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Labour Law in India: Structure and Working

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LABOUR LAW IN INDIA: STRUCTURE AND WORKING
Debi S. Saini*

I. INTRODUCTION

Especially after the Second World War, labour law has enjoyed a significant place in developed as
well as developing economies. It is expected to work as an important instrument of welfare state. It
has helped countries to lay down foundations of societies as well as some of the basic postulates of
organizational governance. The subject has occupied a prominent place in general economic and
social discourse as well. Labour law––especially industrial relations law––can also be seen as an
instrument of maintaining some kind of balance between incomes of people as also a medium of
securing dignity of worklife to working people. Most nations view labour rights as fundamental for
ensuring fairness in the carrying out of the labour process. In actuality, labour rights reflect some
kind of compromise between notions of productivity, efficiency and freedom of contract on the one
hand and social justice and labour standards on the other.

After Independence from the colonial rule in 1947, the Indian state consciously chose the path of
passing labour legislations on different spheres of work. A number of such laws were enacted with
the active role of trade union leadership. This branch of law has come to be accepted as distinct from
rest of the Indian legal system. For example, most labour laws in the country envisage quasi-judicial
bodies for expeditious settlement of labour claims under different labour laws. India adopted a system
of Five-Year plans for planning its economic development. Most five-year plans have made
particular mention of promoting growth with social justice; and labour laws were given a prominent
place in this regard. The Indian judiciary has played a salutary role in progressive interpretation of
these laws.

This chapter attempts to analyze the structure of Indian labour law in the overall context of the
notion of social and economic justice as enshrined in the Constitution of India. It also focuses on the
working of the labour law framework in terms of its stated goals as also the changing needs of a
globalizing economy. It deals with questions, among others: the constitutional context of labour law;
the structure and functioning of different branches of labour law i.e. law of working conditions,
labour relations law, law of wages and monetary benefits, law of social security; and a review of the
working of these laws. While discussing the working of these laws in the last part, the chapter focuses,
among others, on the implementation of labour laws and the role being played in this regard by the
state and its agencies. The concluding part discusses how the realization of labour law objectives can
be made more realistic from the view point of the constitutional promise of socio-economic justice,
as also the changing context of the employer and employees’ power position.

II. CONSTITUTIONAL FRAMEWORK AND LABOUR LAW

The Constitution of India – the super-ordinate law of the land – guides all legislative, executive and
judicial actions in the country. The Seventh Schedule of the constitution envisages distribution of
*
Professor & Chairperson––Human Resource Management Area, Management Development Institute, Mehrauli Road,
Gurgaon-122001, Haryana.

1
legislative powers between central and state legislatures on different matters. The Schedule contains
three lists – Central List (List I), State List (List II) and Concurrent List (List III). For matters
contained in List I only Parliament, the Central Legislature, can enact a law; for matters specified in
List II only the State Legislature concerned can enact a law; and for matters contained in List III, both
Central and State Legislatures can enact a law. In case a matter falls in List III, and a case of
repugnancy arises between the laws passed by the Central Legislature and the State Legislature, then
the Central law will prevail over State law. But in case such legislation is submitted to the President
for his assent, and which is duly accorded, then the State law will prevail over the central law.

Most labour matters find place in List III (Concurrent List). Among others, these includes: trade
unions; industrial and labour disputes; social security and social insurance; employment and
unemployment; welfare of labour including conditions of work; provident funds; employers’ liability;
workmen’s compensation; invalidity and old age pensions; and maternity benefits. However,
regulation of labour and safety in mines and oilfields is the exclusive domain of the Central
Legislature as these matters are specified in list I. Likewise, relief for the disabled and unemployable
is under the exclusive jurisdiction of the State Legislatures as these matters are specified in list II.
Since most labour matters fall in the Concurrent List, Parliament has enacted labour laws in almost
all these matters. However, states have made amendments in the central Acts as per their local
requirements and have obtained the President’s assent to the changes made.

