Labour Law II

Unit 1

1. LABOUR WELFARE AND INDIAN CONSTITUTION

1. Industrial Jurisprudence

The immediate source of Industrial Jurisprudence may be traced to the enactment of a plethora of labour laws
aimed at:

a) Ensuring the health, welfare and safety of the working class.

b) Protection against exploitation and unfair dismissals.

c) Recognizing the right of workmen to organize and bargain collectively.

A more distant source is found in the traditional master-servant relationship where the servant had no option
but to serve the will of the master. The extension of this attitude was seen in early stages of Capitalism where
Factory workers got nothing more than starvation wages. It was only towards the middle of the 19th century
that contractual relationships replaced the traditional master-servant relationship while state regulation
added a new dimension to it.

The range and variety of rights created was very complex where the remedies and reliefs were unknown to
civil jurisprudence and resulting in the birth of Industrial Jurisprudence.

Therefore, Industrial Jurisprudence is based on the principle of operation of organisation not only by an
individual/management but where employees are given rights regarding their employment. In India, Industrial
Jurisprudence refers to a body of law based on three sources, namely, the Constitution, Legislative enactments
and Judge-made law.

In India, various labour legislations have been enacted to ensure the welfare of labour and workers where it is
based on fundamental principles, like Social Justice, Social Equity, International Uniformity and National
Economy. Therefore, the primary concern of Industrial Jurisprudence is to maintain peace among the various
parties and ensure contentment of the workers, the end product being increased production informed by
distributive justices.

However, it is due to the various provisions enshrined in the Constitution, especially the Fundamental rights
and directive principles of state policy which ensure social and economic justice.

2. CONCEPT OF LABOUR WELFARE IN INDIA

The concept of labour welfare is a broad concept. It connotes a condition of well-being, happiness,
satisfaction, conservation and development of human resources. Labour welfare activities arose in
colonial India in reply to the need for cheap labours. The British government passed legislations
which led to the development of the concept of labour welfare in colonial India. The Fatal Accidents
Act of 1853 aimed at providing compensation to the families of workmen who lost their lives as a
result of an ‘‘actionable wrong.
3. PREAMBLE

“The founding fathers of the Constitution cognizant of the reality of life-wisely engrafted the Fundamental
Rights and Directive Principles... by securing and protecting as effectively as it may, a social order in which
justice, social, economic and political shall inform all the institutions of the national life and to minimise the
inequalities in income and endeavour to eliminate inequalities in status, facilities and opportunities, not only
amongst individuals but also amongst groups of people residing in different areas and engaged in different
vocations.”'

4. FUNDAMENTAL RIGHTS

The fundamental rights, which are contained in Part III of the Constitution, limit, and control legislative
competency. Any law including labour legislation contravening any fundamental right is void. Any citizen
affected by such a law has a right of access to the courts under articles 32 and 226; whereunder it is the duty
of the Supreme Court, or a high court, respectively, to enforce fundamental rights by issuing writs or suitable
orders or directions.

Article 14. - commands State to treat any person equally before the law.

According to Dr Jennings puts it: "Equality before the law means that among equals the law should
be equal and should be equally administered, that like should be treated alike. The right to sue and
be sued, to prosecute and be prosecuted for the same kind of action should be same for all citizens
of full age and understanding without distinctions of race, religion, wealth, social status or political
influence” It only means that all persons similarly circumstance shall be treated alike both in the
privileges conferred and liabilities imposed by the laws

Various Acta related to this area are- Equal remuneration Act, Child labour prohibition act, Karnataka
shops and commercial establishment Act. etc

Article 15 - prohibits discrimination on grounds only of religion, race, caste, sex, place of birth or any
of them. However, nothing in this article shall prevent the State from making any special provision
for women and children.

In this direction, the Parliament has passed the Equal Remuneration Act, 1976; Maternity Benefit
Act, 1961; Factories Act, 1948 etc.

Article 19 (1) (c) - grants citizens the right to form association or unions.

It includes the right to form companies, societies, partnership, trade union, and political parties. The
right guaranteed is not merely the right to form association but also to continue with the association
as such. The freedom to form association implies also the freedom to form or not to form, to join or
not to join, an association or union.

In Damayanti v. Union of India The Supreme Court held that, any law by which members are
introduced in the voluntary association without any option being given to the members to keep
them out, or any law which takes away the membership of those who have voluntarily joined it, will
be a law violating the right to form an association".

Article 23 - prohibits traffic in human beings, beggar(forced labour) and other similar forms of forced
labour. Any contravention of this provision shall be an offence punishable in accordance with law.
This right is available to both citizens and non-citizens.

In order to provide for this, the parliament has passed Immoral Traffic (Prevention) Act, 1956.

In People's Union for Democratic Rights vs. Union of India, 1983, it was held that labour or services
for a remuneration less than a minimum wages amounts to forced labour. Several other laws have
been passed in this direction, such as the Minimum Wages Act, 1948; the Bonded Labour system
(Abolition) Act, 1976; the Inter-State Migrant Workmen Act 1979 etc.

Article 24 - prohibits employment of children below the age of fourteen years.

This provision is certainly in the interest of public health and safety of life of children. Children are
assets of the nation. That is why Article 39 of the Constitution imposes upon the State an obligation
to ensure that the health and strength of workers, men and women, and the tender age of the
children are not abused and that citizens are not forced by economic necessity to enter avocations
unsuited to their age or strength.

The Child Labour (Prohibition and Regulation) Act, 1986, is the most important law in this direction.
In addition, the Employment of Children Act, 1938; the Factories Act, 1948; the Mines Act, 1952; the
Merchant Shipping Act, 1958; the Plantation Labour Act, 1951; the Motor Transport Workers Act,
1951; Apprentices Act, 1961; the Bidi and Cigar Workers Act, 1966; and other similar acts prohibit
the employment of children below certain age.
5. DIRECTIVE PRINCIPLES OF STATE POLICY

Part IV of the Constitution contains the Directive Principles of State Policy. The provisions contained
in this part even though not judicially enforceable but nevertheless fundamental in the governance
of the country and it shall be the duty of the state to apply these principles in making laws. Some of
these specify the goals and values to be secured by labour legislation for workmen. They are:

(i) an adequate means to livelihood;

(ii) prevention of the concentration of wealth and means of production;

(iii) equal pay for equal work for both men and women;

(iv) protection and preservation of the workers’ health;

(v) the right to work, the right to education, and the right to public assistance in cases of old age,
sickness disablement and in other cases of undeserved want;

(vi) just and humane conditions of work and maternity relief;

(vii) a living wage,

(viii) participation of workers in management and a decent standard of life.

Article 39(a) - provides that the State shall secure to its citizens equal right to an adequate means of
livelihood.

Related statutes - Payment of bonus act, minimum wages act, Equal remuneration act.

Article 39A - provides that the State shall secure the equal opportunities for access to justice to its
citizens and ensure that such opportunities are not denied by reason of economic or other
disabilities.

Legislations providing for this are The Unorganized Workers Social Security Act.2008, Sexual
Harassment of Women at work place (Prevention Prohibition and Redressal) Act, 2013 etc

Article 41 - provides that within the limits of its economic capacity the State shall secure for the
Right to work and education.

Equal Remuneration act, Employees State Insurance Act, Mahatma Gandhi National Rural
Employment Guarantee Act 2005.

Article 42 - instructs State to make provisions for securing just and humane conditions of work and
for maternity relief.
Maternity Benefit Act, Fatal Accidents Act, Dangerous Machines Regulation Act, Docks works Act,
Inter – State Migrants Workmen Act 1979 etc.

Article 43 - orders the State to secure a living wage, decent condition of work and social and cultural
opportunities to all workers through legislation or economic organisation.

Weekly holidays Act, Karnataka Shops and Commercial Establishment Act 1961, Child Labour
(Prohibition and Regulation) Act 1986

Article 43A - provides for the participation of workers in Management of Industries through
legislation.

Trade Union Act, Industrial Disputes Act

Article 47 - aims to raise the level of nutrition and the standard of living of people and to improve
public health.

Legislations providing for this are: Minimum Wages Act, 1948; Payment of Wages Act, 1936;
Environment (Protection) Act, 1986; Water (Prevention and Control of Pollution) Act, 1974 etc.

Therefore, it can be said that, Part III and Part IV of the Constitution of India form the backbone of
Labour and Industrial laws in India.

Principle of equal pay for equal work and Indian Supreme Court

The principle of equal pay for equal work is enshrined in Article 39(d) of the Constitution. For the
first time, this principle was considered in Kishori Mohanlal Bakshi v. Union of India in 1962.Supreme
Court then ruled that it was not capable of being enforced in a court of law. The Apex court changed
its mind in 1982 when in Randhir Singh v. Union of India, through a 3 judge bench, it held that:

The principle of ‘equal pay for equal work’, which meant equal pay for everyone irrespective of sex,
was deducible from preamble and Articles 14,16 and 39(d) of the Constitution. The principle of equal
pay for equal work was held to be applicable to cases of unequal scales of pay, based on
classification or irrational classification, though both sets of employees(engaged on temporary and
regular basis, respectively) performed identical duties and responsibilities.

In State of Punjab v.Jagjit Singh (2016) where it held that temporarily engaged employees(daily wage
employees, ad‐hoc appointed on casual basis , contractual employees and the like),are entitled to
minimum of the regular pay scale, along with dearness allowance(as revised from time to time )on
account of their performing same duties, which are discharged by those engaged on regular basis,
against sanctioned posts.

2. BONDED LABOUR SYSTEM (ABOLITION) ACT, 1976

It is sometimes difficult to define bonded labour as it varies depending upon the arrangement, the region and
the customs involved. The Royal Commission on labour in India, 1931, defined bonded labour as — the
labourer who borrows money from the landlord under a contract to work until the debt is repaid. The debt
tends to increase rather than diminish and the man, and sometimes his family, is bound for life.

The common features of this social system are obligation, force and curtailment of liberty. Compulsions arising
from hunger, poverty, want and destitution derives the helpless labourer to the doors of the mighty land lord
for less than minimum wage. In case of debt bondage, the labourer usually takes a loan from an employer and
in turn mortgages his labour to the employer until the loan is repaid with or without interest. His wages are so
fixed that he can hardly make both ends meet and is not in a position to pay back the loan. In this way, debt
bondage ties a labour to a particular master.

Causes of bonded labour

There are a number of reasons responsible for causing and the prevalence of bonded labour in India. The
extreme form of poverty, rise of feudalism and societal structure are some of the main reasons. However, for
the purpose of this chapter, we shall classify the causes into economic and social causes.

The economic causes:

Bonded labour is more of an economic issue than a social issue. The main economic reasons forcing a person
into bondage are:

1. Poverty: Bonded labour has its roots in poverty due to the fact that hunger and poverty go together. Due to
poverty, there is a reduction in the capacity to procure food leading to hunger. In order to overcome this crisis,
the poor are left with no choice but to take a loan for consumption which ultimately drives them into bondage.

2. Indebtedness: Rural -Indebtedness is another major contributing factor to bonded labour. The various needs
of the agricultural poor who are forced to take loans at high rate of interest from private money lenders and
the absence of institutional lenders leads them to extreme poverty and hence eventually get pushed into
bonded labour.

3. Unemployment: People from poor and rural sections who fail to obtain formal education have no chance of
entering into formal employment. The fragmented pieces of land also fail to produce enough to sustain a
family. They are left with no choice but to mortgage their labour for food with the land lord.

4. Landlessness: The state of landlessness refers to a situation where a person has no permanent source of
livelihood. If this persists, their economic situation becomes hopeless where they are forced to take loan and
upon failure to repay, enter into bondage.

The Social causes:

1.Illiteracy: Education plays an important role in the development of an individual. It is through education that
a person becomes aware of his rights. Those who lack awareness are easily exploited and remain exploited.
Also lack of ability to read and write makes it difficult to find employment for oneself.

2. Caste structure: The caste structure is another reason responsible for bondage in India where, people
belonging to Scheduled castes were impoverished and forced to sell their labour doing menial jobs.

3. Social customs and traditions: Social customs, traditions and certain events such as marriage, child birth and
death in the family add new dimensions to reality where the poor are forced to take loans which in turn may
push them into bonded labour upon failure to repay the loan.

Features of Bonded Labour

a) A bonded labour is one who mortgages his labour for money or kind or both.

b) The wages are paid in advance, partially or entirely.

c) A bonded labourer has to work with his creditor until the debt is paid back or the stipulated period is
over.

d) Bonded labour does not necessarily belong to a particular caste or community but it depends upon
poverty and helplessness of the labourer.

e) The agreement between the creditor and the debtor (bonded) usually relates to the period of work,
nature of work, amount to be paid and mode of payment. Contract may be oral as well.
f) During the subsistence of the contract, a bonded labourer is paid nominal wages which are lower than
the prescribed wages. He may be provided with daily meals and sometime a residence also.

g) A bonded labour is not entitled for holidays. If he absents himself, he has to give a substitute or
compensate the days of absence by doing extra work.

Constitutional Dimension

The Constitution of India incorporates special provisions for the eradication of this evil practice.

Article 14: Guarantees equality before law and equal protection of laws to all the persons residing within the
territory of India.

Article 21: Secures right to life and human dignity.

In Neerja Chaudhary v. State of Madhya Pradesh, 1984, the court held that failure on part of the state to
rehabilitate freed bonded labourers is a violation of their right to live with human dignity under Article 21 of
the Constitution.

Article 23: Prohibits, traffic in human being and beggar and other forms of forced labour

In Sanjit Roy v. State of Rajasthan, 1983, the Court held that where a person provides labour or service to
another for remuneration which is less than the minimum wage, the labour or service provided by him clearly
falls within the meaning of the words 'forced labour' and violates Article 23.

Article 24: Prohibits the employment of children below the age of 14 years.

Article 39. Certain principles of policy to be followed by the State:

a) That the citizens, men and women equally, have the right to an adequate means to livelihood.

b) That the ownership and control of the material resources of the community are so distributed as best
to sub serve the common good.

c) That the operation of the economic system does not result in the concentration of wealth and means
of production to the common detriment;

d) That there is equal pay for equal work for both men and women.

e) That the health and strength of workers, men and women, and the tender age of children are not
abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or
strength.

f) That children are given opportunities and facilities to develop in a healthy manner and in conditions
of freedom and dignity and that childhood and youth are protected against exploitation and against moral and
material abandonment.

Article 41: Right to work, to education and to public assistance in certain cases The State shall, within the limits
of its economic capacity and development, make effective provision for securing the right to work, to
education and to public assistance in cases of unemployment, old age, sickness and disablement.

Article 42: The State shall make provision for securing just and humane conditions of work and for maternity
relief.

The Bonded Labour System (Abolition) Act, 1976 is an Act to provide for the abolition of bonded labour system
with a view to preventing the economic and physical exploitation of the weaker sections of the people and for
matters connected therewith or incidental thereto

What is Bonded Labour?

Bonded labour is debt bondage and is a form of slavery that has been practiced for ages. It is known
as the worst form of modern slavery and is a profitable business as most of the labourers are made
to work for maximum time with minimal payment. It also includes forced work by an employer for a
fixed time without being paid, often as a way of repaying debt. A person becomes a bonded labourer
when his/ her labour is demanded as means of repayment for a loan. Not all bonded labour is
forced, but most forced labour practices, whether they involve children or adults, are of a bonded
nature.

The Salient Features of Bonded Labour Act:

The Act makes bonded labour illegal and a cognizable offence punishable with imprisonment up to 3
years with fine which may extend up to 2,000 rupees. The salient features of the Act are:

1. Bonded labour was declared illegal in the country in 1976. Thus, today it is against the law to
withhold any person for forced labour

2. Every bonded labourer shall stand freed and discharged from any obligation to render
forced labour.

3. Any obligation to repay bonded debt or part of it cannot be enforced.

4. No suits or proceeding can be brought in the civil court or before any authority for the
recovery of bonded debts.

5. Any decree or order for the recovery of bonded debt shall be deemed to have been fully
satisfied.

6. Any attachment made for recovery of bonded debt stands vacated.

7. Any attachment of movable/immovable property stands vacated and shall be restored to

the bonded labour.

8. The bonded labourer shall not be evicted from any homestead land which he is inoccupation
under any obligation.

9. The Act provides for a vigilance committee, for the purposes of this Act.

10. The Act is explicit on the point that bonded labour is paid less than the prescribed wages and
hence his wages are nominal and far below the normal wages in the locality.

In Mukesh Advani v. State of M.P., related to bonded labour, the Supreme Court as a first step
against exploitation of workmen directed the Central Government to issue notification specifying
minimum wages payable in stone mines.

In People's Union for Democratic Rights v. Union of India, the Supreme Court held that giving wages
below the limits set by the Minimum Wages Act would amount to forced labour. This was a
landmark decision of the Supreme Court which has made significant contributions to labour laws.
The Court gave a new dimension to several areas, such as minimum wage, employment of children,
enforcement of labour laws and public interest litigation.

In Bandhua Mukti Morcha v Union of India, the Supreme Court issued directions for the release and
rehabilitation of bonded labourers engaged in the mining operations and issued specific directions to
the Government of Haryana to ensure proper rehabilitation of the freed bonded labourers.

Objective:
The object of the Act is to provide for the abolition of bonded labour system in order to prevent the
economic and physical exploitation of the weaker sections of the society and for matters with or
incidental thereto.

Definitions (sec 2)

(a) “Advance”- means an advance, whether in cash or in kind or partly in cash or partly in kind, made
by one person (the creditor to another person the debtor)

(b) “Agreement” means

a. an agreement (whether written or oral or partly written and partly oral)

b. between a debtor and creditor, and

c. includes an agreement providing for forced labour, the existence of which is presumed
under any social custom prevailing in the concerned locality.

Explanation. —The existence of an agreement between the debtor and creditor is ordinarily
presumed, under the social custom, in relation to the systems mentioned under the Act.

(d)“Bonded debt” means an advance obtained or presumed to have been obtained, by a bonded
labourer under, or in pursuance of, the bonded labour system;

(e)“Bonded labour” means any labour or service rendered under the bonded labour system;

(f)“Bonded labourer” means a labourer who incurs, or has, or is presumed to have, incurred, a
bonded debt;

(g)“Bonded labour system” means the system of forced, or partly forced, labour under which a
debtor enters, or has, or is presumed to have, entered, into an agreement with the creditor to the
effect that,—

1. in consideration of an advance obtained by him or by any of his lineal ascendants or descendants

and in consideration of the interest, if any, due on such advance, or

2. in pursuance of any customary or social obligation, or

3. in pursuance of an obligation devolving on him by succession, or

4. for any economic consideration received by him or by any of his lineal ascendants or descendants,
or

5. by reason of his birth in any particular caste or community, He would—

1. render, by himself or through any member of his family, or any person dependent on him,
labour or service to the creditor, or for the benefit of the creditor, for a specified period or
for an unspecified period, either without wages or for nominal wages, or

2. forfeit the freedom of employment or other means of livelihood for a specified period or
for an unspecified period, or

3. forfeit the right to move freely throughout the territory of India, or

4. forfeit the right to appropriate or sell at market value any of his property or product of his
labour or the labour of a member of his family or any person dependent on him, and
includes the system of forced, or partly forced, labour under which a surety for a debtor
 enters, or has, or is presumed to have, entered, into an agreement with the creditor to the
effect that in the event of the failure of the debtor to repay the debt, he would render the
bonded labour on behalf of the debtor.

Sannasomannavara Somashekarappa V. Gorappa Rudraswamy

One Mr somashekarappa approached the parents of four children and paid some advance, in return
the children had to render service (grazing cattle) for a period of one year. Food and clothing were
provided to the children. A case was registered under the bonded labour abolition act. The court
observed that

1. there was no creditor-debtor relationship between the parents at the employer

2. It was child labour not bonded labour system

3. parents of the children were not compelled obliged to send children

4. The requirement of section 2 (g) was not fulfilled.

ABOLITION OF BONDED LABOUR SYSTEM

Abolition of bonded labour system. (sec 4)

1. On the commencement of this Act, the bonded labour system shall stand abolished and every
bonded labourer shall, on such commencement, stand freed and discharged from any obligation to
render any bonded labour.

2. After the commencement of this Act, no person shall

(a) make any advance under, or in pursuance of, the bonded labour system, or

(b) compel any person to render any bonded labour or other forms of forced labour.

On the commencement of the Act, the system of bonded labour is completely abolished and all the
bonded labours became free from the obligation to render bonded labour. It also prohibited making
advance in pursuance of bonded labour system.

The agreement, custom, etc., to be void.— (sec 5)

On the commencement of this Act, any custom or tradition or any contract, agreement or other
instrument, by virtue of which any person, or any member of the family or dependant of such
person, is required to do any work or render any service as a bonded labourer, shall be void and
inoperative

EXTINGUISHMENT OF LIABILITY TO REPAY BONDED DEBT

Liability to repay the bonded debt to stand extinguished.— (sec 6)

All bonded debts are deemed to be extinguished

1. On the commencement of this Act, every obligation of a bonded labourer to repay any bonded
debt, or such part of any bonded debt as remains unsatisfied immediately before such
commencement, shall be deemed to have been extinguished.

No suit shall be filed for recovery of bonded debt

2. After the commencement of this Act, no suit or other proceeding shall lie in any civil court or
before any other authority for the recovery of any bonded debt or any part thereof.

Decree or order deemed to be fully satisfied

3. Every decree or order for the recovery of bonded debt, passed before the commencement of this
Act and not fully satisfied before such commencement, shall be deemed, to have been fully satisfied.

Attachment and recovery stand vacated

4. Every attachment made before the commencement of this Act, for the recovery of any bonded
debt, shall, on such commencement, stand vacated; and, where, in pursuance of such attachment,
any movable property of the bonded labourer was seized and removed from his custody and kept in
the custody of any court or other authority pending sale thereof, such movable property shall be
restored, as soon as may be practicable after such commencement, to the possession of the bonded
labourer.

Property should be restored

5. Where, before the commencement of this Act, possession of any property belonging to a bonded
labourer or a member of his family or other dependant was forcibly taken over by any creditor for
the recovery of any bonded debt, such property shall be restored, as soon as may be practicable
after such commencement, to the possession of the person from whom it was seized.

Application if the property is not restored

6. If restoration of the possession of any property is not made within thirty days from the
commencement of this Act, the aggrieved person may, within such time as may be prescribed, apply
to the prescribed authority for the restoration of the possession of such property and the prescribed
authority may, after giving the creditor a reasonable opportunity of being heard, direct the creditor
to restore to the applicant the possession of the concerned property within such time.

7. An order made by any prescribed authority, under sub-section (6), shall be deemed to be an order
made by a civil court and may be executed by the court of the lowest pecuniary jurisdiction within
the local limits of whose jurisdiction the creditor voluntarily resides or carries on business or
personally works for gain.

Sale of the attached property before the Act will not get affected

8. For the avoidance of doubts, it is hereby declared that, where any attached property was sold
before the commencement of this Act, in execution of a decree or order for the recovery of a
bonded debt, such sale shall not be affected by any provision of this Act:

Provided that the bonded labourer, or an agent authorised by him in this behalf, may, at any time
within five years from such commencement, apply to have the sale set aside on his depositing in
court, for payment to the decree-holder, the amount specified in the proclamation of sale, for the
recovery of which the sale was ordered, less any amount, as well as mesne profits, which may, since
the date of such proclamation of sale, have been received by the decree-holder.

Pending suit shall stand dismissed

9. Where any suit or proceeding, for the enforcement of any obligation under the bonded labour
system, including a suit or proceeding for the recovery of any advance made to a bonded labourer, is
pending at the commencement of this Act, such suit or other proceedings shall, on such
commencement, stand dismissed.

10. On the commencement of this Act, every bonded labourer who has been detained in civil prison,
whether before or after judgment, shall be released from detention forthwith.

In T. Chakkalackal v. State of Bihar and Ors. the court held that, after Section 6 came into operation
in regard to bonded labourers whose debt stood extinguished, if they continued to work under the
same or any other employer, they have to be paid wages as required by law, such as under the
Minimum Wages Act, 1948.

Property of bonded labourer to be freed from mortgage, etc.—(sec 7)

1. All property vested in a bonded labourer which was, immediately before then commencement of
this Act under any mortgage, charge, lien or other incumbrances in connection with any bonded
debt shall stand freed and discharged from such mortgage, charge, lien or other incumbrances, and
where any such property was, immediately before the commencement of this Act, in the possession
of the mortgagee or the holder of the charge, lien or incumbrance, such property shall on such
commencement, be restored to the possession of the bonded labourer.

2. If any delay is made in restoring any property, to the possession of the bonded labourer, such
labourer shall be entitled, to recover from the mortgagee or holder of the lien, charge or
incumbrance, such mesne profits as may be determined by the civil court of the lowest pecuniary
jurisdiction within the local limits of whose jurisdiction such property is situated.

Freed bonded labourer not to be evicted from homestead, etc.— (sec 8)

1. No person who has been freed and discharged under this Act from any obligation to render any
bonded labour, shall be evicted from any homestead or other residential premises which he was
occupying immediately before the commencement of this Act as part of the consideration for the
bonded labour.

2. If, after the commencement of this Act, any such person is evicted by the creditor from any
homestead or other residential premises, the Executive Magistrate in charge of the Sub-Division
within which such homestead or residential premises is situated shall, as early as practicable, restore
the bonded labourer to the possession of such homestead or other residential premises.

Creditor not to accept payment against extinguished debt.— (sec 9)

1. No creditor shall accept any payment against any bonded debt which has been extinguished or
deemed to have been extinguished or fully satisfied by virtue of the provisions of this Act.

2. Whoever contravenes the provisions of sub-section (1) shall be punishable with imprisonment for
a term which may extend to three years and also with fine.

3. The court, convicting any person, in addition to the penalties which may be imposed, direct the
person to deposit the amount accepted, in the court, in the order for being refunded to the bonded
labourer.
IMPLEMENTING AUTHORITIES

Authorities who may be specified for implementing the provisions of this Act.Sec10
The State Government may confer such powers and impose such duties on a District Magistrate to
ensure that the provisions of this Act are properly carried out and the District Magistrate may specify
the officer, subordinate to him, who shall exercise all or any of the powers, and perform all or any of
the duties, so conferred or imposed and the local limits within which such powers or duties shall be
carried out by the officer so specified.

Duty of District Magistrate and other officers to ensure credit. Sec 11

The District Magistrate authorised and the officer specified by the District Magistrate shall, as far as
practicable, try to promote the welfare of the freed bonded labourer by securing and protecting the
economic interests of such bonded labourer so that he may not have any occasion or reason to
contract any further bonded debt.

Duty of District Magistrate and officers authorised by him. Sec12

It shall be the duty of every District Magistrate and every officer specified by him to inquire whether,
after the commencement of this Act, any bonded labour system or any other form of forced labour
is being enforced by, or on behalf of, any person resident within the local limits of his jurisdiction
and if, as a result of such inquiry, any person is found to be enforcing the bonded labour system or
any other system of forced labour, he shall forthwith take such action as may be necessary to
eradicate the enforcement of such forced labour.

Jai Singh v. State of Punjab - Where family members of petitioners were made to work in obligation
of loan advanced, it was held that it is a clear violation of mandate given under Article 23 of the
Constitution and Bonded Labour System (Abolition) Act, 1976. Hence, District Magistrate was
directed to take immediate action under Section 12 of the Act,

VIGILANCE COMMITTEES
Vigilance Committees Sec 13.

Every State Government shall constitute Vigilance Committees in each district and each Subdivision
as it may think fit.

Each Vigilance Committee constituted for a district, shall consist of the following members,
namely:—

a. the District Magistrate, or a person nominated by him, who shall be the Chairman;

b. three persons belonging to the Scheduled Castes or Scheduled Tribes and residing in the district,
to be nominated by the District Magistrate.

c. two social workers, resident in the district, to be nominated by the District Magistrate;
d. not more than three persons to represent the official or non-official agencies in the district
connected with rural development, to be nominated by the State Government;

e. one person to represent the financial and credit institutions in the district, to be nominated by the
District Magistrate.

Constitution of Vigilance Committee

Each Vigilance Committee constituted for a Sub-Division, shall consist of the following members,
namely:—

1. the Sub-Divisional Magistrate, or a person nominated by him, who shall be the Chairman;

2. three persons belonging to the Scheduled Castes or Scheduled Tribes and residing in the Sub-
Division, to be nominated by the Sub-Divisional Magistrate.

3. two social workers, resident in the Sub-Division, to be nominated by the Sub-Divisional

Magistrate;

4. not more than three persons to represent the official or non-official agencies in the SubDivision
connected with rural development to be nominated by the District Magistrate;

5. one person to represent the financial and credit institutions in the Sub-Division, to be nominated
by the Sub-Divisional Magistrate;

6. one officer specified under section 10 and functioning in the Sub-Division (District magistrate /
person authorised by him)

Functions of Vigilance Committee sec14

The functions of each Vigilance Committee shall be,—

a. to advise the District Magistrate or any officer authorised by him as to the efforts made, and
action is taken, to ensure that the provisions of this Act or of any rule made thereunder are properly
implemented;

b. to provide for the economic and social rehabilitation of the freed bonded labourers;

c. to co-ordinate the functions of rural banks and co-operative societies with a view to canalising
adequate credit to the freed bonded labourer;

d. to keep an eye on the number of offences of which cognizance has been taken under this Act;

e. to make a survey as to whether there is any offence of which cognizance ought to be taken under
this Act;

f. to defend any suit instituted against a freed bonded labourer or a member of his family or any
other person dependent on him for the recovery of the whole or part of any bonded debt or any
other debt which is claimed by such person to be bonded debt.

Any member authorized by the vigilante committee will defend the suit against the freed bonded
labourers. They will be deemed as authorized agent of the freed bonded labourer.
The burden of proof.—Whenever any debt is claimed by a bonded labourer, or a Vigilance
Committee, to be a bonded debt, the burden of proof that such debt is not a bonded debt shall lie
on the creditor.

OFFENCES AND PROCEDURE FOR TRIAL

Punishment for enforcement of bonded labour. (Sec 16 and 17)

Whoever, after the commencement of this Act, compels any person to render any bonded labour
shall be punishable with imprisonment for a term which may extend to three years and also with
fine which may extend to two thousand rupees.

Punishment for advancement of bonded debt. Whoever advances, after the commencement of this
Act, any bonded debt shall be punishable with imprisonment for a term which may extend to three
years and also with fine which may extend to two thousand rupees.

Punishment for extracting bonded labour under the bonded labour system.—

Whoever enforces, after the commencement of this Act, any custom, tradition, contract, agreement
or other instrument, by virtue of which any person or any member of the family of such person or
any dependant of such person is required to render any service under the bonded labour system,
shall be punishable with imprisonment for a term which may extend to three years and also with
fine which may extend to two thousand rupees; and, out of the fine, if recovered, payment shall be
made to the bonded labourer at the rate of rupees five for each day for which the bonded labour
was extracted from him.

The Act also has provision of punishment for omission or failure to restore possession of property to
bonded labourers (shall be punishable with imprisonment for a term which may extend to one year,
or with fine which may extend to one thousand rupees, or with both;)

Abetment to be an offence.

Whoever abets any offence punishable under this Act shall, whether or not the offence abetted is
committed, be punishable with the same punishment as is provided for the offence, which has been
abetted.

3. Equal Remuneration Act, 1976

In India, the constitution does not expressly state equal pay for equal work as a fundamental or even
constitutional right. It has been read into the Constitution through the interpretation of Articles 14,
15 and 16, which guarantee equality before the law, protection against discrimination and equality
of opportunity in matters of public employment. It was only through interpretation of Articles 14, 15
and 16 of the constitution through various judgments of the court that equal pay for equal work
became a fundamental right.

Article 39 of the Constitution envisages that the State shall direct its policy, among other things,
towards securing equal pay for equal work for both men and women. To give effect to this
constitutional provision, the President promulgated on the 26th September, 1975, the Equal
Remuneration Ordinance, 1975 so that the provisions of Article 39 of the Constitution may be
implemented in the year which was being celebrated as the International Women's Year. The
Ordinance provides for payment of equal remuneration to men and women workers for the same
work or work of similar nature and for the prevention of discrimination on grounds of sex.

The Ordinance also ensured that there will be no discrimination against recruitment of women and
provides for the setting up of Advisory committees to promote employment opportunities for
women.

The Equal Remuneration Act seeks to replace the Ordinance as an act to provide for the payment of
equal remuneration to men and women workers and for the prevention of discrimination, on the
ground of sex, against women in the matter of employment and for matters connected therewith or
incidental thereto.

In Dharwad District P.W.D. Employees' Association v. State of Karnataka, 1990, according to the SC,
the Equal remuneration Act, 1976, is a legislation providing equality of pay for equal work between
men and women which is a part of the principle, 'equal pay for equal work'.

Constitutional Dimension:

Equal pay for equal work as a phrase is not expressly mentioned in the chapter on Fundamental
rights of Indian Constitution yet there can be no second thought on the point whether it is
fundamental right or not. There are a number of provisions in the Constitution of India that ensure
that there is equal pay for equal work in India.

Article 14: Men and women to have equal rights & opportunities in the political, economic & social
spheres.

Article 15(1): Prohibits discrimination against any citizen on the grounds of religion, race, caste, sex
etc.

Article 15(3): Special provision enabling the State to make affirmative discriminations in favour of
women.

Article 16: Equality of opportunities in matter of public appointments for all citizens.

Article 39(a): The State shall direct its policy towards securing all citizens men and women, equally,
the right to means of livelihood.

Article 39(d): Equal pay for equal work for both men and women.

Article 42: The State to make provision for ensuring just and humane conditions of work and
maternity relief.

Article 51 (A) (e): To renounce the practices derogatory to the dignity of women.

Salient features of the Act:

The Act prohibits discrimination based on gender in recruitment and payment of remuneration. Any
person/employer who contravenes such provisions of the Act shall be punishable with fine which
shall not be less than 10,000 rupees which may extend to 20,000 rupees or with imprisonment for a
term which shall be not less than 3 months but which may extend to 1 year or with both for the first
offence, and with imprisonment which may extend to 2 years for the second and subsequent
offences
1. The remuneration paid by the employer to any worker employed in the establishment shall not be
less than the remuneration paid by him to the workers of the opposite sex in the establishment for
performing the same work.

2. No employer shall reduce the rate of remuneration of any worker, for the purpose of complying
with the provisions of this Act.

3. The Act provides for the maintenance of such registers and other documents in relation to the
workers employed by him as may be prescribed.

4. The Act provides for punishment for contravening provisions of the Act, such as:

i. Makes any recruitment in contravention with the provisions of the Act.

ii. Makes any payment or remuneration at unequal rates to men and women worker,
for the same work or work of a similar nature.

iii. Makes any discrimination between men and women workers in contravention of the
provisions of this Act.

iv. Omits or fails to carry out any direction made by the appropriate Government.

5. Companies and individual employers can both be held accountable to maintain the standards
prescribed under this Act.

6. Nothing in this Act shall apply:

i. To cases affecting the terms and conditions of a woman's employment in complying

with the requirements of any law giving special treatment to women.

ii. To any special treatment accorded to women in connection with the birth or
expected birth of a child, or the terms and conditions relating to retirement, marriage or
death or to any provision made in connection with the retirement, marriage or death.

In Randhir Singh v. Union of India, 1982, the Supreme Court has held that although the principle of
equal pay for equal work is not expressly declared by our Constitution as a fundamental right, but it
is certainly a constitutional goal under Articles 14, 16 and 39(c) of the Constitution. This right can,
therefore, be enforced in cases of unequal scales of pay based on irrational classification.

In another case of Frank Anthony Public School Employees' Association v. Union of Indian, 1986, the
court struck down Section 12 of the Delhi School Education Act as unconstitutional on the ground
that it was violative of Article 14 as it made discrimination in pay and other conditions of service of
school teachers mainly on the ground of aided schools and unaided minority schools.

In Dhirendra Chamoli v. State of UP, 1986, it has been held that the principle of equal pay is also
applicable to casual workers employed on daily wage basis. Thus, it was held that persons employed
in Nehru Yuwak Kendra in the country as casual workers on daily wage basis were doing the same
work as done by Class IV employees appointed on regular basis and therefore entitles to same salary
and conditions of work.

In another significant verdict, in state of Punjab and Ors v Jagjit Singh and Ors, 2017, the Supreme
Court has held that the principle of equal pay for equal work has to be made applicable to those
engaged as daily wagers, casual and contractual employees who perform the same duties as the
regulars.
Definitions

Sec. 2 of the Equal Remuneration Act, 1976 provides for the meaning of the following words:

a) "appropriate Government" in relation to

i. Any employment carried on under the authority of the Central Government or a railway
administration, or in relation to a banking company, a mine, oilfield or major port or any
corporation established by or under a Central Act, the Central Government.
ii. Any other employment, the State Government.

g) Remuneration means the basic wage or salary, and any additional emoluments whatsoever
payable, either in cash or in kind, to a person employed in respect of employment or work done in
such employment.

h) "same work or work of a similar nature" means work when the skill, effort and responsibility
required are the same, when performed under similar working conditions, by a man or a woman and
the differences, if any, between the skill, effort and responsibility required of a man and those
required of a woman are not of practical importance.

In, Mewa Ram v. A.I.I.M.S, 1989, the SC has held that if the duties and functions are of similar nature
but if educational qualifications prescribed for the two posts are different and there is difference in
measure of responsibilities, the principle of equal pay for equal work would not apply. Thus,
different salaries can be given to Hearing Therapists and Audiologists in A.I.I.M.S due to difference in
educational qualifications.

In Government of West Bengal v. Tarun K. Roy, 2004'. the SC held that, equal pay for equal work
would not apply where educational qualification and other considerations such as source of
recruitment and nature of work done, vary between two classes of employees, although nature of
work of done is the same.

Payment of Remuneration at Equal Rates to men and women workers and other matters

Section 4 – Duty of employer to pay equal remuneration to men and women workers for same work
or work of a similar nature

Section 4 of the Act provides for the payment of equal remuneration to both men and women
workers for the same work or work of similar nature. Section 4 provides that:

1. The remuneration paid by the employer to any worker employed in the establishment shall
not be less favourable than the remuneration paid by him to the workers of the opposite sex in the
establishment for performing the same work or work of a similar nature.

2. No employer shall reduce the rate of remuneration of any worker, for the purpose of
complying with the provisions of sub-section (1).

3. An establishment where the remuneration paid to men and women before the
commencement of the Act are different only on the grounds of sex for the same work or nature of
work, the highest of such remuneration will be the rate at which remunerations will be paid to men
and women after the commencement of this Act.

However, in Ashok Kumar Garg v. State of Rajasthan, 1994, the SC held that, the question of equal
work depends on various factors like responsibility, skill, effort and condition of work.
Burden of proof lies upon the workman claiming equal pay for equal work.

In Mackinnon Mackenzie and Co. Ltd v. Avdrey D’ Costa, the SC held that, any agreement between
the management and the employees must be in accordance with the provisions of this Act.

Sec 5 – No discrimination to be made while recruiting men and women workers

Section 5 prohibits discrimination in recruitment between men and women. According to this
section, no employer shall discriminate against women during recruitment for the same work or
work of a similar nature except where the employment of women in such work is prohibited or
restricted by law for the time being in force.

However, this shall not affect any priority or reservation for scheduled castes or scheduled tribes, ex-
servicemen, retrenched employees of any other class or category of persons.

Sec. 6 - Advisory Committee

Section 6 provides for the establishment of an Advisory Committee for the purposes of this Act.

1. The appropriate Government shall constitute one or more Advisory Committees to advise it
for increasing employment opportunities for women and the extent to which women may be
employed in establishments as the Central Government may specify.

2. Every Advisory Committee shall consist of not less than 10 persons, nominated by the
appropriate Government, of which one-half shall be women.

3. While tendering advice, the Advisory Committee shall have regard to the number of women
employed in the concerned establishment or employment, the nature of work, hours of work,
suitability of women for employment, as the case may be, the need for providing increasing
employment opportunities for women, including part-time employment, and such other relevant
factors as the Committee may think fit.

4. The Advisory Committee shall regulate its own procedure.

5. The appropriate Government may, after considering the advice tendered to it by the Advisory
Committee and after giving to the persons concerned in the establishment or employment an
opportunity to make representations, issue such directions in respect of employment of women
workers, as the appropriate Government may think fit.

sec. 7 - Power of appropriate Government to appoint authorities for hearing and deciding claims
and complaint,

Section .7 lays down the powers of the appropriate government while appointing authorities for
hearing and deciding claims and complaints.

