“Labour Laws For Managers”

By:B.D Singh

Prof. HRM & Dean MDP & Consultancy

IMT, Ghaziabad

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Introduction to labor legislation

Explaining the Concept of law- Law is the expression of sobered will– control guides the

behavior of the members of the society.- Ignorance of law is low excuse.- Law is a dynamic concept

Like a citadel, which requires repairs, law creates rights and privileges. It also imposes duties, obligations and restrictions.Presence of good laws in any society does not, ipso facto, ensure justice in the society. Laws are simple tools, which have to be used by the authorities (courts) in particular and the society in general to achieve a just society. Justice is the end-product of law and legal dispensations. Fairness is what justice is.

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Movements and changes in society create social gaps. Justice seeks to bridge these gaps.

- “Social justice”- Economic justice

- “discriminative justice”- “Judicial Activism”

- “judicial restraint”- “Social Engineering”- “Social Activism”- “Judicial imperialism”- “Judicial despotism”

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Industrial Revolution and the Need for Labour Legislations

Laissez-faire (let not interfere) and employers

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Factors Influencing Labor Legislations

- Early Exploitative Industrial Society (Workmen’s Breach of Contract Act, 1859)

- Impact of Contemporary Events- The Growth of Trade Unionism- Political Freedom End of Colonial Rule and Extension

of Adult Franchise- Rise of Socialist and Other Revolutionary ideas- The Growth of Humanitarian ideas and the Concept of

Social Welfare and Social Justice- Establishment of I.L.O.

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- Influence of Colonial Rule- The Struggle for National Emancipation and

Adoption of Indian Constitution

The Nature of Labour Legislations

i) The labour legislations are the products of Industrial Revolution and they have come into being to take care of the aberrations created by it. Therefore, they are specific and not general in orientation, philosophy, concept and even in practice.

ii) Labour legislation regards individuals as workers, whereas the general legislation regards him a citizen. 6

iii) Labour legislation seeks to deal with problems arising out of occupational status of the individual.

iv)- Not only contractual obligations, but beyond it by creating new rights and obligations.

- Labour law an operate along with General Law. A ‘theft’ can be dealt by labour law as well as IPC

- No jurisdiction of civil courts

Principles of Modern Labour LegislationPrinciple of Protection (Examples of Protective labour

laws in India are: Factories Act 1948)

Principle of Social Justice ( Examples: Contract Labour (Regulation and Abolition ) Act, 1970.

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• Principle of Regulation( examples: Industrial Disputes Act, 1947)

• Principle of Welfare( Example: Iron Ore Mines)• Principle of Social Security ( Workmen’s Compensation Act,

1923)• Principle of international Obligation ( Conventions and

Recommendations have covered wide range of subjects concerning labour)

Objectives of the Labour Legislations

Different ObjectivesLabour legislation in India has sought to achieve the following objectives:

i) Establishment of justice-Social, Political and Economic.ii) Provision of opportunities to all workers; irrespective of caste,

creed, religion, beliefs; for the development of their personality.

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iii) Protection of weaker sections in the community

iv) Maintenance of Industrial Peace.

v) Creation of conditions for economic growth.

vi) Protection and improvement of labour standards.

vii) Protect workers from exploitation.

viii) Guarantee right of workmen to combine and form association or unions

ix) Ensure right or workmen to bargain collectively fro the betterment of their service conditions.

x) Make state interfere as protector of social well being than to remain an onlooker.

xi) Ensure human rights and human dignity.

