The document provides an overview of key sections and definitions within the Factories Act of 1948 in India. It discusses definitions such as what constitutes a factory, adult, child, hazardous process and more. It outlines obligations of workers and their rights. It describes the roles and powers of inspectors appointed to enforce the Act. The purpose of the Act is to regulate factories and protect workers' health, safety and welfare.

1. PREPARED AND PRESENTED BY,
N. GANESHA PANDIAN
ASSISTANT PROFESSOR
MADURAI SCHOOL OF MANAGEMENT
MADURAI
Legal Aspects of Business
Unit 3: Industrial law

2. Contents
 An Overview of Factories Act
 Payment of Wages Act
 Payment of Bonus Act
 Industrial Disputes Act

3. Factories act, 1948

4. Introduction
 The first and foremost factories act in India was passed in the
year 1881, the act was principally designed for the protection
of children and provides for some health and safety measures
 The factories Act 1881 was followed by new factories Act in
1891,1911,1922 and 1934.To implement the recommendations
of the Royal commission on Labor in India and the
conventions of the International Labor organization, the
factories Act 1934 enacted

5. Contd…
 The effective administration was hampered by numerous shortcomings
and flaws because of inadequate and unsatisfactory safety, healthy and
welfare measures for the workers
 As a result the factories Act, 1948 was passed which came into force w.e.f
1st April 1949
 The Act was primarily enacted with a view to protect and defend the
workforce employed in manufacturing establishments against industrial
and occupational hazards
 The Act divided into 11 chapters and 120 sections which regulates the
factories in India

6. Chapter 1: Preliminary (sec 1 – 7B)

7. Section 1: Short, title, extent and commencement
 The act extends to whole of India including the state
of J&K. It has been extended to the Union territory of
Dadra and Nagar Haveli, Pondicherry, Goa, Daman
and Diu and it has also been extended to the state of
J&K in the year 1970
 The provisions of this Act are applicable to all
factories including factories belonging to central or
any state government unless otherwise excluded

8. Section 2: Definitions
1. Adult [sec 2a]: An ‘adult’ means a person who has completed
his eighteenth year of age
2. Adolescent [sec 2b]: An ‘Adolescent’ means a person who
has completed his fifteenth year of age but has not
completed his eighteenth year of age
3. Calendar year [sec 2bb]: ‘Calendar year’ means the period of
twelve months beginning with the first day of January in any
year
4. Child [sec 2c]: ‘Child’ means a person who has not
completed his fifteenth year of age

9. Contd…
5. Competent person [sec 2ca]: ‘Competent person’ means a person or an
institution recognized by the chief inspector for the purpose of carrying out
test, examinations and inspections required to be done in a factory under the
provisions of this Act having regard to:
i) The qualifications and experience of the person and facilities available at
his disposal;
ii) The qualifications and experience of the persons employed in such
institution and facilities available therein,
With regard to the conduct of such tests, examinations and inspections,
and more than one person or institution can be recognized as a competent
person in relation to a factory

10. Contd…
6. Hazardous process [sec 2cb]: ‘Hazardous process’ means any process or
activity in relation to an industry specified in first schedule where, unless
special care is taken, raw materials used therein or the intermediate or
finished products, wastes, by-products or effluents thereof would:
i) Cause material impairment to the health of the person engaged in or
connected therewith, or
ii) Result in pollution of general environment
However the state government may, by notification in the official
Gazette, amend the first schedule by way of addition, omission or
variation of any industry specified in the said schedule

11. Contd…
7. Young person [sec 2d]: ‘Young person’ means a person who is either a child or an
adolescent
8. Day [sec 2e]: ‘Day’ means a period of twenty four hours beginning at midnight
9. Week [sec 2f]: ‘week’ means a period of seven days beginning at midnight on Saturday
night or such other night as may be approved in writing for a particular area by the
Chief inspector of factories
10. Prime mover [sec 2h]: ‘prime mover’ means any engine, motor or other appliance
which generates or otherwise provides power
11. Transmission machinery [sec 2i]: ‘Transmission machinery’ means any shaft, wheel
drum, pulley, system of pulleys, coupling, clutch, driving belt or other appliance or
device by which the motion of a prime mover is transmitted to or received by any
machinery or appliance
12. Machinery [sec 2j]: ‘Machinery’ include prime movers, transmission machinery and
all other appliances whereby power is generated, transformed, transmitted or applied

