MBA HR-02; MODEL QUESTION

SCHOOL OF BUSINESS MANAGEMENT

DEPARTMENT OF MANAGEMENT

MODEL QUESTION - ANSWER BANK

MBA HR-02

LABOUR LAWS AND INDUSTRIAL RELATIONS

Q1. Define Industrial Relations. Also discuss its concept, nature, scope and importance?

Ans. Concept of Industrial Relations

Basically, IR sprouts out of employment relation. Hence, it is broader in meaning and wider in scope. IR is dynamic and developing socio-economic process. As such, there are as many as definitions of IR as the authors on the subject. Some important definitions of IR are produced here.

According to Dale Yoder’, IR is a designation of a whole field of relationship that exists because of the necessary collaboration of men and women in the employment processes of Industry”.

Armstrong has defined IR as “IR is concerned with the systems and procedures used by unions and employers to determine the reward for effort and other conditions of employment, to protect the interests of the employed and their employers and to regulate the ways in which employers treat their employees”

In the opinion of V. B. Singh “Industrial relations are an integral aspect of social relations arising out of employer-employee interaction in modern industries which are regulated by the State in varying degrees, in conjunction with organised social forces and influenced by the existing institutions. This involves a study of the State, the legal system, and the workers’ and employers’ organizations at the institutional level; and of the patterns of industrial organisation (including management), capital structure (including technology), compensation of the labour force, and a study of market forces all at the economic level”.

Encyclopedia Britannica defined IR more elaborately as “The concept of industrial relations has been extended to denote the relations of the state with employers, workers, and other organisations. The subject, therefore, includes individual relations and joint consultation between employers and workers at their places of work, collective relations between employers and trade unions; and the part played by the State in regulating these relations”.

Thus, IR can now safely be defined as a coin having two faces: co- operation and conflict. This relationship undergoes change from thesis to antithesis and then to synthesis. Thus, the relationship starting with co-operation soon changes into conflict and after its resolution again changes into cooperation. This changing process becomes a continuous feature in industrial system and makes IR concept as dynamic and evolving one.

Scope of IR

Based on above definitions of IR, the scope of IR can easily been delineated as follows:

1. Labour relations, i.e., relations between labour union and management.

2. Employer-employee relations i.e. relations between management and employees.

3. The role of various parties’ viz., employers, employees, and state in maintaining industrial relations.

4. The mechanism of handling conflicts between employers and employees, in case conflicts arise.

The main aspects of industrial relations can be identified as follows:

1. Promotion and development of healthy labour — management relations.

2. Maintenance of industrial peace and avoidance of industrial strife.

3. Development and growth of industrial democracy.

Objectives of IR

The primary objective of industrial relations is to maintain and develop good and healthy relations between employees and employers or operatives and management. The same is sub- divided into other objectives.

Thus, the objectives of IR are designed to:

1. Establish and foster sound relationship between workers and management by safeguarding their interests.

2. Avoid industrial conflicts and strikes by developing mutuality among the interests of concerned parties.

3. Keep, as far as possible, strikes, lockouts and gheraos at bay by enhancing the economic status of workers.

4. Provide an opportunity to the workers to participate in management and decision making process.

5. Raise productivity in the organisation to curb the employee turnover and absenteeism.

6. Avoid unnecessary interference of the government, as far as possible and practicable, in the matters of relationship between workers and management.

7. Establish and nurse industrial democracy based on labour partnership in the sharing of profits and of managerial decisions.

8. Socialise industrial activity by involving the government participation as an employer.

According to Krikaldy, industrial relations in a country are influenced, to a large extent, by the form of the political government it has. Therefore, the objectives of industrial relations are likely to change with change in the political government across the countries.

Accordingly, Kirkaldy has identified four objectives of industrial relations as listed below:

1. Improvement of economic conditions of workers.

2. State control over industrial undertakings with a view to regulating production and promoting harmonious industrial relations.

3. Socialisation and rationalisation of industries by making the state itself a major employer.

4. Vesting of a proprietary interest of the workers in the industries in which they are employed.

Importance of Industrial Relations

The healthy industrial relations are key to the progress and success. Their significance may be discussed as under –

v Uninterrupted Production – The most important benefit of industrial relations is that this ensures continuity of production. This means, continuous employment for all from manager to workers. The resources are fully utilized, resulting in the maximum possible production. There is uninterrupted flow of income for all. Smooth running of an industry is of vital importance for several other industries; to other industries if the products are intermediaries or inputs; to exporters if these are export goods; to consumers and workers, if these are goods of mass consumption.

v Reduction In Industrial Disputes – Good industrial relations reduce the industrial disputes. Disputes are reflections of the failure of basic human urges or motivations to secure adequate satisfaction or expression which are fully cured by good industrial relations. Strikes, lockouts, go-slow tactics, gheraos and grievances are some of the reflections of industrial unrest which do not spring up in an atmosphere of industrial peace. It helps promoting co-operation and increasing production.

v High Morale – Good industrial relations improve the morale of the employees. Employees work with great zeal with the feeling in mind that the interest of employer and employees is one and the same, i.e. to increase production. Every worker feels that he is a co-owner of the gains of industry. The employer in his turn must realize that the gains of industry are not for him along but they should be shared equally and generously with his workers. In other words, complete unity of thought and action is the main achievement of industrial peace. It increases the place of workers in the society and their ego is satisfied. It naturally affects production because mighty co-operative efforts alone can produce great results.

v Mental Revolution – The main object of industrial relation is a complete mental revolution of workers and employees. The industrial peace lies ultimately in a transformed outlook on the part of both. It is the business of leadership in the ranks of workers, employees and Government to work out a new relationship in consonance with a spirit of true democracy. Both should think themselves as partners of the industry and the role of workers in such a partnership should be recognized. On the other hand, workers must recognize employer’s authority. It will naturally have impact on production because they recognize the interest of each other.

v Reduced Wastage – Good industrial relations are maintained on the basis of cooperation and recognition of each other. It will help increase production. Wastages of man, material and machines are reduced to the minimum and thus national interest is protected.

Thus, it is evident that good industrial relations is the basis of higher production with minimum cost and higher profits. It also results in increased efficiency of workers. New and new projects may be introduced for the welfare of the workers and to promote the morale of the people at work. An economy organized for planned production and distribution, aiming at the realization of social justice and welfare of the massage can function effectively only in an atmosphere of industrial peace. If the twin objectives of rapid national development and increased social justice are to be achieved, there must be harmonious relationship between management and labor.

Q2. Discuss the various approaches of industrial relations. Also explain the contribution of Dunlop’s Model towards Industrial Relations?

Ans. Approaches/Perspectives of IR

The IR can be viewed from the various angles which may range from the economic and social, political to the legal, psychological and managerial.

An economist tries to interpret the problem of IR in terms of interpersonal forces of the laws of demand and supply. To a politician, the dynamics of IR, conflict revolves round the problem of class war, for a psychologist, IR can be best studied in terms of work behavior and attitude of labour and management and the like. A few approaches to IR are discussed.

a. Psychological Approach to IR: The psychologists are of the view that the problem of IR are deeply rooted in the perception and the attitude of focal participants. For ex. A photograph of an ordinary middle aged person served as input, which both groups were expected to rate. It is interesting to note that both the groups rated the photograph in different manner, i.e., the Union leaders referred the person in the photograph as “ Manager” where the group of Executives saw Union leaders referred the person in the photograph as “Manager” where the group of Executives” saw “Union leader” in the photograph.

This variance in perception of parties is largely because of their individual perception. The conflict between labor and management occurs because every group negatively views/perceives the behavior of other i.e. even the honest intention of a party is looked with suspicion.

b. Sociological Approach to IR: The industry is a social world made up of groups with differing personalities, educational background, family breeding, emotions, likes and dislikes and host of other personal factors such as attitudes and behaviour. Since ages, the problems of IR have been looked upon as one basically concerned with wages, employment, conditions and labour welfare. But in fact sociological aspects of the problem are more important than others. This largely includes various sociological factors like value system, customs, norms, symbols and attitude and perception of both labour and management that affect the IR in varied ways.

c.Human relations Approach to IR

Management of people at work is an exclusive prerogative of HR specialists; the various HR policies including those relating to leadership and motivation have profound influence on their work behaviour. For instance, a manager, using an autocratic style, designs, a close supervision system and feels that display of authority would drives people to work. But this style leads to dissatisfaction and hatred among people whereas in a democratic style, it is held that a desired organisational behaviour can be cultivated if employees needs and wants are properly satisfied. The manager working with such a style positively motivates people. Infact, no style is good or bad is every situation demands specific leadership behaviour on the part of HR specialist.

4. Gandhian Approach to IR

Gandhiji advocated that for resolving disputes the following rules to be observed.

a. The workers should seek redressal of reasonable demands only through collective action.

b. If they have to organise a strike, trade unions should seek by ballot authority from all workers to do so, remain peaceful and use non-violent methods.

c.The workers should avoid strikes as far as possible in industries of essential services;

d.The workers should avoid formation of unions in philanthropic organisation.

e. The strikes should be resorted to only as a last resort after all other legitimate measures have failed.

Approaches to IR

UNITARY APPROACH

• Industrial relations is grounded in mutual cooperation, individual treatment, teamwork and the sharing of common objectives.

• The underlying assumption is that it is to the benefit of all to focus on common interests and promote harmony.

• Conflict is regarded as destructive.

Assumptions about workplace relations

• - management and employees share common interest

• - one source of legitimate authority (management)

Assumptions about workplace conflict

• - inevitable, aberration, destructive, to be avoided

• - caused by poor management, dissidents, agitators or poor communication

Assumptions about trade unions

• - a competing and illegitimate source of authority

• - an unwarranted intrusion in the workplace

• - create conflict where none would otherwise exist

Assumptions about collective bargaining

• - creates and institutionalizes unnecessary divisions of interest

• - serves to generate workplace conflict rather than resolve it

PLURALIST APPROACH

Regards conflict as inevitable because employers and employees have conflicting interests.

• Trade unions are seen as legitimate representatives of employee interests.

• Sees stability in industrial relations as the product of concessions and compromises between management and unions.

Assumptions about workplace relations

• - managers and employees have different objectives

• - multiple sources of legitimate authority

Assumptions about workplace conflict

• - inevitable, caused by different opinions and values, benefit to an organization

• - avoid by accepting trade unions, include in decision-making

Assumptions about the workplace role of trade unions

• - not the cause of conflict

• - are expression of diverse workplace interests that always exist

• - a legitimate part of workplace relations

Assumptions about the role of collective bargaining

• - deals with problems on a collective basis

• - most efficient means for institutionalising employment rules

• - fairer outcomes by balancing employee and management power

RADICALOR MARXIST APPROACH

• Marxists, like the pluralists, regard conflict between management and employees as inevitable.

• Sees industrial conflict as an aspect of class conflict.

• The solution to worker alienation and exploitation is the overthrow of the capitalist system.

Assumptions about workplace relations

• - reflects a wider class conflict between capital and labour

• - reflects coercion of working class into dominant capitalist values

Assumptions about workplace conflict

• - inevitable: capital seeks to reduce costs, workers seek fairer price for labour

• - will only cease by revolutionary change in distribution of property and wealth

Assumptions about trade unions

• - should raise revolutionary consciousness of workers

• - should not limit action to improving material lot of workers

• - union leaders who accommodate management betray the workers

Assumptions about collective bargaining

• - merely offers temporary accommodations

• - leaves important managerial powers in tact

Dunlop's Contribution to Industrial Relations

Dunlop's Model One of the significant theories of industrial labor relations was put forth by John Dunlop in the 1950s. According to Dunlop industrial relations system consists of three agents – management organizations, workers and formal/informal ways they are organized and government agencies. These actors and their organizations are located within an environment – defined in terms of technology, labor and product markets, and the distribution of power in wider society as it impacts upon individuals and workplace. Within this environment, actors interact with each other, negotiate and use economic/political power in process of determining rules that constitute the output of the industrial relations system. He proposed that three parties - employers, labor unions, and government-- are the key actors in a modern industrial relations system. He also argued that none of these institutions could act in an autonomous or independent fashion. Instead they were shaped, at least to some extent, by their market, technological and political contexts.

Thus it can be said that industrial relations is a social sub system subject to three environmental constraints- the markets, distribution of power in society and technology.

Dunlop's model identifies three key factors to be considered in conducting an analysis of the management-labor relationship:

Environmental or external economic, technological, political, legal and social forces that impact employment relationships.
Characteristics and interaction of the key actors in the employment relationship: labor, management, and government.
Rules that are derived from these interactions that govern the employment relationship.

Dunlop emphasizes the core idea of systems by saying that the arrangements in the field of industrial relations may be regarded as a system in the sense that each of them more or less intimately affects each of the others so that they constitute a group of arrangements for dealing with certain matters and are collectively responsible for certain results”. In effect - Industrial relations is the system which produces the rules of the workplace. Such rules are the product of interaction between three key “actors” – workers/unions, employers and associated organizations and government The Dunlop’s model gives great significance to external or environmental forces. In other words, management, labor, and the government possess a shared ideology that defines their roles within the relationship and provides stability to the system.

Q3. What is meant by discipline? Discuss the Approaches, Principles and Procedure for discipline.

“Too often discipline is thought of only in the negative sense. In reality, positive discipline is more effective and plays a larger role in business.” Discuss the statement and point out the approaches principles to be borne in mind while taking the disciplinary action.

Ans. Discipline is very essential for a healthy industrial atmosphere and the achievement of organizational goals. An acceptable performance from subordinates in an organization depends upon their willingness to carry out instructions and the orders of their superiors, to abide by the rules of conduct and maintain satisfactory standards of work.

The term ‘discipline’ can be interpreted. It connotes a state of order in an organization. It also means compliance with the proper appreciation of the hierarchical superiorsubordinate relationship. The concept of discipline emerges in a work situation from the interaction of manager and workers in an organization. Formal and informal rules and regulations govern the relationship between a manager and workers, the formal rules and regulations are codified in the company’s manual or standing order. Informal rules, on the other hand, are evolved from convention and culture in the organization.

Webster’s dictionary has defined discipline as “first, it is the training that corrects, mould, strengthen or perfect individual behaviour. Second, it is control gained by enforcing obedience, and third it is punishment or chastisement.”

According to Bremblett, “discipline does not mean a strict and technical observance of rigid rules and regulations. It simply means working, co-operating and behaving in a normal and orderly way, as any responsible person would expect an employee to do.”

In other words, it may be noted that discipline is employee self control which prompts him to willing cooperate with the organizational standards, rules, objectives, etc. It is essentially an attitude of the mind, a product of culture and environment and requires, along with legislative sanction, persuasion on a moral plane.

There are two basic concept of discipline; one of them being negative while the other is a positive aspect of discipline. The negative approach to discipline is traditional concept and is identified with ensuring that subordinates adhere strictly to the rules, and punishment is meted out in the event of indiscipline. In other word, for the violation of rules strict penalties are levied and the fear of punishment works as a deterrent in the mind of the employee.

Approaches, Principles and Procedure for Disciplinary Action

Approaches

Basically, there are five approaches regarding to manage indiscipline or misconduct. All these approaches briefly explain here.

