Industrial Law B.com Sem II Material-1
Industrial Law B.com Sem II Material-1
INDUSTRIAL LAW
UNIT- I
Factories act 1948. Definitions – Health – Safety – Welfare – Working Hours of Adults
Employment of Women – Employment of Young Persons – Leave with Wages.
UNIT-II
UNIT- III
UNIT- IV
UNIT V
UNIT - I
THE FACTORIES ACT, 1948
Definitions
The Factories Act, 1948 (Act No. 63 of 1948), as amended by the Factories (Amendment)
Act, 1987 (Act 20 of 1987), serves to assist in formulating national policies in India with respect
to occupational safety and health in factories and docks in India. It deals with various problems
concerning safety, health, efficiency and well-being of the persons at work places.
2. Health:
For protecting the health of workers, the Act lays down that every factory shall be kept
clean and all necessary precautions shall be taken in this regard. The factories should have proper
drainage system, adequate lighting, ventilation, temperature etc. Adequate arrangements for
drinking water should be made. Sufficient latrine and urinals should be provided at convenient
places. They should be easily accessible to workers and must be kept cleaned.
3. Safety:
In order to provide safety to the workers, the Act provides that the machinery should be
fenced, no young person shall work at any dangerous machine, in confined spaces, there should be
provision for manholes of adequate size so that in case of emergency the workers can escape.
4. Welfare:
For the welfare of the workers, the Act provides that in every factory adequate and
suitable facilities for washing should be provided and maintained for the use of workers. Facilities
for toring and drying clothing, facilities for sitting, first-aid appliances, shelters, rest rooms’ and
lunch rooms, crèches, should be there.
5. Penalties:
The provisions of The Factories Act, 1948, or any rules made under the Act, or any order
given in writing under the Act is violated, it is treated as an offence. The following penalties can be
imposed:
a) Imprisonment for a term which may extend to one year;
b) Fine which may extend up to one lakh rupees
c) Both fine and imprisonment.
IMPORTANT DEFINITIONS
Adult
“Adult” means a person who has completed his eighteen year of age. [Section 2(a)]
Adolescent
“Adolescent” means a person who has completed his fifteen years of age but not his eighteen.
Calendar Year
“Calendar Year” means the period of twelve months beginning with the first day of January in any
year. [Section 2(bb)]
Child
“Child” means a person who has not completed his fifteen year of age. [Section 2(c)]
Competent Person
“Competent Person” in relation to any provision of this Act, means a person 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, examinations and inspections and more than one
person or institution can be recognized as a competent person in relation to a factory. [Section
2(ca)]
Hazardous Process
“Hazardous Process” means any process or activity in relation to an industry 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
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 [Section 2]
Young Person
“Young Person” means a person who is either a child or an adolescent. [Section 2(d)]
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Day
“Day” means under Section 2(e), a period of twenty-four hours beginning at mid-night. [Section
2(e)]
Week
“Week” means a period of seven days beginning at mid-night on Saturday night or such
other night as may be approved in writing for a particular area by the Chief Inspector of Factories.
[Section 2(f)]
Power
“Power” means electrical energy or any other form of energy which is mechanically
transmitted and is not generated by human or animal agency. [Section 2(g)]
Prime Mover
“Prime” Mover means any engine, motor or other appliance which generates or otherwise
provides power. [Section 2(h)]
Machinery
The term includes prime-movers, transmission machinery and all other appliances whereby
power is generated, transformed, transmitted or applied. [Section 2(j)]
HEALTH OF WORKERS
Cleanliness:
Every factory shall be kept clean and free from dirt, and the outflow of drains etc. The
floors must be cleaned. Drainage shall be provided. Inside walls, partitions and ceilings must be
repainted at least once in five years. When washable water paint is used, they must be painted
once every three years and washed at least every period of six months-Sec. 11, as amended in
1976.
