Industrial Laws and

Policies
By Ashis Kumar Pradhan
Factory Act 1948

• The factory is a building or premise where people use machines and physical
labour to produce goods.
• The factories act, 1948 were passed by the constituent assembly on 28th August
1948, and it came into force on 1st April 1949.
• It provides safeguards to health, safety and welfare of workers in the factories.
• It will also monitor the owners of the premises.
• The Act covers 120 sections, 11 chapters and 3 schedules.
Salient features of the Act
• Working hours of the workers should not exceed 48 hours per week and there must be a weekly
holiday.
• For the protection of the health of the workers the Act lays down, there must be prevention and
precautions in every factory. There must be restrooms, adequate lighting, ventilators, temperature
to be provided. The workplace should be kept clean and hygiene.

To ensure the safety of the workers, the factories should be fully fenced and children should not be
allowed to work in hazardous and confined areas. Also, the state government has to monitor every
factory to ensure the safety measures are taken and followed as per the guidelines.
• For the welfare of the workers, there must be restrooms, lunchrooms, first aid appliances, shelters,
crèches to be provided. The facilities for washing to be provided and maintained properly for the
purpose of workers.
• If any person violates the provision of the factories act it shall be treated as an offence and can be
punished with an imprisonment of 3 months or fine up to 1 lakh rupees or both. If any of the
employees misuse any facility granted concerning the health, safety and welfare he/she shall be
punished with fines up to 500 rupees.
Main provisions covered in the Act:
• Duties of the Occupier.
• Powers and duties of Inspectors.
• Provisions regarding the Health of workers
• Provisions regarding the Safety of workers
• Provisions regarding the Welfare of workers
• Working hours for adult workers
• Annual leave with wages
• Provisions regarding the strength of workers
• Provisions regarding women employment
• Provisions regarding child labour
• Dangerous operations
• Notifiable diseases, accidents and dangerous occurrences.
The Factories (Amendment) Bill, 2016
• The Factories (Amendment) Bill, 2016 was introduced in Lok Sabha on August 10,
2016, by the Minister for Labour and Employment, Mr Bandaru Dattatreya. The Bill
amends the Factories Act, 1948. The Act regulates the safety, health and welfare of
factory workers. The Bill amends provisions related to overtime hours of work. The
Act permits the state government to prescribe rules on a range of matters, the bill
provides such rule-making powers to the central government as well.

• The Act permits the state government to make rules related to the regulation of
overtime hours of work. However, the total number of hours of overtime must not
exceed 50 hours for a quarter. The Bill raises this limit to 100 hours. Rules in this
regard may be prescribed by the central government as well and many other changes
Workers Compensation Act 1923
• Employees or Worker’s Compensation Act, 1923 is one of the most
important social security law.
• The act’s main aim is to provide financial protection and assistance to
employees and their dependents through compensation in case of any
accidental injury occurs during the course employment.
• It is generally applicable to the cases where such incidents lead to
either death or disablement of the worker.
Applicability of the Act
• It applies to all employees working in mines, factories, plantations,
construction establishments, oilfields, etc. Moreover, it applies to
establishments which are under Schedule II of the Worker’s
Compensation Act.
• The act applies to persons who are working abroad or outside India as per
Schedule II of the Act.
• It applies to a person recruited as the mechanic, helper, driver, etc. in
connection with a motor vehicle. It also applies to a captain or members
of the crew of an aircraft.
• Moreover, the act does not cover the members of armed forces of the
U&W who are already under ESI (Employee State Insurance) Act.
Employer’s Liability
• (A) Cases where they have to pay
• Injury by accident during employment
• Diseases in occupation
• (B) Cases where they do not have to pay
• In case of any injury or damage which does not lead to the semi or total
disablement of the workers for a period exceeding 3 days.
• In case of any injury which does not result in death or permanent total
disablement under the following circumstances:
• the workman present at the time of the work under the control of drink or drugs.
• when the worker deliberately disobeys the rule which ensures their safety.
• non-application of the devices which are especially for the safety of the workers.