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The Classification of Labour LegislationsOn the basis of specific objectives, which it has sought to achieve, the labour legislations can be classified into following categories:

i) Regulativeii) Protectiveiii) Wage-Relatediv) Social Securityv) Welfare both inside and outside the workplace

The Regulative Labour Legislation- The trade Unions Act, 1926- The Industrial Disputes Act, 1947- Industrial Relations Legislations enacted by states of

Maharashtra, MP, Gujarat, UP, etc.- Industrial Employment (Standing Orders) Act, 1946

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The Protective Labor LegislationsFactories Act, 1948

The Mines Act, 1952

The Plantations Labor Act, 1951

The Motor Transport Workers Act, 1961

The Shops and Establishments Acts

Beedi and Cigar Workers Act, 1966

Wage-Related Labour Legislations- The Payment of Wages Act, 1936- The Minimum Wages Act, 1948- The Payment of Bonus Act, 1965- The Equal Remuneration Act, 1976

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Social Security Labour Legislations- The Workmen’s Compensation Act, 1923- The Employee’s State Insurance Act, 1948- The Coal Mines PF and miscellaneous Provisions Act,

1952- The Maternity Benefit Act, 1961- Payment of Gratuity Act, 1972

Welfare Labour Legislations- Limestone and Dolomite Mines Labour Welfare Fund

Act, 1972

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Miscellaneous- The Contract Labour (Regulation and Abolition) Act,

1970

State Labour Laws

Indian Constitution And Labour Legislations

- Preamble of Indian Constitution and Labour Legislations

- Fundamental Rights and Labour Legislations- Directive Principles and State Policy and Labour

Legislations- Judicial Wisdom of the Courts and Labour

Legislations13

ILO AND ITS INFLUENCE ON LABOUR LEGISLATION IN INDIA

• International Labour Standards• Conventions and Recommendations

Components of Social Clause and Indian Legislation

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Social Clause Aspect Indian Constitution/ Legislation

Freedom of Association and Right to Collective Bargaining (Convention Nos. 87 and 98 respectively)

Freedom of Association is guaranteed as a fundamental right in the Indian Constitution. The trade Union Act, 1926 meets with part of the objectives of convention Nos. 87 and 98. Both conventions have, however, not been ratified by the Government of India.

Forced Labour Convention, 1930 and Abolition of Forced Labour Convention 1953 (Convention Nos. 29 and 105). These provide for progressive abolition of forced labour in all its forms. Convention No. 182 concerning immediate Action to End the Worst Forms of Child Labour.

Article 23 of the Constitution and the Bondid Labour System (Abolition) Act, 1976. India has ratified Convention No. 29, not 105. India is moving towards ratifying Convention Nos. 105 and 182

Equal Remuneration Convention, 1951 (Convention No.100). Its purpose is to eliminate sex-based discrimination in remuneration and provide for equa remuneration, to both men and women, for work of equal value. The four underlying bases for determination of work of equal value are: skills, efforts, responsibility and working conditions.

The Constitution upholds the principle of equality between men and women. The equal Remuneration Act, 1926 seeks to provide for

equal remuneration to men and women.

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Discrimination (Employment and Occupation) Convention, 1958 (Convention No.111). It covers any discrimination, exclusion or preference ‘..which has the effect of nullifying or impairing equality of treatment’ and which can be the result of not only legislation but also of existing factual positions or practices

The Constituaion upholds equality, denounces discrimination and encourages preferential treatment to disadvantage groups in society. Convention No. 111 has been ratified.

Minimum Age Convention, 1973 (Convention No. 138). It provides that minimum wage for employment should ordinarily be 15 and raised to 18 in dangerous occupations.

The child labour (Prohibited and Regulation), Act, 1986 bans employment of children below the age of 14. In several laws, the minimum age is variously defined, Employment of children in certain heavy and hazardous industries (Schedule A, part 3) is prohibited by law and the government is taking steps to enforce it strictly. Several court Judgments under public interest

litigation actively support the prohibition and regulation of child labour.

