Brief History of The Factories Act, 1948- In order to trace the history of legislation, which resulted in legislating the

Factories Act, 1948, we have to go back to the last decade of the 19th Century. Till the end of 19th Century there was
no control of the State over the conditions of the employment and the employers did according to their liking and
advantages. After great objections by the employers the Indian Factories Act, 1881, was passed which gave a limited
measure of protection to children. Provisions for fencing of some dangerous parts of machinery were also there. In
1890 Government of India appointed a Factories Commission and on their recommendation the Act of 1891 was
passed. In 1911 another Act was passed after taking into account the reports of Free Smith Committee and Factory
Labour Commission.
The Indian Factories Act, 1911, was further amended by Acts of 1923, 1926 and 1931. In 1929 a Royal Commission
of Indian Labour was appointed to enquire into and report on the existing condition of labour in industrial undertakings
and plantations in British India; on the health, efficiency and standard of living of workers and on the relations
between the employer and employee and to make recommendations. As a result the Factories Act, 1934, came into
being which was again amended by the Act of 1935, 1937, 1940, 1941, 1944, 1945, 1946, 1947, 1948 and in 1976.
The Act of 1976 received assent of the President on
4th September, 1976 and came into force with effect from October 26, 1976.
The Factories (Amendment) Act, 1891-Dissatisfaction with provisions for the protection of children and, in particular,
the absence of any regulation of workmen's labour, gave rise to an agitation for the amendment of the Act.
After inquiry by the Bombay Factory
Commission of 1884 and the Factory Labour Commission of 1890, as amending Act was passed in 1891. By the
definition of factory was amended to include premises in which 50 persons or more were employed and Local
Governments were granted powers to extend it to premises in which 20 persons or more were employed. Provisions
clating to women's work were now introduced the hours of work or women being limited 11 hours a day with an
interval of rest of an hour help.
It is to be noted that the above Act codifies the old international principle that none should cmploy any worker on any
manufacturing process without ensuring his health, safety and welfare. Although it scems that the opinions with
regard to the measures to modify the old factory law were divergent. Some complained that the Government was
going rather too fast in the matter of labour legislation, some felt that these measures were not far reaching enough
while others regarded the new Act as the "Chapter of the Workers Right."
Important Changes Brought by Factory Act of 1948 in the Act of 1934.
Applicability-The Act of 1934 applied to industrial establishments where manufacturing process was carried on with
the aid of power and where 20, or more workers were employed, but this new Act of 1948 applies to establishments,
employing 10, or more workers, where power is used, and 20 or more workers where power is not used. Under the
Act of 1934, the State Government had power to extend the application of the Act to establishments where power
was used and where more than 10 workers were employed. Under the Act of 1948, on the other hand, the State
Government may apply the provisions of this Act to any establishment irrespective of the number of the workers
employed therein and irrespective of the fact that the manufacturing work in it is carried on by power or otherwise.
Health, Safety and Welfare- The Factories Act, 1948, specifically provides for the disposal of wastes and effluents,
the elimination of dust and fumes, control of temperature, supply of cool drinking water during the summer and for the
employment of cleaners to keep the water closets clean. It also provides for casing of new machinery devices for
cutting of powers, hoists and lifts, cranes and other lifting machines, preserve plants and precautions against
dangerous fumes, explosives and inflammable materials.
Medical practitioners attending on persons suffering from occupational diseases are required to report the case of the
Chief Inspector of Factories and Factory Inspectors are required to take samples of substances used in the
manufacturing process, if their use is either contrary to the provisions of the Act or likely to cause bodily injury to the
health of the worker.
Employment of Children- Under the Act of 1934, the minimum age of employment in the factories was 12 years which
is according to the new Act 14 years, and the period of adolescence, which was from 15 to 17 years has now become
17 to 18 years.
Hours of Work and Overtime Work-The Act of 1948 fixed the weekly and daily working hours to be 48 and 8
respectively. For children the working hours have been reduced from 5 to 4-1/2 hours per day.
Employment of children and women between 7 p.m. and 6 a.m. is prohibited and for overtime work the employee is
entitled to twice their normal rate of wages.
Registration, etc.-The State Government is charged with a duty to see that all the factories are registered and take a
licence for working which should be periodically renewed.
The Factories (Amendment) Act, 1954-In pursuant to recommendations of International Labour Convention, a new
chapter viz. "Annual Leave with Wages" was substituted for Chapter VIII of the Act. By this amendment employment
of women and young persons during night was also probibited.
Object of the Act-The Factories Act, 1948 was passed to consolidate and amend the Law regulating labour in
factories. It is probably true that all Legislation in a welfare State is enacted with the object of promoting general
welfare, but certain types of enactments are more responsible to some urgent social demands and also have more.
immediate and visible impact on social vices by operating more directly to achieve social reform.
The Factories Act was passed to make it more appropriate and beneficial to the workers in factories. It has been
observed by the Supreme Court in Works Manager, Central Railway's Workshop, Jhansi Vs. Vishwanath, AIR 1970
SC 483, that the Factories Act was intended to consolidate and amend the law regulating labour in factories. The
Factories Act belongs to this category, and therefore, demands an interpretation liberal enough to achieve the
legislative purpose without violence to the language. Thus, Factroies Act is a social enactment to achieve social
reform and must receive liberal construction.
The Supreme Court has again observed that the title and preamble of the Act would show that this is an Act to
consolidate and amend the law regulating labour in factories. Thus, the main object of the Act as is evident from the
provisions of the Factories Act, was to ensure proper, safe and healthy working conditions in the factories and devote
their time and labour in the working process of the factory without being afraid of bodily strain and without fear and
danger of infection and accidents. 
In ordor to ensure salc, healthy and sanitary working conditions including rest intervals and
measures of their welfare. The act makes provision for the appointment of inspectors to sce that
the objects of the Act are achieved and benefits are ensured to the workers.