Compensation Determination
• (A) In case of injury leading to Death
• An amount equal to Fifty Percent of the monthly salaries of the dead employee
multiplied by the appropriate factor or with the amount of Rs.80,000 or more.
• (B) In case of injury leading to permanent total disablement
• An amount equal to 60% of the monthly wages of the injured workmen multiplied by
the relevant factor or an amount of 90,000 or more.
• (C) In case of an injury occurring in permanent partial disablement
• In this case of permanent disablement due to injury, an amount equal to
the percentage of loss of earning capacity is given to the disabled.
• (D) In case of injury leasing to temporary disablement
• According to Section 4(2), Half-monthly payments is given which is equal to 25% of the
worker’s compensation.
Industrial Disputes Act 1947
• Purpose: An Act to make provision for the investigation and
settlement of industrial disputes, and for certain other purposes.
• Enacted By: Central Legislative Assembly
• Assented to: 11th March 1947
• Commenced from: 1st April 1947
• Total number of sections: 40 sections
Objectives of this Act
• This Act was passed was with a key objective of “Maintenance of
Peaceful work culture in the Industry in India” which are mentioned
under the Statement of Objects & Reasons of the statute.
• The Act also lays down:
• The provision for payment of compensation to the workman on account
of closure or lay off or retrenchment.
• The procedure for prior permission of appropriate Government for laying
off or retrenching the workers or closing down industrial establishments
• The actions to be taken against unfair labour practices on part of an
employer or a trade union or workers.
Causes of Industrial Disputes
• The causes of industrial disputes include disparity in wages, disputes
between the labour Union and the Industry, unfulfillment or disregard
of the rights of the labour, etc.
Controversy Regarding the Industrial
Disputes Act, 1947
• This clause arises controversy regarding the act, particularly as per
Chapter V-B. There have been multiple amendments that have been
made over the years for this clause. The chapter states the following:
• If an industrial establishment employs more than 50 persons, it needs to
give 60 day’s notice, citing reasons of closure to the appropriate
government before the closure of the industry. It was increased to 90
days in 1982.
• If the establishment employs more than 300 employees, it must take
prior approval of the proper government authority regarding approval
for layoffs, retrenchment and closure. This limit was lowered to 100
employees in the 1982 amendment.
Miscellaneous
• Apart from Chapter V-B, Section 9-A is also a cause of concern. This
section says that if employers are modifying the wages and other
allowances, they need to provide the labour commission a notice 21
days in advance. Thus, if employers quickly need to redeploy the
employees to meet certain time-bound targets, this practice disallows
that.
Minimum Wages Act 1948
• Purpose: In order to prevent the exploitation of labour amidst the
largely prevailing unemployment in India, the Central Government
enacted this Act prescribing the minimum rates of wages less than
which the employers are prohibited to pay the wages for certain
employments.
Minimum rates of Wages
• The Minimum Rate of Wages fixed or revised by the appropriate Government for the scheduled
employments may consist of:
• a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such
manner as the appropriate Government may direct, to accord as nearly as practicable with the
variation in the cost of living index number applicable to such workers (hereinafter referred to as the
"cost of living allowance"); or
• a basic rate of wages with or without the cost of living allowance, and the cash value of the
concessions in respect of supplies of essential commodities at concession rates, where so authorized;
or
• an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the
concessions, if any.
• The cost of living allowance and the cash value of the concessions in respect of supplies of essential
commodities at concession rates shall be computed by the competent authority at such intervals and
in accordance with such directions as may be specified or given by the appropriate Government.
Maintenance of registers and records
• Every employer shall:
• maintain such registers and records giving such particulars of
employees employed by him, the work performed by them, the wages
paid to them, the receipts given by them and such other particulars and
in such form as may be prescribed.
• keep exhibited, in such manner as may be prescribed, in the factory,
workshop or place where the employees in the scheduled employment
may be employed, or in the case of out- workers, in such factory,
workshop or place as may be used for giving out-work to them,
notices in the prescribed form containing prescribed particulars.