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Ratification of Core Conventions in Selected Countries

Country 29 87 98 100 105 111 138

Australia * * * * * *Bangladesh * * * * *Canada * * * *China *Germany * * * * * * *France * * * * * * *India * * *Japan * * * *Nepal * * * *Pakistan * * * * *Sri Lanka * * 17

U.K. * * * * *

U.S.A *

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Regulative LegislationThe Trade Unions Act, 1926

- Fundamental Rights

- ILO convention Primary purpose of a trade union is collective bargaining

- Bank of India Employers association v RBI, (1983) 2 LLN 872 (Bom)Definition of Trade Unions“Trade Union” is defined as 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 employer and employersbut also of the employers. The Act, therefore, applies not only to the unions of workers but also to the associations of employers., or for imposing restrictive conditions on the conduct of any trade of business, and includes any federation of two or more trade unions. In other words, a trade union is a combination or association of not only of workmen

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• The occupation of primary school teachers can not be said to be employment in trade or industry. So a federation of teachers seeking registration could not be deemed to be a Trade Union.--S.P. Majarkar v Registrar Trade Unions, Nagpur 1957 Nag LJ (notes) 155 (Nag)

• The union of civil servants engaged in the task of sovereign functions of the Government cannot be held as Trade Union under the Act--Tamil Nadu non-Gazetted Officers Union v Registrar of Trade Unions AIR 1962 Mad.

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Trade unions (Amendment) Act, 2001i) requirement of 10 percent or 10 of workmen, as members for

being eligible for registration as workers, trade union in place of only 7 persons provided for earlier, and subsequent maintenance of this membership after registration;

ii) Election of members of executive and office-bearers at an interval of not more than three years

iii) Prescribing minimum subscriptions for rural, unorganized and other workers;

iv) Limiting the proportion of outsiders to 1/3rd of the total number of office-bearers or 5, whichever is less generally, and 50 percent in the unorganized sector, and

v) Debarring members of Council of Ministers or persons holding office of profit in the union or state (not employed in an establishment or industry with which the trade union is connected) from membership of the executive or other office-bearer of a registered trade union.

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Registration of Trade UnionsThe registration of trade union is not mandatory under the Act

i) One rupee per annum for rural workers;ii) Three rupees per annum for workers in other unorganized

sectors; andiii) Twelve rupees per annum for workers in any other case.- A registered Trade Union is a body corporate with perpetual

succession, common seal and can sue and be ued.PenaltiesThe Act provides penalty of fine up to Rs.500 for making any willful false entry in or any omission from the general statement to be submitted to the Registrar, and up to Rs.200 for giving incorrect copy of the rule or any other document with the intent to deceive a member or a person intending to be a member.

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- Obligations of Registered Trade Unions

Rights and Liabilities of Registered Trade UnionsSection 15 of the Act lays down that the general funds of a registered trade

a) The payment of salaries, allowances and expenses to office-bearers of the trade union;

b) The payment of expenses for the administration of the trade union, including audit of the accounts of the general funds of the trade union;

c) The prosecution or defence of any legal proceeding to which the trade union or any member thereof is a party, when such prosecution or defence is undertaken for the purpose of securing or protecting any rights of the trade union;

d) The conduct of trade disputes on behalf of the trade union or any member thereof;

e) The compensation of members for loss arising out of trade disputes;

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f) The allowances to members or their dependents on account death, old age,

sickness, accidents or unemployment of such members; g) The issue of or the undertaking of liability under policies of assurance on

the loves of members, or under policies insuring members against sickness, accident or unemployment ;

h) The provision of educational, social or religious benefits for members (including the payment of the expenses of funeral or religious ceremonies for deceased members) of members;

i) The upkeep of Periodical published mainly for the purpose of discussing questions affecting employers or workmen as such;

j) The payment of contributions to any cause intended to benefit workmen in general. The expenditure in respect of such contributions in any financial year shall not at any time during that year be in excess of 1/4 th of the combined total of the gross income which has up to that time accrued to the general funds and of the balance of the credit of these funds of the trade union during that year;

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k) Subject to any conditions, any other object notified by the appropriate Government in the Official Gazette.

Under Section 16 (Political fund) a registered trade union may constitute a separate fund for political purposes from which payments may be made, for the promotion of the civic and political interests of its members.