1. Judicial Approach: It is commonly followed in India. The present day manager has to handle a variety of disciplinary issues. His right to hire and dismiss is curbed to a great extent, especially where unionized employees are concerned. The complexity is increasing in this arbitrary managerial function due to intervention by the government, by providing legislation for governing terms of employment. In order to secure security of jobs, the govt. has tried to ensure protection to industrial labour from likely misuse of managerial power to hire and fire.

2. The Human Relation Approach: It calls for treating an employee as a human being and considers the totality of his personality and behaviour while correcting faults that contribute to indiscipline. His total personality is considered, as is his interaction with his colleagues, his family background, etc. and then appropriate punishment for misconduct is awarded.

3. The Human Resources Approach: The approach calls for treating every employee as a resource and an asset to the organization before punishing the workers, the cause for indiscipline has to be ascertained. An analysis of the cause is made, to find out whether indiscipline is due to the failure of his training and motivating system or the individual’s own failure to meet the requirements, and accordingly corrections are made.

4. The Group Discipline Approach: The management in this approach sets and conveys well established norms and tries to involve the groups of employees. The group as a whole control Indiscipline and awards appropriate punishments. The trade union may also act as a disciplinary agency.

5. The leadership Approach: In this case, every supervisor or manager has to guide, control, train, develop, lead a group and administer the rules for discipline.

Principles for Disciplinary Action

Despite, best efforts, acts of indiscipline occur and it becomes necessary to take a disciplinary action. While taking disciplinary action the following principles must be considered.

1. Principles of natural justice: This principle must guide all enquires and actions. This means that no person should be appointed to conducting an enquiry who himself is interested in the outcome –either as an aggrieved party or because he is hostile to the person proceeded against, or for any other reason.

2. Principles of impartiality or consistency: There should be no marked difference in the action taken under identical situations where all the factors associated to situations are alike.

3. Principle of impersonality: The disciplinary authority should not encourage a person who is failing to fulfill his duty. He should be impartial to everyone.

4. Principle of reasonable opportunity to the offender to defend himself. Article 311 of the constitution of India says: No “person employed by the union or a state govt. shall be dismissed or remove until he has been given a reasonable opportunity showing cause against the action proposed to be taken in regard to him.”

Procedure for Disciplinary Action

The procedure for taking disciplinary action involves the following steps:

1. Preliminary Investigation: First of all a preliminary enquiry should be held to find out the misconduct behaviour or situation.

2. Issue of a charge sheet: Once a misconduct or indiscipline is identified, the authority should proceed to issue of charge sheet to the employee. Charge sheet is merely a notice of the charge and provides the employee an opportunity to explain his conduct. Therefore, charge sheet generally called as show cause notice. In the charge sheet each charge should be clearly defined and specified.

3. Suspension Pending Enquiry: In case the charge is grave a suspension order may be given to the employee along with the charge sheet. According to the industrial employment (Standing orders) Act, 1946, the suspended worker is to be paid a subsistence allowance equal to one-half of the wages for the first 90 days of suspensions and three fourths of the wages for the remaining period of suspension if the delay in the completion of disciplinary proceedings are not due to the workers conduct.

4. Notice of Enquiry: In case the worker admits the charge, in his reply to the charge sheet, without any qualification, the employer can go ahead in awarding the punishment without further enquiry. But if the worker does not admit the charge and the charge merits major penalty, the employer must hold enquiry to investigate into the charge. Proper and sufficient advance notice should be given to the worker of the enquiry.

5. Conduct of Inquiry: The inquiry should be conducted by an impartial and responsible officer. He should proceed in a proper manner and examine witnesses. Fair opportunity should be given to the worker to cross-examine the management witnesses.

6. Recording the findings: The enquiry officer must record all the conclusion and findings. As far as possible he should refrain from recommending punishment and leave it to the decision of the appropriate authority.

7. Awarding Punishment: The management should decide the punishment on the basis of finding of an enquiry, past record of worker and gravity of the misconduct.

8. Communicating Punishment: The punishment awarded to the worker should be communicated to him quickly. The letter of communication should contain reference to the charge sheet, the enquiry and the findings. The date from which the punishment is to be effective should also be mentioned.

Q4. Define grievance. Why do grievances arise? Describe the grievance redressal machinery.

Ans. Grievance Defined

The term “grievance” has been defined by different researchers in different ways. Mondy and Noe defined grievance as “employees dissatisfaction or feeling of personal injustice relating to his or her employment.”

Jucius defines grievance as “any discontent or dissatisfaction, whether expressed or not and whether valid or not, arising out anything connected with the company which an employee thinks, believes, or even feels, is unfair, unjust or inequitable”. Thus above definitions describes grievance as any dissatisfaction of an employee which is based on his or her perception about the situation with in an organization.

Causes of Grievance

There are several causes, which leads to employee grievance in an organization.

Management Practices

1. The behaviour of supervisor, peer’s group can cause grievance.

2. The improper division of work among employees lead to employee grievance.

3. The negligence of one’s efforts towards the organization.

4. The autocratic organizational environment can cause grievance.

5. The implementation of personnel policies is not intended policies, it well lead to grievance.

6. If task objective is not clearly defined to employee, then also the employee get frustrated and ultimately grievance arises.

7. Matters such as employee compensation, seniority, overtime and assignment of personnel to shifts are illustrations of ambiguities leading to grievance.

8. Poor communication between management and employees is another cause of grievance.

Union Practices

In firms where there are multiplicities of unions, many of whom may have political affiliation, there is constant jostling and lobbying for numerical strength and support. Where unions are not formed on the basis of specialized craft but are general unions, the pressure to survive is great and, hence there is a need to gain the support of workers. Under such circumstances the grievance machinery could be an important vehicle for them to show their undeniable concern for workers welfare.

The fact that a union can provide a voice for their grievance is an important factor in motivating employees to join a union. Realizing that members expect action and only active unions can generate membership, unions some time incline to encourage the filing of grievance in order to demonstrate the advantage of union membership. It makes union popular that it is the force to solve out the grievance with the management.

Individual Personality Trait

Sometimes mental tension, caused perhaps by ill health also contributes to grievance. Some are basically predisposed to grumble and find fault with every little matter, seeing and looking out only for faults. On the other hand, there are employees who are willing to overlook minor issues and discomforts and get on with the job. A study by Sulkin and Pranis reveals that poor performer tend to use grievance procedure more often than employees who are high performance the union activists, highly educated workers, workers with a high incidence of absenteeism, and worker in lower job classification tend to file more grievances than other employees.

Management of grievance, steps for managing grievances

Management of Grievance

It has been widely recognized that there should be appropriate procedure through which the grievance of workers may be submitted and settled. The main aim to solve out grievance with fairness and justice, so that workers dissatisfaction about various aspects can be properly examined and solved out. For this grievance resolution machinery is an urgent need to manage. Grievance resolution machinery permits employee to express complaints without affecting their job, and encourages and facilitates the settlement of misunderstanding between management and labour. The existence of grievance resolution machinery builds confidence in employees to express their discontent, enhance their morale, and satisfy them and also protects them from the injustice, proper and effective communication between management and workers facilitates review and correction. Thus, presence of grievance machinery explains the organizational health, projects the shop floor cultures and shows leadership quality.

Steps for Managing grievances

Flippo describes five steps for managing a grievance. These are following as:

1. Receiving and defining the nature of dissatisfaction

The supervisor should receive the grievance in a way which it self is satisfying to the individual. It involves his leadership style. It has been that employee-centered supervisors cause fewer grievances than production – centered supervisors.

2. Getting the facts

Efforts should be made to separate facts from the opinions and impressions. Facts can be obtained easily if proper records are maintained by supervisors regarding specific grievances and individual attendance, rating and suggestions.

3 Analyzing the facts and reaching an decision

The supervisor must analyze the facts carefully to reach a specific decision, so that grievance can be solved out fruitfully.

4 Applying the answer

The supervisor has to effectively communicate the decisions to the individuals even if they are adverse in nature. The answer to the aggrieved individuals must be based on legitimate ground.

5. Follow-up

The following of the grievance should be made to determine as to whether or not clash of interest has been resolved. In situation where follow- up indicates that the case is not resolved satisfactorily, the former four steps should be repeated.

The frequent errors in processing of grievance break the whole process. The management should attempt to avoid these errors. Indeed, effective handling of grievance facilitates the integration of interests.

In large undertakings, a common type of grievance procedure involves successive steps at different levels, a workers grievance being first discussed with the immediate supervisor and then, if no solution is found, with higher levels of management. The number of levels and steps in the procedure usually increases with the size of undertakings. Sometime, when an important question of principle, which would involve a number of workers, is concerned, the matter may go directly to higher level of management. Under some procedures, bipartite or joint grievance committees within the undertaking hear grievances after they have been considered at lower levels at a number of earlier stages in the procedure. A settlement reached jointly by workers and management representatives at any level is generally regarded as final and binding on both the parties. A grievance is also deemed to be settled if an appeal is not lodged at the next highest level within a given time.

The Grievance Procedure under Code

Grievance Machinery

Grievance machinery will be required to set up in each under takings to administer the grievance procedure. For the purpose of constituting a fresh grievance machinery, workers in each department (and where a department is too small, in a group of departments) and each shift, shall elect, from amongst themselves and for a period of not less than one year at a time, departmental representatives and forward the list of persons so selected to the management. Where the union in the undertaking is in a position to submit an agreed list of names, recourse to election may not be necessary. Similar is the case, where work committees are functioning satisfactorily, since the work committee member of a particular constituency shall act as the departmental representative correspondingly, the management shall designate the persons for each department who shall be approached at the first stage and the departmental heads for handling grievances at the second stage. In the case of appeals against discharges or dismissal, the management shall designate the authority to whom appeals could be made.

Grievance Procedure

While adaptations have to be made to meet special circumstances such as those obtaining in the Defense Undertaking, Railways, Plantations and also small undertakings employing few workmen, the procedure normally envisaged in the handling of grievances should be as follows:

1. Aggrieved employee shall first present his grievance verbally in person to the officers designated by management for this purpose. An answer shall be given within 48 hours of the presentation of complaint.

2. If the worker is not satisfied with the designated officer, he shall, either in person or accompanied by his departmental representatives, present his grievance to the head of the department designated by management for this purpose. The time allotted to reply within 3 days. If the action cannot be taken with in that period, the reason for this delay should be recorded.

3. If the decision by departmental head is unsatisfactory, then the grievant may request the forwarding of his grievance to the grievance committee which shall make its recommendations to the managers within 7 days of the workers request. The management shall implement unanimous recommendations of the Grievance Committee.

4. In case of different opinions of the members of Grievance Committee, the whole episode shall be transferred to the manager for final decision. In either case time limit for management to accept and communicate its decision in 3 days.

5. If the decision is not in time and not satisfactory, the grievant has right to appeal for a revision. And management shall communicate their decision within a week of workmen’s revision petition.

6. If no agreement is still possible, the union and the management may refer the grievance to voluntary arbitration within a week of receipt by the worker of management decision.

7. Where a worker has taken up a grievance for redressal under this procedure the formal conciliation machinery shall not intervene till final step.

8. If a grievance arises out of an order given by management, the side order shall be complied with before the women concerned invoke the procedure laid down for redressal of grievance. If, however, there is time lag between the issue of order nevertheless must be complied with in the due date, even if all the steps in the grievance procedure have not been exhausted.

9. Worker’s representatives on the grievance committee shall have the right of access to any document connected with the inquiry mentioned in the department. On the other hand, management representative shall have right to refuse to show any document which they consider to be of a confidential nature.

10. In case of any grievance arising out of discharge or dismissal of a workman, the above mentioned procedure shall not apply. Instead, a discharged worker shall have right to appeal either to the dismissing authority or to a senior authority who shall be specified by the management within a week from the date of discharge.

Q5. Write a short note on :

(a) Hot-stove Rule (b) Code of Discipline (c) Causes of Indiscipline and Misconduct

Ans. (a) RED-HOT STOVE RULE

Douglas McGregor has suggested this rule to guide managers in enforcing discipline. The rule is based on an analogy between touching a ‘redhot stove’ and violating rules of discipline. When a person touches a hot-stove,

1. The burn is immediate

2. He had warning that he knew that he would get burn if he touched it.

3. The effect is consistent everybody who touches red-hot stove would be burned.

4. The effect is impersonal. A person is burned because he touches the hot stove not because of who he is.

5. The effect is commensurate with the gravity of misconduct. A person who repeatedly touches the hot stove is burnt more than one who touched it only once.

The same should be with discipline. The disciplinary process should begin immediately after the violation of rules/regulations is noticed. It must give a clear warning that so many penalties would be imposed for a given offence.

(b) Code of Discipline

Code of discipline forms the Gandhian approach to industrial relations to bind employees and trade unions to a moral agreement for promoting peace and harmony. It was an outcome of the efforts of Guljari Lal Nanda, the then Union Labour Minister in 1957 to 1958. G.L. Nanda was the true Gandhian. It was at his instance that code was formulated. It was formally adopted at the 16th session of the Indian labour conference (1958). National representatives of both employers and trade unions were parties to it. This code was a unique formulation to voluntarily regulate labour management relations.

The main features of this code are:

1. Both employer and employees should recognise the rights and responsibilities of each other and should willingly discharge their respective obligations.

2. There should be no strike or lockout without proper notice and efforts should be made to settle all disputes through existing machinery.

3. A mutual agreed grievance procedure will be setup and both the parties will abide by it without taking arbitrary

4. Both employers and trade unions will educate their member regarding their mutual obligations.

5. Management will not increase workloads without prior agreement or settlement with the workers.

6. Employer will take prompt for the settlement of grievances and for the implementation of all awards and agreements.

7. Management will take immediate action against all officers found guilty of provoking indiscipline among workers

8. Union will avoid demonstrations, rowdyism all form of physical duress and workers will not indulge in union activity during working hours.

9. Union will discourage negligence of duty, damage to property, careless operation, insubordination and other unfair labour practices on the part of workers.

Thus, the ‘code of discipline’ consists of three sets of principles, namely (a) obligation to be observed by management, (b) obligations to be observed by trade unions, and (c) principles binding on both the parties.

(c) Causes of Indiscipline

Basically, indiscipline may arise due to poor management, errors of judgment by employees about their union leaders or a lack of understanding of management policy. This problem could also develop when an individual behaves in indisciplinary manner or as an outcome of the management’s ignorance to his grievance. It can occur due to lack of commitment towards the work, by an employee in an organization. Various other factors are also responsible for indiscipline such as: unfair labour practices, victimization by management, wage differentials, wrong work assignment, and defective grievance procedure, payment of very low wages (giving rise to poverty, frustration and indebtedness), poor communication, ineffective leadership, and result in indiscipline. Thus, various socio-economic and cultural factors play a role in creating indiscipline in an organization.

