SBILL

CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 13: Various Initial Registrations and Licenses
Regulatory Framework
• Income Tax Act, 1961
• Goods and Services Tax Act, 2017
• The Shop and Establishment (S&E) Act, 1948
• Employees’ State Insurance Act, 1948
• The Employees Provident Funds and Miscellaneous Provision’s Act (EPF) Act, 1952
• Drugs and Cosmetics Act, 1940
• Food Safety and Standards Act, 2006
• Reserve Bank of India Act, 1934
• Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies)
Regulations, 2000
• Industries (Development and Regulation) Act, 1951

Introduction
1. Registration and Licensing Requirements:
• To establish a business in India, various registrations and licenses are necessary.
• The chapter outlines both mandatory and additional initial registration requirements,
along with detailed procedures for obtaining these licenses.
2. Ease of Doing Business:
• This concept relates to the regulatory environment in a country for setting up and
operating a business.
• The World Bank annually assesses and compares the business environment in 190
countries through its Ease of Doing Business Report.
3. India's Ranking in World Bank Report:
• In the 2020 report, India ranked 63rd among the 190 countries.
• This is a significant improvement from its 142nd position in 2014.
4. Government Initiatives for Business-Friendly Environment:
• Since 2014, the Government of India has implemented regulatory reforms to make it
easier to do business in the country.
• These reforms are part of a broader effort to create a more business-friendly environment.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
5. India's Global Attractiveness:
• Due to these efforts, India has emerged as an attractive destination for both investments
and conducting business activities.

Business Entity Registration

MANDATORY REGISTRATION

What is PAN (Permanent Account Number)?

1. Definition:
• PAN is a 10-character alphanumeric identifier for taxpayers in India, consisting of both
letters and digits (e.g., AAAAA1234A).
• It is issued as a laminated plastic card and is governed by the Income Tax Act of 1961.
2. Utility of PAN:
• Unique Identifier: It uniquely identifies each income tax payer.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Transaction Linkage: Helps the income tax department link all transactions of the PAN

holder, including tax payments, TDS/TCS credits, income returns, specific transactions,
correspondence, etc.
• Information Retrieval and Matching: Facilitates the retrieval of a PAN holder's
information and matches various investments, borrowings, and other business activities.
• Proof of Identity: Serves as an identity proof for numerous purposes, such as in
transactions involving sale or purchase of shares (not listed in a recognized stock
exchange) exceeding Rs. 1 lakh, or immovable property transactions exceeding Rs. 10 lakh.
3. Mandatory Requirement for PAN:
• For Individuals:
• Required for every person whose total income or the total income of another
person for whom they are assessable exceeds the maximum amount not
chargeable to tax.
• Charitable Trusts:
• Mandatory for charitable trusts required to furnish returns under Section
139(4A).
• Businesses and Professionals:
• Required for those in business or profession with total sales, turnover, or gross
receipts likely to exceed Rs. 5 lakh in a year.
• For Specified Financial Transactions:
• Mandatory for individuals intending to enter into financial transactions where
quoting PAN is essential.
• For Non-Individual Residents and Associated Persons:
• Required if the financial transaction during the financial year exceeds Rs.
2,50,000.

Application and Registration of PAN (Permanent Account Number)

1. Importance of PAN Card:
• Essential for various financial activities, including opening a savings account or applying
for debit/credit cards.
2. Application Process:
• Modes of Application: PAN application can be made either online or offline.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Forms for Application:

• Indian citizens use Form 49A.

• Foreign citizens use Form 49AA.
• Supporting Documents:
• Proof of identity, address, and date of birth are required.
• For New PAN Applications (Post-November 1, 2009):
• Individual and HUF (Hindu Undivided Family) applicants must provide office
address proof if the communication address is the office.
• Additionally, residential address proof is required.
3. Photograph Requirements for Physical Applications:
• Individual applicants need to affix two recent, colored photographs (size 3.5 cm x 2.5 cm)
on the application form if applied physically.

TAN (Tax Deduction and Collection Account Number)

Overview:
TAN is a 10-digit alphanumeric number issued by the Income-tax Department, vital for those involved in
tax deduction at source (TDS) or tax collection at source (TCS).
Persons Liable to Apply for TAN:
1. General Requirement:
• Every person responsible for TDS or TCS must obtain TAN.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Exceptions include those who can use PAN in place of TAN, like those deducting tax under

Section 194-IA.
2. Specific Cases:
• Section 194-IB: Individuals or HUFs (not requiring audit under Section 44AB) deducting
tax on rent payments over Rs. 50,000 per month to a resident.
• Section 194M: Individuals or HUFs (not requiring audit under Section 44AB) deducting tax
on payments exceeding Rs. 50 lakhs in a year for contractual work, commission,
brokerage, or professional fees.
Relevance of TAN:
1. Mandatory Under Section 203A:
• Required for every person who deducts or collects tax at source.
• Must be quoted in various documents, including TDS/TCS statements, financial
transaction statements, challans, certificates, and other prescribed documents.
2. Exemptions:
• Not required for those deducting tax under specific sections like 194-IA.
• Other exemptions as notified by the Central Government.

Procedure to Apply for TAN (Tax Deduction and Collection Account Number)
Modes of Application:
1. Offline Mode:
• Use Form 49B, available in duplicate.
• Submit the form at any TIN-Facilitation Centre (TIN-FC) of NSDL.
• Find TIN FC addresses on the NSDL TIN website (https://www.tin-nsdl.com).
2. Online Mode:
• Apply through the NSDL TIN website.
Application Form Guidelines:
• Review the instructions and guidelines in the application form before filling it out.
• Companies not registered under the Companies Act, 2013, can use Form SPICe+ for TAN
application.
Obtaining Physical Application Forms:
1. Downloadable Form:

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Form 49B is available for download on the Income-tax Department website

(http://www.incometaxindia.gov.in).
2. Availability at TIN-FCs.
3. Use of Photocopies:
• Legible photocopies or forms printed exactly as per the format prescribed are also
accepted.
Requirement of Separate TAN for TCS:
• No separate TAN is needed for TCS if the person already has a TAN for TDS.
Documents Submission with TAN Application:
• No documents need to be submitted for offline applications.
• For online applications, the signed acknowledgment generated after filling the form should be
sent to NSDL.
Processing and Communication:
• Applications are digitized by NSDL and sent to the Income Tax Department (ITD).
• The ITD issues TAN and intimates NSDL online.
• NSDL then issues the TAN letter to the applicant.
Tracking Application Status:
• Use the 14-digit unique Acknowledgment Number to track status after three days of application.
• Status can also be tracked via the TIN Call Centre (020 – 2721 8080) or by sending an SMS -
NSDLTAN to 57575.
• The Income-tax Department's website also offers tracking facilities.
Application Fee:
• Fee for filing the TAN application is subject to GST as applicable.
• Note: Application fees may change over time.

Goods and Services Tax (GST)

Definition:
GST is an Indirect Tax imposed on the supply of goods and services in India. It is a comprehensive tax that
has revolutionized the tax structure by creating a unified tax system.
Concept: "One Nation, One Tax, One Market"
• GST embodies this principle by consolidating multiple indirect taxes into a single tax.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• It aims to unify the Indian market, making it more cohesive and integrated.

Implementation:
• GST was implemented on July 1, 2017.
Replacement of Previous Taxes:
• GST replaced various indirect taxes previously levied by both the Central and State governments.
These include:
• Excise Duty
• Service Tax
• Value Added Tax (VAT)
• Central Sales Tax
• Purchase Tax
• Entertainment Tax
• Luxury Tax
• Octroi
Key Features:
1. Elimination of Cascading Effect:
• GST removes the "tax on tax" scenario (cascading effect) by taxing only the value addition
at each stage of the supply chain.
2. Uniform Tax Rates:
• Ensures similar tax rates for the same products across the country, enhancing consistency
and predictability in taxation.
3. Simplified Tax Structure:
• Simplifies the tax structure with a single registration process.
• The entire system is digitalized, making it more efficient and user-friendly.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal

GST Registration
Purpose and Function of GST Registration
• Unique Identification: Obtaining GST registration provides a unique GSTIN (GST Identification
Number), which is used for all GST-related operations.
• Tax Collection and Compliance: Registered businesses are authorized to collect GST from
customers and remit it to the government.
• Input Tax Credit: Enables businesses to claim input credit for tax paid on inward supplies,
offsetting the GST liability on outward supplies.

Registration Thresholds and Applicability

1. For Suppliers of Goods:
• Mandatory registration for turnovers exceeding INR 40 lakhs in a financial year.
2. Special Category States Thresholds:
• For northeastern states, Jammu and Kashmir, Himachal Pradesh, and Uttarakhand, the
threshold is INR 10 lakhs.
3. Service Providers Nationwide:
• The threshold is INR 20 lakhs across India.
4. Service Providers in Special Category States:
• The threshold is INR 10 lakhs.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Persons Exempt from Registration
1. Non-Taxable or Exempt Supplies:
• Businesses engaged exclusively in supplying goods or services not liable to tax or wholly
exempt from tax.
2. Agriculturists:
• The exemption applies to the extent of produce from land cultivation.
3. Government-Notified Categories:
• Specific categories exempted as notified by the government.

Additional Details
• GSTIN Structure: The GSTIN is a 15-digit code, with the state code, PAN, and entity number.
• Voluntary Registration: Businesses below the threshold limit can opt for voluntary registration.
• Inter-State Operations: Any business supplying goods/services across state borders must register
for GST, regardless of turnover.
• E-Commerce Operators: Mandatory GST registration, irrespective of turnover.
• Casual Taxable Persons: Those who occasionally supply goods/services in a state/UT where they
have no fixed place of business.
• Reverse Charge Mechanism: Businesses under reverse charge mechanism need to register,
despite turnover.

Registration Process
• Online Application: Can be done through the GST portal (https://www.gst.gov.in).
• Form 49B: Used for offline applications.
• Documents Required: PAN, proof of business registration, identity and address proof of
promoters, business address proof, bank account statements, and digital signature.
• Acknowledgment and GSTIN: After successful submission, an acknowledgment is issued, followed
by GSTIN.

Compliance Post-Registration
• Filing Returns: Regular filing of GST returns is mandatory.
• Invoicing Rules: Compliance with GST invoicing rules is required.
• Record-Keeping: Maintaining detailed records of sales, purchases, input credit, and tax paid.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal

Procedure for Registration

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Key points
1. Standard Registration Timeline:
• Registration granted within three working days from the application date if documents are
in order.
2. Aadhaar Authentication Failure (Effective from 21.08.2020):
• If Aadhaar authentication isn't completed, physical verification of the principal place of
business is required.
• Registration granted within sixty days from the application date.
• Verification report and other documents (including photographs) to be uploaded in FORM
GST REG-30 within fifteen working days post-verification.
3. Application Deficiencies or Clarifications:
• If there's a deficiency in the application, the officer issues a notice in FORM GST REG-03
within three working days of application submission.
• The applicant must respond with clarification, information, or documents in FORM GST
REG-04 within seven working days of receiving the notice.
4. Approval or Rejection Post-Clarification:
• If satisfied with the response, the officer approves the registration within seven working
days of receiving the clarification.
• If the applicant doesn't respond or the officer isn't satisfied with the response, the
application is rejected with reasons recorded in writing and informed to the applicant in
FORM GST REG-05.
5. Deemed Approval:
• If the officer doesn't act within three working days of application submission or seven
working days of receiving clarification, the application is deemed approved.
6. Effective Date of Registration:
• If the application is submitted within thirty days of becoming liable for registration, the
effective date is the date the applicant became liable.
• If submitted after thirty days, the effective date is the date of registration grant.
7. Communication of Registration:
• The registration number and certificate are communicated to the applicant.
• The certificate, signed or verified through electronic verification code, is made available
on the common portal within three days post the period of deemed registration.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Composition Scheme under GST
Overview
The Composition Scheme is designed as an alternative tax payment method for small taxpayers, aiming to
simplify compliance and reduce costs.
Eligibility and Turnover Limits
1. Turnover Threshold:
• Applicable to businesses with a turnover up to Rs. 1.5 Crores.
• In certain states, the threshold is Rs. 75 lakhs.
2. Inclusion of Service Providers (Post 32nd GST Council Meeting):
• Extended to service providers with an aggregate annual turnover not exceeding Rs. 50
lakhs.
• Applicable to both exclusive service providers and mixed service providers (goods and
services).
Characteristics of the Scheme
1. Tax Payment:
• Tax is paid at a prescribed percentage of the turnover quarterly, instead of the normal
rate.
2. No Input Tax Credit:
• Taxpayers under this scheme cannot claim Input Tax Credit.
3. Tax Collection:
• Businesses opting for this scheme do not collect any GST from customers.
4. Documentation:
• Instead of tax invoices, businesses provide a 'Bill of Supply'.
Persons Not Eligible for the Scheme
• Supply of non-taxable goods under the GST Act.
• Inter-State outward supplies of goods.
• Supplies through electronic commerce operators required to collect tax under section 52.
• Manufacturers of certain notified goods.
• Casual taxable persons and non-resident foreign taxpayers.
• Input Service Distributors (ISD).
• Those registered as TDS Deductors or Tax Collectors.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Key Considerations
• Voluntary Participation: Eligible businesses can choose to opt-in or opt-out of the scheme.
• Quarterly Tax Payments: Simplifies the tax payment process for small businesses.
• Compliance Ease: Reduces the burden of detailed compliance norms applicable under the regular
GST regime.
• The floor rate of tax for CGST and SGST are as follows:

GST Registration Procedures for Specific Cases

1. Online Information and Database Access or Retrieval Services
• Application Process: Submit FORM GST REG-10 electronically for registration.
• Grant of Registration: Issued in FORM GST REG-06 with necessary conditions and restrictions.
2. Suo Moto Registration
• Circumstances: If a person liable for registration has failed to apply, the proper officer may register
them temporarily after a survey, inspection, or other proceedings.
• Temporary Registration: Issued through FORM GST REG-12, effective from the date of the order.
• Subsequent Actions:
• The registrant must apply for mandatory registration within 90 days of temporary
registration.
• If an appeal is filed against temporary registration, the application must be submitted
within 30 days of the appellate authority's decision.
3. Casual Taxable Person
• Definition: Defined in Section 2(20) of the CGST Act, 2017 as someone who occasionally
undertakes transactions in a state or UT where they have no fixed place of business.
• Example: A businessperson from one state participating in an exhibition in another state.
• Registration Duration: Granted for a maximum of 90 days.
4. Multiple Places of Business
• State-wise Registration: Required for businesses operating in multiple states.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Single State, Multiple Locations:

• If multiple branches are within a single state, they can operate under one registration.
• One location should be declared as the Principal Place of Business (PPOB) and others as
Additional Places of Business (APOB).
• Separate Registrations: Possible for each place of business if required.
5. Composition Levy
• Uniformity Across Business Entities: Under one PAN, all entities must opt for either composition
levy or normal levy. No mix-and-match allowed.
6. Bank Account Details
• Post-Registration Requirement: Furnish bank account details on the common portal within 45
days of registration or before the due date of the first return, whichever is earlier.
7. Display of Registration Certificate and GSTIN
• At Business Premises: Display the certificate of registration at the principal place of business and
each additional place of business.
• On Name Boards: Display GSTIN on the name board at the entry of the principal and additional
places of business.

Persons not eligible for Composition Scheme

• A person applying for fresh registration under GST must file FORM REG-01.
• Under Part B of the form, they should select the option of Section 10 for registration as a
composite taxpayer.

Registration under the Act in special cases

1. Person required to deduct tax at source or collect tax at source
• Electronic Application: Individuals or entities required to deduct tax as per section 51 or collect
tax as per section 52 must electronically submit an application.
• Use FORM GST REG-07 for the registration application.
• The application should be signed or verified through an electronic verification code.

2. If applying in a State or Union territory without physical presence

• If the applicant is applying in a State or Union territory where they don't have a physical presence,
mention that State or Union territory in PART A of FORM GST REG-07.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• In PART B, specify the name of the State or Union territory where the principal place of business

is located, which may differ from PART A.

• Certificate of Registration: After verification, the proper officer may grant a certificate of
registration in FORM GST REG-06 within three working days from the date of application
submission.
3. Non-resident taxable persons
• Non-resident taxable person defined as someone who occasionally conducts transactions
involving the supply of goods or services in India but has no fixed place of business or residence
in India.
• To register as a non-resident taxable person, submit an application in FORM GST REG-09, along
with a self-attested copy of a valid passport, at least five days before commencing business.
• In the case of a business entity incorporated or established outside India, include its tax
identification number or unique number by the Government of that country or its Permanent
Account Number if available.
• A temporary reference number is given for making an advance deposit of tax before issuance of
the acknowledgment.
• The application must be signed or verified through an electronic verification code by an authorized
signatory resident in India with a valid Permanent Account Number (PAN).

4. Person supplying online information and database access or retrieval services from outside India to
a non-taxable online recipient:
• Apply for registration electronically using FORM GST REG-10 on the common portal.
• Registration is granted under FORM GST REG-06, subject to specified conditions and restrictions.
5. Suo moto registration:
• If, during any proceedings under the Act, it is found that a person liable for registration has not
applied, the proper officer may register them temporarily.
• Issue an order in FORM GST REG-12 for temporary registration.
• Temporary registration is effective from the date of the order.
• Within 90 days from the date of temporary registration, the person must submit a regular
registration application as required for mandatory registration.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• If the person files an appeal against temporary registration, they must submit the application

within 30 days from the date of the order upholding the liability to registration by the Appellate
Authority.
• The Goods and Services Tax Identification Number (GSTIN) assigned after verification is effective
from the date of the order granting temporary registration.
6. Casual Taxable Person:
• Defined as a person who occasionally conducts transactions involving the supply of goods or
services in a State or Union territory where they have no fixed place of business.
• For instance, a business from one state participating in an exhibition in another state temporarily.
• To register as a casual taxable person, apply for registration in the state or union territory
temporarily conducting business.
• Registration is granted for a maximum period of 90 days.

Important points
Registration for Multiple Places of Business in a State or Union Territory:
• Registration must be obtained on a state-wise basis.
• Multiple branches within a single state can operate under a single registration, designating one as
the Principal Place of Business (PPOB) and others as Additional Places of Business (APOB).

Separate Registration for Each Place of Business:

• If a person has multiple places of business within a state or union territory, and separate
registration is required for any of them, they can apply for separate registrations.
• Submit a separate application in FORM GST REG-01 for each such place of business.
• The procedure for obtaining separate registration is the same as that of mandatory registration.
Composition Levy and Business Registration:
• All businesses under a single PAN must either be registered under the composition levy or under
normal levy.
• There's no provision to choose the Composition Scheme for only a few businesses under the
Goods & Services Tax Act, 2017.
Furnishing Bank Account Details:

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• After receiving a certificate of registration in FORM GST REG-06 and a Goods and Services Tax

Identification Number (GSTIN), registered persons (except those under specific rules) must
provide bank account details and other required information on the common portal.
• This should be done within 45 days from the date of registration or the due date for filing the
return under section 39, whichever is earlier.
Display of Registration Certificate and GSTIN:
1. Registered persons must prominently display their certificate of registration at their principal place
of business and any additional places of business.
2. The Goods and Services Tax Identification Number (GSTIN) must be displayed on the name board
at the entrance of the principal place of business and any additional places of business.

Registration Under Shops & Establishments Act:

• The Shop and Establishment Act is applicable to commercial establishments across India, including
business centers, offices, warehouses, stores, hotels, eateries, amusement parks, theatres, and
more.
• It regulates various aspects of employment such as wages, working hours, leave, holidays, and
terms of service.
Purpose of Shop and Establishment Act:
• This act is enacted by individual states in India and may vary slightly from state to state.
• It covers all shops and commercial establishments operating within each state.
Key Definitions:
• Shop: Refers to any premises where goods are sold (retail or wholesale) or services are rendered
to customers. This includes offices, store-rooms, warehouses, or workplaces used in connection
with the trade or business. Factories and commercial establishments are not considered shops.
• Commercial Establishment: Encompasses premises where various activities like trade, business,
professions, work, and more are undertaken. This category includes a wide range of
establishments, from charitable trusts and educational institutes to restaurants, clubs, theatres,
and places of public amusement.
• Establishments defined by the Act may also include others defined by the Government through
notification in the Official Gazette.
• Note: Factories are not covered by the Shop & Establishments Act; they are regulated by the
Factories Act, 1948

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
License under Shop and Establishment Act:
• Any shop or commercial establishment starting operations must apply for a Shop and
Establishment Act License from the Chief Inspector within the specified time frame.
• The application for the license should be submitted in the prescribed form and include details such
as the employer's name, establishment address, establishment name, category, number of
employees, and other requested information.
• Upon application submission and review by the Chief Inspector, the shop or establishment will be
registered, and a registration certificate will be issued to the occupier.
• The registration certificate must be prominently displayed at the shop or commercial
establishment and renewed periodically in accordance with the Act.
Registration of Shops & Establishments:
• Business owners of shops or establishments are required to register them under the Shops and
Establishment Act.
• The specific rules include submitting an application in the prescribed form to the Inspector of the
area within 30 days of starting any work in the shop/establishment.
• The application should include information such as the employer's name, manager's name (if any),
postal address of the establishment, establishment name, and other prescribed particulars.
• Upon receiving the application and fees, the Inspector verifies its accuracy and correctness, enters
the details in the Register of Establishments, and issues a registration certificate, which is valid for
5 years and needs to be renewed thereafter.
• The registration certificate must be prominently displayed at the establishment.
• The registration process is typically administered by the Labor Department of each state, with
some states offering online registration while others may follow a manual procedure.
• Renewal of the registration certificate is required as per the state's regulations.

ESI REGISTRATION:
• ESI is a social security scheme under the Employees’ State Insurance Act, 1948, provided by the
Government of India.
• It's a self-financing scheme, with contributions from both employees and employers.
• ESI aims to protect employees against the financial impact of sickness, maternity, disablement,
and death due to employment injury. It also provides medical care to insured persons and their
families.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Applicability of ESI:
• The ESI Scheme is applicable to non-seasonal factories and other establishments.
• It covers various types of establishments, including Road Transport, Hotels, Restaurants, Cinemas,
Newspapers, Shops, and Educational/Medical Institutions.
• The scheme applies to establishments where 10 or more persons are employed.
ESIC (Employees’ State Insurance Corporation):
• ESIC is a government organization established under the Employees’ State Insurance Act, 1948.
• Its purpose is to manage funds according to the rules and regulations of the ESI Act.
Coverage under ESI Act:
• Section 2(12) covers all non-seasonal factories employing 10 or more persons.
• Section 1(5) allows state governments to extend coverage to additional establishments like Shops,
Hotels, Restaurants, Cinemas, Road Transport, Newspapers, Private Medical Institutions,
Educational Institutions, and contract and casual employees of Municipal Corporations/Municipal
Bodies employing 10 or more persons in certain states/union territories.
• The Central Government can extend coverage under Section 1(5) to establishments such as Shops,
Hotels, Restaurants, Road Motor Transport, Cinemas, Newspaper establishments, Insurance
Businesses, Non-Banking Financial Companies, Port Trust, Airport Authorities, and Warehousing
establishments employing 20 or more persons where the Central Government is the appropriate
authority.

Wage Limit for Registration:

• Employees of specified categories of factories and establishments are entitled to social security
cover under the ESI Act if their monthly wages are up to Rs. 21,000.
• For disabled persons, the wage limit is Rs. 25,000 per month.
• Employee contribution: 0.75% of total salaries.
• Employer contribution: 3.25% of total wages (effective from 01st July 2019).

ESI Registration Procedure for Employers:

• Online registration of employers is facilitated through the Unified Shram Suvidha Portal launched
by the Ministry of Labour and Employment, Central Government.
• Employers are allotted a Unique Labour Identification Number (LIN) to facilitate online
registration.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• A common form for both ESIC (Employees' State Insurance Corporation) and EPFO (Employees'

Provident Fund Organization) registration is introduced under this portal.

• Registration for employers under the ESI Act and EPF Act is entirely online, eliminating the need
for physical application documents.
• LIN is a unique 10-digit number issued by the Ministry of Labour and Employment, serving as an
identifier for employers.

ESI Registration Procedure for Employees:

• Employees must register on the ESIC Portal when they join an organization.
• After signing up with required details, employees receive an email confirmation with their user ID
and password.
• Employees log in with their user ID and password and fill out the new registration form, including
organization and employer details.
• Declaration form (Form-1) along with a family photo copy is provided to the employee, which the
employer will submit at the ESI branch office.
• Employee registration is completed after making an advance payment for the next six months.
• Once registered, employees receive a C-11 letter containing their unique 17-digit registration
number generated by the ESIC system portal.
• Registration can be transferred if an employee changes organizations and takes up employment
elsewhere.

EMPLOYEE PROVIDENT FUND MEANING AND REGISTRATION PROCEDURE

• EPF is a financial security scheme established by the Indian Parliament.
• It aims to provide financial stability and security to employees in the organized sector, especially
after retirement or when they are temporarily or no longer fit to work.
• The scheme is managed by a tri-partite board known as the Central Board of Trustees, Employee's
Provident Fund, which includes representatives from the government (both Central and State),
employers, and employees.
• Under this scheme, employees are required to contribute a portion of their salary to the EPF every
month during their employment.

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Prof Abhijeet C. Jaiswal

Registration Procedures:
• Employers are required to obtain registration within one month of reaching the mandatory
registration threshold for EPF and ESIC.
• The Government of India has launched the unified portal "Shram Suvidha Portal" as part of the
ease of doing business initiative. This portal facilitates establishments, contractors, employers, or
principal employers to submit applications for registration and licenses under various labor laws
online.
• The labor laws covered on the Shram Suvidha Portal include:
1. Employees Provident Funds and Miscellaneous Provision’s Act (EPF) Act, 1952.
2. Employees' State Insurance Act (ESI) Act, 1948.
3. Contract Labour (Regulation and Abolition) Act, 1970.
4. Building and Other Construction Workers (BOCW) Act, 1996.
5. Inter-State Migrant Workmen (ISMW) Act, 1979.
• The portal serves as a single-window access for registration and licensing-related services for
employers and establishments.
• The registration process for EPF is similar to that of ESI registration.
• Employees are issued a Universal Account Number (UAN) by the EPFO, which is a 12-digit unique
identification number for life, regardless of changes in employment. UAN allows employees to
manage their provident fund accounts across organizations on a single platform through the UAN
Login portal.
• Registration for EPFO and ESIC for new Public & Private Limited Companies and One Person
Companies has been stopped on the Shram Suvidha Portal since 15th February 2020. Instead,
these companies can obtain registration numbers for EPFO and ESIC through the MCA (Ministry
of Corporate Affairs) portal at the time of incorporation using the Spice+ and AGILE-PRO forms.

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Prof Abhijeet C. Jaiswal
• However, these new companies must comply with the provisions of EPF & MP Act, 1952, and ESI

Act, 1948 when they exceed the threshold limit of employment under the respective acts.

POLLUTION CONTROL AND ENVIRONMENTAL CLEARANCES:

• Entrepreneurs planning to set up industrial projects may need to obtain statutory clearances
related to pollution control and the environment.
• For certain types of projects (39 types) listed by the Ministry of Environment, Forest and Climate
Change (MoEFCC), Government of India, environmental clearance is mandatory. These projects
include industries like petrochemical complexes, petroleum refineries, cement, thermal power
plants, bulk drugs, fertilizers, dyes, paper manufacturing, and more.
• The State Pollution Control Board is the relevant authority for obtaining a pollution
license/certificate or consent to establish such businesses.
Consent to Establish (CTE):
• CTE must be obtained before commencing construction or similar activities to start the business.
• The license is valid for a period of 1 to 7 years based on the request made by project developers,
designers, or investors.
Consent to Operate (CTO):
• CTO must be applied for and obtained before starting production activities at the unit.
• The CTO license is typically valid for a period of 5 years, though this may vary from state to state.
• The Central Pollution Control Board has categorized industries into red, orange, and green
categories, which are covered under consent management for obtaining CTE and CTO under the
Water Act, 1974, and the Air Act, 1981.

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Prof Abhijeet C. Jaiswal
• Industries falling under the white category are exempted from environmental clearance and

obtaining consent under the Water (Prevention & Control of Pollution) Act, 1974, and the Air
(Prevention & Control of Pollution) Act, 1981.
• Industries and businesses in the white category are required to self-govern and must inform the
State Pollution Control Board (SPCB) within 30 days of commencing their operations.
• To be eligible for pollution license exemption in the white category, industries must meet certain
conditions:
1. The industry is established in the designated locality.
2. Investment in the industry does not exceed Rs. One Crore on plant and machinery.
3. There is no discharge of trade effluent, air pollution (including noise), toxic/hazardous
waste, or handling of toxic/hazardous chemicals by the industry.

Procedure for Obtaining NOC from Pollution Control Board:

1. Online Application: The application for Consent to Establish (CTE) and Consent to Operate (CTO)
can be submitted online by visiting the website of the respective State's pollution control board.
2. Response Time: The State pollution control board is responsible for processing these applications.
They are required to respond within a period of 4 months.
3. Due Diligence: The pollution control authority conducts due diligence by inspecting the business
premises and assessing pollution-related factors. Based on this assessment, the NOC application
is either accepted or rejected.
4. Certificate Issuance: If the application is accepted, the pollution control board issues a certificate
to the business, granting them the necessary consent to establish or operate while adhering to
pollution control measures.
5. Rejection and Reason: In cases where the application is rejected by the pollution control board,
the applicant is informed of the reasons for the rejection.
6. Penalties: Failure to obtain a CTE/CTO or Pollution License can lead to legal consequences.
Offenders may face imprisonment ranging from 6 months to 1 year, with the possibility of an
extension of up to 6 years, along with penalty charges.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
COMPLIANCES UNDER ENVIRONMENT LAWS
Compliance under environment laws are:
• EC (Environment Clearances)
• FC (Forest Clearance)
• WC (Wild Life Clearance)
• CTE (Consent to Establish)
• CTO (Consent to Operate)
• Authorization (Waste Management & Hazardous and Other Wastes (Management And
Transboundary Movement) Rules
• HSM ( Hazardous Substance Management)

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Import Export Code (IE Code):
• IE Code is a 10-digit business identification number required for importing or exporting goods.
• It is issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industry.
• For services exports, IEC may not be necessary unless the service provider seeks benefits under
the Foreign Trade Policy.
• IE Code has lifetime validity and is essential for importers and exporters to carry out their trade
activities legally.
• Importers must use the IE Code while clearing customs, and banks require it when sending money
abroad.
• Exporters must quote the IE Code while sending shipments, and banks require it when receiving
payments from abroad.
• The type of firm obtaining an IEC can be a proprietorship, partnership, LLP, limited company, trust,
HUF (Hindu Undivided Family), or society. Since the introduction of GST, the IEC number is the
same as the PAN of the firm.
Application for IE Registration:
The process to apply for Importer Exporter Code (IEC) on the DGFT portal (https://dgft.gov.in) includes:
1. Valid Login Credentials on the DGFT Portal (After Registering on DGFT Portal).
2. Active Firm's Permanent Account Number (PAN) and its details, such as name as per PAN, date of
birth or incorporation, which are validated with the Income Tax Department site.
3. Scanned Documents for Upload (PDF Only, Max file size of 5 MB):
• Proof of establishment/incorporation/registration for the relevant type of firm
(partnership, registered society, trust, HUF, etc.).
• Proof of Address (e.g., sale deed, rent agreement, electricity bill, Aadhar card, passport)
in the name of the applicant firm or with a No Objection Certificate (NOC) if the address
proof is not in the firm's name.
• Proof of Firm's Bank Account (e.g., cancelled cheque, bank certificate).
4. Active Digital Signature Certificate (DSC) or Aadhaar of the firm's member for submission.
5. An active firm's bank account for entering details in the application and making online payment
of the application fee.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
DRUG LICENSE:
• A Drug License is required to start a pharmacy business dealing with medications and instruments
used for diagnosis, treatment, and prevention of diseases in humans and animals.
• The issuance of drug licenses is governed by the Drugs and Cosmetics Act, 1940, and is regulated
by the Central Drugs Standard Control Organization and State Drugs Standard Control
Organization.
Types of Drug Licenses:
• Two main types of drug licenses are commonly issued:
1. Retail Drug License (RDL): Issued for operating general chemist shops. Typically requires
a degree or diploma in pharmacy.
2. Wholesale Drug License (WDL): Issued to individuals or agencies engaged in the
distribution of drugs and medicines. Less stringent qualification requirements compared
to RDL.
Prerequisites for Obtaining Drug License:
• Minimum area requirement: A minimum area of 10 square meters is needed for a medical shop
or pharmacy. If it combines retail and wholesale, a minimum of 15 square meters is required.
• Storage facility: The premises must have a refrigerator and air conditioner, especially for drugs that
require specific temperature control, such as vaccines and insulin.
• Technical staff: Wholesale drug sale must be in the presence of a registered pharmacist or a
competent person with specific qualifications. Retail drug sales also require a registered
pharmacist.
Documents Required for Obtaining Drug License:
• The specific documents required may vary by state, but generally include:
• Application form in the prescribed format.
• Covering letter with the applicant's intent.
• Proof of fee payment.
• Declaration form.
• Key and site plans of the premises.
• Proof of ownership or rental agreement for the premises.
• Proof of business constitution (e.g., incorporation certificate, partnership deed).
• Affidavits of non-conviction under the Drugs and Cosmetics Act, 1940.
• Appointment letters of registered pharmacists or competent persons if employed.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
FSSAI (Food Safety and Standards Authority of India):
• FSSAI stands for Food Safety and Standards Authority of India.
• It is an autonomous body established at the central level to regulate food-related matters in India.
• FSSAI was created under the provisions of the Food Safety and Standards Act, 2006, with guidance
from the Ministry of Health and Family Welfare and the Central government.
• Its primary goal is to ensure the safety and quality of food products and to protect and promote
public health.
• FSSAI sets standards for food products based on scientific principles and regulates various aspects
of the food industry, including manufacturing, storage, distribution, sale, and import.
Mandatory Licensing and Registration:
• According to Section 3(1) of the Food Safety and Standards Act, 2006, every food business
operator in India is required to obtain a license or registration from the Food Safety and Standards
Authority of India (FSSAI).
• This applies to all individuals and entities involved in food business operations, including
manufacturers, traders, and restaurants.
• FSSAI issues a 14-digit registration or license number, which must be displayed on food packages.
Purpose of Licensing and Registration:
• The government's food licensing and registration system aim to ensure that food products
undergo quality checks to reduce instances of adulteration and substandard products.
• It also enhances accountability among food manufacturers and ensures compliance with food
safety standards.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
FSSAI Registration for Petty Food Business Operators:
FSSAI registration is mandatory for petty food business operators. A petty food business operator is defined
as any person or entity involved in food-related activities, and they fall into the following categories:
(a) Manufacturers or Sellers: Petty food business operators include those who manufacture or sell any
food product themselves, as well as petty retailers, hawkers, itinerant vendors, and temporary stall
holders.
(b) Food Distributors: This category covers individuals or entities that distribute food, including in religious
or social gatherings, except for caterers.
(c) Other Food Businesses: This includes small-scale, cottage, or similar food industries with an annual
turnover not exceeding Rs 12 lakhs. The specific criteria for this category are as follows:
• Production capacity of food (excluding milk and milk products, meat and meat products) does not
exceed 100 kg/liter per day.
• Procurement, handling, and collection of milk is up to 500 liters of milk per day.
• Slaughtering capacity is 2 large animals, 10 small animals, or 50 poultry birds per day or less.
It's important to note that a producer of milk who is a registered member of a dairy Cooperative Society
registered under the Cooperative Societies Act and supplies or sells the entire milk to the Society is exempt
from FSSAI registration.
Procedure for FSSAI Registration:
Petty food business operators can obtain FSSAI registration by following these steps:
1. Application Submission: Submit an application for registration in Form A or apply online through
the FoSCoS portal.
2. Processing Time: The food safety authority should provide the registration or reject the
application in writing within 7 days of receiving the application.
3. FSSAI Registration Certificate: Upon approval, the petty food business operator will receive an
FSSAI registration certificate. This certificate must be displayed prominently at the place of the
food business at all times while conducting food-related activities.

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SBILL
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Prof Abhijeet C. Jaiswal

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
NON-BANKING FINANCIAL COMPANY (NBFC) REGISTRATION:
A Non-Banking Financial Company (NBFC) is a registered company under the Companies Act, 2013 or the
previous Companies Act of 1956. NBFCs are engaged in various financial activities, such as providing loans
and advances, acquiring stocks or shares, leasing, hire-purchase, insurance, and chit fund businesses.
While NBFCs perform functions similar to banks, there are key differences between them:
Differences between Banks and NBFCs:
1. NBFCs cannot accept demand deposits.
2. NBFCs cannot issue checks drawn on themselves.
3. Depositors with NBFCs are not covered by the Deposit Insurance and Credit Guarantee
Corporation.
Requirement for NBFC License from RBI:
According to Section 45-IA of the RBI Act, 1934, any Non-Banking Financial Company that conducts
financial activities as its principal business, including lending, acquisition of shares, stocks, bonds, financial
leasing, hire purchase, or accepting deposits, must obtain a certificate of registration from the Reserve
Bank of India (RBI). Additionally, the company must have a minimum Net Owned Funds (NOF) of INR 200
lakhs.
Defining Financial Activity as Principal Business: Financial activity is considered the principal business
when a company's financial assets (such as cash, debtors, securities, cash in banks, etc.) constitute more
than 50% of its total assets, and income from financial assets constitutes more than 50% of its gross
income. A company meeting both of these criteria is required to obtain an NBFC registration from RBI
under Section 45-IA of the RBI Act of 1934.
This requirement is often referred to as the "50-50 test." Companies primarily engaged in activities such
as agriculture, industrial operations, purchase and sale of goods, provision of services, or purchase, sale,
or construction of immovable property as their principal business, and are involved in some financial
activities in a minor way, may not require NBFC registration.

Exempt Financial Companies from NBFC License:

Certain types of entities that engage in financial activities as their principal business do not require an
NBFC license from the Reserve Bank of India (RBI). These entities are regulated by other financial sector
regulators, and therefore, they are exempt from the NBFC registration requirements and RBI's NBFC
regulations. Some of the exempt financial entities include:
1. Housing Finance Companies: Regulated by the National Housing Bank.

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Prof Abhijeet C. Jaiswal
2. Insurance Companies: Regulated by the Insurance Regulatory and Development Authority of India
(IRDA).
3. Stock Broking Firms: Regulated by the Securities and Exchange Board of India (SEBI).
4. Merchant Banking Companies: Regulated by SEBI.
5. Venture Capital Companies: Regulated by SEBI.
6. Companies Operating Collective Investment Schemes: Regulated by SEBI.
7. Mutual Funds: Regulated by SEBI.
8. Nidhi Companies: Regulated by the Ministry of Corporate Affairs (MCA).
9. Chit Fund Companies: Regulated by the respective State Governments.
These types of companies are exempted from the NBFC registration requirements and the regulations of
RBI because they are already under the supervision and regulation of other specialized financial sector
regulators.

Additionally, Mortgage Guarantee Companies have been notified as Non-Banking Financial Companies
under Section 45 I(f)(iii) of the RBI Act, 1934.

It's important to note that Core Investment Companies with asset sizes of less than Rs. 100 crore and those
with asset sizes of Rs. 100 crore and above but not accessing public funds are also exempted from
registration with the RBI. These exemptions help streamline the regulatory framework and ensure that
entities in specialized financial sectors are appropriately regulated by the relevant authorities.

To obtain an NBFC license from the Reserve Bank of India (RBI), certain requirements must be met. Here
are the basic requirements for obtaining an NBFC license:
1. Company Registration: The entity seeking to obtain an NBFC license must be a company registered
in India. This can be either a Private Limited Company or a Limited Company.
2. Minimum Net Owned Fund: The company must have a minimum Net Owned Fund (NOF) of Rs.
200 lakhs.

Calculating Net Owned Funds (NOF) as per RBI Definition:

The NOF is calculated based on the last audited balance sheet of the company. It consists of the following
components:
• Paid-up equity capital

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Prof Abhijeet C. Jaiswal
• Free reserves

• Balance in the share premium account

• Capital reserves representing surplus arising out of the sale proceeds of assets (not created by
revaluation of assets)
From the aggregate of these items, the following deductions are made to arrive at the NOF:
• Accumulated loss balance
• Book value of intangible assets, if any
• Investments in shares of other NBFCs and in shares or debentures of subsidiaries and group
companies in excess of ten percent of the owned fund mentioned above
The formula for calculating Net Owned Funds is as follows:
Net Owned Funds = Paid-up equity capital + Free reserves + Balance in share premium account + Capital
reserves representing surplus arising out of sale proceeds of assets (not created by revaluation of assets)
- Accumulated losses - Book value of intangible assets - Investments in shares of other NBFCs and in shares
or debentures of subsidiaries and group companies in excess of ten percent of the owned fund mentioned
above.

Meeting these requirements and accurately calculating the Net Owned Funds as per RBI's definition is
crucial when applying for an NBFC license. Additionally, applicants must fulfill other regulatory and
compliance requirements as specified by RBI for the smooth processing of their license application.

Types of NBFC License Before applying for NBFC License, the type and category of NBFC license must first
be determined.
NBFCs are categorized
a) in terms of the type of liabilities into
(i) Deposit accepting NBFCs and
(ii) Non-Deposit accepting NBFCs
b) non deposit taking NBFCs by their size into
(i) systemically important (NBFC-NDSI ) and
(ii) other non-deposit holding companies (NBFC-ND) and
c) by the kind of activity, they conduct.

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Prof Abhijeet C. Jaiswal
Applying for NBFC License
To apply for an NBFC License, you need to submit the following documents both online at the XBRL website
(https://xbrl.rbi.org.in) and offline at the Regional Office of the Reserve Bank of India:
1. Information about the Management:
• Provide information about the management team.
2. Company Incorporation Documents:
• Certified copies of the Certificate of Incorporation and Certificate of Commencement of Business
for public limited companies.
3. Memorandum and Articles of Association:
• Certified copies of the up-to-date Memorandum and Articles of Association of the company,
specifically mentioning clauses related to financial business.
4. PAN/CIN Copies:
• Copy of PAN (Permanent Account Number) or CIN (Corporate Identification Number) allotted to
the company.
5. Directors' Profiles:
• Profiles of all directors, individually filled out and signed by each director.
6. Director's Experience:
• Certificate from the respective NBFC(s) where the directors have gained NBFC experience.
7. CIBIL Data:
• CIBIL data pertaining to the directors of the company.
8. Financial Statements:
• Financial statements of the last two years for unincorporated bodies within the group where the
directors may hold directorship, with or without substantial interest.
9. Board Resolutions:
• Board resolution approving the submission of the application and its contents, authorizing the
signatory.
• Board resolution confirming that the company has not accepted any public deposits in the past
(specify the period), does not currently hold any public deposits, and will not accept them in the
future without prior RBI approval in writing.
• Board resolution stating that the company is not currently engaged in any NBFC activity, has
ceased NBFC activity, and will not engage in or resume such activity until it obtains registration
from RBI.

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• Certified copy of the board resolution for formulating the "Fair Practices Code."

10. Statutory Auditor's Certificates: - Certificate certifying that the company is not accepting public
deposits. - Certificate certifying that the company is not engaged in any NBFC activity. - Certificate
certifying the net owned fund as of the date of the application.
11. Share Capital and Shareholding: - Details of the authorized share capital and the latest shareholding
pattern, including percentages.
12. Bank Documents: - Copy of fixed deposit receipt and banker's certificate of no lien indicating balances
to support Net Owned Funds. - Details of bank balances, bank accounts, and complete postal addresses
of the branches/banks, loan/credit facilities, etc., availed.
13. Audited Financial Statements: - Last three years' audited balance sheet and profit & loss account,
along with directors' and auditors' reports, or for such a shorter period as are available (for existing
companies).
14. Business Plan: - Business plan for the next three years, including: - Thrust of business - Market segment
- Projected balance sheets - Cash flow statement - Asset/income pattern statement without any element
of public deposits.
15. Source of Startup Capital: - Details and documentary evidence regarding the source of the startup
capital of the company.
16. Self-Attested Documents: - Self-attested copies of bank statements, IT returns, etc.
17. Additional Documents: - Be prepared to provide any additional documents as required by RBI for the
NBFC license application.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Licensing of Banking Companies
The licensing of banking companies in India is governed by the Banking Regulation Act, 1949. To be
registered as a banking company, the entity must meet specific criteria, as outlined in this act:
1. Company Registration:
• The entity must be a company registered under the Companies Act, 2013, or previous company
laws, or it can be a foreign company with the prescribed minimum paid-up capital.
2. Minimum Paid-Up Capital:
• The minimum paid-up voting equity capital required for a bank is:
• 500 Crore Rupees for universal banks.
• 200 Crore Rupees for small finance banks.
• Any addition to this capital should be based upon the plan presented by the promoters of the bank
to the Reserve Bank of India (RBI).
3. Conditions for Carrying on Banking Business:
• According to Section 12 of the Banking Regulation Act, 1949, no banking company is allowed to
carry on its business unless it satisfies the following conditions:
a. Capital Requirements: - Its subscribed capital is not less than one-half of its authorized capital. - Its
paid-up capital is not less than one-half of the subscribed capital. - The capital of the company consists of
ordinary shares, equity shares, and preference shares. The issue of preference shares should comply with
RBI guidelines, specifying the class of preference shares, the extent of issue of each class of preference
shares (whether perpetual or irredeemable or redeemable), and the terms and conditions subject to
which each class of preference shares may be issued.
b. Voting Rights: - No person holding shares in a banking company shall have voting rights exceeding 10%
of the total voting rights of all the shareholders.
c. Shareholding Disclosure: - Every managing executive of the bank is required to disclose to the RBI the
extent and the amount of his shareholding in the firm.

Section 22 - Licensing of Banking Companies

1. Save as hereinafter provided, no company shall carry on banking business in India unless it holds
a license issued by the Reserve Bank for this purpose. Such a license may be issued with conditions
imposed by the Reserve Bank as it deems fit.
2. Every company intending to commence banking business must apply in writing to the Reserve
Bank for a license under this section.

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3. Before granting any license under this section, the Reserve Bank may inspect the books of the
company or use other means to ensure the following conditions are met: (a) The company is
capable of paying its present or future depositors in full as their claims accrue. (b) The affairs of
the company are not being or likely to be conducted in a manner detrimental to the interests of
its present or future depositors. (c) The general character of the proposed management of the
company will not be prejudicial to the public interest or the interests of its present or future
depositors. (d) The company has an adequate capital structure and earning prospects. (e) Granting
a license to the company to carry on banking business in India serves the public interest. (f) Taking
into consideration the banking facilities available in the proposed principal area of operations of
the company, the potential scope for expansion of banks already in existence in the area, and
other relevant factors, the grant of the license would not be detrimental to the operation and
consolidation of the banking system, consistent with monetary stability and economic growth. (g)
Any other condition that the Reserve Bank deems necessary to ensure that the company's banking
business in India will not be detrimental to the public interest or the interests of depositors.
3A. Before granting any license under this section to a company incorporated outside India, the Reserve
Bank may inspect the books of the company or use other means to ensure that the conditions specified in
sub-section (3) are fulfilled. The Reserve Bank must also determine that the company's banking business
in India is in the public interest, that the government or law of the country in which it is incorporated does
not discriminate against banking companies registered in India, and that the company complies with all
the provisions of this Act applicable to banking companies incorporated outside India.

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IRDA (INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY)
IRDA (Insurance Regulatory and Development Authority):
• Established in 1999 to regulate the insurance sector in India.
• Replaced the Controller of Insurance and outdated provisions of the Insurance Act, 1938.
• Issued various regulations to modernize and develop the insurance sector.
• Registration of insurance companies governed by the "Insurance Regulatory and Development
Authority (Registration of Indian Insurance Companies) Regulations, 2000."
Classes of Insurance Business:
• Requisition for registration applications can be made for the following classes of insurance
business:
• Life insurance business
• General insurance business
• Health insurance business exclusively
• Reinsurance business
Applicant for Registration:
• An applicant is a public company registered and incorporated under the Companies Act, 2013.
• Can also be a statutory body established by an Act of Parliament to conduct insurance business.
• Applies to the IRDAI (Insurance Regulatory and Development Authority of India) for registration
as an Indian insurance company.
Requisition for Registration:
• An applicant must make a requisition for a registration application under regulation 3.
• The application can be for Life Insurance, General Insurance Business, Health Insurance Business
exclusively, or Reinsurance Business.
Capital Requirement:
• Minimum equity capital requirements for different types of insurance companies:
• Life, General, or Health Insurance Company: INR 100 crore
• Reinsurance Company: Minimum of INR 200 crore

Who Cannot Apply for Registration under IRDA:

An applicant shall not be eligible to apply for requisition in the following circumstances:
a. If the requisition for registration application has been rejected by the Authority or withdrawn.

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Prof Abhijeet C. Jaiswal
b. If the foreign investors or Indian Promoter of the existing venture have exited for any reason at any time
during the preceding two financial years from the date of requisition for registration application.
c. If the application for registration has been rejected by the Authority or withdrawn by the applicant for
any reason at any time during the preceding two financial years from the date of requisition for registration
application.
d. If the Certificate of Registration has been cancelled by the Authority.
e. If the name of the applicant does not contain the words 'insurance' or 'assurance.'

Procedure of Registration of an Insurance Company (IRDAI):

1. Application in FORM IRDAI/R1:
• An applicant desiring to carry on insurance business makes an application to the Authority
for issuance of requisition for registration application in FORM IRDAI/R1.
• The Authority may request further information or clarifications relevant to the application.
• The Authority can reject the application for issuance of requisition for registration
application.
• An aggrieved applicant may appeal to the Securities Appellate Tribunal within 30 days of
such rejection.
2. Documents to be attached with FORM IRDAI/R1:
• Certified copy of the Memorandum of Association and Articles of Association (for
companies) or certified copy of the Act of Parliament (for statutory bodies) for setting up
the insurance business.
• Name, address, and occupation of the directors.
• Certified copy of the annual report of Indian Promoters and Foreign Investors for the last
five years preceding the year of filing the requisition for registration application.
• Certified copy of the shareholders' agreement between Indian Promoters and Foreign
Investors.
• Projection of Business for 5 years approved by the Board of Directors.
3. Application in Form IRDAI/R2 for Grant of Certificate of Registration:
• The Authority accepts the requisition in FORM IRDAI/R1 if it's complete and accompanied
by all required documents.

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• An applicant, whose requisition for registration application has been accepted, shall make

an application in Form IRDAI/R2 for grant of certificate of registration.

• The application must include evidence of having the required paid-up equity share capital.
• An affidavit certifying that the requirements regarding paid-up share capital have been
satisfied.
• A statement indicating the distinctive numbers of shares issued to each Indian promoter
and Investors.
• An affidavit certifying that the holding of foreign paid-up equity capital does not exceed
74% of the total paid-up capital of the applicant company.
• In case of foreign direct investment exceeding 26%, a certified copy of the FIPB approval.
• Certified copy of the published prospectus (if any).
• Certified copy of standard forms of the insurer and statements of assured rates,
advantages, terms, and conditions.
• A certificate by an actuary in case of life insurance business.
• Details of agreements between Indian promoters and foreign investors.
• Proof of payment of the non-refundable fee.
• Certification by a practicing chartered accountant or company secretary.
• Any other information required by the Authority.
4. Manner of Payment of Fee for Registration:
• The non-refundable fee of rupees five lakh for registration shall be remitted by a bank
draft issued by any scheduled bank payable at Hyderabad or by any recognized electronic
funds transfer to Insurance Regulatory and Development Authority of India.
5. Grant of Certificate of Registration:
• The Authority may register the applicant as an insurer for the suitable class of business
and grant the applicant the certificate in Form IRDAI/R3.
• The Authority may impose conditions at the time of grant of the Certificate of Registration,
and the applicant must comply with those conditions.
• The applicant must commence insurance business for which it has been authorized within
12 months of the date of grant of Certificate of Registration.
• If unable to commence business within the specified period, the company can seek an
extension, but no extension shall be granted beyond 24 months from the date of grant of
Certificate of Registration.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Industry Licensing Policy in India:
Section 11 of the Industries (Development and Regulation) Act, 1951, outlines the conditions for licensing
new industrial undertakings:
1. Licensing Requirement: No person or authority, except the Central Government, can establish a
new industrial undertaking without obtaining a license issued by the Central Government.
However, with prior permission from the Central Government, other government entities can
establish new industrial undertakings.
2. License Conditions: The license or permission may include various conditions, such as the location
of the undertaking and minimum standards for size, as determined by the Central Government in
accordance with the rules, if any, made under section 30.
3. Mandatory Amendment: Section 11A of the Act mandates that the owner of an industrial
undertaking, not being the Central Government, for which a license or permission has been issued
under section 11, cannot produce or manufacture any new article unless they have the existing
license or permission amended in the prescribed manner.
Exemption from Industrial Licensing: Since the liberalization and deregulation of the Indian economy in
1991, most industries no longer require an industrial license to start manufacturing in India. Government
attention is focused on industries that may impact public health, safety, and national security.
Currently, industrial licenses are compulsory for the following:
1. Industries Retained Under Compulsory Licensing:
• Alcoholic drinks
• Cigarettes and tobacco products
• Electronic aerospace and defense equipment
• Explosives
• Hazardous chemicals such as hydrocyanic acid, phosgene, isocyanates, di-isocyanates of
hydrocarbons, and derivatives.
2. Manufacture of Items Reserved for Small-Scale Sector:
• Large or medium industries intending to manufacture items reserved for Small Scale
Industries (SSI) units require an industrial license. These industries must also commit to
exporting 50% of the production of SSI reserved items.
3. Locational Restrictions: Industrial licenses may be required when the proposed location attracts
locational restrictions.

