LABOUR AND INDUSTRIAL LAWS

Evolution of Industrial Legislation In India.

Labour laws encompass a comprehensive set of regulations that govern employees’ and
organisations’ rights and responsibilities. They serve as a crucial framework that balances
workers, employers and trade unions.

These laws can be categorised into two main groups. The first group focuses on the
relationship between employers, employees and trade unions, while the second group
addresses the individual rights of employees. Labour laws encompass various aspects,
including:

 Industrial relations: This pertains to regulating fair labour practices and the
functioning of trade unions.
 Workplace safety: This entails establishing safety requirements and mechanisms to
address any unfortunate incidents.
 Employment standards: This covers procedures for layoffs, regulations regarding
working hours, minimum wage provisions and leave provisions.
 History and Evolution of Labour Laws
 Labour laws have diverse origins in different parts of the world. European scholars
emphasised the significance of guilds and apprenticeship systems during the medieval
period. Asian scholars trace the roots of labour laws back to the Babylon code in the
18th century BCE and the laws of Manu. American authors refer to the law of the
Indies, established in 17th-century Spain, as a significant influence on labour laws.
 The industrial revolution in the 18th century prompted the development of labour
laws. The exploitation of workers and the detrimental impact on labour caused by
rapid industrialisation necessitated the implementation of regulations. Concurrently,
the French Revolution propelled society towards social justice. Consequently, labour
laws emerged due to conflicts during the 18th century, although their widespread
acceptance occurred in the 20th century.

 History of Labour Laws in India

 In India, the history of labour laws dates back to the British era before independence.
The British administration enacted these laws to safeguard the interests of British
employers and industrialists.

 The introduction of the Factories Act in 1883 by the British Parliament aimed to raise
the costs of Indian labour, favouring British textile magnates. This Act introduced
regulations such as an 8-hour workday, overtime wages, the abolition of child labour
and restrictions on women working at night. While these provisions benefited the
labour market, their true motivation was to serve vested interests.

 Following World War I and the international discussions on labour reforms, India
witnessed the introduction of the Trade Union Act of 1923 and the Industrial Disputes
Act of 1929. These acts aimed to regulate the relationship between employees and
 employers. They included provisions to protect workers’ rights to form unions for
collective bargaining and engage in protests through strikes and lockouts.

 Amidst the worldwide economic depression, rising unemployment and continued

agitation for independence, the British government established the Royal Commission
on Labour in 1929. The commission faced significant resistance and boycott from the
Indian labour movement.

 Nonetheless, it issued a report that paved the way for a series of labour legislations
between 1932 and 1937. Key legislations during this period included the Payment of
Wages Act of 1936, which empowered employers to deduct wages for unexcused
absences and the Trade Disputes (Amendment) Act of 1938, which authorised the
government to appoint conciliation officers to settle disputes.

 The labour laws of independent India derive inspiration from the views expressed by
nationalist leaders during the freedom struggle, debates in the Constituent Assembly,
provisions of the Constitution and international conventions and recommendations.
The Constitution of India, in alignment with fundamental rights and directive
principles of state policy, emphasises the dignity of human labour and the need to
protect and safeguard the interests of workers.

 Important human rights conventions and standards from the United Nations have also
influenced labour laws in India. These include the right to work of one’s choice,
protection against discrimination, prohibition of child labour, just and humane
working conditions, social security, wage protection, grievance redressal, the right to
form trade unions, collective bargaining and participation in management.

The Indian Labour Conference and the International Labour Conference have also
significantly shaped labour laws. Recommendations from national committees and
commissions, such as the First National Commission on Labour (1969) and the Second
National Commission on Labour (2002), along with judicial pronouncements on matters
concerning minimum wages, bonded labour, child labour and contract labour, have further
influenced labour legislation.

Code on Wages

The objective of the Code is to consolidate and simplify various laws related to wages and
ensure their smooth implementation. It combines the following acts:

 Payment of Wages Act, 1936

 Minimum Wages Act, 1948
 Payment of Bonus Act, 1965
 Equal Remuneration Act, 1976
Under the new Code, certain changes are being introduced. Section 6 empowers the central
and state governments to set minimum wages for all employees covered by the Code. This is
different from the Minimum Wages Act of 1948, which listed minimum wages in the
schedule of the Act. Additionally, Section 9 of the Code mandates that the central
government determines floor wages, considering working conditions. State governments
cannot set minimum wages below the floor rates established by the central government.
Code on Industrial Relations

The Code on industrial relations deals with relaxations, retrenchment, strikes and lockouts. It
consolidates the following acts:

 Trade Unions Act, 1926

 Industrial Employment (Standing Orders) Act, 1946
 Industrial Disputes Act, 1947
Changes made to this Code include modifying the industry definition under Section 2(p) and
eliminating exceptions listed under Section 2(j). The expanded definition of an industrial
dispute under Section 2(k) encompasses workers’ discharge, dismissal, reduction or
termination.

Code on Social Security

The Code on social security provides social security benefits for workers and replaces
multiple acts, including:

 Employees Provident Fund Act, 1952

 Employees State Insurance Act, 1948
 Maternity Benefit Act, 1961
 Payment of Gratuity Act, 1972
 Employees Exchange (Compulsory Notification Of Vacancies) Act, 1959
 Cine Workers Welfare Fund Act, 1981
 Unorganised Workers Social Security Act, 2008
 Employees Compensation Act, 1923
Notably, the Code expands its coverage to include gig, platform, and unorganised workers. It
aims to protect gig workers who work in non-traditional employment arrangements, such as
food and e-commerce delivery services. Platform workers are those engaged by organisations
to provide specific services or solve problems through Internet platforms, and they are not
confined to an employer-employee relationship.

The Code on Occupational Safety, Health and Working Conditions

The Code on occupational safety, health and working conditions establishes standards for
working conditions, health and safety. It replaces 13 previous laws, including:

 Factories Act, 1948

 Mines Act, 1952
 Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996
 Contract Labour (Regulation and Abolition) Act, 1970
The state government is empowered to exempt new factories from the provisions of the Code.
The government has also simplified licensing for contracting firms to hire workers
nationwide. Gender parity has been introduced, allowing women to work in positions
previously prohibited.

Objectives of the Industrial Disputes Act, 1947

The Supreme Court has analysed the Industrial Disputes Act, 1947[2] in various
cases and laid down the principal objects of the Act in the case of Workmen of
Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate[3]as follows:
1. The promotion of measures for securing amity and good relations between the
employer and workmen.
2. An investigation and settlement of industrial disputes between employers and
employers, employers and workmen or workmen and workmen with a right of
representation by a registered Trade Union or Federation of Trade Unions or
Association of employers or a federation of association of employers.
3. The prevention of illegal strikes and lockouts.
4. Relief to workmen in the matter of layoff, retrenchment and closure of an
undertaking.
5. Collective bargaining.

Salient features
Some of the distinguishing features of the ID Act, 1947 may be summarized
as under:
1. Any industrial dispute may be referred to an industrial tribunal by an agreement of
parties to the dispute or by the Appropriate Government if it deems it expedient to
do so.

2. An award declared the arbitrator shall be binding on both the parties to the
dispute for the specified period not exceeding one year. It shall be normally enforced
by the government.
3. Prohibition of illegal strikes and lockouts.
4. Compensation to the workmen in cases of layoff, retrenchment and transfer or
closure of an undertaking.
5. A number of authorities such as the Works Committee, Conciliation Officers, Board
of Conciliation, Courts of Enquiry, Labour Courts, Industrial Tribunal and National
Tribunal are provided for the settlement of industrial disputes. Each one of these
authorities plays an important role in speedy redressal of grievances and peaceful
and amicable settlement of disputes, thus, ensuring industrial peace.

As a matter of fact, the object of the industrial relations legislations in general is

industrial peace and economic justice. The prosperity of any industry very much
depends upon its growing production. Dissatisfaction with the existing economic
conditions is the root cause of industrial disputes. There are some other factors that
influence the production, namely existence of any dispute between the employers
and workmen, thus, creating a sort of interruption and hindrance in the industrial
peace. Every industrial relations legislations, thereby, intends to ensure that the
production process does not stop even during the existence of any dispute. As such,
they provide for amicable means of settlement of these disputes, like the Industrial
Disputes Act, 1947. Therefore, every such legislation aims at providing conditions
congenial to the industrial peace.

Some important terminology and concepts are given hereunder:

Appropriate Government
The Central Government as well as the State Governments are vested with various
powers and duties in relation to matters dealt with in this Act. In relation to some
industrial disputes the Central Government and in relation to some others the State
Government concerned are the Appropriate Governments [as provided under
Section-2(a) of the Act and further elaborated in sub-sections 2(a)(i)(a), 2(a)(i)(b) and
2(a)(ii)] to deal with such disputes. Whether the Appropriate Government is the
Central Government or the concerned State Government depends upon the subject-
matter of the dispute.

Employer
The Industrial Disputes Act, 1947 defines an employer in Section-2(g) as:
a. In relation to an industry carried on by or under the authority of any department of
the Central Government or a State Government, the authority prescribed in this
behalf, or where no authority is prescribed, the head of the department.

b. In relation to an industry carried on by or on behalf of a local authority, the chief

executive officer of that authority.

The industries run or owned by the authorities other than the Central and State
Governments or local authorities, are also covered by this expression under the Act.
It was held by the Supreme Court that where a worker or group of workers labour to
produce goods or services and these goods or services are for the business of
another then that other is, in fact the employer.[4]

Industry:
Definition of the term industry first originated from Industrial Disputes Act,
1947. Section-2 (j) of Industrial Disputes Act, 1947 provides that:
The term industry means any business, trade, undertaking, manufacture or calling of
employers & includes any calling, service, employment, handicraft, or industrial
occupation or avocation of workmen.[5]

The question as to what comes under the purview of industry has baffled the courts,
and to answer it is not easy. The application of tests laid down in several judgments
of the Supreme Court is not found to be uniform. At times the tests are qualified in
subsequent cases and in some, reasons given by judges are contradictory and
difficult to reconcile. The tests of industry have been formulated and applied to find
out what falls within and outside the definition of industry. The judgments on the
subject have crystallized the features or the essentials of industry, the working
principles, and the ruling tests for characterization or identification of an industry.

Industrial Disputes:
Industrial Dispute is defined in Section 2(k) of ID Act, 1947. This definition is a
modification of definition given in Section 2(j) of Trade Dispute Act, 1929.

It provides that industrial dispute means any dispute or difference between

employers and employers, or between employers and workmen, or between
workmen or workmen, which is connected with the employment or non-employment
or the terms of employment or with the conditions of labour, of any person.

The analysis of this definition as provided in the Act and considered by the Court in
several judgments is the subject-matter of the research project. Hence, it will be
discussed in the subsequent chapters of the project report.

Workman
Workman is the base of the industry. Industry can nither be established or
maintained without the workman. It is the workman who provides labour to the
industry. It is the reason that workman has been given special place in the industrial
dispute act. The definition of workman is important because the act aims at
investigation and settlement of industrial dispute which implies a difference between
an employer and workmen. So it is very necessary to decide who is a workman or
employees.

Definition
Section 2(S) of the industrial dispute act 1947, workman means any person
employed in any industry to do any manual , unskilled, skilled, technical, operational,
clerical, supervisory work for heir or reward whether the term of the employment be
expressed or implied and for the purpose of any proceeding under this act in relation
to an industrial dispute including any such person who has been dismissed,
discharged or retrenched in connection with or as consequences of that dispute or
whose dismissal, discharge or retrenchment has led to the dispute.

Above definition of workman shows following symptoms:

I. A workman must be employed in an industry

II. Employment for heir or reward
III. There shall be some consideration
IV. Nature of work performed by such person may be manual, skilled, unskilled,
technical, operational, clerical or supervisory.
V. Industry in which workman is employed shall be an industry as definition in
section 2(J) of IDA 1947
VI. The section 2(a) of the IDA 1947 clearly mention that the terms of the
employment may be expressed/ implied
VII. In relation to an industrial dispute a workman includes any such person who
has been dismissed, discharged or retrenchment or as consequences of the
dispute has been dismissed, discharged or retrenched.

Person not includes in workman

a. Who is subject to Air Forces Act, Army Act, and Navy Act.
b. Person employed in police services or jail services.
c. Person employed in managerial or administrative capacity.
d. Person employed in a supervisory capacity draws wages exceeding 1600
rupees per mensem.

The word workmen has been defined by several judicial decisions

Case law:
Bihar State Road transport cooperation v/s state of Bihar AIR 1970 SC

It was held that such person has been considered as workman who:

a. Was employed as head clerk in the office of regional manager.

b. His term of employment were being regulated by the orders of state roadways
department.
c. His nature of work was not managerial or administrative.

Case law:
H.C chuahan v/s life insurance corporation of India 1982

It was held that such development officers were held to be workman who:

a. Perform daily, manual, mechanical or clerical work

b. Do not perform managerial or administrative work
c. Cannot appoint or dismiss any other
d. Cannot also distribute the work
e. Obtained a salary of approx. Rs 500 or more.
Factors Contributing to the Growth of Trade Union

Though modern industries began to emerge in India after 1857, trade unions did not emerge
until after 1920. The following are some of the factors that have contributed to the growth of
trade union movements in India:

 After World War I, the prices of essential commodities began to rise, but labour
wages remained unchanged.
 Workers' working conditions are poor and deplorable.
 The Russian Revolution of 1917 and the establishment of the USSR forced workers to
reconsider their social order.
 The International Labour Organization (ILO) was founded in 1919 to protect the
interests of workers.
 During the 1920s, the rise of socialist ideology in India led to the formation of trade
unions.
 The Gaya session of Congress in 1922 adopted a resolution allowing party workers to
participate in trade union activities, providing additional impetus to trade unions.
 The rise of communist parties, which began to take an active interest in worker
grievances, resulted in the expansion of the trade union movement.

Growth of Trade Union in different phases

Pre-1918

 After the establishment of textile and jute mills, as well as the construction of
railways, in the 1850s, worker atrocities began to emerge.
 Though the origins of labour movements can be traced back to the 1860s, the first
labour agitation in Indian history occurred in Bombay in 1875.
 It was organised by S.S Bengalee. It centred on the plight of workers, particularly
women and children.
 This resulted in the establishment of the first Factory commission in 1875. As a result,
the first factories act was passed in 1881.
 M.N Lokhande established the Bombay Mill Hands Association in 1890. This was
India's first labour union.

1918 - 1924

 This period saw the birth of the true trade union movement in India. It was structured
similarly to unions in the industrialised world.
 The deterioration of living conditions caused by the First World War, as well as the
workers' exposure to the outside world, resulted in heightened class consciousness
among the workers. This provided fertile ground for the movement's development.
This is known as the early trade union period.
 Important unions include the Ahmedabad Textile Labour Association (1917), led by
Smt. Anasuyaben Sarabhai, the All India Postal and RMS Association, and the Madras
Labour Union, led by B.P Wadia, among others.
 The AITUC, India's oldest trade union federation, was founded in 1920. Lala Lajpat
Rai, Joseph Baptista, N.M Joshi, and Diwan Chaman Lall founded it. Lajpat Rai was
elected as AITUC's first president.
1925 - 1934

 This period was distinguished by increased militancy and a revolutionary approach.

The movement was also split up several times.
 Leaders such as N.M Joshi and V.V Giri played an important role in moderating the
movement and integrating it further into the nationalist mainstream.
 AITUC split several times, allowing the formation of organisations such as the
National Trade Union Federation (NTUF) and the All India Red Trade Union
Congress (AIRTUC).
 However, the need for unity became apparent, and they all merged with the AITUC in
the following phase.
 The trade union movement was also welcomed by the government. Legislation such
as the Trade Unions Act of 1926 and the Trade Disputes Act of 1929 aided its
expansion.
 It granted the unions many rights in exchange for certain obligations. The left
dominated during this time period.
 As a result, it is sometimes referred to as the period of left-wing trade unionism.

1935 - 1938

 This stage was distinguished by greater unity among various unions. By 1937, the
Indian National Congress had gained control of the majority of the provinces.
 As a result, more and more unions came forward and joined the nationalist movement.
AIRTUC and AITUC merged in 1935. Provincial governments enacted legislation that
gave trade unions more power and recognition.
 The approach of Congress ministries was to promote worker interests while
maintaining industrial peace.
 The goal was to reconcile labour and capital, with ministries working to secure wage
increases and better living conditions.
 However, many ministries regarded strikes as issues of law and order. They used
colonial machinery to suppress it. This infuriated the unions.

1939 - 1946

 The Second World War further lowered workers' living standards, leading to the
movement's strengthening. The issue of war effort sparked a schism between the
Communists and the Congress.
 This, along with other issues, contributed to a further schism in the movement.
 However, the movement as a whole grew stronger as a result of the overlapping
issues. This included post-war mass entrenchment and the massive price rise that
accompanied it.
 Legislation such as the Industrial Employment Act of 1946 and the Bombay Industrial
Relations Act of 1946 helped to strengthen the trade union movement.
 The movements became more vocal and involved in the national movement in
general.

1947 and after

 It was distinguished by the proliferation of labour unions. Sardar Vallabhbhai Patel

established INTUC in May 1947. Since then, the Communists have dominated the
 AITUC. Hind Mazdoor Sabha was founded in 1948 under the banner of the Praja
Socialist Party. It was later influenced by Socialists. The Bharatiya Mazdoor Sangh
was founded in 1955 and is currently affiliated with the BJP.
 Following independence, trade unions became increasingly entwined with party
politics.
 The rise of regional parties has resulted in a proliferation of their numbers, with each
party opting to form its own trade union.
 Their influence, however, has dwindled since the post-1991 liberalisation.
 Following independence, India has seen various unions band together to address a
common issue. Among these were the crippling railway strikes of 1974 and the Great
Bombay textile strike of 1982.
 However, such strikes appear to have received less public support since 1991. There is
also a greater emphasis on informal labour. This is because unorganised labour is
particularly vulnerable.
 All of the major trade unions have seen an increase in membership from the
unorganised sector.

All India Trade Union Congress (1920)

All India Trade Union Congress (1920)

 The AITUC (All India Trade Union Congress) is India's oldest trade union federation.
It is affiliated with the Indian Communist Party.
 It was created on October 31, 1920, and its first president was Lala Lajpat Rai.
 Bal Gangadhar Tilak, N.M.Joshi, B.P.Wadia, Diwan Chamanlall, Lala Lajpat Rai, and
Joseph Baptista were the AITUC's founding leaders.
 In its second session in Jharia in 1921, the AITUC endorsed a resolution of Swaraj
(complete independence from British rule), almost eight years before the platform of
freedom struggle, the Indian National Congress, adopted such a resolution in 1929.
 In the aftermath of World War II, the AITUC was instrumental in the formation of the
World Federation of Trade Unions (WTFU).
 During the 1920s, British communists wielded considerable power over the AITUC.
 During World War II, they gained complete authority, but they lost some popular
support when they chose to join Britain in the war effort.
 Their philosophy was based on class, and they advocated for a violent anti-capitalist
and anti-imperialist struggle.
 Since then, the AITUC has been divided into reformist and revolutionary factions.

Registration of trade unions

By relying on the registration mechanism, unions are encouraged to grow steadily and
permanently. According to the Act, a registered trade union is entitled to certain protections
and benefits. As a result, the union’s supporters are prompted into registering their trade
unions under the Trade Unions Act of 1926.

The regulations relating to the registration of trade unions are outlined in Sections 3 to 14 of
Chapter 2 of the Trade Union Act of 1926 and the Central Trade Union Regulations,
1938, which have around 17 Rules and forms A, B, and C. A useful tool for ensuring the
expansion of long-lasting and reliable unions is registration. Although it is not required,
registration is preferred because a registered trade union is granted certain benefits and
immunity. Members of a registered trade union are also granted certain rights and
advantages. In other words, those who belong to a legally recognised union are entitled to
protection, immunity, and exemption from certain legal obligations on both the civil and
criminal sides. However, it should be remembered that a personal conflict only becomes an
industrial issue when it is represented by a group of employees or a trade union, whether they
are registered or not.

In the case of Tamil Nadu N.G.O Union v. The Registrar of Trade Unions (1962), the N.G.O.
union’s petition was denied by the High Court of Madras. The registrar of the trade union in
this case rejected the N.G.O.’s union’s application for registration on the grounds that public
servant unions could not be registered under the trade union Act. In order for the union to be
registered under the Trade Union Act, its members must be workers employed by trade,
business, or industry, and the applicants lack this qualification because they are civil servants
responsible for the state’s sovereign and legal functions. Accordingly, the High Court
dismissed the appeal.

The Calcutta High Court ruled in the case of Registrar of Trade Unions, West Bengal v.
Mihir Kumar Gooha (1962) that E.S.I. Corporation workers would fall under the definition of
workmen and could, thus, register themselves as union members.

Section 3 : appointment of registrars

Section 3 of the Act empowers the appropriate government to appoint a person as the
registrar of a trade union. The appropriate government can also appoint as many additional
and deputy registrars in a trade union as it deems fit for carrying on the purposes of the Act.

The aforementioned actions must be taken in order to exercise and carry out the Registrar’s
legal obligations under this Act, including any specific powers and functions that the
Registrar may, by order, specify, as well as to specify the local boundaries within which any
additional or deputy Registrar may exercise and carry out those obligations.

Section 4 : mode of registration

Section 4 of the Act provides for the mode of registration of the trade union. According to the
Section, any seven or more than seven members of a trade union may by application apply
for the registration of the trade union subject to the following two conditions:

 At Least 7 members should be employed in the establishment on the date of the

making of the application.
 At Least 10% or a hundred members whichever is less, are employed in the
establishment and should be a part of it on the date of making the application.
Section 5 : application of registration

According to Section 5 of the Act, every application for a trade union’s registration must be
presented in writing to the Registrar and include a copy of the union’s rules as well as a
statement of the information listed below:

1. Firstly, the members submitting must mention their names, occupations, and
addresses;
2. Secondly, the name of the Trade Union and its headquarters’ address must also be
included; and
3. Finally, the titles, names, ages, addresses, and occupations of the Trade Union’s
office holders must also be included.
A trade union’s executive must be organised in conformity with the Act’s requirements
before it may be registered.

