Beruflich Dokumente
Kultur Dokumente
Page No.
Lesson 1 Introduction to Industrial Relations 7
Lesson 2 Trade Unionism 21
Lesson 3 Role of Employer’s Association and State in Industrial Relations 40
Lesson 4 Collective Bargaining 62
Lesson 5 Evolution of Labour Legislations 74
Lesson 6 Labour Legislations: Acts Governing Employment of Personnel and IR 84
Lesson 7 Labour Legislations: Acts Governing Compensation of Employees 114
Lesson 8 Dispute Settlement 130
Lesson 9 Comparative Global Industrial Relations Practices 154
Self Assessment Answers 165
LIST OF FIGURES
Page No.
Figure 1.1 Stakeholders in Industrial Relations 10
Figure 5.1 Management Thoughts 76
LIST OF TABLES
SYLLABUS
Introduction to IR
Trade Unionism
Role of State and Employers Association in IR
Collective Bargaining
Evolution of Labour Legislations
Labour Legislations Governing Employment of Personnel and IR
Labour Legislations Governing Employee Compensation
Industrial Dispute Settlement
Industrial Relations: Comparative Study
7
LESSON Introduction to
Industrial Relations
1
INTRODUCTION TO INDUSTRIAL RELATIONS
CONTENTS
1.0 Aims and Objectives
1.1 Introduction
1.2 Concept of Industrial Relations
1.3 Industrial Relation System
1.4 Scope of Industrial Relations
1.5 Importance of Industrial Relations
1.6 Objectives of Industrial Relations
1.7 Dunlop's Contribution to Industrial Relations
1.8 Perspectives of Industrial Relations
1.8.1 Unitary Perspective
1.8.2 Pluralistic Perspective
1.8.3 Marxist Perspective
1.9 Challenges in IR
1.10 Evolution of Industrial Relations in India
1.11 Let us Sum up
1.12 Keywords
1.13 Self Assessment
1.14 Review Questions
1.15 Suggested Readings
1.1 INTRODUCTION
Industrial relations has become one of the most delicate and complex problems of
modern industrial society. Industrial progress is impossible without cooperation of
8 labors and harmonious relationships. Therefore, it is in the interest of all to create and
Industrial Relations
and Labour Laws maintain good relations between employees (labor) and employers (management).
Industry
Industrial Disputes Act 1947 defines an industry as any systematic activity carried on
by co-operation between an employer and his workmen for the production, supply or
distribution of goods or services with a view to satisfy human wants or wishes
whether or not any capital has been invested for the purpose of carrying on such
activity; or such activity is carried on with a motive to make any gain or profit. Thus,
an industry is a whole gamut of activities that are carried on by an employer with the
help of his employees and labors for production and distribution of goods to earn
profits.
Employer
An employer can be defined from different perspectives as:
z A person or business that pays a wage or fixed payment to other person(s) in
exchange for the services of such persons.
z A person who directly engages a worker/employee in employment. 9
Introduction to
z Any person who employs, whether directly or through another person or agency, Industrial Relations
one or more employees in any scheduled employment in respect of which
minimum rates of wages have been fixed.
As per Industrial Disputes Act 1947 an employer means:
z in relation to an industry carried on by or under the authority of any department of
[the Central Government or a State Government], the authority prescribed in this
behalf, or where no authority is prescribed, the head of the department;
z in relation to an industry carried on by or on behalf of a local authority, the chief
executive officer of that authority.
Employee
z Employee is a person who is hired by another person or business for a wage or
fixed payment in exchange for personal services and who does not provide the
services as part of an independent business.
z An employee is any individual employed by an employer.
z A person who works for a public or private employer and receives remuneration
in wages or salary by his employer while working on a commission basis, piece-
rates or time rate.
z Employee, as per Employee State Insurance Act 1948, is any person employed for
wages in or in connection with work of a factory or establishment to which the act
applies.
In order to qualify to be an employee, under ESI Act, a person should belong to any of
the categories:
z Those who are directly employed for wages by the principal employer within the
premises or outside in connection with work of the factory or establishment.
z Those employed for wages by or through an immediate employer in the premises
of the factory or establishment in connection with the work thereof.
z Those employed for wages by or through an immediate employer in connection
with the factory or establishment outside the premises of such factory or
establishment under the supervision and control of the principal employer or his
agent.
z Employees whose services are temporarily lent or let on hire to the principal
employer by an immediate employer under a contract of service (employees of
security contractors, labor contractors, house keeping contractors etc. come under
this category).
Employment: The state of being employed or having a job.
Labor market: The market in which workers compete for jobs and employers compete
for workers. It acts as the external source from which organizations attract employees.
These markets occur because different conditions characterize different geographical
areas, industries, occupations, and professions at any given time.
1.9 CHALLENGES IN IR
Globalisation and economic reforms have had its own share of impact on Industrial
relations. The major challenges in IR are:
1. Competition on the basis of cheap labour: Globalization and increased
competition has lead to less strikes, lockouts and less man days lost due to strikes.
Also now in the era of knowledge industry employees are educated and thus do 15
Introduction to
not believe in violent activities. Industrial Relations
2. Disinvestment: It affects IR in following ways: It changes ownership, which may
bring out changes not only in work organisation and employment but also in
Trade Union (TU) dynamics. It changes the work organization by necessitating
retraining and redeployment. It affects the right of workers and Trade unions,
including job/union security, income security, and social security.
Trade unions, management and government are responding to these challenges
through various types of new, innovative, or model arrangements to deal with
different aspects of disinvestment like:
(a) Making workers the owners through issue of shares or controlling interests
(latter is still not in India)
(b) Negotiating higher compensation for voluntary separations safeguarding
existing benefits
(c) Proposals for setting up new safety nets that not only include unemployment
insurance but also skills provisions for redundant workers.
3. New actors and the emerging dynamics: Earlier IR was mainly concerned with
Trade unions, but now consumers and the community are also a part of it. When
the right s of consumers and community are affected, the rights of workers and
unions and managers/employers take a back seat. Increasingly Trade unions are
getting isolated and see a future for them only by aligning themselves with the
interests of the wider society.
4. Pro-labour-pro-investor policies: This leads to decline in strength and power of
Trade unions if not in numbers. Unions have to make alliances with the society,
consumers and community and various civil society institutions otherwise they
will find themselves dwindling.
5. Declining trade union density: In government and public sectors workforce is
declining because of non-filling of vacancies and introduction of voluntary/early
separation schemes. New employment opportunities are shrinking in these sectors.
In the private sectors particularly in service and software sector, the new, young,
and female workers are generally less eager to join unions.
Not because of improved IR but because of the fear of job security, concern about
the futility of strikes, and concern to survive their organization for their income
survival.
Trade unions have become defensive evident from the fact that there is significant
shift from strikes to law suits. Instead of pressing for higher wages and improved
benefits, Trade unions are pressing for maintenance of existing benefits and
protection and claims over non-payment of agreed wages and benefits.
6. Collective bargaining: Level of collective bargaining is shrinking day by day.
1.12 KEYWORDS
Industrial Relations: It explains the relationship between employees and management
which stem directly or indirectly from union-employer relationship.
Industry: It is a whole gamut of activities that are carried on by an employer with the
help of his employees and labors for production and distribution of goods to earn
profits.
Employee: He is any individual employed by an employer.
Employment: The state of being employed or having a job.
Labor market: The market in which workers compete for jobs and employers compete
for workers.
20
Industrial Relations 1.13 SELF ASSESSMENT
and Labour Laws
1. …………….. are the result of the difference in conditions in different
geographies, industries and occupations.
2. ………………… perspective holds that line managers should take ownership of
their team’s responsibilities.
3. As per the …………………. view, trade unions are the result of exploitation of
workers by capital.
4. India was predominantly a ………………… economy during ancient and
medieval times.
5. In the ancient times, the employer-employee relations were those of
………………… and later on, those of master and servant.
6. The industrial policy resolution 1956, facilitated the growth of the public
undertakings both at the centre and ……………….. level.
7. The revision of the Trade Dispute Act, 1929, helped the union government in
enacting the Industrial Dispute Act, ……………..
2
TRADE UNIONISM
CONTENTS
2.0 Aims and Objectives
2.1 Introduction
2.2 Objectives of Trade Unions
2.3 Functions of Trade Unions
2.3.1 Militant Functions
2.3.2 Fraternal Functions
2.4 Importance of Trade Unions
2.5 Reasons for Joining Trade Unions
2.6 The Role of Trade Union
2.7 Productivity and Trade Unions
2.8 Management of Trade Unions
2.8.1 Union Structure: The Flow of Authority
2.8.2 Member Allegiance: The Organisational Bond
2.8.3 Union Goals
2.8.4 Managing Internal Affairs of the Union
2.9 The State of Trade Unions in the World
2.10 Trade Unions in India
2.11 Growth of Trade Union Movement in India
2.11.1 The First Strike
2.11.2 The First Factories Act
2.11.3 The First Workers' Organisation in India
2.11.4 Madras Labour Union
2.11.5 Textile Labour Association
2.11.6 Formation of AITUC
2.11.7 Trade Unions Act
2.11.8 Formation of NTUF
2.11.9 Formation of Indian Federation of Labour
2.11.10 Formation of INTUC, HMS and UTUC
2.11.11 Formation of BMS
2.11.12 Formation of CITU and UTUC (LS)
2.12 Let us sum up
2.13 Keywords
2.14 Self Assessment
2.15 Review Questions
2.16 Suggested Readings
22
Industrial Relations 2.0 AIMS AND OBJECTIVES
and Labour Laws
After studying this lesson, you will be able to:
z Enumerate the objectives, functions and importance of trade unions
z Underline the reasons for joining a trade union
z Discuss the management of trade unions
z Analyse the present condition of trade unions
z Trace the evolution of trade union movement in India
2.1 INTRODUCTION
Trade unions are organisations. They have their own structure, policies, norms,
activities, communication system, and leadership. They interact with the environment
and strive to respond to its pressures/challenges not for mere survival, but to remain
effective organisationally. Thus, managing trade unions is a challenging task. Unlike
the business organisations, trade unions as organisations, cannot purchase the
compliance of the members through monetary rewards alone. They have to ensure that
both the economic and non-economic interests of the members are satisfied on a
continuous basis.
Decision Making
In any organisation, decision-making process is an important aspect of management.
Ideally, a union should adopt the democratic method for taking decisions on matters
concerning the union and its members. The workers (members) must be involved in
the decision-making process and their views and opinions must be given due
importance by the leaders while the decisions are finalised and the same are
implemented. However, this does not happen in every union.
Union Election
The constitution of every registered trade union provides for union elections including
the method of voting, periodicity of elections (as per the Trade Unions (Amendment)
Act, 2001, the election of office bearers and Executive Committee has to be held at an
interval of not more than three years), etc. The method followed for voting may be
voice-vote or raising of hands or secret ballot. In unions where democratic practices
are adopted, every member or every faction has an equal opportunity to contest
elections. On the contrary, in unions where oligarchic tendencies prevail, the most
influential individuals or a particular group of individuals virtually suppress the others
from contesting the election. This latter method is not uncommon among the unions in
India.
Membership Drive
One of the main activities of a union is to constantly strive towards expanding its
membership base. A union with a broad membership base is likely to be financially
sound as well as organisationally strong. It may not be always possible for all the
existing members of the union, assuming that they are fully satisfied with their union,
to canvass for their union and motivate the non-members to join their union. However,
a few members devote considerable time to convince the potential new members to
join their union.
Ideological Dissension
Ideological dissension in the labour movement began within few years of the AITUC
coming into being. There were three distinct ideological groups in the trade union
organisation: communists led by Shri M. N. Roy and Shri Shripad Amrut Dange,
nationalists led by Shri Gandhiji and Pandit Nehru, and moderates led by Shri N. M.
Joshi and Shri V. V. Giri. There were serious differences between these three groups
on such major issues as affiliation to international bodies, the attitude to be adopted
towards British rule and the nature of the relationship between trade unions and the
broader political movement. The communists wanted to affiliate the AITUC to such
leftist international organisations as the League against Imperialism and the
Pan-Pacific Trade Union Secretariat.
The moderates wanted affiliation with the BLO and the International Federation of 33
Trade Unionism
Trade Unions based in Amsterdam, The nationalists argued that affiliation with the
latter organisations would amount 10 the acceptance of perpetual dominion status for
the country under British hegemony. Similarly, the three groups saw the purpose of
the labour movement from entirely different points of view. The party ideology was
supreme to the communists, who saw the unions only as instruments for furthering
this ideology. For the nationalists, independence was the ultimate goal and they
expected the trade unions to make this their priority as well. The moderates, unlike the
first two, were trade unionists at heart. They wanted to pursue trade unionism in its
own right and not subjugate it completely to broader political aims and interests.
T
ry to imagine the sophisticated Indian BPO worker protesting with a red flag in his/her hand.
Hard to imagine? This might just happen if the trade unions succeed in their efforts to
convince Indian BPO employees to form a union. Trade unions are making effort for quiet
some time to support BPO employees to form trade unions. While much has been written about the
high salaries and perks earned by BPO employs, the other side is that the high level of stress makes it
difficult for the employees to continue working for a long period of time. The industry experts believe
that stress forces one in seven workers to leave the industry every year.
In fact, the recent VV Giri National Institute of Labour’s report on call center equates the condition at
Indian call centers with 19th century prisons or Roman slave ship. The study said that respondents
reported symptoms such as nervousness, chronic fatigue, body ache, insomnia, nausea, anxiety,
restlessness, irritability and even depression due to the odd working hours and stress. Workers are
also subjected to `emotional labour’ as they are required to display certain kinds of expressions for
customer satisfaction. In some cases even facial expressions are monitored and any deviations from
the defined framework are considered defects. In this scenario, it would be easy for trade unions to
convince BPO employees to form a union. Right? You couldn’t be farther from truth. In fact, CITU
recently announced that it has deployed its cadres in Bangalore, Chandigarh, Chennai and Hyderabad
to contact IT and BPO workers to establish India’s first nationwide union of IT workers by the end of
2006.
“Forming a trade union is the fundamental right of any worker and BPOs are violating the basic
labour rules and regulations. For instance, every company has to form grievance committee for
women employees but many BPOs don’t have it. Also, Maternity Act is being violated and women
employees are made to work late at night. Many times, the employees don’t get Provident Fund and
ESI benefits as well. We want BPO employees to form a trade union so that they are able to fight for
their rights,” KP Rao, member of Delhi State Committee of CITU said. This image of BPO workers
as cyber coolies is further reiterated, if one talks to Chetan Bhagat, the successful writer of `Five
Point Someone’. Chetan researched his recently launched book, `One night@call center’, for six
months. Many a times, he was forced to sneak into call centers at the peak night time since the
company managements wouldn't allow him to "rightfully" research for the book. He studied their
training materials and evaluation sheets and listened into live calls to gather dope for his book.
