History of trade unionism in India

In India, trade unions have developed into an important platform for putting up with the demands
of workers. They have also turned into one of the most influential pressure groups, which is an
aggregate seeking to influence the government in framing legislation in favour of workers
without aspiring to become part of the government. As an organised institution, trade unionism
took its concrete shape after the end of World War 1. The trade unions in India are essentially the
product of modern large-scale industrialization and did not grow out of any existing institutions
in society. The need for an organised trade union was first realised in 1875 by various
philanthropists and social workers like Shri Sorabji Shapurji Bengali and Shri N.M. Lokhandey,
whose constant efforts resulted in the formation of trade unions like the Printers’ Union of
Calcutta (1905) and the Bombay Postal Union (1907).

The setting up of textile and mill industries at the beginning of the 19th century in the presidency
towns of Bombay, Madras, and Calcutta gave impetus to the formation of industrial workforce
associations in India. The Bombay Mill-Hands Association, founded by N.M. Lokhande in 1890,
was the first labour association in India. The following years saw the rise and growth of several
other labour associations and unions in India, like the Madras Labour Union, which was the first
properly registered trade union founded by B.P. Wadia in the year 1918. In the year 1920, the
country saw the growth of the Ahmedabad Textile Labourer’s Association in Gujarat, which
turned into a union under the guidance of Mahatma Gandhi and was considered to be one of the
strongest unions in the country at that time because of the unique method of arbitration and
conciliation it had devised to settle the grievances of the workers with the employers. Since the
union followed the ideals of truth and nonviolence laid down by Mahatma Gandhi, it was able to
secure justice for the workers in a peaceful manner without harming the harmony in society. In
the same year, the first trade union federation, the All India Trade Union Congress (AITUC),
saw the light of day. It was formed after the observations made by the International Labour
Organisation which highlighted the influence of politics on trade unions and associations and
how the same is detrimental to any economy’s ability to prosper.

The importance of the formation of an organised trade union was realised by nationalist leaders
like Mahatma Gandhi, who, to improve the employer and worker relationship, introduced the
concept of trusteeship, which envisaged the cooperation of the workers and employers.
According to the concept, the people who are financially sound should hold the property not only
to make such use of the property as will be beneficial to themselves but should make such use of
the property as is for the welfare of the workers who are financially not well placed in society,
and each worker should think of himself as being a trustee of other workers and strive to
safeguard the interests of the other workers.

Many commissions also emphasised the formation of trade unions in India for eg. the Royal
Commission on labour or Whitley commission on labour which was set up in the year 1929-30
recommended that the problems created by modern industrialization in India are similar to the
problems it created elsewhere in the world and the only solution left is the formation of strong
trade unions to alleviate the labours from their miserable condition and exploitation.
Development of Trade Union Law in India
Labour legislation in India has a key impact on the development of industrial relations. The
establishment of social justice has been the principle of all labour legislation in India. The
establishment of the International Labour Organisation to uplift the condition of labour all over
the world gave further impetus to the need for well-framed labour legislation in the country.
Several other internal factors like the Swaraj movement of 1921-24, the Royal Commission on
Labour also paved the way for various labour laws and also encouraged the framers of the
constitution to incorporate such laws in the constitution which will benefit the labourers. Under
the Constitution of India, labour is the subject of the concurrent list and both the centre and the
state can make laws related to the subject. The different labour laws in the country are as
follows:

• The Apprentices Act, 1961: The object of the Act was the promotion of new manpower
at skills and the improvement and refinement of old skills through practical and
theoretical training.
• The Contract Labour (Regulation and Abolition) Act, 1970: The object of the Act was
the regulation of employment of contract labour along with its abolition in certain
circumstances.
• The Employees’ Provident Funds and Misc. Provision Act, 1952: The Act regulated the
payment of wages to the employees and also guaranteed them social security.
• The Factories Act, 1948: The Act aimed at ensuring the health of the workers who were
engaged in certain specified employments.
• The Minimum wages Act, 1948: The Act aimed at fixing minimum rates of wages in
certain occupations.
• The Trade Union Act, 1926: The Act provided for the registration of trade unions and
defined the laws relating to registered trade unions.

Definition clause
Section 2(h) lays down the definition of trade unions. It states the following:

Trade Union means any combination, whether temporary or permanent, formed primarily for the
purpose of regulating the relations between workmen and employers or between workmen and
workmen, or between employers and employers, or for imposing restrictive conditions on the
conduct of any trade or business, and includes any federation of two or more Trade Unions:

Provided that this Act shall not affect –

(i) any agreement between partners as to their own business;

(ii) any agreement between an employer and those employed by him as to such employment; or

(iii) any agreement in consideration of the sale of the good-will of a business or of instruction in
any profession, trade or handicraft.
A trade union is typically thought of as a group of wage earners or workers. It is a voluntarily
formed group of workers in a specific trade or business. An organisation of wage workers known
as a trade union was created largely for the purpose of taking collective action to further the
defence of its professional interests.