Form of registers and records
• A register of wages shall be maintained by every employer at the work-spot in Form X.
• Every employer shall in respect of each person employed in the establishment, complete the entries
pertaining to a wage period:- in columns 1 to 15 of Form X, before the date on which the wages for
such wage period fall due; and in columns 16 and 17 of the said Form, on the date when payment is
made and obtain the signature or thumb impression of the employee in column 18 of the said Form on
the date when payment is made.
• A wage slip in Form XI shall be issued by every employer to every person employed by him at least a
day prior to the disbursement of wages.
• Every employer shall get the signature or thumb-impression of every person employed on the register
of wages and wage slip.
• Entries in the register of wages and wages slips shall be a authenticated by the employer or any person
authorized by him in this behalf.
• A muster roll shall be maintained by every employer at the work-sport and kept in Form V and the
attendance of each person employed in the establishment shall be recorded daily in that form within 3
hours of the commencement of the work shift or relay for the day as the same may be.
Compliances
• Form I - Register of Fines
• Form II - Register of deductions for damage or loss
• Form III - Annual Return
• Form IV - Overtime Register
• Form V - Muster Roll
• Form VI - Application by employee under section 20(2)
• Form VIA - Group Application under section 21(1)
• Form VII - Application by Inspector or Person under section 23(20)
• Form VIII - Form of Authority
• Form IX - Form of Summons
• Form X - Register of Wages
• Form XI - Wage Slip
Preservation of registers
• A register required to be maintained under rules 21(4), 25(2) and 26(1)
and the muster roll required to be maintained under rule 26(5) shall be
preserved for a period of three years after the date of last entry made
therein.
Employees State Insurance Act 1948
• Purpose: An Act to provide for certain benefits to employees in case of
sickness, maternity and ‘ employment injury ’ and to make provision
for certain other matters in relation thereto.
• Enacted: 19th April 1948
• The act covers a wider spectrum than the factories act
• Extensive regulations have been framed under this act to identify the
employees who would be entitled to the benefits
• An elaborate machinery is provided for the effective administration of
the act.
Applicability
• Extends to the whole India
• Applicable to all factories other than seasonal factories
Objectives
• To offer social insurance to the workers
• To provide benefits in case of sickness, maternity and employment injury
• To provide medical benefits to employees of factories and establishments
and dependents benefits to the dependents of such employees.
• To foster socio-economic justice, to education, and public assistance in
cases of unemployment, old age, sickness, and disablement
• To provide medical relief, cash benefits, maternity benefits, pension to
dependents of deceased workers and compensation for fatal or other
injuries and diseases. It covers, contingencies, sickness, employment
injury and child birth related cases.
Coverage
• It is applicable to factories using power and employing 20 or more
workers.
• But now applicable to non-seasonal factories using power and
employing 10 or more workers and non power using factories
employing 20 or more workers.
• It covers all types of workers whose wage limit does not exceed Rs.
15000 per month.
Exemptions
• Factories run by state government/Central government, whose
employees are receiving social benefits substantially similar or
superior to the benefits provided under this act
• The appropriate government may grant or renew exemption under
section 87 in respect of a factory/establishment or class of factories or
establishments in any specified area from the operation of the act for a
period not exceeding one year at a time.
Exemptions contd.
• Under section 88 appropriate government to employees or class of
employees who remain away from their headquarters for more than 7 months
in a year and those employees who are posted in non- implemented areas.
• No exemption, under section 87, or section 88 can be granted unless
reasonable opportunity has been given to the corporation to make any
representation and the same is considered by the appropriate government.
• Exemption under Section 90 can be granted to a factory/establishment
belonging to any local authority such as a municipality/ Corporation etc. if
employees in any such factory/establishment are otherwise in receipt of
benefits substantially similar or superior to the benefit provided under the
act.
Provisions
• Insured person in case of sickness
• Insured women in case of miscarriage or confinement
• Insured person suffering from disablement due to employment injury
• To dependants of an insured person who dies due to employment
injury
Sickness benefit
• The rate and period thereof shall be such as may be prescribed by the
Central Government.
