Indian Industrial Relations Laws

ALLIANCE BUSINESS SCHOOL EPGP- IRLL-Labour Laws • Some Labour Laws: – – – – – – – 04/25/09

Arbitration Act, 1940 Apprentices Act, 1969 Bonus Act Constitution of India Defence of India Rules Dock Workers Regulation of Employment Act Emigration Act IRLL - Labour Laws

1

Some Labour Laws…2 • • • • • • •

Employees PF Act Employees State Insurance Act, 1948 Employees Family Pension Scheme… Employment Exchanges… Employment of Children Act, 1938 Essential Services Maintenance Act… Factories Act, 1948

04/25/09

IRLL - Labour Laws

2

Some Labour Laws…3 • • • • • • •

Industrial Disputes Act, 1947 Industrial Relations Act, 1971 Labour Welfare Fund Acts… Lok Adalats Maternity Benefits Act, 1961 Mines Acts… Minimum Wages Act, 1948

04/25/09

IRLL - Labour Laws

3

Some Labour Laws…4 • National Commission on Labour – 1 & 2 – 1969 and 2002

• • • • • •

Payment of Gratuity Act, 1976… Payment of Wages Act, 1936 Plantation Labour Act, 1951 Shops and Establishments Acts… Trade Unions Act, 1913… Workmen’s Compensation Act, 1923

04/25/09

IRLL - Labour Laws

4

THE EMPLOYEES PROVIDENT FUND

The Background • Protection of workers against loss of income due to old age and invalidity …. • Began with Private employers, later Govt • PF, Gratuity and Pension on ad hoc basis • Provident Funds Act, 1925 – enacted by GOI • Only for Govt, Railway, local authorities etc • RCL 1931 – provisions against old age …. • Govt to encourage employers to launch schemes for their employees…….. IRLL 2006

Provident Fund Legislation

6

Proposals for Model PF Rules • • • • • • •

Prop’l before 3rd Lab Min Conference 1942 Model Rules placed before 5th Conf 1943 Also to Standing Labour Comm. In 1944 No final decision taken at this stage….. Coal Mines PF/ Bonus Schemes Act, 1948 Workers’ P F Bill 1948 Employees’ PF Act, 1952 – after discussions at several stages …….

IRLL 2006

Provident Fund Legislation

7

OBJECTIVES: • To induce employees to save a portion of their present earnings for a rainy day. • Provide for the institution of provident funds for employees in factories and other establishments 04/25/09

IRLL - Labour Laws

8

APPLICATIONS: • Factory wherein 20 or more persons are employed • Other establishments in which more than 20 persons are employed – the central government may specify such establishments • Mutual agreement of employer and majority of the employees 04/25/09

IRLL - Labour Laws

9

HOW DOES THE SCHEME WORK?

EPF – Personal Records • Every employer is required to maintain Personal Files in respect of the employees: • Duly filled and signed application form along with passport size photograph • Age Certificate • Doc’s pertaining to earlier employment… • Appointment Letter • Any other document pertaining to the employee 04/25/09

IRLL - Labour Laws

11

P F Act… • PF Remittance shall be made on or before 15th • Mly returns in form 5, 10 and 12A along with triplicate copy shall be submitted before 25th • Nomination Forms in F No. 2 in respect of new employees shall be submitted along with mly… • Annual Returns in Form 6A alongwith 3A shall be submitted on or before 30th April • PF shall be calculated on Basic and DA…the ceiling limit being Rs. 6,500/04/25/09

IRLL - Labour Laws

12

THE PAYMENT OF GRATUITY ACT, 1972

• Gratuity is a kind of retirement benefit, like provident fund or pension. • It is a payment intended to help the employee after his retirement. The general principle underlying gratuity schemes is that by faithful service over a long period the employee is entitled to claim a certain benefit. Thus it is earned by an employee as a reward for long and meritorious service. The Act was passed in 1972 by parliament. It has been amended to keep up with the times. 04/25/09

IRLL - Labour Laws

14

OBJECTIVE • Prior to 1972, various states had enacted their own gratuity laws. It became necessary, therefore, to have a Central Law so as to ensure a uniform pattern of gratuity to the employees throughout the country. (Also, to avoid different treatment to the employees of establishments having branches in one or more states). 04/25/09

