Part-1

Labour Laws

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Labour Laws Part-1

IMPORTANT

You will find a list of Practice Questions, at the end of each chapter. There are two
objectives of these questions:

1. To assess your understanding of the topic.

2. To understand the various types of questions which can be asked from this topic.

Please note that, we also provide a bigger question bank on our Online Test Platform.
Each question on the online test platform includes the answer as well as detailed
explanation. ALL previous years’ questions are covered. ln addition, there are new
questions as well.

After covering the syllabus from booklets, it is EQUALLY IMPORTANT to go

through the questions on the Online Test Platform. This will give you confidence of
absolute coverage and ability to face any possible question on the exam day.

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Labour Laws Part-1

TABLE OF CONTENTS

1. Constitutional Provisions for Labour Welfare ...................................................................................... 5

2. Regulatory Framework in India ............................................................................................................ 7
3. Employee’s Compensation Act, 1923 ................................................................................................ 10
4. Industrial Disputes Act, 1947 ............................................................................................................. 20
5. Payment of Wages Act, 1936 ............................................................................................................. 38
6. Minimum Wages Act, 1948................................................................................................................ 43
7. Payment of Bonus Act, 1965 .............................................................................................................. 49
8. Equal Remuneration Act, 1976 .......................................................................................................... 55
9. Payment of Gratuity Act, 1972 ........................................................................................................... 58
10. Employees’ Provident Funds Act, 1952 ............................................................................................. 64
11. Industrial Employment (Standing Orders) Act, 1946 ......................................................................... 73
12. Trade Union Act, 1926 ....................................................................................................................... 84

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Labour Laws Part-1

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1. Constitutional Provisions for Labour Welfare
The Constitution maintains a list of fundamental rights and directive principle of the state policy, which refers
to the upliftment and promotion of labour welfare.

Fundamental Rights that directly concern labour welfare:

 Article 14 states everyone should be equal before the law.
 Article 15 says the state should not discriminate against citizens.
 Article 16 extends a right of "equality of opportunity" for employment under the state.
 Article 19(1)(c) gives everyone a specific right "to form associations or unions".
 Article 21 states that no person shall be deprived of his life or personal liberty except according to
procedure established by law.
 Article 23 prohibits all trafficking and forced labour.
 Article 24 prohibits child labour under 14 years old in a factory, mine or "any other hazardous
employment".

Directive Principles of State Policy that directly concern labour welfare, are:
 Article 38(1) says that in general the state should "strive to promote the welfare of the people" with a
"social order in which justice, social, economic and political, shall inform all the institutions of
national life. In Article 38(2) it goes on to say the state should "minimise the inequalities in income"
and based on all other statuses.
 Article 39 specifically requires the State to direct its policy towards securing the following principles:
(a) Equal right of men and women to adequate means of livelihood.
(b) Distribution of ownership and control of the material resources of the community to the
common good,
(c) To ensure that the economic system should not result in concentration of wealth and
means of production to the common detriment.
(d) Equal pay for equal work for both men and women.
(e) To protect health and strength of workers and tender age of children and to ensure that
they are not forced by economic necessity to enter avocations unsuited to their age or
strength.
(f) That children are given opportunities and facilities to develop in a healthy manner and in
conditions of freedom and dignity and that childhood and youth are protected against
exploitation and against moral and material abandonment.
Pursuant to Article 39 (d), Parliament has enacted the Equal Remuneration Act, 1976.
 Article 41 directs the State to ensure the people within the limit of its economic capacity and
development: (a) employment, (b) education, and (c) public assistance in cases of unemployment, old
age, sickness and disablement and in other cases of undeserved want.
 Article 42 requires the state to "make provision for securing just and human conditions of work and
for maternity relief".
 Article 43 says workers should have the right to a living wage and "conditions of work ensuring a
decent standard of life". Article 43A, inserted by the Forty-second Amendment of the Constitution of
India in 1976, creates a constitutional right to codetermination by requiring the state to legislate to
"secure the participation of workers in the management of undertakings".
Article 43 refers to a "living wage" and not "minimum wage". The concept of living wage includes in
addition to the bare necessities of life, such as food, shelter and clothing, provisions for education of
children and insurance etc.
 Article 45 required the State to make provision within 10 years for free and compulsory education for
all children until they complete the age of 14 years.
 Article 47 requires the State to raise the level of nutrition and the standard of living and to improve
public health.
Labour Laws Part-1

Matters in respect of which laws are to be made have been distributed in three lists (Seventh Schedule
(Article 246):
(1) Union List
(2) Concurrent List
(3) State List

The Union list includes participation in international conferences, associations and other bodies and
implementing of decisions made there at; regulation of labour and safety in mines and oil-fields; industrial
disputes concerning union employees.

The Concurrent List includes; trade unions; industrial and labour disputes; social security and social
insurance; employment and unemployment; welfare of labour including conditions of work, provident fund,
employers' liability , workmen's compensation, invalidity and old age pensions, and maternity benefits;
vocational and technical training of labour in the factories.

The State List includes relief of the disabled and unemployable.

