National Commission on Labour (NCL) was set up in 1966 to study the industrial
relations situation in the country and to make recommendations for improvement. The
recommendations of the National Commission on Labour which had far reaching
implications on labour policy in different areas have been briefly discussed below:
a. a) Strikes / Lockouts and Gheraos:

The NCL categorised industries as essential and non-essential for the purpose
of strikes and lockouts, and made the following recommendations:
i. i. In essential industries / services, where a cessation of work may cause
 harm to the community, the economy or the security of the nation itself, the right to strike
may be banned, but with the simultaneous provision of an effective alternative like
arbitration or adjudication to settle disputes.
i. ii. In non-essential industries, a maximum period of one month has to be fixed
for the continuance of a strike or lockout. After the lapse of this period, the dispute has
automatically to go before the Industrial Relations Commission (IRC) for arbitration.

a. b) Industrial Relations Commission:

The NCL recommended the constitution of Industrial Relations Commission, on a
permanent basis, both at the state level and the Centre.
One of the principal reasons for suggesting these commissions is the desire
to eliminate the possibility of political influence disturbing or distorting industrial peace in
the country.

c. c) Resolution of Industrial Disputes:

The National Commission on labour belt that the best way of settling industrial
disputes is through negotiation between the parties.

c. d) Recognition of Trade Union:

The National Commission on Labour felt that statutory recognition should be
granted to a representative union as a sole bargaining agent. For this, the following
guidelines need to be observed:

Recognition of a representative union should be made compulsory under a Central
Law in all undertakings employing 100 or more workers or where the capital invested is
above a stipulated size. A trade union seeking recognition as a bargaining agent from an
individual employer should have a membership of at least 30 percent of the workers in the
establishment. The minimum membership should be 25 percent if the recognition is sought
for an industry in a local area.

e. e) Strengthening of Trade Unions:

The trade unions should be made strong, organizationally and financially.
Multiplicity of unions and intra-union rivalries should be discouraged by:
1. 1. Providing compulsory registration of unions;
1. 2. Raising the minimum number required for forming a union;
1. 3. Raising the minimum membership fee;
1. 4. Reduction in the number of outsiders; and
1. 5. Taking steps to build internal leadership.
e. f) Collective Bargaining:
The Commission found that collective bargaining did not make any progress in the
country because of absence of arrangements for statutory recognition of trade unions,
except in some states, and greater reliance on adjudication. The Commission
recommended strengthening of collective bargaining through the following measures:
1. 1. In order to enable employees to effectively participate in the process of
collective bargaining, they should be well organised and trade unions must become strong
and stable.
2. 2. To facilitate collective bargaining, there should be compulsory recognition of
a union as sole representative for the purpose of bargaining with the management.

g. g) Grievance Procedure:
The NCL recommended that statutory backing should be provided for the
formulation of an effective grievance procedure, which should be simple, flexible, less
cumbersome and more or less on the lines of the Model Grievance Procedure. It should be
time-bound and have a limited number of steps, say, approach to the supervisor, then to
the departmental head, and thereafter a reference to the grievance committee consisting of
management and union representatives. A formal grievance procedure should be
introduced in each unit employing 100 or more workers.

Second National Commission on Labour:

The Central Government set up the second National Commission on Labour
in 1999 under the Chairmanship of Sh. Ravindra Varma. The Commission was entrusted to
suggest, among other things, rationalization of the existing labour laws in the organised
sector so as to make them more relevant in the changing economic conditions under the
impact of globalisation.

The Second National Commission on Labour was expected to formulate an
umbrella law to ensure protection to workers in the unorganized sector which, in the
absence of growth in job opportunities in the organised sector, is expanding at a rapid
pace, absorbing school dropouts, women and children. It submitted its report to the
Government in June 2002.