Sign and Symptoms of Misconduct

Every act of indiscipline is called misconduct. The main acts of misconduct are given as:

1. Disobedience or willful insubordination.

2. Theft, fraud or dishonesty in connection with the employers business or property.

3. Wilful damage or loss of employer’s goods or property.

4. Taking or giving bribe or any illegal gratification.

5. Habitual absence without leave or absence without leave for more than ten days.

6. Habitual late attendances.

7. Frequent repetition of any act or omission for which fine may be imposed.

8. Habitual negligence or neglect of work.

9. Habitual breach of any law applicable to the establishments.

10. Disorderly behaviour during working hours at the establishment.

11. Striking of work or inciting others to strike in contravention of the provisions of any law.

These are not exhaustive but illustrative examples of misconduct under the model standing orders, framed as a part of the rules made under this Industrial Employment (Standing Orders) Act, 1946.

Q6. Define the term Trade Union and its features. Describe the various types of the trade unions.

Ans. TRADE UNION

Meaning and Concept

It is a well known fact that in every industrial community there are two distinct classes the employees and the Employers, without whom production at a large scale is not possible. Both these parties usually have contradictory motives, which creates many problems. Over the ages, the teeming millions which constituted a sizeable chunk of industrial society have struggled hard to achieve a greater measure of protection against inhuman treatment meted out to them by employers. They have learned to make themselves secure against ills over which they believed to have little control. In fact individually the labourers can do little to bring about the kind of reforms they believe desirable. They are effective only if they act in united ways. The very idea of joint action, laid down the foundation of the instrument of struggle for security and advancement–“Trade Union”. The Trade Union came into existence as an agent of workers and working class at large. It performed and still performs two functions: one to work for the redistribution of some of the nation’s wealth by raising wages and earning of its members. This enable worker at their own to improve their living standard and in the process become better equipment to deal with unfavourable economic conditions. The second objective of union is more directly related to their security role in esprit of here and now. Through various types of union welfare funds and later through pressure for employer welfare programme and the governmental social security measures, the union aim to obtain greater benefits for its members. In liberalized economic environment the union is looked upon as a facilitator of change.

Definition of trade unions

1. “A trade Union is the continuous association of wage earners for the purpose of maintaining or improving the conditions of their working lives.” (Webb)

2. According to Section 2(h) of Indian Trade Union Act, ”Trade union is an combination whether temporary or permanent formed primarily for the purpose of regulating the relation between workmen & employers workers & workers or between employers & employers or for imposing restrictive conditions or conduct of any trade or business and include any federation of two or more trade unions.”

The Characteristics of trade unions

1. Trade unions have a statement specifying that organization is a trade union.

2. Trade unions have a statement of its principle objectives.

3. Registration with Registrar of Trade Union.

4. Independence from employer, which may be evident from the certificate issued by the Registrar of Trade Union.

5. Affiliation with central trade union organization. All the trade union does not necessarily show these characteristics, yet many of the large trade unions do. General features of trade unions

Coming out of a vast definition of the concept, let us put a light on some features of trade union which are as follows:

1. The trade union is voluntary association: Trade union is not a compulsory association but voluntary association of workers, who may be in one or more industries and occupations.

2. Common interest: There is certain common interest of the member workers. The leader of the trade union is supposed to pursue and protect the economic and other interest of the members which leads to their welfare.

3. Collective action: After thorough discussions in the meeting of trade union the leader of the union takes collective steps to press their demand before the management.

4. Permanent & continuous association: A trade union is a permanent and continuous organization. They persistently pursue their purpose conceive of their purpose as one, which is not merely immediate but continuous and long term as well. They do not expect to attain their purpose in a day because they anticipate and contemplate a continuing stream of additional objectives to be adopted from time to time.

5.Association engaged in securing economic benefits: Trade unions attempts is to secure control of supply of labour in one or more markets and to maintain that control as a mean of fixing the price of labour as well as the conditions under which they works.

6.The origin and growth of trade union have been influenced by a number of ideologies: The socio economic and even political movement have influenced trade union in one or other way

7.Other benefits: Trade union is not only confined to economic benefits, but other benefits such as cultural, political, social and psychological are also within their broader preview.

Types and structure of the trade union.

Ever since the dawn of industrialization there has emerged a wide variety of unions across the globe these unions can be classed under two heads

 The purpose for which unions are formed

 The variation in the composition of their membership

(A) Union classification according to the purpose

Under this head normally two type of union have been kept. 1) Reformist 2) Revolutionary

Reformist unions: Such unions don’t believe in the destruction of economic, social and management structure of the state or concern but want only to modify them and to have favourable response for their members through negotiation and other peaceful manners. The reformist union is subdivided in two parts:

(a) Business unionism: Business unions are those unions that are maintained primarily to represent the workers in collective bargaining with the employers. They are distinct from other reformist which try to bring economic advantage to their members.

(b) Friendly or Uplift unionism: Idealistic in nature and aspires to elevate the moral, intellectual and social life of the workers and advocate idealistic plans for social regeneration. They emphasise such other consideration as education, health, insurance etc.

Revolutionary Unions: Such unions aim at destroying the present structure and replacing it with the new and different institution according to the ideals that are regarded as preferable. The revolutionary unionism generally seeks to destroy capitalist industry to abolish the wage system and substitute it with some other system generally socialist and communist. These unions are further classified in two classes:

a) Anarchist unions: The unions which try to destroy the existing economic system by revolutionary means called anarchist Unions. Such unions exists no more in presently scenario.

b) Political unions: The unions which gain power through political action called political unions. The main function of such unions is to eliminate the power of capital and capitalists, redistributing wealth and giving effective power to workers.

(B) Union classification on the basis of membership structure

The union can also be classified according to variations in the composition of the members. On this basis unions have been classified in four categories:

a) Craft union: It is an organisation of workers employed in a particular craft and trade or in a single or few occupations. Such organizations link together those workers who have similar skills, craft training and specialization, aiming to safeguard their interest. Industrial union: It is an organisation of workers which links all craftsmen and skilled workers in any industry. It is organized upon the industry wise basis rather than the craft wise basis.

b) Staff union: The term staff union is popularly used to both craft and industrial union. It is organized the workers on the basis of craft working in same industry. General union: It is an organisation which covers various industries and labourers having different skills. They have numerical superiority (large membership), for they are open to allclasses of workers and this is the source of their strength.

Q7. What functions a Trade Union performs for their employees?

Describe the role of the Trade Unions.

Ans. Some important reason as to why workers organize themselves to form trade union are as follows:

1) To safeguard their interests: Workers often join trade union in order to have a stronger voice to resist those actions of the management which are against their interest. When employers cut wages or pay low wages; when working conditions are unsafe or too unpleasant; when management. Interfere in worker’s personal lives, workers resist by forming unions. Through the unions they petition management for change and if don’t succeed; they may resort to a concerted works stoppage “a strike”.

2) To participate in union activities: Workers may join unions to obtain certain health or insurance benefits or to participate in educational program or to learn about their own business and occupation. They may also join to engage in social and community activities.

3) To exercise leadership: Some workers join union as an outlet for their own ambitions. They have leadership traits and to explore the power of the trade union to be a leader they joins the trade unions.

4)To get hike in wage rate: One of the important objective behind workers joining a union has been their belief that they would get wages increased and have stronger impact through collective action.

5) To maintain good relation: Another reason of employees joining trade unions may be broader realization on their part that trade unions maintain the employer – employee or labour management relation.

6) To maintain adequate working conditions: Employee may join trade union because of their belief that unions are effective way to secure adequate protection from various hazards and financial security during situation like accident injury, illness, unemployment etc.

7) To get a media of communication: The employees may join the unions because of their feeling that this would enable them to communicate their views, ideas, feeling and frustrations to the management and exercise an effective voice to the management decision on the matter concerning their welfare.

8)To do fair dealing: The employees may join trade union to ensure a just and fair dealing by management and well planned actions. Through collective strength restrain the management from taking any such action which may be irrational or contrary to their interest.

9) To get employment: Sometimes workers join trade union because it is a precondition to their getting employment. This is known as the ‘closed shop’ system and was prevalent in America till 1947.

10) To get strengthen: Since the employee alone as an individual feel specially weak in a world of mass production and mass movement, he prefers to join an organization that may offer him an opportunity to join other for the achievement of those objectives that he consider as socially desirable. “Objectives of Trade Union-same as above discussed points”.

Function of Trade Unions

For the attainment of above objectives trade union performs two types of functions

 Militant functions

 Ministrant or Federal functions

Militant function: One of the main aim of the unions is to secure better conditions of work and employment and more recently, the trade union have an aim to secure some share of productivity gains and participation in the management or even control over industry. When the union fails to accomplish these objectives by the method of negotiations they adopt aggressive methods and put a fight with the management in the form of strike, boycott etc.

Federal function: A trade union is also a federal association or a mutual benefit organization supporting the member out of their own funds during the period of work stoppage due to strike or lockout. It also provides financial assistance to the member during the period when they are unfit for their work because of illness or employment injury or when they are temporary unemployed.

Some another function of the trade unions may be summarized as under:

1) Infra-mural activities:-Such functions of unions lead to the betterment of employment condition of employees such as adequate salary, sanitary etc. by collective bargaining, negotiation etc.

2) Extra-mural activities: -Such activities help the employee to maintain and improve their efficiency such as promote friendly relation, education and culture among members.

3) Political activities: - That may be related to the function of a political labour party or those reflecting an attempt to seek influence on public policy relating to matter connected with the interest of members.

Role of the trade unions

Trade union performs various roles regarding the various classes of the society as follows:

•Role towards the members of union

• Role towards the organization

• Role towards the union

• Role towards the society

1. Role towards the trade union member

The trade union performs following duties regarding their member employees:

a) To safeguard the workers against all sort of exploitation by the employers, by union and by political parties.

b) To protect workers from the unfair labour practices of the management.

c) To ensure healthy, safe and conducive work conditions.

d) To exert pressure for the enhancement of reward associated with the work only after making a realistic assessment of its practical implication.

e) To ensure a desirable standard of living by providing various type of services such as health, housing, education, recreational, cooperative etc.

f) To guarantee a fair deal and social justice to workers.

g) To remove the dissatisfaction and redress the day-to-day grievances and complaints of workers.

h) To encourage the worker’s participation in the management of organization.

i) To make the workers aware about their rights and duties.

j) To settle the disputes through negotiation, joint consultation and voluntary arbitration and through adjudication.

2. Role toward the Industrial organization

Trade unions perform following functions for the industrial organization in which they are working:

a) To highlight the organization as a joint enterprise between workers and management and to promote identity of interest.

b) To increase production quantitatively as well as qualitatively, by laying down the norms of production and ensuring their adequate observance.

c) To help in maintenance of discipline.

d) To help in removal of dissatisfaction and redressal of day-to-day complaints and grievances and ensure workers loyalty.

e) To create opportunity for worker’s participation in management and strengthen the co-operation.

f) To promote harmonic relationship between workers and management by setting disputes through negotiation, joint consultation and avoiding litigation.

g) To create favourable opinion of the management towards trade union and improve their status in industrial organization.

h) To exert pressure on the employers to enforce legislative provision beneficial to workers, to share the profit equitably and keep away from various type of unfair labour practice.

i) To facilitate communication with management.

j) To impress upon the management the need to adopt reformative and not punitive approach towards worker’s fault.

3. Role toward the trade union organization

a) To improve financial position of the concern by fixing higher subscription, by realizing the union dues and by organizing special fund raising campaigns.

b) To preserve and strengthen trade union democracy.

c) To train members to assume leadership position.

d) To improve workers network of communication between union and its members.

e) To promote harmonic relationship between different unions to create a unified trade union movement.

f) To resolve the problem of factionalism and promote unity within the union.

g) To prepare and maintain the necessary records.

h) To manage the trade union organization on scientific lines.

i) To publicise the trade union objectives and functions, to know people’s reaction toward them and make necessary modification.

4. Role toward society

a) To render all sort of constructive co-operation in the formulation and implementation of plans and policies relating to national development.

b) To actively participate in the development of the programs of national development such as family planning, forestation, national integration etc.

c) To launch special campaigns against the social evils of corruption, casteism etc.

d) To enable unorganized sector to organize itself.

e) To create public opinion favourable to government’s policies and plans and to mobilise people’s participation for their effective implementation.

f) To create public opinion favourable to trade unions thereby raising their social and public image.

g) To exert pressure, after realistically ascertaining its practical implication on the government to enact legislation conducive to the development of trade unions and their members.

Q8. Define Collective Bargaining? Write a note on its features and process in detail?

Ans. According to Harbinson, collective bargaining is “a process of accommodation between two institutions which have both common and conflicting interests.”

In the National labour Relations Act of the United States, collective bargaining finds a place. The Act, in section 8(d), defines collective bargaining as “the performance of the mutual obligation of the employer and representative of the employees to meet at a reasonable time and confer in good faith with respect to wages, hours and other terms and condition of employment, or the negotiation of an agreement, or any question arising there under, and the execution of the written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making a concession.”

Features of Collective Bargaining Randle observes:

“A tree is known by its fruit. Collective bargaining may best be known by its characteristics.” The main characteristics of collective bargaining are:

1. It is a group action as opposed to individual action and is initiated through the representatives of workers. On the management side are its delegates at the bargaining table; on the side of workers is their trade union, which may represent local plant, the industry membership or nation-wide membership.

2. It is flexible and mobile, and not fixed or static. It has fluidity and ample scope for a compromise, for a mutual give-and-take before the final agreement is reached or the final settlement is arrived at.

3. It is a bipartite process. The employers and the employees are the only parties involved in the bargaining process. There is no third party intervention. The conditions of employment are regulated by those directly concerned.

4. It is a continuous process which provides a mechanism for continuing and organised relationships between management and trade unions. “The heart of collective bargaining isthe process for a continuing joint consideration and adjustment of plant problems.”

5. It is industrial democracy at work. Industrial democracy is the governance of labour with the consent of the governed workers. The principle of arbitrary unilateralism has given way to that of self government in industry. Collective bargaining is not a mere signing of an agreement granting seniority, vacations and wage increases. It is not a mere sitting around a table, discussing grievances. Basically, it is democratic: it is a joint formulation of company policy on all matters which directly affect the workers.

6. Collective bargaining is not competitive process but is essentially a complementary process, i.e. each party needs something that the other party has, namely, labour can make a greater productive effort and management has the capacity to pay for the effort and to organize and guide it for achieving its objectives.

In the words of Davey: “Collective bargaining is a complex process. It involves psychology, politics and power of the work group. It frequently involves a contest between sovereign institutional entities whose survival requirements are, in some instances related and in other instances, independent of, or in conflict with, one another.”

Process of Collective Bargaining : Collective bargaining has two faces:

a) The negotiation state; and

b) The stage of contract administration.

The process of collective bargaining involves six major steps

1. Preparing for negotiations

2. Identifying bargaining issues.

3. Negotiating

4. Settlement and contract agreement

5. Administration of the agreement.

One bargaining environment is the type of bargaining structure that exists between the union and the company. The four major types of structures are:

(i) One company dealing with a single union,

(ii) Several companies dealing with single union,

(iii) Several unions dealing with a single company, and

(iv) Several companies dealing with several unions. The bargaining process is comparatively simple and easy if the structure is of first type and becomes difficult and complicated in the remaining.

