Final-Ashwin-Labour-Laws-Implications-on-Industrial-Relations-MMS-HR-Sem-III-1-munotes

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1 1
OVERVIEW OF INDUSTRIAL
RELATIONS
Unit Structure :
1.1 Objectives
1.2 Overview of IR
1.3 IR History in brief
1.4 System Approach to IR and IR Model
1.5 Collective Bargaining
1.6 Basic Grievance Machinery and Disciplinary Procedure
1.7 Importance o f Workers Participation in Management
1.8 Case Discussion
1.9 Labor Laws relating to IR
1.10 Labor Laws with IR implications for futuristic India
1.11 Summary
1.12 Self-Assessment Test
1.1 OBJECTIVES
After studying this module, you should be able to :
 Understand the nature and relevance of IR
 Importance of IR to Labor Laws
 Changing dynamics of IR
 Concept of collective bargaining
 Importance of workers participation in management
 Understand the various Labor Laws
1.2 OVERVIEW OF INDUSTRIAL RELATIONS
The concept of industrial relation has a broader meaning. Though in a
narrow sense, it implies the relation between employer and employee. In a
broader sense, the term industrial relations refers to the relation between
employer and employee, union and state , employers and government, munotes.in

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2 employees and government. The study of their relationship is known as
industrial relations.
Industrial relations represents the relationship between the employers and
employees. The study of their relationship is a subject matt er of industrial
relation. It refers to a study of examining the relations between employer
and employee, employee and employee and employer and employer. The
management represents employers and unions represent employees. The
government is treated as a th ird party which acts in the interests of the
employees by enacting various laws and legislations. It implies the
relation between the employer and employee. The relationship is studied
during the period of employment in an industrial organization.
Accordi ng to the International Labor Organization (ILO), “Industrial
relations deals with relationships between either state and employers and
workers organizations or the relationship between the occupation
organization themselves.”
The main objectives behind th e concept of industrial relations is to
establish and maintain industrial peace along with safeguarding the
interests of both workers and management. It helps to avoid industrial
disputes. Good industrial relations raise the production capacity. It also
contributes to improving the morale and motivation of employees. With
the help of good industrial relations, the labor turnover rate and
absenteeism can be minimized. It also minimizes the chances of strikes,
lockouts etc.
The concept of industrial relatio ns deals with the relationship of employer
and employee. Good industrial relations safeguards the interests of
employees. It helps to maintain a balance with employee expectations,
employer associations, trade unions, and other social and economic
institut ions of societies. The disputes between management and union can
be avoided with the help of good industrial relations. It establishes
communication between workers and management to maintain the sound
relationship between the two.
1.3 IR HISTORY IN BRIEF
The history of industrial relations dates back to old times. The origin lies
in the employer -employee relationships. The main essence of industrial
relations is employer -employee relationships. The relation between
employer and employees plays an importa nt role in maintaining industrial
peace. The employees were largely dependent on wages as they were not
having any ownership of the means of production, instruments and
materials. Those who had means of production instruments and materials
became the empl oyers and the rest became employees.
The beginning of industrial societies consisted of small competitive
businesses and industrial enterprises. In the economic system, the quantity
of these establishments were large. Each unit and establishment used to
employ a small number of laborers. At that time, when the awareness and
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Overview o f Industrial Relations
3 and close. The relations between them were informal. In some
establishments, they were exploited to some extent or t o greater extent due
to lack of labor laws and legislations.
After the evolution of joint stock companies and business corporations,
thousands of employees were employed. The relationship between the
employer and his employees became no longer intimate an d informal. The
following factors also contributed in creating the gap between laborers and
management -
 State intervention
 Trade unions and its growth
 Employee federations
 Growing field of personnel management
 Industrial psychology
 Industrial development etc.
The above mentioned reasons can be considered a boon or a curse for
widening a gap between labor and management. These factors have tended
to influence the spirit and the course of the relationship between
employers and employees. They have changed th e nature of the
relationship between employer and employee.
The private partnership between management labor and management have
changed into public partnership where they are held accountable more for
the public rather than for each other. For the public welfare, the first and
foremost thing is industrial peace and harmony which can be maintained
through good industrial relations. The command of trade unions,
federation and associations can be used for the welfare of society or for
disruption of society.
The present area of industrial relations revolves around prohibition of
strikes and lockouts, maintenance of discipline, promotion of industrial
peace, courtesy and harmony, hiring right people and firing wrong people,
promotion and transfer, payment of w ages, bonus, overtime allowances,
other benefits etc.
1.4 SYSTEM APPROACH TO IR AND IR MODEL
“Industrial relation is an art of living together for the purpose of
production”
- J. Henry
In 1958, the system approach was developed by J.P. Dunlop of Harvard
University. According to Dunlop, the industrial relations system comprises
certain actors, certain contexts, and an ideology, which binds them
together and a body of rules created to govern the actors at the workplace munotes.in

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4 and work community. The system approa ch of industrial relations deals
with all the individuals and institutions that interact at the workplace.
It may be defined as comprising the totality of power interactions of
participants in a workplace, when these interactions involve industrial
relati ons issues. The system approach can be conceived at different levels,
national, regional, industrial and workplace. The system approach concept
is operationally definable.
The main characters in the system are -
 The managers
 Workers and their representati ves
 Government agencies
The system approach comprises certain actors, certain context and an
ideology. The integration of these things is important. The system helps to
govern the people at the workplace. The rules in the system approach are
classified int o two categories - substantive rules and procedural rules. The
former determine the conditions under which people are employed while
the later govern how substantial rules are to be made and understood.

Fig. 1.1: The System Approach
1.5 COLLECTIVE BARGAI NING
In the writings of Sidney and Beatrice Webb, the term “Collective
Bargaining” originated. Collective bargaining is a process through which
the representatives of both the management and employees participate.
The process of collective bargaining aims to establish stable relationships
between the parties involved. It helps in achieving discipline in the
industry.
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Overview o f Industrial Relations
5 Together, its group or united negotiation.
According to the Encyclopedia of Social Sci ences “Collective bargaining
is a process of discussion and negotiation between two parties, one or both
of whom a group of persons is acting in consent. The resulting bargain is
an understanding as to the terms and conditions under which a continuing
service is to be performed..... More specifically, collective bargaining is a
procedure by which employers and a group of employees agree upon the
conditions of work.”
Collective bargaining is a process through which the management and
employees resolve their differences. As the name suggests, there is no
intervention from a third party. Mutually and collectively, the
management and employees discuss and negotiate. Acting in a manner
that is beneficial for both parties is the essence of collective bargaining.
To set the terms and conditions of work, to resolve disputes, the technique
of collective bargaining is used by the members of management and labor.
The process of collective bargaining takes place at different levels. The
levels vary from region to region and area to area. Healthcare services,
pensions, bonus, working conditions can be discussed through the
techniques of collective bargaining. There are various types of bargaining.
Cooperative bargaining is one of the methods which is found suitable for
the Indian business environment.
1.6 BASIC GRIEVANCE MACHINERY AND
DISCIPLINARY PROCEDURE
1.6.1 Grievance
Grievance reflects the type of dissatisfaction or feeling of injustice in
connection with the employment. In industrial relations. The focus is on
the promotion of the amicable relationship between employees and
employers. Grievance is a rust on human relations. There is hardly a
company where the employees do not have grievances of one kind or the
other. A grievance produces unhappiness, discontent, eff iciency and
productivity.
The cost of grievance can be high in terms of -
 Conflict
 Poor customer service
 Poor work
 Resentment of employees
 Damage to property
 Time wastage/loss
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6 1.6.2 Definition
In the words of Keith Davis, “ Grievance is any real or imag ined feeling of
personal injustice which an employee has concerning his employment
relationship.”
According to Prof. Jucius, “Grievance is any discontent or dissatisfaction,
whether expressed or not, whether valid or not, arising out of anything
connected with the company that an employee thinks, believes, or even
feels is unfair, unjust or inequitable.”
1.6.3 Causes Of Grievances
To understand the concept of grievance, it is important to know the causes
of grievances to avoid those reasons to have better i ndustrial relations and
peace in an organization. In an organization, a grievance may arise due to
several reasons and factors such as -
1. Management policies like -
 Overtime
 No collective agreement
 Leave policy
 Wage rate policy
 Allowances policies
2. Personal Factors like -
 Employees own behavior
 Poor relations with colleagues
 Poor Relations with seniors or juniors
 Conflicts with peers
 Style of leadership
 Lack of coordination with team members
 Understanding problems
3. Reasons related to working conditions like -
 Poor safety conditions
 Negative approach to discipline
 Poor or unrealistic targets
 Non-maintenance of machineries
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7 1.6.4 Grievance Procedure
For the settlement of dispute, a grievance procedure is followed.
Grievance procedure is a formal communication between an employee and
the management designed for the settlement of a grievance. The procedure
differs from industry to industry, organization to organization.
At the 16th session of the Indian Labour Conference, the Code of
Disci pline was adopted. The Code of Discipline has highlighted the need
for a model grievance procedure on an agreed basis between employees
and employers or between the aggrieved parties. Grievances must be
settled as near as possible to the point of origin.
The grievance procedure in any organization should be -
 Prompt
 Well -defined
 Simple
 Time -bound
 Settled at the lowest levels
THE 5 POINT FORMULA
An organization can adopt the following steps to redress the grievance.
The National Commission On Labour has sug gested - The 5 Point
formula of Grievance settlement procedure as below : -
1. Rule of 48 Hours
The aggrieved employee should communicate his/her grievance even
verbally to the officer concerned who will reply within 48 hours of
complaint. The grievance s hould be reported and settled as early as
possible.
2. Rule of 3 Working Days
In case of failure to receive a reply the aggrieved employees will approach
the next higher authority who has vested power to hear such complaints.
She/he shall reply within 3 w orking days of the presentation of grievance.
3. Rule of Seven Days
In case of failure to receive such reply the aggrieved employee will refer
the matter to the grievance committee which shall give reply within seven
days. The management must communicate the decision within three days.
4. Rule of a Week in case of non -satisfaction
In case the employee is yet not satisfied or does not receive the reply
he/she shall appeal to the management for revision of the judgment. The
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8 5. Rule of a Week for voluntary arbitration
The employee, if not satisfied even at the above stage , may be referred to
a voluntary arbitration within a week after a decision taken by the
management at that stage. The decision of th e Arbitrator is final and
binding on both the parties.
1.7 IMPORTANCE OF WORKERS PARTICIPATION IN
MANAGEMENT
1.7.1 Introduction
The concept of workers participation in management is highly complex
and relevant for an organization. The main motive of worke rs participation
in management is to promote the democratic practices in the resolution of
industrial relations problems. Elevating workers' status in industry is an
important aspect of workers participation in management.
For industrial peace and democra cy, workers participation in management
is an essential ingredient. The concept of workers participation in
management refers to the participation of non -managerial employees in
the decision making process of the organization. The other name of
workers par ticipation in management in participative management and
labor participation.
1.7.2 Definition
According to Keith Davis, “Workers’ participation refers to the mental
and emotional involvement of a person in a group situation which
encourages him to contr ibute to group goals and share in responsibility of
achieving them”.
Kenneth Walkar says “Worker’s participation in management is a
resounding phrase, bridging the gap between past and the future. It echoes
the millennial vision of the 19th century thinker s while heralding the
evolution of new forms of industrial organization under 20th century
pressures. The word ‘workers’ participation is plentifully supplied with
ideas, institutions and opinions.”
In the words of Mehtras, “Applied to industry, the conce pt of participation
means sharing the decision -making power by the rank and file of an
industrial organization through their representatives, at all the appropriate
levels of management in the entire range of managerial action”.
1.7.3 Objectives
The follo wing are the objectives of Workers Participation in
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9

Fig.1.2: Objectives of WPM
1.7.4 Importance Of Workers Participation In Management

Fig. 1.3: Importance of WPM
1. Increases Productivity
Workers participation in management is a resounding phase. It bridges the
past and future. Employees in the present through worker participation
feel good about the organization culture. They feel they are also a part and
parcel of organization. Thus, it increases productivity of the employees
and production.

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10 2. Increases Employee Morale
The term ‘participation’ is one of the most misunderstood words. It not
only deals with the physical form of participation of employees but also it
denotes the mental and emotional involvement of employees i n an
organization. When their self esteem needs are satisfied, the employees
feel good and content. Thus, it is said that workers participation in
management helps to increase the morale of the employees.
3. Increases Sense of Belongingness
The scope and objectives of workers participation in management depends
on the objectives set to be achieved from the level of participation in an
organization. The social, political and economic contents play a vital role.
A good level of participation ensures that the workers are placed in a good
position and it also helps to increase the sense of belongingness among
them.
4. Quality Decision -making
Freedom and opportunity for self -expression may lead to better decisions.
When many people contribute their ideas, it can facilitate quality decision -
making in an organization. Creating a good communication system within
the organization can be achieved due to workers participation in
management.
5. Identifies Capable Employees
Workers participation in management helps to id entify the capable
employees within the organization. Through workers participation in
management, the energy and intelligence of workers can be utilized with a
view to increase the productive efficiency. It also helps to prevent the
exploitation of labor.
6. Facilitates Change
Change is inevitable in nature. Organization faces challenges to introduce
and implement change. Through Participation, they can facilitate change
through proper involvement of workers and communication processes. In
fact, for being a part of it, they can readily accept the change and help the
organization to work accordingly.
1.8 CASE -DISCUSSION
Mr. Sunil Mehra is working as a HR Manager in Infotech Conclave
Private Limited. Under him, there are six people working. Out of these s ix
people, an intern Miss Riya is very keen to know the things about
company as she desires to become a manager like Mr. Mehra. In every
meeting, the suggestions and ideas given by her are found to be effective
by the HR Manager. But, Mr. Mehra favors One more intern from his city
Mr. Tushar. Though his ideas are not very effective, they are appreciated
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Overview o f Industrial Relations
11 After going through this case, please identify the answers of the questions
given below -
1. What is the problem in this case?
2. What do you fe el about the behavior of Mr. Sunil Mehra?
3. Who is at fault - Miss Riya or Mr. Tushar ?
4. Can you add a few more characters to this case?
1.9 LABOR LAWS RELATING TO HR
Labor Law is a separate branch of Law aimed to protect the rights and
interests of labor. L abor laws are enacted to facilitate the progressive
policy for workers with a view to save them from exploitation. The
History of Labor laws in India is very old. To date, India has ratified 39
International Labor Organization (ILO) conventions. The need f or labor
laws in India is necessary for the health, safety and welfare of workers. To
maintain industrial peace and democracy, the Labor laws are necessary.
The preservation of health, safety and welfare of workers and maintenance
of good relations between employers and employees are the two -fold
objectives of Labor Laws.
In the subject of HR, every function under the human resource
Management is governed by Labor law. It is a job of a HR Manager to
work carefully and in accordance with the Labor Laws rela ting to HR. The
following are some Labor laws enacted to fulfill specific objectives
pertaining to various fields of HR like -
 Maintaining Industrial relationships, Code of conduct and Discipline.
 Employee appraisal
 Training and Development
 Recruitment an d Selection
 Healthy, Safety and Welfare measures
 Compensation of rewarding
In the next chapters, the students will get a detailed idea about the various
Acts and their provisions.
1.10 LABOR LAWS WITH IR IMPLICATIONS FOR
FUTURISTIC INDIA
The Industrial Re lations Code was passed in the year of 2020. The
Industrial Relations Code received the President’s assent on September 28.
The effective dates of commencement of the code is still pending and the
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12 After receiving th e accent from the President of the nation, on September
29, the government amalgamated the following existing legislative Acts
under the IR Code:
● The Industrial Disputes Act (ID Act), 1947
● The Industrial Employment (Standing Orders) Act, 1946
● The Trade Uni ons Act, 1926
The purpose of the amalgamation is to simplify and consolidate the
country’s matrix of labor laws, which in turn will make it easier to comply
with for foreign investors and the private sector. Under the new Industrial
Relations Code, definit ions of the terms – industry, worker, employer,
industrial dispute, and fixed -term employment have been updated.
Industry
An industry refers to any systemic activity between employers and
workers for the purpose of production, supply, or distribution of go ods and
services, regardless of whether or not this activity is pursued with the
motive of profit or capital investment. Hospitals, educational, and
scientific institutions now come under industry as per the new definition.
Specifically, an industry is not :
● An institution owned or managed by those organizations that are
wholly or substantially engaged in any charitable, social, or
philanthropic services
● An activity carried out by certain departments of the federal
government dealing in defense, atomic energ y, and space research
● Any domestic activity at home
● Any other activity that is not approved by the federal government to
be under the ambit of an industry
Worker
The following are now included within the new definition of worker:
● Working journalists as def ined under the Working Journalists and
other Newspaper Employees (Conditions of Service) and
Miscellaneous Provisions Act, 1955
● Sales promotion employees as defined under the Sales Promotion
Employees (Conditions of Service) Act, 1976
● Supervisory employees earning less than INR 18,000 (US$246) a
month

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13 Employer
The following are now included within the new definition of employer:
● Contractors
● Legal representatives of deceased employers
● Manager of a factory, so named as per the definition given by the
Factor ies Act, 1948
● Manager or managing director of any establishment who is in full
control of it and is entrusted with it
Industrial dispute
This definition is expanded to include any dispute or difference arising
between an individual worker and employer that relates to discharge,
dismissal, retrenchment, or termination of such worker within the ambit of
the Code.
Fixed -term worker
The provisions of a fixed -term worker have been extended to include the
following:
● Work hours, wages, and other benefits will not be less than those
given to permanent employees for doing the same or similar work.
● Eligibility for gratuity will be granted if services have been provided
for a period of one year.
● Eligibility for statutory benefits will be granted in proportion to the
services provided, regardless of whether the period of employment
extends to the qualifying period of employment needed to attain
statutory benefits.
1.11 SUMMARY
 Industrial relations represents the relationship between the employers
and employees. The study of their relationship is a subject matter of
industrial relation. It refers to a study of examining the relations
between employer and employee, employee and employee and
employer and employer. The management represents employers and
unions represent empl oyees.
 The history of industrial relations dates back to old times. The origin
lies in the employer -employee relationships. The main essence of
industrial relations is employer -employee relationships. The relation
between employer and employees plays an i mportant role in
maintaining industrial peace.
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14  In 1958, the system approach was developed by J.P. Dunlop of
Harvard University. According to Dunlop, the industrial relations
system comprises certain actors, certain contexts, and an ideology,
which binds them together and a body of rules created to govern the
actors at the workplace and work community. The system approach
of industrial relations deals with all the individuals and institutions
that interact at the workplace.
 Collective bargaining is a pro cess through which the management and
employees resolve their differences. As the name suggests, there is no
intervention from a third party. Mutually and collectively, the
management and employees discuss and negotiate. Acting in a
manner that is benefici al for both parties is the essence of collective
bargaining.
 Grievance reflects the type of dissatisfaction or feeling of injustice in
connection with the employment. In industrial relations. The focus is
on the promotion of the amicable relationship betwe en employees and
employers. Grievance is a rust on human relations. There is hardly a
company where the employees do not have grievances of one kind or
the other.
 For the settlement of dispute, a grievance procedure is followed.
Grievance procedure is a fo rmal communication between an
employee and the management designed for the settlement of a
grievance. The procedure differs from industry to industry,
organization to organization.
 For industrial peace and democracy, workers participation in
management is an essential ingredient. The concept of workers
participation in management refers to the participation of non -
managerial employees in the decision making process of the
organization. The other name of workers participation in management
in participative management and labor participation.
 In the subject of HR, every function under the human resource
Management is governed by Labor law. It is a job of a HR Manager to
work carefully and in accordance with the Labor Laws relating to HR.
 The Industrial Relat ions Code was passed in the year of 2020. The
Industrial Relations Code received the President’s assent on
September 28.
1.12 SELF -ASSESSMENT TEST
1. What is Industrial Relations? Explain the importance of industrial
relations in maintaining peace and harmony .
2. Elaborate the system approach to IR. Also explain the IR model by
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Overview o f Industrial Relations
15 3. What do you mean by collective bargaining? Explain the important
features of collective bargaining.
4. What is grievance in IR? Describe the basic steps o f Grievance
Machinery and Disciplinary Procedure
5. Explain the term ‘Workers Participation in Management’. Why is the
term ‘Workers Participation in Management’ considered important?
6. Write a note on various laws relating to IR.
7. Write a note on Labor Laws wi th IR implications for futuristic India.