PRACTICE QUESTIONS
List - II
1.) Which Article of the Indian Constitution (i) Article 43
guarantees ‘just and humane conditions of work (ii) Article 41
and maternity relief’? (iii) Article 38(1)
(A) Article 41 (iv) Article 42
(B) Article 42 Codes:
(C) Article 43 (a) (b) (c) (d)
(D) Article 45 (A) (i) (ii) (iii)(iv)
(B) (iv) (iii) (ii) (i)
2.) The Directive Principles of State Policy, as (C) (iii) (ii) (i) (iv)
contained in Indian Constitution, contains various (D) (iii) (iv) (i) (ii)
Articles which has influenced the enactment of
social and labour legislations. Match the subject 3.) Which part of the Indian Constitution divides
matters of the Directive Principles with the Article jurisdiction for enactment of Labour Legislations?
Numbers as given in List - I and List - II (A) Distribution of Legislative Power
respectively: (B) Directive Principles of State Policy
List - I (C) Fundamental Rights
(a) Promotion of Welfare of people by securing (D) None of the above
and protecting effectively a social order in which
justice shall inform all institutions of national life. 4.) Which of the following comes under the 'State
(b) Securing just and humane conditions of work List' as provided under the Seventh Schedule of
and for maternity relief. the Constitution of India?
(c) Securing living wage ensuring decent standard (A) Relief of the disabled and unemployable.
of life. (B) Vocational and technical training of labour.
(d) Within the limits of economic capacity, (C) Social security and social insurance.
securing right to work, education and public (D) Welfare of labour including conditions of
assistance in case of unemployment, old age work.
sickness and disablement

ANSWERS
1. B 2. D 3. A 4. A

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2. Regulatory Framework in India
The labour legislations can be categorized as follows:
1) Labour laws enacted by the Central Government, where the Central Government has the sole
responsibility for enforcement.
2) Labour laws enacted by Central Government and enforced both by Central and State Governments.
3) Labour laws enacted by Central Government and enforced by the State Governments.
4) Labour laws enacted and enforced by the various State Governments, which apply to respective
States.

There are 4 types of Labor Legislations in India:

1) Protective Labor Legislations: The legislations whose primary purpose is to protect minimum labor
standards and improve working conditions are protective labor legislations. Legislations laying down the
minimum labor standards in the areas of work, safety, employment of children and women and also the
manner of wage payment come under this category. The Indian labor laws under this category are:
o The Factories Act, 1948
o The Mines Act, 1952
o The Plantation Labor Act, 1951
o The Motor Transport Workers Act, 1961
o The Shops and Establishment Act passed by various states
o The Payment of Wages Act, 1936
o The Minimum Wages Act, 1948
o The Child Labor (Prohibition and regulation) Act, 1986
o The Contract Labor (Regulation and Abolition) Act, 1970

2) Regulative Legislations: Laws related to Working Hours, Conditions of Service and Employment. The
legislations whose primary purpose is to regulate the relations between employers and employees and to
provide for methods and manners for settling industrial disputes are Regulative Legislations. These laws also
regulate the relationships between workers and trade unions, the rights and obligations of the organizations of
employers and workers, as well as their mutual relationships. The laws under this category are as follows:
o The Trade Unions Act, 1926
o The Industrial Disputes Act, 1947
o The Industrial Employment (Standing Orders) Act, 1946

3) Social Security Legislations: The Legislations which intend to provide social security benefits to the
workmen during certain contingencies of life are Social Security Legislations. Though this, legislations may
cover other classes of citizens also, their primary goal has been to protect the workers. The laws under this
category are as follows:
o The Workmen's Compensation Act, 1923
o The Employees State Insurance Act, 1948
o The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948
o The Employees Provident Funds and Miscellaneous Provisions Act, 1952
o The Maternity Benefit Act, 1961
o The Payment of Gratuity Act, 1972

4) Welfare Legislations: The legislations which aim at promoting the general welfare of the workers and
improve their living conditions are Welfare legislations. Such laws carry the term “Welfare” in their titles and
provide for the funds, which is spent on improving the general welfare of workers including housing, medical,
educational and recreational facilities. The Laws under this category are as follows:
o Mica Mines Labor Welfare Fund Act, 1946
o Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines labor Welfare Fund Act, 1976
o Beedi Workers Welfare Fund Act, 1976
3. Employee’s Compensation Act, 1923
Chapter I: PRELIMINARY
The Workmen’s Compensation Act, 1923 (now renamed Employee’s Compensation Act, 1923) provides for
payment of compensation to employees and their dependents in case of injury and accident (including certain
occupational disease) arising out of and in the course of employment and resulting in disablement or death.
The amount of compensation to be paid depends on the nature of the injury and the average monthly wages
and age of employee.

Sec. 2- DEFINITIONS
Commissioner means a Commissioner for Employee’s Compensation Act.

Dependent means any of the following relatives of a deceased workman, namely:

(i) a widow, a minor legitimate or adopted son, an unmarried legitimate or adopted daughter or a widowed
mother;
(ii) if wholly dependent on the earnings of the employee at the time of his death a son or a daughter who has
attained the age of 18 years and is infirm.
(iii) if wholly or in part dependent on the earnings of the employee at the time of his death-
(a) a widower
(b) a parent other than a widowed mother
(c) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or illegitimate
or adopted if married and a minor or if widowed and minor
(d) a minor brother or an unmarried sister or a widowed sister if a minor
(e) a widowed daughter-in-law
(f) a minor child of a pre-deceased son
(g) a minor child of a pre-deceased daughter where no parent of the child is alive or
(h) a paternal grandparent if no parent of the employee is alive
For sub-clause (ii) and items (f) and (g) of sub-clause (iii), son, daughter or child include an adopted son,
daughter or child respectively.

