LABOUR LAW

Unit 1

1. Provisions of Trade Union Act, 1926 relating to Registration & Cancellation of Trade Unions.

Introduction

A trade union is an organisation made up of members (a membership-based organisation) and its

membership must be made up mainly of workers. One of a trade union's main aims is to protect and
advance the interests of its members in the workplace.

Trade Union under Section. 2(h) of The Trade Union Act, 1926 : Trade Union means any combination,
whether temporary or permanent, formed primarily for the purpose of regulating the relations
between

 workmen and employers

 between workmen and workmen

 between employers and employers for imposing restrictive conditions on the conduct of
any trade or business and includes any federation of two or more Trade Unions.

The provisions relating to the registration of trade unions is given in chapter 2, sections 3 to 14 of
the trade union act 1926. (The registration of trade unions ensures the advancement of long lasting
and reliable trade unions. Although the registration of trade unions is not mandatory, it is
recommended because trade unions enjoy certain immunities.) optional

Mode of Registration

According to section 4 of the Act, any seven or more members of a Trade Union in accordance with
the provisions of the Act may make an application for registration of the trade union. There are two
conditions subsequent to the same, firstly no trade union of workmen shall be registered unless at
least 10% or 100 of the workmen, whichever is less engaged in the employment of the establishment
are its members on the date of making of its application and secondly no trade union shall be
registered unless on the date of making of application, minimum seven of its members who are
workmen are employed in the establishment or industry.

Application for registration

According to section 5 of the Act, every application for the registration of the trade union shall be
made to the Registrar and shall be accompanied by a copy of the rules of the Trade Union and a
statement of the following particulars namely-

1. The names, occupations and addresses of the members making the application;

2. The name of the trade union and the address of its head office, and

3. The titles, names, ages, addresses and occupations of the office- bearers of the trade union.

Where a trade union has been into existence for more than a year, then a copy of the assets and
liabilities shall also be submitted along with the application for registration.

Provisions to be contained in the rules of a Trade Union

According to section 6 of the Act, a Trade Union shall not be entitled to registration under the Act
unless the executive committee has been established in accordance with the provisions of the Act
and the rules provide for the following-

1. The name of the trade union;

2. The whole of the objects for which the trade union has been established;

3. The whole of the purposes for which the general funds of the trade union shall be
applicable;

4. The maintenance of a list of the members of the trade union;

5. The admission of ordinary members who shall be persons actually engaged or employed in
an industry with which the trade union is connected;

6. The conditions under which any member shall be entitled to any benefit assured by the rules
and under which any fine or forfeiture may be imposed on the members;(The rules that
specify when a member can receive benefits and when fines or penalties may be applied.)

7. The manner in which the rules shall be amended, varied or rescinded;

8. The manner in which the members of the executive and the other office bearers of the
Trade Union shall be elected and removed;

9. The safe custody of the funds of the trade union, an annual audit, in such manner, as may
be prescribed, of the accounts thereof, and adequate facilities for the inspection of the
account books by the office bearers and members of the trade union, and;

10. The manner in which the trade union may be dissolved.

Call for Further Information and Alteration of Name (Section 7):If needed, the Registrar can ask for
more details to confirm that the trade union's application complies with Sections 5 and 6. If the
union’s name is too similar to an existing union, the Registrar can ask the union to change its name to
avoid confusion.

Registration: According to section 8 of the Act, if the registrar thinks that the trade union has
complied with all the provisions of the Act, it shall register the Trade Union by entering in a register
all the particulars in accordance with the provisions of the Act.

Certificate of registration : According to section 9 of the Act, the registrar shall issue a certificate of
registration to the trade union after registration under section 8 which shall be conclusive proof that
a trade union has been duly registered.

Cancellation of trade union section 10 : The Registrar can withdraw or cancel a Trade Union's
registration certificate under these conditions:

(a) If the Trade Union applies for it, following the prescribed verification process.
(b) If the Registrar finds that:

 The certificate was obtained through fraud or mistake.

 The Trade Union no longer exists.

 The Trade Union has intentionally violated this Act after being notified or kept rules that go
against the Act.
  The Trade Union has removed any required rule under Section 6.

(c) If the Trade Union of workers no longer has the required number of members.

Note: The Registrar must give the Trade Union at least two months' written notice, explaining the
reasons for the proposed cancellation, unless the Union itself requests it. Before cancellation the
registrar must be satisfied that the registration should be cancelled or withdrawn.

(When a trade union gets cancelled, it can cause big problems for both the union and its members. If
the union doesn’t have legal status anymore, it can’t help its members talk to bosses or make
agreements together. Members might lose the good things that come with being in a union, like
having a lawyer’s help, staying safe at work, and making agreements as a group.

To prevent cancellation of Trade Union, trade unions need to follow the laws, keep good records, and
act in a fair and clear way. They also have to make sure they have enough members to truly speak for
the workers in their field.)(optional in case they ask separate question on cancellation)

2. General Funds & Political Funds & their collection under Trade Union Act.

A registered trade union is entitled to maintain two kinds of funds. They are general funds and
political funds. The act imposes certain conditions on trade unions to spend funds only for some
specific purposes mentioned under section 15 and 16 of the act.

GENERAL FUND

The General Fund of a registered trade union is an essential financial resource that supports the
various activities of the union. It is governed by Section 15 of the Trade Unions Act,1926, which
specifies the purposes for which the general fund can be utilized.

Creation and Contribution; A registered trade union is entitled to maintain a general fund, where all
members of the union contribute. This fund is used for managing the unions internal and external
activities, as permitted under the law. Contributions to the general fund come from union
members,and the money must be used strictly for the purposes allowed under Section 15 of the Act.

15(a) to 15 (k) in total 11

The general funds of a registered Trade Union can only be used for the following purposes:

1. Payment to Office-Bearers: Salaries, allowances, and expenses for the office-bearers of the
Trade Union.This ensures that the union leaders are compensated for their work in
representing the interests of the members.

2. Administration Costs: Expenses for managing the Trade Union, including auditing the
accounts of its general funds.The fund covers all administrative costs, which include day-to-
day office operations, utility bills, and other expenses incurred in managing the union’s
affairs. It also includes the cost of conducting an audit of the union’s accounts to ensure
transparency in how the funds are managed.

3. Legal Proceedings: Costs for prosecuting or defending legal cases to secure or protect the
rights of the Trade Union or its members concerning their employment.

4. Trade Disputes: Managing trade disputes on behalf of the Union or its members.

5. Compensation: Payments to members for losses due to trade disputes.

 6. Member Welfare: Allowances for members or their dependents in case of death, old age,
sickness, accidents, or unemployment.

7. Insurance Policies: Providing or taking responsibility for policies that insure members against
sickness, accidents, unemployment, or death.This is aimed at giving workers additional
protection through insurance.

8. Social and Educational Benefits: Funding for educational, social, or religious benefits for
members or their dependents, including funeral or religious ceremony expenses.

9. Publications: Maintenance of periodicals to discuss issues affecting employers and workers.

10. Contributions to Worker Welfare: Donations to causes benefiting workers in general,

provided that the total contributions in a financial year do not exceed one-fourth of the
Union's income and funds available at the start of that year.

11. Other Notified Purposes: Any other purpose specified by the government through an official
notification.

This ensures that the Union’s funds are used responsibly and directly benefit members or activities
aligned with the Union’s objectives.