12. Contd…
Occupier [sec 2n]: ‘Occupier’ of a factory means the person who has ultimate control over
affairs of the factory
Factory [sec 2m]: According to sec 2m of Factories act 1948, ‘Factory means ant premises
including the precincts thereof:
1. Whereon 10 or more workers are working or were working on any day of the
preceding twelve months, and in any part of which a manufacturing process is being
carried on with the aid of power, or is ordinarily so carried on, or
2. Whereon 20 or more workers are working or were working on any day of the
preceding twelve months, and in any part of which a manufacturing process is being
carried on without the aid of power, or ordinarily so carried on, but does not include a
mine subject to the operation of the mines Act, 1952 or a mobile unit belonging to the
armed forces of the union, a railway running shed or hotel, restaurant or eating place

13. Test of determining any establishment is a
factory
1. There must be a place, premises including precincts thereof where
manufacturing process is carried on. There may be buildings or open land
for purpose of manufacturing process
2. There must be manufacturing process carried on with the aid of power or
without the aid of power, in any part of the premises including precincts
thereof of sought to be brought with in the purview of the term ‘factory’
3. There must be required number of persons working thereon depending on
the context.
4. It is not necessary that a manufacturing process be carried on in whole of
the building or place or premises or precincts thereof, it is sufficient if
manufacturing process is being carried on in any part thereof

14. Manufacturing process [sec 2k]
 Any process for:
1. Making, altering, repairing, ornamenting, finishing,
packing, oiling, washing, cleaning, breaking up, demolishing
or otherwise treating or adapting any article or substance
with a view to use, sale , transport, delivery or disposal, or
2. Pumping oil, water, sewage, or any other substance, or
3. Generating, transforming, or transmitting power, or
4. Composing types for printing by letter press, lithography,
photogravure or other similar process or book-binding, or
5. Constructing, reconstructing, repairing, refitting, finishing,
or breaking up ships or vessels or
6. Preserving or resorting any article in the cold storage

15. Workers [sec 2(1)]
 “worker” means a person employed, directly or by or through
any agency including a contractor with or without the
knowledge of the principal employer whether for
remuneration or not in any manufacturing process, or in
cleaning any part of the machinery or premises used for a
manufacturing process or in any other kind of work incidental
to, or concealed with the manufacturing process, or the
subject of the manufacturing process but does not include any
member of the armed forces of Union

16. Contd…
Obligations of workers [sec 111]:
A worker in a factory shall not:
1. Willfully interfere with or misuse any appliance, convenience
or other thing provided in the factory for the purposes of
securing the health, safety or welfare of the workers therein
2. Willfully and without reasonable cause do anything likely to
endanger himself or others; and
3. Willfully neglect to make use of any appliance or other thing
provided in factory for the purpose of securing the health or
safety of the workers therein

17. Contd…
 Rights of workers [sec 111-A]
As introduced by the amendment Act of 1987, every worker shall have the
right to:
1. Obtain from the occupier, information relating to workers’ health and safety
at work
2. Get trained within the factory wherever possible, or to get himself sponsored
by the occupier for getting trained in a training centre or institute, duly
approved by the chief inspector, where training is imparted for workers’
health and safety at work
3. Represent to the Inspector directly or through his representative in the
matter of inadequate provision for protection of his health or safety in the
factory

18.  Section 3: References to time of day
 Section 4: Power to declare different departments to
be separate factories or two or more factories to be
single factory
 Section 5: Power to exempt during public emergency
 Section 6: Approval, licensing and registration of
factories
 Section 7A: General duties of the occupier
 Section 7B: General duties of manufacturers etc., as
regards articles and substances for use in factories