Perhaps the most important parts of the Indian Constitution are provisions of Chapters III and IV. The
former is titled, the Fundamental Rights and the latter, the Directive Principles of State Policy. The
Fundamental Rights are modeled after the American Bill of Rights. Their violation can be challenged
though the writ jurisdiction of the Supreme Court and the High Courts. These rights limit the power
of the legislature to enact laws. Among others, the Fundamental Rights pertain to right to equality
before law, along with rights to particular freedoms. These particular freedoms include speech;
association; movement throughout the territory of India; residence; profession, trade and business;
protection of life and personal liberty and religion. The Constitution confers a fundamental Right on
children, as per which it prevents employment of children below 14 years of age in hazardous
employments. It also prevents traffic in human beings and employment of forced labour.1

The Preamble of the Constitution is also an important source of power to the legislature for enacting
laws for the protection of labour. It promises to secure to the people “justice, social, economic and
political; liberty of thought, expression, belief, faith and worship; equality of status and of
opportunity ….” The Directives Principles of State Policy as envisaged in Part IV of the Constitution
are not enforceable in any court of law. But they have been held by the Supreme Court of India to be
‘nevertheless fundamental in the governance of the country’. And, the judiciary in general has time
and again expressed its advice to the Government/legislature to apply them in making laws. It has
often taken the support of this chapter in holding the constitutional validity of many labour laws.

A reading of Part IV of the constitution and its Preamble helps to know the basic philosophy of the
Constitution. The Directive Principles contained in Part IV represent certain key values which are to
be rooted in the “reconstruction of Indian society and Government along lines of a modern welfare
state” (Galanter, 1989). Some of these directives relate to promotion of welfare of people2 including
minimizing inequalities; 3 directing the State’s policy towards securing fulfillment of certain
minimum needs;4 right to work, education, and to public assistance in certain cases;5 provision of just

2
and humane conditions of work and maternity relief; 6 living wage 7 , participation of workers in
management of industries; 8 free and compulsory education for children; 9 and to improve public
health.10

Interestingly, much of the development of labour jurisprudence in the country owes to the above-
mentioned provisions contained in Part IV. This part in a way legitimizes the labour’s demands raised
through demand charters submitted to managements. While delivering many judgements, the
judiciary has often reminded the executive and the legislature to enact legislations that provide for
basic needs of the people and to enforce them as per the spirit in which they have been created. The
directive principles are considered so important that some jurists have described them as the “soul of
the Constitution” (Dhavan, 1989: xxii).

Premised in the framework of the directive principles, labour legislation in the country provides a
large number of central (federal) labour statutes. These laws can be classified into mainly four
categories: conditions of work; labour relations; wages and monetary benefits; and social security.
Since labour is a subject in the concurrent list of the Constitution, the 28 states and 6 union territories
comprising the Indian federation have in some cases enacted their own labour legislation. This is
over and above the central enactments on the same matters to suit indigenous situations and local
power realities. So, the central and state labour enactments in the country add up to more than 200. In
fact, India is often being viewed as a society where labour is overprotected through law (Debroy,
1996). However cases of labour law violation are too many; so much so that often when one sees the
working conditions of the unorganized labourers, one would wonder whether any labour law exists at
all for them (Saini, 1998, 1999; Patel and Desai, 1995).

In all, over 60 major central labour legislations have been enacted by the central legislature.
Similarly, about over 150 labour legislations have been enacted by the state legislatures; each of these
legislations is specific to the needs of the state concerned. Some of the central labour legislations in
India that are considered to be important are as follows:

 Apprentices Act, 1961

 Beedi & Cigar Workers (Conditions of Employment) Act, 1966
 Bonded Labour System (Abolition) Act, 1976
 Building and Other Construction Workers (Regulation of Employment Service) Act, 1996
 Child Labour (Prohibition & Regulation) Act, 1986
 Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981
 Contract Labour (Regulation & Abolition) Act, 1970
 Dangerous Machines (Regulation) Act, 1983
 Dock Workers (Regulation of Employment) Act, 1948
 Dock Workers (Safety, Health and Welfare) Act, 1986
 Emigration Act, 1983
 Employees Provident Fund & Miscellaneous Provisions Act, 1952
 Employees' State Insurance Act, 1948
 Employment exchanges (Compulsory Notification of vacancies) Act, 1959
 Employers' Liability Act, 1938
 Equal Remuneration Act, 1976
 Factories Act, 1948

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 Industrial Disputes Act, 1947
 Industrial Employment (Standing Orders) Act, 1946
 Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
 Labour Laws (Exemption from Furnishing Returns & Maintaining Registers by Certain
Establishments) Act, 1988
 Maternity Benefit Act, 1961
 Mines Act, 1952
 Minimum Wages Act, 1948
 Motor Transport Workers Act, 1961
 National Commission for Safai Karamcharis Act, 1993
 Payment of Bonus Act, 1965
 Payment of Gratuity Act, 1972
 Payment of Wages Act, 1936
 Plantations Labour Act, 1951
 Public Liability Insurance Act, 1991
 Sales Promotion Employees (Conditions of Service) Act, 1976
 Trade Union Act, 1926
 Weekly Holidays Act, 1948
 Workmen's Compensation Act, 1923