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Locational Restrictions for Industrial Undertakings in India:
Industrial undertakings located within 25 kilometers of the standard urban area limit of 23 cities with a
population of 1 million as per the 1991 census require an industrial license. However, there are exceptions
to this rule:
1. Pre-1991 Industrial Areas: No industrial license is required if a unit is located in an area designated
as an industrial area before 1991.
2. Non-Polluting Industries: Certain non-polluting industries, such as electronics, computer
software, printing, and other specified industries, do not require an industrial license even if they
are located within the specified urban area limits.
Single Window System for Industrial Entrepreneurs:
To create a business and investor-friendly environment, the Department for Promotion of Industry and
Internal Trade (DPIIT) has developed a Government to Business (G2B) Portal. This portal serves as a Single
Window System for receiving applications from industrial entrepreneurs to file an Industrial Entrepreneurs
Memorandum (IEM) and apply for an Industrial License under the Industries (Development and
Regulation) Act, 1951. Online filing became mandatory from May 15, 2014, and includes authentication
mechanisms for submitting applications.
Procedure for Applying for Industrial License:
1. All applications for Industrial License under the Industries (Development and Regulation) Act, 1951
can be applied online on the G2B Portal using Form FC-IL (Composite form for Foreign
Collaboration and Industrial License).
2. The applications are reviewed for completeness. If any application is found to be incomplete, the
necessary information is requested from the applicants.
3. Complete applications with the required documents are circulated to concerned administrative
ministries, the Ministry of Home Affairs, the concerned State Government, and other relevant
agencies for their comments.
4. After receiving comments from the concerned ministries and agencies, the applications are
processed and submitted to the Licensing committee for consideration.
5. The Licensing committee evaluates the applications and may recommend the grant of a license,
rejection of the proposal, or deferment of the proposal based on the received comments and
committee deliberations. The approval of the Minister in charge of DPIIT is obtained for the grant
of licenses or otherwise.

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License Validity: The validity of all Industrial Licenses has been increased to three years, whether issued
before or after July 2, 2014. Licensees must apply for an extension of validity after three years, if applicable

IEM (Industrial Entrepreneur Memorandum) and Its Process:

1. Who Should File IEM: All industrial undertakings exempted from the requirements of industrial
licensing under the Industries (Development and Regulation) Act (D&R), 1951, and having an
investment in plant and machinery of Rs 50 Crore and above, and a turnover of Rs. 250 crore and
above, including Existing Units, New undertaking (NU), and New Article (NA), may file an IEM in
the prescribed format 'Part A'. This can be done online through the G2B portal.
2. IEM Acknowledgement: When an industrial undertaking files an online application through the
portal, it is scrutinized in the 'IEM Section' for verification purposes. Verification includes checking
documents like the 'Incorporation Certificate,' 'Memorandum of Article,' 'Article of Association,'
'Master data,' 'PAN,' and 'Codes related to NIC & Administrative Ministry/Department.' Once these
documents are verified and found correct, the Department electronically issues an IEM
Acknowledgement (Ack.) to the applicant.
3. Nature of IEM Acknowledgement: It's essential to understand that the Acknowledgement (Ack.)
of the IEM, given upon prima facie evidence of not attracting the provisions of licensing, should
not be construed as clearance or approval to carry out the industrial activity mentioned in the
IEM. Compliance with all applicable statutes, regulations, notifications, and specific directions
issued by the Central or State Governments or competent authorities is required. The
Acknowledgement does not grant permission to bypass any relevant legal or regulatory
requirements.
4. Reporting Commencement of Commercial Production: All industrial undertakings that have filed
an IEM are required to report the commencement of commercial production. This reporting is also
done online through the same portal by filing information as per the prescribed 'Part B' of the IEM.
A copy of the related IEM Acknowledgement is to be attached while filing this information on the
portal.
5. Acknowledgement for 'Part B': Similar to the Acknowledgement for 'Part A' of IEM, the
Department also issues an Acknowledgement for 'Part B' through its portal. This is to confirm the
commencement of commercial production and the compliance with the reported information.

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Telecom License for Other Service Providers (OSP):
Business entities engaged in internet services and commercial communications, such as call centers, BPOs,
tele-education, tele-banking, tele networking, e-commerce, and other IT-enabled services, fall under the
category of 'Other Service Providers' (OSP) as per the New Telecom Policy, 1999. To operate legally, these
entities must obtain a telecom license from the Department of Telecommunication (DoT) under the
Ministry of Communications and Information Technology, Government of India. This license authorizes
them to provide telecommunication services in India.
There are two types of OSP licenses:
1. Domestic OSP: Issued to OSPs providing services to clients located within the national boundaries
of India.
2. International OSP: Issued to OSPs providing services to clients outside India.
Process to Obtain OSP License:
• Eligibility: Entities eligible to obtain an OSP license include companies registered under the
Companies Act, 2013 or under any previous law (e.g., the Companies Act, 1956), Limited Liability
Partnerships (LLPs) registered under the Limited Liability Act, 2008, Partnership Firms, or
organizations registered under the Shops and Establishment Act.
• Application: The company or LLP seeking an OSP license must file an application in Form - 1
through the DoT's online portal.
• Location Specific: OSP licenses are location-specific, and a company can have multiple registrations
for different sites.
• Point of Presence: Entities must inform the DoT of any changes in the point of presence, which is
a location where OSP places equipment like Private Automatic Branch Exchange, Interactive Voice
Recording System, etc., to handle telecom traffic related to its services.
Mandatory Documents Required for OSP License:
• Certificate of Incorporation issued by the Registrar of Companies (ROC).
• Memorandum and Articles of Association.
• Copy of LLP Agreement (for LLPs).
• Board resolution and Power of Attorney authorizing the authorized signatory with attested
signature.
• Resolution passed by all designated partners or partners as per the provisions of the LLP Act (for
LLPs).
• A note on the nature of the business or activities of the proposed OSP.

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• List of present directors of the company.

• List of present designated partners of the LLP.

• Present shareholding pattern of the company (for companies).
• Present shareholding pattern of the LLP (for LLPs).
All documents must be certified with a seal by a company secretary, one of the directors, statutory
auditors, or a public notary (in the case of companies). In the case of LLPs, all documents must be certified
with a seal by either the designated partner, all partners, statutory auditors, or a public notary.
The OSP license is initially valid for 20 years and can be extended for an additional ten years after the
expiry of the initial 20-year period.
Entities seeking an OSP license may also need to obtain state-level approval from the respective State
Industrial Department.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 14: Constitution and Labour Laws
INTRODUCTION
• Under the Constitution of India, Labour is a subject in the Concurrent List and, therefore, both the
Central and the State governments are competent to enact legislations subject to certain matters
being reserved for the Centre.
• Regulatory Framework→ Constitution of India

Introduction to the Constitution

1. Essence of the Constitution: The Constitution is the most important law in a country. It's the base
for all other laws.
2. Source of Authority: Every part of the government – whether it's the people who make laws
(legislature), the people who enforce laws (executive), or the courts (judiciary) – all get their power
and authority from the Constitution.
3. Supremacy of the Constitution: No part of the government or any state department is above the
Constitution. They don't have unlimited power.
4. Core Elements of the Indian Constitution:
a. Preamble: The introduction that outlines the Constitution's core values and principles.
b. Fundamental Rights: The rights guaranteed to every citizen.
c. Directive Principles of State Policy: Guidelines for making laws in India.
5. Role in Legislation: These three elements (Preamble, Fundamental Rights, and Directive Principles)
guide the creation of all laws, including those related to labor/work.

Constitutional Impact on Industrial Laws and Relations:

1. Role of Industrial Relations: Industrial relations are important not just for workers and
management, but also for achieving the social and economic goals set by the State.
2. State's Involvement: The government regulates industrial relations to ensure they align with
societal goals.
3. State Control Based on Economic Development:
• In developed economies (like the U.S. and England), work stoppages (like strikes) have less
impact. These countries set basic rules for employers and workers, allowing them to
resolve disputes with more freedom.

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• In developed economies, government intervention in disputes is limited to cases where

national economy, health, or safety is at risk.

• In developing economies, there is more extensive government control and supervision
over industrial relations, especially in countries with surplus labor.
4. Focus in Developing Countries: Developing countries have more detailed state rules covering
various aspects of labor relationships. This includes:
• Industrial discipline
• Worker training
• Employment laws
5. Challenges in Democratic Frameworks: In countries with democratic systems that guarantee
individual freedoms, balancing economic growth with fair distribution and maintaining industrial
harmony becomes more complex. The state plays an active role in shaping and enforcing work-
related rules.
6. Founding Vision: The creators of India's democratic Constitution aimed to develop a welfare state
with a federal structure, keeping in mind the aspects of labor relations.
7. Constitutional Provisions for Labor Relations:
• Labor relations are included in all three lists of the Constitution (Union, State, and
Concurrent).
• Most critical labor-related matters are in the Concurrent list, meaning both the central
and state governments have jurisdiction. This includes industrial disputes, trade unions,
social security, worker's compensation, provident funds, pensions, maternity benefits, etc.
8. Key Labor Legislation under Concurrent List:
• Industrial Disputes Act, 1947
• Minimum Wages Act, 1948
• Employees’ State Insurance Act, 1948
9. State-Specific Amendments:
• States can amend these acts to suit local needs, either with the President's approval or by
making rules under powers delegated by the central acts.
• States often tailor these central acts to local conditions without needing the President's
assent.

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10. Delegation of Rule-Making Powers:
Central acts like the Industrial Disputes Act and the Minimum Wages Act delegate rule-making
powers to states, enabling them to implement rules specific to their needs.

11. Directive Principles and Labor Legislation:

• Part IV of the Constitution outlines the Directive Principles of State Policy, guiding labor
legislation.
• These principles include ensuring adequate livelihood, fair distribution of resources,
preventing wealth concentration, ensuring equal pay for equal work, and safeguarding
worker health.
12. Implementation of Directive Principles:
• Laws like the Factories Act, ESI Act, and Employees’ Compensation Act focus on humane
working conditions, health and safety, and compensation for work-related injuries.
• Minimum Wages Act and Payment of Wages Act regulate wage payments.
• Payment of Bonus Act aims to bridge the gap between minimum and living wages.
• However, directives on wealth distribution, living wages, and equal pay are not fully
implemented yet

SOCIAL JUSTICE AND INDUSTRIAL LAWS

1. Preamble and Socio-Economic Justice: The Constitution's Preamble emphasizes socio-economic
justice as a key objective of the State.
2. Article 38 - Social Justice Concept:
• This article mandates the State to strive for social welfare by establishing a social order
where justice (social, economic, and political) permeates all aspects of national life.
3. Article 39 - State's Duty in Lawmaking:
• It's the State's duty to incorporate principles of social justice while making laws.
4. Meaning of Social and Economic Justice:
• As described by Justice Gajendragadkar in the State of Mysore v. Workers of Gold Mines
case, social and economic justice is a dynamic concept vital for the rule of law and the
welfare state.
• It focuses on providing more opportunities to the poor and needy to improve their social
and economic status.

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• Social justice isn't about equalizing wealth but ensuring a basic minimum for all and

providing facilities for personal development and dignity.

5. Responsibility for Achieving Social Justice:
• Both the State and citizens have roles in achieving social justice.
• The State has constitutional responsibilities, while citizens have moral obligations.
• The combination of these responsibilities aims to create an ideal society.
6. Impact on Industrial Laws:
• These principles guide the formation of industrial laws, ensuring they contribute to the
broader goal of social justice by improving conditions for workers and promoting fair
economic practices.

Industrial Laws and Socio-Economic Justice:

1. Innate Connection with Social Justice:
• Industrial laws in India are deeply rooted in the concept of social justice, as highlighted in
the Constitution's Preamble and Directive Principles of State Policy.
• These laws aim to reduce socio-economic disparities and inequalities.
2. Core Philosophy of Industrial Laws:
• The fundamental philosophy behind industrial laws is socio-economic equality.
• The aim is to address and balance the conflicting interests of employers and workers,
promoting fairness, peace, and harmony.
3. Wide Application of Social Justice:
• While social justice is a key aspect of industrial laws, its relevance is not limited to this
area. It applies broadly across various legislations.
• The goal is to achieve social and economic equality, removing disparities that arise from
birth or other circumstances.
4. Constitutional Limitations:
• The goals outlined in Part IV of the Constitution must align with the fundamental rights in
Part III.
• Socio-economic reforms should not undermine individual liberty, democratic principles,
or the dignity and worth of citizens.
• Fundamental rights are crucial for protecting individual freedom and ensuring equality in
society.

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• Any law that conflicts with fundamental rights is considered void to the extent of the

inconsistency.
5. Balance between Rights and Reforms:
• While pursuing socio-economic reforms through industrial laws, the State must respect
and uphold the fundamental rights of its citizens

Constitutional Remedies for Violation of Fundamental Rights:

1. Remedies for Fundamental Rights Violation:
• The Constitution provides specific remedies if someone's fundamental rights are violated.
2. Article 32 and Supreme Court's Writ Jurisdiction:
• Article 32 grants the Supreme Court the power to issue writs for enforcing and protecting
fundamental rights.
• This article itself is a fundamental right, ensuring legal recourse if rights are infringed.
3. Article 226 and High Courts' Writ Jurisdiction:
• High Courts have the power under Article 226 to issue writs for the protection of
fundamental rights.
• High Courts also oversee the functioning of all courts and tribunals under Article 227.
4. Supreme Court's Discretionary Jurisdiction:
• Under Article 136, the Supreme Court has the discretionary authority to hear appeals
from any court or tribunal in India, not just cases related to fundamental rights.
5. Appeal to the Supreme Court:
• If a High Court makes an award and a constitutional question is involved, an appeal can
be made to the Supreme Court under Article 132.
• For civil appeals, Article 133 provides a route to appeal to the Supreme Court.
6. Protection and Enforcement Mechanism:
• These articles ensure that there is a robust mechanism for protecting and enforcing
fundamental rights through India's judicial system

Can Trade Unions Use Article 226 for Member Rights? A Case Analysis
1. Case Background: In Jaipur Division Irrigation Employees Union v. State of Rajasthan (1994), the
issue was whether a trade union could file a writ petition under Article 226 to challenge actions
affecting the fundamental rights of its members.

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2. Initial Ruling and Appeal:
• Initially, the Single Bench ruled that the petition was not maintainable, stating that the
fundamental rights of individuals are not transferable to the union.
• However, on appeal, the Division Bench reversed this decision, instructing the Single
Bench to consider the case based on its merits.
3. Evolution of Locus Standi:
• The concept of 'locus standi,' which determines who has the standing to bring a case to
court, has evolved significantly, especially in the context of public interest litigation.
• This change was notably discussed in S.P. Gupta v. President of India (AIR 1982 SC 149),
where it was held that in cases of legal wrong or injury to a person or class of persons,
particularly those who are disadvantaged or unable to approach the court, a member of
the public (including organizations like trade unions) could seek judicial relief on their
behalf.
4. Implication for Trade Unions:
• Following this broader interpretation of locus standi, trade unions could potentially move
the High Court under Article 226 to address violations of their members' fundamental
rights.
• This approach aligns with the modern perspective of public interest litigation, where the
focus is more on addressing the grievance and less on who is presenting it.
5. Broader Legal Context:
• This case reflects a shift towards greater inclusivity in legal standing, recognizing the role
of organizations like trade unions in advocating for the rights of their members, especially
in scenarios where the members might be unable to individually seek redress.

Fundamental Rights and Industrial Relations:

1. Scope of Fundamental Rights (Articles 12-35):
• The Indian Constitution, under Part III, provides a range of Fundamental Rights that are
essential human rights.
• These rights cover a broad spectrum, guaranteeing civil liberties and freedoms to the
people.

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2. Directive Principles and Governance:
• Alongside these rights, Part IV of the Constitution includes the Directive Principles of State
Policy, which are crucial for governing the country.
3. Liberal Interpretation by Supreme Court:
• The Supreme Court has interpreted these rights broadly, aiming to empower citizens and
hold the State accountable.
• Fundamental Rights are not to be understood in isolation but in conjunction with the
Directive Principles and Fundamental Duties.
4. Protection and Safeguarding of Labour Interests:
• Specific articles like 14, 16, 19, 21, 23, and 24 focus on safeguarding the interests of labor
as human beings.
• These provisions reflect the conditions and standards necessary for labor and
employment.
5. Implication for Industrial Relations:
• These constitutional provisions ensure that labor laws and industrial relations in India
align with the broader principles of human dignity, equality, and freedom.
• They guide the creation and interpretation of laws pertaining to work conditions,
employee rights, and employer-employee relationships.
6. Human-Centric Approach:
• The emphasis is on a human-centric approach, placing the welfare and rights of workers
at the forefront of industrial relations.

Article 14: Equality Before Law - Simplified Notes

1. Fundamental Principle of Democracy:
• Article 14 of the Indian Constitution upholds the principle of equality as a cornerstone of
Indian democracy.
2. Article 14's Dual Command:
• The article has two parts:
• It mandates the State not to deny any person "equality before the law," which
prohibits discrimination (a negative concept).

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• It also requires the State to ensure "equal protection of the laws," meaning people
in different situations may need different treatment to achieve equality (a positive
concept).
3. Implication:
• This means treating equals equally and un-equals unequally, as needed, to establish
fairness and justice.
4. Case Studies Illustrating Article 14:
• Air India v. Nargesh Meerza (1981): The Supreme Court declared certain Indian Airlines
regulations unconstitutional. These regulations mandated retirement for air hostesses at
35 years or upon marriage within 4 years of service, or on first pregnancy. The Court found
these clauses arbitrary and violating Article 14.
• D.S. Nakara v. Union of India (1983): The Supreme Court held Rule 34 of the Central
Services (Pension) Rules, 1972, as unconstitutional. The rule discriminated between
pensioners retiring before and after a specific date without a rational basis, violating
Article 14.
5. Equality and Industrial Relations:
• In industrial relations, Article 14 ensures that employment laws and workplace policies
are free from unreasonable and arbitrary discrimination.
• It mandates fair treatment in employment practices, benefits, and retirement policies.
6. Protecting Worker Rights:
• This constitutional provision safeguards workers from discriminatory practices and
supports the creation of equitable workplace environments.

Article 16 of the Indian Constitution: Simplified Explanation

1. Equal Opportunity in State Employment:
• Article 16(1) ensures that all citizens have equal opportunities in employment or
appointment in any state office.
2. Prohibition of Discrimination:
• Article 16(2) states that no citizen should face discrimination in state employment on the
basis of religion, race, caste, sex, descent, place of birth, residence, or related factors.
3. Residential Requirements:

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• Article 16(3) allows for laws that might require people to reside in a particular state or

union territory before they can be employed or appointed in government offices there.
4. Reservations for Backward Classes:
• Article 16(4) permits the State to reserve jobs for any backward class of citizens not
adequately represented in state services.
5. Exceptions for Religious Roles:
• Article 16(5) specifies that this article does not interfere with laws requiring certain
religious affiliations for roles associated with religious or denominational institutions.
6. Overall Impact:
• Article 16 safeguards equality of opportunity in public sector employment, while also
recognizing the need for specific provisions to address under-representation of certain
groups and for roles with special requirements

Application of Articles 14 and 16 to Employment Equality

1. Extension of Equality Principle (Article 14 to Article 16):
• Article 16 applies the general rule of equality before the law, as established in Article 14,
specifically to public employment.
2. Comprehensive Scope in Employment:
• Equal protection and opportunity under these articles cover the entire range of
employment aspects: from hiring, promotion, and termination, to post-employment
benefits like gratuity and pension.
3. Equality for Similar Circumstances:
• The principle asserts that those in similar situations should receive equal treatment.
However, it recognizes that not all situations are identical and allows for reasonable
differentiation.
4. Reasonable Classification of Employees:
• Differentiating between employees based on valid and rational criteria (like job duties,
responsibilities) is permissible. This is not considered a violation of the equality principle.
5. Limits of Equality Principle:
• While promoting equality, these articles do not mandate identical treatment in cases
where circumstances differ significantly.

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• The courts will not interfere with employment policies, such as promotion criteria, unless

there is clear evidence of arbitrariness or discrimination.

6. Judicial Intervention in Employment Matters:
• A court or tribunal can intervene in employment-related decisions only if they are
arbitrary or discriminatory, violating the principles of equality

Case Studies Related to Article 16 and Equality in Employment

1. Mewa Ram Kanojia vs. All India Institute of Medical Sciences (AIIMS) [1989]:
• Case Summary: The Supreme Court examined the doctrine of 'Equal Pay for Equal Work.'
• Observation: It was noted that the State can set different pay scales based on factors like
educational qualifications and the responsibilities associated with the post.
• Conclusion: The principle of 'Equal Pay for Equal Work' applies when employees of the
same rank performing similar duties are treated differently in terms of pay scale without
a reasonable basis.
2. Air India vs. Nargesh Meerza [1981]:
• Case Summary: This case involved challenging certain regulations about the retirement of
air hostesses in Indian Airlines based on age, marriage, and pregnancy.
• Observation: The Supreme Court found these regulations to be arbitrary and
discriminatory.
• Conclusion: The retirement clauses based on age, marriage status, and pregnancy were
struck down as they violated Article 14 and, by extension, the principles of equality in
employment enshrined in Article 16.
3. D.S. Nakara vs. Union of India [1983]:
• Case Summary: The validity of Rule 34 of the Central Services (Pension) Rules, which
differentiated between pensioners based on their retirement date, was challenged.
• Observation: The Supreme Court declared the rule unconstitutional as it created an
arbitrary classification among pensioners without any rational basis.
• Conclusion: The differentiation in pension rules was found to violate the principles of
equality under Article 14 and 16.

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Prof Abhijeet C. Jaiswal
Article 19(1)(c) of the Indian Constitution:
1. Fundamental Right to Form Associations and Unions:
• Article 19(1)(c) grants citizens the fundamental right to form associations and unions.
2. Scope of the Right:
• This right includes forming various types of organizations, such as companies, societies,
partnerships, trade unions, and political parties.
• It encompasses not just the creation of these entities but also the ongoing relationship
and activities within them.
3. Freedom of Association:
• The right to form associations also implies the freedom to choose whether or not to join
an association or union.
4. State's Power to Impose Restrictions:
• Under Article 19(4), the State may impose reasonable restrictions on this right in the
interests of public order, morality, the sovereignty, and integrity of India.
• These restrictions are meant to balance individual freedoms with broader societal and
national interests.
5. Importance in Democracy:
• The right to form associations is crucial in a democratic society, as it allows for collective
action and representation in various fields, including labor, politics, and social causes

Case Studies on Article 19(1)(c) of the Indian Constitution

1. All India Bank Employees vs. National Industrial Tribunal [1962]:
• Case Summary: This case involved the right of labor unions to engage in collective
bargaining and the right to strike.
• Court's Ruling: The Supreme Court acknowledged that labor unions are essential for
collective bargaining, arising from the imbalance of power between workers and
employers. It recognized that the right to strike is a fundamental aspect of the right to
form unions under Article 19(1)(c).
• Observation on Strikes: The court noted that while strikes can cause economic disruption,
the Industrial Disputes Act 1947 provides a system of industrial adjudication as an

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Prof Abhijeet C. Jaiswal
alternative to striking. This adjudication process is a reasonable restriction on the
fundamental right to strike.
2. Damyanti Naranga vs. The Union of India [1971]:
• Case Summary: This case examined the right to form and maintain the composition of an
association.
• Court's Ruling: The Supreme Court held that the right to form an association under Article
19(1)(c) also includes the right to continue with the association as originally formed. This
means that members have the right to determine their association's composition.
• Significance of Continuity: The court observed that the right to form associations would
be meaningless if it did not include the right to maintain the association's composition.
Without this continuation, associations could be easily disrupted by external laws or
interventions.

Article 21 of the Indian Constitution:

1. Right to Life and Personal Liberty:
• Article 21 guarantees every person the right to life and personal liberty.
• This right is fundamental and cannot be taken away except through a legal procedure that
is fair, just, and reasonable.
2. Expansive Interpretation of 'Life':
• The term 'life' in Article 21 is interpreted broadly, not just as mere survival or existence.
• It encompasses all aspects that make life meaningful, complete, and worth living.
3. Wide Amplitude of 'Personal Liberty':
• 'Personal liberty' covers a range of rights essential to a citizen’s personal freedom.
4. Article 21 as the Heart of Fundamental Rights:
• Over time, Article 21 has become central to the understanding and enforcement of
fundamental rights.
• It is not just a protection against the deprivation of life and liberty but also has positive
implications.
5. Enforcement of Directive Principles:
• The liberal interpretation of Article 21 has led to the activation and enforcement of many
Directive Principles, which were originally non-enforceable. This includes rights such as:

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Prof Abhijeet C. Jaiswal
• Right to livelihood
• Right to live with human dignity
• Right to medical care
• Health of labor
• Protection against sexual harassment
• Right to health
• Economic rights
6. Implied Fundamental Rights:
• The Supreme Court, through its interpretations, has derived several fundamental rights
from Article 21.

Case Summary: Olga Tellis & Ors v. Bombay Municipal Corporation [1986]
1. Case Background:
• This landmark case involved the eviction of slum and pavement dwellers in Bombay (now
Mumbai). The petitioners argued that such eviction would deprive them of their
livelihood.
2. Argument on Right to Life:
• The central argument was that the right to life under Article 21 includes the right to
livelihood. Therefore, evicting them from their dwellings, thereby depriving them of their
livelihood, would be equivalent to depriving them of their life.
3. Supreme Court's Interpretation:
• The Supreme Court held that the right to life is not just the physical act of breathing but
includes the right to livelihood.
• The Court reasoned that without the means of livelihood, life would lose its
meaningfulness and could even become impossible to live.
4. Broader Implication of Right to Life:
• The Court acknowledged that the right to life encompasses aspects that ensure a life with
dignity, not just mere survival.
• This interpretation widened the scope of Article 21 to include necessary conditions for a
dignified existence.
5. Significance of the Case:

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Prof Abhijeet C. Jaiswal
• This case is significant as it expanded the understanding of the right to life to include

economic and social rights, like the right to livelihood.

• It set a precedent that the deprivation of livelihood could be seen as a violation of the
right to life under the Constitution.
6. Reference to International Perspective:
• The Court cited international examples, like the observations of Douglas J. in Baksey and
Field J. in Munn v. Illinois, to emphasize that 'life' implies more than mere animal existence
and includes the right to work and live with dignity.

More Case Studies on the Application of Article 21 of the Indian Constitution

1. D.K. Yadav v. J.M.A. Industries Ltd [1993]:
• Case Summary: The case revolved around the termination of an employee's service.
• Court's Ruling: The Supreme Court held that termination of employment impacts not only
the employee's livelihood but also their dignity and the well-being of dependents.
Therefore, any action ending an employee's tenure must include a fair opportunity for the
employee to present their case, adhering to principles of natural justice.
• Implication: This case expanded the scope of Article 21 to include fair treatment in
employment termination, emphasizing the importance of procedural justice.
2. Paschim Banga Khet Mazdoor Samity v. State of West Bengal [1996]:
• Case Summary: This case concerned the inadequate medical treatment provided to an
injured worker.
• Court's Ruling: The Supreme Court emphasized that the State has an obligation under
Article 21 to safeguard the right to life, which includes providing adequate medical
facilities. The failure of government hospitals to provide necessary treatment was seen as
a violation of the right to life.
• Significance: The judgment reinforced the State's duty in a welfare state to provide
essential medical care, affirming this as a part of the right to life under Article 21.
3. Vishakha & Ors. v. State of Rajasthan [1997]:
• Case Summary: This case involved a woman who was assaulted and harassed at her
workplace.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Court's Ruling: The Supreme Court declared that such incidents violate fundamental

rights to gender equality, life, and liberty, as well as the right to practice a profession
(Article 19(1)(g)).
• Outcome: This case led to the formulation of Vishakha Guidelines for preventing sexual
harassment at the workplace, illustrating the application of Article 21 in safeguarding
dignity and personal liberty at work.

Article 23 and Article 24 of the Indian Constitution:

1. Prohibition of Exploitative Practices (Article 23):
• Article 23(1) explicitly prohibits traffic in human beings, begar (forced labor without
payment), and other forms of forced labor.
• Any violation of this prohibition is considered a punishable offense under the law.
2. Definition of 'Begar':
• 'Begar' refers to the practice of compelling a person to work without any remuneration.
• This practice is constitutionally banned, recognizing the fundamental right of a person not
to be forced into unpaid labor.
3. Case Example: Suraj v. State of Madhya Pradesh [1960]:
• In this case, the withholding of a government employee's pay as punishment was declared
invalid under Article 23.
• The court observed that compelling a person to work without wages is equivalent to
begar, violating the fundamental right against forced labor.
4. Trafficking in Human Beings:
• 'Traffic in human beings,' often equated with slavery, involves treating humans as
commodities for buying and selling.
• This practice is abolished under the Constitution, reflecting a commitment to human
dignity and freedom.
5. Right Against Exploitation (Article 24):
• Although not detailed in the provided text, Article 24 specifically prohibits the
employment of children below the age of 14 years in factories, mines, and other
hazardous employments.
• This article aims to protect children from economic exploitation and hazardous work,
ensuring their right to a healthy development.

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Prof Abhijeet C. Jaiswal

1. Interpretation of 'Other Similar Forms of Forced Labour':

• The phrase "other similar forms of forced labour" in Article 23(1) should be understood in
the context of ejusdem generis, a legal principle meaning "of the same kind or nature."
• This implies that the types of forced labor prohibited by this article are akin to traffic in
human beings or begar.
2. Exception to Prohibition on Forced Labour:
• Under Article 23(2), the State is permitted to impose compulsory service for public
purposes, with the caveat that there should be no discrimination based on religion, race,
caste, or class.
• However, the State may differentiate on the basis of sex, as this is not expressly forbidden
in Article 23(2). For example, women may be exempted from certain types of compulsory
service.
3. Expansive Interpretation by the Supreme Court:
• The Supreme Court of India has broadly interpreted the term "forced labour" in Article
23(1), starting with the landmark Asiad case (People’s Union for Democratic Rights v.
Union of India, 1982).
• The Court clarified that Article 23 aims to abolish all forms of forced labor, regardless of
whether they arise from a contract.
• This interpretation underlines that forced labor in any form is an affront to human dignity
and is against fundamental human values.
4. Broader Implication of Article 23:
• The Supreme Court's interpretation ensures that Article 23 is a robust provision against all
forms of forced labor, not just those explicitly mentioned like begar and trafficking.
• This reflects the Constitution's broader commitment to uphold human dignity and prevent
exploitation.

Case Studies on Articles 23 and 24 of the Indian Constitution

1. Sanjit Roy v. State of Rajasthan [1983]:
• Context: This case dealt with the issue of paying wages less than the minimum prescribed.

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Prof Abhijeet C. Jaiswal
• Court's Ruling: The Supreme Court held that when a person is compelled to provide labor

for remuneration below the minimum wage, it constitutes 'forced labor' under Article 23.
• Rationale: The assumption is that working for less than minimum wages implies some
form of compulsion or coercion.
• Implication: Such individuals can approach the higher judiciary under writ jurisdiction
(Article 226 or Article 32) for enforcing their fundamental rights, including the right to
minimum wages.
2. Child Labour and Article 24:
• Provision: Article 24 prohibits the employment of children below 14 years in any factory,
mine, or hazardous employment.
• Consonance with Other Articles: This article aligns with Articles 39(e) and (f), focusing on
protecting workers' health and safeguarding children against exploitation.
• Legislative Support: The Child Labour (Prohibition and Regulation) Act, 1986, enforces this
prohibition and can extend to other sectors.
3. Peoples Union for Democratic Rights v. Union of India (Asiad Workers Case) [1982]:
• Context: The case examined the employment of children in the construction industry.
• Observation: The Supreme Court noted that even though the Employment of Children
Act, 1938, did not cover construction work, such work is hazardous, and employing
children under 14 in such work violates Article 24.
• Outcome: This case affirmed that the right against exploitation under Article 24 is
enforceable even without specific implementing legislation.
4. M.C. Mehta v. State of T.N. [1997]:
• Context: This case addressed the issue of child labor.
• Directive: The Supreme Court mandated that employers of children below 14 must adhere
to the Child Labour (Prohibition and Regulation) Act, ensuring compensation,
employment for their parents/guardians, and their education.
5. Article 39(f) and Child Protection:
• Content: Article 39(f) emphasizes the importance of protecting children from exploitation
and ensuring their development in a healthy environment.
• Link with Articles 23 and 24: This article supports the principles laid down in Articles 23
and 24, focusing on the prohibition of 'forced labor' and the employment of children in
hazardous conditions.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal

Labour Laws and Directive Principles of State Policy:

1. Integration of Economic Democracy:
• The Constitution of India, recognizing the importance of economic democracy alongside
political democracy, especially in a developing country like India, includes provisions
aimed at socio-economic improvement.
2. Role of Directive Principles:
• Directive Principles of State Policy, enshrined in Part IV of the Constitution, are guidelines
for the government to achieve social and economic democracy.
• They set socio-economic goals for the state to strive towards, guiding legislatures and the
executive in their exercise of power.
3. Non-Enforceability of Directive Principles:
• Unlike the Fundamental Rights in Part III, Directive Principles are not legally enforceable
by the courts.
• This non-enforceability is due to the positive obligations they impose on the state, often
constrained by practical limitations like financial resources.
4. Importance Despite Non-Justiciability:
• The Constitution declares these principles as fundamental in governance, obligating the
state to consider them in law-making.
• An 'awakened public opinion' is viewed as more effective than legal enforcement in
realizing these principles.
5. Judicial Approach to Directive Principles:
• Recent judicial trends show an integrative approach between Fundamental Rights and
Directive Principles, interpreting them together for a broader understanding.
• Courts often use Directive Principles to expand the scope and depth of Fundamental
Rights, implying additional rights beyond those explicitly stated.
6. Relevance to Industrial Legislation and Adjudication:
• Articles 38, 39, 41, 42, and 43 are particularly significant in the context of industrial law
and adjudication.
• These articles serve as the foundation of industrial jurisprudence, emphasizing the
government's responsibility towards labor, including ensuring social order and fair wages
in line with the country's economic and political circumstances.

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Prof Abhijeet C. Jaiswal

Social Order Based on Socio-Economic Justice: Simplified Explanation

1. Article 38(1) - Social Welfare and Justice:
• This directive instructs the state to promote the welfare of the people by establishing a
social order where justice (social, economic, and political) guides all national institutions.
2. Article 38(2) - Minimizing Inequalities:
• The state is directed to strive to minimize inequalities in income, status, facilities, and
opportunities among individuals and groups, irrespective of their geographical location or
vocation.
3. Relation with Article 14 and the Preamble:
• Article 38 reinforces the Preamble's commitment to securing social, economic, and
political justice.
• It must be read in conjunction with Article 14, which emphasizes the concept of equality
before law and the state's role in creating a more equal society.
4. Supreme Court's Interpretation in Sri Srinivasa Theatre v. Govt. of Tamil Nadu [1992]:
• The Court noted that equality before law is a multifaceted concept. It includes the state's
responsibility to use the law to create a more equal society, as envisioned in the Preamble
and the Directive Principles.
5. Interplay of Various Articles for Workers' Rights:
• Reading Articles 21, 38, 42, 43, 46, and 48A together, the Supreme Court in Consumer
Education & Research Centre v. Union of India [1995] recognized the right to health and
medical aid as fundamental for workers.
• This ensures that workers can enjoy their lives with dignity, both during and after their
service years.
6. Article 38 and Article 39:
• Article 38 is complemented by Article 39, which lays down specific principles for achieving
the social order envisioned in Article 38.
• Article 39 provides guidelines for the state to ensure adequate means of livelihood, fair
distribution of wealth, equal pay for equal work, preservation of health and strength of
workers, and protection of children against exploitation.

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Simplified Notes on Randhir Singh v. Union of India and Dhirendra Chamoli v. State of U.P. Cases
1. Randhir Singh v. Union of India [1982]:
• Main Outcome: The Supreme Court stated that 'Equal pay for equal work' is a
constitutional goal, based on Article 39(d), but not a fundamental right.
• Article 39(d): This part of the Constitution says men and women should get the same pay
for doing the same work.
• Daily Wage Workers: People who are paid daily are entitled to the same wages as
permanent employees if their work is the same.
• Flexibility in Pay: The Court mentioned that pay scales can differ within the same job
group if the work's nature, reliability, and responsibility vary.
2. Dhirendra Chamoli and Anr. v. State of U.P. [1982]:
• Case Focus: The case was about daily wage workers at Nehru Yuvak Kendras who were
getting less pay compared to regular Class IV employees.
• Supreme Court's View: Even if workers knew they would only get daily wages, the
government can't avoid giving them equal pay for equal work. This is required by Article
14, which calls for equality before law.
• Equality in Salary and Conditions: The Court ruled that these daily wage workers should
get the same salary and work conditions as regular Class IV employees, regardless of their
appointment status, as long as they do the same work.

National Campaign Committee for Central Legislation on Construction Labour (NCC-CL) vs. Union of India
[2018] Summary
Case Background:
• A petition was filed concerning the non-implementation of two acts: the Building and Other
Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (BOCW
Act), and the Building and Other Construction Workers’ Welfare Cess Act, 1996 (Cess Act).
• The petitioner argued that the non-implementation violates Articles 15(3), 39(e) and (f), 45, and
47 of the Constitution, which emphasize the state's responsibility to meet workers' needs and
protect their rights.
Supreme Court's Decision:

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Prof Abhijeet C. Jaiswal
• The Supreme Court recognized both the BOCW Act and the Cess Act as legislations focused on

social justice.
• These acts were enacted in line with the Directive Principles, especially Article 39, which mandates
the state to ensure the health and strength of workers, and Article 42, which calls for just and
humane working conditions.
• The Court also highlighted the relevance of Article 21, which guarantees a life of dignity as a
fundamental right to all, including construction workers.
Key Observations:
• The Court emphasized that these legislations must be understood as welfare and beneficial laws,
designed to uphold the dignity and rights of construction workers.
• It underscored the importance of adhering to laws passed by Parliament, respecting the rule of
law, and recognizing the human rights and dignity of building and construction workers.
• The judgment stressed that non-implementation of these acts could lead to a breakdown of the
BOCW Act and serious violations of fundamental rights guaranteed by Part III of the Constitution.
Conclusion:
• The Supreme Court’s ruling in this case reinforces the importance of implementing legislations
that protect the rights and welfare of workers, particularly those in the construction sector, and
underscores the role of the state in ensuring a dignified life for all its citizens.

Social Security Provisions in the Indian Constitution:

1. Article 41 - State Responsibility:
• Article 41 directs the state to provide rights to work, education, and public assistance in
cases like unemployment, old age, sickness, disablement, and other undeserved needs,
within its economic capability.
2. Constitutional Guarantee of Social Security:
• Social security is anchored in the Indian Constitution under Articles 39, 41, and 43.
3. Key Social Security Legislations:
• Employees’ State Insurance Act, 1948: This act introduced social insurance, offering cash
benefits and medical benefits.
• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952: Focuses on
providing financial security and support to industrial employees and their families.

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Prof Abhijeet C. Jaiswal
• Maternity Benefit Act, 1961: Designed to provide maternity leave with full wages and job

security.
• Payment of Gratuity Act, 1972: Establishes a scheme for the payment of gratuity to
employees in various sectors.
4. Employment and Worker Education Initiatives:
• Apprentices Act, 1961: Augments institutional training with on-the-job training in the
industry.
• Employment Exchanges: Play a crucial role in job seeking. The Employment Exchanges
(Compulsory Notification of Vacancies) Act, 1969, requires employers to notify vacancies
to employment exchanges.
• Voluntary Workers Education Scheme (1958): Aims to educate workers about trade union
philosophy and methods, and enhance awareness about their roles and responsibilities.

Working Conditions and Living Wage in Indian Constitution

1. Article 42 - Just and Humane Working Conditions:
• Article 42 instructs the state to ensure just and humane working conditions and provide
for maternity relief.
• This article forms the foundation for a wide range of labor laws in India.
• The Supreme Court has interpreted Article 21 in conjunction with Article 42, expanding
the definition of the right to life to include the right to live with human dignity, which
encompasses fair working conditions.
2. Living Wage Under Article 43:
• Article 43 directs the state to strive for all workers to receive a living wage and work in
conditions ensuring a decent standard of life, with opportunities for leisure, social, and
cultural activities.
• It also emphasizes promoting cottage industries in rural areas.
• This article establishes the principle that workers are entitled to certain benefits as a right.
3. Definition of 'Living Wage' vs 'Minimum Wage':
• Living Wage: A wage that allows a male earner and his family to afford not just basic
necessities like food, clothing, and shelter, but also education, health protection, essential
social needs, and a degree of financial security.

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Prof Abhijeet C. Jaiswal
• Minimum Wage: A wage covering only the basic physical needs of a worker and their

family.
• The Supreme Court, in Edward Mills Co. v. Ajmer [1955], clarified that setting a minimum
wage is in public interest and does not unreasonably restrict the right to trade under
Article 19(1)(g).
4. Significance:
• These constitutional provisions emphasize the state's responsibility in ensuring fair wages
and humane working conditions, reflecting the Constitutional commitment to worker
welfare and human dignity.

Workers' Participation in Management as per Article 43-A

1. Introduction of Article 43-A:
• Article 43-A was added to the Indian Constitution through the 42nd Amendment in 1976.
2. Focus on Workers' Participation:
• This article specifically addresses the involvement of workers in the management of
industrial establishments.
3. State's Role:
• The article mandates the state to take measures, either through suitable legislation or
other means, to ensure workers' participation in management.
4. Impact on Labour Laws:
• Article 43-A has a significant impact on labor laws, emphasizing the need for a more
inclusive approach in industrial management by involving workers in decision-making
processes.

Case Summary: Janapareddy Surya Narayana and Ors. vs. The Municipal Administration and Urban
Development and Ors. [2021]
Background:
• A petition was filed challenging the proceedings (RC. No. 16394/P.O. (Balyam) dated 19.06.2017)
as being illegal, arbitrary, and in violation of Articles 14, 16, 21, and 39(d) of the Indian
Constitution.
• The petitioners sought to have these proceedings set aside and their services regularized.
Andhra Pradesh High Court's Decision:

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• The court acknowledged that when part-time workers or Non-Muster Roll (NMR) employees are

regularized, they are entitled to the minimum pay scale for the duties they perform, even if they
work limited hours.
• However, the petitioners, in this case, were working full-time (eight hours a day) but were not
receiving equivalent pay, leading to claims of discrimination and violation of Article 39(d) which
mandates equal pay for equal work.
• The court found that employing the petitioners on an outsourcing basis with low wages, despite
them working full-time hours, was discriminatory and arbitrary.
• The High Court ruled that it was unjust to pay these workers less than regular employees for similar
work and hours. As such, the petitioners were entitled to receive the same minimum time scale
of pay as regular employees in the same cadre.
• The court thus directed the respondents to extend the minimum time scale of pay to these
petitioners, aligning their compensation with that of full-time employees in the same cadre.
Conclusion:
• The Andhra Pradesh High Court's decision in this case affirmed the constitutional principle of equal
pay for equal work and emphasized that any form of discrimination in pay scale for similar work is
unconstitutional. The court's intervention ensured that the petitioners received fair and just
compensation in line with their duties and working hours.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 15: Evaluation of Labour Legislation and
Need of Labour Code
INTRODUCTION
1. Industrial Law in India:
• Industrial Law focuses on regulating the labor and employment sector.
• It's essential for ensuring workers' health, safety, and welfare, protecting them from
unfair practices due to their limited bargaining power.
2. Purpose of Labour Laws:
• These laws are designed to:
• Improve workers' health, safety, and overall well-being.
• Protect workers from oppressive work conditions.
• Support workers' organization and participation in management.
• Address industrial disputes effectively.
• Implement social insurance and labor welfare schemes.
3. Ongoing Reforms:
• Labour law reforms are continuously underway to make laws more effective and
adaptable to the changing economic and industrial landscape.
• Reforms aim to make laws more flexible and relevant to current and future industry
and economic needs.
4. Recommendations of the Second National Commission on Labour:
• The Commission suggested consolidating existing labor laws into four or five broad
Labour Codes based on functionality.
5. Drafting of Labour Codes:
• Following the recommendations, the government has been working on drafting
four Labour Codes on:
• Wages
• Industrial Relations
• Social Security & Welfare
• Occupational Safety, Health, and Working Conditions
• The goal of these Codes is to simplify, amalgamate, and rationalize the provisions
of current Central Labour Laws.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Regulatory Framework→ Code on Wages 2019 l Code on Social Security, 2020 l Occupational

Safety, Health and Working Conditions Code, 2020 l Industrial Relations Code, 2020

History of Labour Laws:

1. Development of Labour Laws:
• Labour laws evolved due to the need for better working conditions and the right to
organize.
• They emerged from conflicts between employee demands for rights and employer desires
to keep labor costs low.
2. Role of Labour Movement:
• The labour movement was crucial in enacting laws protecting labour rights during the 19th
and 20th centuries, particularly with the industrial revolution.
3. International Labour Organisation (ILO):
• Established post-World War I as part of the League of Nations, the ILO focused on post-
war reconstruction and the protection of labor unions.
• India is a founding member of the ILO and has been part of its Governing Body since 1922.
• The ILO, with 187 member countries, operates on a tripartite system involving
governments, workers, and employers.
4. Labour Rights in Great Britain:
• Post World War I, the Whitley Commission in Great Britain recommended the
establishment of “industrial councils” for labor rights.
5. Labour Laws in India:
• Even after 75 years of independence, a significant portion of Indian workers
(approximately 90%) work in the unorganized sector, lacking full access to social securities.
• The total workforce, including organized and unorganized sectors, exceeds 50 crore (500
million) people.
6. Reform of Labour Laws in India:
• The Central Government has undertaken a significant step by codifying 29 labour laws into
4 Labour Codes.
• These codes are intended to provide workers with security, respect, health, and welfare
benefits more efficiently.

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SBILL
CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Need for New Labour Legislations:
1. Labour in Concurrent List:
• Labour falls under the Concurrent List of the Indian Constitution, meaning both
Parliament and state legislatures can pass labor-related laws.
2. Multiplicity of Labour Laws:
• India has over 100 state and 40 central laws governing labor issues like dispute resolution,
working conditions, social security, and pay.
3. Lack of Labour Reforms in 1991 Economic Reforms:
• Labour reforms were not addressed during the major economic reforms of 1991.
4. Second National Commission on Labour (2002):
• The Commission reported the complexity due to multiple labour laws and recommended
consolidating them into 4 or 5 Labour Codes: Industrial relations, Wages, Social security,
Safety, Welfare and working conditions.
5. Initial Inaction (2004-2014):
• Despite discussions, there was no significant progress in implementing these
recommendations between 2004 and 2014.
6. Renewed Focus Post-GST:
• The labor law reforms gained momentum parallel to the implementation of GST (Goods
and Services Tax), aligning with the motto “Sabka Sath Sabka Vikas aur Sabka Vishwas.”
7. Labour Reforms Process (2015-2019):
• Extensive consultations took place, including uploading draft codes for public comment
and organizing tripartite discussions with trade unions, employers, and state
representatives.
• The Parliamentary Standing Committee reviewed all four Bills and provided
recommendations.
8. Codification of Labour Laws (2019-2020):
• The Ministry of Labour and Employment introduced four labour code bills in 2019 to
codify 29 central legislations.
• The Code on Wages was passed by Parliament, while the other three were reviewed by
the Standing Committee.
• In September 2020, the government replaced these Bills with new ones, leading to the
formation of four categorized labour codes:

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Prof Abhijeet C. Jaiswal
1. Code on Wages
2. Industrial Relations Code
3. Social Security Code
4. Occupational Safety, Health and Working Conditions Code

Purpose of Labour Legislation: Simplified Explanation

1. Facilitating Productive Employment Relationships:
• Modern labour legislation creates a legal system that supports productive and effective
employment relationships, contributing to an efficient economy.
2. Promoting Harmonious Industrial Relations:
• It offers a structured framework for interactions between employers, workers, and their
representatives on work-related issues.
• This facilitates workplace democracy and helps in achieving peaceful and cooperative
industrial relations.
3. Upholding Fundamental Principles and Rights at Work:
• Labour laws act as a constant reminder and safeguard of fundamental workplace
principles and rights that are widely accepted in society.
• They establish mechanisms for implementing and enforcing these principles and rights,
ensuring fair and just working conditions.

Objective of New Labour Codes

1. Standardization and Streamlining: The main objective of the new labor codes is to bring clarity,
standardization in terminology, and consistency in approach to labor legislation. This streamlining
process aims to simplify and unify labor laws.
2. Comprehensive Coverage: By consolidating labor laws, these codes seek to provide more
comprehensive coverage to various employment classifications and thresholds. Previously,
different rules applied to different types of employment, creating complexity.
3. Introduction of Four Codes: The new labor codes introduced in Parliament are:
• Code on Wages: Focused on wage-related matters.
• Code on Industrial Relations: Addresses industrial relations and workers' rights to
organize.

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Prof Abhijeet C. Jaiswal
• Code on Social Security: Deals with social security benefits for workers.

• Code on Occupational Safety: Concerned with workplace safety.

4. Streamlining Existing Legislation: While the codes successfully combine and streamline existing
laws, there are areas where they could be improved. For example, specific provisions from the
statutes these codes replace still exist in the Codes on Social Security and Occupational Safety.
5. Consistency and Definitions: Although the definitions of various terms have been rationalized,
they are not consistent across all codes. For instance, the definition of "contractor" is uniform in
some codes but differs in the Code on Industrial Relations.
6. Replacing Existing Laws: The new labor codes have replaced 29 laws with the aim of simplifying
the legal framework.
7. Balancing Employment Development and Employee Rights: The primary challenge in labor
reforms is to facilitate employment development while preserving the rights of employees.
8. Key Discussion Topics:
• Coverage of Small Businesses: Ensuring that labor laws are applicable to small businesses.
• Approval of Layoffs: Determining cutoff points for prior approval of layoffs.
• Labor Enforcement: Strengthening the enforcement of labor laws.
• Flexible Forms of Labor: Enabling diverse employment arrangements.
• Supporting Collective Bargaining: Promoting negotiations between workers and
employers.
9. Adapting to Changing Employment: Recognizing the need to continuously update and simplify
labor laws to accommodate emerging forms of employment, such as gig work.

Features of the New Labour Codes

1. Thresholds Based on Company Size: Many labor rules are applicable to businesses larger than a
specific size, usually 10 or more employees. While this eases compliance for smaller businesses,
it's debated whether all businesses should have fundamental protections including pay, social
security, and working conditions.
2. Simplified and Accountable System: The new codes introduce a simple and accountable system
with one registration, one license, and a single return for all labor-related matters, streamlining
processes.

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Prof Abhijeet C. Jaiswal
3. Government Approval for Layoffs: Previously, government approval was required for
establishments with 100 or more employees to close, lay off, or retrench workers. The Industrial
Relations Code increases this threshold to 300, with the possibility of further increases by
government notification.
4. Reducing Compliance Burden: The complexity of labor laws led to numerous compliance
requirements, burdening businesses. The new codes aim to simplify compliance while addressing
issues like weak enforcement and inspector misconduct.
5. Contract Labor and Fixed-Term Employment: Economic factors and labor compliance
requirements have led to increased use of contract labor. However, fundamental rights like
guaranteed salaries for contract workers are not fully addressed. The Industrial Relations Code
introduces fixed-term employment as a new short-term labor type.
6. Recognition of Trade Unions: While there are many registered trade unions, there were no clear
standards for recognizing unions that can formally bargain with employers. The Industrial
Relations Code provides provisions for union recognition.
7. Simplification and Shortcomings: The codes simplify labor rules, but there are areas where they
fall short. The Code on Social Security includes provisions for "gig" and "platform" workers, but
these classifications lack precision.
8. Delegation of Rule-Making Authority: The codes delegate rule-making authority over significant
issues, such as the applicability of social security programs and health and safety regulations.
There's a debate on whether the legislature or the executive branch should decide these issues.
9. Gender Discrimination Prohibition: The law prohibits discrimination based on gender when hiring
new employees for similar or identical jobs and determining pay. Similar work is defined as work
requiring the same level of expertise, effort, responsibility, and experience.
10. Advisory Boards: Federal and state governments make up the advisory boards, with equal
representation from employers and employees, along with independent individuals. One-third of
the boards' membership, including women, provides advice on matters like setting minimum
wages and promoting women's participation in the workforce.
11. Penalties for Offenses: The codes outline penalties for employer offenses, such as underpaying
required wages or violating any code requirement. The maximum punishment is three months in
prison and a fine of up to one lakh rupees, with penalties varying based on the type of offense.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal

Acts Subsumed by the Four Labour Codes

Labour Codes Acts being subsumed
Code on Wages, 2019 Payment of Wages Act, 1936;
Minimum Wages Act, 1948;
Payment of Bonus Act, 1965; and
Equal Remuneration Act, 1976
Occupational Safety, Factories Act, 1948;
Health and Working Mines Act, 1952;
Conditions Code, 2019 Dock Workers (Safety, Health and Welfare) Act, 1986;
Building and Other Construction Workers (Regulation of Employment and
Conditions of Service) Act, 1996;
Plantations Labour Act, 1951;
Contract Labour (Regulation and Abolition) Act, 1970;
lnter-State Migrant Workmen (Regulation of Employment and Conditions of
Service) Act, 1979;
Working Journalist and other Newspaper Employees (Conditions of Service
and Miscellaneous Provision) Act, 1955;
Working Journalist (Fixation of Rates of Wages) Act, 1958;
Motor Transport Workers Act, 1961;
Sales Promotion Employees (Condition of Service) Act, 1976;
Beedi and Cigar Workers (Conditions of Employment) Act, 1966;
Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act,
1981.
Industrial Relations Trade Unions Act, 1926;
Code, 2019 Industrial Employment (Standing Orders) Act, 1946, and
Industrial Disputes Act, 1947.

