UNIT – I

INDUSTRIAL DISPUTE ACT, 1947

INTRODUCTION
Industry plays a vital role in building the economic structure of a society. Therefore, the
importance of labour and industrial laws in shaping the economy of a country can not be
ignored. Industrial jurisprudence is of great importance to all developed or developing
countries of the world because it is concerned with the study of problems relating to human
relations arising out of a large scale development of factory system which has emerged in
consequence of industrial revolution.
Principles of Labour Legislation : Labour legislation in any country should be based on the
principles of social justice, social equity, international uniformity and national economy.
Social Justice : Social justice is a justice according to social interest. It is founded on the
basic idea of socio-economic equality and its aim is to assist the removal of socio-economic
disparities and inequalities.
Social Equity : Where it is felt that the law should be flexible and should be changed or
modified as the circumstances and conditions change, the law empowers the government to
make such changes. This is done by giving the government rule making power under the
provisions of the Act. When power under the Act is given to the government the rules may be
modified to suit the changed conditions. Such legislation is said to be based on social equity.
Social Security : The concept of social security is based on ideals of human dignity and
social justice. The underlying idea behind social security measurers is that a citizen who has
contributed or likely to contribute to his country's welfare should be given protection against
certain hazards. Social security means a guarantee provided by the State through its
appropriate agencies, against certain risks to which the members of the society may be
exposed.
Industrial Adjudication : The essential function of industrial adjudication is to assist the
state by helping a solution of industrial disputes. The objectives of industrial adjudication are
industrial peace and economic justice. Following are some guiding principles of industrial
adjudication–
(i) Industrial adjudication must be in public interest.
(ii) Industrial harmony and good will in solving industrial issues must be taken into
consideration.
(iii) The principle of equality should also be taken into consideration.
(iv) Whenever a tribunal has before it a matter which requires expert assistance us
collecting and assessing the appropriate material as to technical matters, the tribunal
should avail itself of such assistance.
(v) Socio-economic effects of the decisions must be taken into consideration.
(vi) The Tribunals must act in judicial manners.
Industrial Dispute Act, 1947 : The Industrial Dispute Act, 1947 extends to the whole of
India. It came into operation on the first day of April, 1947. The object of the Act according to
its preamble is to make provisions for the investigation and settlement of industrial disputes.
MAIN FEATURES OF THE ACT

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1. Any industrial dispute may be referred to an industrial tribunal by an agreement of
parties to the dispute or by the state.
2. An award 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. Strikes and lock-out are prohibited–
a. During the pendency of conciliation and adjudication proceedings; and
b. During the pendency of settlements reached in the course of conciliation
proceedings; and
c. During the pendency of awards of Industrial Tribunal declared binding by the
appropriate government.
4. In public interest or emergency the appropriate Government has power to declare the
transport (other than railways), Coal, Cotton, textiles, food-stuff and iron and steel
industries to be a public utility service for the purposes of this Act, for a maximum
period of six month.
5. In case of lay off or retrenchment of workmen the employer is required to pay
compensation to them.
6. Provision has also been made for payment of compensation to workmen in case of
transfer or closure of an undertaking.
7. A number of authorities such as work committee, conciliation officers, Board of
conciliation, courts of inquiry, labour courts, tribunal and National Tribunal are
provided for settlement of industrial disputes. The nature of powers, functions and
duties of these authorities differ from each other but each one of them plays an
important role in ensuring industrial peace.
IMPORTANT DEFINITIONS
Section 2(a). Appropriate Government : In relation to some industrial disputes the Central
Government and in relations to some others the state Government Concerned are the
appropriate government to deal with such dispute.
™ In India Naval Canteen Control v. Industrial Tribunals1 : Kerala High Court held
that "the question as to whether an industry is carried on by or under the authority of
the Central Government, is essentially a question of fact depending on the
circumstances of each case."
™ In Goa sampling Employees' Association v. General Superintendence Co. of
India Pvt. Ltd. and others2 : It was held that in case of a dispute arising in Union
Territory reference may be made by the Central Government since Central
Government is the appropriate Government in relation to a union territory.
Section 2 (j) 'Industry' : means any business, trade, undertaking, manufacture or calling of
employers and includes any calling, service, employment, handicraft or industrial occupation
or avocation of workmen. Some guidelines have been given by the Supreme Court in a
number of decisions to determine the Character or industry.
™ Hospital Mazdoor Sabha Case3 : In this case Gajendragadker J. said that an activity
systematically or habitually undertaken for the production or distribution of goods for
the rendering of material services to the community at large or a part of such
community with the help of employees is an undertaking. Such an activity generally

1
(1965) II LLJ, 336
2
(1987) II Lab LJ (7) 217 (SC)
3
State of Bombay v. Bombay Hospital Mazdoor Sabha, AIR, 1960 SC 610

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 involves the co-operation of the employer and the employees; and its object is the
satisfaction of material human needs, is called an industry.
™ Banglore Water Supply Case4 : In this case seven judges bench of Supreme Court
reiterated the test laid down in Hospital Mazdoor Sabha Case:
Triple Test – Ac activity is industry if it is–
a. Systematic activity
b. Organized by co-operation between employer and employee.
c. for the production and distribution of goods and services calculated to satisfy human
wants and wishes;
Dominated Nature Test : Where a complex of activities, some of which qualify for
exemption, others not, involve employees on the total undertaking some of whom are not
productive goods and services if isolated, even then the predominant nature of the services
and the integrated nature of the departments will be true test, the whole undertaking will be
'industry'.
™ The Industrial Dispute (Amendment) Act, 1982 : enacts a new definition has not
been enforced till now. The amended definition to a great extent incorporates the
views of Supreme Court expressed in Benglore Water Supply v. A. Rajappa.
Section 2(k). Industrial Dispute : Following elements are essential to constitute an
Industrial Dispute–
a. A dispute or difference (a) employers and employers (b) employers and workmen (c)
workmen and workmen.
b. The dispute or difference should be connected with (a) employment or non-
employment, or (b) terms of employment (c) conditions of labour of any person.
c. The dispute may be in relation to any workmen or any other person in whom they are
interested as a body.
Section 2(kkk). Lay-off : "Lay – off" means putting aside workmen temporarily. The duration
of lay off should not be for a period longer than the period of emergency. The relationship of
employer and employee does not come to an end but is merely suspended during the period
of emergency. Following are essentials of lay-off.
1. An employer, who is willing to employ fails or refuses or is unable to provide
employment for reason beyond his control.
2. Any such refusal to employ a workmen may be on account of–
a. Storage of coal, power or raw material
b. Or, the accumulation of stock.
c. Or, the breakdown of machinery, or
d. Natural calamity, or
e. Any other connected reasons.
3. A workman who is so deprived of employment must be such whose name is borne on
the muster rolls of his industrial establishment.
4. The workman must not have been retrenches.
™ Remedy : Section 25-C of Industrial Dispute Act, 1947 entitles a workman to get
compensation from the employer for the period is laid- off. When the employer is

4
Banglore water supply v. A Rajappa, AIR 1978, SC 548

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 enable to provide work to his workman for reason beyond his control, he woes a duty
to pay lay-off, compensation to such workmen.
Section 2 (i). Lockout : 'Lockout' means the 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. Following are essentials of lockout–
1.
a. temporary closing of a place of employment by the employer; or
b. suspension of work by the employer;
c. refusal by an employer to continue to employ any number of persons employed
by him;
d. These acts of the employer should be motivated by coercion.
2. These acts of the employer should be motivated by coercion.
3. An industry as defined in the Act.
4. A dispute in such industry.
Difference between Lock out and retrenchment :
(1) Lockout is temporary, retrenchment is permanent.
(2) In lockout the relationship of employer and employee is only suspended, in
retrenchment such a relationship is severed at the instance of the employer.
(3) By lockout employer coerce the workman: retrenchment is to dispense with surplus
labour.
(4) Lockout is due to industrial dispute; but there is no such dispute in a case of
retrenchment.
Difference between Lockout and Closure :
(1) Lockout is temporary but closure is permanent.
(2) Lockout is a weapon of coercion in the hands of employer; closure is generally for
trade reasons.
(3) Lockout is during an industrial dispute but there is no need of such dispute in a case
of closure.
Section 2(oo). Retrenchment : Defines the retrenchment as follows–
- The termination by the employer of service of a workman.
- The termination may be for any reason what so ever.
- But it should not be as a measure of punishment by way of disciplinary action.
Remedy : Section 25-F prescribes following conditions for a valid retrenchment. These
conditions apply in case of retrenchment of an employee who has been in continuous service
for not less than one year–
a. One month's notice in writing to the workmen, stating the reason of retrenchment. If
no notice is given, the workmen must be paid in lieu of such notice wages for the
period of notice.
b. The workman has been paid, at the time of retrenchment, compensation, equivalent
to 15 days' average pay for every completed year of continuous service or any part
there of in excess of six months.

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c. Notice in the prescribed manner is served on the appropriate Government or such
authority as may be specified by the appropriate Government by notification in the
official Gazette.
Section 25(g). Procedure of retrenchment : The principle 'first come last go' and 'last come
first go' has been incorporated in section 25-G of the I.D. Act.
# The principle of 'last come first go' applies only in case of retrenchment. If there has been a
genuine closure the question of its application does not arise.
Difference between Retrenchment and closure :
(1) Retrenchment affects some of the workmen, while closure affects all.
(2) In retrenchment the trade or business remains continue while in closure the business
itself is discontinued.
Section 2 (q). Strike : defines strike as–
(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 industry to continue to work or to accept employment.
Kinds : There are three kinds of strikes–
1. General Strike : Where the workmen join together for common cause and stay away
from work, depriving the employer of their labour needed to run his factory, is called
general strike. Token strike is also a kind of general strike. Token strike is for a short
duration but General Strike is for a longer period.
2. Stay–in–Strike – A 'Stay-in-Strike' is also known as 'tools-down–strike' or pens
down–strike'. In this strike workmen report their duties, occupy the premises but do
not work.
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.
Section 22(l). Prohibition of Strikes : Provides that no person employed in public utility
service shall go on strike in breach of contract–
(a) without giving to the employer notice of strike within six weeks before striking;
(b) or, within 14 days of giving such notice;
(c) or, before the expiry of the date of strike specified in any such notice as aforesaid; or
(d) during the pendency of any conciliation proceeding before a conciliation officer and
seven days after the conclusion of such proceedings–
Illegal Strikes : According to section 24 (l) a strike or lock out shall be illegal if it is–
(1) Commenced or declared in contravention of section 22 in a public utility service.
(2) Continued in contravention of an order made by the appropriate Government under
section 10 (3) or sub-section (4-A) of section 10-A of the Act.
(3) Commenced in contravention of section 23 in any industrial establishment (including
both public utility and non public utility service).

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Punishment for Illegal Strikes : To go on strike is a right of works but it is not a
fundamental right. If a strike is illegal the party guilty of the illegality is liable to punishment
under section 26 of the Act.
Strike by Government Servant : There are different rules which prohibit a Government
Servant to go on strike. Central Government employees are governed by the Central Civil
Service (Conduct) Rules, 1955 Rule 4-A which deals with the demonstrations and strike by
the Central Government employees enacts that no Government servant shall participate in
any demonstration or resort to any strike in connection with any matter pertaining to his
conditions of service. The Supreme Court in Kameshwar Prasad v. State of Bihar held that a
person did not lose his fundamental rights by joining Government service. These conclusions
were supported by Article 33 of the Constitution whereby fundamental rights of the members
of the Armed Forces, etc. can be abridged or abrogated by law, thus implying that
fundamental rights of other Government servants cannot be abridged. Rule 4-A of the Bihar
Government Servant Conduct Rules, 1956 was held to be valid so far as it referred to
strikers, and void in so far as it referred to demonstration because it violated the fundamental
right of speech and expression. This decision was followed by the Supreme Court in O.K.
Ghosh v. E.R. Joseph. Thus the provisions of this Act shall apply to Government servants
going on strike. Of course they shall further be subject to the conduct rules as framed by the
Government concerned. The conduct rules framed by the Government, in order to be valid
must not be in contravention of the fundamental rights guaranteed by the Constitution.
Section 25 of the I.D. Act prohibits financial aid to illegal strikes and lock-outs. It says that no
person shall knowingly spend or apply any money in direct furtherance or support of an illegal
strike or lock-out.
Section 2(rr). Wages : According to this section 'wages' means all remuneration capable of
being expressed in terms of money which would, if the terms of employment, expressed or
implied were fulfilled, be payable to a workman in respect of his employment or of work done
in such employment. Wages also includes–
(i) Such allowance as the workman is for the time being entitled to;
(ii) the value of any house accommodation, or of supply of light, water, medical
attendance or other amenity or of any service or of any concessional supply of food
grains or other articles.
(iii) any travelling concession.
(iv) any commission payable on the promotion of sales or both.
Section 2(s). Workmen : workman is any person including an apprentice employed in any
industry to do any manual, unskilled, skilled technical, operational, clerical or supervisory
work for hire or reward, whether the terms of employment be express or implied, and for the
purposes of any proceeding under this Act, in relation to an industrial dispute includes any
such person who has been dismissed, discharged or retrenched in connection with, or as a
consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that
dispute.
'Workman' does not include any such person–
(i) Who is subject to the Air Force Act, 1950, or the Army Act. 1950, or the Navy Act
1957, or
(ii) Who is employed in the police service or as an officer or other employee of a prison;
or
(iii) Who is employed mainly in a managerial or administrative capacity; or
(iv) Who being employed in a supervisory capacity, draws wages exceeding one
thousand six hundred rupees per men sum or exercises, either by the nature of duties

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 attached to the office or by reason of the powers vested in him, functions mainly of a
managerial nature.
AUTHORITIES
The main purpose of codification of this Act was investigation and settlement of industrial
disputes the machinery for adjudication has been made available. The Act prescribes
following authorities for investigation and settlement of industrial disputes.
1. Work Committee
2. Conciliation Officers
3. Boards of Conciliation
4. Courts of Enquiry
5. Labour Court
6. Industrial Tribunal
7. National Tribunal
8. Arbitration
Section 3 Works Committee : The Works Committee is an authority under this Act. The
following are the duties of the Works Committee–
1. to promote measures for securing and preserving amity and good relations between
the employers and workmen;
2. to achieve the above object, it is their duty to comment upon matters of common
interest or concern of employers and workmen;
3. to endeavor to compose any material difference of opinion in respect of matters of
common interest or concern between employers and workmen.
The main purpose of creating the Works Committee is to develop a sense of a partnership
between the employer and his workmen. It is a body which aims to promote good-will and
measures of common interest. This section is applicable, only to such industrial
establishment in which one hundred or more workmen are employed, or to an establishment
in which a minimum of one hundred workmen have been employed on any day in the
preceding twelve months. The word 'workmen' in this section is used in the same sense in
which it appears in Section 2(s) of the Act. It means there must be one hundred workmen and
not one hundred employees working in the establishment for many categories of employees
are excluded from the definition of workmen. The Appropriate Government under Section
3(1) is authorised by general or special order, to require the employer to constitute in the
prescribed manner a Works Committee.
The Committee consists of representatives of employers and workmen engaged in the
establishment. The number of representatives of workmen on the Works Committee shall not
be less than the number of representatives of the employer. The representatives of workmen
shall be chosen in the prescribed manner from among the workmen engaged in the
establishment and in consultation with their Trade Union, if any, registered under the Indian
Trade Union's Act, 1926.
Works Committee has been provided in the rules framed under the Industrial Disputes Act in
order to look after the welfare and interest of the workmen. They are normally concerned with
the problems arising in the day-to-day working of the concern and, function of the Works
Committee is to ascertain the grievances of the employees and to arrive at some agreement
when the occasion so arise. It is for that reason said that the Works Committee airs the
grievances of workmen and endeavors to seek amicable settlement.
Section 4 Conciliation Officer : The Appropriate Government may by notification in the

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Official Gazette, appoint conciliation officers. These officers are charged with the duty of
mediating in and promoting the settlement of industrial disputes. The Appropriate
Government may appoint one or more conciliation officers, as it thinks fit. A conciliation
officer may be appointed for a specified area or for specified industries in a specified area, or
for one .or more specified industries. The appointment may be made either permanently or
for a limited period. The jurisdiction, powers and other matters in respect of the conciliation
officer shall be published in the Official Gazette.
Section 5 Boards of Conciliation : The provision for appointment of Boards of Conciliation
is made under the Act to bring the two parties to a dispute to sit together and thrash out their
differences and to find out ways and means to settle them. Section 5 of the Act provides that
the Appropriate Government may, by notification in the Official Gazette, constitute a Board of
Conciliation. The object of appointing the Board is promotion of settlement of an industrial
dispute. A Board consists of a Chairman and two or four other members, as the Appropriate
Government thinks fit.
Section 6 Courts of Inquiry : Section 6 points out that if "occasion arises" the Appropriate
Government may constitute a Court of Inquiry. If any matter is referred to a Court by the
Appropriate Government, it shall inquire and make a report ordinarily within a period of six
months from the commencement of inquiry. The purpose of constitution of Court of Inquiry is
to inquire into any matter appearing to be connected with or relevant to an industrial dispute.
The constitution of the Court has to be notified in the Official Gazette.
Section 7 Labour Court : The Appropriate Government may constitute one or more Labour
Courts. The constitution of the Labour Court together with names of persons constituting the
Labour Court should be notified in the Official Gazette.
Section 7(a) Tribunals : In our country the Industrial Tribunals were for the first time created
by the Industrial Disputes Act, 1947. Commenting upon the status of these tribunals the
Supreme Court has observed that the tribunals under the Act are invested with many
trappings of a Court but do not have the same status as Courts. These Tribunals need not
follow the strict technicalities of law in adjudication of industrial dispute.
The power to constitute Industrial Tribunal is conferred upon the Appropriate Government.
The appointment of an Industrial Tribunal together with !he names of persons constituting the
Tribunal shall be notified in the Official Gazette further, one or more than one tribunals may in
the discretion of Appropriate Government, be constituted. It is the duty of the Tribunal to
adjudicate upon any industrial dispute relating to any matter, whether specified in the Second
Schedule or the Third Schedule. These tribunals shall perform such other functions as may
be assigned to them under this Act.
The Tribunal shall consist of one person only, who shall be appointed by the State
Government. Any person having one of the following qualifications may be appointed as the
presiding officer of the Industrial Tribunal, namely–
(a) if he is, or has been, a judge of a High Court; or
(aa) if he has for a period of not less than three years, been a District Judge or an
Additional District Judge.
It is provided by. Section 7-A(4) that the appropriate Government, if it thinks fit, may appoint
two persons as assessors to advise the Tribunal in the proceedings before it.
These Tribunals are important for many practical reasons. First, only experienced persons of
high integrity can be appointed as presiding officer of the Tribunal as stated above secondly,
almost any important matter can be submitted for adjudication to the Tribunal including
questions relating to wages, bonus, provident fund, gratuity and dismissal etc. Thirdly, the
Tribunals enjoy unlimited powers so long as they act within the scope of their authority.
Powers : The Tribunal is a judicial body or at any rate a quasi-judicial body. Therefore, a

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Tribunal must serve notice upon the parties of the reference by name and any award made
without serving such notices is fundamentally wrong. It could make a suitable award for
bringing about harmonious relations between the employers and workmen and can direct
reinstatement of a workman if it is necessary in the interest of industrial peace. The Tribunal
while arriving at a finding in a matter may rely on data available to it otherwise than from
evidence adduced on behalf of the parties.
While an application was made for quashing an award of the Industrial Tribunal, the Supreme
Court held that no writ can be issued against a Tribunal which has ceased to exist. It is clear
from the Act itself that Tribunals are constituted when an industrial dispute arises and
normally function as long as such a dispute is not disposed of. The Tribunals can be
appointed for a limited period or for deciding a specified number of disputes. When a new
Tribunal is appointed it may start hearing of the Case from the beginning, particularly when
any prejudice is likely to be caused to any part. It is open to either party to point out and
convince the Tribunal that prejudice will be caused if a de novo trial is not held.
Jurisdiction : The question whether an objection to jurisdiction of a Tribunal could be raised
before the Tribunal itself or it is necessary to apply to the High Court to quash the
proceedings before the Tribunal, has been considered on a number of occasion by the
Courts. There can be no difficulty where the question of jurisdiction is clear from the admitted
facts. The difficulty of jurisdiction actually arises where the question of jurisdiction is a mixed
question of law and fact. In such cases the question should be raised before the Tribunal
itself which shall determine the question after going into the facts. The proceeding before the
Tribunal comes to an end if it finds that it has no jurisdiction. If in its opinion the Tribunal
thinks that it has jurisdiction it may proceed on to decide the industrial dispute itself. Where a
preliminary finding is given by the Tribunal or the question of jurisdiction along with the
dispute is decided by the Tribunal the High Court in appropriate proceedings may decide
whether the Tribunal has acted with or without jurisdiction. Ordinarily the finding of fact with
regard to the jurisdiction will not be interfered with by the High Court or the Supreme Court.
The finding of the Tribunal may be set aside by these Courts, if it is found that the Tribunal
while interpreting the facts has misapplied any principle of law. Where the objection as
regards the jurisdiction was not raised before the Tribunal, it cannot be, for the first time,
raised before the Court unless it is a pure question of law.
Section 7(b). National Tribunals : The National Tribunals can only be constituted by the
Central Government. The power is to be exercised by issuing of notification in the Official
Gazette. The name of the person constituting the National Tribunal shall also be notified in
the Official Gazette. The Central Government may constitute one or more Tribunals. National
Industrial Tribunals are constituted for the adjudication of industrial dispute, which in the
opinion of the Central Government (i) involves question of national importance or (ii) are of
such a nature that the industrial establishments situated in more than one State are likely to
be interested in or affected by such dispute. It is sole discretion of the Central Government to
decide that the industrial dispute involves a question of national importance or industrial
establishments situated in more than one State are interested in or affected by the dispute.
A National Tribunal shall consist of one person to be appointed by the Central Government.
A person shall not be qualified for appointment as the presiding officer of National Tribunal
unless he is or has been a Judge of a High Court.
The Central Government may, if it thinks fit, appoint two persons as assessors to advise the
National Tribunal in the proceeding before it.
Section 7(c). Disqualifications for the presiding officers of Labour Courts, Tribunals an
National Tribunals : No person shall be appointed to, or continue in the office of the
presiding officer of a Labour Court, Tribunal or National Tribunal, if(a) he is not an
independent person; or (b) he has attained the age of sixty-five years.
According to the latter part of Section 8 proceedings, after filling in the vacancy, may be

