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KLE LAW ACADEMY BELAGAVI
(Constituent Colleges: KLE Society’s Law College, Bengaluru, Gurusiddappa Kotambri Law College, Hubballi, S.A. Manvi Law College, Gadag, KLE Society’s B.V. Bellad Law College, Belagavi, KLE Law College, Chikodi, and KLE College of Law, Kalamboli, Navi Mumbai)
STUDY MATERIAL
for
LABOUR LAW I
Prepared as per the syllabus prescribed by Karnataka State Law University (KSLU), Hubballi
Compiled by
Dr. Vijay V. Muradande, Asst. Prof.
Reviewed by
Mr. Santosh R. Patil, Principal
K.L.E. Society’s S.A. Manvi Law College, Gadag
This study material is intended to be used as supplementary material to the online classes and
recorded video lectures. It is prepared for the sole purpose of guiding the students in preparation
for their examinations. Utmost care has been taken to ensure the accuracy of the content.
However, it is stressed that this material is not meant to be used as a replacement for textbooks
or commentaries on the subject. This is a compilation and the authors take no credit for the
originality of the content. Acknowledgement, wherever due, has been provided.
This Study Material is prepared by me in
consultation with Principal by reading the following
reference books mentioned below, for more and
further reading the reader can refer these books.
Books Referred:
Malhotra O. P. – Law of Industrial Disputes, Vol. I and II. S C Srivastava, Industrial Relations and Labour Laws Dr V G Goswami Labour Insdustrial Laws S. N Mishra - Labour Laws S. C. Srivastava - Social Security and Labour Laws. G Ramanujam, Industrial Labour Movement P L Malik, Industrial Law Mamoria and Memoria, Dynamic of Industrial Relations First National Labour Commission Report, 1969 Second National Labour Commission Report, 2002 International Labour Conventions and Recommendations.
Bare Acts:
The Trade Unions Act, The Industrial Disputes Act, 1947 The Industrial Disputes Act, 1947 The Employees Standing Orders Act, 1946 The Employees Compensation Act, 1923 The Employers State Insurance Act, 1948 The Payment of wages Act, The Factories Act, 1948
UNIT-IV:
Concept and Importance of Social Security - Influence of I'LO' - Constitutional Mandate, The Employees Compensation Act, 1923 - Definitions - employee, employer, dependent, partial disablement, total disablement, etc. - Employer's liability for compensation -Conditions and Exceptions - Procedure for claiming compensation. Computation of Compensation, Commissioner- Jurisdiction, Powers etc.
The Employees State Insurance Act, 1948 - Definitions - Employment injury, Contribution, Dependent, Employee, Principal Employer etc. Employees State Insurance Funds- Contribution, Benefits available - Administrative Mechanism - ESI Corporation, Standing Committee, Medical Benefits Council - Composition, Powers, Duties - Adjudication of Disputes, E.S.I Courts. Comparative analysis of the ESI Act, 1948 with the Employees' Compensation Act, 1923
UNIT-V:
The Payment of wages Act, 1936 - Definitions - employed person, factory, industrial and other establishment, wages, etc. – Deductions - Authorities - Inspectors and Payment of Wages Authority.
The Factories Act, 1948 - Definitions - factory, manufacturing process, occupier' worker, hazardous process, etc. - Provisions of the Factories Act relating to health, safety and welfare of workers - provisions relating to Hazardous process - provisions relating to working conditions of employment - Working hours, Weekly leave, Annual leave facility, Provisions relating to regulation of employment of women, children and young persons.
UNIT-I
LAW RELATING TO TRADE UNION IN INDIA
Introduction:
The law relating to labour and employment in India is primarily known under the broad category of “Industrial Law”. Industrialization is considered to be one of the key engines to support the economic growth of any country. The commence of industry and its growth is not a venture of the employer alone; yet it involves the hard work and tough grind of each and every stakeholder of the industry including the labourers, supervisors, managers and entrepreneurs. With the initiation of the concept of welfare state in the early realm of independence of our country, various legislative efforts have made their first move in the direction of welfare, equitable rights, social justice, social equity and equitable participation of the labour as a stakeholder at parity. A plethora of labour laws have been established to ensure elevated health, safety, and welfare of workers; to protect workers against oppressive terms as individual worker is economically weak and has little bargaining power; to encourage and facilitate the workers in the organization; to deal with industrial disputes; to enforce social insurance and labour welfare schemes and alike.
