Labour Law

A presentation on Labour Laws

by : Uday GhagGeneral Manager – H R & I R ,

Mirc Electronics LtdHon. Secretary ISTD Mumbai

LAWs - Acts and Rules

Acts - Framed by the Legislature, i.e., the Parliament or the State legislature.• The three lists under the Constitution

• The Union list - E.g.: Defence, Banking, Foreign Affair.

• The State list - E.g.: public order, agriculture, forests• The Concurrent list - E.g Torts, trusts, Labour

Rules - Framed by the executive under the provisions of the relevant Acts.

Adoption of pre-independence laws. Industry specific requirements. Regional requirements. Ratification of ILO conventions. Amendments based on court decisions. Changes due to dynamic market forces in a

changing socio-economic environment.

Sources of labour laws

Whose responsibility……….. While all Acts hold specific persons

responsible for enforcement, it is actually the responsibility of all working in an organisation to implement the provisions of law in letter and spirit.

Classification of labour laws-1 Employee Welfare Legislation

• The Factories Act, 1948.• Payment of Wages Act, 1936.• Minimum Wages Act, 1948• The Payment of Bonus Act, 1965• The Maternity Benefits Act, 1961

Classification of labour laws-2 Social security legislation

• The Employees PF & Miscellaneous Provisions Act 1952.

• The Payment of Gratuity Act 1972.• The Workmen’s Compensation Act 1923.

Classification of labour laws-3 Industrial Relations legislation.

• The Industrial Disputes Act, 1947.• The Industrial Employment (Standing Orders)

Act 1947.• The Trade Unions Act 1926.• The Maharashtra Recognition Of Trade Unions

and Prevention of Unfair Labour Practices Act 1972. (MRTU & PULP Act)

Classification of labour laws-4 Other Miscellaneous Legislation

• The Contract Labour (Regulation & Abolition) Act, 1970.

• The Apprentices Act, 1961.• The Employment Exchanges (Compulsory

Notification of Vacancies) Act, 1959.

The Factories Act, 1948

The Factories Act 1948 An Act to secure

• Health• Safety• Welfare• Working hours• Leave• other benefits

to workers employed in factories.

The Factories Act 1948

What is a factory? Factory means a premises where a

manufacturing process is carried out and 10 or more workers are working with the

aid of power or 20 or more workers are working without

the aid of power.

The Factories Act 1948Worker A worker is a person who is: directly employed indirectly employed with wages without wages with the knowledge of the employer without the knowledge of the employer

The Factories Act 1948 Occupier: the person who has the ultimate

control over the affairs of the factory, provided that in the case of a company, any one of the directors shall be deemed to be be the occupier.

Manager: the person responsible to the occupier for the working of the factory for the purpose of the Act.

The Factories Act 1948Health of the workers Factory to take appropriate measures as per the provisions of this act to;

• Keep its premises clean.• Dispose of wastes and effluents.• Maintain adequate temperature and ventilation.• Prevent accumulation of dust and fumes.• Artificial humidification• Avoid overcrowding.( 9.9 & 14.2 cubic meters / worker

measured up to 4.2 meters height )• Provide sufficient lighting, drinking water,toilets,

spittoons etc.

The Factories Act 1948Safety of workers Factory to take appropriate measures as per the

provisions of this act to;• Fence certain machinery.• Protect from machinery in motion.• Protection of young persons from dangerous

machinery. • Maintain hoists and lifts in good conditions.• Protect from injury to eye.


Safety of workers (contd.)

Protect from dangerous, dust, gas fumes and vapours.

Protect from fire.


Welfare of workers Factory to make provision for:

• Washing.• Sitting while at work.• Storage of clothes and belongings.• First aid boxes.• Canteen. (250)• Rest rooms and lunch rooms. (150)• Crèches. (30)• Welfare officers (500)

The Factories Act 1948Duties of Welfare Officer To establish contacts and hold consultations

for maintaining good IR. To take up individual / collective grievances

to management. To understand & put forth the views of

workers for formulating Labour Policies. To educate the workers about their rights &

liabilities under the standing orders. Welfare Officer can not appear in Labour

Courts on behalf of the management.


