1. Trade. : 2. Equal 3. Child

Transcription

1 LABOUR LAW & INDUSTRIAL RELATIONS ( CODE K-4002) Unit I Unit II Unit III : : : 1. Industrial Disputes Act, Workmen s Compensation Act, Employee s Provident Funds Act, Industrial Employments Standing Orders Act, Employee s State Insurance Act, Trade Unions Act, Payment of Wages Act 1936 Unit IV : 1. Minimum Wags Act, Equal Remuneration Act, Child Labour (prohibition Regulation) Act 1986 and Unit V : 1. The Maternity Benefit Act, Payment of Bonus Act,

2 THE INDUSTRIAL DISPUTES ACT, 1947 The Object The Preamble of the Act states that it aims at bringing in conflicts between employer and employee to an amicable settlement and at the same time it makes provisions for some of the other problems that may arise from time to time in an industrial or commercial undertaking which came within the purview of the definition of 'industry' as defined by section 20) of the Act. The. Act does not discourage collective bargaining so long as the industrial peace is not disturbed or normal working is not disrupted. Notwithstanding that, should there be any difficulty or any problem arises under the provisions of the Act, the machinery set up may be approached so that industrial peace may be maintained and sustained without anyone having to resort to illegal strike or lock-outs. The Act provides for payment of compensation to the workmen on account of retrenchment or lay off and closure. It also lays down the procedure for prior permission of the appropriate Government for laying off or retrenching the workers or closing down an industrial establishment in which not less than one hundred workmen were employed on an average per day for the preceding twelve months. Furthermore, the amended Act lays down unfair labour practices on the part of an employer or a trade union or the workers. The Industrial Disputes Act is a benign measure which seeks to preempt industrial tensions, provide the mechanics of dispute- resolutions and set up the necessary infrastructure so that the energies of partners in production may not be dissipated in counter-productive battles and assurance of industrial justice may create a congenial climate. Important Definitions i. "closure" means the permanent closing down of a place of employment or part thereof [section 2(cc)]. 2

3 It is only "the permanent closing down" of a place of employment that can be taken to be closure. However, closure may be partial also. Therefore, it is not necessary that the whole establishment is closed for the purposes of the definition. ii. "Conciliation Officer" means a conciliation officer appointed under this Act [section 2(d)]. A Conciliation Officer is appointed under section 4 of the Industrial Disputes Act Conciliation Officers are charged with the duty of mediating in and promoting the settlement of industrial disputes. iii. "industry" means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen [section 20)]. The definition of industry is exhaustive and comprehensive. The Supreme Court in its landmark judgment of Bangalore Water Supply and Sewerage Board v. A. Rajappa, 1978 Lab IC 778: AIR 1978 SC 548: 36 FLR 266: 1978 (I) LLJ 349, has widened the scope of the definition and broad principles are given be1ow:- (a) Establishments Run Without Profit Motive Absence of profit motive or gainful objective is irrelevant, be the venture in the public, private or other sector. (b) Undertakings Governed by a No-profit-no-loss Rule, Statutorily or otherwise Fastened 3

4 Section 20) of the Act uses words of very wise denotation, a line would have to be drawn in a fair and just manner so as to exclude some callings, services or undertakings. (c) Clubs or Other Organisations Whose General Emphasis is Not on Profit-making But Fellowship and Self-service (i) Professions (ii) Clubs (iii) Educational institutions (iv) Co-operatives (v) Research institutes (vi) Charitable Projects and (vii) other kindred adventures, if they fulfil the triple tests listed above, cannot be exempted from the scope of section 2(j) of the Act. iv. "Industrial Dispute" means any dispute or difference between employer and employees, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person [section 2 (k)]. The scope of definition of 'industrial dispute' is very wide. The words' employment and non-employment' in the definition are of widest amplitude and have been put in juxtaposition to make the definition comprehensive. Any dispute connected with 'employment or non-employment' constitutes the subject matter of one class of industrial disputes. The matters which can form subject matter of industrial dispute are enumerated in Second, Third and Fourth Schedules given at the end of the Act. v. "Lock-out" means the temporary closing of a place of employment or the suspension of work, or the refusal by an employer to continue to employ and number of persons employed by him [section 2 (1)]. vi. "Retrenchment" means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a 4

