Labour Law Notes
Labour Law Notes
Labour Law Notes
Temporary
Due to reasons beyond employer's control
Due to economic reasons
non-intentional
Provided that if during any period of twelve months, a workman is so laid-off for
more than forty-five days, no such compensation shall be payable in respect of any
period of the lay-off after the expiry of the first forty-five days, if there is an
agreement to that effect between the workman and the employer :
Provided further that it shall be lawful for the employer in any case falling within
the foregoing proviso to retrench the workman in accordance with the provisions
contained in section 25F at any time after the expiry of the first forty-five days of
the lay-off and when he does so, any compensation paid to the workman for having
been laid-off during the preceding twelve months may be set off against the
compensation payable for retrenchment.
(2) An application for permission under sub-section (1) shall be made by the
employer in the prescribed manner stating clearly the reasons for the intended lay-
off and a copy of such application shall also be served simultaneously on the
workmen concerned in the prescribed manner.
(3) Where the workmen (other than badli workmen or casual workmen) of an
industrial establishment, being a mine, have been laid-off under sub-section (1) for
reasons of fire, flood or excess of inflammable gas or explosion, the employer, in
relation to such establishment, shall, within a period of thirty days from the date of
commencement of such lay-off, apply, in the prescribed manner, to the appropriate
Government or the specified authority for permission to continue the lay-off.
(4) Where an application for permission under sub-section (1) or sub-section (3)
has been made the appropriate Government or the specified authority, after making
such inquiry as it thinks fit and after giving a reasonable opportunity of being
heard to the employer, the workmen concerned and the persons interested in such
lay-off, may, having regard to the genuineness and adequacy of the reasons for
such lay-off, the interests of the workmen and all other relevant factors, by order
and for reasons to be recorded in writing, grant or refuse to grant such permission
and a copy of such order shall be communicated to the employer and the workmen.
(5) Where an application for permission under sub-section (1) or sub-section (3)
has been made and the appropriate Government or the specified authority does not
communicate the order granting or refusing to grant permission to the employer
within a period of sixty days from the date on which such application is made, the
permission applied for shall be deemed to have been granted on the expiration of
the said period of sixty days.
(7) The appropriate Government or the specified authority may, either on its own
motion or on the application made by the employer or any workman, review its
order granting or refusing to grant permission under sub-section (4) or refer the
matter, or, as the case may be, cause it to be referred, to a Tribunal for adjudication
:
Provided that where a reference has been made to a Tribunal under this sub-
section, it shall pass an award within a period of thirty days from the date of such
reference.
(8) Where no application for permission under sub-section (1) is made, or where
no application for permission under sub-section (3) is made within the period
specified therein, or where the permission for any lay-off has been refused, such
lay-off shall be deemed to be illegal from the date on which the workmen had been
laid-off and the workmen shall be entitled to all the benefits under any law for the
time being in force as if they had not been laid-off.
(10) The provisions of section 25C (other than the second proviso thereto) shall
apply to cases of lay-off referred to in this section.
Explanation : For the purposes of this section, a workman shall not be deemed to
be laid-off by an employer if such employer offers any alternative employment
(which in the opinion of the employer does not call for any special skill or previous
experience and can be done by the workman) in the same establishment from
which he has been laid-off or in any other establishment belonging to the same
employer, situate in the same town or village, or situate within such distance from
the establishment to which he belongs that the transfer will not involve undue
hardship to the workman having regard to the facts and circumstances of his case,
provided that the wages which would normally have been paid to the workman are
offered for the alternative appointment also.
For any reason what so ever - surplusage, redundancy due to advanced machinery,
slowdown in business. Reason does not matter.
Morinda Coop Sugar Mills vs Ram Kishen and others 1996 - Workers were
employed in the sugar mill only during the season and then they ceased to work.
Held that it is not retrenchment because it is only seasonal work.
Santosh Gupta vs SBI 1980 - A worker was removed after he failed a test that he
was required to pass for confirmation of service. SC held it to be retrenchment
because termination for any reason is retrenchment except if it is because of the
reasons mentioned in the act.
VRS
Panjab National Bank vs Virendra Kumar Goel 2004 - SC held that employees
who opted for voluntary retirement and availed any part of retirement benefits
were not eligible for retraction.
