INTRODUCTION TO

LABOUR LAWS
Dr. Parimala

LABOUR LAWS

A set of Laws that apply to factories

and other establishments that
regulate the employment, terms of
employment, conditions of work and
also ensure security and social &
economic wellbeing of workers.
Labour laws in India has divided the
Industry into two categories- (1)
Factories (2) Shops and
Establishments

Laws that regulate

the working
conditions

The Factories Act,

1948

The Shops and

Establishments Act,
1953

The Contract Labour

(Regulations and
Abolition Act, 1970

Laws that relate to wage

and bonus
The Industrial
Disputes Act,
1947

The Trade
Unions Act, 1926
The Industrial
Employment
(Standing
Orders) Act,
1946

Why do we need labour laws?

Free employment markets are imperfect

Employers may abuse workers to extract the maximum
Employers may discriminate against
disadvantaged groups,
underpay workers who are immobile or invest in firm-specific capital,
fire workers who then need to be supported by the state,
force employees to work more than they wish under the threat of
dismissal, fail to insure workers against the risk of death, illness or
disability

THE WORKMENS
COMPENSATION ACT, 1923
Background
For seeking compensation for employment injuries, the workman had to
establish that:
Injury was the result of accident
Employer was somehow responsible for the accident
Injury resulted in loss
Defenses available to the employer:
End of personal action with the death of the person.
The Doctrine of contributory negligence
The doctrine of assumed risks
The doctrine of common employment
Self inflicted injury

SALIENT FEATURES OF THE ACT

The act is the earliest piece of legislation providing social security
It imposes a statutory liability on the employer to compensate the worker
who has sustained injuries resulting in
death or
disablement or
contacting occupational diseases or
Sickness
Arising out of employment and in the course of employment
The objective of the Act is to compensate the worker for the loss of his earning
capacity owing to employment injury

TO WHOM DOES THE ACT APPLY

The Act extends to the whole of India.
It applies to workmen employed in factories, mines, plantations,
transport establishments, construction work, railways, ships,
circuses, & other hazardous occupations & employments specified
in Schedule II to the Act.
The Act does not apply to members of Armed Forces of the Union
& those workers who are insured under the Employees State
Insurance Act 1948.

IMPORTANT DEFINITIONS
Employer
any body of persons whether incorporated or not and any
managing agent of an employer and the legal representative of a
deceased employer, and, when the services of workman are
temporarily lent or let on hire to another person by the person with
whom the workman has entered into a contract of service or
apprenticeship means such other person while the workman is
working for him.

 Workman:
means any person (other than a person whose employment is of a
casual nature and who is employed otherwise than for the
purposes of the employer' s trade or business) who is
a railway servant
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.
but does not include
member of the Armed Forces of the Union

WAGES
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 a workman
towards any pension or provident fund.

For the purpose of paying compensation under the Act, the wage ceiling for a workman is
Rs 8,000. However in case of an employee drawing a salary of more than 8,000 then it shall
be limited to 8,000 for the purpose of compensation.

WHO IS A DEPENDENT ?
There are 3 categories of dependents:
1. the following relations are dependent s whether they are actually so or not!
A widow, a minor legitimate son, an unmarried daughter or a widowed mother
2. The following are dependents if they are wholly dependent on the earnings
of the workman at the time of his death
a son or a daughter who has attained the age of 18 years and who is infirm
3.If wholly or in part dependent on the earnings of the workman at the time of his
death,

a widower, a minor illegitimate son, an unmarried illegitimate daughter, a

minor brother or a unmarried sister or a widowed sister if a minor, a widowed
daughter- in- law, a minor child of a pre- deceased son, a minor child of a
pre- deceased daughter where no parent of the child is alive, or a paternal
grandparent if no parent of the workman is alive

 partial disablement means, where the disablement is of a temporary nature, such

disablement as reduces the earning capacity of a workman in any employment in which he
was engaged at the time of the accident resulting in the disablement, and,
where the disablement is of a permanent nature, such disablement as reduces his earning
capacity in every employment which he was capable of undertaking at that time: provided
that every injury specified 2[in Part II of Schedule I] shall be deemed to result in
permanent partial disablement;

TYPES OF INJURIES

Death
Employme
nt injury

Partial

Disableme
nt
Total

Permanent
Partial
disableme
nt
Temporary
partial
disableme
nt
Permanent
total
disableme
nt
Temporary
total
disableme
nt

 Disablement is the inability of the employer to undertake work due to employment injury.
Permanent total disablement in capacitates a worker from all kinds of work that he was
capable of doing at the time of the injury
Permanent partial disablement :disablement that reduces the capacity to work in any
employment similar to that the worker was performing at the time of the injury
Temporary disablement that may be total or partial that reduces the earning capacity of
theworker during the period of disablement.

EMPLOYERS LIABILITY TO PAY

COMPENSATION
Employer is liable to pay in case of personal injury to the workman arising out of employment and in
the course of employment.
PROVIDED that the employer shall not be so liable: a) in respect of any injury which does not result in the total or partial disablement of the workman for
a period exceeding (three) days.
b)in respect of any (injury, not resulting in death, caused by an accident which is directly attributable
to
the workman having been at the time thereof under the influence of drink or drugs, or
the willful disobedience of the workman to an order expressly given, or to a rule expressly framed, for
the purpose of securing the safety or workmen, or
the willful removal or disregard by the workman of any safety guard or other device he knew to have
been provided for the purpose of securing the safety or workman.
When the workman does not report for medical examination

Amount of compensation payable

Compensation payable in case of Death is :

50% of the monthly wages multiplied by the relevant
factor or 1, 20,000 which ever is more subject to a
maximum of 4.56 lakhs
Monthly wages for this purpose means ;
Actual wages or 8,000 which ever is less

Compensation in case of Permanent Total disablement

60% of the monthly wages multiplied by the relevant

factor or 1, 40,000 which ever is more subject to a
maximum of 5.48 lakhs
Monthly wages for this purpose means ;
Actual wages or 8,000 which ever is less

Age RF
16 228.54
17 227.49
18 226.38
19 225.22
20 224.00
21 222.71
22 221.37
23

RELEVANT FACTOR UNDER SCHEDULE

VI
Age
60
61
62
63
64
65

RF
117.41
113.77
110.14
106.52
102.93
99.37

COMPENSATION IN CASE OF TEMPORARY

DISABLEMENT
25% of the monthly wages of the worker to be paid bi monthly
Note:
1. Disablement from the date of disablement where such disablement lasts for
a period of twenty- eight days or more, or
2. Where the disablement lasts for a period of less than twenty- eight days,
compensation will be made after a waiting period of three days from the
date of disablement
3. Thereafter half- monthly during the disablement or during a period of five
years, whichever period is shorter

DEFAULT IN PAYING
COMPENSATION
For a delay of one month or more from the date when the
payment is due- 5% Simple interest.
For any unjustified delay- 50% of the compensation amount
has to be paid as a penalty.