Negotiation Stage: At the negotiation stage, certain proposals are put forward which explore the possibility of their acceptance and have the way to mutually agreed terms after careful deliberation and consideration. The negotiation stage itself involves three steps namely preparation for negotiation, identifying bargaining issues and negotiating.

1. Preparation for negotiation

Careful advance preparations by employers and employees are necessary because of the complexity of the issue and the broad range of topic to be discussed during negotiations. Effective bargaining means preparing an orderly and factual case to each side. Today, this requires much more skill and sophistication than it did in earlier days, when shouting and expression of strong emotions in smoke filled rooms were frequently the keys to getting one’s proposals accepted.

From the management side the negotiations are required to:

i. Prepare specific proposal for changes in the contract language.

ii. Determine the general size of the economic package the company proposes to offer.

iii. Prepare statistical displays and supportive date for use in negotiations, and

iv. Prepare a bargaining book for company negotiations, a compilation of information on issues that will be discussed, giving an analysis on the effect of each case, its use in other companies, and other facts.

From the employee’s side,the union should collect information in at least three areas:

• The financial position of the company and its ability to pay.

• The attitude of the management towards various issues in past negotiation or inferred from negotiations in similar companies.

• The attitudes and desires of the employees. The other arrangements to be made are selecting the negotiators from both sides and identifying a suitable site for negotiation.

2. Identifying Bargaining Issues: The major issues discussed in collective bargaining fall under the following four categories:

a. Wage related issues: This includes such topics as how basic wage rates are determined, cost of living adjustments, wage differentials, overtime rates, wage adjustments and the like.

b. Supplementary economic benefits: These include such issues as pension plans, paid vacations, paid holidays, health insurance plans, retrenchment pay, Unemployment pension, and the like.

c. Institutional issues: These consist of the rights and duties of employers, employees, unions, employee’s stock ownership schemes, and the like.

d. Administrative issues: These include such issues as seniority, employee discipline and discharge procedures, employee health and safety, technological changes, work rules, job security, and the like. While the last two categories contain important issues, the wage and benefit issues are the ones which receive the greatest amount of attention at the bargaining table.

3. Negotiating: Preparations have been made and issues being identified, the next logical step in collective bargaining process is negotiation. The negotiating phase begins with each side presenting its initial demands. The negotiation goes on for days until the final agreement is reached. But before the agreement is reached, it is a battle of wits, playing on words, and threats of strikes and lockouts. It is a big relief to everybody when the management representatives and the union finally sign the agreement. The success of negotiation depends on skills and abilities of the negotiators. At times, negotiations may breakdown even through both the labour and the management may sincerely want to arrive at an amicable settlement. In order to get negotiations moving again, there are several measures that are usually adopted by both the parties, which sometimes even includes unethical measures:

a. Through third party intervention such as arbitration and adjudication,

b. Unions tactics likes strikes and boycotts, and

c. Management strategies such as lockouts, splitting the union, bribing union leaders and using political influence.

(B) Contract Administration

When the process of negotiation has been completed, it is time to sign the contract, the terms of which must be sincerely observed by both the parties. The progress in collective bargaining is not measured by the more signing of an agreement rather; it is measured by the fundamental human relationships agreement. Once an agreement is signed, both the trade union and the management are required to honour it in letter and spirit. The union officers and company executives should explain the terms and implications of the contract to employees and supervisors with a view to ensuring that the day to day working relationship between workers and management is guided by that contract. It is important that contract must be clear and precise. Any ambiguity leads to grievances or other problems. The whole process of contract administration is identified by two steps, namely settlement and contract agreement i.e. settlement of disputes by collective bargaining and find a solution as an contract agreement between union and management and administration of agreement i.e. implementation according to the letter and spirit of the provisions of the agreement.

Q9.What are the various forms of Workers participation in Management decision making? What important measures that government has initiated for WPM.

Ans. Workers’ Participation in Management

The International Institute for Labour Studies defined WPM as “the participation resulting from practices which increase the scope for employee’s share of influence in decision making at different tiers of organizational hierarchy with concomitant assumption of responsibility”.

Forms of Employee Involvement and Participation

Worker participation is a situation where workers are involved in some way with decision-making in a business organization. Worker participation can take many forms. There might be a Consultative Council in the Company, where trade unions and management meet regularly to discuss points of mutual interest. Workers can be organized in quality circles and meet regularly in small groups to discuss ways in which their work could be better organized. Marchington (1995) has identified five forms of employee involvement and participation:

1. Downward communications: Downward communications (team briefing and meetings) take place from managers to employees in order to inform and ‘educate’ staff so that they accept management plans.

2. Upward problem solving: Upward problem solving is designed to tap into employee knowledge and opinion, either at an individual level or in small groups. The aims are to increase the stock of ideas in an organization, to encourage cooperative relationship at work, and to legitimize change. Attitude surveys, quality circles, suggestion schemes and, total quality management/customer care committees come into this category.

3. Task participation: Task participation and job redesign processes engage employees in extending the range and type of tasks they undertake. Approaches to job design, such as horizontal job redesign (extending the range of tasks undertaken at the same level) job enrichment, vertical role integration (taking greater responsibility for supervisory duties) and team working (where the team organizes its own work so that it becomes ‘self managed’) may be used.

4. Consultation and representative participation: Consultation and representative participation enables employees take part through their representatives in management decision-making. One of the aims of management in encouraging this form of participation is to use it as a safety valve - an alternative to formal disputes - by means of which more deep-seated employee grievances can be addressed. Joint Consultative Committees and the appointment of worker directors falls into this category.

5. Financial involvement/participation: Financial involvement or participation takes the form of such schemes as profit sharing and employee share ownership. Some companies also use gain sharing as a means of involvement. The general purpose of Financial Participation is to enhance employee commitment to the organization by linking the performance of the firm to that of employee. Employee is more likely to be positively motivated as he or she has a financial stake in the company by having a share of profit or by being a shareholder.

a. Co-ownership: In this scheme, the workers are involved in management by making them shareholders of the Company. Thus, workers share the capital as well as profit. This may be done by inducing them to buy equity shares. The management may promote the scheme by allowing the worker to make payment in installments. It may also advance loans or even give financial assistance to such workers to enable them to buy equity share. Workers may also be allowed to leave their bonus with the Company as shares (bonus shares). Participation through ownership has the distinct advantage of making the worker committed to the job and to the organization. It also offers recognition of the claim of the dignity of labour as the worker is viewed as partner in the business. This would, in turn, create a sense of belongingness among workers and stimulate them to contribute their best for the continued progress of the Company.

b. Productivity Bargaining: In this scheme workers’ wage & benefits are linked to productivity. Information on Company performance is provided to employees as part of the scheme and they are encouraged to discuss with their managers or team leaders the reasons for success or failure and methods of improving performance. A standard productivity index is finalized through negotiations initially. Workers do not have to perform at exceptionally high levels to beat the index. If they are able to exceed the standard productivity norms, they will get substantial benefits. The aim of such schemes is to educate employees and gain their commitment. Without such agreement, workers may not realize the importance of raising productivity for organizational survival and growth.

c. Gain sharing: A form of contingent compensation where owners and employees share in productivity gains, as an incentive for improvement. Gains are determined by agreed-upon measures of organizational performance. Gain sharing typically provides for a long term distribution to manufacturing or similar units of a set percentage of the costs saved through the often substantial revamping of production processes. Gain sharing programs encourage teams within a firm to solve fundamental problems within their specific area of expertise.

Important Govt. Measures for WPM

1. Works Committees

The Industrial Disputes Act, 1947, provides for the setting up of bipartite Works Committees as a scheme of workers participation in management, which consists of representatives of employers and employees. The Act provides for these bodies in every undertaking employing100 or more workmen. The aim of setting up of these bodies is to promote measures for maintaining harmoniums relations in the work place and to sort out differences of opinion in respect of matters of common interest to employers and employee. The Bombay Industrial Relations Act, 1946, also provides for these bodies, but under the provisions of this Act they can be set up only in units that have a recognised union and they are called Joint Committees. The workers directly elect their representatives where there is a union.

Functions

The Works Committees /Joint Committees are consultative bodies. Their functions include:

1. Discussion of conditions of work like lighting, ventilation, temperature, sanitation, etc.,

2. Discussion of amenities like water supply for drinking purposes, provision of canteens, medical services, safe working conditions, administration of welfare funds, educational and recreational activities.

3. Encouragement of thrift and savings.

4. it promote measures for securing and preserving amity and good relations between the employers and workmen and to comment upon matters of their common interest or concern and endeavour to reconcile any material difference of opinion in respect of such matters.

Structure

The Works Committees have, as office bearers, a President, a Vice- President, a Secretary and a Joint Secretary. The President is a nominee of the employer and the Vice-President is the workers’ representative. The tenure of these bodies is two years. The total strength of these bodies should not exceed 20. The employees’ representatives have to be chosen by the employees.

2. Joint Management Councils/Committee(JMCs)

The Second Five-year Plan recommended the setting up of Joint Councils of Management consisting of representatives of workers and management. The Government of India deputed a study group (1957) to study the schemes of workers’ participation in management in countries like UK, France, Belgium and Yugoslavia. The Indian Labour Conference (ILC) considered the report of the study group in its 15th session in 1957 and it made certain recommendations:

(i) Workers’ participation in management schemes should be set up in selected undertakings on a voluntary basis.

(ii) A sub-committee consisting of representatives of employers, workers and government should be set up for considering the details of workers’ participation in management schemes. This committee should select the undertakings where workers’ participation in management schemes would be introduced on an experimental basis.

Objectives

The objectives of JMCs are as follows:

(i) To increase the association of employers and employee there by promoting cordial industrial relations;

(ii) To improve the operational efficiency of the workers;

(iii) To provide welfare facilities to them;

(iv) To educate workers so that they are well prepared to participate in these schemes; and

(v) To satisfy the psychological needs of workers.

A tripartite sub-committee was set up as per the recommendations of Indian Labour Conference, which laid down certain criteria for selection of enterprises where the JMCs could be introduced. They are:

(i) The unit must have 500 or more employees;

(ii) It should have a fair record of industrial relations;

(iii) It should have a well organise trade union;

(iv) The management and the workers should agree to establish JMCs;

(v) Employers (in case of private sector) should be members of the leading Employers’ Organisation; and

(vi) Trade unions should be affiliated to one of the central federations.

It was observed by the sub-committee that if the workers and employers mutually agree they could set up JMCs even if these conditions are not met. The sub-committee also made recommendations regarding their composition, procedure for nominating workers representatives, the membership of JMCs etc. The details of these aspects have to be worked out by the parties themselves. A draft model was drawn up regarding the establishment of JMCs. This sub-committee was later reconstituted as the “Committee on Labour-Management Co-operation” to advise on all matters pertaining to the scheme.

3. Shop and Join Councils

The 1975 scheme has come into existence after the emergency was declared in June 1975. It had envisaged the setting up of Shop Councils at the shop/ departmental level and Joint Councils at the enterprise level. These were to be introduced in manufacturing and mining units employing 500 or more workers – whether in public, private or cooperative sector. The actual number of Shop Councils in an enterprise was to be decided by the employer after consultations with the recognised union/ workers. The chosen workers’ representatives must be actually working in the shop or department concerned .The Chairman of the council will be elected by management and the Vice-Chairman by the workers’ representatives.

The Council shall function for 2 years and will meet regularly to discuss matters relating to safety, discipline, physical working conditions, welfare measures, productivity norms and targets, absenteeism, flow of communication etc. The Joint Council, having tenure of two years, shall be constituted for the whole enterprise consisting of representatives of both the management and the labour. The chief executive shall be the Chairman of the council and the representatives of workers shall nominate the Vice-President. The Council will meet once in a quarter to discuss matters which remain unsolved by shop councils including: schedules of working hours, holidays, optimum use of materials, productivity standards, training facilities to develop skills of workers, awards to workers for creative suggestions, general health, safety and welfare of workers, etc.

Apart from manufacturing and mining units, commercial and service organisations (such as railways, hospitals, P&T, state electricity boards) were also covered in the 1977 scheme. Both the schemes evoked considerable interest and were introduced with a lot of enthusiasm, covering a wide spectrum of public and private sector units. However, after the emergency was lifted, most of the councils became defunct. Several operational problems surfaced from time to time, including:

(a) Inadequate sharing of information,

(b) Absence of a participative culture,

(d) Lack of interest on the part of workers,

(e) Failure to clarify the norms for the nominations of representatives,

(f) Absence of a single union interested in a bipartite consultative process etc.

Q10. Write an introductory note on the History and the need of studying Labour Laws in India?

Ans. 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, unfair dismissals, 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.

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 Organisation (ILO) was one of the first organisations 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.

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.

Purpose/ Need 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.

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.

Q11. What are the objectives of Payment of Wages Act, 1936? Who has the responsibility for fixing wages and what Deductions and Penalties on wages can be imposed under this act.

Ans. The Payment of Wages Act, 1936

OBJECT OF THE ACT
The Payment of Wages Act regulates the payment of wages to certain classes of persons employed in industry and its importance cannot be under-estimated. The Act guarantees payment of wages on time and without any deductions except those authorised under the Act. The Act provides for the responsibility for payment of wages, fixation of wage period, time and mode of payment of wages, permissible deduction as also casts upon the employer a duty to seek the approval of the Government for the acts and permission for which fines may be imposed by him and also sealing of the fines, and also for a machinery to hear and decide complaints regarding the deduction from wages or in delay in payment of wages, penalty for malicious and vexatious claims. The Act does not apply to persons whose wage is Rs. 10,000 or more per month. The Act also provides to the effect that a worker cannot contract out of any right conferred upon him under the Act.

Responsibility for payment of wages [Section 3].
Every employer shall be responsible for the payment to persons employed by him of all wages required to be paid.

In the case of the factory, manager of that factory shall be liable to pay the wages to employees employed by him.
In the case of industrial or other establishments, persons responsibility of supervision shall be liable for the payment of the wage to employees employed by him.
In the case of railways, a person nominated by the railway administration for specified area shall be liable for the payment of the wage to the employees.
In the case of contractor, a person designated by such contractor who is directly under his charge shall be liable for the payment of the wage to the employees. If he fails to pay wages to employees, person who employed the employees shall be liable for the payment of the wages .

[Sec 5 (3)]
With the consultation of the central government, state government having power and can change the person responsible for the payment of the wages in Railways, or person responsible to daily-rated workers in the Public Works Department of the Central Government or the State Government.

Fixation of wage-periods. [Section 4]
Every person responsible for the payment of wages under section 3 shall fix periods in respect of which such wages shall be payable. No wage-period shall exceed one month. That means wage can be paid on daily, weekly, fortnightly (for every 15 days) and monthly only. Wage period for payment of wages to employees by employer should not exceed 30days i.e. one month according to this act.

But wages cannot be paid for quarterly, half yearly or once in a year.