Ill-health
Lalit Mohan Puri vs Pure Drinks 1992 - A employee was asked to appear before
ESI doctor to prove ill health. He failed to appear. He was then removed. SC held
merely refusal to appear for medical examination should not be construed as ill
health and held it to be retrenchment.
4 ingradients of Lockout
Indian Iron and Steel Co vs Its Workmen - Held that mere cessation of work is
not strike unless it is shown that it is due to an industrial demand.
Ram Sarup vs Rex - Mere absence from work is not enough but there should be a
concerted refusal to accept employment to call it a strike.
Patiala Cement Co. vs Certain Workers - Cessation of work for even half an
hour can be a strike.
1. Systematic Activity
2. organized by a cooperation of employer and employees
3. for the production and or distribution of goods or services calculated to
satisfy human wants and wishes.
In the Bangalore Water Suppy case, Bombay Hospital Mazdoor Sabha case was
rehabilitated and Hospital is considered an industry.
Clubs such as Cricket Club of India, Lawyers Office, Indian Standards Institute are
all Industry.
Due to a surge in industrial activity in the later part of 19th century, the population
of working class increased. Since the employers were mainly interested only in
profitability, workers were at a mercy of the employers. Slowly, the concept of a
union started taking hold in India. In 1890, mill workers of Bombay associated
under the name of Bombay Millhands Association. Although it was not a trade
union in a strict sense, it was nevertheless a start in India.
After the first world war the cost of living increased and the workers frequently
agitated to demand more pay. In the early 20th century Royal Trade Commission
studied the condition of workers and suggested the formations of Trade Unions. As
per the recommendations of the Royal Commission, Indian Trade Unions Act was
passed in 1926. However, due to strong opposition from employers, it was
enforced only in 1927. The original act lacked teeth in the sense that the formation
of a Trade Union itself dependent on the recognition by the employer. Later on
several amendments were made to fix the issues. In 1947, the act was amended
widely as per the socialist inclination of the polity.
Definition
Section 2(h) of the Trade Unions Act 1926 defines Trade Union as a combination,
temporary or permanent, formed primarily for the purpose of regulating the
relations between workmen and employer, workmen and workmen, or employers
and employers, or for imposing restrictive condition on the conduct of any trade or
business, and includes the federation of two or more trade unions.
Procedure of Registration
If more that half of the persons who applied for the registration cease to be
members of the union or expressly disassociate themselves from the application,
the application will be deemed to be invalid.
Under section 7, the registrar has the power to ask for further information from the
trade union to satisfy himself that the trade union complies with section 5 and is
eligible to be registered under section 6. The registrar can refuse to register the
trade union until he receives the information. Further, he has the power to ask to
change the name of the trade union if a union with the same name already exists or
if he feels that the name could be deceiving or confusing to the public or the
members of the trade union.
Under section 8, upon satisfaction of all the requirements, the Registrar of the
Trade Unions will register the trade union. It is mandatory for the registrar to
register a trade union if the union satisfies all the technical requirements of this act.
In the case of re Indian Steam Navigation Workers Union AIR 1936 SC held
that a Registrar only has to see whether all the technical requirements are being
fulfilled and not whether it could be described as unlawful.
In the case of ACC Rajanka Limestone Quarries Worker's Union vs Registrar
of Trade Unions, AIR 1958, it was held that if the registrar does not register the
trade union within 3 months of application, an appeal can be made to the High
Court under art 226.
Under section 9, the registrar will issue the certificate of registration in the
prescribed form, which shall be a conclusive evidence that the trade union is
registered under this act.
Cancellation of Registration
Under section 10, the Registrar of Trade Unions has the power to cancel the
registration of a trade union in the following conditions:
Under section 27, upon dissolution of a trade union, seven or more members must
send a notification to the registrar within 14 days of dissolution and the registrar
shall register ir after verifying that the dissolution has been done as per the
provisions of this act. Further, if the rules of the trade union do not provide for
distribution of the funds upon dissolution, the registrar may distribute the funds in
such manner as may be prescribed.
An appeal must be made within 60 days of the date on which registrar passed the
order against which the appeal is made.
In the case of Registrar of Trade Unions, West Bengal vs Mihir Kumar Guha
1963, Cal, it was settled that a trade union whose head office is in a presidency
town has only a single chance of appeal against the decision of the registrar, which
is to the high court while a trade union whose head office is in muffasil has two
chances of appeals, first in the local court and second in the high court.