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16 2
INTRODUCTION TO LABOR LAWS
Unit Structure :
2.1 Objectives
2.2 Introduction to Labor Laws
2.3 Government of India, Structure, Constitutional Provisions for Labor
2.4 Structure of Courts and Appropriate Authorities in India
2.5 Principles of Labor Law s
2.6 Classification of Labor Laws
2.7 Social Security and IR
2.8 Summary
2.1 OBJECTIVES
After studying this module, you should be able to :
 To understand the nature and relevance of Labor Laws
 Importance of Labor Laws
 Changing dynamics of Labor Laws
 Working of courts and appropriate authorities in India
 Importance of Social Security and IR
 Understand the various Labor Laws
2.2 INTRODUCTION TO LABOR LAWS
The focus of the old policy of the government related to labor laws was
more focused on the protectio n of the social system rather than the
protection of workers. In India, the industrial jurisprudence is based on
three sources - the Constitution, the Legislative enactments and Judicial
decisions. Tracing the genesis of labor laws in India indicates the r ichness
and ancientness of this topic. Characterized by rapid changes, the labor
laws constitute one of the most delicate and complex elements of the
modern industrial society which is characterized by rapid changes, labor
problems, low living standard and conflicting ideologies.
There is no unanimity on the meaning and scope of Labor Laws. Labor
laws constitute the wider employment relationship and labor market
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Introduction to Labor Laws
17 labor laws are the wor kers, the association of workers, the management
body, the State and the Central. Labor administration in labor laws is a
wide term. The term ‘Labor administration’ is primarily concerned with
labor affairs and social policy administration.
The meeting wa s held in Geneva in October 1973 on labor administration.
Experts were part of that meeting. It was held that there should be central
specialized units for each of the following areas. The major substantive
programmes should be framed for the -
1. Social secu rity
2. Manpower planning and employment
3. Training and development
4. Labor relations
5. Inspection of labor
6. Protection of labor
7. Terms of employment
8. Wages
9. Working conditions

Fig. 2.1: Labor Administration in India
The labor policy is also an important element. The labor policy of a
country is a product of the tradition, history, political culture, people
orientation and conditions of the economy. The policies are highly
influenced by the developmental objectives given by the government.

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18 2.3 ROLE OF GOVERNMEN T OF INDIA IN LABOR
LAWS
2.3.1 Overview
The Central and State Government is empowered to enact laws and
regulation for the betterment of workers and employees. The Constitution
of India has empowered the Central and the State Government to take care
of and to protect the interest of the workers. The Ministry of Labor and
Employment is responsible to protect and safeguard the interest of
workers. They are also responsible for safeguarding the interest of poor,
marginal and disadvantaged sections of the socie ty.
The main objectives of the labor laws enumerate the role of the
government in protecting and safeguarding the interest of the labor class in
India. Labor laws in India cover all aspects of labor. The distinguishing
feature of labor laws in our country is it covers all aspects more than labor
legislation in any other country.
After independence, there was a complete change in the approach to labor
legislation in our country. The concept of social justice has evolved as a
result of the labor laws in Indi a. Indian labor laws have both positive and
negative sides. The coverage of labor laws in our country is very
comprehensive and broad. It covers -
 Industrial Employment
 Industrial Non -employment
 Wages
 Working Conditions
 Social Security
 Labor welfare
 Indust rial Relations
 Industrial Peace and Harmony
 Social Justice
2.3.2 Structure
India is a Sovereign Socialist Secular Democratic Republic with a
Parliamentary form of government which is federal in structure with
unitary features. There is a Council of Ministe rs with the Prime Minister
as its head to advise the President who is the constitutional head of the
country. Similarly in states there is a Council of Ministers with the Chief
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Introduction to Labor Laws
19 Under the Constitution of Indi a, the structure of Government of India has
three branches -
1) The Executive
2) The Legislature
3) The Judiciary

Source: Mondaq - Constitutional framework of India
1. The Executive :
The Executive part of Government of India is responsible for the daily
administrat ion of the state bureaucracy. It works on the idea of separation
of powers. The executive power is vested mainly in the President of our
country. It consists -
 President
 Vice -Presidents
 Cabinet Ministers
2. The Legislature
Legislature is the legislative bod y of a State. The powers of the legislature
in India are exercised by the Parliament . The Parliament consists two
houses -
 Rajya Sabha
 Lok Sabha
Rajya Sabha is known as Upper House while Lo k sabha is known as
Lower House.
3. The Judiciary
In the Republic of India, the Judiciary is a system of courts that interpret
and apply the law. It is the system of courts that interprets, defends, and
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20  Supreme Court of India
 High Courts
 District Courts
2.3.3 Constitutional Provi sions For Labor
The Constitution of India has guaranteed some Fundamental Rights to the
citizens of the country. The Constitution of India has also laid down
certain Directive Principles of State Policy for the achievement of social
order. For achieving th e social order, the basis is on justice, equality,
liberty and fraternity.
The Constitution of India protects the rights and liberty of an individual.
The Constitution of India is the touchstone for any Act passed in our
country. The Constitution of India is the largest written constitution of the
world. The Constitution provides for the upliftment of labor by
guaranteeing certain fundamental rights to al l.
Article 14 lays down that the State shall not deny to any person equality
before the law.
Article 16 lays down that there shall be equal opportunity to all citizens in
respect to employment.
Article 19 guarantees the Right to Form Associations and Un ions.
Article 21 lays down the right to Right to Livelihood.
Article 23 prohibits Traffic in Human being and Forced Labour
Article 24 prohibits Employment of children in factories or mines or other
hazardous work.
Article 39 (d) guarantees Equal Pay for b oth Men and Women.
Article 41 lays down that The State shall, within the limits of its economic
capacity and development, make effective provision for securing the right
to work, to education and to public assistance in cases of unemployment,
old age, sick ness and disablement, and in other cases of undeserved want.
Article 42 enjoins the State Government to make provision for securing
Just and Humane Conditions of work and for maternity relief.
Article 43 lays that The State shall endeavor to secure, by su itable
legislation or economic organization or in any other way, to all workers,
industrial or otherwise, work, a living wage, conditions of work ensuring a
decent standard of life and full enjoyment of leisure and social and cultural
opportunities.
Articl e 43 A put emphasis on Workers Participation in Management. The
Article states that The State shall take steps, by suitable legislation or in
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Introduction to Labor Laws
21 of undertakings, establishments or other o rganizations engaged in any
industry.
The concept of Social Security is guaranteed in our Constitution under
Article 39, Article 41 and Article 43.
2.4 STRUCTURE OF COURTS AND APPROPRIATE
AUTHORITIES IN INDIA
Under the system of structure of courts, the S upreme Court of India is at
the top of the hierarchy followed by High Courts of respective states with
District Judges sitting in District Courts and Magistrates of Second Class
and Civil Judge (Junior Division) at the bottom.
High Courts are second Courts of Importance of the democracy of India.
The State Government is empowered for the establishment of District
Courts in every State by taking into account the population of the district.
These courts are under administrative control of the High Court of th e
State to which the district concerned belongs.

Source: Mondaq.com
In every state, besides the High Court there are a number of judicial
Courts to administer justice. The courts function under the supervision and
control of the High Court. In the hiera rchy, The District Courts and The
ADJ are followed by Subordinate Judge Class I. The Subordinate Judge
Class I is followed by Subordinate Judge Class II.
On the basis of jurisdiction, the Civil Court is divided into following
categories -
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22 3. Pecuniary Jurisdiction
4. Appellate Jurisdiction
2.5 PRINCIPLES OF LABOR LAWS
The principles of labor laws help to formulate the rights and entitlements
of the working people in a civilized society. Social justice, social equality,
social security, social welfare, national economy, and international
solidarity are some important principles of labor legislation in India. The
modern labor legislation is concerned about the rights and welfare of the
labor. The equality and sec urity rights for the labor are demanded and
taken care of at every level of the system.
The modern principles of labor laws can be explained as follows -

Fig. 2.3:Principles of Labor Laws
1. Social Justice
The term ‘social justice’ denotes abolition of se rvitude, freedom of
association, collective bargaining and industrial conciliation. Social justice
concept also deals with providing opportunity to all the citizens of the
country.
2. Social Equality
The term ‘Social Equality’ covers the concept of equal oppo rtunities of
education and employment for all. The term is very broad and covers the
concept of social equality completely. It implies that in India all citizens of
the country should have equal opportunities for employment and
education.

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23 3. Social Securit y
The principle of social security implies that the State shall provide if any
one of the citizens cannot provide for their basic needs. The principle
deals with providing social security to the citizens who are unable to fulfill
their basic needs of livin g life.
4. Social Welfare
The principle of social welfare ensures the provision of certain basic
amenities to workers at their place of work and also, to improve the living
conditions of workers and their family members. It deals with providing
relief to any citizen who might face or facing some illness or disability.
5. National Economy
This principle implies the need for economic and industrial development
of particular countries. Maintaining industrial peace and harmony,
improvement of physical working condi tions, machinery for settlement of
industrial disputes, formation of forums of workers participation in
management are some important aspects of this principle.
6. International Solidarity
This principle implies the support from WTO, ILO, the UN, and other
international organizations. It states that all nations should live in peace.
The International Labor Organization has greatly influenced the trade
union movement in our country.
2.6 CLASSIFICATION OF LABOR LAWS
Labor legislation in India covers all aspect s of labor more than labor
legislation in any other country of the world. The laws cover the aspects of
industrial employment, non -employment, wages and allowances,
amenities, working conditions, industrial relations and disputes, social
security, social w elfare etc. In India, the labor laws can be broadly
classified into the following six groups -
1. Laws on Wages
 The Payment of Wages Act, 1936
 The Minimum Wages Act, 1948
 The Payment of Bonus Act, 1965
 The Equal Remuneration act, 1976
2. Laws on Employme nt and Training
 The Employment Exchanges (Compulsory notification of
Vacancies) Act, 1959
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24 3. Laws on Social Security
 The Workmen Compensation Act, 1923
 The Employees’ State Insurance Act, 1948
 The Employees’ Provident Funds and M iscellaneous Provisions Act,
1952
 The Maternity Benefit Act, 1961
 The Payment of Gratuity Act, 1972
4. Laws on Working Conditions
 The Factories Act, 1948
 The Plantation Labour Act, 1951
 The Mines Act, 1952
 The Motor Transport Workers Act, 1961
 The Contrac t Labour (Regulation and Abolition) Act, 1970
 The Shops and Establishments Acts enacted by various State
Government
 The Child Labor (Prohibition and Regulation) Act, 1986
5. Laws on Industrial Relations
 The Trade Unions Act, 1926
 The Industrial Employment (Standing Orders) Act, 1946
 The Industrial Disputes Act, 1947
 The Bombay Industrial Relations Act, 1946
 The Maharashtra Recognition of Trade Unions and Prevention of
Unfair Labor Practices act, 1971
6. Laws on Labor Welfare Funds
 The Mica Mines Labor Wel fare Fund Act, 1946
 The Iron Ore, Manganese Ore and Chrome Ore Mines Labor
Welfare Fund Act, 1976
 The Limestone and Dolomite Labor Welfare Fund act, 1972
 The Beedi Workers Welfare Fund Act, 1976
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25 2.7 SOCIAL SECURITY AND INDUSTRIAL ELATIONS
The concept of s ocial security implies the protection provided by the
society to its members through a series of public measures against the
economic and social distress. The concept of social justice is one of the
important concepts of labor laws. The principle of social security implies
that the State shall provide if any one of the citizens cannot provide for
their basic needs. The principle deals with providing social security to the
citizens who are unable to fulfill their basic needs of living life. The
concept also plays an important role in the field of industrial relations.
Industrial relations represents the relationship between the employers and
employees. The study of their relationship is a subject matter of industrial
relation. It refers to a study of examini ng the relations between employer
and employee, employee and employee and employer and employer. The
management represents employers and unions represent employees. The
government is treated as a third party which acts in the interests of the
employees by enacting various laws and legislations. It implies the
relation between the employer and employee. The relationship is studied
during the period of employment in an industrial organization.
According to the International Labor Organization (ILO), “Industr ial
relations deals with relationships between either state and employers and
workers organizations or the relationship between the occupation
organization themselves.”
The main objectives behind the concept of industrial relations is to
establish and main tain industrial peace along with safeguarding the
interests of both workers and management. It helps to avoid industrial
disputes. Good industrial relations raise the production capacity. It also
contributes to improving the morale and motivation of employ ees. With
the help of good industrial relations, the labor turnover rate and
absenteeism can be minimized. It also minimizes the chances of strikes,
lockouts etc.
The impact of social security has a powerful presence at all levels of
society. Against a f ew contingencies, the social security measures provide
relief to the citizens. In our country, social security is a crude form of
social protection.
The International Labour Organisation (ILO) defines Social Security as
"the security that society furnishe s through appropriate organization
against certain risks to which its members are perennially exposed. These
risks are essentially contingencies against which an individual of small
means cannot effectively provide by his own ability or foresight alone or
even in private combination with his fellows. The mechanics of social
security therefore consists in counteracting the blind injustice of nature
and economic activities by rational planned justice with a touch of
benevolence to temper it.”
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26 2.8 SUMMARY
 There is no unanimity on the meaning and scope of Labor Laws.
Labor laws constitute the wider employment relationship and labor
market framework. The five main parties actively associated with any
industrial labor laws are the workers, the association of work ers, the
management body, the State and the Central. Labor administration in
labor laws is a wide term. The term ‘Labor administration’ is
primarily concerned with labor affairs and social policy
administration.
 The Central and State Government is empower ed to enact laws and
regulation for the betterment of workers and employees. The
Constitution of India has empowered the Central and the State
Government to take care of and to protect the interest of the workers.
The Ministry of Labor and Employment is re sponsible to protect and
safeguard the interest of workers. They are also responsible for
safeguarding the interest of poor, marginal and disadvantaged sections
of the society.
 Under the Constitution of India, the structure of Government of India
has thre e branches -
the Executive, the Legislature and the Judiciary.
 The Constitution of India has guaranteed some Fundamental Rights to
the citizens of the country. The Constitution of India has also laid
down certain Directive Principles of State Policy for t he achievement
of social order. For achieving the social order, the basis is on justice,
equality, liberty and fraternity.
 Under the system of structure of courts, the Supreme Court of India is
at the top of the hierarchy followed by High Courts of respect ive
states with District Judges sitting in District Courts and Magistrates of
Second Class and Civil Judge (Junior Division) at the bottom.
 The principles of labor laws help to formulate the rights and
entitlements of the working people in a civilized soci ety. Social
justice, social equality, social security, social welfare, national
economy, and international solidarity are some important principles of
labor legislation in India.
 Labor legislation in India covers all aspects of labor more than labor
legisl ation in any other country of the world. The laws cover the
aspects of industrial employment, non -employment, wages and
allowances, amenities, working conditions, industrial relations and
disputes, social security, social welfare etc.
 The concept of social security implies the protection provided by the
society to its members through a series of public measures against the
economic and social distress. The concept of social justice is one of
the important concepts of labor laws. Industrial relations represe nts munotes.in

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27 the relationship between the employers and employees. The study of
their relationship is a subject matter of industrial relation. It refers to a
study of examining the relations between employer and employee,
employee and employee and employer and empl oyer. The
management represents employers and unions represent employees.
2.9 SELF -ASSESSMENT QUESTIONS
1) Trace the genesis of labor laws in India.
2) What are the specific objectives of labor laws in India?
3) Write a detailed note of Labor laws and legislation i n India. Also
explain the principles governing labor laws.
4) Classify the labor laws in various categories.
5) Explain the constitutional provisions by keeping in view the labor
laws of our country.
6) Write a note on Structure of Courts and Appropriate Authorit ies in
India
7) Elaborate the concept of social security and industrial relations.
Explain the importance of their relationship.




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28 3
INDUSTRIAL RELATIONS
REGULATIONS
Unit Structure :
3.1 Objectives
3.2 Overview
3.3 Industrial Disputes Act, 1947
3.4 Trade Union act, 1926
3.5 MRTP & PULP Act, 1971
3.6 Industrial Employment (Standing Order) Act, 1946
3.7 Summary
3.1 OBJECTIVES
After studying this module, you should be able to :
 To understand the nature and relevance of industrial relations
regulations
 Importance of industrial relations regulations
 Understand the various Labor Laws
 Overview of Industrial Disputes Act, 1947
 Unders tand the importance of other acts and their provisions
3.2 OVERVIEW
Tracing the genesis of labor laws in India indicates the richness and
ancientness of this topic. Characterized by rapid changes, the labor laws
constitute one of the most delicate and comp lex elements of the modern
industrial society which is characterized by rapid changes, labor problems,
low living standard and conflicting ideologies. The labor policy of a
country is a product of the tradition, history, political culture, people
orientati on and conditions of the economy. The policies are highly
influenced by the developmental objectives given by the government.
The history of industrial relations dates back to old times. The origin lies
in the employer -employee relationships. The main ess ence of industrial
relations is employer -employee relationships. The relation between
employer and employees plays an important role in maintaining industrial
peace. The employees were largely dependent on wages as they were not munotes.in

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29 having any ownership of th e means of production, instruments and
materials.
For maintaining peace and harmony, many acts play a vital role in
regulating the industrial relations. The beginning of industrial societies
consisted of small competitive businesses and industrial enterpri ses. In the
economic system, the quantity of these establishments were large. Each
unit and establishment used to employ a small number of laborers. At that
time, when the awareness and system for labor was weak, the relationship
between them was personal and close. The relations between them were
informal.
The present area of industrial relations revolves around prohibition of
strikes and lockouts, maintenance of discipline, promotion of industrial
peace, courtesy and harmony, hiring right people and firin g wrong people,
promotion and transfer, payment of wages, bonus, overtime allowances,
other benefits etc. The Acts like -
 Industrial Disputes Act, 1947
 Trade Union act, 1926
 MRTP & PULP Act, 1971
 Industrial Employment (Standing Order) Act, 1946 plays an im portant
role in regulating the industrial relations
Over the years, labor laws have undergone a change with regard to the
object and scope. The labor laws are enacted to safeguard and protect the
interest of the labor and workers class. The labor laws for the purpose of
regulation serve both positive and negative sides. The positive side
provides the rights like right to expression, the right to minimum standard
of living, health and safety, working conditions etc.
While, the negative side shows the -
 Over protection
 Over negative
 Lack of awareness about the rights
 Over reactive
 Fragmented
 Outdated
 Irrelevant aspect of this area.

