Labour legislations in INDIA

By
Sunil Budhiraja
Lovely School of Management
Lovely Professional University
 Origins of Labor Legislations
• Labor laws emerged when the employers tried to
restrict the powers of workers' organizations and
keep labor costs low. The workers began
demanding better conditions and the right to
organize so as to improve their standard of
living.
Laws related to Laws related Laws related to Laws related to Laws related
working to Wages and Industrial Social Securities to Equality
conditions, Reward Relations and
safety, health, Empowermen
and environment t of Women
•The Factory Act, •The Payment •The Trade •The Workmen’s •The Maternity
1948 of Wages Act, Unions Act, Compensation Act, Benefit Act,
1936 1926 1923 1961  
•The •The Industrial •The Employees’ •The Equal
Minimum Disputes Act, State Insurance Act, Remuneration
Wages Act, 1947   1948 Act, 1976
1948 •The Employees’
•The Payment Provident Fund &
of Bonus Act, Miscellaneous
1965 Provisions Act,
1952
•The Payment of
Gratuity Act, 1972  
 The Factories Act, 1948
• A social legislation which has been enacted for
occupational safety, health and welfare of workers at
work places.
• Being enforced by technical officers i.e. Inspectors of
Factories, Dy. Chief Inspectors of Factories who work
under the control of the Chief Inspector of Factories and
overall control of the Labour Commissioner,
Government of National Capital Territory of Delhi
 Applicability
• Any premises in which ten (10) or more than ten
workers are employed on any day of the
preceeding twelve months - engaged in
manufacturing process being carried out with the
aid of power or twenty or more than twenty
workers employed in manufacturing process
being carried out without the aid of power.
 Salient features
1. Approval of Factory Building Plans before
construction/extension, under the Delhi Factories Rules,
1950
2. Grant of Licences under the Delhi Factories Rules, 1950,
and to take action against factories running without
obtaining Licence.
3. Renewal of Licences granted under the Delhi Factories
Rules, 1950, by the Dy. Chief Inspectors of Factories
4. Inspections of factories by District Inspectors of
Factories, for investigation of complaints, serious/fatal
accidents as well inspections to check compliance of
provisions of this Act relating to :-
Health, Safety, Welfare facilities, Working hours,
Employment of young persons and annual Leave with
wages etc.
 The Payment of Wages Act, 1936
• Objectives
To ensure regular and prompt payment of wages
and to prevent the exploitation of a wage earner
by prohibiting arbitrary fines and deductions
from his wages.
 Scope and coverage
- Application for payment of wages to persons employed in
any factory.

- Not applicable to wages which average Rs 1600/- per

month or more.

- Wages include all remuneration, bonus, or sums payable

for termination of service, but do not include house rent
reimbursement, light vehicle charges, medical expenses,
TA, etc.
 Minimum Wages Act, 1948
• A tripartite Committee Viz.,"The Committee on Fair Wage" was
set up in 1948 to provide guidelines for wage structures in the
country. The report of this Committee was a major landmark in
the history of formulation of wage policy in India. Its
recommendations set out the key concepts of the `living wage',
"minimum wages" and "fair wage" besides setting out guidelines
for wage fixation.
• Article 39|- The State shall, in particular, direct its policy towards
securing (a) that the citizen, men and women equally shall have
the right to an adequate livelihood and (b) that there is equal pay
for equal work for both men and women.
• Article 43 |- The State shall endeavor, by suitable
legislation or economic organization or in any
other way, to give all workers, agricultural,
industrial or otherwise, work, a living wage,
conditions of work ensuring a decent standard of
life and full enjoyment of leisure, and social and
cultural opportunities.
 The Payment of Bonus Act, 1965
• Applicability
(a)  Every factory (as def. in Factories Act), & (b) Every
other establishment in which 20 or more persons (less
than 20 but 10 or more if appropriate Govt. notifies) are
employed on any day subject to certain exemptions.
ii)  Employees' drawing remuneration of Rs. 3,500/- or
more and those who have worked for less than 30 days
are not eligible to receive bonus under the Act.
iii) Bonus to be paid within eight months from the
expiry of the accounting year.
 Eligibility