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started from the stage at which the vacancy is filled. But where a tribunal constituted under
Section 7-A of the Act, could not dispose of some references, and a new Tribunal was
constituted by the Government the proceeding must be commenced again and not started as
provided for by Section 8 of the Act.
Section 9 of the Industrial Disputes Act provides that any order of the appointment made
under Sections 5 to 7 of the Act, from being called in question. Therefore, no question can be
raised whether an appointment was legally and properly made or not. Section 9(1) of the Act
provides that no order of the Appropriate Government, or of the Central Government
appointing any person as the Chairman or any other member of a Board or Court or as the
Presiding Officer of a Labour Court, Tribunal or National Tribunal shall be called in question
in any manner on the ground merely of the existence of any vacancy in, or defect in the
constitution of such Board or Court. Section 9(2) of the Act aims to protect any settlement
from being declared invalid simply on the ground that the conciliation proceeding had been
continued beyond a period of fourteen days or less as fixed by the Government under
Section 12(6) or that the proceedings before a Board are continued beyond a period of two
months or less as fixed by the Government under Section 13(5) of the Act.
Section 9(3) of the Act provides that where the report of any settlement arrived at in the
course of conciliation proceedings before a Board is signed by the Chairman and all other
members of the Board, no such settlement shall be invalid by reason only of the casual or
unforeseen absence of any of the members including the Chairman of the Board during any
stage of the proceedings. This sub-section applies only to conciliation proceedings before a
Board of Conciliation.
Section 10. Reference of Disputes to Boards, Courts or Tribunals : Section 10 (1) of the
Act is in the nature of operative provision providing for reference of any matter relating to an
industrial dispute or the dispute itself to various authorities created by the Act. A precondition
for making any reference by the Appropriate Government under this section is in existence or
apprehension of an industrial dispute. The reference should be by an order in writing. This
sub-section provides that where the Appropriate Government is of the opinion that any
industrial dispute exists or is apprehended, it may at any time–
(a) refer the dispute to a Board for promoting a settlement thereof; or
(b) refer any matter appearing to be connected with or relevant to, the dispute to a court
for inquiry ; or
(c) refer the dispute or any matter appearing to be connected with, or relevant to the
dispute to a Labour Court for adjudication provided the dispute relates to any matter
specified in the second schedule; or
(d) refer the dispute or any matter appearing to be connected with, or relevant to, the
dispute (where it relates to any matter specified in the Second Schedule or Third
Schedule), to a tribunal for adjudication:
Provided that where the dispute relates to any matter specified in the Third Schedule and is
not likely to affect more than one hundred workmen the Appropriate Government may, if it so
thinks fit, make the reference to a Labour Court under clause (c) above:
Provided further that where the dispute relates to a public utility service and a notice of strike
or lock-out under Section 22, has been given, the Appropriate Government shall make a
reference under this sub-section notwithstanding that any other proceedings under this Act in
respect of the dispute may have commenced. No such reference shall be made if the notice
has been frivolously or vexatiously given or· that it would be inexpedient to make the
reference:
Provided also that where the dispute in relation to which the Central Government is the
Appropriate Government, it shall be competent for that Government to refer the dispute to a
Labour Court or an Industrial Tribunal, as the case may be, constituted by the State

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Government.
Under Section 10 (I-A) the Central Government may refer a dispute to a National Tribunal for
adjudication if it is of the opinion that–
(i) any dispute exists or is apprehended; and
(ii) the dispute involves any question of national importance; or
(iii) the dispute is of such a nature that industrial establishments situated in more than one
State are likely to be interested in, or affected by such dispute; and
(iv) the dispute should be adjudicated by a National Tribunal.
It is further provided that the reference to National Tribunal shall be made by the Central
Government only whether it is the Appropriate Government in relation to that dispute or not.
The reference must be by an order in writing. The Central Government may refer the dispute
or any matter appearing to be connected with, or relevant to, the dispute, it has only referred
in its order to findings of the Tribunal which has adjudicated he merits of the case.
Reference of industrial dispute : The act of making a reference of any dispute under sub-
section (1) is an administrative act and neither judicial nor quasi-judicial. If the Appropriate
Government decides that no reference is necessary, the Government cannot be compelled
by issuing a writ to make a reference. The use of the word 'may' shows that the power is
discretionary and not mandatory. If in any particular case, the Government acts arbitrarily or
contrary to law in refusing to refer a dispute to the Tribunal or Labour Court, then such a
refusal may be a right ground for petition under Article 226 of the Constitution.
Section 10. Scope of reference : Sections 10(1) and 10(4) of the Act lay down the scope of
reference. Under the former clause matters appearing to be connected with or relevant to the
dispute may be referred and under the latter clause the scope of reference shall be confined
to specified points of dispute and matters incidental thereto. Unless a dispute was raised by
the workmen with their employer it could not become an industrial dispute. The scope of
reference under Section 10 has to be gathered from the circumstances preceding the
Government order.
Sections 10 and 10-A are the alternative remedies to settle an industrial dispute.
Once the parties have chosen the remedy under Section 10-A, the Government cannot refer
the same dispute for adjudication under Section 10. If any such reference is made, it is
invalid.
Where a reference was made under Section 10 of the Tribunal regarding the question of
abolition of contract labour it was pointed out that the Appropriate Government has power
under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 to prohibit
employment of contract labour. If the work for which contract labour is employed is incidental
to and closely connected with the main activity of the industry and is of a perennial and
permanent nature, the abolition of contract labour could be justified. In such a case it would
also be open to the Industrial Tribunal to have regard to the practice obtaining in their
industries in or about the area.
Tribunal's Jurisdiction : In Calcutta Port Shramik Union v. The Calcutta River Transport
Association and others, the Wage Board set up by the Central Government for' Port and
Dock Workers in major ports did not make any recommendation in respect of bargemen.
Hence an industrial dispute was raised by bargemen claiming the benefit of Wage Board
recommendation and the dispute was referred to National Tribunal. The National Tribunal
was of the view that bargemen were dock workers and were as such entitled to wages in
accordance with Wage Board recommendations. The Calcutta High Court held that the award
of the Tribunal was beyond the scope of reference. Hence, this appeal by special leave to the
Supreme Court. It was held that the Courts exercising judicial review should attempt to
sustain the awards made by the Tribunal as far as possible instead of picking holes in the

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award on trivial points, ultimately frustrating the entire adjudication process before the
Tribunal by striking down awards on hyper-technical grounds. The Tribunal was justified in
coming to the conclusion that bargemen were also dock workers and there is no justification
in denying them the benefit of the recommendation of the Wage Board. Such award is within
its jurisdiction.
Section 10. Constitutional validity : The validity of this section has been upheld by the
Supreme Court holding Section 10 as intra-vires. Its validity in D.C. and G. Mills v. Shambhu
Nath, was sought to be challenged on fresh grounds, namely, that Section 10 violated Article
14 of the Constitution. It was held that: "Where the Supreme Court has held that Section 10 is
intra-vires and repelled the objection under Article 14 of the Constitution it would not be
permissible to raise the question again by submitting that a new ground could be raised to
sustain the objection. It is certainly easy to discover fresh ground of attack to sustain the
same objection, but that cannot be permitted once the law has been laid down by the
Supreme Court holding that Section 10 of the Act does not violate Article 14 of the
Constitution."
Section 10(a). Voluntary reference of disputes to arbitration : Section 10-A of the Act
differs from Section 10 of the Act mainly in one respect. Section 10 of the Act provides for
reference of an industrial dispute by the Government either on its own or on an application
having been made to it by the parties to the dispute. The arbitrator under Section 10 is
appointed by the Government making such reference. But Section 10-A of the Act authorises
the parties to a dispute themselves to choose their own arbitrator, including a Labour Court,
Tribunal or National Tribunal.
Section 10-A (1) provides that where any industrial dispute exists or is apprehended and the
employer and the workmen agree to refer the dispute to arbitration, they may refer the
dispute to arbitration. Such reference by agreement may be made at any time before the
dispute has been referred under Section 10 to a Labour Court, Tribunal or National Tribunal.
The agreement, between the parties to an industrial dispute, to make a reference must be in
writing.
Section 10-A (I-A) provides that where an arbitration agreement provides for reference of the
dispute to an even number of arbitrators, the agreement shall provide for the appointment of
another person as umpire who shall enter upon the reference, if the arbitrators are equally
divided in their opinion. The award of the umpire shall prevail and shall be deemed to be an
arbitration award for the purpose of this Act.
Section 10-A (2) provides that an arbitration agreement referred to in sub-section (1) shall be
in such form and shall be signed by the parties thereto in such manner as may be prescribed.
Under Section 10-A (3) a copy of the arbitration agreement shall be forwarded to the
Appropriate Government and the conciliation officer, and the Appropriate Government shall
within one month from the date of the receipt of such copy publish the same in the Official
Gazette.
Section 11. Procedure; Powers and Duties of Authorities : Section-11 procedure and
Powers of Conciliation Officers, Boards, Courts and tribunals. Section 11 of the Act as it
stood at the time of its enactment in 1947 has been amended in 1956. Sub-section (1) of
Section-11 gives very wide powers to the authorities in so far as the procedure to be followed
by them is concerned. This sub-section is worded in general terms. Sub-sections (3), (4) and
(7) of this section provide special procedures to be followed in certain cases and to that
extent they can be said to curtail the general power with regard to the procedure conferred by
sub-section (1).
Section 11(1) provides that "subject to any rules that may be made in this behalf, an
arbitrator, Board, Court, Labour Court, Tribunal or National Tribunal shall follow such
procedure as the arbitrator or other authority concerned may think fit. These provisions give
very wide discretion to the authorities, and the discretion must be exercised with care and

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caution bearing in mind the principles of natural justice.
Under Section 11(2) a Conciliation Officer or a member of a Board or Court or the Presiding
Officer of a Labour Court, Tribunal or National Tribunal may, for the purpose of inquiry into
any existing or apprehended industrial dispute, enter the premises occupied by any
establishment to which the dispute relates. But before entering the premises such authority
must give reasonable notice of its intention to do so.
Sub-section (3) which is in the nature of a proviso to sub-section (1) enacts that every Board,
Court, Labour Court, Tribunal and National Tribunal shall have the same powers as are
vested in a Civil Court under the Civil Procedure Code, 1908, when trying a suit in respect of
the following matters, namely–
(a) enforcing the attendance of any person and examining him on oath;
(b) compelling the production of documents and material objects;
(c) issuing commissions for the examination of witnesses;
(d) in respect of such other matters as may be prescribed.
Every inquiry or investigation by a Board, Labour Court, Tribunal and National Tribunal, shall
be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the
Indian Penal Code. Section 193 of the Indian Penal Code deals with giving or fabricating
false evidence in a judicial proceeding. Section 228 of the I.P.C. deals with intentional insult
or interruption to a public servant acting in any stage of a judicial proceeding. Provisions of
sub-section (3) do not refer to a Conciliation Officer.
Sub-section (4) deals specially with the procedure to be followed by the Conciliation Officer.
He may enforce the attendance of any person for the purpose of examination of such person
or call for and inspect any document which he has ground for considering–
(i) to be relevant to the Industrial Dispute; or
(ii) to be necessary for the purpose of verifying the implementation of any award; or
(iii) carrying out any other duty imposed on him under this Act.
Award of Industrial Tribunal : Any award of the Industrial Tribunal must be supported with
sufficient reasons. The giving of reasons in support of their conclusions by judicial and quasi-
judicial authorities when exercising initial jurisdictions is essential for various reasons. First, it
is calculated to prevent unconscious unfairness or arbitrariness in reaching the conclusions.
The very search for reasons will put the authority on the alert and minimise the chances of
unconscious infiltration of personal bias or unfairness in the conclusion. The authority will
adduce reasons which will be regarded as fair and legitimate by a reasonable man and will
discard irrelevant or extraneous considerations. Secondly, it is a well-known principle that
justice should not only be done but should also appear to be done. Unreasonable conclusion
may be just but they may not appear to be just to those who read them. Reasoned
conclusions, on the other hand, will have also the appearance of justice. Thirdly, it should be
remembered that an appeal generally lies from the decisions of judicial or quasi-judicial
authorities to this Court by special leave granted under Article 136. A judgment which does
not disclose the reasons, will be of little, assistance to the court.
Unfair labour practices on the part of employers and trade unions of employers :
1. To interfere with, restrain from, or coerce, workmen in the exercise of their rights to
organise, from, join or assist a Trade Union or to engage in concerted activities for the
purposes of collective bargaining or other mutual aid or protection, that is to say–
(a) threatening workmen with discharge or dismissal, if they join a trade union;
(b) threatening a lock-out or closure, if a trade union is organised;
(c) granting wage increase to workmen at crucial periods of the union

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 organisation, with a view to undermining the efforts of the trade union at
organisation.
2. To dominate, interfere with or contribute support, financial, or otherwise, to any trade
union, that is to say–
(a) an employer taking an active interest in organising a trade union of his
workmen; and
(b) an employer showing partiality or granting favour to one of several trade
unions attempting to organise his workmen or to its members where such a
trade union is not a recognised trade union.
3. To establish employer sponsored trade unions of workmen.
4. To encourage or discourage membership in any trade union by discriminating against
any workman, that is to say–
(a) discharging or punishing a workman, because he urged other workmen to join
or organise a trade union;
(b) discharging or dismissing a workman for taking part in the strike (not being a
strike which is deemed to be an illegal strike under this Act);
(c) changing seniority rating of workmen because of trade union activities;
(d) refusing to promote workmen to higher posts on account of their trade union
activities;
(e) giving unmerited promotions to certain workmen with a view to creating
discord amongst other workmen, or to undermine the strength of their trade
union;
(f) discharging office-bearers or active members of the trade union on account of
their trade union activities.
5. To discharge or dismissed workmen–
(a) by way of victimisation;
(b) not in good faith, but in the colourable exercise of the employer's right;
(c) by falsely implicating a workman in a criminal case on false evidence or on
conducted evidence;
(d) for patently false reasons;
(e) on untrue or trumped up allegations of absence without leave;
(f) in utter disregard of the principles of natural justice in the conduct of domestic
enquiry or with undue haste;
(g) for misconduct of a minor or technical character, without having any regard to
the nature of the particular misconduct or the past record or service of the
workman, thereby leading to a disproportionate punishment.
6. To abolish the work of a regular nature being done by workmen, and to give such
work to contractors as a measure of breaking a strike.
7. To transfer a workman mala fide from one place to another, under the guise of
following management policy.
8. To insist upon individual workmen, who are on a legal strike to sign a good conduct
bond, as a pre-condition to allowing them to resume work.
9. To show favouritism or partiality to one set of workers regardless of merit.

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10. To employ workmen as 'badlis', casuals or temporaries and to continue them as such
for years with the object of depriving them of the status and privileges of permanent
workmen.
11. To discharge or discriminate against any workmen for filing charges or testifying
against an employer in any enquiry or proceeding relating to any industrial dispute.
12. To recruit workmen during a strike which is not an illegal strike.
13. Failure to implement award, settlement or agreement.
14. To indulge in acts of force or violence.
15. To refuse to bargain collectively, in good faith with the recognised trade unions.
16. Proposing or continuing a lock-out deemed to be illegal under this Act.
Unfair labour practices on the part of workmen and trade unions of workmen :
1. To advise or actively support or instigate any strike deemed to be illegal under this
Act.
2. To coerce workmen in the exercise of their right to self-organisation or to join a trade
union or refrain from joining any trade union, that is to say–
(a) for a trade union or its members to picketing in such a manner that non-
striking workmen are physically debarred from entering the work places;
(b) to indulge in acts of force or violence or to hold out threats of intimidation in
connection with a strike against non-striking workmen or against managerial
staff.
3. For a recognised union to refuse to bargain collectively in good faith with the
employer.
4. To indulge in coercive activities against certification of a bargaining representative.
5. To stage, encourage or instigate such forms of coercive actions and willful 'go slow',
squatting on the work premises after working hours or 'gherao' of any of the members
of the managerial or other staff.
6. To stage demonstrations at the residences of the employers or the managerial staff
members.
7. To incite or indulge in willful damage to employer's property connected with the
industry.
8. To indulge in acts of force or violence or to hold out threats of intimidation against any
workman with a view to prevent him from attending work.
It is difficult to define and lay down exhaustive test of unfair labour practice, but it may be said
that any practice, which violates the directive principles of State policy contained in Article 43
of the Constitution and such other Articles as deal with the decent wages and living
conditions for workmen amount to unfair practice.
Section 25. UNFAIR LABOUR PRACTICES
Section 25- T. Prohibition of unfair labour practice : No employer or workman or a Trade
Union, whether registered under the Trade Unions Act, 1926, or not. shall commit any unfair
labour practice.
Section 25-U. Penalty for committing unfair labour practices : Any person who commits
any unfair labour practice shall be punishable with imprisonment for a term which may extend
to six months or with fine which may extend to one thousand rupees or with both.
Victimization : Victimization means one of two things. One is when the workman concerned

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is innocent and yet he is punished because he has in some way displeased the employer.
For example, by being an active member of a Union of workmen who were acting
prejudicially to the interests of the employer. The second instance is where an employee has
committed an offence but is given a punishment quite out of proportion to the gravity of the
offence, simply because he has incurred the displeasure of the employer, or where the
punishment is shockingly disproportion to the misconduct or is such as no reasonable
employer would impose under the circumstances. If an employer punishes an employee for a
wrong which someone else has committed, it would be right to infer that the employee is
victimized by being made a scape-goat to him.
THE WORKMEN'S COMPENSATION ACT, 1923
INTRODUCTION
The Workmen's Compensation Act, is one of the earliest measures adopted to benefit the
labourers. It was passed in 1923 and enforced on 1st July, 1924. Since then a number of
amendments have been made from time to time so as to suit the changing needs and
conditions of the workmen.
The object of the Act was to make provision for the payment of compensation by certain class
of employers to their workmen for injury by accident. The reasons that compelled the initiation
of the Bill were attributed to the growing complexity of industry with the increasing use of
machinery and consequent danger to workmen along with the comparative poverty of
workmen themselves that rendered it advisable that they should be protected as far as
possible from hardships arising from accidents.
It was as early as 1884, that the question of payment of compensation to workmen involved
in serious or fatal accidents was raised when the Factory and Mining Inspectors drew the
attention of the Government to this human problem which warranted immediate legislative
protection of workmen, But its importance was realised by the Government of India only at
the end of 1920, when public opinion was invited on connected issues. A committee
consisting of members of the Legislative Assembly, employers, workers or representatives of
workers, medical and insurance experts was constituted. It was on the basis of the
recommendation of the committee that Workmen's Compensation Act was enacted in 1923
which provided for setting up of Tribunals on the American model to decide disputes,
appointment of special Commissioners with wide powers and a limited right of appeal to the
High Court.
Originally the Act was applicable to workers of certain specified industries, employed
otherwise than in clerical capacity; and receiving monthly wages not exceeding Rs. 300, The
workmen (as defined in the Act) were entitled to compensation from the employer in case of
personal injury caused by accident arising out of and in the course of employment with
certain reservations to the duration of, incapacity and negligence of workman himself. The
payment of compensation was mainly dependent upon the incapacity or disablement of
workmen. Any claim for compensation was to be determined in accordance with the
provisions of the Act and rules made there under by Provincial Commissioners for workmen's
compensation.
The Workmen's Compensation Act was framed with a view to provide for compensation to
workmen incapacitated by an injury from accident arising out of and in the course of
employment. It is a guarantee against hazards of employment to which a workman is
exposed because of his employment. The main object of the Act was to make provision for
payment of compensation to a workman only, i.e. the concerned employee himself in case of
his surviving the injury in question and to his dependants in the case of his death in view of
section 2 (1) (n) of the Act. But compensation is not the only benefit flowing from this Act; it
has important effects in furthering work on the prevention of accidents, in giving workmen
greater freedom from anxiety and in rendering industry more attractive.
This Act extends to the whole of India except the State of Jammu and Kashmir.

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This Act is not applicable to all workmen. It is applicable to workmen of certain industries. It
affords protection to a workman from loss or injury caused by accident arising out of and in
the course of his employment. It is not necessary that the accident should have been caused
by some wrongful act of the employer. Compensation is payable only when the conditions
provided by section 3 are fulfilled and the procedure prescribed by section 10 has been
adopted in making a claim to compensation. Any claim for compensation must be made
within two years of the occurrence of the accident or in case of death within two years from
the date of death.
The rights and liabilities of the parties stand crystallized on the date of the accident under
sections 3 and 4 of the Act. Where the Schedule is amended it must have a prospective
operation unless the Schedule is made expressly retrospective. Therefore, compensation
would be payable at rates applicable on the date of the accident.
MAIN FEATURES OF THE ACT
1. The Workmen's Compensation Act is modeled on the British pattern. Under the Act
payment of compensation has been made obligatory on all employers whose
employees are entitled to claim benefit under the Act.
2. The workman or his dependants may claim compensation if the injury has been
caused by accident arising out of and in the course of employment in case of injury
not resulting in death if such accident cannot be attributed to the workman having
been at the time of accident under the influence of drink or drugs or if it is not caused
due to willful disobedience of rule or orders or disregard of safety devices.
3. The various classes of workmen have been specified in the definition of "Workman" in
section 2 (1)(n) and in Schedule II. Persons employed in administrative or clerical
capacity and earning more than Rs. 1,600/- per month (except railway servants) were
excluded from the benefit of the Act. But now the condition of average monthly wage
limit of Rs. 1,600/- has been abolished.
4. The amount of compensation payable depends in case of death on the average
monthly wages of the deceased workman and in the case of an injured workman both
on the average monthly wages and the nature of disablement.
5. The term "wages" for the purposes of this Act includes over-time pay, and the value of
any concessions or benefit in the form of food, clothing, free quarters, etc. Whenever
the compensation payable to any workman has to be worked out, first of all his
monthly wages are determined and then the amount of compensation is decided by
reference to section 4 and Schedule IV, where in the method for determining the
amount of compensation for death, and permanent disablement is given.
6. In order to protect the interest of dependants in case of fatal accidents the following
provisions are made–
(i) All cases of fatal accident are to be brought to the notice of the Commissioner;
(ii) If the employer admits his liability the amount of compensation payable is to
be deposited with the Commissioner;
(iii) If the employer admits his liability and at the same time there are grounds for
believing compensation to be payable, the dependants get the information
necessary to enable them to judge if they should make a claim or not.
7. A sub-contractor may indemnify his contractor if he has had to pay compensation
either to a principal or to a workman.
8. The Commissioner may deduct a sum of Rs. 50/- from the amount of compensation
and pay the same to the person who has incurred funeral expenses of the deceased
workman. The Act is administered by the Commissioner for Workman's

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 Compensation appointed by the State Government.
Principles Governing Compensation : The purpose of the Workmen's Compensation Act is
not to provide for solatium to the workman or his dependants but to make good the actual
losses suffered by him. Compensation is in the nature of insurance of the workman against
certain risk of accident. The rule, that in order to make the employer liable to pay
compensation, death or injury must be the consequence of an accident arising out of and in
the course of his employment, is dependent upon the following four conditions–
(1) A causal connection between the injury and the accident, and the accident and tire
work done in the course of employment is essential.
(2) The onus lies upon the claimant to establish that the injury or its aggravation was the
outcome of the work and resulting strain.
(3) It is not necessary that the workman must be actually working at the time of his death
or that death must occur while he is working or has just ceased to work.
(4) If the evidence adduced shows greater probability which satisfies a reasonable man
that the work contributed to the causing of personal injury, it would be sufficient
ground for the workman to succeed in his claim.
Nature of Liability : The Workmen's Compensation Act creates a new type of liability. It is
not strictly a liability arising out of tort, but is. a sort of liability arising out of the relationship of
the employer and the employee. An employer under this Act is liable to pay compensation at
a rate fixed in the Act itself to any workman incapacitated by an accident arising out of and in
the course of his employment. The main principle governing the compensation is not
dependent on the suffering caused to the workman or expenses incurred by him in his
treatment but on the difference between his wage earning capacity before and after the
accident. The liability for the payment of compensation is not dependent upon the neglect or
wrongful act on the part of the employer.
Doctrine of added peril : The principle of added peril means that if a workman while doing
his employer's work, trade or business engages himself in some other work which he is not
ordinarily required to do under the contract of his employment and which act involves extra
danger, he cannot hold his master liable for the risk arising there from. The doctrine of added
peril, therefore, comes into play only when the workman is at the time of meeting the accident
performing his duty.
Adjudication of Compensation : Compensation may be fixed either by settlement or by
award. Once the compensation has been fixed, it cannot be revised on the ground of
subsequent aggravation of a permanent disability. Compensation once fixed operates for
ever except in cases covered by section 6 of the Act which provides for making subsequent
change in the amount of compensation on the ground of change in circumstances. But the
scope of section 6 is limited only to half monthly payments which are prescribed by the Act
for only temporary disablement. No review on the ground of aggravation of disability is
maintainable even under sections 17, 19 and 22 of this Act.
Self-inflicted Injury : An injury caused by accident which could have been anticipated or
foreseen, or is brought about intentionally or negligently by the workman himself does not
make the master liable, for it cannot be termed as an injury by accident within the terms of
the Act. Accident means any unintended and unexpected occurrence, which produces hurt or
loss. If the mishap was designed, intended or anticipated it is self-inflicted injury and not an
injury caused by accident.
Contributory Negligence : Contributory negligence is not ground under the Act for reducing
the amount of compensation if the accident has arisen in the course of employment. A
workman, an employee in a saw mill, received injuries on his finger, was given treatment by
the employer and re-employed. Later on the injury developed into tetanus and the workman
died due to negligence. It was held that compensation payable to the widow cannot be

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reduced on the ground of contributory negligence.
DEFINITIONS
Interpretation : Section 2(1) of the Workmen's Compensation Act begins with words "in this
Act unless there is anything repugnant in the subject or context". Repugnant means
something inconsistent with or contrary to any thing said before in the Act itself. If two
provisions of the same statute are contrary to one another, the test of repugnancy is to see
whether the two can co-exist. If both of such contradictory provisions can stand together they
are not repugnant. If one of such provisions says "do" and another in relation to the same
subject-matter says "do not" they are said to be repugnant with each other.
Dependant : Section 2(1)(d) of the Act defines dependant. Under this sub-section relations of
a workman are divided into three classes. However, there is no preferential right amongst
dependants to maintain claim application. The dependants are not classified in different
categories in the sense that those specified in category I will exclude others. Dependants
belonging to any category may claim simultaneously–
(i) The first category includes a window, a minor legitimate or adopted son, an unmarried
legitimate or adopted daughter and a widowed mother. They are deemed in law as
dependants of a workman whether they are in fact dependant on the earnings of the
workman or not.
(ii) In the second category of dependants are included a son and a daughter, they have
to fulfil the following conditions, namely–
(a) They must be wholly dependant on the earnings of the workman at the time of
his death;
(b) They must be infirm; and
(c) They must have attained the age of 18 years.
(iii) The following are included in the third category of dependants provided they are
wholly or in part dependant on the earnings of the workman at the time of his death–
(a) a widower,
(b) a parent other than a widowed mother,
(c) (i) a minor illegitimate son,
(ii) an unmarried illegitimate daughter,
(iii) a daughter whether legitimate or illegitimate or adopted if married and
minor, or if widowed and a minor,
(d) a minor brother or an unmarried sister or a widowed sister if a minor,
(e) a widowed daughter-in-law,
(f) a minor child of a predeceased son,
(g) a minor child of a predeceased daughter where no parent of the child is alive,
or
(h) a paternal grandparent if no parent of workman is alive.
Section 2(1)(g). Partial Disablement : This section defines partial disablement. Such
disablement is of two kinds–
(1) Temporary partial disablement.
(2) Permanent partial disablement.
The test of such disablement is the reduction in the earning capacity of the workman.

