CHAPTER 1 LABOUR LEGISLATION, OBJECTIVES, PRINCIPLES, CLASSIFICATION, EVOLUTION OF LABOUR LEGISLATION IN INDIA

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1 CHAPTER 1 LABOUR LEGISLATION, OBJECTIVES, PRINCIPLES, CLASSIFICATION, EVOLUTION OF LABOUR LEGISLATION IN INDIA Labour Legislation This is another important area which has a great impact on the industrial relations system. Labour legislation has been instrumental in shaping the course of industrial relations in India. Establishment of social justice has been the principle which has guided the origin and development of labour legislation in India. The setting up of the International Labour Organisation gave an impetus to the consideration of welfare and working conditions of the workers all over the world and also led to the growth of labour laws in all parts of the world, including India. Some of the other factors which gave impetus to the development of labour laws in India were the Swaraj Movement of and the appointment of the Royal Commission on Labour in History of Labour Legislation in India: Labour legislation in India has a history of over 125 years. Beginning with the Apprentice Act, passed in 1850, to enable children brought up in orphanages to find employment when they come of age, several labour laws covering all aspects of industrial employment have been passed. The labour laws regulate not only the conditions of work of industrial establishments, but also industrial relations, payment of wages, registration of trade unions, certification of standing orders, etc. In addition, they provide social security measures for workers. They define legal rights and obligations of employees and employers and also provide guidelines for their relationship. In India, all laws emanate from the Constitution of India. Under the Constitution, labour is a concurrent subject, i.e., both the Central and State governments can enact labour legislation, with the clause that the State legislature cannot enact a law which is repugnant to the Central law. A rough estimate places the total number of enactments in India to be around

2 The Apprentice Act of 1850 was followed by the Factories Act of 1881 and the first State act was the Bombay Trade Disputes (and Conciliation) Act, 1934, followed by the Bombay Industrial Disputes Act, 1938, which was amended during the war years. This was replaced by the BIR Act, The Central Government at this time introduced the Industrial Employment (Standing Orders) Act, In 1947, the government replaced the Trade Disputes Act with the Industrial Disputes Act, which was later modified. This law is the main instrument for government intervention in industrial disputes. After Independence, many laws concerning social security and regulation of labour employment were enacted, such as the ESI Act, 1948, EPF and Miscellaneous Provisions Act, 1952, Payment of Gratuity Act, 1972, Equal Remuneration Act, Etc. Objectives: Labour Legislation in India are to i. Protect workers from exploitation ii. Strengthen industrial relations; iii. Provide machinery for settling industrial disputes and welfare of workers. Types of Labour Legislation in India: Under three broad categories, as formulated by Banerjee: 1) Protective and employment legislation 2) Social security legislation 3) Regulatory legislation' 1. Protective and Employment Legislation: The following acts can be grouped under this category: Factories Act, Payment of Wages Act, Minimum Wages Act, Equal Remuneration Act, Payment of Bonus Act, Apprentice Act and Employment Exchange (Compulsory Notification of Vacancies) Act. Some of these are concerned with the health and safety of the worker at his workplace. Others protect the worker by ensuring that he gets paid for the work done at the end of each month. 2

3 2. Social Security Legislation: This category includes acts such as the Employees State Insurance Act, 1948, Employees Provident Fund Act, 1952 and the Payment of Gratuity Act, These social security measures are meant to protect workers against risks of undue hardship and privation. The ESI Act, for example, provides medical care, accident compensation and compensation to a worker when he is unemployed or ill. The Provident Fund and Gratuity Schemes are meant to provide to the worker with some income after his retirement. 3. Regulatory Legislation: The Industrial Disputes Act, 1947, Industrial Employment (Standing Orders) Act, 1946 and the Trade Unions Act, 1926, etc. come under this category. The Industrial Disputes Act, 1947, basically provides for the investigation and settlement of industrial disputes. Its main objective is to provide for a just settlement of disputes by negotiations, conciliation, mediation, voluntary arbitration and compulsory adjudication. The Act places constraints on strikes and lockouts. It provides for a works committee at the plant level to ensure that management and worker contribute to the efficient day to day working of the enterprise. The Industrial Employment (Standing Order) Act, 1946, requires management to specify the terms and conditions of employment and communicate these to the workers. The Trade Union Act, 1926, is the enabling legislation for the formation of trade unions. A list of Labour Legislation in India: i. Legislation Related to Industrial Relations: The Trade Union Act, 1926 and The Trade Union Amendment Act, 2011 The Industrial Employment (Standing Orders) Act, 1946 The Industrial Disputes Act,

