“Labour Laws For Managers”
Prof. HRM & Dean MDP &
Introduction to labor legislation
Explaining the Concept of law
- Law is the expression of sobered will– control guides the
behavior of the members of the society.
- Ignorance of law is low excuse.
- Law is a dynamic concept
Like a citadel, which requires repairs,
law creates rights and privileges. It also imposes duties,
obligations and restrictions.
Presence of good laws in any society does not, ipso facto,
ensure justice in the society. Laws are simple tools, which
have to be used by the authorities (courts) in particular and the
society in general to achieve a just society. Justice is the endproduct of law and legal dispensations.
Fairness is what justice is.
Movements and changes in society create social gaps. Justice
seeks to bridge these gaps.
- “Social justice”
- Economic justice
- “discriminative justice”
- “Judicial Activism”
Industrial Revolution and the Need for Labour
Laissez-faire (let not interfere) and employers
Factors Influencing Labor Legislations
- Early Exploitative Industrial Society (Workmen’s
Breach of Contract Act, 1859)
- Impact of Contemporary Events
- The Growth of Trade Unionism
- Political Freedom End of Colonial Rule and Extension
of Adult Franchise
- Rise of Socialist and Other Revolutionary ideas
- The Growth of Humanitarian ideas and the Concept of
Social Welfare and Social Justice
- Establishment of I.L.O.
Influence of Colonial Rule
The Struggle for National Emancipation
Adoption of Indian Constitution
The Nature of Labour Legislations
The labour legislations are the products of Industrial
Revolution and they have come into being to take
care of the aberrations created by it. Therefore,
they are specific and not general in orientation,
philosophy, concept and even in practice.
Labour legislation regards individuals as workers,
whereas the general legislation regards him a
iii) Labour legislation seeks to deal with problems arising
out of occupational status of the individual.
iv)- Not only contractual obligations, but beyond it by
creating new rights and obligations.
- Labour law an operate along with General Law. A
‘theft’ can be dealt by labour law as well as IPC
- No jurisdiction of civil courts
Principles of Modern Labour Legislation
Principle of Protection (Examples of Protective labour
laws in India are: Factories Act 1948)
Principle of Social Justice ( Examples: Contract Labour
(Regulation and Abolition ) Act, 1970.
Principle of Regulation( examples: Industrial Disputes Act,
Principle of Welfare( Example: Iron Ore Mines)
Principle of Social Security ( Workmen’s Compensation Act,
Principle of international Obligation ( Conventions and
Recommendations have covered wide range of subjects
Objectives of the Labour Legislations
Labour legislation in India has sought to achieve the following
Establishment of justice-Social, Political and Economic.
Provision of opportunities to all workers; irrespective of caste,
creed, religion, beliefs; for the development of their
iii) Protection of weaker sections in the community
iv) Maintenance of Industrial Peace.
v) Creation of conditions for economic growth.
vi) Protection and improvement of labour standards.
vii) Protect workers from exploitation.
viii) Guarantee right of workmen to combine and form
association or unions
ix) Ensure right or workmen to bargain collectively fro
the betterment of their service conditions.
x) Make state interfere as protector of social well being
than to remain an onlooker.
xi) Ensure human rights and human dignity.
The Classification of Labour Legislations
On the basis of specific objectives, which it has
sought to achieve, the labour legislations can be
classified into following categories:
iv) Social Security
v) Welfare both inside and outside the workplace
The Regulative Labour Legislation
The trade Unions Act, 1926
The Industrial Disputes Act, 1947
Industrial Relations Legislations enacted by states of
Maharashtra, MP, Gujarat, UP, etc.