Working hours for adults Not more than 48 hours in a week. (75 with

OT) Not more than 9 hours in a day. An interval of rest at least half an hour after

5 hours work. Total period of work including rest interval

not to exceed 10 hours and 30 minutes. A holiday for a whole day in every week.


Working hours for adults (contd.)

OT not to exceed 50 hours in a quarter. After 9 hours work in a day or 48 hours in a

week, overtime at double the rate to be paid.

A woman worker can not be employed between 7 p.m. and 6 a.m.

The Factories Act 1948Working hours for children Employment of children below 15 totally

prohibited. A child between the age of 15 and 18 can be

employed for a period of 4 hours and 30 minutes. Such child can not be employed between 10 p.m

and 6 a.m. child to carry certificate of fitness issued by

certifying surgeon.


Working hours for children ... A register to be maintained for child labour. A child between the age of 15-18 can be

employed as an adult provided he carries a certificate of fitness for full days work.

The Factories Act 1948Leave Annual leave with wages @ one day for

every 20 days of work performed by him in the previous calendar year provided he has worked for more than 240 days in the previous year.

Leave not more than three times in a calendar year.

For child leave allowed on the same basis but @ one day for every 15 days of work.


Leave (contd.)

Accumulation of leave permitted up to 30 days for adults and 40 days for a child.

Leave will be exclusive of holidays occurring during or at either end of the leave period.

PAYMENT OF WAGES ACT, 1936


An Act to regulate the payment of wages to certain classes of persons

Extends to the whole of India Responsibility of payment wages rests with

the employer Employer to fix Wage Period No wage period shall exceed one month.


Time of Payment of wages If less than 1000 persons employed

wages to be paid before the expiry of the 7th day of the following month

If more than 1000 persons employed wages to be paid before the expiry of the 10th day of the following month


Wages should be paid in currency coins or currency notes

After obtaining the authorisation either by cheque or by crediting the wages in employee’s bank account


Permissible Deductions from wages

Fines For absence from duty For damage caused to the property of the employer For the amenities provided, like house accommodation For recovery of advance or adjusting over payment of

wages Towards EPF, ESI, Labour Welfare Fund and similar

deductions permitted under any Act or the Standing Orders of the establishment

For premium for Life Insurance/ general insurance policies and Housing loan.

The Minimum Wages Act, 1948

The Minimum Wages Act 1948

An act to provide for minimum rates of wages in certain employment.

The Minimum Wages Act 1948

Minimum Wages such as

Basic rates of Wages,

Variable DA,

Value of other concessions, etc

The Minimum Wages Act 1948Government can also fix Minimum Wages for Time Work

Piece Work at piece rate

Overtime work done by employees for piece work or time rate workers

The Minimum Wages Act 1948 The following procedure is to be followed: by appointing one or more committee

consisting of representatives of employers and employees and by taking into consideration their recommendations.

By formulating and publishing its proposal and taking into consideration the representations received in response to the proposals.

The Minimum Wages Act 1948 As a rule the minimum wages should be

paid in cash only. However the employer can pay in kind with the permission of the government.

Attendance bonus can not be treated as part of minimum wage.

The Minimum Wages Act 1948 An employer is bound to pay minimum

wages fixed under this Act. It is irrelevant whether he has the capacity to pay or not. .

Worker is entitled to receive full day’s work even if he is engaged for less than normal working day.

Normal working hours prescribed under this Act is 9 hours.

OT at double the rate payable beyond 9 hours.

The Minimum Wages Act 1948CATEGORY TOTAL ( Basic + DA)WAGES (P/D.)

UNSKILLED Rs.182

SEMI - SKILLED Rs.202

SKILLED Rs.221

CATEGORY TOTAL WAGES ( HRA & other overheads) (P/D.)

