2nd National Commission On Labour Report 188

REPORT OF THE NATIONAL COMMISSION ON LABOUR
CHAPTER-VI
REVIEW OF LAWS
governance of the country, and it is

efore embarking on a detailed
the duty of the State to apply these
review of the labour legislation in our
principles in making laws. Articles 38,
Statute Book it is necessary to keep in
39 39A, 41, 42, 43 and 43A are
view certain important parameters. In
principles which are relevant to the
earlier chapters and paragraphs we
work of our Commission. It is also
have referred to the articles of the
relevant to remind ourselves that
Constitution of India that provide the
we now have moves to redefine
parameters of our review.
Yet, they
right to work which figures in the
bear repetition as a preface to the
Directive Principles (Article 41) and
ensuing
invest
paragraphs.
Article
19
freedom
to
with
the
status
and
sanctity of a fundamental right.
guarantees freedom of speech and

expression,
it
form
associations or unions and freedom to
6.2
practice any profession or to carry on
necessary
any occupation, trade or business,
three
subject to reasonable restrictions
declaration
that may be imposed by law on the
Principles and Rights at Work,
exercise of these freedoms. We
adopted by the International Labour
also have Article 23 prohibiting
Conference in June 1998, declares
traffic in human beings and forced
inter alia that all Member States
labour, and Article 24 prohibiting
whether they have ratified the
employment of children in factories
relevant conventions or not have an
etc.
These are Constitutionally
obligation arising from the very fact
binding. Besides we have a very large
of membership in the Organisation, to
number of Directive Principles of
respect, to promote and to realise, in
State Policy in Part IV of the
good faith and in accordance with the
Constitution. These principles are not
Constitution the principles concerning
enforceable by any court but are
the fundamental rights which are the
nevertheless fundamental in the
subject of those conventions, namely,

312
Apart from these, it is also

to
other
refer
to
matters.
on
two
The
or
ILO
Fundamental
(a)
freedom of association and the
We are in a prolonged period of
effective recognition of the right
adjustment to an emerging global
to collective bargaining
economy The standard policy

response was formulated by the
(b)
the elimination of all forms of
Bretton Woods Institutions in the
forced or compulsory labour;
1980s at the time of debt crisis and

subsequently applied in the transition
(c)
the effective abolition of child
economies.
It was based on two
labour; and
fundamental assumptions : That free

markets are sufficient for growth, and
(d)
they were very nearly sufficient for
the elimination of discrimination
social
in respect of employment and
stability
political
democracy. The strategy for economic
occupation.
success
basically
transferring
6.3
and
consisted
responsibilities
in
for
In the next year i.e. 1999, the
regulations from the state to the
Report of the Director General to the
market. These policies are influential
International
because
Labour
Conference
they
were
simple
and
was on Decent Work. In his report,
universal. They brought necessary
the Director General emphasised
macro-economic discipline and a new
the following: The primary goal of
spirit of competition and creativity to
the
the economy.
ILO
today
is
to
promote
They opened the way
opportunities for women and men to
for
obtain decent and productive work in
technologies and new management
conditions of freedom, equity, security
practices. But they confused technical
and human dignity. The ILO is
means
concerned with all workers. All
privatisation and de-regulation with
those who work have rights at work.
the social and economic ends of
The ILO is concerned with Decent
development. They became inflexible
Work. The goal is not just the
and did not take the social and
creation of jobs but the creation
political
of
quality.
sufficiently into account. Their impact
The Director General also pointed out
on people and their families was
that
sometimes devastating. Increasing
jobs,
of
acceptable
313
the
application
of
action
context
of
of
such
new
as
markets
doubts about the efficacy of these
Bretton Woods institutions should
prescriptions after a decade of
make decent work development
experience
transitional
objectives a part of their basic
economies came to a head with the
framework. I believe that a system-
recent crisis in the emerging markets.
wide
That crisis marked a turning point in
decent work, as a major development
public opinion.
The result has been
goal and our instrument to reduce
both greater uncertainty and greater
poverty, would not only benefit all our
receptivity to a wider range of
constituents but would also enrich the
opinions, including the views of
policy agenda of other organisations.
in
the
commitment
to
promoting
developing countries and of civil

society.
6.6
That does not mean that we
will always be in agreement, and the

6.4
ILO and the IMF or the World Bank
In June 2001, in his Report to
the International Labour Conference,
may
not
come
to
the
same
the Director General said, inter alia,
conclusions in any given case. Each

organisation has its own identity and
constituents, and its own mandate.
... The multilateral system must
From our perception, when it comes
respond to persistent demands for
to the hard decision there is no
new, better and more coherent
reason why it should so often be the
international frameworks. We have
social goals that are sacrificed.
made progress, but not enough. I

believe that the multilateral system is
6.7
still under-performing in this respect.
Apart from these, it is also
necessary to take note of the fact that

6.5
the Government of India ratified
From the ILO we must push for
Convention 122 on Employment and
greater unity of action. In turn, the
Social Policy in 1998. This convention
ILO must stand ready to engage as a
was adopted by the International
committed team player. This means
Labour Conference in 1964. It is
not only working together but also
relevant both to point out that the
taking on board each others goals.
Convention was ratified after the
Just as the ILO has to integrate the
Government of India embarked on the
need for sound macro economic
new economic policy and to reproduce
policies into its understanding, so the

314
in full the text of Article 1 of the
national extraction or social
Convention:
origin.
3.
Article 1
1.
account of the state and the

level of economic development
With a view to stimulating

economic
growth
and
and
meeting
mutual
relationships
between employment objectives
development, raising levels of

living,
The said policy shall take due
and other economic and social
manpower
objectives, and shall be pursued
requirements, and overcoming
by methods that are appropriate
unemployment and under -
to
employment, each Member shall
practices.
national
conditions
and
declare and pursue, as a major

goal an active policy designed to
6.8
promote full, productive and
that this convention was ratified by
freely chosen employment.

2.
India at a time when unemployment

levels are high even if reckoned
The said policy shall aim at
purely in terms of employment
ensuring that
(a)
exchange statistics. One therefore,

has to presume that the Government
There is work for all who are
is now committed to pursue an active
available for and seeking work.

(b)
policy designed to promote full,

productive
Such work is as productive as
and
freely
chosen
employment.
possible
(c)
It is not without significance
6. 9
There is freedom of choice of the
From what we have cited about
the commitments of the Government
employment and the fullest
of India in the preceding paragraphs it
possible opportunity for each
can be deduced that the following
worker to qualify for, and to use
rights
skill and the endowments in a
of
workers
have
been
recognised as inalienable and must,
job for which he is well suited,
therefore, accrue to every worker
irrespective of race, colour, sex,
under any system of labour laws and
religion,
labour policy. These are:
political
opinion,
315
becomes significant. There is no
(a)
Right to work of ones choice
(b)
Right against discrimination
(c)
Prohibition of child labour
(d)
Just and humane conditions of
picture at the back of ones mind
work
when one talks of organised sector in
accepted definition of this term or of

its
companion,
namely,
the
unorganised sector; however, one can

presume that there is a certain broad
contradistinction to the unorganised
(e)
Right to social security
(f)
Protection of wages including
that
right to guaranteed wages
(Amendment) Act, 2001, (Act 31 of
sector.
It is relevant, to point out

in
the
Trade
Unions
2001) the explanation in clause 8 of

(g)
Right to redress at of grievances
(h)
Right to organise and form trade
the Bill states that for purposes of the

section, unorganised sector means
any sector which the appropriate
unions and right to collective
government may, by notification in
bargaining, and
(i)
Right
to
the official gazette, specify. Even so,
participation
should we delimit the organised
in
sector in terms of the number of
management.
persons
employed
in
the
One cannot overlook the fact
establishment in that sector, or in
that rights are also related to duties.
terms of the capital invested in the
6.10
establishment, or in terms of the level

6. 11 If our understanding is correct,
of technology that obtains in that
what exactly should labour laws do?
establishment, or on the basis of any
Should labour laws be confining their
other criteria like turnover, wage cost
attention only to a section of the
as a proportion of total cost, etc.?
labour force which is a small part of
Also, would the availability of legal
the nearly 400 million work force or
protection under the labour laws be a
should labour laws have universal
criterion for this? As already pointed
applicability? It is in this context that
out, legal applicability may not be a
the distinction that we usually make
sole
in our country between the organised
considering
sector
Minimum Wages Act, the Equal
and
unorganised
sector
316
or
satisfactory
that
laws
criterion,
like
the
Remuneration
Contract
the Equal Remuneration Act, 1976
Labour Act and so on apply to workers
also do not have any employment
in both the organised and the
limit. Therefore, even if a minimum
unorganised
the
employment limit is prescribed for
Industrial Disputes Act applies to large
demarcating the organised sector, it is
sectors
not as though the Industrial Disputes
of
Act,
the
sector;
even
unorganised
labour.
an
Act, the Minimum Wages Act or the
establishment may not always be the
Equal Remuneration Act will not apply
relevant criterion because investment
to those establishments where the
is, in a manner of speaking, the
employment limit is less than the
function of the technology and the
minimum prescribed. The need for
processes involved in the operation of
universality of labour laws, therefore,
that establishment. Keeping all these
appears to have a lot to commend
in view it would appear that perhaps
itself. The Indian Labour Code 1994
the safest approach, in the context of
(draft) prepared by the National
coverage under labour laws, would be
Labour Law Association has accepted
to define the organised sector as
the need for this kind of universal
consisting of establishments which
applicability.
have a minimum employment limit (A
agrees with the study group that this
more
the
is perhaps too ambitious or too
characteristics of the unorganised
impractical an approach now and
sector and employees covered in it can
would therefore, like to fix a certain
be seen in the ensuing Chapter on the
minimum
Unorganised Sector).
coverage under the organised sector.
6.12
6.13
Likewise,
the
detailed
investment
analysis
in
of
A look at the various labour
But the Commission
employment
limit
for
What then should this limit be?
laws particularly Central Labour Laws
A study of the employment limits
show that not all labour laws have any
prescribed currently in various labour
employment limit for coverage.
The
laws shows that the pattern is not
Industrial Disputes Act 1947 has no
uniform. It ranges from covering
such limit excepting for section 3 and
establishments employing 5 persons
Chapters VA or Chapter VB of the Act.
as in the Motor Transport Workers Act
The Minimum Wages Act, 1948 and
and Inter-state Migrant Workers Act to

317
10, 20 or 100 as in the Factories Act,
requirements necessary for coping
Building and other Construction
with many laws. They thus fall easy
Workers Act, Payment of Bonus Act,
prey to the Inspector Raj. It has also
Contract Labour (Regulation and
been urged that if these smaller
Abolition) Act, Industrial Employment
establishments i.e. those employing
(Standing Orders Act) and so on. The
less than 50 persons, were to be
study group that we had appointed
covered by a set of self-contained,
has not been unanimous in defining a
simple
threshold.
Some members held the
are
view that establishments having 20 or
understood
and
are
which
by
easy
the
to
implement, then the entrepreneurs
and others) should be included in the
will be encouraged to expand their
Some others
current small establishments by taking
preferred the employment limit to be
more hands and still keeping their
50, there were also members who
employment strength below 50; this, it
considered even 20 a little too high
is argued, will help generate further
and wanted the limit to be fixed at 10.
6.14
easily
provisions
managements
more employees (ie., both workers

organised sector.
legal
employment in this sector, which, even

now, is both the main source of
Many Small-Scale Industries
employment and the generator of
Associations have told us that the
skills.
limit must be 50 and more. The
These
reasons.
argument that has been used in
has
favour of this is that an establishment
are
The
fairly
weighty
study
group
recommended
that
the
establishments employing 50 or
of a smaller size can in no manner of
more persons (not merely workers)
speaking be described as organised;
must be governed by the general law
they do not have any well-conceived
while the smaller establishments
production plan, any access to
should have a self-contained set of
institutional credit, the necessary
provisions that will be applicable to
economic size to look after all the
them. The group was however,
multifarious responsibilities relating to

production, finance, accounts, human
unanimous
that
resource management, law and so on.
irrespective
of
Their small size itself makes them
size of the establishment, must be
vulnerable, as they do not have the
assured minimum social security and
wherewithal to meet the diverse
protection.
318
every
the
worker,
employment
6.15
We feel that by raising the
their
protection
or
benefits
of
cut-off limit to 50 employees, a large
provisions for safety and security. Nor
majority of establishments and a very
does it want to add to the problems of
high percentage of workers will be
small entrepreneurs with unbearable
kept outside the ambit of the main
financial burdens that affect the
law. However, the study group was of
viability of their enterprises or compel
the
them
view
that
the
smaller
to
work
under
irksome
establishments and their workers
conditions that make complicated
would also benefit from the simple
demands on them.
and adequate provisions which were
these factors, the Commission feels
being proposed to protect the interest
that a limit of 19 workers should be
of the workers satisfactorily under a
accepted as the socially defensible
separate law for such establishments.
mean.
6.16
Thus,
whatever
be
the
6.18
employment limit, there are certain

workmens
If Labour Laws are essentially
meant to protect the interests of the
provisions like maternity benefit, child

care,
Balancing both
weaker party, and to provide a
compensation,
machinery for healthy industrial
medical benefits and other elements
relations, the question arises as to
of social security and safety which
whether there should be any salary
must be applicable to all workers,
limit above which the protection of
irrespective of the employment size of
the labour laws will not be available.
that establishment, or the nature of its
There are of course salary limits
activity.
prescribed in the existing labour laws,

as for example in the Payment of
The Commission has given
Bonus Act, the Employees Provident
considerable thought to the number of
Fund and Miscellaneous Provisions
employees that should be fixed as the
Act, the Employees State Insurance
threshold point for the organised
Act, Payment of Wages Act and so on;
sector. It does not want any decision
the Industrial Disputes Act also has a
on this question to lead to a situation
salary
in which workers who are already
supervisory personnel. The Study
enjoying the protection of laws forfeit
Group has recommended that no
6.17
319
limit
for
coverage
of
salary limit be prescribed for coverage
much higher than what an average
of workers under the labour laws, and
managerial person receives, and are
that the demarcation should be
clothed with authority that in some
functional rather than based on
matters is much higher than that
remuneration.
The Study Group was
enjoyed by ordinary managerial
aware that there has been a history of
personnel, and yet are treated as
wage limits being prescribed in laws
workmen. The Commission has, in a
like EPF Act, ESI Act, Payment of
succeeding
Bonus Act etc.; but even so the Study
recommendations
Group recommended that the criterion
desirability of a separate legal
for coverage should be functional
provision that will offer reasonable
rather than based on wage.
protection to employees who do not
paragraph,
made
regarding
the
come within the purview of the term

workmen
6.19
The
Commission
and
are
generally
carefully
categorized as working in managerial
considered the view of the study
or administrative or supervisory
group.
capacities or in sales promotion work
It also took into account the
evidence it received at various centre
and
not only from employers but other
employees as are outside the purview
interest groups like consumers etc. to
of the present laws as a consequence
the effect that some of the relatively
of judicial pronouncements like
better
of
teachers, artistic personnel, etc. The
employees who are presently deemed
logic behind such recommendations
as
the
has been explained in the relevant
protective umbrella of such Acts like
paragraphs. As has been pointed out
the Industrial Disputes Act which are
earlier the relatively better off section
available to them in total disregard of
of present day employees categorised
the interest of the employer, and
as workmen like Airlines Pilots, etc.
those of the organisation to which
do not merely carry out instructions
they belong, the consumer and the
from superior authority but are also
community as a whole. Illustrations
required and empowered to take
frequently cited in this regard were
various kinds of on the spot decisions
those of Airlines Pilots, and the like
in various situations and particularly
who receive remunerations that are
in
paid
workmen
off
categories
often
misuse
320
also
such
exigencies.
categories
Their
of
functions,
therefore,
cannot
be
underlying premise that the Supreme
categorized as those of ordinary
Court laid down in its judgment on
workmen; in fact, they belong to the
the validity of reservations for the
executive
creamy layer in the categories
realm,
merely
and
there
is,
otherwise qualifying for reservation.
therefore, a case for excluding such

people from the provisions of the law
designed for ordinary workmen. The
6.20
Commission is also of the view that
The next point that will have to
be considered is whether supervisory
such categories of employees are quite
employees should or should not be
capable of negotiating terms of
clubbed with workers for purpose of
employment on their own and do not
coverage. The ID Act, as it now
need protection beyond a limited
stands, excludes all supervisory
extent by legal means. It, therefore,
personnel drawing wages in excess of
recommends that Government may lay
Rs. 1600 p.m. This wage limit is so
down a list of such highly paid jobs
low in the present context that no
which are presently deemed as
argument is necessary to establish
workmen category as being outside
the need to do away with this limit.
the purview of the laws relating to
The more basic point in the case of
workmen and included in the proposed
supervisory personnel is whether they
law
ought to be treated as part of the
for
the
protection
of
non
workmen. Another alternative is that
workforce
the Government fix a cutoff limit of
considered
remuneration which is substantially
management.
high enough, in the present context,
necessary to note that the Industrial
such as Rs. 25,000/- p.m. beyond
Disputes Act distinguishes between
which employees will not be treated as
employees
ordinary workmen. In case the
administrative or managerial nature
Government deems it appropriate to
and those doing work merely of a
lay down a wage or salary criterion as
supervisory nature, for whom alone a
a cutoff provision, it may also have the
salary limit is fixed. The Commission
enabling powers to review it from time
is of the view that it would be logical
to time under delegated legislation. In
to keep all the supervisory personnel,
making such a recommendation the
irrespective of their wage/salary,
Commission has also kept in mind the
outside the rank of worker and keep

321
or
they
to
be
should
part
of
be
the
It is, in this context,
doing
work
of
an
them out of the purview of the labour
excluded from the category of
laws meant for workers. As has been
workmen and others not treated as
recommended
in
previous
workmen or excluded from the
paragraph,
such
supervisory
category of workmen as has been
category of employees should be
proposed in the paragraph preceding
clubbed along with the category of
the previous one. We propose that
persons who discharge managerial
instead of having separate laws, it
and administrative functions. The
may be advantageous to incorporate
Commission would also recommend
all
that such a modified definition of
employment relations, wages, social
worker could be adopted in all the
security,
labour laws. We expect managements
conditions etc., into a single law, with
to take care of the interests of
separate
supervisory staff as they will now be
establishments employing less than
part of the managerial fraternity.
20 persons.
6.21
6.22
all
the
The Commission agrees with
the
provisions
safety
parts
The
relating
and
in
to
working
respect
Commission
of
also
the study group and the large volume
considered the question whether,
of opinion that the existing set of
apart from laws for the protection of
labour
broadly
workers, there should be a separate
grouped into four or five groups of
legislation for giving protection to
laws pertaining to (i) industrial
managerial employees as well.
relations, (ii) wages, (iii) social
wants to point out that in 1978 the
security, (iv) safety and (v) welfare
Government had introduced a Bill on
and working conditions and so on.
the subject in the Parliament. It can
The Commission is of the view that
also be seen that some kind of
the coverage as well as the definition
protection
of the term worker should be the
employees
same in all groups of laws, subject to
Establishments Acts of certain States
the stipulation that social security
where there is a provision for an
benefits must be available to all
appeal to a specified authority,
employees including administrative,
usually an official of the labour
managerial, supervisory and others
department,
laws
should
be
322
is
available
in
the
against
It
to
such
Shops
and
orders
of
discharge, dismissal or removal from
6.23
service of an employee who may not
while embarking on our task of
be a worker under the Industrial
rationalisation of existing labour laws,
Disputes Act.
Opinion on this
one of the important aspects that we
question was divided in the Study
have had to bear in mind is that in the
Group.
So
is
the
case
in
field of labour, we have not only
the
central laws, i.e., laws enacted by
Commission. It was pointed out that
Parliament, but also laws enacted by
incorporating such a provision, is likely
State legislatures which include State
to create some dissension in an

environment
which
currently
As we have stated earlier,
level amendments to Central laws.
is
This is so, because the Constitution of
claimed to be based on trust and
India has included labour and related
confidence as far as such employees
matters in the concurrent list. The
are concerned. As against this it was
Commission does not consider it
pointed out that such employees do
necessary or desirable to change this.
not have any legal remedy against
Howsoever carefully and compre-
unfair removal from service, excepting
hensively a consolidated law of the
by way of a legal suit which,
type envisaged by us is drafted and
experience would show, is not a very
enacted, it is likely that individual
satisfactory method of redressal,
states may feel the need for making
particularly when it is clear that the
changes and/or additions to suit their
best that such a person can expect
local conditions, and this should be
from a civil court is compensation
permitted within the provisions of the
after a very long drawn out procedure.
Constitution, under which the State

will have to move the Central
Keeping all these issues in view, the
Government for getting Presidential
Commission agrees with the Study
assent to such changes.
Group that it is necessary to provide a

minimum level of protection to such
employees
too,
against
unfair
6.24
The enforcement of specific
dismissals or removals. This has to be
laws is either the responsibility of the
through adjudication by labour court
Central Government or of the State
or Labour Relations Commission or
Government concerned or of both.
arbitration.
This is determined on the basis of the
323
definition of the term appropriate
Commission feels that there is no
government that occurs in various
need for different definitions of the
labour laws. While for all state level
term appropriate government, and
legislations,
appropriate
considers that there must be a single
government is the concerned State
definition of the term, applicable to all
Government, the position varies in
labour laws. It therefore recommends
respect of Central laws. Some Central
that the Central Government should
laws like the Mines Act, 1952 have the
be the appropriate government in
Central Government as the sole
respect
authority in respect of that law; there
establishments,
are Central laws like Factories Act,
telecommunications, major ports,
Plantations Labour Act and so on,
lighthouses,
where the authority is exclusively that
of
of the State Government where the
Corporation,
banks
factory or plantation is located; in
Cooperative
banks),
between, we have Central laws like
financial institutions, mines, stock
Industrial Disputes Act, Payment of
exchanges, shipping, mints, security
Bonus Act, and so on, where both the
printing
Central
Governments
industry, petroleum industry, atomic
exercise jurisdiction depending on the
energy, space, broadcasting and
definition of the term appropriate
television, defence establishments,
government in that enactment. The
Cantonment Boards, Central social
question which is the appropriate
security institutions and institutions
government in a given case has come
such as those belonging to CSIR,
up for judicial determination in a large
ICAR, ICMR, NCERT and in respect of
number of cases under different
industrial disputes between the
enactments including the recent
contractor and the Contract Labour
judgment dated 30.08.2001 of the
engaged
Supreme Court of India in the Steel
establishments. In respect of all
Authority of India and Others Vs
others,
National Union of Waterfront Workers
Government/Union Territory adminis-
and Others (Civil Appeal Nos. 6009-
trations should be the appropriate
6010/2001), relating to the Contract
government. In case of dispute, the
Labour
matter will be determined by the
and
the
State
(R&A)
Act,
1970.
The
324
of
India,
Central
government
railways,
posts,
Food
Corporation
Central
Warehousing
presses,
in
the
these
(other
than
insurance,
air
transport
enterprises/
concerned
State
National Labour Relations Commission
Employment (Standing Orders) Act,
that we want to be set up.
1946. Mention must also be made of

the Sales Promotion Employees
6.25
(Conditions of Service) Act 1976 and
We had earlier indicated that in
other
our attempt to rationalise labour laws,

labour
laws
into
Acts
governing
industrial relations in particular trades
we could, with advantage, group the

existing
specific
or employments. There are state level
well-
legislations too on the subject, the
recognised functional groups. While
more important of which are the
the ultimate object must be to
Bombay Industrial Relations Act 1946,
incorporate all such provisions in a
Maharashtra Recognition of Trade
comprehensive code, as has been
Unions and Prevention of Unfair
done by the National Labour Law
Labour Practices Act, UP Industrial
Association, covering all workers
Disputes Act, MP Industrial Relations
including those under Central and
Act, etc. Besides, there are state level
State Governments, we consider that
amendments to the central laws on
such a codification may have to be
the subject. We recommend that the
done in stages and what we have
provisions of all these laws be
proposed is, hopefully, the first step.
judiciously consolidated into a single
What are the laws that should be
law called the Labour Management
included in each functional group will
Relations Law or the Law on Labour
be indicated by us, as we deal with
Management Relations. We do not
each of these groups.
favour separate laws, at least as far

as labour-management relations are
concerned, for specific groups of
Employment Relations
persons such as sales promotion