Bhagat also traveled with the employees in the pick-up car, ate with them at the canteen and
interviewed them. “The call center employees, I interacted with during the research for my recently
launched book, `One night@call center’, were intelligent and clever and certainly deserve better jobs
than the one where they just have to answer phone calls. BPOs are corroding a generation. I mean,
there is something seriously wrong if someone gets ticked for spending too much time in the
bathroom,” says Bhagat. While that is one view, the BPO industry and the analysts present the other
view. The first and foremost argument which goes in favor of BPO community is that the huge
demand and supply ratio makes it apparent that the companies treat their employees well.
This is supported by Sujoy Chohan, Vice President and Research Director – Offshore BPO. “Unlike
factory workers, the trade unions are dealing with an educated set of people who have made the
choice of working at a call center. Moreover, they are working in an exceptionally good environment
with good salaries and frankly, I don’t see any reason as to why they should form a trade union.
Another thing which goes against these trade unions is that they are seen as negative in the country.
The history shows that trade unions have never worked to the advantage of the employees in the
country.”
Also, there is a huge demand and supply gap in the Indian BPOs, making it critical that the companies
look after their employees to reduce the attrition rate. According to NASSCOM figures, BPO sector
directly employs 3,50,000 people in the country and is expected to add 80,000 jobs this year.
“The demand and supply gap ensures that BPO and call center employees are well looked after. The
companies are going out of their way to provide the best possible environment to work in for their
employees. Also, one has to understand that the demands of the outsourcing business are different.
You have to be there when the customer wants you and not when you want the customer,” Ashok
Chadha, President, Global Vantedge Inc. said.
Source: www.rediff.com
38
Industrial Relations 2.12 LET US SUM UP
and Labour Laws
Trade unions are organisations. They have their own structure, policies, norms,
activities, communication system, and leadership. They interact with the environment
and strive to respond to its pressures/challenges not for mere survival, but to remain
effective organisationally. Trade unions are formed to protect and promote the
interests of their members. Their primary function is to protect the interests of workers
against discrimination and unfair labor practices. Trade unions perform a number of
functions in order to achieve the objectives. These functions can be broadly classified
into two categories-militant functions and fraternal function. They provide the advice
and support to ensure that the differences of opinion do not turn into major conflicts.
The central function of a trade union is to represent people at work. But they also have
a wider role in protecting their interests. Employees join trade unions due to variety of
reasons like getting greater bargaining power, lesser discrimination, sense of
belongingness, sense of participation, sense of security etc. Traditionally trade unions
role has been to protect jobs and real earnings, secure better conditions of work and
life and fight against exploitation and arbitrariness to ensure fairness and equity in
employment contexts. Every trade union has its own structure, which reflects the
stated role of each member, division of tasks, the interrelationship between the people
performing different tasks, and the coordination of various activities of the
organisation. Trade unionism in India suffers from a variety of problems such as
politicisation of the unions, multiplicity of unions, inter-union rivalry, uneconomic
size, financial debility and dependence on outside leadership.
2.13 KEYWORDS
Trade Unions: It is an organization of workers who have come together to achieve
common goals.
Negotiation: It is a process by which the involved parties or group resolve matters of
dispute by holding discussions and coming to an agreement.
Militant Functions: A set of activities performed by trade unions leads to the
betterment of the position of their members in relation to their employment.
Fraternal Functions: A set of activities performed by trade unions aims at rendering
help to its members in times of need, and improving their efficiency.
AITUC: All India Trade Union Congress
NTUF: National Trade Union Federation
INTUC: Indian National Trade Union Congress
3
ROLE OF EMPLOYER’S ASSOCIATION AND STATE IN
INDUSTRIAL RELATIONS
CONTENTS
3.0 Aims and Objectives
3.1 Introduction
3.2 Employers’ Association
3.2.1 Objectives
3.2.2 Origin and Growth
3.2.3 Aims and Objectives of EO
3.2.4 Council of Indian Employers (CIE)
3.2.5 International Organisation of Employers (IOE)
3.2.6 Organisation and Management of EOS in India
3.2.7 Future Challenges
3.2.8 Evaluation
3.3 State Policies and Industrial Relations
3.3.1 Role of the State in Industrial Relations
3.3.2 Constitution and Labour Policies
3.3.3 Tripartite Consultations
3.3.4 The Working of Tripartism – A Critical Analysis
3.3.5 Bipartite Consultative Machinery
3.3.6 Limits to the Powers of the State
3.4 Let us Sum up
3.5 Keywords
3.6 Self Assessment
3.7 Review Questions
3.8 Suggested Readings
Primary
(a) Promote and protect the interests of employers engaged in industry, trade and
commerce in India.
(b) Study, analyse and disseminate information relating to labour policy,
labour-management relations, collective bargaining, etc.
(c) Offer advice concerning various aspects of labour policy.
(d) Liaise with Union Government and initiate steps that are representative and
legislative in nature.
Secondary
(a) Train and develop staff and members.
(b) Obtain data on wages and conditions of work in industries attached to them.
(c) Come out with surveys, research-based reports on issues of importance to both
labour and management.
(d) Take up projects for social and family welfare.
(e) Deal with safety and health at work place and working environment.
(f) Initiate steps to improve public image and improve public relations.
(g) Educate the public regarding the character, scope, importance and needs of trade,
industry and commerce represented by members.
Structure
At present employers' organisations are organised at three levels:
(a) Local organisations: They serve the interests of local businessmen. The Bombay
Mill Owners' Association, for example, has been formed to protect the local
interests of manufacturing units operating within the city. Such bodies operate
through the local chambers of commerce.
(b) Regional organisations: The regional outfits such as Employers' Federation to
South India and Employers' Association, Kolkata are affiliated to Central
44 Employers Organisation. They offer consultancy service; take care of training,
Industrial Relations
and Labour Laws safety and welfare measures on behalf of their members. They even have special
committees for specific region or industry-related problems.
(c) Central organisations: As stated earlier AIOE, EFI and AIMO operated as apex
bodies, governing the affairs of several regional and local associations. To have
better coordination, a superstructure called the Council of Indian Employers was
formed in 1956, bringing AIOE and EFI under one umbrella.
AIOE: The All India Organisation of Employers is a unitary type of organisation, set
up in 1953. Members hail from manufacturing, banking, insurance and commercial
establishments. However, there is no sub-organisation on an industrial or geographical
basis. The President is elected every year.
EFI: The Employers' Federation of India has a federal structure; formed in 1933 it has
a governing body, executive committee and the secretariat. The governing body
formulates policies, the executive committee implements policies and the secretariat
with its own permanent staff is responsible for carrying out the decisions of the
governing body. It had only four presidents in over 50 years. EFI was registered as a
trade union in 1963 under the Indian Trade Unions Act of 1926.
IOE: The International Organisation of Employers represents the interests of
employers in all social and labour matters at the international level. Founded in 1920
with headquarters in Geneva, it has a membership of Employers' Associations from
over 100 countries. The Central Council of Indian Employers is a member of IOE.
3.2.8 Evaluation
Employers' Associations (EAs) have remained disparate groups, passing resolutions
and airing grievances from various platforms. EAs relations with Government have
remained individualistic in nature. They were keen to have personalised relations with
Government functionaries instead of presenting a unified stand for the common 49
Role of Employer’s
benefit of all constituent groups. The relations with unions were also far from Association and State in
satisfactory. The focus was not on having an open dialogue on issues affecting the Industrial Relations
lives of both the employer and employee. Naturally, the occasional interactions
between the two groups remained adversarial.
Employers were never a homogeneous class. The reasons for this conclusion are fairly
obvious: the conflict between Swadeshi and Videshi in pre-independence era; the
public and private ownership debate in post-liberalisation era, the on-going rivalry and
battles between ASSOCHAM, EIMO and FICCI – all these prove the point clearly.
Unless they present a unified front, maintain cordial relations among all constituent
groups and learn to address the conflicting issues head-on, it will not be possible to
achieve the ends that EAs have adopted over the years. They have many dilemmas and
challenges. The technological, structural, economic and social changes have altogether
transformed the lives of corporations in a dramatic way, especially after the 90s. The
constituent parts of EAs (their members, unions, government, and public at large)
must realise the futility of carrying the age-old clash-conflict ideology into the
21st century. The free market forces have changed the rules of the game completely.
Unless the EAs understand and adjust to such challenges and dilemmas (such as
technological, structural, economic, social, etc.) in a smooth way, they would be
falling behind.
"They should learn to be proactive than reactive. The distinction between the reactive
and proactive approaches may be described as the difference between settling disputes
and preventive care, between raising demands and removing grievances, seeking
amendments to the law and influencing the law in advance, controlling wages and
providing incentives, enforcing discipline and promoting good relations".
3.5 KEYWORDS
Employer’s Association: They are formal groups of employers set up to defend,
represent or advise affiliated employers and to strengthen their position in society at
large with respect to labour matters as distinct from economic matters
FICCI: Federation of Indian Chamber of Commerce and Industry
ASSOCHAM: Associated Chambers of Commerce
SCOPE: Standing Conference on Public Enterprises
Joint Consultative Board: It was set up as an official body to consider, advise, and
cooperate with the Government on matters relating to industrial relations in general
and specific issues such as retrenchment in particular
61
3.6 SELF ASSESSMENT Role of Employer’s
Association and State in
Fill in the Blanks Industrial Relations
1. State policy to keep away from the matters of trade was known as ………………
2. The British and Indian industrial and business interests came together to form
……………… in 1920.
3. ……………… is a representative body that was set up to protect the interests of
the public sector employers.
4. The relations between the government and the employer’s association has always
been ……………… in nature.
5. ……………… provides the limit within which the labour policies can be
formulated in India.
6. Article ……………… includes the provision for better working conditions and
maternity relief.
7. ILO doesn’t have the legal right to force anyone to accept its conventions so they
use ………………
8. ……………… recommended that the wages should be need based and introduced
the concept of Need Based Minimum Wage.
4
COLLECTIVE BARGAINING
CONTENTS
4.0 Aims and Objectives
4.1 Introduction
4.2 Evolution of Collective Bargaining
4.3 Features of Collective Bargaining
4.4 Subject Matter of Collective Bargaining
4.5 Approaches to Collective Bargaining
4.5.1 Industry Bargaining
4.5.2 Enterprise Bargaining
4.5.3 Concession Bargaining
4.5.4 Composite Bargaining
4.5.5 Conjunctive/Distributive Bargaining
4.5.6 Co-operative Bargaining
4.5.7 Productivity Bargaining
4.6 Collective Bargaining vs. Negotiation Skills
4.7 Importance of Collective Bargaining
4.8 Procedure for Collective Bargaining
4.9 The Indian Scenario
4.10 Suggestions for Better Functioning of Collective Bargaining
4.11 Pre-requisites of Successful Bargaining
4.12 Emerging Issues in Collective Bargaining
4.13 Let us Sum up
4.14 Keywords
4.15 Self Assessment
4.16 Review Questions
4.17 Suggested Readings
4.1 INTRODUCTION
Collective bargaining is process of joint decision making and basically represents a
democratic way of life in industry. It is the process of negotiation between firm’s and
workers’ representatives for the purpose of establishing mutually agreeable conditions
of employment. It is a technique adopted by two parties to reach an understanding
acceptable to both through the process of discussion and negotiation.
ILO has defined collective bargaining as, negotiation about working conditions and
terms of employment between an employer and a group of employees or one or more
employee, organization with a view to reaching an agreement wherein the terms serve
as a code of defining the rights and obligations of each party in their
employment/industrial relations with one another.
Collective bargaining involves discussions and negotiations between two groups as to
the terms and conditions of employment. It is called ‘collective’ because both the
employer and the employee act as a group rather than as individuals. It is known as
‘bargaining’ because the method of reaching an agreement involves proposals and
counter proposals, offers and counter offers and other negotiations.
Union and management are going to face many substantive and procedural issues in
collective bargaining. Some of the issues can probably be handled at the bargaining
table by using existing structures and strategies. Some of the traditionally handled
issues are as follows:
Wage Bargaining
Wages will remain at the centre stage of future contract negotiations because the size
and security of income will continue to be of vital importance to workers.
Women’s Issues
A larger women workforce may give rise to fresh challenges to both employers and
unions to squarely face the particular concerns and problems of working women. The
process will accelerate in the future as women become firmly and permanently
entrenched in the labour force and in the unions. Women issues are going to figure
substantially in future collective bargaining.
Job Security
The potential loss of jobs due to technological change has always been a major
concern for the unions. The recent economic downturn and its impact on jobs is
another crucial factor that adds to this dimension.
Productivity
Time has come, according to many economists, for the unions to be vitally concerned
with productivity and to realise that employee welfare is tied directly to the success of
the enterprise and industry. At the same time, management must recognise that to
obtain an increase in productivity, it must seek the co-operation of the employees and
the union. In short, what is needed in collective bargaining is re-approachment
between union and management that recognises the necessity of co-operating to raise
productivity.
4.14 KEYWORDS
Collective Bargaining: It is a technique adopted by two parties to reach an
understanding acceptable to both through the process of discussion and negotiation.
Concession Bargaining: It was adopted as a temporary measure to save jobs in the
period of economic depression; it was undertaken by the employers to face increased
competition and cope up with higher productivity requirements.
Zero-sum Game: It is a situation where one party’s gain is other party’s loss and vice
versa.
Cooperative Bargaining: In this, both the parties try to get to a win-win situation.
Negotiation: It is a process of resolving conflicts between two or more parties wherein
both or all modify their demands to reach a workable compromise.
Quality of Work Life: It is related to the need for organised labour and management to
work co-operatively toward the goal of greater productivity.
5
EVOLUTION OF LABOUR LEGISLATIONS
CONTENTS
5.0 Aims and Objectives
5.1 Introduction
5.2 Historical Perspectives on Indian Labour Legislations
5.3 Role of India’s Constitutional Framework on Indian Labour Laws
5.4 Impact of International Labour Organization (ILO) on Indian Labour Laws
5.4.1 International Labour Conference
5.4.2 Governing Body
5.4.3 The International Labour Office
5.4.4 International Labour Standards – ILO Conventions
5.5 Role of the National Commission on Labour
5.6 Indian Labour Laws – Review by ASSOCHAM
5.7 Let us Sum up
5.8 Keywords
5.9 Self Assessment
5.10 Review Questions
5.11 Suggested Readings
5.1 INTRODUCTION
The Indian Labour Legislations owe its existence to the British Raj. Most of the labour
legislations were enacted prior to India’s independence. The post independence
enactment of important legislations in the areas of employee security and welfare
derive their origin partly from the vision of independent India’s leaders and partly
from the provisions in the Indian Constitution and international conventions like the
International Labour Organization (ILO). The labour legislations were also enacted
keeping in mind the international standards on Human Rights and United Nations
Protocols.