Political Funds:

Section 16 of the Trade Unions Act, 1926 pertains to the constitution of a separate fund for political
purposes. Here's a summary:

1. Separate Political Fund: A registered trade union may establish a distinct fund, collected through
separate contributions, to promote the civic and political interests of its members.

2. Permissible Uses: This fund can be utilized for activities such as:

 Covering expenses for candidates in elections to legislative bodies or local authorities.

 Organizing meetings or distributing literature supporting such candidates.

 Supporting members who are part of legislative bodies or local authorities.

 Registering electors or selecting candidates for legislative or local authority elections.

 Holding political meetings or distributing political literature of any kind.

3. Voluntary Contributions:A member who does not contribute to the said fund shall not be excluded
from any benefits of the Trade Union. However, the control and management of the political fund
can be vested exclusively to those members who contributed to the political fund.

Procedure for contribution in political fund:

1. Notice: The Trade union must issue/publish an application or notice for call for deposition of
political fund

2. Check in : Interested Trade Union members having capacity to pay will fill a check-in form
and monthly amount will be deducted from their salary account on the name of the political
fund.

3. The filled check-in form remains valid for 6 months, after which members need to fill a new
check-in form and enroll again for political funds.
 4. Check-out application: After lapse of check-in form, those members who wish to discontinue
this deposition may fill in a check-out application.

5. The time span for a check-in form is only 6 months, the reason being financial situation of
labor may change and the employee may want to opt out of such deposition in certain
circumstances.

Purpose of political fund:

Section 16(2) of TUA ,1926 specifically states the purposes for which the political fund may be
utilized with an aim to promote civic and political interests of its members. These are:

1. The payment of any expenses incurred, either directly or indirectly, by a candidate or

prospective candidate for election as a member of any legislative body or of any local
authority, before, during, or after the election in connection with his candidature or election;

2. Maintenance of any person who is a member of any legislative body or local authority;

3. Registration of electors or the selection of a candidate for any legislative body or local
authority;

4. Conducting political meetings or distribution of political literature and documents to the

members of the trade union or to the general public.

3. Privileges / Immunities of Trade Unions (Optional)

Registration of trade unions under the Trade Unions Act, 1926 - iPleaders

4. Change of Name & Amalgamation of Trade Union.(6mrks)

Change of name(Sec. 23) :

Any registered Trade Union may, with the consent of not less than two thirds of its total members
while being subject to the provisions of section 25, can change its name.

Amalgamation(Sec.24) :

Section 24 of the Trade Unions Act, 1926 talks about trade unions coming together, combining their
efforts to create a single union. This can happen with or without dissolving or dividing their funds.
For this to occur, at least half of the members of each trade union must vote and 60% of the casted
votes should support the proposal.

Section 25:

Section 25 of the Trade Unions Act, 1926, deals with informing the Registrar about any changes in
the union’s name or if they amalgamate with another union.

The secretary and seven members of the trade union changing its name or in the case of
amalgamation of trade unions, the secretary and seven members of each involved trade union, must
sign a written notice sent to the Registrar
If the proposed name is too similar to an existing trade union’s name, the Registrar can refuse to
register the change.In DCM Chemical Mazdoor Ekta Union v. Registrar of Trade Unions , The Delhi
high court clarified that the Registrar has the authority to register a trade union under section 25,
similar to section 8.

Section 25 of the Trade Unions Act, 1926 details the procedure for amalgamation of trade unions. A
written notice about the name change after amalgamation must be served as specified. Upon
satisfying the conditions, the Registrar registers the amalgamation by making an entry in the Register
and issues a certificate. The amalgamation of trade unions takes effect from the date of registration.

Problem Based:

1. A Trade Union decided to change the name and wants to amalgamate with another Trade
Union. Is it possible ? Advice.

2. The Registrar of Trade Unions cancel certificate of registration for the reason that it was
obtained by fraud. The Trade Union wants to challenge the cancellation.Advise the Trade
Union.

Unit 2

1. Definition of Industry with Cases. Decide whether Hospital & University are Industries.

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

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

Sec. 2(j) gives the definition of industry, which was elaborated upon by the Supreme Court in the
Bangalore Water Supply and Sewerage Board v. R. Rajappa[i]. The term industry has been given a
wide scope and the judgment overruled several earlier decisions. The court held-

1. Any activity will be industry if it fulfills the ‘triple test’, as under:

 Systematic and organized activity

 With the cooperation between Employers and employees

 For the production and distribution of good and services whether or not capital has been
invested for this activity.

2. It is immaterial whether or not there is profit motive or whether or not there is capital.

3. If the organization is a trade or business it does not cease to be one because of philanthropy
animating the triple test, cannot be exempted from scope of definition of industry.
 4. Dominant nature test – whether there is complex of activities, the test would be
predominant nature of services and integrated nature of departments. All departments
integrated with industry will also be industry.

Exceptions to term “Industry” are :

 Small clubs, gurukuls, ashrams, school, colleges, research institute, which has non employee
characters,

 Single doctor, lawyer, accountant (Because No Organized Labour)

 Free legal and medical services,

 Casual Activities (They are not systematic)

 Sovereign Functions Maintenance of law & order, Legislative & Judicial Function.

 on the basis of afore said interpretations, SC refused to accept the narrow meaning of
definition of Industry & has recognized the wider definition of Industry

Hospitals Industry Under Industrial Disputes Act, 1947 - Academike

In State of Bombay v. Hospital Mazdoor Sabha,[ii] the Supreme Court held the State is carrying on
an ‘undertaking’ within Sec. 2(j) when it runs a group of hospitals for 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 the Government runs
such an 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.

(In Management of Safdarjung Hospital v. Kuldip Singh, the court held that government-run
hospitals were not industries as they were part of sovereign functions, and charitable hospitals were
excluded from the definition as they lacked economic activities akin to trade or business. Similarly, in
Dhanrajgiri Hospital v. Workmen, a hospital focused on nursing training was not considered an
industry due to the absence of economic activity. However, in Bangalore Water Supply v. A. Rajappa,
the Supreme Court overruled these decisions, aligning with the Hospital Mazdoor Sabha case. It held
that hospitals provide services and qualify as industries, emphasizing that government welfare
activities not involving sovereign functions fall within the scope of Section 2(j) of the Industrial
Disputes Act.) optional
 2. Authorities for Investigation & Settlements of Industrial Disputes(optional)

3. Individual Dispute vs Industrial Dispute(6 marks)

The industrial dispute conveys the meaning that the dispute must be such as would affect large
groups of workmen and employers ranged in opposite sides. Whereas, the individual dispute is the
one which is raised by a single worker. It is not mandatory that a dispute should be raised by a
registered Trade Union to constitute an industrial dispute. When community interest gets added to
the individual dispute or it is supported by workmen themselves or their union or federation on their
behalf an individual dispute transforms into a collective industrial dispute.

According to the definition under ID Act, 1947 the dispute can be raised either for a workman or any
person about whom the workmen have a substantial interest in the employment or non-
employment . Here, the expression “any person” must be an employee of the industry to file a
dispute, so the Trade Union or other workman can support this “any person” only if he is employed
in the same industry.In Narendra Kumar Sen v. All India Bank Dispute , the S.C held that this ‘any
person’ can be someone who the workman or T.U has substantial interest in , even if he does not fall
within the definition of workman under IDA, 1947.