4 ii. Legislation Pertaining to Wages: The Payment of Wages Act, 1936 and The Payment of Wages (Amendment) Act, 2005 The Minimum Wages Act, 1948 The Payment of Bonus Act, 1965 The Equal Remuneration Act, 1976 iii. Legislation Related to Work Conditions: The Factories Act, 1948 The Contract Labour (Regulation and Abolition) Act, 1970 The Shops and Establishment Act The Dock Workers (Regulation of Employment) Act, 1948 The Plantation Labour Act, 1951 The Mines Act, 1952 The Merchant Shipping Act, 1958 The Building and Other Construction Workers (Regulation of Employment & Conditions of Service) Act, 1996 iv. Legislation Pertaining to Women and Children: The Maternity Benefit Act, 1961 The Child Labour (Prohibition and Regulation) Act, 1986 v. Legislation Pertaining to Social Security: The Workmen s Compensation Act, 1923 and The Workmen s Compensation (Amendment) Act, 2000 The Employees State Insurance Act, 1948 The Employees provident Fund and Miscellaneous Provisions Act, 1952 and The Employees Provident Fund and Miscellaneous Provisions (Amendment) Act, 1996 The Payment of Gratuity Act, 1972 The Unorganised Workers Social Security Act,

5 Principles of Labour Legislation 1. Principle of Protection: The principle of protection suggests enactment of labour legislation to protect those workers who are not able to protect their interests on their own and also workers, in particular industries against the hazards of industrial processes. 2. Principle of Social Justice: The principle of social justice implies establishment of equality in social relationships. It aims at removing discrimination suffered by particular groups of labour. History is replete with examples where certain groups of society or labour have been subjected to various sorts of disabilities as compared to other groups or workers in general. 3. Principle of Regulation: The principle of Regulation generally seeks to regulate the relationships between the employers and their associations, on the one hand, and workers and their organisations, on the other. As the relationships between the two groups have repercussions on the society, the laws enacted on this principle also aim at safeguarding the interests of the society against the adverse consequences of collusion or combination between them. Thus, the principle of regulation seeks to regulate the balance of power in the relationships of the two dominant groups in industrial relations. 4. Principle of Welfare: Although the protective and social security laws have the effect of promoting labour welfare, special labour welfare or labour welfare fund laws have also been enacted, with a view to providing certain welfare amenities to the workers, and often to their family members also. The main purpose behind the enactment of labour laws on this principle is to ensure the provision of certain basic amenities to workers at their place of work and also, to improve the living conditions of workers and their family members. 5

6 5. Principle of Social Security: Lord William Beveridge, the pioneer in initiating a comprehensive social security plan mentioned five giants in the patch of social progress namely, want, sickness, ignorance, squalor, and idleness. One of the outstanding measures to mitigate the hardship is to make available social security benefits under the coverage of legislation. Social security legislation may be kept under two broad categories social insurance legislation and social assistance legislation. In social insurance, benefits are generally made available to the insured persons, under the condition of having paid the required contributions and fulfilling certain eligibility conditions. In social assistance also, the beneficiaries receive benefits as a matter of right, but they do not have to make any contributions. The finance is made available by the state or a source specified by the state. Social assistance benefits are generally paid to persons of insufficient means and on consideration of their minimum needs. 6. Principle of Economic Development: Labour laws have also been enacted keeping in view the need for economic and industrial development of particular countries. Improvement of physical working conditions, establishment of industrial peace, provision of machineries for settlement of industrial disputes, formation of forums of workers participation in management, prohibition of unfair labour practices, restrictions on strikes and lock-outs, provision of social security benefits and welfare facilities, certification of collective agreements and regulation of hours of work have direct or indirect bearing on the pace and extent of economic development. 7. Principle of International Obligation: This principle postulates enactment of labour laws with a view to giving effect to the provisions of resolutions, adopted by international organisations like ILO, UN and similar other bodies. In general, the countries ratifying the resolutions or agreements are under the obligation to enforce them. One of the instruments of doing so is the enactment of laws. 6

7 Problems of Labour Legislation: In order to protect industrial workers, there are many labour laws in the country which cover all aspects of labour. The problem therefore is not the lack of labour laws but that of implementing these. It has been found that their implementation has been unsatisfactory in public as well as private sectors. Another problem with regard to labour legislation is that in the absence of an all- India code labour laws have a tendency to overlap and become repetitive. National Commission on Labour: The National Commission on Labour (NCL) was set up in 1966 to study the industrial relations situation in the country and to make recommendations for improvement. The recommendations of the National Commission on Labour which had far reaching implications on labour policy in different areas have been briefly discussed below: a) Strikes / Lockouts and Gheraos: The NCL categorised industries as essential and non-essential for the purpose of strikes and lockouts, and made the following recommendations: i. In essential industries / services, where a cessation of work may cause harm to the community, the economy or the security of the nation itself, the right to strike may be banned, but with the simultaneous provision of an effective alternative like arbitration or adjudication to settle disputes. ii. In non-essential industries, a maximum period of one month has to be fixed for the continuance of a strike or lockout. After the lapse of this period, the dispute has automatically to go before the Industrial Relations Commission (IRC) for arbitration. b) Industrial Relations Commission: The NCL recommended the constitution of Industrial Relations Commission, on a permanent basis, both at the state level and the Centre. One of the principal reasons for suggesting these commissions is the desire to eliminate the possibility of political influence disturbing or distorting industrial peace in the country. 7