1. The appropriate Government may, by notification, appoint officers, not below the rank of a
Labour Officer, as authorities for the purpose of hearing and deciding

i. Complaints with regard to the contravention of any provision of this Act.

ii. Claims arising out of non-payment of wages at equal rates to men and women workers for
the same work or work of a similar nature,

The appropriate government shall also define the local limits within which each, such authority shall
exercise its jurisdiction.
2. Every complaint or claim shall be made in such manner as may be prescribed.

3. If any question arises as to whether two or more works are of the same nature, it shall be decided
by the authority appointed under sub-section (1).

4. Where a complaint or claim is made to the authority appointed, it may, after giving the applicant
and the employer an opportunity of being heard, and after such inquiry, direct

i. In the case of a claim arising out of a non-payment of wages at equal rates to men and
women workers for the same work, that payment be equally.

ii. In the case of complaint, that adequate steps be taken by the employer so as to ensure
that there is no contravention of any provision of this Act

5. Every authority appointed under sub-section (1) shall have all the powers of a Civil Court under
the Code of civil Procedure for the purpose of:

• Taking evidence
• Enforcing the attendance of witnesses
• Compelling the production of documents,

6. Any employer or worker aggrieved by any order made by an authority appointed under sub-
section (1), may within 30 days from the date of the order, maker an appeal to such authority as the
appropriate Government may specify (The Regional Labour Commissioners), After hearing the
appeal, the appellate authority may confirm, modify or reverse the order.

7. The appellate authority, if satisfied that the appellant was prevented by sufficient cause from
making the appeal within the specified period specified, allow the appeal to be made within a
further period of 30 days.

8. Any money to be recovered from an employer due to the decision of an authority appointed
under this section, shall be done as per the provisions of the Industrial Disputes Act.

Sec 8 - Duty of Employer to maintain registers

Every employer shall maintain such registers and other documents in relation to the workers
employed by him as may be prescribed.

Inspectors (Sec 9)

Inspectors shall be appointed by the appropriate government to investigate whether the provisions
of this act are being followed by the employers or not. Every inspector shall within the local limits of
his jurisdiction:

• Shall enter any building, factory, premises or vessel with assistance.

• Shall examine documents relating to the muster-roll or other documents relating to the
employment of workers.

• Shall take evidence of any person to ascertain whether the provisions of this act are being
compiled or not.

• Shall examine the employer, his agent or any other person found in charge of the
establishment.

• Shall make copies of any register or document related to the establishment under this act.
 • Shall require any person to produce any register or document or any information.

Penalties (Sec 10)

After the commencement of this act, if any employer fails to follow the following shall be punishable
with a maximum imprisonment of one month or with a maximum fine of ten thousand rupees or
with both:

• Fails to maintain any register or other document in relation to workers.

• Fails to produce any register, muster-roll or other document relating to the workers.

• Refuses to give any evidence or any information.

• Prevents his agent, servant or any other person in charge of the establishment or any
worker, from giving evidence.

After the commencement of this act, if any employer does the following shall be punishable with
fine which shall not be less than ten thousand rupees but may extend to twenty thousand rupees or
with imprisonment for a term which shall be not less than three months but may extend to one year
or with both for the first offence and with imprisonment which may extend to two years for the
second and subsequent offences:

• Pays at unequal rates to men and women workers, for the same work or work of a similar
nature.

• Makes any discrimination between men and women workers in contravention of the
provisions of this Act.

• Fails to follow any direction made by the appropriate government

• Make any recruitment in contravention of the provisions of this Act.

If any person being required to produce any register or any other document to an inspector omits or
refuses to produce or to give any information, then he shall be punishable with a maximum fine of
five hundred rupees.

4. Inter-State Migration of Workers Act, 1979

The system of employment of Inter-State migrant labour is an exploitative system prevalent in many
states. In Orissa and in some other States for example, the system of employment of Inter-State
migrant labour known as Dadan Labour is in vogue. In Orissa, Dadan Labour is recruited from various
parts of the State through contractors or agents called Sardars or Khatadars for work outside the
State in large construction projects. At the time of recruitment Sardars or Khatadars promise that
wages calculated in piece-rate basis would be settled every month but usually this promise is never
kept. Once the worker comes under the clutches of the contractor, he takes him to a far-off place on
payment of railway fare only. No working hours are fixed for these workers and they have to work
on all the days in a week under extremely bad working conditions. The provisions of the various
labour laws are not being observed in their case and they are subjected to various mal practices.

In Francis Coralie v. Union Territory of Delhi, 1981, Justice P.N. Bhagwati observed, "It is the
fundamental right of everyone in this country to live with human dignity and free from exploitation.
This right to live with human dignity enshrined in Article 21 of the Constitution".
The question of protection and welfare of Dadan Labour was considered by the Twenty- eighth
Session of the Labour Ministers' Conference held at New Delhi. It was recommended to set up a
Compact Committee to go into the whole question and to suggest measures for eliminating the
abuses prevalent in the system. Accordingly in February, 1977 the Compact Committee was
constituted and it recommended, inter alia, that a separate Central legislation may be enacted to
regulate the employment of Inter-State migrant workmen as it was felt that the provisions of the
Contract Labour (Regulation and Abolition) Act, 1970, even after necessary amendments, would not
adequately take care of the variety of mal practices indulged in by the contractors, Sardars or
Khatadars. The recommendations of the Compact Committee were examined in consultation with
the State Governments and the Ministries in the Government of India. Accordingly, the Inter-State.
Migrant Workmen (Regulation of Employment and Conditions of Service) Bill, 1979 was introduced
in the Parliament.

The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979,
is an Act to regulate the employment of inter-State migrant workmen and to provide for their
conditions of service and for matters connected therewith.

Salient features of the Act

The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979,
seeks to regulate the employment of inter-State migrant workmen and to provide for their
conditions of service and for matters connected therewith. It provides for:

1. The proposed legislation will apply to every establishment in which 5 or more inter-State
migrant workmen are employed or were employed on any day of the preceding 12 months. It will
also apply to every contractor who employs or employed 5 or more Inter-State migrant workmen on
any day of the preceding 12 months.

2. The establishment proposing to employ Inter-State migrant workmen will be required to be

registered with registering officers appointed under the Central Government or the State
Governments, as the case may be, depending on whether the establishment falls under the Central
sphere or State sphere.

3. Every contractor who proposes to recruit or employ Inter-State migrant workmen will be
required to obtain a licence from the specified authority of both, the State to which the workman
belongs (home State) and the State in which he is proposed to be employed (host State).

4. The contractor will be required to furnish particulars regarding the workmen in the
prescribed form to the specified authority of both the home State and the host State. The
contractor will also be required to issue to every workman employed by him, a pass book containing
the details of the employment.

5. Specific guidelines have been indicated regarding the wages payable to Inter-State migrant
workman and he is required to be paid wages from the date of his recruitment.

6. The Inter-State migrant workman will be entitled to a displacement allowance and a journey
allowance in addition to his wages.

7. The amenities that are required to be provided to the workmen would include provision of
suitable residential accommodation, adequate medical facilities, protective clothing to suit varying
climatic conditions and suitable conditions of work taking into account that they have migrated from
another State.
8. Inspectors will be appointed by the appropriate Government to see that the provisions of
the legislation are being complied with. In addition, power has been given to the State Government
of the home State to appoint, after consultation with the Government of the host State, inspectors
for visiting the establishments wherein workmen from the former State are employed to see
whether the provisions of the legislation are being complied with in the case of such workmen.

9. The inter-State migrant workman may raise an industrial dispute arising out of his
employment either in the host State or in the home State after his return to that State after the
completion of the contract of employment. He will also be permitted to apply for the transfer of
proceedings in relation to an industrial dispute pending before an authority in the host State to the
corresponding authority in the home State on the ground that he has returned to the State after the
completion of his contract.

10. Deterrent punishments have been proposed for contravening the provisions of this Act.

Applicability

It applies;

a) To every establishment in which 5 or more Inter-state migrant workmen are employed or

who were employed or who were employed on any day of the preceding 12 months.
b) To every contractor who employs or who employed 5 or more Inter-State migrant workmen
on any day of the preceding 12 months

Sec 2 - Definitions

Sec 2 of the Inter-State Migrant Workmen (Regulation of Employment and Condition of service)Act,
1979 provides for the meaning of the following words

a) Appropriate Government

i. Any establishment pertaining to any industry carried on by or under the authority of the
Central Government, it shall be the Central Government.
ii. Any other establishment, it shall he the Government of the State in which the other
establishment is situated.
b) contractor

With respect to an establishment, means a person, who undertakes (whether as an independent

contractor, agent employee or otherwise) to produce a given result for the establishment, other
than mere supply of goods or articles of manufacture to such establishment, by the employment of
workmen or to supply workmen to the establishment.

In Shri Chintaman Rao v. State of Madhya Pradesh, 1958, the judiciary in its part also discouraged
the practice of employments of contract labour and criticized the system of middle men since sock
workers were not getting wages according to law and lack of conducive working conditions

c) Establishment

means any office or department of the Government or a local authority or any place where any
industry, trade, business, manufacture or occupation is carried on;

d) Inter-State migrant workman

refers to any person who is recruited by a contractor in one State under an agreement for
employment in an establishment in another State. This may be with or without the knowledge of the
principal employer of such establishment.

In Labourers, Salal Hydro Project v. State of Jammu and Kashmir, 1983, the court held that, workers
recruited by khatadars and brought from other States for work in construction project carried on by
Central Government or contractors or sub-contractors are Inter-State Migrant workmen.

In Sibi Thomas V State of Kerala, 2012, the Kerala High Court held that, on a perusal of the different
provisions of the Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979,
any establishment or any contractor under such establishment, who has procured or brought
employees from other states even under some oral or other arrangement, will be covered by the
provisions under the Act.

e) principal employer

refers to:

i. With respect to any office or department of the Government or a local authority, it shall
be the head of that office, department or authority or such other officer as the
Government or the local authority specifies.
ii. With respect to a factory, the owner or occupier of the factory and where a person has
been named as the manager of the factory under the Factories Act, the person so
named.
iii. With respect to any other establishment, any person responsible for the supervision and
control of the establishment.

f) wages

shall have the meaning as in the Payment of Wages Act, 1936.

g) workman

means any person employed for work in any establishment to do any skilled, semi-skilled, unskilled,
manual, supervisory, technical or clerical work for hire or reward, where the terms of employment
may be express or implied. It however, does not include persons:

Who are employed mainly in a managerial or administrative capacity.

Who are employed in a supervisory capacity, draws wages exceeding 500 rupees per mensem, and
has functions mainly of a managerial nature.

Registration of establishments employing inter-state migrant workmen

Sec 3 – Appointment of registering officers

Section 3 provides for the appointment of registering Officers for the purposes of this Act.

According to Section 3, the appropriate Government may, by order notified in the Official Gazette
appoint Government officers, as it deem fit to be registering officers for the purposes of this Chapter
and also define the limits, within which a registering officer shall exercise the powers conferred on
him.
Sec – 4 – Registration of certain establishments

Section 4 of the Act provides for the registration of certain establishments. Section 4 lays down that:

1. Every principal employer of an establishment to which this Act applies shall make an
application to the registering officer, in the prescribed manner along with such fees for the
registration of the establishment within the period as specified by the appropriate government.

However, the registering officer may accept an application for registration after the expiry of the
period fixed in that behalf, if the registering officer is satisfied that the applicant was prevented by
sufficient cause from making the application in time.

2. Within one month of receiving an application for registration, the registering officer shall:

a) If the application is complete in all respects, register the establishment and issue to the principal
employer of the establishment a certificate of registration in the prescribed form.

b) If the application is not complete, return the application to the principal employer of the
establishment.

3. After the receiving an application for registration of an establishment under this Act, if the
registering officer:

• does not grant the certificate of registration within a period of one month and
• neither returns the incomplete application within a period of one month,

the registering officer shall, within 15 days of receiving an application in this behalf, from the
principal employer, register the establishment and issue the certificate of registration.

Sec. 5 - Revocation of registration in certain cases

Section 5 of the Act provides for revocation of the registration certificate issued under Section 4.

If the registering officer is satisfied, that:

i. The registration of any establishment has been obtained by misrepresentation or

suppression of information and facts.

ii. The registration has been obtained by fraud.

iii. The registration has become useless or ineffective and, therefore, requires to be revoked,

The registering officer may, after giving an opportunity to the principal employer of the
establishment to be heard, revoke the registration and communicate the written order to the
principal employer.

If the registering officer considers it necessary, he may, pending such revocation, suspend the
operation of the registration certificate for a period as may be specified in the order and serve the
order with reasons.

Sec. 6 - Prohibition against employment of inter-State migrant workmen without registration

Section 6 of the Act provides that, no principal employer of an establishment to which this Act
applies shall employ inter-State migrant workmen in the establishment unless a certificate of
registration has been issued under this Act.
Licensing Of Contractors

Sec 7 – Appointment of Licencing Officers

Section 7 provides for the appointment of Licensing Officers for the purposes of this Act.

According to Section 7, the appropriate Government may, by order notified in the Official Gazette
appoint Government officers, as it deems fit to be licensing officers for the purposes of this Chapter
and also define the limits, within which a licensing officer shall exercise the powers conferred on
him.

Sec. 8 - Licensing of contractors

Section 8 of the Act provides for licensing of contractors.

1. The Act further lays down that, no contractor to whom this Act applies shall:

i. Recruit any person in a State for the purpose of employing him in any establishment situated
in another State, except in accordance with a licence issued by the licensing officer.

ii. Employ as workmen for the execution of any work in any establishment in any State,
persons from another State (whether or not in addition to other workmen) except in accordance
with a licence issued by the licensing officer.

2. Subject to the provisions of this Act, a licence issued under Section 8, may specify:

• The terms and conditions of the agreement or arrangement under which the workmen will
be recruited.
• The remuneration payable.
• Hours of work.
• Fixation of wages
• Other essential amenities in respect of the inter-State

3. The licensing officer may also require the furnishing of a security for the performance of the
conditions of the licence is satisfied from the person who has applied for, or who has been issued a
licence.

Sec 9 – Grant of Licences

Section 9 provides for the grant of licences.

1. Every application for the grant of a licence under Section 8 shall be made in the prescribed form
and shall contain the particulars regarding

• The location of the establishment

• The nature of process
• Operation or work for which inter-State migrant workmen are to be employed
• Other particulars as may be prescribed.

2. The licensing officer may investigate the application received for ensuring the correctness of the
information/facts provided.

3. A licence granted under section 8, shall be valid for the period specified and may be renewed from
time to time on payment of such fees and on such conditions as may be prescribed.
Sec 10 – Revocation, Suspension and amendment of licences

Section 10 provides for Revocation, suspension and amendment of licences.

1. If the licensing officer is satisfied that:

i. A licence granted under section 8 has been obtained by misrepresentation or suppression of

information/fact.
ii. The licence holder has, without reasonable cause, failed to comply with the conditions
subject to which the licence has been granted.
iii. The licence holder has, without reasonable cause, contravened any of the provisions of this
Act.

Then, the licensing officer may, after giving the holder of the licence an opportunity to be heard, by
order in writing, revoke the licence or forfeit the security furnished by him under Section 8 of the Act

1. The licensing officer may also suspend the operation of the licence for such period as may be
specified in the order and served to the licence holder in writing.

2. The licensing officer may also vary or amend a licence granted under section 8.

Sec. 11 — Appeal

Section 11 provides for making an appeal under this Act. Section 11 provides that:

1. Any person aggrieved by an order made under Sections 4,5, 8 or 10 may, within 30 days
from the date on which the order is communicated to him, make an appeal to an appellate officer
who shall be a person nominated in this behalf by the appropriate Government.

The appellate officer may accept the appeal after the expiry of 30 days, if he is satisfied that the
appellant was prevented by sufficient cause from filing the appeal in time.

2. On receipt of an appeal, the appellate officer shall, after giving the appellant an opportunity
of being heard, dispose of the appeal as expeditiously as possible.

Duties and obligations of contractors

Sec. 12 - Duties of contractors

Section 12 provides for duties of contractors.

It shall be the duty of every contractor:

i. To furnish the required particulars in the prescribed form, to the specified authority in the
State from which an inter-State migrant workman is recruited and in the State in which the workman
is employed, within 15 days from the date of recruitment, or, the date of employment.

If any change occurs in any of the particulars so furnished, such change shall be notified to the
specified authorities of both the States

ii. To issue every inter-State migrant workman, a pass book having a passport size photograph
of the workman and, indicating in Hindi and English, and where the language of the workman is not
Hindi or English, also in the language of the workman:

a) The name and place of the establishment where the workman is employed

b) The period of employment

c) The proposed rates and modes of payment of wages

d) The displacement allowance payable

e) The return fare payable to the workman on the expiry of the employment period and

Deductions made

iii. After the expiry of the employment period, facilitate a return journey and furnish to the
specified authority in the State from which he is recruited and in the State in which he is employed, a
declaration that all the wages and other dues payable to the workman and the fare for the return
journey back to his State have been paid.

In Rajan Kudumbathil V Union of India, 2009, the Kerala HC held that, a methodology shall be
evolved to get migrant workers registered at the Panchayat/corporation/ District level to issue photo
Identify cards, making it mandatory for employers to report about such migrant workers to the
competent authority, if these workers are engaged by them.

Wages, welfare and other facilities to be provided to inter- state migrant workmen

Sec. 13 - Wage rates and other conditions of service of inter-State migrant workmen

Section 13 provides for the wage rates, holidays, hours of work and other conditions of service of an
inter-State migrant workman:

1. Where the inter-state workman in any establishment, performs the same or similar kind of work
as is being performed by any other workman in that establishment, the wage rates, holidays, hours
of work and other conditions of service shall be the same as those applicable to other workmen.

2. In any other case, as prescribed by the appropriate Government.

3. However, an Inter-State migrant workman shall in no case be paid less than the wages fixed under
the Minimum Wage. Act, 1948.

Sec – 15 – Displacement allowance

1. At the time of recruitment, the contractor shall pay a displacement allowance equal to 50 per cent
of the monthly wages payable to him or 75 rupees, whichever is higher.

2. The amount paid to a workman as displacement allowance shall not be refundable and shall be in
addition to the wages or other amounts payable to him.

Sec. 15 - Journey allowance, etc.

1. The Contractor shall pay a journey allowance of a sum not less than the fare from the place
of residence of the inter-State migrant workman in his State to the place of work in the other State.
The journey allowance shall include both outward as well as return expense.

2. The workman shall be entitled to payment of wages during the period of such journeys as if
he were on duty.

Sec. 16 - Other facilities

It shall be the duty of every contractor employing inter-State migrant workmen in connection with
the work of an establishment to which this Act applies:

1. To ensure regular payment of wages to such workmen.

2. To ensure equal pay for equal work irrespective of sex.

3. To ensure suitable conditions of work.

4. To provide and maintain suitable residential accommodation to such workmen during the
period of their employment.

5. To provide the prescribed medical facilities to the workmen, free of charge.

6. To provide such protective clothing to the workmen as may be prescribed.

7. In case of fatal accident or serious bodily injury to any such workman, to report to the
specified authorities of both the States and also the next of kin of the workman.

Sec. 17 - Responsibility for payment of wages

1. A contractor shall be responsible for payment of wages to each inter-State migrant workman
employed by him and such wages shall be paid before the expiry of such period as may be
prescribed.

2. In case the contractor fails to make payment of wages within the prescribed period or makes
short payment, then the principal employer shall be liable to make payment of the wages in full or
the unpaid balance due, to the inter-State migrant workman employed by the contractor. The same
may be recovered from the contractor either by deduction from any amount payable to the
contractor under any contract or as a debt payable by the contractor.

Inspecting staff

Sec. 20 - Inspectors

1. The appropriate Government may, by notification in the Official Gazette, appoint such
persons as it thinks fit to be inspectors for the purposes of this Act, and define the local limits within
which they shall exercise their powers under this Act.

2. The inspector may:

a) Enter such premises where interstate migrant workers may be employed for the purpose of:

i) Ensuring that the provisions of this Act relating to the payment of wages, conditions
of service, or facilities to be provided to such workmen are being complied with.

ii) Examining any register or record or notices required to be kept or exhibited under
this Act.

b) Examine any person found in any such premises or place for the purpose of determining whether
such person is an inter-State migrant workman.

c) Collect information regarding names and addresses of the persons to, for and from whom the
work is given out or received.

d) Seize or take copies of such register, record of wages, or notices that may be relevant in respect of
an offence under this Act which may have been committed by a principal employer or contractor,
and

e) Exercise such other powers as may be prescribed.

3. A State Government may appoint Government officers to ensure that the provisions of this
Act are being complied with when it comes to any workmen belonging to that State and employed in
an establishment situated in another State. However, no such order shall be issued without the
concurrence of the State Government in which such workmen are employed.

In Dr. Damodar Panda v. State of Orissa, 1990, the SC held that, officers of the home state must be
allowed by the host state to hold inquiries in the host state regarding persons of the home state
working as migrant labour in the host state.

4. Any person required to produce any document or information required, by an inspector shall
be legally bound to do so under the Act

Sec 23 – Registers and other records to be maintained

1. Every principal employer and every contractor shall maintain such registers and records
containing the particulars of the inter-State migrant workmen employed, the nature of work
performed by such workmen, the rates of wages paid to the workmen and such other
particulars in such form as may be prescribed.
2. Every principal employer and every contractor shall display a notice within the premises of
the establishment containing particulars about the hours of work, nature of duty and such
other information as may be prescribed.

Sec. 24 - Obstructions

1. Whoever obstructs an inspector or an authorised person appointed under Section 20 from

discharging his duties under this Act or refuses or wilfully neglects to afford the inspector or
authorised person any reasonable facility for making any inspection, examination, inquiry or
investigation, shall be punishable with imprisonment for a term which may extend to 2 years, or
with fine which may extend to 2,000 rupees, or with both.

2. Whoever wilfully refuses to produce any register or document to be maintained under this
Act or prevents any person from being examined by any inspector or authorised person under this
Act, shall be punishable with imprisonment for a term which may extend to 2 years, or with fine
which may extend to 2,000 rupees, or with both.

Sec. 25 - Contravention of provisions regarding employment of inter-State migrant workmen

Whoever contravenes any provisions of this Act regarding the employment of inter-State migrant
workmen or the licence granted under this Act, shall be punishable with imprisonment for a term
which may extend to one year, or with fine which may extend to 1,000 rupees, or with both

In the case of a continuing contravention, with an additional fine which may extend to 100 rupees
for every day during which such contravention continues after conviction for the first such
contravention.

The Sexual Harassment of Women at Workplace Prevention,

Prohibition and Redressal) Act, 2013

1. Vishaka Guidelines against Sexual Harassment at Workplace

VISHAKA GUIDELINES
The Vishaka Guidelines were a set of procedural guidelines for use in India in cases of sexual
harassment. They were promulgated by the Indian Supreme Court in 1997 and were superseded in
2013 by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act.

Background

Pre-1997 the person facing sexual harassment at workplace had to lodge a complaint under Section
354 of the Indian Penal Code 1860 that deals with the 'criminal assault of women to outrage
women's modesty', and Section 509 that punishes an individual/individuals for using a 'word,
gesture or act intended to insult the modesty of a woman.

During the 1990s, Rajasthan state government employee Bhanwari Devi who tried to prevent child
marriage as part of her duties as a worker of the Women Development Programme was raped by the
landlords of the community. The feudal patriarchs who were enraged by her (in their words: "a lowly
woman from a poor and potter community") 'guts' decided to teach her a lesson and raped her
repeatedly. The rape survivor did not get justice from Rajasthan High Court and the rapists were
allowed to go free. This enraged a women's rights group called Vishaka that filed a public interest
litigation in the Supreme Court of India.

This case brought to the attention of the Supreme Court of India, "the absence of domestic law
occupying the field, to formulate effective measures to check the evil of sexual harassment of
working women at all work places."

Vishakha vs. State of Rajasthan

In 1997, the Supreme Court passed a landmark judgment in the same Vishaka case laying down
guidelines to be followed by establishments in dealing with complaints about sexual harassment.
Vishaka Guidelines were stipulated by the Supreme Court of India, in Vishakha and others v State of
Rajasthan case in 1997, regarding sexual harassment at workplace. The court stated that these
guidelines were to be implemented until legislation is passed to deal with the issue.

The court decided that the consideration of "International Conventions and norms are significant for
the purpose of interpretation of the guarantee of gender equality, right to work with human dignity
in Articles 14, 15 19(1)(g) and 21 of the Constitution and the safeguards against sexual harassment
implicit therein."

What is sexual harassment

Sexual harassment includes such unwelcome sexually determined behaviour

(whether directly or by implication) as:

a) physical contact and advances;

b) a demand or request for sexual favors;

c) sexually colored remarks;

d) showing pornography;

e) any other unwelcome physical verbal or non-verbal conduct of sexual nature.

Where any of these acts is committed in circumstances where the victim has a reasonable
apprehension that in relation to the victim’s employment or work whether she is drawing salary, or
honorarium or voluntary, whether in government, public or private enterprise such conduct can be
humiliating and may constitute a health and safety problem.

It is discriminatory for instance when the woman has reasonable grounds to believe that her
objection would disadvantage her in connection with her employment or work including recruiting
or promotion or when it creates a hostile work environment.

Adverse consequences might be visited if the victim does not consent to the conduct in question or
raises any objection thereto.

Thus, sexual harassment need not involve physical contact. Any act that creates a hostile work
environment - be it by virtue of cracking lewd jokes, verbal abuse,circulating lewd rumours etc.
counts as sexual harassment.

The creation of a hostile work environment through unwelcome physical verbal or non-verbal
conduct of sexual nature may consist not of a single act but of a patternof behavior comprising many
such acts.

Thus, it is important that the victim report such behavior as soon as possible and not wait for it to
become worse. In some cases, the psychological stigma of reporting the conduct of a co-worker
might require a great deal of courage on the part of the victim and they may report such acts after a
long period of time. The guidelines suggest that the complaint mechanism should ensure time bound
treatment of complaints, but they do not suggest that a report can only be made within a short
period of time since the incident occurred.

Often, the police refuse to lodge FIRs for sexual harassment cases, especially where the harassment
occurred sometime ago.

Employer's obligations

Note that the Vishaka Guidelines are not sufficient for legal compliance for employers as the same
has been replaced by a full fledged statute of the Parliament. Although the statute mostly retains
the framework provided in the Guidelines, there are significant differences and it is the statute that
the employers must follow. For instance, the definition of sexual harassment has significantly
changed. From this perspective, the Vishaka Guidelines is of only historical and academic importance
now. It will also be relevant in cases that were brought up before 2013 enactment of the law.

Recently the minister for Women's Welfare Maneka Gandhi has stated that government will take
tough steps against any organisations, including NGOs that do not implement the new law. It is a
good idea to use a checklist to make sure that your organisation is compliant with the law. A sample
checklist for sexual harassment compliance is available here.

Internal Complaints Committee and Local Complaints Committee:

The Sexual Harassment Act requires an employer to set up an 'Internal Complaints Committee'
("ICC") at each office or branch having more than 10 employees of any gender. The government is in
turn required to set up a 'Local Complaints Committees' ("LCC") at the district level to investigate
complaints regarding sexual harassment from establishments where the ICC has not been
constituted on account of the establishment having less than 10 employees or if the complaint is
against the employer.

The Sexual Harassment Act, 2013 also sets out the constitution of the committees, process to be
followed for making a complaint and inquiring into the complaint in a time bound manner.
Interim Reliefs : The Sexual Harassment Act empowers the ICC and the LCC to recommend to the
employer, at the request of the aggrieved employee, interim measures such as (i) transfer of the
aggrieved woman or the respondent to any other workplace; or (ii) granting leave to the aggrieved
woman up to a period of 3 months in addition to her regular statutory/ contractual leave
entitlement.

In addition to ensuring compliance with the other provisions stipulated, the Sexual Harassment Act
casts certain obligations upon the employer to, inter-alia,

• provide a safe working environment

• display conspicuously at the workplace, the penal consequences of indulging in acts that may
constitute sexual harassment and the composition of the Internal Complaints Committee

• organise workshops and awareness programmes at regular intervals for sensitizing employees on
the issues and implications of workplace sexual harassment and organizing orientation programmes
for members of the Internal Complaints Committee

• treat sexual harassment as a misconduct under the service rules and initiate action for misconduct.

• The employer is also required to monitor the timely submission of reports by the ICC.

If an employer fails to constitute an Internal Complaints Committee or does not comply with any
provisions contained therein, the Sexual Harassment Act prescribes a monetary penalty of up to INR
50,000 (approx. US$1,000). A repetition of the same offence could result in the punishment being
doubled and /or de-registration of the entity or revocation of any statutory business licenses.

Complaints mechanism

All women who draw a regular salary, receive an honorarium, or work in a voluntary capacity in the
government, private sector or un-organised sector come under the purview of these guidelines.

• All workplaces should have an appropriate complaints mechanism with a complaints committee,
special counsellor or other support services.

• A woman must head the complaints committee and no less than half its members should be
women.

• The committee should include an NGO/individual familiar with the issue of sexual harassment.

• The complaints procedure must be time-bound.

• Confidentiality must be maintained.

• Complainants/witnesses should not experience victimization/discrimination during the process.

Preventive steps

• Sexual harassment should be affirmatively discussed at workers' meetings, employer-employee

meetings, etc.

• Guidelines should be prominently displayed to create awareness about the rights of female
employees.

• The employer should assist persons affected in cases of sexual harassment by outsiders.
• Central and state governments must adopt measures, including legislation, to ensure that private
employers also observe the guidelines.

• Names and contact numbers of members of the complaints committee must be prominently
displayed.

From Guidelines to Act

The Sexual harassment at workplace Bill was passed by the Lok Sabha on the 2nd of September,
2012.It is now The Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013. It defines sexual harassment as laid down by the Supreme Court in Vishakha
and others v State of Rajasthan (1997) case.]

Recommendations

National Commission for Women has asked the government to ensure constitution of Internal
Complaints Committee (ICC) in accordance with Supreme Court guidelines in its departments,
institutions and autonomous bodies to address such cases. It has also recommended conducting
gender sensitisation workshops for top level management officials.

NCW recommended publicizing committee using posters, etc. and explicitly mention the contact
details of the members. The commission also highlighted the need for orientation programs for
employees to sensitize them on sexual harassment. Another recommendation was to enhance
communication strategies to combat violation against women.

The rules for the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013 have come into force on 9th Dec,13'

The Sexual Harassment of Women at Workplace Prevention, Prohibition and Redressal) Act, 2013

Introduction

From honouring women during the Vedic Period to replacing matriarchal society by patriarchal
society in the modern age, women have been relegated to second position. In order to change this,
emancipation and empowerment of women is necessary. A very important contributing factor to
this is economic independence.

However, working women face many hurdles in their work life, from gender bias, low pay and
missed opportunities to sexual harassment. Women are much more likely to be victims of sexual
harassment since they are more vulnerable.

Sexual harassment of women at a workplace is considered violation of women's right to equality, life
and liberty. It creates an insecure and hostile work environment, which discourages women's
participation in work, thereby adversely affecting their social and economic empowerment and the
goal of inclusive growth. The SC in Vishaka v. State of Rajasthan, 1997, has held that, sexual
harassment is a form of discrimination against women and violates the constitutional right to
equality.

With more and more women joining the workforce, ensuring an enabling working environment for
women through legislation has been held imperative by the Government. Therefore, in 2013, the
Government of India passed the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act to provide protection against sexual harassment of women at
workplace and for the prevention and redressal of complaints of sexual harassment as well as for
matters connected therewith.
Whereas sexual harassment results in violation of the fundamental rights of a woman to equality
under articles 14 and 15 of the Constitution of India and her right to life and to live with dignity
under article 21 of the Constitution. It also affects the right to practice any profession or to carry on
any occupation, trade or business under article 19 which includes a right to a safe environment free
from sexual harassment.

The protection against sexual harassment and the right to work with dignity are universally
recognised human rights by international conventions and instruments such as Convention on the
Elimination of all Forms of Discrimination against Women, which has been ratified on the 25th June,
1993 by the Government of India. One of the requirements of the Convention on the Elimination of
all Forms of Discrimination against Women is that, State parties shall take all appropriate measures
to eliminate discrimination against women in the field of employment in order to ensure equality of
men and women.

Definitions

Sec. 2 - Definitions

Sec. 2 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013, provides for the meaning of the following words:

a) "aggrieved woman" means

(i) In relation to a workplace, a woman, of any age whether employed or not, who alleges to
have been subjected to any act of sexual harassment by the respondent.

(ii) In relation to dwelling place or house, a woman of any age who is employed in such a
dwelling place or house.

b) "appropriate Government" in relation to a workplace which is established, owned, controlled

wholly or substantially financed by funds provided directly or indirectly

(i) By the Central Government or the Union territory administration, then it is the Central
Government.

(ii) By the State Government, then it is the State Government.

c) "Chairperson" means the Chairperson of the Local Complaints Committee nominated under
Section 7(1).

d) "District Officer" means on officer notified under section 5

e) "domestic worker" means a woman who is employed to do household work in any household for
remuneration whether in cash or kind, either directly or through any agency on a temporary,
permanent, part time or full time basis, but does not include any member of the family of the
employer.

f) "employee" means a person employed at a workplace for any work on regular, temporary, ad hoc
or daily wage basis, either directly or through an agent, including a contractor, with or, without the
knowledge of the principal employer, whether for remuneration or not, or working on a voluntary
basis or otherwise, whether the terms of employment are express or implied and includes a co-
worker, a contract worker, probationer, trainee, apprentice or called by any other such name.

g) "employer" means
(i) In relation to any department, organisation, undertaking, establishment, enterprise,
institution, office, branch or unit of the appropriate Government or a local authority, the head of
that department, organisation, undertaking, establishment, enterprise, institution, office, branch or
unit or such other officer as the appropriate Government or the local authority, as the case may be,
may by an order specify in this behalf.

(ii) In any workplace not covered under sub-clause (i), any person responsible for the
management, supervision and control of the workplace.

(iii) In relation to workplace covered under sub-clauses (i) and (ii), the person discharging
contractual obligations with respect to his or her employees.

(iv) In relation to a dwelling place or house, a person or a household who employs or benefits
from the employment of domestic worker, irrespective of the number, time period or type of such
worker employed, or the nature of the employment or activities performed by the domestic worker.

n) “Sexual harassment” means The Prevention of Workplace Sexual Harassment Act defines ‘sexual
harassment’ in line with the Supreme Court’s definition in the Vishaka Judgement. As per the
statute, ‘sexual harassment’ includes unwelcome sexually tinted behaviour, whether directly or by
implication, such as:

i. physical contact and advances,

ii. demand or request for sexual favours,
iii. making sexually coloured remarks,
iv. Showing pornography, or
v. any other unwelcome physical, verbal or non-verbal conduct of a sexual nature

Presence or occurrence of circumstances of implied or explicit promise of preferential treatment in

employment; threat of detrimental treatment in employment; threat about present or future
employment; interference with work or creating an intimidating or offensive or hostile work
environment; or humiliating treatment likely to affect the lady employee’s health or safety could
also amount to sexual harassment.

In Apparel Export v. A.K. Chopra (1999), the Supreme Court again reaffirmed the definition of sexual
harassment by stating that it means any action or gesture intended to outrage the modesty of a
female employee, directly or indirectly.

o) “workplace” includes

(i) any department, organisation, undertaking, establishment, enterprise, institution, office, branch
or unit which is established, owned, controlled or wholly or substantially financed by funds provided
directly or indirectly by the appropriate Government or the local authority or a Government
company or a corporation or a co-operative society;

(ii) any private sector organisation or a private venture, undertaking, enterprise, institution,
establishment, society, trust, non-governmental organisation, unit or service provider carrying on
commercial, professional, vocational, educational, entertainmental, industrial, health services or
financial activities including production, supply, sale, distribution or service;

(iii) hospitals or nursing homes;

(iv) any sports institute, stadium, sports complex or competition or games venue, whether
residential or not used for training, sports or other activities relating thereto;
(v) any place visited by the employee arising out of or during the course of employment including
transportation by the employer for undertaking such journey;

(vi) a dwelling place or a house;

In Saurabh Kumar Mallick v. Comptroller & Auditor General of India (2008), the respondent who had
been facing departmental inquiries for allegedly harassing a senior woman officer contended that he
could not be accused of sexual harassment at work since the misconduct reportedly occurred not at
work but in an official mess in which she resided. A further argument made was that the
complainant was in a senior position to the respondent, so he could not extract any favour from her
and, therefore, the act did not constitute sexual harassment. This was deemed as clearly
misconceived by the Delhi Court in its consideration of the case. According to the Delhi High Court,
the official mess, where the employee reported being sexually harassed, fell under the definition of
a workplace under the POSH Act.

Sec. 3 - Prevention of sexual harassment

Section 3 of the Act provides that, no woman shall be subjected to sexual harassment at any
workplace. The following circumstances, among other circumstances, if it occurs, may amount to
sexual harassment:

1. Implied or explicit promise of preferential treatment in her employment; or

2. Implied or explicit threat of detrimental treatment in her employment ; or

3. Implied or explicit threat about her present or future employment status; or

4. Interference with her work or creating an intimidating or offensive or hostile work

environment for her.

5. Humiliating treatment likely to affect her health or safety.

Sec 4 - Constitution of Internal Complaints Committee

Sec 4 of the Act provides for the establishment of the Internal Complaints Committee

1. Every employer of a workplace shall, by a written order, constitute a Committee known as the
Internal Complaints' Committee. Where the offices or administrative units of the workplace are
located at different places or divisional and sub-divisional level, the Internal Committee shall be
constituted at all administrative units or offices.

2. The Internal Committees shall consist of the following members to be nominated by the
employer:

a) A Presiding Officer who shall be a woman employed at a senior level at workplace

from amongst the employees. In case a senior level woman employee is not available, the
Presiding Officer shall be nominated from other offices or administrative units of the
workplace referred to in sub-section (1).

In case the other offices or administrative units of the workplace do not have a senior level
woman the Presiding Officer shall be nominated from any other workplace of the same
employer or other department or organization.

b) At least 2 Members from amongst the employees preferably committed to the cause
of women or who have had experience in social work or have legal knowledge.
 c) One member from amongst non-governmental organisations or associations
committed to the cause of women or a person familiar with the issues relating to sexual
harassment.

d) At least one-half of the total Members so nominated shall be women.

3. The Presiding Officer and every Member of the Internal Committee shall hold office for a period,
not exceeding 3 years, from the date of their nomination as may be specified by the employer.

4. The Member appointed from amongst the non-governmental organisations or associations shall
be paid such fees or allowances for holding the proceedings of the Internal Committee, by the
employer, as may be prescribed.

5. If the Presiding Officer or any Member of the Internal Committee:

a) Contravenes the provisions of section 16.

b) Has been convicted for an offence or an inquiry into an offence under any law for the
time being in force is pending against him.

c) Has been found guilty in any disciplinary proceedings or a disciplinary proceeding is

pending against him.

d) Has abused his position as to render his continuance in office prejudicial to public
interest.

Such a Presiding Officer or Member, as the case may be shall be removed from the Committee and
the vacancy so created or any casual vacancy shall be filled by fresh nomination in accordance with
the provisions of this section.

The complaints committee which was originally envisaged to be a disciplinary committee, can be
held to be a competent enquiry authority.

Constitution of Local Complaints Committee Sec. 5

The POSH Act provided limited relief for sexual harassment at the workplace until recently. An
employer was not required to provide an internal redress mechanism to address complaints of
sexual harassment. Now, a Local Complaints Committee must be formed at the district level for the
purpose of handling complaints of sexual harassment in the workplace when there is no internal
mechanism in place.(District Magistrate/ additional district magistrate /district or deputy collector)

Under Section 5 of the POSH Act, the district governments are required to set up local committees to
investigate and respond to complaints of sexual harassment from the unorganized sector and from
establishments where the Internal Committee has not been formed due to fewer than 10 employees
of the establishment or when the complaint is against the employer. The formation of a Local
Committee is particularly relevant for instances of sexual harassment of domestic workers or when
the complaint involves the employer or a third party not employed by the company. It is important
to note that as a result of the Repealing and Amending Act, 2016, the Local Complaints Committee
was renamed the Local Committee.

Sec. 7 - Composition tenure and other terms and conditions of Local Committee

Section 7 of the Act provides for the establishment of the Local Committee.
1. The Local Committee shall consist of the following members to be nominated by the District
Office:

a) A Chairperson to be nominated from amongst eminent women in the field of social

work and committed to the cause of women.

b) One Member to be nominated from amongst the women working in block, taluka or
tehsil or ward or municipality in the district;

c) 2 Members, of whom at least one shall be a woman, to be nominated from amongst

such non-governmental organisations or associations committed to the cause of women or a
person familiar with the issues relating to sexual harassment, which may be prescribed.

d) At least one of the nominees should, preferably, have a background in law or legal
Knowledge.

e) Also, at least one of the nominees shall be a woman belonging to the Scheduled Castes
or the Scheduled Tribes or the Other Backward Classes or minority community notified by
the Central Government, from time to time.

f) The concerned officer dealing with the social welfare or women and child
development in the district, shall be an ex officio member.