When Individual dispute becomes industrial dispute:

For an individual dispute to qualify as an industrial dispute, the following conditions must be met:

1. Sponsorship by Workmen: The individual workman's case must be supported or sponsored

by a group of workmen, either through their trade union or collectively. This support must
come from the employees of the same employer against whom the dispute is raised
(Newspaper Ltd., Allahabad v. Industrial Tribunal).

2. Timing of Sponsorship: The dispute must have been taken up or sponsored by the
workmen's group or trade union before it is referred for adjudication.

Workmen of Indian Express Newspapers Ltd. V. Management Indian Express Newspapers,1970 The
Indian Journalists had no union and therefore their dispute was raised by the Delhi Union of
Journalists which was an external union. Few workmen of the Indian express journalists were part of
the Delhi Union. The court held that Delhi Union can represent them. Thus the Individual dispute of
Indian express became an Industrial dispute under Delhi Union.

4. Workman(6 marks)

To determine if an employee is a workman or not under the Act is a subject of intractable

controversy.(questionable or up for debate) When an employee is involved in a dispute with the
employer or in a situation where his employment is terminated and such individual wants to avail the
protective umbrella of the Act, the employer contests by raising an objection that the employee is
not a workman within the definition of the Act.

The Industrial Disputes Act under Sec.2(s) states that a “Workman” is :

Anyone hired to do work, whether it’s manual , skilled, unskilled, technical, operational, clerical or
supervisory for a wage. This applies even if their employment terms are not written down. It also
includes people who were fired, dismissed or laid off if their termination is connected to an industrial
dispute.
However, the following are not considered workmen:

1. Members of the armed forces( Air force, Army, Namy, etc)

2. Police officers or prison staff.

3. Employees mainly in managerial or administrative roles.

4. Supervisors who earn more than $10000 per month or have responsibilities similar to
managers.

What does it mean to be a Workman?

The answer lies in the fact that every employee covered in the definition can avail various benefits
under the Act. A workman can raise an industrial dispute with the employer regarding discharge,
dismissal, retrenchment or termination of his services. Section 25F of the Act provides mandatory
conditions for retrenchment of workers.

In R.G. Makwana vs. Gujarat State Road Transport Corporation has held that any person who has
been dismissed, discharged or retrenched in connection with or as a consequence of a dispute is also
included within the definition of the workman under Section 2(s) HELLOOOO

5. Award(6 marks)

What is an award -The judgment of an arbitrator is called his Award.

Definition of Award - Section 2(b) of the Industrial Dispute Act,1947 defines Award as follows
-‘Award’ means an interim or a final determination of any Industrial Dispute or of any question
relating thereto by any Labour Court, Industrial Tribunal, or National Tribunal and includes an
arbitration award made under section 10A.

Ingredients of Award -

To constitute Award under Section 2(b) of the Industrial Dispute Act, 1947 the following ingredients
are to be satisfied -

 An Award is an interim or final determination of an industrial dispute.

 It must be passed by a competent authority, such as a Labor Court, Industrial Tribunal,

National Tribunal, or through voluntary arbitration

 Award (Judgement) of Arbitrators under section 10A is an Award

Commencement or Enforceability of an award:

The award which has been published shall become enforceable on the expiry of thirty days from the
date of its publication. It is given under Section 17A in The Industrial Disputes Act, 1947.

Unless the award becomes enforceable, no rights and liabilities can arise under the award. In other
words, the obligations imposed by the award on the parties shall come into effect immediately after
the expiry of thirty days statutory period from the date of its publication.

Commencement and Enforceability of an Award:

The commencement and enforceability of an award are governed by Section 17A of the Industrial
Disputes Act, 1947, which outlines when an award comes into effect and the conditions under which
it becomes legally binding on the parties involved.

1. Regular Commencement and Enforceability:

 Publication of the Award: Once a Labour Court, Industrial Tribunal, or National Tribunal
delivers an award, it needs to be published. Publication usually means that the award is
made publicly available or notified, as required under Section 17 of the Act.

 30-Day Waiting Period: The award becomes enforceable 30 days after its publication. This
means that the award’s terms and conditions must be followed by the parties (employees
and employers) once the 30-day period expires.

During these 30 days, the parties are typically expected to prepare for the implementation of the
award. Once the 30 days pass, the award legally binds both the employer and the employees, and
any rights and obligations under the award become enforceable.

2. Government’s Intervention to Delay or Prevent Enforceability:

In some cases, the government may intervene if it believes that implementing the award as it is could
be problematic for broader public reasons, such as:

 Impacting the national economy (e.g., large-scale industries where enforcing the award
could cause financial instability).

 Affecting social justice (e.g., awards that may disproportionately affect certain groups or
communities).

Proviso under Section 17A (1):

 The State Government can intervene when the award is made by a Labour Court or
Industrial Tribunal in a dispute involving the state government as a party.

 The Central Government can intervene if the award is made by a National Tribunal.

In such cases, the appropriate government can issue a notification in the Official Gazette declaring
that the award should not become enforceable after the 30-day period, either in full or in part. This
declaration essentially puts the enforceability of the award on hold for further review.

3. Modification or Rejection of the Award:

If the government issues a declaration to stop the award’s enforceability, it has 90 days from the date
of publication to take further action:

 Modify or Reject the Award: The government can either modify the award to make it more
suitable for implementation or reject it altogether if it believes it is unfit to be enforced.

 Presentation to Legislature or Parliament: Once the award is modified or rejected, the

government must present the changes or the decision before the State Legislature (for state
governments) or Parliament (for central government). The modified or rejected award will
be discussed or reviewed by the legislative body.

4. Final Enforceability after Modification or Rejection:

  If the government modifies or rejects the award and presents it to the Legislature or
Parliament, the award will become enforceable 15 days after it is laid before these bodies.

 If no action is taken by the government within the 90-day period (i.e., the award is neither
modified nor rejected), the award becomes enforceable automatically at the end of these 90
days.

5. Operation of the Award:

 Specific Date in Award: If the award specifies a date on which it should come into effect, it
will operate from that date.

 No Specific Date in Award: If no date is mentioned in the award, it will come into effect as
soon as it becomes enforceable. This means:

o After the 30-day period if there is no government intervention.

o After the 90-day period if there was government intervention but no modifications
were made.

o After 15 days from the date it was laid before the Legislature or Parliament, if it was
modified or rejected.

Unit 3

1. What is lay off? Circumstances in which lay off can be made. When workmen are not entitled
to lay off compensation? When the lay off shall be treated as valid? What are its effects?
Provisions relating to lay off with decided cases.

Layoff is defined under section 2(kkk) of the industrial dispute act, which says that a workman is said
to be laid off when an employer fails, refuses or or is unable to provide employment to the
workman whose name is mentioned in the muster roll of an industrial establishment to due reason
beyond their control such as insufficiency of coal, power, raw material, the accumulation of stocks,
breakdown of machinery, a natural calamity or some other correlated reason. It's important to note
that the worker hasn't been retrenched for the above stated reasons.

In simple terms lay off is the incapacity of the employer to provide employment to the employee for
a temporary period so that the employer can keep his business operational even in times of scarcity.
If the employer ends up shutting down the industrial facility and announces the lock out of the
industrial establishment then the concept of lay off becomes irrelevant. Lay offs are not permanent
and they do not end the contractual relationship between the employer and the employee. Layoff
does not mean full termination of employees; it only means that they will not receive their full
wages during that period.