Industrial Employment (Standing Orders) Act, 1946
The Protective Labor Legislations
Factories Act, 1948
The Mines Act, 1952
The Plantations Labor Act, 1951
The Motor Transport Workers Act, 1961
The Shops and Establishments Acts
Beedi and Cigar Workers Act, 1966
Wage-Related Labour Legislations
The Payment of Wages Act, 1936
The Minimum Wages Act, 1948
The Payment of Bonus Act, 1965
The Equal Remuneration Act, 1976
Social Security Labour Legislations
- The Workmen’s Compensation Act, 1923
- The Employee’s State Insurance Act, 1948
- The Coal Mines PF and miscellaneous Provisions Act,
- The Maternity Benefit Act, 1961
- Payment of Gratuity Act, 1972
Welfare Labour Legislations
- Limestone and Dolomite Mines Labour Welfare Fund
- The Contract Labour (Regulation and Abolition) Act,
State Labour Laws
Indian Constitution And Labour Legislations
- Preamble of Indian Constitution and Labour
- Fundamental Rights and Labour Legislations
- Directive Principles and State Policy and Labour
- Judicial Wisdom of the Courts and Labour
ILO AND ITS INFLUENCE ON LABOUR
LEGISLATION IN INDIA
• International Labour Standards
• Conventions and Recommendations
Components of Social Clause and
Social Clause Aspect
Indian Constitution/ Legislation
Freedom of Association and Right to Collective Freedom of Association is guaranteed as a
Bargaining (Convention Nos. 87 and 98 fundamental right in the Indian Constitution. The
trade Union Act, 1926 meets with part of the
objectives of convention Nos. 87 and 98. Both
conventions have, however, not been ratified by
the Government of India.
Forced Labour Convention, 1930 and Abolition
of Forced Labour Convention 1953 (Convention
Nos. 29 and 105).
These provide for
progressive abolition of forced labour in all its
immediate Action to End the Worst Forms of
Article 23 of the Constitution and the Bondid
Labour System (Abolition) Act, 1976. India has
ratified Convention No. 29, not 105. India is
moving towards ratifying Convention Nos. 105
(Convention No.100). Its purpose is to eliminate
sex-based discrimination in remuneration and
provide for equa remuneration, to both men and
women, for work of equal value. The four
underlying bases for determination of work of
equal value are: skills, efforts, responsibility and
The Constitution upholds the principle of equality
between men and women.
Remuneration Act, 1926 seeks to provide for
equal remuneration to men and women
Discrimination (Employment and Occupation)
Convention, 1958 (Convention No.111).
covers any discrimination, exclusion or
preference ‘..which has the effect of nullifying or
impairing equality of treatment’ and which can
be the result of not only legislation but also of
existing factual positions or practices
The Constituaion upholds equality, denounces
discrimination and encourages preferential
treatment to disadvantage groups in society.
Convention No. 111 has been ratified.
Minimum Age Convention, 1973 (Convention
No. 138). It provides that minimum wage for
employment should ordinarily be 15 and raised
to 18 in dangerous occupations.
The child labour (Prohibited and Regulation),
Act, 1986 bans employment of children below
the age of 14. In several laws, the minimum age
is variously defined, Employment of children in
certain heavy and hazardous industries
(Schedule A, part 3) is prohibited by law and the
government is taking steps to enforce it strictly.
Several court Judgments under public interest
litigation actively support the prohibition and
regulation of child labour.
Ratification of Core Conventions in Selected Countries
The Trade Unions Act, 1926
Primary purpose of a trade union is collective bargaining
Bank of India Employers association v RBI, (1983) 2 LLN 872 (Bom)
Definition of Trade Unions
“Trade Union” is defined as 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 employer and employersbut also of the employers. The Act,
therefore, applies not only to the unions of workers but also to the
associations of employers., or for imposing restrictive conditions on the
conduct of any trade of business, and includes any federation of two or more
trade unions. In other words, a trade union is a combination or association
of not only of workmen
• The occupation of primary school teachers can
not be said to be employment in trade or
industry. So a federation of teachers seeking
registration could not be deemed to be a Trade
Union.--S.P. Majarkar v Registrar Trade
Unions, Nagpur 1957 Nag LJ (notes) 155 (Nag)
• The union of civil servants engaged in the task
of sovereign functions of the Government
cannot be held as Trade Union under the Act-Tamil Nadu non-Gazetted Officers Union v
Registrar of Trade Unions AIR 1962 Mad.