2. The Chairperson and every Member of the Local Committee shall hold office for a period, not
exceeding 3 years, from the date of their appointment as may be specified by the District officer.

3. If the Chairperson or any Member of the Local Committee:

a) Contravenes the provisions of section 16

b) Has been convicted for an offence or an inquiry into an offence under any law for the time
being in force is pending against him

c) Has been found guilty in any disciplinary proceedings or a disciplinary proceeding is pending
against him

d) Has so abused his position as to render his continuance in office prejudicial to the public
interest,

e) Such Chairperson or Member, as the case may be, shall be removed from the Committee
and the vacancy so created or any casual vacancy shall be filled by fresh nomination in accordance
with the provisions of this section.

4. The Chairperson or Members of the Local Committee other than the Members nominated under
clauses (b) and (d) of sub-section (1) shall be entitled to such fees or allowances for holding the
proceedings of the Local Committee as may be prescribed.

Procedure of complaint
Sexual harassment complaints at work can be lodged either with the Internal Committee or Local
Committee in accordance with Section 9 of the POSH Act. The following is the procedure:

An aggrieved woman may file a complaint of sexual harassment at work within three months of the
date of the incident and, in the case of repeated incidents, within three months of the most recent
incident.
The Internal Complaints Committee / Local Complaints Committee may extend the time limit if the
aggrieved woman is not able to submit a complaint within the stipulated period of three months.
The committee must be satisfied that the circumstances prevented the woman from forwarding a
complaint within the specified time period. An extension of time must be justified in writing by the
committee.

Furthermore, if the woman cannot make a complaint in writing, the Presiding Officer, any member
of the Internal Complaints Committee, or the chairperson, or any member of the Local Committee
will provide her with all reasonable assistance to file a complaint in writing.

Moreover, as per Rule 6(i) of the POSH Rules, it is provided that if an aggrieved woman is physically
or mentally incapable or dies, or otherwise is unable to lodge a complaint, her legal heir or her
relative or friend, or her co-worker, or an officer of the National Commission for Women or State
Women’s Commission, or any person who has knowledge of the incident, with the written consent
of the aggrieved woman, may do so.

Conciliation

According to Section 10 of the POSH Act, an Internal Committee/Local Committee can attempt to
resolve a complaint between the parties, at the request of the aggrieved woman, through
conciliation by reaching an amicable settlement. A conciliation process is basically an informal way
of resolving complaints before they escalate to a formal investigation. It may, therefore, be possible
for the IC to resolve sexual harassment complaints by conciliation between the parties before
beginning the inquiry proceedings, although monetary settlements should not be used as a basis for
conciliation. A settlement should be recorded by the Internal Committee or Local Committee, and
copies should be provided to the aggrieved woman and respondent after the settlement is reached.
The IC may not conduct an investigation under the POSH Act after a settlement has been reached.

1. Subject to the provisions of Section 10, when a complaint has been made under Section 9, the
Internal Committee or the Local Committee, shall proceed to make inquiry into the complaint in
accordance with:

i. The provisions of the service rules applicable to the respondent.

ii. Where no such rules exist, in such manner as may be Prescribed.

iii. In case of a domestic worker, the Local Committee shall, if prima facie case exists,
forward the complaint to the police, within a period of 7 days for registering the case under
section 509 of the Indian Penal Code.

If the aggrieved woman informs the Internal Committee or the Local Committee, that any term or
condition of the settlement arrived under Section 10 (2) has not been complied with by the
respondent, the Internal Committee or the Local Committee shall proceed to make an inquiry into
the complaint or, as the case may be, forward the complaint to the police.

Also, if both the parties are employees, the parties shall, be given an opportunity of being heard and
a copy of the findings shall be made available to both the parties enabling them to make
representation against the findings before the Committee.

2. If the respondent is convicted of the offence, the court may order payment of such sums as it may
consider appropriate, to the aggrieved woman by the respondent
3. For the purpose of making an inquiry under sub-section (1), the Internal Committee or the Local
Committee, shall have the same powers as are vested in a civil court under the Civil Procedure Code,
1908:

i. Summoning and enforcing the attendance of any person and examining him on oath.

ii. Requiring the discovery and production of documents.

iii. Any other matter which may be prescribed.

iv. The inquiry under sub-section (1) shall be completed within a period of ninety 90 days.

Inquiry into complaint

Sec. 12 - Action during pendency of inquiry

1. During the pendency of an inquiry, on a written request made by the aggrieved woman, the
Internal Committee or the local Committee, may recommend to the employer to:

i. Transfer the aggrieved woman or the respondent to any other workplace.

ii. Grant leave to the aggrieved woman for a period of three months.

iii. Grant such other relief to the aggrieved woman as may be prescribed.

2. The leave granted to the aggrieved woman under this section shall be in addition to the leave she
would be otherwise entitled.

3. On the recommendation of the Internal Committee or the Local Committee, as the case may be,
under sub-section (1), the employer shall implement the recommendations and send the report of
such implementation to the Internal Committee or the Local Committee, as the case may be.

Sec. 13 - Inquiry report

On the completion of an inquiry under this Act, the Internal Committee or the Local Committee, as
the case may be, shall provide a report of its findings to the employer, or as the case may be, the
District Officer within a period of 10 days from the date of completion of the inquiry and such report
be made available to the concerned parties.

2. Where the Internal Committee or the Local Committee, as the case may be, arrives at the
conclusion that the allegation against the respondent has not been proved, it shall recommend to
the employer and the District Officer that no action is required to be taken in the matter.

3. If the allegation against the respondent has been proved, the Internal Committee or the Local
Committee shall recommend to the employer or the District Officer

i. To take action in accordance with the provisions of the service rules applicable to the respondent.

ii. Where no such service rules have been made, in such manner as may be prescribed.

iii. To deduct, from the salary or wages of the respondent such sum as it may consider appropriate
to be paid to the aggrieved woman or to her legal heirs.

iv. In case the employer is unable to make such deduction from the salary of the respondent due to
him being absent from duty or cessation of employment it may direct to the respondent to pay such
sum to the aggrieved woman
v. In case the respondent fails to pay the sum, the Internal Committee or the Local Committee may
forward the order for recovery of the sum as an arrear of land revenue to the concerned District
Officer.

4. The employer or the District Officer shall act upon the recommendation within 60 days of its
receipt by him.

Sec. 14 - Punishment for false or malicious complaint and false evidence

Section 14 lays down the punishment for false or malicious complaint and false evidence in case:

i. The allegation against the respondent is malicious.

ii. The aggrieved woman or any other person making the complaint has made the complaint
knowing it to be false.

iii. The aggrieved woman or any other person making the complaint has produced any forged
or misleading document.

Then the Internal Committee or the Local Committee may recommend to the employer or the
District Officer, as the case may be, to take action against the woman or the person who has made
the complaint in accordance with the provisions of the service rules applicable to her or him or
where no such service rules exist, in such manner as may be prescribed.

In order to ensure that the protections envisaged under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013, are not misused, provisions for action
against "false or malicious" complainants have been included in the statute. As per the Act, if the
Committee concludes that the allegation made by the complainant is false or malicious or the
complaint has been made knowing it to be untrue or forged or misleading information has been
provided during the inquiry, disciplinary action in accordance with the service rules of the
organisation can be taken against such complainant. Where the organisation does not have service
rules, the statute provides that disciplinary action such as written apology, warning, reprimand,
censure, withholding of promotion, withholding of pay rise or increments, terminating the
respondent from service, undergoing a counselling session, or carrying out community service may
be taken.

Sec. 15 - Determination of compensation

Section 15 provides for determination of compensation to be paid to the aggrieved woman under
Section 13. While determining the compensation to be paid, the Internal Committee or the Local
Committee shall consider:

i. The mental trauma, pain, suffering and emotional distress caused to the aggrieved
woman.
ii. The loss in the career opportunity due to the incident of sexual harassment.
iii. Medical expenses incurred by the victim for physical or psychiatric treatment.
iv. The income and financial status of the respondent.
v. Feasibility of such payment in lump sum or in instalments.

Sec 16- Prohibition of publication or making known contents of complaint and inquiry proceedings

Notwithstanding anything contained in the Right to Information Act, 2005, Section 16 of the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 prohibits the
publication, dissemination or communication of
 i. The contents of the complaint made under section 9.
ii. The identity and addresses of the aggrieved women, respondent and witnesses.
iii. Any information relating to conciliation and inquiry proceedings.
iv. Recommendations of the Internal Committee or the Local Committee, as the case may
be.
v. The action taken by the employer or the District Officer under the provisions of this Act.

In Asma Parveen v. Aligarh Muslim University, 2001, the court confirmed that, non-disclosure of
the name of the victim (in this case a girl student) did not prejudice the case of the petitioner.

Recognising the sensitivity attached to matters pertaining to sexual harassment, the Act attaches
significant importance to ensuring that the complaint and connected information are kept
confidential. The Act specifically stipulates that information pertaining to workplace sexual
harassment shall not be subject to the provisions of the Right to Information Act, 2005.

That Act allows dissemination of information pertaining to the justice that has been secured to any
victim of sexual harassment, without disclosing the name, address, identity or any other particulars
which could result in the identification of the complainant or the witnesses.

Sec 17 - Penalty

Any person entrusted with the duty to deal with the complaint inquiry, recommendations or action
to be taken under the provisions of this Act, contravenes the provisions of Section 16, shall be liable
for penalty in accordance with the provisions of the service rules applicable to the said person or
where no such service rules exist, such manner as may be prescribed.

18- Appeal

(1) Any person aggrieved from the recommendations made under section 13 or section 14 or section
17 or non-implementation of such recommendations may prefer an appeal to the court or tribunal
in accordance with the provisions of the service rules applicable to the said person or where no such
service rules exist then, without prejudice to provisions contained in any other law for the time
being in force, the person aggrieved may prefer an appeal in such manner as may be prescribed.

(2) The appeal under shall be preferred within a period of ninety days of the recommendations.

19 - Duties of employer

Section 19 of the Act provides for the duties of the employer. Every employer shall:

I. Provide a safe working environment at the workplace which shall include safety from the persons a
woman would come in contact with at the workplace.

2. Display a notice at any conspicuous place in the workplace, the penal consequences of sexual
harassments and the order constituting, the Internal Committee.

3. Organise workshops and awareness programmes at regular intervals for sensitising the employees
with the provisions of the Act and orientation programmes for the members of the Internal
Committee in the manner as may be prescribed.

4. Provide necessary facilities to the Internal Committee or the Local Committee, to deal with the
complaint and conduct an inquiry.
5. Provide assistance to secure the attendance of respondent and witnesses before the Internal
Committee or the Local Committee.

6. Make any information regarding a complaint made under this Act available to the Internal
Committee or the local Committee.

7. Provide assistance to the woman if she so chooses to file a complaint in relation to the offence
under the Indian penal Code or any other law for the time being in force

8. Provide for initiating action, under the Indian Penal Code any other law for the time being in force,
against the perpetrator, or if the aggrieved woman so desires, where the perpetrator is not an
employee, in the workplace at which incident of sexual harassment took place.

9. Treat sexual harassment as a misconduct under the service rules and initiate action for such
misconduct.

10. Monitor the timely submission of reports by the Internal Committee.

Sec. 20 - Duties and powers of District Officer

Section 20 of the Act provides for the duties and powers of District Officer. The District Officer shall:

1. Monitor the timely submission of report furnished by Local Committee.

2. Take such measures as may be necessary for engaging governmental organisations for creating
awareness sexual harassment and the rights of the women.

Section 26 of the Act provides for penalty for non-compliance wilt provisions of the Act.

1. The employer shall be punishable with fine which shall extend to 50,000 rupees if he fails to:

i. Constitute an Internal Committee under Section 4 subsection 1.

ii. Take action under Sections 13, 14 and 22.

iii. Contravenes or attempts to contravene or abets contravention of other provisions of this

Act or any rules made thereunder.

2. If any employer, after having been previously convicted of an offence punishable under this Act
subsequently commits and is convicted of the same offence, he shall be liable to:

i. Twice the punishment, which might have been imposed on a first conviction,

ii. Cancellation or non-renewal of the license or registration by the Government or local

authority required for carrying on any business or activity.

Unit 2

Meaning of Wages:

Wages are the remuneration or reward for labour. There are two main kinds of wages- (1) Nominal
wages and (2) Real wages. The term ‘nominal wages’ refers to money wages. But the term ‘real
wages’ refers to the commodities and services that the money wages can provide. The standard of
living of workers relies on real wages and not on money wages. Real wages depend on many things
like the purchasing power of money, additional benefits the workers get such as free boarding and
lodging, regularity of employment, working conditions and so on. Real wage do not always raise with
the money wages.

Factors Determining Real Wages:

1. Real wages relies upon the purchasing power of money. The purchasing power of money in turn
depends upon the level of price. It changes with changes in the price level.

2. Real wages depend on the form of wages. For example, a labour working as agricultural worker
may get low amount of money wage but may be given free food to eat, place to stay, clothes in
festivals and so on. These things should be taken into consideration while considering real wages.

3. The nature of the job and the regularity of employment is an important factor. We have to see
whether the job is permanent or not. Agriculture in India provides mostly seasonal employment. A
person who has a regular job has more real wages than one who has seasonal employment.

4. Possibility of extra income in some occupations has to be considered.

5. The nature of work and also the working conditions should be considered.

Types of Wages:
Wages have been classified into three categories:

(1) Living wages

(2) Minimum wages

(3) Fair wages

1. Living Wages.

The concept of Living Wages is the wage rate which prevails in most of the economically advanced
countries. Living Wage has been defined as one appropriate for the normal needs of the average
employee, regard as a human being living in a civilized society. Living Wage should enable the wages
earner to provide for himself and his family not merely the bare essentials of food, clothing and
shelter but measure of frugal comfort including education for the children, protection against ill
health, requirements for essential social needs and a measures of insurance against the more
important misfortune including old age.

2. Fair Wages

The concept of fair wages involves a rate sufficiently high to enable the worker to provide a
standard family with food, shelter, clothing, medical care and education for children appropriate to
his status in life but not at a rate exceeding the wage earning capacity of the class of establishment
concerned.

Express Newspapers v. Union of India (1961)- Fair Wage is a mean between the Living Wage and the
bare minimum wages. It is a step lower than the living wage
3. Minimum Wages

The Act does not define minimum wages. It is the lowest wage in the scale below which the
efficiency of a worker is likely to the impaired (Kamani Metal and Alloy Ltd v. Their Workmen,
(1967). The minimum wage includes not only the bare physical necessities but also a modicum of
comfort otherwise known as conventional necessities. It must provide not merely for the bare
subsistence of life but also for the preservation of the efficiency of worker. It must also provide for
some measure of education medical requirements and amenities.

Crown Aluminium Workers v. Their Workmen, (1958)- The employer who is unable to pay this
minimum wage to workers has no right to continue the business.

Major Theories of Wages:

Since the time of Adam Smith and even earlier, economists have formulated different theories of
wages. Smith himself, along with others of the classical school, believed in a natural wage,
determined solely by supply and demand. The minimum wage must be a subsistence wage
(sufficient for survival), but when demand for labour rose, wages would rise above this minimum.

Less optimistic theorists, such as David Ricardo, believed that wages always tend to remain at the
bare subsistence level (i.e. Iron Law of Wages). John Stuart Mill and other saw wages as determined
by the number of workers who must share a fixed quantity of capital set aside by entrepreneurs (i.e.
Wages Fund Theory). The marginalists devised the marginal productivity theory of wages, linking
wages to workers’ productivity.

The bargaining theory of wages, developed when labor unions grew more powerful, holds that
wages are never higher than the capitalist’s break-even point or lower than the workers subsistence
level, but exactly where between those two points their fall depends on the relative bargaining
power of capitalists and of workers. Most present-day economists would agree that the broad,
overall level of wages is determined by a complex interplay of many forces, which in turn influences
the supply of wages and demand for labor.

Wages are a payment for the services of labor. In this background, several theories were advanced
from time to time to explain the determination of wage rate.

Among other theories of wages, the important are the following:

1. Subsistence Theory

2. Wages Fund Theory

3. Residual Claimant Theory

4. Marginal Productivity Theory

5. The Demand and Supply Theory of Wages.

1. Subsistence Theory of Wages:

Many of the Classical economists have popularized this theory. According to this theory, the general
level of wages in the long run, is equal to the subsistence level (i.e. food, cloth and shelter), which is
the level of bare necessities.
2. Wages Fund Theory:
This theory was propounded by J.S. Mill. According to this theory, the general rate of wages can be
found by dividing the wage fund set apart by the employer by the number of workers.

3. Residual Claimant Theory:

This theory was propounded by Prof. Walker. This theory states that wage are of the nature of a
residue and the worker is to get what remains after other agents of production have been paid.

4. Marginal Productivity Theory of Wages:

The marginal productivity theory of wages, developed by J.B. Clark, is based on the assumption of
pure competition in both commodity and labor markets. In both the markets the buyers and sellers
are supposed to be price-takers. In brief, the marginal productivity theory of wages states that under
perfect competition, wages are determined by the value of the marginal product of labor.

5. The Demand and Supply Analysis:

This is the modern theory of wages, provides a satisfactory explanation of the wage determination.
According to this theory, the price of labor is determined by the market forces of demand and
supply.

The Minimum Wages Act

The Minimum Wages Act,1948 has been enacted by the Parliament. The Act was enacted to secure
the welfare of the workers in a competitive market by providing for a minimum limit of wages in
certain employments. These employments, are specified in Part I and II of the Schedule.

Edward Mills Co. Ltd., Beware v. State of Ajmir (1954).

The object of this Act is to prevent exploitation of the workers and for this purpose it aims at fixation
of minimum wages which the employer must pay

Unichoyi v. State of Kerala (1962)

It was observed that the Act purports to prevent exploitation of labour and for that purpose
authorises the appropriate Government to take steps to prescribe minimum rates of wages in the
Scheduled industries. The item in the schedule are those where sweated labour is more prevalent or
where there is a big chance of exploitation of labour. The provisions of the Act are intended to
achieve the object of doing social justice by prescribing minimum rate of wages for them.

Engineers Private Limited v. Their Workmen (1969).

In an under developed country which faces the problem of unemployment on a very large scale, it is
not unlikely that labour may offer to work even on starvation wages. The Policy of the Act is to
prevent employment of such sweated labour in the interest of general public and so in prescribing
minimum wage rates even the capacity of the employer need not be considered as the state
assumes that every employer must pay the minimum wages before he employs labour for his work.
The Act applies to the whole of India. This Act enables the Central and the, State Governments to fix
minimum rates of wages payable to employees in Selected number of 'sweated' industries.

Employer
means any person who employs, directly or through another person, or on behalf of himself or any
other person, one or more employees in any scheduled employment in respect of hich minimum
rates of wages have been fixed under this Act, and Includes:

i. In a factory where any scheduled employment is carried on in respect of which minimum rates of
wages have been fixed under this Act.
ii. In any scheduled employment under the control of any Government in India in respect of which
minimum rates of wages have been fixed under this Act, the person or authority appointed by such
Government for the supervision and control of employees or where no person or authority is so
appointed, the head of the department.
iii. In any scheduled employment under any local authority in respect of which minimum rates of
wages have been fixed under this Act, the person appointed by such authority for the supervision and
control of employees or where no person is so appointed, the chief executive officer of the local
authority.
iv. In any other case where there is carried on any scheduled employment in respect of which
minimum rates of wages have been fixed under this Act, any person responsible to the owner for the
supervision and control of the employees or for the payment of wages.

In Krishna Ayer v. Superintending Engineer, PWD, the Madras High Court held that a Private
Engineering Contractor (managing agent) engaged in Government contract work is an employer of
the drivers of the trucks which are hired out to him with drivers at agreed rates.

Scheduled employment

Means an employment specified in the Schedule, or any process or branch of work forming part of
such employment.
In Ms. Sheetha M. L. v. State of Kamataka, it was held that, for minimum wages to be applicable to
any post, the post must be notified in the schedule to the Minimum Wages Act, 1948. However,
workers when working exclusively for the Government on honorarium for a sufficiently long duration
under a post not notified in the Schedule to the Act, may be held to be eligible for Minimum Wages
under this Act.
In Sirpur Paper Mills Ltd. v. Government of Andhra Pradesh, it was held that, workers engaged
through a contractor in scheduled employment shall also be eligible for minimum wages.

Employee

Means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or
clerical, in a scheduled employment in respect of which minimum rates of wages have been fixed.

It includes an out-worker to whom any articles or materials are given out by another person to be
made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed
for sale for the purposes of the trade or business of that other person where the process is to be
carried out either in the home of the out-worker or in some other premises not being premises under
the control and management of that other person.

In Boknath Nathulal v. State of Madhya Pradesh, it was held that, where an out-worker prepares
goods at his own residence and then supplies them to the employer, such a worker will be considered
to be an employee under this Act.

An employee also includes such persons declared to be an employee by the appropriate

Government; but does not include any member of the Armed Forces of the Union.

In Haryana Unrecognised Schools Association v. State of Haryana, the Supreme Court held that, the
State Government can add to either part of the Schedule any employment where persons are
employed for hire or reward to do any work skilled or unskilled and manual or clerical.

Wages (Sec .2 (h))

Wages means all remuneration capable of being expressed in terms of money, which would, if the
terms of contract of employment, express or implied were fulfilled, be payable to a person
employed in respect of his employment or of work done in such employment. It includes house rent
allowance. But it does not include -
i) the value of -

a) any house accommodation, supply of light, water, medical attendance, or

b) any other amenity or any service excluded by general or special order of the appropriate
Government;

ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under any
scheme of Social Insurance.
iii) any travelling allowance or the value of any travelling concession;
iv) any sum paid to the person employed to defray special expenses entailed on him by the
nature of his employment or.
v) any gratuity payable on discharge.

Fixing of Minimum Rates of Wages / Responsibility for payment of wages (Sec.3)

Depending upon the nature of employment the appropriate Government (central or state
Government) is responsible for fixing minimum wages of the workers employed in an employment
specified in part I and part II of the Schedule.

Section 27 of the Act empowers the appropriate government to add any employment in respect of
which the minimum wages are to be fixed. It is to be done by issuing notification in the Official
Gazette.

D.M.S. Rao v. The State of Kerala,(1963).

The minimum wages once fixed shall normally be reviewed after an interval of 5 years. However
the requirement of fixing the minimum wages after an interval of 5 years is not mandatory. If for
sufficient reasons the appropriate Government is unable to review the minimum wages after an
interval of 5 years, Under such circumstances the old wages fixed shall continue to be in force.

The appropriate Government may refrain from fixing minimum rates of wages in respect of any
scheduled employment in which there are in the whole state less than one thousand employees
engaged in such employment. But if at any time the appropriate Government comes to a finding that
the number of employees has been increased and there are more than thousand employees, the
government shall fix minimum rates of wages payable in such employment.

The Appropriate Government may fix-

a) minimum rate of wages for time work (known as a minimum time rate)
b) minimum rate of wages of piece work (known as a minimum piece rate)

The Appropriate Government may fix different minimum rates of wages for-

i. different scheduled employments

ii. different classes of work in the same scheduled employment;
iii. adults, adolescents’ children and apprentices
iv. different localities.
 The appropriate Government is empowered to fix minimum rates of wages by any one or more of
the following wage periods, namely:
i) by the hour
ii) by the day
iii) by the month or
iv) by such other large wage period as may be prescribed
If such rates are fixed by the day or by the month, the manner of calculating wages for a month or
for a day as the case may be is to be indicated.
If any wage periods have been fixed under Section 4 of the Payment of Wages Act, 1936, minimum
wages shall be fixed in accordance therewith.

In fixation of minimum rates of wage the following considerations are irrelevant

i) Difficulty of an employer to carry on his business on the basis of minimum wages

ii) The financial capacity of the employer
iii) The employer having incurred losses during the previous years
iv) Employers’ difficulty in importing raw materials
v) The availability of workmen on lower wages
vi) The minimum wage rates prevalent at other places

Procedure for fixing and revising minimum wages (Sec.5)

The appropriate government is required to adopt following procedures in fixing minimum rates of
wages in respect of a Scheduled employment for the first time or in revising rates of wages already
fixed:

a) appoint as many committees and sub-committees as it considers necessary to hold enquiries

and advise it in respect of such fixation or revision, or
b) by notification in the Official Gazette, publish its proposals for the information of persons
likely to be affected thereby and specify a date, not less than two months from the date of the
notification, on which the proposals will be taken into consideration.

After considering the advice of the committees appointed by it or all representations received by it
before the date specified in the notification, as the case may be, appropriate Government shall fix or
revise the minimum wages respect of each scheduled employment by notification in the Official
Gazette. Unless otherwise provided in the notification, minimum rate of wages fixed or revised shall
come into force after the expiry of three months.

Where the appropriate government proposes to revise the minimum rates of wages by issuing
notification of the proposal for information, it shall consult the Advisory Board constituted under
section 7 of the Act.

Advisory Board

Section 7 of the Act requires the appropriate Government to appoint an Advisory Board. The
purpose of constituting Advisory Board is to co-ordinate the work of committees and sub-
committees appointed under section 5 to collect necessary information for enabling the government
to determine the rates of minimum wages to be fixed or revised in a Scheduled employment. The
Advisory board is further required to advice the government generally in the matter of fixing and
revising the minimum rates of wages.
The Advisory Board shall consist of persons to be nominated by the appropriate Govt representing
employers and employees in the Scheduled employments, the representatives of employers and
employees shall be equal in number. In addition to the representatives of the employers and
employee, independent persons not exceeding 1/3 of the total membership also be nominated. One
of such independent person shall be appointed as the Chairman of the Advisory Board.

Committee and Sub- committee (Sec 5&9)

Section 5 of the Act empowers the appropriate Government to appoint Committees and Sub-
Committees to hold enquires and advise it in respect of fixation or revision of minimum rates of
wages. Each of the Committees, sub-committees shall consist of persons to be nominated by the
appropriate Government representing employers and employees in the Scheduled employment in
equal number. Independent persons not exceeding one third of its total number of members shall
also be nominated. One of such independent person shall be appointed as the Chairman of the
Committee or Sub Committee, as the case may be.

D. Salt Works v. State (1971)- The expression independent person means a person other than those
who are employer and employees in relation to the Scheduled employment in respect of which
minimum wages are sought to be fixed .

Section 9 of the Act states that the members of committees, sub-committees, and Advisory Boards
shall be appointed by the appropriate government. Individuals who are appointed to these
committees shall be representatives of employers and employees in scheduled employments and
shall be equal in number. The appropriate government shall appoint such an independent person to
be the Chairman of the committee.

Central Advisory Board (Sec.8)

In order to advise the Central and State Governments in the matter of the fixation and revision of
minimum rates of wages and other matters under the Act and for Co-ordinating the work of the
Advisory Boards, the Central Government shall appoint a Central Advisory Board.

It shall consist of persons to be nominated by the Central Government representing employers and
employees in the Scheduled employments. They shall be equal in number. The Government shall
nominate independent person not exceeding one-third of its total number of members. One of such
independent person shall be appointed as the Chairman of the Board by the Central Government.

Wages in kind under the Act

Section 11 of the Minimum wages Act, 1948 mentions how the wages will be payable to the
employees.

• Minimum wages under this Act shall be paid in cash.

• The appropriate government under necessary circumstances by notification to the Official
Gazette authorise the payment of the minimum wages either wholly or partly in kind.
• The appropriate government by notification to the Official Gazette authorised a provision for
the supply of essential commodities at concession rates.
• The cash value of wages and the concession rates shall be authorised in the prescribed
manner stated under the Act.
The payment of wages to the employees under this Act should be done in accordance with Section
12 of the Act, which states that the employer shall pay the minimum rate of wages fixed to every
employee working under him within such time and manner prescribed under the Act.

Fixing hours for a normal working day

Section 13 specifies that the appropriate government may:

Fix the working hours of a normal day including one or more specified intervals.

Provide a day of rest in every period of seven days to all the employees or a class of employees, and
adequate remuneration must be provided to the employees during the day of rest.

Provide payment to the employees on the day rest which shall not be less than the overtime rate.

When an employee works more than the specified number of hours constituting a normal working
day, the employer shall be liable to pay him for every hour or part of the hour at the overtime rate
fixed under this Act or under any law of the appropriate government for the time being in force.

Furthermore, under Section 15 if an employee has worked less than the required number of hours
constituting a normal working day they shall be entitled to receive wages in accordance with work
done by him on that day as if he has worked a full day.

Maintenance of registers and records

Under Section 18 of the Minimum Wages Act, 1948 every employer will be liable to maintain
registers and records relating to the number of employees employed under him, the work done by
them, the wages paid to them, the work performed by them, maintain the receipts given by the
employers and any other relevant information.

Inspectors

In this Act, the appropriate government by notification to the official gazette shall appoint inspectors
in a manner prescribed under the Act. The inspectors shall be liable to exercise their functions within
the local limits of their jurisdiction.

The inspectors shall enter the premises or places within the local limits of their jurisdiction where
the employees are employed to work in respect of which minimum rates of wages have been fixed
under this Act, for the purpose of examining the register, record of wages, etc.

To examine any person on the premises or places who is an employee.

Seize or take copies of registers, records of wages, or other required documents under this act which
he may consider relevant in case of commission of any offence.

The inspector will be required to exercise any other power as may be prescribed under the Act.

Every inspector under this Act will be deemed to be a public servant within the meaning of the
Indian Penal Code,1860.

Claims

The appropriate government may by notification to the Official Gazette appoint any Commissioner
for Workmen’s Compensation or any officer of the Central Government exercising functions as a
Labour Commissioner for any region, with an experience as a judge to hear and decide cases in a
particular region about matters relating to non-payment or payment of less than the minimum
wages to the employees.

When an application under Section 20 of the Minimum Wages Act, 1948 is made to the authority,
the authority shall give adequate opportunities of being heard to both the applicant and the
employer. Under this Section, every direction of the authority shall be binding and final. The
authority appointed under the Act shall have the powers of a civil court under the Code of Civil
Procedure, 1908 for the purposes of taking evidence, enforcing the attendance of witnesses,
production of documents, etc.

Procedure before the authority

The procedure before the authority in the matters relating to non-payment or payment of less than
the minimum wages to the employees shall take place in the following manner as prescribed under
the Act.

The prescribed authority shall give adequate opportunities of being heard to the employer, applicant
or any other person relevant to the case.

In case of non-payment of wages, or delay in the payment of wages the authority shall direct the
refund of such amount to the applicant of the amount unpaid, or delayed along with the
compensation for the damages suffered by the employee.

No compensation will be awarded to the employee if the authority is satisfied that the delay in
payment of wages of the employee was a bona fide error. The authorised person was unable to
make the payment even though they exercised due diligence.

Penalties for offences

Section 22 of the Minimum Wages Act, 1948 an employer who fails to provide minimum rates of
wages to the employees or contravenes any rule or order made under Section 13 of the Act shall be
punished with imprisonment for a term which may extend to six months or fine not less than five
hundred rupees or both.

Exemptions of the employers in certain cases

When an employer is accused under this Act and brought before the court he will be exempted from
such offence under the following circumstances:

• The employer has used due diligence in the execution of all the provisions of the Act.
• The other person has committed the offence without his knowledge, connivance or consent.
Then in that case the other will be held liable as if he were the employer and the employer
will be discharged.

The power of the Central Government to make rules

Section 29 of the Minimum Wages Act, 1948 authorises the Central Government to make rules by
notification to the Official Gazette in matters relating to the term of office of the members, the
manner of voting, and the mode of conducting business by the Central Advisory Board, and other
relevant matters.

The rules made by the Central Government must be laid before the Parliament while it is in session
for a total period of thirty days which may consist of one session or two successive sessions.
Furthermore, Section 30 of the Act also authorises the state government to make rules by
notification to the Official Gazette for carrying out the purposes of this Act.

Constitutional validity of Minimum Wages Act

The constitutional validity of this Act was challenged before the court in various cases. However, the
judiciary played a critical role in determining that the Act was constitutionally valid and it protects
the interests of the workers so that they have access to food, shelter, clothing, education, medical
assistance, etc. The judiciary also stated that failure to pay below the minimum wage rate amounts
to forced labour.

BONUS

(Concept of Bonus and Right to Share in the Profits)

The Payment of Bonus Act. 1965 aims at providing for the payment of bonus to the employees of
certain establishments, and for matters connected therewith.

The Scheme of Act, broadly speaking, is four dimensional. They are-

i) To impose statutory liability upon the employers of the establishments covered by the
Act to pay bonus to employees in the establishments
ii) To define the principles for payment of bonus according to the prescribed formula
iii) To provide for payment of minimum and maximum bonus and linking the payment of
bonus with the Scheme of set-off and set-on'
iv) To provide machinery for enforcement of the liability for payment of bonus, with a view
to minimising the disputes on this account.

The Act extends to the whole of India and is applicable to every factory (as defined under the
Factories Act) and to every other establishment wherein 20 or more workmen are employed on any
day during an accounting year.

The Central/ State Government can, however, extend its provisions to any establishment employing
less than 20 but more than 10 persons. For the purpose of calculating the number of employees for
applicability of the Act, part-time employees are also included, irrespective of the amount of salary
drawn by them. The employment of 20 or more persons on even 1 day in a year is sufficient to
attract the provisions of the Act.

Any factory or establishment to which this Act applies, shall continue to be governed by its
provisions irrespective of the fact that the number of employees working therein has fallen below 20
or the number specified by the government.

For the purpose of counting the number of employees and calculation of bonus, employees working
in the branches / departments of the same establishment whether situated in the same place or in
different places, shall also be included. However. employees of different establishments, functioning
in the same premises, shall not be clubbed together,

Employees Entitled

Every employee receiving salary or wages up to Rs21,000 p.m. (from Rs. 10,000 per month before)
and engaged in any kind of work whether skilled, unskilled, managerial, supervisory, manual etc is
entitled to bonus for every accounting year, if he has worked for at least 30 working days in that
year. A probationer is eligible for bonus. Sweepers working on part time basis are also eligible for
bonus. Bonus is payable to daily wagers as well. Apprentice is not eligible for bonus.

Increase of the premium ceiling: previously, for the calculation of the statutory bonus, a salary
ceiling of Rs. 3,500 per month was applied (so that the salary of an eligible employee exceeded Rs.
3,500 per month for calculation purposes). This ceiling was increased to Rs. 7,000 per month or the
minimum wage for employees under the Minimum Wage Act 1948, whichever is greater.

Besides, employees of the General Insurance Companies, LIC, Central / State Government
Establishments, Indian Red Cross Society, Universities and educational Institutions, Hospitals,
Chambers of Commerce, RBI, UTI, Social Welfare Institutions, Local Bodies etc. are not entitled to
bonus under this Act. What they are paid as bonus. is ex gratia payment

Administrative Authority

It is a Central enactment, however, it is administered both by the Central and State Governments
through the Inspectors appointed by them. The Central Government is empowered to make amend
rules for carrying out the provisions of the Act.

Salary or Wages

'Salary' or 'Wage’ means all remuneration (other than remuneration in respect of overtime work)
capable of being expressed in terms of money, which would, if the terms of employment, express or
implied, were fulfilled, be payable to an employee in respect of his employment or of work done in
such employment and includes dearness allowance (that is to say, all cash payments, by whatever
name called, paid to an employee on account of a rise in the cost of living). Salary or wages does not
Include -

1. any other allowance which the employee is for the time being entitled to;
2. the value of any house accommodation or of supply of light, water, medical attendance or other
amenity or of any service or of any concessional supply of food grains or other articles;
3. any other travelling concession;
4. any bonus (Including incentive, production and attendance bonus);
5. any contribution paid or payable by the employer to any pension fund or provident fund or for
the benefit of the employee under any law for the time being in force;
6. any retrenchment compensation or any gratuity or other retirement benefit payable to the
employee or any ex gratia payment made to him.
7. Any commission payable to the employee.

Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free
food allowance or free food by his employer, such food allowance or the value of such food shall, for
the purpose of this clause, be deemed to form part of the salary or wage of such employee.

In other words, Salary or Wages means basic pay plus dearness allowance. Payment, received by
way of encashment of leave will not form salary or wages for the purpose of the Act. However,
retaining allowance, paid to workers during the off seasons for their forced idleness, comes within
the purview of wages.

For, the purposes of calculating the salary or wage all the four allowances, viz, ad-hoc family, house
rent and tiffin allowances, would be included.

Calculation of Bonus (Sec 4)

The method for calculation of annual bonus is as follows:

1) Calculate the gross profit in the manner specified in -

a) First Schedule, in case of a banking company, or

b) Second Schedule, in any other case.

Sum deductible from gross profits

The following sums need to be deducted from the gross profit:

• Any amount by way of development rebate, investment allowance or the development

allowance, which is deductible from the income according to the income tax.
• Any direct tax which the employer has to pay with respect to his income, profits, and gains
during that year.
• Any other sums which are specified by the employer.
• Any amount of depreciation according to the Income Tax Act, 1961 or Agricultural Income
Tax law.

2) Calculate the Available Surplus – (Sec 5)

The available surplus is calculated taking into account the gross profit after making adjustments of
depreciation, development allowance, direct taxes of the current accounting year and all the sums
specified under Schedule 3 of the Act. This gross profit has to be added to the direct taxes in respect
of the gross profit for the preceding year, deducting from it the direct taxes which has been adjusted
to the gross profits that are reduced to the amount of bonus, for the immediately preceding year.

Or

Available Surplus = A+B

A = Gross Profit - Depreciation admissible u/s 32 of the income tax Act - Development rebate or
investment allowance or development allowance - Direct taxes payable for the accounting year
(calculated as per Sec. 7) - sums specified in the Third Schedule.

B = Direct Taxes (calculated as per Sec.7) in respect of gross profits for the immediately preceding
accounting year - Direct Taxes in respect of such gross profits as reduced by the amount of bonus,
for the immediately preceding accounting year.

3) Calculate Allocable Surplus-

Allocable Surplus = 60% of Available Surplus

67% in case of foreign companies

4) Make adjustment for 'set-on and set-off'.

If for any accounting year the allocable surplus exceeds the amount of bonus payable to the
employee in the establishment, the excess shall be carried forward for being set on in the
succeeding accounting year to be utilised for the purpose of payment of bonus.

If for any accounting year, there is no allocable surplus or the allocable surplus in respect of that
year falls short of the amount of bonus payable to the employees, so much amount as is necessary
for the payment of minimum bonus shall be carried forward for being set off in the succeeding
accounting year.
5) The allocable surplus so computed is distributed amongst the employees in proportion to salary
or wages received by them during the relevant accounting year.

Minimum Bonus (Sec 10)

The Minimum Bonus which an employer is required to pay even if he suffers losses during the
accounting year or there is no allocable surplus. (except in case of new establishments), is:

a) 8.33% of the salary or wages during the accounting year, or

b) Rs 100 in case of employees above 15 years (age) and Rs. 60 in case of employees who were
below 15 years(age), at the beginning of the accounting year, whichever is higher.

If an employee has not worked for all the working days in an accounting year, the minimum bonus
payable to him for that year shall be Proportionately reduced. For this purpose, an employee shall
be deemed to have worked, during the days of lay off, leave with pay, temporary disablement
caused by accident in the course of employment or maternity leave.

Maximum Bonus (Sec 11)

If in any accounting year, the allocable surplus, calculated after taking into account the amount 'set
on or the amount 'set-off ', exceeds the minimum bonus, the employer should pay bonus in
proportion to the salary or wages earned by the employee during that accounting year. However,
bonus should not exceed 20% of such salary or wages.

Bonus on Arrears of Wages.

In Mumbai Kamgar Union v. Indian Tool Manufactures (1981). it has been held by Bombay High
Court that bonus will be payable to the employees by the employer when the employees get
payment of arrears of the wages with retrospective effect on the basis of an award.

Where a dismissed workman was ordered to be reinstated with back wages, it was held that the
employer could not take advantage of his illegal action and deny the workman any of the benefits
that would have accrued to him, including the claim for bonus on his back wages, because the
workman was prevented by the employer to put in the necessary attendance under the statute and
perform his duties to earn bonus.

Mode and Time Limit for Payment of Bonus

Bonus Should be paid in cash and within 8 months from the close of the accounting year or within
one month from the date of enforcement of the award or coming into operation of a settlement,
following an industrial dispute regarding payment of bonus. However, an employer may apply for
extension of the period of 8 months up to two years, if there is a sufficient cause.