IRLL - Labour Laws

15

COVERAGE • The Act provides for a scheme of compulsory payment of gratuity by managements of factories, mines, oilfields, plantations, ports, railways, shops and other establishments employing 10 or more persons in the event of super-annuation, retirement, resignation and death or disablement due to accident or disease. In case of death of the employee, gratuity payable to him will be payable to his nominee or if no nomination is made, it will be paid to his heirs. 04/25/09

IRLL - Labour Laws

16

AMOUNT OF GRATUITY • It is calculated at the rate of 15 days salary for every year of completed service, subject to a maximum of Rs. 3,00,000. 15 days salary is calculated on the basis of a 26day month. • The employer should arrange to pay the amount of gratuity within 30 days from the date it becomes payable to the person to whom the gratuity is payable.

04/25/09

IRLL - Labour Laws

17

FORFIETURE OF GRATUITY • The gratuity of an employee, whose services have been terminated for any act, willful omission or negligence causing damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused.

04/25/09

IRLL - Labour Laws

18

PAYMENT OF WAGES ACT, 1936 [Act No. 4 of Year 1936]

Payment of Wages Act … • 1. Short title, extent, commencement and application (1) This Act may be called the Payment of Wages Act, 1936. 2[(2) It extends to the whole of India 3[* * *]]. (3) It shall come into force on such 4[date] as the Central Government may, by notification in the Official Gazette, appoint. 04/25/09

IRLL - Labour Laws

20

Sections 4 & 5 • (4) It applies in the first instance to the payment of wages to persons employed in any 5[factory, to persons] employed (otherwise than in a factory) upon any railway by a railway administration or, either directly or through a sub-contractor, by a person fulfilling a contract with a railway administration, 6[and to persons employed in an industrial or other establishment specified in sub-clauses (a) to (g) of clause (ii) of section 2.] (5) The State Government may, after giving three months’ notice of its intention of so doing, by notification in the Official Gazette, extend the provisions of 7[this Act] or any of them to the payment of wages to any class of persons employed in 8[any establishment or class of establishments specified by the Central Government or a State Government under sub-clause (h) of clause (ii) of section 2]: 04/25/09

IRLL - Labour Laws

21

Contd… • 9[PROVIDED that in relation to any such establishment owned by the Central Government no such notification shall be issued except with the concurrence of that governments.] (6) Nothing in this Act shall apply to wages payable in respect of a wage-period which, over such wageperiod, average 10[one thousand six hundred rupees] a month or more.

04/25/09

IRLL - Labour Laws

22

Definitiions • 2. Definitions In this Act, unless there is anything repugnant in the subject or context,11[(i) "employed person" includes the legal representative of a deceased employed person; (ia) "employer" includes the legal representative of a deceased employer; (ib) "factory" means a factory as defined in clause (m) of section 2 of the Factories Act, 1948 (63 of 1948) and includes any place to which the provisions of that Act have been applied under subsection (1) of section 85 thereof;]

04/25/09

IRLL - Labour Laws

23

Contd… • (ii) 12["industrial or other establishment"] means any11[(a) tramway service , or motor transport service engaged in carrying passengers or goods or both by road for hire or reward; (aa) air transport service other than such service belonging to, or exclusively employed in the military, naval or air forces of the Union or the Civil Aviation Department of the Government of India;] (b) dock, wharf or jetty; 04/25/09

IRLL - Labour Laws

24

Contd… • 13[(c) inland vessel, mechanically propelled;] (d) mine, quarry or oil-field; (e) plantation; (f) workshop or other establishment in which articles are produced, adapted or manufactured, with a view to their use, transport or sale; 04/25/09

IRLL - Labour Laws

25

Definitions … contd.. • 14[(g) establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation, or to the supply of water or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on;] 6[(h) any other establishment or class of establishments which the Central Government or a State Government may, having regard to the nature thereof, the need for protection of persons employed therein and other relevant circumstances, specify, by notification in the Official Gazette.] 04/25/09