Conditions for the Creation of Political Fund and its utilization

Immunity from Criminal Conspiracy in Trade Disputes (Section 17)

No office-bearer or member of a registered trade union shall be liable to punishment under sub-Section (1) of Section 120-B of the Indian 25

Penal Code 1860, in respect of any agreement made between the members or the purpose of furthering any such objective of the trade union as is specified in Section 15, unless the agreement is an agreement to commit an offence. Immunity cannot be invoked in cases of violent strikes ( Jay Engineering Works Ltd. vs. State of West Bengal, AIR-1968-Lab. 407).

Immunity from Civil Suit in Certain Cases (Section 18):- As long as the demonstration is peaceful and does not create any low and order, problem, restriction imposed on demonstration is illegal—Kamgar Sabha v. Hindustan Ciba Geigy 1995 (71) FLR 228.

Encouragement of Persistence of Outsiders:- Prior to the amendment of 2001,50 percent of the office-bearers of a registered trade union could be outsiders. Keeping in view the seriousness of the problem, amendments were ultimately incorporated in the Act in 2001, which provide for a maximum of 1/3rd or 5 of the office-bearers aw outsiders in general and 50 percent in the case of trade unions of unorganized workers.

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- Absence of Provision for Recognition

- No mention of Unfair Labour Practices

The Industrial Dispute Act, 1947- Trade Dispute Act 1929- Defence of India Rules - The Act came into force on 1st April, 1947- The Act extends to the whole of India

PREAMBLE AND OBJECTIVES OF THE ACT• The Preamble to the Act reads thus, "An Act to make provision for the

investigation and settlement of industrial disputes and for certain other purposes."

• On the basis of various judgements of Supreme Court given from time to time (specially Dimakuchi Tea Estate Case, 1958) is made, the principal

objectives of the Act may be stated as below:

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• To ensure social justice to both employers and employees and advance progress of industry by bringing about harmony and cordial relationship between the parties.

• To settle disputes arising between the capital and labour by peaceful methods and through the machinery of conciliation, arbitration and if necessary, by approaching the tribunals constituted under the Act. If disputes are not settled, it would result in strikes or lockouts and entail dislocation of work, essential to the life of the community.

• To promote measures for securing and preserving amity and good relations between the employer and workmen.

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• To prevent illegal strikes and lockouts.• To provide compensation to workmen in cases of lay-

off, retrenchment and closure• To protect workmen against victimisation by the

employer and to ensure termination of industrial disputes in a peaceful manner.

• To promote collective bargaining.• Justice Krishna Iyer, L.I.C - SC 1980 - IDA is a benign

measure. It preempt industrial tension - It is a mechanism for dispute resolution - It ensures industrial justice and creates climate of goodwill.

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Some Important Concepts1) Appropriate Government Section (2A)- Central Government: In relation to any industrial dispute

concerning any industry carried on by or under the authority of Central Government or by a Railway Company etc.

- State Government: In relation to any other industrial dispute

2) Public Utility Service [Sec2 (m)]• any railway service or any transport service for the carriage

of passengers or goods by air;• any section of an industrial establishment on the working of

which the safety of the establishment or the workmen employed therein depends;

• any postal, telegraph or telephone service;• any industry which supplies power, light or water to the

public;• any system of public conservancy or sanitation

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• any industry specified in the First Schedule which the appropriate Government may, if satisfied that public emergency or public interest so requires, by notification in the Official Gazette, declare to be a public utility service for a specified period not exceeding six months in the first instance. It may be extended from time to time by the appropriate Government if it deems such extension necessary.

• Some of the industries mentioned in the first schedule are as follows:-

• Transport (Other than railways) for the carriage of passengers or goods by land or water;

• Banking• Defence Establishments;• Fire Brigade Services;• India Government Mints• Indian Security Press• Coal

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3) Industry

The term "Industry" has been defined under Sec. 2 (j) to mean any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen.

The triple test is:

(I) Systematic Activity;

(ii) Cooperation between employer and employees;

(iii) Production and/or distribution of goods and services calculated to satisfy human wants and wishes.