Trade unions (Amendment) Act, 2001
requirement of 10 percent or 10 of workmen, as members for
being eligible for registration as workers, trade union in place
of only 7 persons provided for earlier, and subsequent
maintenance of this membership after registration;
Election of members of executive and office-bearers at an
interval of not more than three years
Prescribing minimum subscriptions for rural, unorganized and
Limiting the proportion of outsiders to 1/3rd of the total number
of office-bearers or 5, whichever is less generally, and 50
percent in the unorganized sector, and
Debarring members of Council of Ministers or persons
holding office of profit in the union or state (not employed in
an establishment or industry with which the trade union is
connected) from membership of the executive or other officebearer of a registered trade union.
Registration of Trade Unions
The registration of trade union is not mandatory under the
One rupee per annum for rural workers;
Three rupees per annum for workers in other unorganized
Twelve rupees per annum for workers in any other case.
A registered Trade Union is a body corporate with perpetual
succession, common seal and can sue and be ued.
The Act provides penalty of fine up to Rs.500 for making any
willful false entry in or any omission from the general
statement to be submitted to the Registrar, and up to Rs.200
for giving incorrect copy of the rule or any other document
with the intent to deceive a member or a person intending to
be a member.
Obligations of Registered Trade Unions
Rights and Liabilities of Registered Trade Unions
Section 15 of the Act lays down that the general funds of a
The payment of salaries, allowances and expenses to officebearers of the trade union;
The payment of expenses for the administration of the trade
union, including audit of the accounts of the general funds of
the trade union;
The prosecution or defence of any legal proceeding to which
the trade union or any member thereof is a party, when such
prosecution or defence is undertaken for the purpose of
securing or protecting any rights of the trade union;
The conduct of trade disputes on behalf of the trade union or
any member thereof;
The compensation of members for loss arising out of trade
The allowances to members or their dependents on account death, old age,
sickness, accidents or unemployment of such members ;
The issue of or the undertaking of liability under policies of assurance on
the loves of members, or under policies insuring members against
sickness, accident or unemployment ;
h) The provision of educational, social or religious benefits for members
(including the payment of the expenses of funeral or religious ceremonies
for deceased members) of members;
The upkeep of Periodical published mainly for the purpose of discussing
questions affecting employers or workmen as such;
The payment of contributions to any cause intended to benefit workmen
in general. The expenditure in respect of such contributions in any
financial year shall not at any time during that year be in excess of 1/4 th of
the combined total of the gross income which has up to that time accrued
to the general funds and of the balance of the credit of these funds of the
trade union during that year;
k) Subject to any conditions, any other object notified by the
appropriate Government in the Official Gazette.
Under Section 16 (Political fund) a registered trade union may
constitute a separate fund for political purposes from which
payments may be made, for the promotion of the civic and
political interests of its members.
Conditions for the Creation of Political Fund and its
Immunity from Criminal Conspiracy in Trade Disputes
No office-bearer or member of a registered trade union shall be
liable to punishment under sub-Section (1) of Section 120-B of
Penal Code 1860, in respect of any agreement made between the members
or the purpose of furthering any such objective of the trade union as is
specified in Section 15, unless the agreement is an agreement to commit an
Immunity cannot be invoked in cases of violent strikes ( Jay Engineering
Works Ltd. vs. State of West Bengal, AIR-1968-Lab. 407).
Immunity from Civil Suit in Certain Cases (Section 18):- As long as the
demonstration is peaceful and does not create any low and order, problem,
restriction imposed on demonstration is illegal—Kamgar Sabha v. Hindustan
Ciba Geigy 1995 (71) FLR 228.
