Contents

INDUSTRIAL DISPUTES ACT, 1947..........................................................................1

CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970..............................3
FACTORIES ACT, 1948............................................................................................ 5
INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946...................................6
TRADE UNIONS ACT, 1926...................................................................................... 8

LABOUR LAWS APPLICABLE TO HOSPITALITY SECTOR

INDUSTRIAL DISPUTES ACT, 1947
i.

Title and objective of the legislation

The existing title Industrial Disputes Act, presupposes existence of disputes and limits the
scope of the legislation to resolving disputes only. To amplify its scope and promote
employer-employee relationship, the legislation should be renamed as Employment
Relations Act.
ii.

Definition of industry

The definition of industry under Section 2(j) had been amended in 1982, but could not be
enforced due to absence of a parallel machinery to investigate and settle the disputes in the
excluded category of the establishments. Parliament in its own wisdom thought it prudent to
save certain institutions like hospitals, education and research institutions from the vagaries
of industrial unrest like strikes and lockouts, and kept them out of preview of Section 2(j).
The amended definition of industry should, therefore, be enforced forthwith.
iii.

Definition of workman

Section 2(s) defining workman needs to be amended. Excessive protection given to the
employees in the higher salary brackets in the organised sector like Airlines, Bank, Insurance,
etc., has not helped to make these employees accountable to the establishment and the society
at large. On the contrary, it has tended to erode the overall discipline. It is, therefore,
suggested that employees receiving a salary beyond `20,000/-, should be taken out of the
ambit of the definition of workman. Further, Supervisors, Managers and people holding
administrative positions irrespective of the salary limits, should be taken out from the
purview of the definition of workman.
iv.

Notice of change

Section 9-A requires an employer to give 21 days notice to the Union before stipulating any
change in the service conditions. This includes, inter-alia changing of shifts, reducing or
increasing the staff strength as necessitated by the business needs or installing new machines.
This operates as a serious bottleneck, in industries, to address exigencies, such as power
shortage or rescheduling work to meet emergency demands. Therefore, to respond to the
market conditions and make full utilization of resources available, Section 9A needs to be
dropped. In this context, the 2nd National Commission on Labour has recommended that no
notice would be required with regard to rationalization, standardisation dealt with by item
No. 10 & 11 in Fourth Schedule. This may be implemented.
v.

Strikes and Lock-outs

India is perhaps the only country, where the requirement of strike notice is absent barring
public utility service. This does not give adequate time to the parties to take pre-emptive steps
and avert the situation through negotiations. A reasonable period of notice of strike is,
therefore, essential. Section 23 of the ID Act to be amended to provide that a 14 days notice

of strike should be compulsory. Further, to democratize the functioning of trade unions, the
Strike Ballot should be supported by at least 75% of the workers working in the enterprise.
Go-slow and work to rule are the most pernicious forms, even worse than strike. The
economic loss caused by go-slow is far graver than strike. It has not yet been prohibited in
our legislation. It should be recognized as a strike.
vi.

Closure of units under NIMZ

The Government has proposed to insert a new Section 25 FFF (1C) & (1D) to extend the
existing provisions for closure of undertakings engaged in mining operation to manufacturing
unit setup in National Investment and Manufacturing Zone (NIMZ). In this context, a
tripartite discussion has already been held.
vii.

Lay-off, Retrenchment and Closure

Chapter V-B of the Industrial Disputes Act, 1947, which provides for obtaining a prior
permission of the Government for effecting rationalizing measures like lay-off, retrenchment
or closure where the industry employees more than 100 workers, hampers industrys initiative
to be competitive and face global challenges. This chapter was incorporated during
emergency in 1976 to provide for government intervention even in the rationalization
measures where an establishment employed more than 300 workmen. This limit was further
brought down to 100 workmen by another amendment in 1982. As the experience goes this
has significantly contributed to industrial sickness. Therefore, removal of Chapter V-B has
been recommended by a number of Committees, including Inter Ministerial Working Group
on Industrial Restructuring (1992) and Industrial Sickness and Corporate Restructuring
(1993), which observed that Chapter V-B has proved detrimental to workers interest, hence,
should be deleted.
.
viii. Time Limit for raising disputes and filling claims
To discourage the filing of fictitious claims, a one year time limit should be fixed for raising
any disputes or filing of claims before the Authority for recovery of dues by a workman under
Section 33-C (2) and no belated claims should be entertained by any authority or the court.
ix.

Voluntary Arbitration must be Promoted to Discourage Litigation

Section 10A, providing for Voluntary Arbitration, has failed in its objective. Arbitration
should be promoted as an alternative dispute resolution machinery to discourage litigation. A
panel of expert arbitrators to be drawn up for the purpose.
x.