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If the earning capacity of a workman is reduced in relation to the employment he had been at
the time of the accident resulting in such disablement, it is temporary partial disablement.
If the injury caused by an accident results in the reduction, of the earning capacity in respect
of employment which the workman was capable of undertaking at the time of accident it is
permanent partial disablement.
Any injury specified in part II of Schedule I shall be deemed to result in permanent partial
disablement. Compensation under the Act is payable only if the injury caused by an accident
results in workman's disablement exceeding three days.
To determine whether the injury is permanent or temporary the courts have to see whether
the injury has incapacitated the workman from every employment which he was capable of
undertaking at the time of accident or merely from the particular employment in which he was
at the time of the accident resulting in disablement. In the former case the disablement is
partial but permanent in the latter case it is temporary:
The following propositions are helpful in deciding the nature of disablement–
(i) Earning is not the same as earning capacity. There is difference between earning of a
person and his capacity to earn.
(ii) Rise in earning may be because of various factors and rise in wages is not decisive of
no loss of earning capacity.
(iii) Loss of physical capacity is not co-extensive with loss of earning capacity.
(iv) Loss of physical capacity or physical incapacity may be relevant in assessing to what
extent there is loss of earning capacity for every employment which the workman was
capable of undertaking at that time or the employment in which he was engaged at
the time of the accident as the case falls for consideration.
Section 2(1)(i). Total Disablement
Total disablement is defined in section 2(1)(i) of the Act.
When a workman is incapacitated of doing any work which he was capable of performing at
the time of accident resulting in such disablement, it is total disablement. Incapacity for all
work is different from the incapacity for the work which a workman was doing at the time of
accident. It is further provided in the Act that permanent total disablement shall be deemed to
result from every injury specified in Part I of Schedule I. It may also result from any
combination of injuries in Part II of Schedule I, where the aggregate percentage of the loss of
earning capacity, as specified against those injuries amounts to one hundred per cent or
more.
It was held in National Insurance Co. Ltd. v. Mohd. Saleem Khan and another that if the
workman is incapacitated to do all the work which he was capable of performing at the time of
accident it is a case of total disablement. It may be that in view of the injuries the workman is
capable enough to render some other sort of work, but still when there is incapacity to do the
work which he was capable of performing by the date of the accident it is a case of total
disablement. The certificate of the doctor of physical impairment and loss of physical function
is not material in deciding the question of total disablement.
Section 2(1)(m). Wages : The term "wages" as defined in section 2(l)(m) includes any
privilege or benefit which is capable of being estimated in money. The definition is not
exhaustive. The following are not wages–
(a) Travelling allowance or the value of any travelling concession;
(b) Contribution paid by the employer of a workman towards–
(i) any pension, or
(ii) any provident fund;

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(c) Any sum paid to a workman to cover any special expenses incurred on him by the
nature of his employment.
(d) Leave carried forward to next year.
Annual leave with wages is certainly a privilege but this privilege only means that no wages
due for that period shall be deducted from the wages. It does not mean that the workman can
claim an equivalent amount in lieu of such leave. Thus, in calculating wages an addition to
wages for the period of leave a workman was entitled to after working for one year is not
justified, unless there is in the contract of service an express provision for such amount of
wages in lieu of the leave earned for the year.
The term "wages" has different meanings under the Payment of Wages Act, the Factories Act
and Industrial Disputes Act. Compensation to an injured employee under the Workmen's
Compensation Act is determined on the basis of wages of the injured employee. The wages
has to be determined according to the definition of "wages" provided in this Act.
COMPENSATION
Section 3. Compensation Employer's liability for Compensation : The liability of an
employer to pay compensation is limited and is subject to the provisions of this Act. Under
sub-section (1) of section (3) the liability of the employer to pay compensation is dependent
upon the following four conditions–
(1) Personal injury must have been caused to a workman;
(2) Such injury must have been caused by an accident;
(3) The accident must have arisen out of and in he course of employment; and
(4) The injury must have resulted either in death of the workman or in his total or partial
disablement for a period exceeding three days.
The employer shall not be liable to pay compensation in the following cases–
(a) If the injury did not result in total or partial disablement of the workman for a period
exceeding three days;
(b) In respect of any injury not resulting in death or permanent total disablement the
employer can plead–
(i) that the workman was at the time of accident under the influence of drinks or
drugs;
(ii) that the workman wilfully disobeyed an order expressly given or a rule
expressly framed for the purpose of securing safety of workmen ; and
(iii) that the workman having known that certain safety-guards or safety devices
are specifically provided for the purpose of securing the safety of workman,
wilfully disregarded or removed the same.
Section 2(3). Employer's Liability in case of occupational diseases : Sub-section (2) of
section 3, deals with the payment of compensation in case of an injury resulting from
occupational diseases. The list of the occupational diseases is contained is Schedule III of
the Act. Schedule III is divided into three parts, A, B and C. The disease contracted must be
an occupational disease peculiar to the employment specified in Schedule III. In respect of
every such disease mentioned as occupational disease in Schedule III, a list of a number of
employments is given: To support any claim for compensation in case of occupational
disease in Part A no specified period of employment is necessary; for diseases in Part B the
workman must be in continuous employment of the same employer for a period of six months
in the employment specified in that part; and for diseases in Part C the period of employment
would be such as is specified by the Central Government for each such employment whether
in the service of one or more employers. The contracting of any disease specified in

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Schedule III shall be deemed to be an injury by accident arising out of and in the course of
employment unless the contrary is proved.
The employer shall be liable to pay compensation for an injury resulting from an occupational
disease mentioned in Part A of Schedule III, if a workman employed in any employment
specified in Part A of Schedule III contracts any disease specified therein as an occupational
disease peculiar to that employment. The contracting of the disease shall be deemed to be
an injury by accident and unless the contrary is proved the accident would be deemed to
have arisen out of and in the course of employment.
If any such disease as is mentioned in Part A of Schedule III develops after a workman has
left the employment, no compensation shall be payable to him.
In case of contracting of any disease mentioned in Part B of Schedule III the employer shall
be liable if a workman while in the service of an employer in whose service he has been
employed for a continuous period of not less than six months in any employment specified in
Part B of Schedule III contracts any disease specified therein as an occupational disease
peculiar to that employment. The contracting of the disease shall be deemed to be an injury
by accident within the meaning of this section, and unless contrary is proved, the accident
would be deemed to have arisen out of and in the course of the employment.
The employer shall be liable to pay compensation to a workman where a workman contracts
any disease as aforesaid after he has left his employment in the following conditions–
• If a workman has served under any employer in any employment specified in Part B
of Schedule III for a continuous period of six months.
• If a workman has after cessation of his service contracted any disease specified in
Part B of Schedule, III as an occupational disease peculiar to that employment.
• If it is proved that such disease arose out of the employment.
• The contracting of the disease shall then be deemed to be an injury by accident within
the meaning of this section.
Where a workman contracts any disease specified in Part C of Schedule III in the employer
shall be liable–
• If a workman was in the service of one or more employers in any, employment
specified in Part C of Schedule III for such continuous period as the Central
Government may specify in respect of each such employment; and
• If he contracts any disease specified therein as an occupational disease peculiar to
that employment.
Employment : The concept of employment implies three elements: an employer, an
employee and a contract of employment between them. In other words, employment means a
contract of service between the employer and employee wherein the employee agrees to
serve the employer under his control and supervision. Employment under the present Act is
not limited to actual work or place of work but extends to all things which the workman is
entitled by the contract of employment expressly or impliedly to do. To justify any claim for
compensation existence of a contract of employment express or implied between the
employer and the injured workman is necessary.
Personal injury : Injury ordinarily refers to a physiological injury. Personal injury does not
mean only physical or bodily injury but includes even a nervous shock, a mental injury or
strain which causes a chill. It is a term wider than bodily injury. In· Indian News Chronicle v.
Mrs. Lazarus, a workman, employed as an electrician had frequently to go to a heating room
from a cooling plant, was attacked by pneumonia and died after a short illness of five days.
The Court held that the injury caused by an accident is not confined to physical injury and the
injury in the instant case was due to his working and going from a heating room to a cooling

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plant as it was his indispensable duty arising out of and in the course of employment.
Arising out of and in the course of employment : The expression "arising out of" suggests
the cause of accident and the expression "in the course of" points out to the place and
circumstances under which the accident takes place and the time when it occurred. A causal
connection or association between the injury by accident and employment is necessary. The
onus is on the claimant to prove that accident arose out of and in the course of employment.
The employment should have given rise to the circumstances of injury by accident. But a
direct connection between the injury caused by an accident and the employment of the
workman is not always essential. Arising out of the employment does not mean that personal
injury must have resulted from the mere nature of employment and is also not limited to
cases where the personal injury is referable to the duties which the workman has to
discharge. The words arising out of employment are understood to mean that "during the"
course of the employment, injury has resulted from some risk incidental to the duties of the
service which unless engaged in the duty owing to the master it is reasonable to believe the
workman would not otherwise have suffered. There must be a causal relationship between
the accident and employment. If the accident had occurred on account of a risk which is an
incident of the employment; the claim for compensation must succeed unless of course the
workman has exposed himself to do an added peril by his own imprudence. This expression
applies to employment as such, to its nature, its conditions, its obligations and its incidents
and if by reason of any of these, a workman is brought within the zone of special danger and
so injured or killed, the Act would app]y. The employee must show that he was at the time of
injury engaged in the employer's business or in furthering that business and was not doing
something for his own benefit or accommodation. The question that should be considered is
whether the workman was required or expected to do the thing which resulted in the accident
though he might have imprudently or disobediently done the same. In other words, was the
act which resulted in the injury so outside the scope of the duties with which the workman
was entrusted by his employer as to say that the accident did not arise out of his
employment.
COMMISSIONERS
Section 19. Reference to Commissioner : Any Commissioner of an area concerned shall
have the power to decide and settle all questions as to the liability of any person to pay
compensation. In default of an agreement between the parties to arrive at a conclusion in
respect of any claim to compensation, the Commissioner has jurisdiction to decide inter alia–
(i) The question as to whether a person injured is a workman.
(ii) The liability of any person to pay compensation.
(iii) The amount and duration of compensation.
(iv) The nature or extent of disablement.
Section 19 provides for settlement by the Commissioner of any question regarding liability of
any person to pay compensation or the amount or duration of compensation, in default of any
agreement, if such question arises in any proceeding under the Act. The question does not
have the effect of suspending the liability of an employer to pay compensation under Section
3 till after the settlement contemplated under Section 19.
The Commissioner has jurisdiction to decide the loss of earning capacity of an injured
workman. The medical evidence, being only opinion, would not be decisive of the question
and that the Commissioner had independently to give a finding as to extent of the loss of the
earning capacity. If with the consent of the parties, the Commissioner refers any matter for
decision of the Medical Board or some other agency, it should be held that he acted extra
cursum curiae and the parties would be bound by the opinion of the reference. None of the
two parties would have a right to complain if the opinion goes against him. In such a case
there would be no right to appeal. Apart from-the objection to the assessment of the loss of

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earning capacity by the Medical Board, there is no other objection to the assessment of
compensation by the Commissioner. A Commissioner has no power to set aside a previous
order for compensation made by him under a mistake. No addition or alteration shall be made
to the judgment other than the correction of Clerical or arithmetical mistake arising from an
accidental slip or omission.
Section 19 refers to a liability arising by virtue of this Act. The liability adjudicated upon by
Claims Tribunal under the Motor Vehicles Act is a liability founded in tort and thus falls
outside the scope of this section.
The Commissioner acting under the Workmen's Compensation Act is a tribunal and not a civil
court. He constitutes an independent tribunal. His function is to judge and decide and not
merely to enquire and advise and in judging and deciding the matters before him, he has to
proceed judiciously and not arbitrarily.
Appeal : Section 30 of the Workmen's Compensation Act deals with the right of appeal. It
provides a right of appeal to the High Court from the order of the Commissioner. Only
restricted right of appeal has been granted by this section. No appeal shall lie against any
order of the Commissioner unless the following conditions are fulfilled–
(1) A substantial question of law is involved in the appeal.
(2) Except an order refusing to allow redemption of a half-monthly payment, the amount
in dispute in appeal is not less than Rupees three hundred.
(3) The parties have not agreed to abide by the decision of Commissioner.
(4) Order of the Commissioner does not give effect to an agreement arrived at between
the parties.
(5) In case of an appeal against an order awarding compensation in lump sum, the
memorandum of appeal must be accompanied with a certificate by the Commissioner
to the effect that the appellant has deposited with, him the amount payable under the
order appealed against. This provision is mandatory and not merely declaratory. The
presentation of appeal without certificate is not competent.
(6) Appeal is filed within the limitation period of sixty days from the date of the order.
Limitation would begin from the date the party is informed of the order.
It is also provided that an appeal shall lie from the following orders of the Commissioner–
(1) an order awarding as compensation a lump sum whether by way of redemption of a
half-monthly payment or otherwise or disallowing a claim in full or in part for a sum;
(2) an order awarding interest or penalty under Section 4-A;
(3) an order refusing to allow redemption of a half-monthly payment;
(4) an order providing for the distribution of compensation among the dependants of a
deceased workman, or disallowing any claim of a person alleging himself to be such
dependant;
(5) an order allowing or disallowing any claim for the amount of an indemnity under the
provisions of sub-section (2) of Section 12; or
(6) an order refusing to register a memorandum of agreement or registering the same or
providing for the registration of the same subject to conditions.
The provisions of Section 5 of the Limitation Act, 1963 shall be applicable to appeals
under this section.
THE EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT,
1952
OBJECT AND SCOPE OF THE ACT

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The long title of this Act is the Employees Provident Funds, Family Pension Fund and
Deposit Linked Insurance Fund Act, 1952. By an amendment of the year 1997 the words
Family Pension Fund have been substituted by the words Pension Fund. Thus the word
'Family' has now been omitted. But the Act is known by short title The Employees' Provident
Funds and Miscellaneous Provisions Act, 1952. The object of the Employees' Provident
Funds Act, is to provide for the institution of provident funds, pension fund and deposit linked
insurance funds for employees in factories and-other establishments. The principal duty is
laid upon the employer to put the Provident Fund Scheme into operation and to make
contribution of both the employees' and employer's share to the fund then and there and
deduct the employees' share from their wages. The Act extends to the whole of India except
the State of Jammu and Kashmir. The Act and Scheme were enforced in the scheduled
industries in November, 1952. There had been a persistent demand for extension of the
E.P.F. Act to all categories of industrial workers and the Planning Commission and Tripat1ite
Consultative Committees recommended for such extension. The Act was accordingly
extended to many additional industries so as to cover millions of employees working in more
than 4,000 factories by the end of March, 1957.
Employees' Provident Funds (Amendment) Act, 1956 empowered the Government to extend
the Act to non-factory establishments. In view of the Amendment Act, 1976, this Act is now
called Employees' Provident Funds and Miscellaneous Provisions Act, 1952. According to
Section 1 (3)(a) this Act applies to every establishment which is a factory engaged in any
industry specified in Schedule 1, and in which twenty or more persons are employed.
According to Section 1 (3)(b) it shall also apply to any other establishment employing twenty
or more persons or class of such establishments which the Central Government may, by
notification in the Official Gazette, specify in this behalf. In exercise of this power conferred by
the Act upon the Government the Act was extended on 30th April, 1957, to workers in
plantations of tea, coffee, rubber, cardamom and pepper employing 50, or more workers.
Proviso to sub-section (3) provides that the Central Government may after giving not less
than two months' notice of its intention so to do, by notification in the Official Gazette apply
the provisions of this Act to any establishment employing such number of persons less than
twenty as may be specified in the notification. The number of employees specified by the
notification by the Central Government as stated above may be even less than twenty.
However, the provisions of this sub-section are subject to the provisions of Section 16 of this
Act.
DEFINITIONS
Section 2(a). Appropriate Government : According to Section 2(a) the appropriate
Government is the Central Government (I) in relation to an establishment belonging to or
under the control of Central Government ; or (2) in relation to any establishment connected
with (i) it railway company; (ii) a major port; (iii) a mine; (iv) an oilfield ; or (v) a controlled
industry ; or (3) in relation to an establishment having departments or branches in more than
one State.
In relation to any establishment other than those mentioned above, the appropriate
Government means the State Government.
Section 2(aa). Authorised Officer : Authorised officer means the Central Provident Fund
Commissioner, Additional Central Provident Fund Commissioner, Deputy Provident Fund
Commissioner, Regional Provident Fund Commissioner or such other officer as may be
authorised by the Central Government, by notification in the Official Gazette.
Section 2(c). Contribution : 'Contribution' means a contribution, payable in respect of a
member under a Scheme or the contribution payable in respect of an employee, to whom the
Insurance Scheme applies.
Section 2(d) Controlled Industry- 'Controlled industry' means any industry whose control by
the Union of India has been declared by an Act of Parliament to be expedient in the public

- 25 -
interest. All the industries specified in the First Schedule of Industries (Development and
Regulation) Act have been taken under the control of the Union in the public interest.
Section 2(e). Employer : 'Employer' in relation to an establishment which is a factory
means–
(i) the owner or occupier of the factory;
(ii) the agent of such owner or occupier;
(iii) the legal representative of a deceased owner or occupier of the factory; or
(iv) any person named as a manager of the factory under Section 7(1)(f) of the Factories
Act, 1948.
In relation to any other establishment, 'employer' means-
(i) the person who has the ultimate control over the affairs of the establishment ; or
(ii) the authority which has the ultimate control over the affairs of the establishment; or
(iii) where the affairs of an establishment are entrusted to a manager, managing director
or managing agent, such manager, managing director or managing agent.
A receiver appointed under Order XL, Rule I, C.P.C. to take possession of all the properties
of the partnership is an employer within the meaning of this sub-section, where the receiver
so appointed had all the powers except that in certain things he was required to take
permission from the Court.3 He had also power to employ additional staff with the permission
of the Court. When such a receiver was prosecuted for breach of the provisions of the P.E
Scheme he pleaded that he was not 'employer' within the meaning of Section 2(e) of the Act.
Section 2(f). Employee : Before a person can be said to be an 'employee' .there must be
proof–
(1) that he is employed,
(2) that he is employed for wages,
(3) that he is employed in work, manual or otherwise,
(4) that the work is in connection with the work of a factory (establishment), and
(5) that he gets his wages directly or indirectly from the employer. Employee includes any
person–
(i) employed by or through a contractor in or in connection with the work of the
establishment;
(ii) engaged as an apprentice not being an apprentice engaged under the
Apprentices Act, 1961, or under the standing order of the establishment.
Persons employed by or through a contractor in or in connection with the work of the
establishment shall be included as employee provided that they have completed the period of
working days laid down in the scheme for entitling an employee to the benefits of the fund.
For a person to be an employee it is not necessary that he should actually be employed in
the establishment itself, it is sufficient if he is employed in connection with any work of the
establishment. Further, it is also not necessary that a person should be employed for any
manual work; the expression 'employee' includes a person employed for clerical or other
work in or in connection with the work of the establishment.
In Mohammed Ali v. Union of India,4 it was argued that the Act was intended by Parliament to
apply to employees who were mere wage earners and not to the salaried servants. The
contention was rejected by the Supreme Court.
In Victoria Jubilee Technical Institute v. K.S. Naik, R.P. F. Commissioner, Maharashtra and

- 26 -
others the Victoria Institute trained students in electrical, mechanical and general engineering
in laboratories and workshops attached to the Institute. The question was whether workshops
and laboratories attached to the Institute will make it a factory.
It was held that the petitioner Institute cannot be described as engaged in production of
electrical, mechanical and general engineering goods. The Institute has several laboratories
and workshops attached to its departments for the purpose of training students and to give
practical experience in their field of study.
In laboratories and workshops students are given training under the guidance of the teaching
staff. The product manufactured ,by the students are not sold, nor the Institute derives any
monetary benefit out of such production. Therefore, the Institute is not engaged in the
production of such goods. The expression "engaged" indicates the commercial production or
production as a primary concerned and by no stretch of imagination can educational
institution be treated as engaged in production of these goods and hence it is not a factory.
Section 2(h). Fund : 'Fund' means the provident fund established under the Employee's,
Provident Fund Scheme framed under Section 5 of this Act providing for all or any matters
specified in Schedule II.
In Som Prakash Rekhi v. Union of India the Supreme Court pointed out that the roots of
gratuity and Provident fund are different from pension. Each one is a salutary benefaction
statutorily guaranteed independent of the other. Pensions are paid out of regard for past
meritorious service.
Section 2(i). Industry : 'Industry' means any industry specified in Schedule I which means
any industry engaged in the production of cement, cigarette, electrical, mechanical or general
engineering products, iron (or steel), paper or textile, made wholly or in part of cotton, wool,
jute or silk, whether natural or artificial.
Section 3. Application of the Act : Ordinarily the Act applies to such establishment which is
a factory engaged in any industry specified in Schedule I and wherein twenty or more
persons are employed. But Section 3 of the Act empowers the Central Government to apply
the provisions of the Act to any such other establishment, whose employees have a provident
fund common with the employees of any other establishment, to which this Act applies. The
Central Government may do so by a Gazette notification provided the provident fund is in
existence in the establishment immediately before this Act applies to such establishment.
Section 4. Power to add to Schedule : Under Section 4 the Central Government may by a
Gazette notification add any other industry in Schedule 1. After such addition the provisions
of this Act shall apply to any establishment engaged in the industry so added by the Central
Government.
EMPLOYEES' PROVIDENT FUND SCHEME AND AUTHORITIES
Section 5. Employees' Provident Fund Scheme : Section 5 of the Act authorises the
Central Government to frame Employees' Provident Fund Scheme for the establishment of
Provident Fund under this Act. The Central Government shall have to issue a notification in
the Official Gazette before framing any such scheme. The scheme shall apply to employees
or any class of employees of an establishment or class of establishments as specified in it.
The word 'specify' means that there should be no room for uncertainty in mentioning or
naming the establishment to which the scheme is to be applied. I after the framing of the
scheme as soon as possible, a Fund shall be established in accordance with the provisions
of this Act and the scheme.
The fund shall vest in and be administered by the Central Board, constituted under Section 5-
A. Subject to the provisions of this Act. A Provident Fund Scheme may provide for all or any
of the matters specified in Schedule II. Any such scheme shall take effect either prospectively
or retrospectively on such date as may be specified in the Schedule.