19. Chapter 2: The inspecting staff [sec 8-10]

20. Section 8: Appointment of inspectors
1. The state government is empowered to appoint persons
possessing prescribed qualifications as Inspectors and assign
them such local limits as it may think fit [sec 8(1)]
2. The state government may also appoint a Chief inspector
who shall, in addition to the powers conferred on him as
chief inspector, exercise the powers of an inspector
throughout the state [sec 8(2)]
3. The state government may appoint Additional Chief
inspectors, joint chief inspectors and deputy chief inspectors
to assist chief inspector as may be specified [sec 8(2-A)]

21. Section 9: Powers of inspectors
 Subject to any rules made under the Act, an inspector may exercise any of the
following powers within the local limits for which he is appointed
1. Enter any place which is used or which he has reason to believe is used as a factory. For
this purpose, he may take the assistance of any person
i) In the service of the government or
ii) Any local or public authority or,
iii) Of an expert
2. Make examination of the premises, plant, machinery, article or substance
3. Enquiry into any accident or dangerous occurrence whether resulting in bodily injury,
disability or not, and take on the spot or otherwise statements of any person which
he may consider necessary for such inquiry

22. 4. Require the production of any prescribed or any other document
relating to the factory
5. Seize or take copies of, any register, record or other document or
any portion thereof as he may consider necessary in respect of the
offence under this Act, which he has reason to believe have been
committed
6. Direct the occupier that any premises or any part thereof , and
anything lying therein, shall be left undisturbed for so long as is
necessary for the purpose any examination
7. Take measurements and photographs and make such recording as
he considers necessary for the purpose of any examination, taking
with him any necessary instrument or equipment
8. In case of any article or substance found in any factory which
appears to him to be dangerous to the health or safety of the
workers, direct it to be dismantled or subject it to any test or
destroy it, and make possession of it and detain it for so long as is
necessary for making examination
9. He may exercise such other powers as may be prescribed

23. Section 10: Certifying surgeons
1. Appointment of certifying surgeons
Sec 10(1) – The state government may appoint qualified medical practitioners to be
certified surgeons for the purpose of this Act with in such local limits or for such
factory or class or description of factories as it may assign to them respectively
Sec 10(2) – Any certifying surgeon may, with the approval of the state government
authorize any qualified medical practitioners to exercise any of his powers under
this act on such condition and for such a period of time as the state government
may prescribe
Sec 10(3) – No person shall be appointed to be, or authorized to exercise the powers of, a
certifying surgeon, or having been so appointed or authorized, continue to exercise
such powers, who is or becomes the occupier of factory or directly or indirectly
interested therein or in any process or business carried or employ in factory

24. Chapter 3: Health (sec 11- 20)

25. section 11 : Cleanliness
Every factory shall be kept clean and free from effluent, from any drain, privy or
other nuisance and in particular
1. [sec 11(1)(a)] Accumulation of dirt and refuse shall be removed daily by
sweeping or by any other effective method from the floors and benches of
workrooms and from staircases and passage and disposed of in a suitable
manner
2. [sec 11(1)(b)] The floor of every workroom shall be cleaned once in every week
by washing, using disinfectant where necessary, or by some other effective
method
3. [sec 11(1)(c)] Where a floor is liable to become wet in the course of any
manufacturing process to such extent as is capable of being drained, effective
means of drainage shall be provided and maintained

26. Contd…
4. [sec 11(1)(d)] All inside walls and partitions, all ceilings or
tops of passages and staircases shall be painted or
whitewashed or varnished.
5. [sec 11(1)(dd)] All doors and window frames and other
wooden or metallic frame work and shutters shall be kept
whitewashed or color washed shall be carried out at least
once in period of 14 months
6. [sec 11(1)(e)] The dates on which the processes required by
clause (d) are carried out shall be entered in the prescribed
register

27. Section 12: Disposal of wastes and effluents
 [section 12(1)] Effective arrangements shall be made in
every factory for the treatment of wastes and effluents due
to manufacturing process carried on therein so as render
them innocuous and for their disposal
 [section 12(2)] The state government has the power to
make rules in this regard or it may require that such
arrangements shall be approved by a prescribed authority