Employee means a person, who is:

(i) a railway servant as defined under of the Railways Act, 1989, not permanently employed in any
administrative district or sub-divisional office of a railway and not employed in any such capacity as is
specified in Schedule II; or
(ii) (a) a master, seaman or other members of the crew of a ship,
(ii) (b) a captain or other member of the crew of an aircraft,
(ii) (c) a person recruited as driver, helper, mechanic, cleaner or in any other capacity in connection with a
motor vehicle,
(ii) (d) a person recruited for work abroad by a company, and who is employed outside India in any such
capacity as is specified in Schedule II and the ship, aircraft or motor vehicle, or company, as the case may be,
is registered in India; or
(iii) employed in any such capacity as is specified in Schedule II

But DOES NOT include any person working in the capacity of a member of the Armed Forces of the Union.

Any reference to any employee shall include a reference to his dependants, where the employee is dead.

The State Government or the Central Government may add any class of persons employed in any occupation
which it is satisfied is a hazardous occupation, to Schedule II, with notice of 3 months.

Minor means a person who has not attained the age of 18 years.

Partial disablement means:

(a) where the disablement is temporary: if such disablement reduces the earning capacity of an
employee in any employment, in which he was engaged at the time of the accident.
Labour Laws Part-1

(b) where the disablement is permanent: if such disablement reduces the earning capacity in every
employment which he was capable of.
Provided that every injury specified in Part II of Schedule-I shall be deemed to result in Permanent Partial
Disablement.

Total disablement means, whether of a temporary or permanent nature as incapacitates an employee for all
work which he was capable of performing at the time of the accident resulting in such disablement:
Provided that Permanent total disablement shall be deemed to result from every injury specified in
Part I of Schedule I or from any combination of injuries specified in Part II thereof where the
aggregate percentage of the loss of earning capacity as specified in the said Part II against those
injuries amount to 100% per cent or more;

Note: In case of temporary partial disablement, the disablement results in reduction of earning capacity in
respect of “only that employment in which he was engaged” at the time of accident, which means the
workman’s earning capacity in relation to other employments is not affected.
But in case of permanent partial disablement, the disablement results in reduction in his earning capacity is
not only the employment in which he was engaged at the time of accident but in all other employments as
well.

Seaman means any person forming part of the crew of any ship but does not include the master of ship.

Wages includes any privilege or benefit which is capable of being estimated in money other than a
 traveling allowance
 contribution paid by the employer of an employee towards any pension or provident fund
 Any special expenses entailed on him by the nature of his employment.

Workman means any person (except employment of casual nature) employed for the purposes of the
employer' s trade or business and INCLUDES:
 a railway servant as per Indian Railways Act, 1890
but EXCLUDES
 Permanently employed in any administrative, district or sub- divisional office of a railway
 Employed in any such capacity as is specified in Schedule II
 Working in Armed Forces
The State Government or the Centre Government may add any class of persons employed in any occupation
which it is satisfied is a hazardous occupation, to Schedule II, with notice of 3 months.

Chapter II: EMPLOYEE’S COMPENSATION

Sec. 3- EMPLOYER’S LIABILITY

The employer shall not be so liable to pay compensation if -
(a) If injury does not result in the total or partial disablement for a period exceeding 3 days;
(b) If injury caused by an accident which is directly attributable to:
 Employee having been at the time thereof under the influence of drink or drugs
 Willful disobedience of the employee to an order expressly given or to a rule expressly
framed for the purpose of securing the safety of employees.
 Willful removal or disregard by the employee of any safety guard or safety device.

OCCUPATIONAL DISEASES (SCHEDULE III)

If any injury or disease is caused specified in Part A, B and C of Schedule III, it shall be deemed as
occupational disease or injury “arising out of and in the course of employment” enabling the employee to
claim compensation. Thus, the Schedule III is divided in Part A, B & C as follows:
(a) Part A: If an employee is working in any employment specified in Part A of Schedule III contracts
any disease, it shall be presumed to be “occupational disease”. For this no length of service is
prescribed. (which means no specific period of service prescribed).

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(b) Part B: If an employee is working in any employment specified in Part B of Schedule III for a period
of 6 months and attracts any disease specified therein, it shall be presumed to be “occupational
disease”. (which means 6 months service is required)
(c) Part C: If an employee is working in any employment specified in Part C of Schedule III for a period
as is “prescribed by the Central Government”, attracts any disease specified therein as occupational
disease, it shall be deemed to be an injury peculiar to that employment (which means Period of
Service as specified by the Central Government).
The reason behind above conditions are:
• The current employer shouldn’t be blamed for the occupational disease caused to an employee by the
previous employment.
• There should be certain service time gap to decide whether current employer or previous employer is
liable for the occupation disease caused to an employee.

The diseases which are specified in part A, B and C of the Schedule III, need not to be proved that they are
'occupational diseases' as they are already declared so in schedule III. In respect of any disease not covered by
schedule III, the onus is on the employee to prove that such a disease was contracted in the course of
employment.

The State Government can modify employments specified in Part A and Part B of Schedule III, and the
Central Government can modify employments specified in Part C of that Schedule III, with notice of at least 3
months.

There is NO right to compensation if employee reached Civil Court against the employer. Further NO Court
of law can admit a claim to compensation if employee has already reached a Commissioner; or if an
agreement has been already done under this Act.