IRLL - Labour Laws

26

Contd… • 15[(iia) "mine" has the meaning assigned to it in clause (j) of sub-section (1) of section 2 of the Mines Act, 1952 (35 of 1952);] 11[(iii) "plantation" has the meaning assigned to it in clause (f) of section 2 of the Plantations Labour Act, 1951 (69 of 1951);] (iv) "prescribed" means prescribed by rules made under this Act; (v) "railway administration" has the meaning assigned to it in clause (6) of section 3 of the Indian Railways Act, 1890 (9 of 1890); and

04/25/09

IRLL - Labour Laws

27

Contd… • 13[(vi) "wages" means all remuneration (whether by way of salary, allowances, or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes(a) any remuneration payable under any award or settlement between the parties or order of a court; (b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period;

04/25/09

IRLL - Labour Laws

28

Contd… • c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name); (d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made; (e) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force, 04/25/09

IRLL - Labour Laws

29

Contd… • but does not include(1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a court; (2) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the State Government;

04/25/09

IRLL - Labour Laws

30

Contd… • (3) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; (4) any travelling allowance or the value of any travelling concession; (5) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or (6) any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d).] 04/25/09

IRLL - Labour Laws

31

Contd… • 3. Responsibility for payment of wages Every employer shall be responsible for the payment to persons employed by him of all wages required to be paid under this Act: PROVIDED that, in the case of persons employed (otherwise than by a contractor)(a) in factories, if a person has been named as the manager of the factory under 16[clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948)]; 04/25/09

IRLL - Labour Laws

32

Contd… • 17[(b) in industrial or other establishments, if there is a person responsible to the employer for the supervision and control of the industrial or other establishments;] (c) upon railways (otherwise than in factories), if the employer is the railway administration and the railway administration has nominated a person in this behalf for the local area concerned. The person so named, the person so responsible to the employer, or the person so nominated, as the case may be 18[shall also be responsible] for such payment. 04/25/09

IRLL - Labour Laws

33

Other Sections … 4. Fixation of wage-periods 5. Time of payment of wages 6. Wages to be paid in current coin or currency notes 7. Deductions which may be made from wages 8. Fines 9. Deductions for absence from duty 10. Deductions for damage or loss

04/25/09

IRLL - Labour Laws

34

Other Sections … 11. Deductions for services rendered 12. Deductions for recovery of advances 13. Deductions for payments to co-operative societies and insurance schemes 14. Inspectors 15. Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims 04/25/09

IRLL - Labour Laws

35

Contd… 16. Single application in respect of claims from unpaid group 17. Appeal 18. Powers of authorities appointed under section 15 19. Power to recover from employer in certain cases [Repealed] 20. Penalty for offences under the Act 21. Procedure in trial of offences

04/25/09

IRLL - Labour Laws

36

Contd… 22. Bar of suits 23. Contracting out 48[24. Application of Act to railways, air transport services, mines and oilfields 25. Display by notice of abstracts of the Act 26. Rule-making power FOOT NOTES:

04/25/09

IRLL - Labour Laws

37

Trade Unions Act • The Trade Unions Act, 1926 provides for registration of Trade Unions with a view to rendering lawful organisation of labour to enable collective bargaining. It also confers on a registered trade union certain protection and privileges

04/25/09

IRLL - Labour Laws

38

The Act … • The Act extends to the whole of India and applies to all kinds of unions of workers and associations of employers, which aim at regularising labour management relations. A Trade Union is a combination whether temporary or permanent, formed for regulating the relations not only between workmen and employers but also between workmen and workmen or between employers and employers. 04/25/09

IRLL - Labour Laws

39

Registration of TU • Registration of a trade union is not compulsory but is desirable since a registered trade union enjoys certain rights and privileges under the Act. Minimum seven workers of an establishment (or seven employers) can form a trade union and apply to the Registrar for it registration 04/25/09

IRLL - Labour Laws

40

Registration … 1 • The application for registration should be in the prescribed form and accompanied by the prescribed fee, a copy of the rules of the union signed by at least 7 members, and a statement containing (a) the names, addresses and occupations of the members making the application, (b) the name of the trade union and the addresses of its head office, and (c) the titles, names, ages, addresses and occupations of its office bearers. 04/25/09