• i)  Every person (other than an apprentice)

drawing salary up to RS 3,500 per month.
ii) Every person drawing salary between RS
2,501/- and RS 3,500/- per month. The bonus
payable to him is to be calculated as if his salary
were RS 2,500/- p.m. – salary means basic pay +
DA only
 Benefits
i) Subject to other provisions :— Minimum bonus shall
be 8.33% of salary/wages earned or RS 100
whichever is higher.
Ii)  If allocable surplus exceeds the amount of
minimum bonus, then bonus shall be payable at
higher rate subject to a maximum 20% of
salary/wages.
Iii) Computation of bonus is to be worked out as per
Schedule I to IV of the Act.
 The Employees’ State Insurance Act,
1948
• Provides for certain benefits to employees in case of
sickness, maternity and employment injury.
• It applies to all factories (including Government
factories but excluding seasonal factories) employing
ten or more persons and carrying on a manufacturing
process with the aid of power or employing 20 or more
persons and carrying on a manufacturing process
without the aid of power
 Act does not apply to
• Factories working with the aid of power wherein less
than 10 persons are employed;
• Factories working without the aid of power wherein less
than 20 persons are employed;
• Seasonal factories engaged exclusively in any of the
following activities viz. Cotton ginning, cotton or jute
pressing, decortication of groundnuts, the manufacture
of coffee, rubber, sugar (including gur) or tea
 Benefits
• Medical benefits FULL MEDICAL CARE consists of hospitalization
facilities -includes specialist services, drugs and dressings and diets as
required for in-patients.
• Sickness benefit is roughly 50% of the average daily wages and is
payable for 91 days during 2 consecutive benefit periods.
• Maternity Benefit is payable to an Insured Woman in the following
cases subject to contributory conditions:-
Confinement-payable for a period of 12 weeks (84 days) – anti-natal 6
weeks & post – natal 6 weeks restricted to 2 children
• Dependents benefit
• Accident Benefit
• Funeral expenses
 Coverage and contribution
• The existing wage-limit for coverage under the
Act, is Rs.10,000/- per month (with effect from
1.10.2006).
• Currently, the employee’s contribution rate
(w.e.f. 1.1.97) is 1.75% of the wages and that of
employer’s is 4.75% of the wages paid/payable
in respect of the employees in every wage period
 The Workmen’s Compensation Act, 1923
• The Workmen’s Compensation Act, aims to
provide workmen and/or their dependents some
relief in case of accidents arising out of and in
the course of employment and causing either
death or disablement of workmen.
• It provides for payment by certain classes of
employers to their workmen compensation for
injury by accident.
 Employer’s liability
• The employer of any establishment covered under this
Act, is required to compensate an employee :

• Who has suffered an accident arising out of and in the

course of his employment, resulting into (i) death, (ii)
permanent total disablement, (iii) permanent partial
disablement, or (iv) temporary disablement whether
total or partial, or
Who has contracted an occupational disease
 THE EMPLOYER SHALL NOT BE
LIABLE
• In respect of any injury which does not result in the total or
partial disablement of the workmen for a period exceeding
three days;

• In respect of any injury not resulting in death, caused by an

accident which is directly attributable to-

• the workmen having been at the time thereof under the

influence or drugs, or

• the willful disobedience of the workman to an order expressly

given, or to a rule expressly framed, for the purpose of
securing the safety of workmen
 The Industrial Disputes Act, 1947
• “Industry" means any systematic activity carried
on by co-operation between an employer and his
workmen (whether such workmen are employed
by such employer directly or by or through any
agency, including a contractor) for the
production, supply or distribution of goods or
services with a view to satisfy human wants or
wishes (not being wants or wishes which are
merely spiritual or religious in nature)
 Lay-off
• lay-off" means the failure, refusal or inability of
an employer on account of shortage of coal,
power or raw materials or the accumulation of
stocks or the break-down of machinery or natural
calamity or for any other connected reason to
give employment to a workman whose name is
borne on the muster-rolls of his industrial
establishment and who has not been retrenched;
 Lock-out
• "lock-out" means the temporary closing of a
place of employment or the suspension of work,
or the refusal by an employer to continue to
employ any number of persons employed by
him;
• “Retrenchment" means the termination by the employer
of the service of a workman for any reason whatsoever,
otherwise than as a punishment inflicted by way of
disciplinary action, but does not include - (a) voluntary
retirement of the workman; or
• retirement of the workman on reaching the age of
superannuating
• termination of the service of a workman on the ground
of continued ill-health;
 Strike
• Sec 2q of ID Act – combination of persons indulging in
concerted action in stoppage of work or making
hindrance to the normalcy of the organization.
• Illegal strikes and lockouts – strikes as weapons in the
hands of trade union/work force and lockouts in the
hands of employers / management
• Strikes without due notice to the employer
(with in 14 days of the notice) or during the pendancy of
proceedings before labour dept - same is applicable to
lockouts
 The Gratuity Act,1965
• The Act provides for the payment of gratuity to workers
employed in every factory, shop & establishments or
educational institution employing 10 or more persons on
any day of the proceeding 12 months. A shop or
establishment to which the Act has become applicable
shall continue to be governed by the Act even if the
number of persons employed falls bellow 10 at any
subsequent stage.
• All the employees irrespective of status or salary are
entitled to the payment of gratuity on completion of 5
years of service. In case of death or disablement there
is no minimum eligibility period. The amount of
gratuity payable shall be at the rate of 17 days wages
based on the rate of wages last drawn, for every
completed year of service. The maximum amount of
gratuity payable is Rs. 3,50,000/-.
• Formula is - Last Wages *15*No. of services/26
 The Employees’ Provident Fund &
Miscellaneous Provisions Act, 1952