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30 3.3 INDUSTRIAL DISPUTES ACT, 1947
3.3.1 Overview
The Industrial Dispute Act came into existence on 1st April 1947. The
Indust rial Disputes Bill was introduced in the Central Legislative
Assembly on 8th October, 1946. The Industrial Disputes Bill was passed
by the Assembly in March, 1947 and it came into effect from 1st April
1947.
The Act was enacted to make provisions for the investigation and
settlement of industrial disputes. For certain other purposes, the acts as
passed. The Act extends to the whole of India and applies to every
industrial establishment carrying on any business, trade, manufacture or
distribution of goods a nd services irrespective of the number of workmen
employed therein.
3.3.2 Objectives Of The Act
1) To make provision for the investigation and settlement of industrial
disputes.
2) To secure industrial peace and harmony by providing mechanism and
procedure for the investigation and settlement of industrial disputes
by conciliation, arbitration and adjudication which is provided under
the statute.
3) To promote the process of collective bargaining.
4) To prevent illegal strikes and lockouts.
5) To provide compensation to workmen in case of lay -of, retrenchment
and closure.
3.3.3 Important Definitions
Industry
According to Section 2 (j), " industry" means any systematic activity
carried on by co - operation between an employer and his workmen
(whether such workmen are empl oyed by such employer directly or by or
through any agency, including a contractor) for the production, supply or
distribution of goods or services with a view to satisfy human wants or
wishes (not being wants or wishes which are merely spiritual or religi ous
in nature), whether or not, -
(i) any capital has been invested for the purpose of carrying on such
activity; or
(ii) such activity is carrie d on with a mot ive to make any gain or profit,
and includes --
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31 (a) any activity of the Dock Labour Board established under section 5A
of the Dock Workers (Regulation of Employment) Act, 1948 (9 of
1948 );
(b) any activity relating to the promotion of sales or business or both
carried on by an establishment. but does not include --
(1) any agr icultural operation except where such agricultural operation is
carried on in an integrated manner with any other activity (being any
such activity as is referred to in the foregoing provisions of this
clause) and such other activity is the predominant one . Explanation. --
For the purposes of this sub - clause," agricultural operation" does not
include any activity carried on in a plantation as defined in clause (f)
of section 2 of the Plantations Labour Act, 1951 (69 of 1951 ); or
(2) hospitals or dispensaries; or
(3) educational, scientific, research or training institutions; or
(4) institution s owned or managed by organizations wholly or
substantially engaged in any charitable, social or philanthropic
service; or
(5) khadi or village industries; or
(6) any activity of the Government relatabl e to the sovereign functions of
the Government including all the activities carried on by the
departments of the Central Government dealing with defense
research, atomic energy and space; or
(7) any domestic service; or
(8) any activity, being a profession practiced by an individual or body or
individuals, if the number of persons employed b y the individual or
body of individuals in relation to such profession is less than ten; or
(9) any activity, being an activity carried on by a co - operative society or
a club or any other like body of individuals, if the number of persons
employed by the co - operative society, club or other like body of
individuals in relation to such activity is less than ten.
Industrial Dispute
According to Section 2 (k), "industrial dispute" means any dispute or
difference between employers and employers or between employers and
workmen, or between workmen and workmen, which is connected with
the employment or non -employment or the terms of employment or with
the conditions of labor, of any person.


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32 3.3.4 Authoriti es Under The Act
1. Works Committee
2. Conciliation Officers
3. Board of Conciliation
4. Court of Enquiry
5. Labour Court
6. Industrial Tribunal
7. National Tribunal
1. Works Committee
(1) In the case of any industrial establishment in which one hundred or
more workmen are emp loyed or have been employed on any day in
the preceding twelve months, the appropriate Government may by
general or special order require the employer to constitute in the
prescribed manner a Works Committee consisting of representatives
of employers and w orkmen engaged in the establishment so however
that the number of representatives of workmen on the Committee
shall not be less than the number of representatives of the the Indian
Trade Unions Act, 1926 (16 of 1926).
(2) It shall be the duty of the Wo rks Committee to promote measures for
securing and preserving amity and good relations between the
employer and workmen and, to that end, to comment upon matters of
their common interest or concern and endeavor to compose any
material difference of opinion in respect of such matters.
2. Conciliation Officer
(1) The appropriate Government may, by notification in the Official
Gazette, appoint such a number of persons as it thinks fit, to be
conciliation officers, charged with the duty of mediating in and
promo ting the settlement of industrial disputes.
(2) A conciliation officer may be appointed for a specified area or for
specific industries in a specified area or for one or more specified
industries and either permanently or for a limited period.
3. Board of Conciliation
(1) The appropriate Government may as occasion arise by notification in
the Official Gazette constitute a Board of Conciliation for promoting
the settlement of an industrial dispute.
(2) A Board shall consist of a chairman and two or four other members,
as the appropriate Government thinks fit.
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33 (3) The chairman shall be an independent person and the other members
shall be persons appointed in equal numbers to represent the parties to
the dispute and any person appointed to represent a pa rty shall be
appointed on the recommendation of that party: Provided that, if any
party fails to make a recommendation as aforesaid within the
prescribed time, the appropriate Government shall appoint such
persons as it thinks fit to represent that party.
(4) A Board, having the prescribed quorum, may act notwithstanding the
absence of the chairman or any of its members or any vacancy in its
number: Provided that if the appropriate Government notifies the
Board that the services of the chairman or of any other member have
ceased to be available, the Board shall not act until a new chairman or
member, as the case may be, has been appointed.
4. Court of enquiry
(1) The appropriate Government may as occasion arises by notification in
the Official Gazette consti tute a Court of Inquiry for inquiring into
any matter appearing to be connected with or relevant to an industrial
dispute.
(2) A Court may consist of one independent person or of such number of
independent persons as the appropriate Government may think f it and
where a Court consists of two or more members, one of them shall be
appointed as the chairman.
(3) A Court, having the prescribed quorum, may act notwithstanding the
absence of the chairman or any of its members or any vacancy in its
number: Provid ed that, if the appropriate Government notifies the
Court that the services of the chairman have ceased to be available,
the Court shall not act until a new chairman has been appointed.
5. Labor courts
(1) The appropriate Government may, by notification in the Official
Gazette, constitute one or more Labour Courts 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.
(2) A Labour Court shall consist of one person only to be appointed by
the appropriate Government.
(3) A person shall not be qualified for appointment as the presiding
officer of a Labour Court, unless -- (a) he is, or has been, a Judge of a
High Court; or (b) he has , for a period of not less than three years,
been a District Judge or an Additional District Judge; or (c) he has
held any judicial office in India for not less than seven years; or (d) he
has been the presiding officer of a Labour Court constituted under any
Provincial Act or State Act for not less than five years.
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34 6. Industrial Tribunal
(1) The appropriate Government may, by notification in the Official
Gazette, constitute one or more Industrial Tribunals for the
adjudication of industrial disputes relating to any matter, whether
specified in the Second Schedule or the Third Schedule [and for
performing such other functions as may be assigned to them under
this Act].
(2) A Tribunal shall consist of one person only to be appointed by the
appropriate Governme nt.
(3) A person shall not be qualified for appointment as the presiding
officer of a Tribunal unless -- (a) he is, or has been, a Judge of a High
Court; or (b) he has, for a period of not less than three years, been a
District Judge or an Additional Dist rict Judge; (c) The appropriate
Government may, if it so thinks fit, appoint two persons as assessors
to advise the Tribunal in the proceeding before it.
8. National Tribunals
(1) The Central Government may, by notification in the Official Gazette,
constitute one or more National Industrial Tribunals 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 on e State
are likely to be interested in, or affected by, such disputes.
(2) A National Tribunal shall consist of one person only to be appointed
by the Central Government.
(3) A person shall not be qualified for appointment as the presiding
officer of a National Tribunal [unless he is, or has been, a Judge of a
High Court]. The Central Government may, if it so thinks fit, appoint
two persons as assessors to advise the National Tribunal in the
proceeding before it.
For better understanding, the above data without manipulation is taken
from the original The Industrial Disputes Act, 1947.
3.4 THE TRADE UNION ACT, 1926
3.4.1 Overview
Trade union means an association of workers in a particular industry. In
India, the expression ‘Trade Union’ under the trade u nion act 1926
includes both employers and workers organizations. The act is divided
into 33 sections and contains 5 chapters. Trade unions in India governed
by the trade union act 1926.
The Act was enacted to provide protection to the union leaders. The act
also lays down a detailed procedure for the registration and working of
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35 India. The Trade Union Act is a central legislation and it is administered
and enforced by the State Gover nment.
3.4.2 Objectives Of The Act
1. To protect the interest of the trade union activity and movements in
India.
2. To provide for the registration of Trade Unions and in certain respects
to define the law relating to registered Trade Unions.
3. To prevent the exp loitation of workers.
3.4.3 Scope And Applicability Of The Act
1. The Act extends to the whole of India.
2. It shall come into force on such date as the Central Government may,
by notification in the Official Gazette, appoint.
3. The Act was extended to Jammu and Kashmir in 1970.
4. The act is applicable to the union of workers as well as to the
association of employers.
5. The Act is a central legislation and it is administered and enforced by
the State Government.
3.4.5 Important Definitions
Appropriate Government mean s in relation to Trade Unions whose objects
are not confined to one State the Central Government, and in relation to
other Trade Unions, State Government, and unless there is anything
repugnant in the subject or context -
(a) “executive” means the body, by wha tever name called, to which the
management of the affairs of a Trade Union is entrusted;
(b) “Officer -bearer” in the case of a Trade Union includes any member of
the executive thereof, but does not include an auditor;
(c) “prescribed” means prescribed by regulat ions made under this Act;
(d) “registered officer” means that office of a Trade Union, which is
registered under this Act as the Head officer thereof;
(e) “registered Trade Union” means a Trade Union registered under this
Act;
(f) “registrar” means -
i. a Registr ar of Trade Unions appointed by the appropriate
Government under section 3 and includes an, additional or Deputy
Registrar or Trade Unions and
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36 ii. in relation to any trade Union, the Registrar appointed for the State
in which the head or registered offic e, as the case may be, of the
Trade Union is situated;
Section 2(g) states “Trade dispute” means any dispute between
employers and workmen or between workmen and workmen or between
employers and employers, which is connected with the employment or
non-empl oyment, or the terms of employment, or the conditions of labor,
of any person, and “workmen” 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(h) defines “Trade U nion” 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 employees and employers, or for imposing
restrictive conditio ns on the conduct of any trade or business, and includes
and federation of two or more trade unions :
Provided that this Act shall not affect -
(i) Any agreement between partners as to their own business;
(ii) Any agreement between an employer and tho se employed by him as
to such employment ; or
(iii) Any agreement in consideration of the sale of the goodwill of a
business or instruction in any profession, trade or handicraft.
3.4.6 Important Provisions Of The Act
1. Section 3 of the act states the prov ision related to the appointment of
registrar. the appropriate government shall appoint a person to be the
registrar of trade unions for each state.
2. The Act lays down the detailed procedure for registering a trade
union. under this act the registration of trade unions is not mandatory.
3. Section 4 of the act deals with the mode of registration of trade
unions. Any 7 or more members of a trade union apply for
registration by subscribing their names of trade unions.
4. Section 5 of the act States the provision related to the application of
registration of trade unions. Every application for registration of a
trade union shall be made to the registrar and shall be accompanied by
a copy of the rules of the trade union. It shall contain the following
details -
(i) the names, occupations and address of members making the
application;
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37 (ii) the name of the Trade Union and the address of its head office;
and
(iii) the titles, ages, addresses and occupations of the office bearers of
the Trade Union.
1. Section 6 of th e act deals with the provisions related to the rules of
trade union.
2. Section 7 of the act deals with the power to call for further particulars
and to require alteration of names, if needed.
3. Section 8 states that the Registrar, on being satisfied that the Trade
Union has complied with all the requirements of this Act in regard to
registration, shall register the Trade Union by entering in a register, to
be maintained in such form as may be prescribed, the particulars
relating to the Trade Union contained in the statement accompanying
the application for registration.
4. Section 9 states that the Registrar, on registering a Trade Union under
section 8, shall issue a certificate of registration in the prescribed form
which shall be conclusive evidence that the Tr ade Union has been
duly registered under this Act.
5. Section 10 of the act deals with the cancellation of trade unions on the
basis of some grounds like certificates obtained by fraud. Trade
unions have ceased to exist.
3.5 MAHARASHTRA RECOGNITION OF TRADE
UNIONS AND PREVENTION OF UNFAIR LABOR
LAWS PRACTICES ACT 1971
3.5.1 Overview
Maharashtra recognition of trade unions and prevention of unfair labor
laws practices act was passed in 1971 with a view to provide for the
recognition of trade unions for facilit ating collective bargaining for certain
undertakings. The act also covers the provisions related to their rights and
obligations.
The Government of Maharashtra in February 1968 set up a tripartite
committee. The Committee called “the Committee on Unfair Labor
Practices” in their report defined certain activities on the part of employers
and trade unions as unfair labor practices and listed them in three separate
lists. The committee worked under the chairmanship of justice V.A. Naik.
3.5.2 Objectives O f The Act
The Maharashtra recognition of trade unions and prevention of unfair laws
practices Act was passed with a view -
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38 1. To provide for the recognition of trade unions for facilitating
collective bargaining for certain undertakings.
2. To state the rights and obligations of trade unions.
3. To confirm certain powers on unrecognized unions.
4. To define and provide for prevention of certain unfair labor practices.
5. To define the status of certain strikes and lockouts as illegal strikes
and lock outs.
3.5.3 Scope An d Applicability Of The Act
1. The Act extends to the whole state of Maharashtra.
2. It covers industries falling within the preview of Bombay Industrial
Relations Act and industrial dispute act.
3. The act may be divided into two main parts.
4. The first part of the act deals with the recognition of union and the
second part deals with the unfair labor practices.
3.5.4 Recognition Of Union
The act provides for the recognition of Union for an undertaking
employing 50 or more employees on any day in the preceding Twelv e
Days. Section 10 to Section 18 of the trade union Act, 1926 deals with the
various provisions related to the recognition of Union, De - recognition of
a recognized union, Re -recognition of unions.
Section 24 of the Act deals with the obligation of a reco gnized union with
regard to rules and regulations related to strike, vote regarding strikes,
pendency of any proceedings or during the period of operation.
Similarly no employer shall resort to a lockout -
a) Without giving prior notice.
b) During the pendency of any proceeding.
c) During the operation of any settlement or award.
3.5.6 Unfair Labor Practices
According to Section 26, in this Act, unless the context requires
otherwise, ‘unfair labor practices’ mean any of the practices listed in
Schedules II, III an d IV. Section 27 states that no employer or union and
no employees shall engage in any unfair labor practice. Section 28 deals
with the procedure for dealing with complaints related to unfair labor
practices.

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39 3.6 INDUSTRIAL EMPLOYMENT (STANDING ORDER)
ACT, 1946
3.6.1 Overview
The Industrial Employment (Standing Order) Act, 1946 came into force
on 1st April, 1947. Before the passing of this act, there was no uniform
practice governing the conditions of workers. The industrial employment
standing orders Ac t 1946 was passed for improving Industrial Relations by
standardizing the conditions of employment in private industry including
the procedure for any disciplinary action.
The Act was enacted to bring uniformity in the terms of employment in
industrial est ablishments. The clarity regarding the conditions of
employment and making the same known to the workmen is a
fundamental feature to minimize industrial conflict. To promote industrial
peace and harmony, the act plays a vital role in promoting fair indust rial
practices.
3.6.2 Objectives Of The Act
1. To require employers in industrial establishments formally to define
conditions of employment under them.
2. To bring about uniformity in terms and conditions of employment.
3. To have uniform standing orders in respe ct to workers, factories and
working relationships.
4. To minimize the industrial conflict.
5. To ensure that the terms and conditions of employment are known to
the employees.
6. To provide statutory identity and importance to the standing order.
7. To promote the I ndustrial Relations between employers and
employees.
3.6.3 Scope And Application Of The Act
1. The act extends to the whole of India.
2. This Act is to require employers in industrial establishments to
formally define conditions of employment under them and subm it
draft standing orders to the Certifying Authority for its Certification.
3. The act applies to every industrial establishment where in 100 or more
workmen are employed, or were employed on any day of the
preceding twelve months.
4. The Central Government is t he appropriate Government in respect of
establishments under the control of Central Government or a Railway
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40 3.6.4 Important Provisions Of The Act
Section
1. According to Section 3 of the act, the employer shall submit to the
Certifying Officer five copies of the draft standing orders proposed by
him for adoption in his industrial establishment. This should be done
within six months from the date on which this Act becomes applicable
to an industrial establis hment.
2. Section 4 of the act deals with the conditions for certification of
standing orders. Standing orders shall be certifiable under this Act
if—
(a) provision is made therein for every matter set out in the Schedule
which is applicable to the industri al establishment, and
(b) the standing orders are otherwise in conformity with the
provisions of this Act; and
It shall be the function of the Certifying Officer or appellate authority
to adjudicate upon the fairness or reasonableness of the provisions o f
any standing orders.
3. Section 5 of the Act deals with the provision regarding the
certification of standing orders.
4. Section 6 of the Act states the provisions related to appeal.
5. Section 7 of the act deals with the date of operation of a standing
order.
6. The section 8 of the act states the procedure to maintain the register in
a prescribed form maintained for the purpose.
7. According to Section 9, the text of the standing orders as finally
certified under this Act shall be prominently posted by the employer
in English and in the language understood by the majority of his
workmen on special boards to be maintained for the purpose at or near
the entrance through which the majority of the workmen enter the
industrial establishment and in all departments thereof where the
workmen are employed.
8. Section 10 of the act is the duration and modification of standing
orders.
9. Section 11 of the act states the provisions related to the powers of
certifying officer and appellate authority.
10. Section 13 of the Act deals with the penalties and procedures.

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41 3.7 SUMMARY
 The labor laws constitute one of the most delicate and complex
elements of the modern industrial society which is characterized by
rapid changes, labor problems, low living standard and conflicting
ideologies. T he labor policy of a country is a product of the tradition,
history, political culture, people orientation and conditions of the
economy.
 The present area of industrial relations revolves around prohibition of
strikes and lockouts, maintenance of disciplin e, promotion of
industrial peace, courtesy and harmony, hiring right people and firing
wrong people, promotion and transfer, payment of wages, bonus,
overtime allowances, other benefits etc. The Acts like -Industrial
Disputes Act, 1947, Trade Union act, 19 26, MRTP & PULP Act,
1971 and Industrial Employment (Standing Order) Act, 1946 plays an
important role in regulating the industrial relations.
 The Industrial Dispute Act was enacted to make provisions for the
investigation and settlement of industrial disp utes. For certain other
purposes, the acts as passed. The Act extends to the whole of India
and applies to every industrial establishment carrying on any business,
trade, manufacture or distribution of goods and services irrespective
of the number of workm en employed therein.
 The Trade Union Act was enacted to provide protection to the union
leaders. The act also Lays down a detailed procedure for the
registration and working of trade unions. The motive is to ensure a
healthy association of workers in Ind ia. The Trade Union Act is a
central legislation and it is administered and enforced by the State
Government.
 Maharashtra recognition of trade unions and prevention of unfair
labor laws practices act was passed in 1971 with a view to provide for
the recogn ition of trade unions for facilitating collective bargaining
for certain undertakings. The act also covers the provisions related to
their rights and obligations.
 The Industrial Employment (Standing Order) Act, 1946 came into
force on 1st April, 1947. Be fore the passing of this act, there was no
uniform practice governing the conditions of workers. The industrial
employment standing orders Act 1946 was passed for improving
Industrial Relations by standardizing the conditions of employment in
private indus try including the procedure for any disciplinary action.