IRLL - Labour Laws

41

Registration … 2 • If the union has been in existence for more than a year, then a statement of its assets and liabilities in the prescribed form should be submitted along with the application. • The registrar may call for further information for satisfying himself that the application is complete and is in accordance with the provisions, and that the proposed name does not resemble • On being satisfied with all the requirements, the registrar shall register the trade union and issue a certificate of registration, which shall be conclusive evidence of its registration 04/25/09

IRLL - Labour Laws

42

LEGAL STATUS OF A REGISTERED TRADE UNION …1 • A registered trade union is a body corporate with perpetual succession and a common seal. • It can acquire, hold sell or transfer any movable or immovable property and can be a party to contracts. • It can sue and be sued in its own name 04/25/09

IRLL - Labour Laws

43

LEGAL STATUS OF A REGISTERED TRADE UNION …2 • No civil suit or other legal proceeding can be initiated against a registered trade union in respect of any act done in furtherance of a trade dispute under certain conditions. • No agreement between the members of a registered trade union shall be void or voidable merely on the ground that any of its objects is in restraint of trade 04/25/09

IRLL - Labour Laws

44

APPOINTMENT OF OFFICE BEARERS • At least 50% of the office bearers of a union should be actually engaged or employed in the industry with which the trade union is concerned, and the remaining 50% or less can be outsiders such as Lawyers, politicians, social workers etc.

04/25/09

IRLL - Labour Laws

45

APPOINTMENT OF OFFICE BEARERS-1 • To be appointed as an office bearer or executive of a registered trade union, a person must have • attained the age of 18 years; and • not been convicted of any affiance involving moral turpitude and sentenced to imprisonment, or a period of at least 5 years has elapsed since his release 04/25/09

IRLL - Labour Laws

46

CHANGE OF NAME & REGISTERED OFFICE • A registered trade union may change its name with the consent of at least 2/3rds of the total numbers of its members. • Notice of change of name in writing, signed by the secretary and 7 members of the union, should be sent to the registrar

04/25/09

IRLL - Labour Laws

47

CHANGE OF NAME & REGISTERED OFFICE…1 • the Registrar shall register the change in name if he is satisfied that the proposed name is not identical with the name of any other existing union and the requirements with respect to change of name have been complied with. • The change of name shall not affect any rights and obligations of the trade union or render any legal proceeding by or against the trade union as defective 04/25/09

IRLL - Labour Laws

48

CHANGE OF REGISTERED OFFICE

• Notice of change in registered office address should be given to the Registrar in writing within 14 days of such change.

04/25/09

IRLL - Labour Laws

49

DISSOLUTION OF A TRADE UNION • A registered trade union can be dissolved in accordance with the rules of the union. A notice of dissolution signed by any seven members and the secretary of the union should be sent to the registrar within 14 days of the dissolution. On being satisfied the registrar shall register the notice and the union shall stand dissolved from the date. The funds of the union shall be divided by the Registrar amongst its members in the manner prescribed under the rules of the union or as laid down by the government 04/25/09

IRLL - Labour Laws

50

AMALGAMATION OF TRADE UNIONS • Any registered trade union may amalgamate with any other union(s), provided that at least 50% of the members of each such union record their votes and at least 60% of the votes so recorded are in favor of amalgamation. A notice of amalgamation signed by the secretary and at least 7 members of each amalgamating union, should be sent to the registrar, and the amalgamation shall be in operation after the Registrar registers the notice 04/25/09

IRLL - Labour Laws

51

OBLIGATIONS OF REGISTERED TRADE UNIONS 1. The general funds of a registered trade union should be spent only for the objects specified such as, payment of salaries, allowances and expenses of its office bearers, its administrative and audit expenses, prosecution or defence af any legal proceeding for securing or protecting its rights, conduct of trade disputes, compensation for loss arising out of trade disputes, compensation for loss arising out of trade disputes, provision of educational, social or religious benefits and allowances on account of death, old age, sickness, accident or unemployment to its members, publication of labour journals etc. The trade union may set up a separate political fund for furtherance of civic and political interest of members. Contribution to this fund is not compulsory. 04/25/09