75
5.2 HISTORICAL PERSPECTIVES ON INDIAN LABOUR Evolution of Labour Legislations
LEGISLATIONS
Initial periods of imperialism were based on exploitation of the worker class. With the
emergence of ILO at an international level and with the inhumane treatment meted out
to workmen being replaced with an outlook of dignity of labour, the whole scenario of
labour legislations began in pre independence India.
After independence legislations related to worker welfare like Provident Fund Act,
Employee State Insurance Act, Payment of Bonus Act and Payment of Gratuity Act
were enacted with the intention of providing security and retirement benefits to
workmen.
Over a period of time several amendments have been made to the existing labour
legislations as per the needs of the industry. The case in point is the latest amendment
to the Factory Act whereby women worker is allowed to work between 7pm and 6am.
Such amendments have been done after industry associations like NASSCOM and
ASSOCHAM recommendations to the labour ministry. Now BPO and IT sector which
employs a large women workforce during its nightshifts benefits tremendously from
this amendment to the Factory Act.
Table 5.1: Evolution of HR thoughts in India
(a) Labour laws enacted by the Central Government, where the Central Government
has the sole responsibility for enforcement
1. The Employees’ State Insurance Act, 1948
2. The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
3. The Dock Workers (Safety, Health and Welfare) Act, 1986
4. The Mines Act, 1952
5. The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour
Welfare (Cess) Act, 1976
6. The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labor
Welfare Fund Act, 1976
7. The Mica Mines Labour Welfare Fund Act, 1946
8. The Beedi Workers Welfare Cess Act, 1976
9. The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972
10. The Cine Workers Welfare (Cess) Act, 1981
11. The Beedi Workers Welfare Fund Act, 1976
12. The Cine Workers Welfare Fund Act, 1981
(b) Labour laws enacted by Central Government and enforced both by Central and
State Governments
13. The Child Labour (Prohibition and Regulation) Act, 1986.
14. The Building and Other Constructions Workers’ (Regulation of Employment and
Conditions of Service) Act, 1996.
15. The Contract Labour (Regulation and Abolition) Act, 1970.
16. The Equal Remuneration Act, 1976.
17. The Industrial Disputes Act, 1947.
18 The Industrial Employment (Standing Orders) Act, 1946.
19. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979.
20. The Labour Laws (Exemption from Furnishing Returns and Maintaining Registers
by Certain Establishments) Act, 1988
21. The Maternity Benefit Act, 1961
22. The Minimum Wages Act, 1948
23. The Payment of Bonus Act, 1965
24. The Payment of Gratuity Act, 1972
25. The Payment of Wages Act, 1936
26. The Cine Workers and Cinema Theatre Workers (Regulation of Employment)
Act, 1981
27. The Building and Other Construction Workers Cess Act, 1996
28. The Apprentices Act, 1961
78 (c) Labour laws enacted by Central Government and enforced by the State
Industrial Relations
and Labour Laws Governments
29. The Employers’ Liability Act, 1938
30. The Factories Act, 1948
31. The Motor Transport Workers Act, 1961
32. The Personal Injuries (Compensation Insurance) Act, 1963
33. The Personal Injuries (Emergency Provisions) Act, 1962
34. The Plantation Labour Act, 1951
35. The Sales Promotion Employees (Conditions of Service) Act, 1976
36. The Trade Unions Act, 1926
37. The Weekly Holidays Act, 1942
38. The Working Journalists and Other Newspapers Employees (Conditions of
Service) and Miscellaneous Provisions Act, 1955
39. The Workmen’s Compensation Act, 1923
40. The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
41. The Children (Pledging of Labour) Act 1938
42. The Bonded Labour System (Abolition) Act, 1976
43. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
(d) There are also Labour laws enacted and enforced by the various State
Governments which apply to respective States.
5.8 KEYWORDS
Personnel Management: It is the most effective use of people to achieve
organizational and individual goals
Human Resource Development: It aims at empowering people by developing them
for their current and future roles
Human Resource Management: It is leveraging the systems approach to the HR
function and integrating HR functions with other organizational functions
Strategic HRM: It aligns the HR goals to the organizational goals
ILO Conventions: They are international treaties and are instruments, which create
legally binding obligations on the countries that ratify them
ILO Recommendations: They are non-binding and set out guidelines orienting
national policies and actions.
83
5.9 SELF ASSESSMENT Evolution of Labour Legislations
6
LABOUR LEGISLATIONS: ACTS GOVERNING
EMPLOYMENT OF PERSONNEL AND IR
CONTENTS
6.0 Aims and Objectives
6.1 Introduction
6.2 The Industrial Employment (Standing Orders) Act, 1946
6.3 The Factories Act, 1948
6.4 The Industrial Disputes Act, 1947
6.5 The Trade Unions Act, 1926
6.6 The Child Labour (Prohibition and Regulation) Act, 1986
6.7 The Apprentices Act, 1961
6.8 The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
6.9 The Maternity Benefit Act, 1961
6.10 The Contract Labour (Regulation and Abolition) Act, 1970
6.11 Let us Sum up
6.12 Keywords
6.13 Self Assessment
6.14 Review Questions
6.15 Suggested Readings
Applicability
It is applicable to every industrial establishment employing 100 or more workmen.
In Maharashtra the Act applies to all establishments employing 50 or more workmen.
‘Industrial establishment’ means (i) an industrial establishment as defined in
section 2(i) of Payment of Wages Act (ii) Factory as defined in section 2(m) of
Factories Act (iii) Railway (iv) Establishment of contractor who employs workmen for
fulfilling contract with owner of an industrial establishment. [section 2(e)].
The term ‘industrial establishment’ includes factory, transport service, construction
work, mines, plantation, workshop, building activity, transmission of power etc.
‘Workman’ has meaning assigned to it under section 2(s) of Industrial Disputes Act.
[section 2(i)]. Thus, ‘workman’ includes skilled, unskilled, manual or clerical work.
However, ‘workman’ does not include employees engaged in managerial or
administrative capacity or supervisory capacity. ‘Workman’ does not include workers
subject to Army Act, Navy Act or Air Force Act or to police or prison services.
Draft SO
An Industrial establishment has the liberty to either draft its own SO on the guidelines
of the prescribed model SO or directly adopt model SO as specified, within 6 months
of applicability of the Act.
Every employer covered under the Act has to prepare ‘Standing Orders’, covering the
matters required in the ‘Standing Orders’. Five copies of these should be sent to
Certifying Officer for approval. [section 3(1)]. ‘Certifying Officer’ means Labour
Commissioner and any officer appointed by Government to be ‘Certifying Officer’.
[section 2(c)].
Certification of SO
On receipt of the draft SO from the organization, the certifying officer (Govt. Official)
will forward the same to the organization’s Trade Union/s for their objections (if any).
The copy of the certified SO will be forwarded to the TU and Employer within 7 days
of the certification.
Till standing orders are certified, ‘Model Standing Order’ prepared by Government
will automatically apply. [section12A].
Objective
After the SO has been certified by the officer, it becomes “a part of the statutory terms
and conditions of services” between the employer, employee and the TU and is legally
binding on all of them. It is prudent to include it in their Employee Handbook/Manual.
86 Commencement
Industrial Relations
and Labour Laws On and after the 31st day from the date of receipt of the certified SO. Any employee
can appeal to the respective authorities before this period. Where appeal has been
made the SO is applicable from the 8th day of the receipt of amended SO by the
employer/employee/TU.
Once the ‘Standing Orders’ are certified, they supersede any term and condition of
employment, contained in the appointment letter. If there is inconsistency between
‘Standing Order’ and ‘Appointment Letter’, the provisions of ‘Standing Order’
prevail.
Model Standing Orders: The Act has prescribed Model Standing Orders. These are
automatically applicable till employer prepares his own ‘Standing Orders’ and these
are approved by ‘Certifying Officer’. [section 12A].
Disciplinary Action: The most important use of ‘Standing Orders’ is in case of
disciplinary action. A workman can be punished only if the act committed by him is
‘misconduct’ as defined under the ‘Standing Orders’. The ‘Model Standing Orders’
contain such acts like insubordination, disobedience, fraud, dishonesty, damage to
employer’s property, taking bribe, habitual absence or habitual late attendance, riotous
behaviour, habitual neglect of work, strike in contravention of rules etc. as
misconducts. The ‘Certified Standing Orders’ may cover other acts as ‘misconduct’, if
approved by ‘Certifying Officer’.
Modifications
The Act prohibits modification of SO within a period of 6 months of the certification
or previous latest modification date (if applicable)
Important Provisions
1. The SO text should be pasted prominently by the employer on special boards to be
maintained for this purpose at the factory entrances and in all depts. where
workers work.
2. Where any worker is suspended by the employer over pending inquiry into
complaints or on charges of misconduct, the employer shall:
(a) Pay a subsistence allowance @ 50% of wages for the first 90 days
(b) 75% for next 90 days
(c) 100% for remaining days until the inquiry is completed
A Standard SO should have: (This is not an exhaustive list – only indicative)
1. Classification of workmen i.e: permanent, temporary, on probation, apprentice,
etc.
2. Hours of work, rest hours, holidays, pay day and wage rates
3. Shift working timings
4. Attendance and late comings
5. Provisions for application and grant of leave
6. Requirement to enter premises by certain gates and gate searches
7. Termination, suspension and dismissal rules (specially on misconduct)
8. Redressal of grievances procedures and personnel/dept incharge/ess.
87
6.3 THE FACTORIES ACT, 1948 Labour Legislations:
Acts Governing Employment
of Personnel and IR
Purpose
The object of the Act is to ensure for the workers employed in the factories, health,
safety and welfare measures and to provide for proper working hours, leave and other
benefits entitled to them.
The Act requires that workers should work in healthy and sanitary conditions and for
that purpose it provides that precautions should be taken for safety of workers and
prevention of accidents.
Applicability
Any premises in which 10 or more workers are employed and a manufacturing process
is carried on with the aid of power (Fuel/energy and not Animal or Human energy).
Where the process is without the aid of power the worker strength should be 20 or
more. All types of mfg or storing, constructing even Home Industry are covered as per
this Act.
'Factory' means any premises where 10 or more workers are working and a
manufacturing process is carried out with aid of power (20 if manufacture is without
aid of power). [section 2(m)]. ‘Manufacturing process’ means process of altering,
repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up,
demolishing or otherwise treating or adopting any article or substance. It also
includes:
Pumping oil, water, sewage or any other substance
Generating, transforming or transmitting power
Composing, typing, printing
Constructing, repairing, breaking of ships or vessels
Preserving articles in cold storage. [section 2(k)].
Worker means a person employed in any manufacturing process or cleaning or any
work incidental to manufacturing process. It includes persons employed through
contractor. [section 2(l)].
If the employment is less than these numbers, the unit gets covered under Shop &
Establishment Act.
‘Occupier’ of a factory means the person who has ultimate control over the affairs of
factory. It includes a partner in case of firm and director in case of a company. In case
of Government company, ‘occupier’ need not be a director. In that case, person
appointed to manage affairs of the factory shall be ‘occupier’. [section 2(n)]. Name of
‘occupier’ of the factory should be informed to Factories Inspector. The ‘occupier’
will be held responsible if provisions of Factories Act are not complied with. He has
to give notice 15 days before he begins to occupy the premises as a factory, giving
details as prescribed in section 7.
Besides 'occupier', name of 'Manager' should also be informed. Any change in name
of Manager shall also be informed. [section 7(4)].
The occupier shall ensure, as far as possible, health, safety and welfare of workers
while they are working in factory. [section 7A].
88 Provisions of the Act
Industrial Relations
and Labour Laws 1. Compulsory to register the factory and get a license to operate from there. This is
after the inspection from the Chief Inspector of Factories. 'Factory' should be
licensed/registered with Chief Inspector of Factories (termed as Director of
Industrial Health & Safety in some States). [section 6]. The license/registration
has to be renewed every year by paying prescribed fees.
2. The factory should comply with the provisions of the act as to Health related
clauses like cleanliness, disposal of wastes, ventilation, temperatures, dust and
fumes, lighting, drinking water, latrines and urinals. The factory should be kept
clean. [section 11]. There should be arrangement to dispose of wastes and
effluents. [section 12]. Ventilation should be adequate. Reasonable temperature
for comfort of employees should be maintained. [section 13]. Dust and fumes
should be controlled below permissible limits. [section 14]. Artificial
humidification should be at prescribed standard level. [section 15]. Overcrowding
should be avoided. [section 16]. Adequate lighting, drinking water, latrines,
urinals and spittoons should be provided. [sections 17 to 19]. Adequate spittoons
should be provided. [section 20].
3. Safety related to fencing of machines, hoists and lifts, protective gears for
workmen, precautions against fire, etc. All machinery should be properly fenced
to protect workers when machinery is in motion. [section 21 to 27]. Hoists and
lifts should be in good condition and tested periodically. [section 28 and 29].
Pressure plants should be checked as per rules. [section 31]. Floor, stairs and
means of access should be of sound construction and free form obstructions.
[section 32]. Safety appliances for eyes, dangerous dusts, gas, fumes should be
provided. [sections 35 and 36]. Worker is also under obligation to use the safety
appliances. He should not misuse any appliance, convenience or other things
provided. [section 111]. In case of hazardous substances, additional safety
measures have been prescribed. [sections 41A to 41H]. Adequate fire fighting
equipment should be available. [section 38]. Safety Officer should be appointed if
number of workers in factory are 1,000 or more. [section 40B]. Every factory
employing more than 1000 workmen should employee a safety officer ( specially
for certain hazardous industries)
4. Welfare: like washing facilities, First aid box provision, canteen (if employing
more than 250 workmen), lunch room (more than 150 workmen), a crèche (more
than 30 women workers), a welfare officer (if employees exceed 500). Following
facilities are required to be provided by large factories – Ambulance room if 500
or more workers are employed. Canteen if 250 or more workers are employed. It
should be sufficiently lighted and ventilated and suitably located. [section 46].
Rest rooms/shelters with drinking water when 150 or more workmen are
employed [section 47]. Crèches if 30 or more women workers are employed.
[section 48]. Full time Welfare Officer if factory employs 500 or more workers
[section 49]. Safety Officer if 1,000 or more workmen are employed.
5. Employment of women and children: Women should not be employed between
7pm to 6am. Children above 14 yrs only to be employed. A worker cannot be
employed for more than 48 hours in a week. [section 51]. Weekly holiday is
compulsory. If he is asked to work on weekly holiday, he should have full holiday
on one of three days immediately or after the normal day of holiday. [section
52(1)]. He cannot be employed for more than 9 hours in a day. [section 54]. At
least half an hour rest should be provided after 5 hours. [section 55]. Total period
of work inclusive of rest interval cannot be more than 10.5 hours. [section 56]. A
worker should be given a weekly holiday. Overlapping of shifts is not permitted.
[section 58]. Notice of period of work should be displayed. [section 61].
