LABOUR & INDUSTRIAL LAW –

II(SEM-09/PAPER-01)

LW 5013

SELF – NOTES

Anish Mahapatra

BBA LLB “A”

Roll No. – 1782019

MODULE 1: CONCEPTUAL FRAMEWORK OF LABOUR LAW

Conceptual Framework

Labour laws in India are enacted both by the Central and State Government with some overlap
between the two in implementation. India over the years has had a multitude of laws governing
labour and employment which has usually made compliance very arduous for businesses but has
usually provided a fair amount of protection to employees.

In 2020/2021, the Indian Government has subsumed over 29 Central laws and corresponding
State laws in four major Labour Codes, with the aim to simplify, modernise, and restructure the
current regime and increase the ease of doing business in India.

The Labour Codes have been enacted and are likely to be implemented in 2021. For most
businesses, this year would involve straddling the requirements of existing laws while modifying
their current practices to comply with the changes coming with the implementation of the Labour
Codes.

The Government of Indi a has four Labour Codes: the Code on Wages 2019; the Industrial
Relations Code, 2020; the Occupational Safety, Health and Working Conditions Code, 2020; and
the Code on Social Security, 2020. All the Labour Codes have been aimed at broadening the
scope of coverage, rights and protections, reducing multiplicity in definitions, authorities and
compliances, and embracing more digitisation in registrations/compliances. However, at the
same time, the Labour Codes are largely a consolidation of existing laws rather than a significant
overhaul of them, with there not being a substantial change in the position of law itself.

The Code of Wages, 2019 (“Wage Code) amalgamates four labour laws pertaining to minimum
wages, payment of wages, applicable deductions, statutory bonus and equal remuneration to
employees. The Wage Code covers the different aspects of wages payable to employees. The
most significant aspect of the Wage Code is the uniform definition of wages which has also been
adopted across the other three Labour Codes as well as broadening its applicability to all
establishments.

The Industrial Relations Code, 2020 (“IRC”) subsumes three major pieces of labour legislation
that deal primarily with employee working conditions, separations from employment, industrial
disputes and collective bargain. The IRC has been the most contentious legislation with
workmen and trade unions in India believing that their existing rights have been curtailed and
more benefits provided to the employer since threshold limits for applicability in terms of
working conditions and termination have been increased and their right to strike without due
notice have been more firmly regulated. However, the majority of the right and protections have
been actually retained for employees and in fact the coverage has broadened on account of
certain change in definitions. It also encourages more industries to expand operations since the
law is not as onerous in some aspects as before.

The Occupational Safety, Health and Working Conditions Code, 2020 (“OSHWC Code”) repeals
13 central labour laws which are applicable to various types of industries which deal and codifies
in a single regulatory framework the applicable legal provisions for factories, mines, plantations,
contract labour and construction establishments.

The Code on Social Security, 2020 (“SS Code”) combines and repeals nine laws that were
primarily employee social welfare legislation and seeks to create a comprehensive social security
system to provide retirement, health, old-age, disability, unemployment and maternity benefits to
a vast majority of the population. The coverage for most of these has been expanded to cover the
unorganized sector (self – employed or home – based) which constitutes a large segment of
India’s working population as well keeping in mind the vast number of services now provided
with technology as a cornerstone such as gig (workers outside the traditional employer-employee
relationship) and platform workers (who access organizations or individuals through an online
platform and provide services or solve specific problems).
The SS Code has certainly been beneficial for a number of classes of employees, but may prove
to be a greater financial burden on employers.

Concept of Social Justice

Social justice denotes the equal treatment of all citizens without any social distinction based on
caste, colour, race, religion, sex and so on. It means absence of privileges being extended to any
particular section of the society, and improvement in the conditions of backward classes (SCs,
STs, and OBCs) and women. Social Justice is the foundation stone of Indian Constitution. Indian
Constitution makers were well known to the use and minimality of various principles of justice.
Although social justice is not defined anywhere in the constitution but it is an ideal element of
feeling which is a goal of constitution. Feeling of social justice is a form of relative concept
which is changeable by the time, circumstances, culture and ambitions of the people. Social
inequalities of India expect solution equally. Under Indian Constitution the use of social justice
is accepted in wider sense which includes social and economical justice both.

In D. S. Nakara v. Union of India, the Supreme Court has held that the principal aim of a
socialist state is to eliminate inequality in income, status and standards of life. The basic frame
work of socialism is to provide a proper standard of life to the people, especially, security from
cradle to grave. Amongst there, it envisaged economic equality and equitable distribution of
income. This is a blend of Marxism & Gandhism, leaning heavily on Gandhian socialism. From
a wholly feudal exploited slave society to a vibrant, throbbing socialist welfare society reveals a
long march, but, during this journey, every state action, whenever taken, must be so directed and
interpreted so as to take the society one step towards the goal.

The social justice scenario is to be investigated in the context of two streams of entitlements: (a)
sustainable livelihood, which means access to adequate means of living, such as shelter, clothing,
food, access to developmental means, employment; education, health, and resources; (b) social
and political participation (enabling or empowering means), which is built on the guarantee of
fundamental rights, and promotion and empowerment of the right to participation in the
government, and access to all available means of justice, and on the basis of which “justice as a
political programme” becomes a viable reality. We require therefore a study based on select
illustrations of various issues relating to government policies on topics such as: (a) the right to
food and water; (b) housing, which includes resettlement and rehabilitation; (c) access to
education, (d) access to provisions of health and healthcare, (e) right to work, and (f) access to
information and the right to communication. In short, one of the important ways in which the
inquiry will proceed will be through taking stock of various forms that have occasioned the
articulation of ideas of social justice. Governmental justice consists of various welfare schemes,
law, legal literacy, administrative forms of arbitration such as tribunals, boards, courts, public
interest litigation, new legal education, plus the constitutional idea of protection of weaker
sections of the society and introduction of positive discrimination.
Concept of State Regulation and Labour Welfare

The concept of labour welfare originated in the desire for a humanitarian approach to ameliorate
the sufferings of the workers and their families on account of the baneful effects of large-scale
industrialization like undesirable social consequences and the labour problems which have
evolved in the process of transition from tradition to modernity. Later it became a utilitarian
philosophy which worked as a motivating force for labour and for those who were interested in
it. Lastly, labour welfare received inspiration from the evolution of the social thought in regard
to democracy and welfare state.

The I.L.O. (SEA) session held at New Delhi in 1947 defined Labour Welfare as “such services,
facilities and amenities, which may be established in or in the vicinity of, undertakings to enable
persons employed therein to perform their work in healthy, congenial surroundings and to
provide them with amenities conducive to good health and good morale.

The Committee on Labour Welfare (1969) defined labour welfare to “include such services,
facilities and amenities as adequate canteens, rest and recreational facilities, sanitary and medical
facilities, arrangements for travel to and from work and for the accommodation of workers
employed at a distance from their homes and such other services, amenities, and facilities
including social security measures as contribute to improving the conditions under which
workers are employed”.

Scope of Labour Welfare: Labour welfare is a dynamic concept which acquires as new
dimensions with the changes in the environment of the industry. It was as early as 1931 that
„Whitley Commission observed, “Labour welfare is one which must necessarily be elastic,
bearing a somewhat different interpretation in one country from another, according to the
different social customs, the degree of industrialization and the educational development of the
workers”.

Importance of Labour Welfare

The basic objective of labour welfare is to enable workers to live a richer and more satisfactory
life. Labour welfare is in the interest of the labour, the employer and the society as a whole. The
main benefits of the employee welfare services are as follows:
  Benefits to the Workers: The usefulness of welfare need not be overemphasized. For
instance, the provision of welfare measures such as good housing, canteens medical
facilities etc, makes the workers realize that they have some stake in the undertaking in
which they are employed and so they think thrice before taking any reckless action,
which might prejudice the interest of the undertaking.
 Benefits to employers: The provision of welfare facilities is not only beneficial to
workers but also to employers in several ways. For instance, the provision of welfare
facilities helps in increasing employee productivity by improving their physical and
psychological health. Besides this, it helps in improving the goodwill and public image of
the enterprise. It also helps in improving good industrial relations and industrial peace
 Benefits to the Society Labour / Employee: Welfare is also in the interest of larger
society because the health, efficiency, and happiness of each individual represent the
general well-being of all. Well-housed, well-fed and well-looked after labour is not only
an asset to the employer but also serves to raise the standards of the industry.

https://www.legalbites.in/law-notes-labor-law-theories-of-labour-welfare/

Constitution of India and Labour

Under the Constitution of India, Labour is a subject in the Concurrent List where both the
Central & State Governments are competent to enact legislation subject to certain matters being
reserved for the Centre. 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. Each and every
act which was in force before the enactment of our constitution were either amended or nullified
after its enforcement. Our constitution plays an important part in the changes and growth in
labour laws in India.

Part III of the Constitution of India is the benchmark for labour laws in India. Also, Part III
(Article 12 to 35) of the Constitution covers the fundamental rights of its citizens which includes
Equality before the law, Religion, Sex, caste, place of birth, the abolition of untouchability,
freedom of speech and expression and prohibition of employment of children in factories.
The Government of India Act, 1935 defines “weaker sections” as class or classes of people who
are suffering from educational and economic backwardness, as well as some aspects of social
life, due to traditional customs of untouchability, tribal background, tribal way of life or other
backwardness. Different resolutions of the Indian government have divided the weaker groups
into three main categories: SC, ST & OBC.

But this list is not exhaustive. Women, aged persons, disabled, sexual minorities are also
deprived of the benefits and they are ill-treated. Thus, weaker sections that face discrimination
include- women, scheduled castes(SC), scheduled tribes (ST), children, disabled, aged, poor
migrants, sexual minorities, people suffering from HIV/AIDS, and other backward classes. The
Constitution has provided provisions not only for SC/STs, backward classes but also for the
other weaker sections of society.

Constitutional makers have provided different safeguards in the Constitution of India for the
upliftment and protection of the weaker section of the society. They are as follows:

 Article 14 of the constitution provides for the equal protection of law and equality before
the law. Therefore, irrespective of class every citizen has the right to be treated equally
before the law.
 Article 15 prohibits discrimination based on disability, restriction, or the grounds of
castes, religion, sex, or place of birth. Whereas nothing in this article will prevent the
state to make special provisions and arrangements for the betterment of :
o The children and women [Article 15(3)].
o Socially and economically backward classes/ scheduled castes / scheduled tribe
[Article 15(4) & Article 15(5)].
 Article 16 provides equal opportunities to all citizens in matters of employment or
appointment of any office under the state. States can make special provisions related to
the reservation, appointment for the backward classes, and the state has the authority to
decide whether the person falls in the definition of backward classes. This provision helps
to strengthen the weaker section in monetary terms.
 Article 17 abolishes untouchability and it is a punishable offence under the Protection of
the Civil Rights Act, 1955.
 Article 19(5) provides that the state is allowed to restrict freedom of movement for the
benefits of the Scheduled tribe.
 Article 21 provides that every person is entitled to the right to life and personal liberty
except the procedure established by law. Irrespective of the castes, sex, religion, or place
of birth everyone is entitled and they can’t be deprived of his life.
 Article 21A provides that all children between the age of 6 to 14 years are entitled to free
and compulsory education.
 Article 24 prohibits the employment of children below the age of 14 years in factories,
mines, or any other hazardous employment. This article prohibits:
o Child labour
o Working in the construction industry
o Mines
o Hazardous employment
 Article 25 provides that every person has freedom of conscience and they are entitled
equally to profess, propagate and practise any religion. This freedom is subjected to
public order, health and morality. Article 25(2)(b) provides that nothing in this article
will prevent the state from making or it won’t affect any pre-existing law for providing
social welfare and reform or tossing Hindu religious institutions of a public character to
all classes.
 Article 29 protects the interest of minorities, any citizen residing in India having a
distinct language or a culture. They have the right to conserve the culture/language/script
of their own. Further, any citizen based on religion, race, or castes cannot be denied
admission to any educational institution funded by the state.
 Article 30 minorities either based on religion or language have the right to establish and
administer educational institutions.
 Article 38 states must ensure and promote the welfare of the people by promoting and
securing as effectively as may be a social order and must act to minimize inequalities in
terms of income, status, facilities, and opportunities available.
 Article 39 provides the policy which is to be considered by the states. Like, men and
women are equally entitled to adequate means of livelihood, equal pay for equal work for
 men and women, the health of the worker, no abuse against youth, children are provided
with the opportunity to develop healthily to secure, and no citizen must be forced out of
economic necessity to pursue something which unsuited for their age or quality.
 Article 39A states must provide free legal aid to the people who can’t afford it because of
economically weaker sections or due to some disabilities.
 Article 41 provides that the state has the power/capacity to make provisions within the
economic limits to secure the right to education, the right to work, and the right to public
assistance in certain cases. For this Article, certain cases include old age, disablement,
sickness, or any other condition. The Supreme Court while interpreting this article in
many cases held that the state must make effective provisions for securing the rights of
the disabled and for the people suffering from other infirmities within the economic
capacity of the state.
 Article 42 provides that the state must make provisions to secure any other hazardous
employment in the just and humane conditions of work and maternity relief. Protecting
the employment of women during the maternity period.
 Article 46 under the Directive Principles of State Policy provides that the State must
promote the educational and economic interests of the scheduled castes, scheduled tribes,
and the weaker sections of the society with due care. Also, the state must protect the SC,
ST & weaker sections from exploitation and social injustice.
 Part XVI of the Constitution deals with special provisions relating to certain classes. This
part provides political empowerment to the scheduled castes, scheduled tribes, and other
classes. Article 330 and Article 332 reserve seats for scheduled castes and scheduled
tribes in the house of people and legislative assemblies of the state respectively. National
Commission for scheduled castes and scheduled tribes have been established under
Article 338 and Article 338A respectively.
 Article 340 provides that the president has the authority to investigate the condition of
socially and economically backward classes through appointing a commission to
investigate.

https://blog.ipleaders.in/weaker-sections-society-constitution-socio-legal-analysis/
Recent and Important Judicial Decision regarding Conceptual Framework of Labour Law

The Secretary, Ministry of Defence v. Babita Puniya & ors. – The decision in this landmark
judgment puts an end to gender discrimination by directing that women in the Short Service
Commission (“SSC”) are eligible for Permanent Commission in the Indian Army regardless of
their service and is considered as a turning point in the history of the Indian Army. This
judgment not only affords women the opportunity to be at par with men in the Indian army but
also provides job security and ensures equal opportunity to women in the Indian Army. The SSC
female officers who will be eligible for Permanent Commission will be barring women from
Permanent Commission is unjustified and violative of Article 14 of the Constitution of India.

Union of India v Lt Cdr Annie Nagaraja – In pursuit of the aforesaid judgment, the female
officers in the Navy were also held to be entitled to Permanent Commission. The female officers
are to be treated equal to its male counterparts for the same role.

Dr. Malabika Bhattacharjee v Internal Complaints Committee, Vivekananda College and

Others – This case further clarifies that the existing Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act & Rules, 2013 ("PoSH Act"), which prevents and
prohibits the sexual harassment of women at the workplace, allows not only for complaints to be
made by women, but against persons of any gender. In this case, the action of IC to accept a case
under the PoSH Act was challenged by the Petitioner on the ground that the complainant and the
respondent were of the same gender and the complaint was not maintainable. The High Court fe
observed that:

 The definition of "respondent must be read in concurrence with the rest of the legislation,
and stated that "there is nothing in Section 9 of the 2013 Act to preclude a same-gender
complaint under the Act.
 “Although it might seem a bit odd at the first blush that people of the same gender
complain of sexual harassment against each other, it is not improbable, particularly in the
context of the dynamic mode which the Indian society is adopting currently, even
debating the issue as to whether same-gender marriages may be legalized.”
 The term 'sexual harassment" as defined under the Section 2(n) of the PoSH Act must be
interpreted against the background of the social standpoint and cannot be regarded as a
 static concept, that the sexual harassment contemplated pertains to dignity and does not
mean that a person of similar gender cannot hurt any modesty dignity.