These are the components of a trade union:

• There must be a combination of employers and workers in a union;

• The business trade is necessary, and
• The primary goal of the union must be to control employer-employee interactions and
establish limitations on how any trade or company may be conducted.

Since it includes both employers’ unions and workers’ unions, the definition of a trade union
under Section 2(h) is excessively broad.

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.

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.

Section 12 : registered office

Section 12 of the Act lays down that all communications and notices to any trade union must be
addressed to its registered office. If a trade union changes the address of its registered office, it
must inform the registrar within the period of fourteen days in writing, and the registrar shall
record the changed address in the register mentioned under Section 8 of the Act.

Section 13 : incorporation of registered trade union

Section 13 of the Act states that every trade union which is registered according to the provisions
of the Act shall:

• Be corporate by the name under which it is registered.

• have perpetual succession and a common seal.
• Power to contract and hold and acquire any movable and immovable property.
• By the said name can sue and be sued.
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 16 : constitution of a separate fund for political purposes

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.

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

Section 21 : rights of minors to membership of trade union

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.

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

Regulations
Section 29 and Section 30 of Chapter 4 of the Act lays down the regulations which shall be
imposed on the trade union.

Section 29 : power to make regulations

Section 29 of the Act confers the right on the appropriate government to make provisions in
order to ensure that the provisions of the Act are fairly executed. Such regulations may provide
for any or all of the matters, which are as follows:

• The manner in which a trade union or its rules shall be registered;

• The manner in which the registration of a trade union has to be transferred which has
changed its head office;
• The manner of appointment and qualification of the person who shall audit the accounts
of the registered trade union;
• Circumstances under which the documents kept by the registrar shall be allowed to be
inspected and also the fees that shall be levied in lieu of the inspection so made.

Section 30 : publication of regulations

Section 30 states that:

• The power of making regulations conferred to the government is subject to the condition
that such regulation has been made after the previous publication.;
• The date from which the regulation shall be given effect shall be specified in accordance
with clause (3) of Section 23 of the General Clauses Act, 1897, and the date should not
be less than three months from the date on which the draft of the proposed regulations
was published for general information;
• The regulations which are made must be specified in the official gazette of India and it
shall have the effect of an enacted law.
Shortcomings of trade unions
Even though trade unions are very important for the well-being of workers, they also have some
shortcomings, which are discussed as follows:

1. The existence of competing unions and the abundance of unions in the same industry
cause workers to become divided, which in turn leads to unhealthy trade union expansion
and allows bosses to take unfair advantage of the working class during collective
bargaining.
2. Before the country gained its independence, there were only a few industries in existence,
and employers—the managerial class—paid their employees very low wages, worsening
their economic situation. In the current times, the same issue persists, and as a result,
workers are unable to pay the subscription member fee for the trade union and never join
it.
3. The majority of trade unions in our nation are relatively small because their members are
unable to effectively compel the government or companies to meet their requests and
objectives.
4. There is not a very strict implementation of the regulations relating to trade unions, which
leads to its deteriorating the trust of the workers.
5. Due to the fact that trade unions were founded as a result of disputes between employers
and employees, the working class of trade unions must contend with employer resistance.
As a result, the employers try to dissuade by offering bribes to union officials.
6. The migrated workers are in need of economic facilities and the fundamental necessities
for meeting their needs, so they do not try to join a trade union and cannot oppose the
managerial class because they are completely dependent on the managerial class. Some
migrated workers would obtain employment through contractors, and the contractors are
supporters of industry or any establishment.
 UNIT 2

Standing Orders
The term ‘Standing Orders’ refers to the rules relating to the matters defined in the Schedule of
the IESO Act. These matters should be according to the Schedule, provided in Standing Orders
under this Act as follows:

• Classifications of workmen, e.g., temporary, permanent, apprentice, probationers, etc.

• Manner of intimating to workmen periods and hours of work, holidays, paydays and
wage rates.
• Shift working.
• Attendance and late coming.
• Conditions of procedure in applying for and the authority which may grant leave and
holidays.
• The requirement to enter premises by certain gates and liability to search.
• Closing and reopening of sections of the industrial establishment, and temporary
stoppages of work and the rights and liabilities of the employer and workmen arising
therefrom.
• Termination of employment and the notice thereof to be given by employer and
workmen.
• Suspension or dismissal for misconduct, and acts or omissions which constitute
misconduct.
• Means of redress for workmen against unfair treatment or wrongful executions by the
employer or his agents or servants.
• Any other matter which may be prescribed.

It shall be obligatory upon the employer to make provision in the Standing Orders in respect of
any matter provided in the Schedule of the Act. Once a provision is made it can be modified only
in accordance with the provision of Section 10(2) of the Act.