6. Annual leave with wages: 1 day for every 20 days of work done during the 89
Labour Legislations:
previous year, provided that he has worked for atleast 240 days. In case of a child Acts Governing Employment
it is relaxed for every 15 days of work. These leaves are exclusive of all other of Personnel and IR
holidays (general).
7. Work hours: not more than 48 hours in a week and not more than 9 hours in a
day. Overtime has to be paid at double rates, if applicable. If a worker works
beyond 9 hours a day or 48 hours a week, overtime wages are double the rate of
wages are payable. [section 59(1)]. A workman cannot work in two factories.
There is restriction on double employment. [section 60]. However, overtime
wages are not payable when the worker is on tour. Total working hours including
overtime should not exceed 60 in a week and total overtime hours in a quarter
should not exceed 50. Register of overtime should be maintained.
Contd…
90
Industrial Relations Notice of Change of Manager 5 As and when factory manager changes
and Labour Laws
Sec.92 to 106
Table 6.2: Offences and Penalties 91
Labour Legislations:
Offence Penalties Acts Governing Employment
of Personnel and IR
For Contravention of the provisions of the act Imprisonment upto 2 years or fine upto Rs.
or rules 1,00,000 or both.
On continuation of contravention Rs. 1000 per day
On contravention of Chapter IV pertaining to Not less than Rs. 25000 in case of death.
safety or dangerous operations.
Not less than Rs. 5000 in case of serious
injuries
Subsequent contravention of some provisions Imprisonment upto 3 years or fine not less
than Rs. 10,000 which may extend to Rs.
2,00,000.
Obstructing inspectors Imprisonment upto 6 months or fine upto Rs.
10,000 or both.
Wrongful disclosing result pertaining to Imprisonment upto 6 months or fine upto Rs.
results of analysis. 10,000 or both.
For contravention of the provisions of sec. Imprisonment upto 7 years with fine upto Rs.
41B, 41C and 41H pertaining to compulsory 2,00,000 and on continuation fine @ Rs.
disclosure of information by occupier, 5,000 per day.
specific responsibility of occupier or right of
workers to work imminent danger. Imprisonment of 10 years when contravention
continues for one year.
The Bombay Shop & Establishment Act, 1948. (For Establishments not covered
under The Factories Act, 1948)
1. Applicability: Every establishment which carries on any business, trade or
profession or any work in connection with, or incidental or ancillary to, any
business, trade or profession, but does not include any factory. Broadly speaking
the premises governed by the Act are shops, commercial establishments,
residential hotels, clubs, restaurants, eating houses, theatres and other places of
public amusement or entertainment.
2. According to Section 38-B of the Bombay Shops and Establishments Act the
provisions of the Industrial Employment (Standing Orders) Act, in its application
to the State of Maharashtra, are applicable to all establishments wherein fifty or
more employees are employed and to which the Bombay Shops and
Establishments Act applies.
3. Registration: Application for registration under the Act shall be submitted with in
31 days of its commencement.
4. Due Date for Renewal: the last date for renewal is 15th December of every year.
5. Restrictions on the working hours in shops and commercial establishments.
The main restrictive provisions of the Act about the working hours of employees
in shops and commercial establishments are as follows:
(a) The general rule about the opening hours of shops is that they are not allowed
to be opened earlier than 7 a.m. But shops selling goods like milk, vegetable,
fish etc., are allowed to be opened from 5 a.m. onward. {Section 10}
(b) This general rule about the closing hours of shops is that they must be closed
at the latest by 8.30 p.m. But shops selling goods like pan, bidi, etc., are
allowed to be kept open up to 11 p.m. {Section 11}
(c) Commercial establishment are not allowed to be opened earlier than 8.30 a.m.
and closed later than 8.30 p.m. in a day {Section 13}
92 (d) An employee in a shop or commercial establishment cannot be required or
Industrial Relations
and Labour Laws allowed to work for more than 9 hours in a day and 48 hours in a week.
{Section 14}
(e) He must be allowed an interval of rest of at least one hour after five hours of
continuous work {Section 15}
(f) His spread-over cannot exceed 11 hours in a day. {Subsection 16 & 17}
(g) Every shop and commercial establishment must remain closed on one day of
the week. No deduction can be made from the wages of any employee in a
shop or commercial establishment on account of any day on which it has so
remained closed. {Section 18}
Note: The above restrictions can be relaxed in certain circumstances.
6. Restrictions on the working hours in residential hotels and restaurants:
(a) The main restrictive provisions of the Act about the working hours of
employees in residential hotels, restaurants and eating houses are as follows:
(b) A restaurant or eating house cannot be opened earlier than 5 a.m. and closed
later than 12 midnight for service. {Section 19}
(c) An employee in a restaurant or eating house may be required to commence
work from 4.30 a.m. onwards. He cannot be required to work after 00.30 a.m.
{Section 19}
(d) An employee in a residential hotel, restaurant or eating house cannot be
required or allowed to work for more than 9 hours in a day and 48 hours in a
week. {Section 21}
(e) He must be allowed an interval of rest of at least one hour after five hours of
continuous work. {Section 22}
(f) His spread-over cannot exceed 12 hours in a day. {Section 23}
(g) He must be given at least one day in a week as a holiday. No deduction can be
made from his wages on account of such holiday. {Section 24}
Note: The above restrictions can be relaxed in certain circumstances.
7. Leave with wages:
(a) An employee is entitled to annual leave with pay for 21 days for 240 days of
work.
(b) An employee who has not worked for one year is entitled to leave with pay for
5 days for every 60 days of work.
(c) Leave with pay can be accumulated up to 42 days.
(d) A discharged employee is entitled to leave pay for the balance of leave to his
credit.
8. Holidays: In addition to annual leave with pay an employee of a shop or
establishment is entitled to a holiday on 26th January, 1st May, 15th August and
2nd October every year.
Some Definitions
1. Layoff: means failure, refusal or inability of an employer on account of shortage
of power or raw materials or the accumulation of stocks or the breakdown 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.
2. 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
(b) Retirement of the workman on reaching the age of super annotation
94 (c) Expiry of employment contract
Industrial Relations
and Labour Laws (d) Termination of the service of an workman due to continuous ill health or
3. Strike: means a cessation of work by a body of persons employed in an industry
acting in combination or a concerned refusal, or a refusal, under a common
understanding of any number of persons who are or have been so employed to
continue to work or to accept employment.
Applicability
To any industry unit regardless of the numbers of workmen employed. A workman
means Skilled, Unskilled, manual labour, technical, clerical and supervisory workmen
but excludes supervisory workers having salary of more than Rs.1600 p.m.
‘Workman’ means any person (including apprentice) employed in any industry to do
any manual, clerical or supervisory work for hire or reward. It includes dismissed,
discharged or retrenched person also. However, it does not include (i) Armed Forces
i.e. those subject to Air Force Act, Army Act or Navy Act (ii) Police or employees of
prison (iii) Employed in mainly managerial or administrative capacity or (iv) person in
supervisory capacity drawing wages exceeding Rs 1,600 per month or functions are is
mainly of managerial nature. [section 2(x)].
Important Provisions
1. The Act makes it obligatory for the employer to give a notice of change before
affecting any change in the conditions of service in respect of matters such as
wages, leave and holidays, introducing new rules of discipline, withdrawal of
concessions or privileges. A 21 days notice has to be given to all such workmen
who are likely to be affected by these changes.
2. The Act provides for providing full wages for workers during the pending order of
dispute in High Court or Supreme Court.
3. Every Award/Settlement arrived during the settlement machinery is binding on
all parties to the dispute, legal heirs and all present and future employees.
A dismissed workman is also covered under the Act.
4. Lay-off compensation @ 50% of Basic + DA and for retrenchment @ 15 days
wages for every completed year of service, with a minimum service of 1 year
‘lay off’ means failure, refusal or inability of employer on account of shortage of
coal, power or raw materials or accumulation of stock or break down of
machinery or natural calamity; to give employment to a workman on muster roll.
Lay off’ means not giving employment within two hours after reporting to work.
Lay off can be for half day also. In such case, worker can be asked to come in
second half of the shift. [section 2(kkk)].
A factory employing 50 or more but less than 100 employees on an average per
working day can lay off the workmen, who have completed one year of service,
by paying compensation equal to 50% of salary (basic plus DA) (section 25C of
IDA). Employer can offer him alternate employment, if the alternate employment
does not call for any special skill or previous experience, and lay off
compensation will not be payable if employee refuses to accept the alternate
employment (section 25E).
Above provisions of compensation for lay off do not apply to (a) Industrial
establishments employing less than 50 workmen (b) seasonal industry
(c) Establishments employing 100 or more workmen, as in their case, prior
approval of Appropriate Government is necessary u/s 25M(1).
‘Retrenchment’ means termination by the employer of service of a workman for
any reason, other than as a punishment inflicted by a disciplinary action.
However, ‘retrenchment’ does not include voluntary retirement or retirement on
reaching age of superannuation or termination on account of non-renewal of
contract or termination on account of continued ill-health of a workman.
[section 2(oo)].
‘Retrenchment’ means discharge of surplus labour or staff by employer. It is not 97
Labour Legislations:
by way of punishment. The retrenchment should be on basis of ‘last in first out’ Acts Governing Employment
basis in respect of each category, i.e. junior-most employee in the category (where of Personnel and IR
there is excess) should be retrenched first. [section 25G]. If employer wants to
re-employer persons, first preference should be given to retrenched workmen.
[section 25H].
A worker who has completed one year of service can be retrenched by giving one
month notice (or paying one month’s salary) plus retrenchment compensation, at
the time of retirement, @ 15 days’ average wages for every completed year of
service (section 25F). In Parry’s Employees Union v. Third Industrial Tribunal
2001, it was held that for purposes of retrenchment compensation under ID Act,
the monthly salary should be divided by 30.
If number of workmen are 100 or more, prior permission of Appropriate
Government is necessary u/s 25N(1)].
Meaning of ‘Continuous Service’ – Provisions of compensation for lay off and
retrenchment are applicable only to workman who is in ‘continuous service’ for
one year. As per section 25B, ‘continuous service’ includes service interrupted by
sickness, authorised leave, accident or strike which is not illegal, or lock-out or
cessation of work which is not due to fault of workman. In Workmen v.
Management of American Express AIR 1986, it was held that ‘actually worked’
cannot mean only those days where workman worked with hammer, sickle or pen,
but must necessarily comprehend all those days during which he was in the
employment of employer and for which has been paid wages either under express
of implied contract of service or by compulsion of statute, standing orders etc.
‘Closure’ means permanent closing down of a place of employment or part
thereof. [section 2(cc)]. Thus, closure can be of part of establishment also. 60 days
notice should be given for closure to Government, if number of persons employed
are 50 or more. 60 days notice is not necessary if number of persons employed are
less than 50. [section 25FFA]. Compensation has to be given as if the workman is
retrenched. [section 25FFF(1)]. If number of workmen employed are 100 or more,
prior permission of Government is necessary for closure u/s 25-O.
Provisions for large industries for lay off and closure: Large industries
employing 100 or more workmen on an average for preceding 12 months cannot
lay-off, retrench or close down the undertaking without permission from
Government (sections 25M to 25-O of Industrial Disputes Act).
5. Illegal Strikes: The Act deals with the Strike/Lock Out in Public Utility Services
that requires minimum of 14 days advance notice (cannot strike within 14 days of
giving advance notice). In other units no such prior notice is required. A lockout
in consequence of an illegal strike or a strike in consequence of an illegal lockout
shall not be deemed to be illegal.
‘Strike’ means a cessation of work by a body of persons employed in any
industry, acting in combination, or a concerted refusal, or a refusal under a
common understanding, of any number of persons who are or have been so
employed to continue to work or to accept employment. [section 2(q)].
As per section 23, workman should not go on strike in (1) during pendency of
conciliation proceedings and 7 days thereafter (2) during pendency of proceedings
before Labour Court, Industrial Tribunal or National Tribunal (3) During period of
arbitration proceedings (4) During period when settlement or award is in operation
in respect of the matters covered by award or settlement.
98 In case of public utility, employees have to give at least 14 days notice for strike.
Industrial Relations
and Labour Laws The notice is valid only if strike commences within 6 weeks. Otherwise, fresh
notice is required. Similarly, an employer cannot declare lock out without giving
14 days notice. [section 22]. If such notice is received, Government authority
should be informed within five days. As per section 2(n), ‘Public Utility Service’
includes railways, major port and docks, section of industry on the working of
which safety of establishment depends, postal/telegraph/telephone services,
industry supplying power/light/water; system of public conservancy or sanitation.
[section 2(n)]. In addition, Government can declare industry specified in Schedule
I as ‘Public Utility Services’. Such declaration can be made for 6 months at a time
[section 2(n) (vi)]. [Industries in first schedule include banking, transport, cement,
coal, defence establishments, security press, hospitals and dispensaries, oil fields,
mining of certain specified ores, foodstuff, cotton textiles, iron and steel etc].
‘Lock-out’ means temporary closing or 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. [section 2(l)]. Workers go on strike, while ‘lock-out’ is
to be declared by employer.
In every establishment, 1% of total workmen are recognised as ‘Protected
workman’ u/s 33(3) (but minimum 5 and maximum 100). In case of such
workmen, order for his dismissal, discharge or punishment cannot be passed
without permission of authority before whom proceedings are pending, whether
the issue is related to dispute or not.
6. Unfair Labour Practices: Section 25T prohibits unfair labour practices by
employer or workman or a trade union. If any person commits unfair labour
practice, he is punishable with fine upto Rs 1,000 and imprisonment upto 6
months. [section 25U]. Fifth schedule to Act gives list of what are ‘Unfair Labour
Practices’. Then major are as follows:
(a) In Case of Employer: Interfering in Trade Union activities , Threatening
workmen to refrain them from trade union activities ,Establish employer
sponsored Trade Union, Discourage trade union activities by various means,
Discharge or dismiss by way of victimization or falsely implicating workman,
Abolish work of regular nature and to give that work to contractors, transfer
of workman under guise of management policy, Employ badli or casuals and
continue them for years, Recruitment workmen during strike which is not
illegal, Acts of force and violence, Not implementing settlement or agreement
or award, Refuse collective bargaining, Continue illegal lock-out
(b) In Case of Workmen and Trade Unions: Support or instigate illegal strike,
Coerce workmen to join or not to join a particular trade union, Threatening or
intimidating workmen who do not join strike, Refuse collective bargaining in
good faith, Coercive actions including ‘go slow’, ‘gherao’, ‘squatting on work
premises after working hours’ etc. Willful damage to employer’s property,
Acts of force or violence or intimidation.
Applicability
The act extends to the whole of India and includes all unions and associations of
workmen.
Trade Union means any combination, whether temporary or permanent, formed
primarily for the purpose of regulating the relations between workmen and employers
or between workmen and workmen, or between employers and employers, or for
imposing restrictive conditions on the conduct of any trade or business. It includes
federation of two or more trade unions. [section 2(h)].