Artificial humidification:
The water used for this purpose must be pure. It must be taken from source of drinking
water supply. The State Government can frame rules regarding the process of humidification etc.
of Sec15.
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Over Crowding:
There must be no overcrowding in a factory. In factories existing before the
commencement of the Act there must be at least 350 cubic ft. of space per worker. For factories
built afterwards, there must be at least 500 cubic ft. of space. In calculating the space, an account
is to be taken for space above 14 ft. from the floor of Sec. 16
Lighting:
Factories must be well lighted. Effective measures must be adopted to prevent glare or
formation of shadows which might cause eyestrain of Sec. 17.
Drinking water:
Arrangements must be made to provide a sufficient supply of wholesome drinking water.
All supply' points of such water must be marked "drinking water". No such points shall be within
20 ft. of any latrine, washing place etc. Factories employing more than 250 workers must cool the
water during the hot weather of Sec. 18.
SAFETY OF WORKERS
Fencing of machinery:
All dangerous machinery must be securely fenced e.g., moving parts of prime movers and
flywheels connected to every prime mover, electric generators, etc. of Sec 2l.
Work on or near machinery in motion: Work on or near machinery in motion must be carried out
only by specially trained adult male workers wearing tightly fitting clothes of Sec. 22.
Self-acting machines:
Moving parts of a self-acting machine must not be allowed to come within 45cms of any
fixed structure which is not part of the machine of Sec 25.
Revolving machinery:
Where grinding is carried on the maximum safe working speed of every revolving
machinery, connected therewith must be notified. Steps must be taken to ensure that the safe
speed is not exceeded of Sec 30.
Pressure plant:
Where any operation is carried on at a pressure higher than the atmospheric pressure,
steps must be taken to ensure that the safe working pressure is not exceed of Sec.
Excessive weights:
No worker shall be made to carry a load so heavy as to cause him injury of Sec 34.
Protection of eyes:
Effective screen or suitable goggles shall be provided to protect the eyes of the worker
from fragments thrown off in course of any manufacturing process and from excessive light if any.
-Sec. 35.
Maintenance of Buildings:
If the Inspector of Factories thinks that any building in a factory, or any part of it is in such a
state of disrepair that it is likely to affect the health and welfare of the workers he may serve on
the occupier or manager or both in writing specifying the measures to be done before the
specified date. Sec. 4OA.
Safety Officers:
The State Government may notify to the occupier to employ a number of Safety Officers in
a factory (i) wherein one thousand or more workers are ordinarily employed or (ii) wherein any
manufacturing process or operation which involves the risk of bodily injury, poisoning, disease or
any other hazard to health of the persons employed in the factory -Sec. 40B.
WELFARE OF WORKERS:
Washing:
In every factory adequate and suitable facilities for washing shall be provided and
maintained. They shall be conveniently accessible and shall be kept clean. There must be separate
provisions for male and female workers - Sec. 42.
Sitting:
Sitting facilities must be provided for workers who have to work in a standing position so
that they may take rest when possible. If work can be done in a sitting position efficiently the Chief
Inspector may direct the provision of sitting arrangements- Sec. 44.
First Aid:
Every factory must provide first aid boxes or cupboard. They must contain the prescribed
materials and they must be in charge of persons trained in first aid treatment. Factories employing
more than 500 persons must maintain an ambulance roam containing the prescribed equipment
and in charge of the prescribed medical and nursing staff - Sec. 45.
Canteens:
Where more than 250 workers are employed the state Government may require the
opening of canteen or canteens for workers. Rules may be framed regarding the food served its
management etc. - Sec. 46.
Shelters:
In every factory where more than 150 workers are employed there must be provided
adequate and suitable shelters or rest rooms and a lunch room (with drinking water supply) where
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workers may eat meals brought by them. Such rooms must be sufficiently lighted and ventilated
and must be maintained in a cool and clean condition. The standards may be fixed by the State
Government - Sec. 47
Creches:
In every factory where more than 30 women a employed, a room shall be provided for the
use of the children (below 6 years) of such women. The room shall be adequate size, well lighted
and ventilated, maintained in a clean and sanitary condition and shall be in charge of a woman
trained in the care of children and infants. The standards shall be laid down by the State
Government -Sec. 48.