Code on Social Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
Security, 2019 Employees’ State Insurance Act, 1948;
Employees’ Compensation Act, 1923;
Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959;

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Prof Abhijeet C. Jaiswal
Maternity Benefit Act, 1961;
Payment of Gratuity Act, 1972;
Cine-workers Welfare Fund Act, 1981;
Building and Other Construction Workers’ Welfare Cess Act, 1996; and
Unorganised Workers Social Security Act, 2008.

Reforms Proposed by New Labour Codes

Code on Social Security, 2020

The Code on Social Security, 2020 introduces a wide range of salient features aimed at improving social
security coverage and benefits for workers in India.
key features:
1. Pension Scheme for All Workers: The pension scheme provided by the Employees' Provident Fund
Organization (EPFO) is extended to workers in organized, unorganized, and self-employed sectors.
2. Creation of Social Security Fund: A social security fund is established to provide comprehensive
social security coverage to workers in the unorganized sector.
3. Free Treatment under ESIC: Workers can access free treatment in hospitals and dispensaries
under the Employees' State Insurance Corporation (ESIC) through a small contribution.
4. Inclusive ESIC Coverage: ESIC coverage is extended to workers in all sectors, including those in the
unorganized sector. This expansion includes the establishment of ESIC hospitals, dispensaries, and
branches up to the district level.
5. Definition Clarifications: Various terms used in the Code are defined, including "career center,"
"aggregator," "gig worker," "platform worker," and "wage ceiling." The definition of "employee" is
elaborated to cover a maximum number of employees and workers.
6. Hazardous Work Coverage: Even if a single worker is engaged in hazardous work, they are eligible
for ESIC benefits.
7. ESIC for Platform and Gig Workers: Platform and gig workers engaged in new technology have the
opportunity to join ESIC.
8. ESIC Benefits for Plantation Workers: Workers in plantation sectors are entitled to ESIC benefits.
9. Mandatory Registration for Institutions in Hazardous Areas: Institutions operating in hazardous
areas are required to be compulsorily registered with ESIC.

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10. Social Security Organizations: Various social security organizations are established for the
administration of the Code, including the Central Board of Trustees of the Employees' Provident
Fund, Employees' State Insurance Corporation, National Social Security Board for Unorganized
Workers, State Unorganized Workers' Social Security Board, and State Building Workers Welfare
Boards.
11. Maternity Benefits: Provisions for maternity benefits include prohibition from work during certain
periods, nursing breaks, crèche facilities, and the ability to claim maternity benefits.
12. Appeals Process for EPF Dues: Employers can appeal against orders related to the determination
and assessment of dues and damages relating to Employees' Provident Fund (EPF) only after
depositing 25% of the amount due.
13. Gratuity for Fixed-Term Employees: The requirement of minimum service has been removed for
the payment of gratuity for fixed-term employees. They are entitled to the same social security
benefits as permanent employees.
14. National Database for Unorganized Sector Workers: A national database of workers in the
unorganized sector is established through registration on a portal.
15. Mandatory Online Reporting: Employers with more than 20 workers are required to report
vacancies online.
16. Universal Account Number (UAN): A Universal Account Number is introduced for ESIC, EPFO, and
unorganized sector workers. An Aadhaar-based UAN is also introduced to ensure seamless
portability.
17. Empowerment of Central Government: The Central Government has the authority to defer or
reduce employer's and employee's contributions as needed.
18. Separate Accounts: Separate accounts are created under the social security fund for the welfare
of unorganized workers, gig workers, and platform workers. Another separate account is
established for the amount received from the composition of offenses under the Code or other
central labor laws.

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The Occupational Safety, Health, and Working Conditions Code, 2020
It represents a significant effort to consolidate and amend laws related to the safety, health, and working
conditions of workers in India.
key salient features of this code:
1. Flexibility for Technological Changes: The code aims to provide flexibility in adapting to
technological changes and dynamic factors in matters related to the health, safety, welfare, and
working conditions of workers.
2. Applicability: The provisions of the code apply to all establishments with ten or more workers,
except for establishments related to mines and docks, which have more specific regulations.
3. Inter-State Migrant Workers: Provisions in the code focus on easing the lives of Inter-State
Migrant Workers, addressing the anomalies present in the Inter-State Migrant Workers Act, 1979,
and providing legal identity to such workers for access to social security schemes.
4. Traveling Allowance: Employers are required to provide an annual traveling allowance to Inter-
State Migrant Workers for round-trip journeys to their native places.
5. Appointment Letters: Employers are mandated to provide appointment letters to workers.
6. Annual Health Check-up: Employers must provide free annual health check-ups for workers.
7. Benefits for Construction Workers: Workers engaged in building and other construction work in
one state and moving to another will benefit from the Building and other Construction Workers'
Cess fund.
8. One Nation - One Ration Card: Inter-State Migrant Workers can access ration facilities in the state
where they work, while their family members can avail of these facilities in their home state.
9. Grievance Helpline: Mandatory helpline facilities in every state are provided for the resolution of
Inter-State Migrant Workers' grievances.
10. National Database: A national database is to be created for Inter-State Migrant Workers.
11. Revised Leave Entitlement: Instead of 240 days, a worker who has worked for 180 days is entitled
to one-day leave for every 20 days of work.
12. Emphasis on Women Empowerment: The code places an emphasis on women's empowerment,
giving them the right to work in all types of establishments. Women are also allowed to work at
night with their consent, provided safety measures are in place.
13. Maternity Benefits: The Maternity Benefit Act provides for paid maternity leave of 26 weeks and
mandatory crèche facilities in establishments with 50 or more workers.

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14. Appointment Letters: Employers are required to issue appointment letters to promote
formalization in employment.
15. Occupational Safety and Health Advisory Boards: National and State Occupational Safety and
Health Advisory Boards are constituted to provide recommendations on policy matters related to
occupational safety, health, and working conditions.
16. Safety Committees: Provision is made for the constitution of Safety Committees in establishments.
17. Common License: A "common license" is introduced for factories, contract labor, beedi, and cigar
establishments, along with a single all-India license for a five-year period for engaging contract
labor.
18. Compensation for Accident Victims: Courts are empowered to allocate a portion of monetary
penalties, up to fifty percent, to workers who are victims of accidents or their legal heirs in case of
fatalities.
19. Overriding Powers in Emergencies: The Central Government is granted overriding powers to
regulate the general safety and health of residents in the event of declarations of epidemics,
pandemics, or disasters.

The Code on Wages, 2019

It represents a significant legislative effort in India to amend and consolidate laws related to wages and
bonuses. It introduces several important features to ensure wage security, social security, and health
security for workers in both organized and unorganized sectors.
key salient features of this code:
1. Comprehensive Elements of Wages: The code covers all essential elements related to wages,
equal remuneration, payment, and bonus.
2. Wage Security: The code guarantees minimum wages for workers in both organized and
unorganized sectors, ensuring that all workers have the right to minimum wages.
3. Review of Minimum Wages: Minimum wages are subject to periodic review every five years to
ensure they remain fair and appropriate.
4. Timely Payment of Wages: The code guarantees timely payment of wages to all workers,
promoting financial security.
5. Equal Remuneration: Male and female workers are entitled to equal remuneration for the same
work, promoting gender equality.

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6. Floor Wage: To eliminate regional disparities in minimum wages, the concept of a floor wage has
been introduced.
7. Determination of Minimum Wages: The process of determining minimum wages is simplified and
based on criteria such as skill level and geographical area.
8. Wage Payment Methods: Employers may pay wages by check, digital or electronic mode, or by
crediting them to employees' bank accounts, as specified by the appropriate Government.
9. Inspectors-cum-Facilitators: To improve inspection processes and reduce arbitrariness, the code
empowers the appointment of Inspectors-cum-Facilitators who provide information and advice to
employers and workers.
10. Appellate Authority: An appellate authority is established to hear appeals, ensuring speedy, cost-
effective grievance redressal and claim settlement.
11. Graded Penalties: Different types of contraventions of the code's provisions are subject to graded
penalties.
12. Opportunity for Compliance: Employers are given an opportunity to comply with the legislation's
provisions before prosecution proceedings are initiated, except in cases of repeated
contraventions within five years.
13. Compounding of Offenses: Offenses that are not punishable with imprisonment may be
compounded.
14. Enhanced Period of Limitation: The period for filing claims by a worker is extended to three years,
providing workers with more time to settle their claims.
15. Burden of Proof on Employer: In cases of claims related to non-payment of remuneration, bonus,
or unauthorized deductions, the burden of proof is on the employer to demonstrate payment.
16. Advisory Boards: The appropriate Government can establish Advisory Boards at the Central and
State levels to advise on matters related to wages, women's employment, and other related issues.

The Industrial Relations Code, 2020

It is a significant piece of legislation in India aimed at consolidating and amending laws related to trade
unions, employment conditions in industrial establishments, and the resolution of industrial disputes.
key salient features of this code
1. Definition of Workers: The code defines "workers" to include those in supervisory roles earning
wages up to a specified limit, determined by the Central Government.

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2. Fixed-Term Employment: The code allows for fixed-term employment, with employees receiving
benefits similar to permanent workers, except for notice periods and retrenchment
compensation. Employers have flexibility in hiring workers on a fixed-term basis.
3. Revised Definition of Industry: The definition of "industry" is revised to encompass systematic
activities carried out in cooperation between employers and workers for the production, supply,
or distribution of goods or services.
4. Inclusion of Concerted Casual Leave in Strike Definition: Concerted casual leave is included within
the definition of a strike.
5. Grievance Redressal Committee: Industrial establishments employing twenty or more workers
can have Grievance Redressal Committees with representation from women workers.
6. Atal Bimit Vyakti Kalyan Yojna: Workers in the organized sector who lose their jobs are eligible for
financial aid under this scheme, providing unemployment allowances.
7. Retrenchment Benefits: In the case of retrenchment, workers receive 15 days' wages for re-
skilling, credited directly to their bank accounts to enable them to acquire new skills.
8. Trade Union Registration Appeal: Provisions are made for appeals against non-registration or
cancellation of trade union registrations before the Industrial Tribunal.
9. Recognition of Trade Unions: The Central and State Governments are empowered to recognize
Trade Unions or federations of Trade Unions as Central Trade Unions or State Trade Unions.
10. Threshold for Certification of Standing Orders: Industrial establishments with three hundred or
more workers need certification of standing orders if they differ from the model standing orders
provided by the Central Government.
11. Industrial Tribunal: The code establishes Industrial Tribunals, consisting of a Judicial Member and
an Administrative Member, for resolving industrial disputes.
12. Prohibition of Strikes and Lock-outs: Strikes and lock-outs in industrial establishments are
prohibited without a fourteen-day notice.
13. Recognition of Negotiating Union and Council: Employers are required to recognize a negotiating
union or council within an industrial establishment for the purpose of negotiations. The criterion
for recognizing a negotiating union is when it has the support of fifty-one percent or more workers
on the muster roll of that establishment. As for negotiating councils, a Trade Union with support
from every twenty percent of workers will be entitled to one seat, with fractions above twenty
percent disregarded.

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14. New Rights for Trade Unions: Trade unions have been granted new rights, including the ability to
seek statutory recognition.
15. Penalties for Violations: The code provides for penalties of varying degrees for different types of
violations. These penalties are commensurate with the gravity of the offenses.
16. Exemptions for Industrial Establishments: The appropriate government has the authority to
exempt specific industrial establishments from certain provisions of the code in the public interest
for a specified period.
17. Prior Permission for Lay-off, Retrenchment, and Closure: Industrial establishments, including
mines, factories, and plantations with three hundred or more workers, must obtain prior
permission from the appropriate government before implementing lay-offs, retrenchments, or
closures. The government has the flexibility to increase the threshold for this requirement through
notification.
18. Compounding of Offenses: The code allows for the compounding of offenses by a Gazetted Officer.
The appropriate government may specify the sum for compounding, which can be fifty percent of
the maximum fine for offenses punishable with fines only and seventy-five percent for offenses
punishable with imprisonment for a term not exceeding one year or with a fine.

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Prof Abhijeet C. Jaiswal
LESSON 16-I: Law of Welfare & Working Condition Unit I –
Factories Act, 1948
INTRODUCTION

1. Objective: The primary objective of the Act is to ensure the safety and health of workers in
factories and prevent the unregulated growth of factories.
2. Enactment Date: The Factories Act, 1948, was enacted on September 23, 1948.
3. Working Conditions: The Act lays down guidelines on various aspects of working conditions,
including working hours, holidays, and leaves.
4. Health and Safety Measures: It mandates health and safety measures such as cleanliness,
ventilation, lighting, drinking water, and more.
5. Medical Examination: The Act requires medical examinations for children under the age of 15
before they are employed and periodically thereafter.
6. Certificates of Fitness: Young workers in certain industries, like harbors and construction, are
required to have certificates of fitness.
7. Hazardous Processes: The Act contains provisions related to hazardous processes, including the
permissible levels of chemical substances in the workplace.
8. Working Hours: Adult workers are not allowed to work more than 48 hours per week and must
receive one full day off in a week. Women workers have restrictions on night shifts.
9. Child Labor: The Act prohibits the employment of children under the age of fourteen in any
factory.
10. Complaints and Penalties: There are provisions for lodging complaints with inspectors, and the
Act contains penalties for various offenses.
11. Regulatory Framework l Factories Act, 1948

The history of labor legislation and the development of the Factories Act, 1948, in India is a reflection of
the evolving relationship between labor and capital and the changing socio-economic landscape.
1. Struggle Between Labor and Capital: There has been a historical struggle between labor and
capital, with capital often exploiting labor for economic gain. This exploitation led to industrial
unrest, strikes, and labor disputes.

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2. Pre-Independence Era: In the pre-independence era, workers were generally illiterate, poor, and
unaware of their rights. Both the government and the courts tended to stay out of employer-
employee relations.
3. Post-Independence Focus: After India gained independence, the national government recognized
the importance of improving labor conditions in industries for the country's prosperity. Two key
concepts emerged in labor legislation: the worker is a partner in production and should receive a
fair share of the profits, and both individual employers and society as a whole have an obligation
to protect workers' well-being.
4. Evolution of the Factory Act: The Factory Act is a central legislation that was first enacted in 1881.
It underwent several amendments in subsequent years, including in 1948, which brought about
comprehensive changes. The Factory Act of 1948 focused on health, safety, and welfare of workers
inside factories, as well as working hours, minimum working age, and paid leave.
5. Alignment with Constitution: The Factories Act, 1948, is aligned with the spirit of the Indian
Constitution, particularly articles 24, 39(e), 39(f), 42, and 48A, which emphasize the welfare of
workers and protection of their rights.
6. Amendments Post-Bhopal Gas Disaster: The Bhopal gas disaster in 1984, one of the world's worst
industrial disasters, highlighted the need for stronger safety measures in hazardous industries. In
response to this disaster, the Factories (Amendment) Act was enacted in 1987. This amendment
shifted the focus from dealing with disasters after they occur to preventing them in the first place.
7. Occupational Health and Safety: The 1987 amendment introduced a special chapter on
occupational health and safety. It mandated pre-employment and periodic medical examinations
for workers in hazardous industries and monitoring of the work environment. Maximum
permissible limits for various chemicals were also established.

Object of the Factories Act, 1948:

1. Objective of the Act: The Factories Act, 1948 was enacted to provide adequate compensation to
affected persons due to industrial and occupational hazards. Its primary objective is to ensure the
safety, health, welfare, and well-being of workers employed in factories. It extends to various
sectors, including factories, mines, plantations, construction, and mechanically propelled vehicles.

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2. Social Legislation: In the case of Ravi Shankar Sharma v. State of Rajasthan, the court emphasized
that the Factories Act is a social legislation. It is designed to address various aspects of workers'
lives in factories, including their health, safety, and welfare.
3. Protection Against Exploitation: The Factories Act aims to protect workers from exploitation by
business establishments. It sets standards for working conditions within factory premises,
ensuring that workers are not subjected to hazardous or unhealthy environments.
4. Protection from Industrial and Occupational Hazards: The Act was primarily enacted to protect
workers employed in factories from industrial and occupational hazards. It imposes obligations on
factory owners or occupiers to safeguard the health and safety of workers.
5. Overhauling of the Law: The landmark case of J.K. Industries Limited, etc. v. The Chief Inspector
of Factories highlighted the need for overhauling the factories law. The provisions of the 1934 Act
were found inadequate, especially in the context of the growing industrial activity in the country.
6. Social Welfare Legislation: The Factories Act, 1948 is considered a piece of social welfare
legislation. It aims to protect workers from long hours of strain and ensures that they work in safe,
healthy, and sanitary conditions. The Act places stringent obligations on occupiers or managers to
secure the health and safety of workers, indicating its broad purpose.

Applicability of the Act

1. Geographical Applicability: The Factories Act, 1948 extends to the entire territory of India. It came
into effect on the 1st day of April, 1949, making it applicable across the country.
2. Applicability to Factories: The Act primarily applies to establishments known as "factories." For
its provisions to be applicable, the following criteria must be met:
• Using Power: Factories using power for manufacturing processes are covered by the Act
if they employ 10 or more workers on any day during the preceding 12 months.
• Not Using Power: Factories that do not use power in their manufacturing processes are
covered if they employ 20 or more workers on any day during the preceding 12 months.
3. Exclusions: The Factories Act, 1948 does not apply to certain categories of establishments,
including:
• Mines: Mines are not subject to the Factories Act, as they are governed by the Mines Act,
1952.
• Mobile Units of Armed Forces: Mobile units belonging to the armed forces of the Union
are exempt from the Act's provisions.

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• Railway Running Sheds: Railway running sheds are not covered by the Act.

• Hotels, Restaurants, and Eating Places: Establishments falling under the category of
hotels, restaurants, or eating places are also excluded from the Act's scope.
4. Beneficiaries: The benefits and protections provided by the Factories Act are available to
individuals who are employed within the factory premises and meet the criteria defined for a
"worker" under the Act.
5. Exclusion of Armed Forces Members: It's important to note that members of the armed forces of
the Union are excluded from the definition of "worker" and are not covered by the Factories Act.

Scheme of the Act

Definitions

“Adult” Section 2(a) Adult means a person who has completed his eighteenth year of age;
“Adolescent” Section Adolescent means a person who has completed his fifteenth year of age but
2(b) has not completed his eighteenth year;
“Calendar Year” Section Calendar Year means the period of twelve months beginning with the first
2(bb) day of January in any year;
“Child” Section 2(c) Child means a person who has not completed his fifteenth year of age;
“Competent Person” Competent Person, in relation to any provision of this Act, means a person
Section 2(ca) or an institution recognized as such by the Chief Inspector for the purposes
of carrying out tests, examinations and inspections required to be done in a
factory under the provisions of this Act having regard to-
(i) the qualifications and experience of the person and
facilities available at his disposal; or
(ii) the qualifications and experience of the persons
employed in such institution and facilities available
therein, with regard to the conduct of such tests,

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examinations and inspections, and more than one
person or institution can be recognized as a competent
person in relation to a factory;
“Hazardous Process” Hazardous process means any process or activity in relation to an industry
Section 2(cb) specified in the First Schedule where, unless special care is taken, raw
materials used therein or the intermediate or finished products, bye-
products, wastes, or effluents thereof would-
(i) cause material impairment to the health of the persons
engaged in or connected therewith, or
(ii) result in the pollution of the general environment:
Provided that the State Government may, by notification in the Official
Gazette, amend the First Schedule by way of addition, omission or variation
of any industry, specified in the said Schedule;
“Young Person” Section Young person means a person who is either a child or an adolescent
2(d)
“Day” Section 2(e) Day means a period of twenty-four hours beginning at midnight;
“Week” Section 2(f) Week means a period of seven days beginning at midnight on Week means
a period of seven days beginning at midnight on Saturday night or such other
night as may be approved in writing for a particular area by the Chief
Inspector of Factories
“Power” Section 2(g) Power means electrical energy, or any other form of energy which is
mechanically transmitted and is not generated by human or animal agency
“Prime mover” Section Prime mover means any engine, motor or other appliance which generates
2(h) or otherwise provides power;
Transmission Transmission Machinery means any shaft, wheel drum, pulley, system of
Machinery” Section 2(i) pulleys, coupling, clutch, driving belt or other appliance or device by which
the motion of a prime mover is transmitted to or received by any machinery
or appliance;
“Machinery” Section Machinery includes prime movers, transmission machinery and all other
2(j) appliances whereby power is generated, transformed, transmitted or
applied;

“Manufacturing Process” {Section 2(k)} Manufacturing Process means any process for —
(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up,
demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale,
transport, delivery or disposal; or
(ii) pumping oil, water, sewage or any other substance; or
(iii) generating, transforming or transmitting power; or
(iv) composing types for printing, printing by letter press, lithography, photogravure or other similar
process or book binding; or
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or
(vi) preserving or storing any article in cold storage;

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“Worker” {Section 2(I)}

Worker means a person employed, directly or by or through any agency (including a contractor) with or
without the knowledge of the principal employer, whether for remuneration or not], in any manufacturing
process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any
other kind of work incidental to, or connected with, the manufacturing process, or the subject of the
manufacturing process but does not include any member of the armed forces of the Union;

“Factory” {Section 2(m)} Factory means any premises including the precincts thereof-

(i) whereon ten or more workers are working, or were working on any day of the preceding twelve months,
and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily
so carried on, or

(ii) Whereon twenty or more workers are working, or were working on any day of the preceding twelve
months, and in any part of which a manufacturing process is being carried on without the aid of power, or
is ordinarily so carried on,-

The definition of factory specifically excludes from its purview a mine subject to the operation of the Mines
Act, 1952 or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel,
restaurant or eating place.

But does not include a mine subject to the operation of [the Mines Act, 1952 (35 of 1952)], or [a mobile
mobile unit belonging to the armed forces of the Union, railway running shed or a hotel, restaurant or
eating place].

Explanation I: For computing the number of workers for the purposes of this clause all the workers in
different groups and relays in a day shall be taken into account;

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Explanation II: For the purposes of this clause, the mere fact that an Electronic Data Processing Unit or a
Computer Unit is installed in any premises or part thereof, shall not be construed to make it a factory if no
manufacturing process is being carried on in such premises or part thereof;

Occupier (Section 2(n)): Occupier of a factory means the person who has ultimate control over the affairs
of the factory. However, there are specific provisions and exceptions related to the determination of the
occupier:

1. Firm or Association of Individuals: In the case of a firm or any other association of individuals, any
one of the individual partners or members of the firm or association shall be deemed to be the
occupier.

2. Company: In the case of a company, any one of the directors of the company shall be deemed to
be the occupier.

3. Government or Local Authority-Owned Factory: In the case of a factory that is owned or

controlled by the Central Government, any State Government, or any local authority, the person
or persons appointed to manage the affairs of the factory by the respective government or local
authority shall be deemed to be the occupier.

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Additionally, there are special provisions related to ships undergoing repair or maintenance work in a dry
dock that is available for hire:

• Owner of Dry Dock: For matters provided for by the dry dock, the owner of the dry dock shall be
deemed to be the occupier.

• Owner of the Ship or Contractors: For matters related to the repair or maintenance work on a
ship, the owner of the ship, or the agent, master, or other office-in-charge of the ship, or any
person who contracts with such owner, agent, master, or officer-in-charge to carry out the repair
or maintenance work shall be deemed to be the occupier

Exemption of occupier or manager from liability in certain cases

Section 101 of the Factories Act, 1948 provides exemptions from liability for the occupier or manager of a
factory who is charged with an offence under the Act. This section allows the occupier or manager to bring
another person into court whom they charge as the actual offender, provided they can prove two key
points to the satisfaction of the court:

(a) Due Diligence: The occupier or manager must demonstrate that they have used due diligence to
enforce the execution of the Act. In other words, they must show that they have taken reasonable and
appropriate steps to ensure compliance with the Act within the factory.

(b) Lack of Knowledge, Consent, or Connivance: The occupier or manager must establish that the offence
in question was committed without their knowledge, consent, or connivance. This means that they had
no involvement or complicity in the commission of the offence.

If the occupier or manager successfully proves both of these conditions to the satisfaction of the court,
the other person whom they charge as the actual offender will be convicted of the offence. This person
will then be liable to the same punishment as if they were the occupier or manager of the factory.

Statutory Agencies and Their Powers for Enforcement of the Act:

• Reference to Time of Day (Section 3)
• State Government's power to make rules for referencing time of day.
• Relevant when Indian Standard Time (IST), 5-1/2 hours ahead of Greenwich Mean-Time,
is not ordinarily observed.
• Rules may specify the area, define the local mean time ordinarily observed therein, and
permit such time to be observed in all or any of the factories situated in the area.
• Declaration of Different Departments (Section 4)

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• State Government may, on its own or on an application made by an occupier, direct, by an

order in writing, that different departments or branches of a factory specified in the

application shall be treated as separate factories.
• Alternatively, it can direct that two or more factories specified in the application shall be
treated as a single factory.
• Mandatory to provide an opportunity of being heard to the occupier before passing any
such order.
• Exemption During Public Emergency (Section 5)
• In cases of public emergency, the State Government may, by notification in the Official
Gazette, exempt any factory or class or description of factories from all or any of the
provisions of this Act, except section 67.
• Exemptions are for a period and subject to conditions as determined by the State
Government.
• No exemption notification can be for a period exceeding three months at a time.
• "Public emergency" refers to a grave emergency threatening India's security, including
war, external aggression, or internal disturbance.

Power of the State Government to Make Rules for Approval, Licensing, and Registration of Factories:
• Section 6(1) of the Act authorizes the State Government to make rules.
• Rules can include the following provisions:
• Submission of Plans: Requiring the submission of plans of any class or description of
factories to the Chief Inspector or the State Government for the purposes of the Act.
• Prior Permission: Requiring prior written permission from the State Government or the
Chief Inspector for the site where the factory is to be situated and for the construction or
extension of any factory or class or description of factories.
• Submission of Plans and Specifications: Specifying that for considering applications for
such permission, the submission of plans and specifications is required.
• Nature and Certification of Plans: Prescribing the nature of such plans and specifications
and specifying who should certify them.
• Registration and Licensing: Requiring the registration and licensing of factories or any
class or description of factories. It also involves prescribing the fees payable for such
registration and licensing and for the renewal of licenses.

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• License Conditions: Ensuring that no license shall be granted or renewed unless the notice

specified in section 7 of the Act has been given

Deemed Approval:
• If you send an application for permission, along with plans and specifications, to the State
Government or Chief Inspector by registered post.
• And if you don't receive a response within three months from the date you sent the application.
• Then, your permission request is automatically considered approved.
Appeal to the Central Government:
• If the State Government or Chief Inspector denies your permission for things like setting up or
extending a factory, or registering and licensing a factory.
• You have the right to appeal this decision.
• You must file your appeal within thirty days from the date of the denial.
• If the State Government made the decision, you appeal to the Central Government.
• In all other cases, you appeal to the State Government.
Explanation:
• This part explains that making certain changes to your factory won't be seen as extending it under
this section.
• These changes include replacing or adding plant or machinery.
• However, there are conditions:
• These changes must not reduce the minimum space needed for safe work around the
equipment.
• They also must not harm the environment by releasing harmful things like steam, heat,
dust, or fumes.
• All of this should happen within specific limits set by the rules.

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(i) Inspectors
Appointment of Inspectors:
• Section 8 of the Act empowers the State Government to appoint various categories of inspectors.
• These categories include Inspectors, Additional Inspectors, and Chief Inspectors.
• These individuals must possess qualifications prescribed by the State Government.
• Section 8(2) allows the State Government to appoint any person as a Chief Inspector.
• To assist Chief Inspectors, the government can appoint Additional, Joint, or Deputy Chief
Inspectors, as well as other officers as needed.
• District Magistrates automatically serve as Inspectors for their respective districts.
• The State Government can appoint specific public officers as Additional Inspectors for designated
areas.
• Appointments of these inspectors and chief inspectors are made through official notifications
published in the Official Gazette.
Assignment of Powers:
• If there are multiple inspectors in one area, the State Government can issue notifications in the
Official Gazette specifying the powers each inspector shall exercise and to whom prescribed
notices should be sent.
• An Inspector appointed under the Act has authority for all purposes of the Act.
• The Chief Inspector is appointed to oversee the entire state and, in addition to the powers of a
Chief Inspector, can exercise the powers of an Inspector throughout the state.
• Even if areas are assigned to different inspectors under Section 8(6), the Chief Inspector can still
file complaints that the court can legally act upon.
• Additional, Joint, or Deputy Chief Inspectors, as well as other appointed officers, also have the
authority to exercise the powers of an Inspector throughout the state.

Powers of Inspectors:
• Inspectors, within their designated local limits, can exercise the following powers, subject to any
rules made in this regard:
(a) Enter any place used as a factory, along with necessary assistants, government personnel, or
experts, if necessary.
(b) Conduct examinations of the factory's premises, plant, machinery, articles, or substances.

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(c) Investigate accidents or dangerous occurrences, whether resulting in bodily injury, disability, or
not, and record statements from relevant individuals.
(d) Demand the production of any prescribed registers or documents related to the factory.
(e) Seize or take copies of any registers, records, or documents, or portions thereof, if necessary
to address violations of the Act.
(f) Instruct the occupier to keep premises, parts thereof, or specific items undisturbed for the
duration required for examinations.
(g) Take measurements, photographs, and recordings as needed for examinations, with the use of
necessary instruments or equipment.
(h) If any article or substance found in the premises poses or may pose a danger to workers' health
or safety, direct its dismantling, subject it to testing, or take possession of it, as necessary for
examination purposes. However, this should not lead to damage or destruction unless it is
essential for the Act's purposes.
(i) Exercise any other powers as prescribed by rules.
• It is important to note that individuals cannot be compelled to answer questions or provide
evidence that may incriminate themselves under this section.

(ii)Certifying Surgeons:
• The State Government has the authority to appoint qualified medical practitioners as certifying
surgeons for the purposes of the Act.
• These certifying surgeons can be appointed within specific local limits or for particular factories or
classes of factories as determined by the State Government.
• Certifying surgeons can authorize other qualified medical practitioners to exercise their powers
under the Act, subject to the approval of the State Government. Such authorization may be
granted for a specified period and with conditions imposed by the State Government.
• When the Act refers to a "certifying surgeon," it also includes references to any qualified medical
practitioner who has been authorized by the certifying surgeon.
• Individuals cannot be appointed as certifying surgeons or authorized to exercise their powers if
they are or become occupiers of a factory, have a direct or indirect interest in the factory, its
processes, business, patents, machinery, or are employed by the factory.

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• However, the State Government may exempt specific individuals or classes of individuals from the

provisions of the above sub-section for particular factories or classes of factories, provided that
such exemptions are granted in writing and subject to specified conditions.

Duties of Certifying Surgeons:

• Certifying surgeons are required to perform specific duties as prescribed in connection with:
(a) The examination and certification of young persons under the Act.
(b) The examination of persons engaged in factories in dangerous occupations or processes as
prescribed.
(c) The exercise of medical supervision as prescribed for any factory or class of factories under the
following circumstances:
(i) Cases of illness have occurred, which can be reasonably attributed to the nature of the
manufacturing process or other working conditions in that factory.
(ii) Due to any change in the manufacturing process, substances used, or the adoption of
new processes or substances, there is a likelihood of injury to the health of workers
employed in that process.
(iii) Young persons are currently employed or are about to be employed in work that is
likely to cause injury to their health.
Definition of Qualified Medical Practitioner:
• In this context, a "qualified medical practitioner" is defined as a person holding a qualification
granted by an authority specified in either the Schedule to the Indian Medical Degrees Act, 1916,
or in the Schedules to the Indian Medical Council Act, 1933.

(iii)Appointment of Welfare Officers:

• Section 49 of the Act mandates that the occupier of a factory must appoint Welfare Officers when
the factory employs 500 or more workers on a regular basis.
Duties, Qualifications, and Conditions:
• The Act empowers the State Government to prescribe the specific duties, qualifications, and
conditions of service for Welfare Officers.

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• Welfare Officers play a vital role in promoting the well-being and welfare of workers within the

factory.

(iv)Appointment of Safety Officers:

• Section 40-B of the Act empowers the State Government to direct the occupier of a factory to
employ a specific number of Safety Officers.
• This directive is issued when the factory employs more than 1,000 workers or when the
manufacturing process poses risks such as bodily injury, poisoning, disease, or other health
hazards to the workers.
Duties, Qualifications, and Working Conditions:
• The State Government has the authority to prescribe the duties, qualifications, and working
conditions for Safety Officers.
• Safety Officers play a crucial role in ensuring the safety of workers within the factory, particularly
in high-risk environments.

Duties of Occupier / Manufacturer

Notice by Occupier (Section 7):
• The occupier must send a written notice to the Chief Inspector at least fifteen days before
beginning to occupy or use any premises as a factory.
• This notice should include the following details:
• Name and location of the factory.
• Name and address of the occupier.
• Name and address of the owner of the premises or building (including the precincts).
• Address for communication related to the factory.
• Nature of the manufacturing process carried out in the factory during the last twelve
months (for existing factories) or to be carried out in the next twelve months (for all
factories).
• Total rated horse power installed or to be installed in the factory, excluding the rated horse
power of any separate stand-by plant.
• Name of the factory manager.

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• Number of workers likely to be employed in the factory.

• Average number of workers per day employed during the last twelve months (for existing
factories).
• Any other particulars as prescribed.
Notice for New Manager:
• Whenever a new manager is appointed, the occupier must send a written notice to the Inspector
and a copy to the Chief Inspector within seven days from the date the new manager takes over
charge.
Manager as Deemed Occupier:
• If no person is designated as the manager of a factory or during a period when the designated
person is not managing the factory, any person found acting as a manager or, if no such person is
found, the occupier himself, shall be deemed to be the manager of the factory for the purposes
of the Act.

(ii) General duties of the occupier (Section 7A)

• Ensure plant and systems of work in the factory are safe and free from health risks.
• Establish arrangements in the factory to maintain safety and prevent health risks associated with
the use, handling, storage, and transport of articles and substances.
• Provide necessary information, instruction, training, and supervision to ensure the health and
safety of all workers at work.
• Maintain all places of work in a safe condition, free from health risks, and provide safe means of
access to and egress from these places.
• Ensure the working environment in the factory is safe, without health risks, and has adequate
facilities and arrangements for workers' welfare at work.
Policy Statement:
• Every occupier must prepare a written statement of their general policy concerning the health and
safety of workers at work.
• This statement should be revised as needed.
• The occupier is obligated to bring this statement and any revisions to the attention of all workers
in a manner prescribed.

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General Duties of Manufacturers, Etc.:

• Every person involved in designing, manufacturing, importing, or supplying any article for use in a
factory must ensure that the article is designed and constructed to be safe and not pose health
risks to workers when used correctly.
• Testing and examination must be conducted to ensure compliance with safety standards.
• Adequate information must be provided about the article's use, design, testing, and any necessary
conditions to ensure safety for workers.
• Importers of articles designed or manufactured outside India must ensure that the article
conforms to the same or higher standards as those in India.
• Research should be conducted to discover and minimize risks to worker health and safety related
to the article's design.
• Duties apply to actions done in the course of one's business and within their control.
• When a user undertakes to ensure safe usage of an article through a written undertaking, the
manufacturer's duty regarding design and safety may be reduced accordingly.
• Proper usage of an article includes following provided information and advice related to its use.
• The term "article" includes plant and machinery.

Measures to be taken by factories for health, safety and welfare of workers These measures are
provided under Chapters III, IV and V of the Act which are as follows:
Health
Chapter III of the Act deals with the following aspects:
Section 11 of the Act focuses on maintaining cleanliness in factories.
key provisions:
1. General Cleanliness Obligation:
• Every factory is required to be kept clean and free from unpleasant odors or effluvia arising
from drains, toilets, or other nuisances.
2. Specific Cleanliness Requirements:
• Accumulated dirt and refuse on floors, benches in workrooms, staircases, and passages
must be removed daily. This can be done through sweeping or other effective methods,
and the waste should be disposed of appropriately.

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• The floors of workrooms must be cleaned at least once a week. This can be accomplished

by washing, using disinfectants when necessary, or by employing other effective cleaning

methods.
• If a floor is prone to becoming wet during manufacturing processes and can be drained,
effective drainage systems must be provided and maintained.
3. Maintenance of Walls, Ceilings, and Framework:
• Maintenance requirements for various surfaces are specified:
• Surfaces that are painted (except for washable water-paint) or varnished must be
repainted or revarnished at least once every five years.
• If washable water-paint is used, a coat of such paint must be reapplied at least
once every three years, and the surfaces should be washed at least once every six
months.
• Surfaces that are painted, varnished, or have smooth impervious surfaces must
be cleaned at least once every fourteen months using a prescribed method.
• In other cases, surfaces should be kept whitewashed or color washed, with this
maintenance carried out at least once every fourteen months.
• Additionally, doors, window frames, and other wooden or metallic framework and
shutters must be kept painted or varnished. Repainting or varnishing should occur at least
once every five years.
4. Recording Maintenance:
• Dates of the maintenance processes outlined in clause (d) should be recorded in a
prescribed register.
5. Exemption by State Government:
• If the State Government determines that a particular factory, due to the nature of its
manufacturing process, cannot comply with these cleanliness requirements, it has the
authority to exempt the factory from these provisions. In such cases, alternative methods
for maintaining cleanliness may be suggested by the State Government.

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Section 12 of the Act pertains to the disposal of wastes and effluents in factories.
key points:
1. Responsibility of the Occupier:
• Every occupier of a factory is obligated to establish effective arrangements for the
treatment of the wastes and effluents generated as a result of the manufacturing
processes conducted in the factory.
2. Objective of Arrangements:
• The primary objective of these arrangements is to ensure that the wastes and effluents
are treated in a manner that renders them harmless or innocuous.
3. Compliance with State Government Rules:
• The arrangements made by the occupier for waste and effluent treatment must adhere to
any rules that may have been established by the State Government regarding such
treatment.
4. Approval by Prescribed Authority:
• If the State Government has not established specific rules for waste and effluent
treatment, the arrangements made by the occupier should be subject to approval by the
prescribed authority, if mandated by the State Governmen

Section 13 of the Act deals with ventilation and temperature control in factories.
key points:
1. Ventilation and Temperature:
• Every factory is required to establish suitable and effective provisions to ensure two
important factors:
• Adequate ventilation by circulating fresh air within the premises.
• Maintaining a temperature that provides reasonable comfort to the workers and
prevents harm to their health.
2. Determining Reasonable Temperature:
• The definition of a "reasonable" temperature may vary depending on the specific
circumstances of each factory.
3. State Government's Authority:

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• The State Government has the authority to set standards for adequate ventilation and

reasonable temperature.
• It can also specify the locations and positions where proper measuring instruments should
be placed for monitoring and maintaining these conditions.
4. Preventing Excessive Heat:
• Measures must be taken to prevent excessively high temperatures in workrooms. This
includes:
• Using appropriate construction materials and designs for walls and roofs to keep
temperatures as low as possible.
• Separating processes that produce high temperatures from workrooms.
• Insulating hot parts or implementing other effective methods to protect workers.
5. Authority of the Chief Inspector:
• The Chief Inspector has the power to direct factories to adopt specific measures aimed at
reducing excessively high temperatures.
• The Chief Inspector can specify the measures that should be implemented to address
temperature-related issues.

Section 14 of the Act focuses on addressing dust and fume-related issues in factories, especially those
involved in processes like chemicals, textiles, or jute that generate significant amounts of dust and fumes
harmful to workers' health.
key points:
1. Preventing Inhalation and Accumulation:
• Effective measures must be taken to prevent workers from inhaling and accumulating
dust, fumes, and other impurities within the workrooms.
2. Exhaust Appliances and Enclosures:
• Where necessary, exhaust appliances should be installed as close as possible to the source
of dust, fumes, or impurities.
• The source of these pollutants should also be enclosed as much as possible to prevent
their spread.
3. Exhaust for Internal Combustion Engines:
• Stationary internal combustion engines should have exhaust systems connected to the
open air to release fumes safely.

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4. Preventing Accumulation of Engine Fumes:
• For other types of internal combustion engines, measures should be implemented to
prevent the accumulation of fumes.
5. No Need for Evidence of Actual Injury:
• It's important to note that the section does not require evidence of actual injury to
workers' health.
• If the manufacturing process generates dust or fumes in quantities that are injurious or
offensive to the workers' health, it constitutes an offense under this section.
6. Continuing Offense:
• Violating this section is considered a continuing offense. This means that if an offense is
committed on a particular date, it continues to be an offense until the issue is rectified.

Section 15 of the Act deals with artificial humidification in factories, particularly in industries like cotton,
textiles, and cigarette manufacturing, where maintaining a specific level of humidity is necessary for the
manufacturing process.
key points of this section:
1. Artificial Humidification Defined:
• Artificial humidification refers to the intentional increase of humidity (moisture content)
in the air within a factory.
2. State Government Rules:
• The State Government has the authority to create rules regarding artificial humidification
in factories. These rules can include:
• Setting standards for humidity levels.
• Regulating the methods used to increase humidity artificially.
• Mandating tests to measure and record humidity levels accurately.
• Prescribing methods to ensure proper ventilation and cooling of air within
workrooms.
3. Water Source for Humidification:
• In factories where the humidity of the air is artificially increased, the water used for this
purpose should come from a public supply, another source of drinking water, or must be
effectively purified before use.

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4. Inspector's Authority:
• Inspectors have the authority to ensure that water used for humidification is effectively
purified.
• If an Inspector believes that water used for humidification is not properly purified, they
can issue a written order to the factory manager.
• The order specifies the necessary measures to rectify the situation and requires them to
be completed by a specified date.

Section 16 - Overcrowding:
1. Objective: This section aims to ensure that workers have sufficient air space in workrooms,
preventing overcrowding that could harm their health and efficiency.
2. General Prohibition: Overcrowding that is injurious to the health of workers is prohibited.
3. Minimum Working Space: The section specifies a minimum working space of 14.2 cubic meters
per worker in every workroom. Space more than 4.2 meters above the floor level is not considered
for this calculation.
Section 17 - Lighting:
1. Objective: This section mandates the provision and maintenance of sufficient and suitable
lighting, whether natural or artificial, in all parts of a factory where workers are working or passing.
2. Clean Windows and Skylights: Glazed windows and skylights used for lighting workrooms must
be kept clean on both their inner and outer surfaces. They should also be free from obstructions
to allow effective lighting.
3. Prevention of Glare and Shadows: Measures should be taken to prevent glare, whether directly
from a light source or due to reflection from smooth or polished surfaces. Additionally, the
formation of shadows that could cause eye strain or pose a risk of accidents to workers should be
minimized.
4. State Government Standards: The State Government has the authority to prescribe standards for
sufficient and suitable lighting in factories, including specific requirements for different types of
factories or manufacturing processes.

Section 18 - Drinking Water:

1. Objective: This section addresses the provision of drinking water in factories and aims to ensure
that workers have access to an adequate supply of wholesome drinking water.

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2. Arrangements for Drinking Water: Factories must make effective arrangements to provide and
maintain a sufficient supply of wholesome drinking water. These points should be conveniently
situated for all workers.
3. Marking and Distance: Drinking water points should be clearly marked as "drinking water" in a
language understood by the majority of workers. They should not be located within six meters of
any place that could contaminate the water source unless approved in writing by the Chief
Inspector.
4. Cooling in Hot Weather: Factories with more than 250 workers must provide means for cooling
drinking water during hot weather and distributing it to workers.
Section 19 - Latrines and Urinals:
1. Objective: This section addresses the provision of latrine and urinal facilities in factories to ensure
workers have access to clean and sanitary sanitation facilities.
2. Sufficient Accommodation: Factories must provide sufficient latrine and urinal accommodation of
prescribed types that are conveniently situated and accessible to workers at all times during their
work hours.
3. Gender-Separated Facilities: Separate enclosed accommodations must be provided for male and
female workers.
4. Ventilation and Cleanliness: The provided facilities should be adequately lighted and ventilated.
Latrines and urinals should not directly communicate with workrooms unless exempted in writing
by the Chief Inspector. These facilities must be maintained in a clean and sanitary condition at all
times.
5. Sweepers for Maintenance: Sweepers should be employed primarily for the purpose of keeping
latrines, urinals, and washing places clean.
6. Additional Requirements for Larger Factories: In factories with more than 250 workers, specific
sanitary types of latrine and urinal accommodation must be provided, and certain surfaces should
be finished with smooth, polished, impervious materials. Regular cleaning and washing of these
facilities are also required.
7. State Government Authority: The State Government has the authority to prescribe the number
of latrines and urinals based on the proportion of male and female workers and can establish
additional sanitation regulations in the interest of workers' health.
Section 20 - Spittoons According to the section, there shall be provided, in every factory, a sufficient
number of spittoons in convenient places and they shall be maintained in a clean and hygienic condition.

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Prof Abhijeet C. Jaiswal

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Prof Abhijeet C. Jaiswal
Safety
Chapter IV of the Act contains provisions relating to safety. These are discussed below.
Section 21 - Fencing of Machinery Summary:
• Objective: This section emphasizes the mandatory requirement to fence machinery in use or in
motion within factories to ensure the safety of workers. The aim is to prevent accidents and
injuries caused by contact with moving or hazardous machinery parts.
• Types of Machinery to be Fenced:
1. Every moving part of a prime mover (e.g., engines, motors) and every connected flywheel,
regardless of whether the prime mover or flywheel is located in the engine house or
elsewhere.
2. The headrace and tailrace of water-wheels and water turbines.
3. Any part of a stock-bar that extends beyond the headstock of a lathe.
4. Any machinery parts that are not inherently safe for workers and are not in a position or
construction that ensures safety. This includes parts of electric generators, motors, rotary
converters, transmission machinery, and any other machinery with dangerous
components.
• Safeguards: Safeguards, which are substantial and effective fencing, must be securely installed
around these machinery parts. They must be continuously maintained and kept in position while
the machinery is in motion or in use.
• Exemptions: The section allows exemptions for specific situations:
• When it is necessary to examine machinery parts while they are in motion or to carry out
lubrication or other essential adjustments while the machinery is in motion. These
examinations or operations must be necessary and cannot be conducted when the
machinery is stopped.
• In the case of parts of transmission machinery used in continuous processes where
stopping the machinery would substantially disrupt the process.
• State Government Authority: The State Government has the authority to:
• Prescribe additional precautions for specific machinery or parts to enhance worker safety.
• Grant exemptions, subject to specified conditions, to ensure worker safety.

Section 22 - Work on or Near Machinery in Motion Summary:

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• Objective: This section outlines the procedure for conducting examinations of machinery parts

while they are in motion or for performing operations as specified in Section 21. The aim is to
ensure that these tasks are carried out safely.
• Examination in Motion: When it is necessary to examine a part of machinery while it is in motion
or to carry out operations specified in Section 21, the following rules apply:
• The examination or operation should be performed by specially trained adult male
workers.
• Workers should wear tight-fitting clothing supplied by the occupier.
• The names of workers conducting these tasks should be recorded in a prescribed register,
and they should be provided with a certificate of appointment.
• Prohibition for Women and Young Persons: Women and young persons are prohibited from
cleaning, lubricating, or adjusting any part of a prime mover, transmission machinery while it's in
motion, or any other machine if doing so would expose them to the risk of injury from moving
parts of the machinery.

Section 23 - Employment of Young Persons on Dangerous Machines:

• Objective: This section aims to protect young workers by establishing requirements for their
employment on machines that are considered dangerous. It ensures that young workers receive
adequate training and supervision.
• Requirements for Young Workers: Young workers should not be required or allowed to work on
machines covered by this section unless the following conditions are met:
• They have been fully instructed on the dangers associated with the machine and the
precautions to be taken.
• They have received sufficient training in operating the machine or are under adequate
supervision by an experienced person who knows the machine well.
• Machines Covered: This section applies to machines that the State Government prescribes as
being of such a dangerous character that young workers should not operate them without
complying with the above requirements.

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Section 24 - Striking Gear and Devices for Cutting Off Power:
• Objective: This section addresses safety measures related to the use of striking gears and devices
for cutting off power in factories. The goal is to prevent accidents and provide emergency
shutdown capabilities.
• Striking Gears for Belts: Factories are required to provide and maintain suitable striking gears or
other mechanical appliances for moving driving belts to and from fast and loose pulleys that are
part of transmission machinery. This is to prevent the belt from creeping back on the fast pulley.
• Resting of Belts: Driving belts, when not in use, should not be allowed to rest or ride upon shafting
in motion.
• Devices for Cutting Off Power: Suitable devices for cutting off power in emergencies should be
provided and maintained in every workroom within the factory.
• Locking Devices: In factories where devices can inadvertently shift from the "off" to "on" position,
cutoff power arrangements should be provided to lock the devices in a safe position to prevent
accidental starts of transmission machinery or other machines to which the device is fitted.

Section 25 - Self-Acting Machines:

• Objective: This section aims to provide additional safeguards for workers who may be at risk of
injury from self-acting machines. It establishes rules regarding the movement of machine parts
and materials on these machines to prevent accidents.
• Restrictions on Traversing Parts: No traversing part of a self-acting machine in any factory, nor any
material carried on it, shall be allowed to run on its outward or inward traverse within a distance
of forty-five centimeters from any fixed structure that is not part of the machine if there is a
possibility that any person may pass through that space, whether as part of their job or otherwise.
• Grandfathering Clause: The Chief Inspector has the authority to permit the continued use of a
machine that was installed before the commencement of this Act, even if it does not comply with
the requirements of this section. However, the Chief Inspector may impose conditions to ensure
safety.

Section 26 - Casing of New Machinery:

• Objective: This section focuses on the safety of workers by mandating the casing of new
machinery in factories. It aims to prevent accidents and injuries caused by exposed machine parts.

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• Requirements for New Machinery: For all machinery driven by power and installed in a factory

after the commencement of this Act, the following requirements apply:

• Every set screw, bolt, or key on any revolving shaft, spindle, wheel, or pinion must be
adequately sunk, encased, or effectively guarded to prevent danger.
• All spur, worm, and other toothed or friction gearing, which do not require frequent
adjustment while in motion, must be completely encased unless they are situated in a
manner that is as safe as if they were completely encased.
• State Government Rules: The State Government has the authority to make rules specifying further
safeguards that should be provided for any other dangerous part of any particular machine or
class or description of machines.
• Penalty: The section establishes penalties for those who sell or let on hire, or as agents, cause or
procure to be sold or let on hire, machinery driven by power that does not comply with the
provisions of this section or any rules made under it. The penalty may include imprisonment for
up to three months or a fine of up to five hundred rupees, or both.

Section 27 - Prohibition of Employment of Women and Children near Cotton-Openers:

• Objective: This section aims to protect the safety of women and children by prohibiting their
employment in parts of a factory where cotton-openers are in operation. Cotton-openers are
machines used in the cotton industry.
• Prohibition: No woman or child shall be employed in any part of a factory where cotton is being
pressed, and a cotton opener is at work.
• Exception: If the feed-end of a cotton-opener is in a room separated from the delivery end by a
partition extending to the roof or to a height specified by the Inspector in writing, women and
children may be employed on the side of the partition where the feed-end is located.
Section 28 - Hoists and Lifts:
• Objective: This section focuses on ensuring the safety of hoists and lifts in factories. It sets
standards for their construction, maintenance, and examination.
• Requirements for Hoists and Lifts:
• Hoists and lifts must be of good mechanical construction, made from sound materials, and
possess adequate strength.

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• They should be properly maintained and thoroughly examined by a competent person at

least once every six months. A register must be kept containing details of these
examinations.
• Hoist and lift ways must be adequately enclosed with gates to prevent trapping of persons
or objects between the hoist or lift and fixed structures.
• Maximum safe working loads must be clearly marked on every hoist or lift, and loads
exceeding this limit are prohibited.
• Hoists and lifts used for carrying persons must have gates on each side for access to
landings.
• These gates should have interlocking or other efficient devices to ensure that the gates
cannot be opened unless the cage is at the landing and that the cage cannot be moved
unless the gate is closed.
Section 29 - Lifting Machines, Chains, Ropes, and Lifting Tackles:
• Objective: This section outlines safety measures for lifting machines (excluding hoists and lifts),
chains, ropes, and lifting tackles used for raising or lowering persons, goods, or materials in
factories.
• Requirements for Lifting Machines, Chains, Ropes, and Lifting Tackles:
• All parts of lifting machines and related equipment must be of good construction, made
from sound materials, and possess adequate strength. They should also be free from
defects.
• Regular maintenance and thorough examination by a competent person are required at
least once every twelve months, or as specified by the Chief Inspector. A register must be
kept with details of these examinations.
• Equipment must not be loaded beyond their safe working load, which should be clearly
marked. If marking is impractical, a table displaying safe working loads for different
equipment sizes must be displayed prominently.
• Effective measures must be taken to ensure the safety of persons working near the wheel
track of a traveling crane to prevent accidents.
• State Government Rules: The State Government has the authority to make additional rules for
lifting machines, chains, ropes, and lifting tackles, including prescribing further requirements and
providing exemptions where compliance is unnecessary or impracticable.