5 punishment inflicted by way of disciplinary action, but does not include- (a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or (bb) termination of the service of the workman as a result of the nonrenewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or (c) termination of the service of a workman on the ground of continued ill-health [section 2(0)]. vii. "Settlement" means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceedings where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorised in this behalf by the appropriate Government and the conciliation officer [section 2(p)). There are two categories of a settlement, one is arrived at in the course of conciliation proceedings and the other is a written agreement between the employer and the workmen arrived at otherwise than the course of conciliation proceedings. The legal implications of these settlements are different. A settlement arrived at in the course of conciliation binds all the present and future workmen as specified in section 18(3) of the Act. The other kind of settlement binds only the actual parties to the agreement as per provisions of section 18(1) of the Act. 5

6 viii. "Strike" means a cessation of work by a body of persons employed in any industry, acting in combination or a concerted refusal, or a refusal under a common understanding, or any number of persons who are or have been so employed to continue to work or to accept employment [section 2(q)]. The word "strike" has been going constant transformation around the basic concept of stoppage of work or quitting of work by employees in their economic struggle with capital. In order to constitute strike in its technical sense it is necessary that there should be cessation of work but it is not necessary that there must be total suspension of work because even partial stoppage of work would be strike. Thus cessation of work for short duration will also be strike. The term "concert" as used in the definition means "to accord together". Thus an individual who absents himself to enforce a demand for higher wages shall not constitute "strike". The term" strike" postulates three main ingredients, namely-(i) plurality of workmen, (ii) cessation of work or refusal to do work, and (iii) combined or concerted action 'Go-slow' would not technically be a "strike" though go-slow tactics also are generally resorted to by the workers for compelling the employer to yield to their demands. The workers have got the right to strike but there is no such right to adopt 'go-slow' tactics which are more reprehensible in character than strike. ix. "Workmen" means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes 6

7 of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person- I. who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957, or II. who is employed in the Police service or as an officer or other employee of a prison, or III. who is employed mainly in a managerial or administrative capacity, or IV. who, being employed in a supervisory capacity draws wages exceeding ten thousand rupees per mensem or exercises, whether by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature [section 2 (s)]. Whether an employee of an industry is a 'workman' or not the designation given to him is not decisive. What determines the status is the consideration of the nature of duties or the functions assigned to him. The first part of the definition gives the statutory meaning of 'workman', and includes an apprentice or any person employed in an 'industry' to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward. The second part is designed to include something more in what the term primarily denotes. By this part of the definition persons (i) who have been dismissed, discharged or retrenched in connection with an industrial dispute; or (ii) whose dismissal, discharge or retrenchment has led to an industrial dispute; for the purposes of any proceedings under the Act in relation 7

8 to such industrial dispute, have been included in the definition of 'workman' by section2(s) of the Industrial Disputes Act. Authorities under the Act for Investigation and Settlement of Industrial Disputes The Act provides following statutory authorities and vests in them necessary powers to investigate the disputes and to bring. about settlement of such disputes arising between the employees and employers:- a. Works Committee; b. Conciliation Officers; c. Boards of Conciliation; d. Courts of Inquiry; e. Labour Courts; f. Industrial Tribunals; g. National Tribunals. Works Committee The Act provides for setting up of Works Committees in factories employing 100 or more workers. The composition of Works Committees is to be bipartite-consisting of equal number of workers' representatives as well as the employers' representatives. The representatives of the workers shall be elected from the various groups, categories and classes of workmen in consultation with their registered union, if any, but they are to be elected departmentally by workers. It will be an obligation of an employer to enquire from registered Trade Unions of the workers employed in the industry, the number of its/their total membership and its distribution in departments. The Works Committee will promote measures for securing and reserving unity and good relations between the employers an workmen and to that end to 8

9 comment upon matters of their common interest or concern and to endeavour to compose any material difference of opinion in respect of such matters. Employers to have Grievance Redressal Machinery The amended provisions of Industrial Disputes Act, w.e.f , provide that every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes. The Grievance Redressal Committee shall consist of equal number of members from the employer and the workmen. The Chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on rotation basis every year. The total number of members of the Grievance Redressal Committee shall not exceed more than six: Provided that there shall be, as far as practicable, one woman member if the Grievance RedressaI Committee has two members and in case the number of members are more than two, the number of women members may be increased proportionately. Notwithstanding anything contained in section 9C of the Industrial Dispute Act, providing for setting up of Grievance Re3ressal Machinery, the setting up of Grievance Redressal Committee shall not affect the right of the workman to raise industrial dispute on the same matter under the provisions of this Act. 9