Nature of Standing Orders

Though the legal nature of Standing Orders is mostly considered to be statutory in nature and the
same has been reinforced in several judgements by the Apex Court, there have been several
arguments debating the claim. The nature of Standing Orders has been considered as contractual
at times, and an ‘award’ at others. Meanwhile, the argument that the nature of Standing Order is
ambiguous and inconclusive seems to stand corrected as it fails to be put in one category without
solid arguments against the claim of its nature as statutory, contractual or an award. Objective-

Objective of Standing Order Act The first objective states that the act is to provide regular
standing orders for factories, workers and the main professional or working relationship. The
second aim is to ensure that all employees recognize their employment terms and conditions
they are expected to follow or adhere to.
Whether a contract can override in the certified
Standing Orders?
CSOs cannot be deemed as a statutory concept, but can also not be confined to the individualistic
notions of a contract, as they transcend its limits. Hence, standing orders effectuated in compliance
with the statutory provisions may be considered as a special kind of contract or a ‘statutory
contract’.

Herein, to answer the question of whether a contract can override in the CSO, it can be concurred
from the Western India case, that “the employer & workmen cannot enter into a contract overriding
the statutory contract as embodied in the CSO, except when such a contract is entered into in
compliance with Section 10(1), so as to modify such CSO, but not otherwise.”[1]

Standing orders
Section 2(g) of the Act states that “standing orders” are the rules relating to matters set out in the
Schedule, i.e. with reference to:

• The classification of workmen;

• Manner of intimation to workers about work and wage-related details;
• Attendance, and conditions of granting leaves, etc.;
• Rights & liabilities of the employer/ workmen in certain circumstances;
• Conditions of ‘termination of’/‘suspension from’ employment; and
• Means of redressal for workmen, or any other matter.

Submission of Draft Standing Orders: Section 3

A statutory obligation is imposed by the Act upon the employer(s) to submit, individually/ jointly,
five copies of a ‘Draft Standing Order’ within six months of its applicability to the industrial
establishment, which should be inclusive of the matters enlisted in the Schedule and of the MSOs
(short for – Model Standing Orders), if any, and to which shall be annexed such documents
containing particulars of the workmen employed.

S.K. Sheshadri v H.A.L and others, (1983)

In this case, the Hon’ble Karnataka High Court held that, as long as the Standing Orders fall within
the Schedule to the Act, irrespective of the fact that they contain additional provisions which are
not accounted for in the MSOs, the Standing Orders would not be deemed to be invalid or ultra
vires of the Act. The MSOs only serve as a model for framing the Standing Orders.

Hindustan Lever v Workmen, (1974)

In the present case, the issue relating to the ‘transfer of workmen’ was highlighted by concurring
that, the Manager is vested with the discretion of transfer of workmen amongst different
departments of the same company, so far as the terms of the contract of employment are not
affected. Further, if the transfer is found to be valid, the onus of proving it to be invalid lies on the
workmen in dispute.

Management of Continental Construction Ltd. v Workmen of Continental Construction,

(2003)

In the instant case, the employer’s right to terminate the service of a probationer was recognised
by declaring that, if a person is an employee on probation, it is an inherent power of the employer
to terminate during/ at the end of the probationary period, provided, that even while acting in
accordance with the CSO, the employer’s action be fair and consistent with the principles of natural
justice.

Conditions for Certification of Standing Orders: Section 4

Section 4 of the Act declares the conditions upon the fulfilment of which, a standing order can be
certified. It thereby requires a standing order to provide for all the matters set out in the Schedule
of the Act and be in conformity with the provisions of this Act.

Deviation from Model Standing Orders

Section 4(b) when read with Section 3(2) of the Act, requires the draft standing order to, as far as
practicable, be in conformity with the MSO, hence, in cases where it cannot be so claimed, the
appropriate authority may permit deviation from the MSO, and negate the addition of such
impracticable provision in the Standing Order.

Reasonableness of Standing Order

The proviso to Section 4 of the Act, as amended by Act 56 of 1956, necessitates the Certifying
Officer or appellate authority to adjudicate upon the fairness or reasonableness of the contents of
such Draft Standing Order in order to proceed with its certification.

Matters not covered by the Schedule

The Act contemplates by itself that the Standing Orders must cover matters included in the
Schedule initially, and those which may be added to the Schedule by the appropriate Government
in exercise of the authority conferred on it under Section 15. Any other provisions of such kind
may be made if so certified by the Certifying Officer to be fair and reasonable under Section 4 of
the Act.

Different set of Standing Orders

“Once the standing orders are certified, they constitute the conditions of the service binding upon
the management and the employees serving already and in employment or who may be employed
after certification.” This implies that different set of standing orders cannot exist in respect of
distinct sections of workmen or the employer(s), for that would frustrate the intent of the legislature
by rendering the conditions of employment as indefinite & diversified, just as existed prior to the
enactment of the said Act.[2]

Certification Process: Section 5

The procedure for certification of Standing Order, as prescribed under Section 5 of the Act, is
threefold:

• The Certifying Officer to send a copy of the Draft Standing Order to the workmen or trade
union, along with a notice calling for objections, that shall be submitted to him within 15
days of receiving such notice.
• Upon receipt of such objections, the employer and workmen to be given an opportunity of
being heard, after which the Certifying Officer shall decide and pass an order for
modification of the Standing Order.
• Finally, the Certifying Officer shall certify such Standing Order, and thereby, within seven
days, send a copy of it annexed with his order for modification passed under Section 5(2).