The Factories (Amendment) Act, 1976-It introduced important changes in the Principal Act of
1948, namely, the definition of workers is to include a person employed by or through any
agency (including a contractor); effective arrangements shall be made in every factory for the
treatment of wastes and effluents due to the manufacturing process carried on therein; safety
measures are made more extensive and strict; precautions regarding the use of portable electric
light; precaution in case of fire, maintenance of buildings, appointment of safety affairs, working
hours shall be as follows-
Twelve working hours in a day, thirteen hours spread over in the day, sixty working hours in a
week including overtime and seventy five hours overtime in any quarter, notice of certain
dangerous occurrences; safety and, occupational health surveys; and computation of period of
limitation.
Constitutional Validity of The Act-The Act does not violate any of the provisions of the
Constitution. No doubt a wide discretionary power has been conferred on the Central
Government by S. 1 (3) but such conferment is reasonable in view of the policy of the
Legislature as expressed by the Act and the administrative difficulties that are inherent in the
operation of the Act.
Scheme of the Act of 1948-The Factories Act, 1948, consists of eleven Chapters. Chapter I deals
with the Prelimnary provisions.
Chapter II contains the provisions for the appointment of Inspectors, their powers and certifying
Surgeon. Chapter III lays down the provisions for health of the workers. Chapter IV contains the
provisions in respect of the safety of the workers. It also includes the provisions for precautions
to be taken in case of fire. Chaptr V deals with the welfare of the workers. Chapter VI provides
the working hours of adults.
Chapter VII contains the provisions in regard to the employment of young persons. Chapter VIII
contains the provision of annual leave with wages of a, woker. Chapter IX deals with the special
provisions including the power of the State Government to apply the Act to certain premises and
to exempt public institutions. Chapter X deals with the penalties and the procedure to be adopted
in the award or imposition of such punishments. The punishments are provided for the breach of
the provisions of this Act. Chapter XI contains the supplementary provisions of the Act.

Measure Provided for the Protection of the Health of Workers Under the Factories Act, 1948.

1. Cleanliness - S.11
2.Disposal of Wastes and Effluents - S.12
3.Ventilation & Temperature - S.13
4.Dust and Fume - S.14
5.Artificial Humidification - S.15
6.Overcrowding - S.16
7.Lighting - S.17
8.Drinking Water
9.Sanitation Facilities - S.19

Meaning of the Concept of the Welfare of the Workers - The concept of welfare indicates a
condition of well being, happiness, satisfaction, conservation and development of human
resources. Since the term welfare applied to labour hence it refers to the adoption of measures
which aim at promoting the physical, psychological and general well being of the working
population. The basic aim of welfare services in an industry is to improve the living and working
conditions of workers and their families, because the worker's well-being cannot be achieved in
isolation of his family. The concept of welfare is necessarily cynamic bearing a different
interpretation from country to country and time to time and even in the same country, according
to its value system, social institution, degree of industrialisation and general level of social and
economic development.
According to ILO classification, welfare amenities are (1) latrines and urinals, (ii) washing and
bathing facilities, (lil). creches, (iv) rest shelters and canteens, (v) arrangements for drinking
water, (vi) arrangements for prevention of Fatigue, (vil) health services including occupational
safety, (vili) administrative arrangement within a plant or establishment to lookafter welfare, (ix)
uniforms and protective cooling, and (x) shift allowance.
The concept received new strength as a national objective in the wake of independence.
In December, 1947 an industrial truce
Resolution was adopted by the representatives of Government employers and workers for the
reconstruction of the country's economy.
The resolution- emphasised that labour welfare was essential for industrial amity. It was also
influenced by the Philadelphia Declaration of May, 1944. Thereafter the framers of the
Constitution of India recognised labour welfare as national policy to be followed in future and
Articles 41, 42, & 43 are the clear expressions thereof. As it stands today, it is thus synthesis of
social, economic and political developments.
It is to be ntoed that Chapter V containing Ss. 42 to 50 of the Factories Act, 1950 deals with the
various provisions relating to the uniform standard of welfare order to industrial labour. The
various facilities under Chapter V may be explained as follows 
1. Washing Facilities - According to S. 42, in every factory-
(a) Adequate and suitable facilities for washing shall be provided and maintained for the use of
the workmen therein;
(b) Separate adequate screened facilities shall be provided for the use of male and female
workers.
(c) Such facilities shall be conveniently accessible and shall be kept
clean.
2. Facilities for Storing and Drying Clothing- According to S. 43, the State Government may in
respect of any factory or class or description of factories make rules requiring the provision
therein of suitable places for keeping clothing not worn during working hours and for the drying
of wet clothing.
3. Sitting Facilities -S. 44 of the Act provides for suitable sitting arrangements in every factory
where workers are obliged to work in a standing position, so that such workers may take
advantage of the resting to secure efficiency in their work.
If the work can be performed in sitting position with equal efficiency, then the Chief Inspector
may order for providing such sitting arrangements as may be practicable. Standing and working
for a long time causes fatigue and adversely affects the efficiency of the workmen, so sitting
facilities should be provided as far as possible.
4. First-Aid-According to S. 45, there shall in every factory be provided and maintained so as to
be readily accessible during all working hours first-aid boxes or cup-boards equipped with the
prescribed contents, and the number of such boxes or cup-boards equipped with the prescribed
contents and the number of such boxes or cup-boards to be provided and maintained shall not be
less than one for every one hundred and fifty workers ordinarily employed at any one time in the
factory.
In every factory wherein more than five hundred workers are ordinarily employed there shall be
provided and maintained an ambulance room of the prescribed size containing the prescribed
equipment in the charge of such medical and nursing staff as may be precribed and those
facilities shall always be made readily available during the working hours of the factory.
5. Canteens - Accouding to S. 46, the State Government may make rules requiring a canteen or
canteens to be provided in any factory where more than 250 workers are ordinarily employed.
Such rules may provide for the date by which the canteen shall be opened, the standards in
respect of construction, accommodation, furniture and other requirements of the canteen, the
food stuffs to be served in the canteen and the charges therefor and the constitution of the
managing committee for the canteen and representation of the workers therein.
