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Vayu Education of India2/25, Ansari Road, Darya Ganj, New Delhi-110 002

by

ADV. PADAM SINGH

(BA, LLB, LLM)

SUDESHNA SINGH

(B.Sc., LLB, LLM, NET)

(Legal Department CCS University Campus)

PRAVEEN KUMAR

(B.Sc., MCA, M.Phil)

LABOUR

LEGISLATION

LABOUR LEGISLATION

Copyright © VAYU EDUCATION OF INDIA

ISBN: 978-93-3758-08-1

First Edition: 2014

Price. ` 200/-

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or

transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or

otherwise, without the prior permission of the Publishers.

Published by:

VAYU EDUCATION OF INDIA2/25, Ansari Road, Darya Ganj, New Delhi-110 002

Ph.: 91-11-43526600, 41564445

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E-mail: veiindia@veiindia.com,vayueducation1@gmail.com

Web: www.veiindia.com

PREFACE

It give me great pleasure in presenting the First edition of Labour Legislation book.

It is written with several goals in mind. It is designed to provide all essential information

you’ll need to learn and master Labour Legislation. It present basic to advance features of

Labour Act.

I hope that this book will fulfill the requirement of students and teachers both.

The Vayu publication deserves special appreciation for his painstaking effort in bringing

out this book in such an excellent form.

Inspite of all effort some errors might be there. I shell be grateful to the readers if the

some are brought to my notice. Suggestions and comments for further improvement of the

book will be gratefully acknowledged.

August 2013 Mr. Adv. Padam Singh

(BA, LLB, LLM)

&

Mrs. Sudeshna Singh

(B.Sc., LLB, LLM, NET)

(Legal Department CCS University Campus)

E-Mail sudeshcm@yahoo.com

&

Mr. Praveen Kumar

(B.Sc., MCA, M.Phil)

CONTENT

Preface (v)

SECTION-1: EVOLUTION OF LABOUR LEGISLATION

Unit 1: Labour Legislations 3

1.1 Introduction 3

1.2 Aim and Objectives 3

1.2.1 History of Labour Laws 5

1.2.2 Purpose of labour Legislation 6

1.2.3 Evolution of Labour Law in India 7

Review Questions

Unit 2: Indian Labour Laws 8

2.1 Role of India Constitutional Framework on Indian Labour Laws 8

2.2 The Impact of ILO on Industrial Relations 9

2.3 Role of Law in Industrial Relations 9

2.4 The Trade Unions Act 1926 10

Review Questions

Unit 3: Labour Conference 11

3.1 International Labour Conference 11

3.1.1 Objective of the Conference 12

3.2 The Governing Body 13

3.3 The Officers of the Governing Body 14

3.3.0 Election 14

3.3.1 Functions 15

3.3.2 Committees and Subcommittees 15

3.3.3 Decision-Making 15

3.3.4 Committees, Subcommittees and Working Party of the Governing Body 16

3.3.5 Committee on Freedom of Association (CFA) 17

3.3.6 Composition 17

3.3.7 Scope and Mandate 17

(vii)

3.3.8 Building Subcommittee (PFA/BS) 17

3.3.9 Officers 18

3.4 Committee on Legal Issues and International Labour Standards (LILS) 18

3.4.0 Officers 18

3.4.1 Committee on Employment and Social Policy (ESP) 19

3.4.2 Committee on Sectoral and Technical Meetings and Related Issues (STM) 19

3.4.3 Committee on Technical Cooperation (TC) 20

3.4.4 Subcommittee on Multinational Enterprises (MNE) 20

3.4.5 Working Party on the Social Dimension of Globalization (WP/SDG) 21

3.5 Government Group 22

3.5.1 Rotation of the Officers 22

3.5.2 The International Labour Office 23

3.5.3 International Labour Office and the Individual Citizen 23

Review Questions

Unit 4: International Labour Standards 25

4.0 Introduction 25

4.1 Ratification 25

4.2 Influence of International Labour 26

4.3 Classification of International 28

Review Questions

Unit 5: Commission on Labour and Assocham 29

5.1 National Commission for Enterprises in the Unorganised Sector (Nceus) 29

5.2 The Terms of Reference of the Commission 29

5.2.1 Reports Submitted by the Nceus 30

5.2.3 Pilot Growth Poles Project for the Unorganised Sector 30

5.3 ASSOCHAM 31

Review Questions

SECTION-2: LABOUR LEGISLATIONS:

ACTS GOVERNING EMPLOYEMENT OF PERSONAL AND HR

Unit 6: Employment 37

6.1 Industrial Employment (Standing Orders) Act, 1946 (23rd April, 1946) 37

6.2 Factories Act 1948 45

Review Questions

Unit 7: Industrial Disputes and Trade Unions 107

7.1 The Industrial Disputes Act 1947 107

7.1.0 Introduction 107

7.1.1 Meaning of Lay-Off and Continuous Service 107

7.1.2 Compensation for Lay-Off 108

(viii)

7.1.3 Workman not Entitled to Compensation 109

7.1.4 Special Provisions Relating to Lay-Off 109

7.2 The Trade Unions' Act, 1926 110

Review Questions

Unit 8: Child Labour 112

8.1 The Child Labour (Prohibition and Regulation) ACT, 1986 112

8.1.0 Definition 112

8.2 Apprentices Act, 1961 116

Review Questions

Unit 9: Employment Exchanges 122

9.1 The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959. 122

9.2 The Maternity Benefit Act, 1961 (12th December, 1961) 126

Review Questions

SECTION-3: LABOUR LEGISLATIONS

ACTS GOVERNING COMPENSATION OF EMPLOYEES

Unit 10: Compensation of Employees 153

10.1 The Workmen’s Compensation Act, 1923 153

10.1.0 Meaning of Workman (Sec.2 (n)) 153

10.2 The Payment of Wages Act, 1936 158

Review Questions

Unit 11: Wages 167

11.1 The Minimum Wages Act, 1948 167

11.2 The Payment of Bonus Act, 1965 170

Review Questions

Unit 12: Employee Funds 174

12.1 Employees Provident Fund and Misc. Provisions Act, 1952 174

12.2 Payment of Gratuity Act, 1972 176

12.3 Employee State Insurance Act, 1948 179

Review Questions

SECTION-4: DISPUTE SETTLEMENT

Unit 13: Industrial Disputes 187

13.1 Introduction 187

13.2 Types of Disputes 188

13.3 Settlement of Labour Disputes 190

Review Questions

Unit 14: Machinery and Lok Adalats Concepts 196

14.1 Statutory Machinery 196

14.2 Voluntary Machinery 199

14.3 Mediation and Litigation  201

14.4 The Advantages of Mediation 206

Review Questions

Unit 15: Lok Adalats 214

15.1 Organisation and Working of Lok Adalats 214

15.2 History of ADR(Alternative Dispute Resolution)and —Lok Adalat” in India 215

15.3 Benefits of Lok Adalat 216

Questions

Unit 16: Industrial Disputes 224

16.1 Illegal Strikes- the Industrial Disputes Act, 1947 224

16.2 Retrenchment 226

Review Questions

Index 239

(x)

SECTION-1

Evolution of Labour Legislations

Unit 1: Labour Legislations

Unit 2: Indian Labour Laws

Unit 3: Labour Conference

Unit 4: International Labour Standards

Unit 5: Commission on Labour & Assocham

LABOUR LEGISLATIONS

1.1 INTRODUCTION

Labour law also known as employment law is the body of laws, administrative rulings,

and precedents which address the legal rights of, and restrictions on, working people and

their organizations. As such, it mediates many aspects of the relationship between trade

unions, employers and employees. In other words, Labour law defines the rights and

obligations as workers, union members and employers in the workplace. Generally, labour

law covers:

• Industrial relations – certification of unions, labour-management relations, collective

bargaining and unfair labour practices;

• Workplace health and safety;

• Employment standards, including general holidays, annual leave, working hours,

unfairdismissals, minimum wage, layoff procedures and severance pay.

There are two broad categories of labour law. First, collective labour law relates to the

tripartite relationship between employee, employer and union. Second, individual labour

law concerns employees’ rights at work and through the contract for work.

The labour movement has been instrumental in the enacting of laws protecting labour

rights in the 19th and 20th centuries. Labour rights have been integral to the social and

economic development since the industrial revolution.

1.2 AIM AND OBJECTIVES

The International Labour Organization (ILO) is devoted to promoting social justice

and internationally recognized human and labour rights, pursuing its founding

mission that labour peace is essential to prosperity. Today, the ILO helps advance

the creation of decent work and the economic and working conditions that give

working people and business people a stake in lasting peace, prosperity and progress.

Its tripartite structure provides a unique platform for promoting decent work for all

women and men. Its main aims are to promote rights at work, encourage decent

employment opportunities, enhance social protection and strengthen dialogue on

work-related issues.