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42 3.8 SELF ASSESSMENT TEST
1. Why is industrial regulation required? Explain the need for legislation
for industrial activities.
2. What is an Industrial Dispute? Explain the salient features of the
Industrial Dispute Act.
3. Discuss the authorities under the Industrial Dispute Act.
4. Explain the main provisions of the Industrial Standing Orders Act.
5. What is the procedure to register a trade union under the Trade Union
Act, 1926?
6. Discuss the important provisio ns of the MRTU and PULP Act.








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43 4
REGULATIVE LAWS
Unit Structure :
4.1 Objectives
4.2 Overview
4.3 The Factories Act, 1948
4.4 The Bombay Shop and Establishment Act, 1948
4.5 Summary
4.6 Self-Assessment Test
4.1 OBJECTIVES
After studying this module, you should be able to :
 To understand the nature and re levance of regulative laws.
 Importance of regulative laws in labor legislation
 Understand the various regulative labor Laws
 Overview of The Factories Act, 1948
 Understand the importance of other acts and their provisions
4.2 OVERVIEW
Labor laws constitute the wider employment relationship and labor market
framework. The five main parties actively associated with any industrial
labor laws are the workers, the association of workers, the management
body, the State and the Central. Labor administration in labo r laws is a
wide term. The term ‘Labor administration’ is primarily concerned with
labor affairs and social policy administration. The labor policy is also an
important element. The labor policy of a country is a product of the
tradition, history, politica l culture, people orientation and conditions of the
economy. The policies are highly influenced by the developmental
objectives given by the government.
The regulative laws are derived from many sources. The main aim is to
regulate the working conditions, wages and other important aspects related
to the labor. There are two broad categories of labor laws in India. laws
deal with the employee’s rights at work, while collective labor laws
govern the tripartite relationship between employers, employees, and l abor
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44 The management/employers need to consider multiple factors when
assessing their statutory requirements.
The regulative laws of labor establish a legal system that facilitates
productive individual and collective employment relationships and hence a
productive economy. It helps to regulate the various aspects of the factory
and industries. The Central and State Government is empowered to enact
laws and regulation for the betterment of workers and employees. The
Constitution of India has empowered the Central and the State
Government to take care of and to protect the interest of the workers. The
Ministry of Labor and Employment is responsible to protect and safeguard
the interest of workers. They are also responsible for safeguarding the
interest of poor, marginal and disadvantaged sections of the society.
After independence, there was a complete change in the approach to labor
legislation in our country. The concept of social justic e has evolved as a
result of the labor laws in India. Indian labor laws have both positive and
negative sides. The coverage of labor laws in our country is very
comprehensive and broad. It covers industrial employment and industrial
non-employment, wages, working conditions, social security and labor
welfare.
4.3 THE FACTORIES ACT, 1948
4.3.1 Overview
The history of factory laws goes back more than a century. In the year
1881, the first Indian Factories Act was passed. In 1911, a more
comprehensive law was introduced. The act passed in 1881 and 1911 was
basically designed to protect children and to provide few measures for
health and safety of the worker.
The Act was further amended in 1923, 1926, 1931 and 1934. Following
the recommendations of the Rege Comm ittee, The Government of India
elected the factories act 1948. It is a comprehensive piece of legislation
which came into effect from 1949. The Factories Act, 1948 came into
force on 1st April, 1949.
4.3.2 Objectives Of The Act
1. To consolidate and amend the law regulating labor in factories.
2. To establish adequate safety measures and to enhance the health and
welfare of workers employed in a factory.
3. To ensure the health, safety and welfare measures for the labor
working in a factory.
4. To provide the provision s for proper working hours, leave and other
benefits.
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45 4.3.3 Scope And Applicability Of The Act
1. The act extends to the whole of India.
2. It shall come into force on the 1st day of April, 1949.
3. The act covers the provisions related to the health, welfare a nd safety
of the workers.
4. The Act is applied and limited to factories that use power and employ
10 or more people on any working day in the preceding 12 months.
5. The Act is applied and limited to factories that do not use power and
employ 20 or more people on any working day in the preceding 12
months.
6. The Act is also covered under Section 85 of the Factories Act by the
state governments o r Union Territories.
4.3.4 Important Definitions Under The Act
(a) “adult” means a person who has completed his eighteenth year of age;
(b) “adolescent” means a person who has completed his fifteenth year of
age but has not completed his eighteenth year;
(bb) “calendar year” means the period of twelve months beginning with
the first day of January in any year;
(c) “child” means a person who has not completed his fifteenth year of
age;
(ca) “competent person”, in relation to any provision of this Act, me ans a
person or an institution recognised as such by the Chief Inspector for
the purposes of carrying out tests, examinations and inspections
required to be done in a factory under the provisions of this Act
having regard to —
(i) the qualifications and ex perience of the person and facilities
available at his disposal; or
(ii) the qualifications and experience of the persons employed in
such institution and facilities available therein, with regard to
the conduct of such tests, examinations and inspections , and
more than one person or institution can be recognised as a
competent person in relation to a factory;
(cb) “hazardous process” means any process or activity in relation to an
industry specified in the First Schedule where, unless special care is
taken, raw materials used therein or the intermediate or finished
products, bye -products, wastes or effluents thereof would —
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46 (i) cause material impairment to the health of the persons engaged
in or connected therewith, or
(ii) result in the pollution or the general environment: Provided that
the State Government may, by notification in the Official
Gazette, amend the First Schedule by way of addition, omission
or variation of any industry specified in the said Schedule;
(d) “young person” means a person w ho is either a child or an adolescent;
(e) “day” means a period of twenty -four hours beginning at midnight;
(f) “week” means a period of seven days beginning at midnight on
Saturday night or such other night as may be approved in writing for a
particular area by the Chief Inspector of Factories;
(g) “power” means electrical energy, or any other form of energy which is
mechanically transmitted and is not generated by human or animal
agency;
(h) “prime mover” means any engine, motor or other appliance whic h
generates or otherwise provides power;
(i) “transmission machinery” means any shaft, wheel, drum, pulley,
system of pulleys, coupling, clutch, driving belt or other appliance or
device by which the motion of a prime mover is transmitted to or
received b y any machinery or appliance;
(j) ”machinery” includes prime movers, transmission machinery and all
other appliances whereby power is generated, transformed,
transmitted or applied;
(k) “manufacturing process” means any process for —
(i) making, altering, repairing, ornamenting, finishing, packing, oiling,
washing, cleaning, breaking up, demolishing, or otherwise
treating or adapting any article or substance with a view to its
use, sale, transport, delivery or disposal; or
(ii) pumping oil, water, sewage or any other substance; or
(iii) generating, transforming or transmitting power; or
(iv) composing types for printing, printing by letter press, lithography,
photogravure or other similar process or book binding; [or]
(v) constructing, reconstructing, repairing, refitting, finishing or
breaking up ships or vessels; [or]
(vi) preserving or storing any article in cold storage;
(l) “worker” means a person employed, directly or by or through any
agency (including a contractor) with or without the knowledg e of the
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47 manufacturing process, or in cleaning any part of the machinery or
premises used for a manufacturing process, or in any other kind of
work incidental to, or connected with, the manufactu ring process, or
the subject of the manufacturing process but does not include any
member of the armed forces of the Union;
(m) “factory” means any premises including the precincts thereof —
(i) whereon ten or more workers are working, or were working on a ny
day of the preceding twelve months, and in any part of which a
manufacturing process is being carried on with the aid of power, or
is ordinarily so carried on, or
(ii) whereon twenty or more workers are working, or were working on
any day of the preced ing twelve months, and in any part of which a
manufacturing process is being carried on without the aid of
power, or is ordinarily so carried on, —
but does not include a mine subject to the operation of the Mines
Act, 1952 (35 of 1952), or 6 a mobile mobi le unit belonging to the
armed forces of the Union, railway running shed or a hotel,
restaurant or eating place.
Explanation I — For computing the number of workers for the purposes
of this clause all the workers in different groups and relays in a day sha ll
be taken into account;
Explanation II — For the purposes of this clause, the mere fact that an
Electronic Data Processing Unit or a Computer Unit is installed in any
premises or part thereof, shall not be construed to make it a factory if no
manufacturi ng process is being carried on in such premises or part thereof;
(n) “Occupier” means the person, who has ultimate control over the affairs
of the factory,
Provided that -
(i) in the case of a firm or other association of individuals, any one
of the indivi dual partners or members thereof shall be deemed
to be the occupier;
(ii) in the case of a company, any one of the directors, shall be
deemed to be the occupier:
(iii) in the case of a factory owned or controlled by the Central
Government or any State G overnment, or any local authority,
the person or persons appointed to manage the affairs of the
factory by the Central Government, the State Government or the
local authority, as the case may be, shall be deemed to be the
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48 Provided further that in the case of a ship which is being repaired, or on
which maintenance work is being carried out, in a dry dock which is
available for hire,
(1) the owner of the dock shall be deemed to be the occupier for the
purposes of any matter provided for by or under -
(a) section 6, section 7, section 7A, section 7B, section 11 or section
12;
(b) section 17, in so far as it relates to the providing and maintenance
of sufficient and suitable lighting in or around the dock;
(e) section 18, section 19, section 42, section 46, section 47 or section
49, in relation to the workers employed on such repair or
maintenance;
(2) the owner of the ship or his agent or master or other officer -in-charge
of the ship or any person who contracts with such owner, agent or
master or other officer -in-charge to carry out the repair or
maintenance work shall be deemed to be the occupier for the purposes
of any matter provided for by or under section 13, section 14, section
16 or section 17 (save as otherwise provided in this proviso) or
Chapt er IV (except section 27) or section 43, section 44 or section 45,
Chapter VI, Chapter VII, Chapter VIII or Chapter IX or section 108,
section 109 or section 110, in relation to -
(a) the workers employed directly by him or by or through any
agency; and
(b) the machinery, plant or premises in use for the purpose of
carrying out such repair or maintenance work by such owner,
agent, master or other officer -in-charge or person.
4.3.5 Important Provisions Under The Factories Act, 1948
The Factories Act has mad e provisions regarding the health, safety and
welfare of the workers. The fundamental provisions cover the rules and
regulations related to the health, safety and welfare of the workers. In this
head, we will see the provisions in detail.
4.3.5.1 Health Measures Under The Factories Act, 1948
The Factories Act has laid down the following measures for the health of
the workers -
1. Cleanliness [Section 11]
Every factory shall make arrangements for keeping the premises clean
and free from effluvia arising from any drains, privy or other nuisance.

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49 2. Disposal of Waste and Effluents [Section 12]
Every occupier shall make the necessary arrangement for the disposal
of waste and effluents arising from the manufacturing processes. The
state government may prescribe r ules and regulations in this regard.
3. Ventilation and Temperature [Section 13]
Every factory should meet effective and sustainable provisions for
securing and maintaining the adequate ventilation for the circulation of
fresh air and reasonable temperature f or the workers as far as their
comfort and suitability is concerned.
4. Dust and Fumes [Section 14]
Every factory takes effective measures to prevent the inhalation and
accumulation of dust fumes in the premises. The accumulation of dust
and fumes should be avoided and necessary arrangements should be
made in this regard.
5. Artificial Humidification [Section 15]
The process of artificial humidification in India is used in cotton textile
means and in a few cigarette making factories. The state government
shall make rules regarding the standard of the modification of factories
where the humidity in the air is artificial increased. The act empowers
the state government to prescribe the standards of humidification and
regulating methods to be adopted.
6. Overcrow ding [Section 16]
The act prohibits overcrowding in the workrooms to the extent it is
injurious to the health of the worker. Every worker will have to be
provided with 350 cubic feet of space if a factory is built after the
commencement of this act.
7. Lighti ng [Section 17]
In every factory, proper measures should be taken for the maintenance
of sufficient and suitable lighting, natural or artificial or both in every
part of the factory where workers are working.
8. Drinking Water [Section 18]
Every factory shou ld make effective arrangements for sufficient supply
of drinking water for all workers in the factory. The water for drinking
should be free from impurities. The State Government is empowered to
make rules for the compliance of rules.
9. Latrines and Urinals [Section 19]
Every factory shall make provision for sufficient number of latrines and
urinals in premises. All latrines and urinals shall be kept in clean and
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50 10. Spittoons [Section 20]
Every factory should have a sufficient number of spittoons situated at
convenient places. The spittoons must be maintained in a clean and
hygienic condition.
4.3.5.2 Safety Measures Under The Factories Act, 1948
In Chapter IV, the Factories Act lays down the standards of safety to be
adopted by the factories covered under it. Section 41 to 40 of the act
provides a number of provisions to secure a very high standard of safety to
the worker in a factory. The main provisions for the safety of the workers
are -
1. Section 21 deals with provisions re lated to the fencing of machinery.
2. Section 22 deals with the provisions related to the work on or near
machinery in motion.
3. Section 23 of the act deals with provisions related to prohibition of
Employment of young persons on dangerous machines.
4. Section 24 deals with provisions related to the Striking gear and
devices for cutting off power.
5. Section 25 deals with provisions related to the Self-acting machines.
6. Section 26 deals with provisions related to the Casing of new
machinery.
7. Section 27 deals with provi sions related to the Prohibition of
employment of women and children near cotton -openers.
8. Section 28 deals with provisions related to the Hoist and lifts.
9. Section 29 deals with provisions related to the Lifting machines,
chains, ropes and lifting tackles.
10. Section 30 deals with provisions related to the Revolving machinery.
11. Section 31 deals with provisions related to the Pressure plant.
12. Section 32 deals with provisions related to the Floors, stairs and
means of access.
13. Section 33 deals with provisions relate d to the Pits, sumps, openings
in floors, etc.
14. Section 34 deals with provisions related to the Excessive weights.
15. Section 35 deals with provisions related to the Protection of eyes.
16. Section 36 deals with provisions related to the Precautions against
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51 17. Section 36A deals with provisions related to the Precautions
regarding the use of portable electric light.
18. Section 37 deals with provisions related to the Explosive or
inflammable dust, gas, etc.
19. Section 38 deals with provisions related to the Precautions in case of
fire.
20. Section 39 deals with provisions related to the Power to require
specifications of defective parts or tests of stability.
21. Section 40 deals with provisions related to the Safety of buildings
and machinery.
22. Sectio n 40A deals with provisions related to the Section 40A.
Maintenance of buildings.
23. Section 40B deals with provisions related to the Safety Officers.
(1) In every factory -
(i) wherein one thousand or more workers are ordinarily employed, or
(ii) wherein, in the opinion of the State Government, any manufacturing
process or operation is carried on, which process or operation
involves any risk of bodily injury, poisoning or disease or any other
hazard to health, to the person employed in the factory,
The occupi er shall, if so required by the State Government by notification
in the Official Gazette, employ such number of Safety Officers as may be
specified in that notification.
(2) The duties, qualifications and conditions of service of Safety Officers
shall be such as may be prescribed by the State Government.
1. Section 41 deals with provisions related to the Power to make rules to
supplement this Chapter
The State Government may make rules requiring the provision in any
factory or in any class or description of f actories of such further
devices and measures for securing safety of persons employed therein
as it may deem necessary.
4.3.5.3 Welfare Measures Under The Factories Act, 1948
Section 42. Washing facilities -
(1) In every factory -
● (a) adequate and suitable facilities for washing shall be provided and
maintained for use of the workers therein;
● (b) separate and adequately screened facilities shall be provided for
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52 ● (c) such facilities shall be conveniently accessible and shal l be kept
clean.
(2) The State Government may, in respect of any factory or class or
description of factories or of any manufacturing process, prescribe
standards of adequate and suitable facilities for washing.
Section 43. Facilities for storing and dryin g clothing -
The State Government may, in respect of any factory or class or
description of factories make rules requiring the provision therein of
suitable place for keeping clothing not worn during working hours and for
the drying of wet clothing.
Secti on 44. Facilities for sitting -
(1) In every factory suitable arrangements for sitting shall be provided
and maintained for all workers obliged to work in a standing position,
in order that they may take advantage of any opportunities for rest
which may occur in the course of their work.
(2) If, in the opinion of the Chief Inspector, the workers in any factory
engaged in a particular manufacturing process or working in a
particular room, are able to do their work efficiently in a sitting
position, he may, by order in writing, require the occupier of the
factory to provide before a specified date such seating arrangements
as may be practicable for all workers so engaged or working.
(3) The State Government may, by notification in the Official Gazette,
declare that the p rovisions of sub -section (1) shall not apply to any
specified factory or class or description of factories or to any specified
manufacturing process.
Section 45. First -aid-appliances -
(1) There shall, in every factory, be provided and maintained so as to be
readily accessible during all working hours first -aid boxes or
cupboards equipped with the prescribed contents, and the number of
such boxes or cupboards to be provided and maintained shall not be
less than one for every one hundred and fifty workers ordina rily
employed at any one time in the factory.
(2) Nothing except the prescribed contents shall be kept in a first -aid box
or cupboard.
(3) Each first -aid box or cupboard shall be kept in the charge of a
separate responsible person, who holds a certificate in first -aid
treatment recognized by the State Government and who shall always
be readily available during the working hours of the factory.
(4) In every factory wherein more than five hundred workers are
ordinarily employed there shall be provided and maintained an
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53 equipment and in the charge of such medical and nursing staff as may
be prescribed and those facilities shall always be made readily
available during the working hours of the factory.
Section 46. Canteens -
(1) The State Government may make rules requiring that in any specified
factory wherein more than two hundred and fifty workers are
ordinarily employed, a canteen or canteens shall be provided and
maintained by the occupier for the use of the wo rkers.
(2) Without prejudice in the generality of the foregoing power, such rules
may provide for -
(a) the date by which such canteen shall be provided;
(b) the standard in respect of construction, accommodation, furniture
and other equipment of the canteen;
(c) the foodstuffs to be served therein and the charges which may be
made therefore;
(d) the constitution of a managing committee for the canteen and
representation of the workers in the management of the canteen;
(e) the items of expenditure in the ru nning of the canteen which are
not to be taken into account in fixing the cost of foodstuffs and
which shall be borne by the employer ;
(f) the delegation to Chief Inspector subject to such conditions as
may be prescribed, of the power to make rules under clause (c).
Section 47. Shelters, rest -rooms and lunch -rooms -
(1) In every factory wherein more than one hundred and fifty workers are
ordinarily employed adequate and suitable shelters or rest -rooms and
a suitable lunch -room, with provision for drinking wat er, where
workers can eat meals brought by them, shall be provided and
maintained for the use of the workers:
Provided that any canteen maintained in accordance with the
provisions of section 46 shall be regarded as part of the requirements
of this subsect ion:
Provided further that where a lunch -room exists no worker shall eat
any food in the work -room.
(2) The shelters or rest -room or lunch -room to be provided under sub -
section (1) shall be sufficiently lighted and ventilated and shall be
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54 (a) prescribe the standards, in respect of construction accommodation,
furniture and other equipment of shelters, rest -rooms and lunch -rooms
to be provided under this section;
(b) by notification in the Offici al Gazette, exempt any factory or class or
description of factories from the requirements of this section.
Section 48. Creches -
(1) In every factory wherein more than thirty women workers are
ordinarily employed there shall be provided and maintained a su itable
room or rooms for the use of children under the age of six years of
such women.
(2) Such rooms shall provide adequate accommodation, shall be
adequately lighted and ventilated, shall be maintained in a clean and
sanitary condition and shall be under the charge of women trained in
the care of children and infants.
(3) The State Government may make rules -
(a) prescribing the location and the standards in respect of
construction, accommodation; furniture and other equipment of
rooms to be provided, unde r this section;
(b) requiring the provision in factories to which the section applies, of
additional facilities for the care of children belonging to women
workers, including suitable provision of facilities for washing and
changing their clothing;
(c) req uiring the provision in any factory of free milk or refreshment
or both for such children;
(d) requiring that facilities shall be given in any factory for the
mothers of such children to feed them at the necessary intervals.
Section 49. Welfare Officers -
(1) In every factory wherein five hundred or more workers are ordinarily
employed the occupier shall employ in the factory such number of
welfare officers as may be prescribed.
(2) The State Government may prescribe the duties, qualifications and
condition s of service of officers employed under sub -section (1). 50.
Power to make rules to supplement this Chapter. -
The State Government may make rules -
(a) exempting, subject to compliance with such alternative
arrangements for the welfare of workers as may be prescribed,
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55 (b) requiring in any factory or class or description of factories that
representatives of the workers employed in the factories sha ll be
associated with the management of the welfare arrangements of
the workers.
4.4 THE BOMBAY SHOP AND ESTABLISHMENT ACT,
1948
4.4.1 Overview
Bombay shops and Establishment Act was passed in 1948. The act came
into effect from 11th January 1949 with a view to regulate the conditions
of work and employment in shops, commercial establishments, residential
hotels, restaurants, eating houses, theaters, other places of public
amusement or entertainment and other establishments.
The Act was enacted to regul ate the service condition, working hours
leaves a weekly layout of those who work in shops, commercial
establishments, residential hotels and other places of public amusement.
4.4.2 Objectives Of The Act
(1) To regulate the conditions of work and employment i n shops,
commercial establishments, residential hotels, restaurants, eating
houses, theaters, other places of public amusement or entertainment
and other establishments.
(2) To regulate the service condition, working hours leave a weekly
layout of those who w ork in shops, commercial establishments,
residential hotels and other places of public amusement.
(3) To consolidate and amend the law relating to the regulation of
conditions of work and employment in shops.
4.4.3 Scope And Applicability Of The Act
(1) This Act may be called the Bombay Shops and Establishments Act,
1948.
(2) The act extends to the whole of Maharashtra.
(3) It extends its applicability within Municipal limits and can be
extended to local area having a population of more than 25000.
(4) The act consolidates a nd amend the law relating to the regulation of
conditions of work and employment in shops, commercial
establishments, residential hotels, restaurants, eating houses, theaters,
other places of public amusement or entertainment and other
establishments.