28. Section 13: Ventilation and Temperature
1. Effective and suitable provision shall be made in every factory for securing
and maintaining in every workroom:
a, adequate ventilation by the circulation of fresh air and
b, such temperature as will secure to workers therein reasonable conditions of
comfort and prevent injury to health
2. Walls and roofs shall be of such material and so designed that such
temperature shall not be exceeded nut kept as low as practicable
3. Where the nature of work carried on in the factory involves, or is likely to
involve , the production of excessively high temperatures such adequate
measures as are practicable shall be taken to protect the workers there
from, by separating the process, which produces such temperature from
the workroom, by insulating the hot parts or by effective means

29. Section 14: Dust and fume
1. Measures for prevention of inhalation or
accumulation of dust or fume
2. Exhaust for internal combustion engine

30. Section 15: Artificial Humidification
In respect of all factories in which the humidity of the air is artificially
increased, the state government has been empowered to make rules as:
A, prescribing standards of humidification
B, regulating the methods for artificially increasing the humidity of the air
C, Directing prescribed tests for determining the humidity of the air to be
correctly carried out and recorded
D, prescribing methods to be adopted for securing adequate ventilation and
cooling of the air and workrooms
In any factory in which the humidity of the air is artificially increased, the water
used fir the purpose shall be taken from a public supply, or other source of
drinking water, or shall be effectively purified before it is used

31. Section 16: Overcrowding
1. No room in any factory shall be overcrowded to an extent injurious
to the health of the workers employed therein
2. Without prejudice to the generality of the above provision, there
shall be in every workroom of factory in existence 9.9 cu meters on
date of commencement, 14.2 cu meters after date of
commencement of this act
3. If the Chief inspector by order in writing so requires, there shall be
posted in each workroom of a factory specifying the maximum
number of workers who may, in compliance with provisions
4. The chief inspector may, by order in writing exempt, subject to such
conditions

32. Section 17: Lighting
 In every part of factory where workers are working or
passing there shall be provided and maintained sufficient
and suitable lighting, natural or artificial or both
 In every factory all glazed windows and skylights used for
lightings of the workroom shall be kept clean on both
inner and outer surfaces and so far as compliance with law
 In every factory effective provision shall, so far as is
practicable, be made for the prevention of:
a, Glare either directly from a source of light or by reflection
from a smooth or polished surface
b, The formation of shadows to such an extent as to cause
eye-strain or the risk of accident to any worker
 The state government may prescribe, standards of
sufficient and suitable lighting for factories or for any class
or description of factories or for any manufacturing
process

33. Section 18: Drinking water
1. Suitable points for wholesome drinking water
2. Drinking points to be legibly marked and to be away from
urinal, latrine etc
3. Cooling of drinking water where more than 250 workers
employed
4. The state government may make rules for securing
compliance with the provisions of section 18 and for the
examination by prescribed authorities of the supply and
distribution of drinking water in factories

34. Section 19: Latrines and Urinals
In every factory:
a, sufficient latrine and urinal accommodations of prescribed types shall be provided
conveniently situated and accessible to workers at the times while they are in the
factory
b, separate enclosed accommodation shall be provided for male and female workers
c, such accommodation shall be adequately lighted and ventilated and no latrine or
urinals shall, unless exempted in writing by the chief inspector, communicate with
any workroom except through and intervening open space or ventilated passage
d, All such accommodation shall be maintained in a clean and sanitary conditions at all
times
e, sweepers shall be employed whose primary duty it would be to keep clean latrines,
urinals and washing places

35. Contd…
 In every factory wherein more than 250 workers are ordinarily employed:
a. All latrine and urinal accommodations shall be of prescribed sanitary
types
b. The floors and internal walls up to height of 90 cms of the latrines and
urinals and the sanitary blocks shall be laid in glazed tiles or any smooth
polished surface
c. Washed and kept clean at least once in seven days by using suitable
detergents or disinfectants
 The state government may prescribe the number of latrines and urinals
to be provided in any factory in proportion to number of male and
female workers employed therein