- 27 -
The power of the Central Government to frame a scheme is neither unrestricted nor
unguided. There are various provisions in the Act for the guidance of the Central
Government. It is an idle contention that Section 5 gives wholly unrestricted and unguided
direction to the Central Government to frame a scheme, and it appears on the other hand that
the Act is full of carefully laid down principles to guide the Central Government.
Two distinct powers are conferred on the Central Government by Section 5(1) namely, (i) to
frame a scheme, and (ii) to specify to which factories the scheme shall apply. Both these
powers can be exercised through the medium of a single notification. Further the factories to
which the scheme shall apply may be specified in the scheme itself.
Where a factory had ceased to work for some time, the workers thereof applied for refund
because the amount was payable under para 72 of the scheme. But the application for
withdrawal did not conform to the provisions of para 69(2) of the scheme. The workers joined
the same factory, in which they had worked for more than a year, before any order for refund
was made. It was held by High Court that para 69(4) of the scheme will not apply in this case.
Their case was governed by para 26 and those workers cannot be said to be employed in the
factory as new workers. It was wrong to say, that they would not be entitled to the provident
fund benefit unless they again qualified themselves by one year's service.
In Bombay Printers Ltd. & others v. Union of India and others, seven employees of the
petitioners retired on attaining the age of superannuation and had withdrawn their fun amount
of accumulation of Provident Fund. They were re-employed by the petitioner on temporary
basis as per their convenience and subject to their health conditions. Asstt. P.F.
Commissioner, Maharashtra called upon the petitioner to remit provident fund dues in respect
of these employees. It was held 'that the employer cannot be asked to pay contribution in
respect of re-employed employees on temporary basis.
The delegation of power under Section 5 of the Employees' Provident Fund and
Miscellaneous Provisions Act, 1952 on the Central Government for framing the scheme
cannot be said to be ultra-vires the Act or Article 14 of the Constitution of India.
Section 5(a). Central Board : The Central Government may by a Gazette notification
constitute Board of Trustees caned Central Board for administering the Employees' Provident
Fund in the territories to which this Act extends. The Central Board shall come into force from
such date as may be specified in the notification, and shall consist of the following persons as
members–
(a) a Chairman and a Vice-Chairman to be appointed by the Central Government;
(aa) the Central Provident Fund Commissioner, ex-officio;
(b) not more than five persons appointed by the Central Government from amongst its
officials;
(c) not more than fifteen persons representing Government of such State as the Central
Government may specify in this behalf, appointed by the Central Government;
(d) Ten persons representing employers, or the establishment to which the Scheme
applies, appointed by the Central Government after consultation with such
organisations of employers as may be recognised by the Central Government in this
behalf; and
(e) Ten persons representing employers, in the establishment to which the Scheme
applies, appointed by the Central Government after consultation with such
organisations of employees as may be recognised by the Central Government in this
behalf.
The terms and conditions subject to which a member of the Central Board may be appointed
shall be such as may be provided for in the Scheme. The time, place and procedure of the
meetings of the Central Board shall be such as may be provided for in the Scheme. The

- 28 -
Central Board shall subject to the provisions of Section 6-A and Section 6-C administer the
Fund, vested in it in such manner as may be specified in the scheme. The Central Board
shall perform such other functions as it may be required to perform by or under any
provisions of the Scheme, the Family Pension Scheme and the Insurance Scheme.
Section 6(a). Employees' Pension Scheme
(1) The Central Government, may, by notification in the Official Gazette, frame a scheme
to be called the Employees' Pension Scheme for the purpose of providing for–
(a) superannuation pension, retiring pension or permanent total disablement
pension to the employees of any establishment or class of establishments to
which this Act applies; and
(b) widow or widower's pension, children pension or orphan pension payable to
the beneficiaries of such employees.
(2) Notwithstanding anything contained in Section 6, there shall be established, as soon
as may be after framing of the Pension Scheme, a Pension Fund into which there
shall be paid from time to time, in respect of every employee who is a member of the
Pension Scheme–
(a) such sums from the 'employer's contribution under section 6, not exceeding
eight and one-third per cent of the basic wages, dearness allowance and
retaining allowance, if any, of the concerned employees, as may be specified
in the Pension Scheme;
(b) such sums, as are payable by the employer of exempted establishments
under sub-section (6) of Section 17;
(c) the net assets of the Employees' Family Pension Fund as on the date ,of the
establishment of the Pension Fund;
(d) such sums as the Central Government may, after due appropriation by
Parliament by law in this behalf, specify.
(3) On the establishment of the Pension Fund, the Family Pension Scheme (hereinafter
referred to as the ceased scheme) shall cease to operate and all assets of the ceased
scheme shall vest in and shall stand transferred to, and all liabilities under the ceased
scheme shall be enforceable against, the Pension Fund and the beneficiaries under
the ceased scheme shall be entitled to draw the benefits, not less than the benefits
they were entitled to under the ceased scheme, from the Pension Fund;
(4) The Pension Fund shall vest in and be administered by the Central Board in such
manner as may be specified in the Pension Scheme.
(5) Subject to the provisions of this Act, the Pension Scheme may provide for all or any of
the matters specified in Schedule III.
(6) The Pension Scheme may provide that all or any of its provisions shall take effect
either prospectively or retrospectively on such date as may be specified in that behalf
in that scheme.
(7) A Pension Scheme, framed under sub-section (1), shall be laid, as soon as may be
after it is made, before each House of Parliament, while it is in session, for a total
period of thirty days which may be comprised in one session or in two or more
successive sessions, and if, before the expiry of session immediately following the
session or the successive sessions aforesaid, both Houses agree in making any
modification in the scheme or both Houses agree that the scheme should not be
made, the scheme shall thereafter have effect only in such modified form or be of no
effect, as the case may be; so, however, that any such modification or annulment
shall be without prejudice to the validity of anything previously done under that

- 29 -
 scheme.
IMPORTANT QUESTIONS
1. Define the 'Industrial Dispute' under the Industrial Dispute Act, 1947. When does an
individual dispute become industrial dispute? Explain.
2. Write the main condition for the claims of compensations by a workman under the
Workmen Compensation Act.
3. When does a strike become unlawful? Explain the constitutional validity of the strike.
Is these a need to impose total ban on strike in India.
4. Define and Distinguish between 'Lay-off' and 'Retrenchment.
5. "Section 11-A of the I.D. Act, 1947 gives discretionary power to the Labour Court,
Industrial Tribunal and National Tribunal to give appropriate relief to the discharged or
dismissed workmen? Comment.
6. Explain the scope and objects of Employees Provident Fund Act, 1952.
7. "Accident alone does not entitle a workman to claim compensation, accident must
arise out of and in the course of employment". Comment
8. Discuss the applicability and objects of the Employees Provident Fund Act, 195.
RECOMMENDED READINGS
1. "Labour and Industrial Laws", Dr. V.G. Goswami.
2. "Labour and Industrial Laws", S.N. Misra.
3. "Social Security in India", Dr. P.C. Srivastava.
4. Reports of the National Labour Commissions.

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 UNIT - II
THE INDUSTRIAL EMPLOYMENT (STANDING ORDERS)
ACT, 1946

Before passing of The Industrial Employment (Standing Orders) Act, 1946 the conditions of
employment were governed by contracts either express or implied between the employers
and their employees in different industrial undertakings. In many cases these conditions were
not well defined and suffered from doubt and ambiguity.
With the advent of Trade Unionism and collective bargaining new problems of maintaining
industrial peace· and production for the society were created. It was then considered that the
society had a vital interest in the settlement of terms of employment of industrial labour and
thus the settlement of labour problems became tripartite and the State, representing the
society entered on the scene.
The importance of making a law defining precisely the conditions of employment was
emphasised during discussions in the Tripartite Labour Conferences. To give effect to the
new ideology the Industrial Employment (Standing Orders) Act, 1946 was enacted by the
Central Government. It is obligatory upon all the employers covered by this Act to define
conditions of employment under them.
Section 1.
APPLICATION OF THE ACT
The object of the Standing Orders is to make it clearation both the parties on what terms and
conditions the workmen are offering to work and the employer is offering to engage them.
This Act requires the employers to define the conditions of service in their establishments and
to reduce them to writing and to get them compulsorily certified with a view to avoid
unnecessary industrial disputes.
The Act applies to every industrial establishment–
(1) Situated within the Indian Union, except the State of Jammu and Kashmir.
(2) employing 100 or more workmen on any day of the preceding 12 months.
The appropriate Government may by a Gazette notification apply the Act to any Industrial
establishment employing such number of persons as specified in the notification. The number
of employees fixed by the Government may be less than 100. But the Appropriate
Government must give two months' prior notice of its intention to make any such extension of
the Act.
The Act does not apply to the following establishments–
(1) Any industry to which the provisions of Chapter VII of the Bombay Industrial Relations
Act, 1946 apply.
(2) Any industrial establishment to which the provisions of the M.P. Industrial
Employment (S.O.) Act, 1961 apply.
Section 13-B. Act not to apply to certain industrial establishments : The Act does not
apply to such workmen employed in any industrial establishment as are covered by the
following rules and regulations– .
(1) The Fundamental and Supplementary Rules;
(2) The Civil Service (Classification, Control and Appeal) Rules;
(3) The Civil Services (Temporary Service) Rules;

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(4) The Revised Leave Rules;
(5) The Civil Services Regulations;
(6) The Civilians Defence (Classification, Control and Appeal) Service Rules;
(7) The Indian Railway Establishment Code; or
(8) Any other Rules or Regulations that may be notified in this behalf by the appropriate
Government in the Official Gazette.
Section 14. Power to exempt : Section 14 of the Act authorises the appropriate Government
to exempt conditionally or unconditionally any industrial establishment or class of industrial
establishments from all or any of the provisions of this Act.
SPECIAL FEATURES OF THE ACT
The following are some of the main features of the Industrial Employment (Standing Orders)
Act, 1946–
(1) The employer of every industrial establishment to which the Act applies is required to
frame draft Standing Orders and to submit them to the Certifying Officer, who is
generally the Labour Commissioner, for certification;
(2) The definition of workmen under this Act includes a "supervisory Technical
Personnel" under certain conditions;
(3) The certifying officer is empowered to modify or add to the draft Standing orders so
as to render them certifiable under the Act;
(4) A group of employers of similar industrial establishments may submit joint Standing
Orders for certification;
(5) The Government may by rules set out model Standing Orders for the purposes of this
Act. The Draft Standing Order framed by an employer should as far as practicable be
in conformity with the Model Standing Orders;
(6) This Act normally applies to every industrial establishment wherein one hundred or
more workmen are employed;
(7) The certifying officers and appellate authorities shall have all the powers of a Civil
Court in respect of certain matters provided in section 19 of the Act;
(8) The employer can be penalised for failure to submit draft Standing Order for
certification or for contravention of any provision of the Standing Order finally certified;
(9) The appropriate Government may by a Gazette notification exempt any establishment
or class of industrial establishments from any of the provisions of the Act;
(10) The appropriate Government may after previous publication by notification in the
Official Gazette, make rules to carry out the purposes of this Act.
STANDING ORDERS
Section 3. Submission of Draft Standing Orders :
(1) Within six months from the date by which this Act becomes applicable to an industrial
establishment the employer of that establishment shall submit to the Certifying Officer
five copies of the Draft Standing Orders proposed by him for adoption in his industrial
establishment.
(2) The Draft Standing Orders must make provision for every matter, set out in the
Schedule, which may be applicable to the industrial establishment. In those cases
where Model Standing Orders have been prescribed the Draft Standing Orders shall
'be, so far as practicable, inconformity with such model.

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(3) The Draft Standing Orders submitted under this section shall be accompanied by a
statement giving prescribed particulars of the workmen employed in the industrial
establishment. The name of the Trade Union, if any to which workmen belong, should
also be sent along with the Draft Standing Orders.
(4) A group of employers in similar industrial establishments may submit a joint draft of
Standing Orders under this Section provided they satisfy the conditions, if any,
prescribed in this respect.
Section 4. Conditions for Certification of Standing Orders : The Certifying Officer shall
certify the Standing Orders under this Act if–
(1) provision is made in the Standing Order for every matter set out in the Schedule,
which is applicable to the industrial establishment; and
(2) the Standing Orders are otherwise in conformity with the provisions of this Act.
The Certifying Officer or the appellate authority shall have the power to adjudicate upon the
fairness or reasonableness of the provisions of the Standing Orders. While doing so the
Certifying Officer is directed to consider and weigh the social interest in the claims of the
employer and the demands of workmen. Modification of Standing Orders is permissible under
section 10 but that can be achieved only by adhering to the prescribed manner. Modification
of Standing Order requiring giving of reasons in cases of discharge of workman was held to
be fair and reasonable. The question as to fairness and reasonableness of modification has
been left by Legislature to the authorities empowered under the Act and the Supreme Court
under Art. 136 of the Constitution would not be justified in interfering with conclusions of
authorities unless an important principle of law requiring elucidation is involved. The
Parliament has by amending sections 4 and 10 of the Act given dual remedy to the workmen.
One is to raise an industrial dispute under the Industrial Disputes Act and the other by
conferring the right to individual workman to contest the Draft Standing Orders submitted by
the employer for certification on the ground that they are either not fair or reasonable, and
more important is the right to apply for their modification
Section 6. Appeals : Any employer, workman, Trade Union or other prescribed
representatives of the workmen aggrieved by the order of the Certifying Officer may, within'
30 days from the date on which copies of the Draft Standing Orders are sent, appeal to the
Appellate Authority whose decision thereon shall be final. The Appellate authority shall by
order in writing confirm the Standing Orders either in the form certified by the Certifying
Officer or after amending Standing Orders by making such modifications as it thinks
necessary to render the Standing Orders certifiable under this Act.
The Appellate Authority shall within seven days of its order send copies of the Draft Standing
Order to the Certifying Officer, employer, Trade Union or other prescribed representatives of
the workmen. In cases the Appellate Authority makes any modification in the Draft Standing
Order, it shall send a copy of the amended Standing Order along with his order. But no such
copy needs to be sent by him if no modification has been made by him in the Draft Standing
Order.
THE EMPLOYEES' STATE INSURANCE ACT, 1948
INTRODUCTION
Many important Social Security Schemes had been introduced in our country before
independence. The urgency of such Schemes has been more badly felt after World War II.
Social security to the workers of an industry can be provided by a self-balancing Scheme of
Social Insurance or by public assistance or a combination of the two methods. Social security
measures adopted in any country can be said to be dependent upon a number of factors viz.,
population, economic resources, standard of living, availability of technical experts and
development of industry. The Workmen's Compensation Act, though designed to protect and
safeguard the interest of the labour was in the nature of social assistance and not social

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insurance. The Employees' State Insurance Act was first of such measures adopted in India
to provide for social insurance to the labourers. Many other fields of social insurance like
health and unemployment are still left untouched.
The Employees' State Insurance Act is a legislation which aims at bringing about social and
economic justice to the poor labour class of the land. It aims at the labour welfare. But labour
welfare is an elastic term bearing somewhat different interpretation in one country from
another according to different social customs, the degree of industrialisation and the
educational development of the workers}. Investigation Committee of the Government of
India has preferred to include under welfare activities anything done for the intellectual,
physical, moral and economic betterment .of workers whether by employers, by Government
or by other agencies, over and above, what is laid down by law or what is normally expected
as part of contractual benefits for which workers have bargained. Labour Welfare is a very
comprehensive term and includes everything undertaken by the State, employers and
association of workers for the improvement of workers standard of living and promotion of
their social and economic well-being.
These welfare activities need to be considerably extended so as to cover workers of every
factory, industry, mines, plants and communication, etc. A definite minimum standard of
welfare should be laid down, which has to be observed by all employers.
Section 1.
APPLICATION AND SCOPE OF THE ACT
The Employees' State Insurance Act, 1948, extends to the whole of India Section 1(3) of this
Act empowers the Central Government to enforce different provisions of the Act in different
States or part thereof on different dates. These dates of enforcement are to be made public
by a Gazette notification issued by the Central Government. According to Section 1(4), the
Act in the first instance applies to all factories including factories belonging to the,
Government other than seasonal factories.
Section 2.
DEFINITIONS
(1) Appropriate Government : Appropriate Government means the Central Government
in respect of establishments under the control of the Central Government or a railway
administration or a major port or a mine or oil-field and the State Government in all
others cases.
(6-A) Dependant : There are three categories of dependants under the Act. In the first
category are included–
(1) a widow;
(2) a minor legitimate or adopted son;
(3) an unmarried legitimate or adopted daughter;
(4) a widowed mother.
(8) Employment Injury : The following are the ingredients of an Employment Injury–
(1) The injury must be personal to an employee.
(2) The injury must be caused by an–
(i) accident; or
(ii) occupational disease.
(3) The accident must arise out of and in the course of employment.
(4) The employment must be insurable.

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(15-A) Permanent Partial disablement : The definition given in the Act has the following in
ingredients–
(1) partial disablement must be of a permanent nature;
(2) the disablement must reduce the earning capacity of an employee;
(3) reduction of earning capacity must be in every employment which he was capable of
undertaking at the time of the accident resulting in the disablement.
What is permanent partial disablement is a question of fact. But every injury specified in Part
II of the Second Schedule shall be deemed to result in permanent partial disablement. The
test to determine permanent partial disablement has been discussed in detail in the
Workmen's Compensation Act.
(15-B) Permanent total disablement : The definition contains the following ingredients–
(1) the disablement resulting from injury must be permanent; and
(2) the disablement must be of such a nature as renders the workman incapable for all
work which he was capable of performing at the time of accident resulting in such
disablement; and
(3) every injury specified in Part I of Schedule II shall be deemed to result in permanent
total disablement; and
(4) It shall also be deemed to result from any combination of injuries specified in Part II of
Second schedule where the aggregate percentage of the loss of earning capacity, as
specified against those injuries, amounts to one hundred percent or more.
(21) Temporary Disablement : Ingredients of this definition are as follows–
(1) It is a condition resulting from an employment injury; and
(2) The injury must be such as requires medical treatment; and
(3) The injury must render the employee temporarily incapable of doing the work; and
(4) The incapacity to work must be with regard to such work which the employee was
doing either prior to injury or at the time of injury resulting in such disablement.
Corporation
Section 3. Establishment of Employee's State Insurance Corporation : Section 3 of the
Act provides that the Employees' State Insurance Corporation shall be established by the
Central Government by notification in the Official Gazette. The Corporation shall be
established with effect from such date as may be notified by the Government. The function of
the Corporation is the administration of the Scheme of Employees' State Insurance in
accordance with the provisions of this Act.
The following are main features of the Corporation–
(1) It shall be a body corporate by the name of Employees' State Insurance Corporation;
(2) The Corporation shall have perpetual succession;
(3) It shall also have a common seal;
(4) It can sue and be sued in its own name.
The effect of declaring the Corporation as a body corporate is that it becomes a legal entity
like an individual and anyone who trust it, trusts that legal person and must look to its assets
for any claim against it. A decree or award made against the corporate body (i.e.,
Corporation) is not enforceable against the individual members but only against the assets of
the corporate body.
Section 4. Constitution of Corporation- The following office bearers and members shall

- 35 -
constitution the Corporation–
(a) A Chairman to be appointed by the Central Government.
(b) A Vice-Chairman to be appointed by the Central Government.
(c) Not more than five persons to be appointed by the Central Government.
(d) One person each representing each of the States in which this Act is in force to be
appointed by the State Government concerned.
(e) One person to be appointed by. the Central Government to represent the Union
Territories.
(f) Ten persons representing employers to be appointed by the Central Government in
consultation with such organisations of employers as may be recognised for the
purpose, by the Central Government.
(g) Ten persons representing employers to be appointed by the Central Government in
consultation with such organisations of employees as may be recognised for the
purpose, by the Central Government.
(h) Two persons representing the medical profession to be appointed by the Central
Government in consultation with such organisations of medical practitioners as may
be recognised for the purpose by the Central Government.
(i) Two members of the House of the People (Lok Sabha) elected by the members of
that House, and one member of the Council of State (Rajya Sabha) elected by the
members of that house.
(j) The Director General of the Corporation shall be ex-officio member of the
Corporation.
Section 8. Constitution of Standing Committee : The Standing Committee shall be
constituted from amongst the members of the Corporation. It shall consist of the following
office bearers–
(1) The following members and office-bearers shall be appointed by the Central
Government–
(a) Chairman,
(b) Three members of the Corporation,
(2) Three members of the Corporation representing such three State Governments as the
Central Government may, by notification in the official Gazette, specify from time to
time.
(3) The Director-General of the Corporation shall be ex-officio member of the Standing
Committee.
(4) The following eight members shall be elected by the Corporation–
(a) three members from among the members of the Corporation representing the
employers;
(b) three members from among the members of the Corporation representing the
employees ;
(c) one member from among the members of the Corporation representing the
medical profession, and
(d) one member from among the members of the Corporation elected by the
Parliament.
Section 9. Terms of office of members of Standing Committee : The Chairman, three

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members of the Corporation appointed by the Central Government and three members of the
Corporation representing States shall hold office during the pleasure of the Central
Government. All the eight members elected by the Corporation shall hold office for a period of
two years from the date on which their election is notified.
Section 10. Medical Benefit Council : Section 10 of the Act provides for the constitution of
a Medical Benefit Council by the Central Government. The Medical Benefit Council shall
consist of the following members and office-bearers–
1. The Director General Health Services shall be ex-officio Chairman.
2. The Medical Commissioner of the Corporation shall be ex-officio member of the
Council.
3. The following appointments shall be made by the Central Government to the Medical
Benefit Council–
i. A Deputy Director-General, Health Services.
ii. Three members representing employers to be appointed in consultation with
such organizations of employers as may be recognized for the purpose by the
Central Government.
iii. Three members representing employees to be appointed in consultation with
such organizations of employees as may be recognized for the purpose by the
Central Government.
iv. Three members representing the medical profession to be appointed in
consultation with such organizations of medical practitioners as may be
recognized for the purpose, by the Central Government. No less than one of
these members shall be a woman.
4. One representative from every State, other than the Union Territories, in which this
Act is in force shall be appointed by the State Government concerned.
Tenure of the members of the Medical Benefit Council : According to Section 10(2) the
representatives of employers, employees and medical profession in the Medical Benefit
Council, shall hold office for a period of four years from the date on which their appointment is
notified.
Section 16. Principal Officers :
1. The Central Government may, in consultation with the Corporation, appoint a Director
General and a Financial Commissioner.
2. The Director General shall be the Chief Executive Officer of the Corporation.
3. The Director General and the Financial Commissioner shall be whole time Officers of
the Corporation and shall not undertake any work unconnected with their office
without the sanction of the Central Government and the Corporation.
4. The Director General or the Financial Commissioner shall hold office for such period,
not exceeding five years, as may be specified in the order appointing him.
5. Director General or Financial Commissioner shall receive such salary and allowances
as may be prescribed by the Central Government.
6. A person shall be disqualified from being appointed as or for being Director General
or the Financial Commissioner if he is subject to any of the disqualification specified
in Section 13.
7. The Central Government may at any time, remove the Director General or the
Financial Commissioner from office and shall do so if such removal is recommended
by a resolution of the Corporation passed at a special meeting called for the purpose