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56 4.4.4 Important Provisions Of The Act
(1) Section 7 of the act deals with the provision of registration of
establishments, shop or establishment is to be registered under this act
with the local authorities.
(2) Section 13 of the act deals with the working hours of shops. No
commercial establishment shall be opened earlier than 8:30 a.m. and
close by 8:30 p.m.
(3) Section 14 of the act deals with the daily and weekly hours of work in
shops and commercial establishments. No employee in a commercial
establishment or shop can work more than 9 hours in a day and 48
hours in a week.
(4) Section 19 deals with the working hours of restaurants in eating
houses. The restaurants or eating houses cannot be opened earlier
than 5 a.m. and closed later than 12 midnight for service.
(5) 26 d eals with the working hours of every theater or other places of
public amusement or entertainment that cannot remain open after 12
midnight.
(6) Section 63 of the act deals with the provisions related to overtime
wages. If an employee works for more than 9 ho urs in a day and 48
hours in a week, overtime wages shall be payable under this act in
respect of any establishment is twice the ordinary rate of wages.
(7) Section 35 to Section 38 deals with the leave provision with wages.
Every employee who has been emplo yed for not less than 3 months in
a year is to be given 5 days leave for every 60 days of work done by
him. If an employee has worked for more than 240 days during a
year, then he is entitled to 21 days leave.
(8) Section 39 to 40 section 42 of the act deals with the health and safety
provisions. Every establishment must take appropriate measures to
keep the premises clean, ventilated and sufficiently lighted. The
measures for protecting the premises against fire should be well
implemented. There must be a facility for the first aid box.
(9) Section 49 of the act states the powers and duties of an inspector.
Subject to any rules made by the state government In this half, the
Inspector acts within the local limits for which he is appointed
exercise sum powers a s may be necessary for carrying out the
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57 4.5 SUMMARY
 Labor laws constitute the wider employment relationship and labor
market framework. The five main parties actively associated with any
industrial labor laws are the workers, the association of workers, the
management body, the State and the Central. Labor administration in
labor laws is a wide term.
 The regulative laws of labor establish a legal system that facilitates
productive individual and collective employment relationships and
hence a productive economy. It helps to regulate the various aspects
of the factory and industries.
 The Factories Act, 1948 was passed with a view to ensure the health,
safety and welfare measures for the labor working in a factory.
 The act passed in 1881 and 1911 was basically designed to protect
children and to provide few measures for health and safety of the
worker. The Act was further amended in 1923, 1926, 1931 and 1934.
Following the recommendations of the Rege Committee, The
Government of Indi a elected the factories act 1948. It is a
comprehensive piece of legislation which came into effect from 1949.
The Factories Act, 1948 came into force on 1st April, 1949.
 Bombay shops and Establishment Act was enacted to regulate the
service condition, wor king hours leaves a weekly layout of those who
work in shops, commercial establishments, residential hotels and
other places of public amusement.
 An Act to consolidate and amend the law relating to the regulation of
conditions of work and employment in sh ops, commercial
establishments, residential hotels, restaurants, eating houses, theaters,
other places of public amusement or entertainment and other
establishments.
4.6 SELF -ASSESSMENT TEST
1. State the health provisions relating to workers under the Factori es Act
1948.
2. State the safety provision under the Factories Act 1948 relating to
workers.
3. State the Welfare provisions relating to workers under the Factories
Act 1948.
4. Discuss the important provisions under Bombay Shops and
Establishment Act 1948
5. Explain the scope and applicability of the Bombay Shops and
Establishment Act 1948
6. What are the important provisions under the Factories Act 1948.
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58 5
SOCIAL SECURITY LEGISLATIONS
Unit Structure :
5.1 Objectives
5.2 Overview
5.3 Workmen’s Compensation Act 1923
5.4 Employee State Insurance Act, 1948
5.5 Gratuity Act, 1972
5.6 Provident Fund Act and Miscellaneous Provisions Act, 1952
5.7 Summary
5.8 Self Assessment Test
5.1 OBJECTIVES
After studying this module, you should be able to :
 Understand the nature and relevance of social security legislations.
 Importance of social security legislations in India.
 Understand the important provisions of the Workmen's Compensation
Act 1923.
 Understand the important provisions of these employees State
Insurance Act 1948.
 Know the relevance of Gratuity Act 1972.
 Assess the objectives of Provident Fund Act and Miscellaneous
Provisions Act.
5.2 OVERVIEW
The regulative laws of labor esta blish a legal system that facilitates
productive individual and collective employment relationships and hence a
productive economy. It helps to regulate the various aspects of the factory
and industries. The Central and State Government is empowered to ena ct
laws and regulation for the betterment of workers and employees. The
Constitution of India has empowered the Central and the State
Government to take care of and to protect the interest of the workers. The
Ministry of Labor and Employment is responsible to protect and safeguard
the interest of workers. They are also responsible for safeguarding the
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59 Social security legislations are essential because it is the security that
society fur nishes, through appropriate organization, against certain risks to
which its members are exposed. The concept of social security is
essentially related to the higher ideals of human dignity and social justice.
The term social security came into general us e after the year 1935. In the
same year, the US passed the social security act introduci ng the old age
pension scheme. The scheme was administered by the Federal
Government and paid for by employers and employees.
The International Labor Organization pl ays an important role in social
security legislation. In 1919, the formation of the In ternational Labour
Organisation to promote the concept of Social Justice through
International standards, by providing information, technical assistance
and guidance a nd most important through cooperation with other
international organizations was promoted to ensure this concept for
laborers.
India was a founder member of the ILO. The Social Security (Minimum
Standards) Convention No. 102, adopted by the International L abour
Conference on 28th June, 1952, defines the nine branches of social
security benefit. The benefits for the laborers are -
1. Medical Care
2. Sickness benefit
3. Unemployment Benefit
4. Old-age Benefit
5. Employment Injury Benefit
6. Family Benefit
7. Maternity Benefit
8. Invalidity Benefit
9. Survivors Benefit
The evolution of social security provisions, acts and measures in India had
been rather slow. The state bears the primary responsibility for developing
the correct system for providing protection and assistance to its workforce.
In India, the schemes are designed to guarantee the long -term substance to
families when the earning member retires and dies and suffers a disability.
The social security system act as a facilitator and helps the workers to plan
their own fut ure through insurance and assistance.
According to the International Labour Organisation, “ social security is the
security that society furnishes, through appropriate organization, against
certain risks to which its members are exposed. These risks are essentially
contingencies against which the individual of a small means cannot
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60 Social security legislation in India in the industrial sector consist s of the
following important enactments:
01. The Workmen’s Compensation Act 1923
02. The Employees State Insurance Act, 1948
03. The Gratuity Act, 1972
04. The Provident Fund Act and Miscellaneous Provisions Act, 1952
05. The Maternity Benefit Act, 1961
In a country like In dia the problem of poverty is commonly seen.
Illiteracy and unemployment is another problem our country is facing.
The problem of unemployment is in practice and the population is ever
increasing. As of today, social security seems to be the need of th e hour
because the only resource that is available in ample in India is labor. The
above acts important provisions to provide the social security in terms of
compensation, insurance, gratuity provident fund and maternity benefits to
the labor.
The main ob jective of social security legislations are to protect the poor
and the vulnerable and to ensure that they have an acceptable standard of
living. The aim of the social security legislation is three fold. To provide
compensation, to restore the sick and to prevent the loss of a labor.
5.3 THE WORKMEN’S COMPENSATION ACT
5.3.1 OVERVIEW :
The work man compensation act is an important act of social security in
India. The beginning of social security in India was made with the passing
of this act 1923. Before the passing of this act, the government
formulated some proposals for the grant of compensation. These
proposals were circulated for opinion among them. the proposals for the
grant of compensation received general support. Subsequently, the
workmen's compensation Act was passed in March 1923. The act came
into force on July 1st 1924.
The Workmen's Compensation Act is administered by the government.
The extent of the act is very comprehensive as it covers the various types
of disablement, employers liability for compensation, amount of
compensation, compensation to be paid when due and penalty for default
and appointment of Commissioner by the government. It helps the parties
to get relief from a necessary litigation bring about the relations betwe en
employers and workmen.


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61 5.3.2 OBJECTIVES OF THE ACT
01. To provide employment injury compensation to industrial workers.
02. To provide for the payment of certain classes of employers to their
workmen compensation for injury by accident at the workplace.
03. To p rovide a simple and economical mechanism for the recovery of
compensation in case of personal injury.
04. To provide a quick mechanism for the recovery of compensation in
case of occupational diseases.
05. To protect workmen from uncertainty and emergency in the c ourse of
employment.
06. To impose an obligation upon employers to pay compensation to
employees for accidents rising out of and in the course of employment.
5.3.3 SCOPE AND APPLICABILITY OF THE ACT
1. The act extends to the whole of India.
2. The act is applicable to workmen employed in factories, mines,
plantations, mechanically propelled vehicles, construction works and
certain other hazardous occupations in any such a capacity as is
specified in schedule II.
3. Under sub -section (3) of section 2 of the act, the sta te governments are
empowered to extend the scope of the act to any class of persons
whose occupations are considered hazardous after giving three months
notice in the Official Gazette.
4. The act, however, does not apply to members serving in the armed
force s of the Indian Union.
5. The compensation is related to the extent of the injury or death rising
out of and in the course of employment.
6. The employer is not responsible if a workman sustains his injuries
under the influence of drugs, drinks etc.
5.3.4 IMPO RTANT PROVISIONS OF THE ACT :
Employer’s Liability for Compensation [Section 3]
Under this section, the act imposes the liability to pay compensation to
workmen if a personal injury is caused to him arising out of and in the
course of employment. Workmen a re entitled to receive compensation
from the employer if the personal injury is caused to him or her by
accident at the workplace or arising out of or in the course of his
employment.
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62 AMOUNT OF COMPENSATION [Section 4]
The Section 4 of the workmen's compe nsation act deals with the
provisions relating to the amount of compensation to be paid to workmen
if the personal injury is caused by accident or arising out of and in the
course of his employment. Subject to the provisions of this Act, the
amount of comp ensation shall be as follows, namely -
(a) where death results in from the injury : an amount equal to fifty per
cent. of the monthly wages of the deceased employee multiplied by the
relevant factor; or an amount of one lakh and twenty thousand rupees,
whichever is more;
(b) where permanent total disablement results from the injury : an amount
equal to sixty per cent. of the monthly wages of the injured employee
multiplied by the relevant factor; one lakh and twenty thousand rupees,
whichever is more;
COM PENSATION TO BE PAID WHEN DUE AND PENALTY FOR
DEFAULT [Section 4A]
Under this act, if the employer is under fault in paying the compensation
due within one month from the date it fell due, The Commissioner shall
direct that the employer in addition to th e amount of areas pay simple
interest of 12% per annum or on such higher rates. The Commissioner has
the power to impose the penalty and the interest on the cleared amount it
APPOINTMENT OF COMMISSIONER [Section 20]
The State Government may, by notificati on in the Official Gadget,
appoint any person to be a Commissioner for workmen compensation for
such areas as may be specified in the notification.
5.4 EMPLOYEES’ STATE INSURANCE ACT, 1948
5.4.1 OVERVIEW
The Employees State Insurance act 1948 is an impor tant act which falls
under the section of social security legislation. It came into force from
19th April 1948. The act provides for certain cash benefits to employees
in the event of sickness, Maternity, employment injury and medical
facilities in kind. They contain the provisions for certain other matters
having their own.
It also aims to provide benefits to the dependents of the employees. The
act serves as a social security and social insurance measure for employees
in event of sickness injury, acci dent disablement and maternity. The act
also deals with the provisions of providing benefits to the eligible
dependents of an insured person who dies as a result of an accident or an
occupational disease arising out of and in the course of employment.
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63 5.4.2 AIMS AND OBJECTIVES OF THE ACT
01. To provide for certain benefits to employees in case of sickness,
maternity and employment injury and to make provision for certain
other matters in relation thereto.
02. To provide for certain benefits to employees in cas e of sickness,
maternity and employment injury and to make provision for certain
other matters in relation thereto.
03. To create a sense of loyalty among the employees.
04. To serve as a social security and social insurance measure for
employees.
05. To provide the b enefits to the dependents of an insured person who
dies as a result of an accident or an occupational disease arising out of
and in the course of employment.
06. To enable financial backing and support to the working class in times
of medical distress.
5.4.3 SCOPE AND APPLICABILITY OF THE ACT
01. The Employees’ State Insurance act extends to the whole of India.
02. The act shall apply to all factories including those belonging to the
government other than seasonal factories.
03. The act is applicable to all the factories and establishments where there
are 20 or more employees.
04. Every factory or establishment to which this Act applies shall be
registered within such time and in such manner as may be specified in
the regulations made in this behalf.
05. The six kinds of benefits which are provided under the act are sickness
benefit, maternity Benefit, disability benefit, dependents benefit,
medical benefit and funeral expenses.
5.4.4 IMPORTANT PROVISIONS UNDER THE ACT
ESTABLISHMENT OF EMPLOYEES’ STATE INSURANCE
CORPORATION [Sect ion 3]
The Central Government may, by notification in the Official Gazette,
appoint on this behalf, there shall be established for the administration of
the scheme of employees' state insurance in accordance with the
provisions of this Act a Corporation to be known as the Employees' State
Insurance Corporation. The Corporation shall be a body corporate by the
name of Employees' State Insurance Corporation having perpetual
succession and a common seal and shall by the said name sue and be sued.
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64 CONSTITUTI ON OF THE CORPORATION [Section 4]
The Employees State Insurance Corporation shall consist of the following
members, namely:
● The Director -General of the Corporation
● A Chairman, appointed by the Central Government
● A Vice -Chairman appointed by the Central Gov ernment.
● Not more than 5 persons nominated by the Central Government.
● 1 person to represent each state.
● 1 person representing the Union Territories.
● 10 persons representing employers.
● 10 persons representing employees.
● 2 persons representing the medical pr ofession.
● 3 members of parliament (2: Lok Sabha and 1: Rajya Sabha).
TERM OF OFFICE OF MEMBERS OF THE CORPORATION
[Section 5]
The Director -General of the Corporation, the Chairman, the Vice -
Chairman, the five people nominated by the Central Government, the
members representing each State and the members representing each
Union Territory shall hold the office for up to four years.
BENEFITS [Chapter V]
The Chapter V of the act provides for all the benefits under the scheme
that are to be paid in cash except medical benefit which is given in kind.
The benefits are -
01. SICKNESS BENEFIT
An insured person is entitled to receive the sickness cash benefits at the
standard benefit rate for a period of 91 days in any two consecutive benefit
periods. This benefit is p ayable to an end short person in cash, in the
event of sickness resulting in absence from work or his sickness should be
duly certified by an authorized insurable medical officer oblique
practitioner.
02. MATERNITY BENEFIT
Women are entitled to get medical be nefits at double the standard benefit
rate. in case of sickness arising out of pregnancy, miscarriage or
premature birth of a child, and additional benefit is given for some period.
The qualification of an insured woman to claim maternity benefit, the
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65 period thereof shall be such as may be prescribed by the Central
Government.
03. DISABLEMENT BENEFIT
This benefit is payable to insured employees suffering from physical
disability due to empl oyment injury or occupational diseases arising out of
and in the course of employment. a person who sustains temporary
disablement for not less than three days excluding the day of accident shall
be entitled to periodical payment at such rates and for such period and
subject to such conditions as may be prescribed by the Central
Government. A person who sustains permanent disablement, whether total
or partial, shall be entitled to periodical payment at such rates and for such
period and subject to such cond itions as may be prescribed by the Central
Government.
04. MEDICAL BENEFIT
An insured person or a member of his family whose condition requires
medical treatment and attendants is entitled to receive medical benefit.
05. DEPENDANTS’ BENEFIT
This benefit is payabl e to dependents of a deceased insured person. The
benefit arises where death occurs due to employment or occupational
diseases. under this act, this benefit has been divided into three parts -
restricted medical care, expanded medical care and full medi cal care
06. FUNERAL EXPENSES
This benefit to this act was added in 1968. Under this benefit, a fixed
amount is payable to the eldest surviving member of the family or in his
absence to the person who actually incurred the expenditure on the
funeral.
5.5 THE PAYMENT OF GRATUITY ACT, 1972
5.5.1 OVERVIEW
Gratuity is an amount which is paid by the employer to the employee for
the services rendered by him or her towards the organization. It refers to
the additional retirement benefit to be secured to the laborers for the
contribution of their services towards the organization. The amount is paid
by the employer is in lump sum in consideration of the past service of the
laborer. The amount is given as a token of appreciation towards the years
contributed by the lab orer to the organization.
In India, this benefit is governed by the Payment of Gratuity Act, 1972.
The Payment of Gratuity Act, 1972 came into force from 16th September
1972. The act provides for rewarding employees who have served a long
career in the org anization.
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66 5.5.2 OBJECTIVES OF THE ACT
01. To provide for a scheme for the payment of gratuity to employees
engaged in factories, mines, oilfields, plantations, ports, railway
companies, shops or other establishments and for matters connected
therewith or inc idental thereto.
02. To provide a reward to employees who have served a long career in
the organization.
03. To provide the benefits to the employees as a token of appreciation for
his/her services.
5.5.3 SCOPE AND APPLICABILITY OF THE ACT
01. The act extends to th e whole of India.
02. The act is applicable to every shop or establishment in which 10 or
more persons are employed or were employed on any day of the
preceding 12 months.
03. It shall apply to -
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the
time being in force in relation to shops and establishments in a State,
in which ten or more persons are employed, or were employed, on any
day of the preceding twelve months;
(c) such other establishments or class of establishments, in which ten or
more employees are employed, or were employed, on any day of the
preceding twelve months, as the Central Government may, by
notification, specify in this behalf.
04. It shall come into force on such da te as the Central Government may,
by notification, appoint.
5.5.4 IMPORTANT PROVISIONS OF THE ACT
CONTROLLING AUTHORITY [Section 3]
The appropriate Government may, by notification, appoint any officer to
be a controlling authority. The officer shall be re sponsible for the
administration of this act. The appropriate government may appoint
different controlling authority for different areas.
PAYMENT OF GRATUITY [Section 4]
Gratuity shall be payable to an employee on the termination of his
employment after h e has rendered continuous service for not less than five
years, -
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67 (a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease:
POWERS TO EXEMPT [Section 5]
The appropriate Government may, by notification, and subject to such
conditions as may be specified in the notification, exempt any
establishment, in receipt of gratuity or pensionary benefits not less
favorable than the benefits conferred under this Act.
NOMINATION [Section 6]
Section 6 of the act deals with the provisions relating to the nomination.
An employee may in his nomination, distribute the amount of gratuity
payable to him or may nominate one or more members of the family.
DETERMINATION OF THE AMOUNT OF GRATUITY [Section 7]
Section 7 of the act, lays down the rules for the determination of amount
of gratuity. The person who is entitled to receive the gratuity is required to
apply to an employer by writing an application. The employer shall
calculate the amount of gratuity to be paid. He shall provide notice to the
concerned employee and the controlling authority after calculating the
amount to be payable. The payment of gratuity should be made within 30
days from the date it is due.
INSPECTORS [Section 7A]
The appropriate Government may, by notification, appoint as many
inspectors, as it deems fit, for the purposes of this act. While Section 7B
deals with the Powers of Inspectors under this act.
RECOVERY OF GRATUITY [Section 8]
If the amount of gratuity is not paid by the employer, the controlling
authority should give the employer a reasonable opportunity to show the
cause of such an Act. The amount of interest to be paid should not exceed
the amount of gratuity under this Act
PENALTIES [Section 9]
(1) Whoever, for the purpos e of avoiding any payment to be made by
himself under this Act or of enabling any other person to avoid such
payment, knowingly makes or causes to be made any false statement
or false representation shall be punishable with imprisonment for a
term which ma y extend to six months, or with fine which may extend
to ten thousand rupees or with both.
(2) An employer who contravenes, or makes default in complying with,
any of the provisions of this Act or any rule or order made there under
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68 less than three months but which may extend to one year, or with fine
which shall not be less than ten thousand rupees but which may extend
to twenty thousand rupees, or with both:
Provided that where the offense re lates to non -payment of any gratuity
payable under this Act, the employer shall be punishable with
imprisonment for a term which shall not be less than Six months but
which may extend to two years unless the court trying the offense, for
reasons to be reco rded by it in writing, is of opinion that a lesser term of
imprisonment or the imposition; a fine would meet the ends of justice.
5.6 THE EMPLOYEES’ PROVIDENT FUNDS AND
MISCELLANEOUS PROVISIONS ACT, 1952
5.6.1 OVERVIEW
Employees provident fund is a welfare scheme for the benefits of
employees. In this scheme, the contribution is made by employer and
employee. Later on, the whole of the amount is contributed by the
employer. The statutory rate of contribution is prescribed by the act. The
employee share is d educted from the salary of the employee and it is
deducted by the employer. The interest on this provident fund account is
credited to the account of the employee.
If the certain conditions are satisfied, at the time of retirement the
accumulated amount o f provident fund is given to the employee. In India,
the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
came into effect from 1st March, 1971. The act was further amended in
1976. The Act was passed with a view to introducing the Employe es
Deposit Linked Insurance Scheme. The Employees Deposit Linked
Insurance Scheme is a measure to provide an insurance cover to the
members of the provident fund.
Further, the Act was enacted to provide a kind of social security to the
industrial workers . This act is an important labor legislation which came
into existence in 1952 to ensure compulsory provision of Provident Fund,
Family Pension Fund and Deposit Linked Insurance in factories and other
establishments for the benefits of employees.
5.6.2 O BJECTIVES OF THE ACT
01. To provide a kind of social security to the industrial workers.
02. To provide provident fund to the employees after their service.
03. To introduce the Employees Deposit Linked Insurance Scheme.
04. To cultivate the spirit of saving something f or the future among
employees.
05. To make provision for the future of the work man after his retirement
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69 5.6.3 SCOPE AND APPLICABILITY OF THE ACT
The act is applicable -
01. to every establishment which is a factory en gaged in any industry
specified in Schedule I and in which twenty or more persons are
employed, and
02. to any other establishment employing twenty or more persons or class
of such establishments which the Central Government may, by
notification in the Officia l Gazette, specify in this behalf:
03. the Central Government may, after giving not less than two months’
notice of its intention to do so, by notification in the Official Gazette,
apply the provisions of this Act to any establishment employing such a
number of persons less than twenty as may be specified in the
notification.
5.6.4 IMPORTANT PROVISIONS OF THE ACT
01. Section 2A lays down the provisions related to an establishment to
include all departments and branches under this scheme.
02. Section 3 lays down the p rovisions related to the Power to apply Act
to an establishment which has a common provident fund with another
establishment.
03. Section 4 empowers the Central Government to add any industry in
Schedule I. The Central Government may, by notification in the
Official Gazette, add to Schedule -I any other industry in respect of the
employees whereof it is of opinion that a Provident Fund Scheme
should be framed under this Act, and thereupon the industry so added
shall be deemed to be an industry specified in Sched ule-I for the
purposes of this Act.
04. Section 5 of the act lays down provisions related to Employees’
Provident Fund scheme. The Central Government may, by notification
in the Official Gazette, frame a Scheme to be called the Employees'
Provident Fund Scheme for the establishment of provident funds under
this Act for employees or for any class of employees and specify the
establishments or class of establishments to which the said scheme
shall apply 4[and there shall be established, as soon as may be after th e
framing of the scheme, a fund in accordance with the provisions of this
Act and the Scheme.
05. Section 6 lays down the provisions related to the Contribution and
matters which may be provided for in Schemes. The statutory rate of
provident fund by the employ ee and the employer as prescribed in the
act is 10% of the pay/ wages of the employees.
06. Section 7 lays down the provisions related to the modification of
scheme. The Central Government may, by notification in the Official
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70 the Scheme, the Pension Scheme, or the Insurance Scheme as the case
may be. Some 7 of the act is very comprehensive and covers many
provisions.
07. Section 8 of the act lays down the provisions related to the mode of
recovery of money due from employers.
Apart from these provisions, the Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952 covers many other provisions related
to withdrawals, offenses, obligations of employers etc.
5.7 SUMMARY
 Social security legislations are essential because it is the security that
society furnishes, through appropriate organization, against certain
risks to which its members are exposed. The concept of social security
is essentially related to the higher ideals of human dign ity and social
justice. The term social security came into general use after the year
1935. In the same year, the US passed the social security act
introducing the old age pension scheme. The scheme was
administered by the Federal Government and paid f or by employers
and employees.
 The Workmen's Compensation Act is administered by the government.
The extent of the act is very comprehensive as it covers the various
types of disablement, employers liability for compensation, amount
of compensation, co mpensation to be paid when due and penalty for
default and appointment of Commissioner by the government.
 The Employees State Insurance Act, 1948 is an important act which
falls under the section of social security legislation. It came into force
from 19th April 1948. The act provides for certain cash benefits to
employees in the event of sickness, Maternity, employment injury and
medical facilities in kind. The act contains the provisions for certain
other matters having their own.
 In India, this benefit is governed by the Payment of Gratuity Act,
1972. The Payment of Gratuity Act, 1972 came into force from 16th
September 1972. The act provides for rewarding employees who have
served a long career in the organization.
 In India, the Employees’ Provident Fu nds and Miscellaneous
Provisions Act, 1952 came into effect from 1st March, 1971. The act
was further amended in 1976. The Act was passed with a view to
introducing the Employees Deposit Linked Insurance Scheme. The
Employees Deposit Linked Insurance Schem e is a measure to provide
an insurance cover to the members of the provident fund.