Welfare officers:
Welfare officers must be appointed in every factory where 500 or more workers are
employed. The State Government may prescribe the duties, qualifications etc. of such officers- Sec.
49.
he shall not grant or renew a certificate under this sub-section until he has examined such
place.
5. A certificate of fitness granted or renewed under sub-section (2):
a. shall be valid only for a period of twelve months from the date thereof;
b. May be subjected to conditions in regard to the nature of the work in which the
young person may be employed or requiring re-examination before the expiry of
the period of twelve months.
6. A certifying surgeon shall revoke any certificate granted or renewed under sub-section (2)
if in his opinion the holder of it is no longer fit to work in the capacity stated therein in a
factory.
8. Where a certificate under this section with reference to any young person is granted or
renewed subject to such conditions as are referred to in Clause (b) of sub-section (3) the
young person shall not be required or allowed to work in any factory except in accordance
with those conditions.
9. Any fee payable for a certificate under this section shall be paid by the occupier and shall
not be recoverable from the young person, his parents or guardian.
only one of the relays which shall not, except with the previous permission of the Chief Inspector
be changed more frequently once in a period of thirty days.
The provisions of Section 52 shall apply also to child workers, and no exemption from the
provisions of that section may be granted in respect of any child.
No child shall be required or allowed to work in any factory on any day on which he has
already been working in another factory.
No female child shall be required or allowed to work in any factory except between 8 a.m.
and 7 p.m.
8) Hours of work to correspond with notice under Section 72 and register under Section 73 (Sec.
74)
No Child shall be employed in any factory otherwise than in accordance with the notice of
periods of work for children displayed in the factory and the entries made before hand against his
name in the register of child workers of the factory.
UNIT - III
THE WORKMENS COMPENSATION ACT
MEANING
Workers' compensation is a publicly sponsored system that pays monetary benefits to
workers who become injured or disabled in the course of their employment. Workers'
compensation is a type of insurance that offers employees compensation for injuries or disabilities
sustained as a result of their employment.
DEFINITION
Dependent
Dependent means any of the following relatives of a deceased workman, namely: -
Meaning Disablement –
The expression "disablement" means loss of capacity to work or to move. Disablement
which reduces the earning capacity of an employee. Injury caused to an employee by an accident
resulting in the loss of earning capacity is technically called disablement. In other words, a person
is incapacitated to work or to move as a consequence of an accident.
To determine whether the injury is permanent or temporary the total effect of injury on
the employment opportunities of the employee concerned is the deciding Criterion. In simple
words, the accident in capacities loss of 100% earning capacity forever
At the time of injury workman must have been engaged in the business of the employer
and must not be doing something for his personal benefit;
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That accident occurred at the place where he is performing his duties; and
Injury must have resulted from some risk incidental to the duties of the service, or inherent
in the nature condition of employment.
The general principles that are evolved are:
There must be a causal connection between the injury and the accident and the work done
in the course of employment;
The onus is upon the applicant to show that it was the work and the resulting strain which
contributed to or aggravated the injury.
It is not necessary that the workman must be actually working at the time of his death or
that death must occur while he was working or had just ceased to work; and
Where the evidence is balanced, if the evidence shows a greater probability which satisfies
a reasonable man that the work contributed to the causing of the personal injury it would
be enough for the workman to succeed.
But when the accident involved a risk common to all humanity and did not involve any
peculiar or exceptional danger resulting from the nature of employment or where the
accident was the result of an added peril to which the workman by his own conduct
exposed himself, which peril was not involved in the normal performance of the duties of
his employment, then the employer will not be liable.
Calculation of Compensation.