Sec. 4- AMOUNT OF COMPENSATION

Where “death” results from the injury:
 an amount equal to 50% of the monthly wages multiplied by the relevant factor; or an amount of Rs
120000, whichever is more;
 If the monthly wages of a employee exceed Rs 15,000 his monthly wages for the purposes calculation
shall be deemed to be Rs 15,000 only. (Changed from Rs 8000 to Rs 15000 in Jan 2020)

Where “permanent total disablement” results from the injury:

 an amount equal to 60% of the monthly wages multiplied by the relevant factor; or an amount of Rs
140000 whichever is more.
Relevant factor is specified in the Schedule IV and depends upon number of years in service and age of the
employee.

If the monthly wages of an employee exceed Rs 15000 his monthly wages for the purposes calculation shall
be deemed to be Rs 15000 only. (Changed from Rs 8000 to Rs 15000 in Jan 2020)

Where “permanent partial disablement” results from the injury:

 If injury specified in Schedule I, amount is percentage of the compensation which would have been
payable in the case of “permanent total disablement” as is specified therein as being the percentage of
the loss of earning capacity caused by that injury.
 If injury not specified in Schedule I, amount is percentage of the compensation payable in the case of
“permanent total disablement” as is proportionate to the loss of earning capacity (as assessed by the
qualified medical practitioner).
Where more than one injuries are caused by the same accident, then amount of compensation payable shall not
exceed the amount which would have been payable if “permanent total disablement” had resulted from the
injuries.

Where “temporary disablement” whether total or partial, results from the injury
 a half monthly payment of the sum equivalent to 25% of monthly wages.

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 any payment received towards medical treatment shall not be deemed to be a compensation.
 while fixing the amount of compensation, for an accident occurred outside India, the Commissioner
shall take into account the amount of compensation, if any, awarded in accordance with the law of the
country, and shall reduce the amount fixed by him by the amount of compensation awarded in that
country.
 The half-monthly payment shall be payable on 16th day:
o from the date of disablement where such disablement lasts for a period of 28 days or more.
o after the expiry of a waiting period of 3 days from the date of disablement where such
disablement lasts for a period of less than 28 days
o thereafter half-monthly during the disablement or during a period of 5 years, whichever
period is shorter

If the injury results in his death, the employer shall in addition to the compensation, deposit with the
Commissioner a sum of Rs 5000 for payment of the same of the eldest surviving dependant of the employee
towards the expenditure of the funeral.

Compensation shall be paid as soon as it falls due. Where there is default in paying the compensation, the
Commissioner shall direct that the employer to pay, in addition to the amount of the arrears, pay simple
interest at the rate of 12% per annum or at such higher rate not exceeding the maximum of the lending rates of
any scheduled bank. Further if he finds that there is no justification for the delay, he may direct that the
employer shall, in addition to the amount of the arrears and interest thereon, pay a further sum not exceeding
50%, of such amount by way of penalty.

Sec. 5- METHOD OF CALCULATING WAGES

“Monthly wage” is calculated as below:
 If working continuously for more than 12 months immediately preceding the accident, monthly wage
shall be one-twelfth of the total wages in the last 12 months.
 If working continuously for less than 1 month immediately preceding the accident, Monthly wage
shall be equal to monthly wage of any other employee doing same work.
 If there is no necessary information to calculate the monthly wages, then the monthly wages shall be
30 times the total wages earned in respect of the last continuous period of service, divided by the
number of days of employment.
 A period of service shall be deemed to be continuous which has not been interrupted by a period of
absence from work exceeding 14 days.

REVIEW AND COMMUTATION OF HALF-MONTHLY PAYMENTS

Sec. 6- Any half-monthly payment may be reviewed by the Commissioner, and then may be continued,
increased, decreased, be converted to the lump sum or ended.
Sec. 7- There is a provision, according to which, Half-monthly payments may be commuted into “payment of
a lump sum” of such amount as may be agreed to by the parties or determined by the Commissioner, provided
the payments have been continued for not less than 6 months.

Sec. 8- DISTRIBUTION OF COMPENSATION

Compensation in case of (a) death of employee (b) compensation to a woman or (c) to a person under a legal
disability, shall be necessarily deposited with the Commissioner (not paid directly to the employee). Although
in case of death, employer may pay to the dependent, amount equal to 3 months wages as advance.

Any other sum amounting greater than Rs 10 may be deposited with the Commissioner on behalf of the
person. The Commissioner may call all dependents for determining the distribution of the compensation. If no
dependent exists, he shall repay the money back to the employer.

NOTICE AND CLAIM

Sec. 10, 10A and 10B- No claim for compensation shall be entertained by a Commissioner unless notice of the
accident has been given.

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(Bronchopulmonary metal alloys, whose major components cutting and sharpening metals,
diseases) are tungsten carbide and cobalt or cobalt drilling wells, polishing diamond
and diamond and dental prostheses

AMENDMENTS IN THE ACT IN 2010

Workmen's compensation Act was amended in 2010. Given below are the synopsis of the changes:
a) The workmen's compensation (amendment) act, 2009 is now renamed as the employee's
compensation (amendment) act, 2009 and wherever "workman" or "workmen" is mentioned in the
entire Act the same needs to be read as "Employee"
b) The compensation payable on death from the injury, is (i) minimum of Rs.80000 is increased to
Rs.120000 or (ii) 50% of the monthly wages of deceased multiplied by the relevant factor.
c) The compensation payable on Permanent Total Disablement from the injury, is (i) minimum of
Rs.90000 is increased to Rs.140000 or (ii) 60% of the monthly wages of deceased multiplied by the
relevant factor.
d) Definition of workmen replaced by "Definition of Employee"- also now includes CLERICAL
employees.