Publication of Awards

According to Section 17 of the existing Industrial Disputes Act, only a published award
becomes enforceable on the expiry of 30 days from date of its publication. The requirement
of publishing Award is a mere formality, consuming time and resources. The same can be
communicated to the parties like a Judgment of the Civil Court, which should become
enforceable on the expiry of 30 days after the Judgment, to give adequate time to parties to
file Appeal, if it is necessary.
xi.

Payment of wages during pending proceedings in higher courts

Payment of full wages to the workmen pending proceedings in the higher court, under
Section 17B of the Industrial Disputes Act is an iniquitous provision as much as the back
wages paid to the employee is not recoverable, even if the award of the Labour
Court/Industrial Tribunal is quashed by the higher courts

CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970

i.

Contract

Contracting out job work, services or employing contract employees, provides flexibility,
leads to efficient idealization of resources and improves overall competitiveness. Successful
organisations and big trading companies float subsidiary companies to look after the
peripheral and non-core activities of the organisation to achieve efficiency, cost effectiveness
and optimization of profits and productivity to maintain a competitive edge in the global
arena. It is at the same time promoting employment.
ii.

Applicability

It applies
(a) To every establishment in which twenty or more workmen are employed or were
employed on any day of the preceding twelve months as contract labour;
(b) to every contractor who employees or who employed on any day of the preceding twelve
months twenty or more workmen:
Provided that the appropriate Government may, after giving not less than two months' notice
of its intention so to do, by notification in the Official Gazette, apply the provisions of this
Act to any establishment or contractor employing such number of workmen less than twenty
as may be specified in the notification.
It shall not apply--(a) To establishments in which work only of an intermittent or casual nature is performed.
(b) If a question arises whether work performed in an establishment is of an intermittent or
casual nature
iii.

Definition of 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 of 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
iv.

Definition of Controlled Industry

"Controlled Industry" means any industry the control of which by the Union has been
declared by any Central Act to be expedient in the public interest
v.
Definition of 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 (63 of 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.
vi.

Licensing of Contractors

(1) With effect from such date as the appropriate Government may, by notification in the
Official Gazette, appoint, no contractor to whom this Act applies, shall undertake or execute
any work through contract labour except under and in accordance with a licence issued in that
behalf by the licensing officer.
(2) Subject to the provisions of this Act, a licence under sub-section (1) may contain such
conditions including, in particular, conditions as to hours of work, fixation of wages and other
essential amenities in respect of contract labour as the appropriate
Government may deem fit to impose in accordance with the rules, if any, made under section
35 and shall be issued on payment of such fees and on the deposit of such sum, if any, as
security for the due performance of the conditions as may be prescribed.
vii.

Welfare and health of contract labour

Canteens
Rest-rooms
First-aid facilities
Liability of principal employer in certain cases
Responsibility for payment of wages

viii.

Mode of Payment Rule 69

The current provision in Rule 69 of the Contract Labour (Regulation and Abolition) Central
Rules, 1971 provides for payment of all the wages in current coin or currency or in both,
should be suitably amended to enable making all the payments to contract workers through
cheque/ bank accounts. In this regard, the Government should relax the current KYC norms
for enabling contract workers to open bank account. Another option could be that the
registered address of the contractor may be accepted as address proof. With more than 30
million contract workers, this will help in promoting and fulfilling Governments vision of
financial inclusion. In this context, the Maharashtra government has mandated that all the
payment to contract workers should be made through bank accounts.
ix.

Contractors be treated as a separate establishment

Most of the problems in the existing contract labour legislation arise because of workers
being exploited in the hands of unscrupulous Contractors, despite welfare initiatives taken by
the Principal Employers. A provision be laid down in the Act underlying certain eligibility
criteria (annual turnover or total number of workers) to be fulfilled by the contractors before
obtaining a license from the licensing officer. The contractor who has met all the criteria and
obtained license under the Act be treated as a separate establishment and shall be fully
accountable as Principal Employer for any type of compliance/liability.

FACTORIES ACT, 1948

i.

Applicability

The Factories Act, 1948 applies to a manufacturing unit employing 10 workers if the work is
being done with the aid of power, or employing 20 workers without the aid of power. This
limit was fixed more than 60 years back, and since then many safe and hazard free
technologies/processes have been developed and are being used. Yet, even smaller units
employing as low as 10 workers are subjected to the same elaborate and harsh provisions of
the Factories Act, 1948.
ii.

Definition of Factory

The term Factory is defined in Section 2 (m) of the Act as follows: "Factory means any
premises including the precincts thereof- .
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
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,___
but does not include a mine subject to the operation of the Indian Mines Act, 1952 (Act
XXXV of 1952), or a mobile unit belonging to the armed forces of the Union, a railway
running shed or a hotel, restaurant or eating place.
iii.