IRLL - Labour Laws

52

OBLIGATIONS OF REGISTERED TRADE UNIONS…1

• 2. The account books and membership register of the union should be kept open for inspection by any of its office-bearers. • 3. A copy of every alteration made in the rules of the union should be sent to the Registrar within 15 days of making the alteration. 04/25/09

IRLL - Labour Laws

53

OBLIGATIONS OF REGISTERED TRADE UNIONS…2 • 4. An annual statement of receipts and expenditure and assets and liabilities of the union for the year ending on the 31st December, prepared in the prescribed forms and duly audited should be sent to the Registrar within the prescribed time. This statement should be accompanied by a statement showing changes in office bearers during the year and a copy of the rules as amended up to date 04/25/09

IRLL - Labour Laws

54

Payment of Bonus Act : Intro • The payment of Bonus Act provides for payment of bonus to persons employed in certain establishments of the basis of profits or on the basis of production or productivity and for matters connected therewith. • It extends to the whole of India and is applicable to every factory and to every other establishment where 20 or more workmen are employed on any day during an accounting year 04/25/09

IRLL - Labour Laws

55

ELIGIBIITY FOR BONUS • Every employee receiving salary or wages upto RS. 3,500 p.m. and engaged in any kind of work whether skilled, unskilled, managerial, supervisory etc. is entitled to bonus for every accounting year if he has worked for at least 30 working days in that year. • However employees of L.I.C., Universities and Educational institutions, Hospitals, Chamber of Commerce, R.B.I., IFCI, U.T.I. Social Welfare institutions are not entitled to bonus under this Act 04/25/09

IRLL - Labour Laws

56

DISQUALIFICATION FOR BONUS • Notwithstanding anything contained in the act, an employee shall be disqualified from receiving bonus, if he is dismissed from service for fraud or riotous or violent behaviour while in the premises of the establishment or theft, misappropriation or sabotage of any property of the establishment 04/25/09

IRLL - Labour Laws

57

MINIMUM AND MAXIMUM BONUS PAYABLE • MINIMUM BONUS • The minimum bonus which an employer is required to pay even if he suffers losses during the accounting year or there is no allocable surplus is 8.33 % of the salary or wages during the accounting year, or • Rs. 100 in case of employees above 15 years and Rs 60 in case of employees below 15 years, at the beginning of the accounting year, • whichever is higher 04/25/09

IRLL - Labour Laws

58

Maximum Bonus • MAXIMUM BONUS • If in an accounting year, the allocable surplus, calculated after taking into account the amount ‘set on’ or the amount ‘set of’ exceeds the minimum bonus, the employer should pay bonus in proportion to the salary or wages earned by the employee in that accounting year subject to a maximum of 20% of such salary or wages. 04/25/09

IRLL - Labour Laws

59

TIME LIMIT FOR PAYMENT • The bonus should be paid in cash within 8 months from the close of the accounting year or within one month from the date of enforcement of the award or coming into operation of a settlement following an industrial dispute regarding payment of bonus. • However if there is sufficient cause extension may be applied for 04/25/09

IRLL - Labour Laws

60

CALCULATION OF BONUS • The method for calculation of annual bouns is as follow: • Calculate the gross profit profit in the manner specified in– First Schedule, in case of a banking company, or – Second Schedule, in any other case. 04/25/09

IRLL - Labour Laws

61

Calculation … 2. Calculate the Available Surplus. • Available Surplus = A+B, where A = Gross Profit – Depreciation admissible u/s 32 of the Income tax Act Development allowance - Direct taxes payable for the accounting year (calculated as per Sec.7) – Sums specified in the Third Schedule. • B = Direct Taxes (calculated as per Sec. 7) in respect of gross profits for the immediately preceding accounting year – Direct Taxes in respect of such gross profits as reduced by the amount of bonus, for the immediately preceding accounting year. 04/25/09

IRLL - Labour Laws

62

Calculation …2 • Calculate Allocable Surplus • Allocable Surplus = 60% of Available Surplus, 67% in case of foreign companies. • Make adjustment for ‘Set-on’ and ‘Set-off’. For calculating the amount of bonus in respect of an accounting year, allocable surplus is computed after considering the amount of set on and set offf from the previous years, as illustrated in Fourth Schedule. • The allocable surplus so computed is distributed amongst the employees in proportion to salary or wages received by them during the relevant accounting year 04/25/09