Bonus is payable only annually and it cannot be directed to be paid on half yearly basis.

Set On and Set Off (Sec 15)

The allocable income which is left even after paying the maximum bonus at the rate of 20% on the
salary or wages, would be carried forward to the next year to compensate in case there is any
shortage in that year. This is called set on.

However, the set off is the complete opposite of set on in which the profit falls short to pay even the
minimum bonus at the rate of 8.33%. Then, in this case, the set on of the previous year would be
used to pay the bonuses of the given accounting year.
In calculating the bonus, the amount of set on and set off from the previous accounting year shall be
first taken into consideration. This allocable income would be distributed to the employees in
proportion to their salary or wages in a given accounting year.

Deductions permissible from Bonus (Sec 18)

Following amounts can be adjusted against the amount of bonus payable;

1) Any Customary / festival / interim bonus paid.

2) Any financial loss caused by the misconduct of the employee.

Forfeiture of Bonus

An employee shall be disqualified from receiving bonus, if he is dismissed from service for fraud, or
riotous or violent behaviour, or theft, misappropriation or sabotage of any property of the
establishment, not only for the year in which he is so dismissed but also for the past years remaining
unpaid to him.

Contracting Out is Void

All Contracts or agreements depriving the employees of their right to receive minimum bonus, shall
be void and not enforceable.

Bonus in case of New Establishment (upto seven years) (Sec 16)

In the first five accounting years, after the establishment has started selling and manufacturing
goods or rendering services, it has to pay bonuses only in case of profits.

However, in the sixth, seventh and eighth accounting year, after the establishment has started
selling and manufacturing goods or rendering services, the bonus shall be paid, taking into account
the set on or set off.

In the case of the sixth year, the allocable surplus of the fifth and the sixth year would be taking into
account and in the case of the seventh year, the allocable surplus of the sixth and the seventh year is
taken into consideration.

Recovery of bonus due to an employer (Sec 21)

In case of any amount of the bonus which is due from an employer, the employee can or any of his
assignees or in case of his death his heirs, have the right to make an application to the government
and if it is satisfied with the veracity of the application then it shall issue a certificate to the collector
who shall proceed to recover the amount in the like manner as if it were an arrear of land revenue.

However, such an application must be within one year after the payment has become due, if the
application is made after the expiry one year and the government is satisfied with the reasons for
doing so, then that application could be entertained.

Maintenance of registers, records, etc (Sec 26)

Every employer is responsible to maintain records and register in the manner as it is prescribed in
the provisions of this Act.

Inspectors
The government by way of notification in the official gazette may appoint a person to be an
inspector under the provision of this Act.

The inspector can enter any premises at a reasonable time and ask for an examination of the
accounts. The employer is legally bound to furnish the information asked by the inspector.

Penalty (Sec 28)

If any person contravenes a provision of this Act or fails to comply with any of the directions made
under this Act, it would be punishable for imprisonment which shall extend up to 6 months or fine
up to ₹ 1000 or both.

The Payment of Gratuity Act, 1972

History of introduction of Gratuity act in India

This scheme was introduced in those establishments only where the employers were so kind and
generous to the workers or there was an agreement between the employers and the workers. This
scheme was confined to the particular establishments and even within those establishments, to
certain categories of staff. There was no general legislation for the payment of Gratuity to all
industrial workers. In due course of time, it was felt the workers should get gratuity as a right in
return of their long-dedicated services to the industry.

Industrial Tribunals and Supreme Courts dealt with the disputes on the subject and their awards and
decisions brought the revolutionary changes in Social Security Legislations in Indian industrial sector.

In the case of Delhi Cloth and General Mills Co. Ltd. Vs their workers (1968) 36 FJR 247. Supreme
Court held that the object of providing a gratuity scheme is to provide a retiring benefit to the
workman who have rendered long and unblemished service to the employer and thereby
contributed to the prosperity of the employer.

In the Working Journalists (Conditions of Service) & Miscellaneous Provisions Act, 1955, the
provision to pay the gratuity to the working journalists was made. After few years, the Government
of Kerala enacted the Kerala Industrial Employees Payment of Gratuity Act, 1970 making gratuity a
statutory right of the employees. West Bengal Government enacted the West Bengal Employees
Payment of Gratuity Act, 1971 relating to the subject. The other states were also thinking to legislate
such enactments. Thus, it was felt that there should be a uniform central legislation for the whole
country instead of state legislations for each and every separate states. The whole matter was
discussed in the Labour Ministers’ Conference held 24th and the August 1971 and thereafter in the
Indian Labour Conference held on 22nd and 23rd Oct., 1971 it was agreed that the central legislation
on the payment of gratuity should be undertaken. Accordingly, the payments of Gratuity Act, 1972
was enacted, largely based on the West Bengal legislation, which was come into force on 16th
September, 1972.

The payment of Gratuity Act 1972 envisages to provide a retirement benefit to the workmen who
have rendered long and unblemished service to the employer and have thus contributed to the
prosperity of the employer. The Act has been amended on several times and the latest amendment
was made in 2018 by the Payment of Gratuity ( Amendment) Act,2018.

Salient features of the Payment of Gratuity Act, 1972

Gratuity is a voluntary Payment made by the employer to the employee in recognition of
continuous, meritorious services and sincere efforts by the employee towards the organization. It is
governed under the Payment of Gratuity Act 1972. Its salient features are:

1. The Act is a self-contained and an exhaustive Act and the provisions of this Act and rules
made under it have an overriding effect on all other Acts or instruments or contracts so far as they
are inconsistent with this Act.

2. The Act is fairly sweeping in coverage, as it applies to all factories, mines, oil fields,
plantations, ports and railways irrespective of the number of workmen employed by them. It also
covers shops and establishments employing 10 or more persons.

3. The Act gives a statutory right of gratuity to all the employees, who have rendered 5 years'
continuous service and whose services stand terminated after coming into force of the Act on
account of superannuation, or retirement, or resignation, or death or disablement.

4. The Act provides both executive and quasi-judicial machinery for matters pertaining to
nomination, determination and recovery of gratuity.

5. The executive machinery pertains to maintenance of records regarding opening, change or

closure of establishments, display of notices and maintenance of records by the controlling
authority.

6. The quasi-judicial functions have been divided between the employers and the Controlling
Authority in as much as for payment of gratuity, the first forum provided is an application to the
employer. When the employer has declined or avoided payment of gratuity, then an application is
required to be made to the Controlling Authority.

7. The machinery provided for recovery rests with the Controlling Authority.

8. The orders of the Controlling Authority for payment or determination of gratuity are
appealable before appropriate government or the appellate authority.

Gratuity means something given voluntarily or beyond obligation. It refers to the idea of a gift. In
industrial law, however, it has come to mean some sort of retiring benefit which is available to an
employee after a minimum period of continuous service. Gratuity for workers is no longer a gift but
a right. In Balbir Kaur v. Steel Authority of India Ltd., 2000, the SC held that, Gratuity under the
Payment of Gratuity Act, 1972 is no longer considered to be charity but a statutory right given to the
employee.

Definitions
"Employee" means any person (other than an apprentice) who is employed for wages, whether the
terms of such employment are express or implied, in any kind of work, manual or otherwise, in or in
connection with the work of a factory, mine, oilfield, plantation, port, railway company, shop or
other establishment to which this Act applies, but does not include any such person who holds a
post under the Central Government or a State Government and is governed by any other Act or by
any rules providing for payment of gratuity.

Employee under this Act includes all persons:

I. Employed for wages

II. Employed in:

i. Any establishment

ii. Factory

iii. Mine

iv. Oilfield

v. Plantation

vi. Port

vii. Railway Company

viii. Shop

III. Employed to do work which may be:

i. Skilled

ii. Semi-skilled

iii. Unskilled

iv. Manual

v. Supervisory

vi. Technical

vii. Clerical

Employee under this Act does not include:

An Apprentice

An employee holding a civil post under the Central or State Government, and governed by some
other Act or Rules providing for the payment of gratuity.

In Goodyear India Ltd. v. K.S. Devessar, the SC held that a person, whose services are terminated
after the commencement of the Act is eligible for payment of gratuity for the period during which he
falls within the definition of employee if he has rendered continuous service for not less than 5
years.

On a question whether, teachers are included within the definition of an employee in the Act, the
Karnataka HC in Shamaraja Udupa, v. Assistant Labour Commissioner, Mangalore, 2013, held that,
teachers do come under the definition of employee under this Act and therefore entitled to
payment of gratuity.

In General Manager, Yellamma Cotton, Woolen and Silk Mills v. Regional Labour Commissioner and
appellate Authority, Bangalore, 2006, the Court held that a 'trainee' is not an employee, to be paid
wages as an employee. In the absence of any statutory provision under the Act, a trainee cannot be
held entitled to gratuity under the Act.

In Bagi Beedi Factory v. Appellate Authority, 1998, the Court held that, a home worker is very much
a person working in the establishment within the meaning of Section 2(e) of the Act. Since, the place
where the person rolled the beedis, though situated away from the beedi factory, was nevertheless
a part of the establishment within the meaning of Beedi and Cigar Workers (Conditions of
Employment) Act, 1996.

In Nagar Palika, Moradabad v. Appellate Authority of Additional Labour Commissioner, Kanpur,

1989, the Allahabad HC held that, an employee of Nagar Palika is an employee within the purview of
the Payment of Gratuity Act, 1972.

"Wages" means all emoluments which are earned by an employee while on duty or on leave in
accordance with the terms and conditions of his employment and which are paid or are payable to
him in cash and includes dearness allowance but does not include any bonus, commission, house
rent allowance, overtime wages and any other allowance.

Section 2A. CONTINUOUS SERVICE. -

an employee shall be said to be in continuous service even his/her service in interrupted by way

• sickness,
• accident,
• leave,
• leave with full wage,
• temporary disablement,
• laid-off period,
• maternity leave: 26 weeks (THE PAYMENT OF GRATUITY (AMENDMENT) ACT, 2018)

whether such uninterrupted or interrupted service was rendered before or after the
commencement of this Act.

In case of period of one year

• Employee will be treated as he in continuous service, if he is employed by employer for the

period of 190 days employment under the ground in mines, or in establishment which works
less than 6 days in a week.
• 240 days in case of other any establishments (factories, companies, etc.)

In case of period of 6 months

• Employee will be treated as he in continuous service, if he is employed by employer for the

period of 95 days employment under the ground in mines, or in establishment which works
less than 6 days in a week.
• 120 days in case of other any establishments (factories, companies, etc.)

In case of seasonal establishments

An employee of a seasonal establishment shall be deemed to be in continuous service if he has

actually worked for not less than 75% of the numbers of days on which the establishment was in
operation during the 1 year or 6 months.

Seasonal Establishments in which, although work is carried on throughout the year, the number of
employees is regularly subject to seasonal fluctuations for reasons associated with the weather,
their sales or their location. For example, hotels and restaurants in health spas and holiday resorts,
gravel and sand pits and stone quarries are deemed to be seasonal establishments.
In Kothari Industrial Corporation Ltd. v. Appellate Authority, Karnool, it has been held that, a mere
absence from work cannot be said to result in breach of continuity of service for the purposes of this
Act.

Controlling authority

The controlling authority shall be appointed by the appropriate government for the proper
administration of this Act as per Section 3. The government may also appoint different controlling
authorities for different areas.

Conditions to be Fulfilled for Claiming Gratuity

Section 4 of the Act deals with circumstances in which gratuity becomes payable to an employee and
the cases when gratuity may be forfeited.

Under the Act an employer is liable to pay gratuity to an employee on the termination of his
employment after he has rendered continuous service for not less than 5 years. The service may be
terminated by any one of the following reasons, namely.

a) On his superannuation, or

b) On his retirement or resignation, or

c) On his death or disablement due to accident or disease.

If the termination of the employment is due to death or disablement, the completion of the
continuous service of five years shall not be necessary for eligibility.

State of Punjab v. Labour Court, Jullandar (1980)- So as to avail the gratuity benefit, there must be
termination of service. Retrenchment is a termination of service and therefore the retrenched
employee will be entitled to gratuity

In the case of death of the employee, gratuity payable to him shall be paid to his nominee. If no
nomination has been made, then the gratuity may be paid to his heirs.

Rate of Gratuity

For every completed year of service or part thereof in excess of 6 months, the employer shall pay
gratuity to an employee at the rate of fifteen days wages based on the rate of wages last drawn by
the employee concerned.

In the case of piece rate employees, daily wages shall be calculated on the average of the total
wages received by him for a period of three months immediately preceding that termination on his
employment.

In the case of an employee who is employed in a seasonal establishment and who is not so
employed throughout the year, the employer shall pay the gratuity at the rate of seven days wages
for each season.

Maximum Gratuity

The amount of gratuity payable to an employee shall not exceed Rs.10,00,000/ (w e f 24-05-2010),
now it is 20 lakhs. (2021 rules)
Forfeiture of Gratuity (Sec. 4(6)

The gratuity of an employee whose services have been terminated for any Act, wilful omission or
negligence causing any damage to the property belonging to the employer, shall be forfeited to the
extent of the damage or loss so caused.

The gratuity payable to an employee may be wholly or partially forfeited if the services of such
employee have terminated for-

a) his riotous or disorderly conduct or any other act of violence on his part or

b) any act which constitutes an offence involving moral turpitude, provided that such offence is
committed by him in the course of his employment.

In the case of Bharat Gold Mines Ltd. v. Regional Labour Commissioner (1986), it was determined by
the Karnataka High Court that, in cases of employee theft involving moral turpitude, gratuity is
wholly forfeited in accordance with Section 4(6)(b). In light of this, the employer cannot withhold the
employee’s owed gratuity when service has not been terminated for any of the aforementioned
reasons.

The question of the procedure for forfeiting gratuities has also been raised in many cases. The
Allahabad High Court held in Hindalco Industries Ltd. v. Appellate Authority and Ors. (2004) that in
accordance with Section 4(6)(a) of the Act, the quantum of forfeiture must be determined,
necessitating an order, which can only be issued after providing the employee with an opportunity.
The Karnataka High Court ruled in Canara Bank v. Appellate Authority (2012) that the decision to
forfeit a gratuity may only be made after calculating the loss and giving the employee a chance to be
heard.

The Gujarat High Court ruled in Union Bank of India v. K.R. Ajwalia (2004) that notice and hearing are
necessary steps in the forfeiture of gratuity process. The Madhya Pradesh High Court ruled in
Manager, Western Coalfields Ltd. v. Prayag Modi (2018) that an employee’s gratuity may only be
withheld in accordance with the Act’s established procedure. The employer does not have
unrestricted authority to decide to withhold the gratuity at his whim.

In a recent judgement by the Delhi High Court, Union Bank Of India v. Sh D.C. Chaturvedi (2022), it
was observed that the three requirements of notification, quantification, and hearing must all be
met, according to the accepted legal view, before a gratuity can be forfeited.

Compulsory Insurance and Penalties [Sec 4A (6)]

Every employer, other than an employer or an establishment belonging to, or under the control of,
the Central Government or a State Government, shall, obtain an insurance in the manner prescribed,
for his liability for payment towards the gratuity under this Act, from the Life Insurance Corporation
of India established under the Life Insurance Corporation of India Act

If any employer fails shall be punishable with fine which may extend to ten thousand rupees and in
the case of a continuing offence with a further fine which may extend to one thousand rupees for
each day during which the offence continues.

Power to exempt

Section 5 of the Act provides the power to exempt the appropriate government by notification from
having to declare any establishment—a factory, mine, oilfield, plantation, port, railway company, or
shop—exempt from gratuity if the government is of the opinion that the establishment has
favourable benefits, not less than what this Act has been providing. The same law applies to any
employee or class of employees.

Nomination
When to file for nomination

A nomination under Section 6 must be submitted by an employee within 30 days of the end of their
first year of employment in order to be considered under the Payment of Gratuity Act, 1972. This
would imply that the statute mandates that an employee submit a nomination within 30 days after
completing a year of service. In reality, though, this is not the case. In reality, employers demand
that new recruits submit the nomination form when they first join the company. As a result, you can
consult your employer if you are unsure about submitting the nomination form.

Who can be nominated

Only “family members” may be nominated by an employee, and only then may anybody else be
nominated if there are no “family” members.

According to the Gratuity Act, a male member’s “family” is defined as his wife, children (married or
not), dependent parents, dependent parents of his wife, and, if any, the widow and children of any
predeceased sons.

For a female employee, the term “family” refers to her spouse, her children (whether they are
married or not), her dependent parents, her husband’s dependent parents, and, if any, the widow
and any children of her predeceased son.

The Gratuity Act does not provide a female employee with the option to remove her husband and
his dependent parents from the list of nominees, in contrast to the Employees’ Provident Fund
Scheme (EPF), which does. A 1987 Amendment to the Act removed the possibility of excluding the
husband from the definition of family.

Remember that, unlike EPF, gratuity nominations do not end automatically upon marriage. Given
that you would gain a spouse, who would then be considered “family,” if you had nominated anyone
else (assuming you had no “family”), you would need to submit a new nomination after being
married. However, if you designated your dependent parents before getting married, such
designation will remain valid after getting married, and your company is required to give gratuity
benefits to that individual in the event of your untimely death.

How to nominate

A person’s employer must receive the nomination on Form F on their behalf. If the employee did not
have “family” as defined by the Gratuity Act at the time the initial nomination was filed but has since
gotten married and had children, a new submission using Form G must be submitted.

Employers should insist that their staff members evaluate their gratuity nomination after getting
married. The earlier nomination submitted (i.e., before gaining family) will be rendered invalid once
the new submission is made.

Determination of the Amount of Gratuity (Sec.7)

A person who is eligible for payment of gratuity shall send a written application to the employer for
payment of such gratuity. It shall be made within thirty days from the date gratuity became payable
to him. But if the date of superannuation or retirement of an employee is known, the employee may
apply to the employer before thirty days of the date of superannuation or retirement.
As soon as gratuity becomes payable the employer shall determine the amount of gratuity and give
notice in writing to the person to whom the gratuity is payable Notice is also to be given to the
controlling authority. The employer has to determine the amount and give the notice irrespective of
the fact that an application for payment of gratuity has been made or not.

The employer shall arrange to pay the amount of gratuity within thirty days from the date it
becomes payable. If the amount of gratuity payable by the employer is not paid within a period of
thirty days, he shall pay simple interest. The Government may specify the rate of interest by
notification. At present it is 10%.

Protection of Gratuity

No gratuity payable under this Act shall be liable to attachment in execution of any decree or order
of any civil, revenue or criminal court.

Forfeiture of gratuity is permissible only if the termination of an employee is for any misconduct
which constitutes an offence involving moral turpitude, and convicted accordingly by a court:

UNION BANK OF INDIA AND OTHERS Vs C.G. AJAY BABU AND ANOTHER

Facts of the Case

Respondent is a branch manager in the UNION BANK OF INDIA and disciplinary proceedings were
initiated against him on the misconduct proved against you amounts to acts involving moral
turpitude the following are the charges:

a) Failure to take all steps to ensure and protect the interest of the Bank.

b) Failure to discharge his duties with utmost devotion, diligence, honesty and integrity.

c) Doing acts unbecoming of an Officer Employee.

On the charges being duly established, the respondent was dismissed from service on 03.06.2004
and his gratuity was forfeited by order dated 20.04.2004.

The dismissal and forfeiture were the subject matters of challenge before the Court.

Court held that

Though the learned Counsel for the appellant-Bank has contended that the conduct of the
respondent-employee, which leads to the framing of charges in the departmental proceedings
involves moral turpitude, we are afraid the contention cannot be appreciated. It is not the conduct
of a person involving moral turpitude that is required for forfeiture of gratuity but the conduct or the
act should constitute an offence involving moral turpitude. To be an offence, the act should be made
punishable under law. That is absolutely in the realm of criminal law. It is not for the Bank to decide
whether an offence has been committed. It is for the court. Apart from the disciplinary proceedings
initiated by the appellant- Bank, the Bank has not set the criminal law in motion either by registering
an FIR or by filing a criminal complaint so as to establish that the misconduct leading to dismissal is
an offence involving moral turpitude. Under sub-Section (6)(b)(ii) of the Act, forfeiture of gratuity is
permissible only if the termination of an employee is for any misconduct which constitutes an
offence involving moral turpitude, and convicted accordingly by a court of competent jurisdiction.

In the present case, there is no conviction of the respondent for the misconduct which according to
the Bank is an offence involving moral turpitude. Hence, there is no justification for the forfeiture of
gratuity on the ground stated in the order dated 20.04.2004 that the “misconduct proved against
you amounts to acts involving moral turpitude”.

INSPECTORS. [Sec 7A]

(1) The appropriate Government may, by notification, appoint as many Inspectors, as it deems fit,
for the purposes of this Act.

(2) The appropriate Government may, by general or special order, define the area to which the
authority of an Inspector so appointed shall extend and where two or more Inspectors are appointed
for the same area, also provide, by such order, for the distribution or allocation of work to be
performed by them under this Act.

(3) Every Inspector shall be deemed to be a public servant within the meaning of section 21 of the
Indian Penal Code, 1860 (45 of 1860).

POWERS OF INSPECTORS. [Sec 7B]

(1) Subject to any rules made by the appropriate Government in this behalf, an Inspector may, for
the purpose of ascertaining whether any of the provisions of this Act or the conditions, if any, of any
exemption granted thereunder, have been complied with, exercise all or any of the following
powers, namely :-

(a) require an employer to furnish such information as he may consider necessary;

(b) enter and inspect, at all reasonable hours, with such assistants (if any),

being persons in the service of the Government or local or any public authority, as he thinks fit, any
premises of or place in any factory, mine, oilfield, plantation, port, railway company, shop or other
establishment to which this Act applies, for the purpose of examining any register, record or notice
or other document required to be kept or exhibited under this Act or the rules made thereunder, or
otherwise kept or exhibited in relation to the employment of any person or the payment of gratuity
to the employees, and require the production thereof for inspection;

(c) examine with respect to any matter relevant to any of the purposes aforesaid, the employer or
any person whom he finds in such premises or place and who, he has reasonable cause to believe, is
an employee employed therein;

(d) make copies of, or take extracts from, any register, record, notice or other document, as he may
consider relevant, and where he has reason to believe that any offence under this Act has been
committed by an employer, search and seize with such assistance as he may think fit, such register,
record, notice or other document as he may consider relevant in respect of that offence;

(e) exercise such other powers as may be prescribed.

RECOVERY OF GRATUITY. [Sec 8]

If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed
time, to the person entitled thereto, the controlling authority shall, on an application made to it in
this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall
recover the same, together with compound interest thereon at such rate as the Central Government
may, by notification, specify, from the date of expiry of the prescribed time, as arrears of land
revenue and pay the same to the person entitled thereto :

Provided that the controlling authority shall, before issuing a certificate under this section, give the
employer a reasonable opportunity of showing cause against the issue of such certificate :

Provided further that the amount of interest payable under this section shall, in no case exceed the
amount of gratuity payable under this Act

PENALTIES [Sec 9]
Employer who avoids the payment of the gratuity to the employees, shall be punishable with
imprisonment for a term which may extend to 6 months, or with fine which may extend to 10,000/-
rupees or with both.

If any person makes false statements or false representations, they shall be punishable with
imprisonment for a term which may extend to 6 months, or with fine which may extend to 10,000/-
rupees or with both.

Employer who disobeys the rules and regulation of the act, shall be punishable with imprisonment
for a term which shall not be less than 3 months but which may extend to one year, or with fine
which shall not be less than 10,000/- rupees but which may extend to 20,000/- rupees, or with both

Exemption of employer from liability

An employer, if charged with any offence punishable under this Act, shall be exempt from any
liability under Section 10 if he provides sufficient reasons for his conduct of the act or some other
person doing that act without his knowledge. The other person, if found guilty, will be charged with
the same punishment as an employer will be.

The employer has to prove the following to the court in order to get exempted from liability:

To prove that the other person committed the alleged offence without his knowledge, agreement,
or connivance, and

To prove that he exercised due diligence in enforcing the execution of this Act.

Unit 3

Child Labour

Child labour refers to the exploitation of children through any form of work that deprives children of
their childhood, interferes with their ability to attend regular school and is mentally, physically,
socially or morally harmful and dangerous. Such, exploitation is prohibited by legislation worldwide
even though not all forms of work may be considered as child labour.

The worst forms of child labour involves children being enslaved, separated from their families,
exposed to serious hazards and illnesses and/or left to fend for themselves on the streets. The worst
forms of child labour includes:

1. All forms of slavery or practices similar to slavery, such as:

a) The sale of a child.

 b) Trafficking of children, meaning the recruitment of children to do work far away from
home and from the care of their families, in circumstances within which they are exploited.

c) Debt bondage or any other form of bonded labour or serfdom.

d) Forced or compulsory labour, including forced or compulsory recruitment of children for

use in armed conflict.

2. Commercial sexual exploitation of children, including the use, procuring or offering of a child for
prostitution, or the production of pornography or for pornographic performances.

3. Use, procuring or offering of a child by others for illegal activities, also known as children used by
adults in the commission of crime (CUBAC), including the trafficking or production of drugs.

4. Work by its nature that is likely to harm the health, safety or morals of children.

According to ILO Recommendation No. 190, the following category of works should be prohibited
when it comes to children,

1. Any work that exposes children to sexual abuse (physically or psychologically).

2. Any work that is done underground, under Water, at dangerous heights or in confined
spaces.

3. Any work that is done with dangerous machinery, equipment and tools.

4. Any work that involves the manual handling or transport heavy loads.

5. Any work that is done in an unhealthy environment which may, for example, expose children
to hazardous substance agents or processes, or to temperatures, noise levels, vibrations damaging
to their health.

6. Any work that is done under particularly difficult condition such as work for long hours or
during the night or wad where the child is unreasonably confined to the premises of the employer.

Causes of Child Labour

Some of the important causes are:

1. Poverty: Due to poverty, parents cannot afford the studies of their children and make them
earn their wages from a tender age.

2. Lack of educational resources: In many villages there are no proper facilities for education.
The lack of affordable schools for the education of poor children leaves the illiterate and helpless.
Sometimes, children are forced to live without studying and such compulsions push them into child
labour

3. Social and economic backwardness: Socially backward parents do not send their children to
school and instead send them to work as uneducated parents do not realise the impact of child
labour on their children.

4. Addiction, disease or disability: In many families, due to addiction, disease or disability, there
is no earning and the child’s wages are the sole means of family’s sustenance

5. Poor compliance of laws: In the absence of proper compliance of laws, Child Labour still
continues in India with the perpetrators of child labour doing so with impunity.
In Jan Mohan v. State of Gujarat, the SC discusses the effect of failure to keep the rules so framed
before the Parliament or state legislature.

6. Cheap labour: Some companies, factories and shopkeepers employ children so that they
may have to pay less to them and amounts to cheap labour.

7. Family tradition: Many families believe that the age old tradition of labour is the only source
of earning for their livelihood.

8. Discrimination between boys and girls: In many poor families, girls are found to be engaged
in labour along with their families as education is preferred only for boys and girls are expected to
lend a hand at home or other odd chores.

Necessity to abolish Child Labour

Child labour is a serious hindrance to the social and economic development of the nation. Children
employed in various sectors fail to get necessary education, virtually forced to leading a life of
hardship and poverty. It also affects the overall health of a child as children get exhausted easily and
are not physically fit to work for longer durations under difficult conditions.

Children working in glass making, fire cracker or other hazardous industries work not only for long
hours but also under hazardous conditions, seriously compromising their health. They are
continuously exposed to toxic gases and substances leading to skin and respiratory diseases.

Children who are forced into labour industry are unable to fend for themselves and grow up as an
individual who cannot productively contribute to the society. For the nation's economy to be
progressive, it is imperative that its workforce is educated and skilled, to cater to different sectors.
As long as children are employed as labourers, India cannot successively eradicate poverty and
illiteracy.

Feasibility of abolishing Child Labour

In spite of what all the government agencies may say, until the economic conditions for all are
uplifted it is extremely difficult to eradicate child labour. In India children are considered as extra
hands to provide support for farming or earning. Many others are orphans and do not have access to
education. Some of the reason, as to why it is difficult to eradicate child labour:

1. Past experience shows that labour laws are never, implemented. The child labour
(Prohibition and Regulative ) Act will become yet another exercise in futility.

2. Hazardous work does not become safe merely because it is performed at home.

3. Any scheme of exemption provided in a law is bound to be misinterpreted and misused.

4. The intention of the government to regularize child labour merely because it exists.

5. A one-sided and half-hearted approach of banning child labour in few establishments and
regulating it in few others without adopting a holistic or integrated approach, without solving the
problem of poverty and economic deprivation, without enforcing the minimum wages Act, without
resolving the problem of universal enrolment and retention of all children of school going age in the
formal school system will serve little purpose.

As more and more paid work is shifted to home based work and the distinction between work in the
home and work outside has blurred. It has been opined that, all forms of work are bad for children
and any form of distinction between one form of work or another done by children is completely
arbitrary. Until and unless, child labour in all its forms has been prohibited, economic conditions
improved and every child brought under the formal education system. To truly prohibit child labour
in India will be difficult.

Elimination of child labour

1. Abolition of child trafficking, elimination of poverty, free and compulsory education and
basic standards of living need to be improved to reduce the problem of child labour.

2. The World Bank and IMF can help in eradicating poverty by extending loans to developing
nations.

3. Strict implementation of labour laws is also essential in order to prevent exploitation by

parties or MNCs.

4. Amendments in the present child labour laws in order to implement strict measures to
control the menace as the Act does not provide for any strategy to eliminate child labour.

5. The minimum age should be increased from 14 to 18 for all kinds of employment.

6. The list of hazardous activities needs to be expanded to include all hazardous activities.

7. Spreading literacy and education

8. Spread awareness about child labour.

Human rights perspective

Child labour is a human rights problem and increasingly recognized as such the world over. Of the
approximately 246 million children between ages 5 and 17 estimated by the international Labor
Organization (ILO) to be engaged in "child labour," are ruthlessly exploited to perform dangerous
jobs with little or no pay, and thus made often to suffer severe physical and emotional abuse'. Child
labour is detrimental to children preventing them from enjoying their childhood, hampering their
development and sometimes causing lifelong physical or psychological damage.

Child Labour results in:

1. Denial of their right to education.

2. Denial of the right to leisure and cultural activities

3. Exposure to violence (physical, psychological and sexual) by the employers and co-workers.

4. Physical injuries and other risks at work.

5. Meagre wages or denial of wages.

6. Forced and long hours of work.

According ILO convention:

1. A child means every human being below the age of 18 years.

2. Every child has the inherent right to life

3. A child shall have the right to freedom of thought conscience and religion.
4. No child shall be subjected to arbitrary or unlawful interference with his or her privacy.

5. The State shall take all appropriate legislative, administrative, social and educational
measures to protect the child from all forms of physical or mental violence, injury or abuse and
neglect or negligent treatment.

Rights of Child and the Indian Constitution

According to the Indian Constitution, the rights are ensured to the citizens of the country. The
children are also given rights under the Constitution as they are considered citizens of the country.
Considering their special status, special provisions are made for children under the Constitution. The
Government can make special provisions for the protection of the rights of children.

The leading amendment made for the protection of the rights of children is the 86th Constitutional
Amendment i.e. Right to Education. Right to Education was made a Fundamental Right in order to
protect the basic right of children to receive an education. 86th amendment guarantees the
following:

The right to free elementary education that was made compulsory under Article 21 A of the Indian
Constitution.

Right to protection till the age of fourteen years from any kind of hazardous employment which is
provided under Article 24 of the Indian Constitution.

Article 39(e) of the Constitution protects children from any kind of abuse or forced employment
which is not suitable for their age and ability.

The children are provided with equal opportunities, facilities, freedom, dignity, and protection under
Article 39 (f) of the Indian Constitution.

Article 45 of the Constitution ensures early childhood care and education to the children until the
age of 16 years.

Besides the special provisions which are made under the Constitution, the children also have equal
rights as any other adult citizen of the country.

The Child Labour (Prohibition and Regulation) Act, 1986

Introduction

Employment of children below 14 years of age in certain, employments have been prohibited by
various Acts. However, there was no procedure which was laid down in any law for deciding in which
employments, occupations or processes the employment of children should be banned.

Also, there was no law to regulate the working conditions of children in most of the employments
where they are not prohibited from working and are working under exploitative conditions.
Accordingly it was decided to enact a comprehensive law on the subject. To achieve this objective
the Child Labour (Prohibition and Regulation) Bill was introduced in the Parliament.

The objectives of The Child Labour (Prohibition and Regulation), Act, 1986 are:

1. To bring about a uniform definition of "child" in all related laws.

2. To bring about a uniform law for the prohibition and regulation of child labour in India.

3. Ban the employment of children, that is, those who have not completed 14 years of age, in
specified occupations and processes.

4. Lay down a procedure to decide modifications to the Schedule of banned occupations and
processes.

5. Regulate the working conditions of children in employments where they are not, prohibited
from working.

6. Lay down enhanced penalties for employment of children in violation of the provisions of
this Act, and other Acts which forbid the employment of children.

Definitions

Sec. 2 of the Child Labour (Prohibition and Regulation) Act, 1986 provides for the meaning of the
following words

(i) 'adolescent' means a person who has completed his fourteenth year of age but has not
completed his eighteenth year.

(ia) "appropriate Government" means in relation to an establishment under the control of the
Central Government or a railway administration or a major port or a mine or oilfield, the Central
Government, and in all other cases, the State Government;

(ii)"child" means a person who has not completed his fourteenth year of age or such age as may be
specified in the Right of Children to Free and Compulsory Education Act, 2009, whichever is more;

(iii)"day" means a period of twenty-four hours beginning at midnight;

(iv)"establishment" includes a shop, commercial establishment, workshop, farm, residential hotel,

restaurant, eating house, theatre or other place of public amusement or entertainment;

(v)"occupier", in relation to an establishment or a workshop, means the person who has the
ultimate control over the affairs of the establishment or workshop;

(vi)"port authority" means any authority administering a port;

(vii)"week" means a period of seven days beginning at mid-night on Saturday night or such other
night as may be approved in writing for a particular area by the Inspector;

(viii)"workshop" means any premises (including the precincts thereof) wherein any industrial
process is carried on, but does not include any premises to which the provisions of Section 67 of the
Factories Act, 1948 (63 of 1948), for the time being, apply.

Prohibition of Employment of Children in certain occupations and processes (Sec 3)

Child Labour (Prohibition and Regulation) Act, 1986 aims to eradicate any kind of child abuse in the
form of employment and prohibit the engagement of children in any kind of hazardous employment,
who have not completed 14 years of age. The Act prohibits the employment of children in certain
occupations and processes. The occupations which are prohibited are mentioned in the Act under
the Schedule in Part A.

The prohibited occupations for children under 14 years are:

 • Occupations that are related to the transport of passengers, goods or mails by railway;
• Cinder picking, clearing of an ash pit or building operation in the railway premises;
• Working in a catering establishment which is situated at a railway station and if it involves
moving from one platform to another or from one train to another or going into or out of a
moving train;
• The occupation which involves work related to the construction of a railway station or any
other work where such work is done in close proximity to or between the railway lines;
• Any occupation within the limits of any port;
• Work which involves the selling of crackers and fireworks in shops having a temporary
license;
• Working in Slaughterhouses.

Prohibited processes for children under the age of 14 years are mentioned under the Schedule in
Part B. They are as follows:

• The process involving the making of Bidi;

• The process which involves carpet-weaving;
• Manufacturing cement or bagging of cement;
• The processes such as Cloth printing, dyeing, and weaving;
• The processes that involve the manufacturing of matches, explosives, and fireworks;
• Mica-cutting and splitting;
• Any manufacturing process such as shellac manufacture, soap manufacture, tanning;
• The process of wool-cleaning;
• Work that is related to the building and construction industry;
• Manufacture of slate pencils;
• Manufacture of products from agate;
• Manufacturing processes in which toxic metals and substances such as lead, mercury,
manganese, chromium, cadmium, benzene, pesticides and asbestos are used;
• Cashew and Cashew Nut descaling and processing;
• Soldering processes in electronic industries.

The Act in total prohibits approximately 13 occupations and 51 processes for the employment of
children. Article 24 of the Indian Constitution includes the provision for the prohibition of
employment of children in factories. The Act also lays down certain guidelines for employers, which
is to be followed in case the employee is a child of age less than 14 years. According to the Act, the
employer cannot make a child employee work between 7 p.m. and 8 a.m. and no overtime is
allowed for them. It is not allowed for an employer to make a child work for more than 3 hours
without an interval of at least one hour and in total, an employer should not make a child work for
more than six hours a day. Adequate provisions must be made by the employer for the health and
safety of the child employees. Basic facilities such as drinking water, toilets, disposal of waste,
ventilation, etc must be provided by the employer. The employer needs to notify the Factory
Inspector if in case he employs a child for employment. Production of age certificate of the child
employee is also needed according to the rules of the Act.

Power to amend the Schedule (Sec 4)

The Central Government has the power to amend the Schedule after giving notification in the
Official Gazette. The notification for such amendment must be given in advance of not less than
three months. The notice can be given by notification to add any occupation in the schedule or any
process to the schedule. After such notice is provided to Official Gazette to add any occupation or
process, it is deemed to be amended accordingly.

Child Labour Technical Advisory Committee - Sec 5

The Central Government may, if it thinks it to be necessary can constitute an advisory committee i.e.
the Child Labour Technical Advisory Committee by giving notification about it in the Official Gazette.
It is the duty of the Committee to advise the Central Government if there’s a need to add
occupations or processes to the Schedule. The Central Government appoints the members of the
Committee but the Committee should not exceed more than 10 members. The Committee shall also
consist of a Chairman. There isn’t any limitation on the number of meetings Committee shall have.
The Committee shall meet whenever they feel necessary and the meetings shall be regulated
according to the procedure which shall be decided by them.

The Committee may itself constitute one or more sub-committees if they feel a need to do so.

The Chairman and other members of the Committee are entitled to an allowance.

Regulation of Conditions of Work of Children

There are certain regulations provided under the Child Labour (Prohibition and Regulation) Act, 1986
which the employer needs to follow while employing a child in the establishment. Proper work
conditions are to be provided by the employer.

Application of Part

The provisions of this Part of the Act shall apply to an establishment or any class of establishments in
which the occupations or processes which are referred to in Section 3 are not being carried on.

Hours and period of work

As per the Act, no child employee shall be allowed to work in any establishment in excess of the
number of hours that have been decided on and prescribed for such an establishment or class of
establishment. The number of hours shall be fixed by the establishment and the child employee
must not be allowed to work for more than three hours without a break of one hour. The total
number of hours of work for a child employee shall not exceed six hours. Six hours shall also include
one hour of interval. According to the Act, the employer cannot make a child employee work
between 7 p.m. and 8 a.m. and no employer must permit the child employee to work overtime. If a
child has already worked in an establishment in a day, then such a child must not be permitted to
work in another establishment on the same day.

Weekly Holidays

Every child who is employed in an establishment shall mandatorily be allowed a holiday each week.
The holiday must be for a whole day. The day of the week must be decided on which it would be a
holiday for the employees of the establishment and the notice regarding the same must be exhibited
in a conspicuous place of the establishment. The notice should be of a permanent nature and should
not be altered more than once in three months.

Notice to Inspector
Notice is needed to be sent to the Inspector within whose local limits the establishment is situated
by the employer of such establishment if he employs a child employee or by the occupier of an
establishment in which a child is employed or is permitted to work. The notice to be sent must be in
writing. It must contain the following particulars:

• the name of the establishment and place in which it is situated,

• name of the person who manages the establishment,
• the postal address of the establishment,
• the details such as the nature of occupation or process which is carried on in the
establishment.

Every employer who permits a child to work in his establishment is needed to send a notice within
30 days to the Inspector within whose local limits the establishment is situated. Where a process is
carried on by the occupier with the aid of Government or it receives assistance or recognition from
Government for it then such establishment shall not be subject to the provisions of Section 7, 8, 9 of
the Act.

Dispute as to age

In case if a question arises between an Inspector and an occupier on the age of the child who was
permitted to work by the occupier in an establishment then the Inspector can prescribe a medical
authority to decide on the age of such a child in case of absence of an age certificate.

Maintenance of register

The occupier shall maintain a register which shall include information with respect to children who
are employed or permitted to work in his establishment. The register which is made available by the
occupier for inspection at all times shall contain:

• The name and date of birth of the children who are employed by the occupier;
• Number of hours and period of work for which the child employee is made to work;
• The nature of employment and the work which the child employee is made to do;
• Other particulars which may be prescribed.