1

Unit

4 Labour Legislation

The ILO has four strategic objectives

Promote and realize standards and fundamental principles and rights at work

Create greater opportunities for women and men to decent employment and income

Enhance the coverage and effectiveness of social protection for all

Strengthen tripartism and social dialogue

In support of its goals, the ILO offers unmatched expertise and knowledge about the

world of work, acquired over more than 90 years of responding to the needs of people

everywhere for decent work, livelihoods and dignity. It serves its tripartite constituents -

and society as a whole — in a variety of ways, including:

• Formulation of international policies and programs to promote basic human rights,

improve working and living conditions, and enhance employment opportunities

• Creation of international labour standards backed by a unique system to supervise

their application

• An extensive program of international technical cooperation formulated and

implemented in an active partnership with constituents, to help countries put these

policies into practice in an effective manner

• Training, education and research activities to help advance all of these efforts

Objectives of the Labour Legislations

Labour legislation in India has sought to achieve the following objectives:

• Establishment of justice - Social, Political and Economic;

• Provision of opportunities to all workers; irrespective of caste, creed, religion, beliefs;

for the development of their personality;

• Protection of weaker sections in the community;

• Maintenance of Industrial Peace;

• Creation of conditions for economic growth;

• Protection and improvement of labour standards;

• Protect workers from exploitation;

• Guarantee right of workmen to combine and form association or unions;

• Ensure right of workmen to bargain collectively for the betterment of their service

conditions;

• Make state interfere as protector of social well being than to remain an onlooker;

• Ensure human rights and human dignity.

Proper regulation of employee-employer relationship is a condition precedent for planned,

progressive and purposeful development of any society. The objectives of labour legislation

are a developing concept and require ceaseless efforts to achieve them on a continuous

basis.

Evolution of Labour Legislations 5

The object of the Industrial law, said the Court, was to bring in improvements in the

service conditions of industrial labour by providing them the normal amenities of life, which

would lead to industrial peace. This would accelerate the productive activities of the nation,

bringing prosperity to all and further improving the conditions of labour.

1.2.1 History of Labour Laws

Labour law arose due to the demands of workers for better conditions, the right to organize,

and the simultaneous demands of employers to restrict the powers of workers in many

organizations and to keep labour costs low. Employers’ costs can increase due to workers

organizing to win higher wages, or by laws imposing costly requirements, such as health

and safety or equal opportunities conditions. Workers’ organizations, such as trade unions,

can also transcend purely industrial disputes, and gain political power — which some

employers may oppose. The state of labour law at any one time is therefore both the product

of, and a component of, struggles between different interests in society.

International Labour Organization (ILO) was one of the first organizations to deal

with labour issues.

The ILO was established as an agency of the League of Nations following the Treaty of

Versailles, which ended World War I. Post-war reconstruction and the protection of labour

unions occupied the attention of many nations during and immediately after World War I.

In Great Britain, the Whitley Commission, a subcommittee of the Reconstruction Commission,

recommended in its July 1918, Final Report that “industrial councils” be established

throughout the world. The British Labour Party had issued its own reconstruction

programme in the document titled Labour and the New Social Order.

In February 1918, the third Inter-Allied Labour and Socialist Conference (representing

delegates from Great Britain, France, Belgium and Italy) issued its report, advocating an

international labour rights body, an end to secret diplomacy, and other goals. And in

December 1918, the American Federation of Labor (AFL) issued its own distinctively apolitical

report, which called for the achievement of numerous incremental improvements via the

collective bargaining process.

As the war drew to a close, two competing visions for the post-war world emerged.

The first was offered by the International Federation of Trade Unions (IFTU), which

called for a meeting in Berne in July 1919. The Berne meeting would consider both

the future of the IFTU and the various proposals which had been made in the previous

few years. The IFTU also proposed including delegates from the Central Powers as equals.

Samuel Gompers, president of the AFL, boycotted the meeting, wanting the Central

Powers delegates in a subservient role as an admission of guilt for their countries’ role

in the bringing about war. Instead, Gompers favored a meeting in Paris which would

only consider President Woodrow Wilson’s Fourteen Points as a platform. Despite

the American boycott, the Berne meeting went ahead as scheduled. In its final report,

the Berne Conference demanded an end to wage labour and the establishment of socialism.

If these ends could not be immediately achieved, then an international body attached to

the League of Nations should enact and enforce legislation to protect workers and trade

unions.

6 Labour Legislation

The British proposed establishing an international parliament to enact labour laws

which each member of the League would be required to implement. Each nation would

have two delegates to the parliament, one each from labour and management. An

international labour office would collect statistics on labour issues and enforce the new

international laws. Philosophically opposed to the concept of an international parliament

and convinced that international standards would lower the few protections achieved in

the United States, Gompers proposed that the international labour body be authorized

only to make recommendations, and that enforcement be left up to the League of Nations.