36. Section 20: Spittoons
 Sufficient number of spittoons
 Display of notice of provision of spittoons
 Whoever spits in contravention of section 20 shall be
punishable with fine not exceeding Rs.5
 The state government may make rules prescribing
the type and the no. of spittoons to be provided and
location in factory and matter relating to
maintenance in clean and hygienic condition

37. Chapter 4: Safety (sec 21-41)

38.  Measures regarding safety:
1. Fencing of machinery (section 21)
2. Work on or near machinery in motion (section 22)
3. Employment of young persons on dangerous machines
(section23)
4. Striking gear or devices for cutting of power (section 24)
5. Self-acting machines (section 25)
6. Casting of new machinery (section 26)
7. Prohibition of employment of women and children near
cotton openers (section 27)
8. Hoists and lifts (section 28)
9. Lifting machines, chains, ropes and lifting tackles (section 29)

39. 10. Revolving machinery (section 30)
11. Pressure plant (section 31)
12. Floors, stairs and other means of access (section 32)
13. Pits, sumps and opening in floors (section 33)
14. Excessive weights (section 34)
15. Protection of eyes (section 35)
16. Precautions against dangerous fumes (section 36)
17. Precautions against the use of portable electric lights (section
36A)
18.Explosives or inflammable dust or gas (section 37)
19. Precautions in case of fire (section 38)

40. 20. Power to require specifications of defective parts or
tests of stability (section 39)
21. Safety of buildings and machinery (section 40)
22. Maintenance of buildings (section 40A)
23. Safety officers (section 40B)
24. Power to make rules (section 41)

41. Chapter 4A: Provisions relating to hazardous
process (sec 41A-41H)

42. Chapter 5: Welfare (sec 42-50)

43. Section 42: Washing facilities
 In every factory:
1, adequate and suitable facilities for washing shall be provided
and maintained for the use of workers therein;
2, Separate and adequate screened facilities shall be provided and
maintained for the use of male and female workers;
3, Such facilities shall be conveniently accessible and shall be kept
clean
The state government has been authorized to prescribe the
standards of adequate and suitable facilities

44. Section 43: Facilities for storing and drying
clothing
 The state government has been empowered to make
rules requiring the provision therein of suitable
places for keeping clothing not worn during working
hours and for the drying of wet clothing in respect of
any factory or class or description of factory

45. Section 44: Facilities for Sitting
 In every factory suitable arrangements for sitting
shall be provided and maintained for all workers
obliged to work in a standing position, in order that
they may take any advantage of any opportunities for
rest which may occur in the course of their work

46. Section 45: First Aid appliance
 There shall in every factory be provided and
maintained so as to readily accessible during all
working hours first aid boxes or cup-boards equipped
with the prescribed contents, and the number of such
boxes or cupboards to be provided and maintained
shall not be less than one for every 150 workers
ordinarily employed at any one time in the factory

47. Section 46: Canteens
 The date by which such canteen shall be provided;
 The standards in respect of construction, accommodation, furniture and
other equipment of the canteen;
 The foodstuffs to be served therein and the charges which may be made
therefore;
 The constitution of a managing committee for the canteen and the
representation of workers in the management of the canteen;
 The items of expenditure in the running of the canteen which are not to be
taken into account in fixing the cost of foodstuffs and which shall be borne by
the employer;
 The delegation to the chief inspector, subject to such conditions as may be
prescribed, of the powers to make rules

48. Section 47: Shelters, Rest rooms and Lunch
rooms
 In every factory wherein more than 150 workers are
ordinarily employed, adequate and suitable shelters or test
rooms and a suitable lunchroom, with provision for
drinking water where workers can eat meals brought by
them, are required to be provided and maintained for the
use of workers. However any canteen maintained in
accordance with the provisions under section 46
 The shelters or rest rooms or lunch room to be provided
are required to be sufficiently lighted and ventilated and
required to be maintained in a cool and clean condition

49. Section 48: Crèches
 In every factory wherein more than 30 women workers are
ordinarily employed suitable room or rooms are required
to be provided and maintained for the use of children
under the age of six years of such women workers
 Such rooms shall provide adequate accommodation. those
rooms shall be adequately lighted and ventilated and shall
be maintained in clean and sanitary conditions.