It has been held by the Calcutta High Court in the case of Bengal
Water Proof Workers Vs. State of West Bengal, [FL.R. (1970) 2 Page 125 (1953)1, that the
liability of a factory under the Factories Act, 1948 is only to set up and maintain a canteen so that
the workers may have the benefit of its existence. The terms and conditions of service of the staff
of the canteen do not come under that liability.
In Kanpur Suraksha Karmchari Union etc., Vs. The Union of India, 1989 Lab LJ 26 SC, the
Supreme Court has clearly laid down that every factory private or public including Defence
Industrial Installations there shall be a canteen and the employees of the canteen whether
incorporated or not shall be treated as employees of the factory. It is immaterial that the canteen
managing committee works as advisory body. Similar judgement was given by Andhra Pradesh
High Court in A.P. Dairy Development Co-operative Federation Ltd. Vs. Shiva Das Pillay and
Others, (1992) 1 Lab LJ 153 A.P. Madras High Court has ruled in S.R.F. Ltd. Vs. Tamil Nadu
State, (1995) 1LR 687 (Mad.), that it is not the liability of the employer occupier to appoint his
own men to run the canteen.
6. Shelter, Rest-rooms and Lunch-rooms- According to S. 47, in factories wherein more than 150
workers are ordinarily employed, adequate and suitable shelters or rest-rooms and suitable lunch
room, with provisions for drinking water where workers can eat meals brought by them shall be
provided and maintained for the use of the workers.
Shelters, rest-rooms and lunch-rooms provided as aforesaid shall be sufficiently lighted,
ventiliated and shall be maintained in a cool and clean condition. Where a lunch-room exists no
worker shall eat any food in work room.
7. Creches -S. 48 speaks of creches to be provided for the use of children of the female workers
employed in the factory. Where there are more than 30 women workers employed in a factory
there shall be provided and maintained a suitable room or rooms for the use of the children of the
female workers below the age of 6 years. Such room shall provide -
(a) adequate accommodations;
(b) adequately lighted and ventilated;
(c) maintained in a clean and sanitary condition; and (d) under the charge of a woman trained for
taking care of children.
The State Government may make rules -
(a) prescribing the location and the standards in respect of construction, accommodation,
furniture and other equipment of rooms to be provided, under this section;
(b) requiring the provision in factories to which this section applies of additional facilities for the
care of children belonging to women workers, including suitable provision of facilities for
washing and changing their clothing;
(c) requiring the provision in any factory of free milk or refreshment or both for such children;
(d) requiring that facilities should be given in any factory for the mothers of such children to feed
them at the necessary intervals.
8. Welfare Officers - According to S. 49, the occupier of a factory wherein more than 500
workers or more are ordinarily employed is obliged to appoint such number of welfare officers
as may be precirbed.
The State Government may prescribe the duties, qualifications and conditions of service of the
welfare officers.
It was held in Employee's Association of Northern India Vs.
Secretary of Labour, AIR 1952 All. 109, that the provision of this section shall apply to those
Sugar Factories also wherein five hundred or more workers are employed for a few months in a
year. This plea will not be acceptable that the provision of S. 46 will not apply to sugar mills as
they are seasonal.
Where special procedure is prescribed for the termination of services of the Labour Welfare
Officer, that procedure cannot be applied for termination of service of Personnel Officer even if
he incidentally looks after the work of the Welfare Officer.
In Hazarilal Vs. Sugar Co. Ltd., AIR 1964 All. 411, it has been held that Welfare Officer is not a
worker. But an Assistant Personnel Officer is not equivalent to the Welfare Officer, if the
number of workers is below 100 such appointment will be illegal.
Power to Make Rules to Supplement To This Chapter - S. 50 provides that the Government may
make rules-
(a) exempting, subject to compliance with such alternative arrangements for the welfare of
workers as may be prescribed, any factory or class or description of factories from compliance
with any of the provisions of this chapter; 
(b) requiring in any factory or class or description of factories that representatives of the workers
employed in the factory shall be associated with the management of the welfare arrangements of
the workers.

------
WAGES

Definition of "Wages"- According to S. 2 (vi) of the Payment of Wages Act, 1936, wages means
"all remuneration (whether by way of salary, allowance or otherwise) expressed in terms of
money or capable of being so expressed which would, if the terms 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"-
(a) Any remuneration payable under any award or settlement between the parties or order of a
Court;
(b) Any remuneration to which the person employed is entitled in respect of overtime work or
holidays or any leave period;
(c) Any additional remuneration payable under the terms of)
employment, (whether called a bonus or by any other name); 

(d) Any sum which by reason of determination of employment of the person employed is
payable under any law, contract or instrument which provides for the payment of such sum,
whether with or without deductions; but does not provide for the time within which the payment
is to be made;
(e) Any sum to which the person employed is entitled under any scheme framed under any law
for the time being in force-
But does not include-
(i) any bonus (whether under a scheme of profit-sharing or otherwise) which docs not form part
of the remuneration payable under the terms of employment or which is not payable under any
award or settlement between the parties or order of a Court;
(ii) the value of any house accommodation, or of the supply of light, water medical attendance or
other amenity or of any service excluded from the computation of wages by a general or special
order of the State Government; -
(lil) any contribution paid by the employer to any pension or provident fund, if any, the interest
that may have accrued thereon;
(iv) any travelling allowance of the value of any travelling concession;
(v) any sum paid to the employed person to defray special expenses entailed in him by the nature
of its employer;
(vi) any gratuity payable on the determination of employment in cases other than those specified
in sub-clause
 (d). It appears from the perusal of the definition of wages and subsequent interpretation made by
the various High Courts and Supreme Court on the subject that the definition has both the aspects
i.e., exclusive and inclusive in its scope. Bonus and retrenchement compensation have been
included in the wages whereas loan and lay off compensation did not include under the scope of
the definition of wages. Howover the compensation on the closure of the establishment is
included under the term wages.
Wage Period and Its Determination -As a matter of fact, the term
"Wage Period" has no where been defined under the Payment of Wages Act, 1936. S. 3 of the
Act merely says that every person responsible for the payment of wages shall fix wage period in
respect of which such wages shall be payable. It futher says that no wage period shall exceed one
month.
