Presented By: Sundar Ganesh Kumar,

S.Y.B.M.S. Sem-III, Roll No.: 44

Vivek College Of Commerce

Industrial Law

The Industrial Dispute Act, 1947

The Payment Of Wages Act, 1936

The Minimum Wages Act, 1948

The Payment Of Gratuity Act, 1972

Major Industrial Laws

Important Definitions Authorities under the Industrial Disputes Act Award & Settlement Strikes Lock-outs Lay Offs Retrenchments Closure Case Law Studies

The Industrial Disputes Act, 1947

Industry [S.2(j)]: means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.

Employer [S.2(g)]: means-i. In relation to an industry carried on by or under

the authority of any department of the Central Government or a State Government – the authority prescribed in this behalf;

ii. In relation to an industry carried on by or on behalf of a local authority – the Chief Executive Officer of that authority.

Important Definitions

Industrial Dispute [S.2(k)]: means any dispute or difference between-i. Employers and Employers, orii. Employers and Workmen, oriii. Workmen and Workmen,which is connected with-iv. The employment or non-employment, orv. The terms of employment, orvi. The conditions of labour.of any person related directly or indirectly to the

industry.

Important Definitions

Workman [S.2(s)]: means any person (including an apprentice) employed in any industry to do any-i. Manualii. Skillediii. Unskillediv. Technicalv. Operationalvi. Clericalvii. Supervisory

work for hire or reward, whether the terms of employment be expressed or implied, and 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

Important Definitions

Workman (contd.): to that dispute. Workman does not include any such person, who is:-i. Subject to the Air Force Act, 1950, the Army Act,

1950, or the Navy Act, 1957, orii. Employed in the police service or as an officer or

other employee of a prison, oriii. Employed mainly in a managerial or

administrative capacity, oriv. Employed in a supervisory capacity, and draws

wages exceeding Rs.1600 per mensem, orv. Exercises functions mainly of managerial nature,

by the duties attached to the office or by the reason of power vested in him.

Important Definitions

Public Utility Service [S.2(n)]: means-i. Any railway service or any transport service for the

carriage of passengers or goods by air;ii. Any service in, or in connection with the working

of, any major port or dock;iii. Any section of an industrial establishment, on the

working of which the safety of the establishment or the workmen employed therein depends;

iv. Any postal, telegraph or telephone service;v. Any industry which supplies power, light or water

to the public;vi. Any system of public conservancy or sanitation;vii. Any industry specified in the first schedule.

Important Definitions

The Act has set up machinery to deal with the Industrial Disputes. These authorities are meant for dealing with the Industrial Disputes. Even though the name authority is used, it does not mean each and every authority has power to make a binding decision.

The Authorities are:i. Works Committee (Section 3)ii. Conciliation Officer (Section 4,11 & 12)iii. Board Of Conciliation (Section 11 & 13)iv. Court Of Inquiry (Section 6,10,11 &14)v. Labour Court (Section 7,11 &15)vi. Industrial Tribunal (Section 7A,11 & 15)vii. National Tribunal (Section 7b,11 & 15)

Authorities under the Act

Award: means an interim or final determination of any Industrial Dispute to any question relating thereto, by any Labour Court, Industrial or National Tribunal and includes arbitration award made under section 10A.

Settlement (Section 18-21): means a settlement arrived at in the course of conciliation proceedings and includes a written agreement between the employer and workman arrived at, otherwise than in the course of conciliation proceedings where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorized in this behalf by the Appropriate Government and the Conciliation Officer.

Award & Settlement

Strike: means cessation of work by a body of persons in any Industry:-a. Acting in combination, orb. A concerted refusal, orc. A refusal under a common understanding,

of any number of persons who are or have been so employed to continue to work or accept employment.

Strike is a weapon in the hands of the workmen, in the process of collective bargaining. Strike tests the economic bargaining power of each side and forces each of them to face the need it has for others contribution. The economic pressure of the strike is the catalyst which makes the agreement possible. Collectively bargaining is a process of reaching agreement and strikes are an integral and frequently necessary part of that process.

Strikes

Section 22 says “In case an industry is a public utility service, no person employed in it shall g o on strike in breach of contract-a. Without giving to the employer notice of a

strike, provided within 6 weeks before striking,

b. Within 14 days of giving such notice, orc. Before the expiry of the date of strike

specified in any such notice; ord. During the pendency of any conciliation

proceedings before a conciliation offices and 7 days after the completion of these proceedings”

Strikes: in Public Utility Services

Notice of strike should be in prescribed form. The copy of this notice is to be submitted to the

conciliation officer, or such authority as may be prescribed by the Appropriate Government.

The employer, on receipt of notice of strike from employees, shall report within 5 days to-a. Appropriate Governmentb. Authority prescribed by the Appropriate Government-

which states the number of notices received on that day. The date on which the workman proposed to go on

strike should be specified in the notice. A fresh notice is necessary when the date of strike

specified in the original notice expires.

Strikes: in Public Utility Services

A new notice is necessary, when the conciliation proceedings fail, which have started after the notice.

The object of giving the notice is to allow the other party to come to terms, or to approach the authorities to intervene and stop the strike, if possible.

During the period of notice, the parties can respond to each other.

Illegality attaches only to that period which remains to expire before the commencement of action.

Strikes: in Public Utility Services

Section 23 states the general prohibition of strike. No workman who is employed in any Industrial

Establishment shall go on strike in the following circumstances:a. During the pendency of conciliation proceedings before a

Board and 7 days after the completion of these proceedings;b. During the pendency of proceedings before a Labour Court,

Industrial Tribunal or National Tribunal, and 2 months after the completion of these proceedings;

c. During the pendency of arbitration proceedings before an arbitrator and 2 months after the completion of these proceedings; where notification has been issued under S 10A(3A)

d. During any period in which a settlement or award is in operation in respect of any of the matters covered by the settlement or award.

Strikes: General Prohibition

Lock-out [Section 2(I)] means-a. The temporary closing down of a place of employment,b. The suspension of work, orc. The refusal by an employer to continue to employ any

number of persons employed by him. As strike is a weapon in the hands of workmen for

enforcing their demand, lock-out is a weapon in the hands of the employer to persuade the workers to agree to his point of view and accept his demands in the struggle between capital and labour.