The amount of compensation payable by the employer shall be calculated as
follows:
In case of death. - 50% of the monthly wages X Relevant Factor or Rs. 50,000,
whichever is more. And Rs. 1000 for funeral expenses.
In case of total permanent disablement Specified under Schedule I - 60% of the
monthly wages X Relevant Factor or Rs. 60,000, whichever is more?
In case of partial permanent disablement specified under Schedule I - Such
percentage of the compensation payable in case (2) above as is the percentage of
the loss in earning capacity (specified in Schedule I)
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In case of lump sum compensation payable to an adult male worker not suffering from any
legal disability
In case of half-monthly payments payable to any workman
However, if it appears to the Commissioner that the agreement ought not to be registered
by reason of the inadequacy of the sum or amount, or by reason that the agreement has been
obtained by fraud or undue influence or other improper means he may refuse to record the
agreement and may make such order including an order as to any sum already paid under the
agreement as he thinks just in the circumstances.
Filing of Claims
A claim for the compensation shall be made before the Commissioner.
No claim for compensation shall be entertained by the Commissioner unless the notice of
accident has been given by the workman in the prescribed manner, except in the following
circumstances:
In case of death of workman resulting from an accident which occurred on the premises of
the employer, or at any place where the workman at the time of the accident was working
died on such premises or such place or in the vicinity of such premises or place;
In case the employer has knowledge of the accident from any other source, at or about the
time of its occurrence;
In case the failure to give notice or prefer the claim, was due to sufficient cause.
LIMITATION
Workman, to the Commissioner, may file the claim for accident compensation in the
prescribed form, within 2 years from the occurrence of the accident or from the date of death. The
claim must be preceded by a notice of accident, and the claimant-employee must present himself
for medical examination if so, required by the employer.
Duties of Employer/Employees
To pay compensation for an accident suffered by an employee, in accordance with the Act.
To submit a statement to the Commissioner (within 30 days of receiving the notice) in the
prescribed form, giving the circumstances attending the death of a workman as result of an
accident and indicating whether he is liable to deposit any compensation for the same.
To submit accident report to the Commissioner in the prescribed form within 7 days of the
accident, which results in death of a workman or a serious bodily injury to a workman.
To maintain a notice book in the prescribed from at a place where it is readily accessible to
the workman.
To submit an annual return of accidents specifying the number of injuries for which
compensation has been paid during the year, the amount of such compensation and other
prescribed particulars.
DUTIES OF EMPLOYEES
To send a notice of the accident in the prescribed form, to the Commissioner and the
employer, within such time as soon as it is practicable for him. The notice is a precondition
for the admission of the claim for compensation.
To present himself for medical examination, if required by the employer.
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OCCUPATIONAL DISEASES:
a. Part A of schedule III
b. Part B of schedule III
c. Part C of schedule III
PERSONAL INJURY:
a. Personal injury
b. Accident
c. Arising out of employment & in course of employment
Occupational Diseases
Workers employed in certain occupations are exposed to certain diseases which are
inherent [its character] in those occupations.
Infections due to contamination.
Infra-red radiations.
Skin diseases [Chemical, Leather Processing Units].
Hearing impairment caused by noise.
Lung Cancer caused by asbestos dust.
Diseases due to effect of heat/cold in extreme hot/cold climate, etc.