AMENDMENTS IN THE ACT IN 2017

The Employees’ Compensation (Amendment) Act was amended in 2017. The details are as follows:
a) It is the employer’s responsibility and duty to inform an employee of his rights. Failure to do so will
make the employer liable to penalty. The amendment penalises an employer if he fails to inform his
employee of his right to compensation.
b) The penalty amount has been increased from a maximum of Rs. 5000 to a definite penalty of Rs.
50,000 which may be further extended to Rs. 1 lakh.
c) The appeals can be made to High Court, against orders of Commissioner, only if the amount in
dispute is at least Rs 10,000. Earlier this amount was Rs 300.
d) In a further amendment, the Act has scrapped the rule as per which the employer could temporarily
withhold any payments towards the employee in case the former had appealed against a
commissioner’s order.

PRACTICE QUESTIONS

1.) In which amending year the definition of (B) b and d only

“workman” was replaced by definition of (C) a, b and d only
“employee” under the Employee Compensation (D) All of the above
Act, 1923?
(A) 2009 3.) Which of the following is true about “total
(B) 2010 disablement” as per the Employee Compensation
(C) 2014 Act, 1923?
(D) 2017 Statement I: Total disablement means, where the
disablement is of a temporary nature or of a
2.) As per the Employee Compensation Act, 1923, permanent nature such disablement as reduces his
which of the following is/are covered under the earning capacity in every employment, which he
definition of a “dependent”? was capable of undertaking at that time.
a) a widower Statement II: Total disablement means, whether
b) a parent other than a widowed mother of a temporary or permanent nature as
c) a minor illegitimate son an unmarried incapacitates a employee for all work which he
illegitimate daughter or a daughter legitimate or was capable of performing at the time of the
illegitimate or adopted if married and a minor or if accident resulting in such disablement.
widowed and minor Select the correct code:
d) a minor brother or an unmarried sister or a (A) Statement I is true, Statement II is false
widowed sister if a minor (B) Statement I is false, Statement II is true
Select the correct code: (C) Both Statements I & II are true
(A) a and b only (D) Both Statements I & II are false

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Labour Laws Part-1
4.) Match the following
List I: Schedules under the Employee
Compensation Act, 1923
a) Schedule I
b) Schedule II
c) Schedule III
d) Schedule IV
List II: Subject
i) List of occupational diseases
ii) Relevant factors for working out compensation
amount
iii) List of injuries deemed to result in Permanent
Total Disablement and Permanent Partial
Disablement
iv) List of persons who are included in the
definition of Workmen (Employee)
Select the correct code:
abcd
(A) i ii iii iv
(B) ii iv iii i
(C) iii iv i ii
(D) iv ii iii i
5.) The employer shall not be so liable to pay
compensation if injury does not result in the total
or partial disablement for a period exceeding ___
(A) 5 days
(B) 3 days
(C) 10 days
(D) 8 days
6.) As per the provisions of Employee
Compensation Act, 1923, contracting of any
disease because of employment shall be deemed to
be an injury by accident if:
(A) Employed in any employment specified in
Part A of Schedule III
(B) Employed for a continuous period of not less
than 6 months (with One Employer) in any
employment specified in Part B of Schedule III
(C) Employed in the service of one or more
employers in any employment specified in Part C
of Schedule III.
(D) All of the above
7.) According to the provisions of the Employee
Compensation Act, 1923, the amount of
compensation to be paid to dependents of a
employee is if he dies as a result of his injuries is
(A) an amount equal to 60% of the monthly wages
multiplied by the relevant factor; or an amount of
Rs 140000, whichever is more
18
(B) an amount equal to 55% of the monthly wages
multiplied by the relevant factor; or an amount of
Rs 125000, whichever is more
(C) an amount equal to 50% of the monthly wages
multiplied by the relevant factor; or an amount of
Rs 120000, whichever is more
(D) an amount equal to 80% of the monthly wages
multiplied by the relevant factor; or an amount of
Rs 150000, whichever is more
8.) Calculate the amount of compensation to be
paid to the dependent of an employee, in case of
death, under the Employees Compensation Act,
1923, if the monthly salary of the employee is Rs
25,000 and the relevant factor is 99.37
(A) Rs 1,20,000
(B) Rs 27,33,066
(C) Rs 7,45,275
(D) Rs 12,42,125
9.) As per the provisions of Employee
Compensation Act, 1923, in case of an injury
leading to temporary disablement, whether total or
partial a half monthly payment of the sum
equivalent to ______ shall be paid to the
employee.
(A) 50% of monthly wages
(B) 30% of monthly wages
(C) 25% of monthly wages
(D) 20% of monthly wages
10.) As per the provisions of Employee
Compensation Act, 1923, the half-monthly
payment in case of temporary disablement, shall
be paid on
(A) 16th day from the date of disablement
(B) 14th day from the date of disablement
(C) 12th day from the date of disablement
(D) 10th day from the date of disablement
11.) According to the Employee Compensation
Act, 1923, Where there is default in paying the
compensation, the Commissioner shall direct that
the employer to pay, in addition to the amount of
the arrears, pay simple interest at the rate of
(A) 20% per annum
(B) 18% per annum
(C) 16% per annum
(D) 12% per annum
12.) Which of the following statement is true
regarding the calculation of monthly wage in case
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Labour Laws Part-1

of unavailability of necessary information, under Select the correct code:

the Employee Compensation Act, 1923? (A) Statement I is correct
(A) The monthly wages shall be 40 times the total (B) Statement II is correct
wages earned divided by the number of days of (C) Both the statements are correct
employment. (D) Both the statements are incorrect
(B) The monthly wages shall be 30 times the total
wages earned divided by the number of days of 16.) In case of Master and Seaman and Crew of
employment. Aircraft, workers availing which of the following
(C) The monthly wages shall be 20 times the total schemes shall not be liable to receive
wages earned divided by the number of days of compensation under the Employee Compensation
employment. Act, 1923?
(D) The monthly wages shall be 10 times the total a) War Pensions and Detention Allowances
wages earned divided by the number of days of (Mercantile Marine, etc) Scheme, 1939
employment. b) War Pensions and Detention Allowances
(Indian Seamen, etc) Scheme, 1941
13.) In which of the following cases, the c) Pensions (Navy, Army, Air Force and
compensation is NOT paid directly to the Mercantile Marine) Act, 1939
employee/dependent? d) War Pensions and Detention Allowances
a) Death of employee (Indian Seamen) Scheme, 1942
b) Compensation to a woman Select the correct code:
c) To a person under a legal disability (A) a and c only
d) To a person suffering from permanent total (B) a, c and d only
disablement (C) b, c and d only
Select the correct code: (D) All of the above
(A) a and b only
(B) a and d only 17.) In case of death of an employee working
(C) a, b and c only abroad with a company, which is registered in
(D) All of the above India, the dependents can claim for compensation
within how many days from receiving the news of
14.) After receiving the notice from the death of the employee?
Commissioner, regarding the death of an (A) 180 days
employee, the employer who is of the opinion that (B) 365 days
he is liable to deposit compensation, shall do so (C) 120 days
within how many days? (D) 100 days
(A) 15 days of the service of notice
(B) 20 days of the service of notice 18.) As per the provisions of the Employee
(C) 30 days of the service of notice Compensation Act, 1923, if the employer fails to
(D) 35 days of the service of notice maintain a notice-book of accidents, the penalty
will be
15.) Statement I: The employer has to pay (A) Rs. 25,000
compensation within 7 days in case of fatal (B) Rs. 30,000
accidents only. (C) Rs. 50,000
Statement II: The employer has to pay (D) Rs. 80,000
compensation within 7 days in case of fatal
accidents and serious bodily injuries.

ANSWERS
1. B 2. D 3. B 4. C 5. B 6. D 7. C 8. C 9. C 10. A 11. D 12. B 13. C
14. C 15. B 16. D 17. B 18. C

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12. Trade Union Act, 1926
Chapter I: PRELIMINARY

The Trade Union Act, 1926 was enacted with the object of a) Providing for the registration of trade unions b)
Verification of the membership of trade unions registered so that they may acquire a legal and corporate
status. The act has provision for “Registration” of trade union but NOT “Recognition” of trade union.

Sec. 2- DEFINITIONS
Appropriate Government is "Central Government" for Trade Unions whose objects are not confined to one
State, and for all other Trade Unions, "State Government" is appropriate government.

Executive means the body, by whatever name called to which the management of the affairs of a Trade Union
is entrusted.

Office-bearer, in the case of a Trade Union, includes any member of the executive thereof, but does not
include an auditor.

Registered Office means head office of a registered Trade Union.

Registrar means a Registrar of Trade Unions appointed by the appropriate Government and includes any
Additional or Deputy Registrar of Trade Union.

Trade Dispute means any dispute between

(a) employers and workmen or
(b) workmen and workmen, or
(c) employers and employers
which is connected with the employment or non-employment, or the terms of employment or the conditions
of labour, of any person.

Workmen means all persons employed in trade/industry whether or not in the employment of the employer
with whom the trade dispute arises.

Trade Union means combination, whether temporary or permanent, formed primarily for the purpose of
regulating the relations between workmen and employers or between workmen and workmen, or between
employers and employers, or for imposing restrictive condition on the conduct of any trade or business, and
includes any 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 those employed by him as to such employment; or
(iii) any agreement in consideration of the sale of the goodwill of a business or of instruction in any profession
trade or handicraft.

Chapter II: REGISTRATION OF TRADE UNIONS

Sec. 3- APPOINTMENT OF REGISTRARS

The appropriate Government shall appoint a person to be the Registrar (along with as many Additional and
Deputy Registrars) of Trade Unions for each State.

Sec. 4 and 9A- MODE OF REGISTRATION

As per Amendment in 2001- The trade union of workmen shall be registered only when at least 10% of
employees or 100 (whichever is less). However, if the number arrived after calculating least 10% of
employees or 100 (whichever is less) is less than 7, then the requirement is minimum of 7 workmen. Thus the
trade union can not be registered, if less than 7 persons are applying.
Labour Laws Part-1

Consider following scenarios:

1. Number of workmen- 400
Then 10% of employees or 100 (whichever is less) comes out to be 40. Thus required applicants = 40
2. Number of workmen- 4000
Then 10% of employees or 100 (whichever is less) comes out to be 400. Thus required applicants = 100
3. Number of workmen- 50
Then 10% of employees or 100 (whichever is less) comes out to be 5. Thus required applicants = 7

The application for registration will not become invalid even if, at any time after the date of the application,
but before the registration of the trade union, some of the applicants (not exceeding ½ of the applicants) have
ceased to be members of the trade union or have given notice in writing to the Registrar dissociating
themselves from the application.