The High Court also decided that same-gender complaints under the PoSH Act are maintainable.

Pradip Ragunath Daud v State of Maharashtra and Another – The Supreme Court in the
case of Vishaka and Others v State of Rajasthan and Others (JT 1997 (7) SC 384) had laid down
guidelines ("Vishaka Guidelines") for prohibition and prevention of sexual harassment of women
at the workplace and dealing with cases of sexual harassment at the workplace which was later
superseded by the PoSH Act. In the present matter, the complainant levied the allegations against
the applicant of stalking and chasing her in front of other male and female colleagues at the
workplace. A plea was filed by the applicant to quash the First Information Report ("FIR")
registered against him under Sections 354 and 509 of the Indian Penal Code, 1860 and the
complainant had filed a compromise affidavit in this regard. The Bombay High Court did not
accept the compromise affidavit submitted and found it "unconscionable to accept the
compromise as it would be against the interest of justice". The High Court after considering the
merits of the case stated that there exists no ground for quashing of the FIR and the contents of
the FIR were spelt out by the complainants and the same allegations have been stated in the
charge-sheet and the petition was dismissed. Therefore, the High Court observed that the
objective of Vishaka Guidelines will be defeated if the complainant is compelled to withdraw the
complaint.

Gujarat Mazdoor Sabha v State of Gujarat - Gujarat Labour and the Employment Department
had issued a notification under Section 5 of the Factories Act, 1948 exempting factories in the
state of Gujarat from "from various provisions relating to weekly hours, daily hours, intervals for
rest etc. for adult workers" under Sections 51, 54, 55 and 56. The issue raised before the Court in
the present matter was whether the COVID-19 pandemic and the nationwide lockdown falls
within the ambit of "public emergency" as defined in Section 5 of the Factories Act. It was held
that statutory provisions which affords dignity and rights to the worker cannot be done away
with on account of a pandemic situation by the Gujara Government. In this regard, the pandemic
does not qualify as "public emergency within the purview of Section 5 of the Factories Act, 1948
threatening the security of the nation. It was noted that the notification violated the worker's right
to life and right against forced labour guaranteed by Articles 21 and 23 of the Indian Constitution
and the Court directed the payment of overtime wages to all eligible workers who have been
working since the notification was rolled out. Thus, the notification issued by the Gujarat
Government was quashed.

In the case of Chief Regional Manager, United India Insurance Company Limited v. Siraj
Uddin Khan [Civil Appeal No. 5390 of 2019, decided on 11 July 2019], the SC has reiterated
that no individual can claim wages for the period that he/she remained absent without leave or
justification.

In the present case, the Respondent was relieved from the Allahabad branch of the Appellant to
join the Jaunpur branch of the Appellant. However, the Respondent did not join the Jaunpur
branch on the assigned date and was unauthorizedly absent from work for four months.
Disciplinary enquiry was conducted against the Respondent and an order for reduction of basic
pay by two steps was passed in May 2009. However, the Respondent continued to be absent
from work until 2012. Consequently, the Appellant passed an order in June 2012, terminating the
services of the Respondent. The Respondent preferred a series of writ petitions before the High
Court of Allahabad against the above-mentioned orders. The High Court of Allahabad quashed
the above-mentioned orders citing procedural lapses in the conduct of disciplinary enquiry,
without specially directing the Appellant to provide back wages to the Respondent from 2009-
2012. Upon refusal of the Appellant to pay back wages from 2009 - 2012, the Respondent filed
another writ petition before the High Court of Allahabad. The High Court of Allahabad directed
the Appellant to pay salary for the period 2009 - 2012, along with 18% interest. The Appellant
preferred the present appeal before the SC against this order of the High Court of Allahabad.

The two-judge bench of the SC held that, setting aside of the termination order does not
automatically entitle the Respondent to the salary for the period 2009 - 2012. The SC
differentiated the present case from a situation where an employee was dismissed from service
and when such dismissal was set aside, he would automatically be entitled for back wages. The
SC noted that since the Respondent was not kept away from the work on account of dismissal or
by any order of the Appellant, the Respondent was not eligible to claim arrears of wages.
Therefore, the SC partly allowed the appeal and directed the Appellant to consider the claim of
back wages of the Respondent and pass appropriate orders with reasons.
In Pankaj Prakash v. United India Insurance Company Limited and Another [Civil Appeal
No. 5340-5341 of 2019, decided on 10 July 2019], the SC held that all public servants are
entitled to know their grades in an annual performance appraisal report (APAR).

The Appellant was aggrieved by the fact that the entries in his APAR for two years were not
disclosed, as a result of which he was unable to submit a representation for promotion at the
particular time. The Appellant filled a writ petition before the High Court of Allahabad against
such action of the employer i.e. Respondent. The High Court of Allahabad held that in the
absence of an adverse entry or an entry below the benchmark, the failure to communicate the
grade in an APAR did not result in an actionable grievance. The Appellant preferred an appeal
against this judgment of the High Court of Allahabad.

The SC held that as per the decisions of the SC in Dev Dutt v. Union of India [(2008) 8 SCC
725] and Sukhdev Singh v. Union of India [(2013) 9 SCC 566], it is mandatory that every
entry in the APAR of a public servant must be communicated to him/her within a reasonable
period. Apart from ensuring transparency in the system, such disclosures also ensure that a
public servant is given reasonable opportunity to make representations against the gradings if
he / she is dissatisfied with the results. Further, the Union of India had also issued Office
Memoranda on 14 May 2009 and 13 April 2010 seeking compliance by all ministries and
departments. Moreover, on 19 October 2012, a specific communication was also addressed to
public sector insurance companies.

Therefore, the SC disagreed with the reasoning given by the High Court of Allahabad and held
that non-communication of the entries in an APAR, whether good or bad grades, is a matter in
respect of which a legitimate grievance can be made by the Appellant. Accordingly, the SC
directed the Appellant to communicate the details of the APAR to the Respondent within a
period of one month from the date of receipt of this order.

In Dr Pooja Jignesh Doshi v. The State of Maharashtra and Another [Writ Petition No.
1665 of 2015, decided on 3 July 2019], the division bench of High Court of Bombay (Court)
reiterated that even in case of birth of a child by surrogacy, the parents who have lent the ova and
sperm, would be entitled to maternity leave and paternity leave, respectively. The Court
reiterated the law laid down by the division bench of the Court in Dr Mrs Hema Vijay Menon
v. State of Maharashtra [Writ Petition No.3288, decided on 22 July 2015].

MODULE 2: LEGISLATION RELATING TO WORK- CONDITIONS AND

PROVISION OF HEALTH, SAFETY AND WELFARE

Occupational Safety, Health and Working Conditions Code, 2020

The Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code“) received
the President's assent on September 28, 2020 along with two other codes, all of which are yet to
be notified by the Government. The OSH Code has subsumed several key pieces of legislation
on the working conditions of labour and consolidated it into one comprehensive act, including,
inter alia, the Contract Labour (Regulation and Abolition) Act, 1970, the Factories Act, 1948,
etc. The new codes are an exercise in ensuring a streamlining of the labour laws in the country.

Key Definitions

Contract Labour: “Contract labour” has been defined as a worker deemed to be employed in/in
connection with the work of an establishment when he is hired for such work through a
contractor, with or without the knowledge of the principal employer. The definition excludes any
worker (other than a part-time employee) who is regularly employed by the contractor for any
activity of his establishment and such worker's employment is governed by mutually accepted
standards of conditions of employment and gets periodical increment in pay and other welfare
benefits.

Employee: “Employee” means a person employed (whether expressly or impliedly) on wages by

an establishment to do any skilled, unskilled, manual, operational, supervisory, managerial,
administrative, technical, clerical or other work. The definition of employee has been made
consistent in all the new codes, as well as the Code on Wages, 2019.

Employer: The OSH Code defines “employer” to be a person who employs, whether directly or
through any person, or on his behalf, or on behalf of any person, one or more employees in his
establishment, and includes, inter alia, the person/authority which has the ultimate control over
the affairs of the establishment and contractor.

Establishment: An “establishment” is (i) any place with ten (10) or more workers where any
industry, trade, business, manufacturing or occupation is carried on; or (ii) a motor transport
undertaking, newspaper establishment, audio-video production, building and other construction
work or plantation with ten (10) or more workers; or (iii) factory in which ten (10) or more
workers are employed; or (iv) a mine or port or vicinity of port where dock work is carried out4.

Hazardous Process: The OSH Code defines a “hazardous process” as any process or activity in
relation to specific industries (set forth in Schedule I of the OSH Code), where, unless special
care is taken, raw/intermediate/finished/bye-products, etc., as the case may be, would:

 Cause material impairment to the health of the persons engaged in or connected herewith;
or
 Result in pollution of the general environment5.

Principal Employer: For the purposes of the OSH Code, a “principal employer” is (i) any
person responsible for the supervision and control of the establishment where contract labour is
employed or engaged; or (ii) the owner or the occupier of the factory and where a person has
been named as the manager of the factory, the person so named.

Wages: “Wages“, as per the OSH Code, comprises all remuneration such as salaries, allowances
or otherwise, expressed in terms of money or capable of being so expressed which would be
payable to a person in respect of his employment, whether express or implied, or of work done in
such employment and includes basic pay, dearness allowance and retaining allowance, if any.

The OSH Code clarifies that wages do not include (a) bonus; (b) value of accommodation or
light, water, medical attendance; (c) employer contribution towards any pension or provident
fund; (d) conveyance allowance; (e) sum paid to employed person to defray special expenses; (f)
house rent allowance; (g) overtime allowance and (h) gratuity, etc.
Rights of interstate workers

In addition to the general labour laws applicable to all workers, the interstate workers are entitled
with

 Equal or better wages for the similar nature & duration of work applicable for the local
workmen or stipulated minimum wages under the Minimum Wages Act, 1948 whichever
is more,
 Displacement allowance (Section 14),
 Home journey allowance (Section 15) including payment of wages during the period of
journey,
 Suitable residential accommodation and medical facilities free of charge on mandatory
basis.
 Termination of employment after the contract period without any liability.
 Right to lodge compliant with the authorities within three months of any incident,
accident, etc.

Role of contractors

Registration of all contractors who employs or employed five or more Interstate Migrant
Workmen on any day of the preceding 12 months.

 Furnish the details of workmen periodically in such forms as prescribed by state

government.
 Maintain the registers indicating the details of interstate workers and make available for
scrutiny by the statutory authorities.
 Issue of passbook affixed with a passport-sized photograph of the workman indicating the
name and the place of the establishment where the worker is employed, the period of
employment, rates of wages, etc. to every inter-state migrant workman.
 Reporting by the contractor the incidence of fatal accident or serious injury of such
workman to the specified authorities of both the States and also the next of kin of the
workman.
 Liable for the prescribed punishments for violations committed under this Act.
Role of principal employers

 Registration of all principal employers who employs or employed directly or indirectly

five or more Interstate Migrant Workmen on any day of the preceding 12 months.
 Maintain the registers indicating the details of interstate workers and make available for
scrutiny by the statutory authorities.
 Every principal employer shall nominate a representative duly authorized by him to be
present at the time of disbursement of wages by the contractor and it shall be the duty of
such representative to certify the amounts paid as wages in such manner and may be
prescribed.
 Principal employer shall be liable to bear the wages and other benefits to interstate
workers in case of failure by the contractor to effect the same.
 Liable for the prescribed punishments for violations committed under this Act.

Role of state governments

 Appointment of inspectors to oversee implementation of this act.

 Appointment of registration officers to grant and revoke registration of contractors /
principal employers / establishments.
 Appointment of licensing officers to grant, suspend and revoke licenses to contractors /
principal employers / establishments
 Making rules for carrying out the purposes of this Act subject to the condition of previous
publication
 Entertaining appeals from the aggrieved parties and disposal of the same as per this Act

Duties of Employer under OSH Code

Under the OSH Code, every employer is required to undertake the following:

 Ensure that the workplace is free from hazards which cause or are likely to cause injury
or occupational disease to the employees and comply with the OSH Code and the
Government's directions on the same;
 Provide free annual health examination or test, free of costs to certain classes of
employees;
  Provide and maintain, as far as is reasonably practicable, a working environment that is
safe and without risk to the health of the employees;
 Issue letters of appointments to employees; and
 Ensure that no charge is levied on any employee for maintenance of safety and health at
workplace including conduct of medical examination and investigation for the purpose of
detecting occupational diseases.

Furthermore, the OSH Code prescribes a more stringent set of duties for employers with respect
to factories, mines, dock work, building and other construction work or plantations, including (i)
arrangements in the workplace for ensuring safety and absence of risk to health in connection
with the use, storage and transport of articles and substances; (ii) provision of such information,
instruction, training and supervision as are necessary to ensure the health and safety of all
employees at work, etc.

The OSH Code has further clarified that it shall be the duty of the architect, project engineer or
designer responsible for any building or construction work or the design of any project relating
to such building, to ensure that, at the planning stage, due consideration is given to the safety and
health aspects of the building workers and employees who are employed in the erection,
operation and execution of such projects.

Rights of Employee under OSH Code

Every employee has the following rights under the OSH Code:

 To obtain from the employer, information relating to employee's health and safety at
work and represent to the employer regarding inadequate provision for protection of the
employees safety or health in connection with the work activity in the workplace, and if
not satisfied, to the inspector-cum-facilitator;
 If he has reasonable apprehension that there is a likelihood of imminent serious personal
injury or death or imminent danger to health, he may bring the same to the notice of his
employer directly and simultaneously bring the same to the notice of the inspector-cum-
facilitator;
  The employer is required to take immediate remedial action if he is satisfied about the
existence of such imminent danger and send a report forthwith of the action taken to the
inspector-cum-facilitator in such manner as may be prescribed by the Government; and
 If the employer is not satisfied about the existence of any imminent danger as
apprehended by his/he employees, he shall, nevertheless, refer the matter forthwith to the
inspector-cum-facilitator whose decision on the question of the existence of such
imminent danger shall be final.

Registration under OSHWC and Social Security Codes

The Occupational Safety, Health and Working Conditions Code, 2020 provides for registration
under Section-3 and states that every employer of any establishment:-

a) Which comes into existence after the commencement of the Code;

b) To which the Code shall apply

Must apply to the registering officer within sixty days from the date of when the Code becomes
applicable. The registering officer is given the discretion to entertain applications after the expiry
of the above period provided the late fees is paid as prescribed.

Applicability of OSH Code

The OSH Code shall be applicable on every establishment employing fifty (50) or more than
fifty (50) contract labour through a contractor in any establishment. The CLRA, subject to state
specific amendments, applies to establishments employing twenty (20) or more contract labour
through contractors. States like Maharashtra, Telangana etc. have increased this threshold of
twenty (20) contract labour to fifty (50) contract labour. The OSH Code focuses on bringing
uniformity with respect to application of the chapter related to contract labour in all the states
across the country.

One Registration for One Establishment

The OSH Code provides for a single registration of every establishment employing ten (10) or
more workers and every establishment to whom the OSH Code applies shall apply for such
registration within sixty (60) days from the date of applicability of OSH Code. This one
registration concept will now allow every principal employer who has obtained registration
under the OSH Code to engage contract labour in his establishment without taking any separate
registration for the same.