Applicability
• i) Every establishment which is a factory engaged in any industry
specified in Schedule 1 and in which 20 or more persons are
employed and
• ii) Any other establishment employing 20 or more persons which
entral Government may, by notification, specify in this behalf.
(Infancy period of 3 years has been withdrawn by ordinance
w.e.f.22-9-97)
• iii) any establishment employing even less than 20 persons can be
covered voluntarily u/s 1(4) of the Act.
 Eligibility
• Any person who is employed for work of an
establishment or employed through contractor in
or in connection with the work of an
establishment.
 Benefits

• Employees covered enjoy a benefit of Social

Security in the form of an unattachable,
unwithdrawable (except employees and
employers contribute equally throughout the
covered persons employment. This sum is
payable normally on retirement or death. Other
Benefits include Employees’ Pension Scheme
and Employee’s Deposit Linked insurance Fund.
 The Maternity Benefit Act, 1961
• OBJECT: To regulate the employment of women in certain
establishments for certain periods before and after childbirth
and to provide for maternity benefits and certain other
benefits.
• APPLICABILITY: It extends to the whole of India and
applies to i) every factory, mine, plantations, establishments
for the exhibition of equestrain,acrobatic and other
performances.
to every shop or establishments defined under any law
applicable to such establishments in a state in which persons
are employed on any day of the preceding twelve months.
• PROHIBITED PERIOD OF EMPLOYEMENT OR
WORK: The employment of women, or work by women in
any establishment during the six weeks immediately following
the day of her delivery or her miscarriage (section-4).
PAYMENT OF MATERNITY BENEFIT: Every women
shall be entitled to, and her employer shall be liable for, the
payment of maternity benefit at the rate of average
daily wage for the period of her actual absence, and any period
of her actual absence, and any period immediately following
the date of delivery and including the actual day for her
delivery (Section –5). In addition to the maternity benefit,
every women shall also be entitled to receive a medical bonus
of Rs.250/- if no prenatal confinement and post natal care is
provided free of charge (section-8)
• ELIGIBILITY FOR MATERNITY
BENEFIT:
A women shall be entitled to maternity benefit
only if she has actually worked in an
establishment of the employer for a period of
not less then eighty days in the twelve months
immediately proceeding the date of her
expected delivery (section-5[2])
• MAXIMUM PERIOD OF MATERNITY BENEFIT:
Maximum twelve weeks of which not more then six weeks
shall proceed the date of her expected delivery (section- 5[5])
• OTHER BENEFITS: Act also provides provisions for leave
for miscarriage, leave for illness arising out of pregnancy or
delivery, premature birth of child or miscarriage and nursing
breaks for nursing the child until the child attained the age of
15 months (section-9,10 & 11)
• DISMISSAL, DEDUCTION WAGES, ETC: No employer
shall discharge or dismiss a women for her absence form work
in accordance with the provisions of this Act and no deduction
shall be made from the normal; and usual daily wages of a
women entitled to maternity benefits. (section –12&13).
Thank u !!!
 Collective Bargaining
• The act of negotiating contract terms between an
employer and the members of a union.
• Collective Bargaining Agreement – the resulting
contract from a collective bargaining procedure.
• The employer and the union must bargain with
each other in good faith.
 Subjects of Collective Bargaining

• Compulsory Subjects
– Wages
– Hours
– Other terms and conditions of employment
• Illegal Subjects
– Closed shops
– Discrimination
 Check-Off Provision

• Upon proper notification by the union, union

shop and agency shop employers are required
to:
1. Deduct union dues and agency fees from
employees’ wages, and
2. Forward these dues to the union.
 This is called a check-off provision.
 Strikes

• the union call a strike if a collective bargaining

agreement cannot be reached.
• A majority vote of the union’s members must
agree to the action before there can be a strike.
 Crossover Worker
• Individual members of a union do not have to
honor the strike.
• They may:
1. Choose not to strike, or
2. Return to work after joining the strikers for a time
 Replacement Workers
• Workers who are hired to take the place of
striking workers.
• They can be hired on either a temporary or
permanent basis.
• If replacement workers are given permanent
status, they do not have to be dismissed when the
strike is over.
 Illegal Strikes
• Several types of strikes have been held to be
illegal.
• They are not protected by federal labor law.
• Illegal strikers may be discharged by the
employer with no rights to reinstatement.
Employer Lockout
Act of the employer to prevent employees
from entering the work premises when
the employer reasonably anticipates a
strike.