Section 6 : provisions to be contained in the rules of a trade union

Section 6 of the Act enlists the provisions which should be contained in the rules of trade
union and it provides that no trade union shall be recognized unless it has established an
executive committee in accordance with the provisions of the Act and its rules, specifies the
following matters, namely:

 Name of the trade union;

 The object of the establishment of the trade union;
 Purposes for which the funds with the union shall be directed;
 A list specifying the members of the union shall be maintained. The list shall be
inspected by office bearers and members of the trade union;
 The inclusion of ordinary members who shall be the ones actually engaged or
employed in an industry with which the trade union is connected;
 The conditions which entitle the members to any benefit assured by the rules and
also the conditions under which any fine or forfeiture may be imposed on the
members;
 The procedure by which the rules can be amended, varied or rescinded;
 The manner within which the members of the manager and also the alternative
workplace bearers of the labour union shall be elective and removed;
 The safe custody of the funds of the labour union, an annual audit, in such manner,
as may be prescribed, of the accounts thereof, and adequate facilities for the
inspection of the account books by the workplace bearers and members of the
labour union, and;
 The manner within which the labour union could also be dissolved.
The Supreme Court ruled in the case of M. T. Chandrasenan v. Sukumaran (1974) that a
member cannot be regarded as a trade union member if the subscription fee is not paid.
However, subscriptions cannot be rejected on the basis of a reason that prevents membership.

The Supreme Court of India ruled in the 2004 case of Bokajan Cement Corporation
Employees Union v. Cement Corporation of India that membership in the union did not end
immediately upon loss of employment.

Section 7: Power to call for further particulars and require alteration of the name

Section 7 of the Act confers upon the registrar the power to call for information in order to
satisfy himself that any application made by the trade union is in compliance with Sections 5
and 6 of the Act. In matters where the discrepancy is found, the registrar reserves the right to
reject the application unless such information is provided by the union.

This Section also confers power to the registrar to direct the trade union to alter its name or
change the name if the registrar finds the name of such union to be identical to the name of
any other trade union or if it finds its name to so nearly resemble the name of any existing
trade union, it may be likely to deceive the public or members of either of the trade unions.

The Bombay High Court in the case of All India Trade Union Congress v. Deputy Registrar
of Trade Unions (2005) set aside a request to register a trade union with a name that already
existed, claiming it to be expressly contrary to the language in Section 7(2), leading to the
cancellation of registration. It further observed that the very purpose behind Section 7 is to
avoid misleading the general public or trade union members into thinking that the union
seeking registration under the name for which registration is requested is somehow associated
with the union already registered.

Section 8 : registration

According to Section 8 of the Act, if the registrar has fully satisfied himself that a union has
complied with all the necessary provisions of the Act, he may register such a union by
recording all its particulars in a manner specified by the Act.

Each registered trade union should be a body corporate, which makes it a legal entity with
perpetual succession. It shall have a common seal, the ability to buy, possess, and enter into
contracts with both movable and immovable property, as well as the ability to sue and be
sued using that name.

The Supreme Court ruled in the 1935 case of the Re-Indian Steam Navigation Workers
Union that a Registrar just needs to check that all the technical conditions are being met, not
whether it could be deemed illegal.

Whereas in another case before the Supreme Court of India, ACC Rajanka Limestone
Quarries Workers Union v. Registrar of Trade Unions (1958), it was determined that an
appeal might be filed to the High Court under Article 226 of the Indian Constitution if the
registrar fails to register the trade union within 3 months of the application.

Section 9 : certificate of registration

According to Section 9 of the Act, the registrar shall issue a registration certificate to any
trade union which has been registered under the provisions of Section 8 of the Act, and such a
certificate shall act as conclusive proof of the registration of the trade union.

Section 9A : minimum requirement related to the membership of a trade union

Section 9A of the Act lays down the minimum number of members required to be present in
any union which has been duly registered. This Section mandates that a trade union which
has been registered must at all times continue to have not less than 10% or one hundred of the
workers, whichever is less, subject to a minimum of seven, engaged or utilised in an
institution or trade with which it’s connected.

Section 10 : cancellation of registration

The registrar, according to Section 10 of the Act, has the power to withdraw or cancel the
registration certificate of any union in any of the following conditions:

 On an application made by the trade union seeking to be verified in such manner

as may be prescribed;
 If the registrar is satisfied with the fact that the trade union has obtained the
certificate by means of fraud or deceit;
 If the trade union has ceased to exist;
 If the trade union has wilfully and after submitting a notice to the Registrar,
contravened any provision of the Act or has been continuing with any rule which is
in contravention with the provisions of the Act;
 If any union has rescinded any rule provided under Section 6 of the Act.
In the case of Tata Electric Companies Officer’s Guild v. Registrar of Trade Unions (1994),
the Bombay High Court ruled that wilful disregard of the notification is a requirement for the
registrar to cancel the registration. The registrar cannot cancel the registration on the grounds
that the account statement was not filed earlier if the trade union provides the account
statement after receiving notification from the registrar.

Where a 2-month show cause notice was not sent by the registrar to the changed address of
the union, it was held by the Bombay High Court in Bombay Fire Fighters Service Union v.
Registrar of Trade Unions, Bombay (2003), that the registrar did not comply with the
mandatory provisions of Section 10 and quashed the order of cancellation.
Section 11 : appeals

According to Section 11 of the Act, any union which is aggrieved by a refusal to register or a
withdrawal of registration made by the registrar can file an appeal:

 In any High Court, if the head office of the trade union is located in any of the
presidency towns;
 In any labour court or industrial tribunal, if the trade union is located in such a
place over which the labour court or the trade union has jurisdiction;
 If the head office of the trade union is situated in any other location, an appeal can
be filed in any court which is not inferior to the Court of an additional or assistant
has chosen a principal Civil Court of original jurisdiction.
As observed by the Bombay High Court in Mukand Iron & Steel Works Ltd. v. V.G.
Deshpande, Registrar of Trade Unions, Bombay and another (1986), a trade union has the
choice to file an appeal or apply for new registration if the Registrar of Trade Unions cancels
or withdraws its registration. If the appeal is successful, the trade union would continue to be
included on the register as if the decision of cancellation or withdrawal of recognition had
never been made. If a new registration is allowed, it will take effect as of that date. The
Registrar loses all authority over that order once he cancels or withdraws a trade union’s
registration. Because of the following circumstances, he is unable to evaluate it or rescind it.

In Philips Workers Union v. Registrar of Trade Unions (1989), the Calcutta High Court
observed that Section 11 of the Trade Unions Act, 1926 is no bar to filing an application
under Article 226 of the Indian Constitution.

Rights and liabilities of registered trade unions

Sections 15 to 28 elucidate the rights which a registered trade union has and also the
liabilities which can be imposed against them.

Section 15 : objects on which general funds may be spent

Section 15 of the Act lays down the activities on which a registered trade union can spend its
funds. These activities include:

 Salaries are to be given to the office-bearers.

 The cost incurred for the administration of the trade union.
 Compensation to the workers due to any loss arising out of any trade dispute.
 Expenses incurred in the welfare activities of the workers.
 Benefits are conferred to the workers in case of unemployment, disability, or
death.
  The cost incurred in bringing or defending any legal suit.
 Publishing materials with the aim of spreading awareness amongst the workers.
 Education of the workers or their dependents.
 Making provisions for medical treatment of the workers.
 Taking insurance policies for the welfare of the workers.
This Section also provides the reason for non-contribution to the said fund and also that a
contribution to the fund can not be made as a criterion for admission into the union.

Section 16 : constitution of a separate fund for political purposes

Section 16 provides that a trade union, in order to promote the civic and political interests of
its members, can constitute a separate fund from the contributions made separately for the
said purposes. No member of the union can be compelled to contribute to the fund.

A legally recognised labour union may establish a separate fund with the goal of advancing
the civic and political objectives of its members. A recognised trade union is not allowed to
use its general finances for its members’ political campaigns. The trade union must establish
a separate political fund for political causes. Contributions to such a fund must be separately
collected. Some of them are as follows:

 The recovery of all costs incurred, directly or indirectly, by a candidate or

prospective candidate for election as a member of any governmental body or local
authority. The costs cover all outlays in connection with his candidacy before,
during, or after the election.
 Maintenance of any individual who serves on a local or legislative authority.
 The election of a candidate for any legislative body or municipal authority, or the
registration of voters.
 The staging of political gatherings of any type or the dissemination to trade union
members of any political material or papers.

Section 17 : criminal conspiracy in trade disputes

Section 17 of the Act states that no member of a trade union can be held liable for criminal
conspiracy mentioned under sub-section 2 of Section 120B of the Indian Penal
Code regarding any agreement made between the members of the union in order to promote
the lawful interests of the trade union.

The office bearers of the registered trade unions are exempt from penal punishment for
criminal conspiracy, per Section 17 of the Trade Unions Act of 1926. An agreement between
two or more people to carry out an illegal act or a legitimate act through an illegal method is
referred to as a conspiracy in English law.

Criminal conspiracy is defined in Section 120-A of the Indian Penal Code of 1860 as follows:
When two or more people agree to do something or make it happen

1. A prohibited act,
2. An Act that is not committed via unlawful methods; such as a contract is referred
to as a criminal conspiracy;
The Trade Union Act of 1926 grants registered trade unions immunity. Nevertheless, this
immunity is only applicable with regard to the legal agreements made by trade union
members for the promotion of legitimate trade union purposes. The right to call for a strike
and persuade members is one of the rights granted to registered trade unions in the
stimulation of their industrial conflicts. All acts that give rise to civil litigation are considered
illegal acts. For instance, two men who conspire to get workers to violate their employment
contracts are guilty of a crime. However, Section 17 safeguards a trade unionist from a crime
if the arrangement they have entered into is not an agreement to conduct an offence.

In the case of West India Steel Company Ltd. v. Azeez (1988), a trade union representative
protested against the delegation of a worker to another sector by blocking or stopping work
inside the factory for five hours. It was decided that a worker in a factory had to obey the
directives issued by his superiors. A trade union leader is not exempt from following the
rules. There is no legal authority for a trade union official or any other employee to share
managerial responsibilities.

Section 18 : immunity from civil suits in certain cases

Section 18 of the Act immunises the members of trade unions from civil or tortious liabilities
arising out of any act done in furtherance or contemplation of any trade dispute.

For example, in general, a person is subject to tortious liability for inducing any person to
breach a contract. But, the trade unions and its members are immune from such liabilities
provided such inducement is in contemplation or furtherance of any trade disputes. Further,
the inducement should be awful and should not involve any aspect of violence, threat, or any
other illegal activity.

Any authorised officer or member of a registered trade union is eligible for this immunity. No
civil action may be brought against them for conduct related to a trade dispute on the grounds
that it encourages another person to breach an employment agreement; or interferes with
another person’s trade, business, or employment.

Furthermore, the incentive should be made via legal techniques that are not against the
legislation of the state. There is no protection from physical harm, verbal abuse, or other
illegal tactics.

The Kerala High Court ruled in the case of P. Mukundan and Ors. v. Mohan Kandy
Pavithran (1991) that a strike by itself is not a legally actionable offence. Furthermore, it was
determined that the provisions of Section 18 shield the trade union, its officers, and its
members from legal actions related to the workmen’s strike.
In the landmark decision, Rohtas Industries Staff Union v the State of Bihar (1962) by the
Patna High Court, it was decided that employers did not have the right to sue an employee
who participated in an illegal strike and subsequently lost business and output.

The provision puts an end to action against trade unions while looking at the right of trade
unions to use and to be used. The union or its members are not prohibited from bringing a
claim for wrongs done to the union. Unlawful threats and coercion are not protected since
doing so would deprive the person of the Section’s protection.

Torts are considered to be civil wrongs. It can be resolved by civil court action. It is different
from breaking a contract, a quasi-contract, a trust, or other equitable obligations (like
trespassing or creating a private nuisance). However, Section 18(2) grants an exemption from
tort liability. The action of the parties must further result in a trade dispute in order to be
eligible for exemption or immunity from tort liability. If an agent acts without the knowledge
of the executive committee of the trade union or against the specific instructions of the
executive committee, the registered trade union is not accountable for the torts committed by
the agent in the advancement of the trade dispute.

Section 19 : enforceability of agreement

According to Section 25 of the Indian Contract Act of 1872, any agreement in restraint of
trade is void. But under Section 19 of the Trade Unions Act, 1926, any agreement between
the members of a registered trade union in restraint of trade activities is neither void nor
voidable. However, such a right is available only to registered trade unions, as unregistered
trade unions have to follow the general contract law.

Section 20 : right to inspect the books of trade union

According to Section 20 of the Act, the account books and the list of the members of any
registered trade union can be subjected to inspection by the members of the trade union at
such times as may be provided under the rules of the trade union.

Section 21 : rights of minors to membership of trade union

Section 21 provides that a person who is above 15 years of age can be a member of any trade
union, and if he becomes a member, he can enjoy all the rights conferred upon the members
of the trade union, subject to the conditions laid down by the trade union of which he wants
to be a member.

Section 21-A : disqualifications of office-bearers of trade union

Section 21A of the Act lays down the conditions, the fulfilment of which disqualifies a
person from being a member of the trade union. The conditions laid down in the Act are as
follows:
  If the member has not attained the age of majority
 If he has been convicted by any of the courts in India for moral turpitude and has
been sentenced to imprisonment unless a period of five years has elapsed since his
release.

Section 22 : proportion of office-bearers to be connected with the industry

Section 22 of the Act mandates that not less than half of the members of the trade union
should be employed in the industry or work with which the trade union is connected. For
example, if a trade union is made for the welfare of agricultural labourers, then, as per this
Section, half of the members of such a trade union should be employed in agricultural
activities.

The Calcutta High Court in the case of Kesoram Rayon Workmen’s Union v. Registrar of
Trade Unions (1966) observed that if all officers and members of the executive were needed
to be employees of the industry to which the union is related, Section 22 would have no
purpose. Of course, Section 2(h) of the Act defines a trade union as a group of workers
employed in a certain industry. However, Section 22 specifically states that a non-member of
the union may be a member of the executive or another officer, as long as the required
proportion is not exceeded.

Section 23 : change of name

Section 23 states that any registered union is free to change its name provided it does so with
the consent of not less than 2/3rd of its members and subject to the fulfilment of the
conditions laid down in Section 25 of the Act.

Section 24 : amalgamation of trade unions

Section 24 lays down that two or more trade unions can join together and form one trade
union with or without dissolution or division of the fund. Such amalgamation can take place
only when voting by half of the members of each trade union has been effectuated and that
sixty per cent of the casted votes should be in favour of the proposal.

Section 25 : notice of change of name or amalgamation

Section 25 of the Act provides that:

 A notice in writing of every change of name and of every amalgamation which is

duly signed by the Secretary and by seven members of the Trade Union changing
its name, and, in the case of an amalgamation, by the Secretary and by seven
members of each and every Trade Union which are a party thereto, should be sent
to the Registrar.
  If the Registrar feels that the proposed name is identical to the name of any other
existing Trade Union or, it so nearly resembles such name as it is likely to deceive
the public or the members of either Trade Union, the Registrar may refuse to
register the change of name.
 If the Registrar of the State in which the head office of the amalgamated Trade
Union is situated is satisfied that the provisions of this Act have complied with the
amalgamation shall be given effect from the date of such registration.

Section 27 : dissolution

Section 27 of the Act talks about the dissolution of a firm as follows:

 If a registered trade union has been dissolved, a notice of such dissolution which
must be signed by seven members and by the Secretary of the Trade Union should
be served to the registrar within 14 days of such dissolution and if the registrar is
satisfied that the dissolution has been effected in accordance with the rules laid
down by the trade union may register the dissolution.
 Where a union has been dissolved but its rules do not lay down the way in which
the fund is to be distributed after its dissolution, the registrar may distribute the
funds in any prescribed manner.

Section 28 : returns

Section 28 provides that each trade union should send the returns to the registrar annually on
or before such a day as may be prescribed by the registrar. The return includes:

 General statement
 Audit report
 All the receipts and expenditures incurred by the trade union
 Assets and liabilities of the firm on the 31st day of December
Sub-Section 2 of the Section provides that, along with the general statement, a copy of the
rules of the trade union, corrected up to the date of dispatch thereof, and a statement
indicating all the changes made by the union in the year to which the statement is referred, be
sent to the registrar.

Whenever any registered trade union alters its rules, such alterations should be conveyed to
the registrar within a period of not less than 15 days from making such alterations.
Collective bargaining and trade disputes
When an organised body negotiates with the employer and fixes the terms of employment by
means of bargaining, this is known as collective bargaining. The essential element of
collective bargaining is that it is between interested parties and not by third parties.

International labour organisation in its manual in the year 1960 defined the meaning of
collective bargaining as:

“Negotiations about working conditions and terms of employment between an employer, a

group of employees, or one or more employers’ organisations, on the other hand, with a view
to reaching an agreement.” The terms of agreement are used to ascertain the rights and
obligations by which each party is bound towards one another during the course of
employment.

Section 8 of the Industrial Relations Act 1990 defines trade disputes. According to the Act,
an industrial dispute refers to any dispute which arises between the employers and the
workers, and it is usually in connection with any one of the following:

 employment or non-employment,
 the terms or conditions of the employment,
 Something which affects the employment of any person.

Essential conditions for collective bargaining

 Favourable political and social climate: all the collective bargaining which took
place in the past bears testimony to the fact that a favourable political and social
climate is the prerequisite of collective bargaining. The reason for the same is quite
obvious as almost all the trade unions in India subscribe to one or the other
political view and therefore, trade unions usually favour the employees not on the
basis of the merit of the issues they raise but on the basis of their political
considerations.
 Trade union: in any democratic country like India which recognizes the right to
speech as a fundamental right, the right to form a trade union is a direct
consequence of it and so all employers should recognize the trade unions and its
representatives.
 Problem-solving attitude: it means that both parties while negotiating a bringing
up their relative concerns should adopt a problem-solving attitude and should aim
at amicably solving the problem without trying to put the opposite party at a loss.
 Continuous dialogue: the dialogue between the employer and the workers may
sometimes end up without any fruitful negotiation or there may arise a bargaining
impasse, in such a case the free flow of dialogue between the employer and
 employee should not be stopped and sometimes keeping aside the bone of
contention helps bring up a better solution.

Purposes of collective bargaining

 To provide an opportunity for the workers to voice their complaints and grievances
regarding the working conditions.
 To pave the way for the employer and workers to reach an amicable solution
peacefully without having any ill will towards one another.
 To sort out all the disputes and conflicts between the employer and worker.
 To prevent any dispute which is likely to take place in the future by mutually
agreeing on the contract.
 To foster a peaceful and stable relationship between the workers and the
organisation.

Position in India

In India, collective bargaining remains limited in its application and has been restricted by
different labour legislation in India. Different labour laws make different provisions with
respect to the working conditions of the workers. Some of the labour legislation in India is as
follows:

 The Factories Act of 1948 made provisions for the betterment of the workers in
respect of their health, safety, welfare and other aspects while the workers are
employed in factory work. However, all the provisions of the Act were not
applicable in all the factories, for example, the provision for restrooms will be
applicable only if there are 150 or more workers.
 The Employees Provident and Miscellaneous Provisions Act, the Maternity
Benefit Act and the Payment of Gratuity Act.
 The Industrial Disputes Act, of 1947, lays down the procedures by which the
settlement of industrial disputes has to be done. Its procedural aspects are
applicable to all enterprises for the settlement of industrial disputes.
A closer view of the labour laws in India indicates that most of the workers who are
employed in the organised sectors of the economy are protected under various labour
legislation. The Fifth Economic Census of 1999 revealed that more than 97 percent of
enterprises employ less than ten workers, and most of these employ less than five workers.
This clearly shows that labour laws apply to less than 3 percent of enterprises.

Further, the acceleration of the formalisation of the workforce with the onset of liberalisation
has also changed the formal sector in terms of shifting jobs from the formal to the informal
sector and, along with it, the formalisation of jobs. Today, in the formal sector, the number of
formal workers is about 33.7 million, and the number of informal workers is about 28.9
million (2004-05). The increase in employment (in whatever amount) in the formal sector has
largely been informal in nature. Which in turn has been reflected on the trade bargaining?

Agreements for collective bargaining

In India, the following types of agreements are prevalent for collective bargaining:

 Bipartite agreement: These agreements usually result in voluntary negotiations

between the employer and employees and are usually binding per se.
 Settlements: Settlements usually arise out of the conciliation process and they are
usually tripartite in nature as they involve three parties which are the employer,
employee and conciliation officer.
 Consent awards: When the parties reach an agreement while the dispute between
them is pending before the adjudicatory body. Such agreements are incorporated in
the authority’s award and are binding on the parties under the dispute.

Need For Recognition of Trade Union

Collective bargaining is a crucial part of the relationship between employers and employees.
However, not all trade unions have the right to engage in collective bargaining; this right is
typically granted to recognised trade unions.

The process of registering a trade union is one thing, but being officially recognised as the
exclusive representative for collective bargaining is another matter. Many industrial strikes
have occurred due to disputes over trade union recognition.

In practical terms, management usually engages in negotiations and collective bargaining

only with recognised trade unions. Therefore, recognition of trade unions plays a fundamental
role in collective bargaining. The question of whether a trade union should be recognised or
not has been a subject of debate, primarily because there is no enforced central legislation
regarding trade union recognition.

In the case of Kalindi and Others v. Tata Locomotive and Engineering Co. Ltd, the
Supreme Court ruled that there is no inherent right to representation unless a
company’s standing orders explicitly acknowledge such a right. This decision was reaffirmed
in the case of Bharat Petroleum Corporation Ltd. v. Maharashtra General Kamgar
Union & Ors.

Rights Granted on Recognition of Trade Unions

In the case of Workmen of Kampali Co-operative Sugar Factory Ltd. v. Management of

Kampli Co-operative Sugar Factory Ltd., the court ruled that if there is no statutory
provision for trade union recognition, such a right cannot be enforced through a writ petition.
In the absence of a statutory provision or a recognition agreement between the employer and
the union, no legal right exists merely because the management has recognised the union.
Furthermore, the withdrawal of recognition does not violate any legal right.
Indian law does not make it obligatory for managements to establish unions, recognise them
or engage in collective bargaining. However, due to the Indian constitution’s guarantee of the
freedom of association, managements cannot adopt anti-union policies. Just as tax avoidance
is legal but tax evasion is illegal, union avoidance is legal, but evading unions is not.

