TRADE

UNIONS &
LABOUR
LAWS
Presented by:
Snehal Ashtekar – 51
Srushti Pagrut – 52
Soham Purandare - 53
Stuti Doshi – 54
Sumedh Desai - 55
 TRADE UNIONS
• “Trade Union (aka Labour Union) is
an association of workers formed to
protect the interest of workers”.
• They help workers in issues like
fairness of pay, good working
environment, hours of work and
benefits.
• They represent a cluster of workers
and provide a link between the
management and workers.
2
Definition of Trade Unions

• The Indian Trade Union Act, 1926, is the principle act which controls
and regulates the mechanism of trade unions in India.
• The Indian Trade Union Act, 1926 defines Trade Union as,
“Any combination, whether temporary or permanent, formed primarily
for the purpose of regulating the relation between workmen and
employee or between workmen and workmen, between employers and
employers or for imposing restrictive conditions on the conduct of any
trade or business, and includes any federation of two or more trade
unions”.
3
History of Trade Unions
Trade unions in India have come a long way since the first organized trade union - the
Madras Labour Union, one of the earliest unions, was formed in 1918.
Growth of trade/labour unions in India has happened in 6-phases:
• Pre-1918: The genesis of the labour movement in India
• 1918-1924: The early trade union phase
• 1925-1934: Period of left-wing trade unionism
• 1935-1938: The Congress interregnum
• 1939-1946: Period of labour activism
• 1947-present: Post-independence trade unionism
India now has more than 84,642 registered trade unions along with an unaccounted
4
number of unregistered trade unions.
Objectives of Trade Unions
• To regulate terms and conditions of employment.
• To improve working conditions.
• To raise living standards.
• Protect workers from exploitation.
• Maintain Discipline of Industry.
• Ensuring proper implementation of personnel and welfare policies.
• To ensure workers democracy and avoid managerial dictatorship
• Maintaining and improving employer and employee relations.
• Act as a Negotiator machinery
• Safeguard interests of organization.
• In a broader sense, to protect the interests and welfare of workers 5
Characteristics & Functions
of Trade Unions
CHARACTERISTICS
• Association of employees
• Voluntary Association
• Permanent Body
• Common Interest
• Collective Action
• Rapport with the Management
FUNCTIONS
• Negotiations(Collective Bargaining )
• Representation
• Information and advice
• Member services
➢Education and training
➢Legal assistance
➢Financial discounts
➢Welfare benefits
6
Trade Unions – Political Affiliation

• In India, political lines and ideologies influence trade union movements. This is
the reason why today political parties are forming and running trade unions.
Major Labour Unions and their Political Affiliation
• All India Trade Union Congress – Communist Party of India.
• Indian National Trade Union Congress – Indian National Congress.
• Bhartiya Mazdoor Sangh – Bharatiya Janata Party.
• Centre for Indian Trade Unions – CPI(M).
• Hind Mazdoor Sabha – Samajwadi Party.
• Self Employed Women’s Association – Unaffiliated.
7
Collective Bargaining in India
Collective bargaining has been defined by the Supreme Court (“SC”) as “the
technique by which dispute as to conditions of employment is resolved amicably by
agreement rather than coercion”
Stages of Collective Bargaining in India
1. Charter of Demands
2. Negotiation
3. Collective Bargaining Agreement
4. Strikes
5. Conciliation
6. Compulsory Arbitration or
8
7. Adjudication by Labour Courts, Industrial Tribunals and National Tribunals
Important Labour Laws
in India

Laws Relating to :
1. Conditions of Employment 4. Liabilities & Disputes
2. Compensation 5. Discrimination/ Harassment
3. Social Security 6. Miscellaneous Laws
 Laws
under
discussion
today…

