LABOUR AND INDUSTRIAL LAWS – I

LW 4012

Made by:
Anish Mahapatra
BBA LLB “A”
Roll No: 1782019
MODULE 1

Importance of Labour Law

Labour laws play a significant and vital role in the corporate sector. The laws exist so that
employees are treated appropriately in work environments and so their rights as an employee are
protected. They ensure that employers are valued for their expertise and are compensated
accordingly. Labour laws are the body of rulings pertaining to working people and their
organizations, including trade unions and employee unions, enforced by government agencies.
Individual labour laws involve concerns for employees’ rights in the workplace.

Labour laws have a uniform purpose; they protect employee rights and set forth employer
obligations and responsibilities. They also have multiple functions; the primary functions of
labour laws are to provide equal opportunity and pay, ensure employees’ physical and mental
well-being and safety, and workplace diversity.

Although employees are expected to adhere to their agreement in a work contract, they still
cannot be subjected to ill-treatment. One cannot, in any case, harass an employee physically,
mentally or emotionally at work. Gender bias, sexism and racism aren’t allowed to be in practice.
Equality is given utmost priority, and credibility, skill sets, and hardwork of an employee should
be the only criteria for promotions and rising pay-scales.

Necessity and Importance of Labour Law:

1. Improves industrial relations i.e. employee-employer relations and minimizes industrial

disputes
2. Protects workers from exploitation by the employers or management
3. Helps workers in getting fair wages
4. Minimizes labour unrest
5. Reduces conflicts and strikes etc
6. Ensures job security for workers
7. Promotes favourable environment conditions in the industrial system
8. Fixes rest pauses and work hours etc
9. Provides compensation to workers, who are victims of accidents.
Meaning of Industrial Jurisprudence

The term ‘jurisprudence’ denotes knowledge of law. The term ‘industrial jurisprudence’
primarily denotes the literature regarding knowledge of law in relation to labour and industry,
derived from labour legislations, constitutional framework and judicial law-making in a given
country.

The scope of industrial jurisprudence not only covers the protection of interests of the employees
but it also aims at securing a cordial relationship between the employers and employees in a
working unit.

From Laissez Faire to welfarism and to globalization: Transition from exploitation to

Protection and from contract to status: Changing perspectives on Labour

 The employer – employee relationship forms the most important class of legal
relationship in the area of labour relations.
 The very first stage in the evolutionary ladder of employer and employee relationship
was the concept of “master and servant”. Under this concept the employee was simply a
servant whose services were terminable at the will of the master. The servant was a slave
and the status of the slave governed the rights and obligations arising between master and
servant.
 In the second stage of evolutionary development, the concept of status of slave which had
governed the rights and obligations of workers in ancient society gradually disappeared
and its place was taken by the concept of contract and employment in common law. In
the heyday of laissez faire, the state was a mere spectator of what was happening in
society unless there was a breach of peace and order.
 In the third stage, the emphasis shifted from laissez faire government to the welfare state.
Under laissez faire the activities of Government were limited to collection of revenue,
maintenance of peace and order and defence against external aggression. Otherwise, it
was total non-interference in all other matters affecting society. This form of Government
led to major social problems including anarchy in industrial relations and exploitation of
labour giving rise to serious social tensions. Consequently, for the State to survive it had
 to shift to a system of social responsibility for certain minimum standard of individual
and communal welfare, which took the form of Welfare State.
 In the fourth stage, the emphasis has shifted to Globalization. In India, the process of
liberalization started in 1991. The balance of power shifted in the favour of the
employers. Apart from the pressure from the international market, international bodies
like IMF also exerted pressure to change labour policies in India. Employers pushed for
workforce reduction, given their inability to retrench employees, they introduced policies
of voluntary retirement schemes. However, Indian state has and is still playing an
important role in the country’s industrial relations. The basic purpose of the state
intervention has been to maintain industrial peace, but recently with the advent of
globalization the policy is changing towards a more competitive approach.
 In the field of industrial relations this was reflected in State's interference in the terms and
conditions of employment in industry through various Statutory provisions, giving due
regard to the status of the workmen, and not leaving it to be determined by private
agreements between employer and employees. Thus, in service matters the modern
tendency is to withdraw such matters more and more from the domain of contract into
that of status by increasing state regulation of industrial relations.
 The evolution of Central legislative measures to govern industrial relations in India can
be traced back to the earliest piece of labour legislation namely. Employers' and
Workmen's (Disputes) Act, 1860, to the present Industrial Disputes Act, 1947.

Concept of Laissez Faire

 Minimum Control of government/ state

 Free enterprise
 Power concentrated in the hands of the individual
 Law and order not counted as subject of the state

Drawbacks of Laissez Faire

 Income inequality – The presence of absolute autonomy in a state-of-nature economy

creates a situation of chaos for both producers and consumers. Such an economy can lead
to inequality of income and wealth that may contribute to a vicious cycle wherein
 inheritance plays a key role in financial placement within society. As put forward by
Adam Smith, monopolies can emerge wherein they control supply, charge higher prices,
and pay lower wages to workers.
 Failure to represent the interests of the entire society – A laissez-faire economy fails
to be representative of the interests of all sections of a society; it may cater only to the
majority or the affluent class. Thereby, public goods with positive externalities such as
education and healthcare may not be equally distributed in society, whereas goods with
negative externalities may be over-consumed.

Q: How is Welfare State achieved after WWII?

A: Concept of Laissez Faire, Drawbacks of Laissez Faire, Need for welfare state and role of
industrial jurisprudence.

Principles of Industrial Jurisprudence

1. Right to workmen to form associations & unions

2. Right to workmen to bargain collectively for the betterment of conditions of service
3. Shift from doctrine of Laissez Faire to a welfare state
4. Tripartite consultation as a solution of industrial/labour disputes through participation of
workers, employers and Government.
5. The State must interfere as the protector of social goods
6. Minimum standards must be guaranteed by State Legislations

Advantages of Laissez Faire

1. Autonomy – A laissez-faire economy gives businesses more space and autonomy from
government rules and regulations that would make business activities harder and more
difficult to proceed. Such an environment makes it more viable for companies to take
risks and invest in the economy. Moreover, it provides companies with a greater
incentive to try and maximize profits.
2. Innovation – Driven by the need to provide their products with market advantage,
companies are compelled to be more creative and innovative in their approach. The
practice leads to technological advancement in addition to economic growth.
 3. Absence of taxes – Lastly, the absence of taxes leaves companies and employees alike
with greater spending power. It also discourages corruption that can arise as a result of
bureaucrats with limited knowledge but immense regulatory power.

Factors affecting Industrial Relations

The term ‘industrial relations’ means the relationship between labour and management which
arises through interactive processes. Both labour and management interact with each other on
different issues – may be the issues relating to employment terms and condition as specified in
the standing orders/bipartite settlement, HR practices or the issues concerning court judgment,
legal implications, government orders, instructions.

The factors affecting industrial relations are internal factors, external factors, institutional factors,
economic factors, social factors, technological factors, psychological factors, political factors,
enterprise-related factors, global factors, socio-ethical and cultural factors, technological
advancement, market conditions, international relations, ideological factors, economic policy,
political parties and conditions for congenial industrial relations.
These interrelated and interdependent factors determine the texture of industrial relations in any
setting. In fact, they act, interact, and reinforce one another in the course of developing the
industrial relations. A few important factors are as follows:

1. Institutional Factors – Under institutional factors are included items like state policy,
labour laws, voluntary codes, collective bargaining agreements, labour unions,
employers’ organizations/federations etc.
2. Economic Factors – Under economic factors are included economic organizations,
(socialist, communist and capitalist type of ownership), individual company – whether
domestic or MNC, Government, cooperative ownership, nature and composition of the
workforce, the source of labour supply, labour market relative status, disparity of wages
between groups, level of unemployment, economic cycle. These variable influence
industrial relations in myriad ways.
3. Social Factors – Under social factors items like social group (like caste or joint family)
creed, social values, norms, social status (high or low) – influenced industrial relations in
the early stages of industrialization. They gave rise to relationship as master and servant,
 haves and have nots, high case and low caste etc. But with the acceleration of
industrialisation, these factors gradually lost their force but one cannot overlook their
importance.
4. Technological Factors – Under technological factors fall items like work methods, type
of technology used, rate of technological change, R&D activities, ability to cope with
emerging trends etc. These factors considerably influence the patterns of industrial
relations, as they are known to have direct influence on employment status, wage level,
collective bargaining process in an organization.
5. Psychological Factors – Under psychological factors fall items pertaining to industrial
relations like owners’ attitude, perception of workforce, workers’ attitude towards work,
their motivation, morale, interest, alienation; dissatisfaction and boredom resulting from
man-machine interface. The various psychological problems resulting from work have a
far reaching impact on workers’ job and personal life, that directly or indirectly
influences industrial relation system of an enterprise.
6. Political Factors – The political factors are political institutions, system of government,
political philosophy, attitude of government, ruling elite and opposition towards labour
problems. For instance, the various communist countries prior to adoption of new
political philosophy, the new industrial relations environment was very much controlled
by the Government ever since change has altered considerably like other capitalist
economics.
There too, unions are now at the helm of labour activities, the industrial relations and is
marked by labour unrest. Most of the trade unions are controlled by political parties, so
here the industrial relations are largely shaped by the gravity of involvement of political
parties in trade union activities.
7. Enterprise-related Factors – Under enterprise-related factors, fall issues like style of
management prevailing in the enterprise, its philosophy and value system, organization
climate, organizational health, extent of competition, adaptability to change and the
various human resource management policies.
8. Global Factors – Under global factors, various issues included are international
relations, global conflicts, dominant economic-political ideologies, global current milieu,
 economic and trading policies of power blocks, international trade agreements and
relations, international labour agreements etc.

Thus, the industrial relations can be viewed as a “complex system” formed by the interaction of
the industry, the government and the labour which are monitored by the existing and emerging
social economic, institutional and technological factors.

Importance of Industrial Relations

Industrial relations are human relations in industry. The importance of human factor in an
industrial organization is beyond question. Better management of industrial relations in an
industry is a sine qua non for the success of the industrial concern. It results in industrial peace
which is essential for the countries, particularly for India, where the economy is being geared in
a planned way to ameliorate the lot of masses.

Interaction between management and workers and between worker and worker are regular
features in the industry and these constitute industrial relations. So, the importance of industrial
relations in industry is self-evident and does not need any elucidation.

1. Increased Production – Healthy cordial relationship between work force and the
employer and management and amongst the workers within the workplace improves the
workers’ productivity and efficiency. It motivates the workers to contribute their best
towards attainment of organizational objectives. This leads to increase in production in
the organization.
2. Reduction in Industrial Disputes – Good industrial relation helps in reducing the
industrial disputes. Good industrial relationship removes dissatisfaction among the
workers. Adequate financial and non-financial benefits, provision of employee
participation in sharing of profits and of management and decision making, improved
bargaining capacity through mutual negotiations and consultation provides satisfaction to
the workers.
Satisfied workers are less inclined towards entering into conflict with the management on
issues like low wages, long work hours, and unhealthy work environment. Thus,
industrial unrest can be avoided.
 3. Uninterrupted Production – The most important benefit of industrial relations is that it
ensures uninterrupted production. Reduced industrial dispute, industrial unrest, strike,
lock outs can be avoided through good industrial relation. This ensures smooth running of
the organization and continuous production.
4. Improves Morale – Good industrial relation boosts the morale of the employees.
Employees feel that they are part of the organization and their contribution will improve
productivity of the organization. Good industrial relation brings about realization among
the employees that gain to the organization will not benefit the employer but will benefit
them as well. This makes the workers work with zeal, energy and efficiency.
5. Effective Utilization of Resources – Good industrial relation helps in effective
utilization of man, money and material. Improved employee morale, industrial peace,
recognition of employees’ interest and reconciliation of employers’ and employee
objectives and interest increased production with minimum wastage of resources.

Growth of Industrial Relation Legislation

 Industrial Relations under British Rule – India was expected to be a colonial market
for British goods. Establishment of the first cotton mill in Mumbai in 1853 and jute mill
in Kolkata. Working conditions of the workers at that time were harsh with very low pay.
This gave rise to various disputes between the management and the employees. Disputes
between the management and the employees resulted into enactment of Factories Act,
1881 which granted certain rights to the workers.
 During WWI, prices of all products went up and profit soared, but the wages of
employees were still the same. Due to this, the number of strikes was quite high at that
time. During this time, The Workmen’s Compensation Act, 1923, The Trade Union Act,
1926 and The Trade Disputes Act, 1927 were enacted. Due to these legislations, the
workers started getting shares in the profit but still their shares and wages were low for
survival.
 The year following the WWII involved the most workers’ upheaval and saw the
establishment of the two most important labour legislations –
o The Industrial Employment Act, 1946
o The Industrial Disputes Act, 1947
  The Post Independence era saw a developing relation between industry and labour.
The legislations enacted in the post-independence era were:
o Factories Act,
o Minimum Wages Act, and
o Employees’ State Insurance Act, 1948
 In the Post Globalization (1991 onwards) era, significant changes in the social,
economic, technological and political environment of Indian business were brought
which impacted industrial relations significantly.