License of Contractors

As per the OSH Code, every contractor, who is employing fifty (50) or more contract labour and
placing them to work for some other establishment will need to obtain a single license. The
license will be valid for a period of five (5) years. Under the CLRA the contractors are bound to
obtain multiple licenses with respect to each establishment where the contract labour is being
placed by the contractor. The OSH Code will provide relief to the contractors from obtaining
multiple licenses.

Prohibition on Employment of Contract Labours

The OSH Code restricts employment of contract labour in the core activities of an establishment.
However, the OSH Code provides that the principal employer may engage contract labour
through a contractor in any core activity in the following situations, where:

The normal functioning of the establishment is such that the activity is ordinarily done through
contractor; or

The activities are such that they do not require full time workers for the major portion of the
working hours in a day or for longer periods, as the case may be; or

Any sudden increase of volume of work in the core activity which needs to be accomplished in a
specified time.

Under the OSH Code, core activities shall mean any activity for which the establishment is set
up and includes any activity which is essential or necessary to such activity. Further, it is
provided that the following shall not be considered as essential or necessary activity, if the
establishment is not set up for such activity, namely:

a) Sanitation works, including sweeping, cleaning, dusting and collection and disposal of all
kinds of waste;
b) Watch and ward services including security services;
 c) Canteen and catering services;
d) Loading and unloading operations;
e) Running of hospitals, educational and training Institutions, guesthouses, clubs and the
like where they are in the nature of support services of an establishment;
f) Courier services which are in nature of support services of an establishment;
g) Civil and other constructional works, including maintenance;
h) Gardening and maintenance of lawns and other like activities;
i) Housekeeping and laundry services, and other like activities, where these are in nature of
support services of an establishment;
j) Transport services including, ambulance services; and
k) Any activity of intermittent nature even if that constitutes a core activity of an
establishment.

Under CLRA, the appropriate government after consultation with the central board has the
powers to issue notification to prohibit employment of contract labour in any process or activity
in any class of establishment. This however, does not provide for whether the contract labours
can be engaged by a principal employer in his establishment for certain kind of work.

Employment of Contract Labour and Inter-State Migrant Workers

The OSH Code has modified the number of minimum contract labour to fifty (50) from twenty
(20) for the OSH Code to apply. Welfare facilities as specified under the OSH Code are to be
provided by the principal employer of the establishment to the contract labour employed in such
establishment.

In a step that should prove beneficial, the OSH Code provides for a common license in respect of
a factory, industrial premises for beedi and cigar work and engaging contract labour. It has
further been clarified that no contractor is permitted to engage any contract labour if it does not
procure a license under and in accordance with the OSH Code.

The OSH Code has also safeguarded the rights of the Inter-State Migrant Workers by ensuring
that the contractor extends all benefits as are available to a worker under the various labour laws
to inter-state migrant workers as well. Furthermore, the employer of every applicable
establishment is required to pay to every inter-state migrant worker, a lump sum fare for to and
fro journey to his native place from the place of his employment.

The enactment of the OSH Code comes at a crucial juncture wherein the rights of the workers
have been debated heatedly on every fora and their plight has captured the spotlight during the
pandemic. There is a clear impetus in the OSH Code to address the issues that have come to the
fore, including that of the inter-state migrant workers. Furthermore, there is an obvious shift
towards the simplification of the compliance regime by the introduction of the single license.
Therefore, while the OSH Code has all the ingredients of a well-rounded legislation, it is prudent
to await its passage into the implementation stage before declaring it an overall success.

Health, Safety and Working Conditions

The employer is required to provide and maintain welfare activities for employees as may be
prescribed by the Central Government including (i) adequate and suitable facilities for washing
to male and female employees separately; (ii) bathing places and locker rooms for male, female
and transgender employees separately; (iii) sitting arrangements for all employees obliged to
work in a standing position; (iv) adequate first-aid boxes or cupboards with contents readily
accessible during all working hours; and (v) any other welfare measures which the Central
Government considers, under the set of circumstances, as required for decent standard of life of
the employees.

Furthermore, the Central Government is entitled to prescribe for provision of, inter alia, (i)
cleanliness and hygiene; (ii) ventilation, temperature and humidity; (iii) adequate standard of
humidification; (iv) potable drinking water; (v) adequate lighting; (vi) adequate standards to
prevent overcrowding, etc.

Work hours and employment conditions

 Daily work hour limit: The 2019 Bill allowed the appropriate government to notify the
maximum daily work hours for workers. The 2020 Bill fixes the maximum limit at eight
hours per day.
 Employment of women: The 2019 Bill allowed the appropriate government to prohibit
employment of women for undertaking dangerous operations. The 2020 Bill provides
 that women will be entitled to be employed in all establishments for all types of work
under the Bill. It also provides that in case they are required to work in hazardous or
dangerous operations, the government may require the employer to provide adequate
safeguards prior to their employment.
 Workers are entitled to one day off for every 20 days of work and one day off every
week.

MODULE 3: LABOUR WELFARE AND SYSTEM OF GOVERNANCE

Role of Government, Labour Welfare Departments, Workers’ Education

Labour welfare is an important dimension of industrial relation, labour welfare includes overall
welfare facilities designed to take care of well being of employee's and in order to increase their
living standard. It can also be provided by government, non government agencies and trade
unions.

The concept of labour welfare is flexible and elastic and differs widely with time, region,
industry, social values and customs, degree of industrialization, the general socio – economic
development of the people and the political ideologies prevailing at a particular time. It is also
molded according to the age – group, sex, socio – cultural background, marital and economic
status and educational level of the workers in various industries.

According to the Committee on Labour Welfare, welfare services should mean: ―Such services,
facilities, and amenities as adequate canteens, rest and recreation facilities, sanitary and medical
facilities, arrangements for travel to and from place of work, and for the accommodation of
workers employed at a distance from their homes; and such other services, amenities and
facilities, including social security measures, as contribute to the conditions under which workers
are employed.

 The employers need welfare activities to discharge their social responsibility, raise the
employees morale use the work force more effectively and to reduce function with
workers and to avoid Welfare facilities besides removing dissatisfaction help to develop
loyalty in workers towards the organization.
  Welfare may help minimize social evils, such as alcoholism, gambling, prostitution and
drug addiction.
 To create harmonious industrial relationship.

History of Labour Welfare in India

 In India, the labour welfare started sometime during the 1st World Ward. Till then, the
wellbeing of workers in factories was hardly thought by anybody.
 Industrial Labour Organization has played a very significant role for labour welfare.
 Formed by Indian central government and state governments for welfare of labour in
industries.
 Government has laid down minimum standards for employment and working conditions
in organizations.
 Trade unions and various social organizations also function as agencies for
implementation of labour welfare measures.

Objectives of Labour Welfare

 To increase the standard of living of the working class.

 To make the management feel the employees are satisfied about the work and working
conditions.
 To reduce the labour problems in the organization such as absenteeism, turnover ratio,
indebtedness, alcoholism etc., which make the labourer further weak both physically and
psychologically.
 To recognize human values every person has i.e. his own personality that needs to be
recognized and developed. It is in the hands of the management to shape them and help
them grow.
 Labour welfare helps to foster a sense of responsibility in the industry.
 Labour welfare improves industrial relations and reduces industrial disputes.

Need for Labour Welfare

 The employers need welfare activities to discharge their social responsibility, raise the
employees morale, use the workforce more effectively and to reduce function with
 workers and to avoid welfare facilities besides removing dissatisfaction, that helps to
develop loyalty in workers towards the organization.
 Welfare may help minimize social evils, such as alcoholism, gambling, prostitution and
drug addiction.
 To create harmonious industrial relationship.

The top 4 welfare agencies in India are:

 Central Government

Ours is a welfare state wedded to the policy of doing welfare to the people of the country. For the
economic rejuvenation of the country, the toiling masses must be taken care of, their lots must be
improved. In this regard, the Government has an active role to play.

The Government has to come forward to bring about intellectual, physical, moral and economic
betterment of the workers, so that their whole-hearted and willing co-operation may be readily
available for the economic upliftment of the county in our Plan objectives, workers have been
accepted as an essential part of the Apparatus of industrial and economic administration of the
country.

The Central Government has paid attention to improve the conditions of workers. Various
enactments have been promulgated to safeguard the interests of workers, to extend to them
economic benefits and social security.

The Factories Act, for example, is a bold attempt to extend various facilities to factory workers
— their housing facilities, economic benefits, social security’s and physical safety etc. The
Mines Act is another piece of legislation that aims at providing welfare to mine workers.

So far as mines are concerned, Coal Mines Labour Welfare Fund has been instituted to boost the
morale of coal mine workers under the Coal Mines Labour Welfare Fund Act. Similarly, Mica
Mines Labour Welfare Fund and Iron Ore Mines Labour Welfare Fund have been created by
specific Acts of the Central Government. Again, we find Plantation Labour Act for the welfare
of plantation workers.
Besides the various Acts passed for the welfare of labour in mines, plantations and factories, the
Central Government has kept its Labour Ministry alive to the conditions of workers. Measures
have now been adopted to provide medical aid, legal and financial aid to workers under various
schemes.

To ensure industrial safety, various precautionary measures have also been enforced. Prevention
of the possibility of accidents has been one of the objectives of the Government’s welfare
measures and actually the incidence of accidents has come down.

The Government of India has introduced an industrial housing scheme for the accommodation of
industrial workers. Social Security legislations such as The Workmen’s Compensation Act,
Maternity Benefit Act and The Employees’ State Insurance Act have been in force.

 State Government

The State Governments in India were more or less indifferent to labour welfare, prior to
independence. But now various State Governments are very alive to the conditions of labour and
are up and doing for the upliftment of the lots of the workers.

There are popular governments in some states where workers are adequately taken care of
Labour fronts of different political parties are now sufficiently strong to press the demands of
workers to the Government and the link between the State Governments and the labour wings of
political parties is so close that various facilities are now being made available to the workers
through the State Government’s machinery.

 Employers

Employers in India today have started realizing that they should identify their interest with those
of the employees. No prudent management can now ignore the interests of their workers and
expect to reap the benefits of higher labour productivity.

So, for their own interest, employers are being compelled to adopt welfare measures for the
workers. There are only a few employers in India who have been sympathetic to labour welfare
but others are extending various benefits to workers only under compulsion.
Several industries such as cotton, jute, textile, engineering, sugar, cement, glass, chemical etc.
have been brought under legislative measures to give facilities provided by different industries
either under legal compulsion or under union pressure.

We can say that employers in India with their professional training background are becoming
more and more conscious about the workers whom they now consider the most essential tool to
gear up their organisational activities.

Employers who are still maintaining a negative attitude or an indifferent attitude towards
workers are surely to pay for their foolishness. Days have changed. All over the world is the
slogan for workers to unite. Moreover, employers who fail to understand the potentialities of the
labour force, the fullest utilisation of which can bring miraculous results for the organisation, are
sure to suffer.

 Trade Union

Last but not the least important agent for the welfare of workers is the “Workers’ union.”
Conflicts between labour and capital existed since industrialisation, they still exist and will con-
tinue to exist. The complete harmony and amity between the two opposite-interest groups cannot
be achieved.

Not only in India, but nowhere in the world has industrial peace been ensured? Here is the role
for the Trade Union to play in the matter of bargaining. Various facilities of different nature —
economic, social, cultural — are made available to workers by Trade Unions.

The Indian Trade Unions have not yet been able to do much to ameliorate the lot of their
members. Their participation in this sphere has been mainly through their association with the
Labour Welfare Advisory Committees constituted by the Governments.

It is worthwhile to mention that trade unions in the textile industry (Textile Labour Association)
and the Mazdoor Sabha have made provisions for various welfare facilities to the workers.
Educational and cultural upliftments through trade unions have been made possible. With the
change in the attitude of the employers (many of whom are governments themselves), the nature
of trade unions in India — from militancy to conciliatory — is now noticeable.

Various welfare services are now made available to the workers through Trade Unions after the
trade union leaders’ direct discussions and deliberations with the employers across the table.

However, trade unions should take some measures for the welfare of workers. They should come
forward to assist the employers and the Government in formulation and administration of welfare
schemes. To find out the needs of the workers and to bring them to the notice of the employers
should also come under the purview of trade union activities.

A modern Trade Union has to educate its members, organize for them various inexpensive
programmes and to act as a watch-dog of workers’ interests. Trade Unions have, as a matter of
fact, a great role to play for the welfare of the workers.

Employee’s Education – In the word of William Flayed, “Worker Education” is an attempt on

the part of organized labour to educate its own members under an educational system in which
the workers prescribe the courses of instructions, select the teachers and in a considerable
measure, furnish the finance.

Features of Employees education

 The scope of workers’ education is much wider than that of trade union education but is
narrower than that of adult education.
 The workers’ education is designed to create trade union consciousness among workers,
beside making them good citizens and training them to understand their status, rights and
responsibilities.
 In workers’ education, the workers themselves prescribe the curriculum and select the
teachers who have full sympathy with the working class.
 The institutions providing workers’ education are owned, financed and managed by the
workers.
 It is aimed at increasing the bargaining power of trade unions and making the working
class more sensible and cooperative.
  It differs from vocational and professional education, for its main aim is to train a worker
for his group advancement and increasing individual creativity, whereas vocational and
professional education aims at individual development.
 The approach in workers’ education is psychological and philosophical.
 It includes general education, vocational education, technical education, social education
and training in trade unionism.

Workers Education Scheme: Aims and Objectives

 It is important for industrial peace and harmony, healthy management-labour relations

 Develop effective trade unions through better trained officials and more enlightened
members.
 Enhance the leadership skills which enable the worker in his development.
 Increase the total labour mass literacy
 Better understanding of the problem with effective solutions
 To fulfil the organizations requirements through proper responsibility handling
 The pre-condition of workers education literacy
 Important consideration at the present stage of developing country
 To understand teh workers privileges, rights and obligations
 Time to time training programs to upgrade the workers knowledge
 Minimize the industrial accidents and other mishaps on the shop floor
 National Commission on Labour has said that the labour’s/workers’ education should
have the following key areas to be studied:
o This should be employee independent, intelligent and innovative
o He should be responsible, alert and self disciplined
o Also guided, the National trade union centers to arrange for the quality programs
with the Collaboration with some of the universities and institutions.

Labour Law and PIL – Legal Services Programme

Art 14 of the Indian Constitution explains the concept of Equality before law. The concept of
equality does not mean absolute equality among human beings which is physically not possible
to achieve. It is a concept implying absence of any special privilege by reason of birth, creed or
the like in favour of any individual, and also the equal subject of all individuals and classes to the
ordinary law of the land.

In Randhir Singh v. Union of India, the Supreme Court has held that although the principle of
'equal pay for equal work' is not expressly declared by our Constitution to be a fundamental
right, but it is certainly a constitutional goal under Articles 14, 16 and 39 (c) of the Constitution.
This right can, therefore, be enforced in cases of unequal scales of pay based on irrational
classification. The decision in Randhir Singh's case has been followed in a number of cases by
the Supreme Court.

In Dhirendra Chamoli v. State of U.P. it has been held that the principle of equal pay for equal
work is also applicable to casual workers employed on daily wage basis. Accordingly, it was
held that persons employed in Nehru Yuwak Kendra in the country as casual workers on daily
wage basis were doing the same work as done by Class IV employees appointed on regular basis
and, therefore, entitled to the same salary and conditions of service. It makes no difference
whether they are appointed in sanctioned posts or not. It is not open to the Government to deny
such benefit to them on the ground that they accepted the employment with full knowledge that
they would be paid daily wages. Such denial would amount to violation of Article 14. A welfare
State committed to a socialist pattern of society cannot be permitted to take such an argument.