Legislation is only one of the sources of labour law. Almost each labour legislations is supplemented
by a commensurate secondary legislation, which consists of Regulations and Rules made by the
appropriate Government—Central as well as state––to give effect to the legislations or to administer
them. Case law in the form of decisions of the Supreme Court and various High Courts are also a
very important source of labour law. Thousands of such decisions have been delivered; many of them
have been overruled to bring in fresh perspectives of the legal position concerned. Further, terms and
conditions of a labour contract could be derived from a collective bargaining contract or an individual
contract between employer and employee. International standards laid down by bodies like
International Labour Organization (ILO) too have been referred by especially the higher judiciary to
support its decisions; thus they are considered as important sources of labour law in appropriate
situations.

III. THE LAW OF WORKING CONDITIONS

There are several classes of work organization where people are employed. These include: factories,
establishments, shops, mines, plantations, etc. Agriculture too is a major activity, which employs the
largest number of workers in India; but most parts of agricultural operations are not regulated through
law. The issue of conditions of employment needs state attention in case of contract workers; they are
normally made to work in difficult work environment. Inter-state migrant workers and child workers
too are highly susceptible to exploitation. Indian state has enacted legislation for regulating
conditions of work of such categories of workers. Most of the provisions of laws regulating
conditions of work relate to health, safety and welfare of workers. The judiciary has often expanded
the scope of these provisions by giving them liberal interpretation. In doing so, it has repeatedly
referred to the Directive Principles of State Policy stated in the previous section. We may discuss
these legislations as under:

4
The Factories Act, 1948

The Factories Act, 1948 regulates the work conditions of most workers employed in the organized
manufacturing sector in India. The first legislation on factories in India dates back to 1881. Ten years
later it was replaced by the Indian Factories Act, 1891. Soon after independence the Factories Act,
1948 was enacted to further humanize the conditions of work in factories. The word ‘factory’ has
been defined as premises or precincts where a manufacturing process is carried on by 10 or more
workers with the aid of power or by 20 or more workers without the aid of power. The word
manufacturing process has been given a very wide definition; and includes even processes such as
repairing of movable things for the purpose of sale or disposal; and pumping of oil, water, etc. The
word worker too has a wide definition and includes all persons involved in the manufacturing
process; the scope of this definition was further widened in 1976 to include workers employed
through or by contractor.

This legislation mainly deals with the following: provisions related to health, welfare, and safety;
working hours for adults and children; and protection to women and children against certain hazards.
The Act also provides for registration and licensing of factories; obtaining the approval of factory
sites; obligations of occupier of a factory; and provision of annual leave with wages to workers. The
Act provides a maximum of nine hours of work per day with a rest interval of at least half an hour
after five hours of work. Also provided is a daily spread over of not more that ten and a half hours.
Overtime work in a factory has to be paid double the rate. The Act provides for a weekly holiday.
Children below 14 years of age are not permitted to be employed in any factory. The health
provisions deal with, among others, issues like cleanliness, disposal of wastes, ventilation, dust and
fumes, artificial humidification, over crowding, drinking water, latrines and urinals and spittoons.
Provision has also been made for welfare facilities like washing, storing and drying of clothes, places
of sitting, rest shelters and lunch rooms, first aid appliances, canteens and crèches.

Safety provisions include, among others, detailed specification of space to be provided for every
person working; installations of and working on machines; hoists, lifts, lifting machines, chains,
ropes, etc.; pits sumps, opening in floors; carrying of weights; precautions in case of fire. In 1984, the
Bhopal Gas disaster took place at a factory of the Union Carbide Ltd. in Bhopal, Madhya Pradesh.
This led to killing of nearly 8000 people and disabling several thousand. This tragedy showed holes
in the safety provisions of the Factories Act, 1948. This led to an amendment in the Act in 1987.
Consequently, chapter IV-A was added to the Act which has been titled: Provisions Relating to
Hazardous Processes. This chapter provided new sections from 41-A to 41-H. Two new schedules
were added to the Act in the form of the First Schedule and the Second Schedule. The First Schedule
provides a list of 29 industries that involve hazardous processes. The Second Schedule provides the
permissible levels of certain chemical substances in work environment. Provisions of the new chapter
IV-A relate to, among others, constitution of site appraisal committees, compulsory disclosure of
certain information by the occupier, permissible limits of exposure of chemical and toxic substances,
workers’ participation in safety management, and rights of workers to be warned against imminent
danger. The amended Act also gives a right to every worker (section 111-A) to obtain from the
occupier information related to workers’ health and safety at work and get trained in health and safety
matters at the expense of the employer.