The notice of lock-0ut shall be given in prescribed manner. On event of employer giving notice of lock-out on any day

to any person employed by him, he shall report the number of notices given to the Appropriate Government, within 5 days of giving such a notice.

Lock-outs

The conditions of lock-outs in public utility services are dictated under Section 22 and are same as the conditions of Strikes.

The provisions for general prohibition of lock-outs are dictated under Section 23, same as the provisions of Strikes.

The notice of lock-out is not necessary when a lock-out is already existent in case of a public utility service.

However, the employer shall send intimation of lock-out to the authority specified by the Appropriate Government, on the day of declaration of lockout itself.

Prohibition of Lock-outs

Wages are generally not provided during the period of strikes when it is proven illegal under the Act.

However, the factor of justification of reasons leading to the Act of going on strike, also decide the payment or non-payment of wages to the workmen.

If a strike is not justified, but legal; or if a strike is illegal, but duly justified, the workmen are entitled to receive wages for the period of the strike.

A lock-out in violation of the statutory requirements is illegal and unjustified and workers are entitled to wages for the lock-out period.

For a legal lock-out, no wages are payable to the workmen.

Strikes & Lockouts: Wages & Justification

Prohibition of financial aid to illegal strikes or lock-outs (S.25)

Penalty for illegal strike (S.26): Any workman who commences, continues or acts in furtherance of an illegal strike shall be punishable with imprisonment up to 1 month, or fine up to Rs.50 or both.

Penalty for instigation (S.27): Any person who instigates or incites other to take part in a strike or lock-out which is illegal shall be punishable with imprisonment up to 6 months or with fine up to Rs.1000 or both.

Penalty for giving financial aid to illegal strikes and lock-outs (S.28): Punishable with imprisonment up to 6 months or fine up to Rs.1000 or both.

Strikes & Lock-outs: Penalties

Lay-Off means:i. The failureii. Refusal, oriii. Inability of an employer on account of shortage of:

a. Coal,b. Power or raw materials, orc. The accumulation of stocks, ord. The break-down of machinery, ore. Natural calamity, orf. For any other connected reason to give employment;

to a workman whose name is borne on the muster rolls

of his industrial establishment and who has not been retrenched.

Lay-Offs

Lay-Off means putting aside workmen temporarily. The duration of a Lay-Off should not be longer than

that of the current emergency. The employer – workman relationship does not come

to an end, but is suspended during the period of emergency.

The workman’s name should be essentially present on the muster rolls of the industry for claiming relief.

The workman should not have been retrenched.If work is given by the employer on a different shift, it

would be considered as a half-day lay-off.If employment is not given within two hours, it would

be considered as having laid-off that whole day.

Lay-Offs

The payment of compensation for a lay-off is dependent upon-a. Status of a workman, i.e., badli, casual, or

permanentb. Type of service, i.e., continuous or seasonalc. Number of workmen in the Industrial Establishment

Industrial Establishments are classified into three groups depending on the number of workers employed in that establishment:

i. Where the number of workmen is less than 50ii. Where the number of workmen is 50 – 100iii. Where the number of workmen is more than 100.

Lay-Offs: Rules and Provisions

Compensation is provided to the workmen in an Industrial Establishment on the basis of the category they fall in from the above mentioned three groups:i. Nil compensation for IEs with less than 50 workmen.ii. Compensation at the rate of 50% of the total basic

pay and dearness allowance to a time limit of 45 days for IEs with 50 – 100 workmen.

iii. Compensation at the rate of 50% of the total basic pay and dearness allowance to a time limit of 45 days for IEs with more than 100 workmen.

Workmen are not entitled to any compensation if alternate employment is provided by the employer in a radius of 5 miles, or if the lay-off is a result of a strike.

Lay-Offs: Compensation

The employer of the Industrial Establishment is required to prepare a muster register that shows the name and other requisite details of all workmen in the prescribed format.

Section 25M states that an employer of an Industrial Establishment employing 100 or more workmen on average per day in the preceding 12 months is required to obtain previous permission of specified authority appointed for the purpose by the Appropriate Government, by a notification by the official Gazette.

Section 25Q says any employer who contravenes the provision of Section 25M shall be punishable with imprisonment up to one month, or fine up to Rs.1000 or both.

Lay Offs: Penalties

Retrenchment [S.2(oo)]: means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include-a. Voluntary retirement of workman, orb. Retirement of the workman on reaching the age of

superannuation, if his contract contains a stipulation in this behalf, or

c. Termination of the service of a workman as a result of non-renewal of the contract of employment, or

d. Termination of employment of a workman on the ground of continued ill health.

The word ‘ill health’ means cataract, physical unfitness, infirmity due to old age, incapacity to work, leprosy, etc.

Retrenchment

Retrenchment means the discharge of surplus labour. It is not necessary that removal must be only when the

establishment is in loss. The Supreme Court has interpreted the term retrenchment

in stricter sense of it, that is to say, it means termination of service for any reason whatsoever.

Retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff of labour force is discharged a surplusage.

Where a worker suffers an accident during the course of employment making him unfit for the job, termination on this ground is illegal.

Where seasonal worker ceases to do work due to closure of season, it is not retrenchment.

Retrenchment

Provisions are divided into two main categories which are as follows:i. Where number of workmen employed is less than 100,ii. Where number of workmen employed is more than

100. Section 25F: No workman employed in any industry

who is in continuous service for not less than one year under an employer shall be retrenched until-

a. The workman is given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or

b. In case one month’s notice is not given, the workman is paid wages for the period of the notice, in lieu of the notice period.

Retrenchment: Provisions & Rules

c. The workman is paid at the time of retrenchment, compensation which shall be equal to 15 days average pay for every completed year of continuous service or any part thereof in excess of six months, and

d. Notice in the prescribed manner is served on the Appropriate Government.

• Section 25G: The normal rule is to retrench first of all the junior most workman. If an employer has sufficient reasons to depart from this rule, only then he can do so, but the reasons have to be recorded.