6.26
We
begin
with
what
employees or others. All of them will
are
be governed by the same law as will
perhaps the most important laws
be applicable to the entire corpus of
relating to industrial relations. The
workers; we have already stated
basic central laws relating to the
elsewhere that we cannot ask for
subject are currently the Industrial
consolidation of laws and separate
Disputes Act 1947, the Trade Unions

Act
1926
and
the
laws for separate employments at the
Industrial
same time; however, we would carve

325
out a section of these workers who
went to hear evidence, we were told
are employed in establishments with
about the plight and importance of
an employment size of 19 and below,
small-scale industries. We were told,
for a different kind of dispensation. In
and statistics were cited in support,
view of our approach, we recommend
that (i) small-scale industries provide
the repeal of the Sales Promotion
more employment (18.5 million) than
Employees (Conditions of Service)
large-scale industries: (ii) their
Act, 1976 and other specific Acts
contribution to the GDP is around 7%
governing industrial relations in
against 10% of the large-scale
particular trades or employments and
manufacturing sector (iii) their share
also specific laws governing wage
in export earnings is of considerable
fixation
or
importance to the economy; (iv)
employments, in the light of what we
large-scale closure of these units
recommend later in respect of the law
would lead to a frightening increase
on wages. The general law on
in unemployment, and consequent
industrial relations and wages will
increase in misery and possible
apply to them.
starvation for many lakhs of workers
in
particular
trades
and their families, as was seen in

Delhi when lakhs of small-scale units
6.27
There is a strong volume of
had to be closed down as a result of
opinion that holds that all industrial
the Supreme Courts ruling about
establishments, irrespective of their
pollution; (v) the financial, and
size or nature of operations, should
administrative burden imposed on
be under the same law, and that
them by subjecting them to the same
there is no need to exempt any
laws as those that may be necessary
establishment from the uniform law.
in the case of big industries cripple
There are some members of the
their economic viability; (vi) the
Commission who hold the same view.
vulnerability caused by their small
We have, therefore, given much
size, distance from the gaze of
thought and full weight to this view.
publicity and lack of clout exposed
But there are a number of factors that
them to harassment and extortions by
we have to balance while coming
inspectors;
to a conclusion, and making a
difficulties have to be taken into
recommendation. Everywhere we
account and provided for if small326
(vii)
these
genuine
scale industries are to play their role
provisions pertaining to securing
in the economy and employment
safety, health and welfare of the
generation, and (viii) this can be done
workers, hours of work, leave,
only by bringing them under a
payment of wages, payment of bonus,
separate law that takes into account
compensation in case of lay off,
the size of the operation, investment,
retrenchment and closure, resolution
etc. of these enterprises.
of individual and collective disputes of

workers, etc. The law suggested by us
6.28
also has provisions pertaining to
The Commission finds that
social security. We are of the view
these are very weighty and real
that a composite law will not only
considerations. We would, therefore,
protect the interests of the workers in
recommend the enactment of a
these enterprises but will make it
special law for small-scale units. Two
easier for the small enterprises to
important questions remain: one,

waht
is
the
cut-off
point
comply with the same.
for
employment in this law, in other

words, what is the size of the units
6.29
that will be entitled to be considered
the protection and welfare of these
small, and therefore, eligible to be in
workers employed in small-scale
the
After
industries (SSI). They too are entitled
the
to protection and welfare. The size of
question, and the suggestions that
the enterprise or establishment
were discussed in the Study Group
cannot be a reason to leave workers
and the Commission itself, we came to
unprotected,
the conclusion that the reasonable
elementary social security, especially
threshold limit will be 19 workers. Any
when
establishment with workers above that
measures to ensure protection and
number cannot be regarded as small.
welfare to workers in the unorganised
We are, therefore, recommending the
sector, where some workers are self-
threshold limit of 19 workers.
The
employed or are working in units with
composite law suggested by us for
less than 5 workers. We have,
small enterprises has provisions for
therefore, ensured that the law we
registration of establishments, and
propose assures protection and
regime
considering
of
this
law.
all
aspects
of
327
The second question relates to
we
and
are
without
even
recommending
welfare to workers in the SSI.
6.31
It is
We now begin by indicating
of
certain broad approaches we are
establishments in the SSI that need
adopting in drafting the Law on
protection and viability, but also the
Labour Management Relations for
workers working in them.
establishments
not
only
the
management
with
workers
complement of 20 and more.

6.30
While our attempt will be to
make the law simple to understand
6.32
and easy to implement and enforce,
Firstly, the Commission would
prefer the gender neutral expression
our intention in having a separate
worker instead of the currently used
dispensation for establishments with a
word workman that we find in the
workers complement of 19 and below
Industrial Disputes Act and some
(and this is again stated in detail in
other Acts.
para 6.106 below) is to make selfcontained provisions for such small

establishments in respect of all
6.33
matters
employment
uniformly to all such establishments,
relations, wages, social security and
irrespective of the nature of activities
the like; this will, hopefully, meet the
carried on in these establishments;
demands, particularly from the smal-l
and, where such establishments
scale industry sector, as well as shops
have, within a specified local area,
and commercial establishments and
branches, the employment limit will
similar sized institutions like hospitals,
be in respect of all the branches also.
educational establishments, charitable
Thus where a municipality runs
organisations and the like, for not
hospitals, dispensaries and schools at
being burdened with the arduous
various centres within its jurisdiction,
provisions of laws like the Industrial
if the worker complement of all the
Disputes Act 1947 and Industrial
branches adds up to 20 or more, this
Employment (Standing Orders) Act
law will apply, even though individual
1946 which in their view are designed
units like a dispensary or a primary
only for large sized industrial and
school may have less than 20
commercial establishments.
workmen.
such
as
328
Secondly, the law will apply
6.34
Thirdly, we hold that the
settlements entered into bilaterally
workers in these establishments must
and those entered in conciliation must
be enabled to organise themselves
go, and a settlement entered into with
into trade unions of their choice. We
a recognised negotiating agent must
are of the view that employment
be binding on all workers.
relations are best regulated, not by

provisions of law, but on the basis of
6.35
agreed procedures and systems that
provisions must be made in the law
the managements and unions are able
for determining negotiating agents,
to arrive at, on the basis of what is
particularly on behalf of workers; it is
commonly described as collective

bargaining
or
negotiations.
Fourthly, we consider that
equally necessary to recognise that
We
collective bargaining or negotiations
recognise that today the extent of
could be at different levels, say at the
unionisation is low and even this low
establishment level, at the corporate
level is being eroded, and that it is
level, at the industry level, at the
time that this trend was reversed and
regional level, at the national level
collective negotiations encouraged.
and so on.
Such a step will also, in its wake,

reduce, if not altogether avoid, state
intervention
in
employer-worker
relations.
Where,
agreements
and
6.36
however,
for
Fifthly, the law must provide

authorities
to
identify
the
understanding
negotiating agent, to adjudicate
between the two parties is not
disputes and so on, and these must
possible, there, recourse to the
be provided in the shape of labour
assistance of a third party should as
courts
far as possible be through arbitration
commissions at the state, central and
or where adjudication is the preferred
national levels.
and
labour
relations
mode, through labour courts and

labour relations commissions of the
type we propose later in this regard,
6.37
and not Governmental intervention.
view that rigidities in labour laws are
The Commission also considers that
what is standing in the way of
the present distinction in law, on the
acquiring
extent of the binding nature of
attracting foreign investment, and

329
Sixthly, having considered the
competitiveness
and
the equally forcefully articulated view
rationalising and simplifying the
that
existing labour laws is in the area of
comparative small percentage of
simple common definitions of terms
overall costs and the reasons for the
that are in constant use; such terms
present situation have to be sought in
include
other areas as well, areas like
establishment.
infrastructural facilities, management
avoiding use of terms like industry
skills and the like (we have referred to
which has been the source of
these
detail
considerable litigation, one can
elsewhere); the Commission is of the
strengthen the simplification process.
view that changes in labour laws are
By making the law applicable to
only one of the issues involved, and
establishments employing 20 or more
that these have to be visualised and
workers, irrespective of the nature of
effected in a broader perspective of
the
infrastructural
social
establishment is engaged, we have
security, and Government policies.
avoided the need to define industry
We, therefore, suggest that these
(The Commission did in this context
changes be accompanied by a well
examine whether domestic service
defined social security packet that will
should be included in the coverage
benefit all workers, be they in the
under labour laws. After examining all
organised or unorganised sector
aspects of the question, it has come
and should also cover those in the
to the conclusion that they are better
administrative, managerial and other
covered under the proposed type of
categories which have been excluded
umbrella legislation, particularly in
from the purview of the term worker.
regard to wages, hours of work,
In evolving such a social security
working conditions, safety and social
system, it is necessary to provide for
security.)
labour
costs
factors
in
are
more
facilities,
only
worker,
activity
wages
Negatively,
in
which
and
by
the
both protective and promotional

measures, the latter being particularly
relevant for the workers in the
6.39
Positively, we will define
unorganised sector.
worker unambiguously by excluding

from the definition; all employees
6.38
who
One of the most important
are
doing
administrative
steps that one needs to take in

330
and
supervisory,
managerial
functions, by whatever designations
Disputes Act 1947 may stand, Go
they may be called and also excluding
slow and work to rule are forms of
those specifically notified or otherwise
action which must be regarded as
held as not coming within the purview
misconduct. Standing Orders and
of the term. Likewise, we define
Provisions relating to unfair labour
establishment as a place or places
practices already include them and
where some activity is carried on with
provide for action both in the case of
the help and cooperation of workers.
go slow and work to rule.
6.40
6.42
As regards wages, we are
clear, keeping in view the endless
Fifth Schedule of the I.D. Act
litigation that takes place as to
prescribes that to stage, encourage
whether a particular allowance or
or instigate such forms of coercive
payment is part of wages for purposes
actions such as wilful go slow,
of deduction for provident fund or ESI
squatting on the premises after
and calculation for purposes of bonus
working hours or gherao of any of the
or gratuity, that it is desirable to

define
two
terms,
wages
Item number 5 of part II of the
member of the managerial or the
and
other staff shall be an unfair labour
remuneration, the former to include
practice which is prohibited and also
only basic wages and dearness
made punishable under the Industrial
allowance and no other; all other
Disputes Act.
payments including other allowances
Similarly, the Model
Standing Orders framed under the
as well as overtime payment together
Industrial Employment (Standing
with wages as defined above will be
Orders) Central Rules made for the
remuneration.
coal
mines
prescribes
that
malingering or slowing down the

6.41
work shall be misconduct.
The Commission also discussed
We feel
the question whether any distinction
that both these provisions may be
should be made between strike and
added as forms of misconduct in the
work stoppage, as is the position in
Model Standing Orders formulated for
the Bombay Industrial Relations Act
establishments other than coalmines
1946 and decided that the existing
as well; and they may attract
definition of strike in the Industrial
appropriate penalties.
331
6.43
The Commission also carefully
more than one section of the society.
considered the recommendation of
One is the basic right of the workers
the Study Group that the term
to strike. Another is the spectrum of
retrenchment should be defined
society (spectrum of groups in
precisely to cover only termination of
society) that will be affected by such
employment arising out of reduction
a strike. Let us begin by saying that
of
an
we believe that workers have a
establishment, such surplus having
fundamental right to strike. Having
arisen out of one or more of several
said that, we will have to examine the
reasons. The present definition has,
many forms that a strike can take, the
after the Sundaramani case judgment,
many motivations that can prompt
proliferated to cover virtually every
action in the course of the strike, and
kind of termination of employment.
the consequences that they will have
The Commission agrees with the
on different sections on which the
Study Group that this must be
effects of their actions fall.
surplus
workers
in
rectified. This is particularly so

because the provisions in the law for
a months notice, compensation based
6.45
on years of service already put in by
assertion of the fundamental right of
the worker, and provisions of sections
the worker to withdraw co-operation
25G and 25H, are, in the opinion of
from what he perceives as injustice
the Commission, inconsistent with any
being done to him. This is achieved
position other than that retrenchment
by stoppage of work. Secondly, the
can be only in respect of surplus
employer feels the impact when he
workers or in case of redundancy.
sees that the strike has led to a
To begin with, a strike is the
stoppage of production, and this has

adversely affected his economic
6.44
With due deference to the
interests. Thirdly, the worker feels
opinion of the Study Group, the
that continued stoppage of production
Commission will urge a deeper
and continued adverse effect on the
consideration of the arguments that
economic interests of the employer
have
the
will compel him to reconsider his
been
attitude, and seek a compromise with
been
advanced,
apprehensions
that
and
have
expressed. On a matter that affects
the
332
striking
workers,
so
that
production may resume. Fourthly,
the confronting parties. One has only
obstinacy or what is seen as obstinacy
to look at what happens when doctors
by one or other of the parties may
or nurses or hospital employees, or
lead to feelings of indignation and the
people engaged in transport services,
desire to seek revenge on the other.
generation
Fifthly, this may lead to lock-out, the
electricity, water supply and sanitation
use of hired goondas or blacklegs,
in urban areas go on strike. They
agents provocateurs etc. on the part of
create situations which threaten the
the management, or anti-social forces,
lives and normal and essential needs
and
of
and activities of the vast majority that
machinery or other acts of violence on
are not involved in any way; people
the part of the workers. There are
who are in no way responsible for
many who profit by driving the dispute
what those involved are fighting for;
into the realm of law and order, and
and act against society which has a
using the strong arm of the State to
right to protect itself, and for that
convert
into
purpose, intervenes to prevent forms
matters for the police or the law and
of conflict that inflict vicarious and
order enforcement machinery. This is
undeserved suffering or hardship on
not to the advantage of the workers,
those who are not guilty. Ones liberty
and perhaps to that of the industry as
has to be seen in the light of the
well.
equal right that everyone else has to
gherao
or
destruction
industrial
disputes
and
transmission
of
demand and enjoy liberty. Social

intervention thus becomes justified
6.46
There are some industries or
and necessary to protect the interests
services in which where the effects of
of all concerned.
industrial action, or confrontation,

cannot, by the very nature of the
activity
remain
confined
to
the
6.47
The first National Commission,
employers and employees in the
and earlier the Royal Commission,
service or industry. They impinge on
also referred to this dilemma that is
or spread into the lives of the vast
created by strikes in certain essential
majority of people in society who are
industries and services. The earlier
not
neither
National Commission has outlined the
employers nor employees, who are not
pros and cons of social intervention,
involved,
who
are
333
and the forms that such intervention
time of previous settlements or
can take. We do not want to reiterate
chosen afresh by mutual consent, if
these here. But we have referred
there is no panel of arbitrators
elsewhere (in earlier paragraphs) to
provided for in previous agreements).
the increasing need to deal with this
Both parties to the dispute will be
situation
increasing
bound by the award of the arbitrators.
indignation and resistance that one
This will secure redress of grievances
sees in the counter-reaction of the
and at the same time protect the
majority that is subjected to vicarious
ordinary
suffering.
consequences,
and
We
the
have
also
drawn
citizen
from
the
sometimes
fatal
attention elsewhere to the need for
consequences - of the disruption of
workers unions to ensure that they
essential services.
do not lose public sympathy.

6.49
6.48
We, therefore, recommend that
Some argue that such an
arrangement is tantamount to taking
in the case of socially essential
away the right to strike.
services like water supply, medical
accept this contention, because we
services, sanitation, electricity and
are providing for a strike ballot, and
transport, when there is a dispute
recognition of majority support to the
between employers and employees in
proposal for strike as the equivalent of
an enterprise, and when the dispute is
a successful strike. A strike is meant
not
mutual
to project the demands of the workers
negotiations, there may be a strike
as also their determination to resort
ballot as in other enterprises, and if
to direct action or stoppage of work.
the strike ballot shows that 51% of
Another element can be to materially
workers are in favour of a strike, it
affect the profits of the management,
should be taken that the strike has
and to show that the managements
taken place, and the dispute must
profits depend on the workers - at
forthwith be referred to compulsory
least, the workers as well. In the case
arbitration (by arbitrators from the
of essential services, it becomes
panel
Relations
impossible to non-cooperate with the
Commission (LRC), or arbitrators
management without hurting the vast
agreed to by both sides either at the
majority of people as well. It is only
settled
of
the
through
Labour
334
We do not
this
element
therefore
tempered
through
arbitration.
Time
is
a state of affairs does exist. The
compulsory
Commission took note of the Bill
limits
that
can
be
introduced
for
making
some
prescribed to ensure that compulsory
amendments to the Trade Unions Act
arbitration is also speedy and time-
1926, which has now been passed by
bound arbitration, and as in the case
both Houses of Parliament. This is a
of
dispute
minimal bit of legislation in the
settlement, application of these
context of all that is needed, and
awards too, may have retrospective
ignores the most important aspect of
effect to protect the interests of the
the whole question, namely, the
workers.
draw
recognition of the bargaining or
attention here to the fact that we are
negotiating agent. The Act, namely,
recommending
subsequent
Trade Unions (Amendment) Act, 2001
paragraphs the withdrawal of the
(Act No.31 of 2001) does make
Essential Services Maintenance Acts.
provisions
other
processes
We
should
in
of
also
that
would
reduce
multiplicity of unions, reduce the

number of outsiders in the executive
6.50
As
already
indicated,
we
of a trade union, prohibit a Union or
consider it desirable that the law of
State minister from being a member
employment relations is so structured
of the executive of a trade union, etc;
as to enable workers to organise
even so, it would have been desirable
themselves and to play a useful and
if the Act had also provided for a
constructive role in the growth and
ceiling on the total number of trade
development of the establishment in
unions of which an outsider can be a
which they work. The charge that
member
there are inter-union and intra-union
Amendments made in Section 4
rivalries that not only weaken the
recently appear to disentitle workers
trade union movement but also hurt
in the unorganised sector from
the establishments in which the
getting their trade unions registered.
workers are employed, and so on,
To overcome this difficulty, a specific
cannot be brushed aside, but at the
provision may be made to enable
same time we cannot ignore the fact
workers in the unorganised sector to
that trade unions also function in a
form trade unions, and get them
political and social milieu where such
registered even where an employer335
of
executive
bodies.
employee relationship does not exist
collective bargaining, and not for
or is difficult to establish; and the
purposes of membership of trade
proviso
of
unions, and therefore, does not call
membership for registration of trade
for any provision in the law. The
unions will not apply in their case.
Commission also took note of the low
One hopes that if the new system of
level of unionisation as also the fact
law were to progressively diminish the
that all the benefits which accrue to
role of the state in employment
workers as a result of collective
relations matters, the number of
bargaining do not distinguish between
outsiders will also progressively
those who are members of Trade
diminish.
Unions and those who are not. Since
stipulating
10%
all workers in the establishment

receive the benefits that come from
6.51
A wider and deeper look at the
settlements, we feel that it is
Trade Unions Act 1926, than what has
desirable to introduce in law a
been attempted in Act No.31 of 2001
provision according to which :-
mentioned above, will demand a

closer look at a large number of
A worker who is not a member of
important issues. In the course of
any Trade Union will have to pay an
evidence, a question was raised
amount equal to the subscription rate
whether the right to registration as
of the negotiating agent or the
Trade Unions should be confined to
highest rate of subscription of a union
organisations of workers only or
out of the negotiating college. The
employers organisations should also
amounts collected on this account
enjoy this right as provided in the
may be credited to a statutory welfare
existing provisions. After considering
fund. Wherever there is no statutory
various issues involved we have come
workers welfare fund these will be
to the conclusion that the present
credited to a welfare fund set up by
system of eligibility for registration
the employer for the welfare of the
may continue. The question whether
workers of the establishment with the
some sections of workers like security
approval
and watch and ward staff, confidential
Government under clause (ff) of sub
staff and so on be exempted will be
section (2) of section 7 of Payment of
relevant
Wages Act, 1936.
only
for
purposes
of
336
of
the
appropriate
6.52
Flowing from the above, the
6.54
We also recommend that all
Commission considers it necessary to
federations of trade unions as also
provide for resolution of what may be
Central organisations of trade unions
termed trade union disputes which
and federations should be covered
will include any dispute between:
within the definition of trade union

and be subject to the same discipline
(a)
one trade union and another;
(b)
one group of members and
as a primary trade union. The same

dispensation will apply to employers
organisations
another group of members of
one or more members of the
6.55
union and the union; and

(d)
6.53
employees
organisations.
the union;
(c)
and
We do not favour craft based
or caste based organisations of
one or more workers who are
workers or employees or employers.
not members of the union and
The law must specifically provide
the union.
that any trade union or employers
Any
such
dispute,
organisation
which
organisation
currently goes under the appellation
or
which
employees
restricts
its
membership on the basis of craft or
of inter-union or intra-union rivalries,
caste will not be allowed to be
should be capable of being resolved by
registered, and an unregistered
reference of the dispute to the labour
organisation shall not be entitled to
court having jurisdiction, either suo
any privileges, immunities, and rights.
moto or by one or both the disputing

parties or by the state in case it
considers it expedient to do so. The
6.56
present unsatisfactory practice of
in the preceding paragraphs, we
dealing with such issues, namely,
consider that the other provisions of
filing a suit and so on, should be done
the Trade Unions Act 1926 including
away with. Similar provisions may be
the provision to set up a separate
incorporated in law, in regard to
political fund may be appropriately
employees
if
included in the proposed integrated
necessary, in respect of employers
law. We would recommend that such
organisations as well.
provisions be allowed to continue.
organisations
and
337
Subject to what we have stated
However, care must be taken to
of
ensure that the general funds of trade
create and maintain this aware-
unions are not used for political
ness must be sincere and earnest and
purposes.
not
stakes.
But
merely
the
cynical
efforts
lip
to
service.
Secondly, as far as the workers are

concerned,
6.57
success
in
bilateral
We now come to the crucial
negotiations will depend on the
question of recognition of bargaining
strength of the union that speaks and
agent or negotiating agent.
acts on behalf of the workers the more fully the organisation

represents the workers the more
6.58
In
view
of
the
crucial
effective will it be in bargaining or
importance of this question, we would
negotiating on behalf of the workers.
like to make a few observations and,
As
perhaps, an appeal, before we make
strength
our recommendation.
unity,
the
saying
or
and
goes,
strength
unity
is
lies
in
fragmentation
will
fritter away the potential strength of

6.59
the
Firstly, we strongly believe in
workers.
Our
Trade
Union
movement today is fragmented, on
the role that bilateral interaction,
many basis, - but perhaps most
dialogue and negotiations can play in
of
promoting harmonious industrial
considerations.
relations. In a sense, bilateralism is
basis, the effect of fragmentation
the recognition of the stake that
is the same, and that is to undermine
workers and the management have in
the unity of the working class and
the viability and success of the
weaken it. Everyone talks of the
undertaking. In fact their stakes are
value of unity, the imperative need of
higher than those of anyone else. It
unity today, but in practice, hardly
is, therefore, necessary that both
anyone seems to be willing to give up
recognise and respect each others
separate identities. This perpetuation
stakes.
We have already said
of fragmentation is weakening the
elsewhere that the awareness of
workers. Friends of the working class,
mutual dependence can create an
therefore, have to be careful not to
active realisation of the commonalty
recommend any process or system

338
all
on
political
loyalties
Whatever
or
the
that aggravates or strengthens the
eliminate the need to prescribe a
tendency
fragmentation.
separate process for the recognition
Fragmentation not only weakens the
of a negotiating agent. The registered
working class but also lets the
union will automatically be the sole
adversary derive advantages from the
negotiating
divisions on the other side. Closing of
unregistered unions should be treated
ranks, therefore, is the need of the
as illegal and should attract the
working class, but for various reasons
penalties of an illegal strike.
it seems that the incentives for
also pointed out that there were many
for
consolidation are still weak.
One of
agent.
Strikes
by
It was
countries in the world including
the ways to strengthen the incentives
industrially advanced countries where
can lie in the field of registration and
there is no provision for registration.
recognition, where the criteria for

eligibility can be upgraded or at least
6.62
proportionately upgraded.
We are
either of the two kinds of bodies may
also aware that any such criteria
be registered, - one on the basis of
should not militate against the
the present law with a prescribed
fundamental rights of association.
minimum support of 10%, and
We, therefore, looked for methods of
another kind which may be put on a
upgrading the criteria.