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 and supported by the votes of not less than two-thirds of the total strength of the
Corporation.
Section 18. Powers of the Standing Committee : The Standing Committee is constituted to
administer the affairs of the Corporation. It has to function in accordance with the regulations
framed by the Corporation. Its work and activities are controlled and supervised by the
Corporation. It has following powers–
1. Power of administration of the Corporation, subject to the general superintendence
and control of the Corporation.
2. Subject to the general control of the Corporation it may exercise any of the powers
and perform any of the function of the Corporation.
3. It shall submit for consideration and decision of the Corporation all such cases and
matters as may in its discretion, submit any other case or matter for the decision of
the Corporation.
Section 22. Duties of Medical Benefit Council : The Medical Benefit Council shall advise
the Corporation and the Standing Committee on matters relating to the administration of
medical benefit, the certification for purposes of the grant of benefits and other connected
matters.
The Medical Benefit Council shall have such powers and perform such duties of investigation
as may be prescribed in relation to complaints against medical practitioners in connection
with medical treatment and attendance.
The Medical Benefit Council shall perform such other duties in connection with medical
treatment and attendance as may be specified in regulations.
FINANCE AND AUDIT
Section 26. Employees' State Insurance Fund : All contributions paid under the
employees' State Insurance Act and all other moneys received on behalf of the Corporation
shall be paid into the Employees' State Insurance Fund. The Employees' State Insurance
Fund shall be held and administered by the Corporation for the purposes of this Act.
According to sub-section (2) the Corporation may accept grants, donations, and gifts from the
Central or any State Government, local authority, or any individual or body whether
incorporated or not, for all or any of the purposes of this Act.
All moneys accruing or payable to the Employees' State Insurance Fund shall be paid into
the Reserve Bank of India or such other bank as may be approved by the Central
Government.
CONTRIBUTIONS
Section 38. All Employees to be insured : All employees in factories or establishments
shall be insured in the manner provided by this Act. For an employee to be insured two
conditions are provided: namely (i) he must be employed in a factory or an establishment and
(ii) contributions must be either paid or payable to him under the Act.
Section 39. Contribution : The contribution payable under this Act in respect of an
employee shall comprise the contribution partly paid by the employer and partly by the
employee. The contribution payable by the employer is known as employer's contribution and
that by the employee is known as the employee's contribution. The contributions shall be paid
at such rates as may be prescribed by the Central Government Provided that the rates so
prescribed shall not be more than the rates which were in force immediately before the
commencement of the Employees' State Insurance (Amendment) Act, 1989.
Section 40. Principal employer to pay the contribution in first instance : Section 40 of
the Act makes the employers responsible to pay the contribution in respect of all employees,
whether employed by him directly or by or through an immediate employer. The contribution

- 38 -
to be paid by the employer includes both the employer's as well as employee's contribution
from the wages payable to the employee if–
(i) the employee is not an exempted employee; and
(ii) the employee is directly employed by him.
The employer's right to deduct the employee's contribution from his wages is subject to the.
provisions of the Act and regulations and also subject to the following conditions–
(i) the deduction shall be made from wages for that period or part of the period in
respect of which the contribution is payable; and
(ii) no deduction, in excess of the sum representing the employee's contribution for the
period shall be made.
BENEFITS
Section 46. Benefits : The purpose of the Employees' State Insurance Act is to provide
benefits as detailed in the Act particularly in Section 46, to the insured persons or their
dependants. The following benefits are provided under Section 46.
1. Sickness benefit : It is in the form of periodical payment to any insured person,
provided his sickness is certified by a duly appointed medical practitioner, or any
person having such qualifications and experience as may be specified by regulations
of the Corporation. Where provision is made for sick leave by standing order, the
employer cannot require the employee to seek sickness benefit provided under this
sub-section
2. Maternity Benefit : This benefit in the form of periodical payment available to an
insured woman. It is payable in case of–
(i) confinement; or
(ii) miscarriage; or
(iii) sickness arising out of pregnancy; or
(iv) premature birth of a child.
The grounds of eligibility of an insured woman to such payments must be certified by
an Insurance Medical Officer as provided by the regulations .
3. Disablement benefit : Any insured person shall be entitled to periodical payments if–
(i) he suffers from disablement;
(ii) the disablement results from an employment injury; and
(iii) he sustained the employment injury as an employee under condition
mentioned in the Act.
The disablement benefit is payable only when the· injury is duly certified by an
Insurance Medical Officer.
4. Dependents benefit : This benefit is available to such dependents, of an insured
person who dies as a result of an employment injury sustained as an employee, as
are entitled to compensation under this Act.
5. Medical benefit : Medical benefit is available to an injured person or to a member of
his family, were such benefit is extended to the members of his family. This benefit is
in the following forms–
(i) out-patient treatment and attachment in the hospital or dispensary; or
(ii) by visits of the home of the insured; or

- 39 -
 (iii) as an in-patient in a hospital or other institution.
6. Funeral expenses : Funeral expenses are payable to the eldest surviving member of
the family or to such person who actually incurs funeral expenses. The amount of
such payment shall not exceed such amounts as may be prescribed by the Central
Government. Any claim for the funeral expenses must be made within three months of
the death of the insured person or within such extended period as the Corporation or
any other competent official may allow.
Section 49. Sickness benefit : The qualification of a person to claim sickness benefit, the
conditions subject to which such benefit may 'be given, the rates and period thereof shall be
such as may be prescribed by the Central Government.
An award of seven days' sick leave on production of a medical certificate in addition to the
benefits under the Employees' State Insurance Act was held justified by the Supreme Court.
The sickness benefit shall be paid at the rates specified in the First Schedule.
Section 50. Maternity benefit : The qualification of an insured woman to claim maternity
benefit, the conditions subject to which such benefit may be given, the rates and period
thereof shall be such as may be prescribed by the Central Government.
Section 51. Disablement benefit : Subject to the provisions of this Act a person who
sustains temporary disablement for not less than three days (excluding the day of accident)
shall be entitled to periodical payment at such rates and for such period and subject to such
conditions as may be prescribed by the Central Government.
Section 51(a). Presumption as to accident arising in course of employment : Section
51A provides that if it is shown that the accident arose in the course of employment of an
insured person, it would be presumed also to have arisen out of employment. But the
presumption is a rebut table one and applied to this Act only.
Section 51(b). Accident happening while acting in breach of regulations : Section 51B
of the Act provides an explanation to the expression "out of and in the course of
employment". An accident shall be deemed to arise out of and in the course of employment if
the act is done for the purpose of and in connection with employer's trade or business
unless–
(i) the insured person is at the time of accident acting in contravention of the
provisions of any law applicable to him; or
(ii) the insured person is acting in contravention of any orders given by or on behalf of
his employer; or
(iii) he is acting with instructions from his employer:
Section 51(c). Accident happening while travelling in employer's transport : Section 51-
C of the Act incorporates the principle of notional extension of employer's premises. This
section lays down the liability of the employer for the payment of benefit for accident arising
while an employee is traveling in any transport provided by the employer while going to or
coming from work. The conditions for holding the employer liable are the following–
(i) an insured person must be traveling by any vehicle with the express or implied
permission of his employer;
(ii) he must be going to or coming from his place of work;
(iii) the vehicle must be operated by or on behalf of his employer or some other person in
pursuance of an agreement made with the employer;
(iv) the vehicle is not being operated in the ordinary course of public transport service.
Section 52. Dependant's benefit :
(l) If any insured person dies as a result of an employment injury sustained as an

- 40 -
 employee under this Act (whether or not he was in receipt of any periodical payment
for temporary disablement in respect of the injury) dependant's benefit shall be
payable at such rates and for such periods and subject to such conditions as may be
prescribed by Central Government to his dependants specified in sub-clause (i), sub-
clause (i-a) and sub-Clause (ii) of clause (6-A) of Section 2.
(2) In case the insured person dies without leaving behind him the dependants as
aforesaid, the dependant's benefit shall be paid to the other dependants of the
deceased at such rates and for such period and subject to such conditions as may be
prescribed by the Central Government.
Section 52(a). Occupational Disease : The expression "occupational disease" has nowhere
been defined in the Act, but a list of these diseases along with the employments peculiar to
them is given in the third schedule of the Act. Any employee who contracts any such
occupational disease while working in any of these employments shall be deemed to have
extracted an employment injury. The third schedule is divided into three parts. For
occupational disease mentioned in Part A no period of employment is necessary; but in case
of any disease mentioned in Part B of Schedule III, the insured person must have served in
the employment peculiar to that disease for a period of not less than 6 months. The
provisions of section 51-A shall not apply to the case to which section 52-A applies.
ADJUDICATION OF DISPUTES AND CLAIMS
Section 74. Constitution of Employees' Insurance Court : Section 74 of the Act
authorizes the State Government to constitute an Employees' Insurance Court. The
Insurance Court shall be constituted by issuing a notification in the Official Gazette.
The local area within which the Court shall, exercise its jurisdiction will be specified in the
notification. The number of Judges, as shall constitute the Court, shall be determined by the
State Government. A judicial officer or a legal practitioner of five years' standing is qualified
for the appointment as a Judge of the Employees' Insurance Court. The State Government
may appoint the same Court for two or more local areas, or two or more Courts for the same
local area. Where there are more than one Court in the same local area, the distribution of
work amongst them may be regulated by general or special order of the State Government.
Section 75. Matter to be decided by Employees' Insurance Court : Any question or
dispute subject to the provisions of sub-section (2-A) relating to the following matters shall be
decided by the Employee's Insurance Court–
(1) whether any person is an employee or is liable to pay the employee's contribution; or
(2) the rate of wages of average daily wages for the purpose of this Act; or
(3) the rate of contribution payable by the principal employer in respect of any employee;
or
(4) the person who is or was the principal employer in respect of any employee; or
(5) the right of any person to any benefit and the amount arid duration or that benefit;
(6) the direction issued by the Corporation under Section 55-A on a review of any
payment of dependant's benefits; or
(7) any other matter which is in dispute between–
(i) a principal employer and the Corporation; or
(ii) a principal employer and an immediate employer; or (iii) a person and the
Corporation; or
(iv) an employee and a principal or immediate employer.
The dispute between the above parties may be in respect of–

- 41 -
 (i) any contribution, benefit or other dues payable or recoverable under this Act;
(ii) any other matter required to be or which may be decided by the Employees'
Insurance Court under this Act.
The Employees' Insurance Court shall have the powers of a Civil Court for the following
purposes–
(i) summoning and enforcing the attendance of a witness;
(ii) compelling the discovery and production of documents and material objects;
(iii) administering oath and recording evidence.
Section 78. Power of Employees' Insurance Court : The Employees' Insurance Court shall
be deemed to be a Civil Court within the meaning of Section 195 of the Criminal Procedure
Code. It shall follow the procedure prescribed by rules made by the State Government. That
means, it is not necessary that the same set of rules should be followed by Employees'
Insurance Court in different States. If there are no statutory rules prescribing the procedure
the Court will follow the rule of natural justice.
All costs incidental to any proceeding before such Court shall, subject to the rules made by
the State Government, be in the discretion of the Court. The Court has power to allow cost
incidental to proceedings. Any order of the Employees' Insurance Court shall have the
sanctity of a decree passed by a Civil Court. In other words, it shall be enforceable in the
same manner is a decree passed in a suit by a Civil Court.
Section 79. Appearance by Legal Practitioner : The following parties can appear on behalf
of any person before the Employees' Insurance Court–
(i) a legal practitioner;
(ii) an officer of registered Trade Union, authorised in writing by such person; or
(iii) any person authorised in writing with the permission of the Court.
But where a person is required to appear before such Court for the purpose of his
examination as a witness, he shall appear personally, and in all other cases he may be
represented by any of the parties as stated above.
Section 81. Reference to High Court : Section 81 of the Act authorises the Employees'
Insurance Court to submit any question of law for the decision of the High Court. Whenever
any such reference is made, the matter involving the determination of such question of law
shall be kept pending before the Court. When the question of law is considered and decided
by the High Court the decision shall be communicated to the Court making such reference,
which shall decide that matter in conformity with the decision of ;the High Court.
Section 82 Appeal Clause (1) of Section 82, of the Act provides that there shall be no right of
appeal from an order of an Employees' Insurance Court except where appeal is allowed
under this section. The right of appeal is normally creature of a statute. There is no inherent
right of appeal. Therefore an appeal lies only when a provision to that effect is expressly
made in a statute. Under this section an appeal shall lie to the High Court from any decision
of the Employees' Insurance Court if it involves a substantial question of law. No appeal can
be entertained under Section 82(2) on a pure question of fact. The period of limitation for an
appeal is sixty days. It is further provided that the provisions of Sections 5 and 12 of the
Limitation Act, 1963 shall apply to appeals under Section 82 of the Act.
Appeal to Supreme Court : Article 136 of the Constitution empowers the Supreme Court to
grant special' leave to appeal from any judgment decree, determination, sentence or order on
any cause or matter passed or made by any Court or Tribunal in the territory of India.
Decisions of Employees State Insurance .Court are in certain cases appealable to the High
Court. But there is no provision for appeal from the decisions of special Tribunal constituted
under Section 73-B of the Act. Similarly the appropriate Government may in suitable cases

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exempt a particular person or class of persons and a factory or establishment from the
operation of this Act. The special Tribunal, constituted under Section 73-B and any
Government doing an act in the exercise- of powers conferred by Sections 87 and 88 of the
Act is a Tribunal. The Supreme Court can grant special leave to appeal from any such
decision.
Section 83. Stay of payment pending appeal : The provision to withhold the payment of
compensation under Section 83 pending an appeal is very limited. If the Corporation has
appealed against an order of the Employees' Insurance Court that court has a discretion to
withhold the payment of compensation directed to be paid by the order appealed against. But
if the High Court before which any such appeal is pending directs the Employees' Insurance
Court to withhold the payment of compensation that court shall have to comply with the order
because no discretion is conferred in that case. Thus the High Court may pass any interim
order that it thinks proper to meet the ends of justice, pending the decision of appeal.
IMPORTANT QUESTIONS
1. Discuss the medical benefits available to an employee under the Employees' State
Insurance Act, 1948.
2. Discuss the provisions of the Industrial Employment (Standing Orders) Act, 1946
relating to the certification of standing orders.
3. What is 'Model Standing Order'?
4. Discuss the medical benefits available to an employee under the employee's State
Insurance Act, 1948.
5. What is the procedure for certification of standing orders?
6. Explain the objects of Industrial Employment (Standing Orders) Act, 1946.
7. When Industrial Employment (Standing Orders) Act, 1946 does not apply?
8. Explain 'Week' under the provisions of Employee's State Insurance Act, 1948.
RECOMMENDED READINGS
1. "Labour and Industrial Laws", Dr. V.G. Goswami.
2. "Labour and Industrial Laws", S.N. Misra.
3. The Social Security System in India, 1972.
4. Encyclopedia Americana, Vol. 25 p. 186.

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 UNIT – III
THE PAYMENT OF WAGES ACT, 1936

INTRODUCTION
The need to protect the wages earned by the worker had been felt from the early years of the
twentieth century, but it was as early as 1925 that a Private Bill called the "Weekly Payment
Bill" was for the first time introduced in the Legislative Assembly. At that time different periods
of payment of wages were prevalent. An attempt was made to remedy some of the evils viz.,
delay in payment of wages, non-payment of wages, deductions made from wages on account
of fines imposed by the employer etc. The Bill was, however, withdrawn on an assurance of
the Government that the matter was under consideration of the Government. Imposition of
fines by employers on workers and deduction of even double the amount of wages for
absence period by way of fine was very much customary in those days. The desirability of
regulating the extent of fines and other deductions, through legislation was felt by the
Government in 1926.
The Royal Commission on Labour in India made some valuable recommendations.
The present Act is mostly based on those recommendations. The Commission was of the
opinion that legislation regarding deductions from wages and fines was essential.
The following recommendations are worth citing–
(i) If Children should be exempt from fine.
(ii) The minimum amount which could be deducted by way of fine should not exceed in
any month half an anna in the rupee of the worker's earnings.
(iii) The sum realised as fine should be utilised for some purpose beneficial to the
employees as a class and should be approved by some recognised authority.
(iv) A notice specifying the acts and omissions in respect of which fines may be imposed
should be posted and any other fine should be deemed to be illegal
(v) Any deduction made for goods having been damaged should not exceed the
wholesale price of the goods damaged.
(vi) Deductions may be made on account of provision for housing accommodation and of
tools and raw materials.
(vii) Imposition of any fine and deduction made which is not permitted by law should be
made penal.
A Bill of Payment of Wages Act, based on the recommendations of the Royal Commission on
Labour was introduced in the Legislative Assembly in 1933 but could not take the shape of
the Act because of the dissolution of the Assembly. The Payment of Wages Act was passed
in 1936 and came into force on 21st March, 1937.
OBJECT
The preamble of the Act states that the object of the Act is "to regulate the payment of wages
to certain classes of employed persons." The regulation contemplated by the Act is twofold:
first the date of payment of wages and secondly the deductions from wages whether as fine
or otherwise. To ensure payment of wages to persons covered by the Act certain provisions
have been made in this Act.
Any deduction from the wages or salaries of the workmen governed by the Payment of
Wages Act, unless authorised by the Act shall be deemed to be illegal. Any deduction from
the wages of the workmen, under a settlement between representative Union and employer

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can, however, permit a deduction as' it is the outcome of an understanding between the
parties even though such deduction may. not be authorised or legally permissible under the
Act.
Section 1. Application : The Payment of Wages Act, 1936 extends to the whole of India. It
came into operation on 21st March, 1937.
According to sub-section (4) this Act applies in the first instance to the payment of wages to :
(i) persons employed in any factory;
(ii) persons employed (otherwise than in factory) upon any railway by a railway
administration, or either directly or, through a sub-contractor, by a person fulfilling a
contract with a railway administration; and
(iii) persons employed in an industrial or other establishment specified in sub-clauses (a)
to (g) of clause (ii) of Section 2 of this Act.
Sub-section (5) empowers the State Government to extend the application of the whole or
part of the Act to payment of wages to any class of persons employed in the establishment or
class of establishments specified by the Central Government or a State Government under
sub-clause (h) of clause (ii) of Section 2.
Section 2(vi). Wages : 'Wages' means all remuneration, whether by way of salaries,
allowances or otherwise, expressed in terms of money or capable of being so expressed
which would, if the terms of employment, express or implied were fulfilled, be payable to a
person employed in respect of his employment or of work done in such employment.
'Wages' includes–
(a) any remuneration payable under any award or settlement between the parties or
order of a Court;
(b) any remuneration to which the person employed is entitled in respect -of overtime
work or holidays or any leave period;
(c) any additional remuneration payable under the terms of employment whether called a
bonus or by any other name.
AUTHORITIES UNDER THE ACT
Section 14. Inspectors : Section 14 of the Act makes provision for three kinds of Inspectors
which are as follows–
(1) An Inspector of factories appointed under Section 8(1) of the Factories Act shall be an
Inspector for the purposes of this Act in respect of all factories within the local limits
assigned to him.
(2) In respect of all persons employed upon a railway otherwise than in a factory, to
whom this Act applies, the State Government is empowered to appoint Inspector for
the purposes of this Act.
(3) The State Government is further empowered to appoint such other persons, as it
thinks fit, as Inspectors for the purposes of this Act in respect of persons employed in
case of factories and industrial or other establishment as specified by such
Government by a Gazette notification. The State Government shall also define the
local limits within which such inspectors shall exercise their functions.
Powers of the Inspectors : Section 14(4) lays down that an Inspector may–
(a) make such examination and inquiry as he thinks fit in order to ascertain whether the
provisions of this Act or rules made there under are being observed;
(b) enter, inspect and search any premises of any railway, factory or industrial or other
establishment at any reasonable time for the purposes of carrying out the objects of

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 this Act. They have power to take any assistance which they think necessary for any
of the above purposes;
(c) supervise the payment of wages to persons employed upon any railway or in any
factory or industrial or other establishment;
(d) require by a written order the production at such place, as may be prescribed, of any
register or record maintained in pursuance of this Act. He can also take on the spot or
otherwise statement of any persons which he considers necessary for carrying out the
purposes of this Act;
(e) seize or take copies of such registers or documents or portions thereof as he may
consider relevant in respect ,of an offence under this Act which he has reason to
believe has been committed by an employer; and
(f) exercise such other powers as may be prescribed.
But according to sub-section (4) of Section 14 no person shall be compelled to answer any
question or make any statement tending to incriminate himself. The provisions of the Code of
Criminal Procedure, 1973 shall, so far as may be, apply to any search or seizure under this
sub-section. as they apply to any search or seizure made under the authority or a warrant
issued under Section 94 of the said Code. Every' Inspector shall be deemed to be public
servant within the meaning of the Indian Penal Code 1860.
The State Government is further empowered to appoint more than one authority for the same
specified area, and where it so appoints it shall, by general or special order, provide for the
distribution or allocation of work to be performed by them under this Act.
MEANING OF DEDUCTION
In Union of India v. Kameshwar Dubey and others5, the point for consideration by the Court
was the difference between "deducted wage" and "delayed wage". It was held that the
difference depends upon the intention of the employer. If his intention is to deny the liability to
pay the wages or to deny the right of the workmen to receive the same, it would be a case of
"wages deducted". But if the employer concedes the liability to pay and does not dispute the
workman's right to the same, it would be a case of "delayed payment". The word "deduction"
in Section 15 of the Payment of Wages Act is used in a wider sense. It means "to take away"
or denying the liability to pay wages. It includes withholding of wages by the employer
whether partially or wholly.
Presentation of application : An application in respect of the following claim can1be" made
to the Authority mentioned in Section 15(2)–
(i) where contrary to the provisions of this Act any deduction has been made from the
wages of an employed person; or
(ii) where contrary to the provisions of this Act, any payment of wages has been delayed,
an application may be made by anyone of the following–
(a) employed person himself; or
(b) any legal practitioner authorised in writing to act on his behalf; or
(c) any official of a Registered Trade Union authorised in writing to act on his
behalf; or
(d) any Inspector under this Act; or
(e) any oth]er person acting with the permission of the authority appointed to hear
such claims under Section 15(1).

5
(1988) II L.L.J. 302 (Delhi)

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Section 15(3).