50.  Section 49: Welfare officers
In every factory wherein five hundred or more workers are ordinarily
employed is under statutory duty to employ in factory such number of
welfare officers as may be prescribed. The state government may prescribe
the duties, qualifications and conditions of services of such officers.
 Section 50: Power to make rules
The state government may make rules; exempting, subject to compliance with
such alternate arrangement for the welfare of workers as may be prescribed,
any factory or class or description of factories from compliance with any of
the provisions
Requiring in any factory or class of description of factories that
representatives of the workers employed in the factory shall be associated
with the management of the welfare arrangements of the workers

51. Chapter 6: Working hours of adult (sec 51-66)

52. 1. Weekly hours (section 51)
2. Weekly holidays (section 52)
3. Compensatory holidays (section 53)
4. Daily hours (section 54)
5. Intervals for rest (section 55)
6. Spread over (section 56)
7. Night shifts (section 57)
8. Prohibition of overlapping shifts (section 58)

53. 9. Extra wages for overtime (section 58)
10. Restriction on double employment (section 59)
11. Notice of period of work for adults (section 60)
12. Register of adult workers (section 62)
13. Restriction on employment of women (section 66)

54. Chapter 7: Employment of young persons
(sec 67-77)

55. Section 67: Prohibition of employment of young children
Section 68: Non-adult workers to carry tokens
Section 69: Certificate of fitness
Section 70: Effect of Certificate of fitness granted to adolescent
Section 71: Working hours for children
Section 72: Notice of periods of work for children
Section 73: Register of child workers
Section 74: Hours of work to correspond with notice under 72
and 73
Section 75: Power to require medical examination
Section 76: Power to make rules
Section 77: Certain other provisions of law Not barred

56. Chapter 8: Annual leave with wages (sec 78-84)

57.  Section 79:
1, Leave Entitlement
2, Computation of period of 240 days
3, Discharge, dismissal, superannuation, death or quitting of employment
4, Treatment of fraction of leave
5, Treatment of un availed leave
6, Application for leave to be made in writing within a specified time
7, Application for leave covering a period of illness may not be within specified time
8, Scheme for grant of leave
9, Display of scheme for grant of leave
10, Refusal of leave to be in accordance with scheme
11, Payment of wages to worker for leave period if he is discharged or if he quits
service
12, Un availed leave not be taken into account while computing period of notice

58. Wages during leave period (section 80)
 For the leave allowed to him under section 78 or section
79, as the case may be, a worker shall be paid at rate
equal to the daily average of his total full time earnings
for the days on which he actually worked during the
month immediately preceding his leave exclusive of any
overtime and bonus but inclusive of dearness allowance
and the cash equivalent of the advantage accruing
through concessional sale to the worker of food grains
and other articles

59. 1. Payment in advance in certain cases
(section 81)
2. Mode of recovery of unpaid wages
(section 82)
3. Power to make rules (section 83)
4. Power to exempt factories (section 84)

60. Other provisions related to factories Act, 1947
 Chapter 9: Special provisions (sec 85-91A)
 Chapter 10: penalties and procedures (sec 92-
106A)
 Chapter 11: supplemental (sec 107-120)

61. Payment of wages Act 1936

62. Introduction
 The payment of wages act,1936 was passed to regulate the
payment of wages to certain classes or persons employed
in industry
 It is essentially meant for the benefit of industrial
employees not getting very high wages and the provisions
of the act were enacted to safeguard their interest
 It also provides against irregularities in payment of wages
and unauthorized deductions therefore by the employers