In the case of Priya Laxmi Mills Ltd v. Mazdoor Mahajan Mandal (1976), the term ‘Lay Off’ is
interpreted in accordance with the dictionary “in its etymological sense” as a period in which the
workers are temporarily discharged from doing their work. Thereafter, the Apex Court in Workmen
of Firestone Tyre and Rubber Co. of India Ltd v. Mgmt (1973) ruled that ‘Lay Off" is neither a full
dismissal of a workman nor the temporary suspension of the contractual relation between the
employer and employee; rather, it is constituted as temporary unemployment for the workmen. The
Supreme Court further added that ‘LayOff” means the failure, unwillingness, or inability of the
employer to provide employment to the workmen due to the reasons listed in the definition under
the Section. The definition under the Act is explicit in nature and distinct from the Western
understanding of layoff;there is no need to resort to other definitions.

Refusal, Inability, Failure

In accordance with the Act's definition, if an employer cannot provide work due to reasons such as
coal, power, or raw material shortages, stockpiling, machinery breakdowns, natural disasters, or any
other circumstances beyond their control, any resulting layoffs are legally valid. |

In a significant ruling, the Bombay High Court in Central India Spinning, Wearing and Manufacturing
Co. Ltd., Nagpur v. State Industrial Court (1959) emphasized that the terms “failure, refusal, or
inability of an employer” indicate that worker unemployment is not dependent on their actions. |

Circumstances in Which Lay-Off Can Be Made

A lay-off under the Industrial Disputes Act, 1947, is permitted when an employer is unable to provide
employment to workers for reasons beyond their control. Some of the key circumstances include:

1. Shortage of Raw Materials

When there is an insufficiency of essential materials required for production.

Example: Non-availability of imported components due to trade restrictions.

2. Shortage of Power or Fuel

If there is a power outage or fuel scarcity, making it impossible to run machinery.

Example: Load-shedding or disruptions in electricity supply.

3. Breakdown of Machinery or Equipment

If machinery essential to the production process malfunctions or is under repair.

Example: A technical failure in production lines.

4. Natural Calamities

Events like floods, earthquakes, or pandemics that disrupt normal operations.

Example: Factories forced to shut down due to severe floods.

5. Economic Recession

When there is a decline in demand for products, affecting business operations.

Example: Lay-offs during economic downturns due to reduced market demand.

6. Government Orders or Restrictions

If government policies, restrictions, or emergencies prevent the business from functioning.

Example: Lockdowns during a pandemic.

7. Industrial Actions

Strikes or go-slows by workmen in one part of the establishment impacting operations in another
part.

Conditions where a worker is not entitled to lay off compensation

Section 25E of the Act lays down certain circumstances where the workman is not entitled

to receive any lay-off compensation from the employer; those conditions are as follows:

 If the workman refuses to accept the alternate work given to him, provided that;

The alternate employment given to him is in the same establishment he was working in. Also, the
alternate employment given to him is in the alternate establishment but under the same employer
within a radius of 5 miles from the establishment where he was working before.

The new work assigned to the workman by the employer does not require any special skill set or
previous experience in comparison to the work the workman can do. Provided that there will be no
deduction in the wages, the workman will be entitled to the same wages he was getting in his
previous employment for the employer.

 If the workman does not present himself at the appointed time and workplace once a day.

 The workman is not entitled to layoff compensation if he has been laid off due to a strike or
slowdown in another part of the industrial establishment.

 Workers engaged in temporary or casual business are not eligible.

Conditions under which employee is entitled for getting Compensation: Section 25C

1. If a worker (not a temporary or casual worker) is listed on the company's register and has worked
for at least one year, they are entitled to compensation if they are laid off (temporarily not given
work).

2. The employer must pay the worker 50% of their basic wages and dearness allowance for the days
they are laid off, except for weekly holidays.

3. If the lay-off period exceeds 45 days in a year, the employer does not have to pay compensation
for the extra days unless both parties agree otherwise.

4. A worker is not considered laid off if the lay-off is caused by:

 A strike by workers in another section of the company.

 A slowdown in production due to worker actions

2. Define Strike & Lockout. When do they become Illegal? What are the various kinds of Strike?

Meaning and definition

According to section 2(q) of Industrial Disputes Act 1947.

"a strike is "a cessation of work by a body of persons employed in an industry acting in combination;
or a concerted refusal of any number of persons who are or have been so employed to continue to
work or to accept employment; or a refusal under a common understanding of any number of such
persons to continue to work or to accept employment

(Key Elements of the Definition

1. Cessation of Work: A deliberate stoppage of work by employees.

2. Acting in Combination: The workers act together with a shared purpose.

3. Refusal to Work or Accept Employment: Workers either refuse to perform their duties or decline
to accept employment as a form of protest.

4. Concerted Action: The act is not individual but collective, involving multiple workers under a
mutual understanding.) for understanding

The necessary requirements for the strike to exist are

There must be a cessation of work. Cessation means abandonment, stoppage of work or

reluctance to perform the duties of their posts. It is the most important characteristic of

the strike. It is stoppage of work or refusal to continue work that the employees are

required to do. The cessation of work must be voluntary and temporary. Permanent

cessation of work would result in termination of the employment contract. A mere apprehension or
threat of a strike or resolution

to go on at some future date is not a strike. Cessation of work may be inside the very

establishment, even on their seats.

The cessation of work must be by persons employed in any industry. It means that the

establishment must be an industry within the definition of ‘industry’ provided under the

Industrial Disputes Act of 1947. Within the meaning of Section 2(q), if the establishment in

which the strike is carried out is not covered under the definition of industry, even though

all other ingredients of the strike are fulfilled, it will not be a strike.

The strikers must have been acting in combination or concerted action under common
understanding. The word ‘acting in combination’ came up for interpretation in the case of
Shamnuggar Jute Factory Ltd. vs. Their Workmen (1963). The Tribunal observed that the words
“acting in combination’ imply that the group of people in employment must be demonstrated to be
working in concert,

with their psychology oriented towards achieving a particular objective, such as the

group's direct common objective being to terminate employment. Individual workers

Work stoppages do not constitute a strike. Thus, a strike implies cessation of work by a

number of employees under common understanding. Unless the common intention of a

number of workers is proved, it would not amount to a strike.

« The strike must be the result of an industrial dispute- The cessation of work must be

preceded by an industrial dispute. According to the Industrial Disputes Act of 1947, an

industrial dispute arises from a disagreement or conflict between-

+ Employers and employers

+ Employers and workmen

+ Workmen and workmen,

The dispute or difference under Section 2(k) must be a real and substantial difference with an
element of persistence and continuity until resolved. The dispute or difference, if not resolved, is
likely to endanger the peace of industry and the community.

Under the following situation as given under Section 22, on these grounds the strikes can

be considered illegal:

1. Without giving to employer notice of strike within six weeks before striking; or

2. Within fourteen days of giving such notice; or

3. Before the expiry of the date of strike specified in any such notice as aforesaid; or

4. During the pendency of any conciliation proceedings before a conciliation officer and

seven days after the conclusion of such proceedings.

But herein it is important to notice that these arrangements don't forbid the labourers from

demonstration yet expect them to satisfy the condition before taking to the streets.