Appeals: Section 6

Any related party aggrieved by the order of the Certifying Officer may appeal to the ‘appellate
authority’ within 30 days, provided that its decision, of confirming such Standing Order or
amending it, shall be final. The appellate authority shall thereafter send copies of the Standing
Order, if amended, to the related parties within seven days.

Modification of Standing Order: Section 10

A CSO cannot be modified, except on agreement between the related parties, until six months from
the last modification or operation of such standing order under Section 7. Further, subject to
Section 10(1) and other provisions of this Act, the parties may apply to the Certifying Officer for
modifications in the standing order by annexing five copies of the proposal or a certified copy of
the agreement for modifications.

Payment of Subsistence Allowance: Section 10- A

Section 10-A of the Act stipulates for the payment of subsistence allowance by the employer to a
workman who is suspended, pending the investigation/ inquiry of his misconduct, at the rate of
50% for the first 90 days, and 75% for the remaining period if the delay is not attributable to the
workman. The Act also allows an appeal to the Labour Court constituted under IDA-1947 in case
of a dispute relating to such subsistence allowance, whose decision shall be final. Moreover, it
declares that the provisions applicable to a particular State, if more beneficial, shall prevail over
this Section.

Temporary Application of Model Standing Orders: Section 12-A

Section 12-A provides that in spite of the provisions under Section 3 – 12, in the period between
the applicability of this Act and operation of the CSO, MSOs to be adopted, with Sections 9, 13(2),
and 13-A applying in the same way as would apply to a CSO. it also declares that if there exist
two categories of workmen, and the daily rated have a CSO in existence for them, then the MSO
be adopted for the monthly rated workmen.

Penalties and procedure: Section 13

The Act makes it a penal offence in case of a violation of Section 3 or 10 of the Act by the
employer, by imposing a fine of Rs. 5000 and an additional Rs. 200 per day for a continuing
offence. Further, in case of an infringement of the CSO, a fine of Rs. 100 and an additional of Rs.
25 per day for a continuing offence. The Section declares that no prosecution shall be instituted
under it except on prior approval by the appropriate Government, and whence instituted, be tried
only by such Courts not inferior to the Metropolitan/Judicial Magistrate of Second Class.

Interpretation of Standing Orders: Section 13-A

Any question relating to the application/interpretation of this Act may be referred to the Labour
Courts constituted for this purpose, whose decision shall be final and binding on all parties.

Delegation of Powers: Section 14-A

The appropriate Government may delegate its powers under the Act to an Officer/Subordinate
Authority to the Central or the State Government, as the case may be, and subject to such directions
as may be provided under the notification.

Power to make rules: Section 15

The Act empowers the appropriate Government to make rules for the purpose of this Act, in
consultation with representatives of related parties, relating to:

• Additional matters to be included in the Schedule & the procedure for modification;
• Set out MSOs;
• Procedure to be followed by Certifying Officers & appellate authorities;
• The fee to be charged for the copies of registered standing orders, and any other matter so
prescribed.

Provided that the rules made by the Central Government be passed/annulled through each House
of Parliament without prejudice to the validity of anything done under it.
 UNIT 3

Industrial Dispute Act, 1947 – Notes

Before the Industrial Dispute Act, there was no machinery to solve the dispute. The whole system was
based on the common law and according to common law, dispute solved according to the contract
between the parties. Therefore, the Common Law system does not apply to the industrial system.
Hence, Industrial Dispute Act, 1947 was passed to meet the needs which were based on socialistic law.
This act is for social welfare.

Objectives and Scope of The Industrial Dispute Act, 1947:

1. The promotion of measure for securing amity and good relationship between the employer and
workmen.

2. An investigation and settlement of the industrial dispute between employers and employers,
employers and workmen or workmen and workmen with the right of a presentation by a
registered trade union.

3. Prevention of illegal strikes and lock-outs.

4. Relief to workmen in the matter of lay-off, retrenchment and closure of undertaking.

5. Collecting bargaining.

6. To achieve industrial peace, harmony, good relations, and economic justice. For this, machinery
was provided called Workers committee, which discusses the issues of common interest, to
maintain co-operation, accommodation, mutual trust, etc. But this machinery was not
functioning. This objective suffers from idealism. It is not practically reliable because there is
always a clash between the interests of the two.

7. To fulfil the industrial needs like work as a unit, mutual trust and tolerance.

8. Cooperation between employer and employee. They must develop the spirit to work together
and help one another.

9. The protect the democratic right of strike and lock-out.

10. To provide effective, easy mechanism, efficient, speedy and professionalise for the settlement of
the industrial dispute. 3 types of Machinery: Conciliation, Adjudication and Voluntary arbitration.