1. The Code on Wages, 2019

2. Payment of Gratuity Act,
1972
3. The Industrial Disputes Act,
1947
10
1. The Code on Wages, 2019
• On Aug 8, 2019, the Wage Code received Presidential assent
• Aligned with Govt.’s labour reforms to merge 44 existing labour laws into 4 broader
categories (wages, social security, industrial safety and welfare, and industrial
relations) for easier compliance
• Is the first of four labour codes which amalgamates four labour laws: The Payment
of Wages Act 1936, the Minimum Wages Act 1948, the Payment of Bonus Act 1965
and the Equal Remuneration Act 1976 into a single piece legislation.
• Will give respectable life to 50 crore unorganized sector workers by ensuring
minimum wages along with timely payment of wages to all the employees and
workers, regardless of wage ceiling, employment sector; it prohibits gender
11
discrimination on wage-related matters and employment conditions
 Features of the Code
• Coverage: The Code will apply to all employees. The central government will make wage-related decisions for
employments such as railways, mines, and oil fields, whereas state governments will decide for all others.
• Wages include salary, allowance, or any other component expressed in monetary terms. This does not include
bonus payable to employees or any travelling allowance, among others.

• Floor wage: The central government will fix a floor wage, taking into account living standards of
workers. Further, it may set different floor wages for different geographical areas.
• Minimum wage: Prohibits employers from paying wages less than the minimum wages; Will be notified by the
central or state governments based on time, number of pieces produced, skill of workers, or difficulty of work;
To be revised and reviewed by the governments at an interval of not more than 5 years.
• Overtime: The number of hours that constitute a normal working day would be fixed and if employees work in
excess of that, they will be entitled to overtime wage, which must be at least twice the normal rate of wages.
12
 Features of the Code
• Payment of wages: Wages will be paid in (i) coins (ii) currency notes (iii) by cheque (iv) transfer to the bank a/c or
(v) electronic mode. Wage period to be fixed as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly.
• Deductions: Deductions on grounds of: (i) fines (ii) absence from duty (iii) accommodation by the employer or (iv)
recovery of advances; Should not exceed 50% of the employee’s total wage.