• The LIFO (Last In First Out) Principle is mentioned in the Section 25G, which states that the workman who is employed last will be retrenched first.

Retrenchment: Provisions & Rules

Section 25H gives a statutory right of reemployment to the retrenched workmen.

If the employer wants to take the workmen in future, the retrenched workman has a right of preference over the others.

This provides for preferential reemployment of the retrenched workmen.

The employer should take precaution that he pays the retrenchment compensation at the time of retrenchment.

In case the workman denies to accept compensation for the same, the employer should have sufficient proof that retrenchment compensation was offered to the workman, and clearly denied by him.

Retrenchment: Provisions & Rules

Section 25K points out that the provisions of this chapter are applicable to Industrial Establishments employing 100 or more workmen on average per working day for the preceding 12 months.

This establishment should not be of a seasonal character or in which work is performed only intermittently.

Section 25N specifies that no workman who is in continuous service for not less that one year under an employer shall be retrenched until-a. The workman has been given three months notice in

writing indicating the reasons for retrenchment and the notice period has expired or the workman has been paid in lieu of such notice, wages for the period of notice.

b. Notice in the prescribed manner has been given to the Appropriate Government and permission is granted.

Retrenchment: Provisions & Rules

c. Workman has been paid compensation at the time of retrenchment which shall be equal to 15 days average pay for every completed year of continuous service or any part thereof in excess of six months.

d. Inquiry is made by the Appropriate Government or specified authority and granting or refusing permission for the reasons to be recorded in writing.

e. In case retrenchment is effected without making an application or where the permission for retrenchment is refused retrenchment shall be deemed to be illegal from the date on which it is effected and the workman shall be entitled to all the benefits that are available to him under the law.

• Section 25Q specifies that any employer who contravenes the provisions of Section 25N shall be punishable with imprisonment up to one month or fine up to Rs.1000 or both.

Retrenchment: Provisions, Penalties

Closure [Section 2(cc)]: means permanent closing down of a place of employment or part thereof.

The provisions about closure are to be understood with reference to-a. Type of service:- i.e., continuous service or not

(same as layoff)b. Number of workmen employed;-

i. No. of workmen less than 50ii. No. of workmen 50 – 100iii. No. of workmen 100 or more.

• The closure of an undertaking is subject to the restrictions imposed by the statutory provisions.

Closure: Definition & Provisions

Where number of workmen employed is less than 50 [Section 25 FFA & Section 25 FFF], if an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less that one year in that undertaking immediately before such closure shall be entitled to notice and compensation as if the workman has been retrenched.

If the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation payable to the workman shall not exceed his average pay for three months.

If an undertaking is set up for the construction off buildings, bridges, roads, canals, dams, or other construction work and it is closed down on account of completion of the work within 2 years from the date on which the undertaking is set up, then no workman employed by the undertaking shall be entitled to any compensation.

In case the construction work takes more that 2 years for completion after it is set up, then the workman will be entitled to both notice and compensation as per the rules of retrenchment.

Closure: Rules & Provisions

Where number of workmen employed is more than 50, but less than 100 [Section 25 FFA]:-a. The employer who intends to close down his

undertaking shall have to serve at least sixty days notice in the prescribed manner on the Appropriate Government before the date on which the intended closure is to become effective. The reasons for the same have to be clearly stated.

b. No notice is required when:-i. The number of workmen employed is less than 50, orii. An undertaking is set up for the construction of buildings,

bridges, canals, roads, dams or for other such projects.iii. The Appropriate Government is satisfied than; owing to

exceptional circumstances like accident in the undertaking, death of employer or similar reason, no notice is required.

Closure: Rules & Provisions

c. The compensation payable is the same as if applicable to an undertaking employing less than 50 workmen.

d. The notice to be given is only information to the Appropriate Government. The notice does not mean that any previous sanction of the Appropriate Government is required for the closure of an undertaking.

• Where the number of workmen is 100 or more [Section 25-O], an employer who intends to close down his undertaking shall apply to the Appropriate Government for prior permission, 90 days before the intended date of closure.

• Copy of this application should also be served on the representatives of the workmen in the prescribed manner.

• No such application to the Appropriate Government is required when the construction is the case of canals, bridges, buildings, etc.

• Workmen shall be entitled to compensation in case of a legal closure, at the rate of 15 days wages for every completed year of continuous service.

Closure: Rules & Provisions

Penalty for closure [Section 25R]:- Any employer who closes down an undertaking without complying with the provisions of Section 25-) shall be punishable with imprisonment up to six months or fine up to Rs.5000 or both.

Penalty for closure without notice [Section 30A]:- An employer who closes down any undertaking without complying with the provisions of Section 25FFA shall be punishable with imprisonment up to six months or fine up to Rs.5000 or both.

Any employer who contravenes an order refusing to grant permission to close down an undertaking under Section 25-O(2) shall be punishable with imprisonment up to one year, or fine up to Rs. 5000 or both.

Where the contravention is continuing even then, with a further fine up to Rs.2000 for every day during which the contravention after conviction continues can be imposed.

Closure: Penalties

1) Syndicate Bank V/s Umesh NayakHELD:- The Supreme Court has observed that

strike or lock-out is to be resorted to, only in unavoidable circumstances and to compel the other party to see the justness of the demands and is not intended to cause nuisance or physical danger to their employers or others.

2) Hindustan Cables V/s Labour CourtHELD:- Resorting to strikes or lock-outs without

negotiations or conciliations is unjustified.

Case Law Studies

3) Central India Spinning, Weaving & Manufacturing Co. Ltd., V/s State Industrial Court

HELD:- The Bombay High Court said the key words “the failure, refusal, or inability of an employer” in the definition of lay-off make it clear that the unemployment has to be on account of a cause which is independent of any action or inaction on part of the workmen themselves.

4) Morinda Co-op. Sugar Mills V/s Ramakrishnan

HELD:- Where seasonal worker ceases to do work due to closure of the season it is not retrenchment.

Case Law Studies

Introduction Applicability Important Definitions Rules relating to Payment of Wages Compensation & Penalties Case Law Studies

The Payment Of Wages Act, 1936

Preamble – To regulate the proper and timely payment of wages to different classes of workers.