Where permanent or partial (i) in the case of an injury disablement results from specified in
Part II of Schedule the injury I, such percentage of the compensation which would have
been payable in the case of permanent total disablement as is specified therein as being
the percentage of the loss of earning capacity caused by that injury, and
In the case of an injury not specified in Schedule I, such percentage of the compensation
payable in the case of permanent total disablement as is proportionate to the loss of
earning capacity (as assessed by the qualified medical practitioner) permanently caused by
the injury;
Explanation - I:
Where more injuries than one is caused by the same accident, the amount of
compensation payable under this head shall be aggregated but not so in any case as to exceed the
amount which would have been payable if permanent total disablement had resulted from the
injuries;
Explanation II:
In assessing the loss of earning capacity for the purposes of sub- clause (ii), the qualified
medical practitioner shall have due regard to the percentages of loss of earning capacity in relation
to different injuries specified in Schedule I;
Where temporary disable- a half- monthly payment of the employment, whether total or
sum equivalent to twenty- five partial result from the per cent. of monthly wages of injury,
the workman, to be paid in accord- dance with the provisions of sub- section 2. (2) The half-
monthly payment referred to in clause (d) of sub- section (1) shall be payable on the
sixteenth day
- from the date of disablement where such disablement lasts for a period of
twenty- eight days or more, or
- after the expiry of a waiting period of three days from the date of
disablement where such disablement lasts for a period of less than twenty-
eight days; and thereafter half- monthly during the disablement or during
a period of five years, whichever period is shorter: Provided that--
- there shall be deducted from any lump sum or half- monthly payments to
which the workman is entitled the amount of any payment or allowance
which the workman has received from the employer by way of
compensation during the period of disablement prior to the receipt of
such lump sum or of the first half- monthly payment, as the case may be;
and
- no half- monthly payment shall in any case exceed the amount, if any, by
which half the amount of the monthly wages of the workman before the
accident exceeds half the amount of such wages which he is earning after
the accident.
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Explanation:
Any payment or allowance which the workman has received from the employer towards
his medical treatment shall not be deemed to be a payment or allowance received by him by way
of compensation within the meaning of clause (a) of the proviso.
UNIT - II
INDUSTRIAL DISPUTES ACT
1947
MEANING
Industrial disputes are collective dissent and protest against the terms and conditions of
employment and work. In the Industrial Disputes Act, 1947, an Industrial dispute means
“Difference between employer and employer or between employer and workmen or between
workmen and workmen, or any dispute among these which are related to the employment or non-
employment or terms and conditions of employment of any person”.
Objectives:
The objectives of Industrial laws are:
To safeguard the workers against exploitation.
To maintain good relationship between employees and employers.
To provide and improve the welfare, amenities of workers.
To settle industrial disputes.
The Act provides machinery for the settlement of disputes by arbitration or
adjudication.
It attempts to ensure social justice and economic progress by fostering industrial
harmony.
It enables workers to achieve their demands by means of legitimate weapon of
strike and thus facilitates collective bargaining.
It prohibits illegal strikes and lockouts.
It provides relief to the workman in the event of layoff or retrenchment.
The settlement machinery as provided by the Act consists of the three methods:
1. Conciliation
2. Arbitration
3. Adjudication
1. Conciliation:
In simple sense, conciliation means reconciliation of differences between persons.
Conciliation refers to the process by which representatives of workers and employers are brought
together before a third party with a view to persuading them to arrive at an agreement by mutual
discussion between them. The alternative name which is used for conciliation is mediation.
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Conciliation Officer:
The Industrial Disputes Act, 1947, under its Section 4, provides government to appoint such
number of persons as it thinks fit to be conciliation officers. Here, the appropriate
government means one in whose jurisdiction the disputes fall.
Board of Conciliation:
In case the conciliation officer fails to resolve the dispute between the disputants, under
Section 5 of the Industrial Disputes Act, 1947, the appropriate government can appoint a
Board of Conciliation. Thus, the Board of Conciliation is not a permanent institution like
conciliation officer. It is an adhoc body consisting of a chairman and two or four other
members nominated in equal numbers by the parties to the dispute.
The Board enjoys the powers of civil court. The Board admits disputes only referred to it by
the government. It follows the same conciliation proceedings as is followed by the
conciliation officer. The Board is expected to give its judgment within two months of the
date on which the dispute was referred to it.
In India, appointment of the Board of Conciliation is rare for the settlement of disputes. In
practice, settling disputes through a conciliation officer is more common and flexible.