‘Trade dispute’ means any dispute between workmen and employers or between
workmen and workmen, or between employers and employers. However, it should be
connected with employment or non-employment, or the conditions of labour, of any
person. ‘Workman’ means all persons employed in trade or industry, whether or not in
the employment of the employer with whom the trade dispute arises. [section 2(g)].
100 Provisions under the Act
Industrial Relations
and Labour Laws 1. Registration of trade unions: requires 7 or more members of a trade union to
make an application to the registrar. The application should have the names,
occupations and addresses of the members and the office bearers, name and
address of the trade union.
2. A certificate of registration is issued by the registrar of trade unions on
registering a trade union which shall be conclusive evidence that the trade union
has been duly registered.
3. Appeal: Any person aggrieved by any refusal of the registrar to register a trade
union can appeal in the high court within 60 days from the date of such refusal.
4. Every registered trade union becomes a corporate body and is required to create
separate funds for general purposes and a separate fund for political purposes.
5. Notification of change in the address of the head office should be given within
14 days of such change to the registrar in writing.
6. A registered trade union enjoys the following privileges:
(a) No officer or member of a registered TU is liable to punishment under Indian
Penal Code in respect of any agreement made between the members for the
purpose of furthering any objective of the TU, unless it is for committing an
offence.
(b) No suit or other legal proceeding is maintainable in any civil court against any
TU or any office bearer or member in respect of any act done in
contemplation or furtherance of a trade dispute to which a member of a trade
union is a party on the ground only that such an act induces some other person
to break a contract of employment, or that such an act is an interference with
the trade or employment, of some other person or with the right of some other
person to dispose of his capital or of his labor as he wills.
(c) A registered TU shall not be liable in any suit or other legal proceedings in
any civil courts in respective of tortuous acts done in contemplation or
furtherance of a trade dispute by an agent of the TU, if it is proved that such
person acted without the knowledge of, or contrary to the express instructions
given by the executive of the TU.
(i) Registration and recognition of Union by an employer are independent
issues. Registration of Trade Union with Registrar has nothing to do with
its recognition in a particular factory/company. Recognition of Trade
Union is generally a matter of agreement between employer and trade
union. In States like Maharashtra and Madhya Pradesh, there are specific
legal provisions for recognition of a trade union.
“We were not taken into confidence and were not in favour of this. While on one hand
we would have had to work additional hours, there was no talk about any hike in
salaries. We were also skeptical about foregoing our overtime allowance and expected
to face a loss of around Rs 10,000 if we decided to work those extra hours,” explained
Ravindra Deshpande, whose services were terminated after 13 years’ service as a
salesman.
The company had requested that certain preliminary issues like that of the
workman/employee be framed before the case comes up for argument. “The company
had argued that ‘salesmen’ do not fall under the category of ‘workmen’ and stressed
that the question of categorisation should be resolved before the case goes further.
However, Labour Court Judge V M Kakade passed an order on December 31, 2007,
stating that the court would hear and decide all the issues together, to avoid a
piecemeal decision. The company, however, filed a revision appeal in the Industrial
Court, which was rejected. It even approached the Bombay High Court, which again
upheld the Labour Court’s decision,” said Advocate A M Pradhan who is representing
the workers.
The company remains unfazed. “The court has decided that it will deal with all the
issues in the case together and our contention will remain the same when the case is
argued in court — that ‘salesmen’ do not fall under the category of ‘workmen’. There
is no compromise possible as we had initiated action against them based on their acts
of insubordination and indiscipline. Besides, their posts have already been filled and
there is no question of reinstatement,” said BATA general manager Rajiv Chabbra,
who handles the legal functions of the company. The employees’ counsel, however,
stressed that they were ‘workmen’, explaining the difference between ‘sales
representatives’ who engage in door-to-door promotion and ‘salesmen’ who work
from one location.
Besides the 15 salesmen in Pune, 153 salesmen from the company’s Mumbai outlets,
too, filed a similar case with the Mumbai Labour Court. “As many as 172 such
employees opted not to comply with the company’s decision and were terminated
from service.
However, the reasons for the termination were conditional, as the employees were
protesting the management’s decision to keep shops open seven days a week and were
refusing to sign a good conduct bond,” said Chhabra. While the workers are prepared
to negotiate the case on monetary grounds — not wanting to get back into
employment with the company — the management has said that it would wait for the
case to be decided.
2. Strike at M&M's Nashik Plant Illegal
Nashik Industrial Court says strike is illegal.
In response to disciplinary action taken against an office bearer of the Employee’s
Union, workers at the Nashik plant of Mahindra & Mahindra Ltd.’s Automotive
Sector have ‘resorted, commenced with an illegal and unjustifiable strike’ according
to The Nashik Industrial Court. The court declared the ‘tool down’ strike by the
workmen as illegal and unjustified and has thereby directed the respondent-union
workers to report to work at the earliest and withdraw the strike within 48 hours from
the said declaration. According to the Industrial Court, the strike is in breach of
Sec-24 (1) (a) & 24 (1) (b) of the MRTU and PULP Act, 1971 and prima-facie
amounts to unfair labour practice under Item-1 of Sch-III of the MRTU and PULP
Act, 1971.
104 Press Release:
Industrial Relations
and Labour Laws Mumbai, May 13, 2009: The Nashik Industrial Court, by its order dated May 13,
2009, has declared the tool down strike by workmen at the Nashik Plant of Mahindra
& Mahindra Ltd.’s Automotive Sector as illegal and unjustified.
The Industrial Court order states the following: “It is declared that the respondents,
working in the complainant-company have resorted, commenced illegal and
unjustified strike in breach of Sec-24 (1) (a) & 24 (1) (b) of the MRTU and PULP Act,
1971 on and from 04-05-2009, which is continued thereafter till today, prima-facie
amounts to unfair labour practice under Item-1 of Sch-III of the MRTU and PULP
Act, 1971. The respondent-union workers are hereby directed to withdraw said strike
within 48 hours from said declaration. They are advised to report for their work in
their respective shifts at the earliest.”
The workmen at the Nashik Plant of Mahindra’s Automotive Sector had resorted to an
illegal, tool down strike from 4th May, 2009. This was in response to a disciplinary
action initiated against an office bearer of the Employee’s Union for alleged acts of
indiscipline.
The Court has ruled that the workmen should resume their duties within 48 hours.
3. Justify lockouts, says HC
In a judgment upholding the security of a workforce during a lockout, the Bombay
High Court has held that an Industrial Court can investigate the justifiability of a
lockout, even if the company has declared it by legal means. Hence, a company will
now have to justify the reasons for declaring a lockout and explain denial of wages to
its workforce. It can no longer justify its stand by merely fulfilling the legal provisions
under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour
Practices Act (MRTU & PULP) Act.
Justice F I Rebello of the Bombay High Court has ruled that workers are entitled to
wages during the lockout if they can prove the lockout itself was not called for. The
order was delivered on a petition filed by the Bharatiya Kamgar Karmachari
Mahasangh, which alleged unfair labour practices by Guest Keen Williams Limited.
The company had declared a lockout in February 1998 after issuing a notice in
January 1998.
Another group of 19 employees also moved the Industrial Court against the company
under the MRTU & PULP Act. The court, however, rejected the petition, maintaining
that the “lockout was legal'' and the justifiability of the lockout could not examined in
a complaint of unfair labour practices. However, the workers appealed in the high
court, maintaining that the act permits the Industrial Court to probe the circumstances
under which the lockout was declared. They maintained that even though the company
may have followed the legal procedures, the lockout itself may not have been called
for or by subsequent passage of time, it may become totally unfair to the workers. The
company's counsel argued that unless there is a prior agreement with the workers, the
latter are not entitled to wages during the lockout period.
The counsel cited past rulings (Mazdoor Congress vs. S A Patil, Billion Plastics vs.
Dyes and Chemicals Workers Union, and Maharashtra General Kamgar Union vs.
Solid Containers Ltd), which underscore the Industrial Court's inability to go beyond
the scope of the lockout's legality. Upholding the workers' contention, Justice Rebello
observed that the company was not justified in this policy decision, after outlining the
circumstances before the lockout was declared. To begin with, the management
had suspended work from January 19, much before the lockout took effect from
February 5. Also, he observed, no agreements had been reached by the warring parties
despite the workers submission of two charters of demands since 1989.There were no
recent instances of violence in the company, he said, pointing out that in their reply to 105
Labour Legislations:
the lockout notice the workers had in fact assured peace in the factory. This had been Acts Governing Employment
reiterated in the courts too. Moreover, the company had reached an agreement with the of Personnel and IR
union with regard to a particular section of the workforce. Therefore, Justice Rebello
ruled, there was no justification for the lockout at this stage and certainly not for
denial of workers' monthly wages. The judge directed the company to pay wages until
the final disposal of the petitions.
Following the ruling, the company has filed an appeal in the high court, arguing that
“the single judge has erred in interfering with the Industrial Court's well-reasoned
order”. Moreover, the company claims, the judge has not appreciated the lockout
notice, which clearly mentions the looming threat of violence in the establishment.
“No prudent employer could be expected to wait for actual bloodshed before imposing
the lockout,” the appeal states.
Colin Gonsalves and J P Cama appeared for the petitioners while K K Singhvi and
C U Singh represented the management.
4. SC ruling on unfair labour practice
THE appeal under the Maharashtra Recognition of Trade Unions and Prevention of
Unfair Labour Practices Act, 1971 (MRTU & PULP Act) is dismissed on the ground
that the complaint was not maintainable.
It is open for the appellant-union or their members to raise dispute in this behalf
before an appropriate forum provided they are entitled to do so. If they get a
declaration to the effect that they are employees of the respondent-company, then it
may be open to file such a complaint. It is also clarified that if a dispute as to their
status is raised in an appropriate forum, then the same will be decided on merits
without taking into consideration any observations made or finding given by the
Industrial Court in the impugned order.
That was all that the workers' union could obtain from the Supreme Court by
approaching it by way of special leave petition in Vividh Kamghar Sabha vs. Kalyani
Steels Ltd (Civil Appeal No. 3375 of 1998 decided on January 9, 2000) by a Division
Bench comp rising Mr. Justice S. Rajendra Babu and Mr. Justice S.N. Variava. In this
case, Vividh Kamghar Sabha, a union representing the workmen of a canteen run by
the management of Kalyani Steel Ltd (‘company’) claimed that they were employees
of the company, but the company was not treating them at par with the other
employees, and had notionally engaged the contractors to run the canteen. The
company did not accept this claim. The union filed a complaint under Section 28(1) of
the MRTU & PULP Act, alleging that the company had engaged in unfair labour
practices under specified items of Schedule II and Schedule IV of the MRTU & PULP
Act. T his complaint came to be dismissed by the Industrial Court. The union filed a
special leave petition directly in the Supreme Court against this order as the High
Court of Bombay, in the case of Krantikari Suraksha Rakshak Sangathana vs. S.V.
Naik (1993) 1 CLR 1002 had already held that the Industrial Court cannot, in a
complaint, under the MRTU & PULP Act, abolish contract labour, and treat
employees as direct employees of the company.
The Supreme Court referred to its ruling in the case of Central Labour Union (Red
Flag) Bombay vs. Ahmedabad Mfg & Calico Printing Co. Ltd (1995) 2 LLJ 765
holding that where the workmen had not been accepted by the company to be its
employees, then no complaint would lie under the MRTU & PULP Act. The judges
expressed their full agreement with that ruling.
The judges took this opportunity to reiterate the view that the provisions of the MRTU
& PULP Act can only be enforced by persons who admittedly are workmen. If there is
106 a dispute as to whether the employees are employees of the company, then that dispute
Industrial Relations
and Labour Laws must first be got resolved by raising a dispute before the appropriate forum. It is only
after the status as a workman is established in an appropriate forum that a complaint
could be made under the provisions of the MRTU & PULP Act. It was contended by
the appellant-union that the company had always recognised the members of the
appellant-union to be their own workmen. It was submitted that a formal denial was
taken only to defeat the claim.
The judges, however, saw no substance in this contention. Going by the written
statement of the company, the judges noted that the management had categorically
denied that the members of the appellant union were employees of the company. The
judges further took into account that the question was agitated before the Industrial
Court. The Industrial Court gave a finding, on facts, that the members of the
appellant-union were not employees of the respondent-company. This being a
disputed fact, till the appellants or their members, get the question decided in a proper
forum, the present complaint was not maintainable.
Objective
The Act prohibits employment of Child (who has not completed 14 years) in all
the occupations indicated in Part A of schedule to the Act and in all processes
indicated in Part B of the schedule to the Act.
Lay down a procedure to decide modifications to the schedule of banned
occupations or processes
Regulate the conditions of work of children in employments where they are not
prohibited from working
Lay down penalties contravening the provisions of the Act
To define “Child” uniformly in all related laws
Applicability
The Act covers all industries and extends to the whole of India.
Applicability
The Act extends to the whole of India and covers all industrial establishments, both in
private and public sectors.
Applicability
The Act applies to all factories and establishments where 10 or more workers are
working. Further the state governments can extend the provisions of the Act to any
other establishments which are not covered subject to the approval of the central
government.
However, this Act does not apply to factories/establishments covered by the Employee
State Insurance Act 1948. If a woman becomes ineligible for maternity benefits under
ESIS due to her salary being in excess of Rs.10,000/- p.m. (ESIS covers only
employees drawing salary upto Rs.10,000/-)
Applicability
The Act applies to the Principal Employer of an Establishment and the Contractor
where in 20 or more workmen are employed or were employed even for one day
during preceding 12 months as Contract Labour. For the purpose of calculating the
number, contract labour employed for different purposes through different contractor
has to be taken into consideration.
This Act does not apply to the Establishments where work performed is of intermittent
or seasonal nature.
Besides Contract Labour (Regulation and Abolition) Act, various other Acts are
applicable to contract labour – (a) Factories Act: The Act makes no distinction
between persons directly employed and employed through contractor, (b) Employees
Provident Funds Act, (c) ESIC, (d) Payment of Wages Act, (e) Minimum Wages Act,
(f) Industrial Disputes Act, (g) Workmen’s Compensation Act.
6.12 KEYWORDS
Standing Orders: To have a uniform service condition for the workmen employed in
all industrial establishments
Factory: It means any premises where 10 or more workers are working and a
manufacturing process is carried out with aid of power
Small establishment: It means an establishment in which not less than ten and not
more than nineteen persons are employed or were employed during past 12 months
Industry: It means any business, trade, undertaking, manufacture or calling of
employers and includes any calling, service, employment, handicraft or industrial
occupation or avocation of workmen
Strike: It means a cessation of work by a body of persons employed in an industry
acting in combination or a concerned refusal, or a refusal, under a common
understanding of any number of persons who are or have been so employed to
continue to work or to accept employment.