Important features of the Act-Remedies & compensations relating to:

Wrongful deductions made from wages Delay in payment of wages Non-payment of wages

Provisions in the Act: Permissible deductions from wages Timely payment of wages Mode of payment of wages Reasonable rates of recovery

Introduction

The Payment Of Wages Act is applicable to the whole of India.

The Act is applicable to any employee in a factory, employees of the railway industry, including those who are employed through a sub-contractor.

It is also applicable to employees working in any Industrial or Other Establishment, or any other Establishment stated under Sections [2(i)(a) to 2(i)(g)] of the Payment Of Wages Act.

The Act covers all those employees who draw a monthly salary of less than Rs.6500

Applicability

Appropriate Government [S.2(i)] is the Central Government in relation to:a) Railwaysb) Air transport servicesc) Mines and oil fieldsThe State Government is the Appropriate Government in

all other cases.Industrial Establishment [S.2(ii)] means any-

a) Tramway service, or motor transport service for passengers or goods or both by hire or for reward;

b) Dock, wharf, or jetty,;c) Inland vessel, mechanically propelled;d) Mine, quarry or oil field;e) Plantation;

Important Definitions

f. Workshop, or other establishment, where articles are

i. Produced,ii. Adapted, oriii. Manufactured,

with a view to their use, transport, or sale. Wages [S.2(vi)] 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 and conditions of employment, whether expressed or implied, be payable to a person in respect of his employment or any work done in such employment, and includes-

Important Definitions

a. Any remuneration payable under any award or settlement between the parties or order of court;

b. Any remuneration to which the person is employed is entitled in respect of overtime work, or holidays or leave period;

c. Any additional remuneration payable (bonus);d. Any sum paid on the event of termination of employment;e. Any sum to which the a person is entitled under any scheme

which is framed under a law currently in force.But, it does not include-

f. Value of house accommodation, medical and other facilities, amenities and travelling, medical and other allowances;

g. Contribution paid by the employer to any pension or provident fund;

h. Any special expenses and gratuity paid at termination of employment.

Important Definitions

Responsibility for Payment of Wages [S.3]: Payment means transfer of money from one person to another to satisfy a debt or an obligation.

Every employer is responsible for the payment of wages but this responsibility is also cast on other persons; they are:a. In case of factories, the manager of the factoryb. In case of an Industrial Establishment, the person in the

post having control and supervision in the establishmentc. In case of railways, the person nominated for the

payment of wagesd. In case of a contractor, the person designated by the

contractore. In any other case, the person designated by the employer

as a person responsible for complying with the provisions of the Act.

Rules relating to Payment of Wages

Fixation of Wage Periods and time of Payment of Wages [S.4&5]Every person responsible for payment of wages shall fix

wage periods.A wage period shall not exceed one month.Wage period can be daily, weekly, fortnightly, or monthly. In case of a Factory or Industrial Establishment or Railways,

wherein less than 1000 employees are employed, the wages shall be paid within 7 days after the expiry of the wage period.

In any other case, wages shall be paid before the expiry of the 10th day after the last day of the wage period.

In case of docks, wharfs, jetties and mines, wages are to be paid before the expiry of the 7th day on completion of final tonnage account of the material loaded or unloaded.

All payment of wages shall be made on a working day.

Rules relating to Payment of Wages

Mode of Payment of Wages [S.6]Under the Payment of Wages Act, wages cannot be

paid in kind. They must be paid in current coins or currency notes or both.

The employer may, if he desires, after obtaining the written authorization of the employed person pay his wages either by cheque or by crediting the wages in the bank account.

Deductions which may be made from Wages [S.7]The usual rule of the payment of wages is that the

employed person shall be paid his wages without any kind of deductions except those authorized under this Act.

Thus, the Section 7 of this Act is critical.

Rules relating to Payment of Wages

Fines [S.8]: An employer may impose a penalty or fine on an employed person. While imposing such fine, the employer has to obtain

prior approval from the Appropriate Government to the acts and omissions for which the fine many be imposed.

The employed person will be given a chance to show cause against imposing of the fine.

Fine cannot be recovered at a rate more than 3% of the total wages in the respective wage periods.

Fine cannot be imposed on a person below the age of 15 years.

Fine cannot be recovered in installments. Fine should be recovered within 3 months from the

date of imposition of fine.

Authorized Deductions

Deductions for absence from duty [S.9]: An employer has the power to deduct wages for absence from duty. The deduction may be for absence for a whole, or

part of a day. The deduction shall be in proportion to the time for

which an employed person is absent from duty. A person shall be considered as absent from duty,

in case although present in the establishment,i. When he is absent from the place of work where he is

required to be present and work, orii. When he refuses for any unreasonable cause, oriii. In case of a stay-in-strike to carry out his work.

Authorized Deductions

Deduction for Damage or Loss [S.10]: If the goods are expressly entrusted to the employed person for custody or in case he loses money which he is required to account, where loss/damage is directly attributable to damage or neglect or the default on his part, deductions from wages can be made. The deducted amount shall not exceed the amount of

the damage or loss caused to the employer. The employer shall give an opportunity to the

employee to show cause against the fine before making deductions.

Such deductions have to be recorded in the prescribed register and kept by the person responsible for payment of wages.

Authorized Deductions

Deductions for Services Rendered [S.11 & 7(2)]: House accommodation: Supplied by the employer or the

Government or any housing board; such deductions cannot be made unless the employed person has accepted the amenity as term of employment and such deduction shall not exceed an amount equal to the value of actual house accommodation amenity.

Deductions for such amenities and service supplied by the employer ad the Appropriate Government may, by a general or special order authorize; these deductions can be made only when such supply is accepted as term of employment by the employed person.

The term ‘services’ does not include the supply of tools and raw materials, or protective measures required by nature of the employment.

Authorized Deductions

Deductions for Recovery of Advances [S.12]: This is subject to the following conditions-a. Recovery of an advance of money given before

employment began can be made from the first payment of wages in respect of complete wage period.

b. Recovery of advance of money given after employment began and of wages not already earned is subject to the conditions imposed by the Appropriate Government.

c. Recovery of advances of wages not already earned shall be according to the rules made by the Appropriate Government including the installments by which they may be recovered.