Definition of Worker

"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"
iv.

Approval, licencing and registration

It is necessary to obtain a" licence before a factory is started. Section 6 provides that the State
Government may make rules requiring, for the purposes of this Act, the submission of. plans
or any class or description of factories to the Chief Inspector or the State Government, and
the plans and specifications of a factory and its location.
The Amendment of 1976 provides that any replacement and addition to the factory will not
be allowed if it does not reduce the I minimum clear space required for safe working around

the plant or machinery or adversely affect the environmental conditions from the evolution or
emission of steam, heat or dust or fumes injurious to health.
v.

Provisions covered

Provisions Regarding Health

Cleanliness
Disposal of wastes and effluents
Ventilations and temperature
Dust and fumes
Artificial humidification
Overcrowding
Lighting
Drinking water
Latrines and urinals
Spittoons
Provisions Regarding Safety
Fencing of machinery
Work on or near machinery in motion
Employment of young person in dangerous machine
Striking gear and devices for cutting off power
Self acting machines
Casing of new machinery
Prohibition of employment of women and children near cotton openers
Hoists, lifts, lifting machines and others
Revolving machinery
Pressure plant
Safety of building and machines
Safety officers
Provisions Regarding Welfare of Workers
Washing facilities
Facilities for storing and drying clothing
Facilities for sitting
First-aid facilities
Canteens, shelters, rest rooms and lunch rooms
Creches
Welfare officers
The law also talks about hazardous processes, working hours of adults, annual leaves
with wages, offences, penalties.

INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946

i.

Standing Orders

Standing Orders means rules of conduct for workmen employed in industrial

establishments. Standing orders means rules relating to matters set out in the schedule to the
Act. [section 2(g)]. The schedule to the Act requires that following should be specified in
Standing Orders (a) classification of workmen i.e. temporary, badli, casual, permanent, skilled etc.
(b) manner of intimating to workmen working hours, shift working, transfers etc.
(c) Holidays
(d) Attendance and late coming rules
(e) Leave rules
(f) Leave eligibility and leave conditions
(g) Closing and reopening of sections of industrial establishment
(h) Termination of employment, suspension, dismissal etc. for misconduct and acts or
omissions which constitute misconduct
(i) Retirement age
(j) Means of redressal of workmen against unfair treatment or wrongful exactions by
employer
(k) Any other matter that may be prescribed.

ii.

Applicability

The Act is applicable to all industrial establishments employing 100 or more workmen.
[Section 1(3)]. Industrial establishment means (i) an industrial establishment as defined in
section 2(i) of Payment of Wages Act (ii) Factory as defined in section 2(m) of Factories Act

(iii) Railway (iv) Establishment of contractor who employs workmen for fulfilling contract
with owner of an industrial establishment. [Section 2(e)]. The term industrial establishment
includes factory, transport service, construction work, mines, plantation, workshop, building
activity, transmission of power etc.

iii.

Approval of Standing Orders

Every employer covered under the Act has to prepare Standing Orders, covering the matters
required in the Standing Orders. Five copies of these should be sent to Certifying Officer
for approval. [section 3(1)]. Certifying Officer means Labour Commissioner and any officer
appointed by Government to be Certifying Officer. [section 2(c)].
The Certifying Officer will inform the Union and workmen and hear their objections.
After that, he will certify the Standing Orders for the industrial establishment. [section 5].
Till standing orders are certified, Model Standing Order prepared by Government will
automatically apply. [section12A].
Standing order should be displayed in English and local language on special notice
boards at or near entrance of the establishment. [section 9]. Modifications of Standing Order
shall be done by following similar procedure. [Section 10].
Once the Standing Orders are certified, they supersede any term and condition of
employment, contained in the appointment letter. If there is inconsistency between Standing
Order and Appointment Letter, the provisions of Standing Order prevail.
Standing orders are binding on employer and employee. These are statutorily imposed
conditions of service. However, they are not statutory provisions themselves (meaning that
the Standing Orders even when approved, do not become law in the sense in which Rules
and Notifications issued under delegated legislation become after they are published as
prescribed.)

iv.

Model Standing Orders

The Act has prescribed Model Standing Orders. These are automatically applicable till
employer prepares his own Standing Orders and these are approved by Certifying Officer.
[Section 12A].

v.

Disciplinary Action

The most important use of Standing Orders is in case of disciplinary action. A workman can
be punished only if the act committed by him ismisconduct as defined under the Standing
Orders. The Model Standing Orders contain such acts like insubordination, disobedience,
fraud, dishonesty, damage to employers property, taking bribe, habitual absence or habitual
late attendance, riotous behaviour, habitual neglect of work, strike in contravention of rules
etc. as misconducts. The Certified Standing Orders may cover other acts as misconduct, if
approved by Certifying Officer.

vi.