Time Of Payment Of Wages. [Section 5]

In railway factory or industrial or other establishment, if there are less than 1000 employees, wages of employees should be paid before the expiry of the 7th day after the last day of the wage period. (ex:- wages should be paid on starting of present month within 7 days i.e. before 7th date if wage is paid on 1st in previous month )
In other railway factory or industrial or other establishment, if there are more than 1000 employees, wages of employees should be paid before the expiry of the 10th day after the last day of the wage period. (ex:- wages should be paid on starting of present month within 10 days i.e. before 10th date if wage is paid on 1st in previous month )
For employees of port area, mines, wharf or jetty, wages of employees should be paid before the expiry of the 7h day after the last day of the wage period.

WAGES TO BE PAID IN CURRENT COIN OR CURRENCY NOTES –

All the wages of the employees must be paid in form of currently using currency notes or coins or in both forms. Currently using currency notes are 1000/-, 500/-, 100/-, 50/-, 20/-, 10/-, 5/- and currently using coins are 10/-, 5/-, 2/-, 1/-.

DEDUCTIONS WHICH MAY BE MADE FROM WAGES.

At the time of payment of the wage to employees, employer should make deductions according to this act only. Employer should not make deductions as he like. Every amount paid by the employee to his employer is called as deductions.

The following are not called as the deduction

Stoppage of the increment of employee.
Stoppage of the promotion of the employee.
Stoppage of the incentive lack of performance by employee.
Demotion of the employee
Suspension of the employee

The above said actions taken by the employer should have good and sufficient cause.

Deductions [Sec 7 (2)]

Deduction made by the employer should be made in accordance with this act only. The following are said to be the deductions and which are acceptable according to this act.

 Fines,

 Deductions for absence from duty,

 Deductions for damage to or loss of goods made by the employee due to his negligence,

 Deductions for house-accommodation supplied by the employer or by government or any housing board,

 Deductions for such amenities and services supplied by the employer as the State Government or any officer,

 Deductions for recovery of advances connected with the excess payments or advance payments of wages,

 Deductions for recovery of loans made from welfare labour fund,

 Deductions for recovery of loans granted for house-building or other purposes,

 Deductions of income-tax payable by the employed person,

 Deductions by order of a court,

 Deduction for payment of provident fund,

 Deductions for payments to co-operative societies approved by the State Government,

 Deductions for payments to a scheme of insurance maintained by the Indian Post Office

 Deductions made if any payment of any premium on his life insurance policy to the Life Insurance Corporation with the acceptance of employee,

 Deduction made if any contribution made as fund to trade union with the acceptance of employee,

 Deductions, for payment of insurance premia on Fidelity Guarantee Bonds with the acceptance of employee,

 Deductions for recovery of losses sustained by a railway administration on account of acceptance by the employee of fake currency,

 Deductions for recovery of losses sustained by a railway administration on account of failure by the employee in collections of fares and charges,

 Deduction made if any contribution to the Prime Minister’s National Relief Fund with the acceptance of employee,

 Deductions for contributions to any insurance scheme framed by the Central Government for the benefit of its employees with the acceptance of employee,

Limit for deductions [Sec 7 (3)]
The total amount of deductions from wages of employees should not exceed 50%, but only in case of payments to co-operative societies, deduction from wages of employee can be made up to 75%.

FINES. [Sec 8]
Fine should be imposed by the employer on employee with the approval of the state government or prescribed authority. Employer should follow the rules mentioned below for and before imposing of fine on the employee.

Notice board of fines on employee should be displayed in the work premises and it should contain activities that should not be made by employee.
Fine should not be imposed on the employee until he gives the explanation and cause for the act or omission he made.
Total amount of fine should not exceed 3% of his wage.
Fine should not be imposed on any employee who is under the age of 15 years.
Fine should be imposed for one time only on the wage of the employee for the act or omission he made.
Fines should not be recovered in the way of installments from the employee.
Fine should be recovered within 60 days from the date on which fine were imposed.
Fine should be imposed on day act or omission made by the employee.
All fines collected from the employee should be credited to common fund and utilize for the benefit of the employees.

DEDUCTIONS FOR ABSENCE FROM DUTY. [Sec 9]

Deductions can be made by the employer for the absence of duty by the employee for one day or for any period.
The amount deducted for absence from the duty should not exceed a sum which bears the same relationship to the wage payable in respect of the wage-period as this period of absence does to such wage-period. (Example: if the salary of an employee is 6000/- per month and he was absent for duty for one month. Deduction from the salary for absence of duty should not exceed 6000/-)
Employee present for the work place and refuses to work without proper reason shall be deemed to be absent from duty.
If 10 or more persons together absent for the duty without any notice and without reasonable cause, employer can make 8 day of wages as deduction from their wage.

DEDUCTIONS FOR DAMAGE OR LOSS. [Sec 10]
Employer should give an opportunity to the employee to explain the reason and cause for the damage or loss happened and deductions made by employer from the employee wage should not exceed the value or amount of damage or loss made by the employee.

[Sec 10 (2)] All such deduction and all realizations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed.

DEDUCTIONS FOR SERVICES RENDERED. [Sec 11]

House-accommodation amenity or service provided by the employer should be accepted by the employee, than only the employer can make deduction from the wage of the employee. Deduction should not exceed an amount equivalent to the value of the house-accommodation amenity or service supplied.

DEDUCTIONS FOR RECOVERY OF ADVANCES. [Sec 12]
In case of advance paid to the employees by the employer before employment began, such advance should be recovered by the employer from the first payment of the wages /salary to the employee. But employer should not recover the advance given for the travelling expense for the employee.

DEDUCTIONS FOR RECOVERY OF LOANS. [Sec 12A]
Deductions for recovery of loans granted for house-building or other purposes shall be subject to any rules made by the State Government regulating the extent to which such loans may be granted and the rate of interest payable thereon.

DEDUCTIONS FOR PAYMENTS TO CO-OPERATIVE SOCIETIES AND INSURANCE SCHEMES. [Sec 13]
Deductions for payments to co-operative societies or deductions for payments to scheme of insurance maintained by the Indian Post Office or with employee acceptance deductions made for payment of any premium on his life insurance policy to the Life Insurance Corporation shall be subject to such conditions as the State Government may impose.

PENALTY FOR OFFENCES UNDER THE ACT. [Section 20] (2005 amendments)

Reasons
penalty

Delay in payment of wages
Un reasonable deductions
Excess deduction for absence of duty
Excess deduction for damage or loss to employer
Excess deduction for house-accommodation amenity or service

Punishable with fine which shall not be less than 1000/- rupees but which may extend to 7500/- rupees.

If Wage period exceed one month.
Failure in payments of wages on a working day.
Wages not paid in form of current coin or currency notes or in both.
Failure to maintain record for collected fines from employee.
Improper usage of fine collected from employees.
Failure of employee to display notice containing such abstracts of this Act and of the rules made.

punishable with fine which may extend 3000/- rupees

Whoever obstructs an Inspector in the discharge of his duties under this Act
Whoever willfully refuses to produce on the demand of an Inspector any register or other document.
Whoever refuses or willfully neglects to afford an Inspector any reasonable facility for making any entry, inspection, examination, supervision, or inquiry authorized by or under this Act

punishable with fine which shall not be less than 1000/- rupees but which may extend to 7500/- rupees
Whoever repeats the same offence committed before.

Imprisonment for a term which shall not be less than one month but which may extend to 6 months and fine which shall not be less than 3750/- rupees but which may extend 20500/-rupees.

PAYMENT OF UNDISBURSED WAGES IN CASE OF DEATH OF EMPLOYED PERSON. [Sec 25A]

Paid by the employer to the person nominated by the employee.
Wage deposited by the employer with the prescribed authority, the employer shall be discharged of his liability to pay those wages.
Where no such nomination has been made or where for any reasons such amounts cannot be paid to the person so nominated, be deposited with the prescribed authority who shall deal with the amounts so deposited in such manner as may be prescribed.

Q12. Explain the various classifications of wages. What are the main provisions of Minimum Wages Act, 1948?

Ans. MINIMUM WAGES ACT,1948

Introduction: In a labour surplus economy like India wages couldn’t be left to be determined entirely by forces of demand and supply as it would lead to the fixation of wages at a very low level resulting in exploitation of less privileged class. Keeping this in view, the Government of India enacted the Minimum Wages Act, 1948. The purpose of the Act is to provide that no employer shall pay to workers in certain categories of employments wages at a rate less than the minimum wage prescribed by notification under the Act. In fact the sole purpose of this act is to prevent exploitation of sweated and unorganised labour, working in compititive market.

The Act provides for fixation / periodic revision of minimum wages in employments where the labour is vulnerable to exploitation. Under the Act, the appropriate Government, both Central and State can fix / revise the minimum wages in such scheduled employments falling in their respective jurisdiction.

The term ‘Minimum Wage Fixation’ implies the fixation of the rate or rates of minimum wages by a process or by invoking the authority of the State. Minimum wage consists of a basic wage and an allowance linked to the cost of living index and is to be paid in cash, though payment of wages fully in kind or partly in kind may be allowed in certain cases. The statutory minimum wages has the force of law and it becomes obligatory on the part of the employers not to pay below the prescribed minimum wage to its employees. The obligation of the employer to pay the said wage is absolute. The process helps the employees in getting fair and reasonable wages more particularly in the unorganised sector and eliminates exploitation of labour to a large extent. This ensures rapid growth and equitable distribution of the national income thereby ensuring sound development of the national economy.

It has been the constant endeavour of the Government to ensure minimum rates of wages to the workers in the sweated industries and which has been sought to be achieved through the fixation of minimum wages, which is to be the only solution to this problem.

Concepts

(a)Minimum Wage

The Act under section 2(h) defines wages, but does not define “minimum wages”. As it is not possible to bring down a uniform minimum wage for all the industries throughout the country.

Section 2(h)"wages" means all remuneration capable of being expressed in terms of money which would if the terms of the contract of employment express or implied were fulfilled be payable to a person employed in respect of his employment or of work done in such employment and includes house rent allowance but does not include -
(i) the value of -
(a) any house accommodation supply of light water medical attendance or
(b) any other amenity or any service excluded by general or special order of the appropriate government;
(ii) any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance;
(iii) any traveling allowance or the value of any traveling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(v) any gratuity payable on discharge;

(a)(i)Essential Ingredient

1. Wage should be by way of remuneration

2. It should be capable of being expressed in terms of money.

3. It should be payable to a person employed in respect of his employment or of work done in such employment.

4. It should be payable to a workmen.

5. It should be payable if the terms of employment, express or implied, are fulfilled.

6. It includes house rent allowance.

7. It does not include house accommodation, supply of light, water, medical attendance, traveling allowance, contribution of employer towards provident fund, gratuity , any scheme of social insurance etc.

(b)Classification of Wages

The Supreme Court has classified “Wages” into three categories. They are:

1. The Living Wage ( highest standard of wage)

2. The Fair Wage (between living and minimum wage)

3. The Minimum Wage.( it is the lowest standard of wage)

The living and fair wages are acquired by workers with their “collective bargaining”. When the workers have no unions and who have no capacity of collective bargain could not demand the employers for their just and genuine wage. The State come to rescue them through such legislations.

Main provisions under the Act

1. Fixing of minimum rates of wages Section 3

a. The appropriate Government may fix the minimum rates of wages payable to employees employed in an employment specified in Part - I or Part - II of the Schedule and in an employment subsequently added to the Schedule. The Government may review the minimum rates of wages and revise the minimum rates at intervals not exceeding five years.

b. The appropriate Government may refrain from fixing minimum wages in respect of any scheduled employment in which there are in the whole State less than one thousand employees engaged in such employment.

c. The appropriate Government may fix separate minimum rates of wages for time rate and for piece rate. Different wage rates may be fixed for different scheduled employments, different classes of work in the same scheduled employment, for adults, adolescents, children and apprentices and for different localities and for any one or more of the wage periods, viz., by the hour or by the day or by the month or by such larger wage period as may be prescribed.

2. Minimum rate of wages (Section 4)

Any minimum rate of wages fixed or revised may consist of

a. a basic rate of wages and a special allowance ; or

i. a basic rate of wages with or without cost of living allowance and the cash value of concessions in respect of supplies of essential commodities at concessional rates; or

ii. an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of concessions, if any.

iii.

3 Procedure for fixing and revising minimum wages (section 5)

The appropriate Government is required to appoint an Advisory Board for advising it, generally in the matter of fixing and revising minimum rates of wages.

The Central Government appoints a Central Advisory Board for the purpose of advising the Central and State Governments in the matters of the fixation and revision of minimum rates of wages as well as for co-ordinating the work of Advisory Boards.

The Central Advisory Board consists of persons to be nominated by the Central Government representing employers and employees in the scheduled employments, in equal number and independent persons not exceeding one third of its total number of members. One of such independent persons is to be appointed the Chairman of the Board by the Central Government.

4 Wages in kind (section 11)

Minimum wages payable under this Act are to be paid in cash. However, the payment of minimum wages can be made wholly or partly in kind, by notifying in the official Gazette, where it is customary to pay wages either wholly or partly in kind.

5 Payment of minimum rate of wages (Section 12)

The employer is required to pay to every employee, engaged in a scheduled employment under him, wages at a rate not less than the minimum rate of wages notified for that class of employees without any deduction except as may be authorised.( see the Payment of Wages Act 1936 (4 of 1936) for permissible deduction)

6. Fixing hours for normal working day (section 13)

In regard to any scheduled employment, minimum rates of wages in respect of which have been fixed under this Act, the appropriate Government may

a. fix the number of hours of work which shall constitute a normal working day, inclusive of one or more specified intervals;

b. provide for a day of rest in every period of seven days which shall be allowed to all employees or to any specified class of employees and for the payment of remuneration in respect of such days of rest;

c. provide for payment for work on a day of rest at a rate not less than the overtime rate.

7. Overtime (Section 14)

If any employee whose minimum rate of wages is fixed under the Act works on any day in excess of the number of hours constituting normal working day, the employer is required to pay him for excess hours at the overtime rate fixed under this Act or under any law of the appropriate Government for the time being in force, whichever is higher.

8. Wages for two or more classes of work (Section 16)

If an employee does two or more classes of work, to each of which a different rate of wages is applicable, the employer is required to pay to such employee in respect of the time respectively occupied in each such class of work, wages at not less than the minimum rate in force in respect of each such class.

9. Maintenance of registers and records(Section 18)

Every employer is required to maintain registers and records giving particulars of employees, the work performed by them, the wages paid to them, the receipts given by them and any other required particulars.

10 Inspections(Section 19)

The appropriate Government may, by notification in the official Gazette, appoint inspectors for the purpose of this Act and define the local limits for their functions.

11. Claims (Section 20)

The appropriate Government may, by notification in the official Gazette, appoint Labour Commissioner or Commissioner for Workmen’s Compensation or any officer not below the rank of Labour Commissioner or any other officer with experience as a judge of a civil court or as a Stipendiary Magistrate, to hear and decide for any specified area, all claims arising out of the payment of less than the minimum rates of wages as well as payment for days of rest or for work done.

12. Penalties for Offences(Section 22)

Any employer who contravenes any provision of this Act shall be punishable with imprisonment for a term, which may extend to six months or with fine, which may extend to five hundred rupees or with both.

Q13. What are the main provisions of Factories Act, 1948?

Ans. FACTORIES ACT

The object of the Factories Act is to regulate the conditions of work in manufacturing establishments coming within the definition of the term "factory" as used in the Act.