Deductions for Recovery of Loans [S.12-A]: can be made as per the rules approved by the Appropriate Government regulating the extent to which such loans may be granted and rate of interest payable on it.

Authorized Deductions

Deductions for Payments to Cooperative Societies and Insurance Schemes [S.13 & 7(2)]: These deductions shall include-a. Deductions for payments to cooperative societies

approved by the Appropriate Government or to a scheme of insurance maintained by the Indian Post office.

b. Deductions made with the written authorization of the employed person for-

i. Payment of any premium on his life insurance policy to LIC of India, or

ii. Purchase of Government securities, oriii. Payment of contribution to any fund or a trade union.iv. Payment of membership fees to trade union.v. Contribution to Prime Minister’s National Relief Fund

Authorized Deductions

Other Deductions:Deduction of Income Tax payable by an employed person.Deductions according to the order of a court or other

authorities competent to make such order.Deductions for subscriptions to and repayment of advances

from any provident fund approved by the Appropriate Government.

Deductions for payment of insurance premium on Fidelity Guarantee Bonds.

Limit on Deductions [S.7(3)]: The deductions from wages for the permissible deductions shall not exceed-75% including payments to cooperative societies.50% in any other cases In case of exceeds in limits of deductions, balance may be

recovered in the manner prescribed by the Appropriate Government.

Authorized Deductions

The Payment of Wages Act provides for the constitution of a separate authority for any specified area to hear and decide claims arising out of deductions from the wages or delay in the payment of wages.

The authorities include:a. Commissioner of Workmen’s Compensation, orb. Regional Labour Commissioner, orc. Assistant Labour Commissioner,d. Presiding officer of Labour Court or Industrial

Tribunal, ore. Judicial Magistrate.f. Experienced Judge of a civil Court

Remedy & Compensations

Application: A person himself or any legal practitioner or any official of a Registered Trade Union authorized in writing to act on behalf of such person or any inspector under this Act

Period: Such a claim is to be made within 12 months from the date on which the deductions were made, or from the date on which payment of wages was to be made.

Compensation: If the authority is satisfied that there were wrongful deductions, it may in addition to the refund of the amount wrongfully deducted require the employer to pay compensation not exceeding 10 times the actual amount of deductions.

In case of delayed wages, the employer may be directed to pay the wages immediately and also impose a penalty not exceeding Rs.3000, but not less than Rs.1500.

Remedy & Compensations

Arumugham V/s Jawahar MillsHELD:- The expression in Sections [15-17] not only

includes ‘delayed wages’ but also covers ‘refused wages’.

Upper India V/s J.C.MathurHELD:- The word ‘deduction’ in Section 15 appears to

have been used in a very wide sense so as to include the ‘entire deficiency’ which the employee alleges to have been caused in the Payment of Wages as a result of withholding of the same by the employer partially or wholly.

Parmeshwar V/s AttiHELD:- Payment signifies satisfaction of a claim.

Case Law Studies

Introduction Important Definitions Fixation & Revision Of Wages Other Provisions Case Law Studies

The Minimum Wages Act, 1948

The object of this Act is to secure the welfare of the workers in a competitive market by fixing the Minimum rates of wages in certain employments.

The justification for statutory fixation of minimum wages is clear form the following facts: Poorly developed workers organization. Poor bargaining power of workers. Continuous labour struggle demand for increase in wages,

resistance to decrease in wages, and grant of benefits, allowances, etc.

The Act has been modified in the recent past to apply to all industrial establishments and their employees that are involved in any work or job that fits in the schedule to this Act, fitting the description of ‘Scheduled Employments’

The Act intends to prevent exploitation of labour and also has many provisions that ensure the minimum wages, wages for overtime, maximum duration of daily work & weekly day of rest.

Intoduction

Employer [S.2(e)]: means- any person who:a. Employsb. Whether directly or through another personc. Whether on behalf of himself or any other persond. One or more employees in any scheduled employmente. In respect of which rates of minimum wages have been

fixed. Cost of Living Index Number [S.2(d)]: in relation to

employees in any scheduled employment in respect of which minimum rates of wages have to be fixed, means:a. The index numberb. Ascertained and declaredc. By the competent authority by notification in the Official

Gazetted. To be the cost of Living Index Numbere. Applicable to employees in such scheduled employments.

Important Definitions

Scheduled Employment [S.2(g)] means-a. An employment specified in the schedule, orb. Any process or branch of work forming part of such

employment.The schedule is divided into two parts:

Part-I:c. Woolen carpet making or shawl weaving, etc.d. Rice mill, Flour mill, Dal mill, etc.e. Bidi, Tea, Oil, Coffee, Rubber, Stone, etc.f. Glass industryg. Employment under any local authorityPart-II:h. Agriculture, Horticulture, Poultry, Dairy Farming, etc.i. Cleaning and sorting of onions and other incidental

work.

Important Definitions

Wages [S.2(vi)] 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 and conditions of employment, whether expressed or implied, be payable to a person in respect of his employment or any work done in such employment, and includes-a. Any remuneration payable under any award or settlement

between the parties or order of court;

b. Any remuneration to which the person is employed is entitled in respect of overtime work, or holidays or leave period;

c. Any additional remuneration payable (bonus);

d. Any sum paid on the event of termination of employment;

e. Any sum to which the a person is entitled under any scheme which is framed under a law currently in force.

Important Definitions

Employee [S.2(i)]: means any person:a. Who is employed for hire or reward,b. To do any work,c. Skilled or unskilled,d. Manual or clerical,e. In Scheduled Employment,f. In respect of which minimum wages have been fixed.But, it does not include-

g. Value of house accomodation, medical and other facilities, amenities and travelling, medical and other allowances;

h. Contribution paid by the employer to any pension or provident fund;

i. Any special expenses and gratuity paid at termination of employment.

Important Definitions

Appropriate Government [S.2(i)] is the Central Government in relation to:

a) Railways

b) Air transport services

c) Mines and oil fields

The State Government is the Appropriate Government in all other cases.