Whether the right to grant recognition to trade unions is considered a fundamental right under
Article 19(1)(c) of the Constitution of India is answered in the negative. This is because the
right to form an association does not inherently include the right to be recognised by
employers. Therefore, the withdrawal of recognition does not infringe upon the fundamental
rights guaranteed under Article 19(1)(c) of the Constitution of India.

Methods of Recognition of Trade Union

Recognition of trade unions can be broadly categorised into two main types: voluntary
recognition and statutory recognition.

Voluntary recognition of trade unions occurs when employers willingly acknowledge and
engage with a trade union as a legitimate representative of their employees.

In contrast, statutory recognition of trade unions is a legal requirement imposed by

government regulations, which mandates employers to recognise specific trade unions for the
purpose of collective bargaining and negotiation.

Both forms of recognition serve to establish and formalise the relationship between
employers and trade unions, allowing for organised discussions on employment terms,
conditions and workers’ rights.

The other forms of recognition of trade unions are:

 Recognition by Management
Recognition by management, a form of voluntary recognition, is crucial for the success of a
trade union. To be effective in collective bargaining, it’s essential for an employer to
acknowledge the union’s legitimacy. Even if a union is strong and stable, without employer
recognition, its influence may be limited.

 Election by Secret Ballot

Election by Secret Ballot is a system in which all eligible workers in an establishment vote
for their preferred union, typically conducted by a neutral agent, often the Registrar of
Unions, resembling general elections. The election results typically remain valid for a
specified period, often around two years.

The Supreme Court, in the case of Food Corporation of India Staff Union vs. Food
Corporation of India and Others, established guidelines for evaluating the representative
character of trade unions through the Secret Ballot system.

 Check-Off Method
The Check-Off method involves each worker authorising management, in writing, to deduct
union fees from their wages and transfer them to the chosen union.
This method provides management with a clear understanding of the relative strengths of
different unions but can be susceptible to manipulation, particularly when there is favouritism
or a large workforce. It also relies on all unions accepting and cooperating with the method.

 Verification of Union Membership

The Verification of union membership is a method used by the labour directorate, adopted as
a resolution during the same session of the Indian Labour Conference (ILC). It is widely
utilised in various establishments. This process involves the labour directorate collecting
information on all unions in a plant, including their registration and membership details.

Claim lists, fee books, membership records and account books are examined for duplicate
memberships. In some cases, unions also provide lists of their members to prevent dual
memberships. After thorough cross-checking and, when necessary, physical sampling of
workers, a final verified list is prepared for employers, unions and the government.

Rule of Thumb

Assessing union strength through a “Rule of Thumb” or intelligent guessing, general

observation or response at gate meetings, strikes and employee discussions is not a reliable
method, especially in large establishments and can be subject to frequent changes.

When an employer agrees to recognise a trade union, they should formalise the agreement
through a Memorandum of Agreement (MoA) between the employer and the union’s officer
or authorised representative. Such an agreement can cover various aspects, including:

 Bargaining procedures.
 Arrangement of meetings and their timing.
 Designation of employer and union representatives.
 Time off for union representatives to attend meetings.
 Communication of agreements and disagreements to the workforce.
 Conduct during negotiations, including how and when issues can be raised.
 Specific matters subject to joint agreement (e.g., pay and working hours).
 Dispute resolution mechanisms in case of a deadlock, such as conciliation and
arbitration.
 Union recruitment activities within the workplace.
 Union representation of workers at disciplinary and grievance hearings.
 Deduction of union contributions from employees’ wages.
In the case of Karnataka State Road Transport Corporation (KSRTC) vs. Workmen of
KSRTC Staff and Workers Federation, the employer issued a notification stipulating that
33.33% of votes in a referendum would be a precondition for recognition. The federation
challenged this notification in the high court, but the court ruled that interfering in a policy
decision was not justified and recognition should be determined by the order of the labour
court.

A trade union seeking recognition can apply to the industrial court, provided it satisfies the
necessary conditions, such as having all ordinary members employed in the same industry or
a closely allied industry, being a registered trade union and complying with all the provisions
of the law. If these conditions are met, a certificate of recognition is issued.
Different states in India have legislated various methods of recognition, one of which is the
secret ballot system. In the case of the Food Corporation of India, the Supreme Court ordered
a secret ballot and mandated the procedure for recognising trade unions.

Criteria for Recognition of Trade Unions under Code of Discipline)

Here are the key criteria for trade union recognition:

 Duration of Functioning: When there are multiple unions, a union seeking

recognition should have been active for at least one year after its registration.
 Membership Requirement: The union’s membership should encompass at least 15%
of the workers in the relevant establishment. Membership is counted only for those
who have paid their dues for at least three months during the six months preceding the
reckoning.
 Local Area Representation: A union can seek recognition as a representative union
for an industry in a local area if it has a membership of at least 25% of the industry’s
workers in that area.
 Stability Requirement: Once a union is recognised, its position should remain
unchanged for a period of two years.
 Largest Membership: In cases where multiple unions exist in an industry or
establishment, the one with the largest membership should be granted recognition.
 Representative Rights: A representative union for an industry in an area should have
the right to represent workers in all establishments within that industry. However, if a
union in a particular establishment has a membership of 50% or more of the workers
in that establishment, it should have the right to address matters of purely local
interest, such as handling grievances related to its own members. Workers who are not
members of that union can either operate through the industry’s representative union
or seek redress directly.
 Trade Union Federations: Recognition criteria for trade union federations not
affiliated with any of the four central labour organisations need to be addressed
separately.
 Code of Discipline: Only unions that adhere to a Code of Discipline would be
eligible for recognition.

Advantages of A Recognised Trade Union

Recognised trade unions in India enjoy several advantages and rights, which include:

 Negotiation Rights: The executive of a recognised trade union is entitled to negotiate

with the employer on various employment-related matters, including employment,
non-employment, terms of employment or labour conditions. In case of disputes, the
matter can be referred to the registrar and their decision is final.
 Display of Notices: Recognised trade unions have the right to display their notices in
the premises where employees are employed and the employer is required to make
necessary arrangements for this.
 Collection of Dues: These unions can collect dues payable by their members on the
premises where wages are being paid.
 Representation in Inquiries: A recognised trade union can appear on behalf of
employees in domestic or departmental inquiries.
  Nominee in Works Commission: The recognised union has the exclusive right to
appoint its nominee to represent workers in the works commission under the
Industrial Disputes Act of 1947.
 Sole Bargaining Agent: A recognised trade union can act as the sole bargaining agent
or principal bargaining agent for the workers.
The Bombay High Court has ruled that only the recognised trade union can enter into
settlements with the employer and other unions or employees acting independently are not
authorised to do so.

In the case of Balmer Lawrie Workers’ Union, Bombay and Anr. v. Balmer Lawrie &
Co. Ltd. and Ors., it was assumed that a recognised union represents all the workmen in the
industrial undertaking or the industry.

Furthermore, recognised trade unions have a duty to submit returns to the registrar within the
stipulated timeframe and failing to do so can result in penalties. These rights and
responsibilities make recognition a significant achievement for trade unions in India, as it
empowers them to effectively represent and negotiate for the interests of the workers they
serve.

Problems in Recognition of Trade Union

Recognition of trade unions in India has been a complex issue with various problems. Two
major challenges related to union recognition are:

Craft, Caste or Category-Based Unions: Many registered unions in India, whether

officially or unofficially, have been enjoying industrial relation rights, even if they are based
on craft, caste or category. This has been a problem because recognition of such unions may
lead to fragmentation and create complexities in collective bargaining and negotiation.

Politicalisation of Trade Unions: Political affiliations and interference in trade unions,

particularly in central trade unions (CTUs), have contributed to difficulties in the recognition
process. Different political parties support various systems like the secret ballot or check-off
system. This division can lead to coalition issues and hinder the recognition process.

Management, in several instances, has refused to recognise trade unions based on various
grounds, including:

(1) Presence of Outsiders: Management has been reluctant to recognise unions when most
of the office bearers are from outside the organisation, including politicians and former
employees.

(2) Disapproval by Management: When management disapproves of the individuals leading

the union, it can be a barrier to recognition.

(3) Small Membership: In cases where the union has a minimal number of employees as
members, management may refuse recognition.

(4) Rival Unions: The existence of multiple rival unions in the same organisation can
complicate the recognition process as it becomes challenging to determine which union truly
represents the workers.
(5) Unregistered Trade Unions: Management often refuses to recognise trade unions that
are not registered under the Trade Unions Act of 1926, which sets out the legal framework
for trade union operations in India.

These problems underscore the complexities and challenges in the recognition of trade unions
in India, including issues related to their composition, political influence and registration
status. Balancing the interests of workers and employers while ensuring a fair and
representative recognition process remains an ongoing challenge in the field of industrial
relations.

Multiplicity of Unions

The leaders who pledged for the formation of these unions must’ve dreamt of an India where
the formation of the unions would multiply gradually leading to better efficacy in collective
bargaining. On the contrary, the formation of multiple trade unions at a rapid pace has only
proved to be a curse to the Indian Society as comes with it is the politics and the main
objective i.e., the welfare of the workers have gotten sidelined. The scenario encircling the
trade unions has simply resulted in ‘the survival of the fittest’. The trade union movement is
becoming weak due to the constant fight for securing managements support and wider
recognition. A humungous problem that cannot be ignored with respect to this is that most
unions have always been under the shadow of political parties. And when the parties break
up, the unions split too causing a multiplicity of parties. Due to the change in leadership of
these parties, there are frequent changes in the leadership and functioning of the unions as
well. All these factors may prove detrimental to the growth of these unions as there’s no
opportunity for consistency to prevail.

Payment Of Wages Act 1936

What is Payment of Wages?

The Payment of Wages Act of 1936 governs how wages are paid to employees (direct and
indirect). The statute is intended to protect employees from unlawful employer deductions
and/or unjustifiable salary delays. Define laws around wage period, time, and mode of
payment of wages to particular classes of workers working in the industry without any unjust
deductions other than those specified in the Act and also, Regulates the rights of the workers
covered by this Act.

Objectives of Payment of Wages Act 1936

The Payment of Wages Act, of 1936 is an Act of the Parliament of India that regulates the
payment of wages to certain classes of employed persons. The Act was enacted in 1936 and
has been amended several times since then. The objectives of the Payment of Wages Act are
to:

 Ensure that employees are paid their wages on time and in full.
  Protect employees from unauthorized deductions from their wages.

 Promote industrial peace and harmony.

 Provide for penalties for employers who fail to comply with the Act.

Importance of Payment of Wages Act 1936

The Payment of Wages Act 1936 is an important piece of legislation that ensures that
employees are paid their wages on time and in full. The Act also protects employees from
unauthorized deductions from their wages. The Payment of Wages Act is an important tool
for protecting the rights of India’s working class. Here are some of the key importance of the
Payment of Wages Act 1936:

Ensures that employees are paid their wages on time and in full. This is important for the
financial security of employees and their families.

Protects employees from unauthorized deductions from their wages. This prevents employers
from taking advantage of employees and withholding their wages.

Promotes industrial peace and harmony. When employees are treated fairly and paid their
wages on time, they are less likely to go on strike or engage in other forms of industrial
action.

Provides for penalties for employers who fail to comply with the Act. This helps to ensure
that employers are aware of their obligations under the Act and that they are held accountable
for non-compliance.

The Payment of Wages Act is an important piece of legislation that has helped to improve the
lives of millions of Indian workers. The Act has helped to ensure that employees are paid
their wages on time and in full, and it has protected them from unauthorized deductions. The
Act has also helped to improve the financial security of employees and promote industrial
peace and harmony.

Responsibility For Payment of Wages Act 1936

The responsibility for payment of wages under the Payment of Wages Act 1936 lies with the
employer. The employer is defined as the person who pays or is responsible to pay any
person employed by him any wages.

 In case of a factory, the person who is named as the manager under clause (f) of sub-
section (1) of section 7 of the Factories Act, 1948 is responsible for the payment of
wages.
  In case of an industrial or other establishment, the person who is responsible to the
employer for the supervision and control of the industrial or other establishment is
responsible for the payment of wages.

 In case of a railway, the person who is nominated by the railway administration for
the local area concerned is responsible for the payment of wages.

 In any other case, the employer may designate any person to be responsible for the
payment of wages. The person so designated shall be responsible for the payment of
wages in the same manner as the employer would be responsible.

The employer is required to pay the wages of every person employed to him before the expiry
of the seventh day from the end of the wage period. The wage period is the period for which
wages are payable to an employee. The wage period may be fixed by the employer or by the
agreement between the employer and the employee.

The employer is required to pay the wages in current coin or currency notes, by cheque, or by
crediting the wages in the bank account of the employee. The employer is not allowed to pay
wages in kind. The employer is also not allowed to make any unauthorized deductions from
the wages of an employee. The only deductions that are allowed are the following:

 Fines imposed in accordance with the provisions of the Act;

 Deductions for absence from duty, subject to the conditions specified in the Act;

 Deductions for damage or loss caused by the employee’s negligence or willful act;

 Deductions for deductions authorized by the Central Government or a State

Government.

If the employer fails to pay the wages of an employee on time, or if the employer makes
unauthorized deductions from the wages of an employee, the employee may file a complaint
with the Labour Commissioner. The Labour Commissioner may order the employer to pay
the wages owed or to stop the unauthorized deductions. The employer may also be fined for
non-compliance.

Provisions of Payment of Wages Act 1936

The Act specifies the time within which wages must be paid, the form in which wages must
be paid, and the deductions that may be made from wages. The Act also provides for
penalties for non-compliance. The main provisions of the Payment of Wages Act 1936 are as
follows:
  Time of Payment of Wages: The wages of every person employed must be paid
before the expiry of the seventh day from the end of the wage period.

 Form of Payment of Wages: Wages must be paid in current coin or currency notes, by
cheque, or by crediting the wages in the bank account of the employee.

 Deductions from Payment of Wages: Only the following deductions may be made
from wages:

 Fines imposed in accordance with the provisions of the Act;

 Deductions for absence from duty, subject to the conditions specified in the Act;

 Deductions for damage or loss caused by the employee’s negligence or willful act;

 Deductions for deductions authorized by the Central Government or a State

Government.

 Penalties Payment of Wages: Any person who fails to comply with the provisions of
the Act is liable to a fine of up to Rs. 1,000.

 The Payment of Wages Act 1936 is an important piece of legislation that ensures that
employees are paid their wages on time and in full. The Act also protects employees
from unauthorized deductions from their wages. The Act has been amended several
times since it was first enacted, and it continues to be an important tool for protecting
the rights of India’s working class.

Here are some of the key benefits of the Payment of Wages Act 1936:

 It ensures that employees are paid their wages on time and in full.

 It protects employees from unauthorized deductions from their wages.

 It provides penalties for employers who fail to comply with the Act.

 It helps to improve the financial security of employees.

  It promotes industrial peace and harmony.

The Payment of Wages Act 1936 is an important piece of legislation that has helped to
improve the lives of millions of Indian workers. The Act has helped to ensure that employees
are paid their wages on time and in full, and it has protected them from unauthorized
deductions. The Act has also helped to improve the financial security of employees and
promote industrial peace and harmony.

Workmen Compensation Act 1923

Introduction

The Workmen Compensation Act 1923 was enacted as social security legislation to
reimburse workers or employees in the event of an accident due to and during the course of
their employment. It came into force in 1924 and applies to the whole of India. This Act aims
at prioritizing workers’ welfare and preserving their dignity and well-being. It was
implemented keeping in mind the hazardous nature of some labour occupations such as
mining, construction, transportation, Plantations etc. It thus intends to insure workers against
any injury or disease occurring due to their work and pressurized employers to ensure a safe
working environment and a mentally and physically healthy workforce.

Who are Workmen?

The exhaustive list of persons classified as “Workers” is contained in Schedule II of the Act.
According to Section 2 (1)(n), Workmen (or Workers or Employees) broadly constitute:

1. Railway Servants

2. Master, Seaman or other members of the crew of a ship

3. A captain or other member of the crew of an aircraft

4. A person hired as driver, mechanic, cleaner or in any other capacity in

connection with a motor vehicle

5. A person recruited for work abroad by a company, and who is employed

outside India

Note: Workers do not include members of the Armed Forces of India.

Who is/are (an) Employer(s)?

According to Section 2 (1)(e) of the Workmen Compensation Act 1923, an employer has
been defined as comprising a person or group of persons and any managing agent acting as a
representative on behalf of an employer (in a trade or business) and, any person who hires the
services of employees by entering into a contractual arrangement with the employer.

In the State of Kerala v. KhadeejaBeevi [1], it was held that even a Government servant,
working as a “Mahout” in the forest department shall be treated as an employee under the Act
even if he is covered by family benefits schemes under the Government.

In New India Assurance Co. Ltd. vs Mohan Kumar Sahoo[2], it was stated that a person
engaged even for one day to drive a vehicle belonging to the owner is also an employee under
this act. This is because the owner gives directions and exercises definite control over the
person.

In Radhamony v. Secretary, Department of Home Affairs[3] also, it was held that an

individual working as a driver will fall under the label of an employee irrespective of whether
he is a non-governmental or government employee.

Who are dependants?

According to Section 2 (1)(d) of the Workmen Compensation Act 1923, dependants, who are
entitled to monetary compensation include:

1. Widow of the departed.

2. Widower
A son who is below 18 years of age
4. An unmarried daughter
5. Widowed mother
6. Parents of the departed
7. Paternal Grandparents (If parents of the deceased are not alive)
8. A legitimately adopted son or an unmarried daughter
9. A minor sibling or a widowed sister
10. Widowed daughter-in-law

11. A minor child of a pre-deceased son or daughter (if the minor has no parent alive).

When is an employer liable to compensate? (Section 3)

Generally, an employer is held liable in the following circumstances: –

Accident or injury is caused in the course of the worker’s employment. In Natwarsinh A.

Chauhan vs Niranjanbhai K. Shah[4], the court explained the expression- “arising out of
and in the course of employment”, adding that there must be a derivative or proximate
relation between the employer and the accident.

Occupational disorders and diseases, defined by the World Health Organization as “any
disease contracted primarily as a result of an exposure to risk factors arising from work
activity”, their main cause being the work environment. Examples- Occupational Asthma,
COPD, and Dermatitis. Schedule III of the Act lists all possible and proximate occupational
diseases that may occur in the particular nature of employment. An exhaustive list of
occupation disorders is given in Schedule III of the Act.
 Situation Compensation

An amount equal to 50% of the monthly wages of the

deceased workman multiplied by the relevant factor;
or
Where death results from the
injury
(a) an amount of Rs. 80,000; whichever is more.

(Rs. 2,500 to the eldest dependant for funeral

expenses in case of no dependant.)

An amount equal to 60% of the monthly wages of the

Where permanent total injured workman multiplied by the relevant factor,
disablement results from the
Or
(b) injury (A thorough list of such
injuries is provided in Part I
of Schedule I.) An amount of Rs. 90,000; whichever is more.

Same as % payable in case of permanent total

disablement or loss of earning capacity caused by
Where permanent partial that injury (specified in Part II of Schedule I).
disablement results from the
Same as % payable in case of permanent total
(c) injury(A thorough list of such disablement or in proportion to loss of earning
injuries is provided in Part II capacity (as assessed by the qualified medical
of Schedule I.) practitioner) permanently caused by the injury (not
specified in Schedule I).

Where temporary disablement, A half-monthly payment of the sum equivalent to

(d) whether total or partial, results 25% of monthly wages of the workman, to be paid [in
from the injury accordance with the provisions of sub-section (2)].

Further, we must consider the situations when the employer isn’t liable:

1. Injury not resulting in partial or total disablement (for more than 3 days).

2. Injury (not resulting in death) caused:

 a. During the influence of drinks or drugs, or
b. By willful disobedience of express orders and in defiance of safety measures,
or
c. By removal or disregard of safety devices or implements.
In DevidayalRalyaram v. Secretary of State[5], the doctrine of Added Peril was elaborated,
according to which if a workman while performing his duty does something which is not
required and involves extra danger, he shall not be liable to be compensated in the event of an
injury.

3. When a suit for damages has already been instituted before a commissioner in a Civil
Court and has been compensated by the employer.

Regarding the Amount of Compensation (Section 4)

Note: In the event of death or permanent disablement, such a lump sum equivalent of
compensation can be worked out as per Schedule IV of the Workmen Compensation Act
1923.

What is the method of calculating monthly wages? (Section 5)

According to clause (a), the monthly wages shall be one-twelfth of the total wages payable
for service not less than 12 months in case of a subsequent accident.

According to clause (b), if the worker had served less than a month, he would be paid the
average monthly amount paid to a worker involved in the same work before the event of an
accident.

According to clause (c), if it is not possible to calculate wages under clause (b), the monthly
wages shall be 30 times the total wages earned in respect of the last continuous period of
service immediately preceding the accident from the employer who is liable to pay
compensation, divided by the number of days comprising such period.

When should the notice and claim be made? (Section 10)

In case of death, the notice must be given as soon as practicable or within 2 years. However,
a report of the circumstances of serious injury leading to death must be given within 7 days to
the Commissioner.

In the case of disease or disablement, it shall be deemed to be assumed from the day he was
continuously absent from work.
The employer must communicate the circumstances of the death within 30 days to the
commissioner. If he opines that it’s his liability, he may compensate within 30 days. If he
opines that it isn’t his liability, he can justify it through defensive claims. The commissioner
will decide whether he is liable to compensate or not and can ask the dependants to pursue
their claim.

If the notice is irregular, it still can be entertained if:

1. The death was caused within the premises belonging to the employer

2. Other employers were aware of the time of accident or

The following needs to be mentioned in the notice:

a. Name and address of the person

b. Cause of injury of the person

c. Employer(s) responsible for managing the employee of a particular branch

The notice must be sent by a registered post to the residence or any office or place of business
of the person on whom it is to be served, or it can be entered into a notice book. A notice
book is mandatory for the employer to maintain so that the injured workers could themselves
or through others record their injuries.

Regarding Free Medical Examination (Section 11)

An employee who informs about his injury shall be entitled to free medical examination by a
qualified practitioner within 3 days of such information. Such a medical professional is
tasked with assessing the loss of earning capacity, which helps in estimating compensation.