Further, these arrangements apply to open utility assistance in particular. The Industrial

Dispute Act, 1947 doesn't explicitly specify who takes to the streets. Nevertheless, the

definition of the strike itself suggests that the strikers must be persons, employed in any industry to
do work.

Further, the provisions under Section 23 are general in nature. It imposes general

restrictions on declaring strike in breach of contract in both public as well as non-public

utility services in the following circumstances mainly: -

1. During the pendency of conciliation proceedings before a board and till the expiry of 7

days after the conclusion of such proceedings;

2. During the pendency and 2 months after the conclusion of proceedings before a Labour

Court, Tribunal or National Tribunal;

3. During the pendency and 2 months after the conclusion of the arbitrator, a notification has been
issued under subsection 3 (a) of Section 10 A;
4. 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.

The main purpose of this Section is to maintain an untroubled and disciplined atmosphere

when conciliation and negotiation proceedings are in the process without any disturbance.

As held in the case of Ballarpur Collieries Co. v. The Presiding Officer, Central Government

Industrial Tribunal(1972), “It was held, if a person was employed in public utility services

then, he/she cannot go for a strike without the consent and gathering the procedures which

must be satisfied in the provisions.”

Types of strikes

Based on the phenomena of strikes around the world, strikes can be categorised into

economic strikes, sympathy strikes, general strikes, sit-down strikes, slow down strikes,

hunger strikes and wildcat strikes have been experienced.

Economic Strike

Such a strike happens due to economic demands like increments in wages and allowances

like house rent allowance, transport allowances, bonuses etc.

An economic strike is a strike concerning the wages, hours and other conditions of work

and terms of employment of the worker. In economic strikes, the workers demand

betterment regarding their wages, house rent allowance, travelling allowance, dearness

allowance and other facilities such as privilege leave and casual leave.

Sympathy Strike

In such a strike union or workers of one industry join the strikes already hailed by other

unions or workers. A sympathetic strike is one in which striking employees have no

demands or grievances of their own but strike for the purpose of aiding others, either

directly or indirectly. A sympathetic strike is a strike within the purview of the Industrial

Disputes Act.

In the case of S. Kumbalingam vs. Indian Metal and Metallurgical Corporation, Madras

(1963), it was held that when the workers in concert absent themselves out of sympathy

for some cause wholly unrelated to their employment or even in regard to the condition of

workers in service under other management, such absence could not be held to be a strike,

as the essential element of the intention to use it against the management is absent. The

management would be entitled to take disciplinary proceedings against the workmen for
their absence on the ground of breach of the condition of service.

Sit-in Strikes

Other names for sit-in strikes are pen-down, tools-down, and stay-in. In these strikes,

employees report for work but do not work. These strikes may sometimes be planned and

other times spontaneous, depending on the happenings and urgency of the situation. In

these forms of strikes, employees peacefully enter their place of work without indicating

their intention. But after entering their workplace, they do not do their work. If blue-

collared workmen do not do their work, it may be a tool-down strike, and if white-collared

workmen do not work, it is a pen-down strike.

In such cases, workers hold strikes at the workplace and none of the workers stay absent

from duty but they all refuse to work till their demands are fulfilled.

In the case of Punjab National Bank, Limited vs. Its Workmen (1963), the Court held that a

pen-down strike falls within the definition of strike under the Industrial Disputes Act, 1947

and is not per se illegal. In this case, the employees of the appellant bank commenced a

pen-down strike, followed by a general strike during the pendency of arbitration

proceedings. The strike was peaceful and non-violent. The Court held that the pen-down

strike did not disentitle the employees to reinstatement.

Slow down strike

It means workers or unions don’t refuse to work but put pressure on industries to get their

demand by reducing or restricting the output of the production industry. Slow down, also

referred to as go-slow or work-to-rule strikes, are forms of strikes wherein the employees

work but not up to their usual capacity or level. They reduce their output intentionally by

working below the usual benchmark they had previously set to show their protest to the

employer. In this type of strike, the employee's revenue is badly affected, even though the

employees continue to get their wages. Here, the employee strictly follows the rules and

just refuses to deviate from them. The workmen reduce the speed of work or adopt dilatory

tactics to reduce the usual production while pretending to be engaged in work.

In the case of Bharat Sugar Mills Ltd. vs. Jai Singh (1961), the Court held that going slow

is a deliberate delay of production by workmen pretending to be engaged in the factory. It

would not be wrong to look at it and call it dishonest. Delaying production and eventually
reducing the output, the workers claim to have remained employed, thus being in a

position to be entitled to full wages. Go-slow is likely to be much more harmful than total

cessation of work by strike, as during a strike much of the machinery can be fully turned

off. During the go slow the machinery is kept going at a reduced speed, which is often

extremely damaging to machinery parts.

Hunger strike

It is one of the painful strikes by the strikers where workers go on strike without having

food/water to redress their grievances. The employees of Kingfisher Airlines went on

hunger strikes for salary dues for several months.

The employees undertake fasting by abstaining from both food and work as a means of

protest in a hunger strike. Since there is a cessation of work due to employees’

participation in the fast, it is viewed as a strike. The purpose of such a hunger strike is to

put forward their grievance to the employers and get the attention of the government and

the general public to the cause of the strike. It is non-violent and is not strictly a strike

under the Industrial Disputes Act of 1947. In a hunger strike, there is not necessarily a

cessation of work. But when a hunger strike usually results in their cessation or suspension

of work, then it would of course constitute a strike.

In the case of Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor (1956), the

Supreme Court held that a hunger strike amounted to a strike where workmen who held

key positions in the factory went on a hunger strike with the result that other workmen

who came to work could not do work.

3. Define retrenchment? When retrenchment is treated as valid? Conditions precedent to

retrenchment of workmen? (6 marks)

The meaning of retrenchment is to terminate employees or workmen by the employer for

economic reasons. This termination of their services is not done as a punishment or

disciplinary action but on the ground of surplus labour or the financial position of the

business or company. This removal or discharge of a worker from work by the employer is

known as retrenchment. It denotes the end of the employer-employee relationship.

Definition of retrenchment
Retrenchment is defined in Section 2(oo) of the Industrial Dispute Act, 1947. According to

the definition, retrenchment means the termination of the service of a workman by an

employer for any reason whatsoever, other than as a punishment inflicted by way of

disciplinary action’. There are certain factors that do not fall under the definition of

retrenchment, which are as follows:

« If the workman or employee voluntarily retires.

« If the workman or employee retires after reaching the age of superannuation because of

a provision of an agreement relating to superannuation that was made between the

employer and the employee at the time of his employment.

« If the termination of employment of the workman or employee took place due to the

non-renewal of the employment agreement.

« If the termination of employment occurs due to the continuous ill-health of the workman

or employee.

Object of retrenchment

The main object of retrenchment is to terminate employees when an establishment faces

financial constraints and is forced to downsize its number of employees. The companies

retrench the employees due to the surplus labour and to cut down on the expenditure on

human resources. The purpose of retrenchment is to:

« reduce the outgoing money, or

« cutting down the expenditure, or

« attempting to become more financially solvent.

Retrenchment also takes place when an industry faces difficulties paying the wages of its

employees. During that time, they decide to remove the employees from their services.

