Indian Wage Legislation

8/3/2019 Indian Wage Legislation

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Provisions of

Indian Wage Legislation &

Implementation Difficulties

Presented By

Nithin Prasad


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Reward & Performance Management 2

Contents

Aim and Objectives

Introduction to Indian Industrial Legislation

Indian Wage Legislation

Provisions of Wage Legislations Case StudyAir India

The crisis of 2008-09

Impact of Crisis

Difficulties for Air India

Conclusion & Recommendation

Bibliography


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Indian Industrial Legislation

Industrial regulatory body which intervenes in theconduct of the industry and impose statutory obligations.[employer and employee]

It Governs the interest of the employees and the

employer. [peace and good relation]

The Industrial legislation is of 5 parts mainly-

Part 1Working Conditions

Part 2Social Security

Part 3Wages and Bonus

Part 4Industrial Relations

Part 5Miscellaneous

Obligations

mostly on employerand very less

on workers


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Indian Wage Legislation

Indian legislation influences the wage determination.

The 2 acts that affect wage decisions are-

The Payment of Wages Act 1936

Un-uniform wages given at irregular intervals. Delays in the payment and the practice of fines were high. [Result -

abuses and riots]

Minimum Wages Act 1948

Exploitation of unorganized, sweated labor for very low wageswas high.

Statutory fixation of minimum rates to maintain fair return and

secure the welfare of labor was important.


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Provisions of Payment of Wages Act of

1936 Definitions. for employee, employer, wages, work place - industry,

mines, establishments, plantation, factory etc..

Rules for payment of wages, Responsibility for payment, fixation ofwage-periods, time of payment.

Wages to be paid in current coin or currency notes.cash, cheque, crediting in bank accounts are the available options.

Deductions which may be made from wages. fines, absence,damage or loss of property, house accommodation, other services and advances,loans, tax, maintenance etc..

Maintenance of registers and records. On work done, wagegiven, deductions made, receipt.

Enforcement of the Act. Authority, inspector, powers to enquire,appeal etc.. Penalties and offences. For delaying, not paying, failure to maintain

records, obstructing inspector, subsequent offences etc..

Miscellaneous. Bar of suits, protection in good faith, contracting etc..


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Provisions of Minimum Wages Act of

1948

Wage fixation. -Wage

must be paid, either loss or profit, fair to meet needs,

industry ability to pay is irrelevant, no wage below minimum.

Constitutionality. -to prevent evil sweating and benefit workers who dont bargain.

Definitions. - of adolescent, adult, child, competent authority, employer, employee, forproviding living wage.

Fixation and reservation of wages. - to fix min rates, different for work andlevel.

Advisory board and Central Advisory board. - co-ordinate work ofAdvisory board, Central and State government, committee and sub-committee.

Safeguards in payment of minimum wages. -wages in kind, rightamount, fixing hours, overtime, multi work wages, piece work, registers and recordsmaintenance.

Enforcement of act. - Inspectors, authority, powers to appeal.

Penalties and offences. - cognizance of offences and offence by company.

Miscellaneous. -which include due payment, contracting out, exemptions andexceptions, central government power to give direction, make rules and provide schedule forvarious employment.


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Case StudyAir India

Air India India's oldest and largest State-owned flag carrier.

It operates a fleet of Airbus and Boeing aircraft serving Asia,

Europe and North America.

It is the 16th largest airline in Asia, after merging with IndianAirlines.

Has employee base of 31,500. With 14 unions under

NACIL after merger with Indian Airlines.

Fair and righteous legislation followed, by providingwages, PLI and other benefits.

Spends around Rs. 350 crore monthly as wage and PLI,

on the last day of every month.


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The crisis of 2009-10

The major expenditure every year - Salaries, fuel anddepreciation.

Rs. 6500 crore additional expenditure on aircraft and engines.

Grappling Loss of Rs.7200 crore on the consecutive years (2008-09).

Debt of 17000 crore.

This led to huge financial woes and AI went in seek helpfrom Government.

Government agreed to help with Rs.14000 crore; soft

loan, grant and equity infusion included. AI had to showcost cutting.

It targeted Rs.1900 crore as cost cutting for the year 2009and 2010.


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Impact of crisis

June 2009, in the process, AI instantly announcedalarming situation and delayed payment of salaries.

Employees and unions revolted and protested againstdeferred salaries. [There was communication loss]

Jan 2010, AI started cost cutting, not by layoffs but, byrestructuring the manpower costs.

Reduce wages to 15-20%

PLI cut to 50% [annual PLI payment is Rs.1500 crore]

These were considered violation of Indian WageLegislation - unions and employees protest raged to highlevels. Causing about Rs.15 crore loss per day

The appropriate government, had to intervene again.


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Difficulties for Air India

During such financial crisis, AIs managementstruggled as an employer to,

Pay wages on time, fix wage periods,

To make deduction, or come to an agreement with employees

and unions. There was a communication loss in notifying the industrys

alarming situation.

For its survival, changes were vital and needed, but thelegislation favored against the changes.

The employees were more on the safer side than theemployer. Some employees supported and othersincluding unions resisted the change in wage structure.

The economic variation pose threat to AI.


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Conclusion

When we compare to history, the employeesstatus and welfare is being better than before.

Legislation has supported both employer and

employees, to maintain peace & relation betweenand also scrutinize & monitor the work culture.

Employers are not spared from facing difficulties

as business world poses lot of threat.

Financial risk is always there, making difficulties

for employer to implement Wage Legislation

provisions.


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Recommendation

Difficulties are present and clear. They can be minimized by adopting risk

management.

Communication down the line should betransparent and clear.

Employees and the unions are also part ofindustry, a good, collaborative relation with them

can dilute the difficulties. A proactive management approach can make

huge difference in effective implementation ofLegislations.


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Bibliography

N D Kapoor,Handbook of Industrial Law (2006), Part 3: Wage & Bonus Legislations,Sultan chand & sons publications, ISBN 81-7014-498-1.

Ashwini Phadnis & Shubhra Tandon,Air India's plan to cut wages, flights may run intorough weather,http://www.thehindubusinessline.com/2010/01/01/stories/2010010153040100.htm

TNN, Jun 23, 2009, Air India set to cut wages, stir looms - India Business - Business - TheTimes of India http://timesofindia.indiatimes.com/business/india-business/Air-India-set-to-cut-wages-stir-looms-/articleshow/4689910.cms#ixzz0wlqZ3Dhi

Smita Aggarwal, Time to cut Air India wages, says GoM, passes the buck to Govt,

http://www.indianexpress.com/news/time-to-cut-air-india-wages-says-gom-passe/575404/ Sindhu Bhattacharya,Aviation ministry plans 20% wage cut for Air India staff,

http://www.dnaindia.com/india/report_aviation-ministry-plans-20pct-wage-cut-for-air-india-staff_1367491

Express news service, Patel rules out job, wage cuts in AI turnaround plan,http://www.indianexpress.com/news/Patel-rules-out-job--wage-cuts-in-AI-turnaround-plan/651581

Sindhu Bhattacharya, Govt may defer Air India pay cuts till after Commonwealth Games,http://www.dnaindia.com/money/report_govt-may-defer-air-india-pay-cuts-till-after-commonwealth-games_1387331

Business line,Air India to delay salary payment,http://www.blonnet.com/2009/06/15/stories/2009061551590100.htm

Business line,Air India unions protest move to delay salaries,http://www.blonnet.com/2009/06/16/stories/2009061652261500.htm


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Indian Wage Legislation