Encouragement of Persistence of Outsiders:- Prior to the amendment of
2001,50 percent of the office-bearers of a registered trade union could be
outsiders. Keeping in view the seriousness of the problem, amendments
were ultimately incorporated in the Act in 2001, which provide for a
maximum of 1/3rd or 5 of the office-bearers aw outsiders in general and 50
percent in the case of trade unions of unorganized workers.
Absence of Provision for Recognition
No mention of Unfair Labour Practices
The Industrial Dispute Act, 1947
Trade Dispute Act 1929
Defence of India Rules
The Act came into force on 1st April, 1947
The Act extends to the whole of India
PREAMBLE AND OBJECTIVES OF THE ACT
The Preamble to the Act reads thus, "An Act to make provision for the
investigation and settlement of industrial disputes and for certain other
On the basis of various judgements of Supreme Court given from time to
time (specially Dimakuchi Tea Estate Case, 1958) is made, the principal
objectives of the Act may be stated as below
• To ensure social justice to both employers and employees and
advance progress of industry by bringing about harmony and
cordial relationship between the parties.
• To settle disputes arising between the capital and labour by
peaceful methods and through the machinery of conciliation,
arbitration and if necessary, by approaching the tribunals
constituted under the Act. If disputes are not settled, it would
result in strikes or lockouts and entail dislocation of work,
essential to the life of the community.
• To promote measures for securing and preserving amity and
good relations between the employer and workmen.
• To prevent illegal strikes and lockouts.
• To provide compensation to workmen in cases of layoff, retrenchment and closure
• To protect workmen against victimisation by the
employer and to ensure termination of industrial
disputes in a peaceful manner.
• To promote collective bargaining.
• Justice Krishna Iyer, L.I.C - SC 1980 - IDA is a benign
measure. It preempt industrial tension - It is a
mechanism for dispute resolution - It ensures
industrial justice and creates climate of goodwill.
Some Important Concepts
Appropriate Government Section (2A)
Central Government: In relation to any industrial dispute
concerning any industry carried on by or under the authority
of Central Government or by a Railway Company etc.
State Government: In relation to any other industrial
Public Utility Service [Sec2 (m)]
any railway service or any transport service for the carriage
of passengers or goods by air;
any section of an industrial establishment on the working of
which the safety of the establishment or the workmen
employed therein depends;
any postal, telegraph or telephone service;
any industry which supplies power, light or water to the
any system of public conservancy or sanitation
• any industry specified in the First Schedule which the
appropriate Government may, if satisfied that public emergency
or public interest so requires, by notification in the Official
Gazette, declare to be a public utility service for a specified
period not exceeding six months in the first instance. It may be
extended from time to time by the appropriate Government if it
deems such extension necessary.
• Some of the industries mentioned in the first schedule are as
follows:• Transport (Other than railways) for the carriage of passengers
or goods by land or water;
• Defence Establishments;
• Fire Brigade Services;
• India Government Mints
• Indian Security Press
The term "Industry" has been defined under Sec. 2 (j)
to mean any business, trade, undertaking,
manufacture or calling of employers and includes any
calling, service, employment, handicraft or industrial
occupation or avocation of workmen.
The triple test is:
(I) Systematic Activity;
(ii) Cooperation between employer and employees;
(iii) Production and/or distribution of goods and services
calculated to satisfy human wants and wishes.
- Sovereign Functions
iv) Hospitals, Schools, Colleges, Universities, Solicitor’s
Offices, Gymkhana, Clubs, Institutes, Charitable
Projects, are also within the definition of industry.
4) Industrial Dispute (Section 2K):- Industrial Dispute
means any dispute or difference between employers
and employer or between employers and workmen
and between workmen and workemen, which is
connected with the employment or non-employment
or the terms of employment or with the conditions of
labour, of any person.