History of Law Relating to the Payment of Wages Act, 1936-It is to be noted that the labour
Legislation in India relating to workers did not exist at all till 1936.

A private Bill introduced in 1925, was withdrawn. Enquiries conducted by the Bombay Labour
Office and by the Government of India showed that neither wage periods nor proper payment at
the proper time were existing and the levying of fines was a great abuse in itself. The Royal
Commission reported that imposing of fines and making deduction from wages was the order of
the days in railways and factories.
The Royal Commission made the following recommendations-
1. Exemption of children from fines.
2. Fine not to exceed half an anna in the rupee of the worker's earnings.
3. The sum realized as fine to be used for some benefit of the employees as a class on approval
by some authority.
4. Notice to be posted for acts or omissions fixed.
5. Deductions for goods having been damaged not to exceed their wholesale price.
6. Allowing deductions for housing accommodation.
7. Rendering illegal fines and deductions penal.
A Payment of Wages Bill based on recommendation of the Commission was placed before the
Legislative Asembly in 1933, but the dissolution of the Asembly nipped the whole thing in the
bud. It was only in 1936 that the Act could be passed and it came into force on 25th March,
1937. It has been amended from time to time, the latest being the Payment of Wages Amendment
Act, 1982.
The Object and Scope of the Payment of Wages Act, 1936 - The object of the Act as declared by
the Preamble itself that it is an Act to regulate the payment of wages to certain classes of
employed persons in industry.
In Arvind Mills Ltd. Vs. K.R. Gadgil, AIR 1941 Bom. 26; & Codialabaila Press Vs. Monappa,
(1963) 1 LLJ 638, a Bench of the Bombay High Court considered the object of the Act and laid
down that the general purpose of the Act is to provide that employed persons shall be paid their
wages in particular form and at regular intervals without any unauthorised deductions.
It is to be noted that the main object of the Act is to prevent the delay in payment of wages and
illegitimate deductions from the wages.
(Condiala- baila Press Vs. Monappa, (1963) ILLJ 638).
The Act is intended to regulate the payment of wages to certain classes of persons employed in
industries and the object is to provide for a speedy and effective remedy to the employees in
respect of their claims arising out of illegal deductions or unjustified delay made in paying the
wages to them Vide: Rameshwar Lal Vs. Jogendra Das, AIR
1970 Orissa 76. However, any deduction from the wages of the workmen, under a settlement
between the representative union and employer can permit a deduction even though such
deduction may not be authorised or legally permissible under the Act.
In Delhi Transport Corporation Vs. D.D. Gupta, (1984), 2 LLJ 79 (Delhi), it was held that the
Act furnished a summary remedy for wages carned in an office and not paid, but it does not
provide a remedy for investigation of quarrels which concern the office.
The aim of the Act can be summarised as under -
(i) It provides that the employed person shall be paid their wages in a particular form;
(ii) The payments will be made at regular intervals;
(ili) It prohibits unlawful and unauthorised deductions from the wages.
The Act is applicable to the whole of India. According to the Act it is applicable to-
(i) The persons employed in any factory;
(ii) Persons employed by a railway administration upon a railway othewise than a factory,
directly or through a subcontract fulfilling a contract with a railway administration;
(iii) Any class of persons employed in any industrial establishment or in any class or group of
industrial establishments to which the State Government may, after giving three months notice of
its intention of doing so by notification in the Officical Gazette, extend the provisions of this Act.
Nothing in the Act shall apply to wages payable in respect of a wage period if average wages for
such wage period is Rs. 1600 or more a month.
The Act provides that all wages shall be paid in current coin or currency notes or both. It also
provides for the fixation of wage period and lays down that no wage period shall exceed one
month.
In undertakings with less than 1,000 employees, wages must be paid before the expiry of the 7th
day and in other undertakings before the 10th day after the last day of the wages period
concerned. It has also limited the extent and number of deductions which can be made for these
wages, such as, for absence from duty, for damages or loss, taxes, etc. "The general purpose of
the Payment of Wages Act, 1936 is that the employed persons shall be paid the wages in
particular form and at regular intervals and without any unauthorised deduction."
It has been laid down in Bank of India Vs. Raj Gopalan, (2000)
LLJ 15 that the act will cover those staff also who retired after 1-11-86 and they will also get
benefit who took voluntary retirement although the pension in scheme in bank was enforced
w.e.f. 1.11.93.

-------

Meaning of Deduction -Explanation No. 1 to S. 7(1) says that every payment made by the
employed person to the employer or his agent shall, for the purposes of this Act, be deemed to be
a deduction from wages. Explanation No. 2 lays down that any loss of wages resulting from the
imposition, upon a person, of the following penalties shall not be deemed to be a deduction from
wages -
(i the withholding of increment or promotion including the stoppage of increment at any
efficiency bar;
(il) the reduction to a lower post or time scale or to a lower stage in a scale; or
(tii) suspension.
But these penalties shall not be deemed to be deductions provided the rules framed by the
employer for the imposition of any such penalty are in conformity with the requirements, if any,
which may be specified in this behalf by the State Government by notification in the Official
Gazette.
Permissible Deductions - In view of S. 7(2) deductions from the wages of an employed person
shall be made only in accordance with the provision of this Act, and may be of the following
kinds only, namely-
(a) fines;
(b) deductions for absence from duty;
(c) deductions for damages to or loss of goods expressly entrusted to employed persons for
custody, or for loss of money for which he is required to account, where such damage or loss is
directly attributable to his neglect or default;
(d) deductions for house-accommodation supplied by the employer or by Government or any
housing board set up under any law for the time being in force or any other authority engaged in
the business of subsiding house accommodation which may be specified in this behalf by the
State Government by notification in the Official Gazette;
(e) deductions for such amenities and services supplied by the employer as the State Government
or any officer specified by it in this behalf may be general or special order authorise. The
services shall not members of their families, or both, and approved by the State Government or
any officer specified by it in this behalf, during the continuance of such approval;
(kkk) deductions made, with the written authorisation of the employed person, for the payment
of the fees payable by him for the membership of any trade union registered under the Trade
Unions Act, 1926;
It was held in Man Sukh Gopinath Jadhava Vs. W. Muhapat,
(1982) 1 LLJ 114 (Bombay), by the Bombay High Court that agreement for deduction of
membership fee of union between the employer and employees shall be deemed legal and
binding. The decision of Municipal Corporation Vs. N. L. Abhayankar, (1979) 11 LLJ 258
(Bombay), the order of the Court or the Authority of employer to deduct the levy of the
membership of the union and remit the amount to the union office-bearer is valid.