APPLICATION FOR REGISTRATION

Sec. 5- Every application for registration of a Trade Union shall be accompanied by a copy of the rules of the
Trade Union and a statement of the following particulars:
(a) The names, occupations and addresses of applicants & their place of work of the members
(b) The name of the Trade Union and the address of its head office.
(c) The title, names, ages, addresses and occupations of the office bearers of the Trade Union.
(d) General statement of the assets and liabilities, if Trade Union is more than 1 year old.

Sec. 6- Rules of Trade Union includes (a) Name of the Trade Union, (b) Objectives of Trade Union, (c)
Purposes for which the general funds of the Trade Union shall be used, (d) Maintenance of a list of the
members, (e) Admission of ordinary members, honorary or temporary members (f) any benefit, fine or
forfeiture on the members (g) procedure for amendment of rules (h) election of members of the executive &
office bearers (i) safe custody of the funds of the Trade Union and an annual audit (j) rules under which Trade
Union may be dissolved.

Amendment in 2001- Minimum rate of subscription for the trade union is fixed at:
 Rs 1 per annum for rural workers
 Rs 3 per annum for workers in other unorganised sectors
 Rs 12 per annum in all other cases

Amendment in 2001- Members of the executive and other office-bearers of the Trade Union shall be elected
for duration of period being not more than 3 years.

Sec. 8 and 9- REGISTRATION & ISSUANCE OF CERTIFICATE OF REGISTRATION

The Registrar, on being satisfied, shall register the Trade Union by entering in a register. Once registered, he
shall issue a certificate of registration.

Sec. 10- CANCELLATION OF REGISTRATION

A certificate of registration of a Trade Union may be cancelled by the Registrar:
(a) On the application of the Trade Union
(b) If the Registrar is satisfied that the certificate has been obtained by fraud or mistake, or that the
Trade Union has ceased to exist. But Registrar will provide 2 months’ notice in this case, before
cancelation.
(c) If the Registrar is satisfied that a registered Trade Union of workmen ceases to have the requisite
number of members. (Added as per Amendment in 2001)

Sec. 11- APPEAL

Any person aggrieved by any refusal/withdrawal/cancellation of the Registrar to register a Trade Union may
appeal to a (a) a Labour Court or an Industrial Tribunal in that area (b) High Court or (c) not inferior to the
Court of an additional or assistant Judge.

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Labour Laws Part-1

Sec. 12- REGISTERED OFFICE

Notice of any change in the registered address of the head office, should be given to the Registrar in writing,
within 14 days such change.

Sec. 13- LEGAL STATUS OF A REGISTERED TRADE UNION

 A registered trade union is a body corporate with perpetual succession and a common seal.
 It can acquire, hold sell or transfer any movable or immovable property and can be a party to
contracts.
 It can sue and be sued in its own name
 No civil suit or other legal proceeding can be initiated against a registered trade union in respect of
any act done in furtherance of a trade dispute under certain conditions.
 No agreement between the members of a registered trade union shall be void or voidable merely on
the ground that any of its objects is in restraint of trade.

Sec. 14- CERTAIN ACTS NOT TO APPLY TO REGISTERED TRADE UNIONS

The following Acts do not to apply to registered Trade Unions:
(a) The Societies Registration Act, 1860
(b) The Co-operative Societies Act, 1912
(c) The Companies Act, 1956
The registration of any Trade Union under any such Act shall be void.

Chapter III: RIGHTS AND LIABILITIES OF REGISTERED TRADE UNION

Sec. 15- OBJECTS ON WHICH GENERAL FUNDS MAY BE SPENT

The general funds of a registered Trade Union shall not be spent on any other than the following:
 payment of salaries, allowances and expenses to office bearers of the Trade Union
 payment of expenses for the administration of the Trade Union (including Audit of Accounts of
General Funds)
 prosecution or defense of any legal proceeding, to which the Trade Union is Party.
 conduct of trade disputes on behalf of the Trade Union or any member
 compensation of members for loss arising out of trade disputes
 allowance to members/dependents for death, old age, sickness, accidents or unemployment
 liability under policies of assurance on the lives for members or under policies insuring members
against sickness, accident or unemployment;
 educational, social or religious benefits for members (including expenses of funeral or religious
ceremonies for deceased members) or for the dependents of members;
 upkeep of a periodical published
 any other object, as notified by the Government
The expenditure in respect of such contributions in any financial year shall not be in excess of 1/4 th (25%) of
total of the gross income which has up to that time accrued to the general funds of the Trade Union during that
year and of the balance at the credit at the commencement of that year.

CONSTITUTION OF A SEPARATE FUND FOR POLITICAL PURPOSES

Sec. 16- A registered Trade Union may constitute a separate fund, from contributions separately levied for that
fund, for the promotion of the civic and political interest of its members. It may be used for:
 expenses incurred, by a candidate for election as a member of any legislative body.
 holding of any meeting or the distribution of any literature or documents in support of candidate.
 maintenance of any person who is a member of any legislative body
 registration of electors or the selection of a candidate for any legislative body
 holding of political meetings

No member shall be compelled to contribute to the political fund and by not contributing, shall not be
excluded from any benefits of the Trade Union.

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Labour Laws Part-1

Such a statement shall be accompanied by another statement containing assets and liabilities of Trade Union
as existing on 31st December each year.

A copy of the rules of the Trade Union will also be submitted.

A copy of every alteration made in the rules of a registered Trade Union shall be sent to the Registrar within
15 days of making of the alteration.