Display of notice containing abstract of Sections 3 and 14

The notice containing abstract of Sections 3 and 14 (Penalties)of the Act shall be displayed by every
occupier of the establishment in a conspicuous and accessible place of the establishment and in case
the employer is a railway administration or a port authority then the notice must be displayed in a
conspicuous and accessible place at every station or within the limits of a port as the case may be.
The notice must be written in a local language and in the English language.

Health and Safety

The Government may by giving a notification to the Official Gazette make rules for the health and
safety of the children who are employed or permitted to work in an establishment or any class of
establishments if the Government feels necessary to do so. According to the Act the rules which
must be followed by the establishment for the purpose of safety and cleanliness are as follows:

The cleanliness of the place of work must be taken care of and it should be free from any kind of
nuisance;

• There must be a proper place for disposal of wastes and effluents;

 • Proper provisions for ventilation should be made and an adequate level of temperature
should be maintained in the place of work;
• Provisions should be made to reduce dust and fumes;
• Artificial humidification shall be made;
• Lighting must be proper in the place of work;
• Drinking water must be provided;
• Toilets must be made in the place of work for the employees;
• Spittoons should be provided in order to keep the workplace clean;
• The machines which are in the workplace should be fenced properly;
• Children must not be allowed to work near machinery which is in motion;
• Children must not be permitted to work on dangerous machines;
• Children must be instructed, trained and supervised in relation to the employment of
children on dangerous machines;
• Device for cutting off power should be used;
• Self-acting machines should be used in the workplace;
• Easing of new machinery;
• Proper floors should be made and proper means to access through stairs shall be made;
• Pits, sumps, openings in floor shall be made;
• Child employees shall not be permitted to lift excessive weights while working;
• Protection for eyes must be provided;
• Children must not exposed to explosives or inflammable dust, gas, etc;
• In case fire is used in work, proper precautions must be taken;
• Proper maintenance of buildings and machinery shall be taken.

Miscellaneous

Penalties

When an employer employs a child or permits a child to work in contravention of the provisions of
Section 3, the employer shall be liable for punishment with imprisonment for a term which may
extend to one year or with fine and the fine imposed shall not be less than rupees ten thousand and
which may extend to rupees twenty thousand or with both.

Whoever is convicted of the said offence under Section 3 and repeats the same offence again in
future then he shall be punished with imprisonment for a term which shall not be less than six
months and can be extended to two years.

When an employer fails to give a notice as stated under Section 9 or fails to maintain a register
comprising the details of child employees as required by Section 11 of the Act or if the employer
makes any false entry in any such register, or fails to display a notice containing an abstract of
Section 3, or if the employer fails to comply with or contravenes any other provisions of the Act or
any of the rules which are made thereunder, he shall be punished with simple imprisonment which
may extend to one month or with fine which may extend to ten thousand rupees or with both
imprisonment and fine.

Modified application of certain laws in relation to penalties

In case a person is found guilty and is convicted of a contravention of any of the provisions which is
mentioned in the Act, then he shall be liable to pay penalties as per sub-sections (1) and (2) of
Section 14 of this Act.
The provisions which are referred to in Section 14(1) of the Act are as follows :

• Section 67 of the Factories Act, 1948

• Section 40 of the Mines Act, 1952
• Section 109 of the Merchant Shipping Act, 1958
• Section 21 of the Motor Transport Workers Act, 1961

Procedure relating to offences

A police officer, Inspector or any person can file a complaint against an employer for the commission
of an offence under the Act. A complaint can be filed under this Act in any court which has
competent jurisdiction for it.

In cases where there is a question as to the age of a child employee, every certificate as to the age of
a child that is granted by a prescribed medical authority shall be considered to be conclusive
evidence as to the age of the child employee to whom it relates.

No court shall try a case of an offence under this Act which is inferior to that of a Metropolitan
Magistrate or a Magistrate of the first class.

Amendments made through the child Labour (Prohibition and Regulation)

Amendment Act, 2016

The 1986 Act prohibits employment of children below 14 years in 18 hazardous occupations and 65
processes. In July 2016, the Parliament passed the child labour (Prohibition and Regulation)
Amendment Bill, 2016. This act amends the child Labour Act 1986 by widening its scope against child
labour and provides for stricter punishments for violations.

The Child Labour (Prohibition and Regulation) Amendment Act, 2016 is an Act to prohibit the
engagement of children in all occupations and to prohibit the engagement of adolescents in
hazardous occupations and processes and the matters connected therewith or incidental thereto.

Salient Features

1. The act has completely banned employment of children below 14 years of age in all
occupations and enterprises, except those run by his or her own family. The 1986 Act on the other
hand prohibited the employment of children under 14 years of age in 18 hazardous occupations and
65 processes.

2. The Act does not apply to cases where the child helps his family or family enterprise, which
is other than any hazardous occupations or processes given in the Schedule, after his school hours or
during vacations. However, such work should not affect the school education of the child.

3. The Act does not apply to cases where the child works as an artist in an audio-visual
entertainment industry, including advertisement, films, television serials or any other similar
entertainment or sports activities except circus, subject to, such conditions and safety measures, as
may be prescribed. However, such work should not affect the school education of the child.

4. Addition of a new category of persons called "adolescent. It defines "adolescent" as a person

between 14 to 18 years and bars their employment in any hazardous occupations
5. The 2016 Act provides for enhanced punishment. The 2016 Act has increased the quantum
of punishment and makes child labour a cognizable offence. Any occupier who employs children
below 14 years of age will be punished with imprisonment for a term of 6 months which may extend
to 2 years (earlier 3 months to 1 year) or a fine of Rs. 20,000 which may extend to Rs. 50,000 (earlier
Rs. 10,000 to Rs. 20,000) or both in the first instance.

6. Subsequent offenders will be punished with imprisonment for a term of 1 year which may
extend to 3 years (earlier 6 months to 2 years). In case, the offender is a parent, it provides a relaxed
penal provision and proposes a fine of Rs. 10,000 for repeat offence committed by parent.

7. The act provides for the creation of a Rehabilitation Fund for the rehabilitation of children.
The fines collected from occupiers under this Act shall be credited to the fund.

8. The number of hazardous occupations has been brought down from 83 to 3. The three
occupations are mining, inflammable substances, and hazardous processes under the Factories Act.
It also empowers the Central Government to add or omit any hazardous occupation from the list
included in the Act.

9. Empowers the government to make periodic inspection of places at which employment of

children and adolescents are prohibited.

10. Government may confer powers on a District Magistrate (DM) to ensure that the provisions of
the law are properly carried out and implemented.

11. It provides that, henceforth the Act shall be known as the Child and Adolescent Labour
(Prohibition and Regulation) Act.

12. The Child Labour Technical Advisory Committee will henceforth be known as Technical Advisory
Committee.

Positive Aspects

1. With the passing of the Child Labour (Prohibition and Regulation) Amendment Bill, 2016, the
law regarding child labour is as per the statutes of the International Labour Organisation (ILO).

2. The 2016 Act provides for a complete ban on child labour so they can get compulsory
primary education under Right to Education.

3. Further, the act has recognized the ground realities of family enterprises and permitted
children to help their parents run their family enterprises.

4. The 2016 Act has increased the punishment for employing children and made child labour as
a cognizable offence.

criticism

1. According to the UNICEF, permitting children to work in their family enterprises would lead
to more children working in unregulated conditions.

2. The Act does not specifically regulate the conditions of work in in family enterprises.

3. It may restrict children to caste based occupations.

4. Also, it may be difficult to determine whether an enterprise is owned by a family or some

person has employed the whole family to run the enterprise.
5. The 2016Act has reduced the number of hazardous occupation from 83 to just 3 (mining,
explosives and occupations mentioned in the Factory Act). This paves way for children to be
employed in hazardous ,chemical mixing units, battery recycling units, among others. In addition, the
present list of hazardous occupation is liable to be removed by the government authorities on their
own discretion.

According to Section 4 of the act, they need not approach parliament for doing so.

6. According to some estimate, nearly 10% of adolescents working in hazardous conditions are
working in family enterprises and this Act does not expressly prevent it.

7. The bill has also expanded the definition of family to include not only parents and siblings
but also the siblings of either parent.

Judicial Interpretations

Historically, the judiciary has played a pivotal role in guarding the constitution and has played an
integral role in enforcing child rights. There have been several important cases where the judiciary
played a proactive role in preventing the employment of children and forced labour.

In M.C. Mehta v. State of Tamil Nadu and others", the Supreme Court observed that working
conditions in the match factories are such that they involve health hazards in normal and apart from
the special risk involved in the process of manufacturing, the adverse effect is a serious problem.

Exposure of tender age to these hazards requires special attention. It was held that employment of
children with match factories directly connected with the manufacturing process holding of financial
production of match sticks or fireworks should not at all be permitted as Article 39(f) prohibits it.
The Court further observed that the spirit of the constitution perhaps is that children should not be
employed in factories as childhood is the formative period and in terms of Article 45 they are meant
to be subjected to free and compulsory education, until they complete the age of 14 years. Children
can, therefore, be employed in the process of packing. but packing should be done in an area away
from the place of manufacture to avoid exposure to accident.

The Honorable Court further observed that the state (in this case Tamil Nadu) is directed to enforce
provisions relating to facilities for recreation and medical and attention may be given to ensure
provision of a basic diet during the working period to workers including children and medical care
with a view to sound physical growth.

In People Union for Democratic Right v. Union of India known as Asiad Case. This case is an epoch-
making judgment of the Supreme Court of India, which has not only made significant contribution of
labour laws, but also has displayed a creative attitude of judges to protect the interests of the child
workers. The Facts of the case were that a Non-Governmental Organization addressed a letter to the
Supreme Court annexing the report of social activists regarding the conditions under which the
workmen engaged In various Asiad projects. Reference was made in that report that there was
violation of Article 24 of the constitution and of the provisions of the Employments of Children Act,
1938, that is, children below the age of 14 years was employed in construction work of various
projects. With regard to allegation of the provisions of Employment of Children Act, 1938, the Delhi
Administration and Delhi Development Authority took the stand that no complaint in regard to the
violations of the provisions of that Act at any stage received by them. They also took stand that, the
Act was not applicable in case of construction work , since construction industry was not covered in
the schedule of the Act.
 The Supreme Court held that Construction work is clearly a hazardous occupation and it is absolutely
essential that the employment of children under the age of 14 years must be prohibited in every
type of construction work. This is a constitutional prohibition which, even not followed up by
appropriate legislation, must operate proprio vigore.

In Unnikrishnan J.P.and others v. State of A.P and others, the Supreme Court has interpreted Article
21 so as to include the right to education within the scope of that Article as 'right to education' flows
directly from 'right to life'. In other words, right to education is a part of the fundamental rights
enshrined in Part III of the Constitution. The State is under a constitutional mandate to provide
educational institutions at all levels for the benefit of citizens.

S.No Before the amendment After the amendment Impact

1 Children below the age of 14 Complete prohibition of Complete ban that ensures all
years will be allowed to work employment of children below children under 14 years are in
in occupations except for 18 the age of 14 school as per the Right To
occupations and 65 Education Act.
processes.

2 No help was provided to Children allowed to work only This allows the working kids to
children working after school after school hours or during learn their traditional skills and
hours who were below the vacations under the condition also helps them build life values
age of 14 yrs. that the occupations were non- such as a sense of discipline,
hazardous. decision making, responsibility,
and so on.

3 Children below the age of 14 Children below the age of 14 This protects the health and
years will be permitted to years will be allowed to work ensures children’s well being.
work in Family in Family Business/Enterprises Children could work in their
Business/occupation both only if they are non-hazardous. family businesses only if it is safe
hazardous and non- for them.
hazardous.

4 Children will be able to work Children will be able to work This allows the working children
in family businesses even if it in family businesses even if it to learn their traditional skills and
didn’t belong to the child’s didn’t belong to the child’s values of life.
family. family only if the occupation
is non-hazardous.

5 Children above the age of 14 Children between 14-18 years Protection of adolescent’s health.
years didn’t have any are categorised as Adolescents
prohibitions on employment. and are not allowed to work in
hazardous occupations.

6 Adolescents were not Regulated working conditions Adolescent working in non-

provided with any working for adolescents working in hazardous occupations cannot be
regulations regarding non-hazardous occupations are exploited.
working hours and in place.
 conditions.

7 Schedule of 18 occupations A child can’t work in any There is a complete ban on work
and 65 processes (called occupation, so the list of and not just on the 18
certain occupations & prohibited occupations has occupations and 65 processes.
processes) applicable for a been made infinite as there is a
child; tells where a child complete ban on employment.
cannot work.

8 No schedule of hazardous Schedule of hazardous Protection of adolescents health.

occupations and processes processes and occupations
where an adolescent cannot provided where an adolescent
work. cannot work.

9 No provision of providing a The government can provide a Enabling provision to allow the
positive list of occupations positive list of non-hazardous Government to restrict the
where an adolescent can occupations where an employment of adolescents in
work. adolescent can work and a occupations that are classified as
child can assist. non-hazardous.

10 Contravention of provisions It is a cognizable offence. There is no need of an approval

non-cognizable offence. of the DM to take action on the
FIR on violation of the child
labour law.

11 No Officer responsible for District Magistrate or Provision for laying specific

the implementation of Act. a subordinate officer can be responsibility on the designated
made responsible for Officer for violating the
enforcement and can be provisions of the Act – this
conferred with such powers. ensures better enforcement.

12 No provision of rehabilitation Statutory provision for a child The statutory provision for a
fund for rescued children. and adolescent labour rehabilitation fund will ensure
rehabilitation fund with that the child/adolescent is not
contribution of appropriate only rescued but his/her future is
Government also ensured for secured by the amount collected
each child rescued. in the fund. This amount can be
used for the education and
welfare of the rescued child.

CONTRACT LABOUR (REGULATION AND ABOLITION) ACT,1970

Contract labour is the system of employing labourers through a contract by a contractor for a
specified period. A workman is known as a contract labourer when they are assigned to a work of an
establishment for a specific period through a contract by a contractor with or without the knowledge
of the principal employer. Contract workmen are indirect employees; a contract worker is a daily
wager or the daily wages are accumulated and given at the end of the month. It is the responsibility
of the contractor to hire, supervise and remunerate contract labourers.

In India, contract labourers are used in various industries varying from skilled to semi-skilled jobs.
Before and after independence the status and condition of contract labour were analysed by
numerous commissions, committees, Labour Bureau Ministry of Labour, etc. and it was found that
the major characteristics of contract labour are poor economic conditions of the workers, casual
nature of employment, lack of job security, etc. Therefore the legislature enacted the Contract
Labour (Regulation & Abolition) Act, 1970 (which came into force on 10th February, 1971) to
regulate the adequate functioning of the contract labourers and to prevent the exploitation of
contract labourers by the hands of management.

Objective and scope of the Act

The objective and scope of the Act are:

• To prevent exploitation of contract labour.

• To provide proper and habitable working conditions.
• To regulate the functioning of the advisory boards.
• To lay down the rules and regulations regarding the registration procedure of the
establishments employing contract labour.
• To state the necessary requirements and the procedure of licensing of contracts.
• To provide the penal provisions in case of violation of offences under the Act.

Salient Features of the Act

1. The Contract Labour (Regulation and Abolition) extends to the whole of India and there by
Regulating Contract labour throughout the territory.

2. The Act applies to every establishment or contractor who employs or who employed on any
day of the preceding 12 months, 20 or more workmen.

3. The Act provides for the establishment of Central and State Advisory Boards to advice the
Central and State Government respectively on such matters arising out of the administration of this
Act.

4. The Act empowers the Central and State Governments to constitute Committees for the
purposes of the Act.

5. Registration and Revocation of Licence — The principal employer or the contractor

employing contract labour must obtain the necessary licence for the purpose of registration after
payment of prescribed fees. The licence is valid for a particular period and can be revoked when it is
obtained through misrepresentation or suppression of material facts.

6. The appropriate Government is empowered to prohibit the employment of Contract labour

where it deems necessary or fit.

7. The appropriate government is also empowered to provide for the welfare and health of the
contract labours. In this context, the appropriate government may make rules requiring the
contractor employing labour to provide for canteens, Restrooms, clean drinking water and first aid
facilities.
8. Liability of principal employer in certain cases – If any of the amenities such as Canteens,
Restrooms, clean drinking water and first aid facilities for the benefit of contract labours are not
provided by the contractor, then such amenities shall be provided by the principal employer.

9. The Act makes it the responsibility of the contractor for payment of wages to the contract
workers employed by him in a timely manner in the presence of a representative nominated by the
principal employer.

10. Section 21 of the Act provides that, in case the contractor fails to make payment of wages
within the prescribed period or makes short payment, then the principal employer shall be liable to
make payment of wages in full or the unpaid balance due, as the case may be.

11. Inspectors will be appointed by the appropriate Government to see that the provisions of
the legislation are being complied with.

12. The Act makes it mandatory for the principal employer and contractor to make, keep and
maintain records and registers containing information about the contract labour employed, nature
of work carried out by the contract labour and the wages paid to the employees.

13. The Act also provides for penalizing those who do not comply with the provisions of the Act.

14. The Act also empowers the appropriate government to make rules for carrying out the
purposes of the Act.

Applicability of the Contract Labour (Regulation & Abolition) Act, 1970

Section 1(4) mentions the establishments where the Act will be applicable:

Any establishment where twenty or more workmen are employed or were associated as contract
labour on any day during the preceding twelve months.

Any contractor who employs or employed twenty or more workmen as contract labour on any day
of the preceding twelve months.

The Act is also applicable to every establishment if the workmen are employed in the establishment
as ‘contract labour’. Section 2(b) of the Act states that a workman is deemed to be employed as
contract labour when he is hired in or in connection with such work by or through a contractor with
or without the knowledge of the principal employer.

The Act does not apply to any organisation or establishments where any work of intermittent or
casual nature is performed. The Act states that a work is deemed to be of intermittent nature if it is
performed for less than 120 days in the preceding twelve months or it is of non-seasonal character
and is performed for less than 60 days in a year.

The Act is not applicable to a person who is appointed in an advisory or managerial capacity.

Essential provisions of the Contract Labour (Regulation & Abolition) Act, 1970

The essential provisions of the Contract Labour (Regulation & Abolition) Act, 1970 are stated below.

Composition of the advisory boards

Chapter 2 of the Contract Labour (Regulation & Abolition) Act, 1970 mentions the establishment and
composition of the Central and State Advisory Boards. The functions of these boards are to advise
the Central and state governments respectively on the matters concerning the administration of the
Act, and also to carry out all the necessary functions assigned under the Act.

Central Advisory Board (Sec 3)

The Central Advisory Board consists of a Chairman appointed by the Central government, the Chief
Labour Commissioner, and the Central Government may nominate eleven to seventeen members to
represent the government, railways, coal industry, mining industry, contractors, workmen and
members from any other fields which, in the opinion of the Central Government ought to be
represented on the Central Advisory Board.

Furthermore, Section 3 of the Act also states that the number of members nominated to represent
the workmen shall not be less than the number of members nominated to represent the principal
employers and the contractors.

State Advisory Board (Sec 4)

Section 4 of the Contract Labour (Regulation & Abolition) Act, 1970 states the composition of the
State Advisory Board. It consists of a Chairman appointed by the state government, the Labour
Commissioner of that state and in their absence, any other officer will be appointed by the state
government and the state government may nominate nine to eleven members to represent that
government, industry, contractors, workmen and members from any other fields which, in the
opinion of the state government, ought to be represented on the State Advisory Board. However,
the number of members nominated to represent the workmen shall not be less than the number of
members nominated to represent the principal employers and the contractors.

Both Central and State Advisory Boards have the power to form committees under this Act as they
may think fit. The committees will function according to the provisions of the Act and will carry out
all the necessary duties and responsibilities.

Registration procedure of establishments employing contract labour (Sec 6)

The Act lays down the appropriate method for registration of the establishments employing contract
labour. The appropriate government by an order notified in the Official Gazette will be appointing
such persons being Gazetted Officers of the government as it deems fit to be registering offices
under Chapter 3 of the Act. It further mentions the limits, within which a registering officer shall
exercise the powers and functions as conferred upon them under the Act.

Registration of certain establishments (Sec 7)

Section 7 of the Contract Labour (Regulation & Abolition) Act, 1970 states the registration procedure
of the establishments falling under the Act. The principal employer of such an establishment must
make an application to the registering office in the prescribed manner. By the appropriate
government notification in the Official Gazette must be made within the stipulated period for
registration of the establishment. In cases of expiration of such stipulated period, the registering
office will only accept applications if the registering officer is satisfied that the applicant was
prevented by sufficient cause from making the application in time.

After completion of the application of registration, the registering office will register the
establishment and grant the registration certificate to the principal employer.
Revocation of registration (Sec 8)

The registering office has the power to revoke the registration of an establishment with the approval
of the appropriate government if it is satisfied that the registration of the establishment was
received through misrepresentation, suppression of any material fact, or any other reason which
renders the registration ineffective. However, before revoking the registration the registering office
must give an opportunity to the principal employer of the establishment to be heard.

Effect of non-registration – (Sec 9 )

Section 9 of the Act provides that, no principal employer of an establishment, to which this Act
applies, shall:

i. In the case of an establishment required to be registered under section 7, but which has not
been registered within the time fixed for the purpose under that section.

ii. In the case of an establishment the registration in respect of which has been revoked under
section 8,

Employ contract labour in the establishment after the expiry of the prescribed period or after the
revocation of the registration, as the case may be.

Prohibition of employment of contract labour (Sec 10)

The Central or state government after consultation with the appropriate advisory boards may
prohibit the employment of contract labour in any process, operation or other work in any
establishment as stated under Section 10 of the Act (Based on the nature of work, work should be
done through permanent workman or if it need a whole time workman).

Licencing of contractors

Chapter 4 of the Contract Labour (Regulation & Abolition) Act, 1970 states the significant
requirements and the procedure of licensing of contracts. This Chapter lays down the required steps
for granting, revoking, suspending and amending a licence.

Appointment of licensing officers (Sec 11)

The appropriate government by an order in the Official Gazette may appoint Gazetted Officers of the
government as licensing officers and state their powers and functions under Section 11 of the Act.

Grant, revocation, suspension and amendment of licences

Any application for granting a licence under this Act must contain the particulars regarding the
location of the establishment, the nature of the process, operation or work for which contract labour
is to be employed. The granted licence will be valid for the specified period and may be renewed
from time to time.

However, if it comes to the attention of the licencing officer that a licence has been obtained
through misrepresentation, suppression of any material fact or the holder of the licence has failed to
comply with the conditions subject to granting of the licence or contravened any provision of the Act
then the licensing officer after giving reasonable opportunity to be heard to the licence holder may
revoke, suspend or amend the licence as the case may be.
Procedure for appeal (Sec 15)

Section 15 of the Act states that any person aggrieved under any provision of the Act may appeal to
an appellate officer appointed by the appropriate government within thirty days from the date on
which the order is communicated to them.

Payment of wages

It is the responsibility of the contractor to pay the required wages to each worker employed under
contract labour before the expiry of the stipulated period. If the contractor fails to make the
payment within the stipulated period then the principal employer shall be liable to make payment of
wages in full or the unpaid balance due. The wages are to be fixed by the Commissioner of Labour.

Welfare and health of contract labour

Under Chapter 5 of the Act, it is the duty of the principal employer to ensure that the contractor
provides the following facilities adhering to the rules laid down by the appropriate government.

If the contractor is employing more than one hundred workmen by contract labour then one or
more canteens shall be provided and maintained by the contractor for the use of such contract
labour.

Concerning the work of an establishment where contract labour is required to halt at night, the
contractor must provide and maintain restrooms or other suitable facilities which shall be
sufficiently lighted, ventilated, clean and comfortable.

The contractor is liable to provide other facilities such as drinking water, latrines and urinals
(separate for men and women), washing facilities, first-aid, etc.

Infringement of provisions concerning employment labour

Section 23 of the Contract Labour (Regulation & Abolition) Act, 1970 regulates the proper
functioning of the provisions of the Act, it states that if anyone violates any provisions or any rules
concerning the employment of contract labour or contravenes any condition of a licence granted
under this Act will be punished with imprisonment for a term that may extend to three months or
with fine which may extend to one thousand rupees or both.

The Act further states that if any offence is committed by a company infringing any provisions of the
Act then the company, as well as every person responsible during the time of the commission of the
offence, will be held liable.

Cognizance of offences

Under Section 26 a court of law can take cognizance of an offence only when a complaint is made by
an inspector, and no court inferior to a Presidency Magistrate or a Magistrate of the First Class shall
try any offence punishable under this Act.

Sec. 28 - Inspecting staff

Section 28 of the Act provides for the appointment and powers of Inspecting officers for the purpose
of this Act

1. The appropriate Government may, by notification in the Official Gazette, appoint such
persons as it thinks fit to be inspectors for the purposes of this Act, and define the local limits within
which they shall exercise their powers under this Act.
2. Subject to any rules made in this behalf, an inspector may, within the local limits for which
he is appointed:

i. Enter, at all reasonable hours, with such assistance, being persons in the service of the
Government or any local or other public authority as he thinks fit, any premises or place where
contract labour is employed, for the purpose of examining any register or record or notices required
to be kept of exhibited by or under this Act and require the production thereof for inspection.

ii. Examine any person whom he finds in any such premises or place and who, he has reasonable
cause to believe, is a workman employed therein.

iii. Require any person giving out work and any workman, to give any information, which is in his
power to give with respect to the name and addresses of the persons to for and from whom the
work is given out or received, and with respect to the payments to be made for the work

iv. Seize or take copies of such register, record of wages or notices or portions thereof as he may
consider relevant in respect of an offence under this Act which he has reason to believe has been
committed by the principal employer or contractor

v. Exercise such other powers as may be prescribed.

3. Any person required to produce any document or thing or to give any information required by
an inspector under sub-section (2) shall be deemed to be legally bound to do so within the meaning
of Section 175 and Section 176 of the Indian Penal Code.

Sec. 29 - Registers and other records to be maintained

Section 29 of the act provides for the manner in which registers and records are to be maintained by
the contactors and principal employer for the purposes of this Act:

1. Every principal employer and every contractor shall maintain such registers and records
giving such particulars of contract labour employed, the nature of work performed by the contract
labour, the rates of wages paid to the contract labour and such other particulars in such form as may
be prescribed.

2. Every principal employer and every contractor shall keep exhibited in such manner as may
be prescribed within the premises of the establishment where the contract labour is employed,
notices in the prescribed form containing particulars about the hours of work, nature of duty and
such other information as may be prescribed.

Sec 30 – Effect of laws and agreements inconsistent with this Act

The contract Labour Act shall have effect, not withstanding anything which is inconsistent with this
act , in any other law or in the term of any agreement or contract of service, , or in any standing
orders applicable to the establishment whether made before or after the commencement of this
Act.

However, if any such agreement, contract of service standing orders applicable to the contract
labour employed in the establishment, make the contract labour entitled to benefits which are more
favourable to them than those to which they would be entitled under this Act, the contract labour
shall continue to be entitled to the more favourable benefits in respect of that matter,
notwithstanding that they receive benefits in respect of other matters under this Act.

Constitutional validity of the Contract Labour (Regulation & Abolition) Act, 1970
The application of this Act does not violate any Articles of the Indian Constitution. In the case,
Gammon India Ltd. Etc. Etc vs. Union Of India and others (1974). the constitutional validity of the Act
was challenged; it was stated that Section 28 of the Act conferred arbitrary and unguided power
thus violating Articles 14 and 15 of the Indian Constitution. It was also contended before the Court
that Section 34 of the Act which empowers the Central Government to make any provision for
removal of difficulty is unconstitutional on the grounds of excessive delegation. The Supreme Court
held that Section 34 of the Act is an application for the internal functioning of the administrative
machinery and gives effect to the provisions of the Act, therefore does not amount to excessive
delegation. The Court dismissed the petitions and held that the Act does not violate the Constitution
and it is constitutionally valid.

Unit IV

THE EMPLOYEES’ PROVIDENET FUNDS AND MISCELLANEOUS PROVISIONS ACT,1952

The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, is an Act which provides
for the institution of provident funds, pension fund and deposit linked insurance fund for employees
in factories and other establishments.

In Provident Fund Inspector v. T.S. Hariharan, the Supreme Court has held that, the basic objective of
the Act was to provide for Provident Funds and to make provisions for future of the workman after
his retirement or his dependents in the case of his early death.

According to Section 1 of the Act, the Employees' Provident Funds and Miscellaneous Provisions Act,
1952, applies:

i. To every establishment which is a factory engaged in any industry specified in Schedule I and
in which 20 or more persons are employed.

In Jan Siksha Prasar Samiti v. assistant Provident Fund Commissioner's', the Court confirmed that,
the EPF Act shall not be applicable if the total employees are less than 20.

ii. To any other establishment employing 20 or more persons or class of such establishments
which the Central Government may, by notification in the Official Gazette, specify in this behalf.

In Otis Elevator Employees Union v. Union of India's, the Supreme Court held that the Act is a social
welfare legislation to provide for the institution of Provident Fund, Pension Fund and Deposit Linked
Insurance Fund for employees in factories and other establishments.

Therefore, the Employees' Provident Fund is a social welfare legislation intended to protect the
interest of the workers employed in factories and other establishments. It is implemented by the
Employees Provident Fund Organisation of India.

The basic objective of Employees' Provident Fund, and Miscellaneous Provisions Act, 1952 is to
provide a kind of social security to the industrial workers. The Act mainly provides retirement or old
age benefits, such as Provident Fund Superannuation Pension, Invalidation Pension, Family Pension
and Deposit linked Insurance. The Act also provides for payment of terminal benefits on the
happening of various contingencies such as retirement, closure, retirement on attainment of the age
of superannuation, voluntary retirement and retirement due to factors which result in incapacity of
the employee to work.

Statement of objects and reasons

According to the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the statement
of objects and reasons:

I. The question of making some provision for the future of the industrial worker after he retires or
for his dependents in case of his early death, has been under consideration for some years. The ideal
way would have been provision through old age and survivors' pensions as has been done in the
industrially advanced countries. However, in the prevailing conditions in India the institution of a
pension scheme cannot be visualised in the near future. Another alternative may be for provision of
gratuities after a prescribed period of service. The main defect of a gratuity scheme, however, is
that, the amount paid to a worker or his dependents would be small, as the worker would not
himself be making any contribution to the fund. Taking into account the various difficulties, financial
and administrative, the most appropriate course appears to be the institution of compulsorily
contributory provident funds in which both the worker and the employer would contribute. Apart
from other advantages, there is the obvious one of cultivating among the workers a spirit of saving
something regularly. The institution of a provident fund of this type would also encourage the
stabilisation of a steady labour force in industrial centers.

2. The subject of legislation for instituting compulsorily of contributory provident funds in

industrial under-takings was discussed several times at tripartite meetings in which representatives
of the Central and State Governments and employers and workers took part. A large measure of
agreement was reached that there should be such legislation. Further, a non- official Bill on this
subject was introduced in the Central Legislature in 1948 and was withdrawn only on an assurance
given that Government itself would soon consider the introductions of a comprehensive Bill. The
view that the proposed legislation should be undertaken was lastly endorsed by the Conference of
Provincial Labour Ministers held in January 1951. It may be added that a statutory Contributory
Provident Fund already exists for workers in coalmines, covering about 300,000 persons.

3. The Bill provides for institution, in the first instance, of contributory provident funds in the 6
major organised industries named in Schedule I, except undertakings owned by the Central or State
Government or by a local authority. There is also a provision empowering the Central Government,
by notification, to add other industries to the Schedule or to apply the Act to industrial undertakings
employing less than fifty persons.

4. To avoid any hardship to new establishments, a provision has been made for exempting
them for a period of 3 years and similar exemptions are given to other establishments which are less
than 3 years old till they have been in operation for a period of 3 years in all. The rate of contribution
will be 6 percent of the total emoluments of the worker, the worker and the employer each
contributing these amounts. Further, the scheme could empower payment of a higher subscription
by the workers at their option.

5. Where Provident Funds exits in private industry, contributions are usually a percentage of
the basic wage. Unlike Government Departments, wages in private industry have not, however,
been rationalised and there are great variations in the level of basic wages in private industry, even
in different units in the same industry. If contributions are reckoned on the basis of basic wages only,
there will, there for, be wide changes in the degree of benefit received. This will be unfair to the
workers and may also penalise those employers who have brought the level of basic wags more in
accord with current requirements. Government appreciates that dearness allowance is a variable
factor depending on the cost of living. Nevertheless, for the reasons explained, Government is
satisfied that contributions to the Provident Fund should be on the basis of basic pay plus dearness
allowance. This should not be construed as in any way implying that dearness allowances on the
existing rates are to be recognised as a permanent measure.

6. Most of the details relating to the Fund will be settled in accordance with a scheme, which in
the interest of uniformity, will be framed by the Central Government. The administration will, to a
large extent, be decentralised in regard to undertakings falling within the sphere of State
Governments.

7. Where provident funds offering equal or more advantageous terms are operating efficiently,
provision has been made for them to continue subject to certain safeguards in the interest of the
workers.

Definitions

Section 2 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, provides for
the meaning of the following words:

Basic wages

"Basic wages" means all emoluments which are earned by an employee while on duty or in
accordance with the terms of the contract of employment and which are paid or payable in cash to
him, but does not include:

i. The cash value of any food concession.

ii. Any dearness allowance, house-rent allowance, overtime allowance, bonus, commission or any
other similar allowance payable to the employee in respect of his employment or for work done
in such employment.
iii. Any presents made by the employer.

In Surya Roshni Ltd. v. Employees Provident Fund, it was held that special allowance, dearness
allowance, conveyance and other allowances paid to all employees would be treated as basic wages
for EPF contributions.

Employees’ Provident Fund Organisation & Another v. Sunil Kumar B. and Others Based on a
notification dated August 22, 2014, there were amendments made that allowed the employee to
contribute more than 15000/- cut of salary. Along with a move to change it from existing 6500 to
15000/-.

(c) "Contribution" means a contribution payable in respect of a member under a scheme or the
contribution payable in respect of an employee to whom the Insurance Scheme applies.

(d) "Controlled industry" means any industry the control of which by the Union has been declared by
a Central Act to be necessary in the public interest.

(e) "Employer" means:

i. In relation to an establishment which is a factory, the owner or occupier of the factory, including
the agent of such owner or occupier, the legal representative of a deceased owner or occupier, and
where a person has been named as a manager of the factory under Sec 7 of the Factories Act, 1948,
the person so named.
ii. In relation to any other establishment, the person who' or the authority which, has ultimate
control over the affairs of the establishment, and where the said affairs are entrust, to a manager,
managing directing or managing agent, such manager, managing director or managing agent.

(0 "employee" means any person who is employed for wages in any kind of work, manual or
otherwise, in or in connection with the work of an establishment and who gets his wages directly or
indirectly from the employer, and includes any person:

i. Employed by or through a contractor in or in connect, with the work of the establishment.

ii. Engaged as an apprentice, under the Apprentice Act, 1961 or under the standing orders of
the establishment.

In Jyoti Home Industries v. Regional Provident Fund Conunissioner, the Court held that, it is the
employment in the regular course of business of the establishment alone which attracts the
provisions of the Act. Therefore, it is the nature of employment and not the duration of employment
which is important.

In P.M. Patel & Sons v. Union of India, the Supreme Court held that, the definition of the term
'employee' is wide and includes not only persons employed directly by the employer but also
persons employed through a contractor.

However, in Prakash D. Shah v. Union of India, it was held that, a partner of a firm having the status
of a beneficiary will not be an employee either to be covered or counted under the Act.

In Subros Ltd. v. Regional Provident Fund Commissioner, it was held that, a trainee is not an
employee to be covered under this Act.

Sec 2A – Establishment to include all departments and branches.

According to Section 2A, if an establishment consists of different departments or has branches

whether situated in the same place or in different places, all such departments or branches shall be
treated as parts of the same establishment.

In Eddy Current Contracts Ltd. v. Regional Provident Fund Commissioner189, it was held that,
factories situated in different places and having separate licenses but the same registered office
activities, Managing Director etc. will be treated as parts of the same establishment.

Sec. 3 - Power to apply act to an establishment which has a common provident fund another
establishment

According to Section 3 of the Act, where immediately, before this Act becomes applicable to an
establishment there is existence a provident fund which is common to the employers employed in
that establishment and employees in any other establishment, the Central Government may, by
notification in the Official gazette direct that the provisions of this Act shall also apply to such other
establishment.

Sec. 4 - Power to add to Schedule I

Section 4 of the Act provides that, the Central Government may add any industry to Schedule I of the
Act as it deems fit.

The Central Government may, by notification in the Official Gazette, add to Schedule I any other
industry in respect of the employees whereof it is of opinion that a Provident Fund Scheme should
be framed under this Act, and thereupon the industry so added shall be deemed to be an industry
specified'', Schedule I for the purpose of this Act.

Sec. 5 - Employees' Provident Funds Scheme

section 5 of the Act provides for the framing of the Employees' provident Funds Scheme by the
Central Government for any employees or class of employees.

1. The Central Government may, by notification in the Official Gazette, frame a scheme known as
the Employees' Provident Fund Scheme for the establishment of provident funds under this Act
for employees or for any class of employees and specify the establishments or class of
establishment to which the said Scheme shall apply.

After the framing of the Scheme, a Fund shall be established as soon as possible in accordance with
the provisions of this Act and the Scheme.

• The Fund shall vest in, and be administered by, the Central Board constituted under Section
5A of the Act.
• Subject to the provisions of this Act, a Scheme framed under Section may provide for all or
any of the matters specified in schedule II.

2. Scheme framed under sub-section (1) may provide that any of its provisions shall take effect
either prospectively or retrospectively on such date as may be specified in this behalf in the Scheme.

Sec. 5A - Central Board

Section 5A of the Act provides for the establishment of a Central Board by the Central Government
for the purposes of this Act. Section 5A of the Act provides that:

1. The Central Government may, by notification in the Official Gazette, constitute a Board of
Trustees of the territories to which this Act extends consisting of the following persons as members:

a) A Chairman and a Vice- Chairman to be appointed by the Central Government.

The Central Provident Fund Commissioner as Ex- officio member

b) Not more than 5 persons appointed by the Central Government from amongst its officials.

c) Not more than 15 persons representing Governments of such States as the Central
Government may Specify in this behalf, appointed by the Central Government.

d) 10 persons representing employers of the establishments to which the Scheme applies,

appointed by the Central Government after consultation with such organisations of
employers as may be recognised by the Central Government in this behalf.

e) 10 persons representing employees in the establishments to which the Scheme applies.

They shall be appointed by the Central Government after consultation with such
organisations of employees as may be recognised by the Central Government in this behalf.

2. The terms and conditions subject to which a member of the Central Board may be appointed
and the time, place and procedure of the meetings of the Central board shall be such as may be
provided for in the Scheme.

3. The Central Board shall administer the Fund vested in it in such manner as may be specified
in the Scheme.
4. The Central Board shall perform such other functions as it may be required to perform by or
under any provisions of the Scheme.

5. The Central Board shall maintain proper accounts of its income and expenditure in such
manner as the Central Government may, after consultation with the Comptroller and Auditor-
General of India, specify in the Scheme.

6. The accounts of the Central Board shall be audited annually by the Comptroller and Auditor
General of India and any expenditure incurred by him in connection with such audit shall be payable
by the Central Board to the Comptroller and Auditor General of India.

7. The Comptroller and Auditor General of India and any person appointed by him in
connection with the audit of the accounts of the Central Board shall have the same rights and
privileges and authority in connection with such audit as the Comptroller and Auditor General has, in
connection with the audit of Government accounts and, in particular, shall have the right to demand
the production of books, accounts, documents and papers and inspect any of the offices of the
Central Board.

8. The accounts of the Central Board as certified by the Comptroller and Auditor General of
India or any other person appointed by him in this behalf together with the audit report thereon
shall be forwarded to the Central Board which shall forward the same to the Central Government
along with its comments on the report of the Comptroller and Auditor General.

9. It shall be the duty of the Central Board to submit also to the Central Government an annual
report of its work and activities and the Central Government shall cause a copy of the annual report,
the audited accounts together with the report of the Comptroller and Auditor General of India and
the comments of the Central Board thereon to be laid before each House of Parliament.

Sec. 5AA - Executive Committee

Section 5AA of the Act empowers the Central Government to constitute an Executive Committee to
assist the Central board in the performance of its functions. Section 5AA of the Act provides that:

1. The Central Government may, by notification in the Official Gazette, constitute an Executive
Committee to assist the Central Board in the performance of its functions.