- Sovereign Functions- Municipalities

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iv) Hospitals, Schools, Colleges, Universities, Solicitor’s Offices, Gymkhana, Clubs, Institutes, Charitable Projects, are also within the definition of industry.

- temple

iv) Devasthanam

4) Industrial Dispute (Section 2K):- Industrial Dispute means any dispute or difference between employers and employer or between employers and workmen and between workmen and workemen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person.

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• Sec.2A: Where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute.

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In sum, the following conditions must exist for an Industrial Dispute:(i) There must be an industry; (ii) between the parties there must be a relationship of workmen and employer (iii) the dispute must be connected with the employment or non-employment, terms of employment of the conditions of labour; (iv) the dispute must be related to a workman or any other person in whom, the group has a direct and substantial interest; and (v) generally speaking, the dispute should not be merely an individual dispute; it should in some sense be a collective dispute. However, in disputes related to termination of service (dismissal, discharge, or retrenchment), an individual can raise an industrial dispute.

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v) Workman (Section 2(S)• "Workman" means any person (including an

apprentice employed in any industry to do any skilled or unskilled manual, supervisory, operational, technical or clerical work for hire or reward whether the terms of employment be expressed or implied, and for the purposes, of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute or whose dismissal, discharge, or retrenchment has led to that dispute, but does not include any such person:

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In this connection Bombay High Court in Union Carbide vs. Samuel (1999) and Supreme Court of India have led down certain criteria for determine whether a person is workman or not.

• Can his decision bind the employer?• Does he have power to sanction leave?• Does he have power to appoint?• Can he examine quality?• Can he assign duty?• Can he indent material?• Can he recommend leave?• Are any person working under him?• Does he supervise work?• Does he write C.R?

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How disputes are raised and settled

Industry

Employer Workmen

Dispute

Mutually Fail to

Settle Settle

(Agreement)

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Prevention and Settlement of Industrial Disputes

• Prevention of Industrial Disputes

The Act not only provides machinery for investigation and settlement organization disputes, but also some measures for the containment and prevention of conflicts and disputes. Important preventive measures provided under the Act are:

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• Settlement of Industrial Disputes• Conciliation Officer and Board of Conciliation• Voluntary Arbitration• Adjudication by Labour Court, Industrial Tribunal and

National Tribunal

-Voluntary Arbitration

-Reference of Disputes for Arbitration

-Adjudication

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-Labour Court

-Industrial Tribunal

-National Tribunal

-Power of labour Court & Industrial Tribunal

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Introduction of Section 11-A in the Act

• Persons on whom settlements and award are binding - Section 18 of the Act enumerates persons on who settlements and awards are binding. For this purpose settlements are classified in two categories, namely -

(i) settlement arrived at otherwise than in the course of conciliation proceedings, i.e. without the aid of statutory agency, and

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ii) settlement arrived at in the course of conciliation proceedings, i.e. with the aid of statutory agency.

In the former case a settlement under Section 18(1) arrived at by agreement between the employer and workmen otherwise than in the course of conciliation proceedings shall be binding on the parties to the agreement. But any such settlement in order to be binding must be signed by the parties thereto in the manner prescribed by rule and a copy of it must also be sent to the appropriate Government.

Section 18(2) which is made subject to the provisions of Section 18(3) provides that an arbitration award which has become enforceable shall be binding on the parties to the agreement who referred the dispute to the arbitration. 43

Sub-section (3) provides that -(i)a settlement arrived at in the course of conciliation

proceedings under this Act; orii) an arbitration award in a case where a notification has

been issued under sub-section (3-A) of the Section 10-A; or

iii) an award of a Labour court, Tribunal or National Tribunal which has become enforceable shall be binding on:

a) all parties to the industrial disputeb) all other parties summoned to appear in the

proceedings as parties to the dispute, unless the Board, Arbitrator, Labour Court, Tribunal or National Tribunal as the case may be, record the opinion that they were so summoned without proper cause.