If he does not submit himself or obstructs his examination, he shall not be liable to be
compensated.

If he leaves his place of work, he shall not be given compensation till he returns and submits.

Regarding Contracting (Section 12)

If there is an existing contract between the principal and Contractor in the course of a
business or trade, the principal would be liable to compensate the employee, which is
calculated with reference to the employee’s wages under the employer.
The principal gets indemnified by the contractor from whom the workman would have
claimed compensation. Other questions arising out of default of agreement, as to rights and
amount of such indemnity are dealt with by the Commissioner.

The principle shall not be liable to compensate if the accident occurs somewhere else (that is
either on the premises on which the principal has undertaken or usually undertakes, to
execute the work or which are otherwise under his supervision).

Regarding Insolvency of Employer (Section 14)

1. If there is a contract between the insurer and the employer or any scheme or arrangement
with creditors in respect of a liability to an employee, then in case of insolvency, he can
recover such amount to compensate the employee.

2. If the contract is void or voidable due to non-fulfillment of some conditions, the employer
may take to prove its validity during the proceedings for ascertaining compensation or during
liquidation.

3. In case the compensation is a half-monthly payment, the amount would be paid in a lump
sum.

4. If the liability of the employer is greater vis-à-vis the insurer, the employee can prove his
claim for the balance amount during the proceedings or during liquidation.

5. Insolvency of the company will not be applied if the company voluntarily relocates or
reconstructs or merges with another company.

Special Provisions relating to:

1. Masters of ship and seamen (Section 15)

The Act is applicable with certain alterations, which are as follows:
 The seamen need not give notice of any accident occurring onboard the ship.
 The claim for compensation must be made within 1 year (after knowledge of the
incident or 18 months if the ship goes missing.
 No compensation shall be payable for such injuries for which provision of gratuity,
allowance or pension is made under the War Pensions and Detention Allowances
Schemes (of 1939, 1941, and 1942) or the Pensions (Navy, Army, Air Force and
Mercantile Marine) Act, 1939by the Union Government.
2. Captains and Other Members of the crew of aircraft (Section 15A)
The Act is applicable with certain alterations, which are as follows:
 The crew need not give notice of any accident occurring onboard the aircraft.
 The claim for compensation must be made within 1 year (after knowledge of the
incident or 18 months if the aircraft goes missing.
3. Workmen abroad of companies and motor vehicles (Section 15 B)
Workmen who are recruited by companies registered in India and working abroad and
persons (drivers, mechanics, cleaners, etc.) operating motor vehicles registered under Motor
Vehicles Act, 1988 abroad shall fall under these provisions:

The notice and claim will be attended by the local agent (of the vehicle or company) in the
country where the accident occurred. Such a claim must be made within 1 year, subject to the
Commissioner’s consideration.

Who are Commissioners?

Commissioners are public servants appointed under Section 20 of the Workmen

Compensation Act 1923. Under Section 23, he/she is deemed to be a ‘Civil Court’ under the
Code of Civil Procedure, having powers to admit evidence and summon witnesses and
produce documents. According to Section 19, all queries as to the amount and duration of
compensation, liability of the employer, nature and extent of disability are addressed
exclusively by the commissioner.

How is a Commissioner appointed?

The State Government issues notification for appointment in the official gazette. To be
eligible, a person must be/ have been:

1. A member of a State Judicial Service for a minimum of 5 years, or

2. An Advocate or a Pleader for a minimum of 5 years, or

3. A Gazetted Officer for a minimum of 5 years having experience in Personnel Management,

Human Resource Development and Industrial relations.

A commissioner can also appoint one or more persons proficient in a particular field of
inquiry to assist him/her in a matter.

Where can proceedings be undertaken by a Commissioner? (Section 21)

The Venue for proceeding may be:

1. The area where the accident took place

2. Wherever the dependants reside

3. At the registered office of the employer

However, if a Commissioner or State Government deems it just, it can transfer a matter

completely to any other commissioner, who can conveniently deal with it.
Rules (Section 32)

Section 32 of the Workmen Compensation Act 1923, vests powers in State Government to
make rules regarding the following matters: –

1. Prescription of intervals where an application may be made, which is subject to conditions

when not attached with a medical certificate.

2. Prescription of intervals where an employee is required to submit himself/ herself for

medical examination.

3. Prescription of the procedure to be followed by the Commissioner(s) and the Parties while
disposing of the matter.

4. Regulation of transfer of cases from one commissioner to another.

5. Prescription of the manner of investment of money for the benefit of the dependants.

6. Representations of dependants (who are minors or unable to present them) in proceedings.

7. Prescription of the manner of formulation and registration of agreements.

8. Regulation of costs of proceedings

9. Prescription of the number of fees to be paid to the Commissioner relating to proceedings.

10. Maintenance of records and registers of proceedings (by the Commissioners)

11. Prescription of persons responsible for maintaining notice-books.

12. Prescription of the manner of diagnosis and certification, and measurement of incapacity
created by occupational diseases.

Rules made under the Act by State Governments are laid before the State Legislatures and on
similar lines, those made by Central Government are laid before the Parliament for
modifications or altogether annulment after considerations and discussions.

An overview of the Maternity Benefit Act, 1961

The Maternity Benefits Act of 1961 was passed by the Union of India on December 12, 1961,
following the country’s independence. The statute included conditional benefits for
pregnancy, childbirth, and complications related to those, in conformity with the then-current
international standards. The Act covered a lot of areas with meticulous precision and care
was paid to many dimensions of considerations influencing maternity benefits, despite the
fact that India was still a developing nation and in its 14th year of independence.
The Maternity Benefit Act, 1961 governs maternity benefits in India. Every organisation with
ten (10) or more employees is subject to the Act. According to the Act, maternity benefits are
available to any woman who has worked for an organisation for at least eighty (80) days.
The Maternity Benefit Act, 1961 aims to provide all the facilities to a working woman in a
dignified manner, so that she may overcome the “state of motherhood honourably,
peacefully, undeterred by the fear of being victimised for forced absence during the pre or
postnatal period”, as was observed by the Supreme Court in the case of Municipal
Corporation of Delhi v. Female Workers (Muster Roll) (2000).
According to the Maternity Benefit Act of 1961, the employer must pay the beneficiary a
medical bonus of up to 1,000 rupees if there is no prenatal confinement and no paid
postpartum care. The Central Government has raised the medical bonus to 25,000 rupees. If
the woman experiences a miscarriage or any other pregnancy-related complications, she is
entitled to paid leave. A 30-day extra leave with pay is offered to the beneficiary upon
verification of any ailment related to pregnancy. After reporting back to work, the mother is
entitled to a break and is allowed two breaks to feed the child until they are 15 months old.
The “facility of a crèche” has also been mandated to be available in convenient locations in
every firm with fifty or more female employees. Women will be allowed to leave with pay
for their tubectomy operation based on the proof provided.
According to the Act, it is against the law for an employer to fire or dismiss a pregnant
woman while she is away or on account of her pregnancy, or to give notice of a termination
on a day when the notice will expire while she is away, or to change any of the terms of her
employment to their detriment. According to the law, light work allotted to pregnant women
and breaks for child feeding are not grounds for wage deductions.
The statute is applicable to all businesses, including those that belonged to the government
and those that employed people to do equestrian, acrobatic, and other acts for display in
factories, mines, and plantations. Additionally, it applied to any store or business with ten or
more employees. The inclusion of provisions for industrial, agricultural, and commercial
establishments marked the act as a significant improvement over the rudimentary one from
1928. The Act covers all maternity benefits in the following sections:

 Section 4: Employment of, or work of, women prohibited during certain periods.

 Section 5: Right to payment of maternity benefits.

 Section 7: Payment of Maternity Benefits in case of death of a woman.

 Section 8: Payment of Medical Bonus.

 Section 9: Leave for miscarriage, etc.

 Section 10: Leave for illness arising out of pregnancy, delivery, premature birth of
a child, miscarriage, medical termination of pregnancy or tubectomy operation.

 Section 11: Nursing Breaks.

 Section 12: Dismissal during absence of pregnancy.

 Section 13: No deduction of wages in certain cases.

 Section 18: Forfeiture of maternity benefits.

The Act was revised by the Indian Government in 2017 to give women more inclusive
maternity benefits. Among other amendments, a new clause, Section 5(5), was added to the
Act, under which women who requested maternity leave might benefit from working from
home. According to Section 5(5) of the Act, an employer may authorise nursing mothers to
work from home if the nature of the work that is given to them permits it, under mutually
agreed-upon terms.

Features of the Maternity Benefit Act, 1961

 Duration of leave: A woman is entitled to twelve weeks of maternity leave under

the terms of the Act, not more than six weeks of which may come before the due
date. The ILO guideline at the time took this into account.

 Job protection: According to the guidelines of the 1961 Act, it has been ruled
unlawful for an employer to fire or let go of a woman at any time during or
because of her absence. However, the employer may notify the employee in
writing if the dismissal or discharge is the result of serious wrongdoing.

 Remuneration during leave: Women who meet the requirements for maternity
leave outlined in the legislation are entitled to maternity benefits at the rate of the
average daily salary for the time that they are really absent from work.

 Financial benefits: According to this law, every woman is entitled to maternity

benefits and the option of receiving a medical bonus from her employer in the
event that neither prenatal nor postpartum care is provided by the latter at no cost
to the employee. The employer is responsible for paying all debts, including
maternity benefits, to the woman’s nominee or legal representative in the event of
her death.

Benefits covered under the Maternity Benefit Act of 1961

The Act requires the employee to refrain from hiring any known women in any place for the
six weeks immediately following the day of the employee’s delivery, miscarriage, or medical
termination of pregnancy. During the six weeks immediately following the day of delivery or
miscarriage, no woman shall work in any company. The employer shall not require such
women to perform any work unless requested to do so by the employed lady.

1. Which negatively affects her pregnancy or the foetus’s development normally,

2. Any work that could result in her miscarrying or otherwise have a negative impact
on her health.
Every woman has the right to maternity benefits, and her employer is responsible for paying
them at the amount of the average daily income for the time she was actually away from
work, i.e.,:

1. The time leading up to the day of her delivery.

 2. On the day she gave birth and for the period immediately afterwards.

Period of granting maternity benefit

The maximum time a woman may get maternity benefits is twenty-six weeks, not including
the eight weeks prior to the due date of her anticipated delivery, as per Section 5 (3), as
amended by the Maternity Benefit (Amendment) Act 2017. Furthermore, in the event that a
woman passes away within this time, the maternity benefit will only be paid for the days
leading up to and including the day of her passing.
According to subsection (4) of Section 5, a woman who legally adopts a child under the age
of three months or a mother who commissions an adoption will be eligible for maternity
benefits for a period of twelve weeks starting on the day the child is given to the adopting
mother or the commissioning mother, as applicable.
In accordance with subsection (5) of Section 5, if a woman’s job requires her to work from
home, the employer may permit her to do so after she has claimed the maternity benefit for
the time period and on the conditions that they may mutually agree upon.

Conditions for claiming maternity benefit

Only when a woman has really worked for the employer from whom she claims maternity
benefits for a period of not less than eighty days in the twelve months immediately preceding
the date of her anticipated delivery is she eligible to receive maternity benefits.

Methods of claiming maternity benefit

Any woman wishing to exercise the right to maternity benefit must submit a notice to her
employer in the manner and on the form required by the business she is employed with in
order to be eligible to claim the maternity benefit as provided for by the 1961 Act. This
information should be included in the notice along with:

1. The maternity benefit and any additional funds to which she may be entitled in
accordance with this Act.
2. The name of the individual who should receive such payments.
3. A statement stating that she will not work at the company while collecting these
maternity benefits.
4. The day her absence from work officially started.
Following the woman’s provision of documentation proving her pregnancy, the employer is
required to pay the woman’s maternity benefit in advance.

What happens if a woman dies in the duration of the period of maternity leave
The maternity benefit that applies to a woman only lasts up to the date of her death if she
passes away within the above-mentioned term of maternity leave. The complete maternity
benefit would be payable if the mother passes away soon after giving birth, resulting in the
child’s survival. The employer is required to pay the maternity benefit that was in effect as of
the date of the child’s death if the child passes away while the mother is still eligible for it.
When a woman passes away, these payments must be made to the person she specified in the
notification she gave under Section 6 (1) of the Act, or if she did not nominate anybody, to
her legal representative.

Filing of a complaint under the Maternity Benefit Act of 1961

A woman has sixty days to appeal the decision if she is denied maternity benefits or medical
benefits, released from her job, or expelled while on maternity leave. She may do this by
approaching an inspector designated by the Maternity Benefit Act, 1961. In the unlikely
event that she disagrees with the inspector’s requests, she has thirty days to make a
counteroffer to the suggested expert. If she disagrees with the inspector’s requests or if a
more significant legal issue is raised, she may also file a lawsuit within a year.

Advantages and disadvantages of the Maternity Benefit Act, 1961

The existence of a maternity benefit law is crucial for women’s rights and financial stability.
This section of the article will draw attention to a few key advantages and shortcomings that
specifically relate to Indian law.

1. First and foremost, it is certain that every female employee in every store, factory,
mine, or on the other hand, manor, is covered by the Maternity Benefit Act, 1961.
This means there are no standards to evaluate the type of work women do in these
work contexts in order to determine if they are qualified. It is also important to
keep in mind that the Act of 1961 permits the state governments to extend the Act
to another foundation. For instance, the Keralan government has expanded all of
the Maternity Benefit Act, 1961 provisions so that they now embrace foundations
classified as business foundations under the Kerala Shops and Commercial
Establishments Act, 1960. A business foundation is defined in this example as “a
business, modern, exchanging, managing, or protecting foundation, a foundation
or authoritative administration in which the people utilised are primarily engaged
in office work, lodging, eatery, boarding or eating house, bistro or any other
refreshment house, theatre or some other place of open beguilement or
entertainment.”

1. The Act of 1961 provides full pay (100 percent of salary) for women on maternity
leave since it states that female representatives may be paid at the amount of their
typical daily remuneration. The maternity legislation, therefore, is more dynamic
than the corresponding component in the legislation of several European and other
formed nations. The provisions on payment of the Act of 1961 also comply
with ILO Convention No. 183, which states that maternity benefits must be based
on past earnings and cannot be less than 66% of the woman’s prior earnings.
 2. Because of the financial independence that salaried work gives women, it also
gives them options when faced with violent behaviour at home. Although it might
be a result of financial stress, imbalances, or neediness, work drive investment is
considered as not being fundamentally positive because it can place a double
burden of labour on women who are responsible for all domestic duties in the
family. In this sense, corporate perks, especially maternity benefits, are important
additions to women’s salaried labour. Maternity leave can create a space that
improves a woman worker’s capacity to balance work and family obligations.

Applicability

Upon reading Section 2 along with Section 3 (e) of Maternity Benefits Act, 1961 (“Act”), it
can be safely concluded that the Act is applicable to establishments such as factories,
(“factory” as defined in the Factories Act, 1948), mines (“mine” as defined in the Mines Act,
1952) and plantations (“plantation” means a plantation as defined in the Plantations Labour
Act,1951).

The Maternity Benefit Act also applies to establishments belonging to Government and
establishments wherein persons are employed for the exhibition of equestrian, acrobatic and
other performances as per section 2(b). The said Act is also applicable to every shop or
establishment defined under law, wherein ten or more persons are employed on a day during
the preceding twelve months and which is applicable in relation to shops and establishments
in a particular state.

Thus, considering the above, in Delhi, the Act applies to all “establishments” and
“commercial establishments” which are covered under the ambit of Section 2(9) and 2(5)
respectively of the Delhi Shops and Establishments Act, 1954.

Further, as per the proviso of Section 2 of the Maternity Benefit Act, the State Government
may, subject to obtaining approval from the Central Government, declare that the provisions
of Act be applicable to any other establishment or class of establishments which are either
carrying out industrial, commercial or agricultural activities or otherwise any other activity.

It may be noted that the provisions contained in this Act, save as otherwise provided
in sections 5A and 5B, shall not be attracted to any factory or other establishments to which
the provisions of the Employees’ State Insurance Act, 1948, as per Section 2(2) of the Act.
Further, as per Section 26 of the Act, the appropriate Government has the power to exempt
through a notification, an establishment, from the ambit of the Act subject to the conditions
laid down in Section 26.

Eligibility

A woman must be working as an employee in an establishment for a period of at least 80

days in the past 12 months to be entitled to maternity benefit under the provisions of the
Maternity Benefit Act.
Main Highlights of the Amendment in Material Benefit

The Maternity Benefits (Amendment) Bill, 2017 was approved by the Rajya Sabha and Lok
Sabha on August 11, 2016, and the President of India gave his assent on March 27, 2017. The
Maternity Benefits (Amendment) Act 2017’s provisions become operative in India on April
1, 2017. However, the clauses relating to the childcare facility (Section 11) came into force
on July 1, 2017. The Act after the change still adheres to its fundamental principles but offers
better benefits and promotes better child care. According to our investigation, the four levels
of this statute have undergone the following changes:

 Duration of leave: The amendment offers 26 weeks of maternity leave, not to

exceed 8 weeks prior to the anticipated due date unless they have two or more
living children. The overall period of maternity leave is shown to have increased
by 117% since the previous Act. Additionally, it complies with the ILO’s
suggestion of 18 weeks or more. This amendment was passed in order to provide
mothers enough time for self-healing and to improve child care, both of which
would lower the rate of infant mortality. Adoption is an exception to this rule. A
commissioning mother or a woman who adopts a child under three months old is
eligible for twelve weeks of maternity leave.

 Job protection: The original Act’s discharge and dismissal clause remain
unchanged.

 Financial benefits: No immediate financial benefits have been put into practice.
However, the amendment stipulates that a woman has the right to work from home
provided both her employer and she mutually agrees to this. Every business with
50 or more employees should include a crèche facility, either independently or as
part of the common areas. This is another benefit. The employer will permit the
woman four visits to the childcare provider.
The most important modification extends maternity leave from 12 to 26 weeks. According to
the WHO, a child should be nursed for 24 weeks after birth to lower the death risk.
Additionally, it ought to lower the number of women quitting their jobs as a result of
insufficient maternity leave. Additionally, the longer leave period is in accordance with
the Maternity Benefits Convention’s suggestion (no. 183). The addition of maternity leave for
commissioning and adopting women is an important one that allows them to take care of
themselves and their children while also honouring their parenthood. Due to these changes,
India now ranks third globally in terms of the number of maternity benefits available to
women, behind Canada and Norway.

Impact of the Maternity Benefit (Amendment) Act, 2017 on employability

The effects of the Maternity Benefit (Amendment) Act, 2017 on employability have been
listed hereunder:

1. Many employers in private companies may refrain from hiring such women who
may be about to become pregnant because they are required to give them maternity
 leave and compensation for that time (up to 26 weeks). Since the amendment,
many firms view hiring women as a hardship. The exclusive obligation of the
employer to pay all wages in full during the allotted time increases production
costs for employers.
2. A rise in production cost occurs as the exclusive obligation of the employer to pay
all wages in full during the allotted time increases costs for employers.
3. The provision makes employers worry about their financial stability, which can
lead to a predilection for hiring men over women.
4. Losses brought on by extended maternity leave, which helps businesses that
generally hire female employees.
5. Reduces the employment chances for women employees since businesses are
either reluctant to hire them or ask them to quit right before giving birth in order to
avoid further liability.

Creche Facility Introduced by Maternity Benefit (Amendment) Act, 2017

In terms of Section 11A of the Maternity Benefit Act, every establishment to which the Act
applies and have fifty or more employees must establish a Crèche facility within such
distance as may be prescribed through notification. The Creche must be established either
separately or along with common facilities. The employer must allow women at least four
visits a day to the crèche and it shall also include the interval for rest allowed to her. Every
establishment is required to intimate in writing and electronically to every woman at the time
of appointing her initially regarding every benefit available under the Maternity Benefit Act.

National Guidelines for setting up and running creches under the Maternity Benefit

(Amendment) Act, 2017

Section 11A mandates the establishment of crèches within such distance as may be
prescribed, either separately or along with common facilities. As per Section 2(l),
“prescribed” means prescribed by rules made under this Act. Further, as per Section 28 of the
Act, rules can be prescribed by the State or Central Government as the case may be for
carrying out the purposes of the Act. The following are some of the key guidelines published
in the Gazette by the Ministry of Women and Child Development.

Crèche For Whom

The use of a crèche facility is proposed to be extended to children of the age group of 6
months to 6 years of all employees including temporary, daily wage, consultant and
contractual personnel.
Crèche Location

The center should be near/at the workplace site or in the beneficiaries’ neighborhood, within
500 meters.

Timings

The crèche preferably should open for 8 hours to 10 hours. In this case, the workers can
follow a shift system. In case the establishment has day and night shifts, then the crèche
should also be run in shifts.

Facilities to be provided

Crèches should be concrete, with a min space of 10-12 sq.ft. per child, with ventilation,
drinking water and with no unsafe places such as open drains, pits, garbage bins near the
center. Further, other facilities to be provided include:

 A guard, who should have undergone police verification.

 Ramps and handrails.
 Every Creche should have one supervisor per crèche.
 The Creche should have a minimum of one trained worker for every 10 children
who are under three years of age.
 For every 20 children above the age of three, the creche should have one trained
worker along with a helper.
 No plumbers, drivers, and electricians and other outside persons should be allowed
inside the crèche when children are present.
 A Crèche monitoring committee should be formed having representations from
among crèche workers, parents, and administration.
 Forming a grievance redressal committee for inquiring into instances of sexual
abuse.

Maternity Benefit (Mines and Circus) Amendment Rules 2019

It is pertinent to note these rules do not apply to Crèches established in Mines and Circus
establishments. Crèches in Mines are regulated by the Maternity Benefit (Mines and Circus)
Amendment Rules 2019. Some of the key provisions include:

 Rule 2 (b) – The crèches are set up for children under 6 years of age.
 Rule 4- The crèches are divided into 4 Types (A, B, C, D) based on the number of
women employed.
  Rule 4- Basic Standard requirements to be provided.
 Rule 8- The crèches shall be open during the whole day and open at night if the
women employees are at the office.
 Rule 9- Restriction of access to outsiders.
 Rule 10- Guidelines for medical arrangements.

Are creche facilities mandatory?