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Section 30 - Revolving Machinery:

• Objective: This section focuses on ensuring the safety of workers when dealing with revolving
machinery, particularly grindstones or abrasive wheels.
• Requirements:
• Every factory where grinding processes are carried out must permanently affix or place a
notice indicating the maximum safe working peripheral speed of each grindstone or
abrasive wheel.
• The speed of the shaft or spindle on which these grindstones or wheels are mounted to
achieve the safe working peripheral speed should also be indicated.
• The speed limits mentioned in the notice must not be exceeded.
• Effective measures must be taken to ensure that the safe working peripheral speed of all
other revolving equipment driven by power is not exceeded.
Section 31 - Pressure Plant:
• Objective: This section aims to maintain the safety of pressure plant and machinery used in
manufacturing processes that operate at pressures above atmospheric pressure.
• Requirements:
• Effective measures must be implemented to ensure that the safe working pressure of
pressure plant and machinery is not exceeded.
• The State Government has the authority to make rules regulating these pressures and may
also grant exemptions for specific plant parts or machinery.
Section 32 - Floors, Stairs, and Means of Access:
• Objective: This section addresses the safety of floors, stairs, passages, and means of access within
factories.
• Requirements:
• All floors, steps, stairs, passages, and gangways must be of sound construction and
properly maintained. They should be kept free from obstructions and substances that may
cause slipping.
• Where necessary for safety, substantial handrails must be provided.
• Safe means of access must be provided and maintained for every place where a person is
required to work.

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• When a person has to work at a height from which they could fall, provisions must be

made to ensure their safety, such as fencing or other suitable measures.

Section 33 - Pits, Sumps, Openings in Floors, etc.:
• Objective: This section addresses safety concerns related to fixed vessels, sumps, tanks, pits, or
openings in the ground or floors within factories.
• Requirements:
• Any such vessel, sump, tank, pit, or opening that could pose a danger due to its depth,
location, construction, or contents must be securely covered or fenced.
• The State Government has the authority to grant exemptions from these provisions,
subject to prescribed conditions.
Section 34 - Excessive Weights:
• Objective: This section focuses on preventing injuries caused by lifting or carrying excessively
heavy loads by factory workers.
• Requirements:
• Workers in factories should not be employed to lift, carry, or move loads that are so heavy
that they could likely cause injury.
• The State Government has the authority to make rules prescribing maximum weights that
can be lifted, carried, or moved by adult men, adult women, adolescents, and children
employed in factories or specific types of factories or processes.
Section 35 - Protection of Eyes:
• Objective: This section addresses the protection of workers' eyes when they are exposed to
certain manufacturing processes that pose risks to eye safety.
• Requirements:
• The State Government is required to make rules that mandate the provision of effective
screens or suitable goggles to protect the eyes of persons employed in or near
manufacturing processes that involve:
• Risk of injury to the eyes from particles or fragments thrown off during the
process.
• Risk to the eyes due to excessive light exposure.
Section 36 - Precautions Against Dangerous Fumes, Gases, etc.:
• Objective: This section aims to protect factory workers from the dangers of dangerous fumes,
gases, vapors, or dust that may be present in confined spaces within the factory.

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• Requirements:

• Entry into any chamber, tank, vat, pit, pipe, flue, or other confined space in a factory where
there is a likelihood of the presence of gas, fume, vapour, or dust to an extent that poses
a risk to individuals is prohibited. Exceptions are allowed when there is a provision for a
manhole of adequate size or other effective means of egress.
• Before entering such confined spaces, all practical measures must be taken to remove the
hazardous substances and bring their levels within permissible limits.
• Workers can enter these spaces if:
• A competent person certifies in writing, based on a test conducted by them, that
the space is reasonably free from dangerous substances.
• The person wears suitable breathing apparatus and is securely attached to a rope
held by someone outside the confined space.
Section 36-A - Precautions Regarding the Use of Portable Electric Light:
• Objective: This section addresses safety precautions related to the use of portable electric lights
and appliances in confined spaces within factories.
• Requirements:
• The use of portable electric lights or electric appliances with a voltage exceeding 24 volts
is prohibited in confined spaces within factories unless adequate safety devices are
provided.
• If there is a likelihood of inflammable gas, fume, or dust being present in such spaces, only
flame-proof construction lamps or lights are allowed, again provided that adequate safety
devices are in place.
Section 37 - Explosive or Inflammable Dust, Gas, etc.:
• Objective: This section mandates preventive measures in factories where manufacturing
processes produce dust, gas, fume, or vapor that is prone to explosion when ignited.
• Requirements:
• Practical measures must be taken, including:
• Effective enclosure of the plant or machinery used in the process.
• Removal or prevention of the accumulation of such hazardous substances.
• Exclusion or effective enclosure of all possible sources of ignition.

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Section 38 - Precautions in Case of Fire:
• Objective: This section focuses on fire safety within factories to prevent fire outbreaks and ensure
the safety of workers.
• Requirements:
• Measures must be taken to prevent fire outbreaks and its spread both within and outside
the factory.
• Safe means of escape for all individuals in case of fire must be provided and maintained.
• Necessary equipment and facilities for extinguishing fires should be available.
• Workers must be familiar with fire escape routes and trained in fire evacuation
procedures.
• The State Government can make rules specific to factories or types of factories to ensure
compliance with these provisions.
• The Chief Inspector can order additional safety measures to be implemented in specific
factories if deemed necessary.

Section 39 - Power to Require Specifications of Defective Parts or Tests of Stability:

• Objective: This section grants authority to factory inspectors to assess and address potential
dangers to human life or safety in factories.
• Requirements:
• If an inspector believes that any part of a building, ways, machinery, or plant in a factory
may pose a danger to human life or safety, they can serve an order in writing to the
occupier or manager or both of the factory.
• The order can require the occupier or manager to provide drawings, specifications, and
other details necessary to determine the safety of the concerned elements or to carry out
specific tests as specified in the order.
Section 40 - Safety of Buildings and Machinery:
• Objective: This section empowers inspectors to take action when they find that a building, ways,
machinery, or plant in a factory is dangerous to human life or safety.
• Requirements:
• If an inspector determines that certain measures are needed to ensure safety, they can
serve an order specifying those measures to the occupier or manager or both, and these
measures should be carried out by a specified date.

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• If the use of any part of a factory involves imminent danger to human life or safety, the

inspector can serve an order prohibiting its use until proper repairs or alterations are
made.
Section 40-A - Maintenance of Buildings:
• Objective: This section gives inspectors the authority to address the disrepair of buildings in
factories that could negatively affect the health and welfare of workers.
• Requirements:
• If an inspector finds that a building or part of a building in a factory is in a state of disrepair
that could be detrimental to worker health and welfare, they can serve an order specifying
the necessary measures to be taken by the occupier or manager or both, with a specified
deadline.
Section 40-B - Safety Officers:
• Objective: This section empowers state governments to require factories to employ safety officers
to oversee safety in specific cases.
• Requirements:
• If the state government decides, through a notification in the Official Gazette, that specific
conditions apply, such as the employment of one thousand or more workers or
involvement in a hazardous manufacturing process, factories must employ safety officers.
• The duties, qualifications, and conditions of service of safety officers are to be determined
by the state government.
Section 41 - Power to Make Rules to Supplement This Chapter:
• Objective: This section grants authority to state governments to make rules to enhance safety in
factories by requiring additional safety devices and measures.
• Requirements:
• State governments have the power to make rules that mandate the provision of further
safety devices and measures in factories or specific classes or descriptions of factories as
they deem necessary.

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Section 41A - Constitution of Site Appraisal Committees:
• Objective: This section deals with the constitution of Site Appraisal Committees to advise the State
Government on applications for the initial location of a factory involving hazardous processes or
for the expansion of such factories.
• Requirements:
• The State Government has the authority to appoint a Site Appraisal Committee for the
purpose of advising it on applications related to factories involving hazardous processes.
• This committee will evaluate applications for the establishment or expansion of factories
engaged in hazardous processes and provide recommendations to the State Government.
• The committee is expected to complete its evaluation and make recommendations within
a prescribed period of ninety days from the receipt of the application in the prescribed
form.
• In cases where the factory is owned or controlled by the Central Government or by a
corporation or company owned or controlled by the Central Government, a representative
nominated by the Central Government must be co-opted as a member of the Site
Appraisal Committee.
• The committee is empowered to request any necessary information from the applicant
for the establishment or expansion of a factory involving a hazardous process.
• If the State Government approves such an application, there is no need for the applicant
to obtain further approvals from the Central Board or the State Board established under
the Water (Prevention and Control of Pollution) Act, 1974, and the Air (Prevention and
Control of Pollution) Act, 1981.

Section 41B - Compulsory Disclosure of Information by the Occupier:

• Objective: This section outlines the responsibilities of the occupier of a factory involving a
hazardous process to provide comprehensive information, policies, emergency plans, and safety
measures to various stakeholders, including workers, authorities, and the public living near the
factory.
• Requirements:
• The occupier of a factory engaged in a hazardous process must disclose information
related to dangers, including health hazards, and the measures to mitigate such hazards.

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This information should cover exposure to or handling of materials or substances used in
manufacturing, transportation, storage, and other processes.
• The recipients of this information include:
• Workers employed in the factory
• The Chief Inspector
• The local authority within the factory's jurisdiction
• The general public living in the vicinity of the factory
• The disclosed information should include accurate details such as the quantity,
specifications, and characteristics of wastes generated during processes and the disposal
methods for these wastes.
• At the time of registering the factory involving a hazardous process, the occupier must
establish a comprehensive policy regarding the health and safety of the workers. This
policy should be communicated to the Chief Inspector and the local authority.
• The occupier must also periodically inform the Chief Inspector and the local authority of
any changes made to the health and safety policy at prescribed intervals.
• An on-site emergency plan and detailed disaster control measures must be developed for
the factory with the approval of the Chief Inspector. The occupier is responsible for making
these measures known to the workers in the factory and the general public residing near
the factory. This ensures that everyone is aware of the safety procedures to follow in case
of an accident.
• The occupier is required to inform the Chief Inspector about the nature and details of the
hazardous processes within the factory. This information must be submitted within thirty
days if the factory is already involved in hazardous processes at the commencement of
the Factories (Amendment) Act, 1987, or within thirty days before engaging in hazardous
processes after the commencement of the Act.
• Failure to comply with the above provisions may result in the cancellation of the factory's
license under Section 6 of the Act.
• Additional Measures: The occupier must also establish measures, with the Chief Inspector's
approval, for the handling, usage, transportation, and storage of hazardous substances within the
factory premises. These measures should also cover the disposal of hazardous substances outside
the factory premises. These safety measures must be publicized among workers and the general
public living in the vicinity.

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Section 41C - Specific Responsibility of the Occupier in Relation to Hazardous Processes:
• Objective: This section defines the specific responsibilities of the occupier of a factory involved in
hazardous processes to ensure the health and safety of workers exposed to chemicals, toxic
substances, or harmful materials.
• Responsibilities of the Occupier:
• The occupier must maintain accurate and up-to-date health records or medical records of
workers who are exposed to chemicals, toxic substances, or harmful materials. These
records should include information about the substances involved and their effects on
workers' health. Workers should have access to these records subject to prescribed
conditions.
• The occupier is responsible for appointing individuals with qualifications and experience
in handling hazardous substances. These appointed individuals must be competent to
supervise the safe handling of such substances within the factory. They are also
responsible for providing the necessary facilities at the workplace to protect workers, as
prescribed by regulations. The decision of the Chief Inspector regarding the qualifications
and experience of the appointed individuals is final.
• The occupier must ensure that every worker:
• Undergoes a medical examination before being assigned to a job involving the
handling of or working with hazardous substances.
• Receives periodic medical examinations while continuing in such a job.
• Undergoes medical examinations after ceasing to work in such a job, at intervals
not exceeding twelve months, as prescribed.
Section 41D - Power of Central Government to Appoint Inquiry Committee:
• Objective: This section grants the Central Government the authority to appoint an Inquiry
Committee in the event of an extraordinary situation involving a factory engaged in hazardous
processes. The committee's purpose is to investigate the standards of health and safety in the
factory, identify causes of failures or neglect in adhering to prescribed safety measures, and
recommend preventive measures.
• Key Points:
• The Central Government may appoint an Inquiry Committee in the event of an
extraordinary situation involving a factory engaged in hazardous processes.

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• The Committee consists of a Chairman and two other members, and their terms of

reference and tenure of office are determined by the Central Government based on the
situation's requirements.
• The Committee's recommendations are advisory in nature.
Section 41E - Emergency Standards:
• Objective: This section empowers the Central Government to establish emergency standards for
safety in hazardous processes when no standards exist or when existing standards are deemed
inadequate. These emergency standards are enforceable until they are incorporated into official
rules.
• Key Points:
• The Central Government can take action when there are no safety standards prescribed
for a hazardous process or when the existing standards are considered inadequate.
• The Director-General of Factory Advice Service and Labour Institutes or a specialized
institution in safety standards may be directed to establish emergency standards for
enforcing appropriate safety measures for such hazardous processes.
• These emergency standards, once established, have the same legal effect as official rules
until they are officially incorporated into the rules made under this Act.

Section 41F - Permissible Limits of Exposure of Chemical and Toxic Substances:

• Objective: This section establishes the maximum permissible threshold limits for exposure to
chemical and toxic substances in manufacturing processes, whether they are hazardous or not.
• Key Points:
• The Second Schedule contains the maximum permissible threshold limits for exposure to
chemical and toxic substances in manufacturing processes.
• The Central Government has the authority to make suitable changes to the Second
Schedule by notification in the Official Gazette based on scientific proof obtained from
specialized institutions or experts in the field.
Section 41G - Workers' Participation in Safety Management:
• Objective: This section outlines the establishment of Safety Committees in factories where
hazardous processes occur or where hazardous substances are used or handled. The Safety
Committees consist of an equal number of representatives from workers and management, with
the aim of promoting cooperation in maintaining safety and health at work.

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• Key Points:

• The occupier of a factory with hazardous processes or hazardous substance handling must
establish a Safety Committee.
• The Safety Committee's functions include promoting cooperation between workers and
management to ensure proper safety and health measures at work and periodically
reviewing the measures taken.
• The State Government can exempt certain factories or classes of factories from setting up
such committees, provided they record their reasons for doing so.
• The composition, tenure of office, and rights and duties of Safety Committee members
will be prescribed by regulations.
Section 41H - Right of Workers to Warn About Imminent Danger:
• Objective: This section grants workers the right to notify the occupier, agent, manager, or other
responsible persons in a factory about an imminent danger to their lives or health due to an
accident. It outlines the process for workers to raise such concerns and the actions that should be
taken in response.
• Key Points:
• Workers employed in a factory engaged in a hazardous process who reasonably believe
that there is an imminent danger to their lives or health due to an accident can bring this
to the notice of the factory's responsible personnel, either directly or through their
representatives in the Safety Committee. They must also simultaneously notify the
Inspector.
• It is the duty of the occupier, agent, manager, or the person in charge of the factory or
process to take immediate remedial action if they are satisfied about the existence of such
imminent danger and report the action taken to the nearest Inspector.
• If the responsible person is not satisfied about the existence of imminent danger, they
must still refer the matter to the nearest Inspector, whose decision on the question of
imminent danger will be final
Section 42 - Washing Facilities:
• Objective: This section mandates the provision of adequate and suitable washing facilities for
workers in every factory. It also requires separate and adequately screened facilities for male and
female workers, convenient accessibility, and cleanliness of these facilities.
• Key Points:

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• Adequate and suitable washing facilities must be provided and maintained for the use of

workers.
• Facilities for male and female workers should be separate and adequately screened.
• These facilities must be conveniently accessible and kept clean.
• The State Government has the authority to prescribe standards for washing facilities for
specific factories, classes of factories, or manufacturing processes.
Section 43 - Facilities for Storing and Drying Clothing:
• Objective: This section allows the State Government to make rules requiring the provision of
suitable places in factories for storing clothing not worn during working hours and for drying wet
clothing.
Section 44 - Facilities for Sitting:
• Objective: This section requires suitable arrangements for sitting in every factory to be maintained
for all workers who are obligated to work while standing. It aims to provide opportunities for rest
during work.
• Key Points:
• The Chief Inspector can order the provision of seating arrangements if workers in a specific
manufacturing process or room can efficiently perform their work while sitting.
• The State Government has the authority to exempt specified factories, classes of factories,
or manufacturing processes from compliance with this section.
Section 45 - First-Aid Appliances:
• Objective: This section mandates the provision and maintenance of first-aid boxes or cupboards
with prescribed contents in every factory. It also specifies the requirements for the number of
boxes based on the workforce and the qualifications of the person in charge.
• Key Points:
• At least one first-aid box or cupboard must be provided for every 150 workers ordinarily
employed.
• Only prescribed contents are allowed in these boxes or cupboards.
• Each box or cupboard must be supervised by a responsible person holding a recognized
certificate in first-aid treatment.
• Ambulance rooms with prescribed equipment are required in factories with more than
500 workers, and they must be staffed with medical and nursing personnel.

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Section 46 - Canteens:
• Objective: This section empowers the State Government to make rules requiring the provision and
maintenance of canteens in specified factories where more than 250 workers are ordinarily
employed.
• Key Points:
• The rules can specify the date by which canteens must be provided.
• Standards related to construction, accommodation, furniture, equipment, food, charges,
managing committees, and representation of workers in canteen management can be
established.
• Certain items of expenditure for running the canteen may be borne by the employer.
• The Chief Inspector may be delegated the power to make rules related to canteens under
certain conditions.

Section 47 - Shelters, Rest-Rooms, and Lunch-Rooms:

• Objective: This section requires the provision and maintenance of adequate and suitable shelters
or rest-rooms and a lunchroom with drinking water facilities in factories where more than 150
workers are ordinarily employed. Workers can use these facilities to eat their meals.
• Key Points:
• Shelters or rest-rooms and a lunchroom with drinking water must be provided.
• Any canteen maintained under Section 46 provisions is considered part of the
requirements of this section.
• Eating food in the workroom is prohibited when a lunchroom is available.
• These facilities should be well-lit, ventilated, and maintained in a clean and cool condition.
• The State Government can prescribe standards for construction, accommodation,
furniture, and equipment for these facilities.
• The State Government has the authority to exempt specific factories, classes of factories,
or descriptions of factories from complying with this section.

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Section 48 - Creches:
• Objective: This section mandates the provision and maintenance of suitable rooms for children
under six years of age, whose mothers are employed in factories with more than thirty women
workers. These rooms should provide adequate accommodation, be well-lit and ventilated, and
be under the supervision of women trained in childcare.
• Key Points:
• Suitable rooms for childcare must be provided.
• These rooms should be adequately lighted, ventilated, clean, and sanitary.
• Women trained in childcare should supervise these rooms.

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LESSON 16-II: Law of Welfare & Working Condition
Unit II – The Contract Labour (Regulation and Abolition) Act,
1970
INTRODUCTION
Regulatory Framework l The Contract Labour (Regulation and Abolition) Act, 1970
History of the Legislation
1. Pre-Independence Era: Before India gained independence, industrial establishments faced labor
recruitment challenges. Factors such as low social status of factory workers, limited labor mobility,
cultural and linguistic differences, and the lack of organization among laborers made labor
recruitment difficult. Employers often relied on middlemen or contractors to handle labor
recruitment and management.
2. Whitley Commission (1860): The Whitley Commission, established in 1860, recommended the
abolition of contract labor in India, albeit indirectly. This marked one of the early recognitions of
the issues associated with contract labor.
3. Workman’s Breach of Contract Act 1859: Before 1860, the Workman’s Breach of Contract Act
1859 held contract laborers criminally responsible in case of a breach of contract for service. This
further complicated the status of contract labor.
4. Government Committees and Enquiries: Over time, various government committees were
formed to study the socio-economic conditions of contract laborers. Notable committees include
the Bombay Textile Labour Enquiry Committee (1938), the Bihar Labour Enquiry Committee
(1941), and the Rega Committee (1946). These committees recommended expanding the
definition of "workers" in labor laws to include contract labor.
5. Second Five Year Plan: In the Second Five Year Plan, the Planning Commission emphasized the
need to improve the working conditions of contract laborers. The consensus was that while
contract labor should be abolished where possible, in cases where it couldn't be abolished entirely,
their working conditions needed regulation to ensure fair wages and essential amenities.
6. The Contract Labour (Regulation and Abolition) Act, 1970: Based on the recommendations and
discussions, the Contract Labour (Regulation and Abolition) Act, 1970 was passed by both houses
of Parliament and received presidential assent on September 5, 1970. It officially came into force

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on February 10, 1971. This legislation aimed to regulate and, where feasible, abolish the system
of contract labor.
7. Central Rules: In conjunction with the Act, the Contract Labour (Regulation and Abolition) Central
Rules, 1971 were notified to enforce its provisions.

Object of the Act:

1. Regulation: The Act aims to regulate the employment of contract labor in certain establishments.
It seeks to establish rules and conditions for the engagement of contract labor to prevent
exploitation and ensure fair working conditions.
2. Abolition: The Act also provides for the abolition of contract labor in certain circumstances.
Wherever it is feasible and practicable, the Act encourages the abolition of the contract labor
system.
3. Better Conditions: The Act is designed to introduce improved working conditions for contract
labor. It emphasizes the payment of fair wages and the provision of essential amenities for contract
workers.

Scope of the Act:

1. Applicability: The Act extends to the entire territory of India. It applies to two categories of
entities:
a. Establishments: It applies to every establishment in which twenty or more workmen are employed or
were employed on any day of the preceding twelve months as contract labor.
b. Contractors: The Act also applies to every contractor who employs or who employed on any day of the
preceding twelve months twenty or more workmen.
2. Notification: The appropriate Government (Central or State) has the authority to extend the
provisions of this Act to any establishment or contractor employing a number of workmen less
than twenty, provided that it gives at least two months' notice of its intention to do so by
notification in the Official Gazette.
3. Intermittent or Casual Work: The Act does not apply to establishments in which work is of an
intermittent or casual nature. If there is a question about whether work in an establishment falls
under this category, the appropriate Government, after consulting with the Central Board or State
Board, will decide. Work is not considered intermittent if it was performed for more than one

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hundred and twenty days in the preceding twelve months or if it is of a seasonal character and is
performed for more than sixty days in a year.

Definitions
Appropriate Government’ means,-
(i) in relation to an establishment in respect of which the appropriate Government under the Industrial
Disputes Act, 1947, is the Central Government;
(ii) in relation to any other establishment, the Government of the State in which that other establishment
is situated. [Section 2(1)(a)

“Contract Labour” A workman shall be deemed to be employed as “contract labour” in or in connection

with the work-of an establishment 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. [Section 2(1)(b)]
“Contract labour” can be distinguished from employees in terms of employment relationship with the
principal establishment and the method of wage payment. A workman is deemed to be a contract labour
when he/she is hired in connection with the work or contract for service of an establishment by or through
a contractor. They are indirect employees. Contract labour is neither borne on pay roll or muster roll or
wages paid directly to the employer.

“Contractor” Contractor in relation to an establishment, means- a person

• who undertakes to produce a given result for the establishment, other than a mere supply of
goods or articles of manufacture to such establishment, through contract labour; or
• who supplies contract labour for any work of the establishment and includes a sub-
contractor.[Section 2(1) (c)]
Contractor engaged for Section 2 (1)(c) covers construction of building. Gammon India Ltd. v. Union of
India, (1974) 1 SCC 596: 1971 SCC (L & S) 252. –
Section 2 (1)(c)-’Contractor’ is one who supplies contract labour to an establishment undertaking to
produce a given result for it. He hires labour in connection with the work of an establishment. State of
Gujarat v. Vogue Garments, (1983) 1 LU 255: 1983 Lab IC 129 (Guj HC). –
Section 2 (1) (c)-Sub-contractors or ‘piece wagers’, are contractors [Labourers Working on Salal Hydro
Project v. State of J&K, (1983)/2 SCG 181).

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“Establishment”
Establishment means –
(i) any office or department of the Government or a local authority, or -
(ii) any place where any industries, trade, business, manufacture or occupation is carried on. [Section
2(1)(e)]
Section 2 (1)(e)(ii) - A ship or vessel in which repair work is carried on is a place and an “establishment”
within the meaning of Section 2 (1) (e) (ii). The work site or place may or may not belong to the principal
employer, but that will not stand in the way of application of the Act or in holding that a particular place
or work site where industry, trade, business, manufacture or occupation is carried on is not an
establishment. Lionel Edwards Led. v. Labour Enforcement Officer, (1977) 51 FJR 199 (Cal).
Section 2(1)(e)(ii)-Any object for the time being covering the surface and where industry, trade, business,
manufacture or occupation is carried on would be a place and an “establishment” within the meaning of
Section 2 (1) (e) (ii).

“Principal Employer”
Principal employer means –
(i) in relation to any office or department of the Government or a local authority, the head of that office
or department or such other officer as “’the Government or the local authority, as the case may be, may
specify in this behalf,
(ii) in 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, 1948 ,the person so named.
(iii) in a mine, the owner or agent of the mine and where a person has been named as the manager of the
mine, the person so named,
(iv) in any other establishment, any person responsible for the supervision and control of the
establishment. [Section 2(1)(g)]
Explanation. - For the purpose of sub-clause (iii) of this clause expressions mine”, “owner” and “agent”
shall have the meanings respectively assigned to them in clause (j), clause (1) and clause (c) of sub-section
(1) of Section 2 of the ’Mines Act, 1952;

“Workman” Workman means any person employed in or in connection with the work of any
establishment to do any skilled, semi-skilled or un-skilled manual, supervisory, technical or clerical work

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for hire or reward, whether the terms of employment be express or implied, but does not include any such
person-
(A) who is employed mainly in a managerial or administrative capacity; or
(B) who, being employed in a supervisory capacity draws wages exceeding five hundred rupees per
mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers
vested in him functions mainly of a managerial nature; or
(C) who is an out worker, that is to say, a person to whom any articles and materials are given out by or on
behalf of’ the principal employer 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 the principal
employer and 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 the principal employer. [Section
2(1)(i)

THE ADVISORY BOARDS

Central Advisory Board Notes
1. Constitution of the Central Board
• Created as per Section 3.
• Named "Central Advisory Contract Labour Board" (Central Board).
2. Function of the Central Board
• Advises the Central Government on Act administration issues.
• Performs additional functions assigned under the Act.
3. Composition of the Central Board
• Chairman: Appointed by the Central Government.
• Ex Officio Member: Chief Labour Commissioner (Central).
• Other Members:
• Number: 11 to 17 members.
• Representatives from:
• Central Government.
• Railways.
• Coal industry.
• Mining industry.

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• Contractors.
• Workmen.
• Other relevant interests as decided by the Central Government.
4. Member Appointment Details
• Criteria: Number, categories, term, conditions, procedures, and vacancy filling method
prescribed.
• Representation Equality: Workmen representatives must be at least equal in number to
employer and contractor representatives.

State Advisory Board Notes

1. Constitution of the State Board
• Basis: Section 4 of the Act.
• Name: "State Advisory Contract-Labour Board" (State Board).
• Requirement:
• Central Government: Mandatory to constitute Central Board under Section 3.
• State Government: Discretionary to constitute State Board under Section 4.
2. Function of State Board
• Role: Advises State Government on Act-related administration issues.
• Additional Duties: Carries out other functions assigned under the Act.
3. Composition of the State Board
• Chairman: Appointed by the State Government.
• Ex Officio Member: Labour Commissioner or nominated officer.
• Other Members:
• Number: 9 to 11 members.
• Representatives from:
• State Government.
• Industry.
• Contractors.
• Workmen.
• Other relevant interests as decided by the State Government.
4. Member Appointment Details

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• Criteria: Number, categories, term, conditions, procedures, and vacancy filling method

prescribed.
• Representation Equality: Workmen representatives must be at least equal in number to
employer and contractor representatives.

Power to Constitute Committees Notes

1. Authority Under Section 5
• Allows both Central and State Boards to form committees.
2. Committee Formation and Purpose
• Flexibility: Committees can be formed for any purpose deemed appropriate.
• Discretion: The Boards have discretion over the nature and purpose of these committees.
3. Meeting Procedures
• Schedule: Committees to meet at prescribed times and places.
• Rules: Follow prescribed rules for conducting business in meetings.
4. Member Fees and Allowances
• Compensation: Members receive prescribed fees and allowances for attendance.
• Exception: Government officers or corporation members established by law are not
eligible for fees.

Registration of Establishments Employing Contract Labour

1. Appointment of Registering Officers (Section 6)
• Authority to Appoint: The Appropriate Government can appoint Gazetted Officers as
registering officers.
• Official Notification: The appointments and their jurisdictional limits are notified in the
Official Gazette.
• Scope of Power: Registering officers are empowered to oversee registration within their
defined limits.
2. Registration of Certain Establishments (Section 7)
• Mandatory Registration: Principal employers of applicable establishments must register
with the registering officer.
• Application Process: Applications are to be made in a prescribed manner.

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• Deadline for Registration: The government may set deadlines for registration, which can

be specific to certain types of establishments.

• Late Applications: The registering officer can accept late applications if there's a justified
reason for the delay.
• Issuance of Certificate: Once an application is complete, the registering officer registers
the establishment and issues a certificate containing prescribed particulars.
3. Revocation of Registration (Section 8)
• Grounds for Revocation: Registration can be revoked if obtained by misrepresentation,
suppression of material facts, or if it becomes useless or ineffective.
• Due Process: The employer is given an opportunity to be heard before revocation.
• Government Approval: Revocation requires the prior approval of the Appropriate
Government.
4. Rule 19: Circumstances for Rejection of Registration Application
• Incomplete Applications: If an application is not fully complete, the registering officer will
request the employer to amend it.
• Failure to Amend: If the employer does not amend the application as required, the
registering officer has the authority to reject the application.

5. Effect of Non-Registration (Section 9)

• Employment Restriction: Principal employers are prohibited from employing contract
labor in their establishment if:
• They fail to register their establishment within the prescribed time under Section
7.
• Their registration has been revoked under Section 8.
• Legal Implication: This clause enforces compliance with registration requirements,
emphasizing the legal necessity of registering establishments employing contract labor.
6. Prohibition of Employment of Contract Labour (Section 10)
• Government Authority: The Appropriate Government, after consulting with the Central
or State Board, can prohibit contract labor in certain processes or operations.
• Notification Requirement: Such prohibitions are announced in the Official Gazette.
• Consideration Factors: Before imposing any prohibition, the government considers:
• The nature of the work and its necessity for the establishment’s operation.

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• Whether the work is perennial, meaning it is ongoing and of sufficient duration.
• If the work is ordinarily done by regular workers.
• The need for a significant number of full-time workers.
• Final Decision: The Appropriate Government's determination on whether work is of
perennial nature is final.
7. Licensing of Contractors (Section 11 and 12)
• Appointment of Licensing Officers (Section 11)
• Authority to Appoint: The Appropriate Government can appoint Gazetted
Officers as licensing officers.
• Jurisdiction Definition: The limits within which they can exercise their powers are
specified.
• Official Notification: These appointments and jurisdictions are notified in the
Official Gazette.
• Contractor Licensing (Section 12)
• Mandatory Licensing: Contractors must obtain a license to employ contract labor.
• License Conditions: The license stipulates conditions for work hours, wage
fixation, and other amenities for contract labor.
• Fees and Security Deposit: Obtaining a license requires payment of fees and
potentially a security deposit.
• Compliance and Enforcement: These measures ensure contractors adhere to
legal standards and provide fair treatment to contract labor.

Welfare and Health of Contract Labour

1. Canteens (Section 16)
• Government Rules: The appropriate Government may set rules for canteens in
establishments.
• Conditions for Canteen Provision:
• Applicable to establishments under this Act.
• Required where contract labor employment is expected to continue for a
prescribed period.
• Mandatory where 100 or more contract laborers are ordinarily employed.

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• Additional Government Rules:

• Implementation Date: Specifies when canteens should be provided.

• Canteen Specifications: Includes the number of canteens, construction standards,
accommodation, furniture, and other equipment.
• Food and Charges: Governs the type of food served and the pricing.
2. Rest-Rooms (Section 17)
• Mandatory Provision: Contractors must provide rest-rooms or suitable alternative
accommodation.
• Applicability Conditions:
• To establishments covered by the Act.
• Where work requiring contract labor is likely to continue for a prescribed period
and involves overnight stays.
• Facility Standards:
• Adequate lighting and ventilation.
• Maintenance of cleanliness and comfort.
• Legal Validation: The provisions for rest-rooms have been upheld as reasonable
(referenced in Gammon India Ltd. v. Union of India, 1974).

3. Canteens (Section 16)

• Government Rules: The appropriate Government may set rules for canteens in
establishments.
• Conditions for Canteen Provision:
• Applicable to establishments under this Act.
• Required where contract labor employment is expected to continue for a
prescribed period.
• Mandatory where 100 or more contract laborers are ordinarily employed.
• Additional Government Rules:
• Implementation Date: Specifies when canteens should be provided.
• Canteen Specifications: Includes the number of canteens, construction standards,
accommodation, furniture, and other equipment.
• Food and Charges: Governs the type of food served and the pricing.

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4. Rest-Rooms (Section 17)
• Mandatory Provision: Contractors must provide rest-rooms or suitable alternative
accommodation.
• Applicability Conditions:
• To establishments covered by the Act.
• Where work requiring contract labor is likely to continue for a prescribed period
and involves overnight stays.
• Facility Standards:
• Adequate lighting and ventilation.
• Maintenance of cleanliness and comfort.
• Legal Validation: The provisions for rest-rooms have been upheld as reasonable
(referenced in Gammon India Ltd. v. Union of India, 1974).

Penalties and Procedures

1. Obstructions (Section 22)
• Offense: Obstructing an inspector or not cooperating during inspections, inquiries, or
investigations.
• Penalty: Imprisonment up to three months, a fine up to 500 rupees, or both.
• Additional Clause: Penalty also applies to those refusing to produce documents or
hindering others from cooperating with an inspector.
2. Contravention of Provisions Regarding Employment of Contract Labour (Section 23)
• Offense: Violating any provision of the Act or rules related to the employment of contract
labor, including conditions of a license.
• Penalty: Imprisonment up to three months, a fine up to 1,000 rupees, or both.
• Continued Contravention: Additional fine of 100 rupees for each day the contravention
continues post-conviction.
• Legal Precedent: Specific allegations needed for contravention charges (J.P. Gupta v. Union
of India).
3. Other Offences (Section 24)
• Offense: Violating any provisions of the Act or rules where no specific penalty is provided.
• Penalty: Imprisonment up to three months, a fine up to 1,000 rupees, or both.
4. Offences by Companies (Section 25)

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• Liability: Company and responsible individuals are both liable for offenses.

• Defense Clause: Exemption for individuals who were unaware of the offense or exercised
due diligence to prevent it.
• Aggravated Liability: If an offense is committed with the consent, connivance, or due to
neglect of any director, manager, or officer, they are also deemed guilty and liable.
• Definitions: Clarifies the meaning of "company" and "director" in this context.
5. Cognizance of Offences (Section 26)
• Court Jurisdiction: Only certain courts can take cognizance of offenses under this Act.
• Inspector’s Role: No court shall take cognizance of any offense without a complaint made
by or sanctioned by an inspector.
6. Limitation of Prosecution (Section 27)
• Time Limit for Complaints: Complaints must be made within three months from the date
the offense came to the inspector's knowledge.
• Extension for Specific Offenses: In cases of disobeying an inspector’s written order, the
time limit extends to six months.

Inspecting Staff (Section 28)

1. Appointment of Inspectors
• Authority: The appropriate Government can appoint inspectors for enforcing the Act.
• Notification: Appointments and jurisdictional limits are published in the Official Gazette.
2. Powers of Inspectors
• Entry and Inspection:
• Inspectors can enter any premises where contract labor is employed.
• They can do so at reasonable hours, with assistance if necessary.
• The purpose is to examine registers, records, and notices as required by the Act.
• Examination of Persons:
• Inspectors can interview any worker they believe is employed at the premises.
• Information Gathering:
• They can require persons giving out work and workers to provide information
about employment, addresses, and payments.
• Document Seizure:

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• Inspectors can seize or copy relevant documents they believe indicate an offense
under the Act by the employer or contractor.
• Additional Powers: They may exercise other powers as prescribed under the Act.
3. Legal Obligations and Protections
• Compliance Requirement: Individuals are legally obligated to provide documents or
information when asked by an inspector.
• Penal Code Applicability: Non-compliance is treated under Sections 175 and 176 of the
Indian Penal Code, 1860.
• Search and Seizure: The provisions of the Code of Criminal Procedure, 1898, apply to any
search or seizure conducted by an inspector, similar to those under a warrant.

Registers and Other Records to be Maintained (Section 29)

1. Maintenance of Registers and Records
• Who Must Maintain: Both principal employers and contractors are required to maintain
these records.
• Content of Records: The registers and records should include:
• Particulars of contract labor employed.
• Nature of work performed by the contract labor.
• Rates of wages paid to the contract labor.
• Other particulars as prescribed by the Act.
2. Display of Notices
• Location: Notices must be displayed within the premises of the establishment where
contract labor is employed.
• Content of Notices: These should contain:
• Hours of work.
• Nature of duties.
• Other information as prescribed.
• Manner of Display: The way these notices are exhibited must adhere to prescribed
standards.

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LESSON 16-III: Law of Welfare & Working Condition
Unit III – The Child and Adolescent Labour
(Prohibition and Regulation) Act, 1986
INTRODUCTION
1. Scope and Extent
• Geographical Coverage: Applies to the entire territory of India.
• Target Group: Focuses on children and adolescents.
2. Prohibition of Child Labour
• Definition of 'Child': Any person below the age of 14 years.
• Employment Ban: Prohibits the employment of children in all occupations and processes.
• Objective: To ensure children's enrollment in schools, in accordance with the Right of
Children to Free and Compulsory Education Act, 2009.
3. Prohibition and Regulation for Adolescents
• Definition of 'Adolescent': Individuals who have completed 14 years but are below 18
years of age.
• Prohibited Areas: Adolescents are prohibited from being employed in hazardous
occupations and processes.
• Regulation of Conditions: The Act regulates conditions of service for adolescents, aligning
with international standards set by ILO Conventions 138 (Minimum Age Convention) and
182 (Worst Forms of Child Labour Convention).
4. ILO Conventions
• Convention 138: Concerns the minimum age for admission to employment.
• Convention 182: Focuses on the elimination of the worst forms of child labor.

Definition
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.

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Adolescent means a person who has completed his fourteenth year of age but has not completed his
eighteenth year.
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.

Day means a period of twenty-four hours beginning at midnight.

Establishment includes a shop, commercial establishment, workshop, farm, residential hotel, restaurant,
eatinghouse, theatre or other place of public amusement or entertainment.

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.

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 Sec. 67 of the Factories Act, 1948 (63 of
1948), for the time being, apply.

Prohibition of Employment of Children in Any Occupations and Processes (Section 3)

1. General Prohibition
• Primary Rule: No child (person below 14 years of age) is allowed to be employed or
permitted to work in any occupation or process.
2. Exceptions to the Prohibition
• Family or Family Enterprise:
• Children are allowed to help in a family business, provided it is not a hazardous
occupation or process as listed in the Schedule of the Act.
• This work can only be done after school hours or during vacations.
• Working as an Artist in Entertainment Industry:
• Children can work as artists in the audio-visual entertainment industry (including
advertisement, films, television serials, and other similar activities) except in
circuses.
• Work is subject to prescribed conditions and safety measures.
• The work should not interfere with the child’s school education.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
3. Definitions for Clarity
• “Family”:
• Includes the child’s mother, father, brother, sister, and paternal/maternal uncles
and aunts.
• “Family Enterprise”:
• Refers to any work, profession, manufacture, or business conducted by family
members, possibly with the engagement of other persons.
• “Artist”:
• Defined as a child engaged in activities like acting, singing, sports, or any other
prescribed activity relating to entertainment or sports.

Prohibition of Employment of Adolescents in Hazardous Occupations and Processes (Section 3A)

1. General Prohibition
• Hazardous Work: No adolescent can be employed or permitted to work in any hazardous
occupations or processes listed in the Schedule of the Act.
2. List of Hazardous Occupations or Processes
• Mines.
• Inflammable substances or explosives.
• Hazardous processes as defined in the Factories Act, 1948.
3. Government’s Authority
• The Central Government may specify non-hazardous work types permissible for
adolescents.
Hours and Period of Work (Section 7)
1. Working Hours Limitation
• Adolescents should not work more than the prescribed number of hours for their
establishment or class of establishments.
2. Daily Work Schedule
• Maximum Work Periods: Each work period should not exceed three hours without a rest
interval.
• Rest Interval: At least one hour of rest after three hours of work.
• Total Daily Duration: Including rest intervals, the workday should not spread over more
than six hours.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
3. Other Stipulations
• No Night Work: Adolescents cannot work between 7 p.m. and 8 a.m.
• No Overtime: Adolescents are not permitted to work overtime.
• No Multiple Shifts: Adolescents cannot work in multiple establishments on the same day.

Weekly Holidays (Section 8)

1. Entitlement to Holidays
• Adolescents are entitled to one full day off each week.
2. Notification of Holidays
• The day off should be specified and clearly notified within the establishment.
• Changes to the specified day off should not occur more than once in three months.

Notice to Inspector (Section 9)

1. Notification Requirement
• Employers must notify the Inspector within 30 days of employing any adolescent.
• This applies to establishments within the local limits of the Inspector.
2. Content of Notice
• Name and location of the establishment.
• Name of the person managing the establishment.
• Address for communications related to the establishment.
• Nature of the occupation or process carried out in the establishment.

Maintenance of Register
1. Record-Keeping Obligations
• Employers must maintain a register for adolescents employed or permitted to work.
• The register must be available for inspection during working hours.
2. Details in the Register
• Name and date of birth of every adolescent employed.
• Hours and periods of work, including intervals for rest.
• Nature of the work assigned.
• Other particulars as may be prescribed.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Display of Notice Containing Abstract of Sections 3A and 14
1. Obligation to Display Notice
• Railway administrations, port authorities, and other occupiers must display a notice.
2. Location for Display
• The notice should be in a conspicuous and accessible place at every relevant location.
3. Content of the Notice
• An abstract of Sections 3A and 14 of the Act.
• The notice should be in both the local language and English.

Penalties Under the Act

1. Employment of Children (Section 3 Violations)
• Penalty for Employers: Imprisonment of 6 months to 2 years, or a fine of 20,000 to 50,000
rupees, or both.
• Parent/Guardian Liability: Parents or guardians are not penalized unless the child is
employed for commercial purposes in violation of Section 3.
2. Employment of Adolescents (Section 3A Violations)
• Penalty for Employers: Similar to the above - imprisonment of 6 months to 2 years, or a
fine of 20,000 to 50,000 rupees, or both.
• Parent/Guardian Liability: Parents or guardians are not penalized unless the adolescent
is employed in contravention of Section 3A.
3. First Offence by Parents or Guardians
• No penalty for parents or guardians in the case of a first offence.
4. Subsequent Offences
• Employers: For a repeat offence (after a conviction under Section 3 or 3A), the penalty
increases to imprisonment of 1 year to 3 years.
• Parents/Guardians: If convicted of an offence under Section 3 or 3A, a subsequent offence
can result in a fine up to 10,000 rupees.
5. General Contraventions
• Failing to comply with other provisions of the Act or rules can lead to up to one month of
simple imprisonment or a fine up to 10,000 rupees, or both.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
District Magistrate's Role (Section 17A)
1. Implementation Powers
• The appropriate Government may empower the District Magistrate to ensure
enforcement of the Act.
• The District Magistrate can delegate these powers and duties to subordinate officers
within prescribed local limits.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 17 -I: Law of Industrial Relations
Unit I – Industrial Disputes Act, 1947
INTRODUCTION
Early Legislation: Employers’ and Workmen’s Disputes Act, 1860
• First Act: This was the initial legislation addressing industrial disputes.
• Bias Against Workers: The Act was perceived as being heavily weighted against workers.
Transition to Trade Disputes Act, 1929
• Replacement of the 1860 Act: Due to its worker-unfriendly nature, the 1860 Act was replaced by
the Trade Disputes Act in 1929.
• Focus: The Act aimed to manage strikes, especially in public utility services, and community-
affecting general strikes.
• Key Purpose: It established a conciliation machinery for the peaceful settlement of industrial
disputes.
• Whitley Commission's Observation: Emphasized creating an atmosphere that discourages
disputes rather than focusing solely on settlement mechanisms.
World War II and Rule 81-A of the Defence of India Rules
• Emergence Under War Stress: The need for rapid resolution of industrial disputes during World
War II led to the introduction of Rule 81-A.
• Provisions: This rule mandated compulsory referral of industrial disputes to conciliation or
adjudication, made awards binding, and prohibited strikes or lock-outs during and for a short
period after proceedings.
• Restriction on Strikes: It banned strikes not arising from genuine trade disputes.
Post-World War II Developments
• Continuation Post-War: Rule 81-A was set to expire on October 1, 1946, but was extended through
an ordinance using emergency powers.
• Industrial Disputes Act, 1947: This act followed the ordinance and has been foundational in
shaping industrial jurisprudence in India.
• Current Relevance: The provisions of the Industrial Disputes Act, 1947, and its subsequent
amendments, continue to be the cornerstone of industrial law in India, addressing various aspects
of employer-employee relations, dispute resolution, and workers' rights.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Objectives of the Industrial Disputes Act, 1947
1. Promoting Industrial Harmony: The Act is designed to foster a harmonious relationship between
employers and employees, essential for the smooth functioning and progress of the industry.
2. Settlement of Disputes: It provides a mechanism for the investigation and settlement of disputes
between employers and employees, thereby ensuring industrial peace.
3. Regulating Strikes and Lockouts: The Act seeks to prevent illegal strikes and lock-outs, thereby
minimizing disruptions in production and work.
4. Safeguarding Workers during Layoffs: It offers protection to workers in cases of layoffs and
retrenchments, ensuring they are not unfairly disadvantaged.
5. Encouraging Collective Bargaining: The Act promotes collective bargaining as a means to resolve
industrial disputes, recognizing the importance of negotiation and consensus.
Case Studies for Understanding the Act
1. Workmen of Dimakuchi Tea Estate v. The Management of Dimakuchi Tea Estate (1958)
• Background: This case involved a dispute regarding the dismissal of a non-union medical
practitioner.
• Significance: The Supreme Court clarified the definition of 'workmen' and expanded the
scope of who could raise industrial disputes. It emphasized the Act’s role in promoting
industrial harmony.
2. Workmen, Hindustan Lever Limited v. Hindustan Lever Limited (1984)
• Background: This case dealt with the interpretation of the term 'industry' and the Act's
applicability.
• Significance: The Supreme Court stressed the importance of mutual agreements and
reducing conflicts in the industrial sector. It showcased how the Act guides dispute
resolution processes and respects mutual agreements in the larger interest of maintaining
industrial peace.
3. Hospital Employees Union v. Christian Medical College (1987)
• Background: The case focused on the applicability of the Act to institutions irrespective
of religious or caste backgrounds.
• Significance: The Court affirmed the Act's wide applicability, including to institutions run
by religious or caste-based entities, emphasizing its role in ensuring fair wages and
preventing disputes across all industries.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
IMPORTANT DEFINITIONS
(j) “industry” means any systematic activity carried on by co-operation between an employer and his
workmen (whether such workmen are employed by such employer directly or by or through any agency,
including a contractor) for the production, supply or distribution of goods or services with a view to satisfy
human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature),
whether or not,—
(i) any capital has been invested for the purpose of carrying on such activity; or
(ii) such activity is carried on with a motive to make any gain or profit, and includes—
(a) any activity of the Dock Labour Board established under section 5A of the Dock Workers (Regulation
of Employment) Act, 1948 (9 of 1948);
(b) any activity relating to the promotion of sales or business or both carried on by an establishment,
but does not include—
(1) any agricultural operation except where such agricultural operation is carried on in an integrated
manner with any other activity (being any such activity as is referred to in the foregoing provisions of
this clause) and such other activity is the predominant one. Explanation:—For the purposes of this
sub-clause, “agricultural operation” does not include any activity carried on in a plantation as defined
in section 2(f) of the Plantations Labour Act, 1951 (69 of 1951); or
(2) hospitals or dispensaries; or
(3) educational, scientific, research or training institutions; or
(4) institutions owned or managed by organisations wholly or substantially engaged in any charitable,
social or philanthropic service; or
(5) khadi or village industries; or
(6) any activity of the Government relatable to the sovereign functions of the Government including
all the activities carried on by the departments of the Central Government dealing with defence
research, atomic energy and space; or
(7) any domestic service; or
(8) any activity, being a profession practised by an individual or body of individuals, if the number of
persons employed by the individual or body of individuals in relation to such profession is less than
ten; or
(9) any activity, being an activity carried on by a co-operative society or a club or any other like body
of individuals, if the number of persons employed by the co-operative society, club or other like body
of individuals in relation to such activity is less than ten;

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
“Industrial Dispute” means any dispute or difference between employers and employers, or between
employers and workmen, or between workmen and workmen, which is connected with the employment
or non-employment or the terms of employment or with the conditions of labour, of any person. [Section
2(k)]
The above definition can be analysed and discussed under the following heads:
(i) There should exist a dispute or difference;
(ii) The dispute or difference should be between:
(a) employer and employer;
(b) employer and workmen; or
(c) workmen and workmen.
(iii) The dispute or difference should be connected with
(a) the employment or non-employment, or
(b) terms of employment, or
(c) the conditions of labour of any person;
(iv) The dispute should relate to an industry as defined in Section 2(j).
Industrial dispute implies any distinction of conclusion, contest, injury between the business and the
representatives, or between the laborers and bosses, or between the labourers or workers itself which is
all concerned with the work or non-business terms or terms of business dependent on the terms of state
of work of any person.

Workman
“Workman” means any person (including an apprentice) employed in any industry to do any manual,
unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms
of employment be expressed or implied and for the purposes of any proceeding under this Act in relation
to an industrial dispute, includes:
(a) any such person who has been dismissed, discharged or retrenched in connection with, or as a
consequence of that dispute; or
(b) any person whose dismissal, discharge or retrenchment has led to that dispute, but does not include
any such person:
(i) who is subject to the Army Act, 1950, or the Air Force Act, 1950 or the Navy Act, 1957; or
(ii) who is employed in the police service or as an officer or other employee of a prison; or
(iii) who is employed mainly in a managerial or administrative capacity; or

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
(iv) who is employed in a supervisory capacity drawing more than Rs. 1,600 per month as wages;
or
(v) who is exercising either by the nature of the duties attached to the office or by reason of the
powers vested in him, functions mainly of a managerial nature. [Section 2(s)]

Strike
“Strike” means a cessation of work by a body of persons employed in any industry acting in combination,
or a concerted refusal, or a refusal under a common understanding of any number of persons who are or
have been so employed to continue to work or to accept employment. [Section 2(q)]
Strike is a weapon of collective bargaining in the armount of workers.
Characteristics of a Strike
1. Cessation or Refusal to Work
• Essential Element: Strike involves workmen stopping work or refusing to work collectively
or in a concerted manner.
• Duration Irrelevant: The length of time for which work is stopped does not affect the
definition of a strike.
• Purpose of Cessation: The reason behind stopping work is not a determining factor. The
key aspect is defiance of the employer's authority.
• Proof of Consultation: Formal evidence of prior consultations among workmen is not
necessary.
• Participation in Strike: Mere presence in a striking group does not constitute participation
in a strike unless there is an actual cessation of work.
2. Concerted Refusal or Common Understanding
• Requirement: There must be a concerted or collective refusal under a common
understanding to continue work or accept employment.
• Types of Strike: This includes general strikes where there is a wide-scale stoppage of work.
For example, going on mass casual leave with a common understanding is considered a
strike.
• Lawful Work Refusal: The refusal must pertain to normal lawful work which the workmen
are obligated to perform. Refusing tasks that the employer has no right to demand does
not constitute a strike.
3. Employment in an "Industry"

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Operational Industry: The striking workmen must be employed in an industry that is

operational and not closed down.

4. Continuation of Employment Relationship
• Status During Strike: Even during a strike, the legal relationship of employer and employee
continues, albeit in a state of conflict.
• Legal Implications: As observed in Express Newspaper (P.) Ltd. v. Michael Mark, a strike
does not imply abandonment of employment by the workmen, even if the strike is illegal.
• Consequences of Illegal Strike: For an illegal strike, employers can take disciplinary
actions, including dismissal.
Implications of Strike in Industrial Relations
• Collective Bargaining Tool: Strikes serve as a powerful tool for workmen to express grievances and
negotiate better terms of employment.
• Legal Boundaries: While striking is a right, it must be exercised within the legal framework,
respecting the lawful nature of work and the continuation of the employment relationship.
• Consequences for Unlawful Actions: Illegal strikes can lead to disciplinary actions, highlighting the
need for workmen to strike within the bounds of law.

Types of Strikes and Their Characteristics

1. Stay-in, Sit-down, Pen-down or Tool-down Strike
• Nature: Workers take their seats but refuse to perform their duties.
• Refusal to Leave Premises: Even when asked to leave, workers do not vacate the premises.
• Legal Interpretation: These actions are considered a strike as they represent a collective
refusal to work.
• Case Reference: In Punjab National Bank Ltd. v. All India Punjab National Bank Employees’
Federation, the Supreme Court affirmed that such acts constitute a strike under Section
2(q) of the Industrial Disputes Act.
2. Go-Slow
• Definition: A deliberate reduction in work efficiency by workers, commonly known as a
"slowdown."
• Legal Viewpoint: Not classified as a strike, but considered a serious form of misconduct.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Implications: It is seen as an underhanded way to undermine a business and is not

supported by tribunals. For instance, in SU Motors v. Workman, 'go-slow' was deemed a

significant breach of employment contract.
3. Sympathetic Strike
• Characteristics: Workers stop work to support demands of workers from another
employer.
• Legal Perspective: Considered unjustifiable against an employer not directly involved in
the dispute. However, as noted in Ramalingam v. Indian Metallurgical Corporation, such
actions may not always be considered a strike if there is no intention to target the
management.
4. Hunger Strike
• Description: Workers may fast at or near the workplace or employer's residence.
• Strike Classification:
• If peaceful and not leading to work cessation, it's not considered a strike.
• If it disrupts work, it can be classified as a strike, as in Pepariach Sugar Mills Ltd. v.
Their Workmen.
5. Work-to-Rule
• Operation: Involves following all work rules to the letter, often leading to operational
delays.
• Classification: Not regarded as a strike since there is no cessation of work.