6.60
panel of unions that would be

considered
Every one admits that the
to
establishment.
reduce
If this suggestion is
approved there can be at most three
multiplicity.
6.61
as
prescribed as 25% of workers in an
everyone becomes wary when specific

suggested
recognition
support to be empanelled may be
the Trade Union movement; but

are
for
negotiating agent. The minimum
existing multiplicity of unions weakens
steps
A second suggestion was that
unions, or in an unlikely case four

unions, not more, that fulfil the legal
One novel suggestion that
criteria for recognition.
came from a distinguished trade union

leader was that the minimum support
required for registration itself should
be raised to 51% of the workers and
6.63
verification of support should be on
reduction in the number of unions
the basis of check off.
contending to be the negotiating
This would
339
This
would
result
in
agent. From among those in the
suggestion that the negotiating agent
panel anyone who has 66% may be
should be selected for recognition on
recognised as the single negotiating
the basis of the check off system,
agent. If no one has 66%, one
with 66% entitling the union to be
alternative is to have a run off
accepted as the single negotiating
between the two unions at the top of
agent, and if no union has 66%
the table, in which all workers in the
support, then unions that have the
undertaking may participate, and
support of more than 25% should be
whichever secures 66% may be
given proportionate representation on
accepted as a single negotiating
the college.
agent.
6.67
6.64
The question of the method
The third suggestion was that
that should be used to identify the
wherever no union secures 66%,
bargaining agent has been the subject
there should be a negotiating agency
of discussion and debate for many
or negotiating college which has
decades now. The first National
proportionate representation for the
Commission on Labour examined this
unions in the panel.
question and listed the arguments in

favour and against the two systems
that have been proposed, the check
6.65
The Commission feels that all
off system, and the secret ballot.
these proposals need to be discussed
Many committees like the Ramanujam
further with the trade unions, and
Committee,
the
Sanat
perhaps managements, and they
Committee,
the
Shanti
should be persuaded to accept any
Committee
method that reduces or eliminates
Relations Bill of 1978 have made
multiplicity,
which
recommendations on this question.
description
of
is
another
state
of
and
the
Mehta
Patel
Industrial
We have carefully studied all the
fragmentation.
arguments that have been advanced

on either side (and the qualifications
that have been proposed for the
6.66
If either of these is not
negotiating agent). We do not want to
acceptable, we fall back on the
recount all the arguments.

340
6.68
To put the arguments briefly,
the administrative cost of a secret
those who support the secret ballot
ballot, especially when it has to be
urge; (1) that the system of secret
held in a multi-unit undertaking goes
ballot is what is used to elect a
to
representative to the legislature or
deployment of a formidable number
Parliament; (2) that it is a system that
of polling officers; (vi) that this raises
assures a democratic choice; (3) that
the question of the source from which
the secrecy prescribed in it provides
the money to defray the expenditure
protection
from
on the secret ballot should come,
harassment by the management or
whether it should be from the
other unions; and (4) that there is no
management or workers or the
better method to verify support. Those
Government. The management is
who support the check off system
reluctant, and some times, unable to
argue: (i) that the check off or
find such a large sum of money; the
authorization
union
Trade Union does not have the
subscriptions from wages clearly
resources, and the Government too is
shows the respective strength of
unwilling to find the money from the
unions; (ii) that unlike the secret
exchequer; (vii) that the campaign for
ballot
to
which
the
to
worker,
deduct
only
shows
the
crores
of
secret
rupees
ballot
and
disturbs
the
the
preference at the moment, the check
atmosphere,
off system shows the continued
feelings of rivalry and acrimony and
support for the unions over a long
sometimes violent interludes in
enough period of time; (iii) that since
establishments which adversely affect
the negotiating agent has to represent
and disrupt the tenor and volume of
workers over a period of time till the
work done etc.; and (viii) that it takes
next
many days for the aftermath of the
negotiations
fall,
due
membership of the union is a far
generates
intense
campaign to settle down.
better and more reliable index than a

secret ballot (which is more like a
referendum); (iv) that the check off
6.69
system
considered
(v)
does
promotes
that
not
the
check
involve
unionisation;
The
Commission
the
carefully
advantages
and
off
system
disadvantages of the relevant options.
any
special
In dealing with this issue, we had to

keep
expenditure for verification, whereas

341
in
view
our
belief
that
collective negotiations require a
undertakings operating in a number
strong trade union movement which,
of states. It has been shown that the
in its turn, demands an increasing
expenses run into crores of rupees.
degree of unionisation. Any formula
For instance, we are informed that in
which militates against increasing
the case of the Food Corporation of
unionisation should, therefore, ab
India (F.C.I.) the identification of the
initio be avoided. Secret ballot as a
negotiating agent through secret
method of identifying the negotiating
ballot amongst 50,500 employees
agent raises the following questions: -
undertaken during 2002 involved
should the electorate for choosing the
an expenditure of more than 50 lakh
negotiating agent be the entire corpus
rupees, and the deployment of 3,000
of workers in the establishment/
returning officers and polling staff.
industry/region or should it be limited

only to members of registered trade
6.71
unions? If it is to be the latter, then in
A check off system has the
advantage
a situation where the total unionised
of
ascertaining
the
relative strengths of trade unions
strength is less than 50% of the work
based on continuing loyalty reflected
force, and this is the average scenario
by
in our country, then a minority
the
regular
payment
of
union subscription, even if such
will be negotiating for the entire
subscriptions are deducted from the
establishment/industry/region;
wages
on the other hand, if the entire
as
permitted
under
the
Payment of Wages Act, 1936. Also,
workforce were to participate, then it
the check off system by and large
is argued this may weaken the urge
avoids
or inducement for non-unionised
the
incidence
of
dual
membership under which, for a
workers to become members of one
variety of reasons, a worker may
or other of the trade unions.
become member of more than one

union.
Given
the
low
level
of
Also, secret ballot even on a
unionisation in India, neither the
restricted basis is logistically and
check off system nor the secret ballot
financially a difficult process in
confined to members of registered
industries like railways, banks, post
unions is likely to throw up a
offices,
negotiating agent which commands
6.70
coalmines
and
other
342
the support of the majority of workers,
Labour Relations Commission to
excepting
determine the method that should be
in
industries
and
establishments where the degree of

unionisation
is
very
high.
adopted in a particular instance.
The
argument advanced against the check

off system is that it exposes the
loyalty of the worker, and this may
to
be
workers
must
be
made
registered trade unions; each of them
force today, when conscientisation and
will have to indicate to the employer
legal rights have more or less done
the name of the trade union of which
away with the fear that workers had in
he/she is a member and the worker
the early days of trade unionism in the
will also have to issue a written
Today, it is commonly
authorisation to the employer to
accepted even by employers that
deduct his/her subscription from his/
workers have the freedom to join
her wages and pass it on to his/her
Trade Unions of their choice. There

cases
proposals
compulsory for members of all
this argument does not have much
exceptional
above
more
members of other unions. We feel that
be
the
an establishment employing 300 or
by the management or persecution by
may
It is needless to stress that for
implemented, the check off system in
make him vulnerable to victimisation
country.
6.73
trade union.
of
victimisation and vendetta. But they

6.74
are exceptions, and not the vogue.
Though the check off system
will be preferred in the case of

establishments employing less than
We have given consideration to
300 persons too, the mode of
all these arguments and come to the
identifying the negotiating agent in
conclusion that the check off system
these
should be the general pattern, and
determined by the LRCs. Any union in
wherever
such
6.72
there
is
legitimate
establishments
smaller
may
enterprises
be
may
system
approach the LRCs for conducting a
may not achieve the purpose of
secret ballot instead of employing the
verification
the
check off system, and the LRC will
possibility of victimisation, it should
decide the issue after consulting the
be open to unions to petition the
other Trade Unions operating in the
apprehension
or
that
may
the
create
343
establishment. We are recommending
negotiations, manpower adjustments,
a slightly different dispensation for
change in shifts etc. should be
units employing less than 300 as we
concluded
feel that it is in such units that
level so as to maximize the efficient
the possibility of victimisation has to
functioning
be provided against.
establishments
based
on
situations
obtain
in
at
the
of
that
establishment
the
individual
the
such
establishments.
6.75
The
Commission
also
considered the question of the powers

of the single negotiating agent or
6.76
the
We would also recommend that
at
the
recognition once granted, should be
at
the
valid for a period of four years, to be
industry or region levels. It may so
co-terminus with the period of
happen that at the level of individual
settlement. No claim by any other
establishments, there may be trade
trade union/federation/centre for
unions which have much greater
recognition should be entertained till
following than is the case at the
at least 4 years have elapsed from the
industry or regional negotiating level
date of earlier recognition. The
where a single federation/centre
individual workers authorisation for
different from the establishment
check off should also be co-terminus
level
with the tenure of recognition of the
negotiating
establishment
union
college
level
or
and
composite
negotiating agent or college.
negotiating college may hold sway.

The Commission has taken note of the
practice of industry level negotiations
on interest issues, which obtain in
6.77
several industries and would like the
20 or more workers should have
practice to continue. However, it
standing orders or regulations which
would also like that as far as possible,
shall cover all areas of working
negotiations and decision making on
conditions,
wages, allowances, general conditions
security, misconduct, procedure for
including total number of hours of
disciplinary
work, leave, holidays, social security,
payment of suspension allowance,
safety
facilities and protection to be provided
and
health,
productivity
344
All establishments employing
employment,
action,
social
suspension,
to workers against sexual harassment,
challengeable before labour courts by
age of retirement and so on. The
an appeal by either party.
Commission agrees with the opinion of
amendment to the Standing Orders
the Study Group that there is no need
can be asked for by either party and
to delimit the issues on which standing
agreed to by both parties or referred
orders can or need be framed.
to the certifying authority or the
However, the Commission does not
Labour Court for determination.
find it possible to agree with the
However, no demand for amendment

can be made until at least a year has
recommendation of the Study Group
elapsed. The appropriate Government
that the need for certification of the
may prescribe a separate Model
standing orders by a prescribed
Standing Order for units employing
authority may be dispensed with. This
less than 50 workers. We append a
is because the Commission has
draft of Model Standing Orders for
brought down the threshold for
such
framing of standing orders from 50 to
establishments.
The
of Model Standing Orders or the
the number of establishments which
Standing Orders, mutually agreed
need to have standing orders will
upon with the workers, to the
increase. As long as the two parties
appointment letter of every employee.
agree, all manner of things including

production,
small
employer will have to append a copy
20 workers and this would mean that
multi-skilling,
Any
job
6.78
enrichment, productivity, and so on
The Commission has also
taken note of the evidence tendered
can also be added to what we have
at various venues to the effect that
listed above. These standing orders
the present Model Standing Orders
will be prepared by the employer(s) in
only speak of punishment of four
consultation with the recognised
days
unions/federations/centres depending
dismissal,
upon the coverage, and where there is
intermediate grades of penalties. The
any disagreement between the parties,
Commission does not consider this to
the disputed matter will be determined
be a satisfactory arrangement. The
by the certifying authority having
appropriate Government may also
jurisdiction, to which either of the
frame
parties may apply. The decision of the
including the classification of acts of
certifying authority would however be
misconduct as major and minor, and

345
suspension
and
model
and
there
standing
removal/
are
no
orders,
providing for graded punishments
enquiry and further, there would be
depending on the nature and gravity
no increase in subsistence allowance
of the misconduct, and publish them
beyond 50% for the period exceeding
in the official gazette. Where an
90 days in such cases.
establishment has no standing orders,

or where draft standing orders are
6.80
Every establishment to which
still to be finalised, the model
the general law of employment
standing orders shall apply.
relations applies i.e. those with 20 or

more workers, shall establish a
6.79
Any worker who, pending
Grievance
Redressal
completion of domestic enquiry, is
consisting
of
placed under suspension, by orders in
workers and employers represen-
writing giving reasons for his/her
tatives, which shall not be larger than
suspension and the charges framed
ten members or smaller than two
against him, should be entitled to
members
50% of his wages as subsistence
employment size of the establish-
allowance, and if the period of
ment, as may be prescribed. One
suspension exceeds 90 days for no
member of the committee may be
fault of the worker, then for the
designated
remaining period of suspension, he/
another as Vice Chairman and a
she shall be entitled to subsistence
system may be established to see that
allowance calculated at 75% of the
one
wages, so however the total period of
management, and the other from
suspension shall not, in any case,
among employees representatives.
exceed one year. If as a result of
The Grievance Redressal Committee
continued absence of the worker at
shall be the body to which all
the domestic enquiry or if the enquiry
grievances of a worker in respect of
and disciplinary action cannot be
his employment, including his non-
completed
reasons
employment will be referred for
attributable wholly to the workers
decision within a given timeframe.
default or intransigence, the employer
Where the worker is not satisfied with
will be free to conduct the enquiry
the decision of the committee, he
ex-parte and complete the disciplinary
shall be free to seek arbitration of the
proceedings based on such ex-parte
dispute by an arbitrator, to be
in
time
for
346
of
equal
depending
the
as
two
Committee
number
on
Chairman
is
from
of
the
and
the
selected from a panel of arbitrators to
and in the best interests of the
be
manner
undertaking. It is no doubt true that
prescribed, or seek adjudication of the
consequent on the current situation
dispute by the labour court. The
of
decision of the labour court or
competitiveness and upgradation of
arbitrator shall be final.
technology, all economic activities
maintained
in
the
globalisation
and
increasing
become subject to market pressures,

6.81
One of the contentious issues
compelling employers to do different
in the existing Industrial Disputes Act,
levels of adjustments, including the
1947 relates to Section 9A, more
size of the labour force, if he wishes
particularly items 10 and 11 of the
to continue in business. We are
Fourth
informed that some of the court
Schedule
which
read
as
follows: -
decisions include even VRS (Voluntary

Retirement Schemes) as actions that
10. Rationalisation, standardisation or
would attract the provisions of section
improvement of plant or technique
9A. We have carefully considered this
which is likely to lead to retrenchment
issue. We have earlier recommended
of workmen;
that the definition of the term

retrenchment should cover only
11. Any increase or reduction (other
reduction
than casual) in the number of persons
redundancy. We also notice that while
employed or to be employed in any
the first 9 entries in the Fourth
occupation or process or department
Schedule relate to conditions of
or
by
service, items 10 and 11, in a manner,
the
deal with the very employment of
shift
not
circumstances
occasioned
over
which
employer has no control.
of
surplus
labour
or
persons and in the present situation,

the size of employment is a matter
6.82
It is being strongly urged on
which can be best decided by
behalf of employers, and not without
the employer himself or herself
justification, that this effectively
keeping in view various attendant
prevents the employer from adjusting
circumstances. If an entrepreneur
the strength of his labour force from
starting an activity afresh has the
time to time to meet exigencies
right to decide on the number of
caused by genuine economic reasons
persons he/she will employ in various

347
sectors of his activity, there is no
workers so that they are equipped
reason why this option cannot be
and ready for different kinds of jobs
exercised by an existing employer in
that restructuring may entail. In fact,
respect of his continuing activity. A
there is continuous need for this kind
prudent employer will, no doubt, not
of training, and only by equipping
act capriciously, and in the pattern of
themselves with the new skills that
industrial relations we envisage, he
technological
changes
will be ill advised not to consult the
can
adapt
negotiating agent on such matters
successfully, if for nothing else, at
even as he might consult financial
least for retaining their jobs. We are
institutions, technical experts and
told
others; but, yet, the decision will be
reluctance among workers to undergo
his. No doubt, the resulting action
such training. This is unfortunate,
may lead to a dispute needing
and we expect the trade unions to use
arbitration or adjudication but the
their influence and good offices to
main point is that there need be no
encourage the workers to utilise such
statutory obligation for the employer
opportunities, which ultimately are
to give prior notice, in regard to item
not merely in the interests of the
11 of the Fourth Schedule for the
undertaking but of themselves. We
purpose of increase in the workforce,
would suggest that refusal to go for
as is the position now under Section
such training, which must be at the
9A. We would recommend accordingly.
employers cost and in the employers
Further the Commission is of the view
time, may be included as an act of
that notice of change, issued by an
misconduct under the standing orders
employer as per provisions of Section
if such refusal is without valid
9A, should not operate as a stay
reasons.
workers
that
there
is
demand
themselves
sometimes
under Section 33 though such a

decision of the management will be
6.84
Chapter V B of the Industrial
justiciable under Section 33 A. Section
Disputes Act 1947 (ID Act) has of late
33 may be amended accordingly.
attracted heavy criticism. It has been

argued by the employers that this
6.83
Arising out of the above is the
provision in the law which was
need for the employer to foresee and
enacted during the Emergency must
arrange for appropriate training to the
go, as most other manifestations of

348
the Emergency have gone. It has also
the induction of new technology that
been contended that the law originally
often reduces the number of workers
applied to establishments with 300
necessary for processes; and two, the
and more workers which later was
economic costs that are at least
brought down to 100 or more workers
partial
through an amendment in 1982. The
competitiveness. They also argue that
announcement of the Union Finance
upgradation
Minister in his Budget Speech of 2001
imperative for competitiveness in
that the ID Act will be amended to see
quality and cost. Trade Unions feel
that only establishments with 1000 or
that the total elimination of the
more workers would be covered by
existing
chapter V B, has given further fillip to
Governments
the demand to scrap V B.
retrenchment or downsizing will lead
determinants
of
law
of
global
technology
that
requires
permission
is
the
for
to sudden and indiscriminate laying

6.85
We are well aware that this is a
off or retrenchment of workers,
question that has aroused intense
resulting in sudden loss of jobs and
feelings and apprehensions, and
incomes, uncertainty and possible
touched off a running public debate.
starvation for themselves and their
We will therefore approach this
families. No society can be impervious
question from the point of view of
to
society as a whole, not merely of one
economic and social consequences) of
section or the other, but of the
pushing people into poverty and
interests of the totality of society, of
starvation. Both these are important
which sectoral interests are integral
considerations,
parts. If one goes by the declared or
importance that has confronted us
ostensible interests, managements
with a dilemma.
feel that they cannot achieve or
finding a fine balance, because
maintain competitiveness if they are to
industrial efficiency is essential for
treat the number of workers employed
social progress and the protection and
in their undertakings as fixed. They
generation
argue that there are two reasons that
imperative for social justice and social
compel them to look upon the strength
progress. Industry must be helped to
of the workforce in their undertakings
protect its viability and competitive
as variable: one, the consequences of
efficiency, and workers must be

349
the
consequences
of
and
it
(moral,
is
their
The answer lies in
employment
also
helped to protect employment and
close is given effect to: underwrite
incomes.
The best course would
facilities for medical treatment,
have been to seek solutions through
education of children, etc. and
bilateral
and
provide for a third party or judicial
agreement. (Those who want the
review of the decision, without
state to step aside or fade out of the
affecting the right of the management
picture should not be reluctant to
to decide what economic efficiency
accept bilateralism). But leaving
demands.
consultations
matters of this nature solely to

bilateralism at this juncture may lead
6.87
One of the members of the
to wide-spread industrial unrest,
Commission strongly argued that
strikes and lay offs and closures of
Chapter V-B should apply to all
industrial establishments.
This will
industrial undertakings employing 20
neither help industry to acquire
or more workers; that consequently
competitiveness nor help workers to
the need to secure prior permission
protect their incomes, nor help the
should be deemed necessary for all
society as a whole to move towards
establishments employing 20
economic growth. The situation may
more workers. The Commission gave
have been materially different and
due consideration to this argument.
easier, if we had a viable and
It shares the anxiety to protect
adequate system of social security
workers from the effects of arbitrary
including unemployment allowances
closures.
and transitional facilities. But we do
that
not have these, and we cannot set
circumstances on industry cannot be
them up in a day.
ignored or wished away. In the new
the
or
But the Commission felt

effect
of
the
new
circumstances of global competition,

6.86
The alternative then is to pay
adequate
outsourced
compensation,
jobs
to
it
offer
may
some
not
be
enterprises
possible
to
for
continue
retrenched
and meet the economic conse-
workers or their cooperatives, if any
quences of competition. In such
enterprise decides to close down give
cases, one cannot compel non-viable
workers or Trade Unions a chance to
undertakings to continue to bear the
take up the management of the
financial burden that has to be borne
enterprise before the decision to
to keep the concern going. There is