5
Certain authorities like inspectors, welfare officers, certifying surgeons have been provided, who are
expected to ensure the implementation of the Act. Penalties for violation of the Act have been
substantially hiked by the 1987 amendment to the Act. For example, the general penalty for offences
can be imprisonment up to two years and a fine of Rs. one hundred thousand.

The Shops and Establishments legislation

India does not have any central legislation for shops and establishments. It has been left to be
enacted by the state legislature. Each state has enacted its own legislation, and has framed its own
rules under the Act. Most state legislations have similar provisions, with minor differences here and
there. This area of work pertains to mostly workers in the unorganized sector, as most shops and
establishments are small. However, larger establishments are also covered. Those units which do not
fall in the definition of the Factories Act, 1948 due to less number of people employed are covered
under the Shops & Establishments law. Mostly the state governments can exempt, either permanently
or for a specified period, any establishments from all or any provisions of its shops and establishment
legislation. It is applicable to all persons employed in an establishment with or without wages,
except the members of the employer's family. The Act provides for compulsory registration of
shop/establishment concerned. Provisions related to hours of work per day and week as well as the
guidelines for spread-over, rest interval, opening and closing hours, closed days, national and
religious holidays, overtime work, etc. are usually there in each such law. The Delhi Shops and
Establishments Act 1955 has extended the provisions of workmen’s Compensation Act 1923 to all
workers covered by that Act. Most Acts are administered by inspectors.

The Mines Act, 1952

The Mines Act, 1952 contains provisions for measures relating to the health, safety and welfare of
workers employed in mines. According to the Act, the term 'mine' means any excavation where any
operation for the purpose of searching for or obtaining minerals has been or is being carried on and
includes all borings, bore holes, oil wells and accessory crude conditioning plants, shafts, opencast
workings, conveyors or aerial ropeways, planes, machinery works, railways, tramways, slidings,
workshops, power stations, etc. or any premises connected with mining operations and near or in the
mining area. Among others, the Act provides for supply of drinking water, conservancy, and medical
appliances. There is provision also for giving notice to appropriate authorities in case of accidents
and certain diseases. Over time rate has been provided to be twice the daily wage both for workers
working above and below the ground work. Women workers are not allowed to work below the
ground. A person below the age of 18 years is not allowed to work in a mine. But apprentices and
other trainees not below the age of 16 years may be allowed to work under proper supervision by the
manager. Provision has also been made for annual leave with wages. Such leaves are to be calculated
at the rate of one day for every fifteen days’ work.

The Act is administered by inspectors and certifying surgeons. Since it is fully under the central
jurisdiction, the central Ministry of Labour and Employment through the Directorate General of
Mines Safety (DGMS) has been entrusted the responsibility for administering this law. DGMS
conducts inspections and inquiries, and issues competency tests for the purpose of appointment to
various posts in the mines. It also organizes seminars/conferences on various aspects of safety of
workers.

6
The Plantations Labour Act, 1951

The Plantation Labour Act, 1951 regulates the conditions of work for plantations labour. It applies to
tea, coffee, rubber, and cinchona plantations. The state governments may apply it to any other
plantation. All plantations are required to be registered with a registering officer. It mainly provides
for health and welfare measures. According to the Act, the term plantation means “any plantation to
which this Act, whether wholly or in part, applies and includes offices, hospitals, dispensaries,
schools, and any other premises used for any purpose connected with such plantation…”.

Among others, the Act provides for drinking water, conservancy, medical facilities, canteen, crèches,
recreational facilities, educational facilities, and housing for workers and their families. Also, there is
provision for supply of umbrellas, blankets and rain coats. Employers are obliged to provide and
maintain necessary housing accommodation for every worker (including his family) residing in
plantation; and for every worker and family residing outside the plantation, who has put in six months
of continuous service in the plantation and has expressed a desire to reside in the plantation. Children
under 12 years of age are prohibited for employment in any plantation. Children of workers between
the age of 6 and 12 have to be provided free educational facilities. The Act regulates working hours,
provides for a weekly holiday, and leave with wages. It also provides for appointment of suitable
inspecting, medical or other staff for the purpose of securing compliance with various provisions of
the Act. The Act is administered by inspectors and certifying surgeons.