(1) deductions for payment of in insurance premium on Fidelity
Guarantee Bonds;
(m) deductions for recovery of losses sustained by a railway administration on account of
acceptance by the employed person of counterfeit or base coins or mutilated or forged currency
notes;
(n). deuctions for recovery of losses sustained by railway administration on account of failure of
the employed person to invoice, to bill, to collect or account for the appropriate charges due to
that administration, whether on fares, freight, demurrage, wharfage and cranage or in respect of
sale of food in catering establishment or in respect of sale of commodities in grain shops or
otherwise;
(o) deductions for recovery of losses sustained by a railway administation on account of any
rebates or refunds incorrectly granted by the employed person where such loss is directly
attributable to his neglect or default. The Indian Railway Establishment Code is a body of
statutory rules under Article 309 read with Article 372 of the Constitution. If, therefore, there is
an order under Rule 2044 it is an order of competent authority directing deductions to be made
from the wages and would be in accordance with S. 7 (2) (h) of the Act. Vide :
Anant Ram Vs. D.M. Jodhpur, AIR 1956 Raj. 145.
(p) deductions, made with the written authorisation of the employed person, for contribution to
the Prime Minister's National Relief Fund or to such other Fund as the Central Government may,
by notification in the Official Gazette, specify. 
Total Deductions from Wages Permissible- The total deductions in any wage period shall not
exceed the following limit -
(a) In cases where such deductions are wholly or partly made for payments to Cooperative
Societies shall not exceed 75% of such wages; and
(b) In cases other than above the deduction shall not exceed 50% of such wages.
In case where the total deductions exceed the percentage of wage allowed above, the excess may
be recovered in such manner as prescribed under the rules. The provisions of this section cannot
be taken to preclude the employer from recovering from the wages of the employed person or
otherwise any amount due under any law other than the Railways Act. 1890.
It has been held by the Mysore High Court in S. Roadways Vs.
Sathyanarayana Raju FLR (1971) 23 P 42 (45), that the deductions would be contrary to the
provisions of the Act where it is not within the enumeration of S. 7 (2) or is made without
compliance with any statutory provision which prescribes the procedure regulating the
deduction.
Where certain workers resorted to strike and refused to sign guarantee bond as required by the
management, the management is entitled to deduct wages for the preiod of strike on the principle
of 'no work no pay'.
Ss. 8 to 13 contain the exhaustive provisions regarding the deductions which are authorised
under the Act. S. 8 provides for the fines and Ss. 9, 10 to 13 deal with the deductions which are
permissible.
Fines -S. 8 contains the power of the employer to impose a fine on the employees. In respect of
acts or omissions on his part as the employer, with the previous approval of the State
Government or of the prescribed authority, may have specified by notice under sub-section
(2). A notice specifying such acts and shall be exhibited in the prescribed manner on the
premises in which the employment is carried on or in the case of persons employed upon railway
(otherwise than in factory) at the prescribed place or places. Sub-section (3) of S. 8 lays down
that before a fine can be imposed, the employee must be given an opportunity of being heard
against the fine and should be given a show cause notice, why a fine should not be imposed or
the prescribed procedure must be followed.
2. Deductions for Absence from Duty-Sub-section (1) of S. 9 lays down that the deductions may
be made U/S. 7 (2) (b) only on account of the absence of an employed person from the place or
places where, by the terms of his employment, he is required to work. Such absence may be for
the whole or any part of the period during which he is so required to work.
Where the employee is prevented from reaching the work place due to 'Bund', employer is not
entitled to deduct his wages.
3. Deductions for Damage or Loss-S. 10 explains the deductions for damage or loss as authorised
to be made by employer S. 7 (2) (c) or
S. 7 (2) (o). There are two restrictions imposed U/S. 10 for such a deduction-
(a) Such a deduction shall not exceed the amount of the damage or loss caused to the employer
by the neglect or default of the employed person; and
(b) Such deduction shall not be made until the employed person has been given an opportunity of
showing cause against the deduction.
According to S. 10 (2), all such deductions and realisations shall be recorded in register to be
kept by the person responsible for the payment of wages in such form as may be prescribed.
4. Deductions for Services Rendered -S. 11 provides that the employer is authorised to make
deductions from wages for amenities and services rendered by the employer as the State
Government might have authorised by General or Special Order. We have already seen that
S. 7 (2)(d) or S. 2(e) permit deductions from wages of an employed person for accommodation
supplied by the employer, the Government, any housing board, or any other authority engaged in
the business.
According to S. 11 of the Act, three conditions must be fulfilled-
(a) Such services or amenities must be accepted by the employed person; and
(b) Such deductions should not exceed the amount equivalent to the value of the services
rendered; and
(c) Such deductions are premissible subject to such conditions as imposed by the State
Government.
In Baldev Pandey Vs. Presiding Officer and Others, a workman of Tata Iron and Steel Company
Ltd. raised an industrial dispute to the effect that his services were dismissed only on the ground
of conviction in criminal case and subsequently he was acquitted from the charges by the High
Court. The labour Court passed an award directing reinstatement with full back wages but the
management has not paid consequential benefits. The workman filed an application before the
authority under the Payment of Wages Act, 1936 but subsequently also filed an application U/S.