IRLL - Labour Laws

63

Calculation … 3 • In case of an employee receiving salary or wages above Rs. 2,500 the bonus payable is to be calculated as if the salary or wages were Rs. 2,500 p.m. only

04/25/09

IRLL - Labour Laws

64

DUTIES / RIGHTS OF EMPLOYER • DUTIES • To calculate and pay the annual bonus as required under the Act • To submit an annul return of bonus paid to employees during the year, in Form D, to the Inspector, within 30 days of the expiry of the time limit specified for payment of bonus. 04/25/09

IRLL - Labour Laws

65

Duties …2 • To co-operate with the Inspector, produce before him the registers/records maintained, and such other information as may be required by them. • To get his account audited as per the directions of a Labour Court/Tribunal or of any such other authority 04/25/09

IRLL - Labour Laws

66

RIGHTS • An employer has the following rights: • Right to forfeit bonus of an employee, who has been dismissed from service for fraud, riotous or violent behaviour, or theft, misappropriation or sabotage of any property of the establishment 04/25/09

IRLL - Labour Laws

67

Rights …1 • Right to make permissible deductions from the bonus payable to an employee, such as, festival/interim bonus paid and financial loss caused by misconduct of the employee. • Right to refer any disputes relating to application or interpretation of any provision of the Act, to the Labour Court or Labour Tribunal. 04/25/09

IRLL - Labour Laws

68

RIGHTS OF EMPLOYEES • Right to refer any dispute to the Labour Court/Tribunal Employees, to whom the Payment of Bonus Act does not apply, cannot raise a dispute regarding bonus under the Industrial Disputes Act. • Right to seek clarification and obtain information, on any item in the accounts of the establishment. 04/25/09

IRLL - Labour Laws

69

THE PAYMENT OF BONUS ACT 1965* *

Till 1965, it was entirely up to the employer to pay

bonus to his employees. But the enactment of the Payment of Bonus Act 1965 makes this annual payment obligatory on the employers.

OBJECTIVE

• To maintain peace and harmony between labour and capital by allowing the employees, in recognition of their rights, to share in the prosperity of the establishment reflected by the contributions made by capital, management and labour. • To provide for payment of bonus to persons employed in certain establishments and for matters connected therewith.

04/25/09

IRLL - Labour Laws

71

APPLICATION • Every factory defined in the Factories Act • Every other establishment in which 20 or more persons are employed on any day during the accounting year.

04/25/09

IRLL - Labour Laws

72

• The Act specifically precludes some categories of employees from this Act. E.g. Bank employees (other than RBI) are eligible for bonus but employees of LIC are not. Employees of Universities and educational institutions or hospitals or seamen or employees employed through contractors etc., are not eligible for bonus. Moreover, the Central Govt., is empowered to make such rules as it thinks fit excluding certain employees drawing a certain amount of salary from receiving bonus. 04/25/09

IRLL - Labour Laws

73

ELIGIBILITY FOR BONUS • The employee should have worked for not less than 30 days in that year • The employee should not have been dismissed from service for fraud, riotous or violent behaviour while on the premises of the establishment or for theft, misappropriation or sabotage of any property of the establishment.

04/25/09

IRLL - Labour Laws

74

DETERMINATION OF BONUS – Bonus cannot be claimed as a right. The bonus formula under the Act rests on the calculation of available surplus. It entails the following calculations: – Computation of the gross profit (not in the sense of gross profit under accountancy) – Certain deductions from the gross profit.