A registered trade union must follow the provisions of the Trade Unions Act 1926.
In particular, the following are some restrictions in a registered trade union:
1. A Trade Union cannot spend the funds on anything the office bearers want.
It can spend funds only on the activities specified in Section 15. These
include:
1. salaries of the office bearers.
2. expenses required for the administration of the trade union
3. compensation to workers due to loss arise of any trade dispute.
4. welfare activities of the workers including housing, clothing, or any
such activity.
5. benefits to the workers or their dependents in the case of
unemployment, disability, or death.
6. publishing material for creating awareness in the workers.
7. legal expenses required for defending or bringing a suit.
8. education of workers or their dependents.
9. expenses for medical treatment of workers.
10.taking insurance policies for workers.
Mario Raposo vs H M Bhandarkar and others 1994 - Office bearers of a trade
union invested the money from general fund into shares of UTI. This was held
invalid because it is a speculative investment.
1. As per section 13, upon registration, a trade union becomes a legal entity
and as a consequence, it gets perpetual succession and a corporate seal, it
can acquire and hold movable and immovable property, contract through
agents, and can sue and get sued.
2. Under section 15 a registered trade union has a right to establish a general
fund.
3. Under section 16, a registered trade union has a right to establish a political
fund. Subscription to this fund is not necessary for a member.
4. Under section 17, 18, and 19 a registered trade union gets immunity in
certain criminal, civil, and contractual proceedings.
5. Under section 24, trade unions have the right to amalgamate.
6. Under section 28-F, the executive of a registered trade union has a right to
negotiate with the employer the matters of employment or non-employment
or the terms of employment or the condition of labor of all or any of the
members of the trade union and the employer shall receive and send replies
to letters and grant interviews to such body regarding such matters. It further
provides that the executive is entitled to post notices of the trade union
meant for its members at any premises where they are employed and that the
employer shall provide reasonable facilities for that.
In the case of West India Steel Company Ltd. vs Azeez 1990 Kerala, a
trade union leader obstructed work inside the factory for 5 hrs while
protesting against the deputation of a workman to work another section. It
was held that while in a factory, the worker must submit to the instructions
given by his superiors. A trade union leader has no immunity against
disobeying the orders. A trade union leader or any worker does not have any
right by law to share managerial responsibilities. A trade union can espouse
the cause of workers through legal ways but officials of a trade union cannot
direct other workers individually or in general about how to do their work.
They do not have the right to ask a worker to stop his work or otherwise
obstruct the work of the establishment. An employer may deal with a person
causing obstruction in work effectively.
1. Too many unions causes intra-union and inter-union rivalry and thus loss of
precious resources that can be used for worker's welfare.
2. Due to politicization of unions causes the union to overlook the true welfare
and benefits of the worker.
3. Outside Leadership causes unions to lose focus because such leadership does
not understand the problems of the laborers.
4. Closed Shop/Union Shop companies forces laborers to join the union and
thus causes monopoly. Close shops/Union Shops are now illegal in many
countries.
5. Sometime the employers do not recognize unions.
Q. Explain the terms "Dependents" and "Wages" w.r.t. WCA, 1923. What do
you understand by Workers Compensation? In what situations does an
employer have to compensate a worker? Explain the phrase "arising out of
and in the course of employment" with reference to WCA, 1923. How far is an
employer liable to pay compensation to a laborer injured in an accident
arising out of and in the course of employment? Since amount of
compensation depends on the nature of suffering, discuss the various
sufferings on the which amount to be paid differs. What are the remedies
available to a workman injured in course of an employment? How is social
security is made available to the workman under WCA, 1923?
What are the objectives behind Employees' State Insurance Act 1948 and how
does it differ from Workmen's Compensation Act 1923?
Dependents
Dependents means any of the following relatives of a deceased workman. Section
2 (1) (d) of WCA 1923 classifies dependents into three classes. In the case of New
India Insurance Co Ltd vs Man Singh and others, 1984, MP HC held
that persons in these classes do not have mutually exclusive claim to
compensation. They can simultaneously claim compensation.
In the case of Ramji vs Lalit Kumar Bardiya, 1995, MP HC held that the parents
have to the right to claim compensation because the workman was living jointly
with them. In joint families there is a sharing of income and responsibilities. Even
if workman did not contribute to the family fund that was only because he was not
being paid by the employer. The family would have received the benefit of his
wages otherwise.