Employer [S.2(g)]: means-

i. In relation to an industry carried on by or under the authority of any department of the Central Government or a State Government – the authority prescribed in this behalf;

ii. In relation to an industry carried on by or on behalf of a local authority – the Chief Executive Officer of that authority.

Important Definitions

Appointment of Committee:a) The Government may appoint as many committees an

sub committees as it consider necessary to hold inquiries and advise it in respect of such fixation or revision.

b) After considering the advise of such committees or sub committees the Appropriate Government notifies the fixation or revision of Minimum Rates of Wages.

c) Such wages come into force on the date determined in the notification.

d) If no date is mentioned, then on the expiry of 3 months from the date of issue of notification, the rates of wages and other conditions attached to it will expire.

e) The object of the procedure is to enable the Government to reach a balanced conclusion relating to fixing minimum wages

Minimum Wages: Fixation & Revision

By a Notification:a) The Appropriate Government may, by a notification,

publish its proposals about the fixation of Minimum Rates of Wages.

b) For the information of all the persons likely to be affected thereby.

c) It shall specify in the notification the date on which the proposals shall be taken into consideration.

d) Such date shall not be less than 2 months from the date on which the proposals have been notified.

e) After considering all the representations received by it within the specified time.

f) It shall notify the minimum wages was fixed or revised by it.

Minimum Wages: Fixation & Revision

By a Notification (contd.):f) Such Minimum Rates of Wages come into force from

the date mentioned in the notification.g) If no date is mentioned, then on the expiry of 3 months

from the date of issue of notification, the rates of wages and other conditions attached to it will expire.

h) While adopting this method the Appropriate Government is also required to consult the Advisory Board.

i) The Advisory board is appointed by Appropriate Government for the purpose of coordinating the work of different committees and sub committees and also for advising the Government in matters of fixation and revision of minimum wages, and also for general consultation.

Minimum Wages: Fixation & Revision

The provision relating to fixation of minimum rates of wages are given in Section 3 as follows:1) Fix the Minimum Rates of Wages payable to employees

employed in an employment specified in the schedule, and2) In the employment added to the schedule by a notification.3) The Appropriate Government may, in respect of employees

employed in an employment specified in Part-II of the schedule, fix rates for

i. Part of the State, orii. For any specified class or classes of such employment in the

whole state or part of state.iii. Instead of fixing Minimum Rates of Wages for the whole State.

4) The Appropriate Government shall review at such intervals not exceeding 5 years, the Minimum Rates of Wages and revise them if necessary.

Minimum Wages: Fixation & Revision

5) When the Appropriate Government fails to revise the rates of Minimum Wages within 5 years, it can do so even after the expiry of 5 years as it feels necessary.

6) Until the rates of Minimum Wages are revised, the rates of Wages before the expiry of 5 years shall continue to be in force.

7) The Appropriate Government my not fix the rates of Minimum Wages in respect of any schedules employment in which there are less than 1000 employees engaged in the whole State.

8) The Appropriate Government may fix rates of Minimum Wages which may be in the form of Minimum Rates for:-

a) Time Work (Minimum Time Rate)

b) Piece Work (Minimum Piece Rate)

c) Remuneration; time work basis (Guaranteed Time Rate)

d) Minimum rate in respect of overtime (Overtime Rate)

Minimum Wages: Fixation & Revision

Sections [3-5] deal with the fixation and revision of Minimum Wages

Section 3 says the Appropriate Government has powers to fix the Minimum Wages payable to the employees employed in any scheduled employment.

Section 4 gives the content of Minimum Wages. Section 5 gives the procedure for fixing and revising the

Minimum Wages. Section 12 says that it is absolutely necessary for an

employer to pay every employee engaged in Scheduled employment in the Minimum Rates of Wages fixed by the Government without any deductions except those as may be authorized.

Section 16 says that in case an employee does 2 or more classes of work to each of which a different Minimum Rates of Wages is applicable, the employer shall pay to such employee in respect of time occupied by

Other Provisions

him in each class of work, wages not less than the Minimum Rates of Wages applicable to each such class.

Maintenance of Registers and Records (Section 18)Every employer shall maintain Registers and Records giving:i. Particulars of Employeesii. Work performed by Employeesiii. Wages paid to Employeesiv. Receipt given by the Employersv. Other particulars in such form as may be prescribed

Rates of Overtime (Section 14)i. Where an employee works overtime, the employer shall pay him

over time wages for every hour worked in excess at the rates fixed by the Appropriate Government.

ii. The provisions of Minimum Wages Act shall not affect the provisions of Factories Act relating to payment of over time at twice the minimum rate of normal wages.

Other Provisions

Claims (Section 20)The Appropriate Government may appoint an authority to hear out and decide the claims relating to –

i. Payment of less than Minimum Rates of Wages.ii. Payment for days of rest.iii. Payment for work done on days of rest.iv. Wages for the overtime work.

Who may apply to:v. Employee himself, orvi. Any legal practitioner, vii. Registered Trade Union,viii. Any Inspector, orix. Any person with the permission of authority.

Other Provisions

Fixing Hours for Normal Working Day (Section 13)(A) In regard to any Scheduled Employment the Appropriate Government may –

1) Fix the number of hours of work which will constitute a normal working day including intervals.

2) Provide a day of rest in every 7 days and payment of remuneration for such days.

3) Provide for working on the day of rest at over time rate or more.

(B) For the following classes of Employees the above provisions will apply subject to the prescribed conditions–

4) Employees engaged in urgent or emergency work.5) Employees engaged in intermittent work.6) Employees engaged in work dependent on irregular action

of natural forces.

Other Provisions

Wages in Kind (Section 11)1) Wages under the Minimum Wages Act have to be paid

in cash.2) However, if there is a custom to pay wages fully or

partly in Kind, the Appropriate Government may authorize the payment of Minimum Wages either-

a. Fully, orb. Partly, in Kind.

3) If the Appropriate Government is satisfied, then it may authorize the supply of essential commodities at concessional rates.

4) The value of wages in kind and of concessions in respect of supplies of essential commodities shall be estimated in the prescribed manner.