2. The Executive Committee shall consist of the following persons as members:

i. A Chairman appointed by the Central Government from amongst the members of the Central
Board.

ii. 2 persons appointed by the Central Government from amongst the persons referred to Section

5A(1 )(b).

iii. 3 persons appointed by the Central Government from amongst the persons referred to in
5A(1)(c).

iv. 3 persons representing the employers elected by the Central Board from amongst the persons
referred to in Section 5A(1)(d).

v. 3 persons representing the employees elected by the Central Board from amongst the persons
referred to in 5A(1)(e).

vi. The Central Provident Fund Commissioner as ex-officio member.

3. The terms and conditions subject to which a member of the Central Board may be appointed or
elected to the Executive Committee and the time, place and procedure of the meetings of the
Executive Committee shall be as provided in the Scheme.

Sec. 5B - State Board

Section 5B of the Act provides for the establishment of the State Board by the Central Government
for the purposes of this Act. Section 5B of the Act provides that:

1. The Central Government may, after consultation with the Government of any State , by
notification in the Official Gazette, constitute a board of trustees for that State in such manner as
may be provide for in the Scheme.

2. A State Board shall exercise such powers and perform such duties as the Central
Government may assign to it from time to time.

3. The terms and conditions subject to which a member of a State Board may be appointed and
the time, place and procedure of the meeting of a State Board shall be as provided in the Scheme

Sec. 5C - Board of Trustees to be body corporate

Every Board of Trustees constituted under Section 5A or Section 5B shall be a body corporate under
the name specified in the notification constituting it, having perpetual succession and a common
seal and shall by the said name sue and be sued.

Sec 5 D – Appointment of officers

Section 5D of the Act provides for the appointment of certain officers to perform certain functions
for the purposes of this Act.

1. The central Government shall appoint a Central Provident Fund Commissioner who shall be the
chief executive officer of the Central Board and shall be subject to the general control and
superintendence of that Board.

2. The Central Government shall also appoint a Financial Advisor and Chief Accounts Officer to assist
the Central Provident Fund Commissioner in discharging his duties

3. The Central Board may appoint Addition Central Provident Fund Commissioner, Deputy Provident
Fund Commissioner, Regional Provident fund Commissioners, Assistant Provident Fund
Commissioners and such other officers and employees as it may consider necessary for the efficient
administration of the Scheme.

4. No appointment to the post of the Central Provident Fund Commissioner or an Additional Central
Provident Fund Commissioner or a Financial Adviser and Chief Accounts Officer or any other post
under the Central Board carrying a scale of pay equivalent to the scale of pay of any Group `A' or
Group 'B' post under the Central Government shall be made except after consultation with the
Union Public Service Commission

However, no such consultation shall be necessary regarding any such appointment:

i. For a period not exceeding 1 year

ii. If the person to be appointed is at the time of his appointment:

a) A member of the Indian Administrative Service.

 b) In the service of the Central Government or the Central Board in a Group A' or
Group 'B' post.

5. A State Board may, with the approval of the State Government concerned, appoint such staff as it
may consider necessary.

6. The method of recruitment, salary and allowances, discipline and service conditions of the Central
Provident fund Commissioner, the Financial Adviser and Chief Accounts Officer shall be as specified
by the Central Government and such salary and allowances shall be paid out of the fund.

7. The method of recruitment, salary and allowances discipline and service conditions of the
Additional Central Provident Fund Commissioner, Deputy Provident Fund Commissioner, Regional
Provident Fund Commissioner Assistant Provident Fund Commissioner and other officer; and
employees of the Central Board shall be as specified by the Central Board in accordance with the
rules and orders applicable to the officers and employees of the Central Government drawing
corresponding scales of pay.

However, where the Central Board is of the opinion that it is necessary to make a departure from
the said rules or orders in respect of any of the matters aforesaid, it shall obtain the prior approval
of the Central Government.

In determining the corresponding scales of pay of officers and employees, the Central Board shall
have regard to the educational qualifications, method of recruitment, duties and responsibilities of
such officers and employees under the Central Government and in case of any doubt, the Central
Board shall refer the matter to the Central Government whose decision thereon shall be final.

8. The method of recruitment, salary and allowances, discipline and service conditions of officers
and employees of a State Board shall be as specified by that Board, with the approval of the State
Government concerned.

Sec. 5DD - Acts and proceedings of the Central Board or its Executive Committee or the State
Board not to be invalidated on certain grounds

No act done or proceeding taken by the Central Board or the Executive Committee constituted
under Section 5AA or the State Board shall be questioned on the ground merely of the existence of
any vacancy in, or any defect in the constitution of, the Central Board or the Executive Committee or
the State Board, as the case may be.

Sec 5 E – Delegation

The Central Board may delegate to the Executive Committee or to the Chairman of the Board or to
any of its officers whereas a State Board may delegate to its Chairman or to any of its officers, such
powers and functions under this Act as it may deem necessary for the efficient administration of the
Scheme, subject to such conditions and limitations, if any.

Employees’ Provident Fund, Pension Funds and Deposit Linked Insurance Fund

The Act provides for the establishment of three funds for the benefit of the employees. They are -

1.Employees Provident Fund

2.Employees Pension Fund

3.Employees Deposit linked insurance fund

The Act empowers the Central Government to frame Schemes for the establishment of the Funds
and to provide benefits to the employee- members.

The Central Government has framed three Schemes under the Act. They are

1. Employee's Provident Fund Scheme,1952

2. Employee’s Family Pension Scheme,1971
3. Employee's Deposit Linked Insurance Scheme, 1976

In 1995 the Central Government has framed the Employees Pension Scheme,1995 . The Employees
Family Pension Scheme,1971 has been merged under the new Scheme.

Sec 6 - Contributions and matters which may be provided for in Scheme

Contribution to the Funds

The employer is required to contribute the following amounts towards Employees' Provident Fund
and Pension Fund

a) in case of establishments employing less than 20 persons or any establishment in the jute,
beedi, brick, coir or gaur gum industry, 10% of the basic wages, dearness allowance and
retaining allowance of the employee.
b) in case of any other establishments employing 20 or more persons, 12% of the Wages,
Dearness Allowance and Retaining Allowance of the employee.

The employees contribution shall be equal to the contribution payable by employer in respect of
him. If an employee so desires, he may opt to contribute at a higher rate also. However, the
employer shall not be under an obligation to contribute at such higher rate.

A part of the contribution (one-fourth of the contribution) is remited to the Pension fund and the
remaining balance continues to remain in the Provident Fund Account.

The employer is required to deduct the employee's contribution from his wages and deposit the
same into the Provident Fund account along with his own contribution.

The employer is required to contribute towards Deposit -Linked Insurance Fund 0.5% of the wages,
Dearness Allowance and retaining allowance. The employee is not required to contribute towards
Deposit Linked Insurance Fund.

If an employer defaults in making payment of any contribution to the Fund he shall be liable to pay ,
by way of penalty, damages. The rate of damages may vary from 17% to 37% of the defaulted
amount.

Benefits under the Schemes

An employee who is a member is entitled to the following benefits under various schemes.

Under the Provident Fund Scheme

A member can withdraw to a certain extent from his provident fund account for the following
purposes.

a) To pay premium of his insurance policies.

b) To purchase or construct a house or for acquisition of a site for that purpose.

c) To add, alter, improve or repair the dwelling house.

d) To repay loans.

e) To meet the expenses of illness, daughter’s marriage, post metric education of children,
damage to property due to natural calamities or unemployment due to power cut.

A member can withdraw the full amount of provident fund at the time of retirement on
superannuation or otherwise, retrenchment or discharge from service. In case of his death the
accumulated balance is payable to his nominee or his legal heirs.

Under the Pension Scheme

A member shall be entitled to monthly superannuation pension if he has rendered eligible service of
20 years or more and retires at the age of 58 years or retirement pension if he has rendered 20 years
or more and retires before the age of 58 years or service pension if he has rendered service of 10
years or more but less than 20 years.

If a member has not rendered the minimum service of 10 years on the date of retirement he shall be
entitled to return of contribution at the prescribed rate.

A member who is permanently and totally disabled during the employment shall be entitled to the
monthly member's pension subject to a minimum of Rs. 250/-. This pension is available irrespective
of the member's service. The pension will commence from the date of disablement for life-time of
the member.

A monthly widow pension ranging from Rs. 250 p. m. to an amount equal to monthly member's
pension is payable from the date of member's death to the date of death of widow or her
remarriage, whichever is earlier. In case the deceased member is unmarried, an equal amount of
monthly pension shall be paid to the nominee.

Under the Deposit Linked Insurance Fund Scheme

On the death of a member while in service, an amount equal to the average balance in his Provident
Fund Account during the preceding 12 months shall be payable. If the average balance exceeds Rs.
25000/- the amount payable shall be Rs.25000/- plus 25% of the amount in excess at Rs. 25000/-
subject of a maximum of Rs. 35000/- is payable to the eligible member of his family.

Sec. 6D - Laying of Scheme before Parliament

Every scheme framed under Section 5, Section 6A and Section 6C shall be laid, as soon as possible
before each House of Parliament, while it is in session.

Sec 7 – Modification of Scheme.

Section 7 of the Act empowers the Central Government to modify any of the Employees' Provident
Scheme, the Employees' Pension Scheme or the Employees' Insurance Scheme. Section 7 provides
for:

1. The Central Government may, by notification in the Official Gazette add, amend or vary
either prospectively or retrospectively, the Employees' Provident fund Scheme, the Employees'
Pension Scheme or the Employees' Insurance Scheme, as the case may be.

2. Every notification issued under this Section shall be laid, as soon as possible before each
House of Parliament, while it is in session.
Sec 7A – Determination of money dew from employers.

Section 7A of the Act lays down the powers of the Central Provident Commissioner and other
officers appointed under the Act. The Act provides for:

1. The Central Provident Fund commissioner, any Additional Central Provident Fund Commissioner,
any deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any
Assistant Provident Fund Commissioner may, by order:

a) In a case where a dispute arises regarding the applicability of this Act to an establishment,
decide such dispute.

b) Determine the amount due from any employer under any provision of this Act,
Employees' Provident Scheme, the Employees' Pension Scheme or the Employees' Insurance
Scheme as the case may be.

c) Conduct such inquiry as he may deem necessary.

2. The officer conducting the inquiry shall, have the same powers as are vested in a court under the
Code of Civil Procedure, 1908, for trying a suit in respect of the following matters:

a) Enforcing the attendance of any person or examining him on oath.

b) Requiring the discovery and production of documents

c) Receiving evidence on affidavit

d) Issuing commissions for the examination of witness.

3. No order shall be made under against the employer unless the employer concerned is given a
reasonable opportunity of representing his case.

Where the employer, employee or any other person required to attend the inquiry, fails to
attend such inquiry without assigning any valid reason or fails to produce any document or to file
any report or return when called upon to do so, the officer conducting the inquiry may decide the
applicability of the Act or determine the amount due from any employers, as the case may be, on
the basis of the evidence adduced during such inquiry and other documents available on record.

In Gunavantrai Jain v. Regional Provident Fund Commissioner, the Court held that, the inquiring
authority under Section 7A exercises quasi-Judicial functions and his procedure must conform to the
principles, of Natural Justice.

4. Where an order under this Section is passed against an employer ex-Partee, he may, within 3
months from the date of communication of such order, apply to the officer for setting aside such
order and if he satisfies the officer that the show cause notice was not duly served or that he was
prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make
an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry.

However, no such order shall be set aside merely on the ground that there has been an irregularity
in the service of the show cause notice if the officer is satisfied that the employer had notice of the
date of heating and had sufficient time to appear before the officer.

5. No order passed under this section shall be set aside on any application under Sub-section 4
unless a notice thereof has been served on the opposite party.
Sec 7B Review of orders passed under Session 7A

Section 7B of the Act provides for the review of orders passed under section 7A of the Act. Section
7B provides that:

1. Any person aggrieved by an order made under Section 7A(1), but from which no appeal has been
preferred under this Act, and who, from the discovery of new and important matter or evidence
which, after the exercise of due diligence was not within his knowledge or could not be produced by
him at the time when the order was made, or an account of some mistake or error apparent on the
face of the record or for any other sufficient reason, desires to obtain a review of such order may
apply for a review of that order to the officer who passed the order.

Also, such officer may on his own motion review his order if he is satisfied that it is necessary so to
do on any such ground.

2. Every application for review under this Section shall be filed in such form and manner and within
such time as may be specified in the Scheme.

3. Where it appears to the officer receiving an application for review that there is no sufficient
ground for a review, he shall reject the application.

4. Where the officer is of opinion that the application for review should be granted, shall grant the
same, provided that:

a) No such application shall be granted without previous notice to all the parties before him to
enable them to appear and be heard in support of the order in respect of which a review is applied
for.

b) No such application shall be granted on the ground of discovery of new matter or evidence
which the applicant alleges was not within his knowledge or could not be produced by him when the
order was made, without proof of such allegation.

5. No appeal shall lie against the order of the officer rejecting an application for review, but an
appeal under his Act shall lie against an order passed under review as if the order passed under
review were the original order passed by him under Section 7A.

In Anurag Board & Mills Pvt. Ltd. v. RPFC, the court held that, the power of review can be exercised
on discovery of new and important matter or evidence.

Sec. 7C - Determination of escaped amount

Section 7C of the Act provides that, the Officer who had passed an order under Section 7A may
reopen the case within a period of 5 years from the date of passing the order for the purpose of
determining the escaped amount. Section 7C of the Act provide, that:

Where an order determining the amount due from an employer, under Section 7A or Section 7B has
been passed and if the officer who passed the orders:

a) Has reason to believe that by reason of omission or failure on part of the employer to make
any document or report available, or to disclose, fully and truly, all material facts necessary for
determining the correct amount due from the employer, any period has escaped his notice.

b) Has, in consequence of information in his possession, reason to believe that any amount to
be determined under Section 7A or Section 7B has escaped from his determination for any period
notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of
the employer, he may, within a period of 5 Years from the date of communication of the order
passed under section 7A or section 7B, re-open the case and pass, appropriate orders re-
determining the amount due from the employer in accordance with the provisions of this Act.

However, no order re-determining the amount due from the employer shall be passed under this
Section unless the employer is given reasonable opportunity of representing his case.

Section 7D provides for the establishment of the Employ' Provident Funds Appellate Tribunal.

Section 7D provides for the establishment of the employees Provident Funds Appellate Tribunal.
Section 7D provides that;

1. The Central Government may, by notification in the Official Gazette, constitute one or more
Appellate Tribunal to be known as the Employees' Provident Funds Appellate Tribunal to exercise
the powers and discharge the functions conferred on such Tribunal by this Act. Every such Tribunal
shall have jurisdiction in respect of the establishments situated in such area as may be specified in
the notification constituting the Tribunal.

2. A Tribunal shall consist of only 1 person to be appointed by the Central Government.

3. A person shall not be qualified for appointment as the Presiding Officer of a Tribunal, unless
he is, or has been, or is qualified to be:

i. A Judge of a High Court.

ii. A District Judge.

Sec. 7E - Term of office

Section 7E provides for the tenure of the Presiding Officer of the Tribunal. Section 7E provides that,
the Presiding Officer of a Tribunal shall hold office for a term of 5 years from the date on which he
enters upon his office or until he attains the age 62 years, whichever is earlier.

Sec. 7F - Resignation

Section 7F of the Act provides for the procedure to be followed for the resignation of the presiding
officer

1. The Presiding officer may resign by addressing a notice in writing to the Central
Government.

2. However, the Presiding Officer shall, unless he is permitted by the Central Government to
relinquish his office sooner, continue to hold office until the expiry of 3 months from the date of
receipt of such notice or until a person duly appointed as his successor enters upon his officer or
until the expiry of his term of office, whichever is the earliest.

3. The Presiding Officer shall not be removed from his office except by an order by the
President on the ground of proved misbehaviour or incapacity after an inquiry made by a Judge of
the High Court in which such Presiding Officer had been informed of the charges against him and
give a reasonable opportunity of being heard in respect of those charges.

4. The Central Government may, by rules, regulate the procedure for the investigation of
misbehaviour incapacity of the Presiding Officer.
Sec 7G – Salary and allowances and other terms and conditions of service of Presiding Officer.

The salary and allowances payable to, and the other terms and conditions of service (including
pension, gratuity and other retirement benefits) of, the Presiding Officer shall be as prescribed. The
salary and allowances and other terms and conditions of service of the Presiding Officer shall not be
altered to his disadvantage after his appointment.

Sec. 7H - Staff of the Tribunal

Section 7H of the Act provides for the appointment of the Staffs in the Tribunal.

1. The Central Government shall determine the nature and categories of the officers and other
Employees required to assist a Tribunal in the discharge of its functions and provide the Tribunal
with such officer and other employees as deems fit.

2. The officer and other employees of a Tribunal shall discharge their functions under the
general superintendence of the Presiding Officer.

3. The salaries and all allowances and other conditions of service of the officers and other
employees of a Tribunal shall be as prescribed.

Sec 7I- Appeals to the Tribunal

Section 7I provides for appeals against the orders of the Central Government.

Any person aggrieved by a notification issued by the Central Government, or an order passed by the
Central Government, or any authority, under the Section 1(3) or Section 1(4) or Section 3 or Section
7A(1) or Section 7B or Section 7C or Section 14B may make an appeal to a Tribunal against such
order.

Every appeal made shall be filed in such form and manner, within such time and be accompanied by
such fees, as may be prescribed.

Sec. 7J -Procedure of Tribunals

Section 7J provides for the procedure to be followed by the Tribunals.

1. A Tribunal shall have power to regulate its own procedure in all matters arising out of the
exercise of its powers or of the discharge of its functions including the places at which the Tribunal
shall have its sittings.

2. A Tribunal shall, for the purpose of discharging its functions, have all the powers which are
vested in the officers referred to in section 7A and any proceeding before the Tribunal shall be
deemed to be a judicial proceeding.

Sec 7K – Right of appellant to take assistance of legal practitioner and of Government etc. to
appoint presenting officers

Sec 7K of the Act provides for the right of appellant to take assistance of legal practitioner and of
Government or any other authority to present his/her case before the Tribunal

1 . A person preferring an appeal to a Tribunal under this act may either appear in person or take
the assistance of a legal practitioner of his choice to present his case before the Tribunal.
2. The Central Government or a State Government or any other authority under this Act may
authorise one or more legal practitioners or any of its officers to act as presenting officers and every
person so authorised may present the case with respect to any appeal before a Tribunal.

Section 7L - of the Act provides for the Tribunal to pass orders after giving the parties to the
appeal, an opportunity of being heard.

Section 7L provides that;

Tribunal may, after giving the parties to the appeal, an opportunity of being heard

i. Pass such orders as it deems fit, confirming, modifying or annulling the order
appealed against.

ii. May refer the case back to the authority which passed such order with such
directions as the Tribunal may think fit, for a fresh adjudication or order, as the case may be.

iii. Take additional evidence, if necessary.

2. A Tribunal may, at any time within 5 years from the date of its order, with a view to rectifying any
mistake apparent from the record, amend any order passed by it under Sub¬section (1) and shall
make such amendment in the order if the mistake is brought to its notice by the parties to the
appeal

3. A Tribunal shall send a copy of every order passed under this section to the parties to the appeal.

4. Any order made by a Tribunal finally disposing of an appeal shall not be questioned in any court of
law.

Recovery of Money

Sec 8 - Mode of Recovery of money due from employers

Section 8 of the Act provides for the recovery of amount by an Appropriate Government when it
becomes due from the employer. Section 8 provides that, any amount due:

a) From the employer in relation to an establishment to which any Scheme or the Insurance
Scheme applies in respect of any contribution payable to the Fund or Insurance Fund, damages
recoverable under Section 14B, accumulations required to be transferred under Section 15(2) or
Section 17(2) or any charges payable by him under any other provisions of this Act or

b) From the employer in relation to an exempted establishment in respect of any damages

recoverable under Section 14B or any charges payable by him to the appropriate Government under
any provisions of this Act or under any of the conditions specified under Section 17 or in respect of
the contribution payable by him towards the Pension Scheme under the said Section 17, may, if the
mount is in arrear, be recovered in the manner specified in Section 8B to 8G.

Sec. 8A - Recovery of money by employers and contractors

Section 8A of the Act provides for the recovery of the money payable by an employer in respect of
an employee employed by him or through a contractor where the employer pays the share of
contribution and charges of an employee.
1. The amount of contribution and any charge for meeting the cost of administering the Fund
paid or payable by an employer in respect of an employee employed by or through a contractor may
be recovered by such employer from the contractor, either by deduction from any amount payable
to the contractor under any contract or as a debt payable by the contractor.

2. A contractor from whom the amounts mentioned in Subsection 1 may be recovered in

respect of any employee employed by or through him may recover from such employee the
employee's contribution under any Scheme by deduction from the basic wages, dearness allowance
and retaining allowance if any payable to such employee.

3. Notwithstanding any contract to the contrary, no contractor shall be entitled to deduct the
employer's contribution or the charges referred to in Sub-section 1 from the basic wages, dearness
allowance, and retaining allowance if any payable to an employee employed by or through him or
otherwise to recover such contribution or charges from such employee.

In Malwa Vanaspati v. Regional Provident Fund Commissioner, the Court held that, where an
employer does not make the required contributions, he cannot contend that he was not able to
realise the amount from the contractor or that he does not pay wages directly to the workers or that
he was not able to deduct the amount from the wages of the workers.

Sec 8B – Issue of certificate to the Recovery Officer

Section 8B of the Act provides for the issue of certificate to the Recovery Officer:

1. Where any amount is in arrear under section 8, the authorised officer, may issue, to the Recovery
Officer, a certificate under his signature specifying the amount of arrears and the Recovery Officer,
on receipt of such certificate, shall proceed to recover the amount specified therein from the
establishment or, as the case may be, the employer by one or more of the modes mentioned below:

a) Attachment and sale of the moveable or immovable property of the establishment or, as the
case may be the employer.

b) Arrest of the employer and his detention in prison

c) The attachment and sale of any property under this section shall first be effected against the
properties of the establishment and where such attachment and sale is insufficient for recovering
the whole of the amount or arrears specified in the certificate, the Recovery Officer may take such
proceeding against the property of the employer for recovery of the whole or any part of such
arrears.

2. The authorised officer may issue a certificate under Subsection 1, notwithstanding that
proceeding for recovery of the arrears by any other mode have been taken.

In Regional Provident Fund Commissioner v. Deccan Foam Plastics Pvt. Ltd., the Court held that
without exhausting the remedy of attachment and sale of properties of establishment for realization
of amount of arrears, the arrest of employer and his detention in prison cannot at all be made.

Sec 8C – Recovery officer to whom certificate is to be forwarded

Section 8C of the Act provides that, the authorized officer may forward the certificate to the
Recovery Officer within whose jurisdiction the employer carries on business, or resides or the
movable or immovable property of the employer is situated.

Section 8C provides that:

1. The authorised officer may forward the certificate referred to in Section 8B to the Recovery
Officer within whose jurisdiction the employer:

a) Carries on his business or profession or within whose jurisdiction the principal place of his
establishment is situated.

b) Resides or any movable or immovable property of the establishment or the employer is

situated.

2. Where an establishment or the employer has property within the jurisdiction of more than one
Recovery Officers and the Recovery Officer to whom a certificate is sent by the authorised officer:

a) Is not able to recover the entire amount by the sale of the property movable or immovable,
within his jurisdiction.

b) Is of the opinion that, for the purpose of expediting or securing the recovery of the whole or
any part of the amount, and where it is necessary, he may send the certificate or, where only a part
of the amount is to be recovered, a copy of the certificate certified in the prescribed manner and
specifying the amount to be recovered to the Recovery Officer within whose jurisdiction the
establishment or the employer has property or the employer resides, and thereupon that Recovery
Officer shall also proceed to recover the amount due under this section as if the certificate or the
copy thereof had been the certificate sent to him by the authorised officer.

Sec 8 D – Validity of certificate, and amendment thereof

Section 8D provides for the validity of certificate and its subsequent amendment when required.

1. When the authorised officer issues a certificate to a Recovery Officer under section 8B, it
shall not be open the employer to dispute before the Recovery Officer the correctness of the
amount, and no objection to certificate on any other ground shall be entertained by the Recovery
Officer.

2. Notwithstanding the issue of a certificate to a recovery Officer, the authorised officer shall
have power to withdraw the certificate or correct any clerical or arithmetical mistake in the
certificate by sending an intimation to the Recovery Officer.

3. The authorised officer shall intimate to the Recovery Office any orders withdrawn or
cancelling a certificate or any correction made by him under Sub-section (2) or any amendment
made under sub-Section 8E(4).

Sec. 8E - Stay of Proceeding under certificate and amendment or withdrawal thereof

1. Notwithstanding that a certificate has been issued to the Recovery Officer for the recovery
of any amount, and thereupon the Recovery Officer shall stay the proceedings until the expiry of the
time so granted.

2. Where a certificate for the recovery of amount has been issued, the authorised officer shall
keep the Recovery Officer informed of an amount paid or time granted for payment, subsequent to
the issue of such certificate.

3. Where the order giving rise to a demand of amount for which a certificate for recovery has
been issued has been modified in appeal or other proceeding under this Act, and as a consequence
thereof, the demand is reduced but the order is the subject- matter of further proceeding under this
Act, the authorised officer shall stay the recovery of such part of the amount of the certificate as
pertains to the said reduction for the period for which the appeal or other proceeding remains
pending.

4. Where a certificate for the recovery of amount has been issued and subsequently the
amount of the outstanding demand is reduced as a result of an appeal or other proceeding under
this Act, the authorised officer shall, when the order which was the subject- matter of such appeal or
other proceeding has become final and conclusive, amend the certificate or withdraw it, as the case
may be.

Sec. 8F - Other modes of recovery

Section 8F of the Act provides for other modes of recovery of amount by the Central Provident
Commission.

1. Notwithstanding the issue of a certificate to the Recovery Officer under Section 8B, the
Central Provident Fund Commissioner or any other officer authorised by the Central Board may
recover the amount by any one or more of the modes provided in this Section.

2. If any amount is due from any person to any employer who is in arrears, the Central
Provident Fund Commissioner or any other officer authorised by the Central Board in this behalf may
require such person to deduct from the said amount the arrears due from such employer under this
Act, and such person shall comply with any such requisition and shall pay the sum do deduct to the
credit of the Central Provident Fund Commissioner or the officer so authorised, as the case may be.

3. The various procedures involved are:

i. The Central Provident fund Commissioner or any other officer authorised by the Central
Board in this behalf may, at any time or from time to time, by notice in writing, require any person
from whom money is due or may become due to the employer or, as the case may be, the
establishment or any person who holds or may subsequently hold money for or on account of the
employer or as the case may be, the establishment, to pay to the Central Provident Fund
Commissioner either forthwith upon the money becoming due or being held or at or within the time
specified in the notice (not being before the money becomes due or is held) so much of the money
as is sufficient to pay the amount due from the employer in respect of arrears or the whole of the
money when it is equal to or less than that amount.

ii. A notice under this sub-section may be issued to any person who holds or may subsequently
hold any money for or on account of the employer jointly with any other person and for the
purposes of this sub-section on, the shares of the joint holders in such account shall be presumed,
until the contrary is proved, to be equal.

iii. A copy of the notice shall be forwarded to the employer at his last address know to the
Central Provident Fund Commissioner or, as the case may be, the officer so authorised and in the
case of a joint account to all the joint holders at their last addresses known to the Central Provident
Fund Commissioner or the officer so authorized.

iv. Save as otherwise provided in this sub-section, every person to whom a notice is issued
under this sub-section shall be bound to comply with such notice, and, in particular, where any such
notice is issued to a post office, bank or an insurer, it shall not be necessary for any pass book,
deposit receipt, policy or any other document to be produced for the purpose of any entry,
endorsement or the like being made before payment is made notwithstanding any rule, practice or
requirement to the contrary.
v. Any claim respecting any property in relation to which a notice under this sub-section has
been issued arising after the date of the notice shall be void as against any demand contained in the
notice.

vi. Where a person to whom a notice under this sub- section is sent objects to it by statement
on oath that the sum demanded or any part thereof is not due to the employer or that he does not
hold any money for or on account of the of the employer, then, nothing contained in this sub-section
shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but
if it is discovered that such statement was false in any material particular, such person shall be
personally liable to the Central Provident Fund Commissioner or the officer so authorised to the
extent of his own liability to the employer on the date of the notice, or to the extent of the
employer's liability for any sum due under this Act, whichever is less.

vii. The Central Provident Fund Commissioner or the officer so authorised may, at any time or
from time to time, amend or revoke any notice issued under this sub-section or extend the time for
making any payment in pursuance of such notice.

viii. The Central Provident Fund Commissioner or the officer so authorised shall grant a receipt
for any amount paid in compliance with a notice issued under this subsection, and the person so
paying shall be fully discharged from his liability to the employer to the extent of the amount so
paid.

ix. Any person discharging any liability to the employer after the receipt of a notice under this
subsection shall be personally liable to the Central Provident Fund Commissioner or the officer so
authorised to the extent of his own liability to the employer so discharged or to the extent of the
employer's liability for any sum due under this Act, whichever is less.

x. If the person to whom a notice under this sub-section is sent fails to make payment in
pursuance thereof to the Central Provident Fund Commissioner or the officer so authorised he shall
be deemed to be an employer in default in respect of the amount specified in the notice and further
proceeding may be taken against him for the realisation of the amount as if it were an arrear due
from him, in the manner provided in Sections 8B to 8E and the notice shall have the same effect as
an attachment of a debt by the Recovery Officer in exercise of his powers under Section 8B.

4. The central Provident Fund Commissioner or the officer authorised by the Central Board in this
behalf may apply to the court in whose custody there is money belonging to the employer for
payment to him of the entire amount sufficient to discharge the amount due.

5. The Central Provident Fund Commissioner or any officer not below the rank of Assistant
Provident Fund Commissioner may, if so authorised by the Central Government, recover any arrears
of amount due from an employer or, as the case may be, from the establishment by sale of his or its
moveable property in the manner laid down in the Third Schedule to the Income-Tax Act, 1961 (43
of 1961).

Sec. 8G - Application of certain provisions of Income- tax Act

According to Section 8G of the Act, the provisions of the Second and Third Schedules to the Income-
tax Act, 1961 and the Income- tax Certificate Proceedings rules, 1962, as in force from time, shall
apply with necessary modifications as if the said provisions and the rules referred to the arrears of
the amount mentioned in Section 8 of this Act instead of to the income-tax.

Sec. 9 - Fund to be recognised under Act 11 of 1922

Section 9 of the Act provides that, for the purposes of the Indian Income Tax Act, 1922, the Fund
shall be deemed to be a recognised provident fund within the meaning of Chapter IX-A of the Indian
Income Tax Act, 1922.

Sec. 10 - Protection against attachment

Section 10 of the Act provides for the provisions for the protection against attachment. According to
Section 10 of the Act.

1. The amount standing to the credit of any member in the Fund or of any exempted employee in a
provident fund shall:

i. Not in any way be capable of being assigned or charged.

ii. Not be liable to attachment under any decree or order of any Court in respect of any debt
or liability incurred by the member or the exempted employee.

iii. Neither the officer assignee appointed under the Presidency Towns Insolvency Act, 1909
nor any receiver appointed under the Provincial Insolvency Act, 1920, shall be entitled to or
have any claim on, any such amount.

2. Any amount standing to the credit of a member in the fund or of an exempted employee in a
provident fund at the time of his death and payable to his nominee under the Scheme or the rules of
the provident fund shall:

i. Subject to any deduction authorised by the said Scheme or rules, vest in the
nominee.

ii. Be free from any debt or other liability incurred by the deceased or the nominee
before the death of the member or of exempted employee.

iii. Also not be liable to attachment under any decree or order of any court.

Sec 11- Priority of payment of contribution over other debts

Section 11 of the Act provides for prioritizing the payment of contributions by the employer before
clearing off any other debt when declared insolvent. According to Section 11 of the Act:

I. When an employer is adjudicated insolvent or the company is ordered for winding up, the amount
due from the employer

a) In relation to an establishment to which any Scheme applies in respect of:

i. Any contribution payable to the Fund

ii. Damages recoverable under Section 14B of the Act.

iii. Accumulations required to be transferred under Section 15

iv. Any charges payable by him under any other provision of this Act.

b) In relation to an exempted establishment in respect of

i. Any contribution to the provident fund or any insurance fund in so far as it relates to
exempted employees, under the rules of the provident fund or any insurance fund.

ii. Any contribution payable by him towards the Pension Fund.

 iii. Damages recoverable under Section 14B of the Act.

iv. Any charges payable by him to the appropriate Government under any provision of
this Act. are to be paid in priority to all other debts in the distribution of the property of the
insolvent or the assets of the company being wound up, as the case may be.

2. Without prejudice to the provisions of Subsection 1 if any amount is due from an employer,
whether in respect of the employer's contribution or the employees'(deducted from the wages of
the employees), the amount so due shall be deemed to be the first charge on the assets of the
establishment, and shall, notwithstanding anything contained in any other law for the time being in
force, be paid in priority to all other debts.

In Maharashtra State Cooperative Bank Ltd. v. Assistant Provident Fund Commissioner, the Court
held that, the property of employer pledged with Bank as security for repayment of loan can be
attached and sold for recovery of provident fund dues under Section 11(2) of the Act.

Sec. 12 – Employer not to reduce wages etc

Section 12 of the Act provides that, the Employer shall not reduce wages on account of the
employers' contribution to the Fund or scheme under this Act. Section 12 provides that

No employer in relation to an establishment to which any Scheme or the Insurance Scheme applies
shall, by reason only of his liability for the payment of any contribution to the Fund or the Insurance
fund or any charges under this Act or the Scheme or the Insurance Scheme reduce whether directly
or indirectly, the wages of any employee to whom the Scheme or the Insurance Scheme applies or
the total quantum of benefits in the nature of old age pension, gratuity ,provident fund or life
insurance to which the employee is entitled under the terms of his employment, express or implied.

Sec. 13 — Inspectors

Section 13 of the Act provides for the appointment of Inspectors for the purposes of this Act.

1. The appropriate Government may, by notification in the Official Gazette, appoint such
persons as it deems fit to be Inspectors for the purpose of this Act and may define their jurisdiction.

2. Any inspector appointed under Sub-section may, for the purpose of:

i. Inquiring into the correctness of any information furnished in connection with this Act or
with any Scheme or the Insurance Scheme.

ii. Ascertaining whether any of the provisions of this Act or of any Scheme or the Insurance
Scheme have been complied with.

iii. Ascertaining whether the provisions of this Act or any Scheme or the Insurance Scheme are
applicable to any establishment to which the Any of the powers conferred on him under clause (a),
(b), (c), or (d) of Subsection 2.

Penalties

Section 14 of the Act, provides for penalties for contravening the provisions of this Act.

Section 14 provides that:

1. Whoever, for the purpose of avoiding any payment to be made by himself under this Act, the
Scheme, or for enabling any other person to avoid such payment:
 i. Knowingly makes any false statement or false representation.

ii. Causes to be made any false statement or false representation.

Shall be punishable with imprisonment for a term which may extend to 1 year, or with fine of 5000
rupees, or with both.

2. An employer who contravenes, or makes default in complying with, the provisions of Section 6
(Contribution) or Section 17(3)(a) (maintain accounts of different funds) in so far as it relates to the
payment of inspection charges or payment of administrative charges, shall be punishable with
imprisonment for a term which may extend to 3 years, but:

i. Which shall not be less than 1 year and a fine of 10,000 rupees in case of default in payment
of the employees' contribution which has been deducted by the employer from the employees'
wages.

ii. Which shall not be less than 6 months and a fine of 5000 rupees, in any other case.

iii. The Court may, for any adequate and special reasons to be recorded in the judgement,
impose a sentence of imprisonment for a lesser term.

3. An employer who contravenes, or makes default in complying with, the provisions of Section 6C
(deposit linked insurance scheme), or Section 17(3A)(a)(maintaining any insurance fund account) in
so far as it relates to the payment of inspection charges, shall be punishable with imprisonment for a
term which may extend to 1 year but which shall not be less 6 months and shall also be liable to fine
which may extend to 5000 rupees.

i. The court may, for any adequate and special reasons to be recorded in the judgement,
impose a sentence of imprisonment for a lesser term.

ii. Subject to the provisions of this Act, the Scheme may provide that any person who
contravenes, or make default in complying with, any of the provisions thereof shall be
punishable with imprisonment for a term which may extend to 1 year, or with fine which
may extend to 4000 rupees, or with both.

4. Whoever contravenes or makes default in complying with any provision of this Act or of any
condition subject to which exemption was granted under Section 17 shall, if no other penalty is
elsewhere provided by or under this Act for such contravention or noncompliance, be punishable
with imprisonment which may extend to 6 months, but which shall not be less than 1 month, and
shall also be liable to fine which may extend to 5000 rupees.

In Provident Fund Inspector v. Ram Kumar, the Punjab and Haryana High Court held that, mens rea is
not essential for an offence under Section 14(1) of the Act.

Sec. 14A - Offence by companies

Section 14A of the Act deals with offences committed under this Act by a company. According to
Section 14A of the Act:

1. If the person committing an offence under the Act is a company:

i. Every person, who at the time the offence was committed, was in charge of the company.

ii. Every person responsible to the company for the conduct of the business of the company.
iii. As well as the company itself.

Shall be de deemed to be guilty of the offence and shall be liable to be proceeded against and
punished accordingly.

However, nothing contained in this Subsection shall render any such person liable to any
punishment, if he proves that the offence was committed without his knowledge or that he
exercised all due diligence to prevent the commission of such offence.

2. Notwithstanding anything contained in Section 14A(I) of the Act, where an offence under this Act,
has been committed by a company and it is proved that the offence has been committed with the
consent or connivance of, or is attributable to, any neglect on the part of, any director or manager,
secretary or other officer of the company, such director, manager, secretary or other officer shall be
deemed to be guilty of that offence and shall be liable to be proceeded against and punished
accordingly.

Sec. 14B - Power to recover damages

Section 14B of the Act empowers the Central Provident Commissioner or any other officer
authorized by the Central Government to recover damages from the employer. According to Section
14B of the Act, where an employer makes default:

i. In the payment of any contribution to the Fund

ii. In the transfer of accumulations required to be transferred by him under Section 15(2) or
Section 17(5).

iii. In the payment of any charges payable under any other provision of this Act or under any of
the conditions specified under Section 17 of the Act

The Central Provident Fund Commissioner or such other officer as may be authorised by the Central
Government, by notification in the Official Gazette, in this behalf may recover from the employer by
way of penalty such damages, not exceeding the amount of arrears, as may be specified in the
Scheme.

However, before levying and recovering such damages, the employer shall be given a reasonable
opportunity of being heard. Also, the Central Board may reduce or waive the damages levied under
this section in relation to an establishment which is a sick industrial company and in respect of which
a scheme for, rehabilitation has been sanctioned by the Board for Industrial and Financial
Reconstruction.

In K. Streetlite Electric Corporation v. Regional Provident Fund Commissioner, the SC held that, delay
in initiating proceedings under Section 14B of the Act shall not be a ground for setting aside an
Order imposing damages on account of belated deposit of amount by employer towards provident
fund.

In Hindustan Times Ltd. V. Union of India, the Supreme Court held that, the Act does not provide for
a period of limitation for assessment or recovery of damages under the act.

In Orissa Forest Department Corporation v. Regional Provident Fund Commissioner, it has been held
that, the reasonable period to initiate action for the recovery of damages shall depend upon the
facts and circumstances of the case.

Sec. 14C - Power of court to make orders

Section 14C of the Act provides for the powers of the Court to make orders according to the
provisions of the Act.

1. Where an employer is convicted of an offence:

i. Of making default in the payment of any contribution to the Fund

ii. In the transfer of accumulations required to be transferred under Section 15(2) or Section
17(5).

The court may, in addition to awarding any punishment, by order in writing require him within a
period specified in the order, to pay the amount of contribution or transfer the accumulations, as
the case may be, in respect of which the offence was committed.

2. Where an order is made by the Court under this Section, the employer shall not be liable under
this Act in respect of the continuation of the offence during the extended period allowed by the
court, but if, on the expiry of such period, the order of the court has not been fully complied with,
the employer shall be deemed to have committed a further offence and shall be punished with
imprisonment in respect thereof under Section 14 of the Act and shall also be liable to pay fine
which may extend to 100 rupees for every day after such expiry on which the order has not been
complied with.

Sec. 15. Special provision relating to existing provident funds

Section 15 of the Act provides for special provisions relating to provident funds. According to Section
of the Act:

1. Subject to the provisions of Section 17, every employee who is a subscriber to any provident
fund of an establishment to which this Act applies shall, pending the application of a Scheme to the
establishment in which he is employed, continue to be entitled to the benefits accruing to him under
the provident fund, and the Provident fund shall continue to be maintained in the same manner and
subject to the same conditions as it would have been if this Act had not been passed.