1. Bonus - was held to be wages in the case of Maharastra Sugar Mills Ltd.
vs Ashru Jaiwant AIR 1966 Bom.
2. Maternity benefits payable to a woman after pregnancy.
3. Dearness Allowance
4. Benefits in the form of food, clothing, and accommodation
5. Accommodation
6. Overtime pay
In the case of M/s J C Mills vs Deshraj, AIR 1952, MP HC held that paid leave
is not a wage unless it is stated expressly in the contract of employment that paid
leave can be encashed if not taken.
Workman
Section 2(1) n defines workman as
A railway servant as defined in Railways Act 1989 except those who are
permanently employed in an administrative office.
a master, seaman, or any crewman of a ship.
captain or a crew member of an aircraft.
driver, mechanic, cleaner, helper or employed to any task related to motor
vehicles.
a person recruited for work abroad by a company.
a person working for any task as described in schedule 2.
Examples:
This act has gone long way to protect workmen for accidental loss of life or limb
and to provide social security to poverty stricken workmen. Although its main
objective is to compensate the workers for injury it has also prompted the
employers to implement processes that reduce risk to the workers.
Main Features of the act:
The purpose is not to give a solatium but to compensate the worker or his
dependents for the actual loss suffered due to an accident.
There must be a casual connection between the injury and the accident, and
the accident and the work done in the course of employment.
The claimant must prove the connection between the injury and the course
of work during employment.
It is not necessary that the worker is actually working or has just finished
work.
If the evidence shows a greater probability which satisfies a reasonable man
that the work contributed to the injury, it is enough to prove the claim.
Nature of liability
This is a different kind of liability. It is not same as a liability in torts. It arises due
to the relationship between the worker and employer. An employer is only liable to
pay the difference between the earning capacities of the worker before and after the
accident irrespective of the loss or expenses incurred in treatment of the worker. It
is also not dependent upon the neglect or wrong doing of the employer.
When is an employer liable to pay compensation?
The following are the excuses or conditions in which an employer is not liable to
pay any compensation:
1. If the injury did not cause total or partial disablement for more than 3 days.
2. If the injury did not result in death or permanent total disablement and
1. The worker was under the influence of drinks or drugs.
2. The worker willfully disobeyed the orders expressly given or a rule
expressly framed for the safety of the workman.
3. The worker willfully did not wear or removed protective gear as
required to work while having known that such devices exist and were
available.
In the case of Indian News Chronicle vs Mrs Lazarus - Punjab AIR 1961 - it
was held that Injury need not only be physical. Pneumonia caused due to change in
temperature is also injury because of job.
In the case of Sunil Industries vs Ram Chander Pradhan - SC 2001 - It was
held that it is not necessary for a workman to be working in a factory as defined in
Factories Act 1948 to claim compensation.
Arising out of and in the course of Employment
The claimant must prove that the accident has occurred due to the circumstances
arising out of employment. If the risk taken by the workman was only because of
the employment, it is a valid casual connection. If the risk taken was on the
worker's own account and not due to employment, then the employer is not liable.
Worker was doing something for the furtherance of the employer's business and
not for his own benefit, it is a valid connection. Worker should not be doing
something which is way out of scope of his employment - doctrine of added peril.
It is not necessary that the accident has taken place within the work place, or even
within working hours but that the employment has some casual relationship with
the cause of the accident. A worker might get hurt while going to quench his thirst
or bodily needs, and that would be a valid ground for compensation. Thus, the
activity of the worker may not necessarily be exactly the same but must be
reasonably linked to the work that he is supposed to do.
State of Raj vs Ram Prasad - 2001 SC - Worker died due natural lightning. SC
held that since the workman was exposed to lightning only because of the job,
employer is liable to pay compensation.
In the case of Varadarajulu vs Masaya Boyan AIR 1953, Mad. HC held that the
worker had no other means to go to the work place other than to use the employer's
lorry. So, accident happening while in the lorry is in due course of employment.
In the case, of Arya Muni vs Union of India 1965, a workman lost is right eye
due to an accident. The employer claimed that there were instructions to use
goggles but the worker did not use them. However, it was held that since the
worker did not know English, it cannot be said that he understood the message.
Also, while the worker was aware of goggles that did not mean that he understood
that they were mandatory. The supervisor also did not tell him so. Thus, the
employer was liable to pay compensation.