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71 5.8 SELF ASSESSMENT TEST
01. Discuss the important provisions of the Workmen's Compensation Act,
1923.
02. Discuss the important provisions of the Payment of Gratuity Act.
03. What a re the applications of the employer under Payment of Gratuity
Act?
04. What are the important provisions of the Employees Provident Fund
and Miscellaneous Provisions Act, 1952.
05. Explain the concept of provident fund. How are the contributions
drawn from the em ployer and employee?
06. Explain the objectives and scope of the Employees State Insurance act.
07. Important provisions of the Employees’ State Insurance Act.
08. Explain the scope and applicability of the Employees Provident Fund
and Miscellaneous Provisions Act, 1952.

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72 6
WAGE LEGISLATION’S
Unit Structure :
6.1 Objectives
6.2 Payment of Wages Act, 1936
6.3 Minimum Wages Act, 1948
6.4 Summary
6.5 Self-Assessment Test
6.1 OBJECTIVES
01. Understand the nature and relevance of few acts
02. Importance of this laws to society and people in general
03. Changin g dynamics of these laws
04. Concept of these Acts in detail
05. Relevance of Payment of Wages Act, 1936
06. Understanding of Minimum Wages Act, 1948
6.2 PAYMENT OF WAGES ACT, 1936
6.2.1 OVERVIEW
The Payment of Wages Act is a central government act. The act was
passed to regulate the payment of wages of certain classes of [employed
persons]. Whereas it is expedient to regulate the payment of wages to
certain classes of [employed persons]. This act regulates the issues related
to the time limit within which wages shall be paid/distributed to
employees. This act also states that no deductions other than those
authorized by the law are made by the employers. The payment of wages
is ensured through this act in a particular and at regular intervals without
any unauthorized d eductions.
6.2.2 Objectives
01. To regulate the payment of wages to certain classes of persons
employed in industry in a particular form.
02. To regulate the payment at regular intervals.
03. To prevent unauthorized deductions from the wages. munotes.in

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73 04. To regulate the issue s related to the time limit within which wages
shall be paid to employees.
6.2.3 Scope and Applicability of the Act
01. This Act may be called the Payment of Wages Act, 1936.
02. It extends to the whole of India 3[***].Omitted by the Act]
03. It shall come into force on such date 4as the Central Government may,
by notification in the Official Gazette, appoint.
04. It applies in the first instance to the payment of wages to persons
employed in any [factory, to persons] employed (otherwise than in a
factory) upon any railw ay by a railway administration or, either
directly or through a subcontractor, by a person fulfilling a contract
with a railway administration, [and to persons employed in an
industrial or other establishment specified in subclauses (a) to (g) of
clause (i i) of Section 2].
05. The [Appropriate Government] may, after giving three months' notice
of its intention of so doing, by notification in the Official Gazette,
extend the provisions of [this Act or any of them to the payment of
wages to any class of persons employed in [any establishment or class
of establishments specified by the Central Government or a State
Government under sub -clause (h) of clause (ii) of section 2.] [Provided
that in relation to any such establishment owned by the Central
Government, no such notification shall be issued except with the
concurrence of that Government.]
06. This Act applies to wages payable to an employed person in respect of
a wages period is such wages for that wage period do not exceed [ten
thousand rupees per month] or suc h other higher sum which, on the
basis of figures of the Consumer Expenditure Survey published by the
National Sample Survey Organisation, the Central Government may,
after every five years, by notification in the Official Gazette, specify.]
6.2.4 Importan t Provisions of the Act
01. Section 3 deals with the responsibility for the payment of wages.
Every employer shall be responsible for the payment of all wages
required to be paid under this Act to persons employed by him and in
case of persons employed, —
a. in factories, if a person has been named as the manager of the
factory under clause (f) of sub -section (1) of section 7 of the
Factories Act, 1948 (63 of 1948);
b. in industrial or other establishments, if there is a person
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74 c. upon railways (other than in factories), if the employer is the
railway administration and the railway administration has
nominated a person in this behalf for the local area concerned;
d. in the c ase of contractor, a person designated by such
contractor who is directly under his charge; and
e. in any other case, a person designated by the employer as a
person responsible for complying with the provisions of the
Act; the person so named, the person res ponsible to the
employer, the person so nominated or the person so designated,
as the case may be, shall be responsible for such payment.
Notwithstanding anything contained in sub -section (1), it shall be the
responsibility of the employer to make payment of all wages required to
be made under this Act in case the contractor or the person designated by
the employer fails to make such payment.]
02. Section 4 of the Act deals with the fixation of wage period. It is
obligatory under Section 4, on every person resp onsible for the
payment of wages under Section 3, to fix periods in respect of which
such wages shall be payable. No wage period shall exceed one month.
03. Section 5 of the Act deals with the Time of Payment of Wages. The
wages of every person employed upon or in -
(a) any railway, factory or [industrial or other establishment] upon or in
which less than one thousand persons are employed, shall be paid
before the expiry of the seventh day.
(b) any other railway, factory or 1[industrial or other establishment, shall
be paid before the expiry of the tenth day, after the last day of the
wage -period in respect of which the wages are payable:
04. Section 6 deals with the provisions of Medium of Payment of Wages.
Wages to be paid in current coin or currency notes. - All wages shall be
paid in current coin or currency notes or in both: Provided that the
employer may, after obtaining the written authorisation of the
employed person, pay him the wages either by cheque or by crediting
the wages in his bank account.
05. Section 7 to Sec tion 13 deals with the provisions related to the
Deductions part. Deductions from the wages of an employed person
shall be made in accordance with the provisions of this Act.
06. Section 8 deals with the provisions related to Fines.
(1) No fine shall be imposed o n any employed person save in respect of
such acts and omissions on his part as the employer with the previous
approval of 1[the appropriate Government] or of the prescribed
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75 (2) A notice specifyin g such acts and omissions shall be exhibited in the
prescribed manner on the premises in which the employment is carried
on or in the case of persons employed upon a railway (otherwise than
in a factory), at the prescribed place or places.
(3) No fine shall b e imposed on any employed person until he has been
given an opportunity of showing cause against the fine, or otherwise
than in accordance with such procedure as may be prescribed for the
imposition of fines.
(4) The total amount of fine which may be imposed in any one wage -
period on any employed person shall not exceed an amount equal to
2[three per cent] of the wages payable to him in respect of that wage -
period.
(5) No fine shall be imposed on any employed person who is under the
age of fifteen years.
(6) No fin e imposed on any employed person shall be recovered from him
by installments or after the expiry of 3[ninety days] from the day on
which it was imposed.
(7) Every fine shall be deemed to have been imposed on the day of the act
or omission in respect of which it was imposed.
(8) All fines and all realizations thereof shall be recorded in a register to
be kept by the person responsible for the payment of wages under
Section 3 in such form as may be prescribed; and all such realizations
shall be applied only to such purposes beneficial to the persons
employed in the factory or establishment as approved by the
prescribed authority.
Explanation. - When the persons employed upon or in any railway, factory
or [industrial or other establishment] are part only of a staff e mployed
under the same management, all such realizations may be credited to a
common fund maintained for the staff as a whole, provided that the fund
shall be applied only to such purposes as are approved by the prescribed
authority.
07. Section 9 deals with t he provisions related to the Deductions for
absence from duty. Where any employed person remains absent from
duty, deductions from wages on account of such absence are
authorized. The amount of deduction shall be proportionate to the
period of absence.
08. Section 10 deals with the provisions of deductions for damage or loss.
(1) A deduction under clause (c) or clause (o) of sub -section (2) of Section
7 shall not exceed the amount of the damage or loss caused to the
employer by the neglect or default of the empl oyed person. (1 -A) A
deduction shall not be made under clause (c) or clause (m) or clause
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76 (2) of Section 7 until the employed person has been given an opportunity
of showing cause against the deduction, or otherwise than in
accordance with such procedure as may be prescribed for the making
of such deductions.] (2) All such deductions and all realizations
thereof shall be recorded in a register to be kept by the person
responsible for the payment of wages under Section 3 in such form as
may be prescribed.
09. Section 11 of the Act deals with the deductions for the services
rendered. A deduction under clause (d) or clause (e) of sub -section (2)
of Section 7 shall not be made from the wages of an employed person,
unless the house -accom modation amenity of service has been accepted
by him, as a term of employment or otherwise, and such deduction
shall not exceed an amount equivalent to the value of the house -
accommodation amenity or service supplied and, in the case of a
deduction under t he said clause (e) shall be subject to such conditions
as 3[****] [the appropriate Government] may impose.
10. Section 12 deals with the provisions related to deductions for recovery
of advances. Section 12A deals with the provisions related to
deductions for recovery of loans.
11. Section 13 deals with the provisions related to deductions for
payments to co -operative societies and insurance schemes.
12. Section 14 deals with the provisions related to Maintenance of
Registers and Records.
13. Section 15 provides for the appointment of a person to be the authority
to hear and decide, for any specified area, claims arising out of
deductions from wages or delay in payment of wages.
6.3 MINIMUM WAGES ACT, 1948
6.3.1 OVERVIEW
The Minimum Wages Act was passed in 1948. The act enables the Central
and the State Government to fix minimum wages paid to the workers.
Exploitation of labor by giving them minimum wages was a common
problem of that time. The wages paid to the workers were inadequate in
the light of the general level of wages. The reasons were unorganized form
of labor, lack of trade unions and the absence of machinery for the
regulation of wages.
The act was passed with a view to provide for fixing minimum rates of
wages in certain occupations. Whereas it is expedient t o provide for fixing
minimum rates of wages in certain employments; The act extends the
concept of social justice The workmen employed in certain scheduled
employment. Further, the advocates statutorily provide the minimum
rates of wages for workers.
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77 6.3.2 OBJECTIVES OF THE ACT
01. To provide the minimum wages to the workers working in the
organized sector.
02. To protect the workers from exploitation.
03. To provide for fixing minimum rates of wages in certain occupations.
04. To provide for the appointment of an adviso ry committee and advisory
board.
05. To empower the government to take steps for fixing minimum wages
and to revise these pages within a period of five years.
6.3.3 SCOPE AND APPLICABILITY OF THE ACT
01. This Act may be called the Minimum Wages Act, 1948.
02. The act extends to the whole of India.
03. The act is administered by both the Central Government and the State
Government.
6.3.4 IMPORTANT DEFINITIONS
In this Act, unless there is anything repugnant in the subject or context, -
(a) "adolescent" means a person who has c ompleted his fourteenth year of
age but has not completed his eighteenth year;
(aa) "adult" means a person who has completed his eighteenth year of age
(b) "appropriate Government" means, -
(i) in relation to any scheduled employment carried on by or under the
authority of the [3] [Central Government, or a railway administration],
or in relation to a mine, oilfield or major port, or any corporation
established by [4] [a Central Act], the Central Government, and
(ii) in relation to any other scheduled employment, the St ate
Government;
(bb) "child" means a person who has not completed his fourteenth year of
age;
(c) "competent authority" means the authority appointed by the
appropriate Government by notification in its Official Gazette to
ascertain from time to time the cost of living index number applicable
to the employees employed in the scheduled employments specified in
such notification;
(d) cost of living index number", in relation to employees in any
scheduled employment in respect of which minimum rates of wages
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78 the competent authority by notification in the Official Gazette to be the
cost of living index number applicable to employees in such
employment;
(e) "employer" means any person who employs, whether directly or
through another person, or whether on behalf of himself or any other
person, one or more employees in any scheduled employment in
respect of which minimum rates of wages have been fixed under this
Act, and includes, except in subsection (3) of section 26, -
(i) in a factory where there is carried on any scheduled employment in
respect of which minimum rates of wages have been fixed under this
Act, any person named under [6] [clause (f) of sub -section (1) of
section 7 of the Factories Act, 1948 (63 of 1948)], as manager of the
factory;
(ii) in any scheduled employment under the control of any Government in
India in respect of which minimum rates of wages have been fixed
under this Act, the person or authority appointed by such Government
for the supervis ion and control of employees or where no person or
authority is so appointed, the head of the department;
(iii)in any scheduled employment under any local authority in respect of
which minimum rates of wages have been fixed under this Act, the
person appointed by such authority for the supervision and control of
employees or where no person is so appointed, the chief executive
officer of the local authority;
(iv) in any other case where there is carried on any scheduled employment
in respect of which minimum rates of wages have been fixed under
this Act, any person responsible to the owner for the supervision and
control of the employees or for the payment of wages;
(f) “prescribed” means prescribed by rules made under this Act;
(g) “scheduled employment” means an employmen t specified in the
schedule, or any process or branch of work forming part of such
employment;
(h) “wages” means all remuneration, capable of being expressed in terms
of money which would if the terms of the contract of employment
express or implied, were fulf illed, be payable to a person employed in
respect of his employment or of work done in such employment 2[ and
includes house rent allowance] but does not include -
(i) the value of -
(a) any house -accommodation, supply of light, water, medical attendance;
or
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79 (ii) any contribution paid by the employer to any Pension Fund or
Provident Fund or under any scheme of social insurance;
(iii) any traveling allowance or the value of any traveling concession;