The first Act, in India, relating to the subject was passed in 1881. This was followed by new Acts in 1891, 1911, 1922, 1934 and 1948. The Act of 1948 is more comprehensive than the previous Acts. It contains detailed provisions regarding the health, safety and welfare

of workers inside factories, the hours of work, the minimum age 6f, workers, leave with pay etc. The Act has been amended several times.

The Act is based on the .provisions of the Factories Act of Great

Britain passed in 1937.

In 1976 the Act was amended extensively. The provisions of the Amendment have been quoted and summarised at the appropriate .places in this chapter.

APPLICATION OF THE ACT

The Factories Act of 1948 came into force on 1st April 1949; It applies to factories, as defined in. the Act, all over India, including the State of Jammu and Kashmir.

Unless 'otherwise provided, the Factories Act applies to factories belonging to the Central or any State Government.--Sec. 116.

DEFINITIONS UNDER THE FACTORIES ACT

Factory. The term Factory is defined in Section 2 (m) of the Act as follows: "Factory means any premises including the precincts thereof- .

(i). whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or

(ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on,___

but does not include a mine subject to the operation of the Indian Mines Act, 1952 (Act XXXV of 1952), or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place.

PROVISIONS REGARDING THE HEALTH OF WORKERS

Sections 11 to 20 of the Act contain certain provisions intended to ensure that the conditions under .which work is carried on in factories do not affect the health of the workers injuriously. The summary of the provisions are explained below :

Summary of the provisions of the Factories Act. relating -to the health of workers are stated below.

1. Cleanliness. Every factory shall be kept clean and free from dirt, and the outflow of drains etc. The floors must be cleaned. Drainage shall be provided. Inside walls, partitions and ceilings must be repainted at least once in five years. When washable water paint is used they must be painted once every three years and washed at least every period of six months.-Sec. 11,' as amended in 1976.

2. Disposal of wastes and effluents. The waste materials produced from the manufacturing process must be effectively disposed off-Sec. 12.

3. Ventilation 'and Temperature. There must be provision for adequate ventilation by the circulation of fresh air: The temperature must be kept at a comfortable level. Hot parts of machines must be'separated and insulated.-Sec. 13.

4. Dust and Fume. If the .manufacturing process used. gives off injurious or offensive dust and fume steps must be taken so that they are not inhaled or accumulated. The exhaust fumes of internal combustion engines must be conducted outside the factory.--Sec. 14.

5. Artificial humidification. The water used for this purpose must be pure. It must be taken from some source of drinking water supply. The State Government can frame rules .regarding the process of humidification etc.-8ec. 15. .

6. OverCrowding. There must be no overcrowding in a factory. In factories existing before the commencement of the Act there must be at least 350 c.ft. (~r 55 cubic metres) of space per worker. For factories built afterwards, there must be at least 500 c.ft. (or 75 cubic metres) of space. In calculating the space, an account is to be taken of space above 14 ft. (or 5 metres) from the floor.-Sec. 16.

7. Lighting. Factories must be well lighted. Effective measures must be adopted to prevent glare or formation of shadows which might cause eyestrain.-sec. 17.

8. Drinking water. Arrangements must be made to provide a sufficient supply of wholesome drinking water. All supply' points of such water must be marked "drinking water". No such points shall be within 20 ft. (or 7.5 metres) of any latrine, washing place etc. Factories employing more than 250 workers must cool the water during the hot weather.-Sec. 18.

9. Latrines and Urinals. Every factory must provide' sufficient number of latrines and urinals. There must be separate provision for male and female workers. Latrine and urinals must be kept in a clean and sanitary condition. In factories. employing more than 250 workers, they shall be of prescribed sanitary types.--sec. 19.

PROVISIONS REGARDING THE SAFETY OF WORKERS

Sections 21 to 40A, 40B and 41 of the Act lay down rules for the purpose of securing the safety of workers. Summary of the provisions of the Factories Act regarding the safety of the workers are stated below: (Sections 2l to 41) .

1. Fencing ot machinery. All dangerous machinery must be securely fenced e.g., moving .parts- of prime movers and flywheels connected to every prime mover. electric generators. etc.-Sec. 2l.

2. Work on or near machinery in motion. Work on or near machinery in motion must be carried out only by specially trained adult male workers wearing tightly fitting c1othes.-Sec. 22.

3. Employment of young persons on dangerous machines. No young person shall work at any danger()us machine' unless he has been specially instructed as to the dangers and the precautions to be observed. has received sufficient training about th~ work. and is under the supervision of some person having thorough knowledge and experience of the machine.-Sec. 23.

4. Striking gear and devices for cutting off power. In every factory suitable devices for cutting off power in emergencies from running machinery shall be provided and maintained in every workroom.~. 24.

5. Self-acting machines. Moving parts of a self-acting machine must not be allowed to come within 45 cms. of any fixed structure which is not part of the machine.-Sec. 25.

6. Casing of new machinery. In all machinery installed after the commencement of the Act. certain parts must be sunk, encased or otherwise effectively guarded e.g.. set screw. bolt. toothed gearing etc. -sec. 26.

7. Women and children near cotton Openers. Women and children must not be allowed to work near cot/On openers, except In certain cases.-Sec. 27

8. Hoists, lifts, chains etc, Every hoist and lift must be so constructed as to be safe. There are detailed rules as to how such safety is to be secured. There are similar provisions regarding lifting machines. chains, ropes and lifting tackle .Sec. 28. 29.

9.Revolving machinery. Where grinding is . carried on the maximum safe working speed of every revolving machinery connected therewith must be notified. Steps must be taken to see that the safe speed is not exceeded.-Sec. 30.

10. Pressure plant. Where any operation is carried on at a pressure higher than the atmospheric pressure, steps must be taken to ensure that the safe working pressure is not exceed~cL-.sec. 31.

11. Floors, stairs and means of access. All floors, steps, stairs, passage and gangways shall be of sound construction and properly maintained. Handrails shall be provided where necessary. Safe means of access shall be provided to the place where the worker will carry on any work.-Sec. 32.

12. Pits, sumps. openings in floors etc. Pits. sumps. openings in floors etc. must be securely covered or fenced.-Sec. 33.

13. Excessive weights. No worker shall be made to carry a load so heavy as to cause him injury.-8ec. 34.

14. Protection of eyes. Effective screen or suitable goggles shall be provided to protect the eyes of the worker from fragments thrown off in course of any manufacturing process and from excessive light if any.-Sec. 35.

15. Precautions against dangerous fumes. No person shall be allowed to enter any chamber. tank etc. where dangerous fumes are likely to ,be present. unless it is equipped with a manhole or other means of going out. In such space no portable electric light of more than 24 ,volts shall be used. Only a lamp or light of flame proof construction can be used in such space. For people entering such space suitable breathing apparatus, reviving apparatus etc. shall be provided. Such places shall be cooled by ventilation before any person is allowed to enter.-8ecs. 36 and 36A.

16. Explosive or inflammable gas etc. where a manufacturing process produces inflammable gas. dust. fume. etc. steps must be taken to enclose the machine concerned, prevent the accumulation of substances and exclude all possible sources of ignition. Extra precautionary measures are to be taken where such substances are worked at greater than the atmospheric. pressure.-Sec. 37.

17. Precaution in case of fire. Fire escapes shall be provided. Windows and doors shall be constructed to open outwards. The means of exit in case of the fire shall be clearly marked in red letters. Arrangements must be made to give warning in case or fire -sec. 38

18. Specifications of defectives etc. and safety of buildings and machinery. If any building or machine is in a defective or dangerous condition, the inspector of factories can ask fer the holding of tests to determine how they can be made safe. He can also direct the adoption of the measure necessary to make them safe. In case of immediate danger, the use of the building or machine can be prohibited.-Secs. 39. 40.

19. Maintenance of Buildings. If the Inspector of Factories thinks that any building in a factory, or any. part of it. is in such a state of disrepair that it is likely to affect the health and welfare of the workers. he may serve on the occupier or manager or both in writing specifying the measures to be done before the specified date. Sec. 4OA.

20. Safety Officers. The State Government may notify to the occupier to employ a number of Safety Officers in a factory (i) wherein one thousand or more workers are ordinarily employed. or (ii) wherein any manufacturing process or operation which involves the risk of bodily injury, poisoning. disease or any other hazard to health of the persons employed in the factory .-Sec. 40B.

PROVISIONS REGARDING THE WELFARE OF WORKERS

Summary of the provisions of the Factories Act regarding the welfare of workers are stated below :

1.Washing. In every factory adequate and suitable facilities for washing shall be provided and maintained. They shatI be conveniently accessible and shall be kept clean. There must be separate provisions for male and female workers.-Sec. 42.

2. Storing and drying. The State Government may make rules requiring the provision of suitable facilities for storing and drying clothing.-Sec. 43.

3. Sitting. Sitting facilities must be provided for workers who have to work in a standing position. so that they may take rest when possible. When work can be done in a sitting position efficiently the Chief Inspector may direct the provision of sitting arrangements. Sec. 44.

4. First aid. Every factory must provide first aid boxes or cupboard. They must contain the prescribed materials and they must be in charge of persons trained in first aid treatment. Factories employing more than 500 persons must maintain an ambulance roam containing the prescribed equipment and in charge of the prescribed medical and nursing staff-Sec. 45.

5. Canteens. Where more than 250 workers are employed. the state Government may require the opening of canteen or canteens for workers. Rules may be framed regarding the food served. its management etc.,..-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.

9. Rules. The State Government may make rules regarding the welfare of workers.-Sec. 50.

THE WORKING HOURS OF ADULTS

Weekly Hours. No adult worker shall .be required or allowed . to-work in a factory for more than forty-eight hours in any week. Sec. 51.

Daily Hours. No adult worker shall be required or allowed to work in a factory for more than nine hours in any working day. The daily maximum may be exceeded with the previous approval of the Chief Inspector, to facilitate change of shifts.-Sec. 54.

Intervals for Rest. The periods of work of adult workers in a factory each day shall be so fixed that no period shall exceed five hours arid that no worker shall work for more than five hours before he has had an interval for rest of at least half an hour. The State Government or the Chief Inspector may, by order in writing, and for reasons stated therein, increase the work period to six.-Sec. 55.

Spreadover. The periods of work of an adult worker in a factory shall be arranged that inclusive of his intervals for rest under section 55, they shall not spread-over more than ten and half hours in any day. The Chief Inspector may for specified reasons increase the spreadover up to twelve hours.-Sec. 56.

RULES REGARDING EMPLOYMENT OF ADULTS

Night Shifts. Where a worker in a factory works on a. shift which extends beyond midnight, (a) his weekly holiday and compensatory holiday means a period of holiday for 24 consecutive hours beginning when his shift ends, and (b) the following day for him shall be deemed to be the period. of 24 hours beginning when such shift ends and the hours he has worked after midnight shall be counted in he previous day.-sec. 57

Overlapping Shifts. Work shall not be carried on in any factory by means of a system of shifts so arranged. that more than one relay of workers is engaged in work of the same kind at the same time. The State Government or the Chief Inspector may grant exemption from this rule.-See. 58.

Double Employment. No adult worker shall be required or allowed to work in any factory on any day on which he has already been working in any other factory, save In such circumstances as may be prescribed.-Sec. 60.

Notice of Periods of Work. There must be displayed in every factory a notice showing periods of work of adults, classification of workers in groups according to nature of their work, shifts and relays etc. Change made in the system of work must be notified to the Inspector before change. The manager of every factory must maintain a Register of Adult Workers showing the name of each worker, the nature of his work, the group in which he is included, the relay in which he is allotted etc. The hours of work of an adult worker- must correspond with the notice referred to above and the Register.- Sections 61, 62, 63.

No adult worker shall be required or allowed to work in any factory unless his name and other particulars have been entered' in the register of adult workers.-Sec. 62 (1A) added by the Factories (Amendment) Act, 1976.

RESTRICTIONS ON THE EMPLOYMENT OF WOMEN

By section 66 the following restrictions have been imposed to women workers :

(a) Maximum daily work is 9 hours: No exemption from the provisions of Section 54 (which lays down that the maximum daily hours of work shall be nine hours) can be granted in respect of any women.

(b) prohibition of night work: No women shall be required or allowed to work in any factory except between the hours of 6 a.m. and 7 p.m. The State Government may by notification in the official Gazette vary the limits for any factory or group or class or description of factories. But such variation must not authorise the employ -ment of women between the hours 10 p.m. and 5 a.m. .

(c)Change of shift only after holiday:There shall be no change of shifts for women except after a weekly holiday or any other holiday.

Exception: There is an exceptional case. The State Government may make rules providing for the exemption from the afore~aid restrictions (wholly or partially or conditionally) of women working in fish-curing or fish-canning factories. In factories, mentioned above, the employment of women beyond the hours specified is necessary to prevent damage to or deterioration in any raw material. But such rules shall remain in force for not more than three years at a time.

Other restrictions: There are other restrictions on the employ ment of women workers :

1. Work on or near machinery in motion. No woman or young person shall be allowed to clean, lubricate or adjust any part of the machinery while the prime mover or transmission machinery is in motion or to work between moving parts, or between fixed and moving parts of any machinery which is in motion.-Sec. 22(2}.

2. Cotton openers. No woman or child shall be employed in any part of a factory for pressing cotton in which a cotton opener is at work. If the feed-end of a cotton opener is in a room separated from the delivery-end by a partition extending to the roof or to such height as the Inspector may in a particular case specify in writing , women and children may be employed on the side of the partition where the feed-end is situated.-Sec. 27.

3. Excessive weights. The State Government may make rules prescribing the maximum weights .which may be lifted, carried. or moved by adult men, adult women, adolescents and children employed in factories or in any class or description of factories or in carrying on any specified process.-Sec. 34.

4. Creches. In every factory wherein more than thirty women workers are ordinarily employed there shall be provided and main tained a suitable room or rooms for the use of children under the age of six years of such women.-Sec. 48.

5. Dangerous operations. The State Government is empowered to make special rules for the purpose of controlling and regulating factories which carry on operations exposing women, young persons and other workers to a serious risk of bodily injury, poisoning or disease.-Sec. 87 (b).

EMPLOYMENT OF YOUNG PERSONS

Employment of ChiIdren . No child who has not completed his fourteenth year shall be required or allowed to work in any factory.--sec. 67.

Certificate of Fitness and Token. A child who has completed his fourteenth year or an adolescent shall not be required or allowed to work in any factory unless (a) he has been granted a certificate of fitness. which is. in the custody of the manager, and (b) such child or adolescent carries a token giving a reference to such certificate-Sec. 68.

The Certificate of Fitness is a certificate granted to a child or adolescent by a Certifying Surgeon after. examination: The certificate is. given to a child if the surgeon is satisfied that he has completed his fourteenth year and has attained the prescribed physical standards. The certificate is granted to an adolescent if the surgeon is satisfied that he has completed his fifteenth year and is fit for a full day's we in a factory. The certifying surgeon must have personal knowledge of the intended place of work and of the manufacturing process involved. The certificate is valid only for a period of 12 months. It may be granted subject to conditions (e.g., that of periodical re-examination). The

certificate may be renewed and, if necessary, revoked. Any fee pa: able for the certificate must be paid by the occupier of the factory all must not be recovered from the young person or his parents c guardian.-Sec. 69.