33 (c) (2) of the Industrial Disputes Act. The application was objected mainly on the ground of
res- judicata. The High Court rejected the contention of the management and held that the
provisions of Payment of Wages Act, 1936 pertain to the deduction or delayed wages only and as
such the claim of other benefits under the Industrial Disputes Act is not barred by the principle of
res judicata.
5. Deductions for Recovery of Advances- S. 12 of the Act imposes the following conditions for
the deductions to be made from the payment of wages of an employed person for recovery of
advances-
(a) The deductions made for the advances which are made before the employment begain, shall
be recoverable only from the first payment of wages in respect of a complete wage-period, but
no deduction shall be made for travelling expenses; and
(b) The deductions for advances of wages during the employment for unearned wages are subject
to rules made by the State Government.
These rules of the State Government may prescribe the extent to which advance may be given
and the instalments for repayment thereof.
The advances given during the employment on account of earned wages are not subject to any
restriction.
6. Deductions for Recovery of Loans- Deductions for recovery of loans granted under clause (I
or (I of sub-section (2) of S. 7 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.
7. Deductions for Income-tax-S. 7 (2) (g) permits deductions of Income-tax payable by the
employed person which shall be to the extent the tax is payable under the Income Tax Act. The
amount of Income Tax can be recovered in instalments of 12 months as it would be vary hard for
the workman to allow deduction in one month's wages.
8. Deductions by the Order of the Court-S. 7 (2) (h) authorises deductions required to be the
order of authority competent to make such orders. S. 7 (2) (h) rquires that the order should be
passed by an authority and secondly, that the authority should be competent to make the order.
The Supreme Court in Ganeshi Ram Vs. The District Magistrate has held that - (1) The position
under the Act is clear. U/S. 7 of the Payment of Wages Act, 1923 certain specified deductions
are permitted.
The claims for recovery of wages can be validly made U/S. 15 (2) and awarded U/S. 13 (3) only
where if it is shown that the impugned deduction is not authorised or justified by S. 7. Thus, it is
only in respect of unauthorised or illegal deductions that claims can be made before the authority
by an aggrieved workman.
As per decision in Mansukh Gopinath Jadhav Vs. W. M. Bapat, the subscription for the
membership of the Trade Union can be made provided there is agreement between the
employees and the employer to that effect.
9. Deductions for Provident Fund -S. 7 (2) (i) permits deduction for subscriptions to provident
fund or for repayment of advances taken from any Provident Fund to which the Provident Funds
Act, 1925 applies or any recognised provident fund as defined in S. 58-4 of the Income-Tax Act,
1922 or any provident fund approved in this behalf by the State Government during the
continuance of such approval.
In view of this provision the employer can make deduction for subscription to such provident
fund or for repayment of advance from such provident fund.
10. Deductions for Payments to Co-operative Societies and Insurance Scheme- S. 13 of the Act
imposes such conditions on the deductions under S. 7 (2) () and (k) as the State Government may
impose. 

-----------
Brief History of Employees' State Insurance Act, 1948- It is to be noted that social insurance
attracted attention in India after World War I. But more than two decades have passed since the
first social Insurance legislation was enacted. In the meanwhile, however, social protection was
provided to certain groups of workers under the workmen's compensation and maternity benefit
legislation, while provident fund laws have developed simultaneously with social insurance law.
These Acts, however, were based on the doctrine of employer's liability rather than on the
principles and methods of social insurance. Social insurance was the object of a great deal of
discussion until passing of the Employee's State Insurance Act in 1948.
The subject of health insurance for industrial workers was first discussed in the Indian
Legislature in 1927 in which year the ratification of two conventions adopted by the International
Labour Conference came up for discussion. in chose discussions the Government of India, while
accepting the view that the need of Indian workers in other countries expressed their liability to
ratify the convention or to makc any provision by way of health insurance on account of practical
difficulties.
Nevertheless, they instructed the provincial Governments to examine and suggest possibilities of
introducting provision against sickness.
The Royal Commission gave certain suggestion of a limited tentative nature intended to be
measures preliminary to the preparation of a complete Scheme after adequate statistical material
had been collected. The outbreak of World War I gave an impetus to industrial development in
India. The general awakening during the World War and the common urge for a new social order
in the post-war world have had their influence on the Indian Government's policies particularly
as regards industrial labour whose support and co-operation in war-time industries was very
much needed. The influence of the International Labour Organization, the Atlantic Charter, the
Beveridge Report etc. have quickened the pace of social insurance movement in India
considerably.
Object of the Employees' State Insurance Act, 1948- The principal object of the Act is to secure
sickness, maternity disablement and medical benefits to employees of factories and
establishment and to their dependents. The benefit of the Act extends to the employees
mentioned in S. 2 (9) (i) whether working inside the factory or establishment or elsewhere Vide :
G. Subba Rao Vs. APRT
Corporation, 1972 Lab. IC 1058.
The provisions of this Act apply in the first instance to all factories including factorles belonging
to the Goverenment other than seasonal factories. Wide powers have been conferred upon the
appropriate Government to extend the provisions of the Act or any of them to any other
establishments, industrial, commercial, agricultural or otherwise, after giving six months notice
of the intention of so doing by notification in the Offical Gazette [S. 1 (5)]. Similarly, any factory
or establishment or class of factories or establishments in any area may be exempted by the
appropriate Government by notification in the official Gazette from the operation of the Act for a
period of not exceeding one year and such exemption may be renewed from time to time S. 87.
granted to any person or class of persons working in any factory or establishment to which this
Act applies (S. 88).
The expression
"appropriate Government means the Central
Government in respect of establishments under the Control of Government or Railway
Administration or a major port or mine or oil-field and the State Government in all other cases S.
2 (1)."
Scope of The Act-The Employees' State Insurance Act, 1948, applies in the first instance to all
factories which are not seasonal, and it may be extended to any other establishment or class of
establishment, industrial, commercial, agricultural or otherwise. The Act covers labour employed
directly including the clerical staff, but not members of the Armed Forces nor any person whose
salary in the aggregate exceeds Rs.
40,000 a month.
(i) Medical Benefit- Whenever any insured person needs medical aid, he or she will have it free.