The requirements of valid retrenchment are mentioned in Section 25F of the

Industrial Dispute Act, 1947. These conditions are applicable only when the employee has

completed one year of his service on the job. The prerequisites for valid retrenchment in

labour law are as follows:

+ Notice to the employees: Before retrenching the employees from their services, it is
necessary to issue a written notice at least one month before the retrenchment comes

into force. The notice must contain the reason for retrenchment. The employees can be

removed only after notice has been provided to them and not before that.

+ No requirement of notice if an agreement already specifies the date of

termination: In case, there exists an agreement that already mentions the date of

termination of employment for the employees, it is not required to give notice to them

before retrenchment from their services.

+ Compensation for retrenchment: In case, the employer fails to send the

retrenchment notice to the employees, he will be liable to pay compensation to the

employees for this failure. The compensation should be given on the basis that it is

equal to fifteen days’ earnings for each year of continuous employment, or any portion

of it longer than six months.

+ Notice to be served on the appropriate authority: Before retrenching the

employees from their jobs, it is necessary to notify the appropriate government or

authority. The notification must be served in the prescribed manner, as stated in the

official gazette.

+ Adherence to notice regulations: The notice that has been provided to the employees

must be in accordance with the provisions of Rule 76 of the Industrial Disputes (Central)

Rules, 1957, as it governs the notice of retrenchment in Labour Law.

While retrenching the employees from their services, the employer must act within the

limitations imposed by the law, which are as follows:

 The intention should be bona fide.

 The employees must not be victimised.

 The law in force should not be violated by the employer.

25G. Procedure for retrenchment.--Where any workman in an industrial establishment, who is a
citizen of India, is to be retrenched and he belongs to a particular category of workmen in that
establishment, in the absence of any agreement between the employer and the workman in this
behalf, the employer shall ordinarily retrench the workman who was the last person to be employed
in that category, unless for reasons to be recorded the employer retrenches any other workman.

Problem Questions:

1. co. workmen after reporting to duties without the permission of the employer leave the
place of working to attend the funeral ceremony of an Ex-employee. The employer treats this
act of workmen as an illegal strike. Decide.

2. In an industry there was continuous unrest works leading to strikes and lockouts. The
employer closed down the industry. Does this amount to closure. Decide with reasons.

3. Somu and Co., directed its workers not to report for work for 15 days due to electricity
scarcity in the industry. The workers claimed lay-off compensation. Somu co. refused to pay .
Decide.

4. 'Ajay' a workman who is laid-off by his employer at Mysore, refuse to accept an alternative
employment in another establishment belonging to the same employer situated in
Bangalore. 'Ajay' desires to claim lay-otf compensation.Decide.

5. The workers of a registered trade Union declared an illegal strike. Due to illegal strike
employer sustained the loss. Employer filed a suit against the Trade Union for the recovery of
compensation. Will he succeed ?

Unit 4

1. Liability of employer to pay compensation under Employees Compensation Act, 1923

Every employee needs a secured job and wants to get compensation for the expenses he has
incurred. This is a requirement that needs to be fulfilled by the company whether it is small scale or
large scale. After all, a company’s success depends on its employees. Therefore, the protection of
employees’ and their safety is a top priority of a company. Employees Compensation Act, 1923 is all
about how much compensation is given, under what conditions, who is entitled to claim
compensation and a lot more.

The liability of an employer to pay compensation (Sec.3) to the employee arises in the following
circumstances or situations:

Personal Injury by Accident

There is a liability of the employer to pay compensation in a case of personal injury caused to the
employee. Such personal injury should have been caused by an accident which arises out of
employment or it has taken place in the course of his employment.

The personal injury by accident covers two aspects, i.e. out of employment and course of
employment.

 An accident which arises out of employment – Accidents that arise out of employment are
referred to the situation as follows-
 1. At the time when the injury took place, the employee was engaged in the business of the
employer. It does not cover the injury which is caused when doing something for his personal
benefit

2. The accident should have occurred at the place where the employee is performing his duties

3. The injury should be a result of some risk which has been incidental to his duties or it is
inherent in the nature of the condition of employment

 Accident arising in the course of employment – It refers to the situation where the accident
should take place when the employee is on duty at or about the place of his/her work.

Occupational Diseases - Occupational diseases are those which are inherent in the occupation in
which the workers are employed. Schedule III of the Act contains a list of diseases and the nature of
employment. Some of the examples are:

1. Occupational Asthma

2. Occupational Cataract

3. Lung cancer due to asbestos

4. Disease caused due to heat in extreme hot climate

5. Disease caused due to cold in an extremely cold climate

Procedure to Claim Compensation:

Procedure to claim compensation has been dealt with under Section 10 of the Act. The following
procedure is to be fulfilled for filing claims for compensation: -

1. Notice has to be given by the applicant. It can be given to the employer or may be entered in
the notice book

2. Notice submitted so must include the name and address of the applicant, date and the cause
of the injury

3. Thereafter, the application has to be submitted to the commissioner within two years after
the date of the accident

4. If an occupational disease has occurred, it is deemed that the accident occurred on the first
day of illness

5. There is power with the Commissioner to entertain claim even if the notice has not been
given or the claim has not been submitted in mandated time if there is a sufficient cause

6. After the matter is referred, there is a period of three months with the Commissioner to
dispose of the matter and inform the decision to the employee

7. The application shall not be rejected if there is any defect in the notice or there has been a
delay

When is an Employer not Liable to Pay the Compensation: ( Sec.3)

An employer is not liable for paying compensation to the employees under the following conditions:
  Less than 3 Days – If the injury caused by accident causes disablement for a period of fewer
than 3 days.

 Accident causing injury, which does not result in death or permanent total disablement, and
is due to the following causes:

1. Intoxication - The workman was intoxicated by alcohol or drugs at the time of the accident

2. Disobedience – The workman intentionally disobeys the orders or rules, which are
established to ensure the safety of workers

3. Removal of safety guard – The workman willfully removes or disregards safety equipment,
which has been provided for the safety of the workers

2. Constitution, Power & Function of Employees Insurance Court Under ESI Act

Constitution of Employees’ Insurance Court

Via a notification in the Official Gazette, an Employees’ Insurance Court will be constituted by the
State Government, with a set amount of judges as per the decision of the State Government. The
same court may be appointed for two or more local areas, or two courts or more courts may be
appointed for the same local area.

Power of Employee’s Insurance Court:

The Employee’s Insurance court will function with the same powers as that of a Civil court. To
enforce the provisions of the ESI Act , it can enforce witness attendance, compel document and
material evidence to be presented, it can administer an oath and can record evidence. All expenses
incurred before a proceeding are subject to the discretion and liability of the court itself.

Reference to High Court:

An Employee’s Insurance Court, according to Section 81 may submit any question of law for the
decision of the High Court and if it does so, the answer to the question shall hold precedence before
any judgement.

Appeal:

Section 82 defines that no appeal can be laid down against an order from the Employee’s Insurance
Court. However, appeals from the High Court can stand if they involve a substantial question of law.

Penalties and Punishments:

Sections 84,85 & 85A cover all the punishments for default listen within the ESI Act.

1. False Statement: Any person caught increasing the payment or benefit to avoid payment by
himself is known to make a false statement. Punishable with up to six months and/or with
fine not greater than Rs. 2000. Insured persons convicted of this will not be entitled to cash
benefits.

