The Industrial Employment
(Standing Orders) Act, 1946
By:
Introduction
▪ The concept of ‘Standing Orders’ is one of the recent growth in relation
to Indian labour- management. Prior to 1946, there existed chaotic
conditions of employment, wherein the workmen were engaged on an
individual basis with uncertain and vague terms of employment. The
Act was enacted as a simple measure to remedy this situation – by
bringing about uniformity in the terms of employment in industrial
establishments so as to minimize industrial conflicts.
▪ The Preamble of the Act imposes a compulsion upon the employers,
“to define with sufficient precision the conditions of employment” and
make the same known to the workmen.
Application of the Act
▪ Section 1 of the Act provides that the Act shall apply to the industrial
establishments (within India) with an engagement of more than a
hundred workmen at present or as noted on any day in the preceding
year unless provided by the appropriate Government for application
to any such industrial establishment – with less than a hundred
employees.
Exclusion of certain industrial
establishments
Certain industrial establishments have been excluded from its application
via various statutory provisions enlisted in this Act:
▪ Section 1(4) excludes those establishments to which Chapter VII of the
BIRA or MPIESOA applies unless controlled by the Central Government.
▪ Section 13-B excludes those establishments whose workmen are subject
to the Fundamental & Supplementary Rules; various Civil Services Rules;
or any other rules provided by the ‘appropriate Government’.
▪ The provisions of Sections 10 and 12-A(1) do not apply to the
establishments under the control of the States of Gujarat/Maharashtra.
Power to exempt: Section 14
▪ Section 14 empowers the appropriate Government to exempt any industrial establishment
from being subject to all or any of the provisions of this Act, either
conditionally/unconditionally.
Special features of the Act
The Act envisages three important features, they are:
▪ Concept of Standing Orders;
▪ Adjudicatory powers of the Certifying Officer; and
▪ CSOs (short for – Certified Standing Orders) to have the force of law.
Whether a contract can override in
the certified Standing Orders?
CSOs cannot be deemed as a statutory concept, but can also not be confined to the
individualistic notions of a contract, as they transcend its limits. Hence, standing
orders effectuated in compliance with the statutory provisions may be considered as a
special kind of contract or a ‘statutory contract’.
Herein, to answer the question of whether a contract can override in the CSO, it can
be concurred from the Western India case, that “the employer & workmen cannot
enter into a contract overriding the statutory contract as embodied in the CSO, except
when such a contract is entered into in compliance with Section 10(1), so as to modify
such CSO, but not otherwise.”
Standing orders
Section 2(g) of the Act states that “standing orders” are the rules relating to matters set out in the
Schedule, i.e. with reference to:
▪ The classification of workmen;
▪ Manner of intimation to workers about work and wage-related details;
▪ Attendance, and conditions of granting leaves, etc.;
▪ Rights & liabilities of the employer/ workmen in certain circumstances;
▪ Conditions of ‘termination of’/‘suspension from’ employment; and
▪ Means of redressal for workmen, or any other matter.
Submission of Draft Standing Orders:
Section 3
A statutory obligation is imposed by the Act upon the employer(s) to submit, individually/ jointly, five
copies of a ‘Draft Standing Order’ within six months of its applicability to the industrial establishment,
which should be inclusive of the matters enlisted in the Schedule and of the MSOs (short for – Model
Standing Orders), if any, and to which shall be annexed such documents containing particulars of the
workmen employed.
Hindustan Lever v Workmen, (1974)
In the present case, the issue relating to the ‘transfer of workmen’ was highlighted by concurring that,
the Manager is vested with the discretion of transfer of workmen amongst different departments of the
same company, so far as the terms of the contract of employment are not affected. Further, if the
transfer is found to be valid, the onus of proving it to be invalid lies on the workmen in dispute.
Conditions for Certification of Standing Orders: Section 4
Section 4 of the Act declares the conditions upon the fulfilment of which, a standing order can be certified. It
thereby requires a standing order to provide for all the matters set out in the Schedule of the Act and be in
conformity with the provisions of this Act.
Deviation from Model Standing Orders
Section 4(b) when read with Section 3(2) of the Act, requires the draft standing order to, as far as practicable, be in
conformity with the MSO, hence, in cases where it cannot be so claimed, the appropriate authority may permit
deviation from the MSO, and negate the addition of such impracticable provision in the Standing Order.
Reasonableness of Standing Order
The proviso to Section 4 of the Act, as amended by Act 56 of 1956, necessitates the Certifying Officer or
appellate authority to adjudicate upon the fairness or reasonableness of the contents of such Draft Standing
Order in order to proceed with its certification.
Matters not covered by the Schedule
The Act contemplates by itself that the Standing Orders must cover matters included in the Schedule initially,
and those which may be added to the Schedule by the appropriate Government in exercise of the authority
conferred on it under Section 15. Any other provisions of such kind may be made if so certified by the
Certifying Officer to be fair and reasonable under Section 4 of the Act.