Constitutional Framework and Industrial Relations

 Labour is in the concurrent list of the Constitution on which both the Centre as well as
the States have power to make laws. Article 254 of the Constitution provides that in
case of any repugnancy between Union and State Legislation, the legislation of the
Union shall prevail.
 Articles 39, 41, 42 and 43 have special relevance in the field of industrial legislation and
adjudication. In fact, they are substratum of industrial jurisprudence.
 Article 39 accentuates the basic philosophy of idealistic socialism, which is enshrined in
the Preamble of the Constitution. It provides a motivation force to the directive
principles by laying down that the State shall direct its policy towards equal pay for
both men and women.
 Article 41 lays down that the State shall, within the limits of its economic capacity and
development, make effective provision for securing the right to work, to education and
to public assistance in cases of unemployment, old age, sickness and disablement, and
in other cases of undeserved want.
 Article 42 enjoins the state government to make provision for securing just and humane
conditions of work and for maternity relief.
 Article 43 makes it obligatory for the State to secure by suitable legislation or economic
organisation or in any other manner to all workers, agricultural, industrial, or otherwise,
work, a living wage, conditions of work ensuring a decent standard of life and full
enjoyment of leisure and social and cultural opportunities.
 Article 43-A makes it obligatory on the State to take steps by suitable legislation or
otherwise to secure the participation of workers in the management of undertakings and
industrial establishments.
 Thus, social security is guaranteed in our Constitution under Articles 39, 41 and 43. The
Employees’ State Insurance Act, 1948 is a pioneering piece of legislation in the field of
social insurance. The Employees’ State Insurance Scheme provides for benefits in cash
except the medical benefit, which is in kind.
 The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the
Maternity Benefit Act, 1961 are also social security measures to help fulfil the
objectives of directive principles of our Constitution. The Provident Fund Scheme
aimed at providing substantial security and timely monetary assistance to industrial
employees and their families. The Maternity Benefit Scheme is primarily designed to
provide maternity leave with full wages and security of employment. The object of the
Payment of Gratuity Act, 1972 is to provide a scheme for the payment of gratuity to
employees employed in factories, mines, oil fields, plantations, ports, railways, shops
and establishments.
 Besides social security benefits, efforts have also been made to provide ample
opportunities for employment and for workers’ education. The Apprentices Act, 1961
was enacted to supplement the programme of institutional training by on-the-job
training and to regulate the training arrangements in industry. Employment exchanges
play an important role for the job seekers.
 Substantial steps have been taken to fulfil the object of Article 42 of the Constitution.
The Factories Act, 1948 provides for health, safety, welfare, employment of young
persons and women, hours of work for adults and children, holidays and leave with
wages.
 Article 43 of the Constitution provides for a living wage. To provide social justice to the
unorganised labour and to prevent exploitation, the Minimum Wages Act, 1948 was
enacted. It provides for the fixation of minimum rates of wages by the central or state
governments within a specified period for workers employed in certain scheduled
employments. The minimum wage in any event must be paid irrespective of the
capacity of the industry to pay.
Concept of Collective Bargaining and Tripartism

Collective bargaining is a procedure by which employment related disputes are resolved

cordially, peacefully and voluntarily by settlement between labour unions and managements.

Tripartism can be understood as policy of decision making related to industrial relations where
all the three key players, i.e. employers, workers and governments play an equal and fair role.
Apart from the Industrial Dispute Act 1947, various other areas of Indian industrial relations
include the elements of tripartism. The government bodies which are responsible for policy
making related to labour welfare tries to implement tripartism in their working also.

MODULE 2: INTERNATIONAL LABOUR ORGANIZATION

Emergence of International Labour Organization (ILO)

 Tripartite body consisting of representatives of Employers, Labour and Government

 Established by Versailles Peace Conference as an autonomous body in 1919
 Labour wing of the League of Nations
 Became specialized agency of the United Nations in 1946
 India is a founding member of the ILO. Till now, 187 nations are members of the ILO.

Aims and Objectives of ILO

1. Full employment and raising standards of living

2. The employment of workers on the basis of their skill and make their contribution to the
common well-being
3. Facilities for training and transfer of labour including migration for employment and
settlement
4. Policies in regard to wages, bonus and a minimum living wage to all employed and in
need of protection
5. Extension of social security measures to provide basic income to all employed and in
need of protection
 6. Effective recognition for the right of collective bargaining, the cooperation of
management and labour in continuous improvement of productive efficiency and the
collaboration of workers and employers in social and economic measures
7. Adequate protection for the life and health of workers in all occupations
8. Provisions for child welfare and maternity protection
9. Provisions of adequate nutrition, housing and facilities for recreation and culture
10. The assurance of educational and vocational opportunity

Organizational Structure of ILO

The three main organs of ILO are:

a) The International Labour Conference

b) The Governing Body
c) The International Labour Office

International Labour Conference

 The International Labour Conference is a policy making and legislative body.

 The session of the Conference is held yearly i.e. once a year
 It consists of four representatives in respect of each member state
o Two members representing the government
o One member representing employers
o One member representing employees
 Each delegate/member may be accompanied by advisors who are not to exceed two in
number for each item on the agenda of the meeting. When questions specifically affecting
women are to be considered, at least one of the advisors is to be a woman.

Functions of the International Labour Conference (ILC)

 To direct and supervise the work of Governing body and International Labour Office
 To function as the World Parliament of Labour
 To create worldwide uniform standard of labour in the form of conventions and
recommendations
  To fix the amount of contribution by member states
 To decide the budget proposals containing estimates of income and expenditure;
proposed by the Director General and after vote requiring 2/3rd of majority, submitting to
the Governing Body
 To make amendments to the Constitution subject to the subsequent ratification by 2/3 rd
member states including 5 out of 10 industrially important states.
 To consider the report of the Director General giving labour problems and assist in their
solution
 To appoint committees to deal with different matters during each session
 To select once in 3 years members of the Governing Body
 To elect its President
 To seek advisory opinion from the International Committee of Justice
 To confirm the powers, functions and procedure of Regional Conference

[The 10 industrially important states are: Brazil, China, France, Germany, India, Italy, Japan,
Russia, UK and US]

The Governing Body

 The Governing Body is the executive organ of the Organization. It has a similar tripartite
character as that of the conference (ILC).
 The Governing Body consists of 56 members, 28 representing governments, 14
employers and 14 workers. Out of 28 government seats, 10 are non-elective held by 10
industrially important states. The employer and worker members are elected in
individual capacity.
 The Governing Body also has 66 Deputy Members – 19 representing employers, 19
representing workers and 28 representing governments.
 Period of office of the Governing Body is three years.

Functions of the Governing Body

 Required to elect, from its members, a Chairman and two vice Chairman so as to ensure
representation of government, employers and workers, each
  Procedure and time of meetings are regulated by the Governing Body itself, but a special
meeting can be convened only on a written request made by at least 16 representatives of
the Governing Body
 Functions under the general direction of the ILC
 Prepares the agenda to be placed before the International Labour Conference
 Appoints the Director General of the International Labour Office (ILO)
 Supervises the functioning of the IL Office

International Labour Office

 The ILO acts as a Secretariat and is responsible for organizational work and to implement
the decisions of the Conference
 The headquarters of the ILO is at Geneva
 The CEO is the Director General. He is responsible for the efficient working of the office
and for such duties as may be assigned to him by the Governing Body from time to time
 Staffs of the ILO for different Nations are appointed by the Director General under
Regulations approved by the Governing Body. Certain percentages of such staff are to
consist of women.

Functions of the International Labour Office

 To provide secretarial assistance to Conference and Governing Body for various sessions.
The office also prepares the documents for such meetings it also provides other relevant
information.
 To collect and distribute information on all subjects relating to the international
adjustment of the conditions of industrial life and labour.
 Examination of subject which it proposes to bring before the Conference with a view to
conclude International Conventions.
 The conduct of such special investigations as may be ordered by the Conference or the
Governing Body.
 To prepare documents on the various items of the agenda for the meeting of the
Conference.
  To provide assistance within its power to Government at their request with regard to the
framing of laws and regulations on the basis of the decisions of the Conference
 Improvement of administrative practices and systems of inspection;
 To edit and issue publications of international interest dealing with problems of industry
and unemployment
 To carry out the duties required in connection with the effective observance of
Conventions.

ILO and International Labour Standards

International Labour Standards (ILSs) are legal instruments drawn by the ILO’s constituents
(governments, workers and employers) setting out basic principles and rights at work. ILSs take
two forms:

 Conventions, which are legally binding international treaties that may be ratified by
member states
 Recommendations, which serve as non-binding guidelines

Two categories of ILSs:

 The Core Labour Standards

 Other/ General Labour Standards

Upon release of the Declaration on Fundamental Principles and Rights at Work in 1998, ILO
member states agreed to respect, promote, and realise core labour standards.

Core Labour Standards

The Core Labour Standards out of 8 ILO Conventions as follows:

1. Protection against forced labour

2. Abolition of Slavery and Child Labour
3. Elimination of discrimination in employment
4. Right to form unions
5. Right to engage in collective bargaining
Other/ General Labour Standards

These standards are based on recommendations

1. Health and safety conditions at work

2. Minimum wages
3. Government unemployment insurance provisions
4. Old age, survivors’ benefit and health cover

Nature of the International Labour Standards

 Universal: Whoever ratifies the convention, will have to implement

 Flexible: The flexibility in the conventions makes implementations and application
difficult
 Binding once formally ratified
 Recommendations are only guidelines to nations
 Does not incorporate all issues; addresses only those issues which reach the conference
level.

Conventions and Recommendations of ILO

 The ILO passes many conventions and recommendations on different subjects from time
to time.
 The Conventions and Recommendations of the ILO relate to subjects on basic Human
Rights of working class having a direct bearing on the cause of social justice and
everlasting universal peace which is the most focused objective of the ILO.\

Procedure of Implementations

 Conventions and Recommendations are drawn up by the representatives of Govt.,

Employer and Workers
 At the ILC, there is a discussion on the issues by the members present from various
nations.
 The matters raised can only be adopted when it is passed by 2/3rd of the delegates present
at the conference
  Once it is adopted, the members are to submit it to the competent authority in their
respective nations
 After it is ratified, the ratifying country is to apply these conventions and
recommendation in their national laws
 If any of the ratifying nations violates the provision of the convention that they ratify,
then complaint procedure can be initiated against them.

The Eight Fundamental Conventions

1. Freedom of Association and Protection of the Right to Organise Convention, 1948

2. Right to Organise and Collective Bargaining Convention, 1949
3. Forced Labour Convention, 1930
4. Abolition of Forced Labour Convention, 1957
5. Minimum Age Convention, 1973
6. Worst Forms of Child Labour Convention, 1999
7. Equal Remuneration Convention, 1951
8. Discrimination (Employment and Occupation) Convention, 1958

Conventions/ Recommendations of ILO relating to Human Rights

a) Freedom of association and protection of the right to organize

 Freedom of Association and Protection of the Right to Organise Convention, 1948
 Right to organize and collective bargaining convention, 1949
b) Forced Labour
 Forced Labour Convention
 Abolition of Forced Labour Convention, 1957
c) Equality of opportunity and treatment
 Equal Remuneration for Men and Women Workers for Work of Equal Value
Convention, 1951
 Discrimination in respect of Employment and Occupation Convention, 1958
Conventions/ Recommendations of ILO relating to Social Security

In 1944, the Declaration of Philadelphia recognised the obligation of the ILO to further
programmes to extend the social security measures to provide the basic income to all in need of
such protection in addition to comprehensive medical care.

a) Conventions and Recommendations concerning Medical Care and Sickness Benefit

 Sickness Insurance (Industry) Convention, 1927
 Medical Care and Sickness Benefits Convention, 1969
 Medical Care Recommendation, 1944
b) Invalidity, Old Age and Survivors’ Benefit Convention
 Old Age Insurance (Industry) Convention, 1933
 Survivors’ Insurance (Industry) Convention, 1933
 Invalidity, Old Age and Survivors’ Benefits Recommendation, 1967
c) Conventions and Recommendations relating to Employment Injury Benefit
 Workmen’s Compensation (Accidents) Convention, 1925
 Equality of Treatment (Accidents Compensation) Convention, 1925
 Employment Injury Benefits Convention, 1964
 List of Occupational Diseases Recommendation, 2002

ILO Conventions and Recommendations relating to Employment of Women

a) Conventions and Recommendations relating to Maternity Benefits

 Maternity Protection Convention, 1919
 Maternity Protection Recommendation, 2000
b) Conventions relating to Safe Working Condition and Protection of Women Employees
 Night Work Convention, 1990
 Underground Work (Women) Convention, 1935