350
no justice or benefit in compelling a
be to allow closure, provide for
loss-making undertaking to bear
adequate compensation to workers,
burdens that it cannot carry, to sink
and in the event of an appeal, leave it
further. They should, therefore, have
to the Labour Relations Commission
the option to close down. It would be
to find ways of redressal :- through
good if there can be a prior scrutiny of
arbitration or adjudication. Such an
the grounds on which the closure is
enquiry can also assess whether any
sought, and the reasons for the loss of
exercise in retrenchment during the
viability. It is precisely for this reason
immediate past, say 18 months or two
that the provision for prior permission
years
was incorporated in the Law. But
enterprise to scale down to the
experience
that
threshold limit of 300 to exercise the
governments do not want to give
option for closure without obtaining
quick decisions, even though they
permission.
has
shown
was
undertaken
by
the
know that delay in taking decisions

only adds to the burdens that such
6.88
enterprises are forced to carry.
considered the views of the Study
Applications to permit closure are kept
Group and all the evidence and other
pending for months and years.
inputs received in this regard. It
Industries are kept waiting. Losses
agrees with the recommendation of
and liabilities are allowed to mount.
the Study Group that prior permission
Stalemates
Sometimes
is not necessary in respect of
managements try to create alibis by
lay off and retrenchment in an
manoeuvering disruption in the supply
establishment of any employment
of electricity, or seek some such
size. Workers will, however, be
subterfuges to close the enterprise
entitled to two months notice or
and disappear from the scene without
notice pay in lieu of notice, in case of
paying compensation, dues, etc. to
retrenchment.
workers. Such situations lead not only
rate of retrenchment compensation
to de facto closure, but also the loss
should be higher for retrenchment in
of compensation and dues.
In these
a running organisation than in an
circumstances the Commission came
organisation which is being closed.
to the conclusion that the best, and
Again, we are of the view that the
more honest and equitable course will
scale of compensation may vary for
continue.
351
The Commission has carefully
We also feel that the
sick units and profit making units
plantations, as is now the case, but to
even in cases of retrenchment. It
all establishments. We, therefore,
would however, recommend that in
recommend that the provisions of
the case of establishments employing
Chapter VB pertaining to permission
300 or more workers where lay off
for closure should be made applicable
exceeds a period of one month,
to all establishments to protect the
such
be
interests of workers in establishments
required to obtain post facto approval
which are not covered at present by
of the appropriate Government.
this provision if they are employing
Closure of establishments, either
300 or more workers. It is, however,
because of sickness or for other
not
reasons like pollution and so on, is
quite wide-spread, and the present
that the provision of Chapter V A
era
reforms,
should apply to all establishments. It
globalisation, competitiveness and so
would rather recommend that this
on has also aggravated the situation.
chapter applies to all establishments
The Finance Minister in his 2001
with 20 or more workers as it is
Budget
indicated
inclined to recommend a separate set
the cut off limit in chapter V B at
of legal provisions covering all
1000 workers. It has been reported
aspects of lay off, retrenchment and
that the Union Cabinet has also
closure for all kinds of establishments
accorded
this
with less than 20 workers. Necessary
The
changes in chapter VA in regard to
that
retrenchment
establishments
of
should
economic
speech
its
proposition
Commission
had
approval
in
to
principle.
recognises
able
to
agree
and
with
closure
the
will
such a limit would leave out most
have to be made accordingly. Every
employees; and feels that this
employer will have to ensure, before
limit
would,
a worker is retrenched or the
therefore, recommend restoration of
establishment is closed, irrespective
the
The
of the employment size of the
Commission is also inclined to agree
establishment, that all dues to the
with the recommendation of the Study
workers, be it arrears of wages
Group that provisions in regard to
earned, compensation amount to be
chapter V B must be made applicable
paid for retrenchment or closure as
not only to factories, mines and
indicated in the next paragraph, or
is
too
original
high,
limit
and
of
300.
352
any other amount due to the worker,
to give similar notice as prescribed
are first settled as a precondition to
for bigger establishments before
retrenchment
These
retrenching the workers or closing
provisions will not bar industrial
down. We are suggesting a higher
disputes being raised against a lay off
rate of compensation to be payable by
or retrenchment or closure. Having
industries which are running in profit
regard to the national debate on this
or are not so sick as to necessitate
issue and the principles outlined
their being wound up, since such
above, the Commission would like to
industries have the capacity to pay
recommend the compensation per
reasonably good compensation, as
completed year of service at the rate
can be seen from VRS packages.
or
closure.
of 30 days on account of closure in

case of sick industry which has
6.89
continuously run into losses for the
Employees
last 3 financial years or has filed an
Organisation is proposing to bring
application for bankruptcy or winding
about a scheme by which employees
up, and other non-profit making
would be provided some benefit if
bodies like charitable institutions etc.
they are rendered unemployed. The
and at the rate of 45 days for
Scheme is called Employees Multi-
retrenchment by such sick industry or
benefit Insurance Scheme. It would
body where retrenchment is done
be applicable to all provident fund
with a view to becoming viable. It
members.
would
benefit to employees during the
also
recommend
higher
We
understand
Provident
the
Fund
Its aim is to provide
retrenchment compensation at the
period
rate of 60 days of wages and similarly
employment which may be on account
a higher rate of compensation for
of
closure at the rate of 45 days wages
establishment and retrenchment of
for every completed year of service for
the worker. We feel that such a
profit
organisations.
scheme would provide some sort of a
For establishments employing less
safety net to the workers in times of
than
crisis. The Government may consider
making
100
workers
half
of
the
of
that
non-voluntary
permanent
closure
of
unthe
the matter favourably.
compensation mentioned above in

terms of number of days wages
may be prescribed. However, these
6.90
establishments will also be required
we are recommending the restoration

353
It can thus be seen that
of the original threshold limit for
Government within 60 days of receipt
prior permission: increased rates of
of application, the permission will be
compensation; consultation with the
deemed to have been granted.
representatives
of
the
workers
without giving workers a right to
6.92
veto; judicial review by the LRC in
far,
case of dispute; and (legal provisions
adjudication for determining disputes
or
appropriate
between management and labour. We
Governments) that make it obligatory
feel arbitration is the better of the
for employers to purchase insurance
two,
cover for employees.
procedures
review
by
the
We have, at several places so

referred
for
to
the
arbitration
reason
will
be
or
that
the
simple,
the
proceedings will not be tardy and the

6.91
Arising out of the above, we
decision will be rendered by a person
recommend that while the lay off
in whom both parties have confidence.
compensation could be 50% of the
We
wages as at present, in the case of
arbitration to spread, and over time,
retrenchment, Chapter VA of the law
become
may be amended to provide for sixty
determining disputes which are not
days notice for both retrenchment and
settled by the parties themselves. In
closure or pay in lieu thereof.
The
fact it would be desirable if in every
provision for permission to close down
settlement entered into between the
an establishment employing 300 or
parties, (and we would urge that the
more workmen should be made a part
duration of each settlement be four
of Chapter VA, and Chapter VB should
years), there is a clause providing for
be repealed.
arbitration by a named arbitrator or
such
In case of closure of
establishment
the
like
the
accepted
system
mode
of
of
is
panel of arbitrators of all disputes
employing 300 or more workers, the
arising out of interpretation and
employer will make an application for
implementation of the settlement and
permission
appropriate
any other disputes. The law may even
Government 90 days before the
lay down that such a provision be
intended closure and also serve a
deemed
copy of the same on the recognised
settlement. By having a named person
negotiating agent. If permission is not
as an arbitrator during the currency of
granted
a settlement, the arbitrator is able to
to
by
the
the
which
would
appropriate
354
to
be
part
of
every
familiarise himself with all aspects of
prevailing mode.
the activity in the establishment and to
over time, collective bargaining and
get to know the parties better; also,
inbuilt arbitration will result in the
the fact that the person will be the
bulk of the disputes between parties
arbitrator, for better or for worse,
being settled expeditiously. However,
during the entire period of the
there will be at least some instances
settlement will, hopefully, make him
where adjudication is preferred,
impartial and also act in the best
where bipartite negotiations do not
interests of the establishment.
bear fruit. We envisage a system of
We do hope that,
labour courts, lok adalats and Labour

6.93
Arising out of the above, we
Relations
Commissions
as
the
would like to suggest that a panel of
integrated adjudicatory system in
arbitrators is maintained and updated
labour matters. The Labour Courts
by the LRC concerned, which would
and Industrial Tribunals will stand
contain names of all those who are
merged. This system will not only
willing and have had experience and
deal with matters arising out of
familiarity with labour management
employment relations but also trade
relations; the panel may consist of
disputes in matters such as wages,
labour
union
social security, safety and health,
functionaries, employers, managers,
welfare and working conditions and so
officials of the labour department,
on. While labour courts will consist of
both serving and retired, academics,
a single presiding officer, the Labour
retired judicial officers and so on.
Relations Commission at the State,
Some ground rules could also be
Central and National level will be
framed
with
preferably bodies that have as
representatives of employers and
presiding officers, a sitting or retired
workers, and these could include
judge of the High Court or a person
procedures for selecting an agreed
who is eligible for appointment as a
person from the panel, the cost of
judge of the High Court. Both at the
arbitration and so on.
state and central level, the Labour
lawyers,
in
trade
consultation
Relations Commission will consist of

6.94
We recognise that, in the area
representatives
of
employers,
of determination of industrial disputes
workers, economists, leading figures
in our country, adjudication is still the
from the trade union movement,

355
labour or public administration,
The Conciliation Officer should,
management, etc. as members,
however, be clothed with sufficient
besides members from the All India
authority to enforce attendance at
Labour
The
the proceedings of conciliation. The
composition of the National Labour
conciliation officers will carry out
Relations Commission may also be on
such directions as may be given by
similar lines with the presiding officer
the Labour Relation Commissions in
being a sitting or retired judge of the
addition to performing their duties as
Supreme Court or a person who is
prescribed
eligible for appointment of a judge of
particularly commend some of the
the Supreme Court. Until such a
features contained in the Indian
service is constituted, the qualification
Labour Code (Draft) 1994 namely,
for appointment to labour courts and
setting
Labour Relations Commissions will
Commission at the State, Central and
have to be prescribed, and we are
National level, the National level
inclined to recommend the adoption
Commission hearing appeals against
of
National
the decisions of the State and Central
Commission, the Industrial Relations
Commissions, which in their turn
Bill 1978 and the Indian Labour Code
would hear appeals against orders of
(Draft) 1994 have suggested in
labour courts; clothing the National
respect of the qualifications and
Labour Relations Commission with the
powers/functions of labour courts and
power of the Supreme Court of India
Labour
as envisaged in Article 32(3) of the
Judicial
what
the
Relations
Service.
First
Commissions.
However, we are of the opinion that
under
up
the
Labour
law.
We
Relations
Constitution of India and so on.
the machinery for conciliation which

the First Commission wanted to be
6.95
included as a part of the LRC, needs
publication of the awards in the
to be kept separate and vested in
official
the executive, namely, the appropriate
competent court including the labour
Government concerned. We are also
courts and the Labour Relations
of the opinion that inspectors should
Commissions should be deemed to
not be appointed as Conciliation
have come into effect unless an
Officers as that may undermine their
appeal
efficiency as Conciliation Officers.
prescribed period. The Labour Courts

356
Instead of waiting for the

gazette,
is
awards
preferred
of
within
the
the
shall be empowered to enforce their
self-contained labour adjudication
own awards as well as the awards of
system
will
ensure
Labour Relations Commissions. They
adjudicatory
process
should also be empowered to grant
appellate processes will be speeded
interim relief in cases of extreme
up and will also have a greater degree
hardship. During the course of
of consistency.
that
the
including
evidence, the Commission had come

across the widely held view that
6.96
Government
the
resolution
publication of the awards for long
employers
periods. The dispensation that we
recommend that all matters pertaining
have suggested would obviate such
to
shortcomings
full
termination of employment or transfer
autonomy to the judicial process. We
or any other mater be determined by
also consider it desirable to make
recourse to the grievance redressal
officials of labour departments at the
committee,
Centre and the State who are of and
arbitration/adjudication by the labour
above the rank of Deputy Labour
court. These disputes need not be
Commissioners/Regional
Labour
elevated to the rank of industrial
years
disputes which would then take the
Commissioners
often
and
with
delays
ensure
ten
While
on
of
subject
disputes
and
individual
the
of
between
workers,
workers,
concilliation
be
we
it
and
experience in the labour department
form of collective disputes.
and a degree in law, eligible for being
view, section 2A of the Industrial
appointed as presiding officers of
Disputes Act 1947 may be amended
labour courts. The Central and State
to enable such disputes to be treated
Labour
be
as individual disputes and defined
declared as set up under article 323-B
accordingly in the law. Individual
of the Constitution. This will do away
disputes may be taken up by the
with recourse to High Courts as is
affected workers themselves or by
currently the practice. Empowering the
TUs and the collective disputes by the
National Commission with the powers
negotiating agent or an authorised
of the Supreme Court of India will also
representative of the negotiating
similarly discourage parties from
college for resolution. Both Individual
approaching the Supreme Court either
and Collective disputes not settled
under Article 32 or Article 136. Such a
bilaterally may be taken up in
Commissions
should
357
In this
conciliation, arbitration or adjudi-
court comes to the conclusion that
cation. In our scheme of things a
the grave charges have been proved,
union which does not have at least
then the court will not have the power
10%
to
membership
amongst
the
employees in an establishment should

have
no
locus
standi
in
order
reinstatement
of
the
delinquent worker.
that
establishment. A union which has at
6.97
least 10% members amongst the
speedier system for resolution of
employees in a unit should only have
industrial
the right to represent individual
Government of Punjab has been
workers in various fora such as
experimenting with the system of
conciliation, arbitration or adjudication
Labour Lok Adalats, and it is claimed
and a provision in this regard may be
to have been a great success. During
made in Section 36 of the Industrial
the Commissions visit to Chandigarh,
Disputes
appropriate
the representatives of the state
Government may also approach the
Government of Punjab, namely, the
Labour Relations Commission on any
Labour Secretary and the Presiding
individual or collective dispute in any
Officer of the Industrial Tribunal
establishment. Since our emphasis
spoke commending the role that Lok
throughout is on expeditious disposal
Adalats are playing. We were told that
of cases, all disputes, claims or
more than 11,400 pending labour
complaints under the law on labour
cases, which constituted two third of
relations should be raised within one
the total pending cases had been
year of the occurrence of the cause of
disposed off in three rounds of Lok
action. In this context we considered
Adalats, and that this had resulted in
whether section 11A of the ID Act
the payment of Rs. 8.55 crores to the
1947 should be retained and came to
workers. We feel that this is an
the conclusion that it should be.
experiment worth pursuing by other
However, the law may be amended to
State Governments and the Central
the effect that where a worker has
Government. It is of course necessary
been dismissed or removed from
to ensure that these Adalats are not
service after a proper and fair enquiry
used to browbeat workers into
on charges of violence, sabotage,
accepting payments which may be
theft and/or assault, and if the labour
only a fraction of what they may be
Act.
The
358
As an alternate and perhaps

disputes,
the
State
entitled to under the law. Perhaps a
and adjudication, we also recommend
set of dos and donts can be thought
that the jurisdiction of civil courts be
of which may be binding on the Labour
banned in respect of all matters for
Lok Adalat. Can such Adalats be
which provision is contained in the
Tripartite bodies or is it better that
relevant labour laws. The existing
they are manned by functionaries of
powers regarding consent of the other
the labour judiciary? May be, a panel
party for the appearance of legal
of advocates or persons well versed in
practitioner should remain. In the
labour laws and labour administration
case of conciliation and Lok Adalats,
may be maintained, and one or two
appearance of the legal practitioners
such persons may be deputed to
should not be permitted. We would
hearings of Labour Lok Adalats to
also recommend levy of a token court
ensure fair-play. We are not in a
fee in respect of all matters coming
position to recommend the actual
up before labour courts and labour
procedures that would be most
relations commissions. The State
suitable. This has to be found out from
Governments may also decide the
the experience that a few more states
differential rates for court fees for the
may acquire. However, the system of
unorganised sector. The procedure

followed
Lok Adalats on labour matters appears
in
the
labour
courts,
promising, and should be pursued.
arbitration, etc. need not mandatorily
6.98
courts.
be the procedure followed by the civil
We also recommend that a
system of legal aid to workers and
6.100
trade unions from public funds be
It has been brought to the
notice of the Commission that there is
worked out, to ensure that workers
a law in England, popularly called the
and their organisations are not unduly
Whistle blowers law under which
handicapped as a result of their
workers are protected from being
inability to hire legal counsels on their
dismissed or penalised for disclosing
behalf. In this context, we also
information, which they reasonably
recommend that trade unions must be
believe
helped financially by public funds in
malpractices, miscarriage of justice,
meeting the cost of arbitration.
dangers to safety and health, risks to
exposes
financial
environment and so on. This law, it is

6.99
While on the subject of disputes
learnt, had the support of the

359
government, opposition parties, the
the strike/lock-out. The general pro-
Confederation of British Industry and
visions like giving of notice of not less
the Trade Union Congress. The
than 14 days, not declaring a strike or
Commission would suggest that in
lock-out over a dispute which is in
India too, Government may examine
conciliation or adjudication and so on
the feasibility of enacting a law of that
will be incorporated in the law. In this
kind.
context we also recommend that an

illegal strike or illegal lock-out should
6.101
While discussing the need for
attract similar penalties. A worker
retaining a separate category of
who goes on an illegal strike should
establishments to be declared as
loose three days wages for every day
public utility services, or essential
of illegal strike, and the management
services we had indicated that there
must
would have to be a strike ballot before
equivalent to three days wages per
a call for strike is given in all cases or
day of the duration of an illegal lock-
industries.
we
out. The union which leads an illegal
recommend that a strike could be
strike must be derecognised and
called
debarred
Elaborating
only
by
the
this
recognised
pay
the
worker
from
wages
applying
for
negotiating agent and that too only
registration or recognition for a
after it had conducted a strike ballot
period of two or three years.
amongst all the workers, of whom at

least 51% support the move to strike.
6.102 Another
Correspondingly, an employer will not
existing laws do not cover but which
be allowed to declare a lock-out
in the opinion of the Commission
except with the approval at the
must be statutorily provided for
highest level of management except
relates to workers participation in
in
grave
management. The provision in section
apprehension of physical threat
3 of the Industrial Disputes Act 1947
to
is
cases
the
of
actual
management
establishment.
The
or
or
to
the
pale
area
version
which
of
what
the
is
appropriate
contemplated in Article 43 A of the
government will have the authority to
Constitution of India. We feel that the
prohibit a strike or lock-out by a
time has come now to legislatively
general or special order and refer for
provide for a scheme of workers
adjudication the issue leading to
participation in management. An
360
earlier Bill introduced a decade back
have recommended above, all of them
on
may be suitably incorporated in the
this
suffered
from
certain
inadequacies and generated a lot of
consolidated law.
debate. We would recommend that a

Bill be introduced early, incorporating
6.104 We hope we have covered, in
the provisions of the earlier Bill with
the
such changes as proposed during the
important issues, and we hope that if
debate on the Bill and the ideas
all
unanimously accepted by the Tripartite
accepted and acted upon, we will
Committee on Workers Participation in
embark on an era of sound and
Management & Equity that submitted
efficient
its report in 1979. It may be initially
cooperation, giving workers a place of
applicable
establishments
dignity and responsibility in the
employing 300 or more persons. For
establishment and at the same time
the smaller establishments, a non-
providing the management with the
statutory scheme may be provided.
necessary freedom to function. We
Since we have recommended that
would also urge that in making the
supervisors as a category be clubbed
above recommendations, we have
with administrative and managerial
striven to maintain a proper balance
personnel, the demarcation is clear
between the interests of workers and
between workers and management.
those of the managements, all within
Furthermore,
of
the paramount consideration of
recognition for the bargaining agent,
protecting and promoting the health
as also the information available under
and the growth of the establishments
the check off system will furnish
concerned. We would therefore urge
enough data to select representatives
that these recommendations are
of workers at each tier of participation.
taken up as a whole, and not in a
to
all
the
system
above
these
paragraphs,
all
recommendations
labour
the
are
management
piece meal manner that may destroy

6.103 There are a large number of
the context of inter-relation, and the
small issues for which provision can
holistic approach.
be found in the existing laws. The

Commission is broadly in agreement
6.105
with such provisions and to the extent
view that in the enforcement of
they are not inconsistent with what we
labour laws, there is discrimination

361
We would also refer to the
between the private sector and public
establishments. We have therefore
sector, the latter allegedly being
decided that all such establishments,
handled leniently. The provision in the
be they manufacturing units or
Criminal Procedure Code that prior
service providing units or hospitals or
permission or sanction is needed
educational institutions or charitable
before a prosecution can be launched
institutions or shops and establish-
against the senior functionaries of
ments or cooperatives or consultancy
public sector establishments has, it is
out-fits or lawyers firms and the like
urged, contributed to this differential
will be governed by simple legal
treatment. The Commission feels that
provisions covering all aspects of
no such discrimination should be
employment. Where an establishment
permitted either by law or in practice,
in its entirety is made up of branches,
as the purpose of labour laws will be
such
defeated by such discrimination.
dispensaries or schools in a large
as
number
6.106
a
of
local
body
locations
having
within
its
In para 9 above, we indicated
jurisdiction, that will be governed by
our intention to have a separate
this dispensation only when the
dispensation
establishments
combined strength of all branches is
having an employment size of 19 or
19 or below. The provisions in respect
less workers. In coming to the
of such establishments can be in the
conclusion
form of a separate law named
for
that
such
small
establishments need a different and
Small
self-contained set of provisions, we
Relations) Act or be included in the
were persuaded by the fact that in
general law as a separate chapter. A
such establishments, the managerial
draft of such a law has been
capabilities are limited, and more
attempted and is at Appendix-II to
often than not, the entrepreneur is
this chapter. As may be seen from the
himself discharging myriad functions
same, the law seeks to cover all
of
sales,
aspects of employment including
personnel management and so on.
wages, social security, safety and
Moreover, we learnt that the evil
health and so on. A system of self-
effects of what has come to be known
certification has been introduced to
as
more
offset the criticisms of Inspector Raj.
pronounced in the case of such small
An obligatory provision for social
finance,
Inspector
production,
Raj
are
362
Enterprises
(Employment
security, with contributions from the
cleaning etc. jobs in all establish-
employer and from the worker as also
ments
a compulsory annual bonus at 8 /3%
Government
of the wages (a months wage) are
Government.
for
which
is
the
the
Central
appropriate
also features of the law that we have

proposed. These provisions will ensure
6.108
We note that, in essence, the
that the interests of the workers are
SAIL judgment has overruled the Air
fully protected, even while lessening
India judgment, thus leading to the
burdens on the management and
position that on the abolition of
providing them with vigilance in
contract labour by the appropriate
exercising managerial functions.
Government under section 10 of the