Retrenchment: It means termination by the employer of service of a workman for any
reason, other than as a punishment inflicted by a disciplinary action
Trade dispute: It means any dispute between workmen and employers or between
workmen and workmen, or between employers and employers
2. Analyse the provisions of the Factory Act, 1948. Does this act really help in
strengthening industrial relations?
3. What is an industrial dispute? What is the difference between strike and lockouts?
4. Write short notes on: Labour Courts, Industrial Tribunal and National Tribunal.
5. What do you mean by retrenchment of employees and how is it different from
layoff?
6. Underline the importance of Trade Unions Act, 1926. Discuss its main provisions.
7. Discuss Child Labor Act, 1986 and Apprentice Act, 1961.
8. State the major provisions and exceptions of Maternity Benefit Act, 1961.
7
LABOUR LEGISLATIONS: ACTS GOVERNING
COMPENSATION OF EMPLOYEES
CONTENTS
7.0 Aims and Objectives
7.1 Introduction
7.2 The Workmen’s Compensation Act, 1923
7.3 The Payment of Wages Act, 1936
7.4 The Minimum Wages Act, 1948
7.5 The Payment of Bonus Act, 1965
7.6 The Employee Provident Funds Act, 1952
7.7 The Payment of Gratuity Act, 1972
7.8 The Employees State Insurance Act, 1948
7.9 Let us Sum up
7.10 Keywords
7.11 Self Assessment
7.12 Review Questions
7.13 Suggested Readings
7.1 INTRODUCTION
In this lesson we are going to study the major acts concerning the compensation of
employees one by one in brief.
115
7.2 THE WORKMEN’S COMPENSATION ACT, 1923 Labour Legislations:
Acts Governing
Compensation of Employees
Purpose
To impose statutory liability upon an employer to pay compensation to the workman
when the workman suffers from physical disabilities and diseases during the normal
employment tenure.
Applicability
All establishments hiring 20 workers and above must compulsorily register
themselves under the Employees’ State Insurance Act (ESI Act). It is only those
establishments, which employ a lesser number of workers, and therefore to do not
come within the purview of the ESI Act that the Workmen’s Compensation Act
applies to. Also if employers fail to register themselves under the ESI Act, then they
will be responsible to pay compensation under the Workmen’s Compensation Act.
Injury under the Act are classified as: 1. Death 2. Permanent total disablement
3. Permanent partial disablement and 4. Temporary total or partial disablement.
However the Act does not apply to factories/establishments covered by Employee
State Insurance Act 1948.
The Act will apply only to persons recognized as a “workmen” under the Act. The
following criteria have to be satisfied: (s. 2 (1) (n) read with Schedule II)
With the amendment of the Workmen’s Compensation Act in 2000 now it is not
necessary that the worker in question is engaged in the employer’s trade or business.
Further with the Amendment of 2000 now even casual workers are covered by this
law. The only requirement is:
The worker should be employed in an activity, which has to be either listed in
schedule II 2 of the Act OR any duty having connection with the specified activity
mentioned in the schedule.
In addition, schedule III 3 to the Act contains a list of diseases and persons in
occupations where infection is possible can claim compensation under this Act.
They are ‘workmen’ for the purposes of this Act.
In addition to persons employed in the capacity mentioned in Schedule II, a
driver, a mechanic, cleaner, or person employed in any other capacity in
connection with a motor vehicle are also considered ‘workers’ under this Act.
In case part of the work of an establishment is contracted out to a contractor and a
worker employed by the contractor for this purpose, is injured then, the principle
employer and not the contractor (who is the worker’s immediate employer), is
responsible to pay compensation as though the worker was directly employed by
him. (Section 12)
However, this principal employer holds the right to be indemnified by the person
who would normally pay for the compensation of an injured/deceased worker, i.e.
the contractor. However, nothing shall prevent the worker from claiming his
compensation from the principal employer.
Amount of Compensation
1. Death: 50% of the monthly wages of the deceased worker multiplied by the
relevant factor depending on the worker’s age – the amount so derived or Rs.
80,000/- whichever is more.
2. Permanent Total Disability: 60% of the monthly wages of the injured worker
multiplied by the relevant factor or Rs. 90,000/- whichever is higher.
3. Permanent Partial Disability: Worker loses one hand 60% of Rs. 90,000/-
4. Temporary Disability: A half monthly payment of the sum equivalent to 25% of
the monthly wages of the worker, every 15 days till the injury lasts.
5. Wages are the basis for amount of compensation paid. Two workers earning
different salaries therefore will get different amounts of compensation even
though the injury they suffered might be identical.
6. Compensation under this Act is calculated on the basis of the monthly wage
received by the worker.
7. According to this Act, it is the amount of wages which would be payable for a
month’s service i.e. irrespective of whether the worker is paid on a daily, weekly
or piece rate basis.
Table 7.1: Description of Injuries and Corresponding % of Earning Capacity Loss
Schedule I
% of Earning
SNO. Description of injury
capacity loss
Part I
Injuries Deemed to Result in Permanent Total Disablement
1. Loss of both hands 100
2. Loss of hand and a foot 100
3. Amputation of one leg/thigh and loss of other foot 100
4. Loss of sight and unable to work 100
5. Very severe disfigurement 100
6. Absolute deafness 100
Part II
Injuries Deemed to Result in Permanent Partial Disablement
1. Amputation through shoulder joint 90
2. Amputation below shoulder with stump <8” from tip of acromion 80
Amputation from 8” from tip of acromion to <4-1/2” Below top of
3. 70
olecranon
4. Loss of hand or of thumb and four fingers of one hand 60
Contd…
117
Labour Legislations:
5. Loss of thumb 30 Acts Governing
6. Loss of thumb and its metacarpal bone 40 Compensation of Employees
Contd...
118
Industrial Relations 42. Part, any other toe without some loss of bone 1
and Labour Laws 43. Two toes of one foot through metatarsophalangeal joint 5
44. Part, two toes without loss of bone 2
45. Three toes 6
46. Three toes part only without loss of bone 3
47. Four toes of one foot, exceeding great toe 9
48. Part of four toes, without loss of bone 3
Applicability
The Act extends to the whole of India
The Act applies to all persons employed in an Industrial or other establishments
whose monthly wages are less than Rs. 1600/-. However in the state of
Maharashtra the Act has been made applicable to all such establishments covered
by the Bombay Shops and Establishments Act.
Definition of Wages
“Wages” means all remunerations (whether by the way of salary, allowance or
otherwise) expressed in terms of money or capable of being so expressed which
would, if the terms of employment, express or implied, were fulfilled, be payable to a
person employed in respect of his employment or work done in such employment, and
includes:
1. any remuneration payable under any award or settlement between the parties or
order of a court
2. any remuneration to which the person employed is entitled in respect of overtime
work or holidays or any leave period
3. any additional remuneration payable under the terms of employment (whether
called a Bonus or by any other name)
4. any sum which by reason of the termination of employment of the person
employed is payable under any law, contract or instrument which provides for the
payment of such sum, whether with or without deduction, but does not provide for
the time within which the payment is to be made
5. any sum to which the person employed is entitled under any scheme framed under
the law for the time being in force.
Note:
1. Any other deduction from “Wages” will be treated as unauthorized.
2. Though this Act is not directly applicable to many establishments due to salary
ceiling of Rs.1600/- p.m., many state governments have made this act applicable
through the Shops and Establishments Acts.
3. The total deductions for “Wages” shall not exceed 75% of the wages.
4. An employee or his representative can make application to the authority appointed
by the government in case of unauthorized/wrong deductions or delay in the
payment of wages and such authority will pass the necessary orders. Such claims
should be within 12 months. Authority can order refund of amount wrongly
deducted along with a compensation upto 10 times the amount deducted. However
in case of delay in payment, authority can order compensation only upto Rs.25/-.
5. It is mandatory for employers to display notice containing abstracts of this Act at
prominent places in his factory/establishments.
Applicability
According to the Act certain employments (“Scheduled Employments”) are required
to adhere to the minimum prescribed wages for their respective industries. The Act
extends to the whole of India.
Applicability
The Act is applicable to every factory and establishment employing 20 persons or
more on any day during an accounting year
Applicability
To every factory engaged in any industry employing 20 persons or more. Any
establishment to which the Act applies shall continue to be governed by the Act even
if the number of persons employed therein at any time falls below 20. Once an
establishment is covered under PF, all its departments and branches wherever they are
situated are also covered.
As per section 16(1), the PF Act does not apply to (a) any establishment registered
under Cooperative Societies Act or State law relating to cooperative societies,
employing less than 50 persons and working without paid of power (b) to any
establishment belonging to or under Control of Central Government or a State
Government and whose employees are entitled to benefit of contributory provident
fund or old age pension. (c) to any establishment set up under any Central or State Act
and whose employees are entitled to benefit of contributory provident fund or old age
pension.
124 This Act is not applicable to employees drawing salary in excess of Rs.6,500/- p.m.
Industrial Relations
and Labour Laws (Basic +DA). Every employee, other than excluded employee is entitled and required
to become member of the fund from the date of joining factory/establishment.
The Act covers three schemes i.e. PF (Provident Fund scheme), FPF (Family Pension
Fund scheme) and EDLI (Employees Deposit Linked Insurance scheme).
The employer’s contribution of 8.33% will be diverted to the fund of Pension Scheme.
Employee does not have to make any contribution. Members will get pension on
superannuation or retirement from service and upon disablement during employment.
Family pension will be available to widow/widower for life or till he/she remarries. In
addition, children will be entitled to pension, upto 25 years of their age. In case of
orphans, pension at enhanced rate is available upon death of widow/widower or
ceasing payment of widow pension. Benefit of pension to children or orphan is only
restricted for two children/orphans.
Employees Deposit Linked Insurance Scheme: The purpose of the scheme is to
provide life insurance benefits to employees who are already covered under PF/FPF.
The employer has pay contribution equal to 0.50% of the total wages of employees In
addition, administrative charges of 0.1% of total wages. The employee does not
contribute any amount to the scheme. The salary limit for coverage of employees is
same as that of Provident Fund.
If an employee dies during employment, his nominee or family member gets an
amount equal to average balance in the Provident Fund Account of the deceased
employee during last 12 months. If such balance is more than Rs. 35,000, the
insurance amount payable is Rs. 35,000 plus 25% of the amount in excess of
Rs. 35,000, subject to overall limit of Rs. 60,000.
Applicability
The Act is applicable to all establishments employing 10 or more workmen or had
employed on any day of the preceding 12 months. The Act is applicable to all
employees, irrespective of the salary.
Applicability
The Act applies to all factories except seasonal factories. The Government of
Maharashtra has extended the provisions of the Act to Hotels, Shops, Cinemas and
Newspaper employing 20 or more workers.
Workmen whose remuneration (excl. the remuneration for over-time work) does not
exceed Rs. 10,000/- p.m. are covered under the Act.
‘Principal Employer’ means:
owner or occupier of factory
Head of department in case of Government department
Person responsible for supervision and control, in case of any other establishment.
[section 2(17)].
Employees working though contractor are also covered. ‘Contractor’ is termed as
‘Immediate Employer’. ‘Immediate employer’ means a person who has undertaken the
execution, on the premises of factory or establishment to which this Act applies.
He may do on his own or under the supervision of Principal Employer. The work
should be part of work of factory or establishment of principal employer or is 127
Labour Legislations:
preliminary or incidental to the work of factory or establishment. [section 2(13)]. Acts Governing
Primary liability of ESI contribution is of Principal Employer. [section 40(1)]. He can Compensation of Employees
recover the contribution paid by him from the ‘immediate employer’ i.e. contractor.
[section 41].
Construction workers employed in construction activities are not covered under ESIC.
7.10 KEYWORDS
Compensation: It is a systematic approach to providing monetary value to employees
in exchange for work performed
Occupational Disease: It is a disease that inflicts workers in that particular occupation
in which s/he was employed in and resulting from exposure to a hazardous working
atmosphere, particular to that employment
Wages: It is compensation, usually financial, received by workers in exchange for
their labor
Bonus: It refers to extra pay due to good performance
Provident Fund: It is the fund which is composed of the contributions made the 129
Labour Legislations:
employee during the time he has worked along with an equal contribution by his Acts Governing
employer Compensation of Employees
8
DISPUTE SETTLEMENT
CONTENTS
8.0 Aims and Objectives
8.1 Introduction
8.2 Types of Disputes
8.3 Causes of Industrial Disputes
8.4 Settlement of Industrial Disputes
8.4.1 Statutory Machinery
8.4.2 Voluntary Machinery
8.5 Lok Adalats
8.5.1 Concept
8.5.2 Limitations of Litigation
8.5.3 Advantages of Mediation
8.5.4 Development of Lok Adalats
8.5.5 Lok Adalat as a Body to Conduct Mediation
8.5.6 Lok Adalats and the Industrial Disputes Act, 1947
8.6 Case Laws
8.6.1 Illegal Strikes – The Industrial Disputes Act, 1947
8.6.2 Termination – The Industrial Disputes Act, 1947
8.6.3 Retrenchment – The Industrial Disputes Act, 1947
8.7 Let us Sum up
8.8 Keywords
8.9 Self Assessment
8.10 Review Questions
8.11 Suggested Readings
Relations between labour and management do not proceed along the lines envisaged
above for a variety of reasons. Divergent views, opposite stands, contrasting demands
characterise labour-management relations. Employees want more jobs, management
wants to reduce staff, raise productivity and save on all fronts. Management wants to
computerise and introduce latest technology gradually in order to reduce the
dependence on manual force. Labour and unions cannot afford to let this happen by
keeping silence. Labour wants a fair share of productivity gains. Management wants
to demonstrate those gains as fruits of risky investments. The argument goes on and
on. However, the survival of both partners in the industrial activity is dependent on
how appreciatively they look at each other’s concerns and get along without rubbing
each other the wrong way.
Industrial disputes constitute militant and organised protests against existing industrial
conditions.
Strikes
A strike is a spontaneous and concerted withdrawal of labour from production
temporarily. It is a collective stoppage of work by a group of workers for pressuring
their employers to accept certain demands. The Industrial Disputes Act 1947 has
defined a strike as “an assertion of work by a body of persons” employed in an
industry acting in combination, or a concerted refusal or a refusal under a common
understanding of any number of persons who are or have been so employed to
continue to work or to accept employment. Strikes are of several types:
1. Sympathetic strike: When a strike is undertaken to show sympathy with workers
in other industries, it is called a sympathetic strike.
2. General strike: It is a strike by all or most of the unions in an industry or a region.
3. Unofficial strike: It is a strike undertaken without the consent of the unions.
4. Sectional strike: It is the refusal of a section of a given class of workers to
perform their normal duties.
5. Bumper strike: It is a strike when the unions plan to paralyse the industry, firm by
firm, the order being chosen by the union. Such strikes are supported by the
contributions of those who are still at work.
6. Sit down strike (also called stay-in, tool down, pen down strike): It is a strike in
which workers cease to perform their duties but do not leave the place of work.