63. Section 1: Short, title, extent, commencement and
application
1. This act may be called the payment of wages Act, 1936
2. It extends to the whole of India
3. It shall came into force on such date as the central government may, by notification in
the official gazette, appoint
4. It applies in the first instance to person employed in any factory, to persons employed
(otherwise than in a factory)
5. Appropriate government may, after giving three months notice of its intention of so
doing, by notification in the official Gazette extend the provision of this act or any of
them to the payment of wages to any class of persons employs in any establishment
6. This act applies to wages payable to an employed person in respect of a wage period if
such wages for that wage period do not exceed six thousand and five hundred rupees

64. Section 2: Definitions
 Appropriate government (section 2(i)): “Appropriate government
means, in relation to railways, air transport services, mines and
oilfields, the central government and, in relation to all other cases, the
state government
 Employed person (section2(ia)): Employed person includes the legal
representatives of a deceased employer
 Employer (section (2(ib)): Employer includes the legal
representatives of a deceased employer
 Factory (section 2(ic)): Factory means a factory as defined in section
2(m) of the factories act 1948 and includes any place to which the
provisions of factories act, 1948 have been applied under sec 85 of
that act

65. 5. Industrial or other establishment (section (2ii))
6. Wages (section 2 vi): “wages” means all
remuneration (whether by the way of salary,
allowances otherwise) expressed in terms of money
or capable of being so expressed which would, if the
term of employment, express or implied, were
fulfilled, be payable to a person employed in respect
of his employment or work done in such
employment

66. Rules for payment of wages
 Responsibility of payment of wages (section 3)
 Fixation of wage periods (section 4)
 Time of payment of wages (section 5)
Wages to be paid before 7th or 10th day of the following
wages period
 Medium of payment of wages (section 6)
Wages to be paid in current coin or currency notes

67. Deduction from wages (section 7)
 Meaning of deduction (section 7(1))
Section 7(1) provides that notwithstanding the provisions the Railways Act
1989, the wages of an employed Person to the employer or his agent shall,
for the purpose of this act , be deemed to be a deduction from wages. Any
loss of wages resulting from the imposition, for good and sufficient
cause, upon a person employed of any of the following penalties
1, The withholding of increment of promotion including the stoppage of an
increment at an efficiency bar;
2, The reduction to a lower post or time-scale or to a lower stage in a time
scale
3, suspension

68. Maximum amount of deduction
 Section 7(3) provides that notwithstanding anything contained in this act, the
total amount of deductions which may be made under subsection(2) in any
wage period from the wages of any employed person shall not exceed:
1. In cases where such deductions are wholly or partly made for payments to
co-operative societies under clause (j) of sub-section(2), seventy five
percent, of such wages and,
2. In any other case, fifty percent of such wages, it is provided that where the
total deductions authorized under sub-section (2) exceed seventy five
percent or, as the case may be, fifty percent, of the wages . The excess may
be recovered in such manner as may be prescribed

69. Section 7(2): Kinds of deductions
1. Fines (section 8)
2. Deductions for absence from duty (section9)
3. Deductions for damage or loss (section 10)
4. Deduction for house accommodation (section 7(2)d)
5. Deductions for amenities and services (section 7(2)e)
6. Deduction for recovery of advances (section 7(2)f)

70. Contd…
7, Deductions for recovery of loans made from any fund:
(section7(2ff))
8, Deduction for recovery of loans (section 7(2fff))
9, Deduction for income tax (section 7(2g))
10, Deductions required to be made by order of a court
(section (2)h)
11, Deductions for provident fund section 7(2 (i))
12, Deductions for payments to co-operative societies
section ((2)j)
13, Deduction with consent of Employed person section
7(2)k
14, Deductions for welfare fund section 7(2)kk

71. Contd…
 15, Deductions for trade union membership fees section 7(2) kkk
 16, Deductions for fidelity guarantee bonds section 7(2) I
 17, Deduction for recovery of losses sustained by a railway administration
section 7(2)m
 18, Deduction for losses caused due to failure of proper collection charges
section 7(2)n
 19, Deduction for recovery of losses due to incorrect funds etc., section 7(2)o
 20, Deduction for PM’s National relief fund ,etc section 7(2)p
 21, Deductions for contribution to any insurance scheme section 7(2)q