Contract Labour (Regulation and
Contract Labour
Abolition) Act 1970, the principal

employer is under no obligation to
6.107
We are devoting a separate
absorb the contract labour concerned
section in our chapter to the question
as his regular employees, though the
of Contract Labour, both because of its
judgment
size and the topical nature of the
employer to give preference to the
problem. The Study Group was aware
erstwhile
of the recent five - judge judgment of
recruiting fresh workers for the jobs
the Supreme Court in the case of the
in respect of which contract labour
Steel Authority of India (delivered on
system stood abolished.
enjoins
contract
the
principal
labour
while
30.08.2001) overruling the threejudge judgment in the Air India
6.109
Statutory Corporations Case. We do
considered the evidence tendered
not want to enter into a critique either
before it at various centres by both
of the Air India Judgment or the SAIL
employers and employees and the
Judgment.
We are also not making
specific recommendations of the
any comments on the decision in the
Study Group that the decision to
SAIL
of
abolish contract labour should not be
appropriate government or the
an executive one based on the
quashing of the December 1976
recommendations of Contract Labour
notification abolishing contract labour
Advisory Board concerned but must
system in respect of sweeping,
be a judicial one. It is unable to agree
judgment
in
respect
363
The Commission has carefully
with the recommendation of the Study
understand that the Maharashtra
Group that the judicial body vested
Government have moved to have such
with the responsibility for making
a distinction between the core and
recommendation on abolition should
non-core
also
order
therefore, recommend that contract
absorption by the principal employer
labour shall not be engaged for
of such numbers of contract labour as
core production/services activities.
considered just and reasonable. This
However,
would amount to a virtual reversal of
demand, the employer may engage
the Supreme Court judgment in the
temporary labour for core production/
SAIL case and restoring the judgment
service activity. We are aware that
of the Air India Statutory Corporation
off-loading
case on the issue of absorption. The
services like canteen, watch & ward,
Commission is conscious of the fact
cleaning, etc. to other employing
that in the fast changing economic
agencies has to take care of three
scenario and changes in technology
aspects (1) there have to be
and
are
provisions that ensure that perennial
current
core services are not transferred to
challenges, there cannot be a fixed
other agencies or establishments; (2)
number of posts in any organization
where such services are being
for all time to come. Organizations
performed by employees on the pay
must have the flexibility to adjust the
rolls of the enterprises, no transfer to
number of their workforce based on
other agencies should be done
economic efficiency. The industry
without
represen-tatives have at various
(negotiating) agents; and (3) where
centres deposed before us that
the transfer of such services do not
their energies are frittered away in
involve any employee who is currently
taking care of the functions which are
in service, the management will be
not core to their business and
free to entrust the service to outside
therefore,
less
agencies. The contract labour will,
competitive in the global market.
however, be remunerated at the rate
It is essential to focus on core
of a regular worker engaged in the
competitencies
enterprise
same organisation doing work of a
wants to remain competitive. We
comparable nature or if such worker
be
empowered
management,
entailed
in
it
to
which
meeting
makes
if
an
them
364
functions.
for
We
sporadic
perennial
consulting,
would,
seasonal
non-core
bargaining
does not exist in the organisation, at
is to guard against such eventualities
the lowest salary of a worker in a
that we are recommending, that the
comparable grade, i.e. unskilled, semi-
principal employers should be held
skilled or skilled. The Commission
responsible for the benefits payable to
would further recommend that to
contract labour, as the principal
ensure that this recommendation is
employers
not misused in any manner by the
beneficiaries from the work given on
employer, the onus and responsibility
contract.
are
the
ultimate
of proof to show and ensure that the

employer is paying such contract
6.110 While
on
the
worker the wages of a regular
contract labour the Commission would
employee doing comparable work or in
recommend that no worker should be
its absence that of the lowest skilled
kept continuously as a casual or
regular employee, would be on the
temporary
principal employer. The principal
permanent job for more than 2 years
employer will also ensure that the
unless he is employed on a contract
prescribed social security and other
for a specified period.
worker
subject
against
of
benefits are extended to the contract

Law on Wages
worker. There is a reason that compels

us to make this recommendation.
At
many of the centres we visited, we
6.111 Next only to employment,
were told during evidence, that there
wages and remuneration are the most
were cases of contractors making
important of the issues one has to
deductions from the wages of contract
contend with when dealing with
workers as their contribution towards
labour management relations. The
social security, and then absconding
reasons are obvious. While generally
without
employers
depositing
either
the
view
wages
and
contribution realised from the workers
remuneration as an item of cost and
or their own contributions into the
hence to be kept in check even if not
accounts of the concerned social
reduced, these are the wherewithal
security system. It is obvious that
for the worker to maintain himself/
contractors should not be allowed to
herself and his/her family at least at a
perpetrate this double fraud at the
level of living that is consistent with
cost of the poor contract workers. It
human needs and human dignity.

365
Directive Principles of State Policy in
mmendations made in the Judgment
the Constitution have specifically
of the Supreme Court in the Raptakos
referred to living wages in Article 43.
Brett & Co case. We strongly believe
Article 43 is reproduced below: -
that a reasonable wage, keeping in

view the needs of the worker and his/
The State shall endeavour to secure,
her family, will repay itself in many
by suitable legislation or economic
ways to the employer by way of
organisation or in any other way, to
increased productivity, commitment,
all workers, agricultural, industrial or
better labour management relations
otherwise, work, a living wage,
and all in all, a satisfied and
conditions of work, ensuring a decent
cooperative work force. Also, it is only
standard of life and full enjoyment of
that kind of wage that will set the
leisure
cultural
wheels of trade and industry moving,
opportunities and, in particular, the
by putting in the hands of the worker
State shall endeavour to promote
the money that will enable him to
cottage industry on an individual or
purchase his/her bare needs and a
cooperative basis in rural areas.
little more. Needless to add, what we
and
social
and
state here is applicable to all

6.112 The ILO has also declared, the
situations, irrespective of the size of
goal is not just creation of jobs but
the establishment or the nature of its
creation of jobs of acceptable quality,
activity. However, before fixing the
and in the Indian context, the level of
minimum
wages is an index of the acceptability
Government should keep in mind the
or otherwise of the quality of the job.
capacity of the industry to pay as well
That is why the Commission is
as the basic needs of the workers.
anxious that the minimum wage
The attempt to find such a balance
payable to anyone in employment, in
has to be based on a national policy
whatever occupation, should be such
on wages, income and prices about
as would satisfy the needs of the
which
worker and his family (consisting in
observations in later paragraphs.
wage
we
are
the
appropriate
making
more
all of 3 consumption units) arrived at

on the Need Based formula of the
6.113 The Commission looked at the
15th
Conference
problem of bonus and the endless
the
disputes regarding calculation of
Indian
supplemented
Labour
by
reco366
bonus, more particularly the prior
from time to time. It should, in
charges. The Commission is of the
addition, have a component of
view that in Indian social conditions,
dearness allowance to be declared six
there is a necessity to enable the
monthly linked to the consumer price
worker to have some ready cash to
index and the minimum wage may be
enable him to celebrate the festival
revised once in five years. This will be
season, with some satisfaction and
a wage below which no one who is
pride; an ordinary worker will not be
employed anywhere, in whatever
able
amounts
occupation, can be paid. Each State/
periodically from his wages for this
Union Territory should have the
purpose.
the
authority to fix minimum rates of
Commission recommends that every
wages, which shall not be, in any
employer must pay each worker his
event, less than the national minimum
one months wage, as bonus before an
wage when announced; where a state
appropriate festival, be it Diwali or
is large, it may, if it chooses, fix
Puja
or
different rates of minimum wages for
Christmas. Any demand for bonus in
different regions in the state but no
excess of this upto a maximum of
such wage can be less than the
20% of the wages will be subject to
national
negotiation, as at present. We also
Commission also recommends the
recommend
present
abolition of the present system of
system of two wage ceilings for
notifying scheduled employments and
reckoning
entitlement
calculation
of
to
put
or
In
by
small
view
Onam
of
or
that
this,
Ramzan
the
bonus
minimum
wage.
The
and
for
of fixing/revising the minimum rates
should
be
of
wages
periodically
for
each
suitably enhanced to Rs. 7,500/- and
scheduled employment, since it feels
Rs. 3,500/- for entitlement and
that all workers in all employments
calculation respectively.
should have the benefit of a minimum

wage.
6.114 The Commission also considers

it necessary that a competent expert
Piece Rate Wages
body be appointed to examine the

question of a national minimum wage
6.115 In
that the Central Government may
employments that are covered under
notify. This minimum must be revised
the Minimum Wages Act 1948,

367
quite
few
of
the
workers are paid wages on piece rate
6.117 In some earlier paragraphs,
basis. It so happens that apart from
we have already stated our view that
other shortcomings, the piece rates
every
may be fixed so low that a diligent
employment should receive the
worker, even after 8 hours of work
minimum wage prescribed for that
may not be able to earn what would
employment.
amount to the notified time rated
for eight hours is entitled to this
wage
existing
minimum wage. We have been asked
provisions of lay off deal with a
whether those who are employed in
for
day.
The
similar situation in industry where the
We
agree
with
will of course like them to receive the

minimum wage. But we have to point
piece rate basis the employer should
out that those who are employed in
pay at least 75% of the notified time
relief works in areas struck by
rated wage to the piece rated worker
calamities are in a category of their
if the employer is not able to provide
own.
him with work.
Due to reasons beyond their
control,
lost
their
are not reduced to starvation, and so
workers, other members of his/her
organises works in return for which
family also contribute significantly to

piece
have
The State wants to ensure that they
work, where apart from the main
the
they
employment or means of livelihood.
In the case of home-based
production,
Every one who works
also be paid the minimum wage. We
that where wages are fixed purely on
the
any
behalf of the Government should
the
6.116
in
the Government or by NGOs on
the workers for part of the day or for

day.
engaged
the relief works organized directly by
employer is unable to provide work to

full
worker
they offer food or some monetary
rate
earnings of all of them put together
compensation.
adds up to only a fraction of notified
provide free doles to all those who
time rated minimum wage for a single
are affected by the calamity. The
worker. We, therefore, recommend
arguments against doles are well
that fixation of piece rate wages must
known.
be so done as to enable a diligent
prefers to receive a remuneration
worker to earn after 8 hours work
rather than a dole. There is therefore,
what would be the time rated daily
a case to distinguish between regular
rate.
wage
368
The alternative is to
Even the recipient generally
employment
or
food
or
remuneration in return for some token
of Bonus Act 1965. In addition
work for which opportunities are
to this, the Commission does not
created. Where the nature of the work
consider any need for statutory wage
cannot be described as token, where it
boards. There is no reason why
is a full days work on a project that
relatively better organised sets of
builds durable common assets, there
workers should not use the method of
is
the
collective negotiations to get their
remuneration must be equivalent to
wages fixed from time to time. Also,
the
the
the Commission is not sure that
employment). We will, therefore,
successive Wage Boards have really
recommend that this distinction may
solved the problem. In fact, the
be borne in mind in determining
Commission is of the view that there
whether the law on minimum wages
is no need for any wage board,
should be deemed applicable to
statutory or otherwise, for fixing wage
the situation. (If there is a dispute in
rates for workers in any industry.
this
case
to
insist
minimum
regard,
wage
it
can
that
(for
be
raised
before the National Labour Relations
Law
Relating
To
Commission, and the Commissions
Conditions and Welfare
Working
decision will be regarded as final

to
6.119 Issues relating to working
the dispute). This will ensure that
conditions and welfare account for a
workers in calamity stricken areas are
big part of the labour laws. Broadly,
protected from exploitative wages, and
these laws can be classified into two
yet receive at least half a bread to
groups, one dealing with specific
fend off starvation.
activities, such as Factories Act 1948,
binding
on
both
parties
Mines Act 1952, Building and other

By way of simplification, we
Construction Workers Act 1996,
have attempted a draft law on wages,
Plantations Labour Act 1951, Beedi
which is Appendix-III to this chapter.
and Cigar Workers (Conditions and
If this kind of law gains acceptance, it
Employment)
will result in the repeal of existing
Transport Workers Act 1961, Shops
laws like Minimum Wages Act 1948,
and Establishments Act and so on; the
Payment of Wages Act 1936, Equal
other relating to activities across the
Remuneration Act 1976 and Payment
board, as for example Contract Labour
6.118
369
Act
1966,
Motor
(Regulation and Abolition) Act 1970,
accompanying Cess Acts.
Child
and
even a larger number of welfare laws
Regulation) Act 1986, Dangerous
enacted by the states for different
Machines (Regulation) Act, 1983,
categories of workers; Kerala state
Inter State Migrant Workmen Act
perhaps takes the lead in the number
1979, and so on. Besides these, there
of welfare funds, both statutory and
are
non-statutory.
Labour
also
(Prohibition
specific
welfare
laws
There are
providing for a levy of cess on the

activity at a prescribed rate, and the
6.120
constitution of welfare funds out of
growing. Yet it is not clear why one
which welfare activities for the
needs so many laws, if the basic idea
benefits of workers and their families
of all these laws is to provide safe
are taken up; it is in the nature of
and humane working conditions,
such funds that they seek to provide
health and safety both at the work
welfare outside the work place, unlike
place and outside, welfare too, both
the earlier Acts mentioned above
at the workplace and outside. It may
where, essentially, welfare is provided
be that in respect of safety, the
only to workers at the work place,
dispensation may have to be different
excepting for crches which are
for different work situations, but
meant for the children of workers (An
surely this does not call for separate
exception
laws.
to
this
will
be
the
The list of laws seems to be
The safety requirements and
Plantations Labour Act 1951 where
precautions
including
protective
welfare of the extended type is
equipment
can
statutorily provided for). Examples of
incorporated in manuals, drawn up by
the genre of welfare fund laws in the
experts well versed in the technology
central sphere include Beedi Workers
that is used, in the nature of activities
Welfare Fund Act 1976, Mica Mines
carried out by an establishment, in its
Labour Welfare Fund Act 1946, Iron
effect on work situations and on
Ore Mines, Manganese Ore Mines and
human beings who work at these
Chrome Ore Mines Labour Welfare
places and so on.
be
suitably
Fund Act 1976, Limestone and

Dolomite Mines Labour Welfare Fund
6.121
Act 1972 and Cine Workers Welfare
consolidation of all laws of the kind
Fund
described in para 6.119 above and the
Act,
1981
with
their
370
We
would
recommend
enactment of a general law relating to
can be employed; should have a
hours of work leave and working
provision
conditions, at the work place. For
appointment along with a copy
ensuring safety at the work place and
of Standing Orders of the
in different activities, one omnibus law
establishment (in the local
may
for
language); and issue of a photo
different rules and regulations on
identity card giving details of the
safety applicable to different activities.
name of the worker, name of
(We have appended a draft indicative
establishment, designation, and
law on hours of work and other
so on. The appointment letter
working conditions after this chapter
and the card should clearly
and an omnibus draft indicative law on
mention the wages and the
safety
Labour
entitlements of leave, social
Administration). Similarly, there should
security and other benefits
be a consolidated law governing the
along
welfare provisions in various laws at
appointment and condition of
the work place or it can be combined
separation, etc.
be
enacted,
in
the
providing
chapter
for
with
letters
the
term
of
of
with the laws on wages whereas those

b)
relating to provisions on welfare
The
law
must
provide
for
outside the workplace should be
specifying the maximum number
merged with the law on social security.
of working hours in a day/week,
The question then arises what should
payment of overtime at double
such a consolidated law contain?
It
the rates of wages. However, the
should apply to all establishments
limitation on employing workers
where 20 or more workers are
on over time by way of monthly
employed, irrespective of the nature of
and quarterly ceiling needs to be
activity carried on, be it manufacturing
relaxed, and we recommend
or mining or transport or services or
that the present ceilings be
any other.
increased to double to enable

greater
a)
flexibility
to
the
meeting
the
It should provide for certain
employers
in
basic rights of the workers;
challenges
of
indicate a minimum age (say 14
without being required to seek
years) below which no person
approvals etc. The Commission

371
the
market
however is not in a position to
industry
agree
occupations, processes and
with
the
general
to
include
more
recommendation of the Study
contingencies
Group to bring uniformity in the
exemptions can be provided
daily and weekly hours of work
including the conditions of such
of industrial establishments and
exemptions.
workers
of
recommend that the workers
or
right to wages for overtime
otherwise, in view of the fact
work at the prescribed rate of
that the work ethic currently
overtime wages if they are
obtaining in both the sectors
asked to work beyond 9 hours a
needs substantial improvement.
day and 48 hours a week should
During the evidence received at
be ensured.
in
other
employments,
various
kinds
manual
centres
by
for
which
However we also
the
c)
Commission we were told of the
Likewise, law must provide for
need to provide flexibility in the
restrictions on employment, such
daily hours of work in the
as reduced working hours for
context of global competition
adolescents,
and
changes.
underground work in mines for
Sub section (2) of Section
women workers, prohibition of
64
work
technological
of
the
contains
the
give
State
Factories
Act
provision
that
Government
can
exemptions
in
by
prohibition
women
of
workers
between certain hours and so on.

d)
certain
On the question of night work
circumstances by prescribing the
for women, the Commission
conditions of exemptions from
would urge that there need not
the provisions of daily and
be any restriction on this if the
weekly hours of work, rest
number of women workers in a
intervals, weekly holidays and
shift in an establishment is not
spread over in the rules. We
less than five, and if the
recommend that the list of such
management is able to provide
contingencies may be suitably
satisfactory arrangements for
expanded in consultation with
their transport, safety and rest
the
after or before shift hours.
representatives
of
the
372
e)
At
the
same
time,
the
taken for the creation of these
Commission is not in favour of
amenities, common to a market
any exemptions being granted in
or small industrial areas.
respect of establishments in
export
promotion
zones
j)
or
As
regards
Crches,
the
Commission is convinced of the
special economic zones.
need for this facility and this

f)
The Commission feels that the
should not be dependent on the
appropriate Government may be
number of women workers or
empowered to grant exemptions
the number of children between
from different provisions of law
the ages of 0 to 6. Childcare is
in case of emergent situations
of great social importance and
that may arise in the workload of
where both husband and wife go
an establishment or in cases of
out to work, arrangements must
extreme hardship.
However,
be available for parent(s) to
there should be guidelines in the
leave the child in the care of a
respective laws for granting such
Crche. Moreover, the provision
exemptions.
of crches frees the elder sibling

(usually the girl) to attend
g)
Each establishment having an
school instead of having to stay
employment size (including all
at home to look after the young
the shifts) over a specified limit
ones.
must provide for a canteen.
Commission recommends that
In
this
view,
the
every establishment employing

h)
now
20 or more workers must run a
laws
crche, properly manned and
regarding washing facilities,
equipped either singly or in
lavatories and urinals (separate
association with other employers
for men and women workers)
and/or local bodies. In the case
and rest rooms may also be
of smaller establishments, it
incorporated in the law.
must be possible for them to
Normal
obtaining
provisions
in
as
several
jointly provide crche facilities,

i)
The help of municipal and other
again, where necessary with the
local bodies and NGOs may be
help of local bodies.

373
k)
The
law
must
provide
for
consultation amongst employers
holidays, earned leave, sick
and workers. A clear national
leave and casual leave at an
policy is called for in respect of
appropriate scale to the workers,
such matters.
apart from maternity benefits for

women workers. On holidays,
6.122 What we have said above is
we would urge the formulation
nothing new, except perhaps what we
at the National level of a clear
have said about crches; these are
policy. We would suggest that
found in the various laws that exist
apart from the three existing
today,
National Holidays, namely 15th
emphasising that these can all be
August, 26th January and 2nd
consolidated into a single legal
October, the other holidays
framework.
should
in
provisions, and can be improved in
consultation with the unions or
individual establishments through
elected representatives of the
negotiations.
be
declared
and
we
These
are
are
merely
minimal
workers, and there should be a

limit on the total number of
6.123 When we come to welfare
holidays that can be declared in
outside the workplace, the position is
a year. All these holidays should
not so simple.
be paid holidays. We do not
out, the Welfare Fund Acts enacted by
approve of the practice of
Parliament provide for a levy of cess
declaring a holiday, with or
on the product of the industry/
without wages, and usually at
activity. There is no contribution
very short notice on the death of
made by the workers towards such
a person, howsoever eminent he
funds.
Even here, it is pointed out
or she may be. Likewise, we do
that
some
not also see the necessity to
establishments provide far more
declare polling days as holidays.
benefits than what these funds
Only half a days holiday may be
provide.
permitted on such a day to
general labour welfare funds set up
those who have to go to cast
by statutes in several States which
their votes, the timings of which
cover factories and other notified
should be decided by mutual
establishments, and the fund is

374
As already pointed
of
the
larger
As against this, there are
created out of contributions made by
the nature of the activity concerned,
the employer, by the worker and by
with the result that while some funds
the government, normally in the ratio
are affluent, others are not, leading to
of 2:1:1. Such funds, which do not
differences in the levels of benefits
add up to much for each State, are
provided.
essentially utilised for recreational and
persuade different categories of
educational purposes, including some
workers to pool the resources of their
craft training to wives and wards of
welfare funds with a view to providing
workers. There is a third type of
uniform benefits.
welfare fund, very popular in Kerala
there is recognition of the need to
and some other states; these funds
integrate at least the administrative
are set up for each category of
structures so that the cost of
workers like coir workers, motor
administering the fund is kept at a
transport
minimum.
workers,
construction
And it is not easy to
The
At the same time,
Commission
has
workers, head load workers and so on,
considered the pros and cons of all
and the funds are made up of
matters pertaining to social security,
contributions
and
and made its recommendations in the
workers at stipulated rates per worker
chapter on social security and also in
per month. Some of these funds have
the chapter on unorganised workers.
very
money,
We would only say at this point that
sometimes running into tens, if not,
the present laws on welfare outside
hundreds of crores of rupees. Quite a
the workplace should be integrated as
large number of welfare activities,
far as possible with the laws on social
including a modicum of social security,
security.
large
by
employers
corpuses
of
are carried out by the funds each of

Laws Relating to Social Security
which has an administrative set up to

carry out these functions. It is
increasingly being recognised that
6.124
such funds may be the most suitable
considered the recent Workmens
vehicles for providing social security
Compensation
coverage to the workers, particularly
2000, which came into effect on 8th
those in the unorganised sector.
December 2000. By this amendment
However, it is also seen that the size
Act, the words other than a person
of the funds depends very much on
whose employment is of a casual

375
The Commission has also

(Amendment)
Act
nature
and
employed
arising out of, and in the course of
otherwise than for the purposes of the
employment; is there any virtue in
employers trade or business have
only singling out those situations
been
in
covered by Schedule II. The schedule
subsection (1), in clause (n) of the
can be widened. Many employers
Act.
organisations
omitted
who
in
is
section
2,
We are not able to appreciate
have
drawn
our
the implication of this amendment
attention to item No. (ii) of the
and considering that Schedule II of
schedule and have suggested that
the Act is a very long list, we are not
there is no reason why persons
sure whether the deletion of words
working in clerical capacity should be
and who is employed otherwise than
excluded form the provisions of
for the purpose of the employers
Workmens Compensation Act as they
trade or business will not cause
are frequently required to go on the
unintended hardship; also, all the
shop floor for performing their
entries in Schedule II refer to person
functions and are equally exposed to
employed .. in some specific
risks.
activity and therefore the need for

deleting the above mentioned words
6.126
is not clear.
We would urge the
Workmens Compensation Act 1923,
Government to reconsider the matter
we do not see why we should still
as
that
have on the statute book laws like
amendment has in fact extended the
Employers Liability Act 1938 and the
Act to the domestic sector.
The
ancient Fatal Accidents Act 1855; if
Commission recommends that the
necessary, the relevant provisions of
domestic sector be kept out of the
these
purview of the Act.
incorporated into the Workmens
the
Commission
feels
Also
Acts
in
the
may
context
be
of
suitably
Compensation Act 1923.