10 The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party. The workman who is aggrieved of the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of Grievance redressed Committee and the employer shall, within one month from the date of receipt of such appeal, dispose of the same and send a copy of his decision to the workman concerned. Nothing contained in section 9C of the Industrial Dispute Act shall apply to the workmen for whom there is an established Grievance Redressal Mechanism in the establishment concerned. Board of Conciliation The Board of Conciliation is to consist of an independent Chairman and two or four other members representing the parties in equal number. Adjudication of Industrial Disputes If despite efforts of the Conciliation Officer, no settlement is arrived at between the employer and the workmen, the Act provides for a three-tier system of adjudication, viz., Labour Court, Industrial Tribunal and National Tribunal, each having its own sphere of functions as allocated to each. Schedule II of the Act refers specifically to section 7 of the Act. That section la)'s down that the appropriate Government may, by notification in the Official Gazette, constitute one or more Labour Courts for adjudication of industrial disputes relating to any matter specified in the Second Schedule and for performing such other functions as may be assigned to them under this Act. 10

11 Industrial Tribunals The Industrial Tribunals may be constituted by appropriate Government as and when necessary for adjudication of industrial disputes relating to any matter, whether specified in the Second or Third Schedule. Thus the Industrial Tribunals have jurisdiction over the matters over which the Labour Courts have Jurisdiction and specifically over those mentioned in the Third Schedule, namely:- (i) Wages, including the period and mode of payment; (ii) Compensatory and other allowances; (iii) Hours of work and rest intervals; (iv) Leave with wages and holidays; (v) Bonus, profit-sharing, provident fund and gratuity; (vi) Shift-working otherwise than in accordance with Standing Orders; (vii) Classification by grades; (viii) Rules of discipline; (ix) Rationalisation; (x) Retrenchment of workmen and closure of establishment; and (xi) Any other matter that may be prescribed. Powers of the Labour Court Industrial Tribunal to Modify the Punishment of Dismissal or Discharge Section 11A of the Act gives wide powers to the Labour Court and the Industrial Tribunal, etc., not only to reappraise the evidence to find out whether the finding of guilt of a workman recorded in the domestic enquiry is correct or not, but also to see whether the punishment inflicted is in proportion to the gravity of the proved misconduct or it is so severe tl1at it has to be altered. It 11

12 can interfere with the orders of discharge or dismissal of a workman and can impose lesser punishment or even set aside. Notice of Change in Conditions of Service Section 9A of the Act prohibits a unilateral action on the I'art of the employer to change the conditions of service to the prejuaice of the workinen. This affords an opportunity to the workmen to consider the effect of the proposea change and, if necessary, to present their point of view on the proposal and such consultation would further serve to stimulate a feeling of common joint interest of the management and workmen. It is pertinent to refer to section 9A which reads as under:- "No employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change:- (a) without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or (b) within twenty-one days of giving such notice: Provided that no notice shall be required for effecting any such changea) Where the change is effected in pursuance of any "settlement or award"; or b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Service (Classification, Control and Appeal) Rules, Civil Services (temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Service (Classification, Control and Appeal) Rules 12

13 or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply. Power of the Government to Refer a Dispute for Adjudication Section 10 of the Act provides that where the appropriate Government is of the opinion that any industrial dispute exists or is apprehended, it may, at any time, by order in writinga) refer the dispute to a Board for promoting a settlement thereof; or b) refer any matter appearing to be connected with or relevant to the dispute, to a Court for enquiry; or c) refer the dispute or any matter appearing to be connected with or relevant to the dispute, if it relates to any matter specified in the Second Schedule or the Third Schedule, to a Labour Court for adjudication; or d) refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, whether it relates to any matter specified in the Second Schedule or the Third Schedule, to a Tribunal for adjudication. It may further be noted that - 1) the Government may refer a dispute relating to any matter in the Second or Third Schedule to a Labour Court, if such dispute is not likely to affect more than one hundred workmen; 2) in a disr.ute relating to public utility service when a notice of a strike or lockout has been given under section 22 of the Industrial Disputes Act, unless the notice has been frivolously or vexatious given, the appropriate Government shall, if it thinks that it would be expedient to do so, make a reference under sub-section (1) of section It is the Central Government alone which can refer a dispute involving?; any question of national importance or affecting industrial 13