• ESI scheme provide medical care via network of ESI dispensaries,
hospitals, diagnostic centres etc.
• Minimum of 78 days contribution in one contribution period.
• Daily rate of sickness benefit is 50 % of daily wages.
• Cash benefit in case for prolonged illness due to any of the 34 diseases
specified under annexure A
• Continuous employment of 2 years and contribution of atleast 156 days
in 4 preceding contribution periods.
Maternity Benefit
• The rate and period thereof shall be such as may be prescribed by the Central
Government.
• Contribution same as the sickness benefit.
• Daily benefit rate is double of sickness benefit. Benefit is paid for sundays also.
• Delivery- A total of 12 weeks beginning not more than 6 weeks before the expected
date of child birth.
• Miscarriage- 6 weeks following miscarriage.
• Sickness due to pregnancy, childbirth, or miscarriage, additional period upto 4 weeks.
• Medical bonus of Rs. 2500 if the women does not avail medical facility from an ESI
hospital at the time of delivery.
• Claim forms- 09 and 19
Disablement benefits
• A person who sustains temporarily disablement for not less than 3 days (excluding
the day of accident) shall be entitled to periodical payment based on the prescription
of the Central Government.
• A person who sustains permanent disablement, whether total or partial shall be
entitled to periodical payment based on the prescription of the Central Government.
• Daily benefit for both temporary and permanent illness is roughly equivalent to
100% of the wage rate.
• The rate of benefit is proportional to the percentage of loss of earning capacity.
Benefit is paid for sundays also.
• Forms (a) Permanent- Form 14
• (b) Temporary- Form 09
Medical Benefits
• Provided to insured person, their families, reasonable medical, surgical
and obstetric treatment.
• Where the incidence of sickness benefit payment to insured is found
exceeding the all India average, the amount is to be shared by the
corporation and the Government in such proportion as may be fixed
by an agreement.
• Depending upon the scale of the medical treatment provided to the
insured person and their families.
Dependent Benefit
• A widow can receive this benefit on a monthly basis for life or till her
re-marriage.
• A son and daughter can receive this benefit till 25 years of age.
• Other dependants like parents can also receive this benefit.
• The first instalment is payable within a maximum of 3 months
following the death of an insured person and therefore, on a regular
monthly basis.
Penalties
• Fails to pay contribution fee might lead to:
• Not less than one year of imprisonment in case of failure to pay the
employee contribution deducted from employees wages and /or fine of
Rs. 10000.
• Not less than six months imprisonment, in any other case and/ or fine
of Rs. 5000.
Employees Provident Fund &
Miscellaneous Provisions Act 1952
• Purpose: An Act to provide for the institution of provident funds 2 [,3
[pension fund] and deposit-linked insurance fund] for employees in
factories and other establishments.
• Employees Provident Fund is established in 1952 and hence the act is
named as Employees Provident Fund & Miscellaneous Provisions
Act, 1952, which extend to the whole of India except Jammu &
Kashmir.
Applicability
• It is applicable:
• a) Every factory engaged in any industry specified in Schedule 1 in which 20 or
more persons are employed;
• b) Every other establishment employing 20 or more persons or class of such
establishments which the Central Govt. may notify;
• c) Any other establishment so notified by the Central Government even if employing
less than 20 persons.
• Every employee, including the one employed through a contractor (but excluding an
apprentice engaged under the Apprentices Act or under the standing orders of the
establishment and casual laborers), who is in receipt of wages up to Rs.6,500 p.m.,
shall be eligible for becoming a member of the funds. The condition of three months’
continuous service or 60 days of actual work, for membership of the scheme.
Taxability of PF
• Deduction of PF can be claimed under section 80C while calculating
Income Tax & when the employee withdraw the amount of PF &
Interest after the retirement then, PF amount & Interest amount is not
taxable.