11. Protection of Trade Union’s right.

12. To regulate lay-off and retrenchment.

13. Production and productivity should be regulated.

14. To provide social justice:

 15. To protect the employee:

Main features of The Industrial Dispute Act:

1. Strike and lock-outs are prohibited during the pendency of conciliation, adjudication settlement
preceding.

2. Any industrial dispute may be referred to an industrial tribunal by an agreement of parties to

dispute or by State Government.

3. An award shall be binding on both the parties to the dispute for a specified period not exceeding
one year enforced by the government.

4. In public interest or emergency, the appropriate government has the power to declare the
transport, coal, iron and steel industry to be public utility services for the purpose of The Industrial
Dispute Act, for a maximum period of six months.

5. In case of lay off or retrenchment of workmen, the employer is required to pay compensation.

6. Provision has also been made for payment of compensation to workmen.

7. A number of authorities such as works committee, Conciliation Officer, Board of Conciliation,

Labour court, Tribunal are provided for settlement of industrial disputes.

Work Committee:

It consists of representatives of employers and workmen constituted by democratic principles. It works

for serving amity and good relations and co-operation. It discusses matters of common interests.

Functions of The Industrial Dispute Act:

1. Aspires for co-operation and good relation among employer and employees. 2 Constructed by the
representatives of employer and employees by democratic pattern. 3 To provide a piece of
effective machinery for the settlement of the industrial dispute. There are 3 types of machinery:
A.Conciliation b. Adjudication c. Voluntary arbitration 4 During the post-independence era, we
have witnessed the development of a new jurisprudence, namely ‘Industrial Law’. 5 The economic
growth of the country depends upon the industrial development. Industrial Law plays an
important role in the national economy of a country

Settlement of Industrial Dispute:

1. WORKS COMMITTEE (Section 3 of the Industrial Disputes Act, 1947) –

a. Requirement – In case of an industrial establishment in which 100 or more workmen are

employed or have been employed on any day in the preceding 12 months.
b. Constituted – The Appropriate Government may by special or general order require the employer
to constitute in a prescribed manner a Works Committee, consisting of equal representatives of
employers and equal representatives of workmen engaged in the establishment. The
representatives of the workmen will be selected in a prescribed manner from among the
workmen engaged in the establishment and in consultation with the registered trade union if any,
as registered under the Trade Unions Act, 1926.

c. Duties of Works Committee – i) Promote Measures for securing and preserving good Relations
between the employer and the workmen, ii) Communicate with the employer and comment on
matters of common interest or concern of the workmen & iii) Initiate and locate the source of the
problem and difference of opinion in respect of matters of common interest of the workmen
engaged in the establishment.

2. CONCILIATION OFFICERS (Section 4 of the Industrial Disputes Act, 1947) –

a) Appointment – The Appropriate Government may by notification in the Official Gazette, appoint
such number of Conciliation officers as it may deem fit and necessary in the industrial
establishment in a specified area, either permanently or for a limited time.
b) Purpose and objective- Appointed to mediate into and promote a peaceful and amicable
settlement of the industrial dispute in the concerned industrial establishment.

3. BOARD OF CONCILIATION (Section 5 of the Industrial Disputes Act, 1947).

a) Appointment - The Appropriate Government may as the occasion arises, by notification in the
Official Gazette, constitute a Board of Conciliation.
b) Composition- The Board of Conciliation shall consist of a Chairman and 2 or 4 other members, as
the appropriate Government thinks fit.

c) Eligibility – The Chairman of the Board of Conciliation shall be an independent person and the
other members shall be persons appointed in equal numbers to represent the parties to the
industrial dispute and any person appointed to represent a party shall be appointed on
recommendation of that party and in case the party fails to appoint the member, then the
Appropriate Government shall appoint such persons as members as it thinks fit to represent that
party.
d) Purpose and Objective – Promoting the settlement of an industrial dispute.

e) Vacancy to the post in the Board – In case of vacancy to the post of the Chairman, the Appropriate
Government shall notify the Board that the services of the Chairman is not available and until a
new Chairman is not appointed, the Board will not act and function.

4. COURTS OF ENQUIRY (Section 6 of the Industrial Disputes Act, 1947)

a) Appointment - The appropriate government may, as occasion arises by notification in the Official
Gazette, constitute a Court of Inquiry.
b) Purpose and Objective – The Purpose and Objective of the Courts if Enquiry is for inquiring into
any matter appearing to be connected with or relevant to an industrial dispute.
c) Composition - A court of Enquiry, may consist of one independent person or of such number of
independent persons as the appropriate government may think fit. In case, where a court of
enquiry consists of two or more members, one of them shall be appointed as the Chairman.
d) Vacancy to the post of Chairman- A court of enquiry having the prescribed quorum, may act
notwithstanding the absence of the Chairman or any of its members or any vacancy in its number:
If the appropriate government notifies the court that the services of the Chairman have ceased
to be available, the court shall not act until a new Chairman has been appointed.