14 establishments situated in more than one State, to a National Tribunal whether or not it is the appropriate Government in relation to that dispute or any matter relating to that dispute irrespective of its nature, i.e., whether it is specified in the Second or the Third Schedule [subsection (14) of section 10]. 2. The appropriate Government cannot refuse to refer a dispute, whether jointly or separately applied for by the parties in the prescribed manner, to any of the prescribed authorities under the Act, if it is satisfied that the persons applying represent the majority of each party [sub-section (2) of section 19]. 3. The appropriate Government has power to prohibit the continuance of any strike or lock-out in connection with such dispute when it has been referred to any of the prescribed authorities [sub-section (3) of section 10]. 4. The appropriate Government must specify in the order referring an industrial dispute, the points of the dispute, for adjudication, and the Labour Court, Tribunal or the National Tribunal, as the case may be, shall have to confine its adjudication to these points and the matters incidental thereto [sub-section (4) of section 10]. 5. If the appropriate Government while referring a dispute, is of the opinion that the dispute is of such a nature that any other establishment, group or class of establishments of similar nature is likely to be interested in, or affected by such dispute, it may, at the time of making the reference, or at any time thereafter but before the submission of the award, include in that reference such establishment, group, etc., whether 14

15 or not at the time of such inclusion any dispute exists or is apprended in such establishment or group, etc. [sub-section (5) of section 10]. 6. Notwithstanding any provisions in the Act, no Labour Court, or Tribunal shall have jurisdiction to adjudicate upon any matter which is under adjudication before the National Tribunal. a. Accordingly if the matter referred to the National Tribunal is also ending in a proceeding before a Labour Court or Tribunal, it will be deemed to have been quashed as such reference being made to the National Tribunal; b. It will also be unlawful for the Government to refer a matter under adjudication before the National Tribunal, to any Labour Court or Tribunal for adjudication [sub-section (6) of section 10]. 7. When any industrial dispute in relation to which the Central Government is not the appropriate Government, is referred to the National Tribunal, then notwithstanding anything contained in the Act, any reference in section 15, section 17, section 33A, section 33B, and section 36A to the appropriate Government is to be construed as a reference to the Central Government, but save as aforesaid and as otherwise expressly provided in the Act, any reference in other provision of the Act to the appropriate Government in relation to that dispute shall mean a reference to the State Government. However, the Government is not bound to refer all the demands put forward to it. The Government has discretion to refer some of them and refuse others for reasons stated in writing. The Government is not also bound to refer the whole dispute or the dispute in all aspects as raised by the parties. 15

16 Reference of Disputes to Arbitration There is also a provision for voluntary reference to arbitration. A reference under section 10A(l) is not the act of the appropriate Government but the act of the parties themselves. The parties to an agreement under section 10A proceed on the footing of an existing or apprehended industrial dispute and cannot thereafter raise an objection that there was no industrial dispute between the parties. In order to constitute a valid reference to arbitration the following conditions must be satisfied;- a. there must exist an industrial dispute or there must be an apprehension of such a dispute; b. the employer and the workmen involved in such dispute, or apprehending such dispute must mutually agree to refer the dispute to arbitration; c. such voluntary reference must be made before the dispute has been referred under section 10 of the Industrial Disputes Act to a Labour Court or Tribunal or National Tribunal; d. the agreement to refer the dispute must be in writing and in the form as prescribed for the purpose ~d must be signed by the parties in such manner as prescribed; e. a copy of the arbitration agreement must be sent to the: appropriate Government and the Conciliation Officer; f. the appropriate Government must within one month from the date of the receipt of such copy, publish the same in the Official Gazette. Section 10A cannot be applied to an arbitration agreement which does not comply with sub-sections (2) and (3) thereof which have been analysed in (c), (d) and (e) above. Legal Strikes 16

17 A strike or lock-but in contravention of the provisions of section 22 or 23 of the Industrial Disputes Act, 1947 is declared illegal by section 24 of the said Act. A distinction has been made in this respect by the Act between public utility service and any other industrial establishment. Section 24 of the Act describes as to when the strikes or lockouts are illegal. Section 25 provides that no person shall knowingly expend or apply any money in direct furtherance or support of any illegal strike or lock-out. Section 26 la);'s down the penalty for illegal strikes and lock-out while section 27 prescribes the penalty for instigation of illegal strike or lock-out. Section 28 provides the penalty for giving financial aid to illegal strikes and lock-outs. Prohibition of Strikes and Lock-Outs 1. No person employed in a public utility service shall go on strike in breach of contracta) without giving to the employer notice of strike, as hereinafter provided, within six weeks before striking; b) within fourteen days of giving such notice; or c) before the expiry of the date of strike specified in any such notice as aforesaid; or d) during the pendency of any conciliation proceedings before a Conciliation Officer and seven days after the conclusion of such proceedings. 2. No employer carrying on any public utility service shall lock-out any of his workmena) without giving them notice of lock-out as hereinafter provided, within six weeks before locking out; or b) within fourteen days of giving such notice; or c) before the expiry of the date of lock-out specified in any such notice as aforesaid; or 17