(iv) any sum paid to the person employed to defray special expenses
entailed on him by the nature of his employment; or
(v) any gratuity payable on discharge.
(vi) “employee” means any person who is employed for hire or reward to
do any work skilled or unskil led, manual or clerical, in a scheduled
employment in respect of which minimum rates of wages have been fixed;
and includes an out worker to whom any articles or materials are given out
by another person, to be made up, cleaned, washed, altered, ornamented ,
finished, repaired, adapted or otherwise processed for sale for the purposes
of the trade or business of that other person where the process is to be
carried out either in the home of the out -worker or in some other premises
not being premises under the control and management of that other
person; and also includes an employee declared to be an employee by the
appropriate Government; but does not include any member of the Armed
Forces of the 1[Union].
6.3.5 IMPORTANT PROVISIONS OF THE ACT
Fixing of Minim um Rates of Wages [Section 3]
The section 3 of the act empowers appropriate governments to fix the
minimum rate of wages payable to the employees employed in an
employment specified in part I or part II of the schedule. The appropriate
government May revie w and revise the minimum rates at an interval not
exceeding five years.
The appropriate government may fix:
1. The minimum rate of wages for time work,
2. the minimum rate of wage for piece work,
3. a minimum rate of remuneration to apply in the case of employees
employed on piece work for the purpose of securing to such
employees a minimum rate of wages on a time work basis,
4. a minimum rate of wage to substitute the for the minimum rate which
would otherwise be applicable, in respect of overtime work done by
employe es.
In fixing or revising minimum wages under Section 3 of the Act:
1. Different minimum rates of wages may be fixed for; different classes
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80 2. Minimum wages may be fixed by the wage period such as; by the
hour, by the day, etc.
Minimum Rate of Wages [Section 4]
Section 4 of the act states that the Appropriate Government while fixing
the minimum wages must consider -
01. A basic rate of wages and a special allowance must be adj usted at
necessary intervals by the appropriate government to match the cost of
living of the employees.
02. Basic rate of wages with or without cost of living allowances and the
cash value of the concessions in respect of suppliers of essential
commodities a t concession rates, where so authorized; or
03. An all inclusive rate allowing for the basic rate the cost of living
allowance and the cash value of the concessions, if any
Procedure for Fixing Minimum Wages [Section 5]
In respect of any scheduled employment f or the first time under this act
revising minimum rates of wages, the Appropriate Government may
establish as many committees and subcommittees necessary to hold
enquiries in matters regarding fixing and revision of minimum wage.
By notification in the Of ficial gadget, the appropriate government
publishes proposals for the information of the individual who are likely to
be affected by such information and thereby specify the date which must
not be less than two months from the date of notification of the proposals
that will be taken into consideration.
Advisory Board [Section 7]
Appropriate government shall appoint an advisory board for coordinating
the work of the committees and subcommittees mentioned in Section 5
and also for advising the appropriate go vernment generally in the matter
of fixing and revising minimum rates of wages.
Central Advisory Committee [Section 8]
The Central Government shall appoint a Central Advisory Board on the
matters of fixation and revision of minimum rates of wages of the
employees. The Central Advisory Board may advise the Central and State
government in the matters of the fixation and revision of minimum rates of
wages and other matters under this act. The committee also works to
coordinate the work of the advisory board.
Wages in Kind [Section 11]
The wages will be payable to the employees.
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81 2. The appropriate government under necessary circumstances by
notification to the Official Gazette authorizes the payment of the
minim um wages either wholly or partly in kind.
3. The appropriate government by notification to the Official Gazette
authorized a provision for the supply of essential commodities at
concession rates.
4. The cash value of wages and the concession rates shall be autho rized
in the prescribed manner stated under the Act.
Payment of Minimum Rate of Wages [Section12]
Without any authorized deduction, the employer shall pay every wage at a
rate not less than the minimum rates of wages fixed by the authority.
Fixing Hours fo r Normal Working Days [Section 13]
Section 13 of the act covers the provisions for fixing hours for normal
working days. The appropriate government may -
1. Fix the working hours of a normal day including one or more specified
intervals.
2. Provide a day of rest in every period of seven days to all the
employees or a class of employees, and adequate remuneration must
be provided to the employees during the day of rest.
3. Provide payment to the employees on the day rest which shall not be
less than the overtime rate .
Overtime [Section 14]
When an employee works more than the specified number of hours
constituting a normal working day, the employer shall be liable to pay him
for every hour or part of the hour at the overtime rate fixed under this Act
or under any law of the appropriate government for the time being in
force.
Apart from the above important provisions of the act, Section 22 states the
penalties for certain offenses. an employer who fails to provide minimum
rates of wages to the employees or contravenes any rule or order made
under Section 13 of the Act shall be punished with imprisonment for a
term which may extend to six months or fine not less than five hundred
rupees or both.
6.4 SUMMARY
 The Payment of Wages Act is a central government act. The act w as
passed to regulate the payment of wages of certain classes of
1[employed persons]. Whereas it is expedient to regulate the payment
of wages to certain classes of [employed persons]. This act regulates
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82 paid/distributed to employees. This act also states that no deductions
other than those authorized by the law are made by the employers.
 This act also states that no deductions other than those authorized by
the law are made by the employers. The payment of wages is ensured
through this act in a particular and at regular intervals without any
unauthorized deductions.
 The Minimum Wages Act was passed in 1948. The act enables the
Central and the State Government to fix minimum wages paid to the
workers. Exploitation of labor by giving them minimum wages was a
common problem of that time. The wages paid to the workers were
inadequate in the light of the general level of wages. The reasons were
unorganized form of labor, lack of trade unions and t he absence of
machinery for the regulation of wages.
 The act was passed with a view to provide for fixing minimum rates of
wages in certain occupations. Whereas it is expedient to provide for
fixing minimum rates of wages in certain employments; The act
extends the concept of social justice The workmen employed in certain
scheduled employment. Further, the advocates statutorily provide the
minimum rates of wages for workers.
6.5 SELF -ASSESSMENT TEST
01. Explain the important features of payment of wages act
02. Give a brief account of important provisions of payment of wages act
03. What is the object of payment of wages act? What are the applications
of an employer under Payment of wages act
04. What is the object of the Minimum Wages Act?
05. Discuss the important provisi ons under the Minimum Wages Act.








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83 7
OVERVIEW OF FEW LAWS
Unit Structure :
7.1 Objectives
7.2 Maternity Benefit Act, 1961
7.3 The Apprentice Act, 1961
7.4 Employment Exchange Act, 1951
7.5 Payment of Bonus Act, 1965
7.6 Summar y
7.7 Self Assessment Test
7.1 OBJECTIVES
After studying this module, you should be able to :
01. Understand the nature and relevance of few acts
02. Importance of this laws to society and people in general
03. Changing dynamics of these laws
04. Concept of these Acts in detail
05. Importance of these acts in management
06. Understand the various Labor Laws
7.2 MATERNITY BENEFIT ACT, 1961
7.2.1 Overview
The Act regulates employment of women in certain establishments for a
certain period before and after childbirth and provides for maternity and
other benefits. The Act applies to mines, factories, circus, industr y,
plantation and shops and establishments employing ten or more persons,
except employees covered under the Employees State Insurance act, 194 7.
It can be extended to other establishments by the state governments. There
is no wage limit for coverage under the Act. The Central Government is an
Appropriate Government in respect of the Circus Industry and Mines.
The motive is to facilitate the women with a benefit to take care of her and
her child. Along with leave from employment, there are other benefits
which this act facilitates to women before, during and after the birth of her
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84 7.2.2 Objectives of the Act
The object of the act is -
01. To provide maternity benefits to women workers in certain
establishments.
02. To regulate the employment of women worker s in such establishments
for certain periods before and after childbirth.
03. To regulate women employment during maternity or childbirth.
04. To provide maternity leave and benefits to working women.
05. To protect the dignity of motherhood.
7.2.3 Applicability and Scope of the Act
Under the scope of Section 2(1)(a), the Act applies to all establishments
including:
● factories,
● plantations,
● mines,
● shops or establishments covered under the ambit of law having 10 or
more than 10 employees. (As provided by the 2017 amendm ent) This
includes the private sector as well.
7.2.4 Important Provisions of the Act
Section 4: Prohibition of employment of women during certain
periods – No employer shall allow the women to work during 6 weeks
after the delivery or miscarriage, the work given to the pregnant women
should not be ardent or requiring long standing hours.
Section 5: Right to payment of maternity benefit – Every woman is
entitled to claim and every employer is liable to pay maternity benefit at
the rate of average daily wage s for the period of her actual absence
(provided the woman has worked for more than 160 days in the 12 months
preceding the expected delivery date). The maximum period of 12 weeks
leave is provided to the women entitled to maternity benefit. (6 weeks
befor e delivery and 6 weeks after delivery)
Section 6: Notice of claim of maternity benefit – For claiming the
maternity benefit, the woman shall give it in writing to the employer at a
date 6 months prior to her expected delivery. The employer shall permit
her leave on this ground.
Section 7: Payment of maternity benefit in case of death of a woman –
On the woman’s death, the employer shall be liable to pay the maternity
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85 Section 8: Payment of Medical B onus – Every woman is entitled to
receive from her employer a medical bonus.
Section 9: Leave for Miscarriage – The employer shall provide a leave
with wages at a rate of maternity benefit for a period of 6 weeks
immediately after her miscarriage.
Section 10: Leave for illness arising out of pregnancy, delivery,
premature childbirth or miscarriage – In such a case, the woman may
be allowed an additional leave of 1 month with wages on presenting
proofs.
Section 11: Nursing Breaks – The employer shall allow 2 nursing leave
and required rest periods after such delivery upto the time the child attains
15 months of age.
Section 12: Dismissal during Absence or pregnancy – It shall be
unlawful if the employer dismisses or discharges her from work on
account of abse nce according to the provisions of this act.
Section 13 - No deduction of wages in certain cases - No deduction from
the normal and usual daily wages of a woman entitled to maternity benefit
under the provisions of this Act shall be made by reason only of —
(a) the nature of work assigned to her by virtue of the provisions contained
in sub -section (3) of section 4; or
(b)breaks for nursing the child a llowed to her under the provisions of
section 11.
Section 14: Appointment of Inspectors – The Central government has
the power to appoint the inspectors by notification to the Official Gazette
and define their limits of work.
Section 15: Powers and Duties of Inspectors – Inspectors can enter into
the premises of the industries where women are employed, ask for copies
of registers , notices, etc, inspect them, and investigate the persons
involved in the work.
7.3 THE APPRENTICES ACT, 1961
7.3.1 Overview
The Apprentices Act, 1961 was enacted with the objective of utilizing the
facilities available in industries to impart practical training among
employees. In institutions, the training and development skills are not
sufficient. To acknowledge the needs of trai ning at the workplace, this act
was passed in 1961.
With addition to this, Apprenticeship Rules were enacted in 1962 to
provide more scope to this act. In starting, the act covered apprenticeship
training for the trade Apprentices. But, amendments were in corporated in
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86 (Vocational) and Optional Trade Apprentices respectively under its
purview and Apprenticeship Rules, 1992 were revised in the year 2015.
7.3.2 Objectives of the Act
The object ives of the Act are -
01. To regulate and promote the programme of training of
apprentices in the industry; and
02. To utilize the facilities available in industry for imparting practical
training with a view to meeting the requirements of ski lled
manpower for industry.
03. To provide training to qualified workforce in various trades and
promote new skilled manpower.
04. To act as a connector between potential employees and the employer.
05. To provide for the regulation and control of training of apprenti ces and
for matters connected therewith
7.3.3 Scope and Applicability of the Act
01. This Act may be called The Apprentices Act, 1961.
02. It extends to the whole of India [* * *].
03. It shall come into force on such date as the Central Government may,
by notificati on in the Official Gazette, appoint; and different dates may
be appointed for different States.
04. The provisions of this Act shall not apply to -
(a) any area or to any industry in any area unless the Central Government
by notification in the Official Gazette spe cifies that area or industry as
an area or industry to which the said provisions shall apply with effect
from such date as may be mentioned in the notification;[* * *] clause
(b) is omitted by Section 27 of 1973.
(c) any such special apprenticeship scheme for imp arting training to
apprentices as may be notified by the Central Government in the
Official Gazette.]
7.3.4 Important Provisions of the Act
Section 3 Qualifications for being engaged as an apprentice. [3 -
A.Reservation of training places for the Scheduled Castes and the
Scheduled Tribes in designated trades. [3 -B.Reservation of training places
for Other Backward Classes in designated trades].
Section 4 deals with the contract of Apprenticeship.
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87 Section 5 deals with novation of contracts of apprenticeship. Section 5A
deals with regulation of optional trade and Section 5B deals with
engagement of apprentices from other States.
Section 6 deals with the Period of apprenticeship training.
Section 7 deals with the Termination of apprenticeship contract.
Section 8 Number of apprentices for a designated trade and optional trade.
Section 9 deals with the practical and basic training of apprentices.
Section 10 deals with the related instruction of apprentices.
Section 11 deals with the obligation of employers.
Section 12 deals with the obligations of apprentices
Section 13 deals with the payment to apprentices.
Section 14 deals with the health, safety and welfare of apprentices.
Section 15 deals with the hours of work, overtime, leave and holidays.
Section 16 deals with the Employer's liability for compensation for injury
in case of any accident or injury.
Section 17 deals with conduct and discipline.
Section 18 deals with the matter of whether apprentices are trainees and
not workers.
Section 19 deals with the reco rds and returns maintained by the employer,
Section 20 deals with the settlement of disputes under this act.
Section 21 deals with the holding of test and grant of certificate and
conclusion of training
7.4 THE EMPLOYMENT EXCHANGE ACT, 1959
7.4.1 Overvie w
The Act was enacted in 1959. It came into force from 1st May, 1960. The
main aim of the act is to provide for compulsory notification of vacancies
to the employment exchanges. The Employment Exchange Act, 1959 was
passed with a view to collect and furnis h information on the prospective
employers, available vacancies and job seekers, thereby facilitating job
seekers to find a suitable job and for industry to find the suitable
manpower.


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88 7.4.2 Objectives of the Act
The following are the objectives of the act -
01. To provide for compulsory notification of vacancies to the
employment exchanges.
02. To collect and furnish information on the prospective employers,
available vacancies to the job seekers.
03. To facilitate the process of registration of job seekers.
7.4.3 Scope and Applicability of the Act
(1) The Act may be called the Employment Exchanges (Compulsory
Notification of Vacancies) Act of 1959.
(2) It extends to the whole of India except the State of Jammu and
Kashmir.
(3) This Act is applicable to the establishments i n the Public Sector.
(4) Such establishments in the private Sector excluding Agriculture,
where ordinarily 25 or more persons are employed come within the
purview of the Act.
7.4.4 Important Provisions of this Act (From Bare Act Live)
(1) Vacancies required to be notified to the local Employment Exchange,
shall be notified at least [fifteen days] before the date on which
applicants will be interviewed or tested where interviews or tests are
held, or the date on which vacancies are intended to be filled, if no
interviews or tests are held.
(2) Vacancies required to be notified to the Central Employment
Exchange shall be notified, giving at least 60 days, time to the Central
Employment Exchange from the date of receipt of the notification to
the date of despatch of partic ulars or applications of the prospective
candidates for purpose of appointment or taking interview or test
against the vacancies notified.]
(3) An employer shall furnish to the concerned Employment Exchange the
results of selection within 15 days from the date of selection.]
(4) An Employer shall furnish to the Local Employment Exchange
[quarterly returns in Form ERI and biennial returns in Form ERII].
Quarterly returns shall be furnished within thirty days of the due dates,
namely, 31st March, 30th June, 30th Sept ember and 31st December.
Biennial returns shall be furnished within thirty days of the due date as
notified in the Official Gazette.
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89 (5) The Director is hereby prescribed as the officer who shall exercise the
rights referred to in section 6, or authorize any person in writing to
exercise those rights.
(6) [The Director of Employment of the State in which the establishment
is located is hereby prescribed as the officer who may institute or
sanction the institution of prosecution for an offense under the Act, or
authorize any person in writing to institute or sanction the institution
of such prosecution.]
7.5 PAYMENT OF BONUS ACT, 1965
7.5.1 Overview
The Payment of Bonus Act was passed in 1965. The act was passed to
regulate the amount of bonus to be paid to the pers ons employed in
establishments. The amount of bonus is calculated on the basis of
employee’s salary and profit of the establishments. The productivity of the
employees largely depends on this factor. The term ‘Bonus’ means
something given in addition to sa lary. The Payment of Bonus
(Amendment) Bill, 2015 was introduced in Lok Sabha on December 7,
2015. The bill seeks to amend the Payment of Bonus Act, 1965.
7.5.2 Objectives of the Act
01. To provide for the payment of bonus to the person employed in certain
establishments on the basis of profit or productivity.
02. To regulate the amount of bonus to be paid,
03. To prescribe the minimum and maximum percentage of calculating
bonus.
04. To share the prosperity of the establishment in terms of profit.
7.5.3 Scope and Applica bility of the Act
01. This act extends to the whole of India.
02. This act is applicable to every factory and every establishment in
which twenty or more persons are employed on any day during an
accounting period.
03. The act has laid down a detailed procedure for calculating the amount
of bonus payable to employees.
7.5.4 Important Provisions of this Act
01. Section 4 deals with the computation of Gross profit derived by an
employer from an establishm ent in respect of any accounting year.
02. Section 5 deals with the pr ovisions related to computation of available
surplus in respect of any accounting year.
03. Section 6 deals with the deduction part from the gross profit. Any
amount by way of depreciation, development rebate, investment
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90 04. Subject to the provisions of Section 7 and direct tax, the employer is
liable to pay for the accounting year in respect of his income, profits
and gains during that year.
05. Section 8 deals with the provisions related to eligibility of bonus. A
person is entitled to get the bonus if he/she has worked in the
establishment for less than thirty working days in that year.
06. Section 9 deals with the provisions related to disqualification of an
employee for bonus. If a person due to fraud, riotous or violent
behavior, theft, misappropriation or sabotage of any property is
dismissed from service is disqualified to receive bonus.
07. Section 10 deals with the minimum amount of bonus to be paid to the
eligible person.
08. Sectio n 11 deals with the maximum amount of bonus to be paid to the
eligible person.
09. Section 15 deals with the set -on and set -off of allocable surplus.
10. Section 19 deals with the provisions of time limit for the payment of
bonus. The bonus shall be paid within a period of 8 months from the
close of the accounting year.
7.6 SUMMARY
 The Maternity Benefit Act, 1961 Act regulates employment of women
in certain establishments for a certain period before and after childbirth
and provides for maternity and other bene fits. The Act applies to
mines, factories, circus, industry, plantation and shops and
establishments employing ten or more persons, except employees
covered under the Employees State Insurance act, 194 7.
 The Apprentices Act, 1961 was enacted with the objec tive of utilizing
the facilities available in industries to impart practical training among
employees. In institutions, the training and development skills are not
sufficient. To acknowledge the needs of training at the workplace, this
act was passed in 19 61.
 The Employment Exchange Act, 1959 was passed with a view to
collect and furnish information on the prospective employers,
available vacancies and job seekers, thereby facilitating job seekers to
find a suitable job and for industry to find the suitabl e manpower.
 The Payment of Bonus Act was passed in 1965. The act was passed to
regulate the amount of bonus to be paid to the persons employed in
establishments. The amount of bonus is calculated on the basis of
employee’s salary and profit of the establi shments. The productivity of
the employees largely depends on this factor.