In the case of Roshan Deen vs Preeti Lal 2002 SC held that liability to pay
compensation cannot be reduced or avoided by any agreement with the worker to
that affect.
Alternative Remedies
In case of an injury, a workman has the following alternative remedies
A workman cannot get compensation twice through any means for the same injury.
Section 3(5) uses the word "instituted", which is more specific than that the just
filing a claim. "Instituted" means setting on foot an inquiry. Thus, if a workman
has filed a claim and then withdrawn it before any inquiry was started, it will not
be considered as instituted.
Amount of compensation
The amount of compensation for an injury depends on the extent of the loss of
earning capacity, which usually depends on the type of injury and resulting
disablement. Section 4 defines detailed rules for determining the amount of
compensation.
a) If the injury results in death, the amount of compensation is equal to the amount
of 50% of the monthly wages of the deceased workman multiplied by a relevant
factor or 80,000/- which ever is more.
b) If the injury results in total permanent disability, the amount of compensation is
equal to the amount of 60% of the monthly wages of the workman multiplied by a
relevant factor or 90,000/- which ever is more.
In these cases, if the monthly wage is more than 4000 Rs then the monthly wage
considered in the calculation will be 4000/-. The relevant factor must be seen in
schedule IV and it depends on the number of years in service.
c) If the injury results in partial permanent disability, the amount of compensation
is equal to the amount determined under permanent total disability multiplied by
the percentage of loss of earning capacity as given in schedule I, if the injury is
mentioned in schedule I, or is equal to the percentage of amount determined under
permanent total disability as the percentage of loss of earning capacity as
determined by a qualified medical practitioner.
d) If the injury results in temporary, partial or total, disablement, the workman
must be paid half monthly payments of 25% of his monthly wages for the time he
is disabled.
Any payment received by the workman for the treatment of his injury from his
employer will not be considered against the amount of compensation.
Dr Adarkar studied the social conditions of labor in India and made a detailed
report on the problems and solutions. Based on his reports and suggestions made
by several prominent experts of ILO, ESI Act was enacted. The main object of
ESIA 1948 is to provide a comprehensive insurance to the workers. ESIA is the
first legislation that looks after the general welfare of the labor in India. It provides
health, disability, and unemployment insurance to workers. The term welfare is
quite wide and includes any activity done for the physical, economical, and
intellectual betterment of the workers and their dependents.
In the first instance this act applies to factories all over India. A state govt. can all
extend provisions of this act to any industry or any class of industries, or
establishment in any part of the state.
Section 3
Under this section, the Central Govt. has formed a corporation by the name of
Employees' State Insurance Corporation, which is a legal entity.
Section 4 defines the constitution of the ESI Corporation. It details the provisions
regarding president, board of directors, managers, etc.
Section 38
This sections specifies that all employees working in factories are covered. In the
case of Hyderabad Asbestos vs. ESI Court AIR 1978, SC held that the term
employee is wide enough to included anybody who works for the factory directly
or indirectly.
Section 39
It obligates the factory occupier to contribute to the ESI fund. This contribution
includes Employer's share as well as Employee's share.
Section 46
This section details the benefits that Employees' state insurance provides. This
includes sickness, maternity, disability, medical, dependent, and funeral benefits.
Bargaining Process
1. The process starts with the workers uniting to form an association in the
form of a Trade Union.
In the case of Workers of B and C Co vs Labour Commissioner, AIR
1964 Mad it was held that a Trade Union can raise or sponsor a trade
dispute and represent on behalf of its members in legal proceedings arising
out of a trade dispute.
2. Trade Union of registered and gets the power to represent the issues of the
workers. Though it is not necessary for a TU to be registered. In the same
case mentioned above, it was also held that an unregistered Trade Union that
has the support of the majority of the workers has a better claim to
negotiation than a recognized trade union that does not have majority
support.
3. The members of the trade union adopt a resolution to authorize the Trade
Union to represent them and put their issues across to the management.
4. Employer recognizes the Trade Union and gets ready to discuss the issues
with the Trade Union representatives.
5. The union representatives put their list of demands to the management
and the management discusses those with the representatives.
6. After a give and take either a mutually agreeable solution is found or
pressurizing tactics such as strike or lock-out are adopted.
7. If no solution is found, the matter could be referred to arbitration. If the
solution is found, it is implemented and the process ends.
Benefits in General