ILO and India

 India has been a founding member

 The ILO has played a vital role in influencing not only specific laws and policies but also
on legal ideas and institutions as they evolved in India.
  Many principles of ILO are also reflected in the Constitution of India in the form of
‘Directive Principles’ of State Policy.
 ILO's current portfolio in India centres around child labour, preventing family
indebtedness, employment, skills, integrated approaches for local socio-economic
development and livelihoods promotion
 It also includes dealing with issues like green jobs, value-addition into national
programmes, micro and small enterprises, social security, migration, industrial relations,
dealing with the effects of globalization, productivity and competitiveness, etc.
 Due to the impact of ILO Conventions, many labour legislations have been enacted by
India, some of which are:
o Factory Act, 1922
o The Ports Act, 1908
o The Employment of Children Act, 1938
o The Mines Act, 1952
o The Workmen’s Compensation Act, 1923
o The Indian Railways (Amendment) Act, 1930
o The Maternity Benefit Legislations etc

Ratifications of Conventions and Protocols by India

 47 Conventions and 1 protocol

o Fundamental Conventions: 6 out of 8
o Governance Conventions (Priority): 3 out of 4
o Technical Conventions: 38 out of 178
 Out of 47 conventions and 1 protocol ratified by India, 39 are in force, 5 conventions and
0 protocol have been denounced; 4 instruments abrogated
 None have been ratified in the past 12 months

Important Conventions ratified by India

 Fundamental Conventions
o Forced Labour Convention, 1930
o Equal Remuneration Convention, 1951
 o Abolition of Forced Labour Convention, 1957
o Discrimination (Employment and Occupation) Convention, 1958
o Minimum Age Convention, 1973 Minimum age specified: 14 years
o Worst Forms of Child Labour Convention, 1999

MODULE 3: INDUSTRIAL RELATIONS UNDER THE INDUSTRIAL DISPUTES ACT,

1947

Industrial Disputes Act, 1947

 The objective of the IDA is to secure industrial peace and harmony by providing
mechanism and procedure for the investigation and settlement of industrial disputes by
conciliation, arbitration and adjudication which is provided under the statute.
 In the IDA 1947, an Industrial Dispute means “Difference between employer and
employer or between workmen and workmen, or any dispute among these which are
related to employment or non-employment or terms and conditions of employment of any
person.”
 There are various authorities under the Act such as works committee, conciliation officer,
conciliation board, courts of inquiry, labour court, tribunal, national tribunal etc

Definition of “Industry” under the Industrial Disputes Act

Sec 2(j) of the IDA, 1947 defines ‘industry’ as “any business, trade, undertaking, manufacture,
or calling of employers and includes any calling, service, employment or industrial occupation or
avocation of workmen.”

An industry exists only when there is a relationship between employers and employees, the
employer is engaged in business, trade, undertaking or manufacture and the employee is engaged
in the service, employment, handicraft or industrial occupation and avocation.

Bangalore Water Supply and Sewerage Board v A. Rajappa (1978)

This case is a landmark judgement under Industrial Disputes Act, 1947, which provides clarity
on what the term “industry” encompasses within its scope. The 7-judge bench in Bangalore
Water Supply judgement established the triple test and the dominant nature test for the
scope of the definition of “industry”, defined under Section 2 (j) of the Act. The Court held the
following:

 The Triple Test – Any activity will be industry if it fulfils the following ‘triple test’:
o Systematic & Organized Activity
o Co-operation between employer & employee
o Production & Distribution of goods & services in order to satisfy human wants &
wishes, whether or not capital has been invested for this activity.
 Dominant Nature Test – Whether there is complex of activities, some of which qualify
for exemption and others not qualifying so, the test would be predominant nature of
services and integrated nature of departments. All departments integrated with industry
will also be industry.
It is immaterial whether or not there is profit motive or whether or not there is capital.
If the organization is a trade or business, it does not cease to be an industry because of
philanthropy animating from the triple test. Such organization cannot be exempted from
scope of definition of industry.
The exception to industry are:
o Casual activities (because they are not systematic)
o Small clubs, cooperatives, research labs, gurukuls which have an essentially non-
employee character
o Single door lawyer taking help from clerk (because there is no organized labour)
o Selfless charitable activities carried on through volunteers e.g. free legal or
medical services
o Sovereign functions – strictly understood, i.e., maintenance of law and order,
legislative functions and judicial functions.
 Charitable Institutions fall into three categories –
a) Those that yield profit, but the profits are not siphoned off for altruistic purposes
b) Those that make no profit but hire the service of employees as in any other business,
but the goods/services which are the output, are made available at a low cost or no
cost to the indigent poor; and
 c) Those that are oriented on a humane mission fulfilled by men who work, not because
they are paid wages, but because they share the passion for the cause and derive job
satisfaction.

The first two categories are industries, but not the third, on the assumption that they all
involve co-operation between employers & employees.

Aftermath of Bangalore Water Supply Case

 With the 1978 Bangalore Water Supply judgement, professions such as attorneys,
activities like clubs, educational institutions, co-operatives, research institutes, and
philanthropic enterprises were also covered in the definition of industry. The top court
also held that the absence of profit motive or gainful objective or whether the venture is
public/joint or private or other sector is irrelevant while deciding whether an enterprise is
an industry. It also ruled that welfare economic activities undertaken by the government
or statutory bodies not being sovereign functions are also covered by the definition.
 The interpretation of the definition of Industry by the Hon’ble Supreme Court in
Bangalore Water Supply case brought a large ambit of activities under the definition of
Industry. A large number of institutes, particularly, charitable institutes, universities
approached the Union of India for an amendment in the definition of Industry.
 Aggrieved by the widened definition, the government amended the Industrial Disputes
Act in 1982 which created several exceptions to the definition. But this amendment was
never brought into force (notified) by the government and the original definition under
the ID Act continues to be the law in force.
 The extremely broad definition of industry laid down under Bangalore Water Supply case
has led to litigation in courts across the country as to whether certain professions are an
‘industry’ or not. This is primarily because any person who works in an industry as
defined by the ID Act is entitled to the various protections under the Act. These
protections include a mandatory notice period before someone is removed from service,
maximum hours of work, leave etc.
 In recent times, these stringent labour standards have led to demands for a restrictive
reading of the word 'industry' by industry bodies and various states in order to usher in
 labour reforms. The states want the definition of 'industry' to be limited to the
manufacturing sector.
 In 2005, a five-judge constitution bench referred the decision in Bangalore Water Supply
for reconsideration. The Supreme Court was of the opinion that the majority judgment in
Bangalore Water Supply was not unanimous and had been subject to varying
interpretations by the judiciary.
 Furthermore, the focus of the ID Act was to ensure a harmonious relationship between
the employer and the employee. The worker- oriented focus of Bangalore Water Supply
has become an impediment to a harmonious relationship according to the five-judge
bench. The Court also alluded to the helplessness of the executive and the legislature to
bring about the necessary amendments. Accordingly, it called for the constitution of a
larger bench.
 In 2017, a seven-judge bench of the Supreme Court passed an order for the constitution
of a 9-judge bench in light of the 2005 referral order.

Is University an “Industry”?

Case: University of Delhi v Ram Nath (1961)

 In the Delhi University case, a college closed down the amenity of running buses as they
were incurring losses. The drivers of the buses were retrenched raising a dispute claiming
retrenchment compensation. The question was whether the University of Delhi was an
“industry”.
 Universities were held to be excluded from the ambit of “industry” for the following
reasons:
o Main scheme of an educational institution is imparting education
o Teaching is not within the purview of industry as there is no commercial motive
o The subordinate staff play a minor or insignificant role in the process of imparting
education
o Due to the insignificant role of the subordinate staff, it is unreasonable to lend the
colour of industry to a University.
  This judgment was criticized in Bangalore Water Supply case. The Court in Bangalore
Water Supply observed that education is a service to the community and hence,
university is an industry. The teaching staffs of the University was not held to be
“workmen” but the non-teaching staff would come within the scope of the said term so
that they are able to take the benefits under the Act.

Is Hospital an “Industry”?

Case: State of Bombay v Hospital Mazdoor Sabha (1960)

The Supreme Court held the State is carrying on an ‘undertaking’ within Sec. 2(j) when it runs a
group of hospitals for the purpose of giving medical relief to the citizens and for helping to
impart medical education.

The court observed as follows:

 An activity systematically or habitually undertaken for the production or distribution of

goods or for the rendering of material services to the community at large or a part of such
community with the help of employees is an ‘undertaking’.
 It is the character of the activity in question which attracts the provisions of Sec. 2 (j),
who conducts the activity and whether it is conducted for profit or not, do not make a
material difference.

Thus, activities that have no commercial implications, such as hospitals carried on with
philanthropic motives would be covered by the expression ‘undertaking’. The mere fact that
Government runs such activity is immaterial. In case an activity is industry if carried on by a
private person, it would be so, even if carried on by the Government.

Case: Safdarjung Hospital v Kuldip Singh (1967)

 Safdarjung case reversed the judgment of Hospital Majdoor Sabha

 It was held that a place of treatment of patients run as a department of the government
was not an industry because it was a part of the functions of the government. Charitable
hospitals run by Government or even private associations cannot be included in the
definition of industry because they have not embarked upon economic activities
 analogous to trade or business. If hospitals, nursing home or a dispensary is run as a
business in a commercial way, there may be elements of industry.

Is Municipal Corporation an “Industry”?

Case: D.N. Banerjee v P.R. Mukherjee (1953)

 In this case, the question that was raised was whether Municipality is an industry.
 The Supreme Court held that though municipal activity could not be regarded as
“business or trade” it would fall within the scope of the expression “undertaking” and it is
an industry. Neither investment of capital nor profit making motive is essential to
constitute an industry as they are generally in a business. Hence, the non-profit
undertakings of the municipality were included in the concept of an industry, even if
there is no private enterprise.

Is the Law Department an “Industry”?

Case: State of Rajasthan v Ganeshi Lal (2007)

In the State of Rajasthan v. Ganeshilal, the Supreme Court held that the law Department was not
an Industry. The respondent was working as a peon for a Public Prosecutor as a temporary
employee on a contract basis. The issue before the court was with regard to his termination. But
the court went on to hold that the accepted concept of an industry cannot be applied to the Law
department of the Government.

Rational Choice Theory

Rational Choice Theory is a framework for understanding and often formally modelling social
and economic behaviour. The basic premise of rational choice theory is that aggregate social
behaviour results from the behaviour of individual actors, each of whom is making their
individual decisions. The theory also focuses on the determinants of the individual choices.
Rational choice theory then assumes that an individual has preferences among the available
choice alternatives that allow them to state which option they prefer. These preferences are
assumed to be complete (the person can always say which of two alternatives they consider
preferable or that neither is preferred to the other) and transitive (if option A is preferred over
option B and option B is preferred over option C, then A is preferred over C).

In simpler terms, this theory dictates that every person, even when carrying out the most
mundane of tasks, performs his own personal cost and benefit analysis in order to determine
whether the action is worth pursuing, for the best possible outcome. And following this, a person
will choose the optimum venture in every case. This could culminate in a student deciding on
whether to attend a lecture or stay in bed or even a voter deciding which candidate or party based
on who will fulfil their needs the best.

Unjust Enrichment

 Unjust enrichment occurs when Party A confers a benefit upon Party B without Party A
receiving the proper restitution required by law. This typically occurs in a contractual
agreement when Party A fulfils his/her part of the agreement and Party B does not fulfil
his/her part of the agreement.
 Unjust enrichment has been defined as: "A benefit obtained from another, not intended as
a gift and not legally justifiable, for which the beneficiary must make restitution or
recompense." A claim for unjust enrichment arises where there has been an "unjust
retention of a benefit to the loss of another or the retention of money or property of
another against the fundamental principles of justice or equity and good conscience."
 It is a general equitable principle that a person should not profit at another's expense and
therefore should make restitution for the reasonable value of any property, services, or
other benefits that have been unfairly received and retained.
 In India, the doctrine of unjust enrichment is codified in enactments such as the Contract
Act, 1872. The law has been further developed by various judgments.

Strike & Lockout

As per Cambridge Dictionary, “Strike is to refuse to continue working because of an argument

with an employer about working condition, pay levels, or job losses”.

A strike is a powerful weapon used by trade unions or other associations or workers to put across
their demands or grievances by employers or management of industries. In another way, it is the
stoppage of work caused by the mass refusal in response to grievances. Workers put pressure on
the employers by refusal to work till fulfilment of their demands. Strikes may be fruitful for
workers’ welfare or it may cause economic loss to the country.

India recognized strike as a statutory right under Industrial Disputes Act, 1947. As per section
2(q) of IDA, 1947, strike means a cessation of work by a body of persons employed in any
industry acting in combination, or a concerted refusal, or a refusal under a common
understanding, of any number of persons who are or have been so employed to continue to work
or to accept employment.

Components of a strike

 There has to be an industry

 Work must stop
 It must be a combined action of individuals
 A relationship between parties must be strictly of employment
 It should be planned refusal of work

According to section 2(i), lockout means the temporary closing of a place of employment, or the
suspension of work, or the refusal by an employer to continue to employ any number of persons
employed by him.