The Motor Transport Workers Act, 1961

The Motor Transport Workers Act, 1961 seeks to regulate the conditions of work of motor transport
workers. The Act applies to every motor transport undertaking employing five or more motor
transport workers. The State Government has been authorized to extend the Act to any motor
transport undertaking employing less than five motor transport workers. It can do so after giving
notification in the Official Gazette. According to the Act, a “motor transport undertaking' has been
defined as “an undertaking engaged in carrying passengers or goods or both by road for hire or
reward and includes a private carrier.” Every employer of a motor transport undertaking to which this
Act applies is obliged to register such undertaking under this Act.

The welfare and health provisions to be made available to all workers include: canteens where 100 or
more motor transport workers are employed, restrooms where workers are required to halt at night,
uniforms, and medical and first-aid facilities. No adult motor transport worker can be required or
allowed to work for more than eight hours in any day and forty-eight hours in any week. The hours of
work can not spread over more than 12 hours in any day. Provision has been made for weekly day of
rest and compensatory day of rest. Children are prohibited to work as motor transport worker. Also,
no adolescent shall be employed or required to work as a motor transport worker in any motor
transport undertaking for more than six hours a day including rest interval of half-an-hour; and
between the hours of 10 P.M. and 6 A.M. Overtime has to be paid at the rate of twice the ordinary
rate of wages. Annual leave with wages are payable on similar pattern as in case of factory workers.
The Act is administered by inspectors and certifying surgeons.

The Contract Labour (Regulation & Abolition) Act, 1970

7
Contract workers are subjected to intense exploitation by contractors as well as the principal
employers. These workers are generally engaged in agricultural operations, plantation, construction
industry, ports & docks, oil fields, factories, railways, shipping, airlines, road transport, etc. The
Contract Labour (Regulation & Abolition) Act, 1970 (CLA) was enacted to regulate employment of
labour employed by contractors so as to provide some sense of security to workers working with
them. It also regulates the conditions of work of such workers. The Act provides for registration of all
employers covered by the Act, and licensing of contractors and sub-contractors. It requires payment
of wages by the contractor in the presence of the representative of the principle employer, who has to
certify that correct payment has been made in his presence. There is provision for constitution of
Central and State Advisory Boards for advising the appropriate government for administering the
CLA.

Chapter V of the CLA provides for certain welfare and health measures for contract labour. In case
100 or more contract labourers are employed a canteen has to be provided. Where contract labour is
supposed to halt at night, rest rooms have to be provided. First-aid facilities have to be readily made
available. Other welfare facilities to be provided include: wholesome drinking water; sufficient
number of latrines and urinals; and washing facilities.

The Act is implemented both by the Centre and the State Governments. The Central Government has
jurisdiction over establishments like railways, banks, mines, etc. and the State Governments have
jurisdiction over units located in that state.

The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act,
1979

The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
(ISMWA) was enacted to protect the rights of migrant workers, and thus safeguard their interest. It
regulates their employment and provides for minimum conditions of work for this category of
workers. It applies to every establishment and the contractor that employs five or more inter-state
migrant workmen. Among others, it provides for compulsory registration of principal employers and
licensing of contractors. The Act fixes responsibility on the contractor and the principal employer for
payment of wages. It is provided that all liabilities of migrant labourers are deemed to be
extinguished after the completion of the period of employment.11

The Act has provision for issue of Pass-Book to every inter-state migrant workman with full details,
payment of displacement allowance, payment of journey allowance including payment of wage
during the period of journey, suitable residential accommodation, medical facilities and protective
clothing, payment of wages, equal pay for equal work irrespective of sex, etc. The Act fixes the
responsibility of wage payment on the contractor as well as the principal employer. The Act is
administered by inspectors.

Child Labour (Abolition and Regulation) Act 1985

No enlightened society can allow its children to be subjected to work at a tender age. World over
child labour is a serious issue for human right activists. There is considerable pressure on states for its
complete abolition. Indian situation on employment of child labour is quite bad. Even as the best

8
friends of children were waiting for compulsory primary education to become a reality and abolish
child labour altogether, the Indian Parliament passed the Child Labour (Prohibition and Regulation)
Act 1985. This Act banned the employment of children below the age of 14 years in hazardous
occupations; which among others, include glass and glassware, fireworks and matchmaking, and
carpet weaving. The Act regulates the work of children where they are permitted to work. It fixes
the number of hours for child work. It is provided that the total spread over of child’s work shall not
exceed 6 hours. There is a provision of weekly holiday. There are provisions for health and safety of
children employed or permitted to work in any establishment. It lists 24 areas in which governments
are expected to frame rules for the protection of child labour. These, among others, include
cleanliness, disposal of wastes, lighting, drinking water, safety issues, maintenance of buildings, etc.
The Act provides stringent punishment for violation of the