18 d) during the pendency of any conciliation proceedings before a Conciliation Officer and seven days after the conclusion of such proceedings. 3. The notice of lock-out or strike under this section shall not be necessary where there is already in existence a strike, or as the case may be, lockout in the public utility service, but the employer shall send intimation of such lock-out or strike on the day on which it is declared to such authority as may be specified by the appropriate Government either generally or for a particular area or for a particular class of public utility services. 4. The notice of strike referred to in sub-section (1) shall be given by such number of persons to such person or persons and in such manner as may be prescribed. 5. The notice of lock-out referred to in sub-section (2) shall be given in such manner as may be prescribed. 6. If on any day an employer received from any person employed by him any such notices as are referred to in sub-section (1) or gives to any persons employed by him any such notices as are referred to in subsection (2), he shall within five days thereof report to the appropriate Government or to such authority as that Government may prescribe, the number of such notices received or given on that day (section 22). General Prohibition of Strikes and Lock-Outs No workman who is employed in an industrial establishment shall go on strike in breach of contract and no employer of any such workman shall declare a lock outa) during the pendency of conciliation proceedings before a Board and seven days after the conclusion of such proceedings; 18

19 b) during the pendency of proceedings before a Labour Court, Tribunal or National Tribunal and two months after conclusion of such proceedings; (bb) during the pendency of arbitration proceedings before an arbitrator and two months after the conclusion of such proceedings, where a notification has been issued under sub-section (3A) of section 10A; or (c) during any period in which a settlement or award is in operation, in respect of any of the matters covered by settlement or award (section 23). Illegal Strikes and Lock-Outs 1. A strike or a lock-out shall be illegal if- I. It is commenced or declared in contravention of section 22 or section 23; or II. It is continued in contravention of an order made under subsection (3) of section 10 or sub-section (4A) of section 10A. 2. Where a strike or lock-out in pursuance of an industrial dispute has already commenced and is in existence at the time of the reference of disputes to a Board, an arbitrator, a Labour Court, Industrial Tribunal or National Tribunal, the continuance of such strike or lock-out was not at its commencement in contravention of the provisions of this Act or the continuance thereof was not prohibited under sub-section (3) of section 10 or sub-section (4A) of section 10A. 3. A lock-out declared in consequence of illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to be illegal (section 24). Penalty for Illegal Strikes and Lock-Outs 1. Any workman who commences, continues or otherwise acts in furtherance of a strike which is illegal under this Act, shall be 19

20 punishable with imprisonment for a term which may extend to one month, or with fine which may extend to fifty rupees, or with both. 2. Any employer who commences, continues, or otherwise acts in furtherance of a lock-out which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to one thousand rupees, or with both. (section 26). Penalty for Instigation etc. Any person who instigates or incites others to take part in, or otherwise acts in furtherance of a strike or lock-out which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both (section 27). Government can Prohibit the Continuation of Strikes and Lock-Outs Section 10(3) of the Industrial Disputes Act, 1947 empowers the appropriate Government to prohibit the commencement and continuance of strikes and lock-outs in certain circumstances for investigation and adjudication of the industrial disputes in a peaceful atmosphere. In order to exercise the power to prohibit the strike or lock-out it is necessary that an industrial dispute should have been referred to a Board, Labour Court, Industrial Tribunal or National Tribunal under section 10 or the arbitrator under section 10A of the Industrial Disputes Act, 1947 and that on the date of reference for adjudication there would be a strike or lock-out in existence in connection with such dispute. An order under section 10B for prohibiting a lock-out or strike requires findings on facts and an adjudication thereon before the power under it could be exercised by the appropriate Government. If an order is made without 20