UNSKILLED Rs.225

SEMI - SKILLED Rs.252

SKILLED Rs.278

THE MATERNITY BENEFIT ACT, 1961


The Act extends to the whole of India except Jammu & Kashmir

Applies to every factory, shop or establishment

Woman entitled to maternity benefit not withstanding the application of the Employees State Insurance Act, 1948


Conditions for eligibility of benefits

Women who have worked in an establishment for a period of not less than 80 days in the twelve months immediately preceding the date of her expected delivery.


Cash Benefits: Leave for six weeks before the delivery Leave for six weeks after the delivery/

miscarriage Additional leave of one month if the

woman is suffering from illness related with pregnancy, delivery, miscarriage, etc


Non Cash Benefits: Light work for ten weeks before the date

of delivery Two nursing breaks of 15 minutes till the

child is 15 months old No discharge or dismissal while she is on

maternity leave

EMPLOYEES PROVIDENT FUND AND MISC. PROVISIONS ACT, 1952

An Act to provide for the institution of provident funds, pension funds and deposit linked insurance fund for the employees in the factories and other establishments

Extends to the whole of India except the State of Jammu and Kashmir

Applicability Applies to all factories and

establishments in which 20 or more are employed

Continuity of application Exemption – Where employees get benefits in the

nature of provident fund or old age pension fund from the establishment which are not less favourable than the benefits under the Act.

Schemes under the Act

Three beneficial schemes-

1.Employees Provident Fund Scheme 1952

2.Employees Pension Scheme 1995

3.Employees Deposit Linked Insurance 1976

membership

An employee at the time of joining the employment and getting wages up to Rs.6500/- is required to become a member.

an employee is eligible for membership of fund from the very first date of joining a covered establishment.

Contribution to EPF Employees’ share : 12% of the Basic + DA Employer’s contribution : 12% to be deposited

as : 8.33% to be deposited in Pension Fund A/C

No 10 and the balance, ie, 3.67% to be deposited in

Provident Fund A/C No 01 along with Employees’ share of 12%

Contribution (contd.) Administration charges - @ 1.1% of the total wages/salary disbursed

by deposit to A/C No 02, Employees Deposit Linked Insurance @

0.5% of the total wages/salary by deposit to A/C No. 21 and

Administration of EDLI @ 0.01% of the wages/ salary by deposit to A/C. No. 22.

Benefits to employees

Provident Fund Benefits Pension Benefits Death Benefits

Provident Fund Benefits• Employer also contributes to Members’ PF @ 3.67% (1.67% in case of sick industry - eg: beedi)

• EPFO guarantees the Employer contribution and Govt. gives a decent interest to PF accumulations

• Member can withdraw from this accumulations to cater financial exigencies in life - No need to refund unless misused

On resignation, the member can settle the account. i.e., the member gets his PF contribution, Employer Contribution and Interest

The Employees’ Deposit-Linked Insurance Scheme, 1976

Purpose : To provide life insurance benefits to the employees of the establishments covered by the EPF & MP Act, 1952

Contribution under EDLI Scheme,1976

1. Employees : Not required2. Employer : (a) 0.5% on Basic + DA (b) Administrative Charges : 0.01% on Basic +DA Where the monthly pay of an employee is more than

Rs. 6,500 the contribution payable in respect of him by the employer is limited to the amts payable on a monthly pay of Rs. 6,500 only.

Benefits of EDLI scheme

The benefit provided under the scheme in the nature of life insurance as follows:

1. On the death of an employment while in service a lump sum insurance amount is payable to his nominee or family members.

2. The insurance amount is equal to the average balance in the account of the deceased employee in the Provident Fund during a period of 12 months immediately preceding his death. In case the average balance exceeds Rs.35,000/- the insurance amount payable is Rs. 35,000/- plus 25% of the amount in excess of Rs. 35,000/- subject to a ceiling of Rs. 60,000/-.