Where any employer discharges,
dismisses, retrenches or otherwise terminates the
services of an individual workman, any dispute or
difference between that workman and his employer
connected with, or arising out of, such discharge,
dismissal, retrenchment or termination shall be
deemed to be an industrial dispute notwithstanding
that no other workman nor any union of workmen is a
party to the dispute.
In sum, the following conditions must exist for an
(i) There must be an industry; (ii) between the parties
there must be a relationship of workmen and employer
(iii) the dispute must be connected with the
employment of the conditions of labour; (iv) the
dispute must be related to a workman or any other
person in whom, the group has a direct and
substantial interest; and (v) generally speaking, the
dispute should not be merely an individual dispute; it
should in some sense be a collective dispute.
However, in disputes related to termination of service
(dismissal, discharge, or retrenchment), an individual
can raise an industrial dispute.
v) Workman (Section 2(S)
"Workman" means any person (including an
apprentice employed in any industry to do any skilled
or unskilled manual, supervisory, operational,
technical or clerical work for hire or reward whether
the terms of employment be expressed 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, but does not
include any such person:
In this connection Bombay High Court in Union
Carbide vs. Samuel (1999) and Supreme Court of
India have led down certain criteria for determine
whether a person is workman or not.
Can his decision bind the employer?
Does he have power to sanction leave?
Does he have power to appoint?
Can he examine quality?
Can he assign duty?
Can he indent material?
Can he recommend leave?
Are any person working under him?
Does he supervise work?
Does he write C.R?
How disputes are raised and settled
Prevention and Settlement of Industrial
• Prevention of Industrial Disputes
The Act not only provides machinery for investigation
and settlement organization disputes, but also some
measures for the containment and prevention of
conflicts and disputes.
measures provided under the Act are:
• Settlement of Industrial Disputes
• Conciliation Officer and Board of Conciliation
• Voluntary Arbitration
• Adjudication by Labour Court, Industrial Tribunal and
-Reference of Disputes for Arbitration
-Power of labour Court & Industrial Tribunal
Introduction of Section 11-A
in the Act
Persons on whom settlements and award
are binding - Section 18 of the Act enumerates
persons on who settlements and awards are
binding. For this purpose settlements are classified
in two categories, namely (i) settlement arrived at otherwise than in the course of
conciliation proceedings, i.e. without the aid of
statutory agency, and
ii) settlement arrived at in the course of conciliation
proceedings, i.e. with the aid of statutory agency.
In the former case a settlement under Section 18(1)
arrived at by agreement between the employer and
workmen otherwise than in the course of conciliation
proceedings shall be binding on the parties to the
agreement. But any such settlement in order to be
binding must be signed by the parties thereto in the
manner prescribed by rule and a copy of it must also
be sent to the appropriate Government.
Section 18(2) which is made subject to the
provisions of Section 18(3) provides that an arbitration
award which has become enforceable shall be binding
on the parties to the agreement who referred the
dispute to the arbitration.
Sub-section (3) provides that (i)a settlement arrived at in the course of conciliation
proceedings under this Act; or
ii) an arbitration award in a case where a notification has
been issued under sub-section (3-A) of the Section
iii) an award of a Labour court, Tribunal or National
Tribunal which has become enforceable shall be
a) all parties to the industrial dispute
b) all other parties summoned to appear in the
proceedings as parties to the dispute, unless the
Board, Arbitrator, Labour Court, Tribunal or National
Tribunal as the case may be, record the opinion that
they were so summoned without proper cause.
c) Where party referred to is an employer, his heirs,
successors or assigns in respect of the establishment
to which the dispute relates.
d) Where a party referred to in Clause (a) or Clause (b)
is composed of workmen, all persons who are
employed in the establishment or part of the
establishment, as the case may be, to which the
dispute relates on the date of the dispute and all
persons who subsequently become employed in that
establishment or part thereof
STRIKE AND LOCKOUTS
"Strike" means a cessation of work by body of
persons employed in any industry acting in
combination, or a concerted refusal, or a refusal
under a common understanding, of any number of
persons who are or have been so employed to
continue to work or to accept employment [Sec. 2
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. (Sec.2(I).