Labour laws are the one dealing with employment laws in any organization – whether it is a manufacturing organization or trading organization or shops and establishment. The labour laws address the various administrative rulings (such as employment standing orders) and procedure to be followed, compliance to be made and it addresses the legal rights of, and restrictions on, working people and their organizations. By and large the labour law covers the industrial relations, certification of unions, labour management relations, collective bargaining and unfair labour practices and very importantly the workplace health and safety with good environmental conditions. Further the labour laws also focus on employment standards, including general holidays, annual leave, working hours, unfair dismissals, minimum wage, layoff procedures and severance pay and many other issues related to employer and employee and the various compliance requirements.
The labour laws derive their origin, authority and strength from the provisions of the Constitution of India. The relevance of the dignity of human labour and the
and impose duties upon each other by voluntary mutual contract; though in practice the freedom was false. The then prevailing state of policy of laissez faire i.e. of letting the bargain between the capitalist and the labourer be what they liked in combination with the superior social and economic position of the capitalist, rendered the freedom of contract meaningless.
In an industrial era, now the evolution of capital labour relationship is marked by the recognition of two aspects, namely- (i) The existence of two distinct social groups or classes i.e. Capitalist and Labourers, each possessing a different social and economic position; and
(ii) The necessity of State intervention in capital-labour relationship for protecting and balancing the contracting claims of these groups.
The enhancement of industrial laws in particular, and State support to trade unionism and collective bargaining in general, are the important characteristics of the new basis of capital-labour relationship. The new capital-labour relationship is still that of master and servant and is based on the freedom of contract, but unlike in the past, the freedom is now no more the individual freedom of a labourer, but is the collective freedom of a group or union of labourers and the contract is no more an individual contract between the capitalist and the labourer but is ‘collective agreement’ between a group or class or union of labourers on the one hand and the capitalist or group of capitalists on the other. In short, the labourer is now no more a condemned slave, neither an unfree serf nor a submissive servant, but is a free member of a group or class or union of labourers now known by the name ‘employee’ or ‘worker’. However, this recognized right assuming different dimensions with the changing needs of the State and employer. The Nature of Master and Servant Relationship
A servant is one who works for another individual, known as the master, with or without pay. The master and servant relationship only arises when the tasks are performed by the servant under the direction and control of the master and are subject to the master's knowledge and consent. Advocate S. R. Samant observed that: “The words master and servant are suggestive of the ideas of domination and submission hidden behind them. According to the settled law of master and servant, the master
holds authority over the servant and the servant owes obeyance to the master. In other words, the servant is under the control and bound to obey the orders of the master. The master is the superior of the servant and the servant is the inferior of the master. The so called equality of persons before the law is conspicuous by absence in the master and servant relation. The masters economic and social might determine his legal rights. The strong is never wrong and the weak must ever be meek is the maxim of the master and servant law. The master and the servant are truly the ruler and the ruled”.
In recent times of democratic order and social justice, however, the words master and servant have almost fallen out of use and new ones like manager and worker or employer and employee have taken their place. No doubt, this is in conformity with the great social revolution, sometimes styled as the “New Industrial Revolution” or the “Second Industrial Revolution” that is taking place in the field of industrial relations. This transformation of words master and servant is certainly significant in that the new words no more smell at least in theory of the ideas of domination and submission, unlike their predecessors. Taken at their dictionary meaning, these new words are truly descriptive of the functions rather than the relations of the master and the servant.
But though outwardly, the new words possess dignity and respect, it is quite evident after a little reflection that the transformation of the words is more apparent than real as regards the actual facts. They are certainly changed in point of form, but they remain more or less the same in substance. There is no improvement in the relationship between the employer and the employee formerly known as the master and the servant which ought to have followed the improvement in their nomenclature. The transformation is incomplete giving rise to a problem known as the human relations problem.