Despite vigorous opposition from the British, the American proposal was adopted.

The Americans made 10 proposals. Three were adopted without change: That

labour should not be treated as a commodity; that all workers had the right to a wage

sufficient to live on; and that women should receive equal pay for equal work. A proposal

protecting the freedom of speech, press, assembly, and association was amended to

include only freedom of association. A proposed ban on the international shipment of goods

made by children under the age of 16 was amended to ban goods made by children under

the age of 14. A proposal to require an eight-hour work day was amended to require the

eight-hour work day or the 40-hour work week (an exception was made for countries where

productivity was low). Four other American proposals were rejected. Meanwhile,

international delegates proposed three additional clauses, which were adopted: One or

more days for weekly rest; equality of laws for foreign workers; and regular and frequent

inspection of factory conditions.

The Commission issued its final report on 4 March 1919, and the Peace Conference

adopted it without amendment on 11 April. The report became Part XIII of the Treaty of

Versailles. (The Treaty of Versailles was one of the peace treaties at the end of World War

I. It ended the state of war between Germany and the Allied Powers. It was signed on 28

June 1919.)

The first annual conference (referred to as the International Labour Conference, or

ILC) began on 29th October 1919 in Washington DC and adopted the first six International

Labour Conventions, which dealt with hours of work in industry, unemployment, maternity

protection, night work for women, minimum age and night work for young persons in

industry. The prominent French socialist Albert Thomas became its first Director General.

The ILO became a member of the United Nations system after the demise of the League in

1946.

1.2.2 Purpose of labour legislation

Labour legislation that is adapted to the economic and social challenges of the modern

world of work fulfils three crucial roles:

• it establishes a legal system that facilitates productive individual and collective

employment relationships, and therefore a productive economy;

• by providing a framework within which employers, workers and their representatives

can interact with regard to work-related issues, it serves as an important vehicle for

achieving harmonious industrial relations based on workplace democracy;

• it provides a clear and constant reminder and guarantee of fundamental principles

and rights at work which have received broad social acceptance and establishes the

processes through which these principles and rights can be implemented and

enforced.

Evolution of Labour Legislations 7

But experience shows that labour legislation can only fulfills these functions effectively

if it is responsive to the conditions on the labour market and the needs of the parties involved.

The most efficient way of ensuring that these conditions and needs are taken fully into

account is if those concerned are closely involved in the formulation of the legislation through

processes of social dialogue. The involvement of stakeholders in this way is of great importance

in developing a broad basis of support for labour legislation and in facilitating its application

within and beyond the formal structured sectors of the economy.

1.2.3 Evolution of Labour Law in India

The law relating to labour and employment is also known as Industrial law in India. The

history of labour legislation in India is interwoven with the history of British colonialism.

The industrial/labour legislations enacted by the British were primarily intended to protect

the interests of the British employers. Considerations of British political economy were

naturally paramount in shaping some of these early laws. Thus came the Factories Act. It

is well known that Indian textile goods offered stiff competition to British textiles in the

export market and hence in order to make India labour costlier the Factories Act was first

introduced in 1883 because of the pressure brought on the British parliament by the textile

magnates of Manchester and Lancashire. Thus India received the first stipulation of eight

hours of work, the abolition of child labour, and the restriction of women in night employment,

and the introduction of overtime wages for work beyond eight hours. While the mpact of

this measure was clearly welfarist the real motivation was undoubtedly protectionist.

The earliest Indian statute to regulate the relationship between employer and his

workmen was the Trade Dispute Act, 1929 (Act 7 of 1929). Provisions were made in this Act

for restraining the rights of strike and lock out but no machinery was provided to take care

of disputes.

The original colonial legislation underwent substantial modifications in the post-colonial

era because independent India called for a clear partnership between labour and capital.

The content of this partnership was unanimously approved in a tripartite conference in

December 1947 in which it was agreed that labour would be given a fair wage and fair

working conditions and in return capital would receive the fullest co-operation of labour for

uninterrupted production and higher productivity as part of the strategy for national

economic development and that all concerned would observe a truce period of three years

free from strikes and lockouts. Ultimately the Industrial Disputes Act (the Act) brought

into force on 01.04.1947 repealing the Trade Disputes Act 1929 has since remained on

statute book.

REVIEW QUESTIONS

Q.1 What is Labour?

Q.2 Define Legislation?

Q.3 Explain in brief aims and objective of labour legislation.

Q.4 Explain Indian labour legislation.

Q.5 Define benefits of labour legislation.