21 determining these facts, in certain circumstances it may prove incapable of implementation, for instance, if for any valid reasons, it has become impossible to continue the industry, or the employer has disposed of the same, the order under section 10(3) will become incapable of implementation. The Government may not prohibit the continuance of a lock-out because the workmen have indulged in unlawful and criminal activities, and there is scope for apprehension that, if the work is restored, such activities would continue. Noncompliance with such an order is illegal under section 24(1)(ii) and is punishable with imprisonment and/or fine under section 26 of the Industrial Disputes Act, The power to prohibit a strike or lock-out springs into existence only when such dispute has been made the subject of reference under section 10(1) of the Industrial Disputes Act, If Government feels that it would prohibit a strike under section 10(3) it must give scope for the merits of all the disputes or demands for which the strike had been called to be gone into by some adjudicatory body. In regard to such dispute natural justice would depend upon the circumstances of the case, the nature of enquiry and the subject matter that was being dealt with. Lay-off, Right of an Employer and its Duration Chapter VA of the Industrial Disputes Act empowers the employer to lay-off. It determines not merely the right of the workmen to receive compensation but also the wider rights and liabilities with regard to lay-off itself. According to the definition given in the Act the periods of lay-offs are - a) Lay-off for a day occurring when work is denied within two hours of his presenting himself for work. 21

22 b) Lay-off for one-half of day occurring when work is denied in the first half of the shift but the workman is called in the second half of the shift. Law Governing Lay-off By virtue of section 25J, these provisions have an overriding effect on other laws like the Industrial Employment (Standing Orders) Act, 1946 or other State industrial relations laws so far as rights and liabilities are concerned. The rights of the employees under the following provisions are not affected by the Chapter:- a. any right which a workman has under the Minimum Wages Act, 1948 or any order or notification issued thereunder; or b. any right under any operative award; or c. any right under any contract with the employer; d. any provisions concerning any law for the time being in force in any State for the settlement of industrial disputes. Employer's Duties in Connection with a Lay-off The following duties are cast on the employer in connection with a lay- off:- a. It must be a justified lay-off effected bona fide and not mala fide. b. The employer must maintain a muster-roll of workmen. c. The stoppage of work if resorted to during working hours must be notified by notice put up on the notice board and must be in accordance with the standing orders. d. The period of detention of workmen if stoppage occurs during working hours should not exceed two hours after the commencement of the stoppage. 22

23 e. If the unemployment caused by lay-off is for short period the unemployment should be treated as compulsory leave either with or without wages. f. If the lay-off is for an indefinite long period, the services may be terminated by due notice or payment of notice-pay in lieu of notice. g. The employees must be informed of the following things:- i. whether the employees are to remain on place of work or leave it; ii. when work shall be resumed; iii. the time when the workers are to present themselves for work during normal working hours. The period of lay-off should not be left indefinite. Where the workers did not suffer any loss; because of this irregularity it was held that the employer could not be penalised. Where it is not possible to specify the period of lay-off, the worker should be given three weeks' time to rejoin duty when work is resumed. Where the workers are called back to work in batches the union should be consulted as otherwise it may be construed by the union as discrimination. Workmen laid off as a consequence of strike by other workmen are not entitled to lay-off compensation. Quantum of Lay-Off Compensation The compensation must be paid at the rate and for period specified in section 25B of the Industrial Disputes Act. 1. If the lay-off occurs during working hours and results in the detention of the workmen not exceeding one hour the workmen so detailed shall not be paid for the period of detention 23

24 2. If the period of detention in clause (1) above exceeds one hour, the workmen so detained shall be paid wages for the whole of the time during which they are detained as a result of stoppage. 3. Where the workman during the period of twelve months is laid-off, he shall be paid by the employer for all days during which he is so laid-off, except for such weekly holidays as may intervene, compensation at the rate of fifty per cent. of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid off. By Industrial Disputes (Amendment) Act, 1%5, section 25C has been re-enacted as: "Whenever a workman (other than a badli workman or a casual workman), whose name is borne on the muster-rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid-off, whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid-off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent. of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid off: Provided that if during any period of twelve months, a workman is so laid off for more than forty-five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty-five days, if there is an agreement to that effect between the workman and the employer: Provided further that it shall be lawful for the employer in any case falling within the foregoing proviso to retrench the workman in accordance with the provisions contained in section 25F at any time after the expiry of the 24