Arbitration: Arbitration is a process in which the conflicting parties agree to refer their dispute to a
neutral third party known as ‘Arbitrator’. Arbitration differs from conciliation in the sense that in
arbitration the arbitrator gives his judgment on a dispute while in conciliation, the conciliator
disputing parties to reach at a decision.
The arbitrator does not enjoy any judicial powers. The arbitrator listens to the view points
of the conflicting parties and then gives his decision which is binding on all the parties. The
judgment on the dispute is sent to the government. The government publishes the
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judgment within 30 days of its submission and the same becomes enforceable after 30 days
of its publication. In India, there are two types of arbitration: Voluntary and Compulsory.
Voluntary Arbitration:
In voluntary arbitration both the conflicting parties appoint a neutral third party as
arbitrator. The arbitrator acts only when the dispute is referred to him/her. With a view to
promote voluntary arbitration, the Government of India has constituted a tripartite National
Arbitration Promotion Board in July 1987, consisting of representatives of employees (trade
employers and the Government. However, the voluntary arbitration could not be successful
because the judgments given by it are not binding on the disputants. Yes, moral binding is
exception to it.
Compulsory Arbitration:
In compulsory arbitration, the government can force the disputing parties to go for
compulsory arbitration. In other form, both the disputing parties can request the government to
refer their dispute for arbitration. The judgment given by the arbitrator is binding on the parties of
dispute.
Adjudication:
The ultimate legal remedy for the settlement of an unresolved dispute is its reference to
adjudication by the government. The government can refer the dispute to adjudication with or
without the consent of the disputing parties. When the dispute is referred to adjudication with the
consent of the disputing parties, it is called ‘voluntary adjudication.’ When the government itself
refers the dispute to adjudication without consulting the concerned parties, it is known as
‘compulsory adjudication.
The Industrial Disputes Act, 1947 provides three-tier machinery for the adjudication of industrial
disputes:
Labour Court
Industrial Tribunal
National Tribunal
Labour Court:
Under Section 7 of the Industrial Disputes Act, 1947, the appropriate Government by
notifying in the official Gazette, may constitute Labour Court for adjudication of the industrial
disputes The labour court consists of one independent person who is the presiding officer or has
been a judge of a High Court, or has been a district judge or additional district judge for not less
than 3 years, or has been a presiding officer of a labour court for not less than 5 years. The labour
court deals with the matters specified in the second schedule of the Industrial Disputes Act, 1947.
Industrial Tribunal:
Under Section 7A of the Act, the appropriate Government may constitute one or more
Industrial tribunals for the adjudication of industrial disputes. Compared to labour court, industrial
tribunals have a wider jurisdiction.
The matters that come within the jurisdiction of an industrial tribunal include the following:
Wages, including the period and mode of payment.
Compensatory and other allowances.
Hours of work and rest periods.
Leave with wages and holidays.
Bonus, profit sharing, provident fund, and gratuity.
Classification by grades.
Rules of discipline.
Rationalization
Retrenchment of employees and closure of an establishment or undertaking.
Any other matter that can be prescribed.
National Tribunal:
This is the third one-man adjudicatory body appointed by the Central Government by
notification in the Official Gazette for the adjudication of industrial disputes of national
importance.
Features of strikes
1. There must be cessation of work or refusal to do work with common intention.
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Kinds of strike
1. General strike
2. Sit down strike
3. pen down strike
4. Tool down strike
5. Hunger strike
6. Work to rule, etc.,
LOCKOUT
Lock out is closing of place of employment or the suspension of work or the refusal by any
number to continue to employ any number of persons employed by him. Its temporary closing of
place of employment.
Essentials of a lockout:
a) There is temporary closing of the place of employment, or suspension or withholding of the
work by the employer in some form.
b) There is an element of demands for which the place of employment is locked -out or
closed. That, is it is done by the employer to press his demand among the workman.
c) There is an intension to re-employ the workers if they accept the demands.