PROCEDURE

Lays down the procedure to be followed by the Authority entertaining an application under
Section 15(2). The Authority shall hear the applicant and the employer or other persons
responsible for payment of wages under Section 3. Thus after giving them an opportunity of
being heard and after such further inquiry as may be necessary, the Authority may direct the
refund to the employed person, of the amount deducted or the payment of the delayed
wages. The authority may also direct payment of such compensation as it thinks fit but not
exceeding ten times the amount of wages deducted and in case of delay in payment of
wages, not exceeding twenty-five rupees. In case where the amount deducted or the wages
delayed are paid before the disposal of the application, the Authority can direct the payment
of such compensation as it may think fit but not exceeding twenty-five rupees. Any other
penalty to which the employer or the other person responsible for delay or deduction is liable
under this Act may be also imposed. That is, the direction under sub-section (3) of Section 15
does not prejudice any other penalty to which the employer or other person is liable under
this Act.
But no direction for the payment of compensation shall be made in the case of delayed
wages if the Authority is satisfied that the delay was due to-
(a) bona fide error or bona fide dispute as to amount payable to the employed person; or
(b) the occurrence of an emergency, or the existence of exceptional circumstances such
that the person responsible for the payment of wages was unable, though exercising
reasonable diligence, to make prompt payment; or
(c) the failure of the employed person to apply for, or accept payment.
Section 15.
SCOPE OF JURISDICTION
The scope of jurisdiction which the Authority under Section 15 exercises in deciding claims is
limited. Where complicated questions of fact or law are raised and a prolonged inquiry
becomes necessary, the Payment of Wages Authority would have no jurisdiction to the claim
before it.
THE TRADE UNIONS ACT, 1926
HISTORY OF TRADE UNIONISM IN INDIA
The germs of trade unionism in India can be traced back to the year 1890, when for the first
time an association of mill workers was formed in the name and style of 'Bombay Millhands
Association'. This association was formed for the redressal of grievances of the Bombay mill
workers. It is difficult to treat this association as Trade Union in the strict sense in which this
expression is used now-a-days. Very little account is available about its mode of working.
After the first world war was over the cost of living considerably increased. The political
agitation against foreign rule was also gaining momentum throughout the country. The
increase in cost of living and country-wide political upsurge found its way in economic
discontent amongst masses, particularly in industries. The industrial unrest and economic
discontent led to a number of strikes by workers, guided and controlled by their Action
Committees consisting 'of representatives of workers themselves. On many occasions these
strikes were successful in getting the demands of the workers fulfilled. The Trade Union
movement in India got impetus by the success of strikes in India and the world-wide uprising
of labour consciousness. The establishment of International Labour Organisation has also
influenced the growth to the trade union movement in our country.
The progress of the trade union movement in India in pre-independence days has not been
very satisfactory, but the post-independence has been a tremendous Trade Union activity in

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every sphere of industry.
DEVELOPMENT OF TRADE UNION LAW IN INDIA
After independence democratic spirit is gradually developing among the Indian citizens and
the workmen in industry are not an exception to it. It was in the year 1920 that the High Court
of Madras in a suit filed against the officials of the Madras Textile Labour Union by Binny &
Co. granted an injunction restraining the Union Officials to induce certain workers to break
their contracts of employment by refusing to return to work. Obviously the leaders of the
Trade Union found themselves liable to prosecution and imprisonment even for bona fide,
trade union activities. It was then that they felt that some legislative protection of Trade Union
was necessary. Mr. N.M. Joshi, the then General Secretary of All India Trade Union
Congress, successfully moved a resolution in the Central Legislative Assembly seeking
introduction of some measure by the Government for protection of Trade Unions. The
employers were so much opposed to any such legislative measure being adopted that the
passing of the Indian Trade Union Act could only be possible in 1926. But this Act was
enforced only from 1st June, 1927. The contribution of the capital and labour in any industry
is equally important.
Therefore, the prosperity of an industry depends upon the co-operation of its two
components-the capital and the labour. As disputes between the capital and the labour are
inevitable so the object of any industrial legislation is to ensure smooth relationship between
the two and to strive for settlement of any dispute by resorting to negotiation and conciliation.
The importance of the Trade. Unions lies in the fact that they encourage such collective
bargaining as ensures better terms and conditions of employment to the labour, and at the
same time endeavours for maintenance of good relations between employer and employees.
In their endeavour to secure better working conditions, privileges and amenities to the labour,
the Trade Unions adopt certain methods, namely, legislation, collective bargaining, mutual
insurance, and strike. The method of mutual insurance is almost unknown to Trade Unions in
India.
The original Act of 1926 was amended in 1929 so as to provide for the procedure of appeal
against the decisions of the Registrar. When the Registrar refused to register a Trade Union
or when the registration was withdrawn, an appeal could be preferred against any such
decision of the Registrar.
The Royal Commission on Labour, after examining the working of the Act made the following
recommendations–
(1) The Act was to be re-examined within 3 years. The limitations imposed upon the
activities of the Trade Unions and their office-bearers were .to be reconsidered. It
should be ensured that a bona fide Trade Union is not deprived of applying for
registration.
(2) The accounts of the Trade Union should be audited free of charge by Government
officers.
(3) At least two-third members of the executive of a Trade Union should be persons
actually engaged or employed in industry to which the union relates.
(4) Trade Unions should not be deprived of carrying on co-operative societies.
The original Trade Unions Act of 1926 made provisions in respect of–
(i) Conditions governing the registered Trade Unions.
(ii) Obligations imposed upon a registered Trade Union.
(iii) Rights and privileges of a registered Trade Union.
Under the original Trade Unions Act of 1926, where the object of a Trade Union was not
confined to one State the appropriate Government was the Central Government and the

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powers of the provincial Governments in respect of such Unions were by the Government of
India (Adaptation of Indian Laws) Order, 1937 vested in the Central Government. But after
the first Labour Ministers' Conference held in January 1940, the powers in respect of a Union
whose object was not confined to one State were to be exercised by the Government of that
province where the registered office of the Union was situated.
Indian Trade Union (Amendment) Act, 1947 : The Indian Trade Unions Act, 1926 made
provision for registration of a Trade Union after fulfilling the requisite conditions but the
employer was under no obligation either to recognise or to deal with a Trade Union even if it
was a registered one. The Royal Commission on Labour pleaded for recognition of
representative Trade Unions in spirit as well as in the letter. The matter was repeatedly
discussed in various Labour Minister's Conferences and Standing Committees.
Consequently, the Act was amended in the year 1947 providing for compulsory recognition
by employers of representative Trade Unions.
Individual Dispute and Trade Dispute : As observed by the Supreme Court, an individual
dispute cannot per se be a trade dispute unless the cause is sponsored by a Trade Union or
by a substantial number of workmen. It is not necessary that it should be supported by all or
majority of the workmen, but it should have the support of substantial section of workmen of
the establishment. It is not the arithmetical majority of the workmen but the substantiality of
their number taking up the cause, which is to be considered. It does not matter that the
dispute is not raised by a majority of the workmen. An industrial dispute may be raised by a
group of workmen who may not represent all or even the majority of workmen, and if the
dispute is referred to the Industrial Tribunal for adjudication and an award is made, it binds
not only the parties to the dispute, or other parties summoned to appear but all persons who
were employed in the establishment, or who would be employed in future are also governed
by the award.
Employment and non-employment : The use of the expression "employment or non-
employment" in the Act makes it clear that the dispute may be connected with the workman
in employment or out of employment. That means a dispute connected with a dismissed,
discharged, removed or retrenched employee is a Trade Dispute. It has been observed by
the Federal Court that reinstatement is connected with non-employment and is, therefore,
within the words of the definition. So also, a claim for compensation for wrongful dismissal
being connected with the question of non-employment is a Trade Dispute.
Workman : The latter part of section 2 (g) of this Act defines "workmen" as follows:
"Workmen" means all persons employed in trade or industry whether or not in the
employment of the employer with whom the Trade Dispute arises. This definition has two
ingredients–
(1) "Workmen" means all persons employed in trade or industry.
(2) It is immaterial that the persons employed in a trade or industry are not in the
employment of the employer with whom the Trade Dispute arises.
TRADE UNION
Section 2, (h) defines "Trade Union" which can be analysed into the following ingredients:
(1) Any combination whether temporary or permanent;
(2) The combination should have been formed for the purposes of–
(a) regulating the relations between:
(i) workmen and employers; or
(ii) workmen and workmen; or
(iii) employers and employers.

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 (b) imposing restrictive conditions on the conduct of any trade or business. But
this Act shall not affect–
(i) any agreement between partners as to their business; or
(ii) any agreement between an employer and those employed by him as to
such employment;
(iii) any agreement inconsideration of the sale of the goodwill of a business
or instruction in any profession, trade or handicraft.
A Trade Union is a continuous association of wage earners for the purpose of maintaining the
conditions of their lives. But the statutory definition given in the Trade Unions Act, 1926 uses
the expression 'combination' instead of 'association' used in Sydney's definition. The word
'combination' carries a very wide meaning. Whatever may be the 'combination' if it is for one
or the other of the statutory objects as provided in this Act) it is Trade Union. It is the primary
object of an association which determines its nature. A society consisted of authors,
publishers and other owners of copyright and was formed for the protection of copyright in
music and songs. There were also certain rules which could be regarded as imposing certain
restrictions on the trade of the individual music publishers who became members of the
association. The society was held by the House of Lords to be not a Trade Union because
the principal object of the society was the protection of the copyright. It was further held that,
to come within the statutory definition, restrictive conditions imposed must be in respect of
trade or business in general and imposition of such conditions on particular members of a
trade or business will not suffice. Tamil Nadu N.G.O. Union included among its members
Sub-Magistrates of the Judiciary, Tahsildars, officers incharge of Treasuries and Sub-
Treasuries, officers of Civil Court establishment, and the Home-Department of Government.
Their union could not be recognised as a Trade Union for these persons were civil servants
engaged in the task of the sovereign and regal aspects of the Government which were its
inalienable functions.
Section 9(a). Minimum requirement about membership of a Trade Union : A registered
of Union and workmen shall at all times continue to have not less than ten per cent. or one
hundred of the workmen, whichever is less, subject to a minimum of seven, engaged or
employed in an establishment or industry with which it is connected, as its members.
Section 10.
CANCELLATION OF REGISTRATION
Power to withdraw or cancel registration of a Trade Union is given to the Registrar. The
Registrar can exercise his power in the following cases–
(1) On the application of the Trade Union to be verified in the prescribed manner.
(2) If the Registrar is satisfied that the certificate of registration has been obtained by
fraud or mistake.
(3) Where the Trade Union has ceased to exist.
(4) If the Union has willfully and after notice from the Registrar contravened any
provisions of this Actor allowed any rule to continue in force which is inconsistent with
the provisions of the Act.
(5) Where the Union has rescinded any rule providing for any matter provision for which
is required to be made by section 6.
(6) According to clause (c) of Section 10 if the Registrar is satisfied that a registered
Trade Union of workmen ceases to have the requisite number of members, the
registration can be cancelled.
The Registrar on receiving an application from the Union for withdrawal or cancellation of
registration must· before granting the prayer, satisfy himself that the withdrawal or

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cancellation of registration was approved by. a general meeting of the Trade Union or if it was
not so approved it had the approval of the majority of the members of the Trade Union. For
this purpose he may call for such further particulars as he thinks necessary and may also
examine any officer of the Union.
COLLECTIVE BARGAINING AND TRADE DISPUTES
An individual is free to bargain for himself and safeguard his own interest. If an individual
workman seeks employment he stands in a weaker position before his master, who having
command over wealth stands in better position to dictate his own terms and the individual has
to accept the offer without any reserves for he has to earn something to feed his family.
However the position becomes different if a bargain is made by a body or association of
workmen. They can negotiate and settle their terms with the employer in a better way and
secure better wages, better terms of employment .and greater security. The object of
collective bargaining is to harmonise labour relations, promote industrial peace by creating
equality of bargaining power between the labour and the capital. Collective bargaining can
exist only in an atmosphere of political freedom. Any conditions of service like, wages, hours
of work, leave, gratuity, bonus, allowances and other like privileges can all be settled by
negotiation between the body of workmen and employer. Thus "collective bargaining" is that
arrangement whereby the wages and conditions of employment of workmen are settled
through a bargain between the employer and the workmen collectively whether represented
through their Union or by some of them on behalf of all of them.
The Encyclopedia of social sciences treats collective bargaining as a process of discussion
and negotiation between two parties, one or both of whom is a group of persons acting in
concert more specifically it is the procedure by which an employer or employers and a group
of employees agree upon the conditions of work. Ludwig Teller defines collective bargaining
as an agreement between a single employer or an association of employers on the one hand
and a labour Union on the other, which regulates the terms and conditions of employment.
"The Encyclopedia Britannica", defines collective bargaining as "negotiation between an
employer or group of employers and a group of work people to reach agreement on working
conditions. If negotiations are between an employer and a group of his work people the
dependence of the work people on the employer for their job weakens their bargaining power,
and therefore collective, bargaining is more usually understood to be negotiation between
one or more Trade Unions and an 'employer or group or association of employers. Trade
Union organisation gives the work people greater strength to providing means for the expert
presentation of demands by skilled officials not dependent on the employers for their jobs.
Further a Union has funds and means of obtaining information outside any one undertaking
and can secure for the work people at anyone firm the support of their fellows in other firms."
Now a day collective bargaining has become a general feature in all industry. Any agreement
collectively arrived at is generally observed by both the employers and workmen who are not
a party to it. Of course the Trade Union movement in India has not been able to reach that
standard which its counterpart, in other developed countries could, yet it has done much.
Large concentration of economic power in the hands of the employer due to modern
technological development has placed individual in a weaker position in so far as contractual
bargaining relating to the terms and conditions of employment or settlement of disputes is
concerned. It was to protect the interest of individual labour against the capitalist employer
that the Trade Union movement gave birth to the principle of collective bargaining. The
principle of collective bargaining presupposes the right of workmen to be represented
collectively by a Trade Union. This right has received statutory recognition. A Trade Union
can raise or sponsor a trade dispute and represent on behalf of its members in legal
proceedings in consequence of an industrial dispute. But a Trade Union cannot represent a
workman who is not its member. It does not mean that the workman himself cannot, where a
Trade Union has right to represent his case, pursue or represent his own case in a legal
proceeding. Provisions of section 36 of the Industrial Disputes Act, 1947 are only permissive.

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A workman can either himself represent his case or his case can be sponsored and
represented by a Trade Union of which such workman is a member.
The rights of an unregistered Trade Union are different from a registered Trade Union. The
employer can negotiate with an unregistered Trade Union. The management will be bound to
recognize any Trade Union which has enrolled a majority of its employees as its member. A
Union whether registered or unregistered commanding allegiance of a majority of the
workmen has fl better claim to negotiate with the employer on behalf of its workmen in
preference to a registered Trade Union representing a minority of the workmen. To accept a
principle other than this would, in the opinion of the Madras High Court, give room for abuse
and lead to inconvenient results.
But an unregistered Trade Union is not competent to represent its member's interest in
proceedings initiated under the Industrial Disputes Act, 1947, because only an officer of a
registered Trade Union is entitled to represent its member's interest in any proceeding under
the Act. A worker who is a member of an unregistered Trade Union is entitled to be
represented by an officer of a registered Trade Union connected with, or by any other
workmanc employed in the industry in which such worker is employed, provided there is an
authorisation to represent in prescribed manner.
The process of collective agreements normally takes one or the other of the forms, namely,
negotiation, mediation and arbitration, voluntary or compulsory.
Negotiation is the process of settling the differences by face to face round table talks between
the representatives of the employees and employers. In case of failure of the negotiating
machinery to resolve the difference by mutual discussions and understanding, a third party
intervention to secure settlement of labour disputes by way of mediation is often resorted to.
The mediator functions not as a judge, but assists the parties in dispute to reach an
agreement by persuading them to resume or continue their bargaining efforts. Arbitration is
an act of settling labour disputes through the medium of a neutral third party. The parties to a
dispute may either agree amongst themselves to submit for settlement by a third person and
abide by his award or a dispute might be submitted to arbitrator under the provisions of a
statute. In the former case it is voluntary arbitration, in the latter it would be compulsory
arbitration. In case of voluntary arbitration the selection of arbitrator entirely rests with the
parties to the dispute. The award is binding on the parties and is also enforceable in the
courts.
IMPORTANT QUESTIONS
1. Under which provisions of Payment of Wages Act deductions are permissible?
2. Discuss the rights of Trade Union under Trade Unions Act.
3. Discuss the mode of registration of trade union. Can Registrar cancel the registration
certificate?
4. What are permissible deductions under the payment of Wages Act, 1936?
5. Explain the 'General Fund' of a Trade Union.
6. What are the rights and immunities which are available to a trade union under the
Trade Union Act, 1986?
7. When can registration of a trade union be withdrawn or cancelled? Can Registrar
refuse to register a trade Union? What remedy is available when registration is
refused or it is cancelled or withdrawn?
RECOMMENDED READINGS
1. "Labour and Industrial Laws", Dr. V.G. Goswami.
2. "Labour and Industrial Laws", S.N. Misra.

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3. "Industrial Labur in India", V.B. Singh.
4. Conventions and Recommendations, I.L.O. Veneva, 1949.

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 UNIT – IV
THE MINIMUM WAGES ACT, 1948

OBJECT OF THE ACT

The Minimum Wages act was passed for the welfare of labourers. This Act has been enacted
to secure the welfare of the workers in a competitive market by providing for a minimum limit
of wages in certain employments.
"The justification for statutory fixation of minimum wages is obvious. Such
provisions which exist in more advanced countries are even necessary in India,
where workers' organizations are yet poorly developed and the worker's
bargain-power is consequently poor."
The Act provides for fixation by the Central Government of minimum wages for employments
detailed in the Schedule of the Act and carried on by or under the authority of the Central
Government, by a railway administrative or in relation to a mine, oilfield or majorport, or any
corporation established by a Central Act, and by the State Government for other
employments covered by the Schedule of the Act.
SALIENT FEATURES OF THE ACT
Some of the features are–
1. This Act provides for the fixation of– (a) minimum time rate of wages; (b) a minimum
piece rate; (c) a guaranteed time rate; and (d) an overtime rate, for different
occupations, localities or classes of work and for adults, adolescents, children and
apprentices.
2. The minimum rate of wages under the Act may consist of: (a) a basic rate of wages
and a cost of living allowance; or (b) basic rate of wages with or without and a cost of
living allowance; or (b) basic rate of wages with or without the cost of living allowance
and the cash value of the concessions in respect of essential commodities supplied at
concessional rate; or (c) an all-inclusive rate.
3. The Act requires that wages shall be paid in cash, although it empowers the
appropriate Government to authorize the payment of minimum wages, either wholly or
partly in kind in particular cases.
4. It lays down that the cost of living allowance and the cash value of concessions in
respect of supplies of essential commodities at concessional rates shall be compute
by the competent authority at certain interval. In case of undertakings controlled by
the Union Territories and the Central Government, the Director, Labour Bureau is the
competent authority.
5. The Act empowers the appropriate Government to fix the number of hours of work per
day, to provide for a weekly holiday and the payment of overtime wages in regard to
any scheduled employment in respect of which minimum rates of wages have been
fixed under the Act.
6. The establishments covered by this Act are required to maintain registers and records
in the prescribed manner;
7. The Act also provides for appointment of Inspectors and authorities to hear and
decide claims arising out of payment of wages at less than the minimum rates of
wages or remuneration for days of rest or of work done on such days or of overtime
wages.
8. The provision is also made in the Act for dealing with complaints made for violation of

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 the provisions of the Act and for imposing penalties for offences committed under the
Act.
Section 2. Interpretation
(a) "Adolescent" means a person who has completed his fourteenth year of age but has
not completed his eighteenth year.
(aa) "Adult" means a person who has completed his eighteenth year of age.
(h) "Wages" 'Wages' means all remuneration, capable of being expressed in terms of
money, which would if the terms of the contract of employment, express of implied,
were fulfilled, be payable to person employed in respect of his employment or of work
done in such employment and includes house rent allowance.
Wages do not include–
1. the value of–
a. any house accommodation, supply of light, water, medical attendance; or
b. any other amenity or any service excluded by general or special order of the
appropriate Government;
2. any contribution paid by the employer to any Pension Fund or Provident Fund or
under any scheme of social insurance;
3. any traveling allowance or the value of any traveling concession;
Where a trip allowance was prescribed by a notification, the notification was held to
be invalid because trip allowance is meant to compensate the extra cost which an
employee is likely to incur when he moves out of his headquarter in connection with
his employment; it clearly partakes of the character of traveling allowance and
traveling allowance according to the definition of the expression "wages" cannot form
a component of the wages;
4. any sum paid to the person employed to defray special expenses entailed on him by
the nature of his employment;
5. any gratuity payable on discharge.
Wage-Structure : Broadly speaking the wage structure can be divided into three categories-
The basic 'minimum wage' which provides bare subsistence and is at poverty line-level, a
little above is the 'fair wage' and finally the 'living wages' which comes at a comfort level. It is
not possible to demarcate these levels of wage structure with any precision.
Minimum Wages : The expression "minimum wages" is not defined in the Act presumably
because it would not be possible to lay down a uniform minimum wages for all industries
throughout the country on account of different and varying conditions prevailing from industry
to industry and from one part of the country to another.
Components of a minimum wage : A minimum wage must provide not merely for the bare
subsistence of life but for some measure of education, medical requirements and amenities.
The concept of minimum wage does not mean a wage that enables the worker to cover his
bare physical need and keep himself just above starvation. The capacity of the employer to
pay is irrelevant in fixing minimum wage. Therefore, no addition shall be made to the
components of the minimum wage, which would take the minimum wage near the lower level
of the fair wage. In Unichay v State of Kerala, it was held that "the Act contemplates that
minimum wage rates should be fixed in the scheduled industries with the dual object of
providing subsistence and maintenance of the worker and his family and preserving his
efficiency as a worker."
The Tripartite Committee of the Indian Labour Conference (1957) accepted the following five
norms for the fixing of 'minimum wage'–

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1. In calculating the minimum wage, the standard working class family should be taken
to consist of 3 consumption units for one earner; the earnings of workmen, children
and adolescents should be disregarded.
2. Minimum food requirement should be calculated on the basis of a net intake of
calories, as recommended by Dr. Aykroyd for an average Indian adult of moderate
activity.
3. Clothing requirements should be estimated at per capita consumption of 18 yards per
annum which would give for the average workers family of four, a total of 72 yards.
4. In respect of housing, the rent corresponding to the minimum area provided for under
Government Industrial Housing Scheme should be taken into consideration in fixing
the minimum wage.
5. Fuel, lighting and other 'miscellaneous' items of expenditure should constitute 20% of
the total minimum wage.
Fair wages : There is difference between minimum wages and fair wages. In case of fair
wage, besides the principle of industry-cum-region, of company's capacity to bear the
financial burden must receive due consideration. But mere hopeful observations made in the
director's annual report cannot be basis for awarding increased observations made in the
director's annual report cannot be basis for awarding increased wages because such
observations are sometimes made to inspire hope and confidence in shareholders and they
cannot be a substitute for actual audited figure.
Living Wage : The Fair Wage Committee in its report published by Government of India,
Ministry of Labour in 1949 defined the 'living wage' as under:
"The living wage should enable the male earner to provide for himself and his family not
merely the bare essentials of food, clothing and shelter but a measure of frugal comfort
including education for children, protection against ill-health, requirements of essential social
needs, and a measure of insurance against the more important misfortunes including old
age."
Section 3. Fixation of minimum rates of wages : Section 3 lays down that the appropriate
Government shall be empowered to fix the minimum rates of wages in the manner prescribed
under this Act. It shall fix the minimum rates of wages payable to employees employed in an
employment specified in Part I or Part II of the Schedule and in an employment added to
either part by notification under Section 27.
The appropriate Government shall review the minimum rates of wages to fix and revise the
minimum rates, if necessary, at such intervals as it may think fit. The intervals as aforesaid
shall not exceed five years.
Sub-section (1-a) provides that the appropriate Government may refrain from fixing minimum
rates of wages in respect of any scheduled employment in which there are in the whole State
less than one thousand employees engaged in such employment.
Section 4.
MINIMUM RATES OF WAGES
Section 4 provides that any minimum rates of wages fixed or revised by the appropriate
Government in respect of scheduled employment under Section 3 may consist of–
1. a basic rate of wages and a special allowance at a rate to be adjusted, at such
intervals and in such manner as the appropriate Government may direct, to accord as
nearly as practicable with the variation in the cost of living index number applicable to
such workers (which is known as the cost of living allowance); or
2. a basic rate of wages with or without the cost of living allowance and the cash value of
the concession in respect of supplies of essential commodities at concession rates,