The cherished objectives of harmonious and amicable relations between the employer and the workmen could not in these circumstances be achieved within the framework of the then prevailing juristic thought, legal principles or legal traditions; (it called for altogether new approach, based on new legal thought and philosophy so that new legal traditions could come up so as to pave the way for social justice and for an equitable distribution of profits and benefits accruing from the industry between
not have much impact, unlike in developing economy. Countries like the U.S. and England, etc. with advanced and free market economy only lay down bare rules for observance of employers and workers giving them freedom to settle their disputes. In the U.S., States intervention in industrial dispute is eliminated to actual or threatened workers’ stoppages that may imperil the national economy, health or safety. However, in a developing economy, the States rules cover a wider area of relationship and there is equally greater supervision over the enforcement of these rules. This is emphatically so in developing countries with labour surplus. It is a concern of the state to achieve a reasonable growth rate in the economy and to ensure the equitable distribution thereof. This process becomes more complex in a country with democratic framework guaranteeing fundamental individual freedoms to its citizens. Hence, the State in a developing country concerns itself not only with the content of work rules but also with the framing of rules relating to industrial discipline, training, and employment. The founding fathers of democratic Constitution of India were fully aware about these implications while they laid emphasis to evolve a welfare state embodying federal arrangement. Entries about labour relations are represented in all the three lists in the Constitution. Yet most important ones come under the Concurrent list. These are industrial and labour disputes, trade unions and many aspects of social securities and welfare like employer’s’ liability, employees’ compensation, provident fund, old age pensions, maternity benefit, etc. Thus, the Industrial Disputes Act, 1947, the Minimum Wages Act, 1948, the Employees’ State Insurance Act, 1948, etc. come under the concurrent list. Some States have enacted separate amendment Acts to some of the above legislations to meet local needs. Such amendments are recommended either with the assent of the President of India or by promulgating rules pursuant to the powers delegated by the Central Act. Under the rule making powers delegated by the Centre, the States have often been able to adopt Central Act to local needs without the President’s assent. The Central acts often delegate such powers. For example, Section 38 of the Industrial Disputes Act delegates to the appropriate government, which in many is the State Government, the power to promulgate such rules as may be needed for making the Act effective. Similarly, Section 29 and Section 30 of the Minimum Wages Act and Section 26 of the Payment of Wages Act delegated the rule making power to the State. In pursuance to this, several States have promulgated separate minimum wages rules and
payment of wage rules. The Factories Act also contains similar provisions and they have been similarly availed of. Further, the goals and values to be secured by labour legislation and workmen have been made clear in Part IV, Directive Principles of the State Policy of the Constitution. Thus, the State shall secure a social order for the promotion of welfare of the people and certain principles of policy should be followed by the State towards securing right to adequate means of livelihood, distribution of the material resources of the community to subserve the common good, prevention of concentration of wealth via the economic system, equal pay for equal work for both men and women, health and strength of workers including men, women and children are not abused, participation of workers in management of industries, just and humane conditions of work and that childhood and youth are protected against exploitation against exploitation and against moral and material abandonment. By and large industrial and labour legislations have been directed towards the implementation of these directives. Factories Act, 1948, ESI Act, 1948, Employees’ Compensation Act, 1923 are focused to the regulation of the employment of the women and children in factories, just and humane conditions of work, protection of health and compensation for injuries sustained during work. Minimum Wages Act, 1948 and the Payment of Wages Act, 1936 regulate wage payment. Payment of Bonus Act, 1965 seeks to bridge the gap between the minimum wage and the living wage. However, the directives relating to distribution of wealth, living wages, equal pay for equal work, public assistance, etc. have not been generally implemented as yet.
TRADE UNIONS ACT, 1926
Trade Union Movement in India is not a new idea. From the Marxian to the Gandhian, move violently to non violence, howlingness to achievement Trade Union Movement has been gradually developed till date. It is mentionable that, in industrially developed countries, there are every Trade Unionism in the fields of Agriculture, Industry, Bus and Lorry, Handy Workers and Labours, and Edu- Professionals etc. Their Trade Unionism had made a great impact on the social, political and economic life, while in India; Trade Unionism can be seen only in the field of Industrial area. As long as history of human society various conflicts between workers group and employers group have been lasting in the form of strike, gherao,
“Bombay Mill Hands Association” and succeeded a weekly holiday system for Bombay Mill Owners Association.
In 1918 Trade Union Movement in India became more organized and formed varieties of unions e.g. Indian Collie or Employees Association, Indian Seamen’s’ Union, Railway Men’s Union, Port Trust Employees Union etc. Meanwhile Gandhiji formed The Textile Labour Association in 1920 for fulfilling the demands of spinners and weavers society. More over the different labour unions and their representatives from all over India met in Bombay in 1920 and established the All India Trade Union Congress (AITUC) led by Lala Lajpat Rai.
With the days passed, Trade Union Movement in India gradually strengthened and became national figure in leading of periodic strikes, Gherao, picketing and boycotts etc in contrary of different work fields for prevention and settlement of industrial disorders. The historic background of Bombay Mill Case of 1920 over which Madras High Court witnessed Madras Labour Union forbidding by an interim injunction against The Laborers’ strike which was pondered about some necessary legislation for protecting the sustained Trade Union in India.
As a result Mr. N.M. Joshi, the then General Secretary of All India Trade Union Congress moved a resolution in the Central Legislative Assembly in 1921 recommending the Government to introduce legislation for the registration and protection of Trade Union’s existence in India. The resolution was strongly protested by Bombay Mills Owners and it took a long bed rest on the table of the Central Legislative Assembly.