2. Failure to pay contribution: Persons failing to pay the contribution, unlawfully deducts wages
or benefits, unfairly punishes an employee, obstructs inspector’s duties, etc. can be
punishable for up to three years, no less than one year with a fine up to Rs. 10000.
 3. Subsequent Punishment: If a person is found committing the same offence twice, he shall be
punished with imprisonment for a term extending up to two years with a fine of Rs. 5000 for
each subsequent offence. ESIC V. Surya Enterprises(2009), The court highlighted that
habitual non-compliance with ESI provisions would attract the enhanced penalties under
Section 85A.

Power to recover damages:

If an employer fails to pay the contributions due in any aspect, whether it be from his side or his
employee’s side, the Corporation can recover the deficit from him by way of penalty. However, this
recovery of contribution will not take place until after the person in charge has been given a
reasonable opportunity to be heard regarding the failure to pay the contribution.

Power of Court to make orders:

Along with the power of the court to recover damages, it also has provisions to enforce judicial
orders. If the defaulting employer fails to meet the time conditions for payments that have been
stated by the Court, the employer will be deemed to have committed another offence, which can be
punishable with imprisonment and/or fines.

Prosecution:

Section 86 dictates that any sort of prosecution cannot take place under the provisions of ESI Act
unless it has previously obtained the sanction of the Insurance Commissioner or any other
authorized authority such as the Director-General of the Corporation. No court lower than a First
Class Magistrate can try an offence under the ESI Act, and no Court will take cognizance of any
offence reported under this Act.

Offences by companies:

Taking inference from the concept of business entity, where every company is its own individual i.e. it
is a separate legal entity of its own and can sue or be sued in a court of law accordingly. As such,
when an offence is said to have been committed by a company, all of its managerial employees, who
were responsible for the company at the time, will be tried along with the company, deemed to be
guilty of the same offence. They are liable for punishment accordingly. In State of Maharashtra V.
Syndicate Transport Co. Pvt. Ltd. The SC held that Companies can be held criminally liable for failing
to comply with statutory obligations under labor laws, including failure to make ESI contributions.

3. Partial & Total Disablement (6 marks)

In labour law, disablement refers to the reduction or loss of earning capacity due to an injury or
illness caused by an accident arising out of and in the course of employment. The Workmen's
Compensation Act,1923 provides compensation to workers who suffer from disablement because of
their employment.

Partial Disablement:

It refers to the loss of earning capacity of a worker , which does not completely incapacitate the
worker from performing his/her work. The worker is Entitled to compensate for the loss of earning
capacity. Partial disablement can be either permanent or temporary, depending on the nature and
extent of the injury.

Permanent Partial Disablement occurs when a worker suffers permanent loss of earning capacity
due to an injury that does not completely incapacitate them. Example, loss of a finger or eye.
Temporary Partial Disablement occurs when a worker suffers a temporary reduction in earning
capacity due to an injury that partially disables them for a certain period. During this time, the
worker may be able to perform some duties but not all. The compensation for temporary partial
disablement is calculated as a percentage of the worker’s wages during the period of disablement.

Total Disablement:

Total disablement refers to the complete loss of earning capacity of a worker because of an injury or
illness caused by an accident arising out of and in the course of employment. The worker is entitled
to compensation for the total loss of earning capacity, usually provided as a lump sum amount.Ex-
Loss of both arms and legs. It can also be either permanent or temporary.

Permanent Total Disablement: This occurs when a worker is rendered permanently incapable of
performing any work and earning a livelihood due to a work-related injury. The Act provides for a
lump sum compensation amounting to 60% of the worker’s monthly wages, subject to a maximum
limit of Rs. 1,20,000.

Temporary Total Disablement: This occurs when a worker is completely unable to perform any work
for a temporary period due to a work-related injury. The compensation for temporary total
disablement is calculated as a percentage of the worker’s wages during the period of disablement.

Factors Affecting Compensation:

Nature of Injury: The type and severity of the injury play a crucial role in determining the
compensation amount.

Age of the Worker: Younger workers may receive higher compensation due to their longer expected
working life.

Earning Capacity: The worker’s earning capacity at the time of the injury is considered to ensure fair
compensation.

Percentage of Disability: The degree of disablement, as assessed by a medical board, directly

impacts the compensation amount.

4. Medical Benefit Council, ESI Act (6 marks)

The Medical Benefit Council is an advisory body on matters related to the administration of medical
benefits under the ESI scheme.

Constitution of Medical Benefit Council

1. The Director-General of ESIC as Chairman.

2. The Director-General of Health Services as co-Chairman.

3. The Medical Commissioner of ESIC.

4. One member for each state appointed by State Government.

5. Three members representing employers.

 6. Three members representing employees.

7. Three members including one woman representing the medical profession.

Tenure of the members of the Medical Benefit council

The following members of the Medical Benefit Council are appointed for a period of 4 years, these
are:

1. The Director-General of ESIC as Chairman.

2. The Director-General of Health Services as co-Chairman.

3. The Medical Commissioner of ESIC.

4. One member for each state appointed by the State Government.

Duties of the Medical Benefit Council

The Medical Council’s functions are as follows:

1. Advise the other two ESIC bodies on matters relating to the implementation that would be
beneficial in the medical field. It acquires certification for the grant of medical benefits.

2. Investigate against complaints lodged against medical practitioners with relevance to the
medical relief offered.

Problem Based:

1. "A"a workman died due to an accident while performing the duty of an Employer.
Subsequently it had been proved that at the time of the accident the workman was under
the influence of intoxication. Whether the Employer is liable to pay compensation.

2. Ajay, an employee in Jaideep industries, died in a Fatal accident in a factory. The employer
paid the Widow of Ajay 1 lakh , is the payment valid?

Unit 5

1. Provisions relating to Health & Welfare measures under Factories Act

Introduction:

The Factories Act, 1948, is a comprehensive piece of legislation enacted to ensure the welfare,
health, and safety of workers employed in factories across India The health provisions in the Act aim
to prevent occupational diseases, maintain cleanliness, and ensure hygiene standards within
factories. Simultaneously, the welfare measures are designed to provide additional benefits such as
proper restrooms, drinking water facilities, and canteens, contributing to workers' physical and
mental well-being. Section 42-49 of the act deals with these Health & welfare Measures.

1. Washing facilities: In every factory adequate and suitable facilities for washing shall be
provided and maintained for the use of the workers therein; separate and adequately
screened facilities shall be provided for the use of male and female workers; such facilities
 shall be conveniently accessible and shall be kept clean. The Government may, in respect of
any factory or class or description of factories or of any manufacturing process, prescribe
standards of adequate and suitable facilities for washing. (Sec 42)

2. Facilities for storing and drying of wet clothing: The State Government may in respect of any
factory or class or description of factories, make rules requiring the provision therein of
suitable places for keeping clothing not worn during working hours and for the drying of wet
clothing. (sec 43)

3. Facilities for sitting: In every factory suitable arrangements for sitting shall be provided and
maintained for all workers obliged to work in a standing position, in order that they may take
advantage of any opportunities for rest which may occur in the course of their work. If, in the
opinion of the Chief Inspector, the workers in any factory engaged in a particular
manufacturing process or working in a particular room are able to do their work efficiently in
a sitting position, he may, by order in writing, require the occupier of the factory to provide
before a specified date such seating arrangements as may be practicable for all workers so
engaged or working. (Sec 44)

4. First aid appliances: There shall in every factory be provided and maintained so as to be
readily accessible during all working hours first-aid boxes or cupboards equipped with the
prescribed contents, and the number of such boxes or cupboard to be provided and
maintained shall not be less than one for every one hundred and fifty workers ordinarily
employed in the factory (sec 45).