6.125
While on the subject, we
would also like to suggest that
Laws Relating to Miscellaneous
Schedule II to the Act though long is
Matters
not complete, in so far as it leaves out

a lot of other situations where bodily
6.127
injury leading to loss of earning
so far looked at, there are still some
capacity or death may be occasioned
laws, even among those enacted by

376
Besides the laws that we have
Parliament, that are remaining; there
6.129
are also other matters, not necessarily
considered the recommendation of
statutory, on which we would like to
the Study Group to provide statutory
offer brief comments.
shape to bodies such as the Indian
The Commission carefully
Labour Conference, Standing Labour

6.128
To begin with, we take the
Committee, State Labour Advisory
Apprentices Act 1961. We want to take
Boards, Industrial Committees, and so
the opportunity to point out that the
on. We propose to deal with the
small
matter in detail in the chapter on
enterprises
are
presently
deprived of the opportunities of having
Labour Administration.
apprentices, since the law lays down a

minimum strength of tradesmen of
different
categories
in
6.130
an
We come back to our earlier
establishment for allowing apprentices
task of looking at such central laws,
on a proportionate basis. There is
as have not so far been considered in
need to provide flexibility so that even
the earlier paragraphs. We begin with
if the strength of different categories
the following enactments namely,
of tradesmen in a small enterprise
Personal Injuries (Compensation
does not match up to what is required
Insurance) Act 1963, Personal Injuries
to keep apprentices, if the combined
(Emergency Provisions) Act 1962, and
strength is such as to allow keeping an
Public Liability Insurance Act 1991.
apprentice of a particular category as
The Ministry of Labour does not seem
per the proportion laid out, the small
to be involved in the implementation
enterprises should be allowed to
of these laws. Also, the first of these
engage
The
two laws seems to apply only when
Commission has separately dealt with
there is an emergency, and the third
matters relating to improving the
law applies to persons other than
necessary infrastructure for making
workmen (section 3(i) of the Act). We
the workforce more skilled and for
therefore do not make any comments
coping with the challenges that come
on these. Likewise there are a large
with increasing globalisation.
Our
number of environmental laws which
suggestions in this regard can be
also find place in the books on Labour
found
Laws, and we are not making any
such
in
the
apprentices.
chapter
on
Skill
comments on them either.
Development.
377
6.131
However, there are a large
substitute its provisions to the
number of laws which indisputably are
benefit of children which would
labour laws which we have not dealt
also aid the abolition of child
with so far. We deal below with the
labour.
remaining laws briefly:

(iii) Children (Pledging of Labour)
(i)
Bonded
Labour
System
Act 1933. We are not sure of the
(Abolition) Act, 1976. In a
need for such an Act, and even
manner, it can be argued that
if a situation of pledging of child
this is not a labour law but only
labour obtains, surely that can
a welfare legislation. While all
be incorporated as part of the
the other labour laws relate to
general law. Also, we are
situations where there is an
shocked at the proviso to the
employer-employee nexus, this
definition of an agreement of
is about the only law where the
pledge of the labour of child
reverse takes place i.e. even the
which
existing relation of master-
Provided that any agreement
servant is snapped, the affected
made without detriment to a
person released from bondage
child
and provision sought to be made
consideration of any benefit
for his/her rehabilitation. The
other than reasonable wages to
Commission
the
be paid for the childs services
implementation of this law by
and terminable at not more than
the
as
a weeks notice, is not an
appropriate, as it emanates from
agreement within the meaning
Article 23 of the Constitution
of this definition. This proviso
and deals with working people.
would amount to approving
Ministry
regards
of
Labour
reads
and
as
not
follows:
made
child labour if reasonable wages

(ii)
The Commission has dealt with
are paid. We think that, given
the Child Labour (Prohibition
this proviso, the entire purpose
and Regulation) Act 1986 in the
of the law is vitiated. Pledging
chapter on Women and Child
of child labour can be made a
Labour, and has suggested a
crime under the criminal law of
new law on the subject to
the
378
land.
The
punishment
proposed in the existing law is
trust workers, the application of
also inadequate, considering the
the
nature
and
operation and may be, over the
modern thinking on the subject.
next few years, the first law
We are in the era of the
namely
Convention of the Rights of the
(Regulation of Employment) Act
Child and would, therefore,
1948 will cease to have any
recommend the repeal of this
relevance for major ports. We
law.
are also not sure how far state
of
the
offence
third
law
comes
Dock
into
Workers
governments will be willing to

(iv) Dock Workers (Regulation of
adopt this 1948 law in respect of
Employment) Act 1948
minor ports in their jurisdiction.

So, perhaps, the repeal of the
Dock Workers (Safety, Health
1948 law, may be only a
and Welfare) Act 1986
question of time. However, the

other law namely Dock Workers
Dock Workers (Regulation of
(Safety, Health and Welfare) Act
Employment) (Inapplicability to
1986
Major Ports) Act 1997
importance to workers of minor
should
be
of
much
ports too. We would recommend

These Acts, other than the last,
that
are applicable to both major and
(Factory Advisory Services and
minor ports, but in effect, the
Labour Institutes) under the
first two laws have been applied
Ministry of Labour, who looks
only to major ports. The State
into these matters as far as
governments which are the
major ports are concerned, be
appropriate
in
enabled to advise suitably State
respect of minor ports do not
governments as well, at least in
appear
any
respect of some of the larger
recourse to these laws. Even in
minor ports and also the newly
major ports, to the extent that
established private sector ports,
Dock Labour Boards are being
to deal with the problems of
abolished
safety, health and welfare of
to
governments
have
and
taken
the
entire
workforce merged with the port
the
Director
General
dock workers in minor ports.

379
(v)
Employment
Exchanges
(Compulsory
Notification
central/state government offices
of
also, as at present. In passing,
Vacancies) Act, 1959.
we would also like to point out

that the salary level of rupees
This Act is essentially designed
sixty per month, above which
to know the nature of vacancies
alone vacancies will have to be
that may arise in establishments
notified,
to which the Act applies, and to
keeping in view the current
facilitate
levels
Exchange
the
Employment
Organisation
to
is
of
raised
suitably
wages
and
emoluments.
sponsor suitable candidates for

filling up such vacancies. The
(vi) The Employment of Manual
act also, helps to generate
Scavengers and Construction of
information relating to the
Dry Latrines (Prohibition) Act
employment market in a region,
1993.
state and the country as a

whole, and incidentally will
We see that the Act applies in
enable to identify pockets of
the first instance to the states of
scarcity in stipulated trades and
Andhra
alert the training authorities to
Karnataka, Maharashtra, Tripura
provide for training in such
and West Bengal and to all
trades. In the context of likely
Union Territories, and that it
requirements of workers with
also applies to such other states
specified multiple skills, we feel
which
that a strict and imaginative
resolution passed in that behalf
implementation of this law will
under clause (1) of Article 252
help
We
of the Constitution. We do not
therefore recommend that the
know whether any other State
provisions of this law be made
has
applicable to all establishments
resolution in this regard. Nor
to which the general law of
are we aware of the extent to
employment relations will apply
which the implementation of the
i.e. these employing 20 or more
law in States already covered,
workers. This should include
namely, Andhra Pradesh, Goa &
in
the
long
run.
380
Pradesh,
adopt
passed
the
the
Goa,
Act
by
necessary
so on, has been effective. The
(Regulation of Employment and
Human Rights Report of 1999
Conditions of Service) Act 1979.
has
adduced evidence
that
should shock, and cause concern
This is a well-intentioned piece
and shame. We refer to it in
of legislation but implemen-
detail in the succeeding chapter
tation
devoted to the unorganised
because of the involvement of
sector. We strongly urge that the
both the State Governments-
law
universally
the state of origin of the worker
applicable without further delay
and the State in which he works.
with deterrent penalties for
The
infringement.
compounded by the fact that
be
made
has
not
matter
been
is
easy
further
very often the workers do not

(vii) Equal Remuneration Act 1976
happen to have been recruited

by contractors and come to work
In our suggested law on wages,

we
have
incorporated
at the destination state on the
the
basis of information gathered
provision of equal pay for equal
from their relatives, friends, etc.
work. We reiterate the same.

The
Commission
During its visits to States
however,
particularly like Orissa, Bihar,
recommends that the important

provisions
of
the
Chattisgarh which have a history
Equal
of sending large numbers of
Remuneration Act other than on

wages
i.e.
Prohibition
unskilled workers to other states
of
the Commission came across the
discrimination against female

workers
in
matters
view expressed both by workers
of
organisations and the State
recruitment, training, transfers

and
promotions
incorporated
should
either
in
Governments, that the Act
be
should apply whether or not the
the
workers have been recruited by
employer-employee relations law

or
in
the
law
on
contractors. The Commission
Working
has seriously considered the
Conditions.
matter, and although we are

fully sympathetic to the position
(viii) Inter-State Migrant Workmen
that workers from other states

381
who
may
been
worker hailing from another
recruited by contractors, should
state to work in the unskilled
not be subject to exploitation or
category.
discrimination; we feel that the
more powers to the originating
Government may not be in a
state
position to legislate separately
presently provides so as to
for such workers or provide the
prevent exploitation and non
benefits of the present Act by
discrimination vis. a vis. the
extending coverage to them in
workers belonging to the state
view
Constitutional
where the establishment is
provisions enabling a citizen to
located, the Commission would
seek employment anywhere in
only observe that the matter
the country (Article 19). It will
involves Centre- State relations,
not be proper to provide legal
and should, therefore, be taken
protection over and above what
up by the Labour Ministry in the
is available to workers born or
appropriate forum.
of
not
the
have
As for conferring
than
what
the
Act
resident in the host State to

those who have come from
outside.
However,
(ix) Labour Laws (Exemption from
these
Furnishing
Returns
and
observations should not be
Maintaining Registers by Certain
construed to mean that we do
Establishments) Act, 1988.
not endorse the need to deal

with the problems of migrant
This is an enactment intended
workers.
to
Adequate provisions
provide
exemption
will be made in the general law
employers
that we are recommending. We
very
would also recommend that to
from furnishing returns and
keep proper records and access
maintaining registers under
to information, employers in the
certain labour laws. Small
host state be required to inform
establishment has been defined
the state Government as well as
to mean an establishment in
the Government of the state to
which not less than ten and not
which
belongs
more than nineteen persons are
whenever they engage any
employed or were employed on
the
worker
382
small
in
small
to
and
establishments
any day of the preceding twelve
only to those listed above. There
months;
is
very
small
no
reason
why
the
establishment has been defined
simplification of returns to be
to mean an establishment in
sent
which
nine
maintained cannot be extended
persons are employed or were
to all aspects, including social
employed on any day of the
security. In fact, we would
preceding twelve months. The
suggest
laws in respect of which this law
can
provides for exemption from
establishments irrespective of
filing returns and maintaining
the employment size. We would
registers as prescribed are the
suggest the setting up of a high
following: - Payment of Wages
power group which can deal
Act, 1936; Weekly Holidays Act
with this question and come up
1942; Minimum Wages Act 1948;
with recommendations. After all,
Factories Act 1948; Plantation
it must be recognised that the
Labour
returns are being asked for,
not
more
Act
than
1951;
Working
and
registers
that
be
to
be
simplification
extended
to
all
Journalists and Other Newspaper
essentially
Employees
of
purposes and in some cases for
Miscellaneous
information on compliance with
Service)
(Conditions
and
for
statistical
Provisions Act 1955; Contract
safety
Labour
and
considering the delays, the
1970;
gaps and unevenness of data,
Employees
these returns in the aggregate
(Conditions of Service) Act 1976
do not serve much purpose. It
and
may be desirable to rely on
(Regulation
Abolition)
Sales
Act
Promotion
Equal
Remuneration
Act 1976.
regulations.
But
periodic sample surveys which

will furnish the data necessary
The law thus will cover all those
for policy formulation. We would
establishments for which we
urge that this matter be pursued
have proposed a separate simple
vigorously. Some States have
law (see para 6.106 above).
already simplified the forms
However, the 1988 law does
that are to be submitted, and
not extend to all labour laws but
are experimenting with one

383
simple form. There is no reason
new establishments are exempted
why
from the operation of labour laws for
this
should
not
be
prescribed and given effect to.
the first few years, say 5 years, of its

operation. Section 16 of the Payment
6.132
Though there is merit in what
of Bonus Act 1965 has been referred
has been stated by the Study Group in
to, in this context. We are not sure
Para 90 of its Report regarding
that there is merit in this request. We
constituting tripartite boards based on
have repeatedly pointed out earlier
the Mathadi Boards in Maharashtra.
that
As per the evidence received by the
including economic security, is a sine
Commission with regard to the
qua non and also the starting point of
Mathadi Workers in Maharashtra and
labour protection and in such a
Headload workers in Kerala, the
scheme of things, infancy clauses
system seems to have lent itself to
have
certain abuses such as the closed
entrepreneur starting a business
shop system of working where new
should take note of all the legal
entrants are not allowed, and proxy
provisions he will be subjected to and
work is allowed, whereby those who
plan his operations accordingly. We
are actually enrolled with these
therefore do not consider it necessary
boards engage others to work in their
or desirable to incorporate an infancy
places by paying a part of the
clause in respect of any matter
remuneration received.
covered by labour laws. The State
The closed
social
no
security
place.
protection,
Any
prudent
shop system also creates problems for
may
the employers who hire workers but
enterprises in other ways.
are not able to get the work done as
us, however, do consider that there is
per their requirements.
Perhaps
need for such assistance from the
better results can come from the
Government, for a variety of reasons,
system if due steps are taken to
including the need to induct new
prevent the closed shop system and
entrepreneurs who otherwise may
work by proxy.
feel nervous about venturing out.
6.133 The Study Group examined a
6.134 Of course, there is no question
suggestion to provide an infancy
of exemption when the law does not
clause in labour laws by which all
apply to an establishment or class of

384
consider
assisting
new
Some of
establishments; such may be the case
6.135 We have given considerable
in
state
thought to the question of the
governments which are discharging
workers who are engaged in the khadi
sovereign functions. The question,
industries, spinners and weavers and
what are sovereign functions, may be
also to crafts persons engaged in
the subject of contentious debate. We
programmes
do not propose to enter into such a
ordinated by the KVIC.
debate. We would broadly exclude
aware of their special position, and
from the coverage of labour laws that
we have the utmost sympathy for
we
them. This is particularly so because
respect
of
propose,
functionaries,
central
all
or
functions
including
and
defence
today providing employment, and
and tax collection, internal and
therefore, livelihood to many lakhs of
making,
women and men in the rural areas
administration of justice, and external
where this category of people have
relations. Where in a case, the
hardly any other means of livelihood.
functions are not so very discreet and
These are days when people are
include other activities which do not
being retrenched from jobs, and are
fall in the above mentioned categories
not able to find alternative jobs. The
of sovereign functions, then we may
protection of avenues of employment
stretch the point a little and designate
is, therefore, an imperative need. We
all such as sovereign. We may leave
are, therefore, very keen that our
this matter to be decided by the

appropriate
government,
We are fully
and weaving and handicrafts are
connected with law and order, tax levy

law
co-
of khadi and the fact that spinning
services and prison services, services
security,
projects
of the traditional and unique position
forces, para military forces, police, fire
external
and
recommendations should not result in
whose
anyone losing even the half bread
decision will be final. At the same

time, we strongly urge that persons
that he or she is able to earn today.
employed in these sovereign tasks
Even so, we are equally keen that
are
anyone who does an eight hour job
also
adequately
protected,
including protection of their right to
gets a minimum wage.
form associations and unions as
made strong recommendations about
enshrined
the
minimum wages and said that all jobs
Constitution of India. We recommend
and any regional or state legislation
accordingly.
on minimum wage should not go
in
Article
19
of
385
We have
below the national minimum that
Labour laws. We recommend that any
Government may prescribe.
So, we
violation of a law or rules thereunder
cannot recommend exemption from
be treated as an offence, which must
the national minimum.
However, we
be made triable by a labour court
also do not want to recommend
which will have to be empowered for
anything that may lead to instant loss
the purpose. We also recommend that
of means of livelihood for large
any offence that is not merely a
numbers of persons.
We, therefore,
violation of labour laws but also a
recommend that the KVIC reviews it
violation of basic human rights should
remuneration system to reach the
attract more stringent punishment.
level of the prospective or prescribed
This category of offences will include
national
engagement
minimum
as
soon
as
of
child
labour,
possible, within five years at the
discrimination between men and
latest; that the KVIC ensures that its
women workers in matters of wages/
activities are confined to facilitation
remuneration, opposition to the
and sale-purchase, and as far as
formation of trade unions by workers
possible organised on the basis of
in the establishment, recourse to
cooperatives; that its system of
bonded labour and others i.e. all
remuneration does not lend itself to
those where basic human rights are
the
infringed.
description
of
wages
and
employment; that it adjusts its piece

rates for hours of work to reach the
6.137 On the other hand, there are
relation that is being prescribed with
technical offences, such as non
time rates; that the workers whom it
maintenance
serves or organises have access to a
furnishing of returns and the like, for
security system that is equivalent to
which
what is available to workers in small
compounding; such compounding
scale industries with 19 or less
may be permitted, provided it is
workers or that prescribed for workers
approved at an appropriately senior
in the unorganised sector.
level in the administration. We also
law
of
may
registers,
provide
non
for
recommend that at least 75% of the

6.136 We have not, in the earlier
proceeds of such compounding be
parts of our Report, made any
credited to an appropriate welfare
recommendations on the penal part of
fund for being used for the benefit of

386
workers. It may also be provided that
salaries without work because there
a subsequent offence of the same type
was no infrastructure for discharging
by an employer will not be allowed to
their duties. These observations were
be compounded, but will invite double
made by the Chief Justice while
the penalty in addition to imposition of
hearing a Public Interest Litigation
fine for each day of continuance of
(PIL) from Ranchi Labour Lawyers
offence or infringement.
Association against the Governments

failure to even provide premises for
6.138 We also recommend that where
Labour Courts. Given the number of
in the case of an offence coming up
cases pending in labour courts/
for hearing it becomes necessary for
industrial
the complainant worker to attend
necessary to devise methods by which
hearings more than once, the worker
cases get disposed of with reasonable
must be reimbursed for loss of wages
dispatch. The suggestion in the earlier
and expenditure incurred by him for
paragraph to compensate the worker
travel etc., in respect of the second
for loss of wages and expenditure
and subsequent hearings, unless the
incurred by him, in respect of the
complainant-worker is at fault. Such
second and subsequent hearings will
payments may be either recovered
hopefully expedite matters. Further, a
from the employer and paid to the
provision may be made in the laws
worker, or in the alternative, the
that all cases must be disposed off in
expenditure may be borne by the
a span of three hearings, and where
state.
this is not possible, the labour court
tribunals,
it
becomes
should in its award give reasons for

6.139 We also consider it necessary
taking more hearings. In the scheme
to look into the problems or delays in
of adjudication the hierarchy, namely,
labour courts/industrial tribunals.
labour courts and Labour Relations
Very recently, the High Court of Ranchi
Commissions, that we have proposed,
delivered severe strictures on the
the Labour Relations Commissions
Chief Minister of Jharkhand for the
may also be entrusted with the
state of Labour Courts and Tribunals in
responsibility to assess the work of
the State. The Chief Justice said it
the labour courts, particularly in the
would withdraw judges from Courts
matter of expeditious disposal of
(Labour Courts) as they were drawing
cases. With the constitution of an All

387
India Labour Judicial Service that we
only on a complaint (a) made by or
are recommending in the succeeding
with the previous sanction in writing
paragraphs, we hope that we will have
of the Director General or the Chief
a dedicated and competent set of men
Inspector; or (b) made by an office
and women as presiding officers of
bearer of a voluntary organisation
labour courts who will be able to
registered
discharge
Registration Act, 1860; or (c) made
their
responsibilities
under
the
Societies
by an office bearer of any concerned
efficiently and expeditiously.
trade union registered under the

6.140 We
have
looked
at
Trade Unions Act, 1926.
the
provisions in several labour laws
6.141 Thus we see that there is a
regarding the sanction of prosecution
progressive liberalisation in the law
and taking cognisance of offences.
and we would recommend that the
Generally it is the inspector alone who
right to file a complaint in the court of
can file a prosecution, and only a
competent
magistrate of First class who can take
in the person aggrieved or an office
provisions. In the Equal Remuneration
bearer of a trade union of which the
Act, 1976, it is provided in section
aggrieved person is a member
12(2)(b) that cognisance can be taken
or in a recognised welfare institution
of a complaint made by the person
or organisation. Where a vexatious
aggrieved by the offence or by any
malicious or flippant complaint has
recognised welfare institution or
been made, the complainant may be
organisation. Section 16 (1) of the

(Prohibition
be
an officer authorised for the purpose,
we see a certain relaxation of such
Labour
may
vested, in addition to an inspector or
cognisance of the complaint. Latterly
Child
jurisdiction
visited with a stringent fine.
and
Regulation) Act 1986 enables any
6.142 We also recommend that all
person, police officer or inspector to
Rules and Regulations under the law
file a complaint of the commission of
must be first published as draft Rules
an offence under the Act. Section 54
or draft Regulations, giving a period
of the Building and other Construction
of ninety days for comments, and
Workers (Regulation of Employment
must be finalised only after the
and Conditions of Service) Act 1996,
comments, if any, received within the
provides for cognisance to be taken
stipulated period are examined.

388
6.143 We have so far dealt with
subject in detail). Essentially, labour
issues with reference to only Central
administration in India consists of
laws. Excepting for some passing
implementation
references to Shops and Establish-
though we recognise that the labour
ments Acts and Welfare Fund Acts of
administration may consist of non-
States, we have not examined the
statutory activities like workers
State laws in any detail. There is, no
education, craftsmans training other
doubt that such an examination would
than the Apprentices Act, and so on.
have enhanced the value of our
Though labour administration is the
Report. We consider that having
executive arm of the State, we would
looked at all issues - employment
like to see the administration as the
relations, wages, welfare, safety and
guide, philosopher and friend of both
health, working conditions and social
workers, and their organisations, and
security - in a macro context i.e. at
employers and their organisations,
the level of the whole country, our
rather than be a policeman, finding
recommendations can validly apply to
faults and prosecuting parties. It
situations in all the States. Further,
becomes necessary therefore not to
where a State considers it necessary
judge
to legislate for an issue or problem
functionary
which it considers unique and peculiar
administration merely on the basis of
to its area, it can have a legislation on
the number of inspections carried out,
the subject, subject to what is
number of defects noticed, number of
contained in the relevant articles of
prosecutions launched, percentage of
the Constitution. We would only urge
success in these prosecutions and so
that when a State goes in for special
on.
legislation,
the
orientation and training to the
have
functionaries at all levels. Equally it
it
observes
recommendations
that
all
we
incorporated in our report.
the
This
of
labour
laws,
performance
in
calls
the
for
of
labour
appropriate
becomes necessary to expose the

functionaries at various levels to the
6.144 We think it is proper and
changing situation, occasioned by
necessary that we devote here some
globalisation,
attention to the subject of labour
privatisation, all of them demanding a
administration (we have devoted a
high level of competitive performance
separate chapter which deals with the
and ever increasing productivity.