LOANS AVAILABLE Type of Loan Eligibility

Criteria Amount Of Loan

Papers to be submitted

Purchase of a Dwelling Site

Membership for Min 5 Years

90% of the Employee Part

Original Title deed, non-encumbrance Certificate (For verification & Return), Agreement with the seller

Purchase of Dwelling House/Flat



As above and a certificate stating that House/Flat is new and unlived one. Furnishing the number and date of approval

Construction of House



Original Title deed (For verification and return).Non encumbrance certificate estimate cost of Construction , Approved Plan

LOANS AVAILABLE……. CONTDType of Loan Eligibility

Criteria Amount Of Loan


Repayment of (Housing) Loan State Govt.Housing Board ,Municipal Corporation or a Body Similar to DDA

Membership For 5 Years

50% of total contribution

or loan amount

whichever is less

A Certificate from the lending authority furnishing the details of Loan and Outstanding Amount.

Marriage of Self/Son/Daughter/Sister/Brother

Membership for 7 Years

6 times of Basic plus DA – 48

instalments

A marriage Card

LOANS AVAILABLE……. CONTD

Type of Loan Eligibility Criteria

Amount Of Loan


Religious Ceremony Membership For 5 Years

3 times of Basic plus DA – 24 instalments

Post matriculation education of Son/Daughter

Membership For 5 Years

3 times of Basic plus DA – 24 instalments

The Payment of Gratuity Act, 1972


An act to provide for uniform scheme for payment of Gratuity to industrial workers throughout the country


Eligibility for Gratuity On Superannuation; or On resignation from service; or Employee dies while in service; Service of the employee is terminated on his

disablement due to accident or disease


Eligibility for Gratuity In order to earn Gratuity, the employee has to

render minimum five year’s service In case of death or disablement of the employee,

Gratuity becomes payable to his nominee even if he has rendered service less than five years.


Quantum of Gratuity

{(Basic plus DA)} * 15 * No. of years of service{ 26 }


Forfeiture of Gratuity On termination of an employee on moral

turpitude and riotous or disorderly behavior Wholly or partially for willfully causing loss,

destruction of property, etc

The Workmen’s Compensation

Act, 1923

The Workmen’s Compensation Act, 1923

An Act to provide for the payment by certain classes of employers to their workmen of compensation for injury by accident.

The Workmen’s Compensation Act, 1923Liability for compensation Compensation payable to workmen for

injury caused in accident;• Arising out of and

• During the course of employment

The Workmen’s Compensation Act, 1923The doctrine of notional extension of

employment Compensation payable for injury caused to a

workman by accident occurring :• beyond his working hours• beyond his workplace

if there is a nexus between the time and place of the accident and his employment

The Workmen’s Compensation Act, 1923Types of injury compensated Death. Permanent total disablement. Permanent partial disablement. Temporary disablement.

• Total• Partial

The Workmen’s Compensation Act, 1923Not payable ………. Injury does not result in total or partial

disablement for more than three days. If the injury does not result in death or permanent

total disablement compensation not payable if;• workman was intoxicated.• He did not follow safety rules.• Willfully removed any safety guard or device.

The Workmen’s Compensation Act, 1923To whom payable... In case of death of a workman

compensation is payable to the dependents as defined in section 2 (1)(d) of the Act.

The Workmen’s Compensation Act, 1923How much is payable….. In case of death = 50% of wages multiplied by the

relevant factor or Rs 80000 whichever is more. In case of permanent total disablement= 60% of wages

multiplied by the relevant factor or Rs 90,000 whichever is more.

In case of permanent partial disablement a percentage of this amount is payable.

In case of temporary disablement=25% of the wages paid half monthly.

The Workmen’s Compensation Act, 1923 For the purpose of calculating the

compensation for death or permanent total disablement, the maximum wages is treated as Rs 4000/-.

The Industrial Disputes Act, 1947

The Industrial Disputes Act, 1947

An Act to make provision for the investigation and settlement of industrial disputes

Definition of Industrial Disputes Section 2(k) defines industrial dispute as

any dispute or difference between; Employers and employers. Employers and workmen. Workmen or workmen connected with the employment or non

employment or the terms of employment or with the conditions of labour of any person.