Legal Framework Governing Strikes

1. Governing Sections of the Industrial Disputes Act:
• Sections 22 and 23: Impose restrictions on commencing a strike.
• Sections 10(3) and 10A(4A): Prohibit the continuance of a strike under certain conditions.
2. Legality vs. Justifiability:
• The legality of a strike is determined by the Act, irrespective of the strike's purpose.
• The justifiability of a strike, as per the Punjab & Haryana High Court in Matchwell
Electricals of India v. Chief Commissioner, is based on the fairness and reasonableness of
the demands and not solely on the exhaustion of legitimate means to fulfill these
demands.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Judicial Interpretations
1. Justifiability as a Question of Fact:
• In Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Majdoor Sabha, the Supreme Court held
that the justifiability of a strike is a factual matter. A strike is justified if it supports
reasonable and peaceful demands, but unjustified if marked by violence or ulterior
motives.
2. Wages During Strike Period:
• In legal and justified strikes, workers may be entitled to wages for the strike period
(Charakulam Tea Estate v. Their Workmen; Crompton Greaves Ltd. case).
• In illegal or unjustified strikes, wages for the strike period are typically not owed
(Statesman Ltd. v. Their Workman; Madura Coats Ltd. v. The Inspector of Factories,
Madurai).
3. Strikes Followed by Lockouts:
• In cases where both strike and subsequent lockout are unjustified, the Supreme Court has
applied the “apportionment of blame” doctrine (India Marine Service Pvt. Ltd. v. Their
Workman), often awarding half wages.
4. Bank of India v. TS Kelawala:
• The Supreme Court held that workers are generally not entitled to wages for the strike
period, regardless of the strike's legality. This decision emphasizes that legality doesn’t
necessarily guarantee wage payment for strike periods.

Lock-out
“Lock-out” means the temporary closing of a place of employment, or the suspension of work, or the
refusal by an employer to continue to employ any number of persons employed by him. [Section 2(I)]

Concept of Lockout
1. Definition: A lockout occurs when an employer temporarily closes the workplace, or suspends
work, to exert pressure on employees during a dispute.
2. Purpose: Similar to a strike, a lockout is a coercive tactic used by employers to compel employees
to understand and agree to their demands.

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Prof Abhijeet C. Jaiswal
Legal Aspects and Interpretations
1. Employer’s Action: The critical aspect of a lockout is the employer's refusal to continue employing
the workers, typically as a response to a labor dispute.
2. Intention Behind Suspension: A mere suspension of work does not constitute a lockout unless it's
accompanied by the employer's intention to use it as a form of retaliation or pressure tactic.
3. Employment Relationship: Like a strike, a lockout does not sever the employer-employee
relationship. It is a temporary measure in the context of an ongoing dispute.
4. Distinction from Closure: A lockout should be distinguished from closure. Closure refers to the
permanent shutting down of the establishment, whereas a lockout is temporary.
Case References
1. Express Newspapers (P). Ltd. v. their Workers: This Supreme Court case emphasized that a lockout
is an employer's tool, akin to a strike by employees, used in the context of industrial disputes.
2. Lord Krishna Sugar Mills Ltd. v. State of U.P.: In this case, the closure of a business for 30 days in
response to workers' actions was considered a lockout. The motive was to discipline the workers
rather than to permanently close the business.
Implications in Industrial Relations
• Negotiation Tool: A lockout, like a strike, is a strategic tool used in the negotiation process during
industrial disputes.
• Legal Boundaries: While lockouts are a legitimate tool in industrial disputes, they are subject to
legal constraints and must be distinguished from permanent closures.
• Balance of Power: Just as strikes empower workers, lockouts serve as a mechanism for employers
to assert their stance in disputes.

Lay-off’
(with its grammatical variations and cognate expressions) means the failure, refusal or inability of an
employer to give employment due to following reasons, to a workman whose name appears on the
muster-rolls of his industrial establishment and who has not been retrenched:
(a) shortage of coal, power or raw materials, or
(b) accumulation of stocks, or
(c) break-down of machinery, or
(d) natural calamity, or
(e) for any other connected reason. [Section 2(kkk)]

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Prof Abhijeet C. Jaiswal
1. Failure, Refusal, or Inability to Give Employment: Lay-off occurs when an employer cannot
provide employment to a worker who is on the muster rolls and ready to work.
2. Reasons for Lay-off:
• Shortage of coal, power, or raw materials.
• Accumulation of stocks.
• Breakdown of machinery.
• Natural calamity.
• Any other connected reason.
3. Exclusion of Retrenched Workers: A worker who has been retrenched (permanently dismissed) is
not considered laid-off.
4. Explanation and Provisions:
• A worker presenting themselves for work but not employed within two hours is deemed
laid-off.
• If asked to work in the second half of the shift but not employed, the worker is eligible for
full wages for that part of the day.
Judicial Interpretations and Implications
1. Suspension of Employment Contract: A lay-off does not terminate the employment contract but
suspends it temporarily.
2. Preventing Abuse of Lay-off:
• In M.A. Veirya v. C.P. Fernandez, it was noted that employers should not use lay-off to keep
employees in a state of uncertainty indefinitely.
• Lay-offs should not be mala fide (in bad faith) or the result of deliberate action by the
employer.
3. Tribunal’s Role: Tribunals can investigate the genuineness of the lay-off and whether it was
necessitated by actual conditions.
4. Financial Stringency Not a Ground: As per Hope Textiles Ltd. v. State of MP, financial difficulties
cannot be a reason for lay-off.
5. Right to Lay-off:
• Not an inherent right of employers; it must be specified in the contract of employment or
by statute.
• In cases of temporary stoppage, the obligation is to lay-off rather than discharge workers.

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Prof Abhijeet C. Jaiswal
6. Lay-off vs. Closure: Lay-off cannot occur in an industrial undertaking that has been permanently
closed. Lay-off implies a temporary halt, while closure indicates a permanent cessation of
operations.

Difference between lay-off and lock-out

(1) In lay-off, the employer refuses to give employment due to certain specified reasons, but in lock-out,
there is deliberate closure of the business and employer locks out the workers not due to any such reasons.
(2) In lay-off, the business continues, but in lock-out, the place of business is closed down for the time
being.
(3) In a lock-out, there is no question of any wages or compensation being paid unless the lock-out is held
to be unjustified.
(4) Lay-off is the result of trade reasons but lock-out is a weapon of collective bargaining.
(5) Lock-out is subject to certain restrictions and penalties but it is not so in case of lay-off.
However, both are of temporary nature and in both cases the contract of employment is not terminated
but remains in suspended animation.

Retrenchment
“Retrenchment” means the termination by the employer of the service of a workman for any reason
whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include:
(a) voluntary retirement of the workman; or
(b) retirement of the workman or reaching the age of superannuation if the contract of employment
between the employer and the workman concerned contains a stipulation in that behalf; or
(bb) termination of the service of the workman as a result of the non-renewal of the contract of
employment between the employer and the workman concerned on its expiry or of such contract being
terminated under a stipulation in that behalf contained therein.
(c) termination of the service of workman on the ground of continued ill-health.
Thus, the definition contemplates following requirements for retrenchment:
(i) There should be termination of the service of the workman.
(ii) The termination should be by the employer.
(iii) The termination is not the result of punishment inflicted by way of disciplinary action.
(iv) The definition excludes termination of service on the specified grounds or instances mentioned in it.
[Section 2(oo)]

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Prof Abhijeet C. Jaiswal
“Award” means an interim or a final determination of any industrial dispute or of any question relating
thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and includes an arbitration
award made under Section 10-A. [Section 2(b)]
1. Scope of Award:
• An "award" refers to the decision made by a Labor Court, Industrial Tribunal, or National
Industrial Tribunal regarding an industrial dispute.
• It can be either interim (temporary) or final.
• The term also includes arbitration awards made under Section 10-A of the Act.
2. Components of the Definition:
• First Part: Covers the determination of any industrial dispute, whether it’s a final or
interim decision.
• Second Part: Includes the determination of any question related to an industrial dispute.
3. Prerequisite: The basic requirement for an "award" is the existence of an actual or apprehended
industrial dispute.
Legal Analysis in Cox & Kings (Agents) Ltd. v. Their Workmen
1. Analysis of 'Award':
• The case analyzed the definition of "award" and emphasized that the core element is the
presence of an industrial dispute.
• The determination referred to in the definition relates to the industrial dispute or a
question connected to it, and it must be based on merits.
2. Implication of 'Determination':
• The term "determination" implies a resolution or decision regarding the dispute or related
questions, arrived at after considering the merits of the case.

Average Pay
“Average pay” means the average of the wages payable to a workman:
1. Monthly Paid Workman:
• The average pay is calculated based on the wages paid in the three complete calendar
months preceding the date on which the average pay becomes payable.
2. Weekly Paid Workman:
• For workers paid weekly, the calculation is based on the wages paid in the four complete
weeks preceding the relevant date.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
3. Daily Paid Workman:
• In the case of workers paid on a daily basis, the average pay is calculated based on the
wages paid over twelve full working days preceding the date of calculation.
• This applies if the worker had worked for three complete calendar months, four complete
weeks, or twelve full working days, as applicable.
4. Calculation in Case of Incomplete Periods:
• If a worker hasn't completed the requisite period (three months, four weeks, or twelve
working days), the average pay is calculated based on the period the worker actually
worked.

Employer
“Employer” means:
(i) in relation to an industry carried on by or under the authority of any department of the Central
Government or a State Government, the authority prescribed in this behalf, or where no authority is
prescribed, the head of the department;
(ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of
that authority. [Section 2(g)]
“Employer includes among others an agent of an employer, general manager, director, occupier of factory
etc.

Public Utility Service

“Public Utility Service” means:
(i) any railway service or any transport service for the carriage of passengers or goods by air;
(ia) any service in, or in connection with the working of, any major port or dock;
(ii) any section of an industrial establishment, on the working of which the safety of the establishment or
the workman employed therein depends;
(iii) any postal, telegraph or telephone service;
(iv) any industry which supplies power, light or water to the public;
(v) any system of public conservancy or sanitation;
(vi) any industry specified in the First Schedule which the appropriate Government may, if satisfied that
public emergency or public interest so requires, by notification in the Official Gazette, declare to be a public
utility service for the purposes of this Act, for such period as may be specified in the notification:

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal

Provided that the period so specified shall not, in the first instance, exceed six months but may, by a like
notification, be extended from time to time, by any period not exceeding six months at any one time, if in
the opinion of the appropriate Government public emergency or public interest requires such extension.
[Section 2(n)] Public utility services may be carried out by private companies or business corporations
[D.N. Banerji v. P.R. Mukharjee (Budge Budge Municipality)

Wages
“Wages” means all remuneration capable of being expressed in terms of money, which would, if the terms
of employment, expressed or implied, were fulfilled, be payable to workman in respect of his employment
or of work done in such employment, and includes:
(i) such allowance (including dearness allowance) as the workman is for the time being entitled to;
(ii) 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 foodgrains or other articles;
(iii) any travelling concession,
but does not include:
(a) any bonus;
(b) any contribution paid or payable by the employer to any pension fund or provident fund or for
the benefit of the workman under any law for the time being in force;
(c) any gratuity payable on the termination of his service;
(d) any commission payable on the promotion of sales or business or both. [Section 2(rr)]

AUTHORITIES UNDER THE ACT AND THEIR DUTIES

(i) Works Committee.
(ii) Conciliation Officers.
(iii) Boards of Conciliation.
(iv) Court of Inquiry.
(v) Labour Tribunals.
(vi) Industrial Tribunals.
(vii) National Tribunal.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
1. Works Committee (Section 3)
Constitution of the Committee:
• Mandatory in industrial establishments where 100 or more workmen are employed or have been
employed on any day in the previous 12 months.
• Comprised of representatives of both employers and workmen.
Duties:
• To promote measures for ensuring and maintaining amity and good relations between employers
and workmen.
• To comment on matters of common interest or concern.
• To strive to resolve any material differences of opinion regarding such matters.
2. Conciliation Officers (Section 4)
Appointment:
• Appointed by the appropriate Government through a notification in the Official Gazette.
• Can be designated for a specific area, industry, or for a set period.
Objective and Role:
• To mediate and promote the settlement of industrial disputes.
• Creating a conducive atmosphere for employers and workers to reconcile their disputes.
• Assists in facilitating dialogue and understanding between the disputing parties.
3. Boards of Conciliation (Section 5)
Formation:
• Constituted by the appropriate Government as needed, announced via the Official Gazette.
• Composed of a Chairman and two to four other members, as deemed fit by the Government.
Functions and Responsibilities:
• To investigate disputes and all related matters to facilitate a fair settlement.
• To undertake necessary actions to encourage the disputing parties towards an amicable
settlement.
• To report to the appropriate Government in cases of both settlement and non-settlement.
• If settled, include a memorandum of settlement signed by all parties.
• If not settled, list out the efforts made, reasons for non-settlement, and any
recommendations for dispute resolution.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
4. Courts of Inquiry (Section 6)
Constitution and Role:
• Formed by the appropriate Government as needed, announced through the Official Gazette.
• Aimed at investigating matters connected to or relevant to an industrial dispute.
• Can consist of one or more independent persons, with one appointed as Chairman.
Function and Report:
• Duty to inquire into referred matters and report findings to the appropriate Government.
• Typically expected to submit a report within six months, but this is not a mandatory timeline.

5. Labour Courts (Section 7)

Formation and Empowerment:
• Constituted by the appropriate Government to adjudicate industrial disputes related to matters in
the Second Schedule of the Act.
• Can also perform other functions as assigned under the Act.
Composition:
• Each Labour Court is presided over by a single individual.
• Qualifications for the presiding officer include being or having been a High Court judge, a district
judge or additional district judge for at least three years, holding a judicial office in India for no
less than seven years, or being the presiding officer of a Labour Court for at least five years.
Duties and Expectations:
• Expected to conduct proceedings expeditiously and submit an award to the appropriate
Government promptly after concluding proceedings.
• No specific time frame for completing proceedings, but they are expected to avoid the
technicalities typical of Civil Courts.
• Labour Courts do not have the power to permit fresh evidence in support of charges on their own
initiative.
Limitation Act and Relief Modification:
• Article 137 of the Limitation Act does not apply to the referral of disputes to Labour Courts.
• Courts can modify relief in cases of delay, such as refusing back wages or directing payment of
past wages.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
6. Industrial Tribunals (Section 7-A)
Constitution and Jurisdiction:
• The appropriate Government may establish one or more Industrial Tribunals for adjudicating
disputes related to matters in the Second or Third Schedule of the Act.
• Jurisdiction is conferred upon a Tribunal through reference by the appropriate Government under
Section 10.
Composition:
• Each Tribunal is presided over by a single individual.
• Qualifications for the presiding officer include being or having been a High Court judge or serving
as a District Judge or an Additional District Judge for at least three years.
• The appropriate Government may appoint two assessors to advise the Tribunal.
Age Limit and Independence:
• The presiding officer must be an independent person and should not have attained the age of 65
years.
Functioning and Limitations:
• Tribunals may be constituted for specific cases, areas, or limited periods and cease to function
upon the expiry of their term.

7. National Tribunals (Section 7-B)

Authority and Scope:
• Only the Central Government can establish National Tribunals.
• These Tribunals adjudicate disputes of national importance or those affecting industrial
establishments across multiple states.
Composition:
• Each National Tribunal is headed by a single individual.
• The presiding officer must be, or have been, a High Court judge.
• The Central Government may appoint two assessors for advisory roles.
Age Limit and Independence:
• The presiding officer should be independent and below the age of 65 years, as per Section 7-C.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
REFERENCE OF DISPUTES
A. Reference of Disputes to Various Authorities
1. When a Reference is Made:
• The appropriate Government may make a reference when it believes an industrial dispute
exists or is apprehended.
2. Referral to Conciliation Board:
• Disputes can be referred to a Conciliation Board to promote settlement. The Board's role
is not to adjudicate but to facilitate an agreement. If the Board fails to resolve the dispute,
this guides the Government on further action.
3. Referral to Court of Inquiry:
• Matters connected to or relevant to the dispute can be referred to a Court of Inquiry,
which serves an investigatory purpose rather than a conciliatory or adjudicatory one.
4. Referral to Labour Court:
• Disputes related to matters in the Second Schedule, and in some cases the Third Schedule,
can be referred to a Labour Court for adjudication.
5. Referral to Industrial Tribunal:
• Disputes specified in the Second or Third Schedule can be referred to an Industrial Tribunal
for adjudication.
6. Mandatory Reference in Public Utility Services:
• In case of public utility services, if a notice of strike or lockout has been given, the
Government is obliged to refer the dispute for adjudication, unless it deems the notice
frivolous or the reference inexpedient.
7. Judicial Review of Government's Decision:
• The Government's decision to refer (or not refer) a dispute is subject to judicial review,
particularly if it’s influenced by bias, mala fide, or irrelevant considerations.
8. Application for Reference:
• If parties to a dispute apply for a reference to a Board or Court, and if they represent the
majority of each party, the Government must make the reference.
9. No Appeal or Revision Against Awards:
• The Act does not provide for an appeal or revision against the awards made by these
bodies. However, the Supreme Court may, under Article 136 of the Constitution, grant
special leave to appeal against such awards.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal

Judicial Interpretations of Section 10(1)

1. Nature of the Reference Order:
• It's an administrative act, not a judicial or quasi-judicial one [State of Madras v. C.P.
Sarathy]. The Government's role is to refer the dispute for adjudication, not to assess its
merits.
2. Discretionary Powers and Judicial Review:
• The Government's power to make a reference is discretionary but can be subject to
judicial review within certain limits.
3. Compulsion to Make Reference:
• Ordinarily, the Government cannot be compelled to make a reference. However, if it
refuses, it must provide reasons [State of Bombay v. K.P. Krishnan]. The Government can
be compelled to reconsider its decision under certain circumstances.
4. Timing of Reference Relative to Conciliation:
• The Government need not wait for conciliation proceedings to conclude before making a
reference [Western India Match Co. Ltd. v. Workmen].
5. Possibility of Subsequent References:
• The Government can make a subsequent reference even after initially deciding against it,
especially if new material or considerations arise [Western India Match Co. Ltd. v. Workers
Union].
6. Limits on Government’s Power to Modify References:
• The Government cannot cancel, withdraw, or supersede a matter once referred. It can,
however, add or amplify a matter already referred [State of Bihar v. D.N. Ganguli; Dabur
Ltd. v. Workmen]. Transfers between Tribunals are possible under Section 33-B.
7. General Terms of Reference:
• A reference made in general terms is valid as long as the Tribunal can understand the
dispute from the reference and surrounding facts [State of Madras v. C.P. Sarthy].
8. Assessment of Prima Facie Case:
• The Government can assess whether there's a prima facie case before making a reference
but cannot decide the dispute on its merits [Bombay Union of Journalists v. State of
Bombay].

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
B. Reference of Dispute to National Tribunal (Section 10(1-A))
1. Criteria for National Tribunal Reference:
• The Central Government can refer a dispute to a National Tribunal if it involves questions
of national importance or affects industrial establishments across multiple states.
2. Authority of Central Government:
• The Central Government can make this referral irrespective of whether it is the
appropriate Government concerning the dispute.
3. Written Order for Reference:
• The referral is made through a formal, written order.
4. Impact on Existing Proceedings:
• If the dispute is already being adjudicated by a Labour Court or Tribunal, those
proceedings are deemed quashed upon its referral to a National Tribunal.
• It's unlawful to refer the dispute to any Labour Court or Tribunal for adjudication while it's
pending before the National Tribunal.
C. Reference on Application of Parties (Section 10(2))
1. Application by Parties for Referral:
• Parties to a dispute can apply, either jointly or separately, for its referral to a Board, Court,
Labour Court, Tribunal, or National Tribunal.
2. Conditions for Government to Make a Reference:
• The referral is mandatory if the parties applying represent the majority of each side in the
dispute.
• The Government must be satisfied that the applicants indeed represent the majority of
each party.
3. Time Limit for Award Submission:
• The Government must specify a time limit for the award submission, typically not
exceeding three months, which can be extended if necessary.

(D) Time limit for submission of awards

1. Section and Purpose: Section 10(2A) deals with the time limit for Labour Courts, Tribunals, or
National Tribunals to submit their award in industrial disputes.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
2. Specified Time Period: This section requires an order referring an industrial dispute to specify the
time within which the award must be submitted to the appropriate government. This is to speed
up the proceedings.
3. Limit for Individual Workman Disputes: For disputes involving an individual workman, the time
limit for submission cannot exceed three months.
4. Extension of Time Limit:
• Parties to the dispute can apply for an extension.
• They can apply jointly or separately.
• The presiding officer can extend the time for valid reasons, which must be recorded in
writing.
5. Exclusion of Stalled Period: If the proceedings were paused due to an injunction or order from a
Civil Court, this period is not counted in the specified time limit.
6. No Lapse of Proceedings: Proceedings before a Labour Court, Tribunal, or National Tribunal do
not lapse merely because the specified time period has expired without completion.

(E) Prohibition of Strike or Lock-out

1. Government's Authority: When an industrial dispute is referred to a Board, Labour Court,
Tribunal, or National Tribunal under Section 10(3), the appropriate Government can issue an order
to prohibit any ongoing strike or lock-out related to that dispute.
2. Legal Status Without Order: If the government doesn't issue an order prohibiting the strike or
lock-out, their continuation is not considered illegal.
3. Irrelevance of Issue Coverage: Once the government orders a prohibition of strike or lock-out, the
fact that the strike was on an issue not covered by the reference becomes immaterial (Keventers
Karamchari Sangh v. Lt. Governor Delhi, 1971).
4. Basis for Government Action: Action under Section 10(1) requires that the government have
some information or material enabling them to form an opinion that an industrial dispute exists
or is anticipated. This is an administrative function, distinct from judicial or quasi-judicial roles.
5. Continuation of Dispute: If the government rejects a request for a reference or declines to make
a reference, it doesn't mean the industrial dispute has ended. It may persist, and the government
can still decide to make a reference later if it's in the interest of industrial peace.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
(F) Subject-matter of Adjudication
1. Specified Points for Adjudication: When an industrial dispute is referred under Section 10(4), the
appropriate Government specifies the points of dispute for adjudication in the order.
2. Adjudication Scope: The Labour Court, Tribunal, or National Tribunal must focus its adjudication
exclusively on those specified points and any related matters.

(G) Powers of the Government to Add Parties

1. Government's Authority: When a dispute related to an establishment or establishments is
referred to a Labour Court, Tribunal, or National Tribunal under Section 10, the appropriate
Government can take action if it believes that another establishment, group, or class of similar
establishments is likely to be interested in or affected by the dispute.
2. Inclusion of Additional Parties: The government can include such other establishment, group, or
class of establishments in the reference either at the time of making the initial reference or at any
point before the award is submitted.
3. No Requirement of Existing Dispute: Importantly, the government can make this inclusion even
if, at the time of adding these parties, there is no existing dispute or anticipation of one in the
newly included establishment, group, or class of establishments.

Voluntary Reference of Disputes to Arbitration (Section 10-A)

1. Initiation of Arbitration: When an industrial dispute exists or is anticipated and hasn't been
referred for adjudication by a Labour Court, Tribunal, or National Tribunal, the employer and
workmen can voluntarily refer the dispute to arbitration through a written agreement. They can
specify the arbitrator(s) in the agreement. The presiding officer of a Labour Court, Tribunal, or
National Tribunal can also be named as an arbitrator.
2. Even Number of Arbitrators: If the arbitration agreement involves an even number of arbitrators,
it must also provide for the appointment of an umpire. The umpire steps in if the arbitrators are
equally divided in their opinion, and the umpire's decision becomes the arbitration award.
3. Form and Signing of Agreement: The arbitration agreement must be in a prescribed form and
signed by the parties involved.
4. Notification to Appropriate Government: A copy of the arbitration agreement must be sent to
the appropriate Government and the Conciliation Officer. The appropriate Government should
publish it in the Official Gazette within one month of receiving the copy.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
5. Involvement of Non-Parties: If the appropriate Government is satisfied that the majority of each
party is represented in the arbitration reference, it can issue a notification within the specified
time. Non-parties (employer and workmen) concerned in the dispute can then present their case
before the arbitrator(s).
6. Arbitration Award: The arbitrator(s) investigate the dispute and submit an arbitration award
signed by them to the appropriate Government.
7. Prohibition of Strike or Lock-out: If an industrial dispute is referred to arbitration and a notification
is issued, the appropriate Government can order the prohibition of any existing strike or lock-out
related to the dispute on the date of reference.
8. Exclusion of Arbitration Act, 1940: Arbitrations under this Section are not governed by the
Arbitration Act, 1940.

STRIKES AND LOCK-OUTS

1. Collective Bargaining Tools: Strikes and lock-outs are tools used by workers and employers to
assert their positions during collective bargaining processes.
2. Legal Limitations: The Industrial Disputes Act, 1947 doesn't grant an unrestricted right to engage
in strikes or lock-outs.
3. Government's Authority: Under Section 10(3) and Section 10A(4A) of the Act, the government
has the power to issue orders prohibiting the continuation of strikes or lock-outs.
4. Restrictions on Commencement: Sections 22 and 23 of the Act provide further provisions that
restrict the commencement of strikes and lock-outs.

(i) General Prohibition of Strikes and Lock-outs

• Workmen in industrial establishments cannot go on strike in violation of their employment
contracts, and employers cannot declare a lock-out under certain circumstances.
• Conciliation Proceedings: Strikes by workmen and lock-outs by employers are prohibited during
the period when conciliation proceedings are ongoing before a Conciliation Board and for seven
days after these proceedings conclude.
• Proceedings Before Courts and Tribunals: Strikes and lock-outs are also restricted during the
pendency of proceedings before a Labour Court, Tribunal, or National Tribunal and for two months
after the conclusion of these proceedings.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Arbitration Proceedings: If a notification is issued under sub-section (3A) of Section 10A for

arbitration proceedings, strikes and lock-outs are prohibited during these proceedings and for two
months after their conclusion.
• Settlement or Award in Operation: Strikes and lock-outs cannot occur during any period in which
a settlement or award is in effect, specifically in relation to the matters covered by that settlement
or award.

(ii) Prohibition of Strikes and Lock-outs in Public Utility Service

1. Applicability of Restrictions: The restrictions on strikes and lock-outs mentioned earlier apply to
both utility services and non-utility services. Section 22 introduces additional safeguards
specifically for public utility services to ensure uninterrupted operations and prevent
inconvenience to the general public and society.
2. Conditions for Strikes in Public Utility Services:
• Employees in public utility services cannot go on strike without adhering to certain
conditions.
• Notice of strike must be provided to the employer as follows: (a) Within six weeks before
the intended strike. (b) With at least 14 days' notice from the date of giving notice to the
date of the actual strike. (c) The strike must not commence before the specified date
mentioned in the notice. (d) Strikes are prohibited during the pendency of any conciliation
proceedings before a conciliation officer and for seven days after the conclusion of such
proceedings.
3. Conditions for Lock-outs by Employers in Public Utility Services:
• Employers in public utility services cannot declare a lock-out without adhering to certain
conditions.
• Notice of lock-out must be provided to the workmen as follows: (a) Within six weeks
before the intended lock-out. (b) With at least 14 days' notice from the date of giving
notice to the date of the actual lock-out. (c) The lock-out must not commence before the
specified date mentioned in the notice. (d) Lock-outs are prohibited during the pendency
of any conciliation proceedings before a Conciliation Officer and for seven days after the
conclusion of such proceedings.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
4. Right to Strike with Conditions: The right to strike in public utility services is subject to specific
conditions, including the need to provide notice and to exhaust the intermediate remedy of
conciliation proceedings.
5. Dispute Initiation: The Act does not prescribe a specific manner in which a dispute must come
into existence. A written demand is not mandatory to establish an industrial dispute, except in the
case of public utility services, where Section 22 mandates the giving of a strike notice.
6. Exemption from Notice: Notice of a lock-out or strike is not necessary if there is already an
ongoing strike or lock-out in the public utility service. However, the employer is required to notify
the appropriate authority specified by the government on the day the strike or lock-out is
declared.
7. Notice Procedure: The Act allows for the prescription of various aspects of the notice procedure.
This includes determining the number of persons who can give notice, identifying recipients for
the notice, and specifying the manner in which the notice should be given for both strikes and
lock-outs.
8. Reporting Requirement: If an employer receives or issues notices in accordance with Section 22,
they are obligated to report the number of such notices within five days to the appropriate
Government or to the authority that has been prescribed for this purpose.

(iii) Illegal Strikes and Lock-outs

1. Definition of Illegal Strikes and Lock-outs:
• A strike or lock-out is considered illegal if it falls under the following conditions: (i) It
commences or is declared in violation of Section 22 or Section 23. (ii) It continues in
contravention of an order issued under Section 10(3) or Section 10A(4A).
2. Continuation of Strikes or Lock-outs During Dispute Resolution:
• If a strike or lock-out initiated due to an industrial dispute has already begun and is
ongoing at the time the dispute is referred to a Board, arbitrator, Labour Court, Tribunal,
or National Tribunal, its continuation shall not be deemed illegal.
• However, this exception applies only if the strike or lock-out was not in contravention of
the provisions of the Industrial Disputes Act at its commencement or if its continuation
was not prohibited under Section 10(3) or Section 10A(4A).
3. Legality of Lock-outs in Response to Illegal Strikes and Vice Versa:

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• A lock-out declared as a response to an illegal strike or a strike declared as a response to

an illegal lock-out shall not be considered illegal under Section 24.

4. Prohibition of Financial Support for Illegal Strikes and Lock-outs (Section 25):
• Section 25 of the Industrial Disputes Act prohibits any person from knowingly expending
or applying money in direct support or furtherance of any illegal strike or lock-out.

PENALTIES
1. Penalty for Illegal Strikes (Section 26(1)):
• Any workman who initiates, continues, or participates in an illegal strike under this Act can face
the following penalties:
• Imprisonment for up to one month.
• A fine of up to fifty rupees, or both.
• It's essential to note that an employer can waive certain rights against a workman who participates
in an illegal strike, but this waiver does not affect prosecution under Section 26.
2. Penalty for Illegal Lock-outs (Section 26(2)):
• Any employer who commences, continues, or otherwise supports an illegal lock-out under this
Act may face the following penalties:
• Imprisonment for up to one month.
• A fine of up to one thousand rupees, or both.
3. Penalty for Instigation or Incitement (Section 27):
• Any person who instigates or incites others to participate in, or otherwise supports, an illegal strike
or lock-out under this Act may face the following penalties:
• Imprisonment for up to six months.
• A fine of up to one thousand rupees, or both.
4. Penalty for Providing Financial Aid (Section 28):
• Any person who knowingly expends or applies money in direct support of any illegal strike or lock-
out under this Act may face the following penalties:
• Imprisonment for up to six months.
• A fine of up to one thousand rupees, or both.
5. Penalty for Breach of Settlement or Award (Section 29):

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Prof Abhijeet C. Jaiswal
• Any person who breaches any term of a settlement or award binding on them under this Act may

face the following penalties:

• Imprisonment for up to six months.
• A fine.
• Additional fine for each day the breach continues after the first conviction.
• The court can also direct that the fine be paid as compensation to an injured party.
6. Penalty for Disclosing Confidential Information (Section 30):
• Any person who willfully discloses confidential information in contravention of the Act may face
the following penalties:
• Imprisonment for up to six months.
• A fine of up to one thousand rupees, or both.
7. Penalty for Closure Without Notice (Section 30-A):
• Any employer who closes down an undertaking without complying with the provisions of Section
25-FFA may face the following penalties:
• Imprisonment for up to six months.
• A fine of up to five thousand rupees, or both.
8. Penalty for Other Offences (Section 31):
• Any employer who contravenes the provisions of Section 33 may face the following penalties:
• Imprisonment for up to six months.
• A fine of up to one thousand rupees, or both.
• For other contraventions of the Act or its rules, a fine of up to one hundred rupees may be
imposed.
9. Offence by Companies, Etc. (Section 32):
• When a company, body corporate, or association of persons commits an offence under this Act,
every director, manager, secretary, agent, or other officer or person involved in its management
shall be deemed guilty of the offence unless they can prove they had no knowledge or consent
regarding the offence.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 17 -II: Law of Industrial Relations
Unit II – The Industrial Employment
(Standing Orders) Act, 1946
Objects of the Act:
1. Uniformity in Conditions: The Act aims to enforce uniformity in the conditions of services among
different employers in various industrial establishments.
2. Protection of Employee Rights: Once an employer has communicated the conditions of
employment to their workmen, they cannot change these conditions to the detriment of the
employees' rights and interests.
3. Express or Written Conditions: Prospective workers have the option to accept the express written
conditions of employment before joining an industrial establishment.
4. Industrial Peace and Productivity: The Act plays a significant role in maintaining industrial peace
and ensuring continued productivity.
Scope and Application:
• The Act applies to the entire country and covers industrial establishments where 100 or more
workmen are employed or were employed during the preceding twelve months.
• The appropriate Government has the authority to extend the Act's provisions to industrial
establishments employing fewer than 100 persons, provided it gives a minimum of 2 months'
notice.
• Exemptions: The Act does not apply to industries covered by Chapter VII of the Bombay Industrial
Relations Act, 1946, or to industrial establishments governed by the Madhya Pradesh Industrial
Employment (Standing Orders) Act, 1961. However, it applies to all industrial establishments
under the control of the Central Government.
• Binding Certified Standing Orders: Certified standing orders are considered part of the statutory,
not contractual, terms and conditions of service and are binding on both employers and
employees.
• Further Limitations: Section 13-B and Section 14 of the Act provide additional limitations and
exemptions based on certain criteria and conditions for specific industrial establishments.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Standing Orders “Standing Orders” means rules relating to matters set out in the Schedule to the Act.
[Section 2(g)]

CERTIFICATION OF DRAFT STANDING ORDERS

Submission of Draft Standing Orders by Employers:

1. Section 3 of the Industrial Employment (Standing Orders) Act mandates that within six months
from the date when this Act becomes applicable to an industrial establishment, the employer of
that establishment must take specific actions.

2. The employer is required to submit five copies of the draft Standing Orders that they intend to
implement in their establishment to the Certifying Officer.

3. These draft Standing Orders should not deviate from the Model Standing Orders, if they exist.
Additionally, they must cover every matter detailed in the Schedule of the Act, provided that
such matters are applicable to the particular industrial establishment.

4. Alongside the draft Standing Orders, the employer must provide a statement that includes
prescribed particulars about the workmen employed in the industrial establishment. This
statement should also specify the name of any trade union to which the workmen belong, if
relevant.

Conditions for Certification of Standing Orders:

1. Section 4 of the Act outlines the conditions that must be met for the certification of Standing
Orders:

• (a) The draft Standing Orders must incorporate provisions for every matter mentioned in
the Schedule to the Act that is relevant to the specific industrial establishment.

• (b) Furthermore, the Standing Orders must be in compliance with all the other
provisions and requirements stipulated in the Act.

Fairness and Reasonableness of Standing Orders:

1. Section 4 of the Industrial Employment (Standing Orders) Act places a significant responsibility
on the Certifying Officer or appellate authority. Their role is to assess the fairness and
reasonableness of the provisions outlined in the draft Standing Orders.

2. The Act obliges the Certifying Officer to scrutinize whether the proposed Standing Orders
conform to the requirements of the Act. If the Certifying Officer identifies provisions in the draft
Standing Orders that pertain to matters not included in the Schedule or deems certain provisions
to be unreasonable, they are duty-bound to refuse certification.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
3. It's important to note that if a Standing Order contains provisions outside the scope of the
Schedule or includes unreasonable clauses, its certification would be invalid, as the Certifying
Officer would lack jurisdiction to certify such orders. The Certifying Officer operates in a quasi-
judicial capacity, which means they have a legal duty to perform this assessment.

4. In situations where a particular matter is not covered in the Schedule and the relevant
appropriate Government has not added it to the Schedule, the employer cannot unilaterally
create a Standing Order related to that matter. Additionally, the Certifying Officer lacks
jurisdiction to certify such an order. Even if employees consent to such standing orders, it would
not alter this legal stance.

Certification of Standing Orders:

1. Certifying Officer's Procedure: Section 5 of the Act outlines the procedure that the Certifying
Officer must follow. Upon receiving the draft Standing Orders from the employer, the Certifying
Officer is required to provide a copy to the trade union of the workmen. In cases where there is
no trade union, the copy is sent directly to the workmen, following the prescribed manner.

2. The Certifying Officer accompanies this with a notice requesting any objections that the
workmen may have regarding the draft Standing Orders. Workmen are given a 15-day window to
submit their objections after receiving the notice.

3. Upon receiving objections, the Certifying Officer must grant an opportunity for both the
workmen and the employer to be heard. If necessary amendments are required based on the
objections and discussions, the Certifying Officer incorporates these amendments.

4. Once the draft Standing Orders align with the Act and any necessary amendments have been
made, the Certifying Officer certifies them. Subsequently, a copy of the certified Standing Orders
is sent to both the employer and the employees' association within seven days of certification.

Effect of Certification:

1. The Act holds a special status for matters specified in the Schedule and regulations made by the
employer concerning these matters. These regulations are considered ineffective unless they are
either notified by the Government under Section 13B or certified by the Certifying Officer under
Section 5 of the Act.

Register of Standing Orders:

1. Section 8 empowers the Certifying Officer to maintain a register that contains copies of all the
Standing Orders that have been certified by them. This register is maintained in a prescribed
form.

2. Upon request and payment of the prescribed fee, the Certifying Officer is obliged to furnish a
copy of the certified Standing Orders to any interested person.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Appeals:

1. According to Section 6 of the Act, any employer, workman, trade union, or other prescribed
representatives of the workmen have the right to challenge the order of the Certifying Officer.
They can do so by filing an appeal before the appellate authority within 30 days from the date on
which copies of the Standing Orders are sent to the employer and the workers' representatives.

2. The appellate authority, whose decision is considered final, has the authority to either confirm
the Standing Orders as certified by the Certifying Officer or make amendments to them as
deemed necessary.

3. The appellate authority is obligated to send copies of the Standing Orders as confirmed or
modified by them to the employer or workers' representatives within 7 days of issuing their
order.

Date of Operation of Standing Orders:

1. As per Section 7 of the Act, Standing Orders shall become effective on the expiry of 30 days from
the date on which authenticated copies are sent to the employer and workers' representatives.
However, if an appeal has been filed, they will come into operation on the expiry of 7 days from
the date on which copies of the appellate authority's order are sent to the employer and
workers' representatives.

Posting of Standing Orders:

1. Section 9 of the Act mandates that the text of the Standing Orders, once finally certified under
the Act, must be prominently displayed by the employer. They should be posted in both English
and in the language understood by the majority of the workmen.

2. These posted copies of Standing Orders should be displayed on special boards located at or near
the entrance through which the majority of the workmen enter the industrial establishment.
Additionally, they must be posted in all departments where workmen are employed.

Duration and Modification of Standing Orders:

1. Section 10 of the Act restricts employers from modifying the certified Standing Orders without
the agreement of the workmen, a trade union, or another representative body of the workmen.
Any such modifications will not take effect until the expiration of 6 months from the date on
which the Standing Orders were last modified or certified.

2. The Act provides the option for an employer, workmen, or a trade union or other representative
body of the workmen to apply to the Certifying Officer for modifications to the Standing Orders.
This application should include five copies of the proposed modifications. If modifications are
proposed based on an agreement between the employer and the workmen or their
representatives, a certified copy of the agreement should accompany the application.

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Prof Abhijeet C. Jaiswal
3. It's important to note that there is no specific time limit mentioned in Section 10(2) for making
modification applications. Therefore, such applications can be submitted at any time.

Payment of Subsistence Allowance:

1. Section 10A of the Act addresses the payment of subsistence allowance when a workman is
suspended by the employer pending an investigation or inquiry into complaints or charges of
misconduct against them.

2. During the first ninety days of suspension, the employer is required to pay the suspended
workman a subsistence allowance at the rate of fifty percent of the wages the workman was
entitled to immediately preceding the date of suspension.

3. If the delay in completing the disciplinary proceedings against the workman is not directly
attributable to the workman's conduct, the subsistence allowance rate increases to seventy-five
percent of the wages for the remaining period of suspension.

4. Disputes related to subsistence allowance can be referred to the Labour Court constituted under
the Industrial Disputes Act, 1947, by either the workman or the employer.

5. It's important to note that if there are more beneficial provisions regarding the payment of
subsistence allowance under any other law currently in force, those provisions will take
precedence.

Interpretation of Standing Orders:

1. Section 13-A of the Act allows questions related to the application or interpretation of a certified
Standing Order to be referred to a Labour Court constituted under the Industrial Disputes Act,
1947.

2. This referral can be made by an employer, workman, trade union, or another representative
body of the workmen.

3. The Labour Court to which the question is referred will make a final and binding decision after
giving both parties an opportunity to be heard.

Temporary Application of Model Standing Orders:

1. Section 12-A specifies that during the period from the date on which the Act becomes applicable
to an industrial establishment until the date on which the Standing Orders certified under the
Act come into operation in that establishment, the prescribed model Standing Orders will be
deemed to be adopted.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
2. Certain provisions of the Act, including Sections 9 (regarding posting of Standing Orders), 13(2)
(related to interpretation), and 13-A (application and interpretation of Standing Orders), will
apply during this temporary period.

Matters to be Provided in Standing Orders:

The Act outlines several key matters that should be addressed in the Standing Orders certified under its
provisions. These matters include:

1. Classification of workmen, such as permanent, temporary, apprentices, probationers, or badlis.

2. Procedures for informing workmen about periods and hours of work, holidays, paydays, and
wage rates.

3. Guidelines for shift working.

4. Rules concerning attendance and late coming.

5. Conditions, procedures for applying for, and the authority granting leave and holidays.

6. Requirements for entering premises through specific gates and the authority to conduct
searches.

7. Procedures for closing and reopening sections of the industrial establishment, temporary
stoppages of work, and the associated rights and liabilities of the employer and workmen.

8. Termination of employment and the notice requirements for both employer and workmen.

9. Rules governing suspension or dismissal for misconduct and defining acts or omissions that
constitute misconduct.

10. Mechanisms for workmen to seek redress against unfair treatment or wrongful exactions by the
employer or their agents or servants.

11. Any other matter that may be prescribed by relevant regulations.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 18-I: Law of Wages
Unit I – Payment of Wages Act, 1936
Object and Scope:
1. The main objective of the Payment of Wages Act is to eliminate malpractices related to the
payment of wages. It achieves this by specifying the time and mode of wage payments and
ensuring that workers are paid their wages at regular intervals without unauthorized deductions.
2. The Act provides the government with the power to increase the wage ceiling through
notifications in the future.
3. The Act applies to the entire territory of India.

Definitions
“Employed person” includes the legal representative of a deceased employed person. (Section 2(ia)}
“Employer” includes the legal representative of a deceased employer. {Section 2(ib)}
“Factory” means a factory as defined in clause (m) of section 2 of the Factories Act 1948 (63 of 1948) and
includes any place to which the provisions of that Act have been applied under sub-section (1) of section
85 thereof. {Section 2(ic)}
“Industrial or other establishment” means any —
(a) tramway service or motor transport service engaged in carrying passengers or goods or both by road
for hire or reward;
(aa) air transport service other than such service belonging to or exclusively employed in the military naval
or air forces of the Union or the Civil Aviation Department of the Government of India;
(b) dock wharf or jetty;
(c) inland vessel mechanically propelled;
(d) mine quarry or oil-field;
(e) plantation;
(f) workshop or other establishment in which articles are produced adapted or manufactured with a view
to their use transport or sale;
(g) establishment in which any work relating to the construction development or maintenance of buildings
roads bridges or canals or relating to operations connected with navigation irrigation or to the supply of
water or relating to the generation transmission and distribution of electricity or any other form of power
is being carried on;

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
(h) any other establishment or class of establishments which the Appropriate Government may having
regard to the nature thereof the need for protection of persons employed therein and other relevant
circumstances specify by notification in the Official Gazette. [Section 2(ii)]

“Wages” means all remuneration (whether by way of salary allowances or otherwise) expressed in terms
of money or capable of being so expressed which would if the terms of employment express or implied
were fulfilled by payable to a person employed in respect of his employment or of work done in such
employment and includes —
(a) any remuneration payable under any award or settlement between the parties or order of a court;
(b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or
any leave period;
(c) any additional remuneration payable under the terms of employment (whether called a bonus or by
any other name);
(d) any sum which by reason of the termination of employment of the person employed is payable under
any law contract or instrument which provides for the payment of such sum whether with or without
deductions but does not provide for the time within which the payment is to be made;
(e) any sum to which the person employed is entitled under any scheme framed under any law for the
time being in force,
but does not include —
(1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the
remuneration payable under the terms of employment or which is not payable under any award or
settlement between the parties or order of a court;
(2) the value of any house-accommodation or of the supply of light water medical attendance or other
amenity or of any service excluded from the computation of wages by a general or special order of
Appropriate Government;
(3) any contribution paid by the employer to any pension or provident fund and the interest which may
have accrued thereon;
(4) any travelling allowance or the value of any travelling concession;
(5) any sum paid to the employed person to defray special expenses entailed on him by the nature of his
employment; or
(6) any gratuity payable on the termination of employment in cases other than those specified in subclause
(d). {Section 2(vi)}

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Prof Abhijeet C. Jaiswal
Responsibility for Payment of Wages (Section 3):
• Every employer is responsible for paying wages to the persons employed by them as required by
the Act.
• In specific cases, where there is a manager, supervisor, or designated person responsible for the
supervision and control of the establishment, that person is responsible for payment.
• For persons employed on railways, the railway administration may nominate a responsible person
for the local area.
• In the case of persons employed by contractors, the contractor may designate a person directly
under their charge.
• In other cases, the employer designates a person responsible for complying with the Act.

Fixation of Wage Periods (Section 4):

• Every person responsible for the payment of wages must establish wage periods for which wages
will be payable.
• No wage period should exceed one month in duration.

Time of Payment of Wages (Section 5):

• The timing of wage payments depends on the type of establishment:
• For establishments with less than one thousand persons employed, wages must be paid
before the expiry of the seventh day.
• For other establishments, wages must be paid before the expiry of the tenth day after the
last day of the wage period.
• In cases involving docks, wharves, jetties, or mines, the balance of wages found due after
completing the final tonnage account must be paid before the expiry of the seventh day.
• If a person's employment is terminated, their wages must be paid within the second
working day from the day of termination.
• In case of establishment closure, wages must be paid within the second day from the day
of termination, provided it's not a weekly or recognized holiday.
• The Appropriate Government has the authority to exempt specific categories of workers, such as
those employed on railways or as daily-rated workers in the Public Works Department, from the
specified timing requirements, subject to certain conditions.
• All wage payments should occur on a working day.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Modes of Wage Payment (Section 6):
• According to Section 6 of the Act, wages must be paid to employees in one of the following forms:
• Current coin
• Currency notes
• Cheque
• Crediting the wages in the bank account of the employee
• The appropriate Government can specify, through an official notification, certain industrial or
other establishments where wage payments should be made only by cheque or by crediting wages
to employees' bank accounts.
Permissible Deductions from Employee Wages (Section 7):
• Section 7 of the Act outlines deductions that are allowed from an employee's wages, including:
1. Fines
2. Absence from duty
3. Damage to or loss of goods expressly entrusted to the employee
4. Housing accommodation and amenities provided by the employer
5. Recovery of advances or adjustment of over-payments of wages
6. Recovery of loans from welfare funds approved by the State Government and the interest
due on such loans
7. Subscriptions to and repayment of advances from any provident fund
8. Income tax
9. Payments to cooperative societies approved by the State Government or to a scheme of
insurance maintained by the Indian Post Office
10. Deductions made with the written authorization of the employee for the payment of
premiums on their life insurance policy or for the purchase of securities.

Fines (Section 8):

• Fines can only be imposed on employed persons for specific acts and omissions as specified by
the employer with prior approval from the State Government or the prescribed authority.
• A notice specifying the acts and omissions subject to fines must be displayed in the workplace.
• An employed person must be given an opportunity to show cause against the fine, and the
imposition of fines must follow prescribed procedures.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• The total amount of fines in a wage period cannot exceed 3% of the wages payable to the

employee for that period.

• Fines cannot be imposed on employed persons under the age of fifteen years.
• Fines should not be recovered from an employee by installments or after ninety days from the
date of imposition.
• Fines are deemed to be imposed on the day of the act or omission.
• All fines and their realizations must be recorded in a register and used only for purposes approved
by the prescribed authority. In some cases, fines may be credited to a common fund for staff under
the same management.
Maintenance of Registers and Records (Section 13A):
• Employers are required to maintain registers and records containing specific details of persons
employed, work performed, wages paid, deductions made, receipts issued, and other particulars
as prescribed.
• These registers and records must be kept in the prescribed format.
• Employers must preserve these registers and records for a period of three years from the date of
the last entry made in them.

Appointment of Authority (Section 15):

• The appropriate Government has the authority to appoint specific individuals or officers to handle
claims related to deductions from wages or delays in wage payments in a specified area.
• These appointed authorities may include Commissioners for Workmen's Compensation, officers
of the Central Government or State Government with relevant experience, presiding officers of
Labour Courts or Industrial Tribunals, or other officers with judicial experience.
• Multiple authorities may be appointed for a specified area, and their duties can be allocated as
needed.
Filing a Claim (Section 15(2)):
• Any employed person, legal practitioner, authorized official of a registered trade union, Inspector
under the Act, or another person with permission from the appointed authority may apply to the
authority for a direction regarding a deduction from wages or a delay in wage payment.
• The application must be submitted within twelve months from the date on which the deduction
or delayed payment occurred. In exceptional cases, if the applicant can show sufficient cause for
the delay, the authority may admit the application even after the twelve-month period.

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Prof Abhijeet C. Jaiswal
Handling of Claims (Section 15(3)):
• When an application is submitted, the appointed authority must conduct a hearing involving the
applicant and the employer or person responsible for wage payment.
• The authority may also conduct further inquiries if necessary.
• The authority can issue a direction that includes:
• Refund of the deducted amount.
• Payment of delayed wages.
• Compensation to the employed person, not exceeding ten times the deducted amount (in
the case of deductions) or not exceeding three thousand rupees (in the case of delayed
wages), but not less than one thousand five hundred rupees (in the case of delayed
wages).
• Even if the deducted amount or delayed wages are paid before the application is decided, the
authority can still order the payment of compensation, not exceeding two thousand rupees

Timely Disposal of Claims:

• A claim made under the Act should ideally be resolved within three months from the date of its
registration by the authority.
• However, if both parties involved in the dispute agree for a valid reason, the authority can extend
this three-month period to ensure a just resolution.
Exceptions for Compensation (Section 15(3)):
• Compensation for delayed wages will not be directed by the authority if certain conditions are
met. Compensation will not be granted if:
• There was a bona fide error or dispute about the amount owed to the employed person.
• The delay resulted from an emergency or exceptional circumstances, and the person
responsible for wage payment was unable to make the payment despite reasonable
efforts.
• The employed person failed to apply for or accept payment.

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Prof Abhijeet C. Jaiswal
Penalties for Malicious or Vexatious Claims (Section 15(4)):
• If the authority determines that an application made under this section was malicious or
vexatious, it may direct the payment of a penalty not exceeding three hundred seventy-five
Rupees to the employer or the person responsible for wage payment by the applicant.
• In cases where compensation is directed to be paid under subsection (3) but the applicant should
not have been compelled to seek redress under this section, the authority may direct a penalty
not exceeding three hundred seventy-five Rupees to be paid to the State Government by the
employer or the person responsible for wage payment.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 18-II: Law of Wages
Unit II – Minimum Wages Act, 1948
Scope of the Act:
1. Fixing Minimum Rates: The Act empowers the appropriate government (central or state) to
prescribe and fix minimum rates of wages for workers in certain employments. These
employments are specified in the schedule to the Act and are referred to as "Scheduled
Employments."
2. Scheduled Employments: The Act covers specific employments or industries listed in the
schedule. The minimum wage rates are determined separately for each scheduled employment.
The rates may vary based on the type of work and location.
3. Geographical Applicability: The Minimum Wages Act applies to the entire country, extending its
provisions to all states and union territories in India.
4. Welfare State: The Act is aligned with the concept of a welfare state, where the government plays
a proactive role in ensuring the well-being and fair treatment of its citizens, particularly in the
labor sector.

IMPORTANT DEFINITIONS
Appropriate Government [Section 2(b)]
“Appropriate Government” means — (i) in relation to any scheduled employment carried on by or under
the authority of the Central or a railway administration, or in relation to a mine, oilfield or major part or
any corporation established by a Central Act, the Central Government, and
(ii) in relation to any other scheduled employment, the State Government.

Employee [Section 2(i)]

“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; and includes an outworker 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 purpose of the trade or business of that other person where the process is to be carried out either in
the home of the outworker or in some other premises, net being premises under the control and

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Prof Abhijeet C. Jaiswal
management of that person; and also includes an employee declared to be an employee by the
appropriate Government; but does not include any member of Armed Forces of the Union.

Employer [Section 2(e)]

“Employer” means any person who employs, whether directly or through another person, or whether on
behalf of himself or any other person, one or more employees in any scheduled employment in respect of
which minimum rates of wages have been fixed under this Act, and includes, except, in sub-section (3) of
Section 26 —
(i) in a factory where there is carried on any scheduled employment in respect of which minimum rates of
wages have been fixed under this Act, any person named under clause (f) of sub-section (1) of Section 7
of the Factories Act, 1948, as manager of the factory;
(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 of 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 of the supervision and
control of the employees or for the payment of wages.