Components of a lockout

 There has to be a temporal shut down of area of employment

 It could also be a temporary suspension of workers or holding back of work from the
workers
 The employer has to have a demand that leads him to initiate a lockout
 The lockout touches any number of workers employed within the industry

Difference between Legal and Illegal Strikes

Section 22 of the IDA deals with strikes in industries relating to public utility services like
railways, port, post, telegraph, power, water, sanitation etc. According to this section, no person
employed in a public utility service shall go on strike in breach of contract, without following the
steps below:

 Notice of strike (with or without the date of strike) to the employer by their employees is
mandatory.
 If the date of strike by the employees is not mentioned in the notice, such notice is valid
for six weeks only.
 If the date of strike is mentioned in the notice, the date of strike should not be before the
expiry of 14 days from the date of notice of strike.
 Therefore, employees should not go on strike before the expiry of 14 days from the date
of issue of notice of strike to the employer.
 Notice of strike without the date of strike is valid for six weeks only. if employees do not
go on strike within six weeks, again a fresh notice of strike by employees is necessary if
they want to go on strike.
 Employees should not go on strike during the pendency of any conciliation proceedings
before a conciliation officer and seven days after the conclusion of such proceedings.

Thus, any strike by employees working in an industry dealing with public utility services not
following the above conditions shall be termed as an Illegal Strike.

Section 23 provides for general prohibition of strikes, according to which no workman who is
employed in any industrial establishment shall go on strike in breach of contract:

 During the pendency of conciliation proceedings before a Board and seven days after the
conclusion of such proceedings;
 During the pendency of proceedings before a Labour Court, Tribunal or National
Tribunal and two months after the conclusion of such proceedings;
 During the pendency of arbitration proceedings before an arbitrator and two months after
the conclusion of such proceedings, where a notification has been issued.
 During any period in which a settlement or award is in operation, in respect of any of the
matters covered by the settlement or award.
Section 24 differentiates between a legal strike and an illegal strike. It states that legal strikes are
those strikes in which procedures for going on strikes as laid down in section 22 or section 23 are
followed. However, illegal strikes will not be in conformity with sections 22 or 23.

In short, the strike is illegal if –

1. It is in breach of Contract of Employment.

2. It is in Public Utility Services.
3. Notice under Section 22(1) is not given.
4. It commenced during Award or settlement period.
5. It commenced during or within 7 days of completion of Conciliation Proceedings.
6. It commenced during or within Two months of completion of Adjudication Proceedings.

Justified and Unjustified Strikes

If a strike is in contravention of the above provisions, it is an illegal strike. Since strike is the
essence of collective bargaining if workers resort to strike. To press for their legitimate rights,
then it is justified. Whether the strike is justified or unjustified will depend upon the fairness and
reasonableness of the demands of workers.

Thus, if workmen go on strike without contravening statutory requirements, in support of their

demands, the strike will be justified. In the beginning, the strike was justified but later on
workmen. Indulged in violence, it will become unjustified.

This distinction is not warranted by the Act and is wholly misconceived, especially in the case of
employees in a public utility service. Therefore, an illegal strike is always unjustified.

A strike is legal if no violation to the provision of the statute is there. It is well settled that in
order to entitle the workmen to wages for the period of the strike. Also, the strike should be legal
as well as justified. Again a strike cannot be said to be unjustified unless the reasons for it are
entirely perverse or unreasonable.

Whether a particular strike’s justification is there or not is a question of fact which has to be
judged. In the light of the facts and circumstances of each case, it is also well settled that the use
of force or violence or acts of sabotage resorted to by the workmen during a strike disentitled
them to wages for the strike period.

Where pending an industrial dispute the workers went on strike the strike thus being illegal, the
lock-out that followed becomes legal, a defensive measure.

Difference between Lockout and Closure

LOCKOUT
Section 2 (I) defines ‘Lock-out’
Lock-out means the temporary closing of a
place of employment
It is a weapon in-the hands of employer against
his employees. He uses it as a threat
A bona fide lock-out can be illegal, if it is
violated the provisions of Sec. 24
Lock-out signifies the closure of the place of
business, and not the closure of business
In the lock-out the relationship of employer
and employees does not come to an end
The causes for the lock-out in an industry are
temporary and can be cured
Generally, the causes of lock-out arise from
political, disturbances with trade union leaders,
rigid policies of the State, and particularly the
economic factors too, etc.
A lock-out may turn into closure of an industry
Generally lock-out is declared as answer to a
Strike
CLOSURE
Section 2 (cc) defines ‘Closure’.
Closure means the permanent closing down of
a place of employment or part thereof
Closure is not a weapon in the hands of
employer. It equally effects on both the
employer and employees
But a bona fide closure can never be illegal
Closure signifies the final and irrevocable
termination of the business itself
In the Closure, the relationship between them
comes to an end
The causes for the Closure of an industry are
permanent or lasting and cannot be cured
Generally, the cause of closure is economical,
poor quality of maintenance, poor
management, nonavailability of raw material,
Government policies, etc.
A closure cannot be turned into a lockout
Closure of an industry is a last resort. It may be
due to economic reasons

Difference between Strike & Lockout

 STRIKE LOCKOUT
It is the weapon of employees against It is the weapon of the employer against
employers employees
Cessation of work by employees. Cessation of work by the employer.
It is a full cessation of work by employees until It is a temporal shutdown by the employer,
the fulfilment of their demands. refusal of employ.
The reasons are often economic. Reasons can be economic or non-economic

The strike is of various types. The lock-out does not have varieties.
The strike is conducted to gain a concession Lock-out is used to enforce the terms of
from the employer. employment during the dispute.

Layoff, Retrenchment and Closure

Layoff – It is suspension or termination of employment (with or without notice) by the employer

or management. Layoffs are not caused by any fault of employees but by reasons such as lack of
work, cash or material. Layoff is temporary. Permanent layoff is called redundancy.

The term layoff has been defined under section 2(kkk) of the Industrial Disputes Act, 1947.
Layoff means the failure, refusal or inability of an employer on account of the shortage of coal,
power or raw materials or the accumulation of stocks or the breakdown of machinery or natural
calamity or for any other unconnected reason to give employment to a workman whose name is
borne on the muster rolls of his industrial establishment and who has not been retrenched.

Thus, the following are the essentials of layoff:

 There must be failure, refusal or inability on the part of the employer to give employment
to a workman.
 The failure, refusal or inability should be on account of shortage of coal, power or raw
materials or accumulation of stocks or breakdown of machinery, or natural calamity, or
any other connected reason.
 The workman’s name should be on the muster rolls of the industrial establishment.
  The workman should not have been retrenched.

Retrenchment

The Act defines “Retrenchment” as the termination by the employer of the services of a
workman for any reason whatsoever, otherwise than as a punishment inflicted by way of
disciplinary action, but doesn’t include –

a) Voluntary retirement of the workman; or

b) Retirement of the workman on reaching the age of superannuation and the workman
concerned contains a stipulation in that behalf; or
c) Termination of the service of a workman on the ground of continued ill-health;

Here, the key ingredient is the termination of workman from service, by the employer. This does
not mean the employer can retrench a worker as punishment by way of disciplinary action.
Further this scenario strictly does not include the above-mentioned conditions contemplated
under the subsection.

Special Provisions – It is pertinent to note that a worker who has served for at least a year of
continuous service cannot be retrenched unless served a notice 3 months in advance and prior
permission from the appropriate government. The said application has to be submitted by the
employer along with the reasons for such retrenchment. The said application will be taken into
consideration and scrutinized through an inquiry. They shall provide an opportunity to be heard
for both sides and may decide on the outcome of the application for reasons recorded in writing.
If there’s no reply from the appropriate government for a period of 60 days from the date of
application, the permission shall be deemed to have been granted. Further, it is to be noted that
the said decision could be reviewed by the said appropriate government suo-moto or on
application from any of the sides.

Closure

The Act defines “Closure” as the permanent closing down of a place of employment or part
thereof. Here, the employer is constrained to close the establishment permanently. Nonetheless,
the due procedure has to be complied with when it comes to rolling out a plan of closure. These
procedures, nonetheless, do not apply to an undertaking set up for the construction of buildings,
bridges, roads, canals, dams or for other construction work.

Special Provisions – The employer intending to do a closure of his establishment has to

necessarily apply at least 90 days in advance to the appropriate government. A copy of the said
application has to be given to the representatives of the workmen as well. The said application
will be considered and a reasonable opportunity to be heard shall be given to the employer as
well as the workmen. After considering the same, the appropriate government may or may not
grant the employer to close down. Even here, if the government does not respond within 60 days
from application, the permission will be deemed to have been granted. A similar provision for
review of the decision exists even here.

What are the rights of a workman being laid off?

 According to section 25C of the Industrial Disputes Act, a workman who is laid-off is
entitled to compensation equivalent to 50% of the total basic wages and dearness
allowance for the period of lay-off except for weekly holidays which may intervene.
 However, Compensation can normally be claimed for not more than 45 days during any
period of 12 months. Even if lay-off exceeds 45 days during any period of 12 months, no
compensation is required to be paid for the excess period if there is an agreement to that
effect between the workman and the employer.
 This right of compensation is, however, subject to the following conditions:
o He is not a badli (a person who is employed as a casual workman who is working
in place of another), or a casual workman.
o His name should be borne on the muster rolls of the establishment.
o He should have completed not less than one year of continuous service under the
employer.

Penalties for Illegal Strikes & Lockouts

Section 26 provides for penalties for illegal strikes and lockouts

  Any workman, who commences, continues or otherwise acts in furtherance of, a strike
which is illegal under this Act shall be punishable with imprisonment for a term which
may extend to one month, or with fine which may extend to fifty rupees, or with both.
 Any employer, who commences, continues, or otherwise acts in furtherance of a lock-out
which is illegal under this Act, shall be punishable with imprisonment for a term which
may extend to one month, or with fine which may extend to one thousand rupees, or with
both.

MODULE 4: JUSTICE SYSTEM UNDER THE LABOUR LEGISLATION

Organizations/ Institutions/ Systems for Dispute Resolution

Works Committee – The institutions of Works Committee was introduced in 1947 under the
Industrial Disputes Act, 1947 (IDA), to promote measures for securing good relations between
employers and employees. It is concerned with problems arising in day-to-day working of the
establishment. The decision of the Works Committee is neither agreement nor compromise nor
arbitration. Further, it is neither binding on the parties nor enforceable under the Act.

Conciliation Officer – The appropriate government is empowered under the IDA to appoint any
number of Conciliation Officers, for mediating in and promoting the settlement of disputes.

Board of Conciliation – This is a higher forum which is constituted for a specific dispute. It is
not a permanent institution like the Conciliation Officer.

Court of Inquiry – Under the IDA, Court of Inquiry may be constituted by the appropriate
Government for inquiring about matter appearing to be connected with or relevant to an
industrial dispute.

Voluntary Arbitration – When Conciliation Officer or Board of Conciliation fails to resolve

conflict/ dispute, parties may go for voluntary arbitration for settling their disputes. Section 10A
of the IDA provides for the settlement of industrial disputes by voluntary reference of dispute to
arbitrators.
Adjudication - Unlike conciliation and voluntary arbitration, adjudication is compulsory method
of resolving conflicts. The IDA provides the machinery for adjudication, namely:

 Labour Courts
 Industrial Tribunals and
 National Tribunals

Alternate Dispute Resolution (ADR) – Section 89 of the Civil Procedure Code (CPC)
provides for settlement of disputes outside the Court. According to this section, the Court may
refer a dispute for:

 Arbitration
 Conciliation
 Settlement through Lok Adalat;
 Mediation

ADR System aims at providing justice that not only resolves dispute but also harmonizes the
relation of the parties. Machineries under Industrial disputes Act in India provides opportunity
for industrial employees to resolve their disputes through ADR in the form of conciliation and
voluntary arbitration before the disputes are referred to compulsory adjudication through labour
court and tribunals. Although ADR is not a new concept in resolving industrial disputes, the
obstacles faced in the conciliation and arbitration proceedings lead to ineffective alternative
mechanisms. The recent growth of ADR in the form of Lok Adalats is very relevant where
justice is dispensed summarily without too much emphasis on legal technicalities. It has been
proved to be a very effective alternative to litigation. The govt. should take appropriate measures
to establish permanent Labour Lok Adalats exclusively for the purpose of settling labour
disputes effectively and to that effect necessary reformation should be made in the ID Act.

Constitutional Provisions relating to Establishment of Tribunals

Tribunals were added in the Constitution by Constitution (Forty-second Amendment) Act, 1976
vide Articles 323-A and 323-B.

 Article 323-A deals with Administrative Tribunals;

 Article 323-B deals with tribunals for other matters like industrial and labour disputes

In general sense, the ‘tribunals’ are not courts of normal jurisdiction, but they have very specific
and predefined work area.

Difference between Arbitration, Conciliation & Adjudication

Conciliation, arbitration and adjudication are the different methods provided for in the Industrial
Disputes Act 1947 for the settlement of Industrial Disputes.