25 first forty-five days of the lay-off and when he does so, any compensation paid to the workman for having been laid-off during the preceding twelve months may be set-off against the compensation payable for retrenchment. Explanation.-"Badli workman" means a workman who is employed in an industrial establishment in the place of another workman whose name is borne on the muster-rolls of the establishment, but shall cease to be regarded as such for the purposes of this section if he has completed one year of continuous service in the establishment." Prior practice of paying wages and dearness allowance on a sliding scale for the period of lay-off has also been held to be fair. A badli workman has been held to be entitled to lay-off compensation on satisfying other conditions. Retrenchment and Compensation 'Retrenchment' means discharge of surplus labour or staff in a continuing industry. It means the removal of 'the dead weight of uneconomic surplus'. It is not necessary that removal of surplus must only be when the establishment runs in losses. It may operate at any level of profits. The Legislature in using the expression "for any reason whatsoever" says in effect: "It does not matter why you are discharging the surplus if the other requirements of the definition are fulfilled, then it is retrenchment." The words "for any reason whatsoever" in section 2(00) of the Act exclude closure of the business. Though the reason may be any, but it must essentially be "retrenchment" i.e., discharge of surplus labour or staff by the employer. The definition of "retrenchment" in section 2(00), though an artificial one, is certainly very wide and would include termination of services even in pursuance of a standing order. The heading of section 25F leaves no doubt that 25

26 the observance of the provisions thereof is a condition precedent to retrenchment of a workman to whom the section applies. It would, therefore, follow that before action can be taken under standing orders the provisions of section 25F have to be complied with. The retrenchment must be just and fair and its justifiability can be questioned in a reference. Reorganisation of business rationalisation, economy, etc., are good grounds for retrenchment. Conditions Precedent to Retrenchment Reading section 25F of the Industrial Disputes Act, 1947 it is clear that the requirements prescribed by it are a condition precedent for retrenchment of the workmen, non-compliance with which would render the impugned retrenchment invalid and inoperative. a) The retrenchment must be by termination of employment; b) The employee must be given one month's notice in writing indicating the reasons for retrenchment and retrenchment must be effected after expiry of period of notice or the employee should be given wages for the notice period in lieu of such notice [section 25F(a)]. The notice must specify a certain date for retrenchment, otherwise a mere writing would not be a notice. Notice is not necessary if notice pay is given. c) The employee should be paid at the time of retrenchment, compensation equivalent to fifteen days average pay for every completed year of service or any part thereof in excess of six months. Employer's Obligations and Duties in Retrenching Employees The following further obligations lie on the employer in the matter of retrenchment:- 1. Maintenance of Muster-roll: The employer must maintain a musterroll as required under section 25D of the Industrial Disputes Act,

27 2. Seniority-list: Rule 77 of the Industrial Disputes (Central) Rules, 1957 further requires that the employer should prepare a list of all workmen in the particular category from which retrenchment is contemplated arranged according to seniority of their service in the category. A copy of this list should be affixed on a notice board at a conspicuous place in the premises of the industrial establishment at least seven days before the actual date of retrenchment. Rule 77 is mandatory and its violation renders retrenchment illegal. 3. The retrenchment should be in consonance with the statutory provisions in section 25G: The nominal rule is to retrench first of all the junior most employees in a particular category. If the employer has sufficient reasons to depart from this rule, only then it may be departed from and reasons for such departure must be recorded. 4. Re-employment: The retrenched employees have a statutory right of re-employment if the employer proposes to take into employment in future any persons and the retrenched staff has a right of preference over other persons. Section 25F gives statutory sanction to this rule. Under rule 78 of the Industrial Disputes (Central) Rules, the employer has to comply with requisitions mentioned therein. This right is given to citizens of India only. Transfer of an Undertaking Where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who has been in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched: 27

28 Provided that nothing in section 25FF shall apply to a workman in any case where there has been a change of employers by reason of the transfer, ifa. the service of the workman has not been interrupted by such transfer; b. the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and c. the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer. In such cases no compensation will be payable. CLOSURE AND COMPENSATION Concept of Closure The Industrial Disputes Act, 1947, has defined the word 'closure' recently, as permanent closing down of a place of employment or part thereof. The State Acts of Bombay, and M.P. define it as: "Closure" means the closing of any place or part of a place of employment or the total or partial suspension of work by an employer or the total or partial refusal by an employer to continue to employ persons employed by him whether such closing, suspension or refusal is or is not in consequence of an industrial dispute. The essence of closure whether whole or partial is closing. down of the place of employment. 28