8 Labour Legislation

INDIAN LABOUR LAWS

2.1 ROLE OF INDIA CONSTITUTIONAL FRAMEWORK ON INDIAN

LABOUR LAWS

The relevance of the dignity of human labour and the need for protecting and safeguarding

the interest of labour as human beings has been enshrined in Chapter-III (Articles 16, 19,

23 & 24) and Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India

keeping in line with Fundamental Rights and Directive Principles of State Policy.

Labour is a concurrent subject in the Constitution of India implying that both the

Union and the state governments are competent to legislate on labour matters and administer

the same. The bulk of important legislative acts have been enacted by the Parliament.

The legislations can be categorized as follows:

1. Labour laws enacted by the Central Government, where the Central Government

has the sole responsibility for enforcement.

2. Labour laws enacted by Central Government and enforced both by Central and

State Governments.

3. Labour laws enacted by Central Government and enforced by the State

Governments.

4. Labour laws enacted and enforced by the various State Governments which apply

to respective States.

The Constitution of India provides detailed provisions for the rights of the citizens and

also lays down the Directive Principles of State Policy which set an aim to which the activities

of the state are to be guided. These Directive Principles provide:

(a) for securing the health and strength of employees, men and women;

(b) hat the tender age of children are not abused;

(c) that citizens are not forced by economic necessity to enter avocations unsuited to

their age or strength;

(d) just and humane conditions of work and maternity relief are provided; and

(e) that the Government shall take steps, by suitable legislation or in any other way, to

secure the participation of employee in the management of undertakings,

establishments or other organizations engaged in any industry.

2

Unit

Evolution of Labour Legislations 9

2.2 THE IMPACT OF ILO ON INDUSTRIAL RELATIONS

The International Labour Organization (ILO) was set-up in 1919 by the Versailles Peace

Conference as an autonomous body associated with the League of Nations. It became the

first specialized agency of the United Nations in 1946. India has been a member of the ILO

since its inception. The aims and objectives of ILO are set out in the Preamble to its

Constitution and in the Declaration of Philadelphia (1944), which was formally annexed to

the Constitution in 1946. The Preamble affirms that universal and lasting peace can be

established only if it is based upon social justice. The Philadelphia Charter is are affirmation

of the principles on which the Organization was originally based. The Declaration reiterates

that the central aim of national and international policy should be the attainment of social

justice. In order to achieve its objective, the ILO has relied on its standard-setting function.

The international labour standards take the form of Conventions and Recommendations.

The ILO adopted a series of Conventions and Recommendations covering hours of work,

employment of women, children andyoung persons, weekly rest, holidays, leave with wages,

night work, industrial safety, health, hygiene, labour inspection, social security, labour-

management relations, freedom of association, wages and wage fixation, productivity, and

employment. India has been one of the founder members of the ILO and has been taking

active part in its deliberations. The ILO has adopted 183 Conventions and 180

Recommendations so far. Out of 183 Conventions, India has ratified 39 Conventions.

Conventions ratified by India have been incorporated in the existing legislation. Conventions

not ratified by India have indirectly guided and shaped the Indian labour legislation in

afar-reaching manner. The ILO standards have a decisive impact on the factory, mines,

social security and wage legislation in India. The Conventions concerning basic human

rights have considerable influence on Indian law and practice. The Conventions have

formed the sheet- anchor of Indian labour legislation, especially after 1946, when the

Indian national government assumed office at the Centre. The ILO has also greatly

influenced the trade union movement in our country. The AITUC owes its immediate

origin to it. It is instrumental in improving the lot of the working class in our country.

India’s commitment to the ILO is reflected in its adherence to the institution of tripartism

as a novel method for resolving labour-management conflicts. ILO and India have common

aims, common goals and common destiny, as both of them are committed to world peace,

freedom and social justice. Both are striving for the socio-economic betterment of the poverty

stricken and under-privileged people.

2.3 ROLE OF LAW IN INDUSTRIAL RELATIONS

All systems of industrial relations have a legal framework if they operate within alegal

system. The legal framework may take the form of recognizing the development of certain

institutions and remove any impediments to their existence. The role of law in an industrial

relations system may be perceived by the extent to which it attempts to regulate relationships,

the extent to which it is obligatory rather than optional and the attitude of the parties to

the legal system. In India there has been a large degree of agreement on the need for

reforms. Major disagreement, however, exists as to the part that law should play in any

scheme of reforms. Nevertheless, it has been commonly felt that any legislative reform by

definition involves the law. The legal framework within which the industrial relations

Labour Legislation By Adv. Padam Singh

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