While in the year of 1924, many communist leaders were arrested and prosecuted against aggressive and lengthy strikes. From the period numbers of Indian working classes including Peasants Party united and demanded Indian government through the AITUC to pass an act to protect the interest of all India workers group which results The Trade Union Act 1926 in India. More over different situations in different times formed many Unions and Federations, which of some are All India Trade Union Congress 1920, Red Trade Union Congress 1931 , National Federation of Labour 1933 Red Trade Union Congress merged with AITUC in 1935 and Indian Federation of Labour 1941 etc.
The importance of the formation of an organized trade union was realized by nationalist leaders like Mahatma Gandhi who to improve the employer and worker relationship gave the concept of trusteeship which envisaged the cooperation of the workers and employers. According to the concept, the people who are financially sound should hold the property not only to make such use of the property which will be beneficial for themselves but should make such use the property which is for the welfare of the workers who are financially not well placed in the society and each worker should think of himself as being a trustee of other workers and strive to safeguard the interest of the other workers.
Many commissions also emphasized the formation of trade unions in India for eg. The Royal Commission on labour or Whitley commission on labour which was set up in the year 1929-30 recommended that the problems created by modern industrialization in India are similar to the problems it created elsewhere in the world and the only solution left is the formation of strong trade unions to alleviate the labours from their miserable condition and exploitation.
The Eighteenth Session of the All-India Trade Union Congress led by Suresh Chandra Banerjee, President of the Congress, was held at Bombay on 28 and 29 September 1940; The session constituted a landmark in the history of the Indian Trade Union Movement is that it witnessed the restoration of complete unity in Indian Trade Union from the merging of the National Trades Union Federation in the All-India Trade Union Congress.
A Tripartite Labour Conference was convened in 1942 to provide common platform for discussion between employees and employers. Indian National Trade Union Congress (INTUC) was formed in 1947 to settle the industrial disputes in democratic and peaceful methods. Moreover, the Indian Federation of Labour formed in 1949, Hind Mazdoor Sabha in 1948 and United Trade Union Congress formed in 1949 in the national level and recognized by the government of India as to serve national and International conference. Trade Union Movement does not delimit its operation within Bombay vicinity nor Delhi only. With the passage of time the movement spreads all across the country and convenient groups welcome the organism of Trade Union Movement from different parts of India. In state of Assam, the garden men’s forum, Assam Chah Mazdoor Sangha, claims for their minimum
- Freedom of expression and of association are essential to sustained progress;
- Poverty anywhere constitutes danger to prosperity everywhere; and
- The war against want requires to be carried on with unrelenting vigour within each nation, and by continuous and concerted international effort in which the representatives of workers and employers, employing equal status with those of governments, join with them in free discussion and democratic decision with a view to the promotion of the common welfare. International Labour Standards on Freedom of Association:
The principle of freedom of association is at the core of the ILO's values: it is enshrined in the ILO Constitution (1919), the ILO Declaration of Philadelphia (1944), and the ILO Declaration on Fundamental Principles and Rights at Work (1998). It is also a right proclaimed in the Universal Declaration of Human Rights (1948). The right to organize and form employers' and workers' organizations is the prerequisite for sound collective bargaining and social dialogue. Nevertheless, there continue to be challenges in applying these principles: in some countries certain categories of workers (for example public servants, seafarers, workers in export processing zones) are denied the right of association, workers' and employers' organizations are illegally suspended or interfered with, and in some extreme cases trade unionists are arrested or killed. ILO standards, in conjunction with the work of the Committee on Freedom of Association and other supervisory mechanisms, pave the way for resolving these difficulties and ensuring that this fundamental human right is respected the world over.
1. Freedom of Association and Protection of the Right to Organize Convention, 1948: This Convention provides that workers and employers shall have the right to establish and join organizations of their own choosing without previous authorization. The public authorities are to refrain from any interference which would restrict the right to form organization or impede its lawful exercise. These organizations shall not be liable to be dissolved or suspended by administrative authority. It also provides protection against act of anti-union discrimination in respect of their employment. This convention has been ratified by Albania, Argentina, Austria, Belgium, Brazil,
Byelorussia, Cuba, Denmark, Dominican Republic, Finland and France. Federal Republic of Germany and India have not ratified this particular convention. As regards the Trade Unions Act, 1926, it limits the number of outsiders in the executive of a trade union. Further there is restriction on outsiders in the federations of Government servants who cannot affiliate themselves with any central federations of workers. Also, the Government in public interest can forego any association or trade union and detain or arrest a trade union leader under the Essential Services Act, 1967 , the Preventive Detention Act, 1950, the Maintenance of Internal Security Act, 1971 Likewise the Code of discipline in industry, although non-legal and non- statutory, one regulates the organization of constitution of India itself, while guaranteeing freedom in public interest and public good. These laws and practice on trade unions do not conform to the requirements of the convention.