Deemed dispute Where an employer discharges, dismisses,

retrenches or otherwise terminates the services of a workman, any dispute or difference between that workman and his employer connected with or arising out of such dismissal, discharge retrenchment or termination shall be deemed to be an industrial dispute.

Authorities under the Act Works committee. Conciliation officers. Board of conciliation. Labour Courts. Industrial Tribunals. Grievance Settlement Authority.

Modes of settling a dispute The three modes normally adopted to settle

any dispute are: Mediation. Conciliation. Arbitration / Adjudication.

The genesis of a dispute and its settlement Union submits its charter of demands The management may also submit its COD. Collective Bargaining takes place. An agreement is arrived at OR there is a stalemate and the dispute is

referred for conciliation

Conciliation Once the dispute is refereed to for

conciliation the conciliation officer takes step to bring about an amicable settlement.

If a settlement is arrived at as a result of conciliation a memorandum of settlement is signed.

If a settlement can not be arrived at a failure report is sent to the government.

Arbitration Either before the conciliation proceedings

or immediately thereafter (but before the dispute is referred to for adjudication) the parties to the dispute can refer the dispute for arbitration. The arbitrator could be a mutually agreed person.

Adjudication After getting the failure report from the

conciliation officer the government may refer the dispute for adjudication to labour court or industrial tribunal.

Strike Strike means a cessation of work by a body

of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to except employment.

Strikes No person working in a public utility

service can go on strike - without giving a notice of strike within six

weeks before striking within fourteen days of giving such notice before the expiry date of strike specified in

such notice during the pendency of a conciliation

proceeding and seven days thereafter.

lockout Provisions similar to those for strike apply

for lockout also.

A lockout declared in consequence of an illegal strike or a strike declared in consequence of an illegal lockout shall not be deemed to be illegal.

The Maharashtra Recognition of Trade Unions and Prevention of Unfair Trade Practices Act 1971

MRTU & PULP Act 1971 An act to provide for

the recognition of trade unions for felicitating collective bargaining, to state their rights and obligations, to confer certain powers to unrecognised unions

Procedure for recognition A union can apply to the industrial court for

recognition if:

in the preceding six calendar months it has a membership of 30% of the total number of employees.

Procedure for recognition (contd..) On receipt of the application for recognition

the labour court issue a notice inviting objections to recognition being granted to the applicant.

If After considering the objections, if any, the court is satisfied about the genuineness of the applicant union, grant recognition (subject to conditions of s/19 being fulfilled.)

Procedure for recognition (contd...) If after considering the objections the court

comes to the conclusion that some other union has the largest majority, it may grant recognition to that union provided it has registered its claim to be recognised.

Only one union can be recognised. Recognition not granted if bona fide interest

of the employee not established. Recognition not granted if within past six

month the union has gone on an illegal strike

Rights of unrecognised unions Settlement of individual grievances. Represent in domestic enquiry.

The Industrial Employment (Standing Orders )Act,1946

The Industrial Employment (Standing Orders )Act,1946 An Act for defining

with sufficient precision certain conditions of employment in industrial establishments

Application of Model Standing Orders The model standing orders apply to all

establishments till certification of amendments.

Certification of amendments Five copies of the draft amendments to be

submitted to the certifying officer. Certifying officer forwards the proposed

amendments to the union or employer inviting their views.

After giving an opportunity to the other party the officer shall decide whether such modification is required.

If satisfied he shall certify.

Standing Orders

Classification of Workmen Permanent Probationer Temporary Casual Apprentices

Standing Orders Transfer Transfer to different category of job Payment of Unclaimed Wages Payment of Wages in case of Death Shift Working Change of shift Closure and starting of shifts

Standing Orders Lunch, Tea and Refreshments Attendance Marking Attendance Leaving Time Late Arrival Absence Urgent Personal Work

Standing Orders Entry and Exit Search Leave Resignation Superannuation Premature Retirement

Standing Orders Misconducts Punishment Procedure for Disciplinary Action

The Contract Labour (Regulation & Abolition) Act, 1970

The Contract Labour (R & A)Act, 1970

An act to regulate the employment of contract labour in certain establishments and to provide for its abolition in certain circumstances and for matters connected therewith.