• Pf can be accumulated withdrawn by the employee if he is
unemployed for more than 2 month. 75% PF can be withdrawn after
the employment of 1 month & rest 25% PF can be withdrawn after
the unemployment of 2 month. It is on the choice of the employee
after withdrawn of 75% amount that they should continue with the PF
account or want to withdrawal the whole amount.
Income Tax Liability on PF withdrawal
Types of Provident Fund
• Statutory Provident Fund (SPF)
• Public Provident Fund (PPF)
• Recognized Provident Fund (RPF)
• Unrecognized Provident Fund (URPF)
Statutory Provident Fund (SPF)
• It is a provident fund registered under Provident fund Act, 1925.
They are also known as government provident fund. So, the
employees who are meant for govt, semi-govt employees, university
or educational institutions affiliated to a university established under
the statue or other specified institution would be qualified to give to
them.
Public Provident Fund (PPF)
• PPF is covered under Public Provident fund Act, 1968. Any member
of the public weather employed or not can invest in PPF. Minimum
Contribution in this fund is Rs. 500 & Maximum amount is 1, 50,000
per year. The contributions made to the scheme along with the
interests are repayable after 15 years unless extended. The rate of
interest, at present, under the scheme is 8% per annum.
Recognized Provident Fund (RPF)
• This Scheme is registered under Employee’s Provident Funds and
Miscellaneous Provisions Act, 1952.According to the act, any person
who employees 20 or more employees is under an obligation to
register himself under this Act. Any person can register himself by
their choice weather they had less than 20 employees.
Unrecognized Provident Fund (URPF)
• A scheme started by the employer and the employees in an
establishment, whether approved by the commissioner of Income Tax
is called an unrecognized provident fund.
PF Contribution rate
• Contribution of Pf paid by employer & employee is 12% (basic pay + dearness
allowance + retaining allowance) Equal contribution is paid by the employer &
employee. The establishment which employees less than 20 person shall be
restricted to contribute 10% for both employee & employer contribution.
• It is voluntary for the employees who drawn a salary less than 15000 per month to
became the member of EPF.The employee who drawn a salary more than 15000per
month at the time of joining is not required to make pf contribution. If they want to
become the member of EPF, then they become with the consent of the Employer &
Assistant PF Commissioner.
• The entire 12% of your contribution goes into your EPF account along with 3.67%
(out of 12%) from your employer, while the balance 8.33% from your employer’s
side is diverted to your EPS (Employee’s Pension Scheme) and the balance goes
into your EPF account
Breakup of EPF Contribution
• 12% of the employee’s salary goes towards the EPF.
• Whereas the employer’s contribution is divided as below:
• 1. 67% goes towards contribution for EPF
• 2. 33% goes towards contribution for EPS
• 3. 5% goes towards contribution for EDLI
• 4. 1% goes towards contribution for EPF administration charges
• 5. 01% goes towards contribution for EDLI administration charges
• Therefore, the employer contribution is 13.61%. The premium and
management charges are borne by the employer and the maximum limit is
set at 0.5% of Rs.15, 000.
Universal Account Number (UAN)
• It is a 12 digit number allotted to the employee who is contributed to EPF. It remain same throughout the life of
the employee. It does not change with the change of Job. It will help in easy transfer and withdrawals of claims.
Along with the service of Online Passbook, SMS Service on each deposit of contribution & online KYC update
can be provided on the basis of UAN. But before that UAN need to be activated on EPFO portal.
• The member who is unable to withdraw PF for any reason can withdraw without consent of employer. They can
submit FORM 19 for EPF (Employees Provident Fund) and FORM 10C for EPS (Employees’ Pension Scheme)
with any of the following official’s attestation to EPFO office in which their EPF account is maintained.
• Any gazette officer
• The Magistrate
• The Post/ Sub Post master
• President of the Village Union
• President of the Village Panchayat where there is no Union Board
• Chairman/ Secretary/ Member of the Municipal/ District Local Board
• Member of the Parliament or Legislative Assembly
• Manager of the Bank in which your savings Bank Account is currently maintained
• Head of Educational Institution which is recognized by Government
• Any authorized official, as may be approved by the commissioner