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91 7.7 SELF ASSESSMENT TEST
01. Explain the important objectives of the Maternity Benefit Act, 1961.
02. Give a brief account of important provisions of the Apprenticeship
Act.
03. What are the important provisions under the Payment of Bonus Act,
1965.
04. Who is eligible to get a bonus?
05. Discuss the important provisions of the Employment Exchange Act.



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92 8
INTERNAL ASSESSMENT OF
ALTERNATE DISPUTE RESOLUTION
Unit Structure :
8.1 Objectives
8.2 Overview
8.3 Alternate Dispute Resolution
8.4 Types of Alternate Dispute Resolution
8.5 Summary
8.6 Self Assessment Questions
8.1 OBJECTIVES
After studying this module, you should be able to :
 Understand the types of Alternative Dispute Resolution.
 Know the process of Alternate Dispute Resolution.
 Relevance of Alternate Dispute Resolution.
 Mechanism and how it works in solving industrial disputes.
8.2 OVERVIEW
The history of industrial relati ons dates back to old times. The origin lies
in the employer -employee relationships. The main essence of industrial
relations is employer -employee relationships. The relation between
employer and employees plays an important role in maintaining industrial
peace. The employees were largely dependent on wages as they were not
having any ownership of the means of production, instruments and
materials. Those who had means of production instruments and materials
became the employers and the rest became employe es.
The main objectives behind the concept of industrial relations is to
establish and maintain industrial peace along with safeguarding the
interests of both workers and management. It helps to avoid industrial
disputes. Good industrial relations raise th e production capacity. It also
contributes to improving the morale and motivation of employees. With
the help of good industrial relations, the labor turnover rate and
absenteeism can be minimized. It also minimizes the chances of strikes,
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93 The conflict between labor and management is bound to arise in a
developing economy like India because of their diverse portfolios and
interests. To maintain the Industrial Relations, it is important that the
industrial conflict should be managed at the e arly stages. The industrial
dispute or conflict may take various forms. it is considered dangerous if it
is not resolved or managed at the early stages.
Industrial unrest arises from frustration and discontent with workers and
Management. Strike is one of the dramatic manifestations of the
employee unrest while Lockout is considered as the weapon of employer
used against employees. The expression of the unrest is determined by a
complex mechanism of economic, social, political and psychological
factors. Industrial disputes constitute one of the most delicate and complex
problems of modern Industrial society. The model Industrial society is
characterized by Rapid change, personal conflicts and different
ideologies.
There are a number of reasons which co ntribute to industrial unrest. The
issues like -
 Bonus
 Wage demands
 Existence of multiple unions
 Political interference
 Over and outdated laws
 Lack of central legislation
 Sickness
 Lack of communication between employers and employees
 Unfair labor practices
The major cause of industrial unrest is monetary in nature. Filing
everything at the court and solving every dispute through the intervention
of court is not a solution to the problems of industrial dispute. There are
various mechanisms to solve the indus trial disputes to maintain industrial
peace and harmony.
The alternate methods through which the disputes can be resolved are
known alternate dispute resolution. In the next section, we will understand
the concept and types of alternative dispute resolutio n.


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94 8.3 ALTERNATE DISPUTE RESOLUTION
8.3.1 INTRODUCTION
The prompt and equitable settlement of industrial disputes is an important
basis for sound industrial relations. It is essential that the appropriate
dispute settlement machinery exist to facilitate su ch settlement. It has been
widely recognised that the best way of preventing and resolving industrial
disputes is through strengthening the relation between syllabus and
Management.
However, lack of communication can bring the unavoidable situation in
any industry. The absence of effective dispute settlement mechanisms can
result in widespread industrial disputes with adverse effects on labor
management relations. The industrial conflict can also affect the process
of collective bargaining. India is alrea dy facing a problem of a large
backlog of industrial disputes before labor courts and tribunals.
There are a large number of pending cases which are creating a challenge
for maintaining industrial peace and Social Justice. It is important to
stress out th e need to identify the ways and means to increase the
effectiveness and efficiency of adjudication. In order to be meaningful,
the settlement of these disputes should be on time. This thing can be
achieved with the help of alternative dispute resolution.
8.3.2 MEANING
Alternative dispute resolution is a method of resolving disputes. The
alternative dispute resolution method refers to the methods through which
the disputes are resolved without taking the matter to the court. In other
words, it refers to a range of dispute settlement methods which help the
parties in the dispute to come to a settlement without going to court, or
without litigating the said matter.
The alternative dispute resolution method usually involves a third party,
who helps them in se ttling the disputes. The process of alternative dispute
resolution is inexpensive and time saving. The process is free from
technicalities. The parties are free to differ in their opinion and can discuss
their opinions with each other. The processes invol ved in alternative
dispute resolution are decision making processes.
The system of alternative dispute resolution involves the cooperation of
both the parties - employers and employees. The alternative dispute
resolution often results in -
 Dispute resolut ion
 Creative solutions
 Sustainable Outcomes
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95 In our country, there are mainly two types of machinery. The first
machinery deals with the direct settlement of industrial disputes and the
second machinery deals wi th the involvement of third parties.
8.4 METHODS OF RESOLVING INDUSTRIAL
DISPUTES THROUGH ALTERNATE DISPUTE
RESOLUTION
There are various methods to resolve industrial disputes through
alternative dispute resolution mechanisms.
 Mediation
 Arbitration
 Conc iliation
 Negotiation
 Collective Bargaining
In India, the Post in the field of Industrial Relation cannot be solved within
the limits of a single discipline. It is important to adopt an
interdisciplinary approach to solve the disputes at industrial places. As
mentioned in previous chapters, The main objectives of the labor laws
enumerate the role of the government in protecting and safeguarding the
interest of the labor class in India. Labor laws in India cover all aspects of
labor. The distinguishing featu re of labor laws in our country is it covers
all aspects more than labor legislation in any other country.
The Central and State Government is empowered to enact laws and
regulation for the betterment of workers and employees. The Constitution
of India has empowered the Central and the State Government to take care
of and to protect the interest of the workers. The Ministry of Labor and
Employment is responsible to protect and safeguard the interest of
workers. They are also responsible for safeguarding the interest of poor,
marginal and disadvantaged sections of the society.
With the help of alternative dispute resolution machinery, the disputes out
of the court or without the help of the court can be solved. We will see the
details of each and every machi nery in the following part of this chapter.
8.4.1 MEDIATION
In the process of mediation, the ‘Mediator’ is a person who is considered
as a third party. In mediation, an impartial person assists the parties in the
negotiation of their differences. The proce dure of mediation is non -
binding. Mediation leaves the decision power strictly with the parties as
the decisions are non -binding.
The process of mediation is confidential in nature. The parties cannot be
compelled to disclose information. Mediation is a p rocess available to the
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96 in to help them reach a settlement. The third party tries to move the parties
towards agreement by maintaining communication and suggesting
alternative sol utions to issues.
The mediation process generates significant advantages to the parties as
the procedure is confidential in nature and the decision given by the third
party is non -binding. Mediator is a person who is brought in by the union
and management to resolve the disputes between them without the
intervention of the court.
The mediator must possess some qualities to solve the problems of the
parties. A mediator will act as a third party and must have thorough
knowledge about the dispute between the parties. He/she must be an
effective communicator. He/she must have gained the confidence of both
the parties. The following attributes are expected from a mediator -
 Integrity
 Honesty
 Impartialness
 Fairness
 Good communication skills
 Positive attitude
Medi ation begins with the joint sessions between the parties. The issues
are discussed and an agenda is set to ascertain the position of the parties.
The parties are engaged in a dialogue to solve the dispute to come to an
agreement. Mediation often results in a settlement that creates more value
than would have been created if the underlying dispute had not occurred.
8.4.2 ARBITRATION
The term ‘Alternative Dispute Resolution’ any out of court processes
adopted to solve disputes. Arbitration, mediation, concili ation, and
negotiation are usually the most common methods of alternative dispute
resolution. Arbitration is one of the most famous methods of alternative
dispute resolution.
According to Section 2(1)(a ) of the Arbitration and Conciliation Act,
1996 “Arbitration means any arbitration whether or not administered by a
permanent arbitrary institution”. Arbitration and mediation both promote
the same idea but the difference is mediation decision is non -binding
while the decision passed by the Arbitrator is binding on the parties.
Arbitration is a process which comes under alternative dispute resolution.
It is a process through which the parties to a dispute come under the
procedure of solving disputes among them. The award passed by the
arbitrator is binding on the parties just like a court decree or order.
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97 agreement" means a written agreement to submit present or future
differences to arbitration, whether an arbitrator is named therein or not;
According to Section 2 (b), " award" means an arbitration award;
Outside the court system, the disputes a re resolved between the parties.
Arbitration can only take place if both parties have agreed to it. In the
process of arbitration, the parties agree to have their dispute heard by one
or more arbitrators and agree to be bound by their decision. The followi ng
are the important features of the arbitration process -
 Arbitration is consensual in nature.
 The parties in the process choose the Arbitrator/Arbitrators.
 It is neutral in nature.
 Arbitration is confidential in nature.
 The decision/award passed by the process of arbitration is final.
 Arbitration may be cheaper and quicker than litigating a dispute in
court.
 arbitration decisions are unlikely to be overturned.
 In the case of future disputes arising under a contract, the parties can
insert an arbitra tion clause in the relevant contract.
8.4.3 CONCILIATION
Conciliation is an informal process of alternate dispute resolution. In the
process of conciliation, the disputing parties resolve the ir disputes with the
aid of one or more conciliators who act in an impartial manner and aid the
parties in reaching an amicable settlement. Part III of the Arbitration and
Conciliation Act, 1996 governs the law of conciliation in India. Subject to
Part III of the Arbitration and Conciliation Act, 1996, the procedural rules
are mutually decided by the parties.
The outcomes are usually non -binding, unless a court order directs to the
contrary. The conciliator is more proactive compared to a mediator. The
conc iliator proposes solutions that are acceptable to both parties. Section 4
of the Industrial Dispute Act lays down the provisions related to the
Conciliation Officers.
Conciliation Officer
(1) The appropriate Government may, by notification in the Official
Gazette, appoint such a number of persons as it thinks fit, to be
conciliation officers, charged with the duty of mediating in and
promoting the settlement of industrial disputes.
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98 The Section 5 of the Industrial Dispute Act lays down the provisions
related to the Conciliation Officers.
(1) The appropriate Government m ay as occasion arise by notification in
the Official Gazette constitute a Board of Conciliation for promoting
the settlement of an industrial dispute.
(3) A Board shall consist of a chairman and two or four other members,
as the appropriate Government thinks fit.
(4) The chairman shall be an independent person and the other members
shall be persons appointed in equal numbers to represent the parties to
the dispute and any person appointed to represent a party shall be
appointed on the recommendation of that party : Provided that, if any
party fails to make a recommendation as aforesaid within the
prescribed time, the appropriate Government shall appoint such
persons as it thinks fit to represent that party.
(5) A Board, having the prescribed quorum, may act notwithsta nding the
absence of the chairman or any of its members or any vacancy in its
number: Provided that if the appropriate Government notifies the
Board that the services of the chairman or of any other member have
ceased to be available, the Board shall not a ct until a new chairman or
member, as the case may be, has been appointed.
8.4.4 NEGOTIATION
The history of industrial relations dates back to old times. The origin lies
in the employer -employee relationships. The main essence of industrial
relations is em ployer -employee relationships. The relation between
employer and employees plays an important role in maintaining industrial
peace. The employees were largely dependent on wages as they were not
having any ownership of the means of production, instruments and
materials.
Still, the disputes arise between parties. For maintaining peace and
harmony, many acts play a vital role in regulating the industrial relations.
The beginning of industrial societies consisted of small competitive
businesses and industrial enterprises. In the economic system, the quantity
of these establishments were large. Each unit and establishment used to
employ a small number of laborers. At that time, when the awareness and
system for labor was weak, the relationship between them was personal
and close. The relations between them were informal.
Negotiation is a term which helps to solve the disputes between the parties
without taking the help of the court. It is a kind of win -win situation for
both the parties. Negotiation is a strateg ic discussion that resolves an issue
in a way that both parties find acceptable. It is a process by which parties
settle their differences. It is a process by which compromise or agreement
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99 There are counte r proposals. Negotiations involve two or more parties
who come together to reach some end goal through compromise or
resolution that is agreeable to all those involved. Specific forms of
negotiation are used in many situations. The following stages are inv olved
in the process of negotiation.
Stage I - The stage I deals with the preparation stage.
Stage II - This stage involves the discussion between the parties.
Stage III - In this stage, the goals are clarified.
Stage IV - In this stage, both the parties tries to achieve the win -win
situation.
Stage V - In the final stage, the parties come to an agreement by keeping
their interest.
8.4.5 COLLECTIVE BARGAINING
In the writings of Sidney and Beatrice Webb, the term “Collective
Bargaining” originated. Colle ctive bargaining is a process through which
the representatives of both the management and employees participate.
The process of collective bargaining aims to establish stable relationships
between the parties involved. It helps in achieving discipline in the
industry.
Collective means united
Bargaining means negotiation
Together, its group or united negotiation.
According to the Encyclopedia of Social Sciences “Collective bargaining
is a process of discussion and negotiation between two parties, one or both
of whom a group of persons is acting in consent. The resulting bargain is
an understanding as to the terms and conditions under which a continuing
service is to be performed..... More specifically, collective bargaining is a
procedure by which employe rs and a group of employees agree upon the
conditions of work.”
Collective bargaining is a process through which the management and
employees resolve their differences. As the name suggests, there is no
intervention from a third party. Mutually and collec tively, the
management and employees discuss and negotiate. Acting in a manner
that is beneficial for both parties is the essence of collective bargaining.
To set the terms and conditions of work, to resolve disputes, the technique
of collective bargaining is used by the members of management and labor.
The process of collective bargaining takes place at different levels. The
levels vary from region to region and area to area. Healthcare services,
pensions, bonus, working conditions can be discussed through the
techniques of collective bargaining. There are various types of bargaining. munotes.in

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Labour Laws &
Implications on
Industrial Relations
100 Cooperative bargaining is one of the methods which is found suitable for
the Indian business environment.
The following are the important features of collective bargaining -
 It is a group process.
 Collective bargaining is a process through which the representatives of
both the management and employees participate.
 Negotiation forms an important aspect of collective bargaining.
 The process of collective bargaining involves a number of steps.
 It is a continuous process.
 In collective bargaining, each party needs something that the other
party has;
8.5 SUMMARY
 The major cause of industrial unrest is monetary in nature. Filing
everything at the court and solving every dispute th rough the
intervention of court is not a solution to the problems of industrial
dispute. There are various mechanisms to solve the industrial disputes
to maintain industrial peace and harmony. The alternate methods
through which the disputes can be resolve d are known alternate
dispute resolution. In the next section, we will understand the concept
and types of alternative dispute resolution.
 Alternative dispute resolution is a method of resolving disputes. The
alternative dispute resolution method refers to the methods through
which the disputes are resolved without taking the matter to the court.
In other words, it refers to a range of dispute settlement methods
which help the parties in the dispute to come to a settlement without
going to court, or withou t litigating the said matter.
 Meditation, Arbitration, Conciliation, Negotiation and Collective
Bargaining are the important methods of Alternate Dispute Resolution.
 In the process of mediation, the ‘Mediator’ is a person who is
considered as a third party . In mediation, an impartial person assists
the parties in the negotiation of their differences. The procedure of
mediation is non -binding. Mediation leaves the decision power strictly
with the parties as the decisions are non -binding.
 Arbitration is a pr ocess which comes under alternative dispute
resolution. It is a process through which the parties to a dispute come
under the procedure of solving disputes among them. The award
passed by the arbitrator is binding on the parties just like a court
decree or order.
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Internal Assessment of
Alternate Dispute Resolution
101  Conciliation is an informal process of alternate dispute resolution. In
the process of conciliation, the disputing parties resolve their disputes
with the aid of one or more conciliators who act in an impartial
manner and aid the parties in reachi ng an amicable settlement. Part III
of the Arbitration and Conciliation Act, 1996 governs the law of
conciliation in India. Subject to Part III of the Arbitration and
Conciliation Act, 1996, the procedural rules are mutually decided by
the parties.
 Negotia tion is a term which helps to solve the disputes between the
parties without taking the help of the court. It is a kind of win -win
situation for both the parties. Negotiation is a strategic discussion that
resolves an issue in a way that both parties find acceptable. It is a
process by which parties settle their differences. It is a process by
which compromise or agreement is reached while avoiding argument
and dispute.
 Collective bargaining is a process through which the representatives of
both the mana gement and employees participate. The process of
collective bargaining aims to establish stable relationships between the
parties involved. It helps in achieving discipline in the industry.
8.6 SELF ASSESSMENT QUESTIONS
 Write a detailed note on ADR.
 What is alternate dispute resolution? Explain the importance of ADR.
 What do you mean by ADR? Discuss the salient features of alternate
dispute resolution.
 What is Arbitration? Explain the salient features of Arbitration with
reference to the Act.
 What is the process of collective bargaining? Highlights the important
features of collective bargaining.
 Explain the types of alternate dispute resolution in detail.
 Discuss the importance of negotiation. How does it help to solve the
industrial dispute?
 Explain the working of the Board of Conciliation.


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