29 Closure-A Fundamental Right It is a fundamental right of a citizen to carry on or close down business, industry or work if he so chooses and nobody can be compelled to carry on against his will. Closure must be, when effected, permanent. This does not mean that the employer is barred from re-starting the closed business or because the business is restarted, it was not closed with the intention of closing permanently. It would be a question of fact whether the closure, when effected, was intended to be a permanent or temporary closure. Refusal to employ a single worker may be a closure. The right is subject to liability of payment of compensation to the workmen as provided by section 25 FFF of the Industrial Disputes Act, 1947 and also to obtain prior permission in cases covered by Chapter VB of the Act. Closure of Part of Undertaking A closure of a section or department or a branch or a part of undertaking is a "closure" and is valid. It is not retrenchment. Closure may also be effected in stages. Unfair Labour Practices Effective from , unfair labour practices have been introduced under the Industrial Disputes Act. An "unfair labour practice" has been defined as any of the practices specified in Fifth Schedule. Sections 25T and 25U of the Act provide as underi. Prohibition of unfair labour practice: No employer or workman or a trade union, whether registered under the Trade Unions Act, 1926 (16 of 1926) or not, shall commit any unfair labour practice. 29

30 ii. Penalty for committing unfair labour practices: Any person who commits any unfair labour practice shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees or with both. For enumeration of such practices refer to Fifth Schedule of the Act. Compensation to Workmen in Case of Closing Down of Undertakings 1. Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2) of section 25FFF be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched: Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under clause (b) of section 25F shall not exceed his average pay for three months. Explanation.-An undertaking which is closed down by reason merely of- (1) financial difficulties (including financial losses); or (2) accumulation of undisposed of stocks; or (3) the expiry of the period of lease or licence granted to it; or (4) in a case where the undertaking is engaged in mining operation, exhaustion of the minerals in the area in which such operations are carried on, shall not be 30

31 deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this su1rsection. 1A. Notwithstanding anything contained in sub-section (1) of section 25FFF where an undertaking engaged in mining operations is closed down by reason merely of exhaustion of the minerals in the area in which such operation are carried on no workman referred to in that sub-section shall be entitled to any notice or compensation in accordance with the provisions of section 25F, ifa. the employer provides the workman with alternative employment with effect from the date of closure at the same remuneration as he was entitled to receive and on the same terms and conditions of service as were applicable to him, immediately before 'the closure; b. the service of the workman has not been interrupted by such alternative employment; and c. the employer is, under the terms of such alternative employment or otherwise legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by such alternative employment. 1B. For the purposes of sub-sections (1) and (1 A) of section 25FFF, the expressions "minerals" and "mining operations" shall have the meanings respectively assigned to them in clauses (a) and (b) of section 3 of the Mines and Minerals (Regulations and Development) Act, 1957 (67 of 1957). 2. Where any undertaking set up for the construction of buildings, bridges, roads, canals, dams or other construction work is closed down on account of the completion of the work within two years from the date on which 31

32 the undertaking had been set up, no workman employed therein shall be entitled to any compensation under clause (b) of section 25F, but if the construction work is not so completed within two years, he shall be entitled to notice and compensation under that section for every completed year of continuous service or any part thereof in excess of six months. Sixty Days' Notice to be Given of Intention to Close Down Certain Undertaking 1. An employer who intends to close down an undertaking shall serve, at least sixty days before the date on which the intended closure is to become effective, a notice, in the prescribed manner, on the appropriate Government stating clearly the reasons for the intended closure of the undertaking: Provided that nothing in this section shall apply to- (a) an undertaking in which- (i) less than fifty workmen are employed, or (ii) less than fifty workmen were employed on an average per working day in the preceding twelve months; (b) an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work or project. 2. Notwithstanding anything contained in sub-section (I), the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order (section 25FFA). 32

33 Controls on Retrenchment, Closure and Lay-off The Industrial Disputes Act, 1947, prior to enactment of Chapter VB did not contain any provisions for preventing lay-off and retrenchment. The employers had an unfettered right to close down an establishment, subject to the provisions of 60 days' notice and often it was utilised to stifle trade union activities. There had been many cases of large-scale lay-offs, particularly by large companies and undertakings. This action on the part of the management had resulted in an all-round demoralising effect on the workmen. In order to prevent avoidable hardship to the employees and to maintain higher tempo of production and productivity, it became necessary to put some reasonable restrictions on the employer's right to lay-off, retrenchment, and closure. By the Amendment Act of 1976 prior approval of the appropriate Government is necessary in the case of lay-off, retrenchment and closure in any industrial establishment where 300 or more workmen are employed. In the interests of rehabilitation of workmen and for maintenance of supplies and services essential to the life of the community, a provision is also made in the Act for restarting the undertakings which were already closed down otherwise than on account of unavoidable circumstances beyond the control of the employer. Special Provisions of Chapter VB Relating to Lay-off, Retrenchment and Closure of Certain Establishments (i) Application to undertakings employing 100 or more workmen: (1) The provisions of this Chapter shall apply to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not 33