The definition of 'strike' postulates the following
(i)Plurality of workmen.
Cessation of work or refusal to
Acting in combination or concerted
under a common
Duration is immaterial
Strike is used by workmen as instrument of
economic coercion to compel management to
accept their demands.
Forms of Strike
iii) Lightning or wild-Cat strike
iv) Gberao means encirclement
v) Government case
vi) Picketing and peaceful demonstration
There is no fundamental right to go on strike
General prohibition of strikes (Sec.23)
No group of workman may strike in the following five
i) When conciliation is going on before a Board of
Conciliation an seven days thereafter.
ii) When adjudication is going on before a Labour Court
or Tribunal and two months thereafter.
iii) When and if an appropriate Government in its
reference prohibits the continuance of any strike.
iv) When arbitration is going on before an arbitrator and
two months thereafter.
v) When a settlement or award is in operation. (Note that
the prohibition here is restricted to those matters only
which are covered by the settlement or award).
Additional restrictions on strikes in public utility
services (Section 22).
i) A strike notice must be given to the employer and
ii) The Strike must not take place for 14 days after the
notice has been given.
iii) The strike must not take place after six weeks from
iv) The strike must not take place before the day, if any,
specified in the strike notice.
v)The strike must not take place during conciliation
before a Conciliation Officer and seven days after the
conclusion of such proceedings.
• The employers' right to lockout is subjected to the
same restrictions as the workmen's right to strike. The
same rules apply with the same additional restrictions
for public utilities. A strike is not illegal when it is
declared because of an illegal lockout.
Illegal Strikes and Lock-outs - According to Section
24 (1) a strike or lock-out shall be illegal if it is:
i) Commenced or declared in contravention of Section
22 in a public utility service;
ii) Commenced in contravention of Section 23 in any
industrial establishment (including both public utility
and non-public utility service);
iii) Continued in contravention of an order made by the
Appropriate Government under Section 10(3) or subsection (4-A) of Section 10-A of the Act.
Sub-section (2) provides that where a strike or
lock-out in pursuance of an industrial dispute has
already commenced and is in existence at the time51
reference of the dispute to a Board, an arbitrator, a
Labour Court, Tribunal or National Tribunal, the
continuance of such strike or lock-out shall not be
deemed to be illegal provided that such strike or lockout was not at its commencement in contravention of
the provisions of this Act or the continuance thereof
was not prohibited under Section 10(3) or sub-section
(4-A) of Section 10-A.
According to Section 24 (3) a lock-out declared in
consequence of an illegal strike or strike declared in
consequence of an illegal lock-out shall not be
deemed to be illegal.
Strikes, Lockouts & Wages
The Act does not say anything about wages during a
strike or lockout period but the decisions of Tribunals
have generally been as follows:
Strikes or Lockouts
• 1. Illegal strikes
• 2. Illegal lockouts
• 3. Legal & justified strikes
• 4. Legal & unjustified strikes
(Pereira & State of Madras, H.C. Northbrook Jute
Company vs. Their Workmen, 1962-1-L.L.J 122; 19601-L.L.J. 580, S.C.)
IDA and ESMA
ESMA empowers the Central Government to prohibit
any and all strikes, lockouts or lay-off in any essential
service, if this is considered necessary in the public
ESMA overrides all other laws in case of conflict
Chapter V-A: Lay-off, Retrenchment and
Section 2 (kk) of the Act defines lay-off. It means “the
failure, refusal of inability of an employer on account of
shortage of coal and power or raw material or the
accumulation of stocks or the breakdown of machinery
or for any other reason to give employment to a
workman whose name is borne on the muster rolls of
his industrial establishment and who has not been