Wages [Section 2(i)]

“Wages” means all remunerations capable of being expressed in terms of money, which would, if the terms
of the contract of employment, express of implied, were fulfilled, be payable to a person employed in
respect of his employment or of work done in such employment and includes house rent allowance but
does not include:
(i) the value of:
(a) any house accommodation, supply of light, water medical;
(b) any other amenity or any service excluded by general or social order of the appropriate
Government;

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

Fixation of Minimum Rates of Wages (Section 3(1)(a)):

1. Appropriate Government: The appropriate government, which can be the central or state
government, is responsible for fixing the minimum rates of wages for employees in scheduled
employments listed in Part I and Part II of the Schedule. These employments can also be added or
modified by notification under Section 27 of the Act.
2. Variation by Zones or Localities: In the case of employments specified in Part II of the Schedule,
the minimum wage rates may not need to be fixed for the entire state. Parts of the state may be
excluded, and different rates can be fixed for different zones or localities within the state.
3. Minimum Threshold: The Act allows the appropriate government not to fix minimum wage rates
for a scheduled employment if it employs fewer than 1000 employees in the whole state. However,
if the number of employees in that employment increases to 1000 or more, the government is
required to fix the minimum wage rates.
Revision of Minimum Wages (Section 3(1)(b)):
1. Interval for Review: The appropriate government may review and revise the minimum wage rates
at intervals not exceeding five years. This means that the rates can be revised earlier than five
years if deemed necessary.
Manner of Fixation/Revision of Minimum Wages (Section 3(2)):
1. Types of Minimum Rates: The Act allows for the fixation of minimum wage rates in different forms,
depending on the nature of employment and work. These include:
• Minimum Time Rate (for time-based work)
• Minimum Piece Rate (for piecework)
• Guaranteed Time Rate (to ensure a minimum wage for pieceworkers)
• Overtime Rate (to apply for overtime work)
Differentiation and Wage Periods (Section 3(3)):

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1. Differentiation: The Act allows for differentiation in minimum wage rates based on various factors,
including:
• Different scheduled employments
• Different classes of work within the same employment
• Age groups (adults, adolescents, children, and apprentices)
• Different localities
2. Wage Periods: Minimum wage rates can be fixed for different wage periods, including by the hour,
day, month, or other prescribed wage periods. When rates are fixed by the day or month, the Act
allows for indicating the manner of calculating wages for the corresponding period.
3. Payment of Wages Act: If the Payment of Wages Act, 1936, prescribes a specific wage period for
an employment, minimum wages must be fixed in accordance with that wage period.

Minimum Rate of Wages (Section 4):

1. Components of Minimum Wage: Section 4 allows the minimum rate of wages to be composed of
the following elements:
• Basic Rate of Wages: This is the core wage component.
• Cost of Living Allowance (COLA): A special allowance to be adjusted periodically to align
with changes in the cost of living index number applicable to workers.
• Cash Value of Concessions: This includes the value of any benefits provided to workers,
such as essential commodities at concessional rates, where authorized.
2. Calculation and Adjustment: The competent authority, as directed by the appropriate
government, is responsible for calculating the COLA and the cash value of concessions at specified
intervals and in accordance with government directions.

Procedure for Fixing and Revising Minimum Wages (Section 5): The Minimum Wages Act outlines two
methods for fixing or revising minimum wage rates:
First Method (Section 5(1)(a)): Committee Method:
1. Committee Appointment: The appropriate government may appoint one or more committees or
sub-committees to conduct inquiries and provide advice regarding the fixation or revision of
minimum wage rates for a scheduled employment.

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Prof Abhijeet C. Jaiswal
2. Committee Recommendations: After considering the advice and recommendations of the
committee(s), the appropriate government will issue a notification in the Official Gazette to fix or
revise the minimum wage rates.
3. Effective Date: The minimum wage rates specified in the notification will come into force on the
date mentioned in the notification. If no specific date is mentioned, they will become effective
after three months from the date of the notification.
Note: The committees are advisory bodies, and the government is not bound to accept their
recommendations.
Second Method (Section 5(1)(b)): Notification Method:
1. Publication of Proposals: The appropriate government will publish its proposals for fixing or
revising minimum wage rates in the Official Gazette. These proposals will be made available for
the information of the affected parties.
2. Consultation Period: A specified date, not less than two months from the date of the notification,
will be set for considering representations and feedback from those likely to be affected by the
proposals.
3. Consultation and Final Decision: After considering representations and consulting the Advisory
Board as per Section 7, the appropriate government will issue a notification in the Official Gazette
to fix or revise the minimum wage rates.
4. Effective Date: The new minimum wage rates specified in the notification will come into force on
the date mentioned in the notification. If no specific date is mentioned, they will become effective
after three months from the date of the notification.
Retrospective Effect: Minimum wage rates can be revised with retrospective effect if deemed necessary.

State Advisory Board (Section 7):

1. Purpose: The State Advisory Board is constituted by the appropriate State Government under
Section 7 of the Act. Its primary purpose is to coordinate the work of committees and sub-
committees appointed under Section 5 of the Act. It also advises the appropriate State
Government on matters related to fixing and revising minimum wage rates.
2. Composition: The State Advisory Board consists of members nominated by the appropriate State
Government. It includes an equal number of representatives from employers and employees in
the scheduled employment. Additionally, up to one-third of its members can be independent

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persons. The State Government appoints one of these independent persons as the Chairman of
the Board.
3. Independence of Members: An independent person in this context refers to an individual who is
neither an employer nor an employee in the employment for which minimum wages are being
determined.
Central Advisory Board (Section 8):
1. Purpose: The Central Advisory Board is appointed by the Central Government under Section 8 of
the Act. Its primary function is to advise both the Central Government and State Governments on
matters concerning the fixation and revision of minimum wage rates and other aspects related to
the Minimum Wages Act. It also plays a coordinating role in the work of advisory boards.
2. Composition: The Central Advisory Board is comprised of members nominated by the Central
Government. Similar to the State Advisory Board, it includes an equal number of representatives
from employers and employees in the scheduled employment, along with up to one-third
independent persons. The Central Government appoints one of these independent persons as the
Chairman of the Board.

Mode of Payment (Section 11):

1. Cash Payment: Section 11 of the Act specifies that minimum wages payable under the Act must
be paid in cash. This means that workers should receive their minimum wages in the form of
currency notes or coins.
2. Payment in Kind: However, if it has been a customary practice to pay wages wholly or partly in
kind, the appropriate Government may approve and authorize such payments. Additionally, the
Government can authorize the supply of essential commodities at concessional rates as part of
the payment. When wages are paid in kind, the cash value of these wages or commodities should
be estimated in the prescribed manner.

Payment of Minimum Wages (Section 12):

1. Obligatory on Employers: Section 12 of the Act makes it mandatory for employers to pay their
employees engaged in scheduled employments wages at a rate not less than the minimum rate of
wages fixed by the appropriate Government under Section 5. This payment should be made
without any unauthorized deductions.

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Prof Abhijeet C. Jaiswal
2. Prescribed Time and Conditions: Employers are required to pay minimum wages within the
timeframes and subject to the conditions prescribed by the appropriate Government.
Fixing Hours for a Normal Working Day (Section 13):
1. Purpose: Section 13 allows the appropriate Government to address the working hours of
employees in relation to minimum wages. Fixing the number of hours for a normal working day is
important to ensure that minimum wage rates are meaningful and fair to employees.
2. Components of Normal Working Day: The appropriate Government can fix the number of hours
that constitute a normal working day. This includes specifying one or more intervals within that
day.
3. Day of Rest: The section also empowers the appropriate Government to provide for a day of rest
in every period of seven days. During this day of rest, employees are allowed a break, and the
employer is typically required to provide remuneration for this day.
4. Payment for Work on a Day of Rest: If an employee is required to work on a day of rest, the
appropriate Government can specify that the payment for such work should be at a rate not less
than the overtime rate.
5. Applicability to Specific Classes: The provisions related to fixing hours for a normal working day
apply to specific classes of employees, but only to the extent and subject to the conditions
prescribed. These classes include employees engaged in urgent work, work outside the usual
working hours, essentially intermittent employment, work with technical reasons for irregular
hours, and work dependent on natural forces' irregular action.
6. Definition of Essentially Intermittent Employment: For the purpose of clause (c), employment is
considered essentially intermittent when it involves periods of inaction during which the
employee may be on duty but is not required to engage in physical activity or sustained attention.

Payment of Overtime (Section 14):

• Section 14 of the Minimum Wages Act addresses the payment of overtime wages. It applies when
an employee's minimum wage is determined under this Act based on the hours worked, the day,
or any other prescribed wage period.
• If an employee in such a scenario works on any day for more hours than what constitutes a normal
working day, the employer is legally obliged to compensate them for every hour or part of an hour
worked in excess of the normal working day.

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Prof Abhijeet C. Jaiswal
• The rate at which overtime is paid should be either the overtime rate specified in this Act or the

rate established under any other relevant law of the appropriate Government that is currently in
force, whichever is higher.
• It's crucial to note that the right to claim payment for overtime work is reserved for employees
who are receiving wages at or above the minimum rates set by this Act. Those employees who are
already earning higher wages are not entitled to claim overtime payments under this Act.

Wages of a Worker Who Works Less Than a Normal Working Day (Section 15):
• Section 15 deals with situations where an employee's wage rate is determined under this Act
based on a daily wage.
• If such an employee works on a day for a period that is shorter than the required number of hours
constituting a normal working day, they are still entitled to receive wages for that day as if they
had worked for a full working day.
• However, there are exceptions to this rule:
• The employee will not receive wages for a full normal working day if their failure to work
is due to their unwillingness to work, and not because the employer failed to provide them
with work.
• Additionally, there may be other cases and circumstances that are prescribed by the
appropriate Government where the employee is not entitled to full wages for a normal
working day.

Minimum Time-Rate Wages for Piece Work (Section 17):

• Section 17 is applicable when an employee is engaged in piece work, and the minimum wage rate
is determined based on a minimum time rate (hourly rate) rather than a minimum piece rate.
• In such cases, the wages paid to the employee must adhere to the minimum time rate specified
in the Act. This ensures that employees engaged in piece work are guaranteed a minimum hourly
wage, preventing them from earning less than the minimum wage for their work.

Maintenance of Registers and Records (Section 18):

• Section 18 imposes additional obligations on employers. In addition to ensuring that employees
are paid at or above the minimum wage rates, employers are required to maintain registers and
records.

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• These records should contain various particulars related to the employees under their

employment, such as details of the work performed by employees and the receipts provided to
them. Employers are also required to include other particulars as prescribed by the appropriate
Government.
• Employers are further obligated to display notices in the prescribed form at the workplace, which
contain specific details.
• Additionally, employers are required to maintain wage books or wage-slips as prescribed by the
appropriate Government. The entries made in these records must be authenticated by the
employer or their agent following the manner specified by the appropriate Government.
• These record-keeping requirements aim to ensure transparency and compliance with the
Minimum Wages Act and enable authorities to monitor wage-related matters effectively.

Authority and Claims (Sections 20-21):

• Under Section 20(1) of the Minimum Wages Act, the appropriate Government is empowered to
appoint an authority to hear and decide claims arising from the payment of less than the minimum
wage rates or regarding remuneration for days of rest or wages for overtime work.
• The authority can be one of the following:
• A Commissioner for Workmen's Compensation.
• An officer of the Central Government exercising functions as the Labour Commissioner for
a specific region.
• An officer of the State Government, provided they are not below the rank of Labour
Commissioner.
• Any other officer with experience as a Judge of a Civil Court or as a Stipendiary Magistrate.
• This appointed authority has the jurisdiction to hear and make decisions on claims related to
payment below the minimum wage rates, remuneration for rest days, work done on rest days, or
payment for overtime.
• It's essential to note that Section 20(1) is applicable when there is a dispute between the employer
and the employee regarding wage rates. In cases where no such dispute exists and the only
question is whether a particular payment, as per the agreed rate for minimum wages, overtime,
or work on off days, is due to an employee or not, the Payment of Wages Act, 1936 provides the
appropriate remedy.

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Prof Abhijeet C. Jaiswal
Offences and Penalties (Sections 22 and 22A):
• Section 22 of the Act outlines the penalties for employers who fail to comply with the Minimum
Wages Act. Specifically, it stipulates that any employer who:
• Pays any employee less than the minimum wage rates fixed for that employee's class of
work.
• Pays an amount less than what is due to the employee under the provisions of the Act.
• Contravenes any rule or order made under Section 13 of the Act.
• Such employers may be subject to penalties, which can include:
• Imprisonment for a term that may extend to six months.
• A fine that may extend to five hundred rupees.
• A combination of imprisonment and a fine.
• When imposing a fine for an offence under this section, the court is required to take into
consideration any compensation that has already been awarded against the accused in any
proceedings conducted under Section 20 of the Act.
• Section 22A of the Act further emphasizes penalties for employers who violate the Act or any rules
or orders made under it. It states that employers who contravene the Act or related rules or orders
and are not subject to penalties under other provisions of the Act can be fined. The fine imposed
can extend up to five hundred rupees

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Prof Abhijeet C. Jaiswal
LESSON 18-III: Law of Wages
Unit III – Payment of Bonus Act, 1965
1. Object of the Act: The primary objective of the Bonus Act is to ensure the payment of bonuses to
employees in certain establishments and address related matters. The Act aims to promote peace
and harmony between labor and capital by allowing employees to share in the prosperity of the
establishment. It also sets out provisions for determining maximum and minimum bonus rates
and includes schemes for "set-off" and "set on." These provisions not only secure the right of labor
to share in profits but also ensure a reasonable level of consistency in bonus payments.
2. Types of Bonuses: The passage highlights that the term "bonus" encompasses various types of
bonuses, not just profit-based ones. It mentions:
• Profit-based bonus, which is the most common type and directly linked to a company's
profits.
• Customary or traditional bonus, which is based on long-standing practices and
expectations within a specific workplace.
• Attendance bonus and other types, which may be specific to certain employment
conditions.
3. Coexistence of Statutory and Customary Bonuses: The passage emphasizes that the Bonus Act,
as of the time it was discussed, primarily deals with statutory or profit-based bonuses. However,
it does not invalidate or prohibit customary bonuses. The Act and customary bonuses are seen as
operating in separate domains and are not necessarily in conflict with each other.
4. Consistency: The passage concludes by stating that the provisions of the Bonus Act do not have
any bearing on customary bonuses, and there is no inherent inconsistency between statutory and
customary bonuses. Each type of bonus has its own distinct characteristics and applicability.

APPLICATION OF THE ACT

1. Geographical Coverage: The Bonus Act extends to the entire territory of India, meaning it applies
throughout the country.
2. Coverage of Establishments: The Act applies to two categories of establishments: a. Every factory.
b. Every other establishment in which twenty or more persons are employed on any day during
an accounting year.

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Prof Abhijeet C. Jaiswal
3. Exception for Smaller Establishments: The appropriate Government (typically the state or central
government) has the authority to issue a notification to apply the provisions of the Act to
establishments that employ fewer than twenty persons, provided that the notification gives at
least two months' notice of this intention. However, the specified number of persons in such
notifications cannot be less than ten.
4. Commencement of Application: The provisions of the Bonus Act apply to establishments in
relation to the accounting year commencing on any day in the year 1964 and every subsequent
accounting year. However, there is an exception for the state of Jammu and Kashmir, where the
reference to the year 1964 is replaced with the year 1968.
5. Continuation of Application: Once an establishment falls under the purview of the Bonus Act, it
continues to be governed by the Act even if the number of persons employed in the establishment
falls below twenty or the specified number in the notification issued under the proviso to sub-
section (3).

ACT NOT TO APPLY TO CERTAIN CLASSES OF EMPLOYEES

1. Employees of Insurance Companies: The Act does not apply to employees employed by any
insurer carrying on general insurance business and the employees employed by the Life Insurance
Corporation of India.
2. Seamen: Seamen, as defined in clause (42) of Section 3 of the Merchant Shipping Act, 1958, are
not covered by this Act.
3. Dock Workers: Employees registered or listed under any scheme made under the Dock Workers
(Regulation of Employment) Act, 1948, and employed by registered or listed employers are
exempt.
4. Government Department Employees: Employees employed by an establishment engaged in any
industry called on by or under the authority of any department of the Central Government or a
State Government or a local authority are not covered.
5. Specific Institutions and Educational Institutions: The Act does not apply to employees employed
by:
• The Indian Red Cross Society or any similar institution, including its branches.
• Universities and other educational institutions.
• Institutions (including hospitals, chambers of commerce, and social welfare institutions)
established not for the purpose of profit.

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6. Reserved Sections: Sections (vi) and (vii) are omitted, meaning they do not apply.
7. Employees of Specific Financial Institutions: Employees employed by various financial
institutions, including the Reserve Bank of India, Industrial Finance Corporation of India, Financial
Corporations, Deposit Insurance Corporation, National Bank for Agriculture and Rural
Development, Unit Trust of India, Industrial Development Bank of India, Small Industries
Development Bank of India, National Housing Bank, and other specified public sector financial
institutions, are exempt.
8. Inland Water Transport Employees: Employees employed by inland water transport
establishments operating on routes passing through any other country are not covered.

IMPORTANT DEFINITIONS
Accounting Year:
• In the case of a corporation, it refers to the year ending on the day when the books and accounts
of the corporation are to be closed and balanced.
• In the case of a company, it refers to the period for which the profit and loss account of the
company presented in the annual general meeting is prepared, whether it's a year or not.
• In any other case:
• It can refer to the year starting on April 1st.
• If the accounts of an establishment maintained by the employer are closed and balanced
on a day other than March 31st, the employer has the option to choose the year ending
on the day when the accounts are closed and balanced. However, this option can only be
exercised again with the previous written permission of the prescribed authority and
subject to their conditions. [Section 2(1)]
Allocable Surplus:
• For an employer that is a company (other than a banking company) which has not made the
prescribed arrangements under the Income-tax Act for the declaration and payment of dividends
within India as per Section 194 of that Act, it is sixty-seven percent of the available surplus in an
accounting year.
• In any other case, it is sixty percent of the available surplus. [Section 2(4)]
Available Surplus:
• It refers to the surplus determined under Section 5. [Section 2(6)]

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Award:
• It means an interim or final determination of any industrial dispute or any question related to it.
• This determination can be made by a Labour Court, Industrial Tribunal, or National Tribunal
constituted under the Industrial Disputes Act, 1947.
• It can also be made by any other authority constituted under any corresponding law in a State
related to the investigation and settlement of industrial disputes.
• This definition also includes an arbitration award made under Section 10A of the Industrial
Disputes Act, 1947, or under such a corresponding law. [Section 2(7)]

Corporation:
• It means any body corporate established by or under any Central, Provincial, or State Act.
• However, it does not include a company or a cooperative society. [Section 2(11)]

Employee:
• An "employee" refers to any person (other than an apprentice) who is employed on a salary or
wages not exceeding Rs. 21,000 per month in any industry.
• The work they do can be skilled or unskilled, manual, supervisory, managerial, administrative,
technical, or clerical work, and it is done for hire or reward.
• Their terms of employment can be express or implied. [Section 2(13)]

Employer:
• "Employer" includes:
• In the context of an establishment that is a factory, it refers to 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, if a person has been named as a manager of the factory
under Clause (f) of Sub-section 7(1) of the Factories Act, 1948, that named person.
• In the context of any other establishment, it refers to the person or authority that has the
ultimate control over the affairs of the establishment. If the affairs are entrusted to a
manager, managing director, or managing agent, then it includes that manager, managing
director, or managing agent. [Section 2(14)]

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Prof Abhijeet C. Jaiswal
Establishment in Private Sector:
• It refers to any establishment that is not in the public sector. [Section 2(15)]
Establishment in Public Sector:
• It refers to an establishment that is owned, controlled, or managed by:
• A Government company as defined in Section 617 of the Companies Act, 1956; or
• A corporation in which not less than forty percent of its capital is held by:
• The Government.
• The Reserve Bank of India.
• A corporation owned by the Government or the Reserve Bank of India. [Section
2(16)]

Salary
Included in Salary or Wage:
1. All remuneration that can be expressed in terms of money.
2. Payments that would be payable to an employee if the terms of employment, whether express or
implied, were fulfilled.
3. Dearness allowance, which comprises all cash payments, regardless of their name, made to an
employee due to a rise in the cost of living.
Excluded from Salary or Wage:
1. Any other allowance that the employee is entitled to at the time.
2. The value of house accommodation or the value of utilities (light, water, etc.), medical attendance,
other amenities, services, or concessional supplies of foodgrains or other articles provided by the
employer.
3. Any traveling concession.
4. Any form of bonus, including incentive, production, and attendance bonus.
5. Contributions paid or payable by the employer to any pension fund or provident fund or for the
benefit of the employee under any applicable law.
6. Any retrenchment compensation, gratuity, or other retirement benefits payable to the employee
or any ex-gratia payment made to the employee.
7. Any commission payable to the employee.

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Prof Abhijeet C. Jaiswal
The explanation appended to this section clarifies that if an employee is provided with free food allowance
or free food by the employer in lieu of a part of their salary or wage, the value of such food allowance or
food is considered part of the employee's salary or wage.

CALCULATION OF AMOUNT PAYABLE AS BONUS

(i) Computation of Gross Profits: According to Section 4 of the Act, the method for calculating gross profits
depends on the type of establishment. Here are the two scenarios:
(a) For Banking Companies: Gross profits are computed in the manner specified in the First Schedule.
(b) For Other Establishments: Gross profits are calculated following the methodology outlined in the
Second Schedule.
These schedules provide specific guidelines and formulas for determining the gross profits for the
respective types of establishments.

(ii) Deductions from Gross Profits: Section 6 of the Act outlines the deductions that are subtracted from
the gross profits to arrive at the available surplus. These deductions include:
(a) Depreciation: The Act allows for the deduction of depreciation as per the provisions of Section 32(1)
of the Income-tax Act or in accordance with the provisions of the Agricultural Income-tax Law, as
applicable. It's important to note that if an employer has been paying bonuses to employees under a
settlement or agreement made before May 29, 1965, and has been deducting notional normal
depreciation from gross profits, they have the option to continue doing so within one year from that date.
This means that the type of depreciation deductible is the one admissible under the Income-tax Act.
(b) Development Rebate, Investment Allowance, or Development Allowance: Any amounts that the
employer is entitled to deduct from their income under the Income Tax Act can also be subtracted from
gross profits.
(c) Direct Tax: Subject to the provisions of Section 7, any direct tax liability that the employer is required
to pay for the accounting year in respect of their income, profits, and gains is deducted from gross profits.
(d) Additional Sums: The Act allows for further deductions specified in respect of the employer in the
Third Schedule. These additional deductions may vary depending on the specific circumstances of the
employer.

(iii) Calculation of Direct Tax Payable by the Employer: Under Section 7 of the Act, the direct tax payable
by the employer for any accounting year is calculated based on the following provisions:

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Prof Abhijeet C. Jaiswal
(a) Tax Calculation Rates: The tax is calculated at the rates applicable to the income of the employer for
that particular year. However, certain factors are taken into account in this calculation:
• Losses Incurred: Any loss incurred by the employer in respect of any previous accounting year and
carried forward under the applicable direct tax laws is not considered.
• Arrears of Depreciation: Any arrears of depreciation that the employer is entitled to add to the
allowance for depreciation for any subsequent accounting year(s) under Section 32(2) of the
Income-tax Act are not included in the tax calculation.
• Exemptions and Deductions: Exemptions granted to the employer under Section 84 of the Income-
tax Act or any deductions they are entitled to under Section 101(1) of that Act (as in force
immediately before the commencement of the Finance Act, 1965) are not considered.
(b) Treatment of Religious or Charitable Institutions: If the employer is a religious or charitable institution
that is exempt from tax under the Income-tax Act, any income exempted from tax is treated as if it were a
company in which the public are substantially interested within the meaning of that Act.
(c) Calculation for Individuals or Hindu Undivided Families: If the employer is an individual or a Hindu
undivided family, the tax payable is calculated on the basis that the income derived from the establishment
is their only income.
(iv) Computation of Available Surplus: The available surplus, which forms the basis for the calculation of
bonus payable to employees, is determined based on the following formula outlined in Section 5 of the
Act:
• The available surplus in respect of any accounting year is the gross profits for that year after
deducting the sums specified in Section 6. These deductions include depreciation, development
rebates, investment allowances, development allowances, and other specified sums.
• Additionally, for the accounting year commencing on any day in the year 1968 and every
subsequent accounting year, the available surplus is further adjusted by considering the difference
between the direct tax calculated for the immediately preceding accounting year and the direct
tax calculated for that preceding year after deducting the amount of bonus already paid or liable
to be paid to employees in accordance with the Act.

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ELIGIBILITY FOR BONUS AND ITS PAYMENT
Eligibility for Bonus:

• To receive a bonus, an employee must have worked for at least 30 days in a year in the same
company.

• This rule ensures that employees who have worked for a reasonable period can get a bonus.

Disqualification for Bonus:

• If an employee is involved in fraud, violent behavior, theft, or sabotage at work, they won't get a
bonus.

• This is to reward good behavior and discourage disruptive actions.

Payment of Minimum Bonus:

• Employers must pay a minimum bonus to eligible employees every year.

• The minimum bonus is 8.33% of the employee's yearly salary or 100 rupees, whichever is higher.

• Even if the company didn't make a profit, this minimum bonus must be paid.

• For employees under 15 years old, the minimum bonus is 60 rupees.

Maximum Bonus (Section 11):

• If the allocable surplus is more than the minimum bonus, the employer must pay a bonus to
employees based on their salary or wage.

• This bonus is proportionate, but it cannot exceed 20% of the employee's salary or wage.

• The amount set on or set off under Section 15 is considered in calculating the allocable surplus.

Calculation of Bonus for High-Earning Employees (Section 12):

• If an employee earns more than seven thousand rupees per month or the minimum wage set by
the government (whichever is higher), their bonus is calculated as if their earnings were seven
thousand rupees or the government's minimum wage, whichever is higher.

Proportionate Reduction in Bonus (Section 13):

• If an employee hasn't worked for all the working days in an accounting year, their minimum bonus
of one hundred rupees (or sixty rupees if higher) is reduced proportionately based on the days
they worked.

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Prof Abhijeet C. Jaiswal
Computation of Working Days (Section 14):

• For the purpose of calculating bonus reduction, certain days are considered as working days, even
if the employee didn't work on those days.

• These days include days of layoff, leave with salary or wage, absence due to work-related
accidents, and maternity leave with salary or wage.

Set On and Set Off of Allocable Surplus (Section 15):

1. When the allocable surplus for an accounting year exceeds the maximum bonus payable under
Section 11, the excess can be carried forward for up to four years.

2. The carry-forward amount is subject to a limit of twenty percent of the total salary or wage of the
employees in the establishment for that accounting year.

3. The carried-forward surplus is utilized for the payment of bonus in the succeeding years as
illustrated in the Fourth Schedule.

Deficiency in Allocable Surplus (Section 15):

1. If there's no available surplus or the allocable surplus falls short of the minimum bonus required
under Section 10 for a given year, and there's no carried-forward surplus to cover it, then the
minimum amount or deficiency is carried forward.

2. This deficiency can be carried forward for up to four years and is set off in the manner illustrated
in the Fourth Schedule.

General Principle (Section 15):

1. The set on and set off principles, as illustrated in the Fourth Schedule, apply to all other cases not
covered by sub-sections (1) or (2) for the purpose of bonus payment under this Act.

2. When calculating bonus for the succeeding accounting year, the amount of set on or set off carried
forward from the earliest accounting year is considered first.

(viii) Adjustment of Customary or Interim Bonus (Section 17):

• If an employer has paid any puja bonus or other customary bonus to an employee or has paid a
part of the bonus payable under this Act to an employee before the due date, the employer can
deduct the amount of bonus already paid from the amount of bonus payable under this Act for
that accounting year.

• The employee will receive only the balance amount after the deduction.

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(ix) Deductions of Certain Amounts from Bonus (Section 17):

• This point seems to be a repetition of the previous one, which discusses the adjustment of
customary or interim bonus. The content is the same as in point (viii).

(x) Time Limit for Payment of Bonus (Section 18 and Section 19):

• If an employee is found guilty of misconduct causing financial loss to the employer during an
accounting year, the employer can deduct the amount of loss from the bonus payable to the
employee for that year.

• There are different time limits for bonus payment depending on the situation:

(a) If there is a dispute regarding bonus payment pending before any authority under Section 22,
the employer must pay all amounts due to the employee as bonus in cash within one month from
the date the award becomes enforceable or the settlement comes into operation.

(b) In other cases, the bonus should be paid within eight months from the close of the accounting
year. However, the appropriate Government or a specified authority may extend this period for
valid reasons, but the total extension period should not exceed two years.

(xi) Recovery of Bonus (Section 21):

• If an employee is owed bonus by their employer as per a settlement, award, or agreement, the
employee or someone authorized by them in writing can apply to the appropriate Government
for the recovery of the unpaid bonus.

• If the appropriate Government or a specified authority is satisfied that the bonus is indeed due,
they will issue a certificate for the amount to the Collector, who will proceed to recover it in the
same way as arrears of land revenue.

• It's important to note that such applications must be made within one year from the date the
bonus became due. In exceptional cases where there is a valid reason for not applying within this
period, the appropriate Government may consider applications made after one year.

• The term "employee" in this section and related sections includes individuals entitled to bonus
payments under this Act, even if they are no longer employed

(Bonus Linked with Production or Productivity - Section 31A):

• Section 31A allows employees and employers to establish and operate a bonus payment scheme
linked to production or productivity instead of using the general profit-based formula specified in
the Act.

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Prof Abhijeet C. Jaiswal
• However, bonus payments under Section 31A must still adhere to the minimum (8.33 percent)
and maximum (20 percent) limits. This means that a minimum of 8.33 percent must be paid in any
case, and the maximum cannot exceed 20 percent.

(Power of Exemption - Section 36):

• The appropriate Government, considering the financial situation and other relevant circumstances
of a specific establishment or a class of establishments, can exempt that establishment or class
from some or all provisions of the Act. This exemption can be for a specified period and subject to
certain conditions specified by the Government.

(Penalties - Section 28):

• Anyone who violates any provision of this Act or any rule made under it can face penalties,
including imprisonment for up to six months, a fine of up to one thousand rupees, or both.

• If a person who receives a direction or requisition under this Act fails to comply with it, they can
also face similar penalties.

(Offences by Companies - Section 29):

• If a company commits an offence under this Act, not only the company but also the individuals in
charge of and responsible for the company's business at the time of the offence can be considered
guilty of the offence and can be prosecuted accordingly.

• Furthermore, if it is proven that the offence was committed with the consent, connivance, or
neglect of any director, manager, secretary, or other officer of the company, they too can be
prosecuted and punished.

• The term "company" in this context includes any body corporate and even a firm or association of
individuals. And "director," in relation to a firm, refers to a partner in that firm.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 18-IV: Law of Wages
Unit IV – Equal Remuneration Act, 1976
Equal Remuneration Act, 1976
• Article 39 of the Constitution of India outlines that the State should formulate policies to ensure
several objectives, one of which is achieving equal pay for equal work for both men and women.
• In line with this constitutional provision, the Parliament of India passed the Equal Remuneration
Act, 1976.

Object and Scope

• The Equal Remuneration Act, 1976 is aimed at ensuring that men and women workers receive
equal remuneration for performing the same work or work of a similar nature, without any
discrimination based on gender.
• It also prevents discrimination against women employees during recruitment for the same work
or work of a similar nature, as well as in any conditions of service after recruitment.
• The Act applies to all categories of employment and covers the entire country, extending its
provisions nationwide.

Overriding Effect of the Act:

• Section 3 of the Act establishes that the provisions of the Equal Remuneration Act, 1976, take
precedence over any conflicting provisions found in any other law, as well as in the terms of any
award, agreement, or contract of service. This applies regardless of whether these agreements
were made before or after the Act's commencement or if they are governed by any instrument
under existing laws.

Duty of Employer to Ensure Equal Remuneration:

• Section 4 of the Act imposes a crucial obligation on employers. It states that no employer can pay
remuneration, whether in cash or kind, to a worker in their establishment or employment at rates
less favorable than those provided to workers of the opposite sex in the same establishment or
employment for performing the same work or work of a similar nature.
• Furthermore, employers are prohibited from reducing the rate of remuneration for any worker.

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Prof Abhijeet C. Jaiswal
Key Definitions:
• The Act provides specific definitions to clarify its scope and application:
• Remuneration (Section 2(g)): Remuneration encompasses the basic wage or salary, along
with any additional emoluments, whether in cash or kind, paid to a person employed for
work in that employment, provided that the terms of the employment contract, either
expressed or implied, have been fulfilled.
• Same Work or Work of a Similar Nature (Section 2(h)): This term is defined as work for
which the required skill, effort, and responsibility are identical when performed under
similar working conditions by either a man or a woman. Any differences between the skill,
effort, and responsibility required for a man or woman are considered inconsequential
regarding the terms and conditions of employment.

Recruitment Without Discrimination:

• Section 5 of the Act mandates that during recruitment for the same work or work of a similar
nature, as well as in any condition of service subsequent to recruitment (e.g., promotions, training,
or transfer), employers are prohibited from making any discrimination against women. This
prohibition applies unless the employment of women in such work is prohibited or restricted by
existing laws.

Exceptions for Priority and Reservation:

• The Act explicitly mentions that Section 5 does not interfere with any priority or reservation
granted for specific categories of individuals, such as Scheduled Castes, Scheduled Tribes, ex-
servicemen, retrenched employees, or any other designated group, in matters related to
recruitment for positions in an establishment or employment.

Authorities for Addressing Claims and Complaints:

• Section 7 of the Act empowers the appropriate Government to appoint officers, typically not lower
in rank than a Labour Officer, as authorities responsible for hearing and deciding various matters.
These matters include complaints regarding violations of the Act's provisions, claims arising from
the unequal payment of wages to men and women workers for the same work or similar work,
and defining the jurisdictional boundaries within which each authority will operate.

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Prof Abhijeet C. Jaiswal
Maintenance of Registers:
• Under Section 8, every employer is required to maintain registers and other documents
concerning the workers employed by them in the manner prescribed by law.
Penalties for Contraventions:
• The Act prescribes penalties for employers who:
• (i) Engage in recruitment that contravenes the Act.
• (ii) Pay remuneration at unequal rates to men and women workers for the same or similar
work.
• (iii) Discriminate between men and women workers in violation of the Act.
• (iv) Fail to comply with directions issued by the appropriate Government.
• Penalties for such contraventions may involve fines, imprisonment, or a combination of both.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 19-I: Social Security Legislations
Unit I – Employees’ State Insurance Act, 1948
Regulatory Framework → Employees’ State Insurance Act, 1948
1. Purpose:
• Provides benefits to employees during sickness, maternity, and employment injury.
• Includes provisions for related matters.
2. Amendments:
• Amended by the Employees’ State Insurance (Amendment) Act, 2010.
• Enhancements in social security coverage and streamlined procedures.
• Improved services for beneficiaries.
3. Geographical Scope:
• Extends to the whole of India.
• Central Government enforces the Act, with different provisions in different regions.
4. Applicability:
• Initially applies to all factories, including government-owned, except seasonal ones.
• Excludes factories with employees receiving similar or superior benefits under
government control.
5. Government's Role:
• Appropriate Government can extend the Act to other establishments after consultation.
• Requires one-month notice in the Official Gazette.
• State Government needs approval from Central Government for extension.
6. Extension of the Act:
• Extended by State Governments to shops, hotels, restaurants, cinemas, transport
undertakings, etc., with 20 or more employees.
• Employees must meet the criteria defined in Section 2(9) of the Act.
7. Continued Applicability:
• Once applicable, the Act continues to govern a factory/establishment even if the
employee count falls below the specified limit or if the manufacturing process stops using
power.

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Prof Abhijeet C. Jaiswal
IMPORTANT DEFINITIONS
(i) Appropriate Government
“Appropriate Government” means in respect of establishments under the control of the Central
Government or a railway administration or a major port or a mine or oil-field; the Central Government,
and in all other cases, the State Government. [Section 2(1)]

(ii) Confinement
“Confinement” means labour resulting in the issue of a living child or labour after 26 weeks of pregnancy
resulting in the issue of child whether alive or dead. [Section 2(3)]

(iii) Contribution
“Contribution” means the sum of money payable to the Corporation by the principal employer in respect
of an employees and includes any amount payable by or on behalf of the employee in accordance with
the provisions of this Act. [Section 2(4)]

(iv) Dependent
“Dependent” under Section 2(6A) of the Act (as amended by the Employees’ State Insurance
(Amendment) Act, 2010) means any of the following relatives of a deceased insured person namely:
(i) a widow, a legitimate or adopted son who has not attained the age of twenty-five years„ an unmarried
legitimate or adopted daughter,
(ia) a widowed mother,
(ii) if wholly dependent on the earnings of the insured person at the time of his death, a legitimate or
adopted son or daughter who has attained the age of 25 years and is infirm;
(iii) if wholly or in part dependent on the earnings of the insured person at the time his death:
(a) a parent other than a widowed mother,
(b) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or
adopted or illegitimate if married and minor or if widowed and a minor,
(c) a minor brother or an unmarried sister or a widowed sister if a minor,
(d) a widowed daughter-in-law,
(e) a minor child of a pre-deceased son,
(f) a minor child of a pre-deceased daughter where no parent of the child is alive or,
(g) a paternal grand parent if no parent of the insured person is alive.

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Prof Abhijeet C. Jaiswal
(v) Employment
Injury It means a personal injury to an employee caused by accident or an occupational disease arising out
of and in the course of his employment, being an insurable employment, whether the accident occurs or
the occupational disease is contracted within or outside the territorial limits of India. [Section 2(8)]
1. Scope of Injury:
• Beyond Workplace: Includes injuries outside the workplace if they are connected to
employment activities.
2. Concept of Notional Extension:
• Flexibility in Interpretation: The time and location of the injury can be beyond regular
working conditions if there's a clear link to employment.
3. Case-by-Case Basis:
• Individual Assessment: Each incident is assessed on its specific facts and circumstances.
4. Key Legal Cases:
• E.S.I. Corpn. Indore v. Babulal, 1982: The Madhya Pradesh High Court recognized an
employment injury where a worker, attending duty despite strike threats, was assaulted
after work hours.
• Jayanthilal Dhanji Co. v. E.S.I.C., AIR AP 210: The Andhra Pradesh High Court ruled that
an injury due to an employee's negligence at work (involving machinery) constituted an
employment injury.
• Shyam Devi v. E.S.I.C., AIR 1964 AII. 42: The Allahabad High Court supported a broad
interpretation of 'injury', extending beyond physical wounds, in line with the Act's
objectives.
5. Interpretation of 'Injury':
• Wider Definition: Not limited to visible wounds; encompasses various forms of harm
incurred during employment

(vi) Employee
Employee [Section 2(9)]
1. General Definition:
• Section 2(9): Defines 'Employee' as a person employed for wages in connection with work
of a factory or establishment covered by this Act.
2. Specific Criteria:

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Prof Abhijeet C. Jaiswal
• Direct Employment [Section 2(9)(i)]: Includes employees directly employed by the

principal employer for factory or establishment work, regardless of the location of work.
• Employment Through Immediate Employer [Section 2(9)(ii)]: Covers those employed by
or through an immediate employer on the premises, or under supervision of the principal
employer, for work typically part of the factory's operations.
• Temporarily Lent or Hired Services [Section 2(9)(iii)]: Encompasses individuals whose
services are temporarily lent or hired to the principal employer under a service contract.
3. Inclusive Aspects:
• Covers those involved in the administration of the factory/establishment, material
purchase, product distribution/sale, or any department or branch thereof.
• Includes apprentices not under the Apprentices Act, 1961, and those with extended
training periods.
4. Exclusions:
• Military Exclusion [Section 2(9)(a)]: Excludes members of the Indian Naval, Military, or Air
Forces.
• Wage Limit Exclusion [Section 2(9)(b)]: Excludes persons whose wages exceed a
prescribed limit by the Central Government (excluding overtime).
5. Wage Limit for Coverage:
• Currently set at Rs. 21,000 per month.
• Employees exceeding this wage limit after the start of a contribution period remain
covered until the end of that period.

vii). Principal Employer [Section 2(17)]:

• In a Factory: Includes the owner or occupier, managing agent, legal representative of a
deceased owner/occupier, and the person named as the manager under the Factories Act,
1948.
• In Government Establishments: The authority appointed by the Government, or in the
absence of such an appointment, the head of the Department.
• In Other Establishments: Any person responsible for the supervision and control of the
establishment.
viii). Family [Section 2(11)]:
• Spouse: Legally married partner of the insured person.

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Prof Abhijeet C. Jaiswal
• Children:

• Minor legitimate or adopted child dependent on the insured.

• Child dependent on the insured and either receiving education (up to 21 years),
or an unmarried daughter.
• Child with a physical or mental abnormality or injury, dependent as long as the
infirmity continues.
• Parents: Dependent parents with an income below a prescribed limit.
• Siblings: In the case of an unmarried insured person with deceased parents, any minor
brother or sister wholly dependent on the insured.
ix). Factory [Section 2(12)]:
• Definition: Premises where ten or more persons are employed (or were employed in the
last twelve months), with an ongoing manufacturing process.
• Exclusions: Does not include mines under the Mines Act, 1952, or railway running sheds.
• Relevant Terms: 'Manufacturing process,' 'occupier,' and 'power' have meanings as
assigned in the Factories Act, 1948.

x). Immediate Employer [Section 2(13A)]:

• A person who employs workers directly or indirectly for work that is part of or connected
to the principal employer's work.
• Includes contractors and those who lend or hire employee services to the principal
employer.
• The work need not be confined to the premises of the principal employer’s factory or
establishment.
xi). Insurable Employment [Section 2(13A)]:
• Employment in a factory or establishment covered by this Act.
xii). Insured Person [Section 2(14)]:
• An individual who is or was an employee with contributions payable under the Act.
• Entitled to benefits provided by the Act due to these contributions.
xiii). Permanent Partial Disablement [Section 2(15A)]:
• A permanent disability that reduces an employee's earning capacity in all forms of
employment they were capable of before the accident.

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• Specific injuries listed in Part II of the Second Schedule to the Act are considered to cause

permanent partial disablement.

xiv). Permanent Total Disablement [Section 2(15B)]:
• A permanent condition preventing an employee from performing any work they were
capable of at the time of the accident.
• Deemed to occur from injuries specified in Part I of the Second Schedule to the Act or a
combination of injuries in Part II that result in 100% (or more) loss of earning capacity.

xv). Seasonal Factory [Section 2(19A)]:

• A factory engaged exclusively in specific manufacturing processes like cotton ginning, jute
pressing, and others, for a period not exceeding seven months in a year.
• Includes processes like blending, packing, or repacking of tea or coffee.
• Can also include other processes specified by the Central Government.
xvi). Sickness [Section 2(20)]:
• A condition requiring medical treatment and attendance.
• Leads to necessary abstention from work on medical grounds.
xvii). Temporary Disablement [Section 2(21)]:
• A condition resulting from an employment injury.
• Causes temporary incapacity to perform work done prior to or at the time of injury.
xviii). Wages [Section 2(22)]:
• All remuneration paid to an employee under the terms of employment, including
payments for authorized leave, lock-outs, non-illegal strikes, or lay-offs.
• Includes additional remuneration paid at intervals not exceeding two months.
• Excludes employer contributions to funds, traveling allowances, special expense
payments, and gratuity on discharge.
• Sales commission and incentives are considered wages if paid at intervals not exceeding
two months.
• Traveling allowance is not considered part of wages for contribution purposes.

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Prof Abhijeet C. Jaiswal
1. Registration of Factories and Establishments [Section 2A]:
• Mandatory Registration: Factories and establishments covered by the Act must register.
• Time and Manner: Specific guidelines for registration timing and procedure are outlined
in the Act’s regulations.
2. Employees’ State Insurance [Section 38]:
• Compulsory Insurance: All employees in applicable entities must be insured.
• Contributions: Contributions are made to the Insurance Fund by both employers and
employees.
• Benefits and Dispute Resolution: Insured individuals are entitled to benefits from the
fund, and disputes are settled by the Employees’ Insurance Court.
3. Administration of Employees’ State Insurance Scheme:
• Organizational Structure: Managed by the Employees’ State Insurance Corporation, along
with a Standing Committee and Medical Benefit Council.
• ESI Fund: A special fund created for the scheme, administered by the Corporation with
assistance from various boards and councils.
4. Employees’ State Insurance Corporation [Section 3]:
• Establishment and Function: Set up by the Central Government as a body corporate.
• Legal Entity: Has perpetual succession, a common seal, and the capacity to sue and be
sued.
• Constitution [Section 4]: Composed of a chairman, vice-chairman, and members
representing various groups, including ex-officio members from the Parliament and the
Director General.
5. Powers and Duties of the Corporation [Section 19, Section 29]:
• Health and Welfare Initiatives [Section 19]: Promote measures for the improvement of
the health and welfare of insured persons, including their rehabilitation and re-
employment.
• Financial Management [Section 29]: Authority to manage property, investments, loans,
and funds, subject to conditions set by the Central Government.
6. Appointment of Regional Boards [Section 25]:
• Regional and Local Structures: The Corporation can establish Regional Boards, Local
Committees, and Medical Benefit Councils.

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• Delegation of Powers: These bodies are delegated specific powers and functions as

outlined in the regulations.

WINGS OF THE CORPORATION

1. Standing Committee:
• Established Under Section 8: Composed of members from the Corporation itself.
• Functions and Powers: The Committee is tasked with administering the affairs of the
Corporation. It has the authority to exercise any powers and perform any functions of the
Corporation, but this is subject to the general oversight and control of the Corporation.
• Role as an Executive Body: The Standing Committee functions as the executive wing,
ensuring the efficient administration of the Employees State Insurance Corporation.
2. Medical Benefit Council:
• Constitution Under Section 10: Created by the Central Government.
• Duties as Per Section 22:
• (a) Advising the Corporation and the Standing Committee on the administration
of medical benefits, certification processes for the grant of benefits, and other
related matters.
• (b) Empowered to investigate issues related to complaints against medical
practitioners involved in providing medical treatment and attendance.
• (c) Responsible for performing additional duties connected with medical
treatment and attendance as specified in the Act’s regulations.
EMPLOYEES’ STATE INSURANCE FUND
1. Creation of Fund:
• As Per Section 26: All contributions paid under the Act, along with other moneys received
on behalf of the Corporation, are to be paid into the Employees’ State Insurance Fund.
• Administration: The Fund is to be held and administered by the Corporation for executing
the purposes of the Act.
• Acceptance of External Funds: The Corporation may accept grants, gifts, donations from
various sources, including Central or State Governments, local authorities, or any
individual or body, for all or any of the Act's purposes.
2. Bank Account and Operation:

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• Banking Arrangements: A bank account in the name of the Employees’ State Insurance

Fund is to be opened with the Reserve Bank of India or any other bank approved by the
Central Government.
• Operation of Account: This account is to be operated by officers who are authorized by
the Standing Committee with the approval of the Corporation.

Purposes for Expenditure of the Employees’ State Insurance Fund [Section 28]
1. Payment of Benefits and Medical Treatment [Section 28(i)]:
• Covering benefits, medical treatment, and attendance for insured persons and their
families as per the Act.
• Includes associated charges and costs.
2. Fees and Allowances [Section 28(ii)]:
• Payment to members of the Corporation, Standing Committee, Medical Benefit Council,
Regional Boards, Local Committees, and Regional and Local Medical Benefit Councils.
3. Salaries and Related Expenses [Section 28(iii)]:
• Salaries, leave, joining time allowances, traveling and compensatory allowances.
• Gratuity, compassionate allowances, pensions, contributions to provident or other benefit
funds for officers and servants.
• Expenditure related to officers and other services for implementing the Act.
4. Medical Infrastructure [Section 28(iv)]:
• Establishment and maintenance of hospitals, dispensaries, and other institutions.
• Provision of medical and ancillary services for insured persons and their families.
5. Contributions to External Entities [Section 28(v)]:
• Payments to State Governments, local authorities, private bodies, or individuals for
medical treatment and attendance costs for insured persons and their families.
• Includes costs of buildings and equipment under specific agreements.
6. Auditing and Valuation Costs [Section 28(vi)]:
• Covering all expenses for auditing the Corporation's accounts and valuation of assets and
liabilities.
7. Employees Insurance Courts Expenses [Section 28(vii)]:
• All expenses related to the operation of Employees Insurance Courts established under
the Act.

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8. Contractual Payments [Section 28(viii)]:
• Payments under contracts for the purposes of the Act, made by the Corporation, Standing
Committee, or authorized officers.
9. Legal Obligations [Section 28(ix)]:
• Payments under any decree, order, or award of courts or tribunals against the Corporation
or its officers for actions executed in duty or under legal settlements.
10. Legal Proceedings Costs [Section 28(x)]:
• Costs and charges of initiating or defending civil or criminal proceedings related to actions
taken under the Act.
11. Health and Welfare Measures [Section 28(xi)]:
• Expenditure on measures for health and welfare improvement, rehabilitation, and re-
employment of disabled or injured insured persons, within prescribed limits.
12. Other Authorized Purposes [Section 28(xii)]:
• Expenditures for other purposes authorized by the Corporation with prior approval from
the Central Government

CONTRIBUTIONS
1. Rate and Due Dates [General Provisions]:
• Contributions are paid at rates prescribed by the Central Government.
• The wage period is the unit for which contributions are calculated and payable.
• Contributions ordinarily fall due on the last day of the wage period.
• For employees working part of the wage period or under multiple employers, due dates
can be specified in the regulations.
2. Responsibility of Principal Employer [Section 40]:
• The principal employer is responsible for paying both the employer's and employee's
contributions for each employee.
• The employee's contribution can be recovered by the principal employer through wage
deduction.
• The principal employer bears the cost of remitting contributions to the Corporation.
3. Interest on Late Payments [Section 39(5)]:

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• If contributions are not paid by the due date, the principal employer incurs simple interest

at 12% per annum or a higher rate as specified in the regulations, until actual payment.
• The maximum interest rate should not exceed the lending rate of interest charged by any
scheduled bank.
• Interest due can be recovered as an arrear of land revenue or under Sections 45-C to 45-
1 of the Act.
4. Recovery from Immediate Employer [Section 41]:
• The principal employer can recover contributions paid (both parts) from the immediate
employer.
• Recovery can be made by deduction from amounts payable under any contract or as a
debt.
• The immediate employer can, in turn, recover the employee’s contribution from the
employee through wage deduction.
• Immediate employers must maintain a register of employees and submit it to the principal
employer for settlement purposes.
• Immediate employers are not required to maintain a separate account with the ESI.

Method of Payment of Contribution [Section 43]

Section 43 allows the Corporation to establish regulations concerning the payment and collection of
contributions:
1. Payment Manner and Timing:
• Regulations specify how and when contributions should be paid.
2. Use of Stamps:
• Contributions may be paid using adhesive or other stamps affixed to books, cards, or other
formats.
• Regulations govern the conditions and methods for affixing these stamps.
3. Evidence of Payment:
• Specifies the due date by which proof of contributions paid must be received by the
Corporation.
4. Record Keeping:
• Entry of contribution details and benefit distributions in books or cards for insured
persons.

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5. Management of Contribution Documents:
• Rules about the issue, sale, custody, production, inspection, and delivery of books or
cards.
• Procedures for replacing books or cards that are lost, destroyed, or defaced.
Benefits [Section 46]
Insured persons and their dependents are entitled to the following benefits:
1. Sickness Benefits:
• Periodical payments in case of sickness, certified by a medical practitioner.
2. Maternity and Related Benefits:
• Payments in case of confinement, miscarriage, or sickness related to pregnancy and
confinement.
3. Disablement Benefits:
• Payments to those suffering from disablement due to employment injury.
4. Dependents’ Benefits:
• Payments to dependents of an insured person who has passed away.
5. Medical Treatment and Attendance:
• Provision of medical treatment and attendance for the insured person.
6. Funeral Expenses:
• Payment of funeral expenses upon the death of an insured person, at a prescribed rate.
General Provisions Relating to Benefits
• Non-transferable Rights: The right to receive benefits is not transferable or assignable.
• Exclusivity of Benefits: Receiving benefits under this Act precludes entitlement to benefits under
any other enactment.
• Single Benefit Restriction: An insured person cannot receive more than one type of benefit for
the same period (e.g., cannot combine sickness benefit with maternity or disablement benefits).

EMPLOYEES’ INSURANCE COURT (E.I. COURT)

Constitution [Section 74]:
1. Establishment by State Government: Constituted through a notification in the Official Gazette for
specified local areas.
2. Composition: Comprises a number of judges as deemed fit by the State Government.