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 where so authorized; or
3. an all-inclusive rate allowing for the basic rate, the cost of living allowance and the
cash of the concessions, if any.
Irrelevant considerations in fixation of minimum wages : The following considerations
are not relevant in fixation of wages–
1. the fact that an employer may find it difficult to carry on his business on the basis of
minimum wages;
2. the financial capacity of the employee i.e., his capacity to pay;
3. the fact of the employer-company having incurred losses during the previous year;
4. employer's difficulties in importing raw materials; and
5. the region-cum-industry principles.
Section 5. Procedure of fixing and revising minimum wages : Section 5 lays down that in
fixing minimum rates of wages in respect of any scheduled employment for the first time
under this Act or in revising minimum rates of wages so fixed, the appropriate Government
shall either–
(a) appoint as many committees and sub-committees as it considers necessary to hold
enquiries and advise it in respect of such fixation or revision, as the case may be; or
(b) by notification in the Official Gazette, publish its proposals for the information of
persons likely to be affected thereby and specify a date not less than two months
from the date of the notification of which the proposals will be taken into
consideration.
Section 7.
ADVISORY BOARD
The appropriate Government shall according to Section 7 appoint an Advisory Board for the
purpose of:
(a) co-ordinating the work of committees and sub-committees, appointed under Section
5; and
(b) advising the appropriate Government in the matter of fixing and revising minimum
rates of wages.
Besides the Advisory Board may devise the procedure to be adopted for discharging its
functions under Section 5 of the Act.
Section 8. Central Advisory Board : Section 8 makes it obligatory upon the Central
Government to appoint a Central Advisory Board for he following purposes–
(a) advising the Central and State Governments in the matters of the fixation and revision
of minimum rates of wages and other matters under the Act; and
(b) for co-ordinating the work of the Advisory Boards.
Section 8(2) provides that the Central Advisory Board shall consist of–
(a) persons to be nominated by the Central Government representing employers and
employees in the scheduled employment who shall be equal in number; and
(b) independent persons not exceeding one-third of its total number of members.
The Chairman of the Central Board shall be one of the independent persons and shall be
appointed by the Central Government.
Section 9. Composition of committees etc. : Section 9 provides that such of the

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committee, sub-committees and the Advisory Board shall consist of persons to be nominated
by the appropriate Government. Persons who can be appointed to these committees shall be
representatives of the employers and employees in the scheduled employments and shall be
equal in number. Independent persons not exceeding one-third of the total number of
members in such bodies shall also be appointed. The appropriate Government shall appoint
one of such independent persons to be the Chairman.
The expression 'independent person' in this section means a person other than those who
are employer and employees in relation to the scheduled employment in respect of which
minimum wages are sought to be fixed. The fact that the person nominated to function as
independent member in the committee is a Government official, is no bar to such nomination.
It does not mean that persons in the employment of Government were to be excluded. The
presence of high Government officials who may have actual working knowledge about the
problems of employers and employees can afford a good deal of guidance and assistance in
formulating the advice which is to be tendered under Section 9 to the appropriate
Government. The appointment of a Labour Commissioner as a Chairman who is conversant
with the employment conditions and representing independent interest is valid.
Section 11. Wages in kind : The minimum wages payable under this Act shall be paid in
cash. Where it has been the custom to pay wages wholly or partly in kinds, the appropriate
Government being of the opinion that it is necessary in the circumstances of the case may,
by notification in the official Gazette, authorize the payment of minimum wages either wholly
or partly in kind.
If the appropriate Government is of the opinion that provisions should be made for the supply
of essential commodities at concessional rates, it may by notification in the official Gazette,
authorize the provision of such supplies at concessional rates. The cash value of wages in
kind and of concessions in respect of supplies of essential commodities at concessional rates
shall be estimated in the prescribed manner.
Section 12. Payment of minimum rates of wages : Section 12 lays down that where in
respect of any scheduled employment a notification under Section 5 is in force, the employer
shall pay to every employee engaged in a scheduled employment under him, wages at a rate
not less than the minimum rate of wages fixed by such notification for that class of employees
in that employment without any deductions except as may be authorized within such time and
subject to such conditions as may be prescribed. Provisions of Section 12 of this Act should
not affect the provisions of the Payment of Wages Act, 1936.
Section 13. Fixing hours of normal working day, etc. : Section 13(1) provides that, in
regard to any scheduled employment minimum rates of wages in respect of which have been
fixed under this Act, the appropriate Government may:
(a) fix the number of hours of work which shall constitute a normal working day, inclusive
of one or more specified intervals;
(b) provide for day of rest in every period of seven days which shall be allowed to all
employees or to any specified class of employees and for the payment of
remuneration in respect of such day of rest;
(c) provide for payment for work on a day of at a rest not less than the overtime rate.
According to Section 13(2) the provisions of sub-section (1) shall, in relation to the following
classes of employees apply only to such extent and subject to such conditions as may be
prescribed–
(a) employees engaged on urgent work, or in any emergency which could not have been
foreseen or prevented;
(b) employees engaged in work in the nature of preparatory or complementary work
which must necessarily be carried on outside the limits laid down for the general

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 working in the employment concerned;
(c) employees whose employment is essentially intermittent;
(d) employees engaged in any work which for technical reasons has to be completed
before the duty is over;
(e) employees engaged in a work which could not be carried on except at time
dependent on the irregular action of natural forces.
Section 20. Claims : Section 20(1) empowers the appropriate Government to appoint, by
notification in the official Gazette, in Authority to hear and decide for any specified area the
following claims–
(a) any claims arising out of payment of less than the minimum rates of wages; or
(b) any claim in respect of the payment of remuneration for days of rest; or
(c) any claim in respect of payment of remuneration for work done on such days under
clause (b) or (c) or Section 13(1); or
(d) any claim of wages at the overtime rate under Section 14, or employees employed or
paid in that area.
Who can be appointed as authority : The following may be appointed as an Authority to
decide any claims as aforesaid:
(a) any Commissioner for Workmen's Compensation; or
(b) any officer of Central Government exercising functions as a Labour Commissioner for
any region; or
(c) any officer of the State Government not below the rank of a Labour Commissioner; or
(d) any other officer with experience as a Judge of a Civil Court or as Stipendiary
Magistrate.
Who can apply : Sub-section (2) provides that where an employee has any claim as referred
to in Section 20(1) the following may apply to the Authority for a direction:
(a) the employee himself; or
(b) any legal practitioner authorized in writing to act on his behalf; or
(c) any official of a registered Trade Union authorized in writing to act on behalf of the
employee; or
(d) any Inspector; or
(e) any person acting with the permission of the Authority.
Application for claims : The application for any claim shall be presented within 6 months
from the date on which the minimum wages or other amount become payable. But any
application may be admitted after six months if the applicant satisfies the Authority that he
had sufficient cause for not making the application within the prescribed period. The exercise
of power for the condonation of delay is not controlled by the period of limitation prescribed
by the Limitation Act for a suit and the Authority functioning under the Minimum Wages Act
has, in its discretion, plenary power to condone the delay in presentation of a claim.
Procedure for deciding claims : Sub-section (3) provides that when any application for
claim is entertained, the Authority shall hear the applicant and the employer or give them an
opportunity of being heard, and after such further inquiry, if any, as it may consider
necessary, may without prejudice to any other penalty to which the employee may be liable
under this Act, direct:
(a) in the case of a claim arising out of payment of less than the minimum rates of wages,

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 the payment to the employee of the amount by which the minimum wages payable to
him exceed the amount actually paid together with the payment of such
compensation as the Authority may think fit. In no case any payment so directed
should exceed ten times the amount of such excess as stated above;
(b) in any other case, the payment of the amount due to the employee, together with
payment of such compensation as the Authority may think fit, but not exceeding ten
rupees; and
(c) payment of such compensation in cases where the excess of the amount due is paid
by the employer to the employee before the disposal of the application.
Powers of the Authority : Section 20(4) lays down that if the Authority hearing any
application under this section is satisfied that it was either malicious or vexatious, it may
direct that a penalty not exceeding fifty rupees be paid to the employer by the person
presenting the application.
Recovery of amount under order of Authority : According to Section 20(5) any amount
directed to be paid by the Authority may be recovered:
(a) if the Authority is a Magistrate, by the Authority as if it were a fine imposed by the
Authority as a Magistrate; or
(b) if the Authority is not a Magistrate, by any Magistrate to whom the Authority makes
application in this behalf, as if it were a find imposed by such Magistrate.
Section 22. Penalties for certain offences : Section 22 lays down that an employer shall be
punishable with imprisonment for a term which may extend to six months or with fine which
may extend to five hundred rupees or with both, if he:
(1) pays to any employee less than the minimum rates of wages fixed for that employee's
class of work, or less than the amount due to him under the provisions of this Act; or
(2) contravenes any rule or order made under Section 13.
The Court, while imposing any fine for an offence under this section, shall take into
consideration the amount of any compensation already awarded against the accused in any
proceedings taken under Section 20.
THE EQUAL REMUNERATION ACT, 1976
INTRODUCTION
The principle of equal pay for equal work is contained in Clause (d) of Article 39 of the Indian
Constitution which envisages that the State shall, in particular, direct its policy towards
securing that there is equal pay for equal work for both men and women. This principle
implies that where all things are equal, that is, where all relevant considerations are the
same, persons holding identical posts may not be treated differently in the matter of their pay
merely because they belong to different departments. Of course, if officers of the same rank
perform dissimilar functions and the powers, duties and responsibilities of the posts held by
them vary, such officers may not be heard to complain of dissimilar pay merely because the
posts are of the same rank and the nomenclature is the same. In Randhir Singh v. Union of
India the Supreme Court held that the principle of equal pay for equal work though not a
fundamental right is certainly a constitutional goal and therefore capable of enforcement
through constitutional remedies under Article 32 of the Constitution. The doctrine of wagers
are entitled to the same wages as other permanent employees in the department employed
to do the identical work.
Equal pay for equal work finds its place in the Directive Principles of State Policy and it is an
accompaniment of equality clause enshrined in Articles 14 and 16 of the cannot be read in
Article 14. Reasonable classification based on intelligible criteria, having nexus to the object
sought to be achieved, is permissible.

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Section 5. No discrimination to be made while recruiting men and women workers : On
and from the commencement of this Act, no employer shall, while making recruitment for the
same work or work of a similar nature, or in any condition of service subsequent to
recruitment such as promotions, training or transfer, make any discrimination against women
except where the employment of women in such work is prohibited or restricted by or under
any law for the time being in force:
Provided that the provisions of this section shall not effect any priority or reservation for
Scheduled Castes or Scheduled Tribes, ex-servicemen, retrenched employees or any other
class or category of persons in the matter of recruitment to the posts in an establishment or
employment.
Section 6.
ADVISORY COMMITTEE
1. For the purpose of providing increasing employment opportunities for women the
appropriate Government shall constitute one or more Advisory Committees to advise
it with regard to the extent to which women may be employed in such establishments
or employments as the Central Government may, by notifications, specify in this
behalf.
2. Every Advisory Committee shall consists of not less than ten persons to be
nominated by the appropriate Government, of which one-half shall be women.
3. In tendering its advice, the Advisory Committee shall have regard to the number, of
women employed in the concerned establishment or employment, the nature of work,
hours of work, suitability of women for employment, as the case may be, the need for
providing increasing employment opportunities for women, including part-time
employment, and such relevant factors as the Committee may think fit.
4. The Advisory Committee shall regulate its own procedure.
5. The appropriate Government may, after considering the advice tendered to it by the
Advisory Committee and after giving to the persons concerned in the establishment or
employment an opportunity to make representations, issue such directions in respect
of employment of women workers, as the appropriate Government may think fit.
Section 7. Power of appropriate Government to appoint authorities for hearing and
deciding claims and complaints:
1. The appropriate Government may, by notification, appoint such officers, not below the
rank of a Labour Officer, as it thinks fit to be the authorities for the purpose of hearing
and deciding–
a. Complaints with regard to the contravention of any provision of this Act;
b. Claims arising out of non-payment of wages at equal rates to men and women
workers for the same work or work of a similar nature.
and may, by the same or subsequent notification, define the local limits within which
each such authority shall exercise its jurisdiction.
2. Every complaint or claim referred to in sub-section (1) shall be made in such manner
as may be prescribed.
3. If any question arises as to whether two or more works are of the same nature or of a
similar nature, it shall be decided by the authority appointed under sub-section (1).
4. Where a complaint or claim is made to the authority appointed under sub-section (1),
it may, after giving the applicant and the employer an opportunity of being heard and
after such inquiry as it may consider necessary, direct–
a. In the case of a claim arising out of non-payment of wages at equal rates to men

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 and women workers for the same work or work of a similar nature, that payment
be made to the worker of the amount my which the wages payable to him exceed
the amount actually paid:
b. In the case of complaint, that adequate steps be taken by the employer so as to
ensure that there is not contravention of any provision of this Act.
5. Every authority appointed under sub-section (1) shall have all the powers of a Civil
Court under the Code of Civil Procedure, 1908 (5 of 1908), for the purpose of taking
evidence and of enforcing the attendance of witnesses and compelling the production
of documents, and every such authority shall be deemed to be a Civil Court for all the
purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973
(2 of 1974).
6. Any employer or worker aggrieved by any order made by an authority appointed
under sub-section (1), on a complaint or claim may, within thirty days, from the date of
the order, prefer an appeal to such authority as the appropriate Government may, by
notification, specify in this behalf, and that authority may, after hearing the appeal,
confirm, modify or reverse the order appealed against and no further appeal shall lie
against the order made by such authority.
7. The authority referred to in sub-section (6) may, if it is satisfied that the appellant was
prevented by sufficient cause from preferring the appeal within the period specified in
sub-section (6), allow the appeal to be preferred within a further period of thirty days
but not thereafter.
8. The provisions of sub-section (1) of section 33-C of the Industrial Disputes Act, 1947
(14 of 1947), shall apply for the recovery of monies due from an employer arising out
of the decision of an authority appointed under this section.
Section 10.
PENALTIES
(1) If after the commencement of this Act, any employer, being required by or under the
Act, so to do:
a. Omits or fails to maintain any register or other document in relation to workers
employed by him, or
b. Omits or fails to produce any register, muster-roll or other document relating to the
employment of workers employed by him, or
c. Omits or refuses to give any evidence or prevents his agent, servant, or any other
person in charge of the establishment, or any worker from giving evidence. or
d. Omits or refuses to give any information,
he shall be punishable with simple imprisonment for a term which may extend to
one month or with fine which may extend to ten thousand rupees or with both.
(2) If, after the commencement of this Act, any employer:
a. Makes any recruitment in contravention of the provisions of this Act, or
b. Makes any payment of remuneration at unequal rates to men and women
workers, for the same work or work of a similar nature, or
c. Makes any discrimination between men and women workers in contravention of
the provisions of this Act, or
d. Omits or fails to carry out any direction made by the appropriate Government
under sub-section (5) of section 6,
he shall be punishable with fine which shall not be less than ten thousand rupees but

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 which may extend to twenty thousand rupees or with imprisonment for a term which
shall not be less than three months but which may extend to one year or with both for
the first offence, and with imprisonment which may extend to two years for the second
and subsequent offences.
(3) If any person being required so to do, omits or refuses to produce to an Inspector any
register or other document or to give any information, he shall be punishable with fine
which may extend to five hundred rupees.
The CHILD LABOUR (PROHIBITION AND REGULATION) ACT, 1986
INTRODUCTION
The need for providing protection and safeguards to children have first been stated in the
Geneva Declaration of the Rights of he Child. 1924 and was recognised in the Universal
Declaration of Human Rights, 1948 and in the Statutes of specialised agencies of U.N.O. Art,
25 of the Universal Declaration of Human Rights, 1948 provides that "motherhood and
childhood are entitled to special care and assistance. All children, whether born in or out of
wedlock, shall enjoy the same social protection". Rights to free and compulsory elementary
education to children is assured by Article 26.
The Declaration of the Rights of Child, 1959 : A concrete step has been taken through the
Declaration of the Rights of the child in 1959 which aims that the child may have a happy
childhood and enjoy for his own good and for the good of the society, the rights set forth in
the Declaration. The Preamble of the Declaration expresses concern of the International
Community for child welfare. The child by reason of his physical and mental immaturity,
needs special welfare. The child by reason of his physical and mental immaturity, needs
special safeguards and care. It also calls upon parents, upon men and women as individuals,
and upon voluntary organisations, local authorities and national Governments to recognise
children rights and strive for their observance by legislative and other measures. These rights
which the General Assembly of the United Nations calls upon to be recognised and
implemented by the National Governments are contained in the following Ten Principles of
the Declaration.
International Convention on the Rights of Child, 1989 : A great headway had been made
in the year 1989, which marked the 30th Anniversary of the 1959 Declaration of the Rights of
the Child and the 10th Anniversary of the international year of the child, when on 20th
November the General Assembly adopted an international convention on the rights of child,
which was termed by the adopted an international convention on the rights of child, which
was termed by the General Assembly President Joseph N. Garba as a binding piece of
international legislation. The convention needs to be ratified by 20 countries before it comes
into force. Prior to being placed before the assembly the draft of the Convention was
approved by the Economic and Social Council and the commission on Human Rights during
their sessions in 1989.
Section 1.
OBJECT AND SCOPE
There are a number of enactments which prohibit, the employment of children below 14
years and 15 years of age in certain specified employments. However, there is no procedure
laid down in any law for deciding in which employments, occupations or processes the
employment of children should be banned. There is also no law to regulate the working
conditions of children in most of the employments where they are not prohibited from working
and are working under exploitative conditions. Therefore the Child Labour (Prohibitions and
Regulation) Act, 1986 has been enacted to prohibit the engagement of children in certain
employments and to regulate the conditions of work of children in certain other employments.
The Act seeks to achieve the following objects–
(1) To ban the employment of children, i.e., those who have not completed their

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 fourteenth year, in specified occupations and processes;
(2) To lay down a procedure to decide modifications to the Schedule of banned
occupations or processes;
(3) To regulate the conditions of work of children in employments where they are not
prohibited from working;
(4) To lay down enhanced penalties for employment of children in violation of provisions
of this Act, and other Acts which forbid the employment of children;
(5) To obtain uniformity in the definition of "child" in the related laws.
In view of sub-section (2) of Section 1 this Act extends to the whole of India. Section 1(3)
provides that the provisions of this Act other than Part III, shall come into force at once, and
Part III shall come into force on such date as the Central Government may, by notification in
the Official Gazette, appoint, and different dates may be appointed for different States and for
different classes of establishments.
Section 2.
DEFINITION
In this Act, unless the context otherwise requires–
(1) "child" means a person who has not completed his fourteenth year of age;
(2) "day" means a period of twenty-four hours beginning at midnight;
(3) "establishment" includes a shop, commercial establishment, workshop, farm,
residential hotel, restaurant, eating house, theatre or other place of public amusement
or entertainment;
(4) "family", in relation to an occupier, means the individual, the wife or husband, as the
case may be, of such individual, and their children, brother or sister of such individual;
(5) "occupier", in relation to an establishment or a workshop, means the person who has
the ultimate control over the affairs of the establishment or workshop;
(6) "port authority" means any authority administering a port;
(7) "workshop" means any premises (including the precincts thereof) wherein any
industrial process is carried on, but does not include any premises to which the
provisions of Section 67 of the Factories Act, 1948 (63 of 1948), for the time being,
apply.
Section 3. Prohibition of employment of children in certain occupations and processes
: No child shall be employed or permitted to work in any of the occupations set forth in Part A
of the Schedule or in any workshop wherein any of the processes set forth in Part B of the
Schedule is carried on:
Provided that nothing in this section shall apply to any workshop wherein any process is
carried on any the occupier with the aid of his family or to any school established by, or
receiving assistance or recognition from, Government.
Section 5. Child Labour Technical Advisory Committee :
1. The Central Government may, by notification in the Official Gazette, constitute an
advisory committee to be called the Child Labour Technical Advisory Committee
(hereafter in this section referred to as the Committee) to advise the Central
Government for the purpose of addition of occupations and processes to the
Schedule.
2. The Committee shall consist of a Chairman and such other members not exceeding
ten, as may be appointed by the Central Government.

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3. The Committee shall meet as often as it may consider necessary and shall have
power to regulate its own procedure.
4. The Committee may, if it deems it necessary so to do, constitute one or more sub-
committees and may appoint to any such sub-committee, whether generally or for the
consideration of any particular matter, any person who is not a member of the
Committee.
5. The term of office of the manner of filing casual vacancies in the office of and the
allowances if any payable to the Chairman and other members of committee and the
conditions and restrictions subject to which the committee may appoint any person
who is not a member of the committee as a member of the Committee as a member
of any of its sub committees shall be such as may be prescribed.
Section 6. Application of Part : The provisions of this Part shall apply to an establishment
or a class of establishments in which none of the occupations or processes referred to in
Section 3 is carried on.
Section 7.
HOURS AND PERIOD OF WORK
1. No child shall be required or permitted to work in any establishment or a class of
establishments.
2. The period of work on each day shall be so fixed that no period shall exceed three
hours and that no child shall work for more than three hours before he has had an
interval for rest for at least one hour.
3. The period of work of a child shall be so arranged that inclusive of his interval for rest,
under sub-section (2), it shall not be spread over more than six hours, including for
time spent in waiting for work on any day.
4. No child shall be permitted or required to work between 7 p.m. and 8 a.m.
5. No child shall be required or permitted to work in any establishment on any day on
which he has already been working in another establishment.
6. No child shall be required or permitted to work in any establishment on any day on
which he has already been working in another establishment.
Section 8. Weekly holidays : Every child employed in an establishment shall be allowed in
each week, a holiday of one whole day, which day shall be specified by the occupier in a
notice permanently exhibited in a conspicuous place in the establishment and the day so
specified shall not be altered by the occupier more than once in three months.
Section 9. Notice to Inspector :
1. Every occupier in relation to an establishment in which a child was employed or
permitted to work immediately before the date of commencement of this Act in
relation to such establishment shall, within a period of thirty days from such
commencement, send to the Inspector within whose local limits the establishment is
situated, a written notice containing the following particulars, namely:
a. The name and situation of the establishment;
b. The name of the person in actual management of the establishment;
c. The address to which communications relating to the establishment;
d. The nature of the occupation or process carried on in the establishment.
2. Every occupier, in relation to an establishment, who employs, or permits to work, any
child after the date of commencement of this Act in relation to such establishment,
shall, within a period of thirty days from the date of such employment, send to the

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 Inspector within whose local limits the establishment is situated, a written notice
containing the particulars as are mentioned in sub-section (1).
Section 11. Maintenance of register : There shall be maintained by every occupier in
respect of children employed or permitted to work in any establishment, a register to be
available for inspection by an Inspector at all times during working hours or when work is
being carried on in any such establishment, showing:
(a) the name and the date of birth of every child so employed or permitted to work;
(b) hours and periods of work of any such child so employed or permitted to he is
entitled;
(c) the nature of work of any such child; and
(d) such other particulars as may be prescribed.
Section 13.
HEALTH AND SAFETY
1. The appropriate Government may, by notification in the Official Gazette, make rules
for the health and safety of the children employed or permitted to work in any
establishment or class of establishments.
2. Without prejudice to the generality of the foregoing provision, the said rules may
provide for all or any of the following matters, namely–
a. Cleanliness in the place of work and its freedom from nuisance;
b. Disposal of wastes and effluents.;
c. Ventilation and temperature;
d. Dust and fume;
e. Artificial humidification;
f. Lighting;
g. Drinking water;
h. Latrine and urinals;
i. Spittoons;
j. Fencing of machinery;
k. Work at or near machinery in motion;
l. Employment of children on dangerous machines;
m. Instructions, training and supervision in relation to employment of children on
dangerous machines;
n. Device for cutting of powers;
o. Self-acting machines;
p. Device for cutting of powers;
q. Self-acting machines;
r. Floor, stairs and means of access;
s. Pits, sumps, openings in floors, etc.;
t. Excessive weights;
u. Protection of eyes;

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 v. Explosive or inflammable dust, gas, etc.;
w. Precautions in case of fire;
x. Maintenance of buildings; and
y. Safely of buildings and machinery.
Section 14. Penalties :
1. Whoever employees any child or permits any child to work in contravention of the
provisions of Section 3 shall be punishable with imprisonment for a term which shall
not be less than three months but which may extend to one year or with fine which
shall not be less than ten thousand rupees but which may extend to twenty thousand
rupees or with both.
2. Whoever, having been convicted of an offence under Section 3, commits a like
offence afterwards, he shall be punishable with imprisonment for a term which shall
not be less than six months but which may extend to two years.
3. Whoever–
a. Fails to give notice as required by Section 9, or
b. Fails to maintain a register as required by Section 11 or makes any false entry in
any such register; or
c. Fails to display a notice containing an abstract of Section 3 and this section as
required by Section 12; or
d. Fails to comply with or contravenes any other provisions of this Act or the rules
made thereunder;
shall be punishable with simple imprisonment which may extend to one month or with fine
which may extend to ten thousand rupees or with both.
Section 16. Procedure relating to offences :
1. Any person, police officer or Inspector may file a complaint of the commission of an
offence under this Act in any court of competent jurisdiction.
2. Every certificate as to the age of a child which has been granted by a prescribed
medical authority shall, for the purposes of this Act, be conclusive evidence as to the
age of the child to whom it relates.
3. No court inferior to that of a Metropolitan Magistrate or a Magistrate of the first class
shall try any offence under this Act.
Meaning of Complaint : The word 'complaint' as used in this section has a wide meaning
since it includes even an oral allegation. No particular from of complaint is prescribed. But a
complaint must be an allegation prima facie disclosing the necessary facts that are necessary
to constitute the offence alleged. It is on the basis of these facts that the Magistrate takes
action.
IMPORTANT QUESTIONS
1. Discuss the procedure of fixing minimum wages under Minimum Wages Act, 1948.
2. What do you understand by minimum wages? Is the Government bound to take into
account capacity of an industry to pay minimum wages?
3. Explain the concept of 'living wage' 'fair wage' and 'minimum wages'.
4. Explain the provisions regarding prohibitions of a child labour under the Child Labour
Act, 1986.
5. Explain the main provisions of Equal Remuneration Act, 1976.