5. LABOUR COURTS (Section 7 of the Industrial Disputes Act, 1947) –

a) Appointment - The appropriate government may, by notification in the Official Gazette, constitute
one or more Labour Courts.
b) Purpose and Objective - Adjudication of industrial disputes relating to any matter specified in the
Second Schedule and for performing such other functions as may be assigned to them under this
Act.
c) Composition- A Labour Court shall consist of one person only to be appointed by the appropriate
government.
d) Qualification - A person qualified for appointment as the presiding officer of a Labour Court, may
possess the following qualifications-i) he is or has been, a judge of a High Court; or ii) he has, for
a period of at least three years, been a District Judge or an Additional District Judge; or iv) he has
held any judicial office in India for at least seven years; or v) he has been the presiding officer of
a Labour Court constituted under any Provincial Act or State Act for at least five years.

6. INDUSTRIAL TRIBUNALS (Section 7A of the Industrial Disputes Act, 1947)

a) Appointment - The appropriate government may, by notification in the Official Gazette, constitute
one or more Industrial Tribunals.
b) Purpose and objective - Adjudication of industrial disputes relating to any matter, whether
specified in the Second Schedule or the Third Schedule.
c) Composition- A Tribunal shall consist of one person only to be appointed by the appropriate
government. The appropriate government may, if it so thinks fit, appoint two persons as assessors
to advise the Tribunal in the proceeding before it.
d) Qualification - A person qualified for appointment as the presiding officer of a Tribunal must
possess the following qualifications- i) he is, or has been, a Judge of a High Court; or ii) he has, for
a period of not less than three-years, been a District judge or an Additional District Judge ,or, .iii)
he is or has been a Deputy Chief Labour Commissioner (Central) or Joint Commissioner of the
State Labour Department, having a degree in law and minimum 7 years experience in the Labour
Department including 3 years of experience as a Conciliation Officer, or iv) he is an officer of Indian
Legal Service in Grade III with 3 years experience in that Grade.
 7. National Tribunals (Section 7B of the Industrial Disputes Act, 1947)

a) Appointment - The Central Government may, by notification in the Official Gazette, constitute
one or more National Industrial Tribunals.
b) Purpose and objective- Adjudication of industrial disputes which, in the opinion of the Central
Government, involve 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.
c) Composition - A National Tribunal shall consist of one person only to be appointed by the Central
Government. The Central Government may, if it so thinks fit, appoint two persons as assessors to
advise the National Tribunal in the proceeding before it.
d) Qualifications- A person to be qualified for appointment as the presiding officer of a National
Tribunal he is, or has been, a Judge of a High Court.

CASE- LAWS-
I) Vijaya Bank V/s. Shyamal Kumar Lodh - SUPREME COURT OF INDIA CIVIL APPEAL Nos.
4211 & 4212 OF 2007 Decided on 06-07-2010 CORAM- C.K. PRASAD, J.

HELD - Labour Court constituted under the Industrial Disputes Act, 1947, within the local limits of whose
jurisdiction the establishment is situated, has jurisdiction to decide any dispute regarding subsistence
allowance. Here in the present case undisputedly dispute pertains to subsistence allowance and the
Labour Court where the workman had brought the action has been constituted under Section 7 of the
Industrial Disputes Act, 1947 and further the appellant bank is situated within the local limits of its
jurisdiction.

Unfair Labour Practices

The main concern of labor relations is on the relationships that exist between the employer and
the employee, and the labor practices that arise from the interests of such relationships. Labor
relations can be of both international and domestic firms. All deal with matters such as
remuneration, job security, minimum wages, health and safety, social security, and working time.
Therefore, any form of violation of such laws by employers or unions is termed unfair labor
relations.

It has been codified under Schedule V of the Act, restraining the employer from:

1. Interfering with the formation of trade union movement by the workmen and
discouraging employers sponsored trade unions.
2. Discharging workmen by way of victimization by putting up false cases.
3. Conduct of the management in breaking strikes by engaging contract workmen.
4. Indulging in malafide transfer
5. Employing badly, casuals and temporaries for long years, etc.
 UNIT 4

strike and lock-out are two powerful weapons in the hands of the workers and the employers. Strike
signifies the suspension or stoppage of work by the worker while in case of lock-out the employer
compels persons employed by him to accept his terms or conditions by shutting down or closing the
place of business. Strike is recognized as an ordinary right of social importance to the working class to
ventilate their grievances and thereby resolve industrial conflict.
Skillful use of these weapons, whether threatened or actual, may help one party to force the other to
accept its demand or atleast to concede something to them. But reckless use of them results in the risk
of unnecessary stoppage of work hurting both parties badly creating worse tensions, frictions and
violations of law and order. From the point of view of the public, they retard the nation’s economic
development. India cannot tolerate frequent stoppage of work for frivolous reasons that often
accompany it.
For these reasons, the Industrial Disputes Act seeks to regulate and restrict strikes and lock-outs so that
neither the workmen nor employers may hold the nation to ransom.