Conciliation: The Government that is either the Central Government or the State Government
appoints conciliation officers who are usually officials of the State Labour Department or the
officials of the Ministry of Labour Government of India. Usually conciliation officers are
appointed for a particular geographical area, usually a revenue district. In certain cases the
conciliation officer is appointed for a particular industry in a particular area. If any industrial
dispute arises between an employer and his workmen the workmen or the employer can approach
the Conciliation Officer for the area in which the industry is situated and request him to hold
conciliation talks in the dispute and settle the issue. The talks initiated by the conciliation officer
are called conciliation talks. The conciliation talks may end in the settlement of the disputes in
which case a settlement is drafted and signed by the employer, the workmen (trade union) and
the conciliation officer. There may be cases when the conciliation officer may not be able to
settle the dispute for several reasons. In such circumstances, the conciliation officer sends a
report to the Government. This report is called the conciliation failure report. The Government
considers the report of the conciliation officer and if necessary refers the issue in dispute to the
Labour Court/Industrial Tribunal as the case may be for adjudication.

Adjudication: The Labour Court/Industrial Tribunal gets the jurisdiction to decide an industrial
only if the Government makes a reference of that dispute to it. The proceedings before the
Labour Court/Industrial Tribunal are called adjudication proceedings. The Labour
Court/Industrial Tribunal after following the procedure prescribed under law finally gives its
Award. This Award is sent to the Government and becomes operational thirty days after the date
of its publication by the Government. The Award given by the Labour Court/Industrial Tribunal
is binding on the parties to the industrial dispute. However, any one of the parties in the
adjudication proceedings before the Labour Court/Industrial Tribunal can challenge the Award
by means of a writ petition before the High Court.

Arbitration: Arbitration is also a procedure for the settlement of the industrial dispute. In the
case of arbitration, the parties agree that the issue in dispute between them should be settled by
referring the issues for arbitration. The parties to the dispute can select the person who should
arbitrate the issue i.e., the arbitrator. The difference between arbitration and adjudication is that
in the case of arbitration the parties to the dispute agree to refer the dispute for the decision of the
arbitrator. In the case of adjudication, the dispute is referred for adjudication by the Government.
In the case of arbitration the parties to the dispute can choose the arbitrators. In the case of
adjudication the Presiding Officer of the Labour Court/Industrial Tribunal are appointed by the
Government. The parties to an adjudication proceeding cannot choose the Presiding Officer of
the Labour Court/Industrial Tribunal.

Difference between Compulsory & Voluntary Arbitration

In the case of a dispute over a contract or other legal matter, arbitration may be in order.
Arbitration involves the use of a neutral party to both review and help settle the dispute. The use
of arbitration helps keep the matter from going to the courts, and may be either compulsory or
voluntary.

In compulsory arbitration, the parties involved are required to go through the third party to
settle their dispute. If an arbitration clause is included in a contract, and if the contract itself is
valid, the parties must abide by the clause. Arbitration may also be ordered by a court as a means
to prevent a situation from going to trial, and the parties must comply or face possible sanctions.

Another possibility is voluntary arbitration. In this instance, the sides involved agree on their
own to use an outside party, like an arbitration attorney, to help settle their differences. No
contract or law requires this action, yet deciding to use arbitration can save money, time and
maybe even good will. In business relationships, all of these are important. If the matter is
personal, such as in a divorce proceeding, voluntary arbitration can be equally valuable.
Award

An arbitration award is the award granted by the arbitrator in their decision. This award can be
money one party has to pay to the other party. It can also be a non-financial award, such as
stopping a certain business practice or adding an employment incentive.

Arbitration Award is a determination on the merits by an arbitration tribunal in arbitration, and is

analogous to the judgment in the Court of Law. Arbitration is particularly a means of dispute
resolution in the commercial sphere. One of the reasons for doing so is that in international trade
it is often easier to enforce a foreign arbitral award than to enforce a judgment of the Court. The
closing decades of the twentieth century saw arbitration gain worldwide acceptance as the
normal means of resolving commercial disputes. National laws on arbitration have been
modernized on all continents. The Arbitration & Conciliation Act, 1996 is one such step by India
to make the arbitration law more responsive to contemporary requirements, taking into account
the Model law and Rules adopted by the United Nations Commission on International Trade Law
(UNCITRAL).

Challenges to Awards or Grounds for setting Awards

Domestic Arbitral Award – Part I of the 1996 Act is modelled on the UNCITRAL Model Law
and the UNCITRAL Arbitration Rules with few departures. The relevant provisions are briefly
outlined below. Section 13 of the 1996 Act, corresponding to Art 13 of the Model Law,
provides for challenge to an arbitrator on the ground of lack of independence or impartiality or
lack of qualification. In the first instance, a challenge is to be made before the arbitral tribunal
itself. If the challenge is rejected, the tribunal shall continue with the arbitral proceedings and
make an award. Section 13(5) of the 1996 Act provides that where the tribunal overrules a
challenge and proceeds with the arbitration, the party challenging the arbitrator may make an
application for setting aside the arbitral award under Section 34 of the 1996 Act (corresponding
to Art 34 of the Model Law). Hence, approach to a court is only at the post-award stage. This is a
departure from the Model Law which provides for an approach to the court within 30 days of
the arbitral tribunal rejecting the challenge. The second departure from the Model Law
(relevant to enforcement) is to be found in S. 16 of the 1996 Act (corresponding to Art 16 of the
Model Law). Section 16 incorporates the competence-competence principle and enables the
arbitral tribunal to rule on its jurisdiction, including with respect to the existence or validity of
the arbitration agreement. If the arbitral tribunal rejects any objection to its jurisdiction, or to the
existence or validity of the arbitration agreement, it shall continue with the arbitral proceedings
and make an award. Section 16(6) of the 1996 Act provides that a party aggrieved by such
award may make an application for setting aside the same in accordance with S.34. Article 16 of
the Model Law, in contrast, provides that where the arbitral tribunal overrules any objection to
its jurisdiction, the party aggrieved with such decision may approach the court for resolution
within 30 days. The Indian Act permits approach to the court only at the award stage (and not
during the pendency of the arbitration proceedings). Hence, Section 13(5) and 16(6) of the 1996
Act furnish two additional grounds for challenge of an arbitral award (over and above the
ones stipulated in s 34 of the 1996 Act referred to below). Section 34 of the 1996 Act contains
the main grounds for setting aside the award. It is based on Art 34 of the Model Law and, like
Art 34, states that the grounds contained therein are the ‘only’ grounds on which an award
may be set aside. However, in the Indian context the word ‘only’ prefixing the grounds is a bit
of a misnomer as two additional grounds have been created by the Act itself as mentioned above.
Besides, another ground is to be found in an ‘Explanation’ to the public policy ground in s 34.
The same reads as follows:

It is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public
policy of India if the making of the award is induced or affected by fraud or corruption or was in
violation of Section 75 or Section 81.

Section 75 referred to above is part of the conciliation scheme under the Act and states that the
conciliator and parties shall keep confidential all matters relating to the conciliation proceedings.
Section 81 prohibits any reference in arbitral or judicial proceedings to views, suggestions,
admissions or proposals, etc. made by parties during conciliation proceedings.

Save for the exception, referred to above, s 34 of the 1996 Act is a faithful reproduction of Art
34 of the Model Law.

Grounds for which award is set

Section 34 of the Arbitration and Conciliation Act provides the provisions of certain specific
grounds on the basis of which an arbitral award rendered in India can be set aside. They are-

1) Incapacity of a party while making an application to enter the agreement.

2) Arbitration agreement not being valid under the law.
3) Parties were not given proper notice of the appointed Arbitrators or the Arbitral Tribunal.
4) Nature of dispute not capable of settlement by arbitration.
5) Composition of the arbitral award was not in accordance with the agreement of parties.
6) The Arbitral award is in the violation of the public policy of a state.
7) The Arbitral award deals with a dispute not falling within the terms of submissions to
arbitration.

(1) Incapacity of Parties

An application for setting aside an arbitral award can be passed if a party to the arbitration is
incapable in taking care of their interest and they are not represented by a person who can
safeguard their rights. The award can be set aside by the court if it finds that a party to a contract
is a minor or of an unsound person who is not being represented by a Guardian for protecting his
interest. Section 9 of the Arbitration and Conciliation Act, 1996 provides that the provision of
appointment of a guardian for a minor of unsound mind for his/her matter’s arbitral proceedings.

(2) The Invalidity of Arbitration Agreement under Laws

The validity of an arbitration agreement can be challenged in the same way on the same grounds
on which the validity of a contract is challenged. In cases where the agreement Clause is added
in a contract by the parties to it, the arbitration will be considered invalid if the contract is
invalid.

(3) Notice not given to the parties of arbitration proceedings

As provided under section 34(2)(a)(iii), if the party to a dispute in arbitral proceedings was not
given proper notice regarding the appointment of an arbitrator or any other notice of arbitral
proceedings, then this would be considered as a ground for setting aside the arbitral award of
such proceedings.
Section 23(1) of Arbitration and Conciliation Act, 1966 provides that the arbitral Tribunal has
to determine the time within which the statement must be filed. This must be timely
communicated to the parties by a proper notice and section 24(2) provides that an advance notice
shall be given to the parties regarding any hearing or meeting of the Tribunal for any purpose of
inspection of documents, goods or other property etc.

In Dulal podda V. Executive Engineer, Dona Canal Division, Court held that the appointment
of an arbitrator at the request of the appellant of the dispute without sending a notice to the
respondent and an ex-parte decree given by the arbitration Tribunal will be held illegal and liable
for setting aside.

(4) An Award not falling within the terms of Submission to Arbitration

The testimonials of a dispute in an agreement determine the limits of the authority and
jurisdiction of an Arbitral Tribunal. If the jurisdiction does not come within the ambit of the
Tribunal, then the award to the extent to which it is beyond the arbitrator’s jurisdictional powers
would be considered as invalid and such award would be liable for setting aside. An arbitrator
cannot act in contradiction to the terms of the contract.

In Rajendra Krishan Kumar V. Union of India, a matter under a writ petition was referred for
arbitration proceedings. The writ petition contains no claim of compensation for damage to the
perfectibility of the land because of the opposition party releasing effluents and slurry on that
other party’s land. The court held that the award of any such compensation would be liable to set
aside as it stands outside the scope of reference.

(5) Composition of Tribunal – Not in accordance with Agreement

Section 34(2)(a)(v) lays out that an award can be discarded or challenged if the composition of
the arbitral tribunal was not in obedience with the agreement of the parties or if the procedure of
conduct of proceedings was not followed properly. If the arbitrator passes a decision of an award
which is in deviation from the terms of reference and the arbitration agreement, then this would
lead to the award to be set aside and will amount to the misconduct of the arbitrator.
In the case of State Trading Corporation V. Molasses Co. the Bengal Chamber of Commerce,
the Arbitral Tribunal did not allow a company who was a party to be represented by its law
officer who was a full-time employee of the company. Here, the court held that it was the
misconduct of the arbitrator as well as the violation of arbitration proceedings.

In the case of ONGC Ltd V. Saw Pipe Ltd., the Supreme Court held that the arbitral Tribunal,
while exercising its jurisdiction cannot act in breach of some provisions of substantive law or
provisions of the Arbitration and Conciliation Act, 1966.

(6) Disputes not arbitrable

The nature of the dispute should be capable of settlement by arbitration. Generally, all disputes
which can be decided by a Civil Court involving private rights can be referred to the arbitration.
Therefore, matters of criminal nature or matters of public rights cannot be decided by arbitration
proceedings.

(7) Award against public policy

Section 34 provides that an application for setting aside an arbitral award can be made if such
award is in violation of the public policy of India. The concept of public policy implies matters
which concerns public good and Public Interest. The explanation of this section clarifies that
such award which is obtained either by fraud or by corruption would be considered against the
public policy of India. Also, the award which is required by suppressing the actual facts of the
case either by misleading or tricking the arbitrator or by bribing the arbitrator or by using force
on the arbitrator etc. would be held liable for setting aside as in contrary to the public policy.

In the case of Venture Global Engineering V. Satyam Computer Services Ltd., the Court
held that an arbitral award could be set aside if it is conflicting with the fundamental policies of
Indian laws or the justice, morality or interest of India.

Limitation
Section 34(3) states regarding the limitation period for filing an application that an appeal to set
aside an arbitration order by an aggrieved party has to be strictly made within the period of 3
months from the date of receipt of the same. The importance of this is set out by Section 36
which asserts that the award becomes enforceable as soon as the limitation period under Section
34 expires. Under section 33, the Court may, however, allow a delay of 30 days on request made
by the aggrieved party if the court is satisfied on the evidence of the sufficient cause. In Case of
National Aluminum Co Ltd v. Presteel Fabrication (P) Ltd, proceedings were instituted
before the Supreme Court under the disbelief that it had jurisdiction in the matter of setting aside
the arbitral award passed by Arbitral Tribunal. Time consumed on a bona fide prosecution of an
application in a wrong forum was held by the Supreme Court to be a sufficient cause for
condonation of delay.

 As in the Code of Civil Procedure, 1908, there is a general rule that an executing Court
can execute the decree if there is no stay by the appellate court. In the same way, in
Arbitration Act, once an application of setting aside the arbitral award is done under
section 34, the executing Court has no power or authority to effectuate the award until
and unless the application gets dismissed/ refused under section 34.