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3. Qualification for Judges: Eligibility includes being or having been a judicial officer, or a legal
practitioner with 5 years of standing.
4. Flexibility in Appointment: The same Court can serve multiple local areas, or multiple Courts can
be appointed for the same area. The State Government may regulate the distribution of business
among them.
Matters to be Decided by E.I. Court:
1. Adjudication of Disputes:
• Jurisdiction includes determining the status of an employee under the Act, rates of wages
or contributions, identification of the principal employer, and entitlement to benefits.
2. Adjudication of Claims:
• Decides claims related to the recovery of contributions from principal or immediate
employers, actions for failure to pay contributions, and recovery of benefits under the Act.
3. Proceedings Initiation: Can be initiated by employees, dependents, employers, or the
Corporation, depending on the cause of action.
4. Exclusivity: Civil courts are not empowered to decide matters within the jurisdiction of the E.I.
Court.
EXEMPTIONS
The Act also allows for certain exemptions:
1. Exemption Scope:
• Appropriate Government can exempt any factory/establishment or individuals or groups
employed therein.
2. Condition for Exemption:
• Exemption is conditional on employees receiving benefits superior to those offered under
the Act.
3. Duration and Extension:
• Initially granted for one year, exemptions may be extended periodically.
4. Application Process:
• Requires submission of a detailed application justifying the exemption, demonstrating the
superiority of benefits provided.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 19-II: Social Security Legislations
Unit II – Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952
Introduction:
1. Purpose of the Act: The Act establishes provident funds, pension funds, and deposit-linked
insurance funds for employees in factories and other establishments.
2. Geographical Scope: Applies to the entire country of India, excluding Jammu and Kashmir.
3. Historical Context: Prior to the enactment of the Act, some organizations voluntarily instituted
provident fund schemes for their employees, but these were limited in number and scope. The
Act was introduced to expand this benefit more broadly.
Key Provisions:
1. Application: Initially targeted at six specific industries, with provisions for gradual extension to
other industries and classes of establishments.
2. Definition of Pay: Includes basic wages, dearness allowance, retaining allowance (if applicable),
and the cash value of food concessions.
Framed Schemes Under the Act:
1. Employees’ Provident Fund Schemes, 1952: This scheme ensures that employees save a fraction
of their salary every month, so that the funds can be used in the event that the employee is no
longer able to work, or upon retirement.
2. Employees’ Pension Scheme, 1995: Provides pension benefits to employees of the organized
sector after retirement, ensuring a steady income flow post-retirement.
3. Employees’ Deposit-Linked Insurance Scheme, 1976: Offers life insurance benefits linked to the
deposit in the provident fund, providing security to employees' dependents in case of untimely
death of the employee.
Social Security Benefits:
• These schemes collectively provide significant social security benefits, offering financial support
and stability to workers and their dependents. They play a critical role in the socio-economic
welfare of the working class in India.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
APPLICATION OF THE ACT
1. General Application [Section 1(3)]:
• Applies to factories engaged in industries specified in Schedule I with 20 or more
employees.
• Can also apply to any other establishment employing 20 or more persons, or to a class of
such establishments, as specified by the Central Government.
2. Extension of Provisions [Proviso to Section 1(3)]:
• The Central Government has the authority to apply the Act to establishments employing
fewer than 20 persons, following a notice period of not less than two months.
3. Extension by Agreement [Section 1(4)]:
• Provisions of the Act can be extended to any establishment, including cooperative
societies initially exempt under Section 16(1), through a notification in the Official Gazette,
if the employer and the majority of employees agree to it.
• Parties have the option to opt out of such an agreement before the notification is made.
4. Continued Application [Section 1(5)]:
• Once an establishment falls under the Act, it continues to be governed by it even if the
number of employees subsequently falls below twenty.
• In cases of division or partition of an establishment, the Act continues to apply to each
part, regardless of the number of employees.
5. Real and Bona Fide Partition:
• In cases of real and bona fide partition, where separate establishments emerge, the Act's
applicability may vary, especially if there are no regular employees.
6. Constitutional Validity and Non-Discrimination:
• The Act's constitutional validity has been upheld, ensuring that it does not discriminate
between factories or establishments within the same class or group.
7. Liability to Contribute:
• Liability to contribute to the provident fund arises as soon as the Scheme is applied to an
establishment.
8. Central Government’s Empowerment [Section 1(3)(b)]:
• The Central Government is empowered to apply the Act to trading or commercial
establishments, regardless of whether they are classified as factories or not.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Non-Applicability of the Act to Certain Establishments
1. Exclusions Under Section 16(1):
• Co-operative Societies: Establishments registered under the Co-operative Societies Act,
1912, or similar state laws, employing less than 50 persons and operating without power.
• Government Establishments with Other Benefits: Establishments belonging to or under
the control of the Central or State Government, whose employees are entitled to
contributory provident fund or old age pension as per government schemes or rules.
• Establishments Under Specific Acts: Establishments set up under Central, Provincial, or
State Acts, where employees are entitled to contributory provident fund or old age
pension according to schemes or rules framed under those Acts.
2. Central Government's Discretion [Section 16(2)]:
• The Central Government may exempt certain classes of establishments from the Act if it
is deemed necessary or expedient, considering their financial position or other
circumstances.
• Such exemption is subject to conditions specified in the notification and is valid for a
specified period.
3. Interpretation of 'Establishment Date':
• The establishment date of a factory is considered to be the date when its manufacturing
process begins.
• Changes in ownership or partnership do not alter the original date of establishment for
the purposes of Section 16(1).
4. Legal Precedent [P.G. Textile Mills v. Union of India (1976)]:
• A change in partnership deed does not constitute the establishment of a new business for
the purpose of applying Section 16(1).

IMPORTANT DEFINITIONS [Section 2]

i). Appropriate Government [Section 2(a)]:
• Central Government: For establishments belonging to or under its control, connected
with railway companies, major ports, mines, oil fields, controlled industries, or
establishments with branches in multiple states.
• State Government: For all other establishments not specified above.

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Prof Abhijeet C. Jaiswal
ii). Basic Wages [Section 2(b)]:
• Definition: Encompasses all emoluments earned by an employee while on duty, on leave,
or on holiday with wages, in line with the terms of the employment contract, and paid or
payable in cash.
• Exclusions: Does not include the cash value of food concessions, dearness allowance,
house-rent allowance, overtime allowance, bonus, commission, or other similar
allowances related to employment; also excludes gifts from the employer.
iii). Contribution [Section 2(c)]:
• Refers to contributions payable in respect of a member under a Provident Fund Scheme
or contributions for an employee covered by the Insurance Scheme.
iv). Controlled Industry [Section 2(d)]:
• An industry whose control by the Union is declared necessary in the public interest by a
Central Act.
v). Employer [Section 2(e)]:
• In Relation to a Factory: The owner or occupier of the factory, including their agent, the
legal representative of a deceased owner or occupier, and the person named as manager
under the Factories Act, 1948.
• In Relation to Other Establishments: The person or authority with ultimate control over
the affairs of the establishment, including a manager, managing director, or managing
agent, if the affairs are entrusted to them.

vi). Employee [Section 2(f)]

1. Comprehensive Definition:
• Covers anyone employed for wages in any work, manual or otherwise, in or in connection
with the work of an establishment.
2. Inclusive Aspects:
• Includes contract workers and apprentices not covered under the Apprentices Act, 1961.
3. Case Studies and Legal Interpretations:
• Sons as Employees (Goverdhanlal v. REPC 1994 II LLN 1354): In this case, sons who were
paid wages were recognized as employees. This demonstrates the Act’s broad scope,
covering family members working in family-run businesses.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• Hearing in Ambiguity (1976-11 Labour Law Journal, 309): Emphasizes the need for a fair

hearing by the Commissioner in cases where there's ambiguity about an individual's status
as an employee.
• Part-Time and Irregular Workers (Railway Employees Co-operative Banking Society Ltd.
v. The Union of India, 1980 Lab. IC 1212): This case expanded the definition to include
part-time employees like sweepers, night watchmen, and gardeners, recognizing irregular
and non-traditional employment forms.
• Beedi Industry Workers (1986 1 SCC 32): A significant ruling where workers engaged by
beedi manufacturers, even those working from home, were recognized as employees. This
case highlights the application of the Act to home-based and informal sector workers.
• Cooperative Society Members (1998 LU I Mad. 827): In this case, members of a
cooperative society who performed work and received wages were considered
employees, reinforcing the employer-employee relationship in cooperative structures.
4. Exclusions:
• Excludes working partners drawing salaries or allowances from a business, emphasizing
the distinction between ownership and employment.

vii). Exemption Employee [Section 2(ff)]:

• An employee who would have been covered by a Provident Fund Scheme or the Insurance
Scheme, but is not due to an exemption granted under Section 17.
viii). Exemption Establishment [Section 2(fff)]:
• An establishment that has been granted exemption from all or any of the provisions of
any Scheme or the Insurance Scheme under Section 17. This exemption can apply to the
establishment itself or to any person or class of persons employed therein.
ix). Factory [Section 2(g)]:
• Defined as any premises, including surrounding areas, where a manufacturing process is
carried on, with or without the aid of power.
x). Fund [Section 2(h)]:
• Refers to the Provident Fund established under the respective Scheme.
xi). Industry [Section 2(i)]:
• Any industry specified in Schedule I of the Act, including any other industry that may be
added to the Schedule through a notification under Section 4.

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Prof Abhijeet C. Jaiswal
xii). Insurance Fund [Section 2(i-a)]:
• The Deposit-Linked Insurance Fund established under Section 6-C(2) of the Act.
xiii). Insurance Scheme [Section 2(i-b)]:
• Refers to the Employees Deposit-Linked Insurance Scheme framed under Section 6-C(1).

xiv). Manufacture or Manufacturing Process [Section 2(i-c)]:

• Defined as any process involved in making, altering, repairing, ornamenting, finishing,
packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or
adapting any article or substance. The aim of these processes is the article's or substance's
use, sale, transport, delivery, or disposal.
xv). Member [Section 2(j)]:
• A 'Member' refers to an individual who is a member of the Provident Fund established
under the scheme.
xvi). Occupier of a Factory [Section 2(k)]:
• The 'Occupier' of a factory is the person with ultimate control over the factory's affairs. In
cases where a managing agent is entrusted with the factory's affairs, the agent is deemed
to be the occupier.
xvii). Pension Fund [Section 2(kA)]:
• The 'Pension Fund' refers to the Employees Pension Fund established under sub-section
(2) of Section 6A.
xviii). Pension Scheme [Section 2(kB)]:
• The 'Pension Scheme' is the Employees Pension Scheme that is framed under sub-section
(1) of Section 6A.
xix). Scheme [Section 2(l)]:
• Refers to the Employees’ Provident Fund Scheme as framed under Section 5.
xx). Superannuation [Section 2(ll)]:
• 'Superannuation' in relation to a member of the Pension Scheme, refers to the attainment
of the age of fifty-eight years by the employee.
xxi). Different Departments or Branches of an Establishment [Section 2A]:
• In cases where an establishment consists of various departments or branches, whether
located in the same place or in different places, they are all treated as parts of the same
establishment.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal

SCHEMES UNDER THE ACT

(A) Employees Provident Fund Scheme:
1. Central Government's Role: The Central Government has established the Employees Provident
Fund Scheme, a key component of the Act.
2. Fund Administration:
• Board of Trustees/Central Board [Section 5A]: The administration of the Fund is vested
in the Central Board of Trustees, constituted by the Central Government.
• Scheme Provisions: The Scheme outlines terms for appointing members to the Central
Board and the procedures for Board meetings.
• Board's Functions: The Board administers the funds under the Scheme, adhering to the
provisions of Sections 6AA and 6C of the Act. It also oversees functions related to the
Family Pension Scheme and the Insurance Scheme.
3. Employees Entitled and Required to Join:
• Coverage: All employees working in or in connection with a factory or establishment
covered by the Scheme, except excluded employees, are entitled and required to join the
Fund from their date of joining.
• Excluded Employees [Defined in Para 2(f) of the Scheme]:
• Employees who have withdrawn their full accumulations from the Fund.
• Employees whose pay (including basic wages, dearness allowance, retaining
allowance, and food concession) exceeds fifteen thousand rupees per month at
the time of potential membership.
• Apprentices, as defined by applicable standing orders or specified by the
appropriate Government.

Contributions:
1. Section 6 Requirement: According to Section 6, employers are required to contribute 10% of the
basic wages, dearness allowance, and retaining allowance (if applicable) to the Provident Fund for
each of their employees. This applies to all employees, whether they are directly employed or
hired through a contractor.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
2. Employee's Contribution: Employees are also obliged to contribute an amount equal to what their
employer contributes to the Provident Fund. However, employees have the option to contribute
more than the prescribed rate if they wish.
3. Limits on Employer Contribution: Employers are not obligated to contribute more than what is
prescribed by the Government under the Act at any given time.
4. Calculation of Contribution: Contributions are rounded to the nearest rupee. Amounts with fifty
paise or more are rounded up to the next higher rupee, while amounts with less than fifty paise
are ignored.
5. Dearness Allowance: Dearness allowance includes the cash value of any food concessions
provided to employees.
6. Retaining Allowance: Retaining allowance is the amount paid to an employee to retain their
services even when the establishment is not operational.
7. Mandatory Contribution: The Provident Fund Scheme makes it mandatory for employers to
contribute, and there are no exceptions provided under the Act to exempt specified employers
from this obligation.
Investment:
1. Board of Trustees: The amount collected through Provident Fund contributions is invested by a
Board of Trustees.
2. Government-Approved Investment Pattern: The investments made by the Board of Trustees
follow an investment pattern that is approved by the Government of India.
3. Interest for Members: Members of the Provident Fund receive interest on the funds in their
Provident Fund Accounts. The rate of interest for each financial year is recommended by the Board
of Trustees and is subject to final approval by the Government of India.
Case Study: In the case of "State v. S.P. Chandani, AIR 1959 Pat. 9," it was established that the Provident
Fund Scheme requires the mandatory payment of contributions, and there are no exceptions for specific
employers to avoid this legal liability.

Advances:
1. Non-refundable advance for Life Insurance: Members can take a non-refundable advance from
the Provident Fund for paying life insurance premiums.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
2. Withdrawal for Dwelling House: Withdrawals are allowed for purchasing a dwelling house, flat,
or for constructing one. This includes acquiring a suitable site, completing an ongoing
construction, or making substantial improvements.
3. Advances for Factory/Establishment Closure: Advances are permitted in cases of temporary
factory or establishment closure for more than fifteen days (other than due to a strike) or non-
receipt of wages for two months or more. Refundable advances are allowed for closures exceeding
six months.
4. Advances for Medical Reasons: Non-refundable advances are available for hospitalization lasting
one month or more, major surgeries, and specific medical conditions. Advances can also be
granted for the hospitalization of a family member.
5. Advances for Marriage and Education: Non-refundable advances can be taken for various
purposes, including daughter/son's marriage, self-marriage, sibling's marriage, and post-
matriculation education.
6. Advances for Electricity Cut: Members affected by electricity supply cuts can take non-refundable
advances.
7. Advances for Calamities: In cases of property damage due to exceptional events like floods,
earthquakes, or riots, non-refundable advances are allowed.
8. Withdrawals for Loan Repayment: Withdrawals can be made for repaying loans in special cases.
9. Advances for Physically Handicapped Members: Physically handicapped members can take non-
refundable advances for purchasing equipment to alleviate their hardship.
Final Withdrawal:
1. Reasons for Full Withdrawal: Full accumulations with interest are refunded in the following cases:
• Death
• Permanent disability
• Superannuation
• Retrenchment
• Migration abroad for permanent settlement or employment
• Voluntary retirement
• Certain discharges under the Industrial Disputes Act, 1947
• Transfer to an establishment not covered by the Act
2. Withdrawal with Commissioner's Permission: In other cases, a member can withdraw the full
amount if they cease employment and have not been employed in a covered establishment for at

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Prof Abhijeet C. Jaiswal
least two months. This waiting period requirement does not apply to female members resigning
from service for marriage purposes.

(B) Employees’ Pension Scheme

1. Introduction of the Scheme: Under Section 6A, the Government introduced the Employees’
Pension Scheme, 1995, replacing the Family Pension Scheme, 1971. This new scheme came into
effect on 16.11.1995.
2. Compulsory for Existing Members: The Employees’ Pension Scheme is mandatory for individuals
who were members of the Family Pension Scheme, 1971.
3. Optional for New Members: Individuals who become members of the Provident Fund from
16.11.1995 have the option to join the Employees’ Pension Scheme.
4. Option to Join from 1.4.1993: Employees, including those covered under the Voluntary
Retirement Scheme, had the option to join the scheme from 1.4.1993.
5. Minimum Service Requirement: To be eligible for pension benefits, a minimum of 10 years of
contributory service is required.
6. Age for Normal Superannuation Pension: Normal superannuation pension is payable when an
individual reaches the age of 58 years.
7. Discounted Pension Option: Pension at a discounted rate is also available starting from the age of
50 years.
8. Less than 10 Years of Service: If an employee has less than 10 years of pensionable service, they
can choose to remain covered for pensionary benefits until the age of 58 or opt for a return of
contributions/withdrawal benefits.
9. Contingencies Covered: The scheme provides for the payment of monthly pension in various
situations, including:
• Superannuation upon reaching the age of 58.
• Retirement.
• Permanent total disablement.
• Death during service.
• Death after retirement, superannuation, or permanent total disablement.
• Children's Pension.
• Orphan's pension.

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Prof Abhijeet C. Jaiswal
10. Monthly Pension Amount: The amount of monthly pension varies from member to member
based on their pensionable salary and pensionable service.

Employees’ Deposit-Linked Insurance Scheme:

1. Introduction of the Scheme: In 1976, an amendment to the Act added Section 6C, empowering
the Central Government to create the Employees’ Deposit-Linked Insurance Scheme. This scheme
provides life insurance benefits to employees of establishments covered by the Act.
2. Effective Date: The Employees’ Deposits-Linked Insurance Scheme, 1976 came into effect on
August 1, 1976.
3. Applicability: This scheme is applicable to all factories and establishments covered by the
Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
4. Coverage of Employees: All employees who are members of the Provident Funds, both in
exempted and unexempted establishments, are covered under this insurance scheme.
5. Contributions: Employees do not need to contribute to the Insurance Fund. Employers are
responsible for contributing to the Insurance Fund at a rate of 1% of the total emoluments,
including basic wages, dearness allowance, cash value of food concessions, and retaining
allowance (if any).
6. Administrative Expenses: Employers of all covered establishments must pay charges to the
Insurance Fund to cover administrative expenses.
7. Nomination: The nomination made by a member under the Employee Provident Fund Scheme
1952 or in an exempted provident fund is considered valid under this scheme. Section 5 provisions
take precedence over personal laws regarding nominations.
8. Payment of Assurance Benefit: In the event of a member's death, an amount equal to the average
balance in the deceased member's account during the preceding 12 months or the period of
membership, whichever is less, is paid to eligible beneficiaries or as Provident Fund
accumulations.
9. Exemption from the Scheme: Factories or establishments that have an insurance scheme offering
more benefits than the statutory scheme may be granted exemption, provided the majority of
employees are in favor of such exemption, subject to specific conditions.

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Prof Abhijeet C. Jaiswal
Determination of Moneys Due from Employers:
1. Authority for Determination: Section 7A of the Act authorizes the Central Provident Fund
Commissioner, Additional Provident Fund Commissioner, Deputy Provident Fund Commissioner,
or Regional Provident Fund Commissioner to determine the amount due from any employer under
the Act.
2. Dispute Resolution: These authorities also have the power to decide disputes related to the
applicability of the Act. They can conduct inquiries as necessary for this purpose.
3. Employees Provident Fund Appellate Tribunal: The Central Government has established the
Employees Provident Fund Appellate Tribunal, consisting of a presiding officer qualified to be a
High Court Judge or a District Judge, effective from July 1, 1997.
4. Appeals: Any person aggrieved by orders or notifications issued by the Central Government or
authority under specific sections of the Act can file an appeal before the tribunal. The tribunal has
its own procedures and powers similar to those of officers under Section 7A.
5. Judicial Status: Proceedings before the tribunal are considered judicial proceedings under certain
sections of the Indian Penal Code and the Code of Civil Procedure. The tribunal is treated as a Civil
Court for various purposes.
6. Representation: Appellants can seek assistance from a legal practitioner, and the Government
appoints a presenting officer to represent it in tribunal proceedings.
7. Finality of Tribunal Orders: Orders issued by the Tribunal that finally dispose of an appeal cannot
be challenged in any court.
Mode of Recovery of Moneys Due from Employers:
1. Recovery by Commissioner: Section 8 of the Act outlines the mode of recovery of moneys due
from employers. The Central Provident Fund Commissioner or authorized officers can recover
these amounts.
2. Similar to Arrear of Land Revenue: The recovery is carried out in the same manner as recovering
an arrear of land revenue.
3. Limitations on Recovery: Notably, recovery of arrears of Provident Fund cannot be made from the
unutilized part of cash-credit of an industrial establishment.
(iii) Recovery of Moneys by Employers and Contractors:
1. Employer's Responsibility: Section 8A of the Act states that the employer's contribution, as well
as the employee's contribution and any administrative charges for administering the Provident

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Fund, related to an employee employed through a contractor, can be recovered by the employer
from the contractor.
2. Contractor's Recovery from Employee: Contractors can recover the employee's contribution
under any scheme by deducting it from the basic wages, dearness allowance, and retaining
allowance (if any) payable to the employee.
3. Limitations on Deductions: Contractors are not allowed to deduct the employer's contribution or
administrative charges from the employee's wages or recover such amounts from the employee,
regardless of any contractual agreements.
(iv) Measures for Recovery of Amount Due from Employer:
1. Certificate for Recovery: The authorized officer under the Act issues a certificate for the recovery
of the amount due from the employer to the Recovery Officer.
2. Powers of the Recovery Officer: The Recovery Officer has the authority to attach and sell the
employer's property, and can even call for the arrest and detention of the employer to effect the
recovery. The employer cannot challenge the validity of the certificate.
3. Time Extension: The authorized officer may grant the employer additional time to make the
payment of dues.
(v) Priority of Payment of Contributions over Other Debts:
1. Section 11 Priority: Section 11 of the Act establishes that contributions toward the Provident Fund
take precedence over other payments in specific situations, including when the employer is
declared insolvent or when a winding-up order is issued for a company.
2. Scope of Amounts Included: The amount covered by this priority includes contributions payable
to the Provident Fund, the Insurance Scheme, damages recoverable under Section 14B,
accumulations required to be transferred under Section 15(2), charges payable under various
provisions of the Act or any provisions of the Scheme or Insurance Scheme.
3. Exempted Establishments: The priority also extends to contributions related to exempted
establishments, including contributions to the Provident Fund, Insurance Fund, or Pension Fund,
damages under Section 13B, or any charges payable to the appropriate Government under
specified conditions.

EMPLOYER NOT TO REDUCE WAGES:

1. Prohibition on Wage Reduction: Section 12 of the Act prohibits employers from directly or
indirectly reducing the wages of any employee covered by the Scheme or the Insurance Scheme.

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Prof Abhijeet C. Jaiswal
This restriction also applies to reducing the total benefits related to old-age pension, gratuity,
provident fund, or life insurance to which the employee is entitled under the terms of
employment, whether express or implied.
2. Reason for the Prohibition: Employers cannot reduce wages or benefits solely because of their
liability to make contributions to the Provident Fund or Insurance Fund or pay any charges under
the Act, the Scheme, or the Insurance Scheme.
Transfer of Accounts:
1. Provision for Employee Transfers: Section 17A(1) of the Act addresses the transfer of accounts
when an employee who works in an establishment covered by the Act leaves their employment
and gets re-employed in another establishment not covered by the Act.
2. Transfer from Old Establishment: In such cases, the accumulations to the credit of the employee
in the Fund or Provident Fund of the establishment they left can be transferred to the credit of
their account in the Provident Fund of the new establishment where they are re-employed. This
transfer is subject to the employee's desire for the transfer and the rules governing the Provident
Fund of the old establishment.
3. Transfer to Covered Establishment: Conversely, Section 17A(2) allows for the transfer of
accumulations to the credit of an employee in the Provident Fund of the old establishment when
they leave employment in a non-covered establishment and get re-employed in an establishment
covered by the Act. This transfer is contingent on the employee's desire for the transfer and the
rules of the Provident Fund of the old establishment.

Protection Against Attachment:

1. Statutory Protection: Section 10 of the Act provides statutory protection to the amount of
contributions to the Provident Fund against attachment by any Court decree.
2. Protection from Assignment or Charging: Under Section 10(1), the amount standing to the credit
of a member in the Fund or an exempted employee in a Provident Fund cannot be assigned,
charged, or attached under any decree or order of any Court. This protection extends to prevent
the official assignee appointed under the Presidency Towns Insolvency Act, 1909, or any receiver
appointed under the Provincial Insolvency Act, 1920, from claiming such amounts.
3. Protection After Member's Death: Section 10(2) stipulates that the amount in the Fund standing
to the credit of a member at the time of their death, payable to their nominee under the Scheme
or Provident Fund rules, vests in the nominee. This amount is free from any debt or liability

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incurred by the deceased or the nominee before the member's death and is not subject to
attachment by any Court decree.
4. Vesting of Fund on Dependents: After the death of the subscriber, there is a statutory vesting of
the fund on dependents. Once vested, the fund becomes the absolute property of the dependent
and cannot be considered an inheritance.
Power to Exempt:
1. Authority to Grant Exemptions: Section 17 of the Act empowers the appropriate Government to
grant exemptions to certain establishments or individuals from the application of some or all
provisions of the Scheme.
2. Exemption Conditions: Exemptions are granted through notifications published in the Official
Gazette, and they may include specific conditions as specified in the notification.

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Prof Abhijeet C. Jaiswal
LESSON 19-III: Social Security Legislations
Unit III – Maternity Benefit Act, 1961
Regulatory Framework - Maternity Benefit Act, 1961
1. Overview:
• The Act focuses on the employment of women in specific establishments during and after
pregnancy.
• It ensures maternity and related benefits.
• Applicable across India.
2. Constitutional Basis (Article 39(e) & (f)):
• Directs State policy to protect workers' health and prevent child labor.
• Ensures opportunities for children's healthy development in freedom and dignity.
• Protects youth against exploitation and neglect.
3. Purpose of Maternity Benefits:
• Safeguards the dignity of motherhood.
• Provides for women and child's maintenance when the woman is not working.
4. Applicability:
• Relevant to mines, factories, the circus industry, plantations, shops, and establishments
with 10 or more employees.
• Can be extended to other establishments by State Governments.

Definition
“Employer”
means — (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 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 or the authority which has the ultimate control over the affairs of
the establishment and where the said affairs and entrusted to any other person whether called a manager
managing director managing agent or by any other name such person; {Section 3(d)}

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Prof Abhijeet C. Jaiswal

“Establishment”
means —
(i) a factory;
(ii) a mine;
(iii) a plantation;
(iv) an establishment wherein persons are employed for the exhibition of equestrian acrobatic and other
performance
(iva) a shop or establishment; or
(v) an establishment to which the provisions of this Act have been declared under sub-section (1) of section
2 to be applicable{ Section 3(e)};

“Maternity benefit”
means the payment referred to in sub-section (1) of section 5 (Section 3(h)};

“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 –
(1) such cash allowances (including dearness allowance and house rent allowances) as a woman is for the
time being entitled to
(2) incentive bonus and
(3) the money value of the concessional supply of food grains and other articles but does not include —
(i) any bonus other than incentive bonus;
(ii) over-time 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; and
(iv) any gratuity payable on the termination of service; (Section 3(n)}

PROHIBITION OF EMPLOYMENT DURING POST-DELIVERY OR POST-MISCARRIAGE PERIOD

• Mandatory Leave Period: The Act mandates a leave period of six weeks immediately following the
day of a woman's delivery, miscarriage, or medical termination of pregnancy.
• Employer's Obligation: Employers are prohibited from employing women in any establishment
during this six-week period.

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Prof Abhijeet C. Jaiswal
Work Restrictions Preceding Delivery
• Request for Reduced Physical Strain: If a pregnant woman requests, her employer must not assign
her any work of an arduous nature or which involves long hours of standing during the one month
immediately preceding the six-week period before her expected delivery date.
• Health and Safety Considerations: The work should not interfere with the pregnancy, the normal
development of the fetus, or be likely to cause a miscarriage or otherwise adversely affect her
health.

Entitlement to Maternity Benefits

• Eligibility: Every woman is entitled to maternity benefits for the period of her actual absence due
to childbirth. This includes the period immediately preceding childbirth, the day of delivery, and
the period following delivery.
• Calculation of Benefits: The benefit is calculated based on the average daily wage, which is the
average of the woman’s wages for the days she worked during the three months preceding her
maternity leave. The higher of this average, the minimum wage as per the Minimum Wages Act,
1948, or ten rupees, is considered for calculation.
• Work Requirement: To be eligible for maternity benefits, a woman must have worked for at least
80 days in the 12 months preceding her expected delivery in the establishment of the employer
from whom she claims the benefit.

Duration of Maternity Benefit

• General Rule: The maximum period for maternity benefit is 26 weeks, with up to 8 weeks allowed
before the expected delivery date.
• Special Provision: For women with two or more children, the maximum benefit period is 12
weeks, with up to 6 weeks before the expected delivery date.
• In Case of Death: If a woman dies during the period for which she is entitled to maternity benefit,
the benefit is payable only until her death. If her child also dies during this period, the benefit
extends until the child’s death.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Additional Provisions
• Adoptive and Commissioning Mothers: Women who legally adopt a child under three months old
or are commissioning mothers are entitled to 12 weeks of maternity benefit from the date the
child is handed over to them.
• Work from Home Option: If the nature of the work permits, an employer may allow a woman to
work from home after availing maternity benefit, under mutually agreed conditions and for a
mutually agreed period.

Notice of Claim for Maternity Benefit (Section 6)

• Process of Notification: A woman entitled to maternity benefit must notify her employer in
writing, in a prescribed form, indicating her intention to claim the maternity benefit and any other
entitlements under the Act. She must also state that she will not work in any establishment during
the period she receives the maternity benefit.
• Notification Timing for Pregnant Women: The notice should specify the date from which the
woman will be absent, which should not be earlier than six weeks from her expected delivery date.
If notice was not given during pregnancy, it should be given as soon as possible after delivery.
• Employer's Obligation Upon Receipt of Notice: Upon receiving the notice, the employer must
permit the woman to be absent from work for the period she is entitled to maternity benefit. The
benefit for the period before the expected delivery date is paid in advance upon proof of
pregnancy. The benefit for the period after delivery is paid within 48 hours of providing proof of
childbirth.
Nursing Breaks
• Entitlement for Nursing Mothers: A woman who returns to work post-delivery is entitled to two
additional breaks for nursing her child, apart from her regular rest intervals, until the child reaches
the age of fifteen months.

Creche Facility
• Mandatory Provision in Larger Establishments: Establishments with fifty or more employees must
provide a crèche facility within a prescribed distance. This can be a separate facility or part of
common facilities.
• Access to Crèche Facility: The woman is allowed four visits to the crèche daily, which includes her
rest intervals.

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Prof Abhijeet C. Jaiswal
Information about Maternity Benefits
• Employer's Responsibility: Every establishment is required to inform women in writing and
electronically at the time of their initial appointment about all the benefits available under the
Act.

Exhibition of Act's Abstract (Section 19)

• Visibility Requirement: Employers are mandated to exhibit an abstract of the Act's provisions and
the rules made thereunder in a language or languages understood in the locality. This abstract
must be displayed conspicuously in every part of the establishment where women are employed.

Maintenance of Registers and Records (Section 20)

• Record-Keeping: Every employer is required to prepare and maintain registers, records, and
muster-rolls in a prescribed manner as stipulated in Section 20 of the Act.

Penalties for Contravention by Employers (Section 21)

• Penalties for Non-Payment or Unfair Dismissal: If an employer fails to pay maternity benefits or
unfairly dismisses a woman due to her absence in accordance with the Act, the penalty includes:
• Imprisonment: Not less than three months and up to one year.
• Fine: Not less than two thousand rupees and up to five thousand rupees.
• Lesser Sentence Option: The court may impose a lesser term of imprisonment or a fine
only, for recorded sufficient reasons.
• General Contravention Penalties: For contravention of any provisions of the Act or rules (if not
specifically penalized elsewhere in the Act):
• Imprisonment: Up to one year.
• Fine: Up to five thousand rupees.
• Both Imprisonment and Fine: Possible in certain cases.
• Recovery of Maternity Benefit: If the contravention involves non-payment of maternity
benefit or any other amount, the court will recover this amount as a fine and pay it to the
person entitled.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 19-IV: Social Security Legislations
Unit IV– Payment of Gratuity Act, 1972
Introduction to the Payment of Gratuity Act, 1972
• Purpose: The Act is designed to provide a gratuity payment to employees as a recognition of their
service when they retire or leave service. This is applicable to a wide range of establishments
across India.
• Scope and Amendments: The Act has been periodically amended to reflect the changing
economic and employment landscapes. Notably, amendments include an increase in the gratuity
ceiling from Rs. 10 lakh to Rs. 20 lakh and an expansion of the definition of "employee" under
Section 2(e).

Application of the Act

• Eligibility Criteria: The application of the Act is based on two factors: the nature of the
establishment and the definition of an "employee" as per Section 2(e).
• Establishments Covered:
• Factories, mines, oilfields, plantations, ports, and railway companies.
• Shops or establishments in a state where ten or more persons are employed, as per the
relevant state law.
• Other specified establishments where ten or more persons are employed, as designated
by the Central Government.
• Specific Inclusions: The Central Government has extended the Act's applicability to include motor
transport undertakings, clubs, chambers of commerce and industry, inland water transport
establishments, solicitors' offices, local bodies, educational institutions, societies, trusts, and the
circus industry, provided they meet the employee count criteria.
• Continued Applicability: Once the Act becomes applicable to an establishment, it continues to be
governed by it even if the number of employees subsequently falls below ten (as per Section 3A).

Definition of "Employee" (Section 2(e))

• Inclusion of Teachers: The Amendment Act of 2009 expanded the definition of "employee" to
include teachers in educational institutions, effective retrospectively from April 3, 1997. This

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Prof Abhijeet C. Jaiswal
amendment was made following the Supreme Court judgment in Ahmedabad Private Primary
Teachers’ Association v. Administrative Officer.
• Broad Definition: An "employee" encompasses any person (excluding an apprentice) employed
for wages in any kind of work (manual or otherwise) in connection with the work of establishments
like factories, mines, oilfields, plantations, ports, railway companies, shops, or other
establishments to which the Act applies.
• Exclusions: The definition excludes individuals holding posts under the Central or State
Government who are governed by other Acts or rules regarding gratuity.

Definition of "Appropriate Government" (Section 2(a))

• Criteria for Determination:
• Central Government: This applies to establishments belonging to, or under the control of,
the Central Government, those with branches in more than one State, factories under
Central Government control, major ports, mines, oilfields, and railway companies.
• State Government: In all other cases, the "Appropriate Government" is the State
Government.
• Relevance for Companies: It is crucial for a Company Secretary to know whether their
establishment falls under the Central or State Government's jurisdiction. This knowledge affects
the handling of disputes related to gratuity, requests for exemptions under Section 5, and
identifies the relevant 'Controlling Authority' and 'Appellate Authority' as appointed under
Sections 3 and 7 of the Act.

Continuous Service (Section 2A)

1. Uninterrupted and Interrupted Service:
• An employee is considered in continuous service if they have been in uninterrupted
service, including periods of sickness, accident, leave, absence from duty without leave
(unless such absence is treated as a break in service under applicable rules), layoff, strike,
lock-out, or cessation of work not due to the employee's fault.
2. Criteria for Deeming Continuous Service:
• For non-seasonal employees:

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
• One-year criterion: An employee is deemed in continuous service for one year if,
in the preceding 12 months, they have worked at least 190 days (for mines/less
than 6-day work weeks) or 240 days (other cases).
• Six-month criterion: An employee is deemed in continuous service for six months
if, in the preceding six months, they have worked at least 95 days (for mines/less
than 6-day work weeks) or 120 days (other cases).
• Inclusion of days: Days of layoff, leave with full wages earned in the previous year, absence
due to temporary disablement (accident related to employment), and maternity leave (up
to twelve weeks) are counted as days worked.
3. Seasonal Establishment Employees:
• Such employees are deemed in continuous service for one year or six months if they have
worked for at least 75% of the operational days of the establishment during that period.
4. Non-Continuous Service Cases:
• Legal termination of service and subsequent re-employment do not count as continuous
service.
• An example case (Baluram v. Phoenix Mills Ltd., 1999) illustrates that gratuity cannot be
claimed based on continuous service if there's a break in service due to termination (e.g.,
for participating in an illegal strike) and the employee had previously received and
accepted gratuity for their past service.

Definition of "Family" (Section 2(h))

• For a Male Employee: His family includes himself, his wife, his children (married or unmarried),
his dependent parents, the dependent parents of his wife, and the widow and children of his
predeceased son (if any).
• For a Female Employee: Her family consists of herself, her husband, her children (married or
unmarried), her dependent parents, the dependent parents of her husband, and the widow and
children of her predeceased son (if any).
• Adoption Consideration: Legally adopted children are included in the employee's family. If an
employee's child is legally adopted by someone else, that child is considered excluded from the
employee's family.

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Prof Abhijeet C. Jaiswal
Definition of "Retirement" (Section 2(q))
• Meaning: "Retirement" refers to the termination of an employee's service for reasons other than
superannuation.

Definition of "Superannuation" (Section 2(r))

• Context: "Superannuation" pertains to an employee reaching the retirement age as specified in
their contract or conditions of service, leading to their vacating of employment.

Definition of "Wages" (Section 2(s))

• Components: "Wages" include all emoluments earned by an employee while on duty or leave, in
line with their employment terms, and payable in cash. This includes dearness allowance.
• Exclusions: "Wages" do not cover bonus, commission, house rent allowance, overtime wages, and
any other allowances.

When is Gratuity Payable? (Section 4(1))

• Conditions for Payment:
• Gratuity is payable to an employee upon the termination of employment after at least five
years of continuous service.
• Specific scenarios for payment include:
• On superannuation,
• On retirement or resignation,
• On death or disablement due to accident or disease.
• Exceptions to Five-Year Rule:
• The requirement of five years of continuous service is waived if the termination of
employment is due to the employee's death or disablement.
• Additional Clarifications:
• The continuous service is counted from the date of employment, not from the
commencement of the Act.
• Absence from duty without leave does not constitute a break in continuous service for the
purpose of gratuity.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
TO WHOM IS GRATUITY PAYABLE?
• To the Employee or Nominee: Normally, gratuity is payable to the employee himself/herself. In
the event of the employee’s death, it is paid to the nominated person.
• In Absence of Nomination: If no nomination is made, it is paid to the employee's heirs.
• Minor Beneficiaries: If the nominee or heir is a minor, their share is deposited with the controlling
authority, who will invest it on behalf of the minor until they reach majority.

Amount of Gratuity Payable

• Calculation Method: Gratuity is calculated based on continuous service - for each completed year
of service or part thereof exceeding six months, at the rate of fifteen days’ wages last drawn by
the employee.
• Maximum Limit: The maximum gratuity payable is Rs. 20 lakh, which was increased from Rs. 10
lakh by the Payment of Gratuity (Amendment) Act, 2018.

Nomination Process
• Requirement for Nomination: Employees covered by the Act must make a nomination for the
payment of gratuity in the event of their death.
• Rules for Nomination: The Act includes provisions for changing the nomination as per the rules
under the Act.

FORFEITURE OF GRATUITY (SECTION 4(6))

1. For Damage or Loss (Section 4(6)(a)):
• Gratuity can be forfeited to the extent of damage or loss caused by an employee's willful
omission or negligence resulting in damage or loss to, or destruction of, the employer's
property.
• The right to forfeit is limited to the actual extent of the damage or loss. Without proof of
the extent of damage, forfeiture rights do not apply.
2. For Misconduct (Section 4(6)(b)):
• Gratuity may be wholly or partially forfeited if an employee's service is terminated due to:
• Riotous and disorderly conduct or any other act of violence, or
• Any act constituting an offence involving moral turpitude, committed in the
course of employment.

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Prof Abhijeet C. Jaiswal
• In cases not involving these grounds, the employer cannot withhold gratuity.

3. Prohibited Withholding:
• Gratuity cannot be withheld for reasons like not vacating employer-provided housing.
Exemptions
• Government's Discretion: The appropriate Government may exempt any establishment or class
of employees from the Act if their gratuity or pensionary benefits are not less favorable than those
under the Act.

Controlling and Appellate Authorities (Sections 3 and 7(7))

• Controlling Authority: Appointed by the appropriate Government for the administration of the
Act, responsible for different areas.
• Appellate Authority: Appeals against orders of the Controlling Authority can be made to the
appropriate Government or another specified authority.

RIGHTS AND OBLIGATIONS OF EMPLOYEES

Application for Payment of Gratuity
• Eligibility for Application: Both the person eligible for gratuity under the Act and any person
authorized in writing to act on their behalf can send a written application for gratuity to the
employer.
• Timeframe for Application:
• The standard period for making the application is within 30 days from the date the gratuity
becomes payable.
• If the date of superannuation or retirement is known, the employee can apply to the
employer 30 days before the date of superannuation or retirement.
• Application by Nominee:
• In the event of an employee's death, the nominee should ordinarily apply for gratuity
within 30 days from when the gratuity becomes payable.
• Form of Application:
• While specific forms for the application are prescribed, applications written on plain paper
with relevant details are also acceptable.
• The application can be delivered to the employer either personally or via registered post
with acknowledgment due.

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Prof Abhijeet C. Jaiswal
• Late Applications:

• Applications submitted after the 30-day period can still be entertained if they provide
sufficient cause for the delay.
• Any disputes related to this will be referred to the Controlling Authority for a decision.

RIGHTS AND OBLIGATIONS OF THE EMPLOYER

• Determination of Gratuity (Section 7(2)):
• Upon gratuity becoming payable, the employer must determine the gratuity amount,
irrespective of whether an application has been made, and notify the person eligible for
gratuity and the Controlling Authority about the amount.
• Payment Timeline (Section 7(3)):
• The employer is required to pay the determined gratuity amount within thirty days from
its becoming payable.
• Interest for Delayed Payment (Section 7(3A)):
• If the employer fails to pay gratuity within the specified 30 days, they must pay interest at
the rate of 10% per annum from the due date to the payment date.
• However, no interest is applicable if the delay is due to the employee's fault and the
employer has obtained written permission from the Controlling Authority for the delay.
Dispute Resolution
• Inadmissible Claims:
• If a gratuity claim is deemed inadmissible, the employer must issue a notice to the
employee, nominee, or legal heir stating the reasons and also inform the Controlling
Authority.
• Disputes Over Gratuity Amount:
• In case of a dispute over the amount, the employer must deposit the admitted amount
with the Controlling Authority, which will then be paid to the rightful claimant once the
dispute is resolved.
Recovery of Gratuity
• Process for Unpaid Gratuity (Section 8):
• If the employer does not pay the gratuity within the prescribed time, the Controlling
Authority can issue a certificate to the Collector to recover the amount as arrears of land
revenue, along with compound interest as specified by the Central Government.

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• Before issuing the certificate, the Controlling Authority must give the employer a chance

to show cause against it.

• The interest amount cannot exceed the gratuity amount due.

Protection of Gratuity
• Exemption from Attachment: Gratuity is exempted from attachment under any decree or order
of Civil, Revenue, or Criminal Courts, ensuring that it reaches the entitled individuals without legal
interferences.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 19-IV: Social Security Legislations
Unit V – Apprentices Act, 1961
Introduction
1. Apprentices Act, 1961:
• Purpose: To regulate and control training programs for apprentices in India.
• Coverage: Applies across the whole of India.
2. Introduction and Objectives:
• Enactment Year: 1961.
• Goal: To regulate training of apprentices in industries using on-the-job training facilities.
• Amendments:
• 1973 and 1986: Included training for graduates, technicians, and technician
(vocational) apprentices.
• 1997 and 2007: Changes in definitions and rules about the number of apprentices,
and inclusion of Other Backward Classes.
3. Current State and Issues:
• Performance: The scheme's performance is not satisfactory compared to India's economic
growth.
• Unused Facilities: Many training facilities in the industry remain unutilized.
• Youth Impact: Unemployed youth miss out on training opportunities.
• Employer Concerns:
• Act provisions seen as rigid.
• Fear of penalties and prosecution.
4. 2014 Amendments:
• Effective Date: 22nd December 2014.
• Key Changes:
• Expanded apprenticeship opportunities for youth.
• Non-engineering graduates and diploma holders eligible for apprenticeship.
• Introduction of a portal for transparent and timely approvals.
• Apprenticeship available in new occupations.

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Prof Abhijeet C. Jaiswal
Definitions
Apprentice (Section 2(aa)}
means a person who is undergoing apprenticeship training in pursuance of a contract of apprenticeship.

Apprenticeship training (Section 2 (aaa)}

means a course of training in any industry or establishment undergone in pursuance of a contract of
apprenticeship and under prescribed terms and conditions which may be different for different categories
of apprentices.

Appropriate Government:
• Central Government's Responsibility:
• For the Central Apprenticeship Council.
• For the Regional Boards.
• For training of graduate or technician apprentices, and technician (vocational)
apprentices.
• For establishments like railways, major ports, mines, or oilfields.
• For establishments operating in four or more states.
• For establishments owned, controlled, or managed by:
• Central Government or its departments.
• Companies where the Central Government holds at least 51% share capital.
• Corporations (including co-operative societies) established under Central Acts and
controlled by the Central Government.
• State Government's Responsibility:
• For the State Apprenticeship Council.
• For any establishment not covered under Central Government's responsibility.

Designated trade [Section 2(e)}.

means any trade or occupation or any subject field in engineering or non-engineering or technology or
any vocational course which the Central Government, after consultation with the Central Apprenticeship
Council, may, by notification in the Official Gazette, specify as a designated trade for the purposes of this
Act.

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Employer [Section 2 (f)}
means any person who employs one or more other persons to do any work in an establishment for
remuneration and includes any person entrusted with the supervision and control of employees in such
establishment.

Establishment [Section 2 (g)}

includes any place where any industry is carried on and where an establishment consists of different
departments or have branches, whether situated in the same place or at different places, all such
departments or branches shall be treated as part of that establishment.

Graduate or technician apprentice {Section 2(j)}

means an apprentice who holds, or is undergoing training in order that he may hold a degree or diploma
in engineering or non-engineering or technology or equivalent qualification granted by any institution
recognised by the Government and undergoes apprenticeship training in any designated trade.

Industry {Section 2(k)}

means any industry or business in which any trade, occupation or subject field in engineering or
nonengineering or technology or any vocational course may be specified as a designated trade or optional
trade or both.

Optional trade {Section 2(II)}

means any trade or occupation or any subject field in engineering or non-engineering or technology or
any vocational course as may be determined by the employer for the purposes of this Act.

Portal-site [Section 2(III)]

means a website of the Central Government for exchange of information under this Act.

Technician (vocational) apprentice [Section 2(pp)]

means an apprentice who holds or is undergoing training in order that he may hold a certificate in
vocational course involving two years of study after the completion of the secondary stage of school
education recognised by the All-lndia Council and undergoes apprenticeship training in designated trade.

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Trade Apprentice [Section 2(q)]
means an apprentice who undergoes apprenticeship training in any designated trade.

Worker [Section 2(r)].

means any person working in the premises of the employer, who is employed for wages in any kind of
work either directly or through any agency including a contractor and who gets his wages directly or
indirectly from the employer but shall not include an apprentice referred to in clause (aa).

Section 3: Qualifications for Being Engaged as an Apprentice

1. Age Requirement:
• Minimum age is 14 years.
• For hazardous industries, the minimum age is 18 years.
2. Educational and Physical Fitness Standards:
• Must meet prescribed educational standards.
• Must meet physical fitness requirements.
• Standards may vary for different trades and apprentice categories.
Section 4: Contract of Apprenticeship
1. Requirement of a Contract:
• No person can be an apprentice without a contract.
• If the apprentice is a minor, their guardian must also agree to the contract.
2. Commencement of Training:
• Training starts on the date the contract is signed.
3. Terms and Conditions in the Contract:
• Contract may include agreed-upon terms and conditions.
• Terms must not contradict the Act or its rules.
4. Submission and Registration of Contract:
• Employer must send the contract to the Apprenticeship Adviser within 30 days (until a
portal is developed).
• After the portal is developed, details must be entered within seven days for verification
and registration.

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5. Handling of Objections:
• Apprenticeship Adviser must communicate any objections to the employer within 15 days
of receipt.
• Contract must be registered within 30 days of receipt.
6. Modification of Terms:
• If the Central Government changes apprenticeship terms, existing contracts are modified
accordingly.

Section 5: Novation of Contracts of Apprenticeship

1. Transfer of Apprenticeship Due to Employer's Inability:
• If an employer cannot fulfill the apprenticeship contract for any reason, a new employer
can be assigned.
• This process requires the approval of the Apprenticeship Adviser.
2. Agreement Among Parties:
• An agreement is formed between the original employer, the apprentice (or their guardian
if the apprentice is a minor), and the new employer.
• This agreement states that the apprentice will continue their apprenticeship with the new
employer for the remaining period of the original contract.
3. Registration and Legal Status:
• The new agreement must be registered with the Apprenticeship Adviser.
• Once registered, this agreement is officially recognized as the new contract of
apprenticeship.
• The registration date marks the termination of the original apprenticeship contract.
• After this date, no obligations from the original contract can be enforced against any party
involved.
Section 5A: Regulation of Optional Trade
• Prescribed Conditions for Optional Trade Apprentices:
• Qualifications, training period, assessment tests, certification, and other conditions for
apprentices in optional trades will be set as per prescribed standards.
• This means that the specific requirements for optional trade apprenticeships can be
tailored according to the needs of the trade and industry standards.

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Section 5B: Engagement of Apprentices from Other States
• Inter-State Apprenticeship Engagement:
• Employers are allowed to engage apprentices from other states.
• This provision aims to provide broader opportunities for apprenticeship training,
facilitating the movement of apprentices across state boundaries for training purposes.

Section 6: Period of Apprenticeship Training

1. For Trade Apprentices with Institutional Training:
• Apprentices from National Council Recognized Institutions:
• Those who have undergone training and passed tests from institutions recognized
by the National Council.
• The duration of their apprenticeship will be determined as prescribed.
2. For Trade Apprentices with Other Recognized Training:
• Apprentices from Other Recognized Boards or Authorities:
• Those trained in schools or institutions affiliated with or recognized by state
technical boards or other authorities.
• Applies also to courses approved under schemes specified by the Central
Government.
• The apprenticeship period for these individuals is also to be prescribed.
3. For Other Trade Apprentices:
• General Trade Apprentices:
• The apprenticeship duration for other trade apprentices, not covered above, will
be as prescribed.
4. For Graduate or Technician Apprentices:
• Higher Education Apprentices:
• The training period for graduate, technician, and technician (vocational)
apprentices will be set as per prescribed standards.
Section 8: Number of Apprentices for a Designated Trade and Optional Trade
1. Prescription of Apprentice Numbers:
• The Central Government has the authority to specify the number of apprentices that an
employer can engage in both designated and optional trades.
2. Collaboration Among Employers:

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Prof Abhijeet C. Jaiswal
• Employers can collaborate, either directly or through an approved agency, to provide

apprenticeship training.
• This collaboration is subject to guidelines issued by the Central Government.
3. Purpose of Collaboration:
• The collaboration aims to facilitate the provision of apprenticeship training, especially in
scenarios where individual employers may not have sufficient resources or capacity to
train apprentices independently.

Section 9: Practical and Basic Training of Apprentices

1. Employer's Responsibility for Practical Training:
• Every employer must arrange practical training for each apprentice they engage.
2. Inspection and Testing by Apprenticeship Advisers:
• The Central Apprenticeship Adviser or an authorized Assistant Apprenticeship Adviser will
have access to apprentices to test their work and ensure proper training.
• Similarly, State Apprenticeship Advisers or authorized persons will have access to
apprentices in establishments under the State Government.
3. Basic Training for Certain Trade Apprentices:
• Trade apprentices who haven't had institutional training must undergo basic training
before starting practical training.
• This basic training should be conducted in institutes with adequate facilities.
4. Syllabus and Equipment for Practical Training:
• For trade apprentices (excluding graduate or technician apprentices), the syllabus and
equipment for practical training, including basic training, will be approved by the Central
Government after consulting with the Central Apprenticeship Council.
5. Program for Graduate or Technician Apprentices:
• The apprenticeship training program and facilities for graduate or technician apprentices
will be approved by the Central Government in consultation with the Central
Apprenticeship Council.
6. Costs Associated with Training:
• For Trade Apprentices (excluding clauses (a) and (aa) of Section 6):
• Employers with 250 or more workers bear all recurring costs, including stipends.

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Prof Abhijeet C. Jaiswal
• Employers with fewer than 250 workers share these costs equally with the
Government up to a certain limit set by the Central Government. Beyond that
limit, the employer bears the full cost.
• For Trade Apprentices under clauses (a) and (aa) of Section 6:
• Employers bear all recurring costs, including stipends.
• For Graduate or Technician Apprentices:
• Recurring costs (excluding stipends) are borne by the employer.
• The cost of stipends is shared equally by the Central Government and the
employer up to a specified limit. Beyond that limit, the employer bears the full
cost.
7. Exception for Certain Apprentices:
• The cost-sharing arrangement does not apply to apprentices with a degree or diploma in
non-engineering.

Obligations of Employers
1. Provision of Training:
• Employers must provide apprentices with training in their trade according to the Act and
its rules.
2. Qualification of Trainer:
• If the employer is not qualified in the trade, they must ensure that a qualified person is in
charge of the apprentice's training.
3. Instructional Staff and Facilities:
• Employers are required to have adequately qualified instructional staff for both practical
and theoretical training.
• They must also provide facilities for the trade test of apprentices.
4. Fulfillment of Contractual Obligations:
• Employers must carry out their obligations under the contract of apprenticeship.

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Prof Abhijeet C. Jaiswal
Obligations of Apprentices
A) Obligations of Trade Apprentices
1. Learning and Diligence:
• Apprentices must conscientiously and diligently learn their trade to become skilled
craftsmen by the end of their training period.
2. Attendance:
• They are required to regularly attend practical and instructional classes.
3. Obedience to Orders:
• Apprentices must follow all lawful orders from their employer and superiors in the
establishment.
4. Contractual Responsibilities:
• They must fulfill their obligations under the contract of apprenticeship.