2. On the application of any Scheme to an establishment, the accumulation in any provident

fund of the establishment, standing to the credit of the employees who become member of the
Fund established under the Scheme shall, notwithstanding anything to the contrary contained in any
law for the time being in force or in any deed or other instrument establishing the provident fund
but subject to the provisions, if any, contained in the Scheme, be transferred to the fund established
under the Scheme, and shall be credited to the accounts of the employees entitled thereto in the
Fund.

Sec 16 Act not apply to certain establishment

Section 16 of the Act provides that, the Act shall not apply to certain establishments. According to
Section 16 of the Act:

1. The Act shall not apply to:

a) Any establishment registered under the Co-operative Societies Act, 1912 or under any other law
for the time being in force in any State relating to cooperative Societies Act, 1912 or under any other
law for the time being in force in any state relating to cooperative societies employing less than 50
persons and working without the aid of power.
b) Any other establishment belonging to or under the control of the Central Government or a
State Government and whose employees are entitled to the benefit of contributory provident fund
or old age pension in accordance with any Scheme or rule framed by the Central Government or the
State Government governing such benefits.

c) Any other establishment set up under any Central, Provincial or State Act and whose
employees are entitled to the benefits of contributory provident fund or old age pension in
accordance with any scheme or rule framed under that Act governing such benefits.

2. If the Central Government is of opinion that having regard to the financial position of any class of
establishment or other circumstances of the case, it is necessary to do so, it may, by notification in
the Official Gazette, and subject to such conditions, as may be specified in the notification, exempt
prospectively or retrospectively, that class of establishments from the operation of this Act for such
period as may be specified in the notification.

In Bharat Board Mills Ltd. v. Regional Provident Fund Commissioner, it has been held that, Section
16(2) of the Act has been enacted to benefit such factories that may be suffering from financial
losses. The Government may in appropriate cases grant temporary relief to such establishments by
exempting them from the application of the Act.

Powers of the Appropriate Government

Power to exempt Sec 17

1. The appropriate Government may, by notification in the Official Gazette, and subject to such
conditions as may be specified in the notification, exempt, whether prospectively or retrospectively,
from the operation of all or any of the provisions of any Scheme:

a) Any establishment to which this Act applies if, in the opinion of the appropriate
Government, the rules of its provident fund with respect to the rates of contribution are not less
favourable than those specified in Section 6 and the employees are also in enjoyment of other
provident fund benefits which on the whole are not less favourable to the employees than the
benefits provided under this Act or any Scheme in relation to the employees in any other
establishment of a similar character.

b) Any establishment, where the employees of such establishment are in enjoyment of benefits
in the nature of provident fund, pension or gratuity and the appropriate Government is of opinion
that such benefits, separately or jointly, are on the whole not less favourable to such employees
than the benefits provided under this Act or any Scheme in relation to employees in any other
establishment of a similar character.

2. Any Scheme may make provision for exemption of any person or class of persons employed
in any establishment to which the Scheme, applies from the operation of all or any of the provisions
of the Scheme, if such person or class of persons is entitled to benefits in the nature of provident
fund, gratuity or old age pension and such benefits, separately or jointly, are on the whole not less
favourable than the benefits provided under this Act or the Scheme

3. Where in respect of any person or class of persons employed in an establishment an

exemption is granted under this section from the operation of all or any of the provisions of any
Scheme whether such exemption has been granted to the establishment wherein such person or
class of persons is employed, or to the person or class of persons as such, the employer in relation to
such establishment:
a) Shall, in relation to the provident fund, pension and gratuity to which any such person or
class of persons is entitled, maintain such accounts, submit such returns, make such investment,
provided for such facilities for inspection and pay such inspection charges, as the Central
Government may direct.

b) Shall not, at any time after the exemption, without the leave of the Central Government,
reduce the total quantum of benefits in the nature of pension, gratuity or provident fund to which
any such person or class of persons was entitled to at the time of the exemption.

c) Shall, where any such person leaves his employment and obtains reemployment in another
establishment to which this Act applies, transfer within such time as may be specified in this behalf
by the Central Government, the amount accumulations to the credit of that person in the provident
fund of the establishment left by him to the credit of that person's account in the provident fund of
the establishment in which he is reemployed or, as the case may be, in the Fund established under
the Scheme applicable to the establishment.

4. Any exemption granted under this section may be cancelled by the authority which granted it, by
order in writing, if an employer fails to comply:

i. In the case of an exemption granted under Subsection 1, with any of the conditions imposed
under that Subsection 1.

ii. In the case of an exemption granted under Subsection 2, with any of the provisions of
Subsection 3.

5. Where any exemption granted under sub-section 1 or sub-section 2 is cancelled, the amount of
accumulation to the credit of every employee to whom such exemption applied in the provident
Fund, the Pension fund or the Insurance Fund of the establishment in which he is employed together
with any amount forfeited from the employer’s share of contribution to the credit of the employee
who leaves the employment before the completion of the full period of service shall be transferred
within such time and in such manner as may be specified in the Scheme.

6. The employer of an exempted establishment or of an exempted employee of an establishment to

which the provisions of the Pension Scheme apply, shall notwithstanding any exemption granted
under Sub-sectons 1 or Sub-section 2, pay to the Pension Fund such portions of the employer's
contribution to its provident fund within such time and in such manner as may be specified in the
Pension Scheme.

18 - Protection of action taken in good faith

Suction 18 of the Act offers protection for action taken in good faith in pursuance of this Act.
According to Section 18 of the Act, no suit, prosecution or other legal proceeding shall lie against the
central Government, a State Government, the Presiding Officer of a tribunal, any authority referred
to in Section 7A of the Act, an Inspector or any other person for anything which is in good faith done
or intended to be done in pursuance of this Act.

Sec. 19 - Delegation of powers

Section 19 of the Act provides for the delegation of power, authority or jurisdiction by the
appropriate government. Section 19 provides that:

The appropriate Government may direct that any power or authority or jurisdiction exercisable by it
under this Act, or the schemes, subject to such conditions, be exercisable also:
a) Where the appropriate Government is the Central Government, by such officer or authority
subordinate to the Central Government or by the State Government, or by such officer or authority
subordinate to the State Government, as may be specified in the notification.

b) Where the appropriate Government is a State Government, by such officer or authority

subordinate to the State Government as may be specified in the notification.

In State of U.P. v. Ram Gopal, the Court held that, where the appropriate government is the Central
Government, then under Section 19 of the Act, it may delegate its powers for prosecution to the
State Government and the State Government in turn may specify an officer or authority subordinate
to it to give sanction for prosecution under Section 14 of the Act.

Sec. 20 - Power of Central Government to give directions

The Central Government may, from time to time, give such directions to the Central Board as it
deems fit for the efficient administration of this Act and when any such direction is given, the Central
Board shall comply with such direction.

Sec. 21 - Power to make rules

1. The Central Government may, by notification in the Official Gazette, make rules to carry out the
provisions of this Act.

2. Such rules may provide for all or any of the following matters, namely:

a) The salary and allowances and other terms and conditions of service of the Presiding Officer
and the employees of a Tribunal

b) The form and the manner in which, and the time within which, an appeal shall be filed
before a Tribunal and the fees payable for filing such appeal

c) The manner of certifying the copy of the certificate to be forwarded to the Recovery Officer
under Section 8C.

d) Any other matter which has to be, or may be, prescribed by rules under this Act.

3. Every rule made under this Act shall be laid, as soon as possible before each House of Parliament,
while it in session.

Sec. 22 - Power to remove difficulties

If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by
order published in the Official Gazette, make such provisions, not inconsistent with the provisions of
this Act, for the removal of the difficulty.

THE MATERNITY BENEFIT ACT 1961

The Maternity Benefit Act, 1961, aims at regulation of employment of women employees in certain
establishments for certain periods before and after child birth and provision of maternity and certain
other benefits. The Act has been amended on several times and the latest amendment was made in
the year 2008 by the Maternity Benefit ( Amendment) Act, 2008.
The Act extends to the whole of India and is applicable to every factory, mine or plantation
(including those belonging to Government) irrespective of the number of employees, and to every
shop or establishment wherein 10 or more persons are employed or were employed on any day of
the preceding 12 months. The State Government may extend the Act to any other establishment or
class of establishments, industrial, commercial, agricultural or otherwise.

However, the Act does not apply to any such factory or other establishment to which the provisions
of the employee State Insurance Act are applicable for the time being. But, where the factory or
establishment is governed under the E.S.I. Act, and the woman employee is not qualified to claim
maternity benefit under section 50 of that Act, because her wages exceed Rs. 15,000 p.m. or for
other reason, then such woman employee is entitled to claim maternity benefit under this Act till
she becomes qualified to claim maternity benefit under the E.S.I Act

Administrative Authority

The administration of the provisions of this Act in respect of mines and establishments engaged in
exhibition of equestrian, acrobatic and other performances, is controlled by the Central
Government, where as in respect of all other establishments it is looked after by the concerned
State Governments.

The central/State government shall appoint competent authority and inspectors and shall make
rules for enforcing the provisions of the Act

Definitions

Sec. 3 of the Maternity Benefit Act, 1961, provides for the meaning of the following words:

(a) "appropriate Government" means in relation to an establishment being a mine or an

establishment where persons are employed for the exhibition of equestrian, acrobatic and other
performances, the Central Government and in relation to any other establishment, the State
Government.

(d) "employer" refers to:

i. In relation to an establishment which is under the control of the Government, a person or

authority appointed by the Government for the supervision and control of employees or
where no person or authority is so appointed, the head of the department.

ii. In relation to an establishment which is under any local authority, the person appointed
by such authority for the supervision and control of employees or where no person is so
appointed, the chief executive officer of the local authority.

iii. In any other case, the person who are the authority which has the ultimate control over
the affairs of the establishment and where the said affairs are entrusted to any other person
whether called a manager, managing director, managing agent, or by any other name, such
person.

(e) "establishment" refers to:

i. A factory.

ii. A mine.

iii. A plantation
iv. An establishment wherein persons are employed for the exhibition of equestrian, acrobatics
and other performances.

v. An establishment to which the provisions of this Act have been declared to be applicable
under Section 2 of the Act.

(j) "miscarriage" refers to the expulsion of the contents of a pregnant uterus at any period prior to or
during the twenty-sixth week of pregnancy but does not include any miscarriage the causing of
which is punishable under the Indian Penal Code, 1860.

(n) "wages" means all remuneration paid or payable in cash to a woman, if the terms of the contract
of employment, express or implied, were fulfilled and includes:

i. Such cash allowances (including dearness allowance and house rent allowance) as a
woman is for the time being entitled to.

ii. Incentive bonus.

iii. The money value of the concessional supply of foodgrains and other articles.

However, it does not include:

i. Any bonus other than incentive bonus.

ii. Overtime earnings and any deduction or payment made on account of fines.

iii. Any contribution paid or payable by the employer to any pension fund or provident
fund or for the benefit of the woman under any law for the time being in force.

iv. Any gratuity payable on the termination of service.

In B. Shah v. Labour Court, Coimbatore, the Supreme Court held that, while computing maternity
benefit, it shall be computed including Sundays in a week.

Benefits under the Act

1) Restriction on Employment of Pregnant Woman

No employer should knowingly employ a woman during the period of 6 weeks immediately following
the day of her delivery or miscarriage. Besides, no woman should work in any establishment during
the said period of 6 weeks.

Further, the employer, should not require a pregnant woman employee to do an arduous work
involving long hours of standing or any work which is likely to interfere with her pregnancy or cause
miscarriage or adversely affect her health, during the period of 1 month preceding the period of 6
weeks before the date of her expected delivery, and period during the said period of 6 weeks for
which she does avail of the leave as provided for in Section 6 of the Act.

2) Discharge or Dismissal to be void

When a pregnant woman absents herself from work in accordance with the provisions of this Act, it
shall be unlawful for her employer to discharge or dismiss her during such absence. An employer
shall not give a notice of discharge dismissal during such absence.

Dismissal or Discharge of a pregnant woman shall not disentitle her to the maternity benefit or
medical bonus allowable under the Act, except when such dismissal or discharge is on account of
gross misconduct such as, wilful destruction of employer's goods or property, assault on any
superior or co-employee, criminal offence involving moral turpitude, theft, fraud, or dishonesty in
connection with the employers business or property, and wilful non-observance of safety measures
or rules or interference with devices or fire fighting equipment.

3) Maternity Benefit

Prior of the amendment of 1989, if a woman employee could not avail of the six weeks leave
preceding the date of her delivery, she was entitled to only six weeks leave following the day of her
delivery. However by the above amendment, the position has changed. Now, in case a woman
employee does not avail six weeks leave preceding the date of her delivery, she can avail of that
leave following her delivery, provided the total leave period, i.e, preceding and following the day of
her delivery, does not exceed 12 weeks. (twenty-six weeks of which not more than eight weeks, shall
precede the date of her expected delivery – 2017 amendment)

A woman employee is entitled to maternity benefits under the Act irrespective of the number of
children she has. This matter was considered in a high level committee set up by the Central
Government. The Committee thought that though it is contrary to the family planning norms being
advocated by the Government, it is also not appropriate to deny a woman employee the benefits
under the law, once she gave birth to a child.

Amount of Benefit

The maternity benefit is payable to a woman worker at the rate of average daily wages for the
period of her actual absence, during the benefit period. Wages for this purpose includes basic
wages, dearness and house rent allowance, incentive bonus and money value of concessional supply
of foodgrains and other articles.

If a woman dies during the benefit period, the benefit is payable-

1) upto and including the day of her death, in case she dies without delivering a child;

2) for the entire period, in case she dies after delivering the child; or

3) upto and including the day of child's death, in case the child also dies during that period.

The benefit is payable for a maximum period of 12 weeks of which not more than six weeks shall
precede the date of her expected delivery.

"Average daily wages" means average of the wages payable to the woman employee for the days on
which she has worked during the period of 3 calendar months immediately preceding the date from
which she absents herself on account of maternity.

Notice of Claim

A woman employee entitled to maternity benefit may give a notice in writing (in the prescribed
form) to her employer, stating as follows:

i) that her maternity benefit may be paid to her or to her nominee (to be specified in the notice);

ii) that she will not work in any establishment during the period for which she receives maternity
benefit; and

iii) that she will be absent from work from such date (to be specified by her) which shall not be
earlier than 6 weeks before the date of her expected delivery.
The notice may be given during the pregnancy or as soon as possible, after the delivery.

On receipt of the notice, the employer shall permit such woman to absent herself from work after
the day of her delivery. The failure to give notice, however, does not disentitled the woman to the
benefit of the Act.

Payment of Benefit

The employer is liable to pay the amount of maternity benefit for the period preceding the date of
expected delivery, in advance to the women employee on production of the proof of pregnancy (in
the prescribed form). The balance of amount due for the subsequent period should be paid within
48 hours production of proof of delivery (in the prescribed form).

In case of death of a woman employee entitled to maternity benefit, the employer shall pay the
amount of benefit to her nominee or legal representative, as the case may be.

4) Leave for Miscarriage and illness

In case of miscarriage, a woman shall, on production of the prescribed proof, be entitled to leave
with wages at the rate of maternity benefit, for a period of 6 weeks immediately following the day of
her miscarriage.

Besides, leave for a maximum period of one month with wages at the rate of maternity benefit are
allowable in case of illness arising out of pregnancy, delivery, premature birth of child or miscarriage.

5) Medical Bonus

Every woman entitled to maternity benefit, shall also be allowed a medical bonus of Rs. 2500/- if no
pre-natal confinement and post-natal care is provided for by the employer free of charge. (w.e.f.
11.08.2008)

6) Nursing Breaks

Every woman who returns to duty after delivery of child, shall in addition to the interval of rest
allowed to her, be allowed in the course of her daily work, two breaks of 15 minutes duration each
for nursing the child until the child attains the age of 15 months

7) No Deduction of Wages

The employer should not make any deduction from the normal and usual daily wages of a woman
entitled to maternity benefit, merely due to the light nature of work assigned to her or for the
nursing breaks allowed to her.

8) Forfeiture of Maternity Benefit

If any woman, who has been allowed to go on maternity leave, works, in any other establishment for
any period during the authorised leave, then her claim to the maternity benefit for such period
worked, shall be forfeited.

Inspectors

The appropriate Government may, by notification in the Official Gazette, appoint such officers as it
thinks fit to by Inspectors for the purposes of this Act and may define the local limits of the
jurisdiction within which they shall exercise their function under this Act.
Powers and duties of Inspectors

Section 15 of the Act provides for the powers and duties of the Inspectors appointed for the
purposes of this Act. An Inspector may, subject to such restrictions or conditions as may be
prescribed, exercise all or any of the following powers:

1. Enter at all reasonable times with such assistants, if any, being persons in the service of the
Government or any local or other public authority as he thinks fit, any premises or place where
women are employed, for the purposes of examining any registers, records and notices required to
be kept or exhibited by or under this Act and require their production for inspection.

2. Examine any person whom he finds in any premises or place and who, he has reasonable
cause to believe, is employed in the establishment. However, no person shall be compelled under
this Section to answer any question or give any evidence tending to incriminate himself.

3. Require the employer to give information regarding the names and addresses of women
employed, payments made to them, and applications or notices received form them under this Act

4. Take copies of any registers and records or notices or any portions thereof.

Every Inspector appointed under this Act shall be deemed to be a public servant within the meaning
of Section 21 of the Indian Penal Code.

Power of Inspector to direct payments to be made

1. A complaint may be made to the inspector by:

i. Any woman claiming that maternity benefit or any other amount to which she is entitled
under this Act has been improperly withheld.

ii. Any person claiming that payment due under Section 7 of this Act has been improperly
withheld.

2. The Inspector may, on his own or on receipt of a complaint referred to in Subsection (1), make an
enquiry or cause an inquiry to be made and if satisfied that payment has been wrongfully withheld,
may direct the payment to be made in accordance with his orders.

3. Any person aggrieved by the decision of the Inspector under sub-section (2) may, within 30 days
from the date on which such decision is communicated to such person, appeal to the prescribed
authority.

4. The decision of the prescribed authority where an appeal has been made to it under sub-section
(3) or of the Inspector where no such appeal has been preferred, shall be final.

5. Any amount payable under these sections shall be recoverable as an arrear of land revenue.

Sec. 18 - Forfeiture of maternity benefit

If a woman works in any establishment after she has been permitted by her employer to absent
herself under the provisions of Section 6 for any period during such authorized absence, he shall
forfeit her claim to the maternity benefit for such period.

Sec. 19 - Abstracts of Act and rules thereunder to be exhibited

An abstract of the provisions of this Act and the rules made thereunder shall be exhibited in a
conspicuous place by the employer in every part of the establishment in which women are
employed.

Sec. 20 - Registers. etc,

Section 20 of the Act provides that, every employer shall prepare and maintain such registers,
records and muster-rolls and in such manner as may be prescribed.

Sec. 21 - Penalty for contravention of Act by employers

Section 21 of the Act provides for imposing penalty on employers who contravene the provisions of
this Act.

If any employer contravenes the provisions of this Act or the rules made thereunder he shall be
punishable with imprisonment which may extend to 3 months, or with fine which may extend to 500
rupees, or with both.

Where the contravention is of any provision regarding maternity benefit or regarding payment of
any other amount and such maternity benefit or amount has not already been recovered, the court
shall in addition, recover such maternity benefit or amount as if it were a fine, and pay the same to
the person entitled thereto.

Sec. 22 - Penalty for obstructing Inspector

Whoever fails to produce any register or document in his custody kept in pursuance of this Act or
the rules made thereunder when demanded by an Inspector or conceals or prevents any person
from appearing before or being examined by an Inspector, shall be punishable with imprisonment
which may extend to 3 months, or with fine which may extend to 500 rupees or with both.

Sec. 23 - Cognizance of offences

1. No prosecution for an offence punishable under this Act or any rule made thereunder shall
be instituted after the expiry of one year from the date on which the offence is alleged to have been
committed and no such prosecution shall be instituted except by, or with the previous sanction of,
the Inspector.

However, in computing the period of one year aforesaid, the time, if any, taken for the purpose of
obtaining such previous sanction shall be excluded.

2. No court inferior to that of a Presidency Magistrate or a Magistrate of the First Class shall try
any such offence.

In Thomas Eapen v. Assistant Labour officer, the Kerala High Court has held that, if any woman has
been denied benefits under this Act, then such a woman has the right to approach a Court of
Competent jurisdiction.

Sec. 24 Protection of action taken in good faith

Section 24 provides that, no suit, prosecution or other legal proceeding shall lie against any person
for anything which is done in good faith or intended to be done in pursuance of this Act or of any
rule or order made thereunder.

Sec 25 – Power of Central Government to give directions

The Central Government may give such directions as it may deem necessary to a State Government
regarding the execution of the provisions of this Act and the State Government shall comply with
such directions.

Sec. 26 - Power to exempt establishments

If the appropriate Government is satisfied that an establishment or class of establishments provides

benefit which are not less favourable than those provided in this Act, then the appropriate
Government may by notification in the Official Gazette, exempt subject to such conditions and
restrictions, the establishment or class of establishments from the operation of all or any of the
provisions of this Act.

Sec. 27 - Effect of laws and agreements inconsistent with this Act

1. The provisions of this Act shall have effect notwithstanding anything inconsistent which is
contained in any other law or in the terms of any award, agreement or contract of service, whether
made before or after the coming into force of this Act.

However, where under any such award, agreement, contract of service or otherwise, a woman is
entitled to benefits in respect of any matter which are more favourable to her than those to which
she would be entitled under this Act, the woman shall continue to be entitled to the more
favourable benefits in respect of that matter, notwithstanding that she is entitled to receive benefit
in respect of other matters under this Act.

2. Nothing contained in this Act shall be construed to prevent a woman from entering into an
agreement with her employer for granting her rights or privileges in respect of any matter, which are
more favourable to her than those to which she would be entitled under this Act.

Sec. 28 - Power to make rules

1. The appropriate Government may by notification in the Official Gazette, make rules for carrying
out the purposes of this Act.

2. In particular, and without prejudice to the generality of the foregoing power, such rules may
provide for:

a) The preparation and maintenance of registers, records and muster rolls.

b) The exercise of powers and the performance of duties by Inspectors for the purposes of this
Act.
c) The method of payment of maternity benefit and other benefits under this Act.
d) The form of notices under Section 6.
e) The nature of proof required under the provisions of this Act.
f) The duration of nursing breaks referred to in Section 11.
g) Acts which may constitute gross misconduct for purposes of Section 12.
h) The authority to which an appeal under Section 12(2)(b) shall lie, the form and manner in
which such appeal may be made and the procedure to be followed in its disposal.
i) The authority to which an appeal shall lie against the decision of the Inspector under Section
17
j) The form and manner in which such appeal may be made and the procedure to be followed
in its disposal.
k) The form and manner in which complaints may be made to Inspectors under Section 17 and
the procedure to be followed by them when making inquiries or causing inquiries.
 l) Any other matter which is to be prescribed.

3. Every rule made by the Central Government under this section shall be laid as soon as possible,
before each House of Parliament while it is in session.

UNIT 5

THE UNORGANIZED WORKERS SOCIAL SECURITY ACT, 2008

Social Security for unorganised sector

In India, mostly all the social security legislations and the schemes fail to address unorganised sector
workers and thus exclude them and their problems. This is a harsh truth for the nation as more than
90% of the total work force falls under unorganised sector. These unorganised sector workers are
compelled to spend out of their meagre incomes for all contingencies and remain helpless in their
old age. These workers face serious problems which range from the uncertainty of employment to
hazardous conditions at work. This led to the need for specific legislation of social security for
unorganised workers who are poor and vulnerable and are in dire need of welfare programs.

In light of this, Unorganised Workers’ Social Security Act 2008 was enacted to provide social security
and welfare to unorganised sector. The act got President assent on 30 December 2008. This act is
crucial for India as it is the first time the term unorganized workers is defined thereby identifying
them in the eyes of law. The Act enlist various welfare schemes under which workers can get some
protection and allows for registration of unorganized workers and it empowers Governments at
Central and State levels for framing the rules.

The prime objective behind the Act was to provide social security and welfare of the unorganized
workers and all matters that is in connection with it. It defines unorganised worker as –self-
employed worker , home- based worker, or a wage worker in the unorganized sector and also
includes a worker in the organized sector who is not covered by any of the Acts mentioned in
Schedule II to this Act.

unorganized workers

Under section 2(m) of the Unorganized Workers Social Security Act, 2008, the term unorganized
worker' means a home-based worker or a self- employed worker or a wage worker in the
unorganized sector. It includes a worker in the organized sector who is not covered by any of the
acts pertaining to welfare schemes as mentioned in Schedule II of Unorganized Workers Social
Security Act, 2008. Unorganized workers take over the Indian labour market and represent 90% of
the total Indian workforce. Unorganized sector in India is one of the largest in the post- industrial
world.

Unorganized Workers are people who do not have the benefit of pension, maternity leave, provident
fund, gratuity etc. These workers work on daily and hourly wages. The unorganized labour in India is
enormous when it comes to its number range and hence they are omnipresent in India. The
unorganized sector has to put up with cycles of excessive seasonality of employment because most
of the unorganized workers do not have secure durable avenues of employment. Unorganized
workers have no formal employer employee relationship and their workplace is scattered and
disintegrated. Unorganized workers are subjected to indebtedness as their income does not meet
with their living needs. These workers face exploitation, harassment, discrimination by the rest of
the society.

Salient Features of the Act

Enabling Framework for Social Security Schemes

The Act enables the central government to formulate welfare schemes for unorganized sector
workers. These welfare schemes consist of health and maternity benefits, life and disability cover,
old age protection and any other benefit by the government. The Act, lists down 11 schemes for the
unorganized sector workers. Further, the Act also enables state governments to formulate welfare
schemes which are related to provident fund, employment injury benefits, educational schemes for
children, and skill up graduation of workers, funeral assistance and old age homes. These notified
schemes may be wholly funded by the central or state government or both and it might require
contributions by the beneficiaries of the schemes or their employers to unorganized sector workers.

Establishment of State and National Social Security Advisory Boards

The Act provides for institution of a National Social Security Advisory Board to recommend
formation and implementation of suitable welfare schemes for the unorganized sector workers. This
national board will consist of an appointed chairperson, a member secretary, and 31 nominated
members. Further, the Act seeks to establish state level Social Security Advisory Boards. These state
boards will have alike functions as the central board at the relevant state and district levels. Each
state board consists of an appointed chairperson, a member secretary, and 26 nominated members.

Provision for Registration and Smart Cards for Unorganized Sector Workers

The unorganized workers should mandatorily apply for registration with the district administration.
An individual must be 14 years of age or older and should declare that he is an unorganized sector
worker. Upon registration, the district administration will issue a smart card which will carry a
unique identification number. If any scheme requires contribution from worker, then the worker will
become eligible for scheme only on contribution.

Progress Made Under It

To follow up the act, government has set up a National Social Security Fund with an initial allocation
of Rs 1000 crore. Government has also announced that the benefits of the Rashtriya Swasthya Bima
Yojana (RSBY) will now be extended to all Mahatma Gandhi National Rural Employment Guarantee
Scheme (NREGA) beneficiaries who have worked for more than 15 days during the preceding
financial year. The scheme provides health insurance cover to below poverty Line (BPL) workers and
their families and so far more than one crore smart cards have been issued under this scheme. Some
State Governments have also taken steps for enforcing the provisions of the Act. For example, Orissa
Government has started the process of for formation of Orissa State Social Security Board for the
unorganized workers engaged in the construction sector.

Sec 9. workers facilitation centre : the Govt may setup such workers facilitation centres as may be
considered necessary from time to time to perform the following functions namely

• Disseminate information on available social security schemes for the unorganized workers
• Facilitate the filling, processing and forwarding of application forms for registration of
unorganized workers
• Assist unorganized worker to obtain registration from the District administration
• Facilitate the enrolment of the registered unorganized workers in social security schemes.
Sec 10. Eligibility for registration and social security benefits: every unorganized worker shall be
eligible for registration subject to the fulfillment of the following conditions.

• He or she shall have completed fourteen years of age

• A self declaration by him or her confirming that he or she is an unorganized worker
• Every eligible unorganized worker shall make an application in the prescribed form to the
District administration.

The Act has number of flaws which needs to be corrected.

The term “social security” has been defined on the basis of various schemes, which instead should
have been articulated from the perspective of rights derived from the constitution. Unorganised
sector has been defined as an establishment which employ less than 10 workers. It should be
amended to include all enterprise not falling under the purview of the factories Act, 1948. It creates
a cleavage among the workers by only providing for schemes for workers who are below poverty
line.

It has not acknowledged the principle of unemployment allowance in the case of job losses for
unorganised workers or any form of employment and wage/income guarantee.

The passage of the Act is not accompanied by any legally stipulated guarantee for the establishment
of a Central Welfare fund.

The advisory boards are supposed to monitor the working of the welfare schemes, the act does not
vest them with executive powers.

Thirdly, the Act missed out considerable number of things like it has not laid down its scope,
targeted beneficiaries, implementation and grievance redressal mechanisms or penalties for
violation, regulation of entry into jobs and exit from jobs. Further, it also fails to recognise the right
to organise, to represent groups and to enter into collective bargaining.

Conclusion

The act aims at imparting social security to unorganized workers and place them in a better position
turning away from all miseries and crisis. But, there is a dire need of removing the flaws and
ambiguities of the legislation as it is the principal law with regard to unorganised sector. The terms
Social Security and Family must be defined so that worker and his family can get benefits that are
covered by the ILO Convention on minimum standards .There is a need to spell out legislative policy
and intent of act.

The Karnataka Shops and Establishment Act, 1961

Introduction

India is dominated by the unorganised sector, where there are no formal agreements between the
workers and the employer. This gives rise to the question of whether there is any legislation that
provides for such workers, who are mostly employed in shops or other services rendered by
commercial establishments. The Department of Labour supervises all the premises where any trade,
business, or profession is carried out. The Department of each state also ensures that there exist
shops and establishment act in each state to regulate the working of all shops and commercial
establishments within its state.

The Karnataka Shops and Establishment Act, 1961, is a local Act of Karnataka that aims to regulate
all shops and commercial establishments operating within the state of Karnataka. The Act makes
registration for all such establishments mandatory and provides for the appointment of a labor
inspector to supervise such establishments. This creates a legal framework that ensures that there is
a record of all such establishments, The Act also deals with aspects like hours of work, intervals for
rest and meals, leave policy, cleanliness, etc. As a result, the unorganized sector falls within the
purview of the court and the chief inspector appointed under this act.

Historical background of the Karnataka Shops and Establishment Act, 1961

Every state has its Shops and Establishment Act, which helps in the regulation of conditions of work
and employment in shops and commercial establishments present in the respective states. These
acts are mostly based on a model act provided by the centre, which is adopted with necessary
implications by all states. All acts are pari materia to each other as all have a common issue to
resolve. The Act has an expansive definition of shops and commercial establishments, which helps in
the inclusion of almost all the establishments operating within the territory of Karnataka.

Important definitions under the Karnataka Shops and Establishment Act, 1961

Commercial establishment

The word “commercial establishment” has been defined in Section 2(e) of the Act,

“commercial establishment” means a commercial or trading or banking or insurance establishment,

an establishment or administrative service in which persons employed are mainly engaged in office
work, a hotel, restaurant, boarding or eating house, a cafe or any other refreshment house, a
theatre or any other place of public amusement or entertainment and includes such establishments
as the State Government may by notification declare to be a commercial establishment for the
purposes of this Act;

Employee

In accordance with Section 2(g) of the Act, the employee can be any person who has been wholly or
for most of the time employed directly in such an establishment or in relation to such an
establishment. This gives the definition a wider ambit, as it will not only include the employees who
are employed for a full day but also those employees who are hired seasonally or hired part-time.
The definition also includes those employees who may be employed for any activity that is not the
primary activity of the establishment. Further, the definition goes on to clarify its ambit by expressly
including all workers who are employed permanently, periodically, on a contractual basis, on a
piece-rate basis, or on a commission basis. Further, by including apprentices, the definition specifies
that even if an employee is not getting any reward for his labour, he can be included in the
definition.

Furthermore, the residuary clause has been added to the definition, which aims to include all
members of the staff of a factory or industrial establishment who fall outside the ambit of the
Factories Act, 1948. The definition also excludes any family member of the employee from its ambit,
as they have been included in the definition of the word “employer.”

Employer
Section 2(h) of the Act defines an employer as a person who has ownership of the establishment or
someone who has control over the affairs of the establishment. The definition expressly includes
family members of the employer, any person who has general control over the establishment’s
affairs, and any agent who works within the given capacity.

Shop

The word “shop” has been defined in Section 2(u) of the Act as a premise where trade or business of
any kind is carried on or where services are carried on for the customers. The word “shop” includes
its offices, storerooms, go downs, and warehouses, which can be in the same premise or in another
premise, given that when they are claimed to be in another premise, there has to be a nexus drawn
between another premise, and the usage in such trade or business. The definition also excludes
“commercial establishments” and shops attached to factories falling within the scope of the
Factories Act, 1948, from its ambit.

In the case of Airfreight Ltd. v. State of Karnataka (1999), the Supreme Court held that one of the
most essential elements of any premise to fall within the ambit of a commercial establishment or
shop is that it should be running for a profit-making motive, and the definitions of commercial
establishments and shops should be construed liberally in line with the purpose of the act, which is
to have government supervision over the functioning of such establishments.

The Apex Court upheld the decision of the High Court observing that the main activity being led in
the premise was handling the incoming and outgoing ships and acting as a clearing forward agent.
Other activities being led included acting as a facilitator in the export and import of goods and also
delivering the goods domestically through door-to-door delivery. The Supreme Court held that all
the activities seen in toto fall under the ambit of the definition of “commercial establishments.“

Further, in the case of Hindu Jea Band v. Regional Director, ESI Corpn (1987) the question arose
whether a place of retail services can be called a shop under the definition of the Act. The Hon’ble
Supreme Court clarified and affirmed that such kinds of retail, when done for profit-making
purposes, can fall under the ambit of “shop.”

Furthermore, in the case of International Ore and Fertilizers (India) (P) Ltd. v. ESI Corpn (1987), the
petitioner in the case provided services related to the unloading and surveying of the goods. No
goods being aided ever came to the petitioner’s premises but were directly sent to the purchaser’s
premises. The question arose whether the mere lending of services in this case made the premises
from where the petitioner operated a shop. The Court in the following case observed that even in
such cases, the premises from where the person retails the services will amount to a “shop.” The
same question arose in the case of Cochin Shipping Co. v. ESI Corpn. (1992), where the court again
reiterated that the company that operates from a premise to render services systematically for
commercial purposes will be said to be operating in a “shop.” In the case of ESI Corpn. v. R.K. Swamy
(1994), the court held that an expansive meaning should be given to the word “shop” and held that
premises from which advertising services are rendered will also fall into the definition of “shop.”

Applicability and extent of Karnataka Shops and Establishment Act, 1961

The Karnataka Shops and Establishment Act, 1961, came into force on 1st October 1964 by
notification of the state government and applies to a set of 80 districts mentioned in Schedule I and
also to the Belgaum Area, Gulbarga Area, Mangalore and Kollegal Area, and Mysore Area, which
have been repealed by Section 42 of the Act with prospective effect. Further, Section 43 repeals the
Weekly Holidays Act, 1942, with prospective effect. Furthermore, the State Government has been
conferred with the power to make rules under this Act through Section 40 of the Act.

Premises exempted from the operation of the Act

The following premises has been exempted from the operation of this Act by Section 3 of the Act:-

Offices except for commercial undertakings under the control of the Central Government, State
Government, or any local authority.

Railway services, railway dining cars, water transport services, communication services like
telephone, telegraph, or postal, any system of public conservancy or sanitization, and Industries
which supply electricity or water to the public.

Establishments like hospitals where sick, infirm, or mentally unfit people are taken care of.

Offices of banking companies, the establishment of food corporation of India.

Offices of medical or legal practitioners given that less than 3 employees should be employed.

Persons who have been excluded from the purview of the Act include any person who is employed
at a position of management in any occupation, persons who have intermittent nature of work,
clearing and forwarding clerks which are responsible for the dispatch of goods as they are employed
in preparatory or complementary work.

Further, the Section provides that the State Government, by notification, can remove such
exemptions and include any person or establishment within the purview of such an Act.

Registration process under the Karnataka Shops and Establishment Act, 1961

Registration

Every commercial establishment and shop has to get registered under the Act, and for the same
purpose, such establishments are to send the statement in the prescribed form along with the fees.
If the establishment exists before the commencement of the Act the application should be made
within 30 days from the date of commencement of the Act and if it is a new establishment that came
into existence after the commencement of the Act then the application should be made within 30
days from its establishment. If the officer is satisfied with the correctness of the statements, then
the certificate shall be issued, which will remain valid for 5 years and can be renewed later. Earlier,
the validity of the certificate was only for a period of one year, but through an Amendment in 1997,
the period was extended up to 5 years, and the amendment was given prospective effect. The
process of renewal and registration is pari materia to each other.

Deemed registration

On the other hand, if the officer is not satisfied with the correctness of the statements, he shall
return the statements and fees within 30 days from the date of receipt, along with the reasons for
refusing to register the establishment. It is pertinent to note that on failing to do the same, the
establishment will be deemed to be registered. On such legal fiction being carved out, the employer
shall send a self-certification statement along with an acknowledgment of the fact that he has got
the deemed benefit by registered post to the authority, and the employer shall display the same
self-certification in the establishment in lieu of the registration certificate. However, the same is to
be replaced with the registration certificate if he subsequently receives it. If any employer falsely
claimed the benefit of the deemed registration, then he will be liable to punishment of
imprisonment for at least 6 months and a fine of up to Rupees 5,000. The provisions concerning the
registration of an establishment have been provided under Section 4 of the Act.

Changes in the establishment or closure of the establishment

Even if there is any change in the statements given during registration, the employer should inform
the inspector of the changes, and on being satisfied with such changes, the inspector shall make
changes to the existing registration certificate or issue a fresh certificate, as the case may be. The
changes shall be notified to the inspector within 15 days of such changes being made. Further, even
the closure of the establishment should be communicated to the inspector, and the certificate
should be returned to the inspector, who, being satisfied with the correctness of the statements,
may remove such establishments from the register and cancel the registration certificate. It is
pertinent to note that the inspector has been empowered to cancel the registration suo moto if he
believes that the establishment has been closed. The provisions regarding the changes in the
establishment and closure of establishment have been provided in Sections 5 and 6 of the Act
respectively

Appointment order

Further, the Act also aims to document the terms of services of any employee being hired by the
employer in such an establishment by mandating the issuance of an appointment order by the
employer to the employee within 30 days of the date of such appointment, and if the employee has
been appointed before the commencement of the Act, then the issuance of the appointment order
should be within 30 days of the commencement of the Amendment Act of 1997. The provisions with
respect to the appointment order have been provided under Section 6A of the Act.

Hours of work

A humane work environment

The directive principles embedded in Part IV of the Indian Constitution direct that the state come up
with suitable legislation for securing just and humane conditions of work under Article 42 and that
all workers should be guaranteed a minimum wage, and working conditions that ensure a decent
standard of living along with social and cultural opportunities. The same directives have been
followed in all the state acts to ensure that the unorganized sector is regulated properly and no
employee working under such establishments is forced to work under inhumane conditions due to
his economic difficulties. To ensure the same, the Act provides for the maximum number of hours of
work that an employee can be subjected to.

Working hours in a day

Section 7 of the Act provides that no employee can be forced to work for more than 9 hours a day
and 48 hours a week. Further, no child between the ages of 14 and 18 should be allowed to work for
more than 5 hours a day. Furthermore, Section 9 of the Act provides that there should be at least 1
hour for the rest of the employees in such a way that the employee doesn’t have to work for a
stretch of more than 5 hours continuously. Section 10 enumerates that, inclusive of such periods of
rest, the total time for which an employee has to be in the establishment spread over a day shall not
exceed 12 hours a day.
Overtime

The proviso to Section 7 also provides that there can be overtime working hours for an employee,
however, the total number of work hours should not exceed 10 in a day, inclusive of such overtime.
The provision provides an exception to such a rule on days of stock-taking and preparation of
accounts. The proviso to such proviso provides that overtime hours should not exceed 50 hours in a
period of continuous 3 months. Further, Section 8 provides that such overtime work is entitled to
wages at a double rate than normal wages where the provision also defines what constitutes
“normal wages”.