As per section 34, a party to the arbitration agreement has to make an application for setting
aside the award. But a legal representative in a case of any such party can also apply for it
because he is a person claiming under that. An award which is set aside no longer remains
applicable by law. Setting aside means that it is rejected as invalid. The parties get back to their
former position in regard to their claims in the dispute and the matter becomes open again for
decision. The parties have the option after setting aside an order to either again go for arbitration
or to have the matter decided by the court of law.

Constitutional Validity of Sec 34

In the case of TPI Ltd. V. Union of India, in a writ petition, it was contended by the petitioner
that an inherent right to set aside an arbitral award on the grounds provided, should be present
and in the absence of the same, section 34 should be considered as unconstitutional. Here, the
court dismissed the writ petition by stating that the arbitration is an alternate forum for the
resolution of a dispute and it is on the wish of the parties to opt in on their free will for their
matters and if they agree to the decision of the arbitral tribunal by mutual agreement. There is no
compulsion by any statute forcing the parties to resort to the arbitration procedure.

Public policy

It is clear that, The Arbitration and Conciliation Act, 1996 was conceived by the compulsions
of globalisation leading to adoption of the United Nations Commission on International
Trade Law (UNCITRAL) Model Law. This Act is by and large an integrated version of the
1940 Act which governed the domestic arbitration, the Arbitration (Protocol and Convention)
Act, 1937 and the Foreign Award (Recognition and Enforcement) Act, 1961, which governed
international arbitral awards. Apparently, Chapter I to VIII of the UNCITRAL are replicas of
Chapters I to VII of the Part-I of the 1996 Act, with the difference that in the UNCITRAL the
provisions are called ‘Article’ whereas under the Act they are called ‘Section’. The main
objectives set out in the Statement of Objects and Reasons of the 1996 Act are “to minimise the
supervisory role of courts in the arbitral process” and “to provide that every final arbitral award
is enforced in the same manner as if it were a decree of the Court”.

Public policy is that principle of law which holds that no subject can lawfully do, which has a
tendency to be injurious to the public or against the public good, which may be termed, as it
sometimes has been, the policy of the law or public policy in relation to the administration of the
law. Public policy connotes some matter which concerns public good and public interest. The
concept of public policy varies from time to time.

The UNCITRAL Model Law Commission stated in its report that the term “public policy”
comprises “fundamental principles of justice”. It was understood that the term public policy
which was used in the 1958 New York Convention and many other treaties, covered fundamental
principles of law and justice in substantive as well as procedural respects. Thus, instances such
as corruption, bribery, or fraud and similar serious cases would constitute a ground for setting
aside an award.

In the case of Renusagar Power Plant Co. Ltd. Vs. General Electric Co., the court in view of
the absence of a workable definition of “international public policy” found it difficult to construe
the expression “public policy” in Article V (2)(b) of the New York Convention to mean
international public policy as it could be, construed both in narrow or wide sense. In the
Renusagar case, it has been observed: “It is obvious that since the Act is calculated and designed
to subserve the cause of facilitating international trade and promotion thereof by providing for
speedy settlement of disputes arising in such trade through arbitration, any expression or phrase
occurring therein should receive, consisting with its literal and grammatical sense, a liberal
construction.”

The Supreme Court, while construing the term ‘public policy’ in Section 7(1)(b)(ii) of Foreign
Awards (Recognition and Enforcement) Act, applied the principles of private international law
and held that an award would be contrary to public policy if such enforcement would be contrary
to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality.

The trend in India is similar to that in England i.e. public policy could be interpreted in a narrow
sense and a broad sense.

ONGC Vs. Saw Pipes case

The limited grounds of challenge provided under Section 34 are universally recognised. It is well
accepted that the courts have no power to get into the merits of the dispute. However, this basic
proposition was put to test and suffered a setback in the case of ONGC Vs. Saw Pipes Ltd. In
this case, an award was challenged on the ground that the arbitral tribunal had incorrectly applied
the law of the land in rejecting a claim for liquidated damages.

Two errors of great magnitude that have been committed in this case are:

 While reviewing the merits of the ONGC case, the court failed to consider the labour
strike in entire European continent, something which was neither under the control nor
could be predicted by SAW Pipes. This particular aspect has been completely overlooked
by the court.
 The decision of the two judges Bench in ONGC has bypassed the ruling of the three
judges Bench of Supreme Court in the Renusagar case.

Steps for enforcement of Arbitral Award

One of the declared objectives of the 1996 Act is that every final award: ‘is enforced in the same
manner as if it were a decree of the Court’. Hence, the scheme of the Act is that it is up to the
losing party to object to the award and petition the court for setting it aside. The winning party
has to make no procedural move. If the objections to the award are not sustained (or if there are
no objections within the time allowed) the award itself becomes enforceable as if it were a decree
of the court. It would be noticed that the Indian law has thus fundamentally departed from the
Model Law in this regard. The Model Law requires an application for enforcement (Art 35) and
the grounds on which enforcement of an award may be refused are as set forth in Art 36 thereof.
This has been departed from under the Indian regime as stated above with the result, that in so
far as domestic awards are concerned, if there is no application to set aside an award under s 34
(or if the objections if made have been rejected), the award can straightaway be executed as a
decree of the court. Thus, when the period for filing objections has expired or objections have
been rejected, the award can be enforced under the Civil Procedure Code (CPC) in the same
manner as if it were a decree passed by a court of law. Section 36 declares that an arbitral award
has the force of the decree, though in fact it is not a decree. An ex parte Award passed by an
Arbitral Tribunal under Section 28 of the Act is also enforceable under Sec. 36. Even a
settlement reached by the parties under Section 30 of the Act can be enforceable under Sec. 36 of
the Act as if it is a Decree of the Court.

http://www.legalservicesindia.com/article/433/Arbitral-Award-Its-Challenge-&-
Enforcement.html#:~:text=Arbitration%20Award%20is%20a%20determination,resolution%20in
%20the%20commercial%20sphere.

https://www.lexology.com/library/detail.aspx?g=7f7b07eb-8728-4e20-9bbd-f335e8fac73d

MODULE 5: INDUSTRIAL RELATIONS UNDER THE TRADE UNIONS ACT, 1926

Trade Unions Act, 1926

 According to the Trade Union Act, a Trade Union means “any combination, whether
temporary or permanent, formed primarily for the purpose of regulating the relations
between workmen and employers, or between workmen and workmen, between
 employers and employers or for imposing restrictive conditions on the conduct of any
trade or business.
 The object of the Act is to make provisions for the registration of Trade Unions formed
by the workers to protect their legitimate rights while fighting with employers so that
they may acquire a legal and corporate status.
 As soon as a trade union is registered, it is treated as an artificial person in the eyes of
law, capable of enjoying the rights and discharging liabilities like a natural person.
 The Act applies not only to the Union of the Workers but also to the association of
employers.

Functions of Trade Union (TU)

Primary functions of a trade union are to protect and promote the interest of the workers and the
conditions of their employment. In India, trade unions generally undertake the following
functions:

 To achieve higher wages and better working and living conditions for the members.
 To generate self confidence among the workers.
 To encourage sincerity and discipline among workers.
 To take up welfare measure for improving the morale of the workers.

The National Commission of Labour has under scored certain basic functions to which trade
unions have to pay greater attention such as:

 To secure fair wages for workers

 To safeguard the security of tenure and improve conditions of services.
 To enlarge opportunities for promotion and training
 To improve working and living wages.
Important Provisions of the TU Act

Registration of Trade Union (Section 8)

The Registrar, on being satisfied that the Trade Union has complied with all the requirements of
this Act in regard to registration, shall register the Trade Union by entering in a register, to be
maintained in such form as may be prescribed, the particulars relating to the Trade Union
contained in the statement accompanying the application for registration.

Certificate of Registration (Section 9)

The Registrar, on registering a Trade Union under section 8, shall issue a certificate of
registration in the prescribed form which shall be conclusive evidence that the Trade Union has
been duly registered under this Act.

Incorporation of registered Trade Unions (Section 13)

 Every registered TU becomes a legal entity or body corporate by the name under which it
is registered.
 Every registered TU has perpetual succession and common seal with power to acquire
and hold both movable and immovable property.
 Registered TU has a power to contract
 Every registered TU can sue and be sued.

Certain Acts not to apply to registered Trade Unions (Section 14)

Certain Acts do not apply to the registered Trade Unions.

 The Societies Registration Act, 1860.

 The Cooperative Societies Act, 1912
 The Companies Act, 1956

The Registration of any such union under any such Act is null and void.

Duties and Liabilities of a Registered Trade Union

1. To maintain general fund of the registered TU for the following purposes: (Section 15)
  The payment of salaries, allowances and expenses to the Office-bearers of the TU.
 The payment of expenses for the administration of the trade union, including audit
of the accounts of the general fund of the TU.
 The prosecution or defence of any legal proceeding to which the trade union or
any member is a party.
 The conduct of trade disputes on behalf of the trade union or any member thereof.
 The compensation to members for the loss arising out of trade disputes.
 Allowances to members or their dependents on account of death, old age,
sickness, accidents.
 Policies insuring members against sickness, accident or unemployment.
 The provision of educational, social or religious benefits for members (including
payment of the expenses on funeral, religious ceremony)
2. To maintain a separate fund for the following political purposes (Sec.16)
 The payment of any expenses by a candidate or a prospective candidate for
election as a member of any legislative body constituted under the Constitution or
any local authority before, during or after the election in connection with his
candidature or election.
 The maintenance of any person who is a member of any legislative body
constituted under the Constitution or of any local authority.
 The holding of any meeting or distribution of any literature in support of such
candidate
 The holding of political meetings of any kind.

Criminal conspiracy in trade disputes (Section 17)

No office-bearer or member of a registered Trade Union shall be liable to punishment under

section 120B of the IPC, in respect of any agreement made between the members for the purpose
of furthering any such object of the Trade Union as is specified in section 15, unless the
agreement is an agreement to commit an offence.
Immunity from civil suit in certain cases (Section 18)

 No suit or other legal proceeding shall be maintainable in any Civil Court against any
registered Trade Union or any office-bearer or member thereof in respect of any act done
in contemplation or furtherance of a trade dispute to which a member of the Trade Union
is a party on the ground only that such act induces some other person to break a contract
of employment, or that it is in interference with the trade, business or employment of
some other person or with the right of some other person to dispose of his capital or of his
labour as he wills.
 A registered Trade Union shall not be liable in any suit or other legal proceeding in any
Civil Court in respect of any tortious act done in contemplation or furtherance of a trade
dispute by an agent of the Trade Union if it is proved that such person acted without the
knowledge of, or contrary to express instructions given by, the executive of the Trade
Union.

Q. Is Trade Union a Company?

A: Characteristics of a Trade Union are similar to a Company but there are many exceptions.
Differences between Trade Union and Company (S. 13, 14, 15, and 16)

https://blog.ipleaders.in/trade-unions-act-1926/

Types of Trade Unions

1. Craft Union – The workers belonging to the same craft, specialized skill or same
occupation can form their trade union irrespective of industry or trade they be employed.
For example, mechanists working indifferent industries may form a union of mechanists
only. In the same way electricians, carpenters, and turners may form their separate
unions.
Therefore, craft unions are open to members of a certain trade/skill, like Air India
Navigator’s unions and Indian Pilots Guild. The main drawback of this union is that
during strike in craft union, the entire working of the organisation paralyze because the
workers of this union cannot be easily replaced by other workers. Their unions generally
oppose technologically advances in the organisation.
 2. Industrial Union – The workers on the basis of industry can form unions irrespective of
their craft. For example, if entire workforce of a cement industry decides to form a union
consisting of workers of different craft; the union is called an industrial union. Therefore,
an industrial union is open to the members of workers of a factory like Girni Kamgar
Union at Bombay.
This type of union encourages workers solidarity and makes negotiations easy because a
single agreement covers all workers of a particular industry. One major drawback of this
type of union is that the skilled workers in it feel that their specific demands are not
scientifically taken care of.
3. General Union – This type is open to all members irrespective of their craft and industry
within a particular city or region. For example, Jamshedpur Labour Union, whose
membership includes workers, engaged indifferent industries and crafts of Jamshedpur.
In this case, there is no distinction between skilled and unskilled workers.

MODULE 6: SOCIAL SECURITY LEGISLATION

Workmen’s Compensation Act, 1923

 Social Act initiated in India

 Before this, there was Accident Act, 1885.
 The Act was brought in to address multiple and complex issues.
 Schedule II of the Act was amended. Earlier Schedule II contained categorization of
workmen. Now anyone working comes in the category of “workman”, irrespective of the
nature of work being engaged into.
 Now the Act is known as the Employee’s Compensation Act, 1923. The word
“Workman” has been replaced by “Employee”.