04/25/09

IRLL - Labour Laws

75

• The bonus formula as envisaged in the Act provides for the payment of minimum & maximum bonus to the employees in an accounting year so that they are not deprived of any bonus in the accounting year. The bonus is payable even if there are losses in that particular year. • Minimum bonus : 8.33% of the salary or wage earned by the employee during the accounting year or Rs. 100 whichever is higher 04/25/09

IRLL - Labour Laws

76

• Maximum bonus: Bonus at a higher rate is payable only when the employees share of bonus in a particular year exceeds the minimum bonus payable to employees. The distribution in this case will be proportionate to the salary or wages earned by the employee during the accounting year subject to a maximum of 20% of such salary or wage. • Where the salary of an employee exceeds Rs. 2,500 per month, the bonus payable to such an employee will be calculated as if his salary or wages were Rs. 2,500 per month. 04/25/09 IRLL - Labour Laws 77

The bonus shall be paid in cash within a period of 8 months from the close of the accounting year. If an employee has deceased, then his legal heirs can claim bonus for that part of the year for which the employee was alive

04/25/09

IRLL - Labour Laws

78

THE INDUSTRIAL DISPUTES ACT 1947

MAIN OBJECTS • To secure industrial peace: – a) by preventing and settling industrial disputes between the employers and workmen, – b) by securing and preserving amity and good relations between the employers and workmen through an internal works committee and – c) promoting good relations through an external machinery of conciliation, courts of inquiry, labour courts, industrial tribunals and national 04/25/09 IRLL - Labour Lawstribunals ........ 80

• To ameliorate the condition of workmen in industry by redressal of grievances of workmen through a statutory machinery and provide job security. • The main object of this Act is to make provisions for the investigation and settlement of industrial disputes. It seeks to prevent industrial strikes, to maintain industrial peace, to promote industrial harmony and to ensure social justice. The ultimate object is to help the industrial progress and economic growth of the national economy. 04/25/09

IRLL - Labour Laws

81

MEANING OF INDUSTRY • Industry means any systematic activity carried on by the co-operation between an employer and his workmen. • The employer may employ the workmen directly or by or through an agency, including a contractor. The employment should, however be for the production, supply or distribution of goods & services with a view to satisfy human wants and wishes • It makes no difference whether or not: a) any capital has been invested or b) such activity is carried on with a motive to make any gain or profit. 04/25/09

IRLL - Labour Laws

82

WHO IS A WORKMAN? • Workman is a person employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be expressed or implied and for the purpose of any proceeding under this act in relation to an industrial dispute, including any such person who has been retrenched, dismissed or discharged in connection with or as a consequence of that dispute. IRLL - Labour Laws 83 • 04/25/09

WHAT IS AN INDUSTRIAL DISPUTE? • In common language, any industrial dispute is implied to mean a dispute between the workmen and management. • Under the Act, Industrial Dispute means:.........

04/25/09

IRLL - Labour Laws

84

• There should be a real & substantial dispute or difference (It means that the dispute has some element of persistency and continuity till resolved and is likely, if not resolved, to endanger the industrial peace of the undertaking or the community) • The dispute should be between employer and his workmen. • The dispute or difference must be connected with the employment or non-employment or terms of employment, or the conditions of labour of any person. 04/25/09 IRLL - Labour Laws 85

CONTENTS OF THE ACT: • The act contains provisions regarding: a) Lock outs, b) Lay off, c) List of industries which can be declared to be public utility services, d) Retrenchment, e) Strike, f) List of unfair trade practices by employer & workmen which are prohibited, g) Circumstances when the dispute can be referred to tribunals etc. and h) award & settlement. • 04/25/09

IRLL - Labour Laws

86

LOCKOUT • Lockout is an employer’s weapon. It means the temporary closing of a place of employment, or the suspension of work or refusal of an employer to employ any number of persons employed by him

04/25/09

IRLL - Labour Laws

87

The essentials of a lockout • There is a temporary closing of a place of employment or the suspension or with holding of work by the employer. • There is an element of demands for which the place of employment is locked out or closed, and • There is an intention to re-employ the workers if they accept the demands.

04/25/09

IRLL - Labour Laws

88

LAY OFF • It means the failure, refusal or inability of an employer to give employment to a workman: – whose name is borne on the muster rolls of his industrial establishment and, – who 04/25/09

has

not

been

IRLL - Labour Laws

retrenched. 89

The failure, refusal inability may be due to:

or

• Shortage of coal, power or raw materials, • Accumulation of stocks, • Breakdown of machinery, and • Natural calamity. • 04/25/09

IRLL - Labour Laws

90

Compensation: • The employer is bound to pay compensation to the workman for the period of lay off. The right of the workman to lay-off compensation is designed to relieve the hardship caused by the unemployment due to no fault of the workman. It is based on grounds of humane public policy.