B) Obligations of Graduate or Technician Apprentices

1. Conscientious and Diligent Learning:
• Apprentices are required to actively learn and engage in their specific field of engineering,
technology, or vocational course. This learning should be done conscientiously and
diligently at their training location.
2. Regular Attendance in Classes:
• They must regularly attend both practical and instructional classes. This ensures that they
acquire the necessary skills and knowledge associated with their field.
3. Compliance with Lawful Orders:
• Apprentices are obligated to follow all lawful orders given by their employer and the
superiors in their training establishment. This includes adhering to workplace rules,
regulations, and instructions related to their training and professional conduct.
4. Adherence to Contractual Obligations:
• They must fulfill all obligations outlined in their contract of apprenticeship. This includes
commitments related to the duration of training, the nature of the work, and other
conditions as stipulated in the contract.

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Prof Abhijeet C. Jaiswal
Section 15: Hours of Work, Overtime, Leave, and Holidays
1. Work Hours:
• The weekly and daily hours of work for an apprentice during practical training are
determined by the employer, but must align with any prescribed training durations.
2. Overtime Conditions:
• Apprentices cannot be required or allowed to work overtime unless approved by the
Apprenticeship Adviser.
• Approval for overtime is given only if it's beneficial for the apprentice's training or in the
public interest.
3. Leave and Holidays:
• Apprentices are entitled to the same leave and holidays as observed in the establishment
where they are undergoing training.
Apprentices as Trainees, Not Workers
• Status of Apprentices:
• Apprentices in designated trades are considered trainees, not workers.
• Thus, labor laws typically applicable to workers do not apply to apprentices.

Section 19: Records and Returns

1. Record Maintenance:
• Employers must maintain records of each apprentice's training progress in a prescribed
format.
2. Information and Returns:
• Until a dedicated government portal is developed, employers must furnish information
and returns in a prescribed form to the designated authorities at prescribed intervals.
3. Use of Portal Site:
• Once the government portal is developed, employers are required to report the trade-
wise requirement and engagement of apprentices for apprenticeship training on this
portal.
Section 20: Settlement of Disputes
1. Disagreement or Dispute Resolution:
• Any disagreement or dispute between an employer and an apprentice related to the
apprenticeship contract is referred to the Apprenticeship Adviser for a decision.

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Prof Abhijeet C. Jaiswal
2. Appeal Process:
• If either party is aggrieved by the Apprenticeship Adviser's decision, they can appeal to
the Apprenticeship Council within 30 days of the decision’s communication.
• The appeal is heard and determined by a Committee appointed by the Apprenticeship
Council.
• The Committee's decision, and subject to that, the Apprenticeship Adviser's decision, are
final.
Section 21: Holding of Test and Grant of Certificate and Conclusion of Training
1. Trade Apprentice Test:
• Every trade apprentice who completes their training can take a proficiency test.
• The test is conducted by the National Council or another agency authorized by the Central
Government.
• It assesses proficiency in the designated trade.
2. Certificate of Proficiency for Trade Apprentices:
• Trade apprentices who pass this test are awarded a proficiency certificate by the National
Council or the authorized agency.
3. Assessment of Graduate or Technician Apprentices:
• The progress of graduate or technician apprentices is periodically assessed by the
employer.
4. Certificate for Graduate or Technician Apprentices:
• Graduate or technician apprentices who satisfactorily complete their training receive a
proficiency certificate from the concerned Regional Board.

Section 22: Offer and Acceptance of Employment

1. Employer's Policy for Recruiting Apprentices:
• Under Section 22(1), every employer is required to have a policy for recruiting apprentices
who have completed their apprenticeship training in their establishment.
2. Conditions for Post-Apprenticeship Employment:
• Section 22(2) addresses situations where the apprenticeship contract includes a condition
that the apprentice will serve the employer after successful training.
• In such cases, the employer must offer suitable employment to the apprentice upon
completion of training.

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Prof Abhijeet C. Jaiswal
• The apprentice, in turn, is obligated to serve the employer as per the contract's terms.

• If the Apprenticeship Adviser deems the period or remuneration in the contract

unreasonable, they can revise it to make it reasonable. The revised terms are considered
the agreed terms.
Authorities under the Act
The Act establishes several authorities, each with specific roles and affiliations:
1. National and Central Councils:
• The National Council
• The Central Apprenticeship Council
2. State-Level Councils:
• The State Council
• The State Apprenticeship Council
• Affiliation: State Councils are affiliated with the National Council, and State Apprenticeship
Councils are affiliated with the Central Apprenticeship Council.
3. Educational and Regional Authorities:
• The All India Council
• The Regional Boards
• The Boards or State Councils of Technical Education
• Affiliation: These bodies are affiliated with the Central Apprenticeship Council.
4. Advisory Positions:
• The Central Apprenticeship Adviser
• The State Apprenticeship Adviser
5. Functions and Assignments:
• Each authority performs functions assigned by the Act or the Government.
• State Councils also perform functions assigned by the National Council.
• State Apprenticeship Councils and the Boards or State Councils of Technical Education
perform functions assigned by the Central Apprenticeship Council.

Section 30: Offences and Penalties

1. Non-Compliance with Apprentice Engagement Requirements:

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Prof Abhijeet C. Jaiswal
• If an employer does not engage the required number of apprentices as stipulated by the

Act, they are issued a month's written notice. This notice is provided by an officer
authorized by the appropriate Government.
• The purpose of the notice is to ask the employer to explain why they have not complied
with the apprenticeship engagement requirements.
2. Penalties for Non-Compliance:
• If the employer either fails to respond to this notice within the specified period or the
authorized officer is not satisfied with the explanation provided, penalties are imposed.
• The fine for such non-compliance is:
• INR 500 for each shortfall of the required apprenticeship month for the first three
months.
• INR 1000 per month for each shortfall thereafter until the required number of
apprentices are engaged.
3. Violations by Employers or Others:
• The Act specifies several violations, including:
• (a) Refusing or neglecting to furnish required information or returns, or providing
false information.
• (b) Refusing or neglecting to allow authorized inspections or inquiries.
• (c) Requiring an apprentice to work overtime without approval from the
Apprenticeship Adviser.
• (d) Employing an apprentice in work unrelated to their training.
• (e) Paying an apprentice on a piece-work basis or involving them in output bonus
or incentive schemes.
• (f) Engaging someone as an apprentice who is not qualified.
• (g) Failing to fulfill the terms of the apprenticeship contract.
Penalties for Violations:
• Employers or others committing any of these offenses are subject to a fine of INR 1000 for
each occurrence.
4. Exemption for Certain Establishments:
• Subsection (2A) provides that the penalties outlined in this section do not apply to
establishments or industries under the Board for Industrial and Financial Reconstruction
as established by the Sick Industrial Companies (Special Provisions) Act, 1985.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 19-VI: Social Security Legislations
Unit VI – Labour Laws (Simplification of Procedure for
Furnishing Returns and Maintaining Registers by Certain
Establishments) Act, 1988

Overview of the Act

• Purpose: The Act aims to exempt employers, particularly of smaller establishments, from the
burden of furnishing returns and maintaining registers under certain labor laws. It applies across
India.

Introduction and Amendments

• 1988 Act: The original act focused on simplifying procedures for small establishments in terms of
compliance with labor laws.
• 2014 Amendment: This amendment further simplified procedures and expanded the scope of the
Act.

Key Features of the 2014 Amendment

1. Expansion of Coverage:
• From 19 to 40 Workers: The amended Act increases the coverage from establishments
employing up to 19 workers to those with up to 40 workers. This expansion allows more
small and medium-sized establishments to benefit from the simplified procedures.
2. Inclusion of Additional Labour Acts:
• 7 More Labour Acts: The amendment brought seven more labor laws under the purview
of this Act, broadening the scope of exemptions and simplifications provided.
3. Option for Electronic Maintenance and Filing:
• Digital Compliance: Establishments now have the option to maintain registers
electronically and file returns electronically. This change aligns with modern business
practices and technology usage, making compliance easier and more efficient.
4. Ease of Compliance and Enforcement:

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Prof Abhijeet C. Jaiswal
• Simplified Processes: By allowing electronic maintenance and filing, the Act reduces the

administrative burden on employers, particularly small and medium-sized enterprises.

• Better Enforcement: Electronic systems can also facilitate better enforcement of labor
laws due to improved record-keeping and accessibility.

Impact of the Act

• Support for Small Businesses: The Act, especially with the 2014 amendment, supports small
businesses by reducing the regulatory burden, thereby encouraging compliance and simplifying
administrative processes.
• Alignment with Technological Advancements: The move towards electronic systems reflects a
modern approach to labor law compliance, making the process more streamlined and less
cumbersome for both employers and regulatory authorities.

Establishment has the meaning assigned to it in a Scheduled Act, and includes —

(i) an “industrial or other establishment” as defined in Sec. 2 of the Payment of Wages Act, 1936 ;
(ii) a “factory” as defined in Sec. 2 of the Factories Act, 1948 ;
(iii) a factory, workshop or place where employees are employed or work is given out to workers, in any
scheduled employment to which the minimum wages Act, 1948 , applies.
(iv) a “plantation” as defined in Sec. 2 of the Plantations Labour Act, 1951; and
(v) a “newspaper establishment” as defined in Sec. 2 of the Working Journalists and other Newspaper
Employees (conditions of Service) and Miscellaneous Provisions Act, 1955{Section 2 (b)}.

FROM
1. Form I - Annual Return:
• Purpose: This form is used for compiling and submitting an annual return.
• Submission: It must be furnished to the Inspector or the designated authority as per the
respective Scheduled Act.
• Deadline: The submission deadline is typically set before the 30th of April of the following
year.
2. Form II - Register of Persons Employed-Cum-Employment Card:

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Prof Abhijeet C. Jaiswal
• Content: This form serves as a register to record the details of persons employed in the

establishment.
• Dual Function: It often doubles as an employment card, providing a record of employment
for each individual worker.
3. Form III - Muster Roll-Cum-Wage Register:
• Purpose: This form combines the functions of a muster roll and a wage register.
• Muster Roll Component: It keeps a record of the attendance of the employees.
• Wage Register Component: It documents the wages paid to the employees.

Definition of "Scheduled Act" and List of Acts in the First Schedule

Definition of "Scheduled Act"
• Meaning: In Indian labor law, a "Scheduled Act" refers to any Act that is listed in the First Schedule
of a relevant labor law statute.
• Scope: It encompasses the Act itself and any rules made under it.
• Application: The Act must be in force at the commencement of the principal Act and applicable
generally in the territories to which it extends.
List of Acts in the First Schedule
The First Schedule specifies sixteen different Acts, each addressing various aspects of labor and
employment laws. These are:
1. The Payment of Wages Act, 1936: Governs the payment of wages to certain classes of employed
persons.
2. The Weekly Holidays Act, 1942: Pertains to the granting of weekly holidays to persons employed
in shops, restaurants, and theaters.
3. The Minimum Wages Act, 1948: Ensures that minimum wages are paid to employees in certain
types of employment.
4. The Factories Act, 1948: Deals with labor welfare in factories, including working hours, health,
safety, and other working conditions.
5. The Plantations Labour Act, 1951: Covers labor issues specific to plantation workers.
6. The Working Journalists and other Newspaper Employees (Conditions of Service) and
Miscellaneous Provisions Act, 1955: Addresses employment conditions for newspaper
employees.

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Prof Abhijeet C. Jaiswal
7. The Motor Transport Workers Act, 1961: Regulates employment conditions for motor transport
workers.
8. The Payment of Bonus Act, 1965: Concerns the payment of bonuses to employees in certain
establishments.
9. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966: Focuses on the employment
conditions of workers in the beedi and cigar industries.
10. The Contract Labour (Regulation and Abolition) Act, 1970: Regulates the employment of contract
labor and aims to abolish it in certain circumstances.
11. The Sales Promotion Employees (Conditions of Service) Act, 1976: Deals with the service
conditions of sales promotion employees.
12. The Equal Remuneration Act, 1976: Seeks to provide for equal remuneration to men and women
workers and to prevent gender discrimination.
13. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act,
1979: Protects the rights of migrant workers.
14. The Dock Workers (Safety, Health and Welfare) Act, 1986: Focuses on the safety, health, and
welfare of dock workers.
15. The Child Labour (Prohibition and Regulation) Act, 1986: Prohibits the employment of children
in certain types of occupations and regulates the conditions of work of children in other
occupations.
16. The Building and Other Construction Workers (Regulation of Employment and Conditions of
Service) Act, 1996: Pertains to the employment conditions and welfare of construction workers.

Definitions and Regulations for Small and Very Small Establishments

Definitions
1. Small Establishment:
• Size Criteria: An establishment where at least ten but not more than forty persons are
employed, or were employed on any day of the preceding twelve months.
2. Very Small Establishment:
• Size Criteria: An establishment where no more than nine persons are employed, or were
employed on any day of the preceding twelve months.

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Prof Abhijeet C. Jaiswal
Exemption from Furnishing or Maintaining Returns and Registers
• Scope of Exemption (Section 4(1)):
• Under the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by
certain Establishments) Amendment Act, 2014, small and very small establishments are
exempt from furnishing certain returns or maintaining certain registers required under
Scheduled Acts.
• Conditions for Exemption:
• For Small Establishments:
• They must furnish an annual return in Form I.
• They need to maintain registers in Form II and Form III at the work spot.
• For Very Small Establishments:
• They are required to maintain only a register in Form III at the work spot.
• Continued Obligations:
• Despite these exemptions, employers in these establishments must still:
• Issue wage slips as prescribed in the Minimum Wages (Central) Rules, 1950 under
the Minimum Wages Act, 1948.
• Issue slips for piece-rated workers under the Payment of Wages (Mines) Rules,
1956 as per the Payment of Wages Act, 1936.
• File returns relating to accidents as required under the Factories Act, 1948 and
the Plantations Labour Act, 1951.

Maintaining of Returns and Registers in Electronic Form and Penalties for Non-Compliance
Electronic Maintenance of Records (Section 4(2))
1. Forms and Records in Electronic Format:
• Employers are permitted to maintain the annual return in Form I, registers in Forms II and
III, wage slips, wage books, and other records in either physical form or electronically (e.g.,
computer, floppy, diskette, or other electronic media).
2. Availability of Printouts:
• In cases where records are maintained electronically, employers must provide printouts
of these returns, registers, books, and records, or portions thereof, to the Inspector upon
demand.

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Prof Abhijeet C. Jaiswal
Electronic Submission of Returns (Section 4(3))
Method of Furnishing Annual Returns:
• The annual return in Form I can be furnished to the Inspector or other authorized
authority either in physical form or via electronic mail, provided the Inspector or authority
has the capability to receive such electronic communications.

Penalties for Non-Compliance (Section 6)

1. Penalties for First Conviction:
• An employer who fails to comply with the provisions of the Act is subject to a fine that
may extend to INR 5,000 upon the first conviction.
2. Penalties for Subsequent Convictions:
• For second or subsequent convictions, penalties include imprisonment for a period
ranging from one month to six months, a fine not less than INR 10,000 but which may
extend to INR 25,000, or both.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
LESSON 20: Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
Regulatory Framework:
1. Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013:
This Act is the primary legal framework for addressing sexual harassment of women at the
workplace in India. It provides for the prevention, prohibition, and redressal of complaints related
to sexual harassment.
2. Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Rules,
2013: These rules accompany the Act and provide further details and guidelines for its
implementation.
History of the Legislation:
1. Recognition of the Issue: Sexual harassment of women in the workplace is recognized as a serious
concern with psychological and health effects, including stress, depression, anxiety, shame, and
guilt.
2. Constitutional Rights: Sexual harassment is seen as a violation of fundamental rights guaranteed
to women under the Constitution of India, including the right to equality (Articles 14 and 15), the
right to life and dignity (Article 21), and the right to practice any profession or occupation in a safe
environment free from harassment.
3. Vishaka Judgment: The landmark judgment of Vishaka v. State of Rajasthan in 1997 by the
Supreme Court of India recognized workplace sexual harassment. In this case, the Supreme Court
issued guidelines and directions to the Union of India, calling for the enactment of an appropriate
law to combat workplace sexual harassment.
4. Vishaka Guidelines: In the absence of a specific law, the Vishaka Judgment mandated that every
employer establish mechanisms to address workplace sexual harassment, based on the Vishaka
Guidelines. These guidelines were followed by employers until the enactment of the Sexual
Harassment of Women at Workplace Act in 2013.

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Prof Abhijeet C. Jaiswal
The Vishaka Judgment is a significant legal milestone in India's efforts to address workplace sexual
harassment and ensure the safety and dignity of working women. Here are the key points related to the
Vishaka Judgment:
1. Background of the Case: The Vishaka Judgment is rooted in the case of Bhanwari Devi, a dalit
woman working with the rural development program of the Government of Rajasthan. She was
subjected to a brutal gang rape in 1992 due to her efforts to combat child marriage. This incident
brought to light the dangers faced by working women and the need for protective measures.
2. Public Interest Litigation: Women's rights activists and lawyers filed a public interest litigation (PIL)
in the Supreme Court of India under the banner of Vishaka. The aim was to advocate for the rights
and safety of working women in the country.
3. Recognition of Legislative Inadequacy: The Supreme Court, in the Vishaka Judgment,
acknowledged the lack of adequate legislation to address workplace sexual harassment and
recognized it as a violation of human rights.
4. International Framework: The Supreme Court based its judgment on international conventions,
particularly the Convention on the Elimination of All Forms of Discrimination Against Women
(CEDAW), which India had signed and ratified. This helped establish the need for comprehensive
measures to combat sexual harassment.
5. Vishaka Guidelines: The Vishaka Judgment led to the formulation of the Vishaka Guidelines, which
were issued under Article 32 of the Constitution. These guidelines were deemed to have the force
of law until a legislative framework on the subject was enacted.
6. Definition of Sexual Harassment: The Vishaka Judgment provided a comprehensive definition of
sexual harassment, which includes various forms of unwelcome sexually determined behavior.
This behavior can encompass physical contact, demands for sexual favors, sexually colored
remarks, showing pornography, and any other unwelcome physical, verbal, or non-verbal conduct
of a sexual nature.
7. Mandatory Compliance: Organizations, both in the private and government sectors, were
required to mandatorily follow the Vishaka Guidelines to prevent and address sexual harassment
at the workplace

Definition of Sexual Harassment:

• Sexual harassment in the workplace includes unwelcome sexually determined behavior, which
may involve:

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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 nonverbal conduct of a sexual nature.
• The circumstances under which these acts are committed must create a reasonable apprehension
of humiliation or a health and safety problem in relation to the victim's employment.
2. Vishaka Judgment (1997):
• The Vishaka Judgment was a landmark decision by the Supreme Court of India in 1997.
• It recognized workplace sexual harassment as a human rights violation.
• The court issued guidelines known as the "Vishaka Guidelines" that were mandatory for employers
to follow until a legislative framework was established.
• The Vishaka Guidelines required employers to provide mechanisms for addressing workplace
sexual harassment.
3. Apparel Export Promotion Council v. A.K Chopra (1999):
• In this case, the Supreme Court reiterated the principles of the Vishaka Judgment.
• It clarified that physical contact was not necessary for an act to be considered sexual harassment.
• Sexual harassment could include unwelcome advances, requests for sexual favors, or any conduct
with sexual overtones that interferes unreasonably with the victim's work.
4. Legislative Efforts:
• Several bills related to preventing sexual harassment were introduced in Parliament over the
years.
• The Protection of Women against Sexual Harassment at Workplace Bill, 2007, was introduced but
not enacted.
• The Protection of Women against Sexual Harassment at Workplace Bill, 2010, later became the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Bill, 2013.
5. Medha Kotwal Lele Case:
• In Medha Kotwal Lele vs. Union of India (2013), the Supreme Court emphasized the need for the
effective implementation of the Vishaka Guidelines.
• It required state governments to make necessary amendments to rules and regulations within two
months.

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• Various professional bodies and institutions were directed to ensure compliance with the Vishaka

Guidelines.

6. Enactment of POSH Act (2013):

• The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
(POSH Act), was enacted in 2013.
• It comprehensively addressed workplace sexual harassment.
• The POSH Act came into force on December 9, 2013, with the government also notifying the
accompanying Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Rules, 2013.
7. Criminal Law Amendment Act (2013):
• In 2013, the Criminal Law (Amendment) Act was enacted, criminalizing various offenses, including
sexual harassment, stalking, and voyeurism.

OBJECTIVE OF THE ACT:

• The primary objective of the Act is to prevent and protect women against workplace sexual
harassment.
• It aims to provide mechanisms for the effective redressal of complaints of sexual harassment in
the workplace.
2. Preamble of the Act:
• The Preamble of the Act states its purpose and the recognition of fundamental rights of women:
• It acknowledges that sexual harassment violates the fundamental rights of women,
including the right to equality under Articles 14 and 15 of the Indian Constitution, the right
to life and to live with dignity under Article 21, and the right to practice any profession,
occupation, trade, or business in a safe environment free from sexual harassment.
• It recognizes that protection against sexual harassment and the right to work with dignity
are universally recognized human rights, as enshrined in international conventions such
as the Convention on the Elimination of all Forms of Discrimination against Women
(CEDAW), which India ratified on June 25, 1993.

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• It states that the Act aims to give effect to the CEDAW and protect women against sexual

harassment at the workplace.

3. Definition of Workplace Sexual Harassment:
• Workplace sexual harassment is described as:
• Sexual: Involving sexual advances, requests for sexual favors, or conduct with sexual
overtones.
• Unwelcome: Actions that are not consensual or are not desired by the recipient.
• Subjective: The experience of harassment is based on the perception and feelings of the
person experiencing it, regardless of the harasser's intent.
• Impact Matters: What matters is the impact on the victim, not the intent of the harasser.
• Power Dynamics: Sexual harassment often occurs within a power dynamic, where one
party holds power over the other.
• The Act recognizes that workplace sexual harassment creates an insecure and hostile environment
for women. It not only affects their performance at work but also hinders their social and
economic growth, causing physical and emotional suffering.

Forms of Workplace Sexual Harassment:

1. Quid Pro Quo: This form of sexual harassment involves the implied or explicit promise of
preferential or detrimental treatment in employment. It can include offers of benefits or threats
related to a person's present or future employment status. For example, a supervisor may suggest
that a promotion or job security is contingent on the victim's compliance with sexual advances.
2. Hostile Work Environment: Creating a hostile work environment is another form of workplace
sexual harassment. It entails behaviors or actions that make the work environment intimidating,
offensive, or hostile. Such behavior can include humiliating treatment that affects the victim's
physical or mental health or safety. It creates an atmosphere where the victim feels
uncomfortable, unsafe, or degraded.
Applicability of the Act:
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 applies
broadly across various sectors and settings in India:

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• Organized and Unorganized Sectors: The Act covers both the organized and unorganized sectors.

It extends to self-employed individuals or workplaces with fewer than 10 workers, ensuring a wide
range of workplaces are included.
• Government and Private Sectors: The Act applies to government bodies as well as private and
public sector organizations, ensuring that both government and corporate workplaces are
covered.
• Non-Governmental Organizations (NGOs): NGOs are also subject to the Act's provisions,
highlighting the importance of addressing sexual harassment in the non-profit sector.
• Various Types of Organizations: The Act applies to organizations involved in commercial,
vocational, educational, entertainment, industrial, financial, healthcare, and other activities. It
covers a diverse range of workplaces, from factories and offices to hospitals, educational
institutions, sports facilities, and entertainment venues.
• Dwelling Places: The Act also extends its protection to dwelling places or houses, recognizing that
harassment can occur in residential settings as well.

DEFINITIONS (SECTION 2)
“Aggrieved woman” [Section 2(a)]
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 a dwelling place or house, a woman of any age who is employed in such a dwelling place
or house.
The Act recognizes that all women, regardless of their age, employment status, or the type of workplace
they are associated with, have the right to a safe and harassment-free environment. This includes women
working on various employment terms, such as regular employees, temporary workers, ad-hoc staff, or
those working on a daily wages basis. The Act also covers women working directly or through
intermediaries, including contractors, with or without the knowledge of the principal employer. It
encompasses women working for remuneration, on a voluntary basis, or in any other capacity. The Act's
protection extends to various work-related categories, including co-workers, contract workers,
probationers, trainees, apprentices, or individuals referred to by different names.

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Appropriate Government” [Section 2(b)]
means —
i. in relation to a workplace which is established, owned, controlled or wholly or substantially financed by
funds provided directly or indirectly —
a. by the Central Government or the Union territory administration, the Central Government;
b. by the State Government, the State Government
ii. in relation to any workplace not covered under sub-clause (i) and falling within its territory, the State
Government; i.e. for the private sector, appropriate Government is the concerned State Government.

“Domestic worker” [Section 2(e)]

means l a woman who is employed to do the 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 fuIl time
basis; l but does not include any member of the family of the employer.

“Employee” [Section 2(f)]

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.

Employer
1. Government and Local Authorities: In the context of any department, organization, undertaking,
establishment, enterprise, institution, office, branch, or unit of the appropriate Government or a
local authority, the "employer" refers to the head of that entity or any other officer designated by
the appropriate Government or local authority through an official order. This includes government
departments and organizations.
2. Non-Governmental Workplaces: For workplaces that are not covered by the government or local
authorities, the "employer" is any person who holds responsibility for the management,
supervision, and control of the workplace. The term "management" also includes individuals or

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boards or committees responsible for formulating and administering policies within the
organization.
3. Contractual Obligations: In workplaces covered under both government/local authorities and
non-government entities, the "employer" is the person who is fulfilling contractual obligations
concerning their employees. This includes individuals or entities responsible for employment
contracts and relations.
4. Domestic Workers: In the context of a dwelling place or house, where domestic workers are
employed, the "employer" refers to the person or household that employs or benefits from the
employment of domestic workers. This definition applies regardless of the number of domestic
workers employed, the duration of their employment, the type of work they perform, or the
specific nature of their tasks.

“Respondent” Section 2(m)

means a person against whom the aggrieved woman has made a complaint under section 9.

“Sexual harassment” [Section 2(n)]

includes any one or more of the following unwelcome acts or behaviour (whether directly or by
implication) namely: –
i. physical contact and advances; or
ii. a demand or request for sexual favours; or
iii. making sexually coloured remarks; or
iv. showing pornography; or
v. any other unwelcome physical, verbal or non-verbal conduct of sexual nature.

This definition encompasses various forms of sexual conduct, whether direct or implied, involving physical,
verbal, or written actions. The defining characteristic is that such conduct is unwanted and unwelcome by
the recipient. Additionally, the definition includes the creation of an intimidating, offensive, or hostile
working environment as a form of sexual harassment. Here's a breakdown of the key elements of the
definition:
1. Unwanted and Unwelcome Conduct: Sexual harassment, as per the Act, refers to any conduct of
a sexual nature that is not desired or welcomed by the person subjected to it. This ensures that

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the focus is on the recipient's perspective, and any conduct that makes an individual
uncomfortable can be considered harassment.
2. Implied or Explicit Promises or Threats: The Act goes further to specify that sexual harassment
may involve implied or explicit promises of preferential treatment in the victim's employment or
threats of detrimental treatment in their employment. These promises or threats can pertain to
both present and future employment status.
3. Interference with Work: Any conduct that interferes with the victim's ability to perform their work
or creates an intimidating, offensive, or hostile work environment is considered sexual
harassment. This aspect emphasizes the impact of such conduct on the victim's professional life.
4. Humiliating Treatment: The Act recognizes that humiliating treatment, which may affect the
victim's health or safety, can also constitute sexual harassment. This provision highlights that
sexual harassment extends beyond mere verbal or physical advances and includes any behavior
that results in humiliation.

1. Government or Local Authority Establishments: This category covers any department,

organization, undertaking, establishment, enterprise, institution, office, branch, or unit that is
established, owned, controlled, or financed, either directly or indirectly, by funds provided by the
appropriate Government or local authority. It also extends to those funded by Government
companies, corporations, or cooperative societies. In essence, it includes government-owned or
funded entities.
2. Private Sector Organizations: The Act does not limit its scope to government entities alone. It also
encompasses private sector organizations, private ventures, undertakings, enterprises,
institutions, establishments, societies, trusts, non-governmental organizations, units, or service
providers. These entities can be involved in various activities, such as commercial, professional,
vocational, educational, entertainment, industrial, health services, or financial activities, including
production, supply, sale, distribution, or services.
3. Healthcare Facilities: Hospitals and nursing homes are explicitly included within the definition of
a workplace. This recognizes that healthcare settings can also be venues where instances of sexual
harassment may occur.
4. Sports Institutions and Venues: The Act extends its coverage to sports institutes, stadiums, sports
complexes, competition or games venues, whether residential or not. This includes places used

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for training, sports, or other activities related to sports. The aim is to ensure the safety and
protection of individuals engaged in sports-related activities.
5. Journeys Arising Out of Employment: Any place visited by an employee during the course of
employment, including transportation provided by the employer for such journeys, is considered
part of the workplace. This provision takes into account situations where employees may be
required to travel for work-related purposes.
6. Dwelling Places or Houses: Even dwelling places or houses are covered under the definition of a
workplace. This inclusion recognizes that domestic workers may also be vulnerable to sexual
harassment in private residences

Interpretation of "Workplace" under the POSH Act:

Case Study: Saurabh Kumar Mallick v. Comptroller & Auditor General of India (WP(C) No. 8649/2007):
Facts: In this case, Mr. Saurabh Kumar Mallick, a government official, faced allegations of sexually harassing
a senior woman officer. The alleged misconduct did not occur within the office premises but took place at
an official mess where the woman officer was residing.
Legal Interpretation: The key issue in this case was the interpretation of the term "workplace" as defined
under the POSH Act. The Act provides an inclusive definition of "workplace," covering a wide range of
settings where employment-related activities occur. However, the question was whether a residential
facility like an official mess could be considered part of the workplace.
Court's Decision: The Delhi High Court emphasized the need for a logical and comprehensive
interpretation of the term "workplace." It rejected the narrow argument that "workplace" should be
limited to the physical office premises. Instead, the court considered several factors in determining
whether an act could be categorized as occurring in the workplace:
1. Proximity: The court considered the proximity of the location to the primary office or workplace.
In this case, the official mess was in close proximity to the workplace.
2. Management Control: It examined whether the management had control over the location where
the alleged harassment occurred. If the management had authority over the place, it could be
deemed an extension of the workplace.
3. Extension of the Workplace: The court determined whether the residential facility, in this case,
the official mess, could be considered an extension or contiguous part of the working place.
Conclusion: The Delhi High Court held that the official mess where the employee was alleged to have been
sexually harassed fell within the definition of "workplace." The court emphasized that the objective of the

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POSH Act and the Vishaka Guidelines was to prevent sexual harassment of working women
comprehensively. It acknowledged the impact of modern work trends, such as remote work and virtual
interactions, and affirmed that acts of sexual harassment should not go unpunished merely because they
occurred outside the physical office premises.

“Unorganised sector” in relation to a workplace means an enterprise owned by individuals or self-

employed workers and engaged in the production or sale of goods or providing service of any kind
whatsoever, and where the enterprise employs workers, the number of such workers is less than ten.

COMPLAINTS COMMITTEE
The Act provides for two kinds of complaints mechanisms:
(i) Internal Complaints Committee (ICC); and
(ii) Local Complaints Committee (LCC).

Mandatory Constitution of Internal Complaints Committee (ICC):

• Every employer at a workplace must, through a written order, establish an ICC known as the
"Internal Complaints Committee."
• If the workplace has offices or administrative units located at different places or at divisional or
sub-divisional levels, an ICC must be constituted at all such administrative units or offices.
2. Composition of the ICC: The Internal Complaints Committee shall consist of the following members
nominated by the employer:
a. Presiding Officer: The ICC must have a Presiding Officer who is a woman employed at a senior level
within the workplace. However, if a senior-level woman employee is not available, the Presiding Officer
may be nominated from other offices or administrative units of the workplace.
b. Members: There should be not less than two Members from among the employees. Preferably, these
members should be individuals committed to the cause of women or those with experience in social work
or legal knowledge.
c. External Member: The ICC should include one external member who can be from non-governmental
organizations or associations dedicated to women's issues, or a person well-versed in matters related to
sexual harassment.
• It is important to note that at least one-half of the total members nominated for the ICC must be
women, emphasizing gender diversity within the committee.

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3. Tenure of Office:
• The Presiding Officer and every Member of the ICC shall serve for a period not exceeding three
years from the date of their nomination, as specified by the employer.
4. Fees of External Members:
• The Member appointed from non-governmental organizations or associations shall be entitled to
receive fees or allowances for their participation in the proceedings of the Internal Committee.
The specific fees and allowances will be determined and prescribed by the employer.
5. Casual Vacancy in the Office of Presiding Officer or Any Member of the ICC:
• In case of a casual vacancy occurring in the office of the Presiding Officer or any Member of the
ICC due to specific circumstances, such as contravention of the Act, conviction for an offense,
pending inquiry or disciplinary proceedings, or abuse of their position prejudicial to public interest,
the concerned Presiding Officer or Member shall be removed from the Committee.
• Any vacancy, whether casual or otherwise, shall be filled through a fresh nomination process in
accordance with the provisions outlined in this section.
In a case (Vidya Akhave v. Union of India and Ors, Writ Petition 796 of 2015) heard by the Bombay High
Court, the Court ruled that it would refrain from interfering with an order of punishment issued by the
Internal Complaints Committee in relation to a sexual harassment complaint unless the order is found to
be shockingly disproportionate. This underscores the importance of the ICC's role in addressing complaints
and ensuring that the outcomes are just and fair.

Constitution of Local Complaints Committee (LCC)

• LCC is established at the district level.
• LCC deals with complaints of sexual harassment in the unorganized sector and cases where the
ICC hasn't been formed (usually due to fewer than 10 employees) or if the complaint is against the
employer.
• LCC is crucial for addressing issues like domestic worker harassment or complaints against
employers.
• Governed by Sections 5 and 6 of the Act.
• Appropriate Government designates a District Officer (e.g., District Magistrate, Collector, Deputy
Collector) to oversee LCC's functions.
Composition and Jurisdiction of LCC

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• District Officer forms the "Local Committee" in the respective district.

• Nodal officers are designated in rural, tribal areas, wards, or municipalities to receive complaints
and forward them to the Local Committee within seven days.
• LCC's jurisdiction covers areas within the district where it operates.
Section 5 - Notification of District Officer
• The Appropriate Government appoints District Officers to execute functions under the Act.
Section 6 - Constitution and Jurisdiction of Local Committee
• District Officers establish Local Committees in their districts.
• Nodal officers are designated in different areas to receive and forward complaints to the Local
Committee.
Composition (Section 7(1)):
• The Local Committee is formed by the District Officer and consists of the following members:
a. Chairperson: An eminent woman dedicated to social work and women's causes.
b. One Member from women working in the local area.
c. Two Members, with at least one woman, from non-governmental organizations or individuals
knowledgeable about sexual harassment issues, with a preference for those with legal
backgrounds.
d. Ex officio Member: The officer responsible for social welfare or women and child development
in the district.
Tenure and Removal (Section 7(2)):
• Chairperson and Members serve for a specified period, not exceeding three years, as determined
by the District Officer.
• Removal from the Committee occurs if a member:
a. Contravenes Section 16.
b. Is convicted of an offense or faces pending inquiries under any law.
c. Is found guilty in disciplinary proceedings or has pending disciplinary actions.
d. Abuses their position in a manner detrimental to public interest.
Fees and Allowances (Section 7(3)):
• Chairperson and Members (except those nominated under clauses b and d of subsection 1) are
entitled to prescribed fees or allowances for their service on the Local Committee.

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Grants and Audit (Section 8):
• The Central Government can allocate funds to the State Government for the purpose of paying
fees and allowances to the members of the Local Committee (as per Section 7).
• The State Government has the authority to establish an agency to manage and disburse the grants
received from the Central Government.
• This agency is responsible for transferring the necessary funds to the District Officer to cover the
expenses related to the Local Committee.
• The accounts of this agency must be maintained and audited in a manner determined through
consultation with the Accountant General of the State.
• The person responsible for the agency's accounts must submit the audited accounts, along with
the auditor's report, to the State Government by a prescribed deadline.

Filing a Complaint of Sexual Harassment (Section 9):

1. Complaint Deadline: An aggrieved woman can file a written complaint of sexual harassment at
the workplace to the Internal Committee (if constituted) or the Local Committee (if not
constituted) within three months from the date of the incident. If there is a series of incidents, the
complaint should be filed within three months from the date of the last incident. If the woman is
unable to file a written complaint, the committee members must assist her in doing so. The
Internal Committee or the Local Committee can extend this time limit for up to three months if
there are valid reasons preventing the woman from filing the complaint within the specified
period.
2. Complaint by Legal Heir: If the aggrieved woman is unable to file a complaint due to physical or
mental incapacity, death, or other reasons, her legal heir or a prescribed representative can file a
complaint on her behalf.
3. Prompt Reporting: Swift reporting of sexual harassment incidents is crucial, and prompt
complaints are considered more authentic.
4. Anonymous Complaints: The Act does not typically accept anonymous complaints. Complaints
should be made with the identity of the complainant disclosed.
5. Content of Complaint: The written complaint should include a detailed description of each
incident, including dates, times, locations, the names of the respondents, and the working
relationship between the parties. If the complainant requests assistance in writing the complaint,
a designated person in the workplace must provide the necessary help.

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6. Importance of Swift Action: Timely reporting and action are essential for addressing workplace
sexual harassment effectively.

CONCILIATION (SECTION 10):

1. Conciliation Process: The Internal Committee or the Local Committee, upon the request of the
aggrieved woman, can attempt to settle the matter between her and the respondent through
conciliation. However, it's important to note that no monetary settlement can be the basis of
conciliation.
2. Recording of Settlement: If a settlement is reached through conciliation, the Internal Committee
or the Local Committee will record the details of the settlement and forward it to the employer or
the District Officer. The settlement is then acted upon as per the specified recommendation.
Copies of the recorded settlement are provided to both the aggrieved woman and the respondent.
3. No Further Inquiry: If a settlement is successfully reached through conciliation, no further inquiry
is conducted by the Internal Committee or the Local Committee.
Inquiry into Complaint (Section 11):
1. Inquiry Procedure: The Internal Committee or the Local Committee (in the case of a domestic
worker) proceeds to conduct an inquiry into the complaint in accordance with the service rules
applicable to the respondent if the respondent is an employee. If no such rules exist, the inquiry
is conducted as prescribed or in a manner specified. For domestic workers, if a prima facie case
exists, the complaint is forwarded to the police for registering a case under Section 509 of the
Indian Penal Code and other relevant provisions where applicable.
2. Non-Compliance with Settlement: If the aggrieved woman informs the Internal Committee or the
Local Committee that the respondent has not complied with any term or condition of the
settlement reached through conciliation (as per Section 10(2)), the committee proceeds to make
an inquiry into the complaint or forwards it to the police, depending on the situation.
3. Opportunity to Be Heard: In cases where both parties involved are employees, they are given an
opportunity to be heard during the inquiry process. A copy of the findings is made available to
both parties, allowing them to make representations against the findings before the Committee.
This ensures a fair and transparent inquiry process.
4. Court Order for Payment: In cases where the respondent is convicted of the offense under Section
509 of the Indian Penal Code, the court has the authority to order the payment of an appropriate

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sum by the respondent to the aggrieved woman. This order takes into consideration the provisions
of Section 15 of the Act.
5. Powers of ICC and LCC: The POSH Act grants the Internal Complaints Committee (ICC) and the
Local Complaints Committee (LCC) specific powers when conducting an inquiry into a complaint
of workplace sexual harassment. These powers are akin to those vested in a civil court under the
Code of Civil Procedure, 1908, when dealing with a lawsuit. The powers include:
• Summoning and enforcing the attendance of any person and examining them under oath.
• Requiring the discovery and production of documents.
• Dealing with any other matters that may be prescribed.
6. Timeframe for Inquiry: The Act stipulates that such an inquiry must be completed within a period
of ninety days. This time constraint ensures that investigations are conducted promptly and
efficiently.

Action during Pendency of Inquiry (Section 12):

1. Relief for the Aggrieved Woman: Section 12 of the Act outlines the relief that can be provided to
the aggrieved woman during the pendency of an inquiry into a sexual harassment complaint. Upon
a written request from the aggrieved woman, the Internal Committee or the Local Committee, as
applicable, may recommend to the employer to take one or more of the following actions:
• Transfer the aggrieved woman or the respondent to a different workplace.
• Grant leave to the aggrieved woman for a period of up to three months.
• Provide any other relief to the aggrieved woman as prescribed under the Act.
2. Additional Leave: Importantly, any leave granted to the aggrieved woman under this section is in
addition to any leave she would be otherwise entitled to.
3. Implementation of Recommendations: Once the Internal Committee or the Local Committee
makes such recommendations, the employer is obligated to implement them. Subsequently, the
employer must report the implementation of these recommendations to the Internal Committee
or the Local Committee, as appropriate. This ensures that the relief measures are effectively
carried out.
These provisions are designed to protect the aggrieved woman during the course of the inquiry and
provide her with necessary support and remedies.

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Inquiry Report (Section 13):
1. Submission of Findings: Section 13 of the Act outlines the procedure for submitting an inquiry
report after an investigation has been conducted by the Internal Committee or the Local
Committee. Upon completing the inquiry, the committee is required to provide a report of its
findings.
2. Timely Reporting: This report must be submitted within ten days from the date of completing the
inquiry. It emphasizes the importance of timely reporting.
3. No Finding of Harassment: If the Internal Committee or the Local Committee concludes that the
allegation against the respondent has not been proven, they are to recommend to the employer
and the District Officer that no further action is necessary.
4. Finding of Harassment: However, if the committee finds that the allegation has been proven, it
must recommend appropriate actions, which include:
• Treating sexual harassment as a misconduct in accordance with the applicable service
rules or, in the absence of such rules, as prescribed under the Act.
• Deducting an appropriate sum from the salary or wages of the respondent for payment
to the aggrieved woman or her legal heirs, as determined by the committee. This
deduction may be made even if it is not provided for in the respondent's service rules.
• If the respondent is absent from duty or no longer employed, the committee may direct
the respondent to make the payment directly to the aggrieved woman.
• If the respondent fails to make the payment, the Internal Committee or the Local
Committee can forward an order for the recovery of the sum as arrears of land revenue
to the concerned District Officer.
5. Timely Action: The employer or the District Officer is obligated to act upon these
recommendations within sixty days of receiving the report. This ensures that appropriate actions
are taken promptly in cases of proven sexual harassment.

Punishment for False or Malicious Complaint and False Evidence (Section 14):
1. False or Malicious Complaint: Section 14 of the Act establishes strict provisions to address false
or malicious complaints. If the Internal Committee or the Local Committee concludes that the
complaint against the respondent is malicious or that the aggrieved woman or anyone making the
complaint knowingly filed a false complaint, it may recommend action against the person who

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made the false complaint. This action is to be taken by the employer or the District Officer, as
applicable, following the service rules or prescribed procedures.
2. Proof Required: It is important to note that merely being unable to substantiate a complaint or
provide sufficient proof will not be grounds for taking action against the complainant. To establish
malicious intent on the part of the complainant, an inquiry following prescribed procedures is
necessary before any action can be recommended.
3. False Evidence: In cases where during the inquiry, a witness provides false evidence or produces
forged or misleading documents, the Internal Committee or the Local Committee may recommend
action against the witness. This action is to be taken by the employer of the witness or the District
Officer, following the service rules or prescribed procedures.
Determining Compensation (Section 15):
1. Factors Considered: Section 15 outlines the factors that should be considered when determining
the compensation to be paid to the aggrieved woman. These factors include:
• The mental trauma, pain, suffering, and emotional distress experienced by the aggrieved
woman.
• Loss of career opportunities resulting from the incident of sexual harassment.
• Medical expenses incurred by the victim for physical or psychiatric treatment.
• The income and financial status of the respondent (the accused).
• Feasibility of making the payment in a lump sum or in installments.
This provision ensures that compensation takes into account the various aspects of harm and loss
experienced by the aggrieved woman, as well as the financial capacity of the respondent.

Prohibition of Publication or Making Known Contents of Complaint and Inquiry Proceedings (Section
16):
1. Content Confidentiality: Section 16 emphasizes the confidentiality of the complaint, inquiry
proceedings, and related information. This provision restricts the publication, communication, or
disclosure of the following:
• The contents of the complaint filed under section 9.
• The identity and addresses of the aggrieved woman, respondent, and witnesses.
• Information related to conciliation and inquiry proceedings.
• Recommendations made by the Internal Committee or the Local Committee.
• Actions taken by the employer or the District Officer under the Act.

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2. Exceptions: However, it allows for information to be disseminated regarding the justice achieved
for a victim of sexual harassment under the Act, without disclosing any details that could lead to
the identification of the aggrieved woman and witnesses.
Penalty for Publication or Making Known Contents of Complaint and Inquiry Proceedings (Section 17):
1. Penalty for Contravention: Section 17 specifies that if any person who is entrusted with handling
or dealing with complaints, inquiries, recommendations, or actions under the Act violates the
provisions of section 16 by publishing or making known the confidential information, they shall be
liable for a penalty.
2. Penalty Determination: The penalty imposed will be in accordance with the service rules
applicable to the person in question. In cases where no such service rules exist, the manner of
determining the penalty will be prescribed by relevant authorities.
Appeal (Section 18):
1. Right to Appeal: Section 18 grants the right to appeal to any person who is aggrieved by the
recommendations made under various sections of the Act, including section 13(2), section 13(1)(i)
or (ii), section 14(1) or (2), section 17, or non-implementation of such recommendations.
2. Appeal Process: The aggrieved person can prefer an appeal to the court or tribunal in accordance
with the service rules applicable to them. In cases where there are no service rules, the Act
provides for an alternative appeal process, ensuring individuals have a means of redress.
3. Time Limit for Appeal: The appeal should be filed within a period of ninety days from the date of
the recommendations that the aggrieved person wishes to challenge.

Duties of Employer (Section 19):

1. Safe Working Environment: Employers are required to provide a safe working environment at the
workplace, ensuring the safety of employees from any person they come into contact with at work.
2. Displaying Information: Employers must display information related to the penal consequences
of sexual harassment at a conspicuous place in the workplace. They should also display
information about the Internal Committee established under section 4.
3. Workshops and Awareness Programs: Employers are responsible for organizing workshops and
awareness programs at regular intervals. These programs are aimed at sensitizing employees to
the provisions of the Act. Additionally, orientation programs for the members of the Internal
Committee should be conducted as prescribed.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
4. Providing Facilities: Necessary facilities must be provided to the Internal Committee or the Local
Committee, as required, to effectively deal with complaints and conduct inquiries.
5. Assistance with Attendance: Employers should assist in ensuring the attendance of both
respondents and witnesses before the Internal Committee or the Local Committee, as applicable.
6. Information Sharing: Employers are required to provide the Internal Committee or the Local
Committee with the information they need, taking into account the complaint made under section
9(1).
7. Assistance for Legal Action: If a woman chooses to file a complaint related to an offense under
the Indian Penal Code or any other applicable law, the employer must provide assistance.
8. Initiating Action: Employers must initiate action under the Indian Penal Code or other relevant
laws against the perpetrator if the aggrieved woman desires it, especially when the perpetrator is
not an employee at the workplace where the incident occurred.
9. Treating Sexual Harassment as Misconduct: Sexual harassment should be treated as misconduct
under the service rules, and appropriate actions should be initiated accordingly.
10. Monitoring Reports: Employers are responsible for monitoring the timely submission of reports
by the Internal Committee.
Duties and Powers of District Officer (Section 20):
1. Monitoring Reports: District Officers have the duty to monitor the timely submission of reports
submitted by the Local Committee.
2. Engaging NGOs: District Officers are empowered to take necessary measures for engaging non-
governmental organizations (NGOs) to create awareness about sexual harassment and women's
rights.

Annual Report (Section 21):

1. Preparation and Submission: The Internal Committee or the Local Committee must prepare an
annual report each calendar year. This report should be in the prescribed form and submitted to
both the employer and the District Officer.
2. Report to State Government: The District Officer, in turn, is required to forward a brief report on
the annual reports received to the State Government.
Employer's Inclusion in Annual Report (Section 22):
1. Reporting Cases: Employers must include information regarding the number of cases filed and
their disposition under the Act in their organization's annual report. In cases where no annual

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Prof Abhijeet C. Jaiswal
report is necessary, the employer must still inform the District Officer about the number of cases,
if any.
Monitoring and Data Collection (Section 23):
1. Government Responsibility: The appropriate Government is tasked with monitoring the
implementation of the Act. This includes maintaining data on the number of cases filed and
disposed of concerning sexual harassment in the workplace.
Public Awareness (Section 24):
1. Development of Materials: The appropriate Government, subject to resource availability, can
develop information, education, communication, and training materials to enhance public
understanding of the Act's provisions for protecting women against workplace sexual harassment.
2. Orientation and Training: Additionally, the Government may formulate orientation and training
programs for the members of the Local Committee.
Power of the Appropriate Government (Section 25):
1. Information and Inspection: The appropriate Government has the authority, when it deems
necessary for public interest or women employees' well-being at a workplace, to:
• Require employers or District Officers to provide written information regarding sexual
harassment.
• Authorize officers to inspect records and workplaces related to sexual harassment. The
inspecting officer must submit a report of the inspection within a specified period.
2. Compliance: Employers and District Officers must cooperate with and provide access to all
relevant information, records, and documents upon demand by the inspecting officer during an
inspection related to sexual harassment.

Penalties for Non-Compliance (Section 26):

1. Failure to Comply: Section 26 outlines penalties for employers who fail to comply with certain
provisions of the Act, including:
• Not constituting an Internal Committee (as per Section 4(1)).
• Failing to take action as required by Sections 13, 14, and 22.
• Contravening or attempting to contravene, or aiding and abetting contravention of other
provisions of the Act or its rules.
2. Penalty Amount: The penalty for such non-compliance may include a fine of up to Rs. 50,000.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
3. Repeat Offense: If an employer, previously convicted of an offense under this Act, commits the
same offense again, they may be liable for a penalty twice the amount that could have been
imposed on a first conviction. This is subject to the maximum penalty prescribed for the same
offense.
4. Higher Punishment: If any other law in force prescribes a higher punishment for the same offense,
the court should consider that higher punishment while awarding the penalty.
5. Additional Consequences: In addition to the penalties, the employer may face other
consequences, such as the cancellation of licenses, withdrawal, non-renewal, or approval for
carrying on their business or activity. These actions can be taken by the Government or local
authority.
Cognizance of Offenses (Section 27):
1. Non-Cognizable Offenses: Offenses under this Act are considered non-cognizable, meaning a
person cannot be arrested without a warrant.
2. Complaint Requirement: No court can take cognizance of any offense under this Act or its rules
unless a complaint is made by:
• The aggrieved woman.
• A person authorized by the Internal Committee or Local Committee for this purpose.
3. Jurisdiction: Offenses under this Act should be tried by courts no lower in authority than a
Metropolitan Magistrate or a Judicial Magistrate of the first class.
Act not in derogation of any other law (Section 28):
Section 28 emphasizes that the Act provides an additional safeguard for women in the workplace. It
clarifies that the Act's provisions are meant to complement and not override any other existing laws in
force. This ensures that women's rights and protection are upheld in the workplace while respecting the
legal framework as a whole.

Power of the Central Government to Make Rules (Section 29):

Section 29 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,
2013 empowers the Central Government to create rules through an official notification in the Official
Gazette. These rules are designed to provide detailed guidance and procedures for implementing the
provisions of the Act. The rules cover a wide range of matters, and some of the key areas they may address
include:

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
a. Fees and Allowances: Determining the fees or allowances to be paid to Members as mentioned in
Section 4(4).
b. Nomination of Members: Providing guidelines for the nomination of members under Section 7(c).
c. Compensation: Specifying the fees or allowances to be paid to the Chairperson and Members under
Section 7(4).
d. Complaint Procedure: Defining who is eligible to make a complaint under Section 9(2).
e. Inquiry Process: Prescribing the manner in which inquiries should be conducted under Section 11(1).
f. Powers of Inquiry: Specifying the powers necessary for conducting inquiries as outlined in Section
11(2)(c).
g. Relief Recommendations: Outlining the relief options to be recommended under Section 12(c).
h. Action on Findings: Providing procedures for taking action under Sections 13(3)(i) and 14.
i. Penalties: Detailing the processes for handling cases under Section 17.
j. Appeals: Defining the procedures for filing appeals as per Section 18(1).
k. Awareness Programs: Describing the manner in which workshops, awareness programs, and orientation
programs for sensitizing employees and Internal Committee members should be organized under Section
19(c).
l. Annual Report: Prescribing the format and timing for the preparation of annual reports by Internal
Committees and Local Committees under Section 21(1).

Amendments and Notifications:

In 2019, the Act underwent an amendment, and certain state governments took additional measures to
ensure compliance:
• Telangana Registration Requirement: The Women Development and Child Welfare Department
of Telangana issued a notification stating that businesses in the state with ten or more employees
were required to register their Internal Committees (IC) with the State Shebox portal by July 15,
2019. This measure aimed to enhance the monitoring of local companies' compliance with the
Act.
• Maharashtra Compliance Status Requirement: In Maharashtra, the government mandated that
all companies must complete and submit a form explaining their compliance status and providing
details of their internal committee to the Sub-Divisional Magistrate by July 20, 2019. This step was
taken to ensure compliance with the Act.

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CS Praveen Choudhary
Prof Abhijeet C. Jaiswal
Central Government Rules (Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Rules, 2013):
In accordance with the powers conferred by Section 29 of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, the Central Government established the "Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013." These rules
provide comprehensive guidance on various aspects of implementing the Act, offering a framework for its
effective enforcement and redressal of workplace sexual harassment.

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