389
liberalisation
and
Despite the emphasis we have laid in
and other institutions to assist state
our Report on diminishing the role of
governments in this effort.
the State qua state, what we have
that the V.V. Giri National Labour
stated
Institute will take the lead in this
above
vis--vis
labour
and
We hope
administration is valid. We therefore,
regard,
along
with
other
strongly recommend that every large
institutions,
help
the
State
State and groups of small States set
Governments in their efforts to
up Institutions for training and
transform the calibre of labour
research in labour matters to which
administrators.
labour administration functionaries

can be sent from time to time, for in-
6.145 While on the subject, we
service training, refresher training and
would also recommend that the law
so on. We emphasise the need for
may provide for bipartite committees
such institutions to develop research
or tripartite committees to be set up
capabilities too, as such research will
in
aid the training programme, and vice
commercial activities to function as
versa. These institutions should also
watchdogs to ensure the implemen-
develop into resource centres with a
tation
sound statistical base. We do not want
establishments and to bring to the
these institutions to be a mere arm of
notice of the administration any cases
the government but want them to be
of violation. Such committees may be
endowed with sufficient autonomy.
set up even at the level of local
Such institutions already exist in some
bodies including Panchayats. As a
States though not endowed with the
watchdog from within, we think that
kind of autonomy that we would like
these bodies would be in a good
them to have but we want them in all
position to know which establish-
states or groups of states, equipped
ments do or do not follow the laws,
with a good library, up-to-date
and to what extent. Such a step
computer
and
would also, in our view, facilitate the
computerised data and so on, and
formation of strong and viable
manned
organisations
equipment
by
persons
with
both
areas
of
of
industrial
labour
of
laws
and/or
by
workers
the
and
employers at various levels.
academic credentials and labour

administration experience. We want
6.146 One of the issues that merit
the V.V. Giri National Labour Institute

390
consideration in the administration of
our scheme of things, the labour
labour laws is whether there must be
relations commissions have multiple
compulsory
all
duties including the important task of
such
identifying collective bargaining/
registration is feasible, and is provided
negotiating agents. We have also
for in respect of factories, plantations,
suggested that all matters in the
motor transport undertakings and so
labour field needing adjudication, be
on, the task becomes stupendous
it a labour-management dispute
when we come down to shops and
(except collective disputes) or a
establishments
the
workmans compensation claim or
establishments covered under the
disputes arising out of and relating to
Minimum Wages Act. The Commission
coverage of labour laws or disputes
has carefully examined this, and is of
relating to social security and the like,
the view that while it is tempting to
will have to be determined by the
recommend
the
labour courts at the lowest level, with
establishments including even those
appeals to the Labour Relations
where the number of employees is
Commissions. Collective disputes
one should be registered, it is
between the negotiating agent and
expedient
registration
employer, if not resolved bilaterally or
compulsory initially only for all
in conciliation should be dealt with by
establishments employing ten or more
appropriate
workers, and to progressively reduce
Commission if the parties do not
the employment limit to five in due
agree for arbitration. This will need
course. Provision could also be made
considerable increase in the number
for the renewal of registration once
of labour courts in the first instance,
every five years. A nominal fee may
particularly
be charged for registration and for
recommended that labour courts be
renewal. We recommend accordingly.
vested with magisterial powers to try
registration
establishments.
While
and
that
to
of
make
all
all
Labour
when
Relation
we
have
cases relating to offences under the

6.147 We have earlier recommended
labour laws. The setting up of labour
an integrated labour judiciary system,
relations commissions also increases
with labour courts at the base and
the demand for high-level labour
with State/Central/National Labour
adjudicating functionaries. All these
Relations Commissions at the top. In
compel us to recommend an All India

391
Labour Judicial Service which in the
charge of Labour administration need
new dispensation will be viable and
some specific skills and attitudes, and
necessary.
aptitudes to which we have made
We
recommend
accordingly.
reference. Some of these have to be

identified and developed. Considering
6.148 Equally important in our view
all this we recommend the setting up
is the need for constituting an All
of such an All India Service.
India Labour Administrative Service.

Labour being in the concurrent list of
6.149 Lastly,
the Constitution, the advantages of
paramount need for generating
such a service, which will also enable
employment, employment of the
exchange of officers between the
decent work type. Labour laws have
Centre and the States, are obvious. It
often
must be recognized that the bulk of
stumbling blocks in the creation of
the labour administration in the States
employment, and we hope that what
and union territories relates to
we have recommended in the above
implementation and enforcement of
paragraphs will not lead to such an
labour laws which are centrally
accusation. Even so, we would urge
enacted. Though there may be some
that the feasibility of generating
State level amendments to some of
further employment through all
these laws, the main provisions of
practical means including systems of
these laws are common to all States
tax incentives be examined.
and union territories.
been
we
refer
accused
to
of
the
being
We are of the
view that if all the posts of the labour
6.150
department of and above the rank of
time at our disposal, we have
Dy. Labour Commissioners/Regional
attempted to make a draft of what a
Labour Commissioners at States and
comprehensive
Centres are included in the service
Management Relations, as visualised
and also senior level appointments
in this Chapter would look like. It is
such as Executive Heads of Welfare
obvious that for various reasons,
Funds, Social security administration
including the absence of technically
and so on, there will be an adequate
competent legal experts, we have not
number of posts justifying such a
put the draft in the shape and
service.
terminological precision that a piece
Moreover, those who are in

392
In spite of the paucity of the
Law
on
Labour
of
legislation
should
have
for
at a word-by-word agreement. Even
introduction in the Parliament. Since
so, it has been drafted incorporating
the draft could be made ready only
the recommendations in the Chapter,
towards the very end of our work, it
more to provide an approximate
could not be vetted in a sitting of all
picture
the Members. It should, therefore, be
visualised than to propose a cut and
taken as our indicative draft, not one
dried piece of legislation.
on which the Commission has arrived
393
of
the
system
that
is
APPENDIX - I
MODEL STANDING ORDERS
(For establishments employing 20 or more but less than 50 workers)

1.
Classification of Workers
(1)
Workers shall be classified as: (i)
Permanent: - A worker who has been engaged on a permanent basis

or who has satisfactorily completed his probation period.
Provided that if no appointment letter is issued or where the worker
has been appointed on probation no letter of confirmation is issued
at the end of the probation period, the worker shall be deemed to
be a permanent worker.
(ii)
Probationer: - A worker who has been employed to fill a permanent

vacancy but is on trial.
Provided that period of probation shall be one year which may be
extended by three months at a time so, however, that the total
period of probation shall in no case exceed eighteen months.
Provided further that if the employer fails to issue the letter of
confirmation after the maximum period mentioned in the first
proviso the worker shall be deemed to have been confirmed.
(iii)
Temporary: - A worker who is engaged for a fixed term for work

which is temporary or for temporary increase in normal work.
(iv)
Apprentice: - A person appointed under the provisions of the

Apprentices Act, 1961.
394
(v)
Trainee: - A person appointed for the purpose of being trained

provided that such worker shall be paid at the same rate as a
temporary worker.
(vi)
Badli : - A person who is appointed to work in the place of a regular

or temporary worker who is on leave of absence.
(2)
Every worker shall be issued token number or identity card containing his
name, his fathers name, address, name of the establishment where he
is employed, his designation, and classification such as permanent,
probationer and so on.
2.
Appointment Letter
(1)
Every worker shall be issued appointment letter containing the following

details:
(i)
Name of the Worker
(ii)
Fathers name
(iii)
Residential Address Local & Permanent
(iv)
Designation
(v)
Date of appointment
(vi)
Classification
(vii) Terms of Appointment

(viii) Nominee for Social Security purposes
(2)
The letter of appointment shall be issued by a person duly authorised in

this behalf by the employer.
3.
WORKING HOURS
(1)
The working hours of the establishment shall be ______ to ______ (here

give details of the timings of the establishment and also of the worker)
and any change in this regard shall be communicated to the worker 24
hours in advance.
395
(2)
All workers shall be at work at the time fixed and notified.
Workers
attending late would be liable for deductions of wages.

(3)
For the work, beyond normal working hours overtime wages shall be paid
to the workers as prescribed in the Law on Hours of Work, Leave & Other
Working Conditions at the Workplace at double the rate of his normal
wages, on a hourly basis.
4.
Shift Working
Workers may be required to work in shifts, provided that no worker shall be
required to work continuously for more than fifteen days in the night shift.
5.
LEAVE
(1)
Every worker who has worked for 240 days or more shall be allowed
during the subsequent calendar year one days earned leave with wages
for every 20 days work in case of all establishments above ground and
one days earned with wages for 15 days work in case of a worker working
in a mine where the work is carried on below ground, provided that the
employer may allow leave on a pro rata basis to the workers even before
the completion of one year.
(2)
A worker who desires to go on leave shall apply to the employer or any

other officer of the establishment specified by the employer who shall
issue orders on the application within a week of its submission or two
days prior to commencement of leave applied for and where the leave
application is made three days before its commencement, the order shall
be given on the same day and if the leave is refused or postponed, the
fact of such refusal or postponement shall be recorded in writing in the
register to be maintained for the purpose and the worker shall be supplied
with a copy of the entry made in the leave register. If the worker desires
an extension thereof he shall apply to the employer or to the specified
officer who shall send a written reply either granting or refusing extension
of leave to the worker at his address maintained in the record or given
in the original application for leave.
396
(3)
If the worker remains absent for more than 10 days beyond the period
of leave originally granted or subsequently extended he shall lose the lien
on service
unless he explains to the satisfaction of the employer his
inability to return before the expiry of his leave.

6.
Casual Leave and Sick Leave

(1)
Every worker shall be allowed 8 days casual & sick leave in a year.
(2)
Casual leave shall not be granted for more than three days at a time
except in case of sickness. The casual and sick leave is intended to meet
special circumstances which cannot be foreseen. Ordinarily previous
permission of the employer or the Head of the Department or Section
shall be obtained before availing such leave and where the same is not
possible the Head of the Deptt. shall be informed as soon as is
practicable.
7.
Festival Holidays
Every establishment shall observe 8 holidays in a year, out of which 3 would
be National Holidays, i.e. Republic Day, Independence Day & Gandhi Jayanti
and the remaining holidays shall be declared every year and notified to the
workers by displaying the same on the notice board.
8.
Attendance
All workers shall be at the workplace specified for them and shall not leave the
place of work without permission during working hours or without sufficient
reasons and any unauthorised absence shall be treated as absence liable to
deductions being made from the wages pro-rata to the period of absence.
397
9.
Stoppage of Work
The employer may in the event of breakdown of machinery, stoppage of power
supply, raw material or for any other reason stop the working of the
establishment and in the event of such stoppage the workers shall be notified
by notice put up on the notice board. The workers shall be required ordinarily
to remain within the establishment after commencement of stoppage for not
more than 2 hours unless the employer has declared the lay off. In the event
of lay off or if they are not required after remaining 2 hours in the
establishment they shall be paid the lay off compensation. In case the lay off
continues for more than 45 days the employer may retrench the workers as per
law on the subject.
10. Termination of Service

(1)
For termination of employment of a permanent worker a one months

notice shall be required to be given either by the employer or the worker
or either party may make payment of wages for one month in lieu of the
notice period.
(2)
No notice shall be required by either side for termination of employment

of a temporary, probationer or a badli worker unless the termination is on
account of misconduct.
(3)
Where an employment of any worker is terminated or he or she quits, the

wages earned by him or her and the other dues shall be paid before
expiry of 48 hours of termination or as the case may be quitting of
employment.
11. Discipline, Misconducts and Disciplinary Action

(1)
All workers shall perform the duties entrusted to them by the

management from time to time.
(2)
All workers shall maintain discipline in the establishment and with respect
to the work of the establishment.
398
(3)
The following is an illustration of acts or omissions which shall be treated

as misconduct: (a)
Wilful insubordination or disobedience, whether alone or in

combination with others, to any lawful and reasonable order of a
superior.
(b)
Theft, fraud or dishonesty in connection with the employers

business or property.
(c)
Wilfull damage to or loss of employers goods or property or to the

work in progress.
(d)
Taking or giving bribes or any illegal gratification.
(e)
Habitual absence without leave or absence without leave for more

than 10 days.
(f)
Habitual late attendance.
(g)
Habitual breach of any law applicable to the establishment.
(h)
Riotous or disorderly or violence behaviour during working hours at

the establishment or any act subversive of discipline.
(i)
Habitual negligence or gross neglect of work.
(j)
Resorting to go-slow or work to rule.
(k)
Striking work or inciting others to strike work in contravention of the

provision of any law, or rule having the force of law.
(l)
Conviction in any Court of Law for any criminal offence involving

moral turpitude.
(m) Drunkenness, fighting or riotous, disorderly or indecent behaviour

while on duty at the place of work.
(n)
Failure or refusal to wear or use any protective equipment given by

the employers.
399
(o)
Failure to comply with norms relating to safety or working in a

manner which is likely to cause an accident.
(p)
Causing sexual harassment to female workers.
(q)
Sleeping on duty.
(r)
Malingering or slowing down the work.
(s)
Leaving work without permission or sufficient reason.
(t)
Threatening or abusing or assaulting any superior or co-worker.
(u)
Preaching of or instigating others to resort to violence.
(v)
Going on illegal strike either singly or with others.
(w)
Disclosing to any unauthorised person of any confidential

information in regard to the working or process of the establishment
which may come into the possession of the worker in the course of
his work.
(x)
Refusal to accept any order or notice or any communication in

writing.
(4)
No order of punishment under the Standing Orders shall be made unless

the worker concerned is informed in writing of the alleged misconduct and
is given an opportunity to explain the allegations made against him. A
departmental inquiry shall be instituted before dealing with the charges or
awarding any punishment.
(5)
Where a disciplinary proceeding against a worker is contemplated and

where the presence of such worker is likely to, in the opinion of the
employer, create indiscipline or jeopardise the investigation into alleged
misconduct, the employer may suspend the worker pending enquiry.
Provided that during the pendency of suspension, the worker shall be paid
subsistence allowance at the rate of 50% of the wages for the first three
400
months and 75% wages thereafter and if after enquiry, the charges
levelled are not proved, the worker will be entitled to full wages.
Provided further that if the delay in completion of proceedings and
enquiry into misconduct is attributable to the worker the subsistence
allowance shall not exceed 50% of his wages.
(6)
Where a worker is found guilty of misconduct after an enquiry, the

employer may warn the worker or impose the punishment of suspension
without wages for a period of not exceeding 15 days or stoppage of
increments or demotion or termination or dismissal from service
depending on the gravity of the misconduct.
Provided that no such punishment shall be imposed without giving an
opportunity to the worker to explain his position except if he or she is only
warned.
(7)
If a worker is arrested on charge of offence relating to moral turpitude,

the employer may suspend the worker without pay till such time the
worker is honourably acquitted and where the worker is held guilty and
sentenced, the employer may terminate the services of such a worker.
12. Payment of Wages

(1)
The employer shall specify a wage period and the date on which wages
shall be paid, provided that no wage period shall exceed one month.
(2)
Wages to monthly paid workers shall be paid by the seventh day of the
succeeding month and in other cases as per provisions of Wages Act.
401
13. Transfer
Every worker shall be liable for transfer from one department to another and
from one unit to another provided such units are under the same management.
14. Retirement
A worker will be liable to retirement on attaining the age of superannuation,
i.e. 58 years.
Provided that a worker may be retired earlier on medical grounds.
15. Certificates on Termination of Service
Every permanent worker shall be entitled to a service certificate at the time of
his dismissal, discharge, resignation or on termination of employer - employee
relationship for any other reason or retirement from service.
16. Providing a Copy of Standing Orders to the Workers
A copy of these Standing Orders shall be given to every worker along with the
appointment letters.
402
APPENDIX - II
THE SMALL ENTERPRISES

(EMPLOYMENT RELATIONS ) ACT 2002
An Act to regulate the employment in small enterprises.

WHEREAS it is expedient to consolidate and amend the laws relating to regulation
of employment in small enterprises and for certain other purposes hereinafter
specified, it is hereby enacted as follows:
CHAPTER I
Preliminary
1.
Short Title, Extent, Commencement and Operation

(1)
The Act may be called The Small Enterprises (Employment Relations) Act
2002.
(2)
(3)
It extends to whole of India

It shall come into force on or from the date notified by the Central
Government in this behalf.
(4)
It shall apply to all establishments or enterprises in which not more than

19 workers are employed.
Provided that nothing in this Act shall apply to an establishment of a
Government.
2.
Definitions: In this Act unless there is anything repugnant in the subject or

context
(1)
Appropriate Government in respect of an establishment under this Act

shall mean the Government of the State in which the establishment is
situated
403
(2)
Charitable institution: A Charitable institution means an institution

which is established for the purpose of charity to any living being or
formed for not any profit motive or formed for the welfare of living beings
or for preservation of environment or of heritage or for religious
purposes.
(3)
Child: Child means a person who has not completed his 14th year of age
(4)
Day: Day means a period of 24 hours beginning at mid night.
(5)
Worker: Worker means a person who is wholly or principally employed

directly for wages or reward in connection with the work of any small
enterprise or establishment to which this Act applies but does not include
a supervisor or manager.
(6)
Employer: Employer means an owner or who has the ultimate control

over the affairs of the small enterprise or establishment.
(7)
Establishment: An establishment or enterprise means manufacturing

(except of hazardous nature), or mining (except underground mining)
activity, plantation, construction, service, transport or other enterprises
and include hospitals, dispensaries, nursing homes, restaurants, eating
houses, hotels, shops and establishments, charitable, research, training
and educational institutions, consultancy and solicitors or lawyer
organisations and other professions such as C.As., Architects, etc.
(8)
Factory: A factory means a place where any manufacturing process is

carried on and wherein not more than 19 workers are employed.
(9)
Hotel: Hotel means any premises in which business is carried on for the
supply of dwelling accommodation and meals on payment of a sum of
money by a traveller or any member of the public or a class of the public
and includes a club.
(10) Inspector: Inspector means a person appointed as inspector by the

Government for securing the compliance of this Act, and the Chief
Inspector and the Dy. Chief Inspector mean the Chief Inspector and the
Dy. Chief Inspector of small enterprises appointed under this Act.
404
(11) Restaurant:
Restaurant means any premises in which is carried on
wholly or principally the business of the supply of meals or refreshment

to the public or a class of the public for consumption on the premises.
(12) Shop: Shop means any premises where goods are sold, either by retail
or wholesale or where services are rendered to customers, and includes
an office, a store-room, godown, warehouse or workhouse or work place,
whether in the same premises or otherwise, used in or in connection with
such trade or business but does not include a factory or commercial
establishment.
(13) Weekly Off: Weekly Off means a day on which a worker shall be given
a holiday under the provisions of this Act.
(14) Wage: Wage means the basic wage, dearness allowance, city
compensatory allowance or house rent allowance or overtime wages or
wages for leave period or bonus.
(15) Young Person: Young person means a person who has not completed
his eighteenth year of age.
(16) The terms used in this Act but not defined shall have the same meaning
as assigned in the relevant laws.
Chapter II
Registration of Small Enterprises
3.
Procedure for Registration.
(1)
Within 30 days of commencement of this Act, every employer shall furnish an

affidavit on a non-judicial stamp paper of Rs. 10/- to the Chief Inspector or Dy.
Chief Inspector of the State appointed for the area or district where the small
enterprise is located along with the information in Form A appended to this
Act and the fee for registration of his establishment.
405
(2)
The affidavit shall contain the name and address of the employer, the name
and address of small enterprise and such other information as may be
prescribed and an undertaking that information furnished by him in the Form
is correct to his knowledge and belief and nothing material has been concealed.
(3)
A fee as may be prescribed shall be payable by an employer along with affidavit

filed by him for seeking registration.
(4)
If an employer seeking registration under this Act has furnished the

information and fee as required in Sections (1) to (3) above, the Chief
Inspector shall forthwith issue the certification of registration and make an
entry in this behalf in a register maintained for the registration of small
enterprises and If at any time any change occurs subsequently in the
information submitted by an employer along with the affidavit, the same shall
be intimated by the employer within 30 days of occurrence of such change by
a written communication by the Chief Inspector.
(5)
A registration granted under Section (4) shall be valid for five years and the
registration may be renewed by following the procedure provided in Section (1)
to (3) by making an application within 30 days before the expiry of registration
and if an employer fails to make an application before 30 days of expiry of the
registration his registration may be renewed provided he pays double the fee
for registration prescribed in Sub Section (3).
Chapter III
Conditions for Employment of Certain Persons
4.
Prohibition of Employment of Children: No child below the age of 14 years

shall be permitted to work in any establishment and a young person who has
completed 14 years but not completed 18 years of age may be employed after
he has been declared fit by a qualified medical practitioner. In mining
establishments any person who has not completed 18th years of his age shall
not be employed.
5.
Non-Discrimination against female workers

The female workers shall not be discriminated against in matters of
recruitment, training, transfers or promotions.
406
Chapter IV Conditions of Work

6.
Health
(1)
Every employer shall ensure to keep the enterprise clean and free from harmful
material including gases, dust and fumes. He shall ensure that there is no
overcrowding and there is proper light and ventilation at the place of work and
shall provide facilities such as toilets, drinking water and for washing either
individually or collectively.
(2)
He shall ensure disposal of wastes and effluents properly and in case he is not
able to arrange the disposal of wastes and effluents by himself he shall with
the cooperation of other enterprises in the same area take effective steps for
disposal of wastes and effluents.
(3)
The State Government may provide facilities for toilets common for a cluster
of shops or establishments by seeking cooperation of local bodies.
7.
Safety
(1)
Every employer of the enterprise where manufacturing, construction or

mining activity is carried on shall ensure the following safety measures
at the work place
(a). Every employer shall ensure that all moving parts of the machines
are properly secured, fenced and guarded.
(b). Every employer shall ensure that Lubrication or adjusting operation
or mounting or shipping of belts and other hazardous work near or
on the machinery in motion is not allowed except by a specially
trained male worker and proper care of the safety of the operator
is taken.
(c). Safety measures in respect of the hoists, lifts, chains, ropes and
tackles shall be taken wherever the same are used and it shall be
ensured that they are of good mechanical construction and safe for
working at the rated capacity.
407
(d). Young persons are not allowed to work on dangerous machines or

engaged in actual mining of the minerals.
(e). The equipment using/operating at more than atmospheric pressure
shall be ensured to be safe for working.
(f).
Wherever there is danger of injury or irritation taking place to the

eyes of the operator/worker proper protective equipment shall be
provided to prevent the eye injury.
(g). In mining activity the working is done by making benches of not

more than 6 metres height from the superjacent ground.
(h). In case of construction work proper scaffolding is provided where
the construction of building is being done at the height of 6 ft. or
above and in roofing no substandard material shall be used.
(2)
Every Employer of the enterprise shall ensure that

(a)
Necessary fire-fighting equipment and arrangements for the safe

exit of the persons employed in the event of the fire is provided.
(b)
First aid facilities within the enterprises and the medical care in
case of accidents requiring immediate medical attention is provided.
(c)
Where in any enterprise an accident occurs resulting in death or

bodily injury to any person which prevents the concerned person
from working for a period of 48 hours or more, the same shall be
reported by sending a notice to the Deputy Chief Inspector in form
E with a copy to the Commissioner for Workmens Compensation.
8.
Application of Factories Act and Other Laws:

The Factories Act and other relevant laws shall apply to small enterprises
wherever storage and handling of hazardous acids, chemicals, gases or
explosives material is involved.
408
9.
Welfare
(1)
The employer shall provide shelters/rest rooms/lunchrooms for the

workers if employing 10 or more workers.
(2)
In case of a cluster of establishments the employer may in cooperation

and combination with other employers in the area take steps to provide
measures for the welfare of the workers such as latrine and urinals,
canteen, crche for the children below the age of 6 years of the women
workers and a local dispensary or hospital for the immediate medical care
of the workers.
10.
Hours of Work
(1)
No adult worker shall be required to work for more than 48 hours in a

week and 9 hours in a day and no worker shall be asked to work
continuously for more than 5 hours unless he has been given a break of
not less than half an hour provided that limit of working hours or of
weekly rest may be relaxed in case of urgent repairs.
(2)
The total number of hours of work including the rest interval shall not
exceed 10 and in case a worker is entrusted with intermittent nature
of work, urgent repairs and for shops the spread over shall not exceed
12 hours.
(3)
Women workers shall not be asked to work normally between 9 pm and

6 am and during these hours women workers can be asked to work only
if not less than five women are working during this period at the
workplace and the employer takes proper steps for the security of the
women workers and provides a transport from the place of work to their
residences.
(4)
The total number of hours of work including overtime shall not exceed
60 hours in a week.
409
11.
Annual Leave & Holidays

(1)
Every worker shall be allowed a weekly holiday with wage for the whole
day as may be fixed by the employer in respect of the worker and any
change in the weekly holiday shall be notified to the worker at least a day
in advance provided that State Government may fix different days as
weekly holidays for different establishments or areas.
(2)
Every worker shall be entitled to eight days casual and sick leave with
wages every year.
A worker who has joined after 1st January shall be
entitled to casual leave pro-rata.