2. Right to Organize and Collective Bargaining Convention, 1949 This fundamental convention provides that workers shall enjoy adequate protection against acts of anti-union discrimination, including requirements that a worker not join a union or relinquish trade union membership for employment, or dismissal of a worker because of union membership or participation in union activities. Workers' and employers' organizations shall enjoy adequate protection against any acts of interference by each other, in particular the establishment of workers' organizations under the domination of employers or employers' organizations, or the support of workers' organizations by financial or other means, with the object of placing such organizations under the control of employers or employers' organizations. The convention also enshrines the right to collective bargaining. 3. Workers' Representatives Convention, 1971 Workers' representatives in an undertaking shall enjoy effective protection against any act prejudicial to them, including dismissal, based on their status or activities as a workers' representative or on union membership or participation in union activities, in so far as they act in conformity with existing laws or collective agreements or other jointly agreed arrangements. Facilities in the undertaking shall be afforded to workers' representatives as may be appropriate in order to enable them to carry out their functions promptly and efficiently.
improving the relations between the employees and the employer. They are formed not only to cater to the workers' demand, but also for imparting discipline and inculcating in them the sense of responsibility. They aim to:-
- Secure fair wages for workers and improve their opportunities for promotion and training.
- Safeguard security of tenure and improve their conditions of service.
- Improve working and living conditions of workers.
- Provide them educational, cultural and recreational facilities.
- Facilitate technological advancement by broadening the understanding of the workers.
- Help them in improving levels of production, productivity, discipline and high standard of living.
- Promote individual and collective welfare and thus correlate the workers' interests with that of their industry.
- to take participation in management for decision-making in connection to workers and to take disciplinary action against the worker who commits in- disciplinary action.
Definition of Trade Union: Sec 2 (h) states that "Trade Union" means any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions. Important elements of Trade Union:
- There must be combination of workmen and employers;
- There must be trade or business; and
- The main object of the Union must be to regulate relations of employers and employees or to impose restrictive conditions on the conduct of any trade or business.
In Rangaswami V. S Registrar of Trade Unions, in the Raj Bhavan at Guindy, a number of persons are employed in various capacities such as household, staff, peons, chauffers, tailors, carpenters, maistries, gardeners, sweepers etc. There are also
gardeners and maistries employed at the Raj Bhavan at Ootacamund. Those persons are employed for doing domestic and other services and for the maintenance of the Governor's household and to attend to the needs of the Governor, the members of his family, staff and State guests. When employees applied for the registration of trade union, the registrar had rejected their application on the ground that, Raj Bhavan not comes under the meaning of trade and business. The petition has been field seeking to set aside the order of the Registrar of Trade Unions, Madras refusing to register the union of employees of the Madras Raj Bhavan as a trade union under the Trade Unions Act.
Supreme Court rejecting the petition, held that, even apart from the circumstance that a large section of employees at Raj Bhavan are Government servants who could not form themselves into a trade union, it cannot be stated that the workers are employed in a trade or business carried on by the employer. The services rendered by them are purely of a personal nature. The union of such workers would not come within the scope of the Act, so as to entitle it to registration there under.
The term "trade union" as defined under the Act contemplates the existence of the employer and he employee engaged in the conduct of a trade or business. The definition of the term "workmen" in Sec. 2 (g) would prima facie indicate that it was intended only for interpreting the term "trade dispute". But even assuming that that definition could be imported for understanding the scope of the meaning of the term "trade union" in S. 2 (h), it is obvious that the industry should be one as would amount to a trade or business, i.e., a commercial undertaking. So much is plain from the definition of the term "trade union", itself. I say this because the definition of "industry" in the Industrial Disputes Act is of wider significance. Section 2 (j) of the Industrial Disputes Act which defines "industry" states its meaning as “any business, trade undertaking, manufacture or calling of employers and includes any calling, services, employment, handicraft or industrial occupation or avocation of workmen."
In Tamil Nadu NGO Union v. Registrar, Trade Unions, in this case Tamil Nadu NGO Union, which was an association of sub magistrates of the judiciary, tahsildars, etc., was not a trade union because these people were engaged in sovereign and regal functions of the State which were its inalienable functions. In GTRTCS and Officer’s Association, Bangalore and others vs Asst. Labor Commissioner and