• Determination of bonus: All employees whose wages do not exceed a specific monthly amount, will be entitled to
an annual bonus; Bonus amt. to be (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher. An employee can
receive a maximum bonus of 20% of his annual wages.
• Gender discrimination: Prohibits gender discrimination in matters related to wages, recruitment of employees
• Offences: Specifies penalties for offences committed by an employer, such as (i) paying less than the due wages,
or (ii) for contravening any provision of the Code. Penalties vary depending on the nature of offence, with the
maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees. 13
2. Payment of Gratuity Act, 1972
• Gratuity is a retirement benefit paid as gratitude to the employees who have rendered a
continuous service for at least five years to incentivize them so that they continue working
efficiently; Paid upon employee’s retirement/termination/resignation or upon his death.
• The Payment of Gratuity Act 1972, is administered and enforced by the Central Government and
the designated establishments under it.
• Coverage: Is applicable to every factory, mine, oilfield, plantation, port; every shop or
establishment in which 10 or more persons are/were employed, on any day of the last 12 months
• Working: Employer may offer gratuity out of the establishment’s funds/ approach insurance co. to
purchase a group gratuity plan; employee is also free to make contributions to his gratuity fund.
• Forfeiture – Gratuity can be forfeited if the employee has been terminated for disorderly conduct/
misdemeanor or an act of violence provided that such offense is committed by him in the course
14
of his employment
 Calculation & Payment of Gratuity
GRATUITY = LAST DRAWN SALARY × 15/26 × NO. OF YEARS OF SERVICE
• The ratio 15/26 represents 15 days out of the 26 working days in a month
• Last drawn salary = Basic Salary + Dearness Allowance
• Years of Service are rounded down to the nearest full year. For example, if the employee has a
total service of 20 years, 10 months and 25 days, only 20 years will be factored into the
calculation.
• In the case of a person who works on commission, daily wages shall be computed.
• The employer shall pay the amount of gratuity within 30 days from the date it becomes active,
after which interest would have to be paid on it; Gratuity can be paid in cash, demand draft or
bank cheque to the employee via his preferred mode of payment.
• Tax Exemptions – For government employees, no tax on the gratuity; For private sector
employees, the gratuity is exempt from tax subject to a maximum of Rs 20 lakhs or 15 days 15
salary for each completed year of service
3. The Industrial Disputes Act, 1947
• Was enacted to make provisions for the prevention and settlement of industrial disputes and for
providing certain safeguards to the workers; Aims to minimize the conflicts between labour and
management by ensuring possible economic and social justice.
Objectives of Industrial Disputes Act
• To support measures for securing and preserving good relations between employers and employees.
• To provide suitable machinery for the equitable and peaceful settlement of industrial disputes.
• To prevent illegal strikes and lockouts.
• To afford relief to workers against layoffs, retrenchment, wrongful dismissal and victimisation.
• To promote collective bargaining.
• To improve the conditions of workers.
16
• To avoid unfair labour practices.
 Authorities under the Act
1. Works Committee - Promotes measures for securing and preserving good relations between the
employer and the workmen; Communicates upon subjects of their common interest or concern.
2. Conciliation Officers - Duty of a conciliation officer is administrative and not judicial; In case of
any industrial dispute, he maintains conciliation proceedings in a prescribed manner without
delay to have the right settlement; submit the report within 14 days of the commencement of
the conciliation proceedings or within the date fixed by the appropriate government.
3. Board of Conciliation – The Board will investigate a dispute, affecting the merits and right
settlement of the dispute without delay; the Board must submit its report within two months of
the date on which the dispute was proposed to it; it only has the power to bring about a
settlement.
4. Courts of Inquiry – Will inquire into the request raised to it and report to the appropriate
government within six months from the commencement of the inquiry 17
 Authorities under the Act …contd
5. Labour Courts – Adjudicates disputes related to the propriety or legality of an order passed by
an employer, discharge or dismissal of workers, including the retirement, grant of relief to
workers wrongfully dismissed, withdrawal of any customary concession or privilege, among
others.
6. Industrial Tribunals – Adjudicates disputes related to wages, compensatory and other
allowances, hours of work and rest intervals, leave with wages and holidays, bonus, profit
sharing, provident fund and gratuity, rules of discipline, among others.
7. National Tribunals – Adjudicates disputes which in the opinion of the Central Government
involve questions of the national importance of industrial establishments situated in more than
one State.

18
 Other Features & Case Examples
• Declares that no person employed in a public utility service shall go on strike in breach of contract
without giving to the employer notice of strike, within six weeks before striking; or within fourteen
days of giving such notice
• Prohibits financial support to illegal strikes and lockouts (Section 25)
• Penalties for Illegal Strikes and Lock-outs - In case of any workman who continues with the illegal
strikes specified under this act will be punishable with imprisonment for one month or more and also
with the fine of Rs.1000 or with both. In case of any employer who continues with the illegal lockouts
specified under this act will be punishable with imprisonment for one month or more and also with
the fine of Rs.1000 or with both.
• Case Examples – Violence at Maruti Suzuki plant in Manesar, Wage dispute at Hero Honda Gurgaon
plant

19
THANK
YOU!
References

• http://www.in.kpmg.com/TaxFlashNews-INT/KPMG-Flash-News-Key-takeaways-on-the-
Code-on-Wages-Bill-2019-1.pdf
• https://blog.ipleaders.in/payment-of-gratuity-act/
• https://www.indiafilings.com/learn/industrial-disputes-act/
• https://www.epw.in/engage/article/protection-workers-wages-india-labour-wage-code
• https://www.businessmanager.in/highlights-of-code-on-wages-2019.php
• https://pib.gov.in/newsite/PrintRelease.aspx?relid=192386
• https://www.thehindubusinessline.com/economy/central-government-notifies-code-of-
wages-2019/article29234044.ece
• https://www.lawnn.com/landmark-supreme-court-important-judgments-on-labour-law/21