Strike:
Definitions:

Strike as defined in clause (q) of Section 2 of the Act means:

1. Cessation of work by a body of persons employed in any industry acting in combination;

or
2. A concerted refusal of any number of persons who are or have been employed in any
industry to continue to work or to accept employment; or
3. A refusal under a common understanding of any number of persons who are or have been
employed in any industry to continue to work or to accept employment.

Thus the definition given in the act postulates three main things or ingredients:

• (a) Plurity of workmen;

• (b) Combination or concerted action;
• (c) Cessation of work or refusal to do work.

Historical Background:
Strikes came into existence in the wake of the Industrial Revolution. With the invention of
machinery to supplant human labour, unemployment, lowering of wages in a competitive
market, supply of labour in excess of demand - became the order of the day.

The first known strike was in the 12th century B.C., in Egypt. Workers under Pharaoh

Ramses III stopped working on the Necropolis until they were treated better.[1] The use of the
English word ‘strike’ first appeared in 1768 when sailors in support of demonstrations in
London, struck or removed the topgallant sails of merchant ships at port thus, thus crippling the
ships.[2]
As the 19th century progressed, strikes became a fixture of industrial relations across the
industrialized world, as workers organized themselves to bargaining for better wages and
standards with their employees.

The 1974 railway strike in India was the strike by workers of Indian Railways in 1974. The 20
days strike by 17 lakh workers is the largest known strike in India. The strike was held to
demand a raise in pay scale, which had remained stagnant over many years, in spite of the fact
that pay scales of other government owned entities had risen over the years.[3]

Strikes became common during the Industrial Revolution, when mass labor became important in
factories and mines. In most countries, strike actions were quickly made illegal, as factory
owners had far more political power than workers. However, most western countries partially
legalized striking in the late 19th or early 20th centuries.

Meaning:
Strike means the stoppage of work by a body of workmen acting in concert with a view to bring
pressure upon the employer to concede to their demands during an industrial dispute.

Indian Iron & Steel ltd. v/s Its Workmen

Held: Mere cessation of work does not come within the preview of strike unless it can be shown that
such cessation of work was a concerted action for the enforcement of an industrial demand.

Cessation of work or refusal to work is an essential element of strike. This is the most significant
characteristic of the concept of strike. There can be no strike if there is no cessation of work. The
cessation of work may take any form. It must however be temporary and not forever and it mustbe
voluntary. No duration can be fixed for this in fact duration for cessation of work is immaterial.
Cessation of work even for half an hour amounts to strike.

Causes of Strikes:-

In the early history of labor troubles the causes of strikes were few. They arose chiefly from
differences as to rates of wages, which are still the most fruitful sources of strikes, and from
quarrels growing out of the dominant and servient relations of employers and employees. While
labor remained in a state of actual or virtual servitude, there was no place for strikes. With its
growing freedom "conspiracies of workmen" were formed, and strikes followed. The scarcity of
labor in the fourteenth century, and the subsequent attempts to force men to work at wages and
under conditions fixed by statute, were sources of constant difficulties, while the efforts to
continue the old relation of master and servant with its assumed rights and duties, a relation law
recognizes to this day, were, and still are, the causes of some of the most bitter strikes that have
ever occurred.

Strikes are caused by differences as to[8]:

1. Rates of wages and demands for advances or reductions i.e. Bonus, profit sharing,
provident fund and gratuity.
2. Payment of wages, changes in the method, time or frequency of payment;
3. Hours of labor and rest intervals;
4. Administration and methods of work, for or against changes in the methods of work or
rules and methods of administration, including the difficulties regarding labor-saving
machinery, piece-work, apprentices and discharged employees;
5. Trade unionism.
6. Retrenchment of workmen and closure of establishment.
7. Wrongful discharge or dismissal of workmen.

Kinds of Strike:
There are mainly three kinds of strike, namely general strike, stay-in-strike and go slow.

1. General Strike:
In General Strike, the workmen join together for common cause and stay away from
work, depriving the employer of their labour needed to run his factory. Token Strike is
also a kind of General Strike. Token Strike is for a day or a few hours or for a short
duration because its main object is to draw the attention of the employer by
demonstrating the solidarity and co-operation of the workers. General Strike is for a
longer period. It is generally resorted to when employees fail to achieve their object by
other means including a token strike which generally proceeds a General Strike. The
common forms of such strikes are organized by central trade unions in railways, post and
telegraph, etc. Hartals and Bundhs also fall in this category.

2. Stay-in-Strike:
It is also known as ‘tools-down-strike’ or ‘pens-down-strike. It is the form of strike where
the workmen report to their duties, occupy the premises but do not work. The employer is
thus prevented from employing other labour to carry on his business.

Mysore Machinery Manufacturers v/s State[9]

Held: Where dismissed workmen were staying on premises and refused to leave them,
did not amount to strike but an offence of criminal trespass.

3. Go-Slow:
In a ‘Go-Slow’ strike, the workmen do not stay away from work. They do come to their
work and work also, but with a slow speed in order to lower down the production and
thereby cause loss to the employer.