Subsistence Allowance

Where a workman is suspended by employer pending investigation or enquiry into

complaints or charges of misconduct against him, the workman shall be paid subsistence
allowance equal to 50% of wages for first 90 days of suspension and 75% of wages for
remaining period till completion of disciplinary proceedings. [section 10A(1)]. - - Wages
has same meaning as under section 2(rr) of Industrial Disputes Act. [section 2(i)].

TRADE UNIONS ACT, 1926

i.

Multiplicity of Trade Unions

Multiplicity of Trade Unions promote inter and intra union rivalry, hence, a bane to promote
bi-partism. There are countries like Japan and Australia where one enterprise one union is a
benchmark. On the contrary, in India, we have multiple unions in one enterprise, promoting
inter and intra union rivalry adversely affecting production, productivity, industrial relations.
To reduce this multiplicity, only trade unions having membership of at least 25% of the total
work force in an enterprise should be registered. Section 4 of the Trade Unions Act, 1926
should therefore be amended accordingly.

ii.

Definition of trade dispute

"Trade

dispute" means any dispute between employers and workmen or between workmen
and workmen, or between employers and employers which is connected with the employment
or non-employment, or the terms of employment or the conditions of labour, of any person,
and "workmen" means all persons employed in trade or industry whether or not in the
employment of the employer with whom the trade dispute arises.
iii.

Definition of trade union

"Trade Union" means any combination, whether temporary or permanent, formed primarily
for the purpose of regulating the relations between workmen and employers or between
workmen and workmen, or between employers and employers, or for imposing restrictive
conditions on the conduct of any trade or business, and includes any federation of two or
more Trade Unions
iv.

Recognised Bargaining Agent

Absence of a Recognised Bargaining Agent weakens the process of collective bargaining,

opening scope for litigations. The Trade Unions Act should, therefore, provide for recognition
of the Bargaining Agent. A union with 51% membership should be recognized as the Sole
Bargaining Agent. In case, no single union has 51%, the top 2-3 unions with more than 25%
membership may come together to form Joint Bargaining Council. A union with less than
25% membership should not have a right to challenge a collective agreement nor raise a
collective dispute. A new provision in the Trade Unions Act should therefore be inserted
suitably.
v.

Trade Union Executive

The number of outsiders in the Trade Union Executive should be restricted to a maximum of
two persons as against 50 percent in the legislation and out of the two top positions of
'President' and 'General Secretary' at least one post should be held by the internal employee.
Section 22 of the Trade Unions Act should be amended accordingly.
vi.

Registration Trade Union

Registration of a Trade Union should be compulsory and the registration is liable for
automatic cancellation if the Union fails to hold elections every year, and also does not
submit return in time to the Registrar of Trade Unions.
Every application for registration of a Trade Union shall be made to the Registrar, and shall
be accompanied by a copy of the rules of the Trade Union and a statement of the following
particulars, namely:-(a) the names, occupations and addresses of the members making the application;
(b) the name of the Trade Union and the address of its head office; and
(c) the titles, names, ages, addresses and occupations of the [office-bearers] of the Trade
Union.
Where a Trade Union has been in existence for more than one year before the making of an
application for its registration, there shall be delivered to the Registrar, together with the
application, a general statement of the assets and liabilities of the Trade Union prepared in
such form and containing such particulars as may be prescribed.
vii.

Rights and liabilities of registered trade union

(a) the payment of salaries, allowances and expenses to [office-bearers] of the Trade Union;
(b) the payment of expenses for the administration of the Trade Union, including audit of the
accounts of the general funds of the Trade Union;
(c) the prosecution or defence of any legal proceeding to which the Trade Union or any
member thereof is a party, when such prosecution or defence is undertaken for the purpose of
securing or protecting any rights of the Trade Union as such or any rights arising out of the
Relations of any member with his employer or with a person whom the member employs;
(d) the conduct of trade disputes on behalf of the Trade Union or any member thereof;
(e) the compensation of members for loss arising out of trade disputes;
(f) allowances to members or their dependants on account of death, old age, sickness,
accidents or unemployment of such members;
(g) the issue of, or the undertaking of liability under, policies of assurance on the lives of
members, or under policies insuring members against sickness, accident or unemployment;
(h) the provision of educational, social or religious benefits for members (including the
payment of the expenses of funeral or religious ceremonies for deceased members) or for the
dependants of members;
(i) the upkeep of a periodical published mainly for the purpose of discussing questions
affecting employers or workmen as such;
(j) the payment, in furtherance of any of the objects on which the general funds of the Trade
Union may be spent, of contributions to any cause intended to benefit workmen
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