Welfare measures to be taken by Contractor Canteen should be provided if 100 or more

contract labour employed First Aid Facilities Rest Rooms Drinking Water, Latrines and Washing facilities


Liability of Principal Employer To ensure provision for canteen, restrooms,

drinking water, latrines, urinals, washing facilities

Principal Employer entitled to recover from contractor for providing such amenities or to make deductions from amount payable


Responsibility of Contractor To pay timely and to ensure the disbursement of

wages in the presence of authorised representative of the principal employer.

Rate of wages not less than the rates fixed or prevailing in such employment as fixed by agreement

The Contract Labour (R & A)Act, 1970DO’S The establishment in the first instance must ensure that they

have got a registration certificate from the competent authority as provided u/s 7 of the Contract Labour (R&A) Act, 1970 before proceeding to engage the contract labour.

The establishment must ensure that they issue certificate in Form V to the contractor for obtaining license as provided u/s 12 of the Act.

It must be ensured that the contractor who is employing more than 20 persons has a valid licence issued in his name by the competent authority as provided under section 12 of the Act.

The payment of wages to the employees employed by the contractor is disbursed to his employees by the contractor himself or his nominee and principal employer has to depute his representative to be present and sign the payment register in token of having disbursed the salary in his presence by the contractor.

The Contract Labour (R & A)Act, 1970 There should not be any direct supervision and

control by the principal employer in respect of employees employed by the contractor to fulfill the obligation of the contract.

The work for which contract labour is engaged is not of perennial nature.

Discipline of the employees of contractor in the discharge of duties must be regulated by the contractor and not by the principal employer.

Leave to the employees of contractor must be sanctioned by the contractor and not by the principal employer.

The Contract Labour (R & A)Act, 1970 Maintenance of all types of record in respect of

the employees employed by the contractor should be his own responsibility and principal employer should not intervene in such matters.

If the establishment is covered by the Employees’ Provident Funds and Misc. Provisions Act and the Employees’ State Insurance Act then the preference should be given to those contractors who have their own code numbers under these Acts.

To ensure compliance by the contractor of the obligation pertaining to the various provisions regarding amenities and benefits as prescribed under the Act.

The Contract Labour (R & A)Act, 1970 That the agreement to be entered into with the contractor should

be drafted and executed on a non-judicial stamp paper.

That the agreement must disclose the names, addresses of the contractor and the principal employer.

That the agreement must specify the rights and obligations of both the parties.

That the agreement must disclose the place of work, time of working, rate of compensation and consequences of breach of contract and procedure for termination of the agreement by both the parties.

That the agreement must also disclose the scope of work, deployment of manpower in number, period of validity, security deposit and terms of payment to the contractor.

That the agreement should be witnessed by two witnesses.

The Contract Labour (R & A)Act, 1970DONT’S Contract should not specify the number of persons

required but must quantify the work itself.

No advance should be paid by the principal employer to the contractor’s employees directly. Only contractor must regulate the same.

Do not employ more than the necessary numbers of contract labour. If need be, people may be employed on contract basis of specific period or on temporary basis.

Leave to the Contract Labour should not be sanctioned by the Principal Employer or his officer.

The Contract Labour (R & A)Act, 1970 Entry pass for Contract Labour should be separate and

different from that issued by the Principal Employer to its direct employees and should clearly indicate “Contract Labour”.

Direct labour should not be employed in the same categories in which Contract Labour is being used. Attendance of Contract Labour should not be marked by officers of the Principal Employer.

Payment of wages to the Contract Labour must not be paid by the Principal Employer (Cases have come to the notice where direct payment was made by the Principal Employer, creating serious complications.)

No instructions/directions should be given in writing by the Principal Employer to the Contract Labour.

Thank you

Labour Law

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