72. Section 13-A: Maintenance of registers and
records
1. Particulars of persons employed by them;
2. The work performed by them;
3. The wages paid to them;
4. The deductions made from their wages;
5. The receipts given by them; and
6. Such other particulars and in such form as may be
prescribed;

73. Enforcement of Act
 Inspectors (section 14)
 Powers, functions and status of inspectors (section 14(4)
 Appointment of authority (section15(1))
 Power of authorities appointed under section 15
 Appeal (section 17)
 Penalty for offences under the act (section 20)
1. Penalty for delaying the payment of wages or making unauthorized deductions from
wages (section 20(1))
2. Penalty for not paying wages on a working day or in current coins (section 20(2))
3. Penalty for failure to maintain and furnish records and returns (section 20(3)
4. Penalty for obstruction etc.,:
5. Subsequent offence
6. Additional fine for failure to pay wages by the final date

74. Other provisions
 Procedure in trial of offences (section 21)
 No court contracting out (section23)
 Delegation of powers (section 23)
 Display by notice of abstracts of the act (section 25)

75. Payment of bonus Act 1965

76. Introduction
 Bonus is concept referring to ex gratia or bounty or a
payment by way of gift.
 Payment of bonus 1965, there is an obligation to pay a
minimum bonus irrespective of the financial results
has turned bonus into an additional statutory
payment by an employer to employees

77. Section 1: Short title, Extent and Application
 This act may be called the payment of bonus act 1965
 It extends to whole of India
 Save as otherwise provided in this act, it shall apply to:
1, Every factory and
2, Every other establishment in which 20 or more
persons are employed on any day during an
accounting year

78. Section 2: Definitions
 Accounting year: section 2(1) Accounting year means
1. 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
2. In relation to a company, the period in respect of which
any profit and loss account of the company laid before
it in AGM is made up, whether that period is a year or
not

79. Contd…
2. Allocable surplus : section 2(4)
3. Appropriate government : section 2(5)
4. Company : section 2(9)
5. Direct tax : section 2(12)
1, any tax chargeable under:
a, The income tax,1961
b, The super profits act,1963
c, The companies (profits) surtax act, 1964
d, The agricultural income tax laws and
2, Any other tax which, having regard to its nature or incidence may be
declared by the central govt, by notification in the official gazatte

80. Contd…
 Employee (section 2(13))
 Employer (section 2(14))
 Salary or wage (section 2(21))
Number of working days:
The absence of the employee from work on account of the following causes
should not be deducted from the total number of working days
1. Period of layoff under any statue
2. Period of leave with salary or wage
3. Absence due to temp. disablement by any accident
4. Period of maternity leave with salary

81. Determination of bonus
 Step1: Computation of gross profit (section 4)
The gross profit can be derived by an employer from an
establishment in respect of any accounting shall
1. In the case of a banking company, can calculated in the
manner prescribed
2. In any other case, be calculated in the manner prescribed
 Step2: computation of Available surplus (section 5)
 Step3: Allocable surplus

82. Eligibility and disqualification for bonus
 Eligibility of bonus (section 8)
Every employee shall be entitled to be paid by his employer in an
accounting year, bonus, in accordance with the provisions of the act,
provided he has worked in this establishment for not less than 30
working days in that year
 Disqualification for bonus(section 9)
An employee shall be disqualified from the receiving bonus, if he is
dismissed from service for:
1, fraud
2, riotous or violent behavior
3, Theft, misappropriation or sabotage

83.  Amount of bonus :
1. Payment of minimum bonus (section 10) 8.33%
2. Payment of maximum bonus (section 11) 20%
Set-on and set-off of allocable surplus (section 15)
Set-on : excess of allocable surplus
Set-off : below the minimum bonus limit
 Time limit for payment of bonus (section 19)
 Maintenance of register, records etc., (section 26)
 Inspectors (section 27)