In Gopika Ranjan Chawdhary v. Union of India, the Armed Forces controlled by NEFA were
re-organized as a result of which a separate unit known as Central Record and Pay Accounts
Office was created at the head quarters. The Third Pay Commission had recommended two
different scales of pay for the ministerial staff, one attached to the headquarters and the other to
the Battalions/units. The pay scales of the staff at the headquarters were higher than those of the
staff attached to the Battalions/units. It was held that this was discriminatory and violative of
Article 14 as there was no difference in the nature of the work, the duties and responsibilities of
the staff working in the Battalions/units and those working at the headquarters. There was also
no difference in the qualifications required for appointment in the two establishments. The
services of the staff from Battalions/units are transferable to the Headquarters.
In Mewa Ram v. A.I.I. Medical Science, the Supreme Court has held that the doctrine of 'equal
pay for equal work' is not an abstract doctrine . Equality must be among equals, unequals cannot
claim equality. Even if the duties and functions are of similar nature but if the educational
qualifications prescribed for the two posts are different and there is difference in measure of
responsibilities, the principle of equal pay for equal work would not apply. Different treatment to
persons belonging to the same class is permissible classification on the basis of educational
qualifications.

It is clear from Article 32 (1) that whenever there is a violation of a fundamental right any person
can move the Court for an appropriate remedy. Traditional rule of locus standi that a petition
under Article 32 can only be filed by a person whose fundamental right is infringed has now
been considerably relaxed by the Supreme Court in its recent rulings. The Court now permits
public interest litigations or social interest litigations at the instance of 'public spirited citizens'
for the enforcement of Constitutional and other legal rights of any person or group of persons
who because of their poverty or socially or economically disadvantaged position are unable to
approach the Court for relief. Once the fundamental rights of the labourers is infringed , They
could approach the Supreme Court by issuing writ under Art 32 and 226.

Public Interest Litigation (PIL) by Employers

PIL petitions challenging the Order (and relevant advisories) were filed before the Supreme
Court in Nagreeka Exports Ltd. Vs. Union of India, Ludhiana Hand Tools Association Vs.
Union of India, Ficus Pax Pvt. Ltd. Vs. Union of India and Twin City Industrial Employers
Association Vs. Union of India on the following grounds:

 The Order is beyond the scope of powers granted to the government under the DMA. The
DMA empowers committees to frame plans to meet disasters and allocate funds for
emergency response / mitigation, but does not authorize the government or the DMA
committees to direct private employers to pay full wages to employees.
 The Order is discriminatory and violative of the right to equality under Article 14 of the
Constitution. It effectively only upholds the rights of employees while ignoring the rights
of employers, whereas the economic rights of both groups have been affected by the
pandemic. It also violates the "equal work, equal play" principle by not differentiating
 between workers who are working during lockdown (in businesses under exemption) and
instead arbitrarily expands the scope to all workers.
 The Order will force employers into insolvency, given their excessive financial burden,
and thus violates the constitutional right to trade under Article 19(1)(g).
 It contravenes the Industrial Disputes Act, 1947 (“IDA”), a special employee welfare
legislation) which specifically contemplates the right to layoff workmen due to natural
calamity upon following the required procedure.
 The petitions have also suggested: (a) utilization of the unclaimed Provident Fund
deposits; and (b) subsidizing 70 – 80% of lockdown wages using funds collected by the
Employees' State Insurance Corporation ("ESIC"), the PM Cares Fund, or other
government scheme.

The petitions were heard on 27 April 2020 (note that Nagreeka Exports Ltd. has withdrawn its
petition but the rest subsist). The Supreme Court allowed the central government two weeks'
response time and directed it to "place its policy" on record on the implementation of the Order,
but did not address the plea for interim relief that would protect employers from paying full
wages during the pendency of the PIL. In fact, when considering the Twin City PIL, the Supreme
Court specifically refused to intervene and stay the Order so as to protect small and medium
enterprises from paying full wages on the basis that, despite threats being issued, no employer
had actually been prosecuted under the Order or the DMA.

Public Interest Litigation by exempt organizations

Certain businesses which were permitted to continued operations during lockdown (being
exempt, as “essential goods / services”) have also raised challenges to the Order. Their basis for
challenge may become increasingly relevant across organisations and industries as relaxations
are introduced on the lockdown.

In Align Components Pvt. Ltd Vs. Union of India, the Bombay High Court on 30 April 2020
declined to intervene in a petition for relief from paying full wages on the basis that a similar
issue is under consideration before the Supreme Court. The petitioner had suggested payment of
50% of wages, as manufacturing activities have been restricted under lockdown. Notably,
however, the Court stated that since the lockdown has been partially lifted for industrial activities
in certain areas, employers are at liberty to deduct wages (subject to following procedure under
law) for workers voluntarily remaining absent. This will also apply to areas where there may not
have been a lockdown.

Petition filed on 1 May 2020 (and currently pending) before the Supreme Court by Teknomin
Construction Limited (work contractors for mine development) sought subsidization of 70%
wages with funds from government schemes (ESIC, PM Cares Fund etc.). Highlights of the
challenges to the Order are as follows:

a) Despite their lockdown exemption, securing workers for continued mining operations has
been problematic. The PIL relies, and requests application of, the Bombay High Court
order (above) that allowed wage deduction of absentee employees in areas where
restrictions are relaxed.
b) The Order itself is challenged as violative of Articles 14 and 39 of the Constitution,
specifically the principles of "equal work, equal pay" and "no work, no pay", as it does
not differentiate between workers who report to work during the lockdown and those who
do not.
c) The DMA does not empower the government to enforce financial obligations upon
private establishments. While under the DMA the government can requisition resources
for rescue operations, this requires payment of compensation. The ultimate onus of any
compensation towards workers under the DMA lies on the government and cannot be
shifted to private employers.
d) It is the obligation of the state to provide financial assistance to workers during
lockdown, as is the practice is several other countries. The Order violates Article 300A of
the Constitution by interfering with and dispossessing the employer of his property other
than by procedure established by law.
e) The petitioner should be entitled to lay-off and retrench workers under the provisions of
the IDA in the event of a natural calamity, and the government cannot legally override
contracts between employers and contract labour and restrain termination of contracts.
f) In fact, the amounts paid to workers cannot be treated as "wages" per the definition under
the IDA – they are at most an advance payment adjustable against future wages or lay-off
/ retrenchment compensation.
 g) The Order was issued without inviting objections and not in a fair, reasonable and
transparent manner, and the government accordingly acted unilaterally and arbitrarily
without following the principle of natural justice.

Public Interest Litigation by Employee Bodies

Media industry: Multiple journalist organizations have moved the Supreme Court with a PIL
against media houses and trade bodies for wage cuts, unpaid leave, layoffs and closure of
business in violation of the Order and labour ministry advisories in support of the Order. The PIL
particularly cites that the media industry is exempt from the lockdown as an “essential service”
and journalists are eligible to work through the lockdown. The PIL also claims violation of the
retrenchment and business closure procedure under the IDA (which requires government
approval, retrenchment compensation etc.), the Working Journalists Act, 1955 as well as their
contracts of service.

The matter was heard on 27 April 2020. Notice has been issued to the government and
respondent employers and will be heard after 2 weeks' time.

IT/ITES/BPO sector: A Pune-based IT union has filed a PIL on 27 April 2020 before the
Supreme Court against IT companies that have ordered pay cuts, withheld salaries and laid off
employees in contravention of the Order and government advisories. The PIL offers similar
grounds as the media industry PIL (above) and further requests that the Supreme Court issue
directions to both private and public sector companies to protect employees' rights (including
payment of subsistence salaries instead of lay-offs, and financial assistance to employees upon
closure of their companies). The petition also seeks action against the errant companies for
contravention of the DMA.

Bonded Labour – Problems of Bonded Labour – Bonded Labour System (Abolition) Act,
1976

Bonded Labour – It is a practice in which employers give high interest loans to workers who
work at low wages to pay off the debt. The Supreme Court has interpreted bonded labour as the
payment of wages that are below the prevailing market wages and legal minimum wages.
Bonded labour was historically associated with rural economies where peasants from
economically disadvantaged communities were bound to work for the landlords. Bonded labour
is found to exist in both rural and urban pockets in unorganized industries such as brick kilns,
stone quarries, coal mining, agricultural labour, domestic servitude, circus, and sexual slavery.

Apart from various constitutional provisions, there is a specific legislation to prohibit bonded
labour i.e. The Bonded Labour System (Abolition) Act, 1976 (hereinafter referred as act).
Bonded labour system as defined under The Bonded Labour System (Abolition) Act, 1976:
“bonded labour means any labour or service rendered under the bonded labour system”

Problems of Bonded Labour in India

 The lack of awareness among workers and employers.

 Low conviction rates.
 Social bias towards bonded labour.
 Migratory nature of bonded labour.
 Weaker implementation of Bonded Labour System (Abolition) Act 1976.
 Punishment for forced labour (Section 374 of IPC– unlawful compulsory labour) is not
appropriate.
 Lack of proper coordination at the national and regional level, and among governments.

Bonded Labour System (Abolition) Act, 1976

The Bonded Labour System (Abolition) Act, 1976 came as a rescuing chevalier for the labourers
who were coerced to work on bonds. This Act applies to the whole of India and has an
overriding effect as the provisions of this Act will be consistent notwithstanding any
inconsistencies.

It was uninhibitedly made intelligible that after the commencement of this Act there shall be a
total veto on the practice of bonded labour. Every individual who was browbeaten to work on
bonds will be unchained and set free. This Act also guarantees to fortify the virtue and rights of
workers to not be forced again as bonded labourers. Section 4 and Section 5 of this act talks
about the same.
Further, this Act makes it perspicuous and comprehensive that any custom, tradition, agreement,
etc. based on which a person or dependant was made to work as bonded labourers, shall be held
nullified and lapsed.

Authorities designated for implementation (Section 10)

There is a hierarchy followed in implementing this Act from the State government to the officer
in charge of implementation. Placed at the top of the hierarchy is the State government who
confers the District Magistrate with the power to safeguard the provision of this Act. Further, the
District Magistrate delegates the powers to an officer who will have the implementing powers at
the local level. Thereby, this acts as a three-tier system of implementation which enhances the
efficiency of this Act with better wings of administration.

The onus to ensure credit by District Magistrate and other (Section 11)

The District Magistrate appointed by the State government and the officer who is delegated with
powers by the magistrate has the right to protect and cushion the rights of bonded labourers. This
is done so that these labourers don’t get back to a situation where they are forced to work on
bonds by the creditors.

This includes promoting welfare schemes and measures in favour of the labour class and
developing their skills to face this accelerating world.

The onus of District Magistrate and officers authorised (Section 12)

It becomes the delegated duty of the District Magistrate and officers authorised by the District
Magistrate to check on whether after the commencement of this Act was there any act of bonded
labour committed anywhere within their local jurisdiction.

If there is a commission of any such forced or bonded labour, then the respective officers shall
take appropriate action to veto such an Act and also protect the rights and dignity of the bonded
labourers. Also, they shall promote welfare measures which would become torchbearers of the
right, dignity, and voice of the labourers.
Vigilance Committee

Functions of the Vigilance Committee

The State government is responsible for appointing a vigilance committee at every district and
sub-division as it may think fit through notifying in the Official Gazette. This is done to have a
proper and well-maintained surveillance system. These provisions are mentioned under Section
13 and Section 14.

The district and sub-divisional magistrate shall provide the vigilance committee with procedural
and other assistance. The entire procedure of the vigilance committee cannot be held nullified
merely because there is any default in their constitution.

The main functions of the vigilance committee include advising the District Magistrate and other
officials concerning the various provisions of this Act and their implementation, further they
provide for the rehabilitation of bonded labour both socially and economically. They monitor
functions of various banks in their respective sectors, surveil and conduct surveys of cognizable
offences and defend suits instituted against any bonded labourers.

Burden of Proof (Section 15)

When there arises a question of a debt claimed by bonded labour then the burden of proof will lie
on the creditor to prove that the debt is not a bonded debt.

Offences and Procedure for Trial

Punishment for enforcement of bonded labour (Section 16)

Deterrence and reformation are two pillars of the justice system of India which prevents an
individual from committing further crimes, these pillars were used to strengthen this Act too.
Here, If any person after the commencement of this Act coerces any other person to render
bonded labour, shall be punished with imprisonment for three years and also with a fine of
rupees two thousand.
Punishment for the advancement of bonded debt (Section 17)

If any person advances any bonded debt after the commencement of this Act shall be punished
with imprisonment up to three years and a fine of rupees two thousand. This depicts the
advancement of bonded debt to be an offence which is punishable under this Act, thereby it
prevents any creditor from the advancement of bonded debt.

Extracting bonded labour, punishments (Section 18)

If any person imposes by virtue of any culture, tradition imposes bonded or any other forced
labour on any person shall be punished according to this Act. The punishment would extend to
imprisonment for one year and a fine of one thousand rupees. The bonded labourer will be paid
from this extracted fine i.e rupee five per day.

Punishment for omission or failure to restore possession of the property to bonded

labourers (Section 19)

After the commencement of this Act all the property which was kept on bonds were to be given
back to its original owner, If the person who is required to restore a property, fails to do so shall
be punished with an imprisonment extending to a year or with a fine of rupees one thousand or
with both. This restoration shall be done within thirty days. And the actual owner is given a sum
from this recovered amount charging five rupees per day.

Abetment of an offence, punishable (Section 20)

Abetment of an offence in layman’s language means instigating any offence. Here, if any person
instigates an offence shall be punished with the effect of an abetted crime. This is done
irrespective of whether the instigated crime is committed or not.

Offences to be tried by Executive Magistrates (Section 21)

The Executive Magistrate is conferred with the powers of a Judicial Magistrate of the first or
second class as per the case by the State government. These Executive Magistrates with the
conferred powers of a Judicial Magistrate will conduct the trial accordingly.
Cognizance of offences (Section 22)

Every offence which is included under this Act can be issued with a bail that is offences covered
here are bailable. And also an investigating officer can arrest the offender without a warrant. The
offences covered here are thereby, categorised as cognizable offences.

Offences by companies (Section 23)

If the offence is committed by a company then all the people associated or were in charge of the
company at the time of the commission of the offence would be held liable and will be punished
accordingly.

If the offence was committed by the neglect of any manager, officer or any other official then he
or she will be liable and will be punished for the same.

The Bonded Labour System (Abolition) Act of 1976 was a great milestone in abolishing the age-
old system of bonded labour which was fast catching the society like a forest fire. The provisions
of this Act uphold the dignity and solemnity of bonded labourers and also restore their property.
This Act had provided them with new wings to fly high with the wind of rights and a platform to
address their grievances. Now with this Act, the bonded labourers are free and unchained and are
all set to face this accelerating world with its fullest might.