5. Canteens: That in any specified factory wherein more than two hundred and fifty workers
are ordinarily employed, a canteen or canteens shall be provided and maintained by the
occupier for the use of the workers. (Sec. 46)

6. Shelters: In every factory where more than 150 workers are employed there must be
provided adequate and suitable shelters or rest rooms and a lunch room (with drinking water
supply) where workers may eat meals brought by them. Such rooms must be sufficiently
lighted and ventilated and must be maintained in a cool and clean condition~. The standards
may be fixed by the State Government. (Sec. 47)

7. Creches: In every factory where more than 30 women a employed, a room shall be provided
for the use of the children (below 6 years) of such women. The room shall be adequate size
well lighted and ventilated, maintained in a clean and sanitary condition and shall be in
charge of a woman trained in the care of children and infants. The standards shall be laid
down by the State Government. (Sec. 48)

8. Welfare officers: Welfare officers must be appointed in every factory where 500 or more
workers are employed. The State Government may prescribe the duties, qualifications etc. of
such officers. (Sec. 49)

<3

2. Appointment, powers & procedures of authorities under Payment of Wages Act (V.V
Optional)

An inspector plays an important role and is provided certain rights under the Payment of Wages
Act,1936. An inspector for the purpose of this Act may be chosen by the state government to
oversee the implementation of the Legislation. Each inspector will be treated as a member of the
general public or a public worker for the purpose of Section 14 of the Indian Penal Code,1860.

Appointment of an Inspector:

 According to the Section 14 (1) of the Factories Act, 1948, ‘The State Government can
appoint individuals who possess the prescribed qualification as Inspectors for the purposes
of the Act.

 Further, the State Government needs to give a notification in the Official Gazette and may
assign to the inspectors such local limits as it may think fit.’

 In the Payment of Wages Act, 1936, the Inspector of Factories appointed as per the sub-
section mentioned above is an Inspector in respect of all factories within local limits assigned
to him.

 Further, the Appropriate Government can appoint Inspectors for the purposes of this Act in
respect of all employed persons in railways (except those in a factory) to whom this Act
applies.

 Also, the Appropriate Government must give a notification in the Official Gazette before
appointing such persons as Inspectors.

Rights/Powers of an Inspector:

An Inspector may:

A. Make an examination and/or inquiry which he thinks fit to ascertain whether the employer is
observing the rules and/or provisions of the Act.

B. Enter, inspect, and also search for any premises of any railway, factory, industrial or other
establishments. Further, the Inspector must ensure that he does so at a reasonable time and
uses assistance as he deems fit.

C. Supervise the payment of wages to persons employed upon any railway or in any factory or
industrial or other establishments.

D. Ask the employer to produce any register that he maintains in pursuance of the Act.
However, the Inspector will need a written order for the same. Further, the Inspector can
also take statements of any persons as he may deem necessary for carrying out the purposes
of the Act.

E. Take copies of such registers or documents. The Inspector can also seize the records or
registers.

F. Exercise all powers that the Act bestows upon him. However, this is provided that no person
is compelled under this sub-section to answer any question or make any statement tending
to incriminate himself.

While an Inspector can enter, inspect, search, and also seize registers/documents on the premises,
any such search or seizure will have the same provisions as applied to the search and seizure made
under the authority of a warrant under Section 94 of the Code of Criminal Procedure, 1973 . It is
also important to remember that every Inspector is a deemed public servant.

1. Weekly leave & Annual leave facilities

The Factories Act, 1948, includes specific provisions to ensure workers receive adequate rest and
opportunities for leisure to maintain their health and productivity. The key provisions regarding
weekly leave and annual leave are:

Weekly Leave (Sec.52):

Every worker is entitled to a holiday for one whole day every week.This day is typically Sunday unless
substituted with another day of the week.If a worker is required to work on a scheduled weekly
holiday:

 They must be given a substituted holiday within the three days before or after the regular
holiday.

 The worker must have worked for at least 6 days in the previous week to be entitled to this
weekly leave.

The provision ensures that workers get sufficient time to rest and rejuvenate, aligning with the Act's
broader objectives of worker welfare.

Annual Leave(Sec.79):

1. A worker becomes eligible for annual leave with wages after completing 240 days of work in
a calendar year. Days spent on leave due to sickness, accident, maternity leave, or public
holidays are counted as part of the 240 days.

2. Adult workers get One day of leave for every 20 days worked in the preceding calendar year.

Child workers get One day of leave for every 15 days worked.

3. Unused leave can be carried forward to the next year, up to a maximum of 30 days for adults
and 40 days for children.

4. Workers wishing to avail of annual leave must apply in writing, preferably in advance.
Employers are required to grant leave in accordance with the worker's application, except in
cases where granting such leave disrupts operations.

5. Workers are entitled to wages at the rate of their average daily earnings during the leave
period.

2. Wages
The Payment of Wages Act, 1936, defines "wages" comprehensively under Section 2(vi). Wages are
monetary compensation paid to employees for their work or services rendered under the terms of
employment.

Key Elements of Wages

Wages include the following:

1. Remuneration:Payable for work done or services rendered under the employment contract.

2. Additional Earnings:Includes payments such as bonuses, overtime wages, and any other
form of compensation provided as part of employment.

3. Allowances: Dearness allowance (DA), house rent allowance (HRA), and other allowances
payable to the worker.

4. Incentives: Any monetary benefits under a productivity or incentive scheme.

5. Other Payments: Includes sums payable under a settlement, award, or order of a court or
tribunal.

Exclusions from Wages

The following payments are explicitly excluded from the definition of wages:

 Bonuses

 Contributions

 Traveling allowance

 Gratuity

3. Manufacturing process & Occupier under the Factories Act , 1948

Manufacturing Process (Section 2(k))

The term "manufacturing process" refers to any process involving systematic operations in a factory
for producing, altering, handling, or storing goods. It includes the following activities:

Key Activities:

 Making, altering, repairing, finishing, packing, or breaking up of goods

 Oil extraction: Pumping oil or any other liquid.

 Generating power: Activities such as power generation or transforming energy.

 Cleaning or dyeing: Cleaning, washing, dyeing, or finishing goods.

 Printing operations: Any printing process, including bookbinding.

 Construction works: Processes involved in building, demolishing, or assembling.

Occupier (Section 2(n))

An "occupier" refers to the person who has ultimate control over the affairs of a factory. This concept
is critical in determining accountability and responsibility for compliance with the provisions of the
Factories Act.

Key Features:

 Responsibility: The occupier is responsible for ensuring the factory adheres to safety, health,
and welfare standards.

 In Case of a Company: If the factory is owned by a company, the board of directors must
designate an occupier, often the managing director or any other responsible official.

 Liability: The occupier is accountable for any violations of the provisions under the Act,
including accidents, unsafe conditions, or non-compliance.

 Eligibility: The occupier can be an individual, partnership, or corporation, but they must have
substantial control over the factory's operation.

4. Illegal Deductions(V.V Optional)