They can get the medicine free of cost from the dispensary which will be run or arranged for near
the employee's home.
About hospital accommodation needed in certain cases, arrangement have been made with the
State hospitals which will set up extra beds, if necessary, to accommodate insured persons
needing indoor hospital treatment in serious and emergent cases.
(il) Maternity Benefit - Women workers will be entittled to receive maternity benefit for 12
weeks. They will also be entitled to medical aid at the aforesaid medical institution i.e., at State
Insurance Dispensaries. (ili) Disablement Benefit - A workman disabled by 'employment injury
will receive for the period of disablement or life depending on whether the disablement is
temporary or full and permanent, as the case may be, a monthly pension equivalent to half his
average wages during the previous. 12 months, subject to a maximum and minimum. Where
disablement is partial the pension will be proportionately reduced.
(iv) Dependent's Benefit-If an insured person is hurt in the course of his work and dies as a
result, dependants, that is, his widow, legitimate (or adopted) sons and legitimate unmarried
daughters will get a pension. The widow will get a pension all her life or till re-marriage, each
legitimate and adopted son will have it up to the age of 15 or 18, if his education continues till
then, and each legitimate unmarried daughter will have it up to the age of 15-or untill she
marries, whichever is earlier or till the age of 18, if her education continues. In cases where there
are no widow or children, that is to say, into the records, if the deceased employee has no wife or
children, the pension will go to other dependants of the deceased workman. In such cases the
rates of pension will be decided by the Employees' State Insurance Court.
(6) Sickness Benefit- An employec, if certificd sickness and incapable of working wil receive for
a period not excceding 8 weeks in my continuous 12 monthly period a cash allowance equal
approximately to half his average daily wages during the previous six months. He will also be
entitled to receive medical care and treatment at such hospitals, employed may be allotted.
dispensaries or other institutions to which the factory in which he is (vi) Funeral Benefit-If an
employee dies, his eldest surviving member of the family is entitled to the funeral expenses for
the performance of his last rites. If a co-employee spends that amount, he shall be entitled to be
compensated.
Applicability of the Act-The Employees' State Insurance Act, 1948 extends to the whole of
India.
It shall come into force on such date or dates as the Central Government may by notification in
the Offical Gazette appoint and different dates may be appointed for different provisions of this
Act and (for different States or for different parts thereof.)
The Supreme Court has rejected the argument in Basant Kumar Sarkar and Others Vs. Eagle
Rolling Mills Ltd., AIR 1964 SC 1260, that the power given to the Central Government to apply
the provision of the Act by notification, confers on the Central Government absolute discretion,
the exercise of which is not guided by any legislative provision and that is, therefore, invalid.
The Court held that, S. 1 (3) is not an illustration of delegated legislation at all-it is what can be
properly described as conditional legislation.
Non-applicability of the Act.-US.
87, the appropriate
Government may, by notification in the Official Gazette and subject to such. conditions as may
be specified in the notification, exempt any factory or establishment or class of factories or
establishments in any specified area from the operation of this Act for a period not exceeding one
year and may from time to time by like notification renew any such exemption for periods not
exceeding one year at a time.
U/S. 88, the appropriate Government may, by notification in the Official Gazette and subject to
such conditions as it may deem fit to impose, exempt any person or class of persons employed in
any factory or establishment or class of factories or establishments to which this Act applies,
from the operation of the Act.
Amending Act of 1951- The Act was amended in 1951 to remove certain difficulties which were
apparent in the administration of the Act. Again the Act was amended in 1966. By this
amendment the provisions of sub-section (4) of S. 2, Ss. 4 to 13 (both inclusive) Ss, 17, 28, 29,
31, 36, 37 and 41 of the Act 44 of 1966 came into force in the whole of India except the State of
Jammu and Kashmir on 17-6-1967.
And again the Act was amended in 1984. Now the Act has covered under the scheme the
employees whose wages excluding remuneration for overtime work do not exceed one thousand
six hundred rupees. It has made amendments in S. 2 in clause (2), (5), (9) and (23); Ss. 17, 39,
42, 50, 56, 78, 95, 96, 97 of the I.S.l. Act, 1948 with a view to cover more employees and make
the scheme more effective and successful.

--------
Scope of the Employees' Compensation Act, 1923-The
Indian
Employees'
Compensation
Act, 1923, provides for the
compensation to an employee who becomes incapacitated due to any accident injury including
certain occupational disease arising out of and in the course of employment resulting in death or
disablement in the course of employment. The Act owes its salient features to the common law
relating to grant of compensation to the employees in England. In the interpretation of the Act,
the Indian Courts have been guided by the English decisions. It is a small but useful piece of
social legislation.
The Act extends to the whole of India except the State of Jammu and Kashmir. It applies to all
factories employing ten or more persons and using power and to those factories which do not use
power but employ 50 or more workers. The Act also applies to shipmasters and seamen of
power-driven ships or non-power-driven ships of 500 or more tons. In general it applies to all
organised industries and hazardous occupations. Besides, the State Government may extend the
application of the Act to other occupations which in its opinion are hazardous. But the Act is not
applicable to the employees who are covered under the Employees' State Insurance Act, 1948.
Obiect of the Act - The statement of objects and reasons appended to the Act says that "the
growing complexity of industry in this country with the increasing use of machinery and
consequent danger to the workmen, alongwith the comparative poverty of workmen themselves,
renders it advisable that they should be protected from hardships arising out from accidents."
The Employees' Compensation Act, 1923 initiallay applied only to workers employed otherwise
than in clerical capacity and receiving monthly wages not exceeding Rs. 300 in factories, mines
and ports, to those engaged on the railways, tramways on loading, unloading or coaling ships' at
dock, etc., where mechanical, power was used in a building tradc, construction of bridges,
telegraph and telephone lines and posts and overhead electric cables, in connection with sewers a
rides the bridge scrvice. The Act also applied to specified occupational discases and the
Government of India was empowered to extend the list Of such discases as well as to hazardous
occupations.