(3)
Every worker who has worked for at least 240 days in a calendar year
shall be entitled to 15 days earned leave in the following calendar year
and a worker who has put in less than 240 days work in the previous
calendar year shall be entitled to earned leave proportionate to his
attendance.
(4)
A worker shall be permitted to accumulate leave upto 45 days in addition

to the leave entitlement of the current year earned on the basis of the
work done by him in the previous year and he shall be entitled to
encashment of entire accumulated earned leave including leave earned
during the current year pro rata in case his services are terminated or he
quits the service.
(5)
A worker shall be entitled to three holidays in a calendar year, namely,

Independence Day, Republic Day and Gandhi Jayanti.
Chapter V
Wages, Bonus and Social Security
12.
Wages
(1)
The State Govt. may fix the minimum rates of wages in respect of the
enterprises covered under this Act. The Minimum Wages may be fixed
area wise if required and the minimum wages shall be revised once in
410
five years. However, the State Govt. may declare DA twice a year on the
minimum wages. All the minimum wages shall be fixed or revised after
consulting the committee or an advisory board set up in this behalf for
the purpose and any contract or agreement whereby a worker agrees to
work for less than minimum wages shall be void ab initio.
(2)
A female worker shall be paid same wages as are paid to a male worker
if the work performed by the female worker is same or similar as that
performed by the male worker.
(3)
Nothing shall prevent the employer from paying better wages than the
minimum fixed by the State Government by mutual agreement with the
workers.
13.
Payment of Wages and Deductions from Wages

(1)
Every employer, manager or occupier shall be responsible for payment of

wages to all person employed by him before the expiry of the 7th day after
the completion of the wage period.
(2)
No wage period shall exceed one month.
(3)
All the wages shall be paid in current currency and coin and it may be
paid by cheque drawn in favour of the worker or by transfer to his
account in the bank.
(4)
All wages shall be paid on a working day during the working hours and
every employer shall issue a wage slip to every worker containing the
wage period, name, token number, designation, number of days worked
or units produced, gross wages payable, deductions and net wages
payable at least 24 hours in advance.
(5)
The wages of a person whose employment has been terminated shall be

paid before the expiry of the second working day after the day on which
his employment is terminated.
411
(6)
Where a worker has worked for more than 48 hours in a week or 9 hours
in a day the employer shall pay extra wages at the rate one and half
times of the ordinary wages and where the total hours worked by an
worker exceeds 9 hours in a day and 56 hours in any week the wages
for the hours of work put in by the worker above 56 hours he or she shall
be paid at the rate of twice his ordinary wages.
(7)
The employer shall keep a record of all wages paid by him to his workers
including the signature/thumb impressions obtained by him while making
the payment of wages. Such records shall be maintained for a period of
three years.
(8)
Deductions may be made from the wages or bonus payable to workers

on account of the following: (a)
For absence from duty in proportion to the period of absence (in

terms of hours or days).
(b)
For causing loss or damage to the property of the employer

specifically entrusted to him and in such a case the employer shall
issue a prior notice to the worker and give him an opportunity to
be heard.
(c)
For recovering the instalments of loans or advances given by the

employer to the worker.
(d)
On account of subscription of the worker towards social security

under this Act or subscription to any welfare fund constituted by the
state govt.
(e)
On account of Income Tax or any other tax payable by the worker

to the extent the employer is responsible to recover the same from
the worker from his wages under the relevant tax law.
(f)
The cost of any amenity such as electricity or water supplied at the

residence of the worker by the employer or the rental of
accommodation provided by the employer.
412
(g)
The subscription or recovery of loans/advances of any cooperative

credit and thrift society or cooperative store or any other
cooperative for which the worker has authorised the employer.
(h)
Any donation to Prime Minister Relief Fund or any other relief fund
if so authorised by the worker.
(i)
Any subscription made by the worker to a union if so authorised by

the worker.
(9)
The employer shall ensure that the recoveries/deductions from wages of

workers are so arranged that a worker receives at least 50% wages in
cash after such recoveries or deductions.
14.
Bonus
(1)
Every worker who has put in at least 90 days work in a calendar year
shall be entitled to annual minimum bonus at the rate of 8.33% of wages
earned by him during the previous year.
(2)
The bonus will be disbursed to the workers within three months from the
close of the accounting year of the enterprise and where the workers
desire that the same may be paid to them at the time of mutually agreed
festival the employer shall pay the bonus at the time of the festival.
(3)
An enterprise which has not been established with a view to make profits
and which is in the nature of charitable or religious institution,
educational training and research institutions, a construction
establishment shall be exempt from payment of bonus.
(4)
Any new establishment will be exempt for first three years from payment
of bonus.
(5)
A worker who has put in 90 days or more but has not worked for all the
days worked by the establishment in the previous calendar year shall be
paid bonus proportionately to the wages earned by him during the
calendar year.
413
(6)
The salary limit for eligibility or for calculation of bonus as prescribed in

the general law shall apply to small enterprises.
15.
Recovery of unpaid wages, illegal deductions etc.

(1)
Where a worker (including a worker who has been retrenched, removed/

dismissed or who has resigned) has not been paid wages on the due
date, or has been paid less wages than that are payable as per this Act
or has not been paid over time wages, leave wages, bonus, retrenchment
compensation or any other dues by his employer he may himself or a
union of which he is a member or an inspector appointed under this Act
may file a claim before the prescribed authority within a period of one
year from the date such unpaid dues became payable or came to be
detected and the application shall contain the name of the employer and
his address, the name and address of the enterprise, the name and
address of the manager if any, the nature of dues which are unpaid or
have been paid less, the period to which such dues pertain, or illegal
deductions if made from the wages and wage period to which the illegal
deduction pertain.
(2)
The authority shall immediately proceed to hear the claim by calling the
employer or the manager of the enterprise and the complainant and pass
an order rejecting or upholding the claim. Any person aggrieved by the
order of the authority may file on appeal before the Labour Court.
(3)
Where an authority upholds the claim either wholly or in part it shall

require the employer to make payment to worker and furnish proof of
making the payment or require the employer to deposit the amount by
cheque or demand draft of the amount ordered drawn in favour of the
worker with the authority.
(4)
If the employer fails to make payment as prescribed in Sub-Section (3)

the authority shall issue a certificate to the collector of the district who
shall recover the same and send it to the authority for payment to the
concerned worker.
414
(5)
The State Government shall designate one of the official of the Labour
Department not below the rank of an Asstt. Labour Commissioner to be
authority to hear the claim cases under this Section.
16.
Social Security
(1)
Every worker shall be entitled to following social security benefits

(a)
Medical Care for self and dependents
(b)
Compensation in respect of employment injury as prescribed under

the Workmens Compensation Act or according to law on social
security applicable to the worker.
(c)
Provident Fund equal to 8% of wages of employers and 8% of

wages as his own contribution plus interest and/or a pension at the
prescribed rate.
(d)
In case of a female worker the maternity benefit i.e. 12 weeks leave

with wages upto two surviving children.
(e)
Gratuity at the rate of 15 days of wages for every completed year

of service provided the worker has put in uninterrupted service for
at least five years provided further that the condition of completion
of five years shall not be necessary for receiving gratuity in case of
death or permanent total disablement of the worker.
(f)
Any other benefit such as unemployment insurance or pension, as

may be introduced under the social security law by the government.
(2)
The social security benefits mentioned at sub section (1) above will be
provided out of the fund consisting of contributions from the employer
@ 16% of wages paid by him to the workers, contributions by workers
@ 12 % of the wages and contributions equal to 2% of the wages by the
State Government.
415
(3)
The implementation of social security programme will be on the lines of

the recommendations made by the National Commission on Labour on
social security.
(4)
Till such time the new social security system is set up the present system
will continue.
Explanation 1- for the purpose of this section the dependents include the
spouse, dependant children below 18 years of age, dependant parents or
parents-in-laws, unmarried daughter and invalid children.
Explanation 2 Wages for the purpose of this section means the basic
wages and dearness allowance but does not include any house rent
allowance, C.C.A. or leave encashment money received from the
employers w/o actually availing the leave or any travelling allowance or
bonus or overtime wages.
Chapter VI
Lay Off, Removal from Service and Settlement of Disputes & Closure
17.
Lay Off:
An employer may lay off his workers for the reasons of
shortage of power, coal, raw material, accumulation of stocks, break

down of machinery, natural calamity or for lack of orders. He shall pay
to his workers lay off compensation at the rate of 50% of wages for the
period of lay off and unless mutually agreed a worker shall be entitled
to lay off compensation if he presents himself daily at the appointed time
at the gate of the enterprise/establishment. If the lay off continues for
more than 45 days , it shall be lawful for the employer to retrench the
workers.
18.
Separations/Removals from Service

(1)
An employer may dispense with the services of a worker who has been
in his employment for five years or more by giving one months notice or
wages in lieu of the same and by paying separation compensation
calculated @ 20 days wages for each completed year of service and a
416
worker who has not completed five years of service shall be entitled to
one-month notice or notice pay in lieu and separation compensation of
15 days wages for each completed year of service.
(2)
The employer may dismiss or remove the worker from service without
giving any notice or paying any compensation on account of proven
misconduct which may include absence from duty without notice or
without sufficient reasons for more than ten days, for going on or
abetting a strike which is illegal prima-facie or for grave violent behaviour
at the workplace or for causing wilful damage or loss to the property of
the employer or for misappropriation or theft.
(3)
A worker who is retrenched as per provisions of sub-section (1) or is

dismissed by the employer or resigns from service by the employer shall
be paid his wages and other dues if any and retrenchment compensation
within 48 hours of such retrenchment removal/dismissal or resignation.
(4)
If a dispute arises between the worker and the employer on account of

any condition of service excluding wages but including removal or
dismissal from service the same shall be resolved as under: (a)
The aggrieved worker will first approach his immediate superior

who in consultation with the head of the establishment will try to
resolve the grievance and give a suitable reply to the worker within
15 days.
(b)
If the worker is not satisfied with the reply received from the
immediate superior he shall make an application within 10 days to
the head of the establishment for personal hearing and on receipt
of such application the head of the establishment will give a
personal hearing to the worker and also give his decision, after
personal hearing within 10 days of making of application by the
worker.
(c)
In case the worker is not satisfied with the decision of the head of
the establishment he may approach the conciliation officer of the
417
appropriate Government within 45 days who shall hold conciliation

proceedings in the matter to resolve the grievance of the worker
and make efforts to resolve the same within three months.
(d)
If the conciliations fail the dispute shall be referred to a mutually

agreed arbitrator and where there is no agreement regarding the
appointment of an arbitrator, the appropriate Government shall
appoint the arbitrator who shall give his award within a period of
four months.
(5)
An aggrieved worker may be represented in any conciliation or arbitration

proceedings by a trade union registered under the general law, provided
such a union has at least 30% membership amongst the workers of the
establishment where such aggrieved workman is or was employed.
19.
Closure
Where an employer intends to close down his establishment he shall serve one
months notice to the workers before the intended date of closure or pay wages
in lieu thereof and he shall also have to pay compensation @ 15 days wages
for every completed year of service to his workers.
20.
Collective Disputes
(1)
Any collective dispute between the workers and an employer or

employers arising out of employment, non-employment, terms of
employment or conditions of labour of the workers may be settled
between the workers and the employer by negotiations between the
employer and the trade union if there is a union in existence in the
establishment failing which the employer or union may take the help of
conciliation officer of the state government for resolution of their
collective dispute.
(2)
If the collective dispute is not resolved bilaterally or in conciliation the

same shall be required by the employer and the workers to be referred
to a mutually agreed arbitrator.
(3)
The bilateral settlement will be valid for a period of four years or for a
period mutually agreed upon by the parties.
418
(4)
Where the dispute has been referred to an arbitrator the arbitrator shall
give his award within six months from the date of reference. If there is
no mutual agreement regarding appointment of the arbitrator the same
shall be appointed by the Appropriate Government.
(5)
In any collective dispute in a small enterprise the workers may be

represented in conciliation or arbitration proceedings by a union which
has at least 40% membership amongst workers of the establishment to
which such dispute pertains.
Chapter VII
Miscellaneous
21.
Registers/Records
(1)
Every employer shall maintain a register of workers, in form B, a register

of leave in form C and a register of muster roll cum wages in form D
which will also show the attendance put in by the workers during the
wage period, the total wage earned and the deductions made from the
wages of the workers.
(2)
The employer shall exhibit at a prominent place in his establishment in

the language understood by the majority of his workers, the notice/
notices containing information on registration number and date of
registration of the establishment, the hours of work and the weekly off,
the list of holidays, the wage period, the wages and allowances
payable to workers and the date of payment and the name and address
of the employer and the manager and name and address of inspector
under the Act.
(3)
Every employer shall submit a return to the authority with whom the
enterprise is registered within 30 days after the close of the calendar year.
The return shall contain the following information:
(a)
Name of the establishment and its complete address
419
(b)
Name and address of the employer
(c)
Name and address of the manager (if employed)
(d)
The nature of business, occupation, trade or industry
(e)
The date of commencement of the business, occupation, industry or

trade
(f)
Average number of persons employed including the break up of

male, female and young persons (above 14 years but below 18
years of age).
(g)
The number of man-days actually worked during the calendar year
(h)
The number of persons taken on rolls as new recruits during the

year
(i)
Number of persons whose services were dispensed with during the

year
(j)
The number of accidents that have taken place during the year
(fatal and non fatal)
(k)
The total wages paid to the workers during the year
(l)
Information on the strike or lockout if it has taken place or was

declared during the year under report and the period of strike or
lockout, the nature of loss of production and loss of wages to the
workers.
(m) Any other information as may be prescribed.

(4)
The employer shall issue an identity card to every worker employed by

him containing such details as may be prescribed.
420
22.
Self Inspection/Inspection
(1)
Every employer, within 30 days after the end of the calendar year shall
certify confirming in form F that all requirements of safety, health,
welfare and payment of wages have been complied with by him and the
certificate will be sent by the employer to the Dy. Chief Inspector with a
copy to the Inspector of the area by registered post and where the
employer fails to send the self certificate the Deputy Chief Inspector shall
direct the Inspector concerned to carry out the inspection of the
enterprise and the inspector shall after carrying out the inspection furnish
a report of the violations committed by the employer to the Chief
Inspector who shall issue a show cause notice to the employer to rectify
the same specifying the period for carrying out rectification.
(2)
Any complaint about violation of this law received from the workers shall
be taken note of by the Deputy Chief Inspector himself whereupon he
shall direct an Inspector to look into the complaint and furnish a report
to him and in case the Deputy Chief Inspector finds that the employer
has violated any provisions of the law he shall call upon the employer by
a written communication to rectify the same within the specified period.
(3)
In case the employer fails to rectify the same in spite of the show cause
notice of the Deputy Chief Inspector as provided in sub section (1) or sub
section (2) in writing the Deputy Chief Inspector will take up the matter
with the trade or business organisation of which the employer is a
member. In case it is still not rectified within 30 days, the Deputy Chief
Inspector shall be free to take steps to prosecute the employer and where
the employer is not a member of any trade or business organisation the
Deputy Chief Inspector may take steps to prosecute the employer if the
employer has not rectified the violations in spite of issue of show cause
notice.
(4)
The State Government shall appoint the Chief Inspector, Joint Chief
Inspector, Deputy Chief Inspectors and Inspectors of Small Enterprises
area-wise or district-wise as deemed appropriate and may distribute the
work jurisdiction amongst them.
421
(5) The officials mentioned in sub sec (4) shall be deemed to be public
servants within the meaning of sec 21 of IPC (Act XLV of 1860).
23.
Non Application of Certain Laws

(1)
Subject to the provisions contained in sub sec (4) of Sec 1 and Sec 8 of
this Act where this Act applies to an establishment nothing in the
following laws shall apply to that establishment.
i)
The Factories Act, 1948 (except those covered by Sec.8)
ii)
The Industrial Disputes Act, 1947
iii)
The Industrial Employment (SO) Act, 1946
iv)
The Minimum Wages Act, 1948
v)
The Payment of Wages Act, 1936
vi)
The Payment of Bonus Act, 1965
vii)
The EPF& Misc. Provisions Act 1952
viii) The Employees State Insurance Act

ix)
The Maternity Benefit Act
x)
The Workmens Compensation Act
xi)
The Equal Remuneration Act, 1976
xii)
The Contract Labour (R&A) Act, 1972
xiii) The Interstate Migrant Workmen (RE&CS) Act 1979

xiv) The Shop & Establishment Act
xv)
The Mines Act 1951 (except the mines where work is being carried
on below ground)
(2)
If the Shops & Establishment Act of a State confers better benefits than
provided under this Act, the State may make amendments in this Act.
422
24.
Penalties
(1)
Fines may be imposed by Chief Inspector or the Joint Chief Inspector as

specified below:
(a)
Any person who violates any provisions of this Act as mentioned in

Part I of the Form F shall be punishable with a fine which shall not
be less than Rs. 1000/- but which may extend to Rs. 2,500/-.
(b)
For any second or subsequent offence of the same nature and

where an employer is held guilty of furnishing false information as
contained in Part-I of Form F a fine may be imposed which
shall not be less than Rs. 2,000/- but which may extend to
Rs. 5,000/-.
(c)
Where a violation as mentioned in Part I of Form F has not been

rectified by an employer in spite of the notice issued by the Deputy
Chief Inspector or Inspector for rectification of any violation, a fine
of Rs.100/- per day for each violation may be imposed for the
period till the violation is rectified.
(2)
Before imposing fine the Chief Inspector or as the case may be the Joint
Chief Inspector shall give an opportunity to the person or the employer
concerned to show cause why the fine as proposed should not be
imposed on him.
(3)
Without prejudice to any other provision contained in this Act, the Chief
Inspector or the Joint Chief Inspector shall have all the powers of a Civil
Court under the Code of Civil Procedure, 1908 (5 of 1908), while
exercising any powers under this section, in respect of the following
matters, namely: (a)
summoning and enforcing the attendance of witnesses;
(b)
requiring the discovery and production of any document;
(c)
requisitioning any public record or copy thereof from any court or

office;
423
(d)
(4)
receiving evidence on affidavits; and
Nothing contained in this section shall be construed to prevent the

person concerned from being prosecuted under any other provision of
this Act or any other law for any offence made punishable by this Act or
by that other law, as the case may be, or for being liable under this Act
or any such law to any other or higher penalty or punishment than is
provided for such offence by this section.
25.
Trial of Certain Offences

(1)
Whosoever wilfully obstructs the Chief Inspector, the Jt. Chief Inspector,
the Dy. Chief Inspector or the Inspector in the exercise of any power
under this Act or in carrying out the purposes of this Act including by
prevention of any worker from appearing before the above mentioned
authorities shall be punishable with a fine which shall not be less than
Rs. 5000/- but which may extend to Rs. 10,000/- or with imprisonment
for one month or both.
(2)
Whosoever furnishes false information as given in Part II of Form F shall

be punishable with fine which shall not be less than Rs. 10,000 but which
may extend to Rs. 20,000/- or with imprisonment which may extend to
one year or both.
26.
Cognizance of offences and competence of courts

(1)
No court shall take cognisance of any offence under this Act unless it is
filed by a Deputy Chief Inspector or an Inspector appointed under this
Act.
(2)
No court lower than that of a Metropolitan Magistrate or a First Class

Magistrate shall try any offence as prescribed under Section 25 of this Act.
27.
The State Government may grant exemption to any establishment from any
provision of this Act in any case of emergency occurring in an establishment
or in case of hardship.
424
28.
Rules under Act

State Government may make rules in respect of any provision of the Act for
securing the implementation of this Act.
29.
Protection to Official Persons Acting Under This Act

No suit, prosecution or other legal proceedings shall lie against any public
servant or any other person in the service of a Government acting under the
direction of any such public servant for anything done in good faith or intended
to be done in pursuance of the provisions of this Act, rule or order made
thereunder.
30.
Power to Remove Difficulties

The Central Government shall have powers to remove difficulties if any that
arise in the implementation upto a period of 3 years.
425

2nd National Commission On Labour Report 188

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2nd National Commission On Labour Report 188

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REPORT OF THE NATIONAL COMMISSION ON LABOUR

governance of the country, and it is

the duty of the State to apply these

review of the labour legislation in our

principles in making laws. Articles 38,

Statute Book it is necessary to keep in

39 39A, 41, 42, 43 and 43A are

view certain important parameters. In

principles which are relevant to the

earlier chapters and paragraphs we

work of our Commission. It is also

have referred to the articles of the

relevant to remind ourselves that

Constitution of India that provide the

we now have moves to redefine

parameters of our review.

right to work which figures in the

bear repetition as a preface to the

Directive Principles (Article 41) and

sanctity of a fundamental right.

guarantees freedom of speech and

associations or unions and freedom to

practice any profession or to carry on

any occupation, trade or business,

subject to reasonable restrictions

that may be imposed by law on the

Principles and Rights at Work,

exercise of these freedoms. We

adopted by the International Labour

also have Article 23 prohibiting

Conference in June 1998, declares

traffic in human beings and forced

inter alia that all Member States

labour, and Article 24 prohibiting

whether they have ratified the

employment of children in factories

relevant conventions or not have an

These are Constitutionally

obligation arising from the very fact

binding. Besides we have a very large

of membership in the Organisation, to

number of Directive Principles of

respect, to promote and to realise, in

State Policy in Part IV of the

good faith and in accordance with the

Constitution. These principles are not

Constitution the principles concerning

enforceable by any court but are

the fundamental rights which are the

nevertheless fundamental in the

subject of those conventions, namely,

Apart from these, it is also

REPORT OF THE NATIONAL COMMISSION ON LABOUR

freedom of association and the

We are in a prolonged period of

effective recognition of the right

adjustment to an emerging global

economy The standard policy

the elimination of all forms of

Bretton Woods Institutions in the

forced or compulsory labour;

1980s at the time of debt crisis and

the effective abolition of child