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c) Where party referred to is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates.

d) Where a party referred to in Clause (a) or Clause (b) is composed of workmen, all persons who are employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part thereof

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STRIKE AND LOCKOUTS

"Strike" means a cessation of work by 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 [Sec. 2 (q)].

Lockout means the closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him. (Sec.2(I).

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The definition of 'strike' postulates the following ingredients:

(i)Plurality of workmen.

ii) Cessation of work or refusal to continue to work.

iii) Acting in combination or concerted action under a common understanding.

iv) Duration is immaterial

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Strike is used by workmen as instrument of economic coercion to compel management to accept their demands.Forms of Strike

i) Stay-in-strikeii) Go-slowiii) Lightning or wild-Cat strikeiv) Gberao means encirclementv) Government casevi) Picketing and peaceful demonstration

There is no fundamental right to go on strike

Lock-out48

General prohibition of strikes (Sec.23)No group of workman may strike in the following five situations:

i) When conciliation is going on before a Board of Conciliation an seven days thereafter.

ii) When adjudication is going on before a Labour Court or Tribunal and two months thereafter.

iii) When and if an appropriate Government in its reference prohibits the continuance of any strike.

iv) When arbitration is going on before an arbitrator and two months thereafter.

v) When a settlement or award is in operation. (Note that the prohibition here is restricted to those matters only which are covered by the settlement or award).

Additional restrictions on strikes in public utility services (Section 22).

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i) A strike notice must be given to the employer and Conciliation Officer.

ii) The Strike must not take place for 14 days after the notice has been given.

iii) The strike must not take place after six weeks from the notice.

iv) The strike must not take place before the day, if any, specified in the strike notice.

v)The strike must not take place during conciliation before a Conciliation Officer and seven days after the conclusion of such proceedings.LOCK-OUT

• The employers' right to lockout is subjected to the same restrictions as the workmen's right to strike. The same rules apply with the same additional restrictions for public utilities. A strike is not illegal when it is declared because of an illegal lockout.

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Illegal Strikes and Lock-outs - According to Section 24 (1) a strike or lock-out shall be illegal if it is:

i) Commenced or declared in contravention of Section 22 in a public utility service;

ii) Commenced in contravention of Section 23 in any industrial establishment (including both public utility and non-public utility service);

iii) Continued in contravention of an order made by the Appropriate Government under Section 10(3) or sub-section (4-A) of Section 10-A of the Act.

Sub-section (2) provides that where a strike or lock-out in pursuance of an industrial dispute has already commenced and is in existence at the time of51

reference of the dispute to a Board, an arbitrator, a Labour Court, Tribunal or National Tribunal, the continuance of such strike or lock-out shall not be deemed to be illegal provided that such strike or lock-out was not at its commencement in contravention of the provisions of this Act or the continuance thereof was not prohibited under Section 10(3) or sub-section (4-A) of Section 10-A.

According to Section 24 (3) a lock-out declared in consequence of an illegal strike or strike declared in consequence of an illegal lock-out shall not be deemed to be illegal.

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Strikes, Lockouts & Wages

The Act does not say anything about wages during a strike or lockout period but the decisions of Tribunals have generally been as follows:

Strikes or Lockouts Wages• 1. Illegal strikes No• 2. Illegal lockouts Yes• 3. Legal & justified strikes Sometimes• 4. Legal & unjustified strikes No.

(Pereira & State of Madras, H.C. Northbrook Jute Company vs. Their Workmen, 1962-1-L.L.J 122; 1960-1-L.L.J. 580, S.C.)

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IDA and ESMAESMA empowers the Central Government to prohibit any and all strikes, lockouts or lay-off in any essential service, if this is considered necessary in the public interest.ESMA overrides all other laws in case of conflictChapter V-A: Lay-off, Retrenchment and ClosureLay-offSection 2 (kk) of the Act defines lay-off. It means “the failure, refusal of inability of an employer on account of shortage of coal and power or raw material or the accumulation of stocks or the breakdown of machinery or for any other 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.”

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