Employee’s Compensation Act, 1923

Objective of the Act

The Act aims to provide for the payment by certain classes of employers to their Employees of
compensation for injury by accident.
Definition Clause

 Section 2 (1) (b): “Commissioner” means a Commissioner for employee’s

Compensation appointed under section 20.
 Section 2 (1) (d): “Dependant” means any of the following relatives of deceased
employee, namely:
i. A widow, a minor legitimate or adopted son, an unmarried legitimate or adopted
daughter or a widowed mother; and
ii. If wholly dependent on the earnings of the employee at the time of his death, a
son or a daughter who has attained the age of 18 years and who is infirm;
iii. If wholly or in part dependent on the earnings of the employee at the time of his
death,
a. A widower,
b. A parent other than a widowed mother,
c. A minor illegitimate son, an unmarried illegitimate daughter or a daughter
legitimate or illegitimate or adopted if married and a minor or if widowed
and a minor,
d. A minor brother or an unmarried sister or a widowed sister if a minor,
e. A widowed daughter-in-law,
f. A minor child of a pre-deceased son,
g. A minor child of a pre-deceased daughter where no parent of the child is
alive, or
h. A paternal grandparent if no parent of the employee is alive;

Case: Manada Devi vs Calcutta Bone Mills

Step mother – not dependent.

 Section 2 (dd): “Employee” means a person, who is-

i. a railway servant as defined in the Railways Act, 1989
ii. a master, seaman or other members of the crew of a ship,
iii. a captain or other member of the crew of an aircraft,
 iv. a person recruited as driver, helper, mechanic, cleaner or in any other capacity in
connection with a motor vehicle,
v. a person recruited for work abroad by a company, and who is employed outside India in
any such capacity as is specified in Schedule II and the ship, aircraft or motor vehicle, or
company, as the case maybe, is registered in India; or
vi. employed in any such capacity as is specified in Schedule II, whether the contract of
employment was made before or after the passing of this Act and whether such contract
is expressed or implied, oral or in writing; but does not include any person working in the
capacity of a member of the Armed Forces of the Union; and any reference to any
employee who has been injured shall, where the employee is dead, include a reference to
his dependants or any of them;

Schedule II – List of persons who are included in the definition of “employee” under the Act.

Types of persons who are not employees under the Act

 Anyone employed for casual nature of work;

 Anyone belonging to the armed forces;
 When there is no Contract/ Agreement

Section 2 (e): “Employer” includes any body of persons, whether incorporated or not, and any
managing agent of an employer and the legal representative of a deceased employer. When the
services of an employee are temporarily lent or let on hire to another person by the person with
whom the employee has entered into a contract of service or apprenticeship, employer means
such other person for whom the employee is working.;

 M.D. Orissa State Warehousing Corporation vs. Smt. Geeta Rani – Any person,
which obviously includes a Corporation, who engages contractor in the course or for the
purposes of his trade or business, contracts with any other person for the execution of
some work, incurs the liability in respect of the workman vis-a-vis the contractor. The
liability in such an event passes on to the principal employer. Thus, in case of contract
labour, the principal employer is liable to pay compensation in the same manner, as he is
liable for his departmental labour. However, he is entitled to be indemnified by the
contractor for such compensation.
  Contractor can be an employee and seek compensation under the Act. If any work is done
in furtherance of work given by employer, only under those situations, the contractor will
be an employee.
 Section 2 (1) (f): “Managing Agent” means any person appointed or acting as the
representative of another person for the purpose of carrying on such other person's trade
or business, but does not include an individual manager subordinate to an employer
 Section 2 (m): “Wages” includes any privilege or benefit which is capable of being
estimated in money, other than a travelling allowance or the value of any travelling
concession or a contribution paid by the employer of an employee towards any pension or
provident fund or a sum paid to an employee to cover any special expenses entailed on
him by the nature of his employment;
 Are privileges wages? – Only such privileges are wages which can be estimated in
money but it does not include travelling allowance/ travelling concession/ contribution
made by the employer towards pension or provident fund/ any sum paid by the employer
to meet any special expenses made by the employee due to nature of the employment.
 Reimbursements are not wages – The reimbursement of any sum spent by the
employee due to the nature of the employment shall not come within the purview of
‘wages’ under the Act. For example, the reimbursement of medical expense bills for the
injuries caused during the course of employment shall not be treated as wages.

Liability Clause – Employer’s liability to pay compensation

Section 3 of the Act provides for the employer’s liability to pay compensation. According to this
section, the employer of any establishment covered under this Act, is required to compensate an
employee:

 Who has suffered an accident arising out of and in the course of his employment,
resulting into:
i. Death;
 ii. Permanent disablement, whether total or partial;
iii. Temporary disablement, whether total or partial; or
 Who has contracted an occupational disease

However, the employer shall not be liable:

 In respect of any injury which does not result in the total or partial disablement of the
workman for a period exceeding three days;
 In respect of any injury not resulting in death, caused by an accident which is directly
attributable to:
o the workman having been at the time thereof under the influence or drugs, or
o the wilful disobedience of the workman to an order expressly given, or to a rule
expressly framed, for the purpose of securing the safety of workmen, or
o The wilful removal or disregard by the workmen of any safeguard or other device
which he knew to have been provided for the purpose of securing the safety of
workmen.

The burden of proving intentional disobedience on the part of the employee shall lie upon the
employer.

 when the employee has contracted a disease which is not directly attributable to a specific
injury caused by the accident or to the occupation; or
 When the employee has filed a suit for damages against the employer or any other
person, in a Civil Court.

How can an employee seek compensation?

 A claim for the compensation shall be made before the Commissioner.

 No claim for compensation shall be entertained by the Commissioner unless the notice of
accident has been given by the workman in the prescribed manner, except in the
following circumstances:
 o In case of death of workman resulting from an accident which occurred on the
premises of the employer, or at any place where the workman at the time of the
accident was working died on such premises or such place or in the vicinity of
such premises or place;
o In case the employer has knowledge of the accident from any other source, at or
about the time of its occurrence;
o In case the failure to give notice or prefer the claim, was due to sufficient cause.
 The amount of compensation is not payable to the workman directly. It is generally
deposited along with the prescribed statement, with the Commissioner who will then pay
it to the workman. Any payment made to the workman or his dependents, directly, in the
following cases will not be deemed to be a payment of compensation:
o In case of death of the employee;
o In case of lump sum compensation payable to a woman or a minor or a person of
unsound mind or whose entitlement to the compensation is in dispute or a person
under a legal disability.
 The receipt of deposit with the Commissioner shall be a sufficient proof of discharge of
the employer's liability.

Amount of Compensation

Section 4 provides for the amount of compensation to the employee. According to this section,
the amount of compensation payable by the employer shall be calculated as follows:

 In case of death – 50% of the monthly wages X Relevant Factor or Rs. 50,000, whichever
is more; Plus Rs. 1000 for funeral expenses.
 In case of total permanent disablement Specified under Schedule I – 60% of the monthly
wages X Relevant Factor or Rs. 60,000, whichever is more.
 In case of partial permanent disablement specified under Schedule I– Such percentage of
the compensation payable as in the case of total permanent disablement as is the
percentage of the loss in earning capacity (specified in Schedule I)
  In case of temporary disablement (whether total or partial) – A half-monthly instalment
equal to 25% of the monthly wages, for the period of disablement or 5 years, whichever
is shorter.
 Schedule IV of the Act contains the factors for working out lump sum equivalent of
compensation amount in case of permanent disablement and death

Disablement

Disablement, in ordinary language, means loss of capacity to work or move. Such incapacity
may be partial or total and accordingly there are two types of disablement, partial and total. In
the Act, both types of disablement are further subdivided into two classes, temporary and
permanent.

Partial Disablement

 Temporary partial disablement

 Permanent partial disablement

Total Disablement

 Temporary total disablement

 Permanent total disablement

According to Section 2 (l) of the Act, “total disablement” means such disablement, whether of
a temporary or permanent nature, as incapacitates an employee for all work which he was
capable of performing at the time of the accident resulting in such disablement:

Provided that permanent total disablement shall be deemed to result from the permanent total
loss of sight of both eyes or from any combination of injuries specified in Schedule I, where the
aggregate percentage of the loss of earning capacity, as specified in that Schedule against those
injuries, amounts to one hundred percent

 According to Section 2 (g), “partial disablement” means, where the disablement is of a

temporary nature, such disablement as reduces the earning capacity of an employee 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 as
 reduces his earning capacity in every employment which he was capable of undertaking
at that time:
 Sukkai vs. Hukum Chand Jute Mills – The Act is not limited only to physical capacity
of disablement, but extends to the reduction of earning capacity as well.
 Commissioner for Port of Calcutta vs. A.K. Ghosh – The medical evidence showing
loss of physical capacity is a relevant factor but it is certainly not the decisive factor as to
the loss of earning capacity. It is the loss of earning capacity that has to be determined.
The type of disablement suffered is to be determined from the facts of the case.

Doctrine of Added Peril

According to Doctrine of Added Peril, if a workman while performing his duty does something
which is not required to do and which involves extra danger, the employer would not be liable to
pay compensation if any injury is caused to him.

Doctrine of Notional Extension

 The expression “in the course of his employment”, connotes not only actual work but
also any other engagement natural and necessary thereto, reasonably extended both as
regards work hours and work-place.
 It refers to the time during which the employment continues.
 However, this is subject to the theory of notional extension of the employer's premises so
as to include an area which the workman passes and re-passes in going to and in leaving
the actual place of work. There may be some reasonable extension in both 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. This is called as the Doctrine of Notional
Extension.
 The doctrine of notional extension could not be placed in a straitjacket; it was merely a
matter of sound common sense as to when and where and to what extent this doctrine
could be applied.

Commissioners under Workmen’s Compensation Act

Appointment of Commissioners (Section 20)

 1) The State Government may appoint any person to be a Commissioner for Workmen’s
Compensation for the specified areas.
2) If more than one Commissioner has been appointed for any area, the State Government
may, by general or specific order regulate the business between them.
3) Every Commissioner shall be deemed to be a public servant within the meaning of the
Indian Penal Code.
4) Any Commissioner may choose one or more persons possessing special knowledge to
assist him in holding the inquiry.

Jurisdiction of Commissioners

The parties are free to settle the matter amicably by the agreement. If the parties concerned could
not settle the matter by mutual agreement, they may refer the matter for decision to the
Commissioner for workmen’s compensation. According to, Section 19 of this Act, the
Commissioner has jurisdiction over the following matters:

1) Liability of any person to pay compensation,

2) Whether a person injured is or is not .a workman,
3) The nature and extent of disablement,
4) The amount or duration of compensation.

No Civil Court has jurisdiction to settle, decide or deal with any question which is under this
Act, required to be settled, decided or dealt by a commissioner.

Venue of Proceedings and transfer for Proceedings: As per Section 21, any matter under the
Act to be done by or before a Commissioner, the same shall be done for the area in which

 The accident took place which resulted in the injury or

 The workman or in case of this death, the dependent claiming the compensation
ordinarily resides or
 The employer has his registered office.

Where any proceeding pending before the Commissioner is sought to be transferred before any
other Commissioner, such transfer cannot be ordered by the Commissioner himself unless prior
sanction of the State Government is obtained. If the second Commissioner works for another
State, then prior approval of the Government of the State is required to be obtained for transfer.

Powers & Duties of the Commissioner

The powers & duties of the commissioner are as follows:

 To deposit and distribute compensation [Section 8].

 Powers to require from employers statement regarding fatal accident [Section 10A].
 Power of settlement of disputes [Section 19(1)].
 Power of transfer [Section 21 (2)].
 Power to require further deposit in case of fatal accident [Section 22A].
 Power of Civil Court [Section 23].
 Power to order costs [Section 26].
 Power to submit cases [Section 27].
 Power to withhold certain payments pending decisions of an appeal [Section 30A].
 Power of recovery [Section 31]
 Power and duty to record evidence.

Employees State Insurance Act, 1948 (ESI Act)

Need of the Act

The Employees’ State Insurance Act, 1948 is a social security legislation that provides for
medical care and cash benefit in the contingencies of sickness, maternity, disablement and death
due to employment injury to workers.

Objectives of the Act

To provide for certain benefits to employees in case of sickness, maternity and injury during
employment and to make provision for certain other matters in relation thereto.

Difference between ESI Act and Employees Compensation Act

Subject Matter E State Insurance Act E Compensation Act
Applicability Applicable to a non-seasonal Applicable to any
organization/ factory organization (other
than clerical jobs)
No. of persons Non-seasonal factories using Any number of employees
employed power and employing 10
or more persons.
Non-seasonal and non-
power using factories
and establishments
employing 20 or more
persons.
Monthly wages Monthly wage of the Minimum monthly wage
employees is up to Rs. considered for
10,000. calculating benefits is
Rs. 8000.
Country of Applicable to workforce Applicable to workers
employment employed in India. employed by Indian
employers in foreign
countries.
Main Objective To cover employee accidents To cover statutory liability
arising out of and in of an employer for the
course of employment, death of or bodily
hospitalization and injuries or occupational
funeral expenses and diseases sustained by
family health care for the workmen arising
card holders etc. out of and in course of
employment.
Benefits In case of death of the In case of death of the
employee, 90% of the employee,
monthly wage is compensation is
 distributed among all the
dependents. (Spouse, till
remarriage or death,
children up to 18
years,parents till death)
Premium Employee has to contribute
1.75% of their salary as
premium and employer
has to contribute 4.75%
of the salary as premium
on monthly basis
throughout the
employment period.
awarded by the court
not only taking into
consideration the
salary, but also age of
the employee, of
dependents; usually the
amount awarded by the
court is much higher.
Only the employer
contributes premium
for the period of
contract

Purposes for which the ESI Act can be invoked

 Medical benefits
 Sickness benefits
 Maternity relief
 Funeral benefits
 Employment injuries.