Working hours for Children. The law regarding working hours for children are stated below.-Sec. 71 :

1. No child shall be employed or. permitted to work in any factory- '

(a) for more than four and a half hours in any day;

(b) during the night, .

Explanation: For the purpose of this sub-section "night" shall mean a period of at least twelve consecutive hours which shall include the interval between 10 p.m. and 6 a.m.

2. The period of work of all children employed in a factory shall be limited to two shifts which shall not overlap or spread-over more than five hours each, and each child shall be. employed in only one of the relays which shall not, except with the previous permission in writing of the Chief Inspector, be changed more frequently than once in a period of thirty days.

3. The provisions of section 52 shaIl apply also to child workers, and in respect of any child. (Sec. 52 relates to weekly holidays. See next ' Section).

4. No child shall be required or allowed to work in any factory on any day on which he has already been working in another factory.

Medical Examination. Where an Inspector is of opinion that a person working as an adult is a young person, or that a young person is not fit to work, he may direct the manager of the factory to. have the person medically examined by a certifying surgeon.--Sec. 75.

CHILD-LABOUR

Rules regarding child-Iabour are contained in the Factories Act, Mines Act etc. There are also. two. general Acts an the subject. The Children (Pledging of Labour) Act (Act 11 of 1933) prohibits the making of agreements to. pledge the labour of children and the employment of children whose labour has been pledged. The Children Act of 1938, 1960 and 1978 prohibit the employment of a child who. has not completed his fifteenth year of age in any occupation connected with the transport of passengers, goods or mails by railway or con -nected with a part authority Within the limits of any part. The Act also prohibits the employment of a child, who. has not completed his fourteenth year of age, in the processes set forth in the schedule to the Act. Children between 15 and 17 can be employed subject to certain restrictions as regards their periods of rest etc

HOLIDAYS AND LEAVE

The Factories Act provides for the following holidays, viz.,Weekly holidays, Compensatory holidays and Annual leave with wages according to certain rules. The provisions are explained below.

Weekly Holidays. Section 52 provides that an adult workers shall have a holiday on the first day of the week. But the manager of the factory may fix the holiday on any other day which is with three days before or after the first day of the week in case of such substitution, notice must be given to the Inspector of Factories an displayed in the factory. No substitution can be made which will result in any worker working for more than ten days consecutively without a holiday for a whole day. The State Government may make rules providing for exemption from the above section in certain cases, e.g., for urgent repairs.

The Weekly Holidays Act (Act XVIII of 1942) provides for the grant of weekly holidays to persons employed in shops, restaurants and theatres. The Act ,can be applied to a State by notification of the State Government.

Compensatory Holidays. Where as a result of the exemption of factory from the operation of the role regarding weekly holidays, a worker is deprived from any weekly holiday he shall be allowed within the month in which the holidays were due, or within two months immediately following that month, compensatory holidays of equal number to the holidays lost.--Sec. 53.

Annual Leave with Wages. Sections 78 to 84 provide for the grant of a certain period of leave with wages to workmen.

Every worker who has worked for a period of 240 days or more in a factory during a calendar year shall be allowed during the subsequent calendar year, leave with wages for a number of days calculated at the rate of

(i) if an adult, one day for every twenty days of work performed by him during the previous calendar year;

(ii) if a child, one day for every fifteen days of work performed by him during the previous calendar year.

EXTRA WAGES FOR OVERTIME

( 1 ) Where a worker works in a factory for more than nine hours in any day or for more than 48 hours in any week, he shall in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.-Sec 59(1)

(2) For the purpose of sub-section (1), "ordinary rate of wages means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the concessional sale to workers of foodgrains and other articles, as the worker is for the time being entitled to, but does not include a bonus and wages for overtime work.-Sec. 59(2).

(3) Where any workers in factory are paid on a piece rate basis, the time rate of their work will include the following rules:

(i) if the workers bad been paid on the same or identical job during a month immediately preceding a month during which overtime work was done, the time rate shall be deemed to be equivalent to the daily average of their fulltime earnings for the days of the overtime work. Also such time rates shall be deemed to be the ordinary rates of wages of those workers.

(ii) In the case of a worker who had not worked in the immediately preceding calendar month on the same or identical job, the time rate shall be deemed to be equivalent to the daily average of the earning of the worker for the days on which he actually worked in the week in which the overtime work was done.

Q14. Write a short note on Payment of Bonus Act, 1965?

Ans.Payment of Bonus Act

— The practice of paying bonus in India appears to have originated during First World War when certain textile mills granted 10% of wages as war bonus to their workers 1917.

— In certain of industrial disputes demand for payment of bonus cases was also included. In 1950, the Full Bench of the Labour Appellate evolved a formula for determination of bonus.

— A plea was made to raise that formula in 1959. At the second and third meetings of the Eighteenth Session of Standing Labour Committee (G.O.I.) held in New Delhi in March/April 1960, it was agreed that a Commission be appointed to go into the question of bonus and evolve suitable norms.

Eligibility

— Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year

Disqualification for bonus

— Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for –

— (a) fraud; or

— (b) riotous or violent behavior while on the premises of

— the establishment; or

— (c) theft, misappropriation or sabotage of any property of the establishment

Payment of minimum bonus

— Every employer shall be bound to pay to every employee a minimum bonus which shall be 8.33 percent of the salary or wage earned by the employee during the accounting year .

Payment of maximum bonus

— If the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting; year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent, of such salary or wage.

— In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions shall be taken into account in accordance with the provisions of that section

— Computation of number of working days

— An employee shall be deemed to have worked in an establishment in any accounting year also on the days on which–(a) he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment (Standing Orders) Act, 1946 (b) he has been on leave with salary or wage; (c)he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and (d) the employee has been on maternity leave with salary or wage, during the accounting year

Set on and set off allocable surplus

— Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on

— Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment and there is no amount of sufficient amount carried forward and set on which could be utilized for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner.

— Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account

— Where any money is due to an employee by way of bonus from his employer under a settlement or an award or agreement, the employee himself or any other person authorized by him in writing in this behalf, or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government or such authority as the appropriate Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrears of land revenue

— Provided that every such application shall be made within one year from the date on which the money became due to the employee from the employer

— Provided further that any such application may be entertained after the expiry of the said period of one year, if the appropriate Government is satisfied that the applicant had sufficient cause for not making the application within the said period.

— set on--first we calculate allocable surplus and out of that surplus we pay bonus and after paying max bonus i.e 20% ,if some amount left balance is called set on and this amount is kept in reserve for future set off-if in any accounting year you do not have sufficient surplus and even you are not able to pay minimum bonus of 8.33% than legally you have to pay 8.33%,so balance amount which you do not have in surplus will be shown as set off for future and you have to take care of set off/on in future before deciding rate of bonus.

Q15. Explain the major provisions of Workmen Compensation Act , 1923?

Ans. Workmen Compensation Act

The Workmen’s Compensation Act, aims to provide workmen and/or their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen.

It provides for payment by certain classes of employers to their workmen compensation for injury by accident.

EMPLOYEES ENTITLED TO COMPENSATION

Every employee (including those employed through a contractor but excluding casual employees), who is engaged for the purposes of employer’s business and who suffers an injury in any accident arising out of and in the course of his employment, shall be entitled for compensation under the Act.

EMPLOYER’S LIABILITY FOR COMPENSATION (ACCIDENTS)

The employer of any establishment covered under this Act, is required to compensate an employee:
a. Who has suffered an accident arising out of and in the course of his employment, resulting into (i) death,

(ii) permanent total disablement,

(iii) permanent partial disablement, or

(iv) temporary disablement whether total or partial, or
b. Who has contracted an occupational disease.

HOWEVER THE EMPLOYER SHALL NOT BE LIABLE

a. In respect of any injury which does not result in the total or partial disablement of the workmen for a period exceeding three days;
b. In respect of any injury not resulting in death, caused by an accident which is directly attributable to-
i. the workmen having been at the time thereof under the influence or drugs, or
ii. the willful disobedience of the workman to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of workmen, or
iii. The willful removal or disregard by the workmen of any safeguard or other device which he knew to have been provided for the purpose of securing the safety of workmen.
The burden of proving intentional disobedience on the part of the employee shall lie upon the employer.
iv. when the employee has contacted a disease which is not directly attributable to a specific injury caused by the accident or to the occupation; or
v. When the employee has filed a suit for damages against the employer or any other person, in a Civil Court.

WHAT IS DISABLEMENT

Disablement is the loss of the earning capacity resulting from injury caused to a workman by an accident.
Disablement’s can be classified as (a) Total, and (b) Partial. It can further be classified into (i) Permanent, and (ii) Temporary, Disablement, whether permanent or temporary is said to be total when it incapacitates a worker for all work he was capable of doing at the time of the accident resulting in such disablement.

ACCIDENT ARISING OUT OF AND IN THE COURSE OF EMPLOYMENT

An accident arising out of employment implies a casual connection between the injury and the accident and the work done in the course of employment. Employment should be the distinctive and the proximate cause of the injury. The three tests for determining whether an accident arose out of employment are:
1. At the time of injury workman must have been engaged in the business of the employer and must not be doing something for his personal benefit;
2. That accident occurred at the place where he as performing his duties; and
3. Injury must have resulted from some risk incidental to the duties of the service, or inherent in the nature condition of employment.

The general principles that are evolved are:

· There must be a casual connection between the injury and the accident and the work done in the course of employment;
· It is not necessary that the workman must be actually working at the time of his death or that death must occur while he was working or had just ceased to work;

COMPENSATION IN CASE OF OCCUPATIONAL DISEASES

Workers employed in certain types of occupations are exposed to the risk of contracting certain diseases, which are peculiar and inherent to those occupations. A worker contracting an occupational disease is deemed to have suffered an accident out of and in the course of employment and the employer is liable to pay compensation for the same.
Occupational diseases have been categorized in Parts A, B and C of Schedule III. The employer is liable to pay compensation:
a. When a workman contracts any disease specified in Part B, while in service for a continuous period of 6 months under one employer.

b. When a workman contracts any disease specified in Part C, while he has been in continuous service for a specified period, whether under one or more employers.

CALCULATION OF COMPENSATION

The amount of compensation payable by the employer shall be calculated as follows:
(a) In case of death. - 50% of the monthly wages X Relevant Factor or Rs. 50,000, whichever is more and Rs.1000 for funeral expenses.
(b) In case of total permanent disablement Specified under -60% of the monthly wages X Relevant Factor or Rs. 60,000, whichever is more.

(c) In case of partial permanent disablement .-Such percentage of the compensation payable in case (b) above, as is proportionate to the loss of earning Capacity (as assessed by a qualified medical practitioner).
(d) In case of temporary disablement (whether total or partial). - A half-monthly installment equal to 25% of the monthly wages, for the period of disablement or 5 years, whichever is shorter

WHEN COMPENSATION TO BE DEPOSITED WITH COMMISSIONER ?

The amount of compensation is not payable to the workman directly. It is generally deposited along with the prescribed statement, with the Commissioner who will then pay it to the workman. Any payment made to the workman or his dependents, directly, in the following cases will not be deemed to be a payment of compensation:
i. in case of death of the employee;
ii. in case of lump sum compensation payable to a or a minor or a person of unsound mind or whose entitlement to the compensation is in dispute or a person under a legal disability.
The receipt of deposit with the Commissioner shall be a sufficient proof of discharge of the employer’s liability.

AMOUNTS PERMISSIBLE TO BE PAID TO THE WORKMAN/ DEPENDENTS DIRECTLY

Following amounts may be paid directly to the workman or his dependents:
a. In case of death of the workman, any advance on account of compensation up to [an amount equal to three months’ wages of such workman] may be paid to any dependent.
b. In case of lump sum compensation payable to an adult male worker not suffering from any legal disability.
In case of half-monthly payments payable to any workman.

REGISTRATION OF AGREEMENTS OF COMPENSATION

1. Where the amount payable as compensation has been settled by agreement a memorandum thereof shall be sent by the employer to the Commissioner, who shall, on being satisfied about its genuineness, record the memorandum in a registered manner.
2. However where it appears to the Commissioner that the agreement ought not to be registered by reason of the inadequacy of the sum or amount, or by reason that the agreement has been obtained by fraud or undue influence or other improper means he may refuse to record the agreement and may make such order including an order as to any sum already paid under the agreement as he thinks just in the circumstances.

3. An agreement for payment of compensation which has been registered shall be enforceable under this act notwithstanding anything contained in the Indian Contract Act, or any other law for the time being in force.

EFFECT OF FAILURE TO REGISTER AGREEMENT
When a memorandum of any agreement is not sent to the Commissioner for registration, the employer shall be liable to pay the full amount of compensation, which he is liable to pay under the provisions of this Act.

FILING OF CLAIMS

— A claim for the compensation shall be made before the Commissioner.
No claim for compensation shall be entertained by the Commissioner unless the notice of accident has been given by the workman in the prescribed manner, except in the following circumstances:
a. in case of death of workman resulting from an accident which occurred on the premises of the employer, or at any place where the workman at the time of the accident was working died on such premises or such place or in the vicinity of such premises or place;
b. in case the employer has knowledge of the accident from any other source, at or about the time of its occurrence;

c. in case the failure to give notice or prefer the claim, was due to sufficient cause.

LIMITATION
Workman, to the Commissioner, may file the claim for accident compensation in the prescribed form, within 2 years from the occurrence of the accident or from the date of death. The claim must be preceded by (i)a notice of accident, and
(ii) the claimant-employee must present himself for medical examination if so required by the employer.

DUTIES OF EMPLOYERS / EMPLOYEES

· To pay compensation for an accident suffered by an employee, in accordance with the Act.
· To submit a statement to the Commissioner (within 30 days of receiving the notice) in the prescribed form, giving the circumstances attending the death of a workman as result of an accident and indicating whether he is liable to deposit any compensation for the same.
· To submit accident report to the Commissioner in the prescribed form within 7 days of the accident, which results in death of a workman or a serious bodily injury to a workman.
· To maintain a notice book in the prescribed from at a place where it is readily accessible to the workman.
· To submit an annual return of accidents specifying the number of injuries for which compensation has been paid during the year, the amount of such compensation and other prescribed particulars.

DUTIES OF EMPLOYEES

· To send a notice of the accident in the prescribed form, to the Commissioner and the employer, within such time as soon as it is practicable for him. The notice is precondition for the admission of the claim for compensation.

· To present himself for medical examination, if required by the employer.

Q16. Explain the major provisions of the Employee State Insurance Act 1948.