04/25/09

IRLL - Labour Laws

91

RETRENCHMENT • It means to end, conclude or cease. Under the act it means the termination by the employer of the service of a workman for any reason whatsoever otherwise than as punishment inflicted or by way of disciplinary action.

04/25/09

IRLL - Labour Laws

92

• But it does not include: • voluntary retirement of the workman • retirement due to superannuation • retirement due to non renewal of contract of employment & • termination on the grounds of continued ill health.

04/25/09

IRLL - Labour Laws

93

• CONDITIONS FOR RETRENCHMENT: • No workman, who has been in continuous service for not less than 1 year under an employer, shall be retrenched by that employer until: – the workman has been given 3 months notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of notice – the prior permission of the appropriate authority as may be specified by the govt. has been obtained on an application made in this regard.

04/25/09

IRLL - Labour Laws

94

• The retrenchment is on the basis of the principle of last come first go. • The workman shall be paid retrenchment compensation at the rate of 15 days average pay for every completed year of service or part thereof in excess of 6 months.

04/25/09

IRLL - Labour Laws

95

STRIKE

• Strike is the weapon of the workman. It means: – Cessation of work by a body of persons employed in any industry acting in combination – Concerted refusal of any number of persons who are or have been so employed to continue to work or accept employment or – Refusal under a common understanding of any number of such persons to continue to work or to accept employment. 04/25/09

IRLL - Labour Laws

96

THE EMPLOYEES STATE INSURANCE ACT, 1948

• The object of the Act is to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto. • The act provides for these benefits through compulsory state insurance. These benefits are secured by financial contributions to the scheme both by employers and employees, central and state government grants, donations & 04/25/09 IRLL - Labour Laws 98 gifts.

• The act is designed to provide cash benefits to the worker in distress or to his dependants in case of death. All persons employed for wages in or in connection with work of a factory or establishment are entitled to disablement benefit provided their remuneration does not exceed Rs.2,500 per month. The dependants of workers who died as a result of any employment injury were paid compensation in the form of a pension 04/25/09

IRLL - Labour Laws

99

• The ESI scheme offers both direct and indirect medical care : – The direct method is called the “service system” by which the ESI Corporation provides medical care, either through its own ESI hospitals or through reservation of beds in state govt. hospitals. – The indirect method is known as the panel system, under which medical care is provided through private doctors selected by the state govt. with the approval of the ESI Corporation. 04/25/09

IRLL - Labour Laws

100

• The benefits provided under the act are: a. Sickness benefit b.maternity benefit c. disablement benefit d. dependants benefit e. funeral benefit f. medical benefit & g. extended sickness benefit for 22 specified long term diseases.

04/25/09

IRLL - Labour Laws

101

• The main sources of finance are the contributions from employers and employees and one eight share from the state government towards the cost of medical care .The employee’s contribution will be 2.25 percent of the wages while the employer’s contribution will be 5% of the wage in respect of every wage period.

04/25/09

IRLL - Labour Laws

102

THE FACTORIES ACT, 1948

WHAT IS A FACTORY? • According to the Act, a factory means any premises including precincts:

– Wherein a manufacturing process is being carried on – If power is being used, 10 or more workers are working – If power is not being used, 20 or more workers are working. • A precinct means a space enclosed by walls or fences

04/25/09

IRLL - Labour Laws

104

WHO IS A WORKER ? • A worker means a person employed, directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer. He may be employed for or without remuneration. But he must be employed in a manufacturing process, or in cleaning some part of the machinery or premises used for the manufacturing process, or in some other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process 04/25/09

IRLL - Labour Laws

105

• The Act contains provisions relating to: – Approval, Licensing & registration of Factories. – Appointment of Inspecting Staff. – Provisions ensuring the health of the workers – Provisions ensuring safety of workers. – Provisions regarding the welfare of the workers. – Provisions regarding the hours of work, employment of young workers, holidays & annual leave with wages. 04/25/09

IRLL - Labour Laws

106