The Registrar may require production of certificate of registration, account books, registers, and other
documents at registered office and at such place as he may specify, but not at a distance of more than 10 miles
from the registered office of a Trade Union.

Chapter IV: REGULATIONS

Sec. 29- POWER TO MAKE REGULATIONS

The appropriate Government may make regulations for:
(a) rules of registration of Trade Unions shall be registered and the fees payable.
(b) transfer of registration in the case change in head office from one State to another;
(c) qualifications of person responsible for audit of the accounts of registered Trade Unions
(d) conditions of inspection of documents kept by Registrars and fees chargeable for inspections.

Sec. 30- PUBLICATION OF REGULATIONS

The date after which draft of regulations proposed to be made will be taken into consideration shall not be less
than 3 months from the date on which proposed regulations were published for general information

Chapter V: PENALTIES

Sec. 31- Failure to submit returns- Fine of Rs 5, and in the case of a continuing default, additional fine of Rs 5
per week. But the aggregate fine shall not exceed Rs 50.
Sec. 31- Willful false entry/omission in the general statement/rules- Fine up to Rs 500
Sec. 32- Supplying false information regarding Trade Unions- Fine which may extend to Rs 200.

AMENDMENTS IN ACT IN 2001

Some of the salient features of the Trade Unions (Amendment) Act, 2001 are:
1) No trade union of workmen shall be registered unless at least 10% or 100, whichever is less, subject to a
minimum of 7 workmen make the application for registration.
2) A registered trade union of workmen shall at all times continue to have not less than 10% or 100 of the
workmen, whichever is less, subject to a minimum of 7 persons.
3) All office bearers of a registered trade union, except not more than one-third of the total number of
office bearers or 5, whichever is less, shall be persons actually engaged or employed in the establishment or
industry with which the trade union is connected.
4) Minimum rate of subscription for the trade union is Rs 1 per annum for rural workers, Rs 3 per annum for
workers in other unorganised sectors and Rs 12 per annum in all other cases.
5) Employees who have retired/retrenched shall not be construed as outsiders for purpose of holding an office
in the trade union concerned.
6) Members of the executive and other office-bearers of Trade Union shall be elected for minimum 3 years.

TRADE UNIONS (AMENDMENT) BILL, 2019

On 08 January 2019, The Trade Unions (Amendment) Bill, 2019 was introduced in Lok Sabha. The Bill
proposes to insert new section which will provide for the “Recognition” of Trade Unions or Federations of
Trade Unions at Central and State level.

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Labour Laws Part-1

PRACTICE QUESTIONS

1.) The Trade Union Act came into force on
(A) 1st June 1927
(B) 1st April 1926
(C) 30th August 1926
(D) 30th May 1927
2.) Which of the following statements relating to
the trade unions under the Trade Unions Act, 1926
are not true?
a. Every registered trade union has to submit a half
yearly return to the Registrar of Trade Unions.
b. Any person who has attained the age of eighteen
can become an office bearer of the trade union.
c. Retired or retrenched employees of an
organization holding an office in a trade union
shall not be construed as an outsider.
d. The number of outsiders working as office
bearers in registered trade union functioning other
than in an unorganized section shall be limited to
eight.
(A) a and b
(B) a and d
(C) b and c
(D) a and c
3.) According to the Trade Union Act, 1926, a
trade dispute means any dispute between
a) employers and workmen
b) workmen and workmen
c) employers and employers
d) trade unions and employees
e) trade unions and trade unions
f) trade unions and employers
Select the correct code:
(A) a, b and c
(B) a, d and e
(C) a, e and f
(D) All of the above
4.) What is the minimum number of members
required for registration of a trade union?
(A) Seven members
(B) 100 members
(C) 100 or 10% but not less than 7
(D) None of the above
5.) Under the provisions of the Trade Unions Act,
1926 what is the minimum subscription to be paid
by the members of a trade union for rural workers?
(A) Five rupees per annum
(B) One rupee per month
(C) One rupee per annum
(D) Ten rupees per annum
6.) Members of the Trade Union are required to
pay a subscription per annum as per the provisions
of the Trade Unions Act, 1926. For workers
working in other unorganized sectors, excepting
rural workers, the annual rate of subscription
should not be less than
(A) Rs 1 per annum
(B) Rs 3 per annum
(C) Rs 12 per annum
(D) Rs 24 per annum
7.) Which of the following is NOT true regarding
the cancellation of registration of a trade union by
the Registrar?
(A) It may be cancelled on the application of the
workers
(B) It may be cancelled if the Registrar is satisfied
that the certificate has been obtained by fraud or
mistake
(C) It may be cancelled if the Registrar is satisfied
that the Trade Union has ceased to exist
(D) It may be cancelled if the Registrar is satisfied
that the Trade Union ceases to have the requisite
number of members
8.) A registered trade union is required to send a
notice of any change in the registered address of
the head office, should be given to the Registrar in
writing within how many days of such change?
(A) 14 days
(B) 15 days
(C) 25 days
(D) 30 days
9.) Which of the following is true regarding the
legal status of a registered trade union?
(A) A registered trade union is a body corporate
with transient succession and a common seal.
(B) It can only acquire and hold any movable or
immovable property but cannot transfer it.
(C) A civil suit or other legal proceeding can be
initiated against a registered trade union in respect
of any act done in furtherance of a trade dispute
under certain conditions.
(D) It can sue and be sued in its own name

89 Human Peritus, www.humanperitus.com