7. Slow-down strike: Known as a ‘go-slow’ tactic, the workers do not stop working
but put breaks to the normal way of doing things.
8. Lightning strike: Out of provocation, workers may go on strike without notice or
at very short notice. There is an element of surprise in such wildcat strikes.
9. Hunger strike: To gain sympathy from the public and get noticed by the
employer, workers may decide to forego food for a specified period. Small
batches of workers may also go on a relay hunger strike in a sequential order.
Such non-violent protests generally bring moral pressure on employers to iron out
the differences with labour quickly.
132 Lock-outs
Industrial Relations
and Labour Laws
Lock-out is the counterpart of strike. It is the weapon available to the employer to
close down the factory till the workers agree to resume work on the conditions laid
down by the employer. The Industrial Disputes Act of 1947 defined it as “the closing
of a place of an employment, or the suspension of work or the refusal of an employer
to continue to employ any number of persons employed by him”. If it is impossible to
meet the demands of the workers, employers may decide to go for lock-out. An
employer may also pull down the shutters so as to bring psychological pressure on the
workers to agree to his conditions or face closure of the unit.
Gherao
Gherao means to surround. In this method, a group of workers initiate collective
action aimed at preventing members of the management from leaving the office. This
can happen outside the factory premises too. The persons who are ‘gheraos’ are not
allowed to move for a long time, sometimes even without food or water. The National
Commission on Labour, while refusing to accept it as a form of industrial protest,
opined that gheraos tend to inflict physical duress (as against economic pressure) on
the persons affected and endanger not only industrial harmony but also create
problems of law and order.
Works Committee
It is a committee formed for resolving disputes in the establishments with 100 or more
workers. It has equal number of representatives of the employer and employees. It
aims at promotion of good relationship between employer and employee(s)
Conciliation officers
They are appointed by the appropriate Government. Their duty is to settle industrial
disputes. They are appointed for a specified area or for specified industries in a
specified area or for one or more specified industries and either permanently or for a
limited period.
Boards of Conciliation
z Appointed by the appropriate Government as occasion arises for settlement of
disputes
z Board shall consist of an independent Chairman and two or four other members in
equal numbers to represent the parties to the dispute
Courts of Inquiry
Constituted by the appropriate Government as occasion arises for inquiring into any
matter appearing to be connected with or relevant to an industrial dispute
Labour Courts 135
Dispute Settlement
Labour Courts are constituted by the appropriate Govt. for the adjudication of
industrial disputes relating to any matter specified in the Second Schedule and for
performing such other functions as may be assigned to them under this Act.
Matters within the Jurisdiction of Labour Courts (the II Schedule)
1. The propriety or legality of an order passed by an employer under the standing
orders;
2. The application and interpretation of standing order;
3. Discharge or dismissal of workmen including re-instatement of, or grant of relief
to, workmen wrongfully dismissed;
4. Withdrawal of any customary concession or privilege;
5. Illegality or otherwise of a strike or lock-out; and
6. All matters other than those specified in the Third Schedule.
Industrial Tribunals
Industrial Tribunals are constituted by the appropriate Govt. for the adjudication of
industrial disputes relating to any matter specified in the Second Schedule or the Third
Schedule and for performing such other functions as may be assigned to them under
this Act.
National Tribunals
National Tribunals are constituted by the Central Government for the adjudication of
industrial disputes which, in the opinion of the Central Government, involve questions
of national importance or are of such a nature that industrial establishments situated in
more than one State are likely to be interested in, or affected by such disputes.
Adjudication
Adjudication is a judicial (decision making) process for settlement of industrial
disputes [sn.2(aa)].
The Act provides for ‘Works Committee’ in factories employing 100 or more workers.
[section 3].
136 The committee will consist of equal number of representatives of employer and
Industrial Relations
and Labour Laws employees. Representatives of employees will be selected in consultation with
Registered Trade Union. The Works Committee will first try to settle disputes. If
dispute is not solved, it will be referred to ‘Conciliation Officer’. He is appointed by
Government. [section 4]. The matter may also be referred to ‘Board of Conciliation’.
[section 4].
He will try to arrive at fair and amicable settlement acceptable to both parties. If he is
unable to do so, he will send report to appropriate Government. [section 12(4)].
The Government may then refer the industrial dispute to Board of conciliation, Labour
Court or Industrial Tribunal. [section 12(5)].
Employer and employees can voluntarily refer the matter to arbitration. [section 10A].
If no settlement is arrived at, there is three tier system of adjudication – Labour Court,
Industrial Tribunal and National Tribunal. The order made by them is ‘award’.
‘Award’ means an interim or final determination of any industrial dispute or of any
question relating thereto by any Labour Court, Industrial Tribunal or National
Tribunal. It also includes arbitration award. [section 2(b)]. The ‘award’ is required to
be published by State/Central Government within 30 days. [section 17]. The award
becomes effective 30 days after its publication. [section 17A].
Settlement
z ‘Settlement’ means a settlement arrived at in the course of conciliation
proceedings.
z It includes a written agreement between employer and workmen arrived at
otherwise than in course of conciliation proceedings (i.e. outside the conciliation
proceedings).
z The difference is that settlement arrived at in course of conciliation or an
arbitration award or award of labour court or Tribunal binds all parties to
industrial dispute including present and future workmen and all parties who were
summoned to appear in the proceedings. [section 18(3)]. If settlement is arrived at
by mutual agreement, it binds only those who were actually party to agreement.
[section 18(1)].
Period of Validity
z The settlement is binding during the period it is in force. Even after that period is
over, it continues to be binding, unless a 2 month notice of termination is given by
one party to another. [section 19(2)].
z If no period has been specified, settlement is valid for 6 months and an award is
valid for one year.
Case Facts
To appreciate in its proper perspective an important question raised in the appeal, it is
necessary to set out relevant facts.
The appellant is Coimbatore District Central Co-operative Bank having its head office
at Coimbatore. It is having 17 branches in the Revenue District of Coimbatore. It is
the case of the appellant-Bank that the Coimbatore District Central Bank Employees
Association ('Union' for short) gave a 'strike notice' on March 31, 1972 which was
received by the Management on April 5, 1972 proposing to go on strike from April 14,
1972. The reason for such notice and going on strike was suspension of certain
employees and withholding of their salary by the Management. Since the strike-call
was illegal and the notice was not in consonance with the provisions of the Industrial
Disputes Act, 1947 (hereinafter referred to as "the Act"), the action of going on strike
was unlawful.
The Union was accordingly informed not to go on strike. The Labour Officer,
Coimbatore in the meanwhile commenced Conciliation Proceedings in connection
with certain issues raised by the Union. Despite proper advice by Labour Officer, the
employees commenced strike from April 17, 1972. The strike was totally illegal and
unlawful. On April 19, 1972, notice was issued to the Union stating therein that the
workmen should join duties by April 22, 1972 by tendering unconditional apology.
The employees accepted it. A settlement had been arrived at between the Management
and the Union and 134 employees gave up 'strike call' and resumed work.
53 employees, however, refused to join duty and continued their illegal strike and acts
of misconduct.
The illegal acts of employees affected the work of the Bank very badly. It was alleged
that not only the workmen did not join duty and continued illegal and unlawful strike,
but also prevented other employees from resuming duty and threatened them with dire
consequences if they returned for duty. Disciplinary proceedings were, therefore,
initiated against 53 workmen, they were placed under suspension and inquiry was
instituted. The employees were intimated of the charges levelled against them, which
they denied. In spite of notices, the workmen did not participate in disciplinary
proceedings and remained absent.
The Management was, therefore, constrained to proceed with the disciplinary inquiry
ex parte against them. By an order dated January 6, 1973, the workmen were held
guilty of the charges and an order of punishment was passed. By the said order, two
punishments were awarded on the workmen; (i) stoppage of increment for 1-4 years
with cumulative effect; and (ii) non-payment of salary during the period of
suspension. According to the Bank, the case was an appropriate one to impose
extreme penalty of dismissal from service, but by taking liberal view, the extreme
punishment was not imposed on the employees and they were retained in employment
144 by the Bank. The workmen joined duty on January 17, 1973. They should have
Industrial Relations
and Labour Laws accepted the order gracefully and appreciated the attitude adopted by the
Management. The workmen, however, did not do so. They preferred to file appeal
which was dismissed by the Executive Committee.
Rival Submissions
We have heard the learned counsel for the parties. The learned counsel for the
appellant-Bank contended that both, the learned Single Judge as well as the Division
Bench of the High Court, were in error in interfering with the order of punishment
passed by the Management particularly when the said action had been confirmed by a
well-considered and well-reasoned award made by the Labour Court, Coimbatore. It
was urged that once an inquiry has been held to be in consonance with rules of natural
justice, charges had been proved and an order of punishment had been passed, it could
not have been set aside by a 'Writ-Court' in judicial review. The Labour Court
recorded a finding of fact which had not been disturbed by the High Court that
principles of natural justice were not violated. The inquiry was conducted in
consonance with law and all the charges leveled against the employees were
established. If it is so, the High Court was clearly wrong in interfering with the award
of the Tribunal. According to the counsel, the High Court was neither exercising
appellate power over the action taken by the Management nor on quantum of
punishment awarded.
The Court was also not having appellate jurisdiction over the Labour Court. The
jurisdiction of the High Court under Article 226/227 of the Constitution was limited to
the exercise of power of judicial review. In exercise of that power, the High Court
could not substitute its own judgment for the judgment/order/action of either the
Management or the Labour Court. The order of the High Court, therefore, deserves to
be quashed and set aside. It was also urged that even if it is assumed that the High
Court has jurisdiction to enter into such arena, then also, in the facts and
circumstances of the case and considering the allegations leveled and proved against
the workmen, it cannot be said that an order of stoppage of increment/increments with
cumulative effect could not have been made. On the contrary, the matter was very
serious which called for much more severe penalty, but by taking liberal view, the
Management had imposed only a 'minor' penalty. Such reasonable order could not
have been set aside by the High Court.
The counsel submitted that 'Banking service' is an 'essential service'. It has public
utility element therein and it was the duty of the employees connected with such
service to discharge their duties sincerely, faithfully and whole-heartedly. In the
instant case, not only the workmen refused to join duty, but they prevented other
employees who had amicably settled the matter with the Management in discharging
their duties by administering threat and by successfully obstructing the Management
in the discharge of its obligations as Public Utility Undertaking. Serious view,
therefore, was called for. There was total and complete misconception on the part of
the High Court in holding that the punishment was 'harsh'. It was, therefore, submitted
on behalf of the Management that the order passed by the learned Single Judge and
modified by the Division Bench deserves to be set aside by confirming the action
taken by the Management and approved by the Labour Court, Coimbatore.
The learned counsel for the respondent-Union, on the other hand, supported the order
passed by the Division Bench of the High Court. According to him, the learned Single
Judge was fully justified in partly allowing the petition observing that the punishment
imposed on the workmen was 'clearly harsh' and in setting aside that part of the
punishment by which increment/increments was/were stopped. Since the punishment
146 imposed by the Management was grossly disproportionate, the learned Single Judge
Industrial Relations
and Labour Laws was also right in directing the Bank Management to pay salary with 12% interest. It is
no doubt true, stated the learned counsel, that the Division Bench partly set aside the
direction of the learned Single Judge by modifying the punishment permitting
stoppage of increment/increments of the workmen without cumulative effect and by
setting aside payment of salary with 12% interest, but as the said part of the order
passed by the Division Bench has not been appealed against by the Union, it would
remain. But no case has been made out by the Bank Management to interfere with the
order of the Division Bench and the appeal deserves to be dismissed.
Findings Recorded
We have given our most anxious and thoughtful consideration to the rival contentions
of the parties. From the facts referred to above and the proceedings in the inquiry and
final order of punishment, certain facts are no longer in dispute. A call for strike was
given by the Union which was illegal, unlawful and not in consonance with law.
Conciliation proceedings had been undertaken and there was amicable settlement of
dispute between the Management on the one hand and the Union on the other hand.
Pursuant to such settlement, 134 workmen resumed duty. 53 workmen, however, in
spite of the strike being illegal, refused to join duty. Their action was, therefore, ex
facie illegal. The workmen were, in the circumstances, placed under suspension and
disciplinary proceedings were initiated. In spite of several opportunities, they did not
co-operate with the inquiry and the Inquiry Officer was compelled to proceed ex parte
against them. Four allegations were leveled against the workmen;
(i) The employees did not come for work from April 17, 1972;
(ii) They took part in illegal strike from that date, i.e. April 17, 1972;
(iii) They prevented other employees who returned for work from joining duty by
administering threat to them; and
(iv) They prevented the employees who came to receive wages on April 17, 1972.
At the enquiry, all the charges levelled against the employees were established. In the
light of the said finding, the Management imposed punishment of
(i) stoppage of increment of 1 to 4 years with cumulative effect; and
(ii) non-payment of salary during period of suspension. In our considered opinion, the
action could not be said to be arbitrary, illegal, unreasonable or otherwise
objectionable. When the Union challenged the action and reference was made by
the 'appropriate Government' to the Labour Court, Coimbatore, the Labour Court
considered all questions in their proper perspective. After affording opportunity of
hearing to both the parties, the Labour Court negated the contention of the Union
that the proceedings were not in consonance with principles of natural justice and
the inquiry was, therefore, vitiated. It held that the inquiry was in accordance with
law. It also recorded a finding that the allegations levelled against the workmen
were proved and in view of the charges levelled and proved against the workmen,
the punishment imposed on them could not be said to be excessive, harsh or
disproportionate. It accordingly disposed of the reference against the workmen. In
our considered opinion, the award passed by the Labour Court was perfectly just,
legal and proper and required 'no interference'. The High Court, in exercise of
power of judicial review under Article 226/227 of the Constitution, therefore,
should not have interfered with the well-considered award passed by the Labour
Court.
8.6.2 Termination – The Industrial Disputes Act, 1947 147
Dispute Settlement
Director, Food and Supplies, Punjab and Another v Gurmit Singh:
Date of Judgment: 17/04/2007
Case No.: Appeal (civil) 7637 of 2004
Bench: Dr. Arijit Pasayat & Lokeshwar Singh Panta
Judgment: (With Civil Appeals Nos. 6766/2004 and 2608/2004)
Dr. Arijit Pasayat, J
Challenge in these appeals is to the judgment of the Division Bench of the Punjab and
Haryana High Court dismissing the writ petitions filed by the present appellants.
Challenge in the writ petitions was to the order passed by the Presiding Officer,
Labour Court, Patiala (in short the 'Labour Court'). Background facts in a nutshell are
as follows:
The dispute in three appeals being common, factual position in Civil Appeal No. 7637
of 2004 is noted.
Civil Appeal No.7637/2004
Reference was made to the Labour Court under Section 10(1)(c) of the Industrial
Disputes Act, 1947 (in short the 'ID Act') of the following purported dispute:
"Whether termination of services of Gurmit Singh-Workman is justified and in order?