Summary of the Act

The Bonded Labour System (Abolition) Act (hereinafter referred as "the act", 1976 provided
various safeguards against bonded labour. Some of them are enumerated below:

i. Under Section 4 of the act, the primary relief that was awarded to the bonded labourers
with the commencement of the act was that the bonded labour stood discharged from any
sort of obligation to provide bonded labour.
ii. Under Section 5 of the act, any custom/agreement whereby bonded labour existed was
rendered void and inoperative.
iii. Prohibition was casted on institution of any suit before any civil court vis-à-vis recovery
of bonded debt.
 iv. “Every decree or order for the recovery of bonded debt, passed before the
commencement of this Act and not fully satisfied before such commencement, shall be
deemed, on such commencement, to have been fully satisfied.”
v. Under Section 7 of the act, any property which is under mortgage vis-à-vis bonded debt
shall stand freed on commencement of the act.
vi. Any person detained in civil prison in pursuance of the bonded debt shall be freed as per
the provisions of the act.
vii. Under Section 8 of the act, a bonded labour who has been freed shall not be evicted from
homestead.

Judicial Interpretation Enforcing the Constitutional Provisions vis-a-vis Bonded Labour

 PEOPLES' UNION FOR DEMOCRATIC RIGHTS V. UNION OF INDIA,

The petitioner commissioned three social scientists to enquire into the conditions under which
the workman worked in Asiad projects. Based on the investigations conducted by the social
scientists, petitioner sent a letter addressed to Justice P.N Bhagwati. In pursuance to the same,
the Hon'ble Supreme Court took notice of the letter on the judicial side and issued notice to
Union of India and State of Delhi.

The court held that, “The Union of India, the Delhi Administration and the Delhi Development
Authority cannot escape their obligation to the workmen to ensure observance of the provisions
of various labour law by its contractors and for non-compliance with the laws by the contractors,
the workmen would clearly have a cause of actions against them as principal employers.”

The Hon'ble Supreme Court of India dealt with the expression “other similar form of forced
bonded labour” envisaged in Article 23 of The Constitution of India, 1950. The court gave the
expression a wide interpretation to meet the objectives of Article 23. The court held that a person
who has been forced to work as a bonded labour and person who is working as a labour at a rate
lesser than the minimum wage shall be dealt equally.

BADHUA MUKTI MORCHA V. UNION OF INDIA,

The Public Interest Litigation was filed before the Supreme Court under Article 32 of The
Constitution of India to issue appropriate directions for prohibition of Bonded Labour. The
petitioner conducted a survey in stone quarries situated in Faridabad district. It was found by the
petitioner that they were living in substandard conditions. There were a lot of middlemen who
extracted the money from the workmen as commission.

The court directed the Central Government and the State of Haryana to install washrooms,
suitable drinking facilities, provide medical kits so as to raise the living standards of the
workmen. The court directed the Central Government to conduct inspection every fortnight and
in case, any workman is found in distressed condition, he should be provided medical and legal
assistance.

The court went on to observe that, “This right to live with human dignity enshrined in Article 21
derives its life breath from the Directive Principles of State Policy and particularly Clauses (e)
and (f) of Article 39 and Articles 41 and 42 and at the least, therefore, it must include protection
of the health and strength of workers men and women, and of the tender age of children against
abuse, opportunities and facilities for children to develop in a healthy manner and in conditions
of freedom and dignity, educational facilities, just and humane conditions of work and maternity
relief. These are the minimum requirements which must exist in order to enable a person to live
with human dignity and no State neither the Central Government nor any State Government has
the right to take any action which will deprive a person of the enjoyment of these basic
essentials.”

NEERJA CHAUDHARY V. STATE OF MADHYA PRADESH

It was alleged by the petitioner that in spite of the fact that a long time has elapsed, quite a
number of labourers rescued from Faridabad quarries have not been rehabilitated. It was
contended by the petitioner that the State Government was obligated to overlook the
rehabilitation of rescued labourers and rehabilitation of labourers is necessary so as to ensure
Right to Life guaranteed to them under The Constitution of India, 1950.

The Hon'ble court held that as per the requirements of Article 21 and 23, the bonded labourers
need to be identified, rescued and also rehabilitated. The court highlighted the importance of
rehabilitation observing that in absence of any concrete measures for rehabilitation of rescued
labourers, they would be driven into the state of poverty and substandard conditions again and it
might lead them to the bonded labour system again.
Judicial Interpretation enforcing statutory provisions vis-a-vis Bonded Labour

 BALRAM V. STATE OF MADHYA PRADESH

The Hon'ble Supreme Court issued several directions to the Central Government and its' officials
in order to enforce the provisions of the act such as:

 Maintain adequate funds for the purposes of the act

 The collector and other designated officials to ensure that the stipulated amount reached
the beneficiary i.e. the free bonded labor.
 Individual bank accounts to be opened in the name of the beneficiary.

PEOPLES' UNION FOR CIVIL LIBERTIES V. STATE OF TAMIL NADU

A writ petition was filed in the year of 1985 highlighting the plight of migrant labourers from
Tamil Nadu in the State of Madhya Pradesh. The court passed an order directing the National
Human Rights Commission to monitor the fulfillment of objectives of the act. The court called
for suggestion by the Government as well. While analyzing the situation at hand, the court
concluded that without chalking out the exit plan on how to rehabilitate the bonded labourers,
their release would render them languishing in the streets without any source of livelihood. In
pursuance of which the court issues certain directions such as:

 States and Union Territories to submit their status report in the form prescribed by the
National Human Rights Commission in every six months
 Vigilance committees shall be constituted at district and sub-divisional levels in
accordance with S. 13 of the act
 It was the duty of the states and the union territories to chalk out a plan to rehabilitate
released bonded labourers either by itself or with the aid of the NGOs.
 Arrangements to be made to sensitize the statutory authorities under the act in order to
enable them to carry out their duties efficiently.
The Child and Adolescent Labour (Prohibition and Regulation) Act, 1986 – Amendment
(2016)

The main object of the Child Labour ( Prohibition and Regulation) Act, 1986 is to address the
social concern and prohibit the engagement of children who have not completed 14th year of age
in certain employments and to regulate the conditions of work of children has been prohibited in
occupations relating to (i) transport of passengers, goods or mails by railways (ii) bidi making
(iii) carpet weaving (iv) manufacturing of matches, explosives and fire (v) soap manufacture (vi)
wool cleaning (vii) building and construction industry. The Government has also prohibited
employment of children in the following occupations or processes: (i) Abattoirs/Slaughter houses
(ii) hazardous processes and dangerous operations as notified (iii) printing, as defined, (iv)
cashew and cashewnut descaling and processing v) soldering processes in electronic industry.
The Act prohibits employment of child in about 13 occupations and about 51 processes. The
Fundamental Rights mentioned in the Constitution of India (the law of land) in the Article 24
under Right Against Exploitation also mentions for prohibition of employment of children in
factories, etc.

The Act provides that no child shall be permitted to work between 7 p.m. and 8 a.m. and shall
not be permitted to work over time. No child shall work for more than 3 hours before he has an
interval of one hour. Spread over has been fixed at six hours. A cannot work in more than one
establishment on any day. A weekly holiday is allowed. The Act also provides health and safety
measures for the children. Section 13 of the Act describes to provide child workers facilities of
drinking water, latrines and urinals, cleanliness, disposal of wastes and effluents, ventilation and
temperature, etc. should be provided by the employer. Measures for safety from dust and fume,
artificial humidification, fencing of machinery etc., also need to be provided by the employer.

The employer is required to notify the Factory Inspectors in case he engages a child for
employment. Production of certificate of age is also required under the rules of the Act.

The 2016 Act came into force in order to amend Child Labour (Prohibition and Regulation) Act,
1986.

The Child Labour (Prohibition and Regulation) Amendment Act, 2016 seems progressive. It
prohibits “the engagement of children in all occupations and of adolescents in hazardous
occupations and processes” wherein adolescents refers to those under 18 years; children to those
under 14. The Act also imposes a fine on anyone who employs or permits adolescents to work.
However, on careful reading, the new Act suffers from many problems. One, it has slashed the
list of hazardous occupations for children from 83 to include just mining, explosives, and
occupations mentioned in the Factory Act. This means that work in chemical mixing units,
cotton farms, battery recycling units, and brick kilns, among others, have been dropped. Further,
even the the ones listed as hazardous can be removed, according to Section 4 — not by
Parliament but by government authorities at their own discretion.

Two, section 3 in Clause 5 allows child labour in “family or family enterprises” or allows the
child to be “an artist in an audio-visual entertainment industry”. Since most of India’s child
labour is caste-based work, with poor families trapped in intergenerational debt bondage, this
refers to most of the country’s child labourers. The clause is also dangerous as it does not define
the hours of work; it simply states that children may work after school hours or during vacations.

Previous laws

India has passed a number of laws on child labour since Independence. Article 24 of the
Constitution prohibits employment of children below the age of 14 in factories, mines, and other
hazardous employment. Article 21A and Article 45 promise to provide free and compulsory
education to all children between the ages of 6 and 14. In 2009, India passed the Right of
Children to Free and Compulsory Education Act (RTE). But the amendments in the new law
make it practically impossible to implement the RTE. Its clauses put such a burden on poor low-
caste families that instead of promoting education, the Act actually increases the potential for
dropouts. And parents, scared of the huge fines that they may have to pay for employing their
children, are likely to lie about school attendance and may unwillingly comply with contractors
in employing them.

Not only do the new amendments reverse the gains of the 1986 Act, but actually contradict the
Juvenile Justice (Care and Protection) of Children Act of 2000 that makes it punishable for
anyone to procure or employ a child in a hazardous occupation. They also contravene the
International Labour Organisation’s (ILO) Minimum Age Convention and UNICEF’s
Convention on the Rights of the Child, to which India is a signatory. According to UNICEF, a
child is involved in child labour if he or she is between 5 and 11 years, does at least one hour of
economic activity, or at least 28 hours of domestic work in a week. And in case of children aged
between 12 and 14, 14 hours of economic activity or at least 42 hours of economic activity and
domestic work per week is considered child labour.

Provisions relating to Child workers under various Acts:

Factories Act, 1948:

Section 22 of the Act mentions that no young person can be shall be allowed to clean, lubricate
or adjust any part of machine which thereof would expose the young person to risk of injury
from any moving part either of that machine or of any adjacent machinery.

Section 23 of the Act defines that no young person is allowed to be employable on dangerous
machines.

Section 27 of the Act prohibits employment of children in any part of a factory for pressing
cotton in which a cotton-opener is at work.

The Beedi and Cigar Workers (Conditions of Employment) Act, 1966:

Section 24 of the Act defines that employment of child under in this industry is strictly
prohibited under this Act.

Plantation Labour Act, 1951:

Section 25 of the Act specifies that Women and children can be employed only between the
hours of 6a.m and 7p.m. They can be employed beyond these hours only with the permission of
the State Government.

Domestic Workers (Registration Social Security and Welfare) Act, 2008:

Section 14 of the Act specifies that no child shall be employed as a domestic worker or for any
such incidental or ancillary work which is prohibited under any law.
MODULE 4: LEGISLATION RELATING TO WAGE

Code on Wages 2019 – its impact on Labour

The Code on Wages, 2019 (“Code”) received assent of the president on September 28, 2020. The
Code focuses on simplifying the existing labour laws dealing with payment of wages, overtime,
bonus, minimum wages etc. by bringing uniformity in the definition of terms and reducing the
burden of filing returns and maintaining the registers under different acts. The Code will
subsume four Central labour legislations namely the Payment of Wages Act, 1936, the Minimum
Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. The
Code not only regulates the wages of workmen but also the wages of employees performing
managerial, supervisory functions.

Code of Wages, also known as the Wage Code was passed in August 2019. The Act consolidates
the provisions of four labour laws concerning wage and bonus payments and makes universal the
provisions for minimum wages and timely payment of wages for all workers in India. The Acts
which are consolidated through the Code of Wages, 2019 are:

 Payment of Wages Act, 1936,

 Minimum Wages Act, 1948,
 Payment of Bonus Act, 1965 and
 Equal Remuneration Act, 1976.

The Code of Wages applies to all the establishments irrespective of the number of employees
working in the establishment. This code applies to all the employees employed in both the
organized and the unorganized sector. However, the requirement of 20 or more employees in an
accounting year has been provided in the code for the application of Chapter IV of the code
governing the payment of bonus to employees. The Wage Code applies to all categories of
employees irrespective of any ceiling limit for the payment of wages to the employees.

Key Highlights of Wage Code 2019

a) The Code introduces a new concept of “floor wages”, which rates will be fixed by the
Central Government taking into account the minimum living standards of a worker. Once
 the Code is enacted, the minimum rates of wages fixed by the State Government cannot
be less than floor wages as determined by the Central Government.
b) The code advises the Central Government to revise the amount of minimum wages every
5 years, besides periodical revision of Dearness Allowance (DA) and Variable Dearness
Allowance.
c) The employer of the establishment cannot deduct any amount from the wages except for
those which are authorised by the code.
d) The payment of bonus to the employees of the establishment has to be made cheques and
bank transfers only.
e) The Code of Wages prohibits discrimination relating to wages, recruitment and
conditions of service amongst employees based on gender.
f) The Code of Wages has scrapped the concept of scheduled employments which were
covered in the Minimum Wages Act, 1948.
g) The code proposes a system through which there will be a composition of offences for
which there is no punishment with imprisonment. Such compounded money shall be a
sum equivalent to fifty percent of the maximum fine.

Equal Remuneration, Payment of Wages, Payment of Bonus, Minimum Wages

Equal Remuneration Act – It provides for payment of equal wages for work of same and
similar nature to male and female workers and for not making discrimination against female
employees in the matters of transfers, training and promotion etc. Central Government is the
appropriate Govt. in respect of industries/establishments for which it is appropriate Govt. under
the Industrial Disputes Act. 1947.

It provides for Equal remuneration both men and women, but also understanding the fact that it
will not override any special treatment provided to women in the country. There was a time in
India when women used to face heavy discrimination in pay. But, after the advent of this Act,
women have been able to sue malpractices prevailing in their workplace.
Equal Remuneration for Equal Work

The Wage Code prohibits any means of discrimination in an establishment among the employees
on the ground of gender in matters relating to wages by the same employer, in respect of the
same work or work of similar nature by any employee.

The Wage Code also prohibits any discrimination on the grounds of gender while recruiting any
employee for the same work or work of similar nature and in the conditions of employment
except when the employment of women in such work is prohibited or restricted by any law for
the time being in force.

Here, ‘same work or work of similar nature’ means work in respect of which skill, effort,
experience and responsibility required are the same when performed under similar working
conditions by employees and the difference if any between the skill, effort, experience and
responsibility required for employees of any gender, are not of any practical importance
concerning the terms and conditions of employment.

The Wages Code contains a new clause on the time limit for payment of wages to various
categories of employees. The employer shall pay wages to the employee engaged as:

a) Daily wage labour – at the end of the shift.

b) Weekly wages – on the last working day of the week.
c) Fortnight basis – on the second day after the end of the fortnight.
d) Monthly basis – before the expiry of the seventh day of the succeeding month.

Payment of Bonus Act, 1965

The Payment of Bonus Act of 1965 imposes a contractual obligation on employers to pay
bonuses to employees in proportion to the resources available for the establishment's smooth
functioning. The Act's purpose was to give workers a say in the company's profits and to enable
them to earn slightly more than the minimum wage based on their performance.

The Bonus Payment Act covers the entire India. It covers any establishment with twenty or more
employees on any given day during the accounting year, as well as any factory as specified by
the factories act of 1948. “Employee” is defined in Section 2 (13) of the Act as any person (other
than an apprentice) employed on a salary or wage of not more than twenty one thousand rupees
per mensem in any industry to perform any skilled or unskilled manual, supervisory, managerial,
administrative, scientific, or clerical work for hire or compensation, regardless of whether the
terms of employment are express or implied.