Weekly holidays

Section 12 of the Act provides for a mandatory holiday every week. There should be a day that has
been specified by the employer at the beginning of the year that will be the day of the weekly
holiday. The notice regarding such a day should be placed in a conspicuous part of the
establishment. The employer shall not alter such days more than once every 3 months and shall also
inform the inspector about such alterations. Further, the employer can seek permission from the
state government to make his establishment function for a whole week, ensuring that each
employee in the establishment gets to rest for one whole day in a week. The employee should not
be called to an establishment for anything related to the work on such a day, and no wages shall be
deducted due to such a weekly holiday.

Annual leave

The Act provides for basic annual leaves with and without wages and how the same should be
computed in ratio to the working days. However, the Act makes it clear that if a contract, award, or
agreement between the employer and employee entitles the employee to more leave than what has
been mentioned in this Act, then no such right of the employee should be prejudiced by the Act.

Paid leaves

The computation of paid leaves should be at a rate of one day for every 20 working days in the case
of an adult and 15 working days in the case of a child between the ages of 14 and 18 years. Paid
leaves also include maternity leave not exceeding 12 weeks. It is pertinent to note that Article 43 of
the Indian Constitution provides for the directive policy of state-making laws for providing maternity
leave. Paid leaves can also include leaves of up to 12 days on account of sickness, accident, or any
other reasonable cause during the first 2 years of continuous employment.

The paid leaves that have been earned but not taken as per the above computation can be carried
forward to the succeeding year; however, the number of paid leaves carried forward should not
exceed 45 days. In the case of unpaid leave, there is no such limit on carry forwarding.

The Act further provides that paid leaves that are not taken make the employee entitled to cash
benefit equivalent to the same on discharge or dismissal from his employment. Such wages for
untaken paid leaves can also be recovered through the initiation of proceedings under the Payment
of Wages Act, 1936. Further, the Act also lays down an elaborate procedure that should be followed
for applying for leave.

Protection of children and women in such establishments

Article 24 of the Constitution of India prohibits the employment of children in any factory, mine, or
other hazardous form of employment. However, it is Section 24 of the Act that prohibits the
employment of children under the age of 14 in any establishment.
Section 25 of the Act before the Amendment of 2020 contained a prohibition on the employment of
women during the night in any establishment; however, the state government could have exempted
only information technology services-related establishments from the operation of this Section upon
such establishments fulfilling requisite conditions pertaining to transportation and security of
women. However, Section 25 was substituted by amendment on 19th October 2020 whereby, all
establishments were able to employ women during the night given that they follow a set of 16
conditions enumerated in the Section and also provides cancellation of registration certificate as an
effect of non-compliance with any condition in Section 25.

Section 30(3) of the Act provides that, in contravention of Sections 24 and 25 of the Act, the
employer should be liable to punishment of imprisonment from 3 to 6 months on the first offence
and on any subsequent offence to imprisonment from 6 months to 1 year, and along with or in lieu
of such terms of imprisonment, the employer should be liable for a fine that may extend from
10,000 to 20,000 rupees. Section 33A of the Act provides that the labour officer, instead of
prosecuting, can compound any of the offences punishable under this Act except for contravention
of Sections 24 and 25.

A written complaint made by the Inspector initiates prosecution under this Act. Such a complaint
should be made within 6 months from the date of the commission of the alleged offence. Further,
only courts of Judicial Magistrate Second Class and above can try such offences.

Inspectors

Sections 26 - 29 provides for Enforcement and Inspection

Sec. 26 provides for the appointment of inspectors for inspection under this Act and to exercise such
powers and perform such functions necessary under the Act.

1. Every person appointed under section 26 is considered to be an Inspector for the purposes of this
Act and deemed to be a public servant under Sec. 21 of the Indian Penal Code. (Setc 28)

2. The Labour Commissioner of the state of Karnataka shall be the Chief Inspector for the purposes
of this Act and extend to the whole of Karnataka.

3. The State Government may by notification appoint such persons as it deems fit to be Inspectors,
Additional Inspectors and Assistant Inspectors for the purposes of this Act.

4. The State Government shall appoint Inspectors for such local limits as it deems fit.

5. If any area has more than one Inspectors, the State Government may, by notification, declare the
powers each Inspector shall exercise respectively.

Sec. 27 - Powers and duties of Inspectors

1. The Inspector along with his Assistants may enter any place that he believes to be an
Establishment under the Act in the State of Karnataka at reasonable times.

2. Every Establishment, employer and employee shall produce the registers, records and notices to
be maintained under this Act when demanded by the Inspector. (Sec. 29)

3. The Inspector shall examine the premises, registers, records and notices for carrying out the
purposes of this Act.

4. The Inspector shall examine and take evidence from any person as he deems necessary.
5. The Inspector shall exercise all such powers and perform all such functions necessary for carrying
out the purposes of this Act.

Every person appointed under section 26 is considered to be an Inspector for the purposes of this
Act and deemed to be a public servant under Sec. 21 of the Indian Penal Code.

Every Establishment, employer and employee shall produce the registers, records and notices to be
maintained under this Act when demanded by the Inspector.

Offences. Penalties and Procedure

Sections 30-33 provides for Offences, Penalties and Procedure.

Sec. 30 - Penalties

1. Any person who is convicted for contravening the provisions of this Act regarding:

a) Registration of Establishments.

b) Change to be communicated to Inspector.

c) Closing of establishment to be communicated to Inspector.

d) Issue of appointment orders.

e) Daily and weekly hours.

f) Interval for rest.

g) Spread over.

h) Opening and closing hours.

i) Weekly holidays.

j) Selling outside establishment prohibited after closing hours.

k) Annual leave with wages.

l) Wages during leave period.

m) Prohibition of employment of women and young persons during night.

n) Notice of dismissal shall be punished with fine, which, which may extend to Rs 2000.

2. Any person who is convicted for contravening the provisions of this Act regarding:

a) Maintenance of registers and records and display of notices.

b) Employer to produce registers, records etc for inspection

c) Extra wages for overtime work

d) Payment of advance in certain cases shall be punished with a fine which may extend to Rs.
250.

3. Any person who is convicted for contravening the provisions of this Act regarding Sec. 24 which
prohibits the employment of children, that is a person below the age of 14 years as an employee or
otherwise in any Commercial Establishment shall be punished with imprisonment for a term which
shall not be less than 3 months and may extend to 6 months or with fine which shall not be less than
Rs. 10,000, but which may extend to Rs. 20,000 or with both, in the first instance and for the second
and subsequent offences, the employer shall be punished with imprisonment of a term not less than
6 months and may extend to 1 year.

Sec. 31 - Procedure

• Sec. 31 provides that no prosecution shall be initiated for any offence under this Act unless
there is a complaint in writing by an Inspector.
• No prosecution shall be initiated for any offence under this Act by any court inferior to that
of Magistrate of the Second Class.
• No prosecution shall be initiated for any offence under this Act unless there is a complaint in
writing by an Inspector within six months from the day on which the offence is alleged to
have been committed

Limitation of prosecutions

No prosecution shall be initiated for any offence under this Act unless there is a complaint in writing
by an Inspector within six months from the day on which the offence is alleged to have been
committed.

Penalty for obstructing Inspectors etc

Any person who wilfully obstructs an Inspector or his assistants from exercising their powers and
performing their functions under this Act or fails to comply with any order made by an Inspector,
shall be punished with a fine which may extend to Rs. 500.

Miscellaneous

Sec. 34 - Maintenance of registers and records and display of notices

The employer of an establishment shall maintain such registers and records and display on the
premises of the establishment, such notices as may be prescribed. All such registers and records
shall be kept on the premises of the establishment to which they relate.

Sec. 37 - Delegation of powers

The State Government may, by notification, may authorise any officer or authority, subordinate to it,
to exercise any one or more of the powers vested in it by or under this Act, subject to such
restrictions and conditions, if any, as may be specified in the notification.

Notice of Dismissal

1. No employer shall remove or dismiss an employee who has put in at least 6 months of
continuous service, except for a reasonable cause. Also 1 month prior notice or pay in lieu thereof
should be been given to the employee. This is subject to the following conditions:

2. The employee shall not be entitled to prior notice or pay in lieu of such notice where
misconduct of an employee is proved at an enquiry held for that purpose.

3. An employee removed or dismissed from service may appeal to such officers having
jurisdiction over such areas or such class of employees on the ground that there was no reasonable
cause for the dismissal or that the employee is not guilty of misconduct as held by the employer.
4. Where an employee has been removed or dismissed without reasonable cause or without
proof of misconduct, the employee shall be entitled to such compensation as the appellate authority
may determine, provided that such compensation shall not exceed an amount calculated at one
month's pay for every year of service.

5. Any person aggrieved by an order of the appellate authority may apply to the District Judge
for a revision of such order who after giving reasonable opportunity to both the parties to represent
themselves may confirm, modify or reverse the decision of the Appellate authority.

6. The amount payable as compensation under this section shall be in addition to any fine
payable under section 30 and shall be recoverable as a fine.

7. No employee who has been awarded compensation under this section shall be entitled to
bring a civil suit in respect of the same claim.

Sec. 40 - Power to make rules

The State Government may by notification, make rules to carry out the purposes of this Act.

International Labour Organisation

The International Labour Organization (ILO) was established in 1919 and is now a specialized agency
of the United Nations (UN) to promote rights at work, encourage decent employment opportunities,
enhance social protection and strengthen dialogue on work-related issues. At present, it has 186
members.

One of the primary functions of the ILO is setting up International Labour Standards. As principal
means of action in the ILO, the setting up the International Labour Standards is in the form of
Conventions and Recommendations. Conventions are international treaties and are instruments,
which create legally binding obligations on the countries that ratify them. Recommendations are
non-binding and net out guidelines orienting national policies and actions.

The ILO instruments have provided guidelines and a useful framework for the evolution of legislative
and administrative measures for the protection and advancement of the interest of labour.

The eight Core Conventions of the ILO (also called fundamental/human rights conventions) are:

I. Forced Labour Convention (No. 29)

The Forced Labour Convention prohibits all forms of forced or compulsory labour and also requires
them to be legally punishable offences. However, it provides for compulsory military service, normal
civic obligations, labour due to conviction in a court of law, in cases of emergency, and for minor
communal services performed by the members of a community in the direct interest of the
community.

2. Abolition of Forced Labour Convention (No.105)

The Abolition of Forced Labour Convention prohibits forced or compulsory labour as a means of
political coercion or education or as a punishment for:

i. Holding or expressing political views opposed to the established political, social or economic
system.

ii. As a method of mobilizing and using labour for purposes of economic development.
iii. As a means of labour discipline.

iv. As a punishment for having participated in strikes.

3. Equal Remuneration Convention (No.100)

Equal Remuneration Convention requires the ratifying countries to provide for equal remuneration
for both men and women workers for the same work and work of similar nature.

4. Discrimination (Employment Occupation) Convention (No.111)

The Discrimination (Employment Occupation) Convention defines discrimination as any distinction,

exclusion or preference made on the basis of race, colour, sex, religion, political opinion or social
origin. It requires ratifying states to provide for equality of opportunity in employment and
occupation.

5. Freedom of Association and Protection of Right to Organise Convention (No.87)

The Freedom of Association and Protection of Right to Organise Convention provides the right for
workers and employers to establish and join organizations of their own choosing without previous
authorization.

6. Right to Organise and Collective Bargaining Convention (No.98)

The right to Organise and Collective Bargaining Convention provides the workers, with the right to
organize collectively bargain while enjoying adequate protection against acts of anti-union
discrimination.

7. Minimum Age Convention (No. 138)

The Minimum Age Convention sets the minimum working age as 15 years (13 for light work) and the
minimum age for hazardous work at 18 years (16 under certain strict conditions).

8. Worst forms of Child labour Convention (No.182)

The Worst forms of Child Labour Convention defines a "child" as a person below the age of 18 years.
The convention requires the ratifying states to eliminate the wont forms of child labour, including:

i. Slavery

ii. Sale and trafficking of children.

iii. Debt bondage and serfdom.

iv. Forced or compulsory labour,

V. Use of children in armed conflict.

vi. Child prostitution and pornography.

vii. Using children for illicit activities, such as drug trafficking.

India’s stand on ILO Standards

The approach of India with regard to International Labour Standards has always been positive. The
ILO Standards have been an influence for labour legislation and practices in India, rather than as a
legally binding norm. Ratification of a Convention imposes legally binding obligations on the country
concerned and, therefore, India has been careful in ratifying Conventions. It has always been the
practice in India that to ratify a Convention when fully satisfied that India's laws and practices are in
conformity with the relevant ILO Convention.

Therefore, the present course of action is to proceed with Progressive implementation of the
standards, leave the formal ratification for consideration at a later stage when it becomes
practicable.

At present, out of the 8 core ILO Conventions, India has ratified four of them:

1. Forced Labour Convention (No. 29)

2. Abolition of Forced Labour Convention (No.105)

3. Equal Remuneration Convention (No.100)

4. Discrimination (Employment Occupation) Convention (No.111)

ILO's Decent Work Agenda

What is decent work?

The International Labour Organization (ILO) defines decent work as “productive work for women
and men in conditions of freedom, equity, security and human dignity”.

In general, work is considered as decent when:

• it pays a fair income

• it guarantees a secure form of employment and safe working conditions
• it ensures equal opportunities and treatment for all
• it includes social protection for the workers and their families
• it offers prospects for personal development and encourages social integration
• workers are free to express their concerns and to organise

The Decent Work Agenda was formulated by the ILO in 1999. Later, at the 2005 UN World Summit,
countries agreed to make employment and decent work for all a central objective of development
strategies to support fair globalisation. And in 2014, the G20 declared employment creation as its
priority objective.

During the UN General Assembly in September 2015, decent work and the four pillars of the Decent
Work Agenda – employment creation, social protection, rights at work, and social dialogue – became
integral elements of the new 2030 Agenda for Sustainable Development

As part of the Sustainable Development Goals 2030, Goal 8 talks about - Decent work and economic
growth which includes:

i. Promotion of sustained, inclusive and sustainable economic growth.

ii. Full and productive employment.

iii. Decent work

Here, Decent work refers to the aspirations of people in their working lives and opportunities for
work that is productive and delivers:

i. A fair income.
ii. Security in the workplace

iii. Social protection for families.

iv. Better prospects for personal development and social integration

v. Freedom for people to express their concerns.

vi. Organize and participate in the decisions that affect their lives.

vii. Equality of opportunity and treatment for all women and men.

Productive employment and decent work are key elements to achieving a fair globalization and
poverty reduction. Therefore, the ILO has developed an agenda for the community of works looking
at job certain, rights at work, social protection and social dialogue, with gender equality as an
important objective.

Liberalisation, Privatisation and Globalisation

In 1991, India met with an economic crisis relating to its external debt where the government was
not able to its borrowings from abroad. The foreign exchange reserves, which is generally
maintained to import petrol and other important items, dropped to levels that were not sufficient
for even a fortnight. The crisis was further compounded by rising prices of essential goods. All these
led the government to introduce a new set of policy measures which changed the direction of our
developmental strategies.

India approached the World Bank and the International Monetary Fund (IMF), and received 7 billion
US dollars as loan to manage the crisis and in return India was expected to liberalise and open up the
economy by removing restrictions on the private sector, reduce the role of the government in many
areas and remove trade restrictions. India agreed to the conditionalities of World Bank and IMF and
announced the New Economic Policy (NEP).

The NEP consisted of wide ranging economic reforms. One was to bring structural reform measures
under which the government initiated liberalisation, privatisation and globalisation.

Liberalisation

Liberalisation means elimination of state control over economic activities. It implies greater
autonomy to the business enterprises in decision-making and removal of government interference.
It was believed that the market forces of demand and supply would automatically operate to bring
about greater efficiency and the economy would recover. This was to be done internally by
introducing reforms externally by relaxing state control on industrial sector, financial sector, tax
reforms, foreign exchange markets and trade and investment sectors. Hence, liberalisation provided
for an open economy.

Privatisation

Privatisation is closely associated to globalisation and liberalisation. Privatisation is the transfer of

control of ownership of economic resources from the public sector to the private sector. It means a
decline in the role of the public sector as there is a shift in the property rights from the state to
private ownership. The public sector had been experiencing various problems, since planning, such
as low efficiency and profitability, mounting losses, excessive political interference, lack of
autonomy, labour problems and delays in completion of projects. Therefore, privatisation was
introduced by two ways:

i. By withdrawal of the government from ownership and management of public sector

companies

ii. By outright sale of public sector companies.

Privatisation of the public sector undertakings by selling off part of the equity of PSUs to the public is
known as disinvestment. The purpose of the sale, according to the government, was mainly to
improve financial discipline and facilitate modernisation.

Globalisation

Globalisation is the outcome of the policies of liberalisation and privatisation. It essentially means
integration of the national economy with the world economy. According to the IMF, Globalisation is
the growing economic interdependence of countries worldwide through increasing volume and
variety of cross border transactions in goods and services and of international capital flows and also
through the more rapid and widespread diffusion of technology. It implies a free flow of information,
ideas, technology, goods and services, capital and even people across different countries and
societies. It increases connectivity between different markets in the form of trade, investments and
cultural exchanges. This is done by opening the domestic markets for inflow of foreign goods,
reducing customs duties on imports, increasing FDI (Foreign direct Investment)etc.

Effects of Liberalisation, Privatisation and Globalisation

1. Globalisation saw a decline in the number of people living below the poverty line in
developing countries due to increased investments, trade and rising employment opportunities.

2. Improvement in various economic indicators of the Less Developed and Developing

Countries such as employment, life expectancy, literacy rates, per capita consumption etc.

3. Free flow of capital and technology enables developing countries to speed up the process of
industrialization and lay the path for faster economic progress.

4. Products of superior quality are available in the market due to increased competition,
efficiency and productivity of the businesses and this leads to increased consumer satisfaction.

5. Free flow of finance enable the banking and financial institutions in a country to fulfil
financial requirements through internet and electronic transfers easily and help businesses to
flourish.

6. MNCs bring with them foreign capital technology, know how, machines, technical and
managerial skills which can be used for the development of the host nation.

Negative effect of Liberalisation, Privatisation and Globalisation:

1. Domestic companies may be unable to withstand competition from efficient MNCs which have
flooded Indian markets since liberalisation. It may lead to shut down of operations, pink slips and
downsizing. Moreover skilled and efficient labour get absorbed by these MNCs that offer higher pay
and incentives leaving unskilled labour for employment in the domestic industries. Thus there may
be unemployment and underemployment. Payment of dividends, royalties and repatriation has in
fact led to a rise in the outflow of foreign capital.
2. With increased dependence on foreign technology, development of indigenous technology has
taken a backseat and domestic Research and Development has suffered.

3. Globalization poses certain risks for any country in the form of business cycles, fluctuations in
international prices, specialization in few exportable and so on.

4. It increases the disparities in the incomes of the rich and poor, developed nations and Less
Developed/Developing Countries. It leads commercial imperialism as the richer nations tend to
exploit the resources of the poor nations.

5. Globalization leads to fusion of cultures and inter-mingling of societies to such an extent that
there may be a loss of identities and traditional values. It gives rise to mindless aping of western
lifestyles and mannerisms however ill-suited they may be.

6. It leads to overcrowding of cities and puts pressure on the amenities and facilities available
in urban areas.

Special Economic Zone – Definition

An SEZ is an enclave within a country that is typically duty-free and has different business and
commercial laws chiefly to encourage investment and create employment.

Apart from generating employment opportunities and promoting investment, SEZs are created also
to better administer these areas, thereby increasing the ease of doing business.

SEZ Background

An SEZ Policy was announced for the very first time in 2000 in order to overcome the obstacles
businesses faced.

• There were multiple controls and many clearances to be obtained before starting a venture.
• Infrastructure facilities were shoddy and well below world standards in India.
• The fiscal regime was unstable as well.

In order to attract huge foreign investments into the country, the government announced the Policy.

The Parliament passed the Special Economic Zones Act in 2005 after many consultations and
deliberations.

The Act came into force along with the SEZ Rules in 2006.

However, SEZs were operational in India from 2000 to 2006 (under the Foreign Trade Policy).

Special Economic Zones Act, 2005

“It is defined as an Act to provide for the establishment, development and management of the
Special Economic Zones for the promotion of exports and for matters connected therewith or
incidental thereto.”

The SEZ Act, 2005, provides the legal framework for establishment of SEZs and also for units
operating in such zones.
Emergence of laws relating to SEZ

India was one of the first countries in Asia to recognize the effectiveness of Export Processing Zone
(EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view to
overcome the shortcomings experienced on account of multiple controls and clearances, absence of
word class infrastructure, and an unstable fiscal regime and with a view to attract larger investments
in India, Special Economic Zones Policy was announced in April 2000. This policy intended to make
SEZs an engine for economic growth supported by quality infrastructure complimented by an
attractive fiscal package both at centre and state level.

To instil confidence in investors and signal the government's commitment to a suitable SEZ policy
regime, the Special Economic Zones Act, 2005 has passed in the parliament in May, 2005 and
received presidential assent in June, 2005.

The main objective of SEZ Act, 2005

• Generation of additional economic activity.

• Promotion of exports of goods and services.
• Promotion of investment from domestic and foreign sources.
• Creation of employment opportunities.
• Development of infrastructure facilities.

The SEZ rules provide for;

• Simplified procedures for development, operation and maintenance of the SEZs, setting up
units and conducting business in SEZs.
• Single window clearance for setting up of an SEZ.
• Single window clearance for setting up a unit in an SEZ.
• Single window clearance on matters relating to central as well as state governments.
• Simplified compliance procedures and documentation

Scope of the SEZ Act. 2005

The SEZ Act, 2005 provides for the establishment, development and management of the Special
Economic Zones for the promotion of exports. SEZs can increase trade balance, employment, results
in increased investment, job creation and effective administration.

The benefits a company gains by being in a SEZ may mean that it can produce and trade good at a
lower price, aimed at being globally competitive.

SEZ Approval Mechanism

The SEZ approval mechanism is a single-window process provided by a 19-member inter-ministerial

SEZ Board of Approval (BoA).

• The developer has to submit the proposal to the state government.

• The state government forwards this proposal to the BoA along with its recommendation
within forty-five days.
• The developer or applicant can also directly submit the proposal to the BoA.
• The Board, which has been constituted by the Central Government, and is a 19-member
Board takes the decision considering the merits of the proposal. All decisions taken by the
Board are by consensus.
 o The Board is chaired by the Secretary of the Dept. of Commerce, Ministry of
Commerce and Industry.
o The other members are from various bodies and ministries such as the Central Board
of Excise and Customs (CBEC), the Central Board of Direct Taxes (CBDT), Department
of Economic Affairs, Dept. of Commerce, Ministry of Science and Technology,
Ministry of Home Affairs, Ministry of Law and Justice, Ministry of Urban
Development, etc.
• Once the BoA gives its approval, and the central government notifies the area of the SEZ,
units are allowed to be established inside the SEZ.

SEZs Facilities & Incentives

The government offers many incentives for companies and businesses established in SEZs. some of
the important ones are:

• Duty-free import or domestic procurement of goods for developing, operating and maintaining
SEZ units.
• 100% Income tax exemption on export income for SEZ units under the Income Tax Act for first 5
years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5
years. (Sunset Clause for Units will become effective from 2020).
• Units are exempted from Minimum Alternate Tax (MAT).
• They were exempted from Central Sales Tax, Service Tax and State sales tax. These have now
subsumed into GST and supplies to SEZs are zero-rated under the IGST Act, 2017.
• Single window clearance for Central and State level approvals.
• There is no need for a license for import.
• In the manufacturing sector, barring a few segments, 100% FDI (Foreign direct investment) is
allowed.
• Profits earned are permitted to be repatriated (send or bring (money) back to once own country)
freely with no need for any dividend balancing.
• There is no need for separate documentation for customs and export-import policy.
• Many SEZs offer developed plots and ready-to-use space.

Apart from the firms operating in SEZs, developers of SEZs also receive many benefits and incentives
from the government.

As of 31st January 2021; 265 SEZs are operational in the country. About 64% of the SEZs are located
in five states – Tamil Nadu, Telangana, Karnataka, Andhra Pradesh and Maharashtra.

Effects of SEZs

Due to SEZ — industrial sector, export, employment, infrastructural facilities are increasing.

However:

• Farmers may become landless due to large scale acquisition of land.

• Increase in unemployment - Though employment generation is one of the key objectives of
SEZ, companies invest more money in capital oriented techniques. The farmers who lost
their source of income don't get jobs in SEZs.
• Existence of small scale industries becomes difficult.
• Neglects agricultural sector.
• Government loses revenue due to tax free facilities.
 • Increases financial disequilibrium — industrialists become richer, poor remain poor.
• SEZs aid Capitalism.
• Establishment of SEZs harms environment — pollution of air, water and soil by industries
and factories.
• No protection to workers — Workers/labour law may not be applicable to SEZ.

SPECIAL ECONOMIC ZONE AUTHORITY

Constitution of Authority

According to Sec 31 of the Act, The Central Government shall, by notification in the Official Gazette,
constitute, for every Special Economic Zone established by it before the commencement of this Act
or which may be established by it after such commencement by the Central Government, an
Authority to be called the (name of the Special Economic Zone) Authority to exercise the powers
conferred on, and discharge the functions assigned to, it under this Act:

Provided that in respect of existing Special Economic Zone established by the Central Government,
such Authority shall be constituted by the Central Government within six months from the date of
commencement of this Act:

Provided further that until such Authority is constituted, the person or the authority including the
Development Commissioner exercising control over such existing Special Economic Zones shall
continue to exercise such control over the Special Economic Zones till the Authority is constituted.

Every Authority shall be a body corporate by the name aforesaid, having perpetual succession and a
common seal, with a power, subject to the provisions of this Act, to acquire, hold and dispose of
property, both movable and immovable, and to contract and shall, by the said name, sue and be
sued.

The head office of every Authority shall be at such place as the Central Government may specify in
the notification. Any Authority may, with the previous approval of the Central Government, establish
branch offices at other places in India.

Every Authority shall consist of -

(a) the Development Commissioner of the Special Economic Zone over which the Authority exercises
its jurisdiction - Chairperson, ex officio;

(b) two officers of the Central Government to be nominated by that Government having knowledge
of, or experience in, dealing with matters relating to Special Economic Zones - Members, ex officio;

(c) an officer of the Government of India in the Ministry or Department dealing with Commerce on
matters relating to Special Economic Zone - Member, ex officio;

(d) not more than two persons being entrepreneurs or their nominee, to be nominated by the
Central Government - Members, ex officio.

The term of office of the Members of an Authority (other than ex officio Members) and the manner
of filling of vacancies shall be such as may be prescribed.
An Authority may associate with itself in such manner, subject to such conditions and for such
purposes as may be prescribed, any person whose assistance or advice it requires in discharging its
functions effectively and that person shall be entitled to receive such allowances or fees as may be
fixed by the Authority.

One third of the total Members of the Authority shall form a quorum, and all the acts of the
Authority shall be decided by a majority of the Members present.

No act or proceeding of an Authority shall be invalidated merely by reason of-

(a) any vacancy in, or any defect in the constitution of, the Authority; or

(b) any defect in the appointment of a person acting as a Member of the Authority; or

(c) any irregularity in the procedure of the Authority not affecting the merits of the case.

Officers of Authority and other staff

Every Development Commissioner of the Special Economic Zone for which he is appointed as such
shall be the chief executive of the Authority concerned and exercise such powers and perform such
functions as may be prescribed.

Every Authority may, in addition to the officers and employees transferred to it under section 33,
appoint such other officers and employees, as it considers necessary for the efficient discharge of its
functions under this Act.

The method of appointment, the conditions of service and the scales of pay and allowances of such
other officers and employees appointed under sub-section (2) shall be such as may be prescribed.

Special provision for transfer of officers or other employees to Authority

It shall be lawful for the Central Government to transfer to each Authority, by order, and with effect
from such date or dates, as may be specified in the order, any officer or other employee holding
office as such (except officers or other employees on deputation) in the existing Special Economic
Zone concerned:

Provided that the scale of pay of the post to which such officer or other employee is transferred shall
not be lower than the scale of pay of the post which he was holding immediately before such
transfer and the other terms and conditions of service (including pension, leave, provident fund and
medical benefits) of the post to which he is transferred shall not be less favourable than the terms
and conditions of service in relation to the post held by him immediately before such transfer:

Provided further that if, immediately before the date of his transfer, any such officer or other
employee is officiating in a higher post under the Central Government either in a leave vacancy or in
any vacancy of a specified duration, his pay and other allowances, if any, on transfer, shall be
protected for the unexpired period of such vacancy and thereafter he shall be entitled to the scale of
pay applicable to the post under the Central Government to which he would have reverted but for
his transfer to the Authority.

If any question arises as to whether the prescribed terms and conditions of service in respect of any
matter, including remuneration, pension, leave, provident fund and medical benefits, are less
favourable than those attached to the post held by an officer or other employee immediately before
his transfer to the Authority, the decision of the Central Government in the matter shall be final.

Functions of Authority

Subject to the provisions of this Act, it shall be the duty of each Authority to undertake such
measures as it thinks fit for the development, operation and management of the Special Economic
Zone for which it is constituted.

Without prejudice to the generality of the provisions, the measures referred to therein may provide
for -

(a) the development of infrastructure in the Special Economic Zone;

(b) promoting exports from the Special Economic Zone;

(c) reviewing the functioning and performance of the Special Economic Zone;

(d) levy user or service charges or fees or rent for the use of properties belonging to the
Authority;

(e) performing such other functions as may be prescribed.

Grants and loans by Central Government.

As per Sec 35, the Central Government may, after due appropriation made by Parliament by law in
this behalf, make to every Authority by way of grants and loans such sums of money as that
Government may think fit for being utilised for the purposes of this Act.

Constitution of Fund and its application

There shall be established by every Authority a Fund to be called the (the name of the Special
Economic Zone concerned) Authority Fund and there shall be credited thereto -

(a) all sums of money, which the Central Government may, after due appropriation made by
Parliament by law in this behalf, provide to the Authority;

(b) all grants or loans that may be made to the Authority under this Act;

(c) all sums received on account of user or service charges or fees or rent for the use of properties
belonging to the Authority;

(d) all sums received by the Authority from such other sources as may be decided upon by the
Central Government.

The Fund shall be applied for meeting

(a) the salaries, allowances and other remuneration of the members, officers and other employees
of the Authority;

(b) the expenses of the Authority in the discharge of its functions under section 34;

(c) repayment of any loan;

(d) the expenses on objects and for purposes authorised by this Act;
(e) meeting any other administrative expenses of the Authority.

Accounts and Audit

Every Authority shall maintain proper accounts and audit. other relevant records and prepare an
annual statement of accounts in such form as may be prescribed by the Central Government, in
consultation with the Comptroller and Auditor-General of India.

The accounts of every Authority shall be audited by the Comptroller and Auditor-General of India at
such intervals as may be specified by him and any expenditure incurred in connection with such
audit shall be payable by the Authority to the Comptroller and Auditor-General of India.

The Comptroller and Auditor-General of India or any person appointed by him in connection with
the audit of the accounts of the Authority shall have the same rights and privileges and authority in
connection with such audit as the Comptroller and Auditor-General generally has in connection with
the audit of the Government accounts and, in particular, shall have the right to demand the
production of books, accounts, connected vouchers and other documents and papers and to inspect
any of the offices of the Authority.

The accounts of every Authority as certified by the Comptroller and Auditor-General of India or any
other person appointed by him in this behalf together with the audit report thereon shall be
forwarded annually to the Central Government and the Central Government shall cause the same to
be laid before each House of Parliament.

Directions by Central Government

Every Authority shall be bound to carry out such directions as may be issued to it from time to time
by the Central Government for the efficient administration of this Act.

Returns and reports

Every Authority shall furnish to the Central Government at such time and in such form and manner
as may be prescribed or as the Central Government may direct, such returns and statements and
such particulars in regard to the promotion and development of exports and the operation and
maintenance of the Special Economic Zone and Units as the Central Government may, from time to
time, require.

Without prejudice to the provisions of sub-section (1), every Authority shall, as soon as possible,
after the end of each financial year, submit to the Central Government a report in such form and
before such date, as may be prescribed, giving a true and full account of its activities, policy and
programmes during the previous financial year.

A copy of every report received under sub-section (2) shall be laid, as soon as may be, after it is
received, before each House of Parliament.

Power to supersede Authority

If at any time the Central Government is of the opinion that an Authority is unable to perform, or has
persistently made default in the performance of, the duty imposed on it by or under this Act or has
exceeded or abused its powers, or has wilfully or without sufficient cause, failed to comply with any
direction issued by the Central Government under section 38, the Central Government may, by
notification, supersede that Authority for such period not exceeding six months, as may be specified
in the notification:
Provided that before issuing a notification, the Central Government shall give reasonable time to
that Authority to make representation against the proposed supersession and shall consider the
representations, if any, of the Authority.

Upon the publication of a notification for superseding the Authority, -

(a) the Chairperson and other Members of the Authority shall, notwithstanding that their term of
office has not expired as from the date of supersession, vacate their offices as such;

(b) all the powers, functions and duties which may, by or under the provisions of this Act, be
exercised or discharged by or on behalf of the Authority shall, during the period of supersession, be
exercised and performed by such person or persons as the Central Government may direct;

(c) all property vested in the Authority shall, during the period of supersession, vest in the Central
Government.

On the expiration of the period of supersession specified in the notification, the Central Government
may -

(a) extend the period of supersession for such further period not exceeding six months; or

(b) reconstitute the Authority in the manner provided in section 31.

Members, officers, and other employees of Authority to be public servants

Under Sec 41 of the Act all Members, officers, and other employees of every Authority, shall, when
acting or purporting to act in pursuance of any of the provisions of this Act or the rules made
thereunder, be deemed to be public servants within the meaning of section 21 of the Indian Penal
Code.

Welfare state

A welfare state is a government that provides for the welfare or the well-being, of its citizens
completely. Such a government is involved in citizen's lives at every level. It provides for physical,
material, and social needs rather than the people providing for their own. The purpose of the
welfare state is to create economic equality or to assure equitable standards of living for all.
Therefore, it is nothing but, a form of government in which the state protects and promotes the
economic and social well-being of the citizens, based upon:

i. The principles of equal opportunity

ii. Equitable distribution of wealth.

iii. Public responsibility for citizens who are unable to avail themselves of the minimal
provisions for a good life.

The welfare state provides education, housing, sustenance, healthcare, pensions, unemployment
insurance, sick leave or tune off due to injury, supplemental income in some cases, and equal wages
through price and wage controls. It also provides for public transportation, childcare, social
amenities such as public parks and libraries, as well as many other goods and services. Some of these
items are paid for via government insurance programs while others are paid for by taxes.
Constitutional mandate

Preamble:

The preamble reveals the nature of the Indian State while declaring India to be a sovereign, socialist,
secular, democratic and republican polity.

Indian socialism is a form of 'democratic socialism' and not 'communistic socialism' which involves
the nationalisation of all means of production and distribution and the abolition of private property.
Democratic socialism, on the other hand, holds faith in a `mixed economy' where both public and
private sectors co-exist side by side.

According to the Supreme Court, Democratic socialism aims to end poverty, ignorance, disease and
inequality of opportunity.

Fundamental Rights

1. The State shall not deny to any person equality before law or the equal protection of the laws
within the territory of India. While Article 14 forbids class legislation, it permits reasonable
classification of persons, objects and transactions by the law. Article 14 ensures:

a) The absence of any special privileges in favour of any person.

b) The equal subjection of all persons to the ordinary law of the land

c) No person whether rich or poor, high or low, official or non-official is above the law.

2. The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex or
place of birth. Article 15 prohibits discrimination by the State.

3. Equality of opportunity for all citizens in matters of employment or appointment to any office
under the State. Article 16 ensures that no citizen is discriminated against or be ineligible for any
employment or office under the State on grounds of only religion, race, caste, sex, descent, place of
birth or residence.

4. Right to practice any profession or to carry on any occupation, trade or business. Article 19
provides for freedom of profession.

5. Protection of Life and Personal Liberty. Article 21 declares that no person shall be deprived of his
life or personal liberty except according to procedure established by law. This right is available to
both citizens and non – citizens. In Olga Tellis V. Bombay Muncipal Corporation, the court held that
the right to life includes the right to livelihood.

Directive Principles of State Policy

The Directive Principles of State of Policy contain Socialistic Principles which reflect the ideology of
socialism. They lay down the framework of a democratic socialist state, aim at providing social and
economic justice, and set the path towards welfare state" They direct the state:

1. To promote the welfare of the people by securing a social order permeated by justice- - social,
economic and political- and to minimize inequalities in income, status, facilities and opportunities -
Article 38.

2. To secure

a. The right to adequate means of livelihood for all citizens.

 b. The equitable distribution of material resources of the community for the common good.

c. Prevention of concentration of wealth and means of production

d. Equal pay for equal work for men and women.

e. Preservation of the health and strength of workers and children against forcible abuse.

f. Opportunities for healthy development of children -Article 39.

3. To promote equal justice and to provide free legal aid to the poor - Article 39 A.

4. To secure the right to work, to education and to public assistance in cases of unemployment, old
age, sickness and disablement - Article 41.

5. To make provision for just and humane conditions of Work and maternity relief - Article 42.

6. To secure a living wage a decent standard of life and social and cultural opportunities for all
workers - Article 43.

7. To take steps to secure the participation of workers in the management of Industries - Article43 A.

9. To raise the level of nutrition and the standard of living of people and to improve public health -
Article 47.

Social Welfare Legislation in India

According to the Dictionary of Sociology by Fairchild, social legislation means laws designed to
improve and protect the economic and social position of those groups in society which because of
age, sex, race, physical or mental defect or lack of economic power cannot achieve health and
decent living standards for themselves. Therefore, social legislation is nothing but special laws which
are passed with the special purposes of improving the socio-economic position of specific groups
such as women, children, elderly, scheduled castes, scheduled tribes, physically and mentally
challenged, unorganised workers, agricultural and landless labourers and other such vulnerable
groups.

Social legislation is needed:

i. To ensure social justice

ii. To bring about social reform

iii. To promote social welfare

iv. To bring about desired social change

v. To protect and promote of rights of socioeconomically disadvantaged groups of the society

vi. To remove discrimination on the grounds of sex, religion, caste, class etc. and promotion of
equality to all.

vii. To safeguard the rights of the weaker section such women, children, elderly, widows,
destitute and the backward classes.

vii. Eradicate traditional malpractices and social evils such as untouchability, dowry, child
marriage, female infanticide etc
With reference to India, the Constitution levies responsibility on the State to provide social security
to citizens of the country. The State discharges duty as an agent of the society in order to help those
who are in adverse situations or otherwise needs protection owing to certain contingencies.

Drawing from the Constitution of India and ILO Convention on Social Security, several legislations
have been enacted such as, the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the
Payment of Bonus Act, 1965, the Contract Labour Regulation and Abolition Act, 1970, the Child
Labour Prohibition and Regulation Act, 1986, the Bonded Labour System Abolition Act, 1976, the
Trade Unions Act, 1926, the Factories Act, 1948, the Mines Act, 1952, the Industrial Disputes Act,
1947, the Workmen's Compensation Act, 1923 etc. have been enacted to protect the interests of the
labour sections.

In 2006, the government banned child labour. In 2016, the Child Labour Prohibition and Regulation
Act, 1986 was renamed as the Child and Adolescent Labour Prohibition and Regulation Act, 1986.
The Maternity Benefit Act, 1961 and the Equal Remuneration Act, 1976 have been made to protect
the interests of women workers.

Various measures have been taken to utilise the financial resources for promoting the common
good. These include nationalisation of life insurance, 1956, the nationalisation of fourteen leading
commercial banks, 1969, nationalisation of general insurance, 1971, abolition of Privy Purses, 1971
and so on.

The Legal Services Authorities Act (1987) has established a nation-wide network to provide free and
competent legal aid to the poor.

However, in spite of the above steps by the Central and state governments, many of the welfare
legislation have not been implemented fully and effectively due to several reasons like inadequate
financial resources, unfavourable socio-economic conditions, population explosion and strained
Centre-state relations. Other reasons for failure of efficient implementation of Social welfare are:

a) With globalization, there is a shift from mass production of goods at a centralised location to
a system of flexible production at dispersed locations. This entire process makes the labouring
population very vulnerable and insecure.

b) With shift in production centres and frequent movement of labour, it becomes difficult to
implement social welfare.

c) Tracking of labour is important and more so to increase awareness among the labourers.

d) With variations in law between Centre and States or between states and frequently moving
labour, makes it difficult to educate the labour force or workers of their rights.

e) Establishment of SEZs also affect labour/workers' rights as many laws may not apply to
them.

f) Economic development and Social welfare do not always go hand in hand.

g) Liberalization, Privatisation and Globalisation have diluted the effectiveness of Social

Welfare.