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6. What are the objects of passing Equal Remuneration Act, 1976?
7. Explain the term 'minimum wages'. Is the financial capacity of an employer to pay it a
necessary consideration for the fixation of minimum wage?
8. Can discrimination be made by an employer in recruiting men and women workers?
RECOMMENDED READINGS
1. "Labour and Industrial Laws", Dr. V.G. Goswami.
2. "Labour and Industrial Laws", S.N. Mishra.
3. "Industrial Jurisprudence.

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 UNIT - V
PAYMENT OF BONUS ACT, 1965

INTRODUCTION
Bonus is a cash payment made to employees in addition to wages. It is not an ex-gratia
payment. Bonus differs from wages in that it does not rest on contract, but still payments for
bonus are made because legally due, but which parties do not contemplate indefinitely. In our
country bonus was for the first time granted to the employees in textile industry in July, 1917
which is known as war bonus because an increase in wages was allowed owing to war
conditions.
Mill Owners Association v. Rastriya Mill Mazdoor Sangh, a Full Bench of the Labour
Appellate Tribunal observed that bonus could no longer be considered as an ex-gratia
payment and laid down a formula known as "Full Bench Formula". Since both labour and
capital contributed to the earnings of industrial concerns, it was only fair that labour should
get some benefit if there was a surplus left after meeting prior and necessary charges.
Broadly speaking the formula provided that the following prior charges should be deducted
from the gross profits of an enterprise–
1. Return on paid up capital generally at the rate of six per cent;
2. Return on working capital varying from two to four per cent;
3. Depreciation worked out on a notional basis;
4. Rehabilitation; and
5. Income tax.
If after deduction of these prior charges, surplus was left over the workmen would he entitled
to a share in the said surplus on an equitable basis. In the absence of any surplus, however,
there would be no question of payment of bonus on genera] notions of social justice.
Labour unions did not feel satisfied with the Full Bench Formula. Their main grievance was
against the rehabilitation charge which, in their view, generally wiped out what was left of the
available surplus. Some employers were also not quite happy with this formula because it did
not provide an easy method for computation of bonus and often led to disputes year after
year.
The Supreme Court, while approving this principle Muir Mill Ltd. v. Suti Mill Mazdoor Union
laid down two conditions which had to be satisfied before a demand for bonus could be
justified–
1. the wages fell short of the living standard; and
2. the industry makes huge profits part of which are due to the contribution made by
workmen in increasing production.
The demand for bonus would become an industrial claim when either or both of these
conditions were satisfied. The Government of India had been under a constant pressure to
revise the bonus formula.
The present Act is the outcome of the recommendations made by a Tripartite commission,
which was setup by the Government of India in 1961. The Commission was asked to
consider the question of payment of bonus based on profits to employees employed in
establishments. The recommendation of the Commission was received by the Government
on January 24, 1964. On September 2, 1964 the Government implemented the
recommendations, subject to certain modifications. With a view to accept these
recommendations, the Payment of Bonus Ordinance, 1965 as promulgated on 26th May,

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1965. The Ordinance later on was adopted by the Parliament and enacted as Payment of
Bonus Act, 1965. Under the Act the payment of bonus has become a statutory obligation
imposed upon the employers covered by the Act.
The object of the Act as contained in the preamble is to provide for payment of bonus to
persons employed in certain establishments and for matters connected therewith.
The scheme of the Act is four dimensional–
(1) to impose statutory liability upon an employer of every establishment covered by the
Act to pay bonus to employees in establishment;
(2) to define the principle of payment of bonus according to the prescribed formula;
(3) to provide for payment of minimum and maximum bonus and linking the payment of
bonus with the scheme of "set-off and set-on"; and
(4) to provide machinery for enforcement of the liability for payment of bonus.
Section 1.
SCOPE AND APPLICATION
This Act extends to the whole of India.
Sub-section (3) of Section 1 provides that save as otherwise provided in this Act, it shall
supply to (a) every factory; and (b) every other establishment in which twenty or more
persons are employed on any day during an accounting year.
Section-2
DEFINITIONS
In this Act, unless the context otherwise requires:
Accounting year- "Accounting year" means–
(i) in relation to a corporation, the year ending on the day on which the books and
accounts of the corporation are to be closed and balanced;
(ii) in relation to a company, the period in respect of which any profit and loss account of
the company laid before it in annual general meeting is made up. whether that period
is a year or not;
(iii) in any other case–
(a) the year commencing on the 1st day of April; or
(b) if the accounts of an establishment maintained by the employer thereof are
closed and balanced on any day other than the 31st day of March. then, at the
option of the employer, the year ending on the day or. which its accounts are
so closed and balanced;
Provided that an option once exercised by the employer under paragraph (b) a; this sub-
clause shall not again be exercised except with the previous permission in writing of the
prescribed authority and upon such conditions as that authority may think fit.
Computation of gross profits : The gross profits derived by an employer from an
establishment in respect of the accounting year shall–
(a) in the case of banking company, be calculated in the manner specified in the First
Schedule;
(b) in any other case, be calculated in the manner specified in the Second Schedule.
ELIGIBILITY FOR BONUS
Every employee shall be entitled to be paid by his employer in an accounting year, bonus in

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accordance with the provisions of this Act, provided he has worked in the establishment for
not less than thirty working days in that year.
It was held in Project Manager, Ahmedabad Project, D.N.G.C. Sabarmati v. Sham Kumar
Sahegal (Died) by his Legal Representatives that when an employee is suspended. it cannot
be said that such an employee did not work for the establishment. The word "worked" in
Section 8 of the Act should mean "ready and willing to work". Therefore when an employee is
prevented from working by an overt act on the part of the employer, which is ultimately set
aside and the employer is reinstated in service then the reasonable inference is that the
employees' statutory eligibility for bonus within the, meaning of Section 8 of the Act cannot be
said to have been lost. Nor can the employer refuse to accede to the demand for such bonus
if it is otherwise payable under the provision of the Act.
Disqualification for bonus : Notwithstanding anything contained in this Act, an employee
shall be disqualified from receiving bonus under this Act, if he is dismissed from service for-
(a) fraud; or
(b) riotous or violent behaviour while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment.
Payment of minimum bonus : Subject to the other provisions of this Act, every employer
shall be bound to pay to every employee in respect of the accounting year commencing on
any day in the year 9.79 and in respect of every subsequent accounting year, a minimum
bonus which shall be 8.33 per cent of the salary or wage earned by the employee during the
accounting year or one hundred rupees, whichever is higher, whether or not the employer
has any allocable surplus in the accounting year:
Provided that where an employee has not completed fifteen years of age at the beginning of
the accounting year, the provisions of this section shall have, effect in relation to such
employee as if for the words "one hundred rupees", the words "sixty rupees" were
substituted.
The statutory bonus of eight and one third per cent shall be payable whether there are profits
in the accounting year or not. After coming into force of this Act, bonus has become an
implied term of employment not dependant upon the profits. Employees are entitled to festival
bonus only if there is an implied agreement or it is paid as customary bonus.
The minimum bonus under the Act is a right vested in an employee under a statute. The right
to minimum bonus is a statutory right which vests in the employee and no further adjudication
of the right to the payment of minimum bonus is called for. It constitutes an existing statutory
right. The denial of this right by the employer does not render it an industrial dispute calling
for an adjudication by way of reference under Section 10 of the Industrial Disputes Act read
with Section 22 of the Payment of Bonus Act. A claim for the payment of minimum bonus
cannot constitute an industrial dispute within the meaning of Section 22 of the Payment of
Bonus Act.
Payment of maximum bonus :
(1) Where in respect of any accounting year referred to in section 10, the allocable
surplus exceeds the amount of minimum bonus payable to the employees under that
section, the employer shall, in lieu of such minimum bonus, be bound to pay to every
employee in respect of that accounting year bonus which shall be an amount in
proportion to the salary or wage earned by the employer during the accounting year
subject to a maximum of twenty per cent of such salary or wage.
(2) In computing the allocable surplus under this section, the amount set on or the
amount set off under the provisions of section 15 shall be taken into account in
accordance with the provisions of that section.

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Calculation of bonus with respect to certain employees : Where the salary or wages of
an employee exceeds two thousand and five hundred rupees per mensem, the bonus
payable to such employee under Section 10 or, as the case may be, under section 11 shall
be calculated as if his salary or wages were two thousand and five hundred rupees per
mensem.
Proportionate reduction in bonus in certain cases : Where an employee has not worked
for all the working days in an accounting year, the minimum bonus of one hundred rupees or,
as the case may be, of sixty rupees, if such bonus is higher than 8.33 per cent of his salary or
wage for the days he has worked in that accounting year, shall proportionately reduced.
Computation of number of working days- For the purposes of Section 13, an employee
shall be deemed to have worked in an establishment in any accounting year also on the days
on which-
(a) he has been laid off under an agreement or as permitted by standing orders under the
Industrial Employment (Standing Orders) Act, 1946, or under the Industrial Disputes
Act, 1947 or under any other law applicable to the establishment;
(b) he has been on leave with salary or wage;
(c) he has been absent due to temporary disablement caused by accident arising out of
and in the course of his employment; and
(d) the employee has been on maternity leave with salary or wage, during the accounting
year.
Set on and set off of allocable surplus :
(1) Where for any accounting year the allocable surplus exceeds the amount of maximum
bonus payable to the employees in the establishment under Section 11, then, the
excess shall, subject to a limit of twenty percent of the total salary or wage of the
employees employed in the establishment in that accounting year, be carried forward
for being set on in the succeeding accounting year and so on, upto and inclusive of
the fourth accounting year to be utilised for the purpose of payment of bonus, in the
manner illustrated in the Fourth Schedule.
(2) Where for any accounting year, there is no allocable surplus or the allocable surplus
in respect of that year falls short of the amount of minimum bonus payable to the
employees in the establishment under Section 10, and there is no amount or sufficient
amount carried forward and set on under sub-section (1) which could be utilised for
the purpose of payment of minimum bonus, then, such minimum amount or the
deficiency, as the case may be, shall be carried forward for being set off in the
succeeding accounting year and so on upto and inclusive of the fourth accounting
year in the manner illustrated in the Fourth Schedule.
(3) The principle of set on and set off as illustrated in the Fourth Schedule shall apply to
all other cases not covered by sub-section (1) or sub-section (2) for the purpose of
payment of bonus under this Act.
(4) Where in any accounting year any amount has been carried forward and set on or set
off under this section, then, in calculating bonus for the succeeding accounting year,
the amount of set on or set off carried forward from the earliest accounting year shall
first be taken into account.
Sum deductible from gross profits : The following sums shall be deducted from the gross
profits as prior charges, namely–
(a) any amount by way of depreciation admissible in accordance with the provisions of
sub-section (I) of Section 32 of the Income Tax Act or in accordance with the
provisions of the Agricultural Income-tax Law as the case may be–

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 Provided that where an employer has been paying bonus to his employees under a
settlement or an award or agreement made before the 29th May, 1965, and subsisting
on that date after deducting from the gross profits notional normal depreciation, then,
the amount of depreciation to be deducted under this clause shall, at the option of
such employer (such option to be exercised once and within one year from that date)
continue to be such notional normal depreciation;
(b) Any amount by way of employment rebate or investment allowance or development
allowance which the employer is entitled to deduct from his income under the Income-
tax Act;
(c) Subject to the provisions of Section 7, any direct tax which the employer is liable to
pay for the accounting year in respect of his income, profits and gains during that
year;
(d) Such further sums as are specified in respect of the employer in the Third Schedule.
Section-17. Adjustment of customary or interim bonus against bonus payable under
the Act : Where in any accounting year–
(a) an employer has paid by puja bonus or other customary bonus to an employee;
(b) an employer has paid a part of the bonus payable under this Act to an employee
before the date on which such bonus becomes payable;
then, the employer shall be entitled to deduct the amount of bonus so paid from the amount
of bonus payable by him to the employee under this Act in respect of that accounting year
and the employee shall be entitled to receive only the balance.
Sec.-18. Deduction of certain amounts from bonus payable under the Act.-When in
accounting year, an employee is found guilty of misconduct 'causing financial loss to the
employer, then, it shall be lawful for the employer to deduct the amount of loss from the
amount of bonus payable by him to the employee under this Act in respect of that accounting
year only and the employee shall be entitled to receive the balance, if any.
Sec.-19. Time-limit for payment of bonus : All amounts payable to an employee by way of
bonus under this Act shall be paid in cash by his employer–
(a) where there is dispute regarding payment of bonus pending before, any authority
under Section 22, within a month from the date on which the award becomes
enforceable or the settlement comes into operation, in respect of such dispute;
(b) in any other case, within a period of eight months from the close of the accounting
year.
Provided that the appropriate Government of such authority as the appropriate Government
may specify in this behalf may, upon an application made to it by the employer and for
sufficient reasons, by order, extend the said period of eight months to such further period or
periods as it thinks fit; so, however, that the total period so extended shall not in any case
exceed two years.
Sec.-20. Application of Act to establishments in public sector in certain cases :
(1) If in any accounting year an establishment in public sector sells any goods produced
or manufactured by it or renders any services, in competition with an establishment in
private sector, and the income from such sale or services or both is not less than
twenty per cent of the gross income of the establishment in public sector for that year,
then the provisions of this Act shall apply in relation to such establishment in public
sector as they apply in relation to a like establishment in private sector.
(2) Save as otherwise provided in sub-section (1), nothing in this Act shall apply to the
employees employed by any establishment in public sector.

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Section-21. Recovery of bonus due from an employer : Where any money is due to an
employee by way of bonus from his employer under a settlement or an award or agreement,
the employee himself or any other person authorised by him in writing in this behalf, or in the
case of the death of the employee, his assignee or heirs may, without prejudice to any other
mode of recovery make an application to the appropriate Government for the recovery of the
money due to him, and if the appropriate Government or such authority as the appropriate
Government may specify in this behalf, is satisfied that any money is so due, it shall issue a
certificate for that amount to the Collector who shall proceed to recover the same in the same
manner as an arrear of land revenue.
Provided that every such application shall be made within one year from the date on which
the money became due to the employee from the employer,
Provided further that any such application may be entertained after the expiry of the said
period of one year, if the appropriate Government is satisfied that the applicant had sufficient
cause for not making the application within the said period.
Explanation- In this section and in Sections 22, 23, 24 and 25, "employee" includes a person
who is entitled to the payment of bonus under this Act but who is no longer in employment.
The mode of recovery prescribed under this section shall be available only if the bonus
sought to be recovered is "under a settlement or an award or an agreement". It will not apply
to recovery of bonus which is payable under the Act.
Section-22. Reference of disputes under the Act : Where any dispute arises between an
employer and his employees with respect to the. bonus payable under this Act or with respect
to the application is this Act to an establishment in public sector, then, such dispute shall be
deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947 or
of any corresponding law relating to investigation and settlement of industrial disputes in
force in a State and the provisions of that Act or, as the case may be, such law, shall save as
otherwise expressly provided, apply accordingly.
Section-28. Penalty : If any person–
(a) contravenes any of the provisions of this Act or any rule made there under; or
(b) to whom a direction is given or requisition is made under this Act fails to comply with
the direction or requisition;
he shall be punishable with imprisonment for a term which may extend to six months, or with
fine-which may extend to one thousand rupees, or with both.
THE MATERNITY BENEFIT ACT, 1961
Section-l Extent and Commencement : The Maternity Benefit Act, 1961 was enacted to
regulate the employment of women in certain establishments for certain periods before and
after child birth and to provide for maternity benefit and certain other benefits. This Act
extends to the whole of India except the State of Jammu and Kashmir. It shall come into force
on such date as may be notified in this behalf in the Official Gazette, (a) in relation to mines
and to any other establishment wherein persons are employed for the exhibition of,
equestrian, acrobatic and other performance, by the Central Government and (b) in relation
to other establishments in a state by the State Government.
The Maternity Benefit Act is intended to achieve the object of doing social justice to women
workers. Therefore in interpreting the provisions of this Act beneficent rule of construction,
which would enable the woman worker not only to subsist but also to make up her dissipated
energy, nurse her child, preserve her efficiency as a worker and maintain the level of her
previous efficiency and output, has to be adopted by the Court.
Section-2
APPLICATION

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It applies in the first instance–
(a) To every establishment which is a factory, mine or plantation, including any such
establishment belonging to Government and to every establishment wherein persons
are employed for the exhibition of equestrian, acrobatic and other performances,
(b) to 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, in which ten or more persons
are employed, or were employed, on any day of the preceding twelve months.
Section-3.
DEFINITIONS
In this Act, unless the context otherwise requires–
(a) Appropriate Government : In relation to an employment being a mine, or an
establishment wherein persons are employed for the exhibition of equestrian, acrobatic and
other performances the appropriate Government means Central Government and in relation
to any other establishment, the State Government.
(o) Woman : 'Woman' means a woman employed, whether directly or through any agency,
for wages in any establishment.
Section-4. Employment of, or work by woman prohibited during certain period : Under
Section 4 of the Act, the employer is prohibited from knowingly employing any woman in any
establishment during the six weeks immediately following the day of her delivery, miscarriage
or medical termination of pregnancy.
No woman shall work in any establishment during the six weeks immediately following the
day of her delivery, miscarriage or medical termination of pregnancy.
Without prejudice to the provisions of Section 6 no pregnant woman shall, on a request being
made by her, be required by her employer to do any work of the following nature during the
period of one month immediately preceding the period of six weeks before the date of her
expected delivery and during the said period of six weeks for which the pregnant woman
does not avail of the leave of absence under Section 6–
(1) any work which is of arduous nature;
(2) any work which involves long hours of standing;
(3) any work which in any way is likely to interfere with her pregnancy or the normal
development of foetus or likely to cause her miscarriage or otherwise adversely affect
her health.
Section-5
RIGHT TO PAYMENT OF MATERNITY BENEFIT
Provides that the maternity benefit to which every woman shall be entitled and her employer
shall be liable for is a payment to a worker at the rate of average daily wages for the period of
her actual absence immediately preceding and including the day of her delivery and for six
weeks immediately following that day.
Section-5B. Payment of maternity benefit in certain cases : Every woman–
(a) who is employed in a factory or other establishment to which the provisions of the
Employees' State Insurance Act, 1948, apply;
(b) whose wages (including remuneration for over-time work) for a month exceed the
amount specified in sub-clause (b) of clause (9) of Section 2 of that Act ; and
(c) who fulfills the conditions specified in sub-section (2) of Section 5, shall be entitled to
the payment of maternity benefit under this Act.

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Section 6. Notice of claim for maternity benefit and payment there of : Section 6
provides that any woman employed in an establishment and entitled to maternity benefit
under the provisions of the Act may give notice in writing in such form as may be prescribed,
to her employer, stating that her maternity benefit and any other amount to which she may be
entitled under this Act may be paid to her or to such person as the may nominate in the
notice and that she will not work in any establishment during the period for which she
receives maternity benefit.
In the case of a woman who is pregnant such notice shall state the date from which she will
be absent from work, not being a date earlier than six weeks from the date of her expected
delivery. Any woman who has not given the notice when she was pregnant may give such
notice as soon as possible after delivery. On receipt of the notice, the employer shall permit
such woman to absent herself from the establishment until the expiry of six weeks after the
day of her delivery.
The amount of maternity benefit for the period preceding the date of her expected delivery
shall be paid in advance by the employer to the woman on production of such proof as may
be prescribed that to woman is pregnant and the amount due for the subsequent period shall
be paid by the employer to the woman within forty-eight hours of production of such proof as
may be prescribed that the woman has been delivered of a child.
Section 7. Payment of maternity benefit in case of death of a woman : If a woman
entitled to maternity benefit or any other amount, under this Act, dies before receiving such
maternity benefit or amount, or where the employer is liable for maternity benefit under the,
second proviso to Section 5(3), the employer shall pay such benefit or amount to the person
nominated by the woman in the notice given under Section 6 and in case there is no such
nominee to her legal representative.
Section 8. Payment of medical-bonus : Every woman entitled to maternity benefit under
this Act shall also be entitled to receive from her employer a medical bonus of twenty-five
rupees if no pre-natal confinement and post-natal care is provided for by the employer free of
charge.
Section 9. Leave for miscarriage : In case of miscarriage or medical termination of
pregnancy, a woman shall, on production of such proof as may be prescribed, be entitled to
leave with wages at the rate of maternity benefit, for a period of six weeks immediately
following the day of her miscarriage or, as the case may be, her medical termination of
pregnancy.
Section 9-A. Leave with wages for tubectomy operation : In case of tubectomy operation,
a woman shall, on production of such proof as may be prescribed, be entitled to leave with
wages at the rate of maternity benefit for a period of two weeks immediately following the day
of her tubectomy operation.
Section 10. Other leaves : A woman suffering from illness arising out of pregnancy, delivery,
premature birth of a child, miscarriage, medical termination of pregnancy or tubectomy
operation shall, on production of such' proof as may be prescribed, be entitled in addition to
the period of absence allowed to her under Section 6, or as the case may be, under Section 9
to leave with wages at the rate of maternity benefit for a maximum period of one month.
Section 11. Nursing breaks : Every woman delivered of a child who returns to duty after
such delivery shall, in addition to the interval for the rest allowed to her, be allowed in the
course of the daily work, two breaks of the prescribed duration for nursing until the child
attains the age of fifteen months–
1. Discuss the features of Indian Maternity Benefit Act, 1961.
2. State the circumstances under which a workman is eligible for 'bonus' under the
Payment of Bonus Act, 1965. What is minimum and maximum limit of bonus as
permissible under the Act?

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3. Explain "available surplus" under the payment of Bonus Act.
4. Explain the main objects of Maternity Benefit Act.
5. When can a female worker claim maternity benefit? Can maternity benefit be
forfeited?
6. What are the disqualification for receiving bonus under the Payment of Bonus Act,
1965?
7. Does the Maternity Benefit Act, 1961 has territorial jurisdiction upon state of Jammu
and Kashmir? Explain its applicability.
8. What are the rights and immunities which are available to a trade union under the
Trade Union Act, 1986?
RECOMMENDED READINGS
1. "Labour and Industrial Laws", Dr. V.G. Goswami.
2. "Labour and Industrial Laws", S.N. Misra.
3. "Social Security in India", Dr. P.C. Srivastava.
4. "The Social Security System in India, 1972", N. Hasan.

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