Objective behind the Act

The objective of the Payment of Bonus Act, 1965 is to provide for the payment of bonus to the
persons employed in certain establishments on the basis of profits or production. The object of
the Payment of Bonus Act was very clearly described in Jalan Trading v Mill Mazdoor Sabha 1,
the Supreme Court observed that the purpose of the Bonus Act was to maintain peace and
harmony between labour and capital by allowing workers to share the prosperity of the
establishment and prescribing the maximum and minimum rates of bonus, as well as the scheme
of "set-off" and set - on to not only secure the labour's right in the share of profits but also to
ensure a reasonable degree of uniformity.

Constitutionality of the Act

The constitutional validity of the act was challenged in the Supreme Court in the case of Jalan
Trading Company Ltd. v. Mill Mazdoor Sabha, on the grounds of violation of Articles 14 and
19 of the Constitution. The Supreme Court ruled that the main provision of the Act which
required the payment of a minimum bonus was constitutional. The payment of a bonus is fair
since it complies with Articles 39 and 43 of the Constitution.

Bonus as under the Act

The word "bonus" is not specified anywhere in the bonus payment act. A bonus is a monetary
reward that is above and beyond the standard payment. According to the Cambridge dictionary, a
bonus is an additional sum of money offered to you as a gift or incentive for good performance.
The primary goal of providing bonuses is to distribute the company's profits to its workers and
employees.

The validity of such a conception of bonus is not affected by the difficulty of determining or
qualifying precisely the living wage or even the need-based: wage at any given time and place. It
appears tows that a properly conceived bonus system that is linked to profit also imparts a
measure of desirable flexibility to wage structure. The workers are enabled to share in the
prosperity of the concern without disturbing the underlying- basic wage structure.

In East Asiatic Co. Ltd. Vs Industrial Tribunal, it was held that a retrenched employee is
eligible for bonus if they worked for a min of 30 days and have a salary of 10,000 pm in a year.

In the case of J. K. Ginning & Pressing Factory v. Second Labour Court, Akola & Others, a
factory employed ten seasonal employees, and the issue of their bonus eligibility arose. The
Bombay High Court ruled that the Act does not exclude such seasonal workers from
employment; the only criterion for eligibility is that they meet the Section 8 requirements. As a
result, even seasonal employees were deemed to be entitled to bonus payments under the Act.

The appellant, a bus conductor working for a government of Tamil Nadu undertaking, was
dismissed from service in Pandian Roadways Corporation Ltd. vs. Presiding Officer.
Following that, the petitioner and management reached an agreement, and the petitioner as
appointed as a new entrant. Following that, the petitioner claimed an bonus of Rs 1,842 for the
duration after his re-appointment. The court ruled in the case that " If an employee is dismissed
from service, he is disqualified from receiving any bonus under the said Act, not just the bonus
for the accounting year," the court ruled.

In Gammon India Ltd Vs Niranjan Das, the court held that an employee who is dismissed
from service for fraud, riotous or aggressive behaviour on the premises of the company, or who
is guilty of theft, misappropriation, or sabotage of any establishment's property is disqualified
from receiving bonus for the accounting year under section 9 of the Payment of Bonus Act,
1965. A dismissed employee who has been reinstated with back pay has evidently not committed
the above crimes and has not been fired. As a result, he is entitled to a bonus.

Minimum Wages Act, 1948

Minimum Wages Act was first enacted by the Central Legislative Assembly in the year a 1948.
The primary intention behind this Act was to bridge the wage disparity between different work
personals in an employment. This Act fixes the minimum rates of wage in certain types of
employments. That is, the wage paid for the work done should not be lesser than the amount
suggested by the Act.
The primary objective of this Act is to ensure that every worker is paid the minimum amount of
wage prescribed for the particular job. This, in turn, reduces the chances of workers getting
exploited in the hands of their employers. As per the Act, Government has to take the steps to fix
the minimum wage rates and revise the same at the interval of every five years. Also, it has the
power to appoint advisory committees to provide just representation of the employers as well as
employees.

The Section 2 of the Act defines the ‘wages’ as remuneration that is capable of being represented
in form of money. This may include the House Rent Allowance, but would exclude the amount
paid as the value of house accommodation, supply of water, electricity and medical, travelling
allowance, contribution to pension fund, provident fund or insurance, gratuity, or any other
special expenses paid by the employer.

Fixing of Minimum Rates of Wages

1. The minimum rate of wages fixed or revised by the appropriate Government in respect of
scheduled employments under section 3 may consist of—
i. A basic rate of wages and a special allowance at a rate to be adjusted with the
variation in the cost of living index number applicable to such workers
(hereinafter referred to as the “cost of living allowance”); or
ii. A basic rate of wages with or without the cost of living allowance, and the cash
value of the concessions in respect of supplies of essential commodities at
concessional rates or
iii. An all-inclusive rate allowing for the basic rate, the cost of living allowance and
the cash value of the concessions, if any.
2. The cost of living allowance and the cash value of the concessions in respect of supplies
of essential commodities at concessional rates shall be computed by the competent
authority at such intervals and in accordance with such directions as may be specified or
given by the appropriate Government.
Impact of Code of Wages on Labour

The Central Government aims to increase the ease of doing business and has focused on
reducing the compliance work related to wages. While maintaining a single register to record
wages, there is more accuracy due to which the compliance work is reduced.

The litigation and the advisory aspect of labour law is going to increase as the time limit for
prosecution of matters related to labour law has been increased from 12 months to 3 years due to
which there will be an increase in the work of litigation related to Labour Laws. The Code
further empowers the Trade Union members to file a class action claim against the employer.

Due to the increase in punishment of the offences by the employers, the due diligence has to be
given importance as a minor offence can cost the employer a huge loss. The employers have to
ensure that the wages are paid before 7th of the next month to avoid being punished and the
bonus has to be mandatorily paid through bank transfer and cheques only.

There will be a standard impact of Code of Wages on all sectors of the economy as the Code has
been made mandatory for the establishments working in various sectors or the industry
irrespective of the wages of employees and the number of employees working in an
establishment.

A provision of the Code of Wages allows the employees to launch a direct prosecution against
the employers, in the laws prevailing before the Wages Code, it could be done only after the
prosecution is sanctioned by the Inspector who is responsible for the inspection of the
establishment. All the employers of the establishments working in different sectors have to take
utmost care and focus on due diligence for these reasons.

Impacts on the Business Community

Consistency in the definition of wages: Under the current labour laws, there are nearly 12
definitions assigned to the term “wages” alone! This was resulting in a lot of litigation and
confusion for the companies. The term ‘wages’ has been uniformly defined under the 4 codes
and therefore, it is expected to reduce much confusion about what is specifically included in
wages.
Businesses need to clearly understand ‘Inclusions’ and ‘Exclusions’ in Wages: The
definition of wages is probably the single most important aspect that the industry needs to
consider. The Code on Wages contains specific inclusions as well as exclusions in the definition
of wages. Further, under the Code of Wages, it has been specified that the total of the specified
exclusions, if the same exceeds 50 per cent (or such other per cent as specified by the Central
Government) of the remuneration, then the amount exceeding such 50 per cent would be deemed
to be remuneration and would be added in wages as per the definition. All companies need to
consider the definition of wages, look at their employment letters, analyse each of the
components of their employees’ CTC, and may need to revisit the components in case of non-
compliance with the definition of wages under the new proposed labour laws.

Impact of the new codes on social security and take-home salary: Due to the change in the
definition of wages and the fact that the various social security such as Provident Fund, Gratuity,
ESIC, etc. have now been pegged as a percentage of the ‘wages’ and not just the basic or basic
plus dearness allowance, there is expected to be a change in the total payouts on account of
social security and retirement benefits. Depending on the employment letters and salary breakup
of existing employees, even the take-home salary of employees may be affected. Even TDS
calculations based on the revisions in the take-home need to be carefully considered as the
obligation to deduct TDS in case of salary is on the employer.

Much wider coverage: Unlike the current labour laws, where coverage is different for each of
the laws depending on the type of work done by the employee or coverage is restricted to
workers or employees drawing certain remuneration, the 4 labour codes seem to apply to all
employees and certainly have much wider coverage than each of the current laws looked at
individually. The new labour codes also look at new-age working models and seem to give
protection and legal remedies to 21st-century workers as well. The labour codes cover contract
labour, fixed-term employment, gig workers, platform workers, and many more concepts. Thus,
the laws appear to be forward-looking and are more inclusive.

Faster F&F Settlements: Section-17(2) of the Code on Wages requires wages payable to an
employee to be paid within two days of removal, dismissal, resignation, or retrenchment. This
will require exit formalities and HR processes to be completed expeditiously and for dues to be
settled within the prescribed period. Companies must take note of this and make the necessary
changes to their internal processes.

Advisory Board, Payment of Dues, Claims and Audit

In 2021, the Ministry of Labour and Employment (MOLE) issued the Code on Wages (Central
Advisory Board) Rules, 2021.

Key Features

Constitution of the Board: The Board shall consist of the persons to be nominated by the
Central Government representing employers and employees as specified in section 42 of Code
on Wages, 2019 and the independent persons and representatives of the State Governments.

Additional Functions of the Board: The Board on reference by the Central Government advise
that Government on the issue relating to the fixation of minimum wages in respect of-

1. working journalists in the Working Journalists and other Newspaper Employees

(Conditions of Service) and Miscellaneous Provisions Act,1955; and
2. sales promotion employees as defined in the Sales Promotion Employees (Conditions of
Service) Act, 1976.

Quorum: No business shall be transacted at any meeting unless at least one-third of the
members and at least one representative member each of both the employers and an employee
are present.

Disposal of business of the Board: All business of the Board shall be considered at a meeting of
the Board, and shall be decided by a majority of the votes of members present and voting and in
the event of an equality of votes, the Chairperson shall have a casting vote.

Travelling Allowance: The travelling allowance of an official member of the Board shall be
governed by the rules applicable to him for journey performed by him on official duties and shall
be paid by the authority paying his salary.

Disqualification: A person shall be disqualified for being nominated as, and for being a member
of the Board–
 a) If he is declared to be of unsound mind by a competent court; or
b) If he is an un-discharged insolvent; or
c) If before or after the commencement of the Code, he has been convicted of an offence
involving moral turpitude.

Claims

The appropriate government shall appoint one or more authorities to hear and determine claims
that arise under the Code. The authority shall endeavor to decide the claim within 3 (three)
months depending on the circumstances under which the claims have arisen. Any person
aggrieved by the order of such authority may appeal to an appellate authority within 90 (ninety)
days from the date of the order. It is pertinent to note that the earlier labour laws provided for
varied limitation periods for filing claims. However, under the Code, the limitation period for
filing claims has been fixed at 3 (three) years from the date on which the claim arises.

Inspector-cum-Facilitator

Chapter VII of the Code provides for the appointment of an Inspector-cum-facilitator

(“Inspector”) by the appropriate Government. The appropriate Government may also lay down
an inspection scheme, to provide for web-based inspection and calling of information
electronically. The Inspector shall be a public servant and shall have the following functions:

 Advising the employer regarding compliance with the Code; and

 Inspecting the establishments assigned to him.

Offences and Penalties

The quantum of penalties specified under the code is also significantly high which varies
depending on the nature of the offence. The maximum penalty being imprisonment for three
months and/ or with a fine of up to INR 1,00,000.

The Code has provided an impetus for trade unionism by allowing a registered trade union to
make complaints for offences under the Code. The Code provides for a graded penalty system
for contraventions under the provisions of the Code. Unlike the provisions under the Minimum
Wages Act and the Payment of Bonus Act which provide for punishment of imprisonment up to
six months, the penal consequences under the Code are relatively lenient and only entail
punishment with fine. However, the Code penalises a second conviction within a span of five
years from the first conviction with imprisonment. The quantum of fines for contraventions
under the Code has seen a significant increase. Additionally, it is to be noted that the offences of
non-maintenance or improper maintenance of records and registers in the establishment are
punishable only with a fine.

Under the Code, the inspector-cum-facilitator is required to afford an opportunity to the

employer before initiating prosecution proceedings in cases of first contraventions. This window
will benefit contraventions which are non-intentional or due to genuine lack of information on
the part of the employer. Exhaustive procedures in relation to compounding of offences have
been provided under the Code.

MODULE 5: LAW RELATING TO SOCIAL SECURITY AGAINST EMPLOYMENT

INJURY AND OTHER CONTINGENCIES

Concept and Development of Social Security Measures – Employees liability to compensate

for employment injury

Social security is defined as the security that the society furnishes through appropriate
organizations against certain risks to which its members are exposed.

The term sometimes is also used to include a broad system of support for all those who, for
whatever reasons, are unable to maintain themselves’. The concept of social security is based on
ideas of human dignity and social justice. The underlying idea behind social security measures is
that a citizen who has contributed or is likely to contribute to his/her country’s welfare should be
given protection against certain hazards.

Social Security – Meaning and Definition

The term social security has been defined differently by authorities and, thus, there is no
commonly accepted definition of the term. There are mainly two streams of thought on this
issue, one represented by the ILO that limits the scope of social security to maintenance of one’s
income against loss or diminution.

Another view perceives social security in a broader sense; in this sense, it is a set of policies and
institutions designed to enable a person to attain and maintain a decent standard of life. This is
described as a preventive or promotional form of social security.

Social Security – Concept Defined by National Commission on Labour (NCL)

The concept of social security is based on ideas of human dignity and social justice. The
underlying idea behind social security measures is that a citizen who has contributed or is likely
to contribute to his/her country’s welfare should be given protection against certain hazards.

The concept of social security, thus, is based on the ideals of human dignity and socio-economic
justice. Underlying the concept is also the desire to give protection to its citizens to contribute to
a country’s total welfare against certain hazards of life to which they are exposed either in the
working life or as a consequence of it.

The social security strategies in India include the following:

 Social insurance with the participation of the beneficiary pooling risks and resources.
 Social assistance financed from general revenues and granting benefits on the basis of
means test.
 Employers liability schemes where there is an identifiable employer and within the
economic capacity of the employer.
 National Provident Funds.
 Universal schemes for social security.

Main Characteristics of the Social Security Program

 Social Security Schemes are providing social assistance and social insurance to
employees who have to face challenges of life without regular earning due to some
contingencies in their life.
 These Schemes are implemented by enactments of law of the country.
  They generally are relief providers to employees who are exposed to the risks of
economic and social security. This protection is provided to them by members of the
society of which he is a part.
 These Schemes have a broad perspective. They not only provide immediate relief to the
employees who have suffered on account of contingencies, but also provide
psychological security to others who may face the same problems in times to come.

Social Security – Measures

Ensuring social security measures for the citizens of a country is the fundamental responsibility
of the government. India being a welfare state, the Constitution of India has described it as a
democratic and socialist Republic.

The clauses that define fundamental rights and formulate the directive principles of State policy
in our Constitution leave no doubt about the concern and commitment of the government to the
rights of citizens to enjoy social security. Ours is a democratic country based on the premise of
equality and accountability.

We are also a socialist state which accepts the responsibility for providing and ensuring Social
Security to all its citizens without any discrimination. Broadly speaking, the idea of Social
Security is that, the Centre and the State government shall make itself responsible for ensuring a
minimum standard of material welfare to all its citizens on a basis wide enough to cover all
contingencies of life.

Employees’ liability to compensate for employment injury

The “Employees Compensation Act, 1923” was enacted to provide payment in the form of
compensation by the employers to the employees for any injuries suffered in an accident. It is
one of the earliest labour welfare and social security legislation enacted in India. Earlier this Act
was known as the Workmen Compensation Act, 1923. It was named as Employee’s
Compensation Act on 18th January 2010 as now employees in clerical capacity are also eligible
for compensation.
Employer’s liability for payment of Compensation

Under Section 3(1) of the Employees Compensation Act, 1923, if personal injury is caused to an
employee by accident arising out of and in the course of his employment, his employer shall be
liable to pay compensation.