If not, to what relief is he entitled?"
The case of the workman was that he joined the present appellants as Chowkidar and
worked therein from 1.6.1985 to 24.8.1986. His services were terminated on
25.8.1986 by the Management without service of any notice, holding of any enquiry
or payment of any compensation. He was getting Rs.400/-p.m. at that time as wages.
He is covered under the Industrial Employment (Standing Orders) Act, 1946 (in short
the 'Standing Orders Act'). The Management did not comply with the principles of
natural justice while terminating his services. The notice of reference was given to the
present appellants. It was stated in the written statement inter alia that the claimant
was working as Chowkidar on daily wages. His services ended with the end of each
working day. The claim of the claimant that he had worked from 1.6.1986 to
24.8.1986 is not correct. The services of the claimant were dispensed with as he was
surplus. No notice or enquiry or compensation was required as the claimant was a
worker on daily wages. He was working in the department on daily wages as fixed by
the Deputy Commissioner, Sangrur from time to time. It was also pleaded in the
preliminary objections that there are three categories of Chowkidars in the Food and
Supplies Department to safeguard the food grains stocks.
The first category consists of regular Chowkidars according to the sanctioned strength
drawing regular pay scale. The second category consists of temporary Chowkidars.
They are recruited through employment exchange and draw emoluments equal to the
regular Chowkidars. The third category consists of daily wages Chowkidars who draw
fixed daily wage from time to time fixed by the department of concerned districts. The
services of the Chowkidars on daily wages end with the end of each working day.
Their strength increased/decreased with the increase/decrease of the food grains
stocks. The services of the daily wages Chowkidars were dispensed with on becoming
surplus. The workman in the present case belonged to the third category i.e. daily
wages Chowkidar. His services were dispensed with on becoming surplus along with
others. It was also stated that the present appellants cannot be treated as an industry
and the ID Act has no application. The Labour Court relied on certain documents and
concluded that the workman had worked for more than 240 days. Unfortunately, the
148 Labour Court did not record any finding about the non applicability of the ID Act. It
Industrial Relations
and Labour Laws was noted that the workman was gainfully employed after the termination of his
services. Accordingly, direction was given for re-instatement with continuity of
service. This finding was recorded primarily on the ground that he had worked for
more than 240 days. No finding was recorded on the plea taken by the present
appellants that the claim was made after 9 years without explaining the belated
approach.
The High Court dismissed the writ petitions filed by the present appellants on the
ground that even if there was belated approach, the Court could not decline to grant
relief but it could mould the relief.
In support of the appeals, learned counsel for the appellants submitted that both the
trial court and the High Court did not notice the basic challenge of the appellants
about the non-applicability of the ID Act. Apparently, the Labour court had not
considered the plea about non applicability of the ID Act. This was specifically
pleaded. It is true that the Labour court could not have declined to answer the
reference. The jurisdiction of the Tribunal and the Labour court as the case may be in
dealing with an industrial dispute is limited. The point was mentioned in Section 10(4)
of the ID Act in National Engineering Industries Ltd. v. State of Rajasthan and Ors.
(2000 (1) SCC 371). It was held that the High Court has jurisdiction to entertain a writ
petition when there is an allegation that there is no industrial dispute which could be
the subject matter of reference for adjudication to the Tribunal under Section 10 of the
ID Act. Thus the existence of the industrial dispute is a jurisdictional factor. Absence
of jurisdictional fact results in invalidation of the reference. The Tribunal or the
Labour Court under Section 10 gets jurisdiction to decide an industrial dispute only
upon a reference by the appropriate government. The Tribunal or the Labour Court
cannot invalidate the reference on the ground of delay. If the employer makes a
grievance that the workman has made a stale claim then an employer can challenge
the reference by way of a writ petition and contend that since the claim is belated there
was no industrial dispute. The Tribunal or the Labour Court cannot strike down the
reference on this ground. As observed in Sapan Kumar Pandit v. U.P. State Electricity
Board and Ors. (2001 (6) SCC 222) there are cases in which lapse of time had caused
fading or even eclipse of the dispute. If nobody had kept the dispute alive during the
long interval, it is reasonably possible to conclude in a particular case that the dispute
ceased to exist after some time. But when the dispute remained alive though not
galvanized by the workmen or the Union on account of other justified reasons it does
not cause the dispute to wane into total eclipse. The long delay for making the
adjudication could be considered by the Adjudicating Authority while moulding the
reliefs. That is a different matter altogether.
In the instant case apart from the fact that the long delay aspect has not been
considered by the Management it also did not decide the jurisdictional fact about the
applicability of the ID Act. That being so, the order of the Labour court as affirmed by
the High Court cannot be sustained and stands quashed. The appeal is allowed without
any order as to costs.
In view of our conclusions in Civil Appeal No.7637/2004, Civil Appeal Nos. 6766 of
2004 and 2608 of 2004 are also allowed on the same terms with no order as to costs.
The matter is remitted to the Labour court to adjudicate on these aspects. Since the
matter is pending since long the Labour court would do well to dispose of the matter
within four months from the date of receipt of this order.
8.8 KEYWORDS
Strike: A collective stoppage of work by a group of workers.
Lock-out: Closing down of an undertaking or the suspension of work or the refusal of
an employer to continue to employ any number of persons employed by him.
Arbitrator: A person who is appointed to play the role of an umpire while resolving
differences and disputes between two parties.
Conciliation: The practice by which the services of a neutral third party are used in a
dispute as a means of helping the disputing parties to reduce the extent of their
differences and to arrive at an amicable settlement or agreed solution.
Voluntary arbitration: The process in which the disputing parties show willingness to
go to an arbitrator (a third party) and submit to his decision voluntarily.
Adjudication: It is the process of settling disputes through the intervention of a third
party appointed by the Government.
Industrial dispute: Any dispute or difference between employers and employers, or 153
Dispute Settlement
between employment or non-employment or the terms of employment or with the
conditions of labour of any person.
9
COMPARATIVE GLOBAL INDUSTRIAL RELATIONS
PRACTICES
CONTENTS
9.0 Aims and Objectives
9.1 Introduction
9.2 ESOP (Employee Share Ownership Plan)
9.2.1 Arguments in Favour of ESOP
9.2.2 Global Experiences
9.2.3 The Importance of the Legislative Framework
9.2.4 The Japanese Experience
9.3 Attitudes of the Social Partners towards Workers' Financial Participation Attitude of
Employers' Associations
9.3.1 Enhancing Productivity
9.3.2 Workers' Participation in Decision-making, a Catalyst
9.4 Few Commendable Examples of Global IR Practices
9.5 Indian Examples of Successes
9.6 Let us Sum up
9.7 Keywords
9.8 Self Assessment
9.9 Review Questions
9.10 Suggested Readings
9.1 INTRODUCTION
A comparative study of industrial relations shows that industrial relations phenomena
is a very faithful expression of the society in which it operates, of its characteristic
features and of the power relationships between different interest groups. Industrial
relations cannot be understood without an understanding of the way in which rules are 155
Comparative Global
established and implemented and decisions are made in the society concerned. Industrial Relations Practices
The first three characteristics are called the Three Sacred Emblems of Japanese labour
policy Lifetime employment is a unique feature of the working of large Japanese
firms. It accounts for the exceptionally dynamic functioning of a large section of
Japanese industry. The system presupposes that it is the employees that ultimately
make the firm productive, creative and respectable To Japanese management,
guarantee of lifetime employment to its staff is a sacred obligation. Lifetime
employment means employment till the employee attains the age of retirement which
is normally 55 years but it is now being extended to 58 or 60 years Top level
executives have, however, no mandatory retirement age.
Lifetime employment is not a legal or contractual obligation. And it is open to the
employee to leave the firm, which, however, is rare. There is no legal restriction on
the right of the employer to discharge or dismiss an employee, which is rarely resorted
to. Mainly large firms adopt this system and about 30-35 percent of the total labour
force is covered by this system. But these employees may be described as Japan's
standing industrial army-the backbone of her economy. Under this system,
employment has emotional and moral implications. Not only the employee but his
family also develops an attachment for the firm and the employee tries to serve the
company to the best of his abilities. The tangible advantages of the system are now
well recognised. Lifetime employment involves lifetime training as well which
facilitates innovation and which strengthens the urge for excellence in work. Lifetime
employment is described as one of the corner stones of the industrial relations system
in Japan.
Japanese firms like Sony are introducing lifetime employment in their factories even
in the USA with great success. For instance, the rate of absenteeism in the Sony
factory in America is only 0.1 percent. American workers in Japanese factories in the
USA take interest in their work and make valuable suggestions for improving
productivity and quality. Japanese management is equally effective in a totally
different American Culture.
The second salient feature of Japanese industrial relations system is the seniority wage
system. The system guarantees that wages and other benefits increase steadily from
the time of appointment. This is generally restricted to lifetime employees.
The enterprise union system of Japan is found to be very useful in strengthening the
individual worker's ties to his firm. In Japan every enterprise would have its own
independent union. It ensures better mutual understanding between union official and
management.
The Japanese firms pay their employees bonuses twice in a year. The payment is
based on the financial achievements of the firm and not linked with the productivity of
the workers. The system has three great advantages:
(a) The workers become aware of the vital importance of the successful functioning
of their firm.
(b) The Japanese workers tend to live within their monthly regular earnings and the
bonuses are mostly saved. This is one of the main reasons why Japanese
households save on an average 17 percent to 19 percent of their annual income,
(c) The bonuses represent a form of deferred payment, which enables the firm to
generate additional working capital.
Apart from the congenial and harmonious industrial relations climate, there has been
indirect public support for workers' financial participation in Japan, as a means of
preventing foreign takeovers of Japanese firms
158
Industrial Relations 9.3 ATTITUDES OF THE SOCIAL PARTNERS TOWARDS
and Labour Laws
WORKERS' FINANCIAL PARTICIPATION ATTITUDE
OF EMPLOYERS' ASSOCIATIONS
Employers' associations have usually supported enterprise level schemes introduced
on a voluntary basis, with the design of the scheme being left to the discretion of the
enterprise. They oppose any binding arrangement. Employers usually consider
financial participation as an important element of human resource management for the
purposes of improving employee motivation and commitment. They have argued for
the introduction of tax incentives.
Tower Colliery
There was large scale closing down of coalmines owned by government in England
and thousands of miners were retrenched. In the course of privatisation process,
Tower Colliery, a prominent coal mine in England was taken over by its retrenched
workers. 239 workers contributed $ 8000 each out of their retrenchment compensation
and successfully bid reworking the mine again. The amount contributed by the
workers was the lion's share of the total amount needed. The mine is functioning
remarkably well. The colliery has signed a $70 million contract to supply coal for
another five years.
Agrokombinat Slusovice
In the privatisation process, the cooperative Agrokombinat Slusovice was transformed
into a series of small and medium sized firms with workers' share ownership and
profit sharing. It led to improved efficiency and diversification of the bio
technological and microelectronic production to meet the challenge of international
competition. As a result, the firm has managed to attract most of the highly qualified
workers.
Hitachi (Electronics)
The company introduced an ESOP in November 1974. In August 1985, 34.8 percent
of employees were participating in the plan. The average stake of participants is JPY
1.2 million. In 1984, the company paid the average employee JPY 0.517 million
(2.65 months' regular pay) as a summer bonus, and another JPY 0.548 (2.72 months'
regular pay) as a year-end bonus.
Kamani Tubes
Kamani Tubes is a worker owned company located in Bombay. Before that, the
Kamanis, a well-known business family owned it. This company, that makes brass
rods and tubes for use in refrigeration and sugar production, was established in 1959.
It was a leading firm till the middle of 1970s, controlling 60 percent of the market. By
1985, the trouble started due to misunderstanding among the members of Kamani
family and financial difficulties. Kamani family abandoned the factory, as the
quantum of loss was uncontrollable.
When the owners abandoned, the independent union consisting 600 workers
approached banks, financial institutions and the state government to help revival.
None of them responded positively. The union then formed a cooperative to take over
the firm. Claiming that workers could raise the share capital from their provident fund,
wage arrears and loans, the union filed a civil petition in the Supreme Court. The court
asked the Board for Industrial and Financial Reconstruction (BIFR) to examine the
union's proposal. The BIFR gave a favourable report, but by now the Kamanis had
returned to claim the company. In spite of the legal hurdles they created, the Supreme
Court upheld the workers' action. By the end of 1988 the shares were transferred to the
cooperative In addition to workers' contribution, the state government sanctioned a
sizeable grant.
Since revival, the company has made good progress. Production, wages and profit
have gone up. The worker owned company pays annually around Rs.3 crore as excise
duty. Thus reviving the company has been beneficial to the government too.
Cooperative of Slag-Pickers
The Tata Iron and Steel Company in Jamshedpur dumps its slag in low-lying areas to
level the land and reclaim it for use. The slag contains bits of iron, which can be
162 collected and sold as scrap. At one time, the job was given to contractors who
Industrial Relations
and Labour Laws employed slag pickers at miserable wages.
In 1979, the State Government formed a cooperative of slag-pickers, with the
sub-divisional officer as the chairman. The cooperative was given the monopoly to
pick slag. In the very first year the cooperative achieved a turnover of Rs.3 crore. This
staggering amount was beyond anybody's expectations. Wages have gone up
substantially. The cooperative has taken up lot of welfare work with its own funds. It
continues to run smoothly.
LESSON 1
1. Labour 2. Unitary
3. Marxist 4. Pastoral and agrarian
5. Master and slave 6. State
7. 1947
LESSON 2
1. Militant 2. Fraternal
3. Represent people at work 4. Upwards
5. Madras 6. Trade Union Act, 1926
7. Hind Mazdoor Sabha
LESSON 3
1. Laissez Faire 2. ASSOCHAM
3. SCOPE 4. Individualistic
5. Constitution of India 6. 42
7. Moral Persuasion 8. ILC
LESSON 4
1. United Kingdom 2. Continuous
3. Composite 4. Negotiation
5. Job Security 6. Quality of Work Life (QWL)
7. Productivity
LESSON 5
1. Factory Act 2. Human Assets
3. Personnel 4. Executive Council
5. Recommendations
6. Liberalization, Privatization and Globalisation
LESSON 6
1. Workmen 2. Misconduct
3. Manufacturing Process 4. Equal
5. National 6. Retrenchment
7. 14 8. 12
LESSON 7
1. Workmen 2. Monthly wages
3. One month 4. Cost of Living Index
5. 8.33%, 20% 6. Equal
7. Gratuity
166
Industrial Relations LESSON 8
and Labour Laws
1. Unofficial 2. Gherao
3. Adjudication 4. Award
5. Code of Discipline, 1958 6. Mediation
7. Litigation
LESSON 9
1. Trust 2. Tax Concession
3. Privatization 4. Japanese
5. Pepper Report