Ans. THE EMPLOYEE’S STATE INSURANCE ACT 1948

ESI Scheme for India is an integrated social security scheme tailored to provide Social Production to workers and their dependents, in the organised sector, in contingencies, such as Sickness, Maternity and Death or Disablement due to an employment injury or Occupational hazard

1. Employees’ Contribution – 1.75% of the Wages

2. Employers’ Contribution – 4.75% of the Wages

TOTAL - 6.5 % of the Wages

Benefits to Employees

ESI Scheme Major Social Security Benefits in Cash and Kind include:

1. Medical Benefit – for self & Family

2. Sickness Benefit – for self

3. Maternity Benefit - for self

4. Disablement Benefit

a). Temporary Disablement Benefit – for self

b). Permanent Disablement Benefit – for self

5. Dependents’ Benefit – for dependents in case of death due to employment injury

• Benefits to Employees …

• In addition, the Scheme also provides some other need based benefits to insured workers. These are:

i). Funeral Expenses – to a person who

performs the last rites of IP

ii). Rehabilitation allowances – for self

iii). Vocational Rehabilitation - for self

iv). Old age Medicare – for self and spouse

v). Medical Bonus – for insured women and IP’s wife

Medical Benefit

Medical Benefit means Medical care of IPs and their families, wherever covered for medical benefit.

· The Standard medical care consists of out-door treatment, in-patient treatment, all necessary drugs and dressing, pathological and radiological specialist consultation and care, ante-natal and post natal care, emergency treatment etc.,

· Out-door medical care is provided at the state Insurance Dispensaries or Mobile Dispensaries manned by full-time doctors (service’ system) or at the private clinics of Insurance Medical Practitioners (Panel System)

· Insured worker and members of his family are eligible for medical care from the very first day of the worker coming under ESI Scheme.

· A worker who is covered under the scheme for first time is eligible for medical care for the period of three months. If he/she contributes at least for 78 days in a contribution period the eligibility is there up to the end of the corresponding benefit period.

· A worker is also eligible for extended sickness benefit when he/she is suffering from any one of the long term 34 diseases listed in the Act. This is admissible after the worker has been under ESI these conditions are satisfied medical benefit is admissible for a maximum period of 730 days for the IP and his/ her family.

Sickness Benefit

· Sickness signifies a state of health necessitating Medical treatment and attendance and abstention from work on Medical grounds. Financial support extended by the corporation is such a contingency is called sickness Benefit

· Sickness Benefit represents periodical payments made to an Insured Person for the period of certified sickness after completing 9 Months in insurable employment.

Benefits to Employees

• To qualify for this benefit, contributions should have been payable for atleast 78 days in the relevant contribution period.

• The Maximum duration for availing sickness Benefit is 91 days in two consecutive benefit periods

• Standard benefit rate – this rate corresponds to the average daily wage of an Insured person during the corresponding contribution period and is roughly half of the daily wage rate.

Extended Sickness Benefits

• Extended Sickness Benefit is a Cash Benefit paid for prolonged illness (Tuberculosis / Leprosy, Mental and Malignant diseases) due to any of the 34 Specified diseases

• The IP should have been in continuous employment for a period of 2 years and should have contributed for atleast 156 days in 4 preceding contribution periods

• The daily rate of Extended Sickness Benefit is 40% more than the standard Sickness Benefit rate admissible

• After exhausting sickness Benefit Payable for 91 days the Extended Sickness Benefit is payable upto further period of 124 / 309 days that can be extended upto 2 years in special circumstances

• Is Cash Benefit for IP undergoing sterilisation operation of vasectomy / tuberctomy for family planning.

• The contributory conditions are the dame as for claiming sickness benefits

• The daily rate of this benefit is double the standard benefit rate. Say, not less than the daily wage.

• The benefit rate of this benefit is double the standard benefit rate. Say, not less than the daily wage.

• The benefit is available upto 7 days for vasectomy and upto 14 days for tubectomy operations.

Maternity Benefit

• Maternity Benefit is cash payable to an Insured women for the specified period of abstention from work for confinement or mis-carriage or for sickness arising out of pregnancy, “confinement” “premature birth of child or miscarriage” “confinement” connotes labour after 26 weeks of pregnancy whether the result issue is alive or dead,

• “Miscarriage” means expulsion of the contents of a pregnant uterus at any period prior to or during 26^th week of pregnancy.

• Criminal abortion or miscarriage does not, however, entitle to benefit.

• The contribution condition is the same as for Sickness Benefit.

• The daily benefit rate is double the sickness Benefit rate and is thus roughly equivalent to the full wages. Benefits is paid for Sundays also.

• The Benefit is paid as follows (Duration)

a). For Confinement

For a total period 12 Weeks beginning not more than 6 weeks before the expected date of child birth, if the insured women dies during confinement or with in 6 weeks thereafter, leaving behind the living child, the benefit continues to be payable for the whole of the period. But the child also die during that period, the benefit will be paid upto and including the day of the death of the child.

b). For Miscarriage For the period of 6 weeks following the date of miscarriage

c). For sickness arising out of pregnancy, confinement, Premature birth of child or miscarriage : For an additional period or upto four weeks. In all the cases, the benefit is paid only if the insured women does not work for remuneration during the period for which benefit is claimed. There is no waiting period.

Medical Bonus

Medical Bonus is lump sum payment made to an Insured woman or the wife of an insures person in case she does not avail medical facility from an ESI hospital at the time of delivery of a child. This bonus of Rs. 250/- has been increased to Rs. 1000/- from 1^st April 2003

Disablement Benefit

a). Temporary disablement benefit :

• In case of temporary disability arising out of an employment injury or occupational disease.,

• Disablement benefit is admissible to insured person for the entire period so certified by an Insurance Medical officer / Practitioner for which IP does not work for wages.

• The benefit is not subject to any contributory condition and is payable at a rate which is not less than 70% of daily average wages.

• However, not payable if the incapacity lasts for less than 3 days excluding the date of accident.

b)Permanent disablement benefit

· In case an employment injury or occupational disease results in permanent, partial or total loss of earning capacity,

· Periodical payments are made to the IP for life at a rate depending on the actual loss of earning capacity as may be determined and certified by a duly-constituted Medical Board.

· The rates of Disablement Benefits are determined in accordance with the provisions of Rule 57 of ESI (Central) Rules, 1991.

· In order to product erosion in real value of the periodical payments of Permanent Disablement benefits, against rise in the cost of living index, periodical increases are granted, based on actuarial calculation

· Commutation of periodical payments into lump sum (one time payment) is permissible where the permanent disablement stands assessed as final.

· Commutation of Permanent Disablement Benefit into lump sum payment is also allowed in case the total commuted value does not exceed Rs.10000/- (The ceiling is now being raised to Rs.30000/-).

Dependants’ Benefit

Dependents Benefit is a monthly pension payable to the eligible dependents of an insured person who dies as a result of an Employment Injury or occupational disease

Beneficiaries and Duration of benefit

a). Widow / widows during life or until remarriage

b). Legitimate or adopted son until age 18 or if legitimate son is infirm, till infirmity lasts.

c). Legitimate or adopted unmarried daughter until age 18 or until marriage, whichever is earlier, or if infirm, till infirmity lasts and she continues to be unmarried.

In the absence of any widow or legitimate child, the benefit is payable to a parent or grandparent for life, to any other male dependent until age 18 or to an unmarried or widowed female dependent until age 18.

How much

• The total divisible benefit is equivalent to the temporary disablement benefit rate (roughly 70% of the wage rate). The widow / widows share 3/5^th of the benefit and the legitimate or adopted son and daughter 2/5^th each of the benefit. If the total benefit so divided exceeds the full rate, there is a proportionate reduction in the respective shares of the beneficiaries.

• The amount of pension paid to the dependents of a deceased insured person is reviewed vis-à-vis the cost of living index and increases are granted from time to time to compensate for erosion in its real value.

Q17. Write short notes on:

a) Maternity Benefit Act, 1961

b) Provident Fund (PF) Act, 1952

c) Gratuity Act, 1972

Ans. a) Maternity Benefit Act, 1961

F Object of the Act

{ To protect the dignity of motherhood and the dignity of a new person’ birth by providing for the full and healthy maintenance of the woman and her child at this important time when she is not working

F Coverage of the Act

Upon all women employees either employed directly or through contractor except domestic women employed in mines, factories, plantations and also in other establishments if the State Government so decides. Therefore, if the State Government decides to apply this Act to women employees in shops and commercial establishments, they also will get the benefit of this Act. Sec.3

@ Conditions for eligibility of benefits

{ Women indulging temporary or unmarried are eligible for maternity benefit when she is expecting a child and has worked for her employer for at least 80 days in the 12 months immediately preceding the date of her expected delivery.

Sec. 5

GCONDITIONS FOR CLAIMING BENEFITS

Ø Ten weeks before the date of her expected delivery, she may ask the employer to give her light work for a month. At that time she should produce a certificate that she is pregnant.

Ø She should give written notice to the employer about seven weeks before the date of her delivery that she will be absent for six weeks before and after her delivery. She should also name the person to who payment will be made in case she cannot take it herself.

Ø She should take the payment for the first six weeks before she goes on leave.

Ø She will get payment for the six weeks after child-birth within 48 hours of giving proof that she has had child. She will be entitled to 2 nursing breaks of 15 minutes each in the course of her daily work till her child is 15 months.

Ø Her employer cannot discharge her or change her conditions of service while she is on maternity leave.

Sec.5

F Cash Benefits

J Leave with average pay for six weeks before the delivery

J Leave with average pay for six weeks after the delivery

J A medical bonus of Rs. 1000, if the employer does not provide free medical care to the woman.

J An additional leave with pay up to one month if the woman shows proof of illness due to the pregnancy, delivery, miscarriage, or premature birth.

J In case of miscarriage, six weeks leave with average pay from the date of miscarriage.

Non Cash Benefits & Privilege

F Light work for 10 weeks (6 weeks plus 1 month) before the date of her expected delivery, if she asks for it.

F 2 Nursing breaks in the course of her daily work until the child 15 months old.

F No discharge or dismissal while she is on maternity leave.

F No charge to her disadvantage in any of the conditions of her employment while on maternity leave.

Leave for Miscarriage & Tubectomy Operation

v Leave with wages at the rate of maternity benefit, for a period of 6 weeks immediately following the day of her miscarriage or her medical termination of pregnancy.

v Entitled to leave with wages at the rate of maternity benefit for a period of 2 weeks immediately following the day of her tubectomy operation.

L Leave for illness arising out of pregnancy etc.,

Forfeiture of maternity benefit

o If permitted by her employer to absent herself under the provisions of sec.6 for any period during such authorised absence, she shall forfeit her claim to the maternity benefit for such period.

o For discharging or dismissing such a woman during or on account of her absence from work, the employer shall be punishable with imprisonment which shall not be less than 3 months, but it will extend to one year and will find, but not exceeding Rs. 5000/-

b) Provident Fund (PF) ACT 1952

PF act was came into force in 1952 in order to secure the life of an employee for rendering his services to organization, this is a statutory liability of employer to give PF amt to an employee.

This amount is paid after the retirement from the services.

Applicability of the act

PF is applicable in any organization where 20 or more persons are employed
PF is applicable in every state except J & k.

— Benefits of the act

— To provide Monetary benefits to survive after retirement.

— To minimize risk against health, sickness, disablement of the employee and his dependents.

— Old age Pension benefits.

— Widow pension.

— To maintain dignity & Social status.

— PF Contribution

PF is deducted on basic salary. If employee's basic is less than or equals to Rs.6500 he will be covered in pf.

12 % Employee side

3.67%(epf part)+ 8.33 % (Pension part)

13.61% Employer side

3.67 (EPF)+8.33 (Pension)+ 1.1(Admin charge) + 0.5(EDLI) +

0.01(Inspection charge /admin on edli)

Employees Deposit linked insurance scheme.

Challans & Returns

PF challans are submitted on 15^th of every month, 5 days grace period is given to submit challans.

PF Returns are submitted twice a year-

PF RETURNS

Form 5 is used to submit pf monthly return in which new employee details is mentioned.

Form 10 is used to submit pf monthly return in which left employee details is mentioned.

Form 12A that is used for the same purpose which contains consolidated details of that particular month-new joinees, left employees & employees/employer pf contribution.

Form 3A is used for pf annual return.

c) Gratuity Act 1972

Extent and Application

It extends to the whole of India

Applicable to:

every factory, mine, oilfield, plantation, port and railway company; every shop or establishment in which 10 or more persons are employed, or were employed, on any day of the preceding twelve months

Section2
Definitions

S.2 (e) "employee" means any person employed to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical or clerical work

it does not include an apprentice

S.2 (s) "wages" includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.

MEANING OF GRATUITY

THE TERM “GRATUITY” WAS CONSIDERED AS AN AMOUNT GIVEN FREELY AND COULD NOT BE DEMANDED AS A MATTER OF RIGHT BY THE EMPLOYEES. IN MANY CASES GRATUITY WAS GIVEN AS A MATTER OF FAVOUR.

EMPLOYERS USED TO PAY GRATUITY AS A REWARD FOR LONG,CONTINOUS & MERITRORIOUS SERVICE.

Section:4
Gratuity when payable ?

Gratuity shall be payable to an employee Who has rendered continuous service for not less than 05 years on the termination of his employment - on his superannuation, or on his retirement or resignation, or on his death or disablement due to accident or disease:

Note:-

The completion of continuous service of five years shall not be necessary where the termination of the employment of any employee is due to death or disablement:

How to calculate the Amount of Gratuity

Monthly rated employee :

At the rate of 15 days wages based on the rate of wages last drawn by the employee concerned:

Formula:-last drawn wages X 15 days X No. of completed year of service

piece-rated employee, daily wages :

On the average of the total wages received by him for a period of three months immediately preceding the termination of his employment excluding overtime wages

seasonal establishment

At the rate of seven days wages for each season.

Maximum Limit Rs.3,50,000/-

Higher benefits can be paid if the employer so desires.

Can Gratuity be withheld by the employer ?

The gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.

The gratuity payable to an employee may be wholly or partially forfeited

If the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or

If the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.

Section:6
Nomination

Each employee, who has completed one year of service, shall make nomination for to receive the amount of gratuity.

In his nomination, an employee may, distribute the amount of gratuity payable to him amongst more than one nominee.

If at the time of making nomination he has already family, he cannot make nomination in favour of a person who is not a member of his family. If he does so it shall be void.

Fresh nomination in favour of one or more members of his family is required where he has not family at the time of making nomination..

If a nominee predeceases the employee, the interest of the nominee shall revert to the employee who can make a fresh nomination.

Every nomination, fresh nomination or alteration of nomination, as the case may be, shall be sent by the employee to his employer, who shall keep the same in his safe custody

Section:7
Determination of the amount of gratuity

A person who is eligible for payment of gratuity shall send a written application to the employer.

The employer shall determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount gratuity so determined as soon as gratuity becomes payable and whether or not an application has been made by the concerned employee.

The employer shall arrange to pay the amount of gratuity within 30 days from the date it becomes payable.

Section:9
Penalties

Knowingly making false statement/ false representation to avoid to make payment à imprisonment up to 06 months, or with fine which may extend to Rs.10,000/- or with both.

Breach, or makes default in complying with any of the provisions of this Act à imprisonment for 03 months to 01 year, or with fine which shall not be less than Rs.10,000/- but which may extend to Rs.20,000/- or with both:

Non-payment of any gratuity à imprisonment 6 months to 02 years + a fine.

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