Under this Section, an employee who dies or suffers partial or total disablement for more than 3
days or permanent total disablement due to accident is entitled to get compensation from
employer.

However, in order to succeed under Section 3(1) for claiming compensation, it has to be proved
by the employee that,

 there was an accident,

 the accident had a causal connection with the employment, and
 the accident must have been suffered in course of employment.

Concept of ‘Accident arising out of’ and ‘in the course of the employments’ & Doctrine of
Notional Extension and Added Peril

Concept of ‘Arising out of Employment’

The phrase "arising out of employment" isn’t merely confined to the nature of the employment.
The phrase applies to conditions, obligations and incidents of employment as well. If by reason
of any of these factors the workman is under danger and suffers injury, then the injury would be
one which arises "out of employment."

In Lancashire and Yorkshire Railway Co. v. Highley, the following test was laid down for
determining whether an accident "arose out of the employment":

1. Was it part of the injured person's employment to hazard, to suffer, or to do that which
caused his injury? If yes, the accident arose out of his employment. If nay, it did not,
because, what it was not part of the employment to hazard, to suffer, or to do, cannot well
be the cause of an accident arising out of the employment.
2. To ask if the cause of the accident was within the sphere of the employment, or was one
of the ordinary risks of the employment, or reasonably incidental to the employment, or
 conversely was an added peril and outside the sphere of the employment, are all different
ways of asking whether it was a part of his. employment,
3. The workman should have acted as he was acting or should have been in the position in
which he was, whereby in the course of that employment he sustained injury.

In Oriental Fire and General Insurance Company Limited v. Sunderbai Ramji, the Gujarat
High Court determined the scope of the expression ‘accident arising out of employment’
occurring under Section 3 of the Act. In this case, the deceased labourer was doing work
involving hard labour and strenuous physical exertion. One morning after 3 hours of work, he
had suffered chest pain and subsequently fainted. He was declared dead at Hospital.

The Commissioner found that deceased was involved in a very heavy and hard labour work,
which undoubtedly would affect the physical efficiency and health, and inferred that the labourer
died because of the nature of his job. It means he died due to an accident arising out of
employment covered under Section 3 of the Act

On appeal the High Court upheld the conclusion of the learned Commissioner that the deceased
died of an accidental injury arising out of and in the course of his employment is fully justified.
The personal injury resulting into death has direct and proximate nexus with employment.

Concept of ‘in the course of his employment’

The phrase "in the course of the employment" means in the course of the work which the
workman is employed to do and which is incidental to it.

The Doctrine of Notional Extension provides the scope of the phrase “in the course of the
employment. As a rule, the employment of a workman does not commence until he has reached
the place of employment and does not continue when he has left the place of employment. The
journey to and from the place of employment is excluded. However, as per the Notional
Extension theory there could be reasonable extension of course of employment in terms of time
and place and a workman may be regarded as in the course of his employment even though he
had not reached or had left his employer's premises.

There is a notional extension of both the entry and exit of work place by time and space. The
scope of such extension must necessarily depend on the circumstances of a given case. An
employment may end or may begin not only when the employee begins to work or leaves his
tools but also when he uses the means of access and egress to and from the place of employment.

In General Manager, B. E. S. T. Undertaking, Bombay v. Mrs. Agnes, a public utility

transport service run by the Bombay Municipal Corporation, owned a number of buses and
employed a staff, including bus drivers, for conducting the said service. The deceased driver
finished his work for the day. After leaving the bus in the depot, he boarded another bus in order
to go to his residence. Bus collided with a parked lorry. As a result of the said collision, the he
was thrown out on the road and got injured. Later he died in the hospital. His widow, filed an
application in the Court of the Commissioner for compensation.

The Supreme Court stated that in view of the long distances to be covered by the employees, the
Corporation, as a condition of service, provides a bus for collecting all the drivers from their
houses so that they may reach their depots in time and to take them back after the day's work.
They are given that facility as a right because efficiency of the service demands it.

The Supreme Court held that when a driver when going home from the depot or coming to the
depot uses the bus, any accident that happens to him is an accident in the course of his
employment.

Doctrine of added peril

When an employee performs something which is not required in his duty, and which involves
extra danger, the employer cannot be held liable to pay compensation for the injuries caused. In
the case of Devidayal Ralyaram v/s Secretary of State, it was ruled that the doctrine of added
peril was used as defense and the employer was not liable for the compensation.

Concept of Total and Partial Disablement – Quantum and method of Distribution of

Compensation

Partial Disablement and Total Disablement

Disability can be considered temporary or permanent, and it can be full or partial. Both total and
partial disability benefits are designed to protect your wages when you are injured or fall ill due
to work-related circumstances. However, one is far more common than the other.
“Partial disablement” means where the disablement is of a temporary nature such disablement
as reduces the earning capacity of a workman in any employment in which he was engaged at the
time of the accident resulting in the disablement and where the disablement is of a permanent
nature such disablement a reduces his earning capacity in every employment which he was
capable of undertaking at that time. It is defined as any type of disability in which the workers is
unable to perform at full physical capacity. This is usually due to an on the job injury or due to
illness.

Calcutta Electric Supply Corp. v. HC Das, No compensation is granted for any physical
disability unless there was loss of earning capacity. It is only in the case of scheduled injury that
such loss is presumed. Where the injury is not scheduled injury, the loss of earning capacity must
be proved.

“Total disablement” means such disablement whether of a temporary or permanent nature as

incapacitates a workman for all work which he was capable of performing at the time of the
accident resulting in such disablement. This is generally defined as the loss of the use of both
legs, arms, hands, or eyes, or any two such parts like a leg and arm. Total disability can also
involve impairment due to a serious occupational disease.

In the case of V. Jayraj v. T.P. Transport Corporation Limited, It was held that the loss of
earning capacity has to be calculated in terms of permanent partial disability which the workman
has been subjected to. The fact that the workman is continued in the employment and gets old
wages will not absolve the employer from paying the compensation. The employer may continue
him in the old post and give him old wages by way of grace, but that would not disentitle the
employee to claim compensation.

K. Janardhan v. United Insurance Company Ltd., In this case the appellant tank driver met
with an accident and was severely injured. His right leg was amputated up-to knee joint. The
Commissioner held it to be 100% disability and awarded compensation. In appeal based on the
opinion of the doctor, the High Court held it to be 65% disability. Relying upon the ratio laid
down in the judgement of Pratap Narain Singh Deo v. Shrinivas Sabata and another, the
Apex Court held the appellant had suffered 100% disability and he was not in a position to work
as a driver.
Calculation of the Compensation

The calculation of compensation as per the act is performed according to the provisions under
Section four of the Workmen’s Compensation Act:

In Case of an Accident that Results in Permanent Total Disablement: In this case, an amount
equal to 60% of injured employee’s monthly wage into the relevant factor or Rs.1, 20, 000,
whichever is more is given.

When an Accident Results in Death: An amount that is equal to 50% of the monthly wage of
the deceased employee into the relevant factor or an amount equal to Rs.1, 20,000, whichever is
more.

Note: According to the new rule mentioned by the government, Rs.15,000 is considered as wage
for computation under the workmen's compensation act, 1923. The relevant factor here is
provided in Section IV of this Act.

When do employers need to compensate an injured employee?

The Act requires employers to compensate an employee who has suffered an accident while
performing his/her duties during work hours, resulting into

 Permanent total disability,

 Permanent partial disability,
 Temporary disability, or
 Death.

Permanent Total Disability

Permanent total disability is relevant when a worker can no longer perform any of their previous
duties due to an on-the-job injury. This injury must be assessed to permanently affect the
employee's ability to perform their duties.

In this case, the worker is entitled to a minimum compensation of INR 140,000 or 60 percent of
his/her monthly wage multiplied by a factor based on the employee's potential future earnings.
The total payment can be significantly larger based on the age of the injured employee.
Permanent Partial Disability

When an employee has sustained an injury that renders them unable to perform their role at the
same capacity for the rest of their career, the employee is entitled to permanent partial
disablement compensation.

For partial permanent disability, compensation is dependent upon the nature of the injury and the
employee's loss of earning capacity. The Act includes a schedule of possible permanent disability
injuries and lists the loss of earning capacity. For example, an arm amputated at the shoulder is
assessed as a 90 percent loss of earning capacity, while the loss of an entire index finger is
considered a 14 percent loss of earning capacity.

In cases that the worker's injury is not included in the given schedule, employers must provide a
medical doctor to perform an evaluation of the injured employee and calculate the loss of earning
capacity. The compensation for the injured worker is then established based on the percent of
lost earning capacity multiplied by the monthly wage multiplied by a factor based on the
employee's potential future earnings.

Temporary Disability

Employees that sustain injuries that render them disabled, permanently or partially, for a
temporary period are compensated through temporary disability.

In cases of temporary disability, an injured worker will be paid 25 percent of their salary every
two weeks, making monthly compensation fifty percent of total earned wages. In cases of
temporary injury, a medical doctor is required to examine the injured employee and determine
necessary leave. A worker on temporary disability leave must undergo a physical examination
twice in the month following the injury and once during the following months if they are still
claiming disability.

Death

In the unfortunate case of a death, the worker's immediate dependents are entitled to
compensation. The compensation payable on death is INR 120,000, or half the worker's monthly
wage multiplied by a factor based on the employee's potential future earnings.
In all cases, it is the employer's duty to ensure that the workers receive these medical evaluations
without incurring personal expenses.

Social Security and Legal Protection

India’s social security system is composed of a number of schemes and programs spread
throughout a variety of laws and regulations. Keep in mind, however, that the government-
controlled social security system in India applies to only a small portion of the population.

Furthermore, the social security system in India includes not just an insurance payment of
premiums into government funds (like in China), but also lump sum employer obligations.

Generally, India’s social security schemes cover the following types of social insurances:

 Pension;
 Health Insurance and Medical Benefit;
 Disability Benefit;
 Maternity Benefit; and
 Gratuity.

While a great deal of the Indian population is in the unorganized sector and may not have an
opportunity to participate in each of these schemes, Indian citizens in the organized sector
(which include those employed by foreign investors) and their employers are entitled to coverage
under the above schemes.

The applicability of mandatory contributions to social insurances is varied. Some of the social
insurances require employer contributions from all companies, some from companies with a
minimum of ten or more employees, and some from companies with twenty or more employees.

The Social Security Code, 2020 (“SS Code”) has been passed by both houses of the Parliament
and received Presidential assent on September 28, 2020. The SS Code has been enacted to
amend and consolidate the laws relating to social security with the goal to extend social security
to all employees and workers either in the organised or unorganised or any other sectors.
Major provisions of SS Code 2020

Enhanced Coverage

 The Code has widened coverage by including the unorganised sector, fixed term
employees and gig workers, platform workers, inter-state migrant workers etc.

National Database and Registration

 With the aim of making a national database for unorganised sector workers, registration
of all these workers would be done on an online portal and this registration would be
done on the basis of Self certification through a simple procedure.
 All records and returns have to be maintained electronically.

Social Security Fund

 It will be created on the financial side in order to implement social security schemes.

Uniform Definitions

 There is uniformity in determining wages for the purpose of social security benefits.
 It has provided a wide definition for wage.
 Specific exclusions with ceilings have been provided for discouraging inappropriate
structuring of salaries to minimise social security benefits.

Consultative Approach

 It has brought in a facilitating approach by the authorities. Unlike the existing role of
inspectors, the Code provides for an enhanced role of inspector-cum-facilitator whereby
employers can look for support and advice to enhance compliances.

Career Centre

 To enable that demand for human resources is met and to monitor employment
information, career centres will be established.
Stringent Penalties

 Any failure to deposit employees’ contributions not only attracts a penalty of Rs.
1,00,000, but also imprisonment of one to three years. In case of repeat offence, the
penalties and prosecution is severe, and no compounding is permitted for repeated
offences.

Concerns towards SS Code 2020

Online Registration Process

 The onus lies on informal workers registering as beneficiaries, further they do not have
digital literacy and connectivity.
 Also, there is a lack of awareness among informal workers regarding social security
schemes.

Lack of Inter-State Arrangement and Cooperation

 Unorganised workers are spread across the length and breadth of India. Implications of
this code would be too varied across States to be administered.

Complicated Processes & Overlapping Jurisdiction

 Providing holistic social security cover for the unorganised workforce in a simple and
effective manner is lost in the Centre-State procedural complications and jurisdictional or
institutional overlap.

Maternity Benefit

 Women engaged in the unorganised sector remain outside the purview of maternity
benefit.

Employees Provident Fund

 For informal sector workers, access to employees’ provident fund remains unfulfilled too
in the new code.
Payment of Gratuity

 Although payment of gratuity was expanded in the new Code, it still remains inaccessible
for a vast majority of informal workers.

Maternity Benefit

The Maternity Benefit (Amendment) Act, 2017 came into force on April 1, 2017, and increases
some of the key benefits mandated under the previous Maternity Benefit Act of 1961. The
amended law provides women in the organized sector with paid maternity leave of 26 weeks, up
from 12 weeks, for the first two children. For the third child, the maternity leave entitled will be
12 weeks. India now has the third most maternity leave in the world, following Canada (50
weeks) and Norway (44 weeks).

The Act also secures 12 weeks of maternity leave for mothers adopting a child below the age of
three months as well as to commissioning mothers (biological mothers) who opt for surrogacy.
The 12-week period in these cases will be calculated from the date the child is handed over to the
adoptive or commissioning mother.

In other provisions, the law mandates that every establishment with over 50 employees must
provide crèche facilities within easy distance, which the mother can visit up to four times a day.
For compliance purposes, companies should note that this particular provision will come into
effect from July 1, 2017.

The Maternity Benefit (Amendment) Act introduces the option for women to negotiate work-
from-home, if they reach an understanding with their employers, after the maternity leave ends.

Under the pre-existing Maternity Benefit Act of 1961, every woman is entitled to, and her
employer is liable for, the payment of maternity benefit at the rate of the average daily wage for
the period of the employee’s actual absence from work. Apart from 12 weeks of salary, a female
worker is entitled to a medical bonus of INR 3,500.

The 1961 Act states that in the event of miscarriage or medical termination of pregnancy, the
employee is entitled to six weeks of paid maternity leave. Employees are also entitled to an
additional month of paid leave in case of complications arising due to pregnancy, delivery,
premature birth, miscarriage, medical termination, or a tubectomy operation (two weeks in this
case).

In addition to the above, the 1961 Act states that no company shall compel its female employees
to do tasks of a laborious nature or tasks that involve long hours of standing or which in any way
are likely to interfere with her pregnancy or the normal development of the fetus, or are likely to
cause her miscarriage or otherwise adversely affect her health.

MODULE 6: LAW RELATING TO RETIREMENT BENEFIT

Family Pension Scheme

Family Pension is granted to the family of a Govt. servant in the event of his death while in
service and also after retirement provided he was on the date of death in receipt of a pension or
compassionate allowance.