Other Provisions

Arvind Mills Ltd. V/s K.R. GadgilHELD:- The Bombay High Court has observed that “the

general purpose of the Act is to provide that employed persons shall be paid their wages in a particular form and at regular intervals without any unauthorized deductions”

D.P. Kelkar V/s AmbadasHELD:- The definition of wages is not limited to

remuneration payable under an agreement or contract. It applies to all kinds of remuneration, whether arising from-

• A contract,• An award,• A settlement, or• Under a statute.

Case Law Studies

Upper India V/s J.C. MathurHELD:- The word deduction in Section 15 appears to

have been used in a very wide sense so as to include the ‘entire deficiency’ which the employee alleges to have been caused in the payment of wages as a result of the withholding of the same by the employer partially or wholly.

Gopalan V/s Augmati Chit FundHELD:- Statutory bonus of 8 1/3% is payable whether

there are profits to the accounting year or not. After coming into force of the Payment of Bonus Act, bonus has become an implied term of employment not dependent upon the profits and therefore comes under the category of remuneration. Viewed in this light the wages as a general term would include bonus.

Case Law Studies

Introduction Important Definitions Authorities under the Act Payment & Provisions Nomination Case law Studies

The Payment of Gratuity Act, 1972

Originally gratuity was considered as an amount given freely and could not be demanded as a matter of right by the employees.

In many cases gratuity was given as a matter of favor. Employees used to pay gratuity as a reward for long,

continuous and meritorious service. Various courts recognized the claim for gratuity and

awarded gratuity schemes. This custom of payment of gratuity became, in the

later days, a matter of right for the employees.With a view to ensure a uniform pattern of payment of

gratuity to the employees throughout the country, the Central Government enacted the Payment of Gratuity Act.

Introduction & Preliminary

Appropriate Government [S.2(i)] is the Central Government in relation to:

a) Railways

b) Air transport services

c) Mines and oil fields

The State Government is the Appropriate Government in all other cases.

Employer [S.2(g)]: means-

i. In relation to an industry carried on by or under the authority of any department of the Central Government or a State Government – the authority prescribed in this behalf;

ii. In relation to an industry carried on by or on behalf of a local authority – the Chief Executive Officer of that authority.

Important Definitions

Employee [S.2(i)]: means any person:a. Who is employed for hire or reward,b. To do any work,c. Skilled or unskilled,d. Manual or clerical,e. In Scheduled Employment,f. In respect of which minimum wages have been fixed.But, it does not include-

g. Value of house accommodation, medical and other facilities, amenities and travelling, medical and other allowances;

h. Contribution paid by the employer to any pension or provident fund;

i. Any special expenses and gratuity paid at termination of employment.

Important Definitions

Wages [S.2(s)] 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 and conditions of employment, whether expressed or implied, be payable to a person in respect of his employment or any work done in such employment, and includes-a. Any remuneration payable under any award or settlement

between the parties or order of court;

b. Any remuneration to which the person is employed is entitled in respect of overtime work, or holidays or leave period;

c. Any additional remuneration payable (bonus);

d. Any sum paid on the event of termination of employment;

e. Any sum to which the a person is entitled under any scheme which is framed under a law currently in force.

Important Definitions

Retirement [Section 2(q)]:It means the termination of service of an

employee otherwise than on superannuation. This definition is framed in the widest sense. Retrenchment is also termination of service. It implies discharge of surplus labour.

Superannuation [Section (2)]:In relation to an employee, it means-• The attainment by the employee of such age as

is fixed in the sontract, or conditions of service, as the age on the attainment of which the employee shall vacate the employment.

Important Definitions

Inspectors [Section 7(A)]a) The Appropriate Government may appoint as many

inspectors as it deems fit.b) The Appropriate Government may define the area to

which the authority of an inspector shall extend.c) Every inspector shall be deemed to be a public servant.

Powers of Inspectors [Section 7(B)]: An inspector maya) Require an employer to furnish any information.b) Enter and inspect any premises or place in any factory,

shop or establishment for the purpose of examining any register, record or notice or other documents, in relation to the employment of any person or the payment of gratuity to the employees

c) Examine the employer or any person who is present in such premises.

Authorities Under The Act

Controlling Authority [Section 3]The Appropriate Government by a notification may

appoint any officer to be the controlling authority who shall be responsible for Administration of this Act. Different controlling authorities may be appointed for different areas.

Powers of Controlling Authorities [Section 7(5)]a) Enforcing the attendance of any person or

examining him on oath.b) Requiring the discovery and production of

documents.c) Receiving evidence on affidavits.d) Issuing commissions for the examination of

witnesses.

Authorities Under The Act

Circumstances under which Gratuity becomes payable to an employee [Section 4]a) On termination of employment after he has rendered

continuous service of not less than 5 years, on his superannuation, retirement, resignation, death or disablement due to accident or disease.

b) In case of death of employee, the gratuity payable to him shall be paid to his nominee. If there is no nomination then to his legal heirs.

c) If any nominee or heir is a minor, the share of such minor shall be deposited with the controlling authority, who shall invest the same for the benefit of such minor in such Bank or Financial Institution as may be prescribed, until the minor reaches the age of majority.

Payment & Provisions

Rate of Gratuity [Section 4(2)]a) An employee who is eligible for gratuity shall be paid for every

completed year of service or part of it in excess of 6 months, gratuity at the rate of 15 days wages for each completed year of service.

b) Such gratuity is to be calculated on the basis of the rate of wages last drawn by the employee.

c) In case of a piece rated employee, the rate of daily wages shall be calculated o the basis of average of the total wages earned by him for a period of 3 preceding months before the termination of his employment.

d) In case of an employee employed in as seasonal establishment, the rate of gratuity payable to him shall be 7 days wages for each completed season.

e) In the case of a daily rated employee, he is to be paid gratuity at the rate of daily wages multiplied by 15 for every year of service.

f) In case of a monthly rates employee, the daily rate of wages is arrived at by dividing the rate of wages last drawn by 26. This rate is to be multiplied by 15 for deciding the quantum of gratuity payable for a year.