Conditions under which ESI Act applicable

 Non-seasonal factories using power and employing 10 or more persons.

 Non-seasonal and non-power using factories and establishments employing 20 or more
persons.

Who can get benefits under the ESI Act

Employees of covered units and establishments drawing wages upto Rs. 10,000/- per month
come under the purview of the ESI Act, 1948 for multi-dimensional social security benefits.
Employees covered under the scheme are entitled to medical facilities for self and dependants.

ESI Fundraising System

 The ESI Scheme is mainly financed by contributions raised from employees covered
under the scheme and their employers, as a fixed percentage of wages. As of now, the
rates of contribution are:
o Employees’ Contribution: 1.75% of wages
o Employers’ Contribution: 4.75% of wages
 Employees earning upto Rs.50/- a day as wages are exempted from payment of their part
of contribution.
 The State Govts. bear 1/8thshare of expenditure on Medical Benefit within the per capita
ceiling of Rs.900/- per annum and any additional expenditure beyond the ceiling.

Employees State Insurance Corporation (ESIC)

 According to Section 2 (6) of the ESI Act, the term “Corporation” under the Act refers to
the Employees’ State Insurance Corporation (ESIC).
 Section 3 of the Act further states that the Central Government has to establish the
Corporation as per given provisions.
 The ESIC is principally policy formulating body and governs the wide range of activities
under the Act.
 The main function of this Corporation is to implement the provisions of the ESI Act and
carry out its duties.
 Follows perpetual succession.
 Regulated by the Central Government.

Constitution of ESIC

 Representatives of
o Central Government (5 members)
o State Government (1 each)
 o Members of Lok Sabha
o Medical profession
o Employers and Employees (10 persons)
 Headed by a Chairman and a Vice Chairman, appointed by the Central Govt.

Organs and Functionaries of ESIC

 Standing Committee
 Medical benefit Council
 Director General
 Insurance Commissioners
 Medical Commissioner
 Chief Accounts Officer and the Actuary
 In order to achieve decentralization, Regional Boards and local committees can also be
constituted.

Functions and Powers of the ESIC

The ESIC is primarily concerned with policy formulation and effective implementation of
various provisions of the ESI Act. For this, it has the following functions and powers:

1. The Corporation can appoint staff members and officers for carrying out its business
effectively.
2. The Corporation has powers to purchase and sell movable as well as immovable
properties. It can even raise loans and invest its money with the Central Govt.’s
sanctioned funds.
3. The Corporation can frame regulations on various matters such as:
o Method of recruitment and service conditions of the employees of the corporation.
o Remission of contributions to the Corporation.
o The constitution of Medical Boards and the Medical Appeal Tribunals.
o Penalties for breach of regulations.
o Any other matter relevant under the Act.

The Standing Committee

  The Standing Committee constitutes of representatives of:
o Central and State Govts. (3 members)
o Employers and Employees (3 elected members)
o Paramedical professionals (1 each)

Powers of the Standing Committee

 To administer the affairs of the Corporation. It may exercise any of the powers of the
Corporation and perform any of the functions of the Corporation.
 To submit for the consideration and decision of the Corporation all such cases and
matters as may be specified in the regulations made in this behalf.
 To submit in its discretion any other case or matter for the decision of the Corporation.

Employees Provident Fund & Miscellaneous Provision Act, 1952 (EPF Act)

 Salary consists of two parts: earnings & deductions. Provident Fund is one of the
statutory deductions made by the employer at the time of salary payment.
 Provident Fund is governed by the Employee’s Provident Fund Act, 1952 – A social
security legislation but quite different from Employees Compensation Act.
 Provident Fund has come into force to give better future to employees on their retirement
& his dependants in case of his death during employment.
 The Employees Provident Fund (EPF) is administered by the Employees Provident Fund
Organization (EPFO), a statutory body developed by the government of India under the
Ministry of Labour and Employment. It has been formed to administer the mandatory
contribution towards the PF scheme by both the employees and employers.
 It is a mandatory contribution – equal contribution by the employer and the employee.

Applicability of the Act and Registration

 An establishment with less than 20 employees can voluntarily opt for PF registration to
protect employee’s benefits.
 However, Companies with more than 20 employees compulsorily have to register under
EPF Scheme (EPFS).
  Once a company is covered under the EPF Act, even if its employee strength drops below
20, it will still be covered.

Need of EPF

 Tax benefits.
 Insurance benefits.
 Lifelong pension.
 Premature withdrawal option.
 Higher returns.
 Does not exhaust even if one switches his job.

Important Components of the EPF Act

1. Employee Provident Fund, 1952 (EPF): This scheme aims to promote retirement savings.
 Employee Pension Scheme, 1995 (EPS): This scheme aims to provide post
retirement pension.
 Employee Deposit Linked Insurance Scheme, 1976 (EDLI): This scheme gives
life insurance to family members in case of sudden death.

Some important key points

 For every employee, it is mandatory to contribute towards EPF and EPS if his/her wages
(Basic + DA) are under Rs. 15,000. If an employee is drawing wages over 15,000 per
month, then he can ask for PF deductions from his salary.
 Both the employees and employers contribute 12%of the basic wages and dearness
allowance to the provident fund (PF) account. Thus, the total contribution to the PF is
24% per month.
 In the EPF account, entire 12%is contributed by the employee, while 3.67% is
contributed by the employer. The employer’s remaining contribution of 8.33% is diverted
to the Employee’s Pension Scheme. It is important to note that if the employee salary
exceeds Rs. 15000, the employer’s contribution towards EPS is restricted to 8.33% of Rs
15000 per month.
  Currently, Employee provident fund interest rate is 8.65 % per annum. The interest is
decided by the Government with the consultation of Central Board of Trustees of the
EPFO.
 The EPF also offers the nomination facility. An employee can nominate his mother,
father, spouse or children who are entitled to receive EPS money in the event of the death
of an employee. However, an employee cannot nominate his brother and sister for EPF.
 The employer also makes 0.50% of contribution towards the EDLI (Employees’ Deposit
Linked Insurance) account of the employee.

EPF withdrawals Rules

 EPF can be completely withdrawn under any of the following circumstances:

o When an individual retires from employment
o When an individual remains unemployed for a period of 2 months or more
 Partial withdrawal of EPF can be done under certain circumstances and subject to certain
prescribed conditions

Tax Benefits

 The employer contribution to employee EPF is tax-free,

 Employee contribution is tax-deductible under Section 80Cof the Income Tax Act.
 The money invested by employee in EPF, the interest earned and the money eventually
withdrawn, by employee after the mandatory specified period (5 years) are exempt from
Income Tax.

Post- retirement benefits of EPF

 Upon retirement, the employee receives the full amount in his EPF account.
 The employee also receives his/her pension from the EPS account provided that the
employee has completed over 10 years of service.

Maternity Benefits Act, 1961

Every woman has a right to live with dignity and avail certain benefits for the complete and
healthy maintenance of herself and her child even when she is not working. With the advent and
progress in the present era there has been a robust growth in the number of working women
employees in the organization and hence resorting to maternity leave and various other benefits
is on the go. The key arrangement includes: Every woman shall be entitled to, and her employer
shall be liable for making timely payment of maternity benefit which is payable for the period of
her actual absence at the rate of the average daily wage so determined. There is need to enforce
maternity benefits so that a woman is to be able to provide a quality living for her child without
having to worry about whether she will lose her job and her source of income.

Q. When did the Maternity Benefit Act, 1961 come into force?

A. The Maternity Benefit Bill was passed by both the Houses of the Parliament & subsequently
received the assent of the President on 12th December 1961, and came to be known as an Act
under the short title “The Maternity Benefit Act,1961 (53 of 1961)” so as to provide maternity
relief and benefit to women employees.

Q. Who is entitled to Maternity Benefit?

A. Every woman employee who may be employed directly or through any contractor and who
has worked in an establishment for a period of at least 80 days during the 12 months immediately
preceding the date of her expected delivery shall be entitled to for the same.

Q. What are the different benefits that can be availed under this Act?

A. The Maternity Benefit Act, 1961 provides both cash as well as non-cash benefits which
include-

Cash Benefits

 Leave with average pay for six weeks before the delivery.
 Leave with average pay for six weeks after the delivery.
  A medical bonus if the employer does not provide free medical care to the woman.
 An additional leave with pay up to one month if the woman shows proof of illness due to
the pregnancy, delivery, miscarriage or premature birth.
 In case of miscarriage, six weeks leave with average pay from the date of miscarriage.

Non Cash Benefits/ Privilege

 Light work for ten weeks (six weeks plus one month) before the date of her expected
delivery, if she asks for it.
 Two nursing breaks in the course of her daily work until the child is 15 months old.
 No discharge or dismissal while she is on maternity leave.
 No change to her disadvantage in any of the conditions of her employment while on
maternity leave.
 Pregnant women discharged or dismissed may still claim maternity benefit from the
employer.

In addition to the above the Act also makes provisions to undertake light work activities for
pregnant women 10 weeks prior to her delivery also nursing breaks during daily work till the
child attends age of 15 months.

Q. What is the period for which maternity benefit can be availed?

A. The maximum period for which maternity benefit can be sought shall be 12 weeks in totality
whether taken before or after childbirth. More than 6 weeks before delivery cannot be taken.
Prior to the amendment of 1989, women employees could not avail benefit of 6 weeks before
delivery.

Q. What are the restrictions that are imposed on the employment of pregnant women?

A. No employer shall knowingly employ any woman who is in the period of 6 weeks
immediately following the day of her delivery or miscarriage or medical termination of
pregnancy. No woman shall be working in any establishment during the period of 6 weeks.

No woman shall be engaged in any arduous work which may involve long hours of standing or
any work which is likely to interfere with her pregnancy or cause miscarriage or adversely affect
her health during the period of 1 month preceding the period of 6 weeks before the date of her
expected delivery and also the period of 6 weeks for which she does not take leave.

Q. How much is the amount of remuneration that a woman under the Act is entitled to?

A. It is calculated by including the average daily wages for the actual absence period which is in
fact the average wages payable to the woman on the days which she has worked during the
period of 3 months immediately preceding the date from which she takes absence on the ground
of maternity or Rupees 10, whichever is higher.

Q. What benefit can be availed in the case of death of a pregnant woman?

A. As per Section 7, maternity benefit shall be paid only for the days including and upto the day
of death. Such benefit or amount shall be paid by the employer to the person nominated by the
woman. If no nomination is made then her legal representative must avail of the benefit.

Q. What precedents paved way for the exclusion of arbitrariness and established a just
platform for women to enforce their rights?

A. Municipal Corporation of Delhi v. Female Workers, 2000 – In this case female workers
who were treated as temporary employees and employed on muster roll claimed that they should
also be entitled to maternity benefit. The court held that as per Articles 39 and 42 of the
Directive Principles of the State Policy a woman at the time of advanced pregnancy cannot be
compelled to undertake hard labour as it would be detrimental to her health and also to the health
of the fates. It is for this reason that it is provided in the Act that she would be entitled to
maternity leave for certain periods prior to and after delivery.

Shah v. Presiding Officer, Labour Court, Coimbatore and Ors, 1977 – In this case, the
question was whether in calculation of the maternity benefit for a period covered by Section 5
Sundays being wage-less holiday should be excluded? The Apex Court ruled that Sunday must
also be included and read in light of Article 42 stating that the Constitution was intended to
enable the woman worker not only to subsist but also to make up her dissipated energy, nurse her
child, preserve her efficiency as a worker and maintain the level of her previous efficiency and
output.
Chandrika v. Indian Red Cross Society, 2006 – Here, the Petitioner was terminated while she
was on maternity leave. The relief of reinstatement and consequential benefits were denied to
her. Also, there was no evidence to show that the Petitioner had received the communication.
The Court held that the Petitioner’s services had been terminated illegally and she should be
reinstated with the service and avail the necessary benefits.

Air India v. Nergesh Meerza, 1981 – In this case, Air India Corporation (AIC) Act and Indian
Airlines Corporation (IAC) Act formulated certain regulations between the conditions of
retirement and termination of service pertaining to air hostesses (AH) and those of male pursers
(MP) forming part of the same cabin crew and performing similar duties. These conditions were
that an AH under AIC retired from service in case of ‘first pregnancy’. The Court held it to be
“grossly unethical” and as smacking of “deep rooted sense of utter selfishness at the cost of all
human values” as compelling to terminate services if a woman becomes pregnant would amount
to forbidding her not to have any children. It has been stated that mere pregnancy should not be
considered to be a disability but a natural outcome of marriage and any distinction made on the
ground of pregnancy is extremely unreasonable and manifestly arbitrary.