Definition of Family

For the purpose grant of Family pension the 'Family' shall be categorised as under:

 Category –I
o Widow or widower, upto the date of death or re-marriage, whichever is earlier.
o Son / daughter (including widowed daughter), upto the date of his / her marraige /
re-marriage or till the date he / she starts earning or till the age of 25 years,
whichever is the earliest.
 Category –II
o Unmarried / Widowed / Divorced daughter, not covered by Category -I above,
upto the date of marriage / re-marriage or till the date she starts earning or upto
the date of death, whichever is earliest.
o Parents who were wholly dependent on the Government servant when he / she
was alive provided the deceased employee had left behind neither a widow nor a
 child. Family pension to dependent parents unmarried/divorced/widowed
daughter will continue till the date of death.
o Family Pension to Unmarried/ widowed / divorced daughters in Category II and
dependent parents shall be payable only after the other eligible family members in
Category I have ceased to be eligible to receive family pension and there is no
disabled child to receive the family pension. Grant of family pension to children
in respective categories shall be payable in order of their date of birth and younder
of them will not be eligible for family pension unless the next above him / her has
become ineligible for grant of family pension in that category.

Eligibility and Period of Grant

1. Widow/Widower: Where a deceased Govt. servant is survived by a widow/widower, the

widow/ widower shall be entitled to the award of family pension from the date following
the date of death of the Govt. servant till death or remarriage which ever is earlier.
2. More than one Widow: Where a Hindu deceased Govt. servant leaves behind more than
one widow the second and other widow are not entitled to family pension as a legally
wedded wife under the Hindu Marriage act 1955. In other cases the award of family
pension will be divided among the surviving widows in equal shares.
3. Divorced Wife: Divorced wife loses the status of a legally wedded wife and as such is
not entitled to the award of family pension. However, the eligible child/children from a
divorced wife shall be entitled to the share of family pension which the mother would
have received at the time of death of her husband had she not been divorced.
4. Child / Children: On the death of the widow / widower the family pension shall become
payable to the eligible child / children. Family Pension to children shall be payable in the
order of their birth and the younger of them shall not be eligible for family pension unless
the elder next above him/her has become in-eligible for the grant of family pension.
5. Son / Daughter: The award of family pension to son / daughter including widowed /
divorced daughter shall be payable till he / she attains the age of 25 years or upto the date
of his / her marriage/remarriage or starts earning his/her livelihood, whichever is earlier.
6. Handicapped Child/Children: If the son or daughter of a Govt. servant is suffering from
any disorder or disability of mind or is physically crippled or disabled so as to render him
 or her unable to earn a living, the family pension shall be payable to such son or daughter
for life. In case the handicapped daughter gets married, her family pension will be
stopped from the date of marriage.The family pension to child who is suffering from
disorder or disability of mind, is paid through a legal guardian.
The award of Family Pension in respect of Handicapped child is not notified jointly along
with the pension/Family Pension of his/her parents. It is notified as and when the
contingency arises.
7. Parents: When deceased Govt. servant left behind neither widow/widower and children,
family pension shall be payable to the parents who were wholly dependent on the Govt.
servant during the life time of the deceased Govt. servant, provided their income does not
exceed Rs.3500/- p.m. and DR

Missing Govt. Servant/Pensioner

The Family Pension in respect of the Government employee/pensioner whose whereabouts are
not known, can be sanctioned to the eligible family member from the date of missing after the
lapse of a period of 6 month from the date of lodging the FIR with the concerned Police station.

Where an employee / pensioner disappears leaving his family, the family must lodge a FIR with
the concerned police station, and obtain a report that the employee could not been traced after all
efforts have been made by the police.

Before the payment of family pension is allowed to the family of a missing govt. servant, an
Indemnity Bond on prescribed format should be taken from the family pensioner that all payment
will be adjusted against the payments due to the employee in case he appears on the scene and
makes any claim.

Calculation of Family Pension

W.e.f. 1.1.2006 the Normal rate of Family Pension shall be calculated at a uniform rate of 30%
of basic pay drawn on the date of death or retirement as the case may be, in all cases and shall be
subject to minimum of Rs.3500/- p.m. and maximum of 30% of the highest pay in the govt. (the
highest pay in the Govt. in Rs.90,000/-).
Definition of Basic Pay: Basic pay includes stagnation increment and non-practicing allowance
if any, drawn on the date of retirement or death.

Date of commencement of Family Pension: The Family Pension is payable from the date
following the date of death of the Govt. servant.

Employee Pension Scheme

EPF Pension which is technically known as Employees’ Pension Scheme (EPS), is a social
security scheme provided by the Employees’ Provident Fund Organisation (EPFO). The scheme
makes provisions for employees working in the organized sector for a pension after their
retirement at the age of 58 years. However, the benefits of the scheme can be availed only if the
employee has provided a service for at least 10 years (this does not have to be continuous
service). EPS was launched in 1995 and allowed existing and new EPF members to join the
scheme.

Employees Pension Scheme is a social security scheme run by the Employees’ Provident Fund
Organisation (EPFO) for the employees of the organised sector.

Eligibility Criteria

In order to be eligible for availing benefits under the Employees’ Pension Scheme (EPS), an
individual has to fulfil the following criteria:

 He should be a member of EPFO

 He should have completed 10 years of service
 He has reached the age of 58
 He can also withdraw his EPS at a reduced rate from the age of 50 years
 He can also defer his pension for two years (up to 60 years of age) after which he will get
a pension at an additional rate of 4% for each year

Features of the Scheme

  A minimum pension of Rs. 1000/- per month to the member/disabled/widow/widower/
parent/nominee pensioners and Rs. 250/- per month for children pensioners and Rs. 750/-
per month to orphan pensioners.
 Contribution to EPS: An employee contributes 12% of his/her pay towards the EPF
account. A matching contribution is also made by the employer. 8.33% of the employee's
pay is remitted by the employer to EPS. The Central Government also contributes at the
rate of 1.16 per cent of the pay of the members to the Employees' Pension Scheme.

What you get from this scheme

Under the EPS, the government promises to pay you a monthly pension calculated using a
specified formula from the age of 58 until your death. Though you can opt for early pension from
the age of 50, this requires a steep sacrifice on the amount of monthly pension. The monthly
pension payable to you is calculated based on the formula — pensionable salary multiplied by
pensionable service divided by 70.

Pensionable salary, for the purpose of this calculation, is your monthly basic pay plus DA
averaged over the last 60 months of your service. (This was 12 months before the September
2014 amendment). The pensionable salary is, however, subject to a ₹15,000 per month cap.
Pensionable service is the number of years you have been employed until you retire, with the
number capped at 35 years. For determining it, periods of over six months are rounded off to one
year and those less than six months are ignored. To illustrate, if your basic pay plus DA averaged
₹40,000 a month in the 60 months before retirement and you retire at 58 after working for a total
of 20 years and five months, your monthly pension will amount to ₹4,285 per month
(₹15,000*20/70).

Concept of Gratuity – Eligibility – Determination of Gratuity – Forfeiture of Gratuity –

Payment of Gratuity

Gratuity is that part of the salary of an Employee which he receives from his/her employer in
gratitude for the services offered to the employer's company. It is one of the retirement benefits
given by the employer to the employee, leaving the job.
The Payment of Gratuity Act 1972 is a genre of various statutes like the Minimum Wages Act,
Employment and Social Policy, etc. which is an extension of labour laws and it lays down the
minimum benefits to be provided to the employees. It is a social security enactment providing for
the welfare benefits of the employees working in industries, companies and organisations.

The Payment of Gratuity Act was enacted in 1972 and applies to every shop or establishment
within the meaning of law for the time being in force in a State in which 10 or more persons are
employed or were employed on any day of the preceding 12 months. This Act provides a social
security cause with it and has been enacted from the word “gratuitous”. It is a form of gratitude
by the employer towards the employee who has served his organisation for 5 years or more.

Scope and Objective

The Payment of Gratuity Act,1972 was enacted with sole objective of providing gratuity i.e., a
monetary award given for services rendered to the employees working in the factories, oilfields,
mines, plantations, railway companies, shops or other establishments upon their superannuation
(e.g.,old age retirement amount,etc.), retirement, resignation, death or disablement.

According to this Act, the continuous service means an uninterrupted service during the
employment period. This includes the leave due to sickness, accident, lay off, strike, etc. If the
interruption is of six months or one year, then the employee is not entitled to gratuity benefits.
He/She should have worked for at least 190 days in mine or coalfield like establishment(where
duration of work is only for 6 months) and 240 days in other areas.

A question arose before the Supreme Court of India that whether the services provided by the
employees were regularised or not and whether they are entitled to gratuity amount or not in the
case of Netram Sahu v. State of Chhattisgarh 2018. The appellant employee had in all
rendered 25 years and 3 months of service (22 years and 1 month as daily wager and 3 years and
2 months as regular work charge employees). However, the Appellant was not paid the gratuity
amount by the State after his retirement because out of the total period of 25 years of his service,
he worked 22 years as daily wager and only 3 years as a regular employee, the Supreme Court of
India held that the state should release the gratuity amount of the employee because the
Appellant had actually rendered the service for a period of 25 years. Because the services were
regularised, the appellant was entitled to claim its benefit for a period of 25 years regardless of
the post and the capacity on which he worked for 22 years. This shows that whether the services
were regularized or not, is of no significance to the continuous service to the said Act.

Eligibility to claim gratuity

Five years continuous service: An employee in order to be eligible to claim gratuity, should
have worked with a particular employer for at least five years (as per Section 10(10) of the
Income Tax Act).

Section 2A of the Gratuity Act, states that a continuous period shall also include the following:

If in case employee is not in continuous service of one year, he/she shall be deemed to be in
continuous service of one year if- he/she has, in immediately preceding twelve calendar months,
worked under the employer for not less than:

 190 Days (in case of employee employed in mines below ground)

 190 Days (in case if employee employed in an establishment which works for less than
six days in a week)
 240 Days ( in any other case)

If in case employee is not in continuous service of six months, he/she shall be deemed to be in
continuous service of six months if- he/she has, immediately preceding six calendar months,
worked under the employer for not less than:

 95 Days (in case of employee employed in mines below ground)

 95 Days (in case if employee employed in an establishment which works for less than six
days in a week)
 120 Days ( in any other case)

If an employee of seasonal establishment is not in continuous service of twelve or six months,

he/she shall be deemed to be in continuous service of twelve or six months; if he/she actually
worked for not less than seventy five percent of the number of days on which the establishment
was in operation during such period.
By continuous service for the purpose of gratuity it is meant uninterrupted service which may be
interrupted due to accident, sickness, absence for duty without any leave, leave, lay-off, lock-out,
strike or cessation of work (due to not any fault of the employee) are considered as continuous
service.

Payment of Gratuity

An employee is entitled for the payment of gratuity if he/she has rendered five years of
continuous service on his superannuation, retirement, resignation, death, disablement. However,
the five years of continuous service is not mandatory in the case where the termination is due to
death or disablement. A retired person is also entitled to gratuity amount along with his pension.
This was held in the case of Allahabad Bank and others v. All India Allahabad Bank Retired
Employees Association 2009, where the honourable court held that pensionary benefits may
include both pension amount and gratuity amount but gratuity amount is a must to be paid to the
employees.

In the case of death or disablement by accident or disease, the employer is under obligation to
pay the gratuity amount to the employee’s nominee or the legal heir, as the case may be,
irrespective of the number of years continuous services has been rendered.

The Act also has a provision for the minors as a legal heir in which the controlling authority has
to invest the amount in such banks or other financial institutions for the benefit of the minor until
he/she becomes a major.

Further, the Act provides for the services rendered for at least 6 months where the gratuity
amount will be calculated at the rate of fifteen days wages based on the rate of wages last drawn
by the employee concerned, provided that the amount paid for the overtime work will not be
considered.

The amount of gratuity shall not exceed Rs. 10 Lakhs.

An employee holds a right to receive a gratuity for services rendered, however, this right of an
employee can be curtailed in two conditions:
  If the termination is due to willful omission or negligence causing loss, or damage, or
destruction of property belonging to the employer.
 If the termination is due to riotous or disorderly conduct or constitutes of an offence
which is immoral in nature.

Determination of the Amount of Gratuity

The person entitled to receive the gratuity amount shall send an application in writing to the
employer. The employer shall calculate the gratuity amount and provide notice in writing to the
concerned employee and the controlling authority. The payment should be made within 30 days
from the date payable to the employee. Failure of payment within the prescribed limit will result
in payment of simple interests. However, if the delayed payment is because of the employee then
the employer is not entitled to pay the simple interests.

In a landmark case of Y.K. Singla v. Punjab National Bank 2012, the Supreme Court had to
decide whether an employee whose gratuity has been withheld under Regulation 46 of the
Punjab National Bank (Employees) Pension Regulations is entitled to get interests because of the
delay after the completion of the proceeding? The court held that even though the provisions of
the 1995 Regulations, are silent on the issue of payment of interest, the appellant would be
entitled to interest, on account of delayed payment under the Payment of Gratuity Act for the
benefit of the employee.

The disputes arising between the employee and employer shall be referred to the controlling
authority and proceeding for the resolution presided by the controlling authority shall be
considered to be judicial proceeding. The controlling authority has the authority to enforce the
presence of any person and examine his oath, production of relevant documents and issuing
commissions for the examination of witnesses if required. After due inquiry and giving the
parties a reasonable opportunity of being heard, the controlling authority may determine the
matters and pass appropriate orders. The aggrieved party can apply for appeals to the
government.

Recovery of Gratuity
If the employer delays in the payment of gratuity amount under the prescribed time limit, then
the controlling authority shall issue the certificate to the collector on behalf of the aggrieved
party and recover the amount including the compound interest decided by the central government
and pay the same to the person. However, these provisions are under two conditions:

 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

Violation of the provisions of the Act shall entail certain penalties. They are:

 For avoiding any payment, if someone makes a false representation or false statement
shall be punishable with imprisonment for 6 months or fine up to Rs. 10,000 or both.
 Failure to comply with the provisions of this Act shall be punishable for a minimum of 3
months which may extend upto 1 year or a fine of Rs. 10,000 which may extend upto
20,000.
 Non-payment of gratuity under the Act will lead to offence and the employer shall be
punishable with imprisonment for at least 6 months and which may extend upto 2 years
unless the court provides for the sufficient reason for less payment.

Forfeiture of Gratuity

The gratuity payable to an employee shall be wholly forfeited for the following reason
mentioned:

 If the service of such employee has been terminated for his riotous or disorderly conduct
or any other act of violence on his part; or
 If the service of such employee is terminated for any act which constitutes an offence
involving moral turpitude provided that such offence is committed by him in the course
of his employment. In order to forfeit gratuity of an employee, there must be termination
order containing charges as established to the effect that the employee was guilty of any
 of the aforesaid misconducts. In one case, it has been held that in the absence of
termination order containing any of the above allegations, the gratuity of an employee
cannot be forfeited.

Act to override other enactments

Since the Payment of Gratuity Act is complete in itself, therefore, this Act has an overriding
effect on all provisions, regulations and statutes relating to gratuity. The landmark case for this
provision is University Of Delhi vs Ram Prakash And Ors. 2015 which states that any
provision which is more beneficial for the employees should be considered to be having
overriding effect.

Conclusion

The Payment of Gratuity Act, 1927, is a welfare statute provided for the welfare of the
employees who are the backbone of any organisation, company or startups. The gratuity amount
encourages the employee to work efficiently and improve productivity. Recently, by the
Payment of Gratuity (Amendment) Act, 2018, the central government has tried to promote
social welfare by providing leverage to the female employees who are on maternity leave from
‘twelve weeks’ to ‘twenty six weeks’.

However, the scope of this Act is limited to large scale companies or organisations and is not
applicable to organisations where the number of employees is less than 10. Yet, the Act in its
entirety is complete and therefore it overrides other Acts and statues in relation to gratuity. The
only need of the hour is to change or modify the implementation of the Act as this Act is still not
followed by many companies or corporations.