Based on the recommendations of the Second National
Commission examined in consultation with the concerned
Ministries/Department and State Governments and report of the Standing Committee the
Amendment Bill was introduced and passed the Act. It received the assent of President on
December 22, 2009. Now the number of employees for the purpose of applicability of the Act
has been reduced from 20 to 10.
The present position of its application is that the workers other than workers whose employment
is of a casual nature come under the scope of the operation of this Act.
Applicability of the Act to Workers in the Public Sector-Clause
(n) of sub-section (1) of S. 2 of the Employees' Compensation Act, 1923, defines the term
"employee", as follows-
"Employee" means any person (other than a person whose employment is of a casual nature and
who is employed otherwise than for the purposes of the employer's trade or business) who is-
(i) A railway servant as defined in S. 3 of the Indian Railways Act, 1890, not permanently
employed in administrative district or. sub-divisional office of a railway and not employed in any
such capacity as is specified in Schedule II, or
(il) Employed in any such capacity as is specified in Schedule II, whether the contract of
employment was made before or after the passing of this Act and where such conract is
expressed or implied, oral or in writting; but does not include any person working in the capacity
of a member of the Armed Forces of the Union of India; and any reference to an employee who
has been injured shall, where the employee is dead, include a reference to his dependants or any
of them.
Thus, whosoever comes within the scope of the definition of the term. 'employee' will be
benefitted by the provisions of this Act, irrespective of the fact whether he is employed in private
or public sector. The Act does not admit any distinction between the public and private sector, so
far as the payment of compensation for injury during the employment is concerned. For this
purpose the private and public sectors are put and deemed equal.

--------
Brief History of Passing the Payment of Bonus Act, 1965 - It is to be noted that the Payment of
Bonus Act, 1965 was passed on the recommendations made by the Tripartite Committee set up
by the Government of India in 1961 to evolve a scheme and formula so that employers may be
compelled to pay bonus on profits earned during the accounting and previous years. As per the
judgement delivered and rule laid down by the Supreme Court in Muir Mill Ltd. Vs. Suti Mill
Mazdoor Union, (1955) I LLJ 1, two conditions should be satisfied before claiming for the
bonus-
(1) The wages fell short of the living standard, and the indusiry makes huge profits due to the
contribution made by workmen in increasing production. The Act extends to the whole of India.
It obliges every (1) factory, and (2) Every other establishment in which twenty or more persons
are employed on any day during an accounting year-
Provided that the appropriate Government may after giving not less than two months notice of its
intention so to do, by notification in the Official Gazette, apply the provisions of this Act with
effect from such accounting year as may be specified in including an establishment being a
factory within the meaning of sub-section (il) of clause (m) of s. 2 of the Factoris Act, 1948,
employees such number of persons less than twenty as may be specified in the notication; so,
however, that the number of persons so specified shall in no case be less than ten.
The Act provides machinery for enforcement of the liability for payment of bonus as this liability
is a statutory liability. Once this Act has become applicable to any establishment, it will continue
to apply even if the number has fallen below the prescribed number ie., 10 questions of its
inapplicability will not arise.
U/S. 8 of the Act unless following two conditions are satisfied a person cannot claim bonus-
(i He is a worker in the establishment.
(i) He worked in the establishment for a period of not less than thirty days in that accounting
year.
No bonus shall be payable in the following conditions - ( if the worker has been dismissed from
service for fraud; or (il) his dismissal is on account of his riotous or violent behaviour
while on the premises of the establishment; or
(fi) his dismissal for the commission of theft, mis-appro!
enronriation or
sabotage of any property of the establishment. [S. 9]
If the bonus is pending then the claim for bonus can be made for the clean record of the service
period. But the bonus for that year shall not be paid in which year he was dismissed. [Ms Sri
Ram Bearings Limitd Vs. The Presiding Officer, Labour Court, Ranchi and Others,
(1986) 2 LLJ 459 (Patna)].
S. 10 provides that subject. to the other provisions of this Act, where an empioyer has any
allocabie surplus in any accountable year, he shall be bound to pay to every employee in respect
of that accounting year a minimum bonus which shall not be less than four per cent of the salary
or wage earned by the employee during the accounting year or one hundred rupees whichever is
higher, or in a case where the allocable surplus exceeds the said amount of minimum bonus
payable to the employees, an amount in proportion to the salary or wage carned by the employee
during the accounting year subject to a maximum of twenty per cent of such salary or wage.
•
Fix Minimum Percentage of Bonus- Notwithstanding anything contained above, every employer
shall be bound to pay to every employee a minimum bonus which shall be 8.33 per cent of the
salary or
-wage earned by the employee during the accounting year or one hundred rupees whichever is
higher, whether or not the employer has any allocable surplus in the accounting year. The
amount of bonus shall not be less than Rs. 100. If on calculation by the rate of 8.33% the amount
falls short of the hundred rupees, say, it comes to Rs. 83, then in that case the employee shall be
paid one hundred rupees. This is the spirit of the Act.
Distribution of Excess Allocable Surplus- S. 15 lays down that where for, any accountable year,
the allocable surplus exceeds the amount of bonus payable to the employees under U/S. 10 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 accountable year, be carried forward for being set on in the
succeeding accounting year and so on, to be utilised for the purpose of payment of bonus, in the
manner illustrated in the Fourth Schedule S. 15 (1).
Where for any accounting yeat, there is no allocable surplus or the allocable surplus in respect of
that year falls short of the amount of bonus payable to the employees in the establishment U/S.
10, and there is no sufficient amount carried forward and set on under sub-section (1) which
could be utilised for the purpose of payment of bonus then, so
•
much amount as is necessary for the payment of bonus under this Act shall be carried forward
for being set-off in the succeeding accounting year and so on in the manner illustrated in the
Fourth Schedule U/S. 15
(2).
Where an employee has not worked for all the working days in accounting year, the bonus
payable to him U/S. 10, shall be proportionately reduced. An establishment to which this Act
applies shall continue to be governed by the Act notwithstanding that the number of persons
employed therein falls below 20 or, as the case may be, the number specified in the notification
issued under the proviso to sub-section (3).