Different set of Standing Orders
“Once the standing orders are certified, they constitute the conditions of the
service binding upon the management and the employees serving already and in
employment or who may be employed after certification.” This implies that
different set of standing orders cannot exist in respect of distinct sections of
workmen or the employer(s), for that would frustrate the intent of the legislature
by rendering the conditions of employment as indefinite & diversified, just as
existed prior to the enactment of the said Act.[2]
Certification Process: Section 5
The procedure for certification of Standing Order, as prescribed under Section 5 of
the Act, is threefold:
▪ The Certifying Officer to send a copy of the Draft Standing Order to the workmen
or trade union, along with a notice calling for objections, that shall be submitted
to him within 15 days of receiving such notice.
▪ Upon receipt of such objections, the employer and workmen to be given an
opportunity of being heard, after which the Certifying Officer shall decide and
pass an order for modification of the Standing Order.
▪ Finally, the Certifying Officer shall certify such Standing Order, and thereby, within
seven days, send a copy of it annexed with his order for modification passed
under Section 5(2).
Appeals: Section 6
Any related party aggrieved by the order of the Certifying Officer may
appeal to the ‘appellate authority’ within 30 days, provided that its
decision, of confirming such Standing Order or amending it, shall be
final. The appellate authority shall thereafter send copies of the
Standing Order, if amended, to the related parties within seven days.
Modification of Standing Order: Section 10
A CSO cannot be modified, except on agreement between the related
parties, until six months from the last modification or operation of such
standing order under Section 7. Further, subject to Section 10(1) and
other provisions of this Act, the parties may apply to the Certifying
Officer for modifications in the standing order by annexing five copies
of the proposal or a certified copy of the agreement for modifications.
Payment of Subsistence Allowance:
Section 10-A
Section 10-A of the Act stipulates for the payment of subsistence
allowance by the employer to a workman who is suspended, pending
the investigation/ inquiry of his misconduct, at the rate of 50% for the
first 90 days, and 75% for the remaining period if the delay is not
attributable to the workman. The Act also allows an appeal to the
Labour Court constituted under IDA-1947 in case of a dispute relating
to such subsistence allowance, whose decision shall be final. Moreover,
it declares that the provisions applicable to a particular State, if more
beneficial, shall prevail over this Section.
Temporary Application of Model Standing
Orders: Section 12-A
Section 12-A provides that in spite of the provisions under Section 3 –
12, in the period between the applicability of this Act and operation of
the CSO, MSOs to be adopted, with Sections 9, 13(2), and 13-A applying
in the same way as would apply to a CSO. it also declares that if there
exist two categories of workmen, and the daily rated have a CSO in
existence for them, then the MSO be adopted for the monthly rated
workmen.
Penalties and procedure: Section 13
The Act makes it a penal offence in case of a violation of Section 3 or 10
of the Act by the employer, by imposing a fine of Rs. 5000 and an
additional Rs. 200 per day for a continuing offence. Further, in case of
an infringement of the CSO, a fine of Rs. 100 and an additional of Rs. 25
per day for a continuing offence. The Section declares that no
prosecution shall be instituted under it except on prior approval by the
appropriate Government, and whence instituted, be tried only by such
Courts not inferior to the Metropolitan/Judicial Magistrate of Second
Class.
Interpretation of Standing Orders:
Section 13-A
▪ Any question relating to the application/interpretation of this Act may be
referred to the Labour Courts constituted for this purpose, whose decision shall
be final and binding on all parties.
Delegation of Powers: Section 14-A
The appropriate Government may delegate its powers under the Act to an
Officer/Subordinate Authority to the Central or the State Government, as the
case may be, and subject to such directions as may be provided under the
notification.
Power to make rules: Section 15
The Act empowers the appropriate Government to make rules for the purpose of this
Act, in consultation with representatives of related parties, relating to:
▪ Additional matters to be included in the Schedule & the procedure for modification;
▪ Set out MSOs;
▪ Procedure to be followed by Certifying Officers & appellate authorities;
▪ The fee to be charged for the copies of registered standing orders, and any other
matter so prescribed.
Provided that the rules made by the Central Government be passed/annulled through
each House of Parliament without prejudice to the validity of anything done under it.
Conclusion
The Act is a regulatory regime to formally define the employment
relations between the workmen/trade union and the employer. A very
prominent initiative of this Act is the concept of ‘standing orders’ which
is amorphous in nature being a contract promulgated statutorily, that
represent the will of the parties so regulated. Finally, it may be stated
that, though it lays an exemplary notion, it requires thorough reforms
in respect of the present scenario of employment practised by the
principal employer so as to fulfil the Constitutional objective of securing
socio-economic justice substantially.