Lay off:
Lay off means the failure, refusal or inability of an employer to give employment to a workman
a) Whose name is borne on the muster rolls of his industrial establishment?
b) Who has not been entrenched.
Lay off means the failure, refusal or inability to provide employment on account of
1. Shortage of coal, power, or raw material.
2. Accumulation of stock
3. Breakdown of machinery.
4. Natural calamity would amount to lay off.
Retrenchment of workmen:
Retrenchment means reduction of surplus employees on account of modernization and
rationalization. It involves removing excess of labour out of employment.
UNIT - V
PAYMENT OF BONUS
The first labour union formed in the year of 1918 in India by B.P.Vadia in the name of
Madras Textile Labour Union.
All India Trade union congress (A.I.T.U.C.) – formed by Indian national congress party, then
it went to the control of Communist.
No Trade Union of workmen shall be registered unless it has on the date of making
application not less than seven persons as its members.
The appropriate Government may extend the said period of 8 months; however, the tale period
shall not exceed two years.
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UNIT - V
THE PAYMENT OF GRATUITY ACT, 1972
Application: - (Sec 1)
a) Every factory, mine, oilfield, plantation, port and Railway Company.
So far as it relates to plantations or ports, it shall not extend to the State of Jammu and
Kashmir.
b) every shop or establishment in which ten or more persons are employed,
c) Such other establishments as the Central Government may, by notification, specify in this
behalf. (Now it is extended to Transport Corporation, Clubs, Chamber of commerce and
industries, Education, local bodies, societies, Trust, circus companies.,)
This act shall continue, notwithstanding that the number of persons employed therein at any
time after it has become so applicable falls below ten.
In case of death of the employee, gratuity payable to his nominee or, if no nomination has
been made, to his heirs,
In Indian Oxygen and Acetylene co Employees Union –Vs- IOA Company, Supreme Court
held that all wealthy establishments should pay gratuity.
1. State of Kerala enacted gratuity Act in1970.
2. State of W.B enacted Employees payment compulsory gratuity Act in1971.
3. Based on W.B Act, The P a r l i a m e n t has enacted the payment of gratuity
Act1972.
Objects:
i. To ensure that the payment of Gratuity throughout the country to be uniform pattern.
ii. To avoid different treatment.
Applicability:
1. Every factory, mine, oilfield, plantation, port and Railway.
2. Shop establishments where 10 or more person are employing or employed on any
day of the preceding 12months.
3. Once this Act applies, it continues to apply even if employment strength falls below
10.
4. Not applies to apprentices.
5. Not apply to the state of J & K plantations.
Eligibility
Gratuity payable to an employee who has rendered continuous service for not less than
5years.
1-year Service means – 190 days of employment under the ground in mines or establishment in
which works less than 6 days in a week.240 days of employment in any other establishment6
months service means:
95 days of employment under the ground in mines or establishment in which works less than 6
days in aweek120 days of employment in any other establishment. Regarding seasonal
establishment 75% of days in a season5 years of continuous service is not necessary; in case of
death occur due to employment
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Forfeiture
Where an employee’s services are terminated in the following conditions the employer can for
future the Gratuity amount.
1. Any act or willful omission or negligence causing damages or loss or destruction of
property.
2. Employee’s riotous or disorderly conduct or any other violent act.
3. Committing an offence involving moral turpitude.
But before forfeiture show because notice should be issued by the employer as per the following
citation, i.e. – Bharath Gold mines Ltd – Vs- Regional Labour commissioner – 1987, Karn.
Compulsory Insurance
Every employer, other than central or a state Government should obtain an insurance for
payment towards the gratuity.
If fail shall be punishable with fine, it may extend to Rs.10,000/, for continuing offence
further fine Rs.1000/- per breaching day.
Family means:
Regarding male - Wife, Children, Parents of both, Predeceased son’s wife and Children, and
adopted children.
Regarding Female - Husband, Children, Parents of both Parties, Predeceased son’s wife and
children, and adopted children.