Sasa Musa Sugar Works Pvt. Ltd. v/s Shobrati Khan & Ors [11]
Held: Go-Slow strike is not a strike” within the meaning of the term in the Act, but is
serious misconduct which is insidious in its nature and cannot be countenanced.
 In addition to these three forms of strike which are frequently resorted to by the industrial
workers, a few more may be cited although some of them are not strike within the
meaning of section 2(q).

• i. Hunger Strike: In Hunger Strike a group of workmen resort to fasting on or near the
place of work or the residence of the employer with a view to coerce the employer to
accept their demands.

Lay off

Lay-off is a well-known name in respect of industrial dispute also known as returning without
work or keeping without work. Lay-off means putting aside the workman temporarily. The
employer-employees relationship does not come to an end but it merely suspended during the
period of emergency.

Meaning of lay-off
Lay-off means temporarily keeping a workman without or away from work. The question of
keeping without work arises when employers are unable to provide employment to the workman
for the reason beyond his control such reason or situations may be:

• Shortage of raw materials

• Economic recession
• Breakdown of machinery
• Accumulation of stocks
• Layoff

Definition:
"lay-off" means the failure, refusal or inability of an employer on account of shortage of coal,
power or raw materials or the accumulation of stocks or the break-down of machinery [or natural
calamity or for any other connected reason] to give employment to a workman whose name is
borne on the muster rolls of his industrial establishment and who has not been retrenched.

Above definition shows the essential elements of lay-off:

a. Such workman is laid off whose name is borne on the muster roll and he has not been
retrenched
b. Employee is willing to employ but unable to provide employment due to some reason
beyond his control.
c. Such situation hall be an emergency and is of temporary nature and
d. Lay-off does not cease the relationship between employer-employees rather are
suspended for the emergency period.
 Case law: Central India spinning, weaving and manufacturing co.ltd Nagpur v/s state
industrial court 1959 Bombay HC
The Bombay high court held that the key to the definition is to be found in the world failure,
refusal or inability of an employer these world make it clear that employment has to be on
account of a cause which is independent of any action or inaction on the part of the workmen
themselves.

Right of Compensation by workmen laid-off

Right of workmen laid-off for compensation] Industrial Disputes Act, 1947 Section 25-C.
Workman has right to lay-off compensation subject to the following conditions, they are:

1. Workman name should be borne on muster rolls of the establishment and he/she is not a
badli workman or a casual workman; and
2. The workman should have completed not less than one year continuous service as
defined under Section 25-B; and
3. The workman should have laid-off, continuously or intermittently;
4. Then the workman shall be entitled to lay-off compensation for all days during which he
was so laid-off;
5. However, the workman shall not be paid lay-off compensation for such weekly holidays
as may intervene the period of lay-off.

Retrenchment
It also has an important place in industrial disputes act 1947. Retrenchment means the discharge
of surplus labour by the employer for any reason whatsoever otherwise then as a punishment
inflicted by way of disciplinary action. It has no application where the service of all workmen
have been terminated by the employer on a real and bona fide closure of business or on the
undertaking on taking being an another employee.

Definition of retrenchment of employee [Section 2(oo)]

"Retrenchments" means the termination by the employer of the service of a workman for any
reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action but
does not include:

a. Voluntary retirement of the workman; or

b. Retirement of the workman on reaching the age of superannuation if the contract of
employment between the employer and the workman concerned contains a stipulation in
that behalf; or

(bb) termination of the service of the workman as a result of the non-renewal of the
contract of employment between the employer and the workman concerned on its expiry
or of such contract being terminated under a stipulation on that behalf contained therein;
or]
 c. termination of the service of a workman on the ground of continued ill-health;]

In Duryodhan Naik v. Union of lndia, the Court held that the discharge of surplus
labour by the employer� for any reason whatsoever, otherwise than as a punishment
inflicted by way of disciplinary action is called retrenchment, but where the services of
all workmen have been terminated by the employer on a real and bona fide closure of
business or the undertaking is taken over by another employer, it has no application of
retrenchment.

Reason for retrenchment

There shall be some reasons for the retrenchment. The service of any employee cannot be
terminated without any reason by the way of retrenchment. Generally the reason could be
following-

a. More than required labour or employee are employed

b. The closure of any part or department of the industry
c. Lack of raw material
d. Deficit in machinery
e. Natural calamity
f. Establishment of self-working machine
g. Economic crises

Penalty for lay-off and retrenchment without previous

permission
This section applies to an industrial establishment (not being an establishment of a seasonal
character or in which work is performed only intermittently) in which not less than [one
hundred] workmen were employed on an, average per working day for the preceding twelve
months. [Section 25K]

Compulsory permission from competent authority by employer to lay off of Workmen [Section
25M] of Industrial Dispute act 1947

Section 25N [Conditions precedent to retrenchment of workmen]

Any employer who contravenes the provisions of section 25M or section 25N 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.