Payment & Provisions

Maximum Amount of Gratuity [Section 4(3)]Payable to an employee shall not exceed Rs.3,50,000 (w.e.f.

24.9.97) Employment after disablement [Section 4(4)]

In case of an employee employed after disablement, the gratuity shall be calculated in 2 parts:

a) For the period of employment before disablement andb) For the period after disablement at the reduced rate.

Better Gratuity Scheme [Section 4(5)]a) If the employer has his own gratuity scheme which is better

than the scheme provided under this Act, then the employees shall be entitled to gratuity as per that scheme.

b) The Appropriate Government has powers to exempt by a notification any establishment, factory, mine, oil field, plantation, port, railway company or shop if the employees are gratuity and pensionary benefits under this Act.

Payment & Provisions

Forfeiture of Gratuity [Section 4(6)]It gives the circumstances in which the gratuity payable

to an employee may be forfeited either partly or wholly.1) Partial Forfeiture: The gratuity of an employee whose

services are terminated for any act, willful omission, negligence causing any damage, loss to, or destruction of property belonging to the employer; only to the extent of damage or loss so caused.

2) Full Forfeiture: The gratuity payable to an employee can be wholly forfeited:

a) If the services of an employee are terminated for his riotous or disorderly behaviors or any other act of violence on his part, or

b) If the services are terminated for any act which constitutes an offence involving moral turpitude; provided, that such an offence is committed by him in the course of his employment.

Payment & Provisions

Determination of Gratuity [Section 7]a) As soon as the gratuity becomes payable, the employer shall

determine the amount of gratuity and give notice in writing to that person to whom the gratuity is payable.

b) Notice is also given to the controlling authority specifying the amount of gratuity so determined.

c) Calculation of gratuity is to be done by the employer whether an application has been made or not.

Mode of Payment of Gratuity [Sections 7(3),(3-A)]a) The employer shall arrange to pay the amount of gratuity

within 30 days from the date it becomes payable to the person.

b) If the gratuity is not paid in time the employer shall pay interest at the rate notified by the Central Government.

c) No interest will be paid if the delay is due to the fault of the employee and the employer has obtained permission in writing from the controlling authority.

Payment & Provisions

Dispute as to Gratuity [Section 7(4)]a) If there is any dispute about-

i. Amount of gratuity payable to an employee.ii. Admissibility of any claim.iii. As to the person entitled to gratuity, the employer shall deposit the

amount which he admits is payable with the controlling authority.

b) Where there is a dispute about the above matters the employee can also make an application to the controlling authority for taking necessary action.

c) The controlling authority, after making the enquiry and giving the amount of gratuity payable to the employee. Further, as a result of the enquiry if any additional amount is payable to the employee, he shall direct the employer to pay the additional amount.

d) The controlling authority shall pay the amount deposited including the additional amount, if any, to the person entitled.

Payment & Provisions

Recovery of Gratuitya) If the employee is not paid gratuity by the employer the

employee can make an application to the controlling authority for the same. The controlling authority, if satisfied, shall issue a certificate for recovery of the amount to the collector.

b) The collector shall recover the amount as arrears of land revenue.

c) Such arrears are payable to the employee together with compound interest at such rate specified by the central government.

d) This amount is to be recovered after the date of expiry of the prescribed time.

e) The controlling authority, before issuing a certificate, shall give a reasonable opportunity for the employer of showing cause against issue of the certificate.

f) The amount of interest payable shall not exceed the amount of gratuity.

g) The interest becomes payable only when the collector issues a Certificate of Recovery of the dues as a public demand.

Payment & Provisions

Meaning- naming the person or persons, who shall be entitled to the amount of gratuity if the employee dies before receiving the amount.

Family [Section 2(h)]: in relation to an employee, shall be deemed to consist of:

1) Male Employees:a) Himself.b) His wife.c) His children (whether married or unmarried)d) His dependent parents.e) Dependent parents of his wife.f) Widow and children of his predeceased son, if any.

2) Female Employees:a) Herself.b) Her husband.c) Her children (whether married or unmarried)d) Her dependent parents.e) Dependent parents of her wife.f) Widow and children of her predeceased son, if any.

Nomination

Every employee under this Act, is required to make a

nomination as per the following rules:

1) Employee to make nomination: Every employee who has

completed service of 1 year shall make a nomination

within 30 days after completing 1 year’s service.

2) More than 1 nominee: An employee can, in his

nomination, distribute the amount of gratuity between

more than one nominee.

3) Family members to be nominated: If the employee has a

family at the time of nomination, the nomination can be

made favoring member or members of his family.

4) No Family: If the employee does not have a family, then

nomination can be made in favor of any person.

Nomination

5) Family after nomination: If the employee acquires a family afterwards, such nomination becomes invalid. The employee shall make a fresh nomination within 90 days in favor of family members.

6) Modification of nomination: Can be done by the employee at anytime, after giving a notice to the employer.

7) Death of Nominee: If the nominee does before the employee, then employee shall make a fresh nomination.

8) Safe custody of nomination: Every:a) Nominationb) Fresh nominationc) Alteration of nomination, as the case may be, shall be sent

by the employee to the employer, who shall keep the same in his safe custody. Further, it shall take effect from the date of receipt by the employer.

Nomination

Indian Hume Pipe Co. Ltd. V/s WorkmenHELD:- The general principle underlying gratuity

schemes is that by faithful service over a long period the employee is entitled to claim a certain amount as retirement benefit.

Delhi Cloth and General Mills Ltd. V/s WorkmenHELD:- The object of providing a gratuity

scheme is to provide a retiring benefit to the workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer.

Case Law Studies

DBR Mills Ltd. V/s Appellate Authority

HELD:- Cessation of work by the employee on these days

cannot be said to be due to any fault of the employee.

Therefore, he would be deemed in continuous service if

he has been actually employed by an employer during

the 12 months, immediately preceding the year for not

less than 240 days in an establishment.

Patel Hiralal Ramlal & Co. Vs. Smt. Chandbib Pirubhai

HELD:- The workmen carrying raw materials from the

employer’s premises to their home and rolling up bidis at

their home for manufacturer are employees, and as such

are entitled to claim and payment of gratuity.

Case Law Studies