8 c) Resolution of Industrial Disputes: The National Commission on labour belt that the best way of settling industrial disputes is through negotiation between the parties. d) Recognition of Trade Union: The National Commission on Labour felt that statutory recognition should be granted to a representative union as a sole bargaining agent. For this, the following guidelines need to be observed: Recognition of a representative union should be made compulsory under a Central Law in all undertakings employing 100 or more workers or where the capital invested is above a stipulated size. A trade union seeking recognition as a bargaining agent from an individual employer should have a membership of at least 30 percent of the workers in the establishment. The minimum membership should be 25 percent if the recognition is sought for an industry in a local area. e) Strengthening of Trade Unions: The trade unions should be made strong, organizationally and financially. Multiplicity of unions and intra-union rivalries should be discouraged by: 1. Providing compulsory registration of unions; 2. Raising the minimum number required for forming a union; 3. Raising the minimum membership fee; 4. Reduction in the number of outsiders; and 5. Taking steps to build internal leadership. f) Collective Bargaining: The Commission found that collective bargaining did not make any progress in the country because of absence of arrangements for statutory recognition of trade unions, except in some states, and greater reliance on adjudication. The Commission recommended strengthening of collective bargaining through the following measures: 1. In order to enable employees to effectively participate in the process of collective bargaining, they should be well organised and trade unions must become strong and stable. 8

9 2. To facilitate collective bargaining, there should be compulsory recognition of a union as sole representative for the purpose of bargaining with the management. g) Grievance Procedure: The NCL recommended that statutory backing should be provided for the formulation of an effective grievance procedure, which should be simple, flexible, less cumbersome and more or less on the lines of the Model Grievance Procedure. It should be time-bound and have a limited number of steps, say, approach to the supervisor, then to the departmental head, and thereafter a reference to the grievance committee consisting of management and union representatives. A formal grievance procedure should be introduced in each unit employing 100 or more workers. Second National Commission on Labour: The Central Government set up the second National Commission on Labour in 1999 under the Chairmanship of Sh. Ravindra Varma. The Commission was entrusted to suggest, among other things, rationalization of the existing labour laws in the organised sector so as to make them more relevant in the changing economic conditions under the impact of globalisation. The Second National Commission on Labour was expected to formulate an umbrella law to ensure protection to workers in the unorganized sector which, in the absence of growth in job opportunities in the organised sector, is expanding at a rapid pace, absorbing school dropouts, women and children. It submitted its report to the Government in June

10 Sample Multiple choice Questions 1. Which Act provides for the Health, Safety and Welfare of workers? (a) Apprenticeship Act, 1961 (b) Factories Act, 1948 (b) Employees Compensation Act, 1923 (d) All of the above 2. Which of the following Authorities come under the Industrial Disputes Act, 1947? (a) Works committee (b) Labour Courts (b) Industrial Tribunal and National Industrial Tribunal (d) All of the above 3. Which of the following is not a type of labour legislation? (a) Protective legislation (b) Regulative Legislation (b) Social Legislation (d) Social security 4. The Workmen s Compensation Act, 1923, the Maternity Benefit Act, 1965 and the Employees State Insurance Act, 1948: (a) Together can be applicable (b) The Maternity Benefit Act and the Employees State Insurance Act can be applicable at a time (c) The Workmen s Compensation Act and the Employees State Insurance Act can be applicable at a time (d) If the Workmen s Compensation Act and the Maternity Benefit Act are applicable, the Employees State Insurance Act is not applicable 5. Labour is not a commodity is the assertion made by: (a) The Declaration of Philadelphia adopted by 26 th session of ILO (b) The Magna Carta (c) The Constitution of India (d) The International Labour Conference 6. Which of the following is as method of social security? (a) Social Assistance (b) Social Insurance (c) Mutual Assistance (d) All of the above 10

11 7. Model Grievance Procedure is given in the: (a) Industrial Disputes Act (b) Industrial Employment (standing orders) Act (b) Employee State Insurance Act (d) Code of Discipline 8. Match the following: List I List II A. Principle of Protection and Welfare i. The Trade Union Act, 1927 B. Principle of Social Justice ii. Robert Owen C. Principle of Regulation iii. Payment of Gratuity Act D. Principle of Social Security iv. The Philadelphia Charter Codes: A B C D (a) ii iv i iii (b) ii iv iii i (c) iv ii iii i (d) iv iii i ii 9. The Article in Indian Constitution that imposes prohibition on traffic in human beings, beggar and other similar forms of forced labour is: (a) Article 19 (b) Article 23 (c) Article 32 (d) Article Which of the following is / are Tripartite Body? (a) International Labour Organisation (b) Indian Labour Conference (c) Wage Boards (d) All of the above. ANSWERS b d c d a d d a b d 11