The language of Section 11A of the Amendment Act, 2017 is that Crèche facilities shall be
established at “every establishment”. Thus, going by the rule of literal interpretation, it can be
inferred that the section mandates to establish crèches only in those “establishments” covered
under the definition of “establishment” under Section 3 (e) of the Act.

Further, it can also be inferred that an “establishment” excluded under Section 2(2) or
excluded by notification under Section 26 of the Act, is not obliged to set up a crèche as
mandated.

As mentioned above, Section 11A’s mandate to set crèches applies to “establishments” under
the ambit of the Maternity Benefit Act, 1961. Further, the clarification notification issued on
behalf of The Maternity Benefit (Amendment) Act, 2017, clarified that as Section 2 has not
undergone an amendment, there are no changes regarding the application of the Act of 1961.
As per Section 2(b), an “establishment” includes every shop or establishment within the
meaning of any law for the time being in force in relation to shops and establishments in a
State.

Consequently, crèches are mandatory in all establishments covered under Delhi Shops and
Establishment Act, 1954. As per Section 2(5) of the 1954 Act, “commercial establishment”
means any premises wherein any trade, business or profession or any work in connection
with, or incidental or ancillary thereto is carried on..”. Further, as per Section 2(9) of the Act
of 1954, “ ‘establishment’ means a shop, a commercial establishment…”.

Thus, Crèches are mandatory in companies, firms and consultant companies even though they
may be incorporated or registered under The Partnership Act, 1932 or Companies Act, 2013.

Applicability of the Industrial Disputes Act, 1947

This Act of 1947 is applicable across the whole of India to every industrial institution
engaged in any kind of business, production, or distribution of products and services, etc.,
regardless of the number of workers employed. Every worker who is either a contractual
labourer, apprentice, or part-time worker or a worker who does any kind of manual, clerical,
skilled, unskilled, technical, operational, or supervisory work is covered under this Act.
This Act, however, does not apply to persons primarily in a managerial or administrative
capacity or to those who are in a supervisory capacity or performing managerial functions; it
also does not apply in the instances where Army Act, 1950, Air Force Act, 1950, and
the Navy Act, 1957 apply, as well as to those in the police service or officers or employees of
a prison.

Who is considered a “workman” under the Act

An industrial dispute can be raised by either a “workman” or an “employer.” The idea of a
“workman” is important to the concept of an industrial dispute. Since the Industrial Disputes
Act of 1947 is a useful piece of legislation, the courts have expanded its scope and
applicability by giving a broad meaning to the term “worker.”

A “workman” is defined in Section 2(s) of the Industrial Disputes Act, 1947 as any person,
including an apprentice, who might be employed in any industry to do any type of manual,
unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward,
whether the terms of employment are express or implied, and includes any such person who
has been dismissed, discharged, or retrenched in connection with, or as a result of, a dispute.
It excludes all members of the army, navy, air force, or police, as well as those primarily
employed in management or administrative, supervisory capacities, and those earning more
than INR 6500 per month.

The Supreme Court of India ruled in Reserve Bank of India and Others v. C.N.
Sahasranaman and Others (1986) that the employees are completely covered by the
definition of the term “workman,” which is given in Section 2(s) of the Industrial Disputes
Act.

In the case of Ved Prakash Gupta v. M/s Delton Cable India (P) Ltd (1984), it was decided
that a person hired in a management or administrative position is not considered a worker.

The courts have gone through this definition many times, and with its various interpretations,
they have determined some elements that would help in deciding whether a person is a
“workman” or not. Some of the components are as follows:

 Whether or not a master-servant relationship exists.

It was held in the case of Chintaman Rao v. State of Madhya Pradesh (1958) that there must
be the existence of a contractual relationship between a master and servant, i.e., the workman
must be under his master’s supervision, direction, and control.

 When an individual performs a number of functions that share characteristics with

other functions, the nature of the primary function for which the claimant is
engaged should be considered in determining whether the person is a worker or
not.
In the case of John Joseph Khokar v. Bhadange B. S. and Ors. (1997), it was held that while
determining whether a person is a workman or not, the court must always try to look at the
main or major work for which that person is hired. The designation of the individual or any
connected work cannot exempt the individual from the provisions of the Act.

 Work is either manual, skilled, unskilled, technical operational, clerical, or

supervisory in nature; simply because it does not fall within the exception does not
make a person a workman.
 Manual and operational labour, both skilled and unskilled.

What is considered an industrial dispute

According to Section 2(k) of the Industrial Disputes Act, 1947, if any conflict or differences
arise between employers and employers, between employers and workers, or between
workmen and workmen that are associated with any person’s employment or non-
employment or related to terms of employment or with the working conditions of the
employee, it is referred to as an “industrial dispute.”

Parties involved in the conflict may be:

 Employers and employees;

 Employers and employers;
 Workers and workers.
There should be a point of contention and not just a mere difference of opinion in order to
constitute a dispute. It must be endorsed in writing by the union at the beginning of the
dispute. Subsequent endorsements will not validate the reference. As a result, the date when
the conflict was argued is very important. It impacts the interests of not just one worker but
multiple workers as a class who work in an industrial enterprise. The debate might be about
any worker or workers, or about any other individual in whom they have an interest as a
group.

In Jadhav J. H. v. M/s. Forbes Gokak Ltd (2005), it was held that a dispute involving a single
worker can be considered as an industrial dispute if the dispute is supported by the union or a
group of workers, regardless of whether the union supporting the worker’s cause is not the
majority of the union.

What is considered an individual dispute

An individual dispute is one that is raised by a single employee only. If we want to consider
an industrial dispute, a disagreement must be raised by a registered trade union. Individual
disputes become collective industrial disputes when community interests are added to them or
when they are backed by workers themselves or their union or federation on their behalf.

Section 9C of the Industrial Disputes Act, 1947 deals with the creation of grievance redressal
bodies and the transfer of certain individual disputes to such bodies. According to this
Section, if a company has 50 or more workers, they need to set up a group of people to help
solve problems between the company and individual workers. This group is called a
Grievance Settlement Authority, and they follow certain rules made by the government. The
goal is to solve any disagreements or arguments between individual workers and the
company in a fair and just manner.

What are the underlying causes of industrial dispute

Industrial disputes develop as a result of workers’ entitlement to collective bargaining. In
order to qualify as an industrial dispute, it is necessary that there be a demand made by
workers or employees about employment or non-employment that is refused by the person to
whom the demand is made, resulting in the disagreement between them.

In the case of Sindhu Resettlement Corporation Ltd. v. Industrial Tribunal (1967), the
Supreme Court held that if the workmen do not have any kind of disagreement with the
management, then every request they make to the government is seen as merely a demand. A
simple demand to the government without a conflict with the management cannot become a
labour dispute.

The expression “industrial dispute” has been extensively defined in the case of Workmen
employed by Hindustan Lever Ltd v. Workmen of Hindustan Lever Ltd. (1984), and according
to this case, any disagreement or conflict that may arise between an employer and its workers
is included under this term. Hence, regardless of the nature of the conflict, it cannot be barred
from being classified as an industrial dispute.

The court held in Shambu Nath Goyal v. Bank of Baroda (1983) that even if the demand was
not previously made before the management and rejected by them but was brought during
referral or conciliation processes, the disagreement may be referred to as an “industrial
dispute.”

The reasons for dispute can be economic grounds such as unhappiness with remuneration
such as earnings, promotions, bonuses, allowances, and other perks, or working
circumstances such as working hours, leave, and holidays without pay, unfair layoffs and
retrenchments, dismissal disputes, and so on.

There can be non-economic issues as well that could cause disputes, such as worker
victimisation, ill-treatment by coworkers, sympathy strikes, political considerations,
indiscipline, and so on. Non-economic causes of industrial disputes can be classified as
psychological causes, which include personality clashes, worker demands for self-respect and
recognition, the nature of administration, etc. There are some institutional causes too, such as
non-recognition and non-registration of trade unions, issues with collective bargaining, unfair
trade and other practices, etc., and the denial of workers’ legal and other rights.

When an individual dispute becomes an industrial dispute

To declare an individual conflict as an industrial dispute, the following elements must be met:
  A body of labourers, trade unions, or a significant number of workmen must be
proven to have made common cause with the individual workmen.
In the case of Newspaper Ltd., Allahabad v. UP State Industrial Tribunal (1960), it was
decided that when a group of workers, either through their union or otherwise, sponsored a
worker’s complaint, it became an industrial dispute, provided, however, that the assistance or
sponsorship gained must come from the employees of the employer being sued.

The Bombay Union of Journalists, of which the Workers Union was a member, initiated a
workers’ dispute in the case of Bombay Union of Journalists v. The Hindu, (1961). In this
case, the Bombay Journalists Union represented all personnel in the Bombay journalism
sector, rather than just one job. The Supreme Court ruled that the dispute was personal rather
than industrial.

 Another criteria for considering an individual dispute as an industrial dispute is

that it was taken up or sponsored by the workers as a body of trade union or by a
huge proportion of them prior to the date of reference. The Indian Express
journalists had no union in the case of Workmen of Indian Express Newspapers
Ltd. v. Management Indian Express Newspapers, (1968), thus their issue was taken
up by the Delhi Union of Journalists, an external union. That union represented
just a small percentage of the Indian Express’s working journalists. The Delhi
Union of Journalists was found to have a representative character by the court in
this case. This is because the journalists worked with the Indian Express, and the
debate escalated into an industrial dispute.
Thus, for an individual dispute to be considered an industrial dispute, it must be supported by
the trade union of the workers, or if there is no trade union, by the majority of the workers, or
it must meet the conditions of Section 2A of the Industrial Disputes Act, 1947.

According to Section 2A of the Industrial Disputes Act, 1947, if an employer terminates the
services of an employee, including by discharging, dismissing, or retrenching them, due to a
dispute or differences between the worker and their employer, the resulting disputes will be
termed as an industrial dispute. In such a situation, whether any other worker or any union of
workers is a party to the dispute or not doesn’t matter.

After three months have passed since an application was filed with the conciliation officer,
any worker may make an application directly to the labour court or an industrial tribunal for
determination of such a dispute. The appropriate government has the power to appoint any
number of persons as it thinks fit to be conciliation officers. Powers of mediating and
promoting the settlement of industrial disputes are present. A conciliation officer can be
appointed for a specified region, for some specific industries in a specified area, or for one or
more specified industries. The government has the power to appoint these officers either
permanently or for a limited period of time. This process is present to avoid unnecessary
delay in the dispute resolution process. However, the application must be submitted within
three years after the date of dismissal, discharge, retrenchment, or termination of
employment.

The court will then move forward to proceed with the case as if it had been referred to it
under Section 10 of the Industrial Disputes Act, 1947.
How an individual worker may file an industrial dispute
There are some ways in which individual workers may file an industrial dispute:

Through trade union

Sections 15 to 28 of the Trade Unions Act, 1926 provide the rights and duties of registered
trade unions. A trade union is allowed to make submissions on behalf of an employee or
individual dispute if the employee grants written authorization to that union to represent him
or her. With that kind of authority, a trade union gets the power to make submissions before
any consolation officer, industrial court, or labour court. A recognised trade union is a legal
body that can also sue the employer or anyone else if necessary. The union may plead under
its own name or on behalf of its members before any labour court, authority, or court.

Through the labour courts

Industrial disputes can be resolved through labour courts as well. One or more labour courts
may be established by the competent authorities. The role of these labour courts is to resolve
industrial disputes involving any of the items listed in the second schedule.

According to Section 10(1)(c) of the Industrial Disputes Act, 1947, as per the subjects stated
in the Third Schedule, disputes that involve a number of workers up to 100 can be addressed
by the labour court. According to Section 10(2), if any party to an industrial dispute seeks the
government’s permission to refer the disagreement to the labour courts, if the government is
satisfied, then only they can submit that referral to the labour courts. As per Section 10(6) of
the Industrial Disputes Act, 1947, no labour court or tribunal shall have jurisdiction to hear
any case before the National Tribunal.

Through the grievance settlement authorities

Under Section 9(c) of the Industrial Dispute Act, 1947, the employer is under a duty to
provide grievance settlement authority as per the regulations established in that name under
this Act in respect of each industrial establishment employing or having employed fifty or
more workers on any day during the preceding twelve months.

Each company or industrial establishment that employs twenty or more people must have one
or more grievance resolution committees to settle conflicts originating from individual
grievances. The grievance redress committee may conclude its proceedings within 45 days
after receiving a written request from or on behalf of the aggrieved party.

The employee who is dissatisfied with the grievance redressal committee’s decision may file
an appeal with the employer, and the employer must dispose of the decision within one
month of receiving the appeal.
Authorities under the act:-
There are various authorities under the act such as the works committee, conciliation officer,
conciliation board, courts of inquiry, labour court, tribunal, national tribunal.

Works Committee:
This has been defined under section 3 of the act which says that each industrial establishment
should have a works committee and the works committee will have equal representations
from both the employer and the employee. it is to try to settle the dispute in the first instance
through the process of mediation in the initial stage of the dispute. The works committee also
time to time comments upon the matters in dispute.

Conciliation officer:
Section 4 of the Industrial disputes act 1947 talks about the provisions of the conciliation
officer. it states that the appropriate government i.e. the central government, state government
or the local authority will appoint such number of persons to be the conciliation officer as it
thinks fit.

it is the duty of the conciliation officer to mediate and promote the settlement of industrial
dispute. The conciliation officer can be appointed either permanently or for some point of
time.
Board of Conciliation:
The board of conciliation are constituted under section 5 by the appropriate government.

The board of conciliation s constituted in order to promote the settlement of industrial

dispute.

The board appointed consists of the chairman and two or four other members. under the
board the chairman is the independent person and the other persons appointed in equal
numbers which represents the parties in disputes and the person who represents the party
shall be appointed by the party . the party needs to appoint such representatives within the
time prescribed and if the party fails to appoint the representatives within the time then the
appropriate government can appoint the person to be the representative of the party.

A board needs to work according to the quorum prescribed but if the chairman or the other
member as the case may be ceased to be available the board shall not act until a new
chairman or member as the case may be has been appointed.

Courts of Inquiry:
the section 6 of the act further talks about the constitution of the court of inquiry in order to
conduct inquiry upon the matter in dispute.the court of inquiry to be run by the independent
person or persons as the appropriate government thinks fit. where the court consists of two or
more persons then any one of them shall be appointed to be chairman.
Labour Court:
section 7 of the act talks about the constitution of the labor court by the appropriate
government. it can create one or more labor court as it thinks fit for the adjudication of
industrial dispute as specified under schedule II. it consists of one person to be appointed by
the appropriate government. the qualifications of the presiding officer of the court shall be as
follows:-
a) if he is or has been a judge of the high court
b) he has for a period of not less than 3 years being a district judge or an additional district
judge
c) has held judicial office for not less than 7 years
d) he has been the presiding officer of a Labor Court constituted under any Provincial Act or
State Act for not less than five years.
e) he is or has been a Deputy Chief Labor Commissioner (Central) or Joint Commissioner of
the State Labor Department, having a degree in law and at least seven years' experience in the
labor department including three years of experience as Conciliation Officer.
f) he is an officer of Indian Legal Service in Grade I with years' experience in the grade.

Tribunal:
section 7A deals with the provision of constitution of the one or more tribunal for the
adjudication of dispute relating to the aspects as mentioned in schedule second or third.
tribunal to consist of one person who shall be appointed by appropriate government.

The qualifications of the presiding officer of the tribunal are as follows:-

a) he is, or has been, a Judge of a High Court;
b) he has, for a period of not less than three years, been a District Judge or an Additional
District Judge;

c) he is or has been a Deputy Chief Labor Commissioner (Central) or Joint Commissioner of

the State Labor Department,, having a degree in law and at least seven years' experience in
the labor department including three years of experience as Conciliation Officer:

d) he is an officer of Indian Legal Service in Grade III with three years' experience in the
grade.
the appropriate government to appoint two persons as assessors to advise the tribunal.

National Tribunal:
section 7B deals with the national tribunal which is appointed by the central government
constitute one or more national tribunal for the adjudication of industrial disputes which in
the opinion of the central government involves questions of national importance or are of
such a nature that industrial establishments situated in more than one state are likely to be
interested in or affected by such disputes. the national tribunal shall be consisted of one
person only to be appointed by the central government. in order to be appointed as the
presiding officer of a national tribunal he should be or has been a judge of a high court. the
central government can also appoint two persons as assessors to advise the national tribunal
in the proceeding before it.

Disqualifications for appointment of the presiding officer of labor court, tribunal and national
tribunal:
section 9 c of the act talks about the provision relating to the disqualification of the presiding
officer which states that if the person is not an independent person or if he has attained the
age of 65 years then he cannot be appointed as the presiding officer of the labor court or
tribunal or national tribunal by the central government.

Section 9C of Industrial Disputes Act 1947 : "Setting up of Grievance Redressal

Machinery"

9C. (1) Every industrial establishment employing twenty or more workmen shall have one or
more Grievance Redressal Committee for the resolution of disputes arising out of individual
grievances.

(2) The Grievance Redressal Committee shall consist of equal number of members from the
employer and the workmen.

The chairperson of the Grievance Redressal Committee shall be selected from the employer
and from among the workmen alternatively on rotation basis every year.

(4) The total number of members of the Grievance Redressal Committee shall not exceed
more than six:

Provided that there shall be, as far as practicable one woman member if the Grievance
Redressal Committee has two members and in case the number of members are more than
two, the number of women members may be increased proportionately.

(5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal
Committee shall not affect the right of the workman to raise industrial dispute on the same
matter under the provisions of this Act.

(6) The Grievance Redressal Committee may complete its proceedings within thirty days on
receipt of a written application by or on behalf of the aggrieved party.

(7) The workman who is aggrieved of the decision of the Grievance Redressal Committee
may prefer an appeal to the employer against the decision of Grievance Redressal Committee
and the employer shall, within one month from the date of receipt of such appeal, dispose off
the same and send a copy of his decision to the workman concerned.

Nothing contained in this section shall apply to the workmen for whom there is an
established Grievance Redressal Mechanism in the establishment concerned.
Strike under Industrial Dispute Act, 1947
For strike, the Industrial Dispute Act under 2 (q) defines strikes as “a cessation of work by a
body of persons employed in any industry acting in combination, or a concerted refusal, or
a refusal, under a common understanding of any number of persons who are or have been
so employed to continue to work or to accept employment”.

In the case of “Cox and Kings Limited v. Their Employees(1977)”, the Court held that a
strike can be considered justified if it is in connection with a current labour dispute or
directed against an unfair labour practice of the employer.

Under the following situation as given under Section 22, on these grounds the strikes can be
considered illegal:

1. Without giving to employer notice of strike within six weeks before striking; or
2. Within fourteen days of giving such notice; or
3. Before the expiry of the date of strike specified in any such notice as aforesaid; or
4. During the pendency of any conciliation proceedings before a conciliation officer
and seven days after the conclusion of such proceedings.
But herein it is important to notice that these arrangements don’t forbid the labourers from
demonstration yet expect them to satisfy the condition before taking to the streets. Further,
these arrangements apply to open utility assistance in particular. The Industrial Dispute Act,
1947 doesn’t explicitly specify who takes to the streets. Nevertheless, the definition of the
strike itself suggests that the strikers must be persons, employed in any industry to do work.

Further, the provisions under Section 23 are general in nature. It imposes general restrictions
on declaring strike in breach of contract in both public as well as non-public utility services in
the following circumstances mainly: –

1. During the pendency of conciliation proceedings before a board and till the expiry
of 7 days after the conclusion of such proceedings;
2. During the pendency and 2 months after the conclusion of proceedings before a
Labour Court, Tribunal or National Tribunal;
3. During the pendency and 2 months after the conclusion of the arbitrator, a
notification has been issued under subsection 3 (a) of Section 10 A;
4. During any period in which a settlement or award is in operation in respect of any
of the matters covered by the settlement or award.
The main purpose of this Section is to maintain an untroubled and disciplined atmosphere
when conciliation and negotiation proceedings are in the process without any disturbance.

As held in the case of Ballarpur Collieries Co. v. The Presiding Officer, Central Government
Industrial Tribunal(1972), “It was held, if a person was employed in public utility services
then, he/she cannot go for a strike without the consent and gathering the procedures which
must be satisfied in the provisions.”
Essential requirements for a strike

The necessary requirements for the strike to exist are

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

work or reluctance to perform the duties of their posts. It is the most important
characteristic of the strike. It is stoppage of work or refusal to continue work that
the employees are required to do. The cessation of work must be voluntary and
temporary. Permanent cessation of work would result in termination of the
employment contract. There must be an actual cessation of work. A mere
apprehension or threat of a strike or resolution to go on at some future date is not a
strike. Cessation of work may be inside the very establishment, even on their
seats.
The cessation of work must be by persons employed in any industry. It means that the
establishment must be an industry within the definition of ‘industry’ provided under the
Industrial Disputes Act of 1947. Within the meaning of Section 2(q), if the establishment in
which the strike is carried out is not covered under the definition of industry, even though all
other ingredients of the strike are fulfilled, it will not be a strike.

 The strikers must have been acting in combination or concerted action under
common understanding. The word ‘acting in combination’ came up for
interpretation before the Industrial Tribunal Bengal in the case of Shamnuggar
Jute Factory Ltd. vs. Their Workmen (1963). The Tribunal observed that the words
‘acting in combination’ imply that the group of people in employment must be
demonstrated to be working in concert, with their psychology oriented towards
achieving a particular objective, such as the group’s direct common objective
being to terminate employment. Individual worker’s work stoppages do not
constitute a strike. Thus, a strike implies cessation of work by a number of
employees under common understanding. Unless the common intention of a
number of workers is proved, it would not amount to a strike.
 The strike must be the result of an industrial dispute- The cessation of work must
be preceded by an industrial dispute. According to the Industrial Disputes Act of
1947, an industrial dispute arises from a disagreement or conflict between-

 Employers and employers

 Employers and workmen
 Workmen and workmen,
The dispute or disagreement ought to be related to

 Employment
 Non-employment
 Terms of employment
 Conditions of service of any persons
The dispute or difference under Section 2(k) must be a real and substantial difference with an
element of persistence and continuity until resolved. The dispute or difference, if not
resolved, is likely to endanger the peace of industry and the community.

 The person must be employed in an industry according to the definition of strike

for the applicability of this Act. The person must be employed in an industry.
In Bangalore Water Supply & Sewerage Board vs. Rajappa (1978), the Supreme
Court interpreted the definition of the industry as covering both the private and
government industries. Thus, all industries, irrespective of their status, whether
they are owned and run by the state or by entrepreneurs, are covered under the
Industrial Disputes Act of 1947.

Illegal Strikes

There are penal provisions contained in the Act to deal with the penalties in respect of strikes.
The penalties are contained in Section 26 to Section 29 of the Industrial Disputes Act of
1947.

If a worker initiates, persists in, or takes any other action in order to support a strike that is
prohibited by this Act, they may face a suspension, which can be a month-long, a fine of up
to fifty rupees, or more.

The act of commencing a strike must be a voluntary act. A worker cannot be said to have
commenced any strike if he can establish that he was willing and prepared to join work and
made efforts for the same but was prevented by other workmen from doing so. Workmen can
be said to be continuing a strike if he is voluntarily absent from work. Workmen can also act
in furtherance by abetting the strike.

Penalty for instigation

Anyone who encourages or incites others to participate in a strike that is prohibited by this
Act may face up to six months in prison, a fine of up to one thousand rupees, or both.

The literal meaning of the terms ‘instigates’ or ‘incites’ is to push forward, support, or
stimulate acting out. Something more profound must be involved than just asking someone to
perform an act.

Penalty for Breach of Settlement or Award

A strike or lockout about any of the subject matter covered by a settlement or award that
occurs during the time the settlement or award is in effect is illegal.
Protection for people refusing to participate in illegal lockouts or strikes

The Act provides protection to persons who refuse to participate in any illegal strike or
lockout. It provides that if any person refuses to participate in or continues to participate in
any strike which is illegal, he shall not be subjected to any expulsion from the trade union or
society or penalty or deprivation of any right by reason of such refusal or any action taken by
him.

Regulation of strikes

The appropriate government is empowered to prohibit the continuance of any strike or

lockout in relation to an industrial dispute that has been brought forward to a Board, Labour
Court, Tribunal or even to the National Tribunal. If an industrial dispute is referred and an
order prohibiting any strike or lockout has been made by the appropriate government, the
strike or lockout shall be illegal if it is continued after the order has been made.

Similarly, in accordance with Section 10A (4-A), the relevant government may, by order,
forbid the continuation of any strike or lockout related to an industrial dispute that has been
referred to arbitration after a notification has been sent out in accordance with Section 10A(3-
A).

Features of strike
According to Ludwing Teller, the word ‘strike’, in its broad sense, corresponds to a
disagreement between an employer and his employees that results in a mutually beneficial
suspension of employment.

He described four characteristics of a strike, which are as follows:

 A relationship between the person or persons who initiate the strike and the person
or persons against whom the strike is called is established,
 The relationship as one of employer or employee is constituted,
 The ongoing dispute between the parties and the utilisation by labour of the
weapon of concerted refusal to continue to work on the strategy of convincing or
coercing adherence to the demands of the workmen,
 The contention advanced by workers is that even in a state of hostile suspension,
although work ceases, the employment relationship is deemed to continue.

Types of strikes
Based on the phenomena of strikes around the world, strikes can be categorised into
economic strikes, sympathy strikes, general strikes, sit-down strikes, slow down strikes,
hunger strikes and wildcat strikes have been experienced.
Economic Strike

Such a strike happens due to economic demands like increments in wages and allowances
like house rent allowance, transport allowances, bonuses etc.

An economic strike is a strike concerning the wages, hours and other conditions of work and
terms of employment of the worker. In economic strikes, the workers demand betterment
regarding their wages, house rent allowance, travelling allowance, dearness allowance and
other facilities such as privilege leave and casual leave.

Sympathy Strike

In such a strike union or workers of one industry join the strikes already hailed by other
unions or workers. A sympathetic strike is one in which striking employees have no demands
or grievances of their own but strike for the purpose of aiding others, either directly or
indirectly. A sympathetic strike is a strike within the purview of the Industrial Disputes Act.

In the case of S. Kumbalingam vs. Indian Metal and Metallurgical Corporation, Madras
(1963), it was held that when the workers in concert absent themselves out of sympathy for
some cause wholly unrelated to their employment or even in regard to the condition of
workers in service under other management, such absence could not be held to be a strike, as
the essential element of the intention to use it against the management is absent. The
management would be entitled to take disciplinary proceedings against the workmen for their
absence on the ground of breach of the condition of service.

General strike

This strike was intended to increase the political pressure on the ruling party by all unions or
members in a region or state.

It normally refers to a large-scale strike organised by employees belonging to an industry,

region or entire country. Since these strikes are organised on a mass basis, they create a huge
impact and often put a lot of pressure on employers. However, these strikes are not intended
against any individual employer.

A few examples of general strikes in India are the nationwide strikes of November 1991, June
1992, September 1993, September 1994 and September 1998.

Sit-in Strikes

Other names for sit-in strikes are pen-down, tools-down, and stay-in. In these strikes,
employees report for work but do not work. These strikes may sometimes be planned and
other times spontaneous, depending on the happenings and urgency of the situation. In these
forms of strikes, employees peacefully enter their place of work without indicating their
intention. But after entering their workplace, they do not do their work. If blue-collared
workmen do not do their work, it may be a tool-down strike, and if white-collared workmen
do not work, it is a pen-down strike.

In such cases, workers hold strikes at the workplace and none of the workers stay absent from
duty but they all refuse to work till their demands are fulfilled.

In the case of Punjab National Bank, Limited vs. Its Workmen (1963), the Court held that a
pen-down strike falls within the definition of strike under the Industrial Disputes Act, 1947
and is not per se illegal. In this case, the employees of the appellant bank commenced a pen-
down strike, followed by a general strike during the pendency of arbitration proceedings. The
strike was peaceful and non-violent. The Court held that the pen-down strike did not
disentitle the employees to reinstatement.

Slow down strike

It means workers or unions don’t refuse to work but put pressure on industries to get their
demand by reducing or restricting the output of the production industry. Slow down, also
referred to as go-slow or work-to-rule strikes, are forms of strikes wherein the employees
work but not up to their usual capacity or level. They reduce their output intentionally by
working below the usual benchmark they had previously set to show their protest to the
employer. In this type of strike, the employee’s revenue is badly affected, even though the
employees continue to get their wages. Here, the employee strictly follows the rules and just
refuses to deviate from them. The workmen reduce the speed of work or adopt dilatory tactics
to reduce the usual production while pretending to be engaged in work.

In the case of Bharat Sugar Mills Ltd. vs. Jai Singh (1961), the Court held that going slow is
a deliberate delay of production by workmen pretending to be engaged in the factory. It
would not be wrong to look at it and call it dishonest. Delaying production and eventually
reducing the output, the workers claim to have remained employed, thus being in a position
to be entitled to full wages. Go-slow is likely to be much more harmful than total cessation of
work by strike, as during a strike much of the machinery can be fully turned off. During the
go slow the machinery is kept going at a reduced speed, which is often extremely damaging
to machinery parts.

Hunger strike

It is one of the painful strikes by the strikers where workers go on strike without having
food/water to redress their grievances. The employees of Kingfisher Airlines went on hunger
strikes for salary dues for several months.

The employees undertake fasting by abstaining from both food and work as a means of
protest in a hunger strike. Since there is a cessation of work due to employees’ participation
in the fast, it is viewed as a strike. The purpose of such a hunger strike is to put forward their
grievance to the employers and get the attention of the government and the general public to
the cause of the strike. It is non-violent and is not strictly a strike under the Industrial
Disputes Act of 1947. In a hunger strike, there is not necessarily a cessation of work. But
when a hunger strike usually results in their cessation or suspension of work, then it would of
course constitute a strike.

In the case of Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor (1956), the
Supreme Court held that a hunger strike amounted to a strike where workmen who held key
positions in the factory went on a hunger strike with the result that other workmen who came
to work could not do work.

Wildcat strike

Such a strike happens by the workers without the consent of the union and authority. In 2004,
advocates went on a wildcat strike at civil courts in Bangalore to protest the remarks
allegedly made by an assistant commissioner against them.

However, if we look at the history of strikes, it is found that strikes mostly occur due to issues
related to wages by the employers to the workers.

Legal Strike

A strike is legal if it does not violate any provisions of the statute. Though the right to strike
is not expressly recognised as a legal right under the Industrial Disputes Act, 1947, strikes not
resorted to in contravention of the provisions of Sections 22 and 23 of the said Act are
considered as legal as enunciated by Section 24 of the said Act.

Illegal Strike

In India, strikes became illegal, not because of objects but because of the breach of statutory
provisions. Thus, strikes in contravention of the provisions of the Industrial Dispute Act, of
1947, the Central Civil Services (Conduct) Rules, of 1964, and the Essential Services
Maintenance Act of 1981 are illegal. The circumstances under which strikes shall be illegal
and under which they shall be deemed to be legal are provided in Section 24 of the Act.

Particular Strike

Particular strikes are limited in scope and are usually confined to a single plant or a few
plants or to a single trade or occupation. Whatever the form or method may be, it is a strike
within the meaning of the Act, provided it fulfils the requirement of Section 2(q) of the
Industrial Disputes Act, 1947. However, the nature and importance of strikes change from
place to place, as they are not static. It may be used as an organising device or even as a
means of general protest. Its use could be extended to a political demonstration or as a
significant part of the collective bargaining process used to induce agreement.

Few Instances of Strikes in India

 In March 2012, nurses employed by different hospitals in Chennai went on strike

for 7 days demanding from hospital management hike of basic wages to Rs
15000/-, apart from leave benefits and annual increments. All the well-known
hospitals like Apollo, Fortis, Max etc. came to a standstill because of the strike.
 In January 2014, Kingfisher employees went on hunger strike due to non-payment
of salary for 17 months.
 In September 2016, tens of millions of Indian workers in the public sector went on
strike demanding higher wages. Banks and power stations were kept shut and
public transportation systems froze in some of the states. Later the government
considered their demands and increased the wages. It was the world’s largest-ever
strike.

Common reasons for strikes

There are many causes of strikes. Anything that affects the minds of the workers can induce
them to go on strike. They are now conscious of their rights. Wherever there is a violation of
the rights of workers or there is unfair labour practices or unnecessary victimisation, it is
bound to lead to an atmosphere of strike. The causes of strikes can be divided into the
following categories-

Economic causes

Economic causes include questions pertaining to wages, bonuses and allowances;

retrenchment of workers by the employer; a faulty retrenchment system; leave; and so on.
Low wages, irrespective of rising prices, demand for a rise in dearness allowance, intolerable
working and living conditions, issues pertaining to hours of work, etc. are some other
economic causes that instigated a number of strikes in India.

 Demand for wages– In India, the remuneration paid to workers for their work is
not adequate to meet their expenses. They can neither provide for the education of
their children nor feed them properly. Their living conditions are deplorable. The
low wages are the main reason for discontent among the workers. While the price
level has been increasing constantly at a higher rate, the increase in the rate of
wages could not keep pace with it. This led to a situation where workers resorted
to striking to raise their rate of wages. Since the cost of living is increasing,
workers generally bargain for higher wages to meet the rising cost of living index
and to increase their standard of living.
  Dearness allowance and bonus– Due to the high rate of inflation and rise in the
cost of living, demand is made for increasing the dearness allowance, as the high
rate of inflation and the dearness allowance are co-related. The various trade
unions in India have been demanding 100 per cent neutralisation of prices by a
corresponding increase in the dearness allowance. Another important cause of
industrial disputes in India is the demand for bonuses by the workers. This has
resulted increased demand to share profits of the industrial units from workers and
non-acceptance of this provision from employers. Though in many industries
bonus is being paid now, the amount or percentage of bonus is a source of frequent
disputes among workers and employers.
 Demand for improved working conditions– Industrial disputes in India have
also resulted from the demand for improved working conditions such as leave,
fewer hours of work, better working conditions like better safety measures,
canteen facilities etc. The working conditions in most of the countries are
unhygienic and poor in respect of lighting and ventilation. These unhealthy
conditions make workers discontented and lead to a strike.
 Demand for reinstatement- At times, employers arbitrarily retrench many
workers, and this is naturally resisted by the affected workers. Besides, other
workers also feel insecure. Therefore, the workers resist such moves. They stand
united and agitate for the reinstatement of the retrenched colleagues.
Modernisation of Industries In modern industries, many new and sophisticated
machines are installed. These machines are labour-saving and therefore result in
the retrenchment of workers.

Managerial causes

The managerial causes include the wrongful treatment of workers by the management, unfair
labour practices, defective recruitment and worker development policies of the management,
non-recognition of the trade unions by the management, political causes, etc.

 Non recognition of trade unions– Sometimes, trade unions are not recognised by
employers, and it eventually becomes a source of contention between the employer
and the employees. The employees may declare a strike to demand recognition of
their trade union conflict, which may result in strikes, etc.·
 Resistance to misconduct by officers– Today there is sufficient awakening
among the workers, and they are very conscious of self-respect. Therefore, any
slight insult by officers provokes them. Such incidents may sometimes ignite the
fire of conflict and tension, which takes the form of gheraos, etc.·
 Defective recruitment and worker development policies– Indian industries
recruit labour through faulty systems, which creates many problems. Besides,
partial treatment by management with regard to grooming, promotion or demotion
of workers is also a cause of dissatisfaction among workers, leading the workers to
resort to strike.·
 Insufficient and defective leadership– The reason for some industrial disputes is
also the lack of able leadership in both management and trade unions. Inefficient
 managerial leaders do not care for the problems of the workers. Due to a lack of
competence on the part of the supervisors and managers, neither they attempt to
improve the human and labour relations, nor do they try to develop mutual
understanding between the workers and themselves.

Political causes

These days, various political parties in India fight with each other to gain the sympathy and
support of workers, and for this reason, they go out of their way to support all types of
distress and even foment discontent among them. All labour unions in India are connected
with one or another political party, which uses workers for its own selfish motives.

Some important political strikes are organised by industrial workers in India. Some strikes
have occurred owing to the agitations of political parties on questions like the reorganisation
of states or the national language, etc.

Illegal Strikes
Section 24 of the Industrial Dispute Act, 1947 provides that strikes which are in non-
compliance with Section 22 and Section 23 are illegal.

 A strike or a lockout shall be illegal if,

1. It is commenced or declared in contravention of Section 22 or Section 23; or

2. It is continued in contravention of an order made under subsection (3) of Section
10 of subsection (4-A) of Section 10-A.

 Where a strike or lockout in pursuance of an industrial dispute has already

commenced and is in existence all the time of the reference of the dispute to a
board, an arbitrator, a Labour Court, Tribunal or National Tribunal, the
continuance of such strike or lockout shall not be deemed to be illegal; provided
that such strike or lockout was not at its commencement in contravention of the
provision of this Act or the continuance thereof was not prohibited under
subsection (3) of Section 10 of subsection (4-A) of 10-A.
 A strike declared as the consequence of an illegal lockout shall not be deemed to
be illegal.

Constitution stand on the legality of the strikes

Contrary to the international laws where the right to strike is generally considered as a
fundamental human right; but here in India Right to Strike is not expressly recognised by the
law, it is not an absolute right, exceeding this right comes with reasonable restrictions which
are being imposed by the state.
Entry 29 in List III, (Concurrent List) of the VII schedule of the constitution of India, deals
with the matter of trade unions, industrial and labour disputes; Entry 61 (concurrent list) deals
in the matter of industrial disputes, concerning union employees, empowered the central as
well as the provincial and presidency legislatures to legislate on the following matter.

According to the concurrent list, it specified that the trade Union, Industrial and Labour
disputes related to entry 22; entry 23 deals with social security and social insurance,
employment and unemployment and entry 24 deals with the welfare of labour, including the
condition of work, provident funds, employers liability, workmen’s compensation etc. Thus,
both the parliament and the legislature have the competence to legislate on this subject.

In Article 19(1) of the Indian constitution guarantees the protection of certain freedoms as a
fundamental right. The constitution of India has specified that all citizens shall have the rights
i.e, To freedom of speech and expression, To Assemble peaceably and without arms, To form
associations or unions, To move freely throughout the territory of India, To reside and settle
in any part of the territory of India, and to practise any profession, or to carry on any
occupation, trade or business. But the principle of the right of the strike is not expressly
defined or recognized under the Indian constitution

In the case of ‘All India Bank Employees Association v. I. T.(1961)’, the Supreme Court held
that “the right to strike or right to declare lockout may be controlled or restricted by
appropriate industrial legislation and the validity of such legislation would have to be tested
not regarding the criteria laid down in clause (4) of Article 19 but by totally different
considerations.”

The Supreme Court concerning strikes has the same point of view that the right to strike is an
important weapon in the armoury of employees as a mode of redress. It is a right earned by
the employees as a form of direct action during their long struggle. It is a weapon to
safeguard and preserve liberty. It is an inherent right of every employee. Being an essential
right for every employee, the right to strike is an inherent legal strike, despite the fact it
cannot be raised to the status of a fundamental right.

Both the Indian constitution and the Industrial Dispute Act, 1947, are on common grounds,
both of them think that the right to strike is a legal right and the sustainment of this right
comes with reasonable restrictions. The significance of the right to strike is the core of
significance to the principle of collective bargaining of each worker.

Hence, the constitution provides a guaranteed fundamental right to association and union
under Article 19 of the Indian constitution but it doesn’t provide the fundamental right to go
on strike.

Consequences of illegal strike

The following are the major consequences of an illegal strike-
Economic Consequences

Losses incurred by strikes are humungous and serious and, in some cases can even lead to the
bankruptcy of the industry. The economic losses caused by the strike may be serious for the
employer. During strikes, production stops, and sales go down, due to which rival companies
use this opportunity to capture their market and the industry loses its consumers and their
trust, strikes badly affect the market goodwill of the company.

Both parties i.e, employer and employee are at a loss; for employers the quick losses capital
loss, loss of profits, the delaying of orders and loss of goodwill as well as the possible
incurring of insurance or strike-breaking expenses while on the worker’s side, there is the
loss of wages, the contracting of debts and all the personal hardships that may be involved.

The losses incurred by a strike are difficult to calculate economically. Strikes can have
adverse effects leading to an unstable foreign investment in an economy. Furthermore, the
negative effects on international trade include the hindrance of economic development and
creating great economic uncertainty – especially as the global media continues to share
details, images and videos of violence, damage to property and ferocious clashes between
strikers and security.

Social Consequences

The social consequences of the strike are serious, and mostly affect the employees; as they
are the ones who are losing their wages, they are at greater risk of losing their jobs. Loss of
wages or loss of jobs will directly affect in curtailing their consumption and expenses and
further strikes in essential utility services affect the tripod of any industry i.e., suppliers,
manufacturers ( both employer and employees ) & customers.

A hostile attitude on the part of the employer towards their employees leads Dismissal of
workmen

In Punjab National Bank v. Their Employees, the court observed that in the strike, the
employer might bar the entry of the strikers within the premises by adopting the effective and
legitimate method in that behalf. He may call upon employees to vacate, and, on their refusal
to do so, take due steps to suspend them from employment, proceed to hold proper inquires
according to the standing order and pass proper orders against them subject to the relevant
provisions of the Act.

The effect of a strike is that the workmen cannot claim wages for the period during which an
illegal strike continues. It is observed that if the strike is legal the workmen are entitled to
wages. A strike is legal or illegal, justified or unjustified is the question of fact which is to be
judged in the light of the fact which is to be judged in the light of the facts and circumstances
of each case.
In Crompton Greaves Ltd. v. Workmen(1978), the Supreme Court observed that if a strike is
legal as well as justified then, the worker is entitled to wages for the period of strike, the
strike should be legal and justified. Whether a particular strike is justified or not is a question
of fact, which has to be judged in the light of the facts and circumstances of each case. The
use of force, coercion, violence or acts of sabotage resorted to by the workmen during the
strike period which was legal and justified would disentitle them to wages for the strike
period.

A strike is legitimate if it doesn’t disregard any arrangement of the provision. Again a strike
can’t be said to be unjustified except if the purposes behind it are altogether unreasonable or
irrational. It is likewise all around settled that the utilization of power or brutality or
demonstrations of treachery turn by the labourers during a strike disentitles them to
compensation for the strike time frame.

Legal consequences

The legitimateness of a strike may rely upon the article, or reason, of the strike, on its
planning, or the direction of the strikers. The article, or items, of a strike and whether the
articles are legitimate are matters that are not in every case simple to decide A strike, legal or
illegal, justified or unjustified does not dissolve the employer-employee relationship.

Normally taking part in the illegal strike amounts to misconduct on the part of a workman for
which they invite the punishment of dismissal. Whether the employer is free to punish
dismissal from services in such cases has been subject to regular domestic enquiry to
determine the quality of misconduct and quantum of punishment by finding out whether they
were peaceful strikes or violent strikers. It is only after complying with these requirements,
that a workman if found guilty of the charges may be dismissed.

The question of whether the workmen are entitled to strike pay or not is generally based on
the dilemma of whether the strike is justified or not.

The Supreme Court in Bank of India v T.S. Kelawala(1990), “held that where the contract or
standing orders or the service rules regulations are silent on the issue of workers entitlement
to wages during the strike period, the management has the power to deduct wages for
absence from duty when the absence is concerted action on the part of the employees and the
absence is not disputed, irrespective of the fact whether the strike was legal or illegal. There
is no statutory provision either in civil law or in industrial law prescribing payment of strike
wages. Strike pay cannot, therefore, be claimed as a legal right.”

The consequences of industrial disputes are often far-reaching as they disturb the economic,
social and political life of a nation. In strikes, besides the employer and employee, there is a
third party involved, i.e., the public. The economic effects are first felt by the employer and
then by the community at large, and in furtherance of their aims, workers also inflict
economic hardships on themselves.
Impact of strikes on workers

 Sufferings of workers– The workers face many difficulties during strikes. During
the strikes, not only workers but also their families suffer as they are not paid
during the strike, which affects their physical and mental health.·
 Loss of wages– The workers may not be paid during the strike period. Thus,
workers and their families have to face financial difficulties due to such disputes.
The workers and their family members also suffer health loss due to mental stress
resulting from loss of wages. The loss of wages also increases the indebtedness
among the workers. ·
 Loss of job– The prolonged strikes by the workers sometimes lead to lock-out by
the employer or closure of the industry due to industrial sickness. This results in
the loss of jobs of the workers and increases unemployment and unrest among
them.
 Victimisation by the employers– Due to industrial disputes, a feeling of hostility
develops between the employer and the employee, due to which the employer
loses sympathy for the workers. As a result, the employer may deny certain
welfare and other facilities to the workers once the strike is over. Injury to the
workers sometimes leads to confrontation, which occurs between the security
forces and the workers during the protest. Security forces use force like lathi
charges, firing, etc. to suppress striking workers, which causes physical injuries
and sometimes the death of workers.

Impact of strikes on the employer

 Employer suffering– The employer suffers equally from workers during strikes as
they face output loss, adverse effects on the quality of production, and damage to
property. All this affects labour management relations.
 Effect on output and quality of production– Strikes affect the productivity and
profitability of the industrial unit. Loss of output not only affects the industry that
is directly affected by the strike but also other industries that are dependent on the
industries affected by strikes. The strike also affects the quality of production due
to limited interest or non-cooperation from workers during the period of the
strike.
 Effect on the goodwill of the industry– The strikes affect the market reputation
of the industry. Society loses faith in the industry. Hardworking, efficient and
sincere workers would become reluctant to join an industry where strikes are really
common. The rate of investment is also reduced due to strikes.
 Bad effect on labour-management relations– Strikes affect labour-management
relations as they can lead to the breakdown of communication between the
employer and employees. The management’s attitude changes towards the
workers, which causes tension between the employer and the employees, and this
disturbs the smooth working of the industrial unit.
  Damage to property– Sometimes strikes result in the destruction of the property
of the employer, as the strikers may turn violent and destroy the property of the
industry. The property may also get damaged due to the confrontation of the
workers with the police, which causes loss to the employer. The employers also
have to bear the additional expenditures for protecting the property.

Impact of strikes on society

Strikes not only affect the employer and employee, but society as a whole equally suffers
from the effects of the strikes.

 Impact on the economy– Industry and economy are interrelated and

interdependent. Due to strikes, industrial production is decreased, exports suffer
and this affects the entire national economy. Strikes lead to shortages of essential
commodities, which cause an artificial price rise. Strikes not only harm the
industry involved but also lead to all-round economic depression. The closure of
one industry due to a strike leads to a reduction in demand for goods from other
industries or trades. If the industry manufactures items that are used in the conduct
of other industries while it is under work stoppage, it lessens the supply of raw
materials for their production.
 Hardships to consumers– Strikes and lockouts create problems for consumers.
Owing to low production levels, items meeting their needs are not always readily
available, and malpractices such as black marketing practices drive up the costs of
these items.
 Threat to social security and public peace– When tension and frustration among
workers and employers take serious form, the workers are liable to become violent
or indulge in sabotage. This may threaten public peace and safety and may compel
the employer to seek the help of the police force. Effect on the Government Strikes
lead to loss of revenues for the government. Lots of money and time are wasted in
the settlement of industrial disputes. Maintaining law and order due to strikes also
became difficult for the government. There is also the destruction of public
property during strikes, for repairing which the government has to spend money.

The positive impact of strikes

Generally, strikes bring with them bad effects, but there are also certain impacts of strikes
that play an important role in the immediate realisation of the demands of the workers and
improving their condition of work.

 Growth in worker unity– Strikes bring a sense of cooperation among workers,

which results in the growth of worker unity. The suffering of workers is not only
for their own rights but even for the rights of other workers. Thus, strikes develop
a feeling of unity and the ethics to endure hardships for the rights of fellow
workers.
  Improvement in work conditions and wages– A strike increases the collective
bargaining power of the workers, which compels employers to negotiate with
them. The stoppage of work in the industries pressurises the employers,
demanding them to increase the salaries of the workers and improve their working
conditions.
 Progress of labour unions– The success of the strikes increases the faith of
workers in labour unions, which in turn increases the membership of unions,
strengthens the bargaining power of the unions, and compels the employer to
accept the legitimate demands of the unions.
 Labour reforms– Strikes are most of the time effective in bringing about change
in the working conditions of the workers. The disruption caused to an entire
society by a general strike can bring down a government or persuade authorities to
bring reforms in labour laws.

Common Reasons for Strike

Strikes generally occur in industries due to disputes between employees and employers,
employees and employees or among employers and employers mostly due to the following
issues:

 Working hours
 Working Conditions
 Salary, Incentive etc
 Time payment of wages
 Reduction in salary/wages
 Issue related Minimum wages
 Leave/Holidays
 Dissatisfaction with the company policy
 PF, ESI, Profit Sharing etc
 Retrenchment of workmen and closure of establishment
 Any other issue.

Lock out:
Lockout of any factory or industry is governed by the law called the Industrial Disputes Act
1947. According to section 22 of this Act, lockout of factory or industry must be done only
after issuing prior notice to concern employees. If not, such lockout shall be treated as illegal
lockout and concerned factory or industry shall be penalised according to the Industrial
Disputes Act 1947.

A lockout is a work stoppage in which an employer prevents employees from working. It is

declared by employers to put pressure on their workers to come to their way by consensus
about settlement of issued lead to lockout. This is different from a strike, in which employees
refuse to work. Thus, a lockout is employers' weapon while a strike is raised on part of
employees. According to [section 2(1)] of Industrial Disputes Act 1947, lock-out means the
temporary closing of a place of employment or the suspension of work or the refusal by an
employer to continue to employ any number of persons employed by him.

Meaning and definition:

According to Industrial Disputes Act 1947,Lockout [Sec. 2(1)]:

 Lockout means "the temporary closing of a place of employment, or the suspension of

work, or the refusal by an employer to continue to employ any number of persons
employed by him". Lockout is the antithesis of strike.
 It is a weapon of the employer while strike is a weapon in the hands of workers.
 Just as the strike is a weapon in the hands of the workers for enforcing their demands,
lockout is a weapon available to the employer to make their employees come to their
way and accept the management's terms and conditions.
 The Industrial Dispute Act does not intend to take away these rights.
 However, the rights of strikes and lockouts have been restricted to achieve the
purpose of the Act, namely peaceful investigation and settlement of industrial
disputes.
 General Labour Union (Red Flag) v/s B. V. Chavan And Ors on 16 November 1984,
the Supreme Court of India expressed, "Imposing and continuing a lockout deemed to
be illegal under the Act is an unfair labor practice."

Management Of Kairbetta v/s Rajamanickam And Others on 24 March, 1960

Supreme Court of India court observed as follows:
"Just as a strike is a weapon available to the employees for enforcing their industrial
demands, a lockout is a weapon available to the employer to persuade by a coercive process
the employees to see his point of view and to accept his demands.

The Reasons Behind The Lockouts

 Disputes or clashes in between workers and the management.

 Unrest disputes or clashes in between workers and workers.
 Illegal strikes, regular strikes or continuous strikes by workers may lead to lockout of
factory or industry.
 External environmental disturbance due to unstable governments may lead to lockouts
of factories or industries.
 Continuous or accumulated financial losses of factory or industry may lead to opt
lockout by the management.
 Maybe lockout if any company involves in any fraudulent or illegal activities.
 Failure in maintaining proper industrial relations, industrial peace, and harmony.
 Lockout of the factory is regarded as a major issue which affects both management of
the factory and their employees. Management should always monitor employee's
behavior and relationship between employees and relationship in between
management and employees to avoid disputes which leads to lockouts.
Procedure Of Lockouts
According to Sec. 22(2)
No person employed in a public utility service shall go on Lockout in breach of contract:

a. without giving to the employer notice of Lockout, as hereinafter provided, within six
weeks before lockout; or
b. within fourteen days of giving such notice; or
c. before the expiry of the date of lockout specified in any such notice as aforesaid; or
d. during the pendency of any conciliation proceedings before a conciliation officer and
seven days after the conclusion of such proceedings.

Prohibition of strikes and lock- outs [Section 23] of The Industrial Disputes Act, 1947
No workman who is employed in any industrial establishment shall go on strike in breach of
contract and no employer of any such workman shall declare a lock-out:

I. during the pendency of conciliation proceedings before a Board and seven days after
the conclusion of such proceedings;
II. during the pendency of proceedings before a Labour Court, Tribunal or National
Tribunal] and two months after the conclusion of such proceedings;
III. during the pendency of arbitration proceedings before an arbitrator and two months
after the conclusion of such proceedings, where a notification has been issued under
sub- section (3A) of section 10A; or] [10A. Voluntary reference of disputes to
arbitration]
IV. during any period in which a settlement or award is in operation, in respect of any of
the matters covered by the settlement or award.

Penalty for illegal strikes and lock-outs. [Section 26] of the Industrial Dispute Act 1947.

Penalty for illegal strikes and lock-outs.

1. Any workman who commences continues or otherwise acts in furtherance of, a strike
which is illegal under this Act, shall be punishable with imprisonment for a term
which may extend to one month, or with fine which may extend to fifty rupees, or
with both.

2. Any employer who commences continues, or otherwise acts in furtherance of a lock-

out which is illegal under this Act, shall be punishable with imprisonment for a term
which may extend to one month, or with fine which may extend to one thousand
rupees, or with both.

Meaning of Retrenchment in Labour Law

The term “retrenchment” is defined in Section 2(oo) of the Industrial Dispute Act, 1947
(“Act”) as the termination of an employee’s service. However, it’s important to note that
retrenchment in Labour Law is distinct from disciplinary action and it does not include the
following situations:
  When a worker voluntarily retires.
 When a worker retires upon reaching the age of superannuation, provided that the
employment contract includes such a provision.
 When a worker’s service is terminated because the employment contract expires and
is not renewed or if the contract contains a provision for termination in such cases.
 When a worker’s service is terminated due to ongoing health issues.
In essence, retrenchment in Labour Law refers to the termination of an employee’s service
for reasons such as company restructuring, downsising, economic challenges, technological
advancements or discontinuation of a specific department or unit, among others. It’s
important to emphasise that retrenchment is not the same as termination for disciplinary
reasons. The Supreme Court, in the case of Anand Bihari v. Rajasthan State Road
Transport Corporation, Jaipur, clarified that termination due to eyesight issues is
considered a termination due to ill health and falls within the definition of retrenchment as
per Section 2(oo) of the Act.

Exceptions to Retrenchment in Labour Law

The definition of retrenchment does not cover the following situations:

 Voluntary Resignation: If an employee voluntarily and willfully resigns from their

job, it is not considered retrenchment in Labour Law.
 Retirement After Superannuation: If an employee or employer retires after
reaching the age of superannuation, this is not considered retrenchment. However, this
provision must be specified in the employment contract.
 Non-Renewal of Employment Contract: If the employer does not renew the
employment contract and as a result, the employee cannot work in the industry, it is
not considered retrenchment in Labour Law.
 Termination Due to Employee’s Ill Health: If an employee’s service is terminated
because of ongoing health issues, both physical and mental, it is not classified as
retrenchment. Whether the employee is indeed suffering from a continuous illness is
determined based on the specific circumstances of the case and can be argued by
either party.

Reasons for Retrenchment in Labour Law

Retrenchment by an employer can be carried out for various reasons, as long as those reasons
are just and legal. Some common reasons for retrenchment in Labour Law include:

 Economic Difficulties: When a company faces financial challenges or a decline in

income, it may resort to retrenchment to reduce its workforce.
 Rationalisation in the Industry: Companies often need to make their operations
more efficient as they evolve. This can involve structural or operational changes and
if a department or unit becomes redundant, retrenchment may be used after careful
evaluation.
 Technological Changes: Industries frequently adopt new technologies to improve
efficiency. While this can reduce the need for employees, it may also require
retraining. If the new technology makes certain jobs obsolete, retrenchment may be
necessary.
 Failure of Machinery: If a specific industry’s machinery breaks down or fails,
retrenchment in Labour Law may be used as a response.
In a case example, the Managing Director of Karnataka Handloom Development
Corporation Limited v. Sri Mahadeva Laxman Raval (2006), the respondent was hired
for specific hours and intervals as an expert weaver to train other weavers. His services were
terminated when the contract period ended. The respondent raised an industrial dispute, but
the Supreme Court ruled that this termination was not retrenchment as defined in Section
2(oo) of the Industrial Disputes Act of 1947 because the respondent was employed on a
contract basis with a predetermined time frame and not as a regular worker.

Requirements for a Valid Retrenchment in Labour Law

For a retrenchment in Labour Law to be considered valid, certain conditions outlined in

Section 25F must be met. These conditions apply when an employee has been continuously
employed for at least one year. The prerequisites for a valid retrenchment are as follows:

 Notice to Employees: The employer must issue a written notice to the workforce at
least one month before the retrenchment takes effect. This notice should specify the
grounds for retrenchment and the retrenchment should only occur after providing this
notice to the employees.
 Compensation: If the employer fails to provide the required notice to the employees,
they are liable to pay compensation for this failure. The compensation should be an
amount equal to 15 days’ wages for each completed year of continuous employment
or any part thereof exceeding six months.
 Notice to Appropriate Authority: The appropriate government or authority must be
notified in the prescribed manner, as specified in the official gazette.
 Adherence to Notice Regulations: The notice regulations must comply with the
provisions of Rule 76 of the Industrial Disputes (Central) Rules, 1957, which govern
the notice of retrenchment.
Failure to comply with these prerequisites renders a retrenchment invalid. If a retrenchment
in Labour Law is found to be unlawful or is not approved by government authorities, the
affected employee has the right to reinstatement with continuity of service and the right to
wages for the period in question.

Procedure of Retrenchment in Labour Law

The principle of ‘first come, last go’ and ‘last come, first go’ is a well-known concept in
industrial law, codified in Section 25G. A worker can seek procedural protections under this
provision, but certain conditions must be met:

 Qualification as a Worker: The person seeking protection must meet the definition
of a worker as defined in Section 2(s) of the Act.
 Citizenship: The worker should be a citizen of India.
 Employment in an Industry: The employee must have been employed in an
establishment classified as an industry under Section 2(j) of the Act.
 Specific Workforce Category: The employee must belong to a specific category of
the workforce in the industry.
 No Agreement on Retrenchment Order: There should not be any prior agreement
between the employer and the employee regarding the order of retrenchment in
Labour Law.
The procedural protections of Section 25G are applicable only when all these five conditions
are simultaneously met.
Re-Employment of Retrenched Workers

Section 25H of the Act is based on the idea that when an employer lays off a worker due to a
shortage of labour, that worker should be given the first opportunity to return to work when
the need for additional employees arises. This section places a legal obligation on the
employer to offer retrenched employees the chance to apply for re-employment. To be
eligible for re-employment, workers must meet the following conditions:

 Offer of Re-Employment: When the company retrenches workers, they should be

given the opportunity to return to work if needed.
 Citizenship: The worker must be a citizen of India.
 Notice: The employer should provide notice to the retrenched workers regarding any
potential re-employment opportunities.
 Same Industry: Re-employment should be in the same industry where the worker
was previously employed before being retrenched.
 Preference for Retrenched Workers: The employer must give preference to
retrenched workers over other individuals when filling new positions.
It’s important to note that only a worker who has been formally retrenched has the right to
claim the benefits under Section 25H. Dismissed, discharged or superannuated workers do
not have a claim for preferential re-employment. If an employer offers re-employment to a
retrenched worker and the worker declines without a valid reason, they may lose the benefits
provided under Section 25H.

When an employer needs to hire more workers, the retrenched worker should be given the
opportunity to rejoin the workforce. The principle of equality is not only embedded in
Section 25H but is a fundamental principle in industrial adjudication. It emphasises equal
treatment and compliance with principles of natural justice, fairness, justice and equity.

In the case of Delta Wire Pvt. Ltd. v. General Labour Union and Another (1995), it was
established that the only right available to a worker who has been retrenched and
compensated under the law is the preference for re-employment provided by Section 25H.
However, it does not guarantee the same level of service or position as before retrenchment in
Labour Law.

Criteria for Retrenchment of Workmen under Section 25N

Section 25N of the Act outlines the conditions that must be followed before an employer can
retrench a worker. These conditions are as follows:

 Notice to Worker: An employer can only retrench a worker who has been
continuously employed for at least one year in the industry. The employer must
provide the worker with a notice stating the reasons for retrenchment at least three
months before the intended date of retrenchment. Additionally, the worker must be
paid their annual wages before the notice period.
 Government Approval: Permission for retrenchment in Labour Law and the issuance
of the notice must be approved by the government or an appropriate authority.
 Application for Approval: The employer is required to submit an application for
retrenchment approval to the government and the appropriate authorities in the
prescribed manner. A copy of the approval or refusal must be provided to the workers
as specified in the official gazette.
  Investigation and Decision: Upon receiving the application for retrenchment
approval, the government will investigate the matter. The employer is given a fair
opportunity to present their case. Subsequently, the government will either grant or
refuse authorisation, based on what it deems appropriate. The decision will be
communicated to both the employer and the worker. The government must conduct
the investigation following the principles of natural justice, ensuring transparency and
impartiality.
 Timeframe for Decision: The government must issue the order within sixty days
after receiving the employer’s application for authorisation. If the government does
not issue the order within this timeframe, it is presumed that authorisation has been
granted.
 Finality of Order: The order issued by the government or the specified authority,
whether it approves or refuses retrenchment, is considered final and binding on all
parties. It remains in effect for one year from the date it was communicated to the
parties.
 Tribunal Adjudication: If the employer challenges the government’s order, it will be
referred to the tribunal for adjudication. The tribunal must pass judgment on the
matter within thirty days.
 Refusal by Government: If the government refuses the application for retrenchment
permission, it is considered illegal.
In the case of Rajinder Singh Chauhan and others v. State of Haryana and others
(2006), the employees who worked for the Haryana Store Federation of Consumers Co-
operative Wholesale Stores Limited were retrenched in accordance with Section 25F of the
Industrial Disputes Act of 1947. Dissatisfied with the retrenchment process, they initially
challenged it in the Punjab and Haryana High Court through writ petitions under Article 226
of the Constitution of India but did not obtain a favourable remedy.

Subsequently, the employees filed writ petitions in the Supreme Court, contesting the
decision of the High Court. The Supreme Court ruled that the respondents, who were the
employers, did not fall within the scope of Section 2(g) of the Industrial Disputes Act of
1947. Therefore, the High Court’s determination that Section 25N did not apply to the
appellants’ retrenchment was correct.

In the case of Workmen of Meenakshi Mills Limited etc v. Meenakshi Mills Ltd and
another (1992), the constitutional validity of Section 25N was questioned, with the argument
that this provision violated Article 14, Article 19(1)(g) and Article 19(6) of the Constitution
of India. It was claimed that employers had no constitutional rights to retrench workers.

The matter was referred to the Supreme Court for a final decision. The Supreme Court upheld
the constitutionality of Section 25N of the Industrial Disputes Act of 1947. The court
reasoned that the restrictions placed on employers’ rights to retrench workers were in the
interest of the general public and did not violate constitutional rights. Additionally, it was
determined that if employers failed to comply with the provisions of Section 25N, it could
lead to industrial disputes.

Therefore, the power to raise industrial disputes and seek permission for retrenchment was
vested in both the workers and management, allowing them to approach the appropriate
government for approval or refusal of retrenchment in Labour Law.

Punishment for Infringement

Section 25Q of the Industrial Disputes Act states that if any employer infringes the
fundamental provisions related to retrenchment and violates the provisions of Section 25N,
they can be subject to punishment. The punishment may include imprisonment for a period of
up to one month or a fine that can go up to one thousand rupees or both.

Layoff under the Industrial Disputes Act, 1947

Layoff is defined under Section 2(kkk) of the Industrial Disputes Act, 1947 (“Act”), which
says that a workman is said to be laid-off when an employer fails, refuses or is unable to
provide employment to the workman whose name is mentioned in the muster roll of an
industrial establishment due to reasons beyond the employer’s control, such as insufficiency
of coal, power or raw material, the accumulation of stocks, the breakdown of machinery, a
natural calamity or any other same or correlated reason. That workman has not been
retrenched due to the above-stated reasons.

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

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

Essential Conditions for layoffs

There are certain essential conditions that must be taken into account before laying off
workers. The conditions are as follows:

 The employer’s inability, failure, or refusal to provide the work to the workmen.
 Such inability, failure, or refusal must be there due to the insufficiency of coal,
power, raw materials, accumulation of stocks, breakdown of machinery, a natural
calamity or any other relevant reason.
  A workman who has been laid off or deprived of employment must be someone
whose name is on the record of the muster roll of his industrial establishment.
 The workmen must not have been retrenched from the work.

Failure, refusal, or inability

As per the definition provided in the Act, when the employer fails, refuses, or is unable to
provide work due to the insufficiency of coal, power, raw materials, accumulation of stocks,
breakdown of machinery or natural disaster, and any other situations that are beyond the
control of the employer in his industrial establishment, the layoff done due to all these
circumstances will be legally valid in itself. In a landmark judgement, Central India
Spinning, Wearing and Manufacturing Co. Ltd., Nagpur v. State Industrial Court (1959), the
Bombay High Court held that the key terms in the definition, i.e., “the failure, refusal, or
inability of an employer” make it apparent that the unemployment caused to the workmen is
irrespective of their action or inaction.

For any other reason

The expression ‘for any other reason’ that is in the definition under Section 2(kkk) of the Act
must be interpreted as ejusdem generis. In a landmark judgement, Management of K. Estate
v. Rajamanickam (1960), the Apex Court elaborated that ‘Any other reason’ as defined under
Section 2(kkk) of the Act, must be similar to the reasons that are explicitly mentioned in the
clause that are insufficiency of coal, power, raw materials, accumulation of stocks,
breakdown of machinery or natural disaster. The common feature of all these reasons has to
be something that is beyond the control of the employer, which led to the layoff of the
workmen. Accordingly, the expression ‘for any other reason’ must have similar
characteristics.

When are workmen considered laid off

As per the explanation attached to Section 2(kkk), the workman whose name is mentioned in
the muster roll of the industrial establishment and is willing to work and is present during the
normal working hours of the day for the specific purpose he has been allotted with, but he
doesn’t get the work within the two hours of his presence at the workplace then such
workman is deemed to be laid off for that day within the context of this clause.

If the workman, instead of being given employment at the start of the shift of any day, is
asked to be present at the workplace in the second half of the shift for the purpose of work,
then such workman is considered laid off only for one-half of that day.

Provided that if the workman has not been given work in any half of the day even after
presenting himself at the workplace, then such workman is considered laid off for the whole
of the day, and thereafter he shall be entitled to the full basic wages and dearness allowance
for that part of the day.
Compensation to laid-off employees

Under the Industrial Disputes Act, 1947, there are provisions regarding compensation to the
workman in certain circumstances that allow the workman to avail compensation from the
employer, subject to some restrictions. The workman is allowed to take compensation from
his employer if he has been laid off under the ambit of Section 2(kkk) of the Act, subject to
certain conditions that need to be fulfilled. The conditions are as follows:

Industries permitted to layoff workmen without any compensation: Section 25A,

Industrial Disputes Act, 1947

Section 25A of the Act lays down certain industry establishments to which the provisions
related to the workmen’s compensation shall not apply. Those industrial establishments are as
follows:

 Industrial establishments in which, on average, less than 50 workmen were there

on any day in the preceding calendar month.
 Industrial establishments of such nature in which the work is done either
seasonally or intermittently.
 Industrial establishments that come under the ambit of Chapter V-B of the
Industrial Disputes Act, 1947.

Continuous Service: Section 25B, Industrial Disputes Act, 1947

Section 25B of the Act, lays down the definition of continuous service. As per the Section, a
workman is said to be in continuous service if he has completed at least one year with that
particular industrial establishment without any interruption; only then will that workman be
entitled to take the compensation. The interruption of the continuous service is not affected
by any kind of authorised leave, sickness, accident, legal strike, lock-out or cessation of work
due to the fault of workmen.

There are two exceptions provided therein in the Section where even if the workman is not in
continuous service, he shall be considered to be in continuous service. They are as follows:

 If the workman was employed for the preceding 12 months from the date on which
the calculation is being made.
 If the workman is employed in the mine for a period of 190 days or more, and in
case of any other employment served for a period of 240 days.
As per the explanation attached to this Clause, the following days shall be taken into
consideration to determine the number of days the workman worked for the employer:
  The number of days during which the workman had been laid off under a standing
order, agreement, this Act, or any other law relevant to the industrial
establishment.
 The number of days during which the workman was on paid leave.
 The number of days during which the workman was on rest due to any temporary
disability caused during his course of work at the job.
 In the case of a female employee, the maximum number of days she spent on
maternity leave was up to 12 weeks.

Conditions to comply with for getting Compensation: Section 25C, Industrial Disputes
Act, 1947

According to, Section 25C of the Act, the workman who has been laid off is entitled to
receive 50 percent of his total basic earnings and a dearness allowance for the duration of the
layoff.

However, this compensation right given to the workman is subject to the following
conditions:

 The workman is not a badli or a casual worker. A badli worker is someone who has
been hired in place of another worker whose name is borne on the muster roll of
the industrial establishment. However, such a worker won’t be considered a badli
worker if he completes the duration of one year with that particular industrial
establishment.
 Workman’s name must be on the muster roll of the industrial establishment.
 The workman must have computed the duration of one year at that particular
establishment as an employee.

In one of the landmark judgements, Veiyre v. Fernandes (1956), the question before the court
was whether the law only confers the right to compensation to the employee and there is no
right given to the employer to lay off the employee. The Bombay High Court ruled that the
legislature, while making the law, intended to grant the right to employers to lay off
employees, and there is no binding obligation on their part to keep employment and give full
year’s wages to employees. Hence, the retrenchment of the employees after giving them
layoffs and retrenchment compensation was held to be legitimate.

Conditions where a worker is not entitled to lay off compensation

Section 25E of the Act lays down certain circumstances where the workman is not entitled to
receive any lay-off compensation from the employer; those conditions are as follows:

 If the workman refuses to accept the alternate work given to him, provided that:
The alternate employment given to him is in the same establishment he was working in. Also,
the alternate employment given to him is in the alternate establishment but under the same
employer within a radius of 5 miles from the establishment where he was working before.

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

 If the workman does not present himself at the appointed time and workplace once
a day.
 The workman is not entitled to layoff compensation if he has been laid off due to a
strike or slowdown in another part of the industrial establishment.

Duty of employer to maintain muster roll: Section 25D, Industrial Disputes Act,
1947
Section 25D of the Act, states that it is the duty of the employer to maintain a muster roll and
keep a proper record of the workmen who present themselves during the working hours of the
establishment. It is important to note that the workmen have to be present at the workplace
during the working hours of the establishment; otherwise, they won’t be eligible to receive
compensation. The employer should maintain the muster roll properly; otherwise, he cannot
take the defence under Section 25E, for not providing compensation to the workmen.

Prohibition of lay off: Section 25M, Industrial Disputes Act, 1947

During the 1970s, there was a major lay-off which led to mass unemployment at that time.
This led the government to introduce provisions prohibiting unhealthy lay-offs by employers.
A new chapter, Chapter V-B was introduced in the Industrial Disputes Act, 1947, by
the Industrial Disputes Amendment Act, 1976.

Section 25M of the Act puts certain restrictions on the employer while laying off the
workman. It is important to note that these restrictions are only applicable to industries that
have more than 100 workmen and do not operate seasonally. Moreover, the employer cannot
lay off an employee whose name is mentioned in the establishment’s muster roll except when
the cause of that layoff is a lack of power or a natural disaster. If the work is related to
mining, then the cause can also be an explosion, fire, an excess of inflammable gas, or a
flood.

As per Section 25M, the employer can lay off the employee after obtaining permission from
the concerned government or the authority as specified by the government. The procedure for
the same purpose is as follows:
  The employer has to write an application to the concerned authority specified by
the government or government itself, citing the reason for the lay-off of the
workman and a copy of the application must be provided to the workman.
 After obtaining the application, the concerned authority or government itself can
inquire about and investigate such lay-off.
 After such investigation, the order of the concerned authority or the government
shall be communicated to the employer and the workmen being laid off.
 Thereafter, the order of such concerned authority or the government shall be
deemed conclusive and will be binding for a period of one year from the date of
such order.
It is important to note that if the concerned authority or the government does not
communicate its decision regarding lay-off within 60 days from the date of filing the
application, then such an application for lay-off will be deemed granted. Moreover, the order
of the concerned authority or the government can be referred to the tribunal for adjudication,
or it can be reviewed by its own motion or through the application given by the employer or
workman.

Lay-Off under the Industrial Relations Code, 2020

In the month of September 2020, the Parliament passed the Industrial Relations Code
2020 (“Code”), which aims to replace the following three acts that are as follows:

 Industrial Disputes Act, 1947

 Trade Unions Act, 1926
 Industrial Employment (Standing Orders) Act, 1946.
Section 2(t) of the Industrial Relations Code, 2020, defines layoff, which is more or less
similar to the definition that is provided under Section 2(kkk) of the Industrial Disputes Act,
1947. Section 2(t) of the Code states that layoff means the failure, refusal or inability of an
employer, on account of the shortage of coal, power or raw materials or the accumulation of
stocks or the break-down of machinery or a natural calamity or for any other connected
reason, to give employment to a worker whose name is mentioned in the muster rolls of his
industrial establishment and who has not been retrenched.

The Industrial Relations Code majorly deals with the by-laws related to layoffs and various
other industrial laws as mentioned herein above. The Code in itself mentions that the aim of
this code is to “consolidate and amend the laws relating to Trade Unions, conditions of
employment in industrial establishments or undertakings, the investigation and settlement of
industrial disputes, and matters connected therewith or incidental thereto.”

Definition of Closure in Labour Law (Section 2(cc))

“Closure” means permanently shutting down a workplace or a part of it.

According to Industrial Disputes Act, 1947, “Closure” is when a workplace or part of it is
permanently shut down. The employer must follow a specific process outlined in the law
when closing the establishment.

However, Closure in Labour Law procedures do not apply to projects for building
construction, like buildings, bridges, roads, canals, dams or other construction work.

Application of Closure in Labour Law

If an employer plans to close their establishment, they must apply at least ninety days in
advance to the appropriate government. They also need to give a copy of the application to
the workers’ representatives.

The government will review the application, providing a fair chance for both the employer
and workers to be heard. After the review, the government may approve or deny the closure.
If there’s no response within sixty days, permission is considered granted and there’s a
provision for a review of the decision.

Provisions of Closure in Labour Law

Section 25(O) of the Industrial Disputes Act, 1947 allows the closure of a business without
prior permission if certain conditions are met. Here are the key points:

Conditions for Closure in Labour Law:

An employer can close a business without seeking prior permission if it has less than 50
workers and compensates the workers with 15 days’ average pay for each completed year of
service.

Notice to Authorities and Workers:

The employer must notify the government authority and workers at least 60 days in advance
or provide wages instead of notice.

Compensation Procedure:

Compensation must be paid at the time of closure or within 15 days from the notice,
whichever comes first.

Penalty for Non-compliance:

Failure to comply with Section 25(O) can result in imprisonment for up to six months, a fine
of up to Rs. 5,000 or both.

Note: Section 25(O) applies only to businesses with less than 50 workers. For those with 50
or more, prior government permission is needed under Section 25(N) of the Industrial
Disputes Act.

Undertakings Covered under Section 25(O)

According to Section 25(O) of the Industrial Disputes Act, 1947, an employer can shut down
a business without needing permission from the government if it meets these conditions:

 The business has fewer than 50 workers.

 The employer provides compensation to the workers equal to 15 days’ average pay for
each completed year of continuous service.
This means that only businesses with less than 50 workers fall under the scope of Section
25(O). It’s crucial to understand that the term ‘workmen’ includes not only permanent
employees but also contractual, casual and temporary workers who have worked for more
than one year in the establishment.

Additionally, it’s worth noting that certain types of businesses are exempt from the Industrial
Disputes Act and therefore, they are not covered by Section 25(O). For instance,
establishments involved in agricultural or horticultural operations, fishing or animal
husbandry are exempt. Similarly, government-owned or controlled establishments are exempt
unless they are engaged in commercial activities.

Procedure for Closure of an Undertaking

The steps for closing an establishment under the Industrial Disputes Act, 1947, depend on the
number of workers employed and the reason for closure. Here are the general procedures:

Closure with Less Than 50 Workers (Section 25(O))

 Less than 50 workers: If the establishment has fewer than 50 workers, the employer
can close it without government permission. However, the employer must pay
compensation equal to 15 days’ average pay for each completed year of service.
 Notice: The employer must inform the appropriate government authority and workers
at least 60 days in advance.
Closure with 50 or More Workers (Section 25(N))
50 or more workers: If there are 50 or more workers, the employer needs prior permission
from the government. Notice to the government and workers is required 60 days in advance.
The government decides based on the employer’s reasons and worker interests.

Voluntary Retirement Scheme (VRS)

The employer may propose a VRS, offering a package with compensation, pension and
benefits. Both parties must agree and terms are formalised in an agreement.

Conciliation Process
If disputes arise, the Industrial Disputes Act allows a conciliation process. A conciliation
officer may be appointed to mediate and reach a settlement.

Undertakings Excluded from Prior Permission

Certain establishments are exempt from obtaining government permission before Closure in
Labour Law. Here are the exclusions:

 Less than 100 workers (Section 25FFA): Establishments with fewer than 100
workers can close without prior government permission. A 60-day notice to the
government and workers is required.
  Natural disasters: In Labour Law, Closure due to natural calamities, like floods or
earthquakes, can occur without prior government permission. Prompt notice to the
government and workers is essential.
 Financial challenges: Closure due to financial difficulties is allowed without prior
government permission. Compensation must be paid and a 60-day notice to the
government and workers is required.
Seasonal Work (Exempted from Industrial Disputes Act)
 Seasonal work: Establishments engaged in seasonal work, such as agriculture, are
exempt from Industrial Disputes Act provisions. They don’t need prior permission but
must comply with notice and compensation requirements.
 Important Note: Even if exempt, establishments must follow notice and
compensation rules specified in the Industrial Disputes Act.

Grant and Refusal of Permission for Closure in Labour Law

According to the Industrial Disputes Act, 1947, if an employer intends to close down an
establishment with 50 or more workers, prior permission from the government authority is
required. Here’s the process for granting or refusing permission:

Grant of Permission of Closure in Labour Law

 Approval Criteria: The government authority reviews the reasons provided by the
employer for Closure in Labour Law. If satisfied and if the employer complies with
all Industrial Disputes Act requirements, permission may be granted.
 Notice Requirement: The employer must notify the government authority and
workers at least 60 days in advance if permission is granted.
Refusal of Permission of Closure in Labour Law
 Denial Criteria: If the government authority is unsatisfied with the reasons or if the
employer doesn’t comply with Act requirements, permission may be refused.
 Legal Recourse: In case of refusal, the employer can seek resolution through the
Labour Court or Industrial Tribunal. These bodies may either support the
government’s decision or order the employer to reinstate workers with back wages.
In summary, the grant or refusal of closure permission is at the discretion of the government
authority. It depends on the employer’s reasons and consideration of workers’ interests.
Employers must follow Industrial Disputes Act procedures to protect workers’ interests
during Closure in Labour Law.

Deemed Grant of Permission of Closure in Labour Law

According to the Industrial Disputes Act, if an employer wants to close an establishment with
50 or more workers, they must seek prior permission from the government authority. If the
government authority does not respond within specified time limits, the permission is deemed
to be granted. Here are the time limits:

Establishments with Less Than 100 Workers

Decision within 60 days: For establishments with less than 100 workers, the government
must communicate its decision within 60 days of receiving the application.

Establishments with 100 or More Workers

Decision within 90 days: For establishments with 100 or more workers, the government must
communicate its decision within 90 days of receiving the application.
If the government authority fails to communicate its decision within these time limits,
permission for Closure in Labour Law is deemed to have been granted. However, it’s crucial
to note that even if permission is deemed, the employer must still adhere to notice and
compensation requirements outlined in the Industrial Disputes Act.

Appeal Against Closure in Labour Law

Under the Industrial Disputes Act, 1947, if the government authority denies permission for
closing an establishment, the employer can appeal to the Labour Court or Industrial Tribunal
within 60 days of receiving the order. This appeal is also applicable if permission is granted
but with unacceptable conditions. Here’s the appeal process:

Filing of Appeal

The employer must submit an appeal to the Labour Court or Industrial Tribunal within 60
days from receiving the government authority’s order. The appeal should follow the
prescribed format and include necessary documents.

Notice to Other Party:

The employer needs to notify the other party (workmen or their representatives) within 7 days
of filing the appeal.

Appeal Hearing on Closure in Labour Law

The Labour Court or Industrial Tribunal is required to conduct the appeal hearing within 45
days of filing. Both the employer and the workmen or their representatives have the chance to
present their cases and provide evidence.

Decision:

The Labour Court or Industrial Tribunal can either uphold the government authority’s
decision or order the employer to reinstate workmen with back wages. The decision is final
and binding on both parties.

Illegal Closure:

An illegal closure occurs when an employer shuts down an establishment without following
procedures outlined in the Industrial Disputes Act, 1947. This is a serious violation with legal
consequences:

Reinstatement with Back Wages

Workmen affected by an illegal closure are entitled to reinstatement with full back wages.
The Labour Court or Industrial Tribunal may order the employer to reinstate the workmen.

Penalties:

The employer may be liable to pay a penalty if found guilty of illegal closure. This penalty
can be up to three months’ wages of the affected workmen.

Criminal Prosecution:
In severe cases, the employer may face criminal prosecution for an illegal closure. Penalties
for such offences may include imprisonment and/or fines.

Illegal closures have serious consequences, emphasising the importance of complying with
the Industrial Disputes Act’s procedures and requirements to ensure fair treatment of
workmen.

Employee’s Provident Funds (EPF) And Miscellaneous Provisions Act, 1952

Introduction

Employees’ Provident Funds (EPF) And Miscellaneous Provisions Act, 1952 is an important
piece of Labour Welfare Legislation which was enacted by the Parliament of India to provide
social security benefits to the workers of industries. It is implemented by the Employees
Provident Fund Organisation. Presently, the act and the schemes framed thereunder provide
for three types of benefits:

• Contributory provident fund.

• Pensionary benefits to the Employees or the family members of the employee.
• Insurance cover to the members of the provident fund.

Therefore, we can say that there are three schemes framed under this act.

Historical Background

Initially this Act was known as The Provident Fund Act, 1952. This Act is implemented by
Employees Provident Fund Organisation of India. This organization have a mission to
provide security in terms of old age income. The Employees Provident Fund bill was passed
by both the houses of the Parliament which is Rajya Sabha and the Lok Sabha and received
the assent of the President on 4th March ,1952. From 1st August 1976, the nomenclature of
the Act was changed as Employees’ Provident Funds (EPF) And Miscellaneous Provisions
Act, 1952. Employees’ Provident Funds (EPF) And Miscellaneous Provisions Act, 1952 has
been amended 15 times.

Extent of this Act

The provisions of Employees’ Provident Funds (EPF) And Miscellaneous Provisions Act,
1952 extended to whole of India except the state of Jammu and Kashmir and also the State of
Sikkim where it has not been notified so far after its annexation with the Union of India.

Objectives behind the enactment of this Act

Following are the objectives which are kept in mind before the promulgation of Employees’
Provident Funds (EPF) And Miscellaneous Provisions Act, 1952:
 To provide security to the industrial worker after his retirement.
 To provide money to the dependents of industrial worker after early death.
 To provide a kind of social security to the industrial workers.
 To provide the retirement and old age benefits.
 To provide risk free deposit acceleration .
 It also inculcate healthy habit of saving.

Nature and Scope

Employees’ Provident Funds (EPF) And Miscellaneous Provisions Act, 1952 is beneficial to
the employees working in factories and many other establishments. This Act applies to each
and every kind of factory which is engaged in any industry specified in Schedule and other
establishments which employ twenty or more workman. Employees’ Provident Funds (EPF)
And Miscellaneous Provisions Act, 1952 does not apply to any factory or any establishment
which is registered under Co-operative Societies Act, 1912 or any other statutory law relating
to Cooperative Societies engaging less than 50 persons and working without the aid of power.
Central Government has the discretionary power to extend the Act to non factory units or
establishments.

Applicability of this Act –

• This act applies to every establishment with less than 20 employees (5 or more in case of
cinema ) is eligible to opt for PF registration to protect employee’s benefits. However, it is
mandatory for Companies with more than 20 employees to register themselves under EPFS.

• Once a company is covered under the Employees Provident Funds (EPF) And
Miscellaneous Provisions Act, 1952, then if its employee strength drops below 20, it will still
be covered.

Conditions for applicability

According to Employees’ Provident Funds (EPF) And Miscellaneous Provisions Act, 1952
there are following conditions to be fulfilled for activating the applicability:

• There must be a manufacturing process carried.

• Industry must be engaged in manufacture of any products listed under Schedule.
• In industry or an establishment there must be 20 persons to be employed in.

Not applied to certain organisations-

Under section 16 of Employees’ Provident Funds (EPF) And Miscellaneous Provisions Act,
1952 does not apply to the following:
• Cooperative societies which is employed with less than 50 persons and working without the
aid of power.
• Voluntary organizations engaged in leprosy eradication programmes.

Administration

Employees’ Provident Funds (EPF) And Miscellaneous Provisions Act, 1952 is administered
by Central Board of trustees. The Chief executive officer of Employees PF organization is the
Provident Commissioner who act as head of this organization.

Membership

• Employees withdrawing not exceeding Rs. 6500 per month are eligible for the membership
of the provident fund.
• Every employee which is in connection with the work of a factory or the establishment
result required to become a member of the provident fund from the date of his joining to the
factory or an establishment.

Key components of this Act

1 Employee Provident Fund , 1952 This scheme guarantees the promotion of retirement
savings.
2. Employee Pension Scheme, 1995 (EPS): This scheme guarantees to provide post
retirement pension.
3. Employee Deposit Linked Insurance Scheme, 1976 (EDLI): On the other hand, this
scheme provides life insurance to family members in case of members sudden death.

Contribution

Statutory rate of contribution to the provident fund by the employees and employers is 10%
of the pay of the employees. The wages include basic wage,DA, including cash value of food
concession and retaining allowance if there is any. Central government have a discretionary
power to enhance this rate to 12%. These contributions after paying advances and final
withdrawals are to be invested in government securities, negotiable securities or bonds,
national saving certificates.

Withdrawal rules

Employees’ Provident fund can be withdrawn by the member to his credit in the fund in the
following situations:
 At the time of retirement from the service after attaining the age of 55.
 At the retirement period on account of permanent or total incapacity.
 At the time of migration from India for permanent settlement in abroad.
 At the time of termination of service in course of miss retrenchment.
Nomination criteria

1. For the nomination purpose a separate nomination form shall be filled in

duplicate and one copy duly accepted by the PF office be maintained by the
member.
2. .If in case there is no nomination whole amount shall be paid to the members
of the family in equal share except:

 Sons (majors).
 Sons of deceased son who is major.
 Married daughters whose husbands are alive.
 Married daughters of deceased son whose husband are alive.

Obligations for employers

There are various obligations for the employers that are listed below:

 Arranging to pay the employers and employees contribution with administrative and
inspection charges.
 Maintaining accounts contributed by employer and his employees.
 Furnishing of particulars regarding the owners, occupiers, directors, managers, partners or
any other persons who have ultimate control over the factory or an establishment.
 Transferring the amount of accumulated contribution to the credit of the employee of an
exempted establishment if he leaves and obtained reemployment.
 Submission of consolidated report within 3 months to the RPFC.
 Implementing of directions issued by the Central Board of trustees.
 Submission of a statement of every contractor within last 7 days of every month.

Obligation for employees

 Providing Information for Employees particulars about himself or nominee as required by

the Provident Fund Organisation.
 Informing the employer in writing at the time of employment whether he is a member of
provident fund or not.

Benefits

Following are the benefits attained under this act:

 Superannuation on attaining the age of 58.
 Benefit at the time of retirement.
 Benefits at the time of permanent total disablement.
 Benefit situation when the death occurs after the retirement.
 Benefit of children pension to the beneficiaries of employees.
 Benefits of orphan pension to the beneficiaries of employees.
Penalties

• Under Section 14 of Employees’ Provident Funds (EPF) And Miscellaneous Provisions Act,
1952 the penalties are governed.
• Section 406 and Section 409 of Indian penal code also relates to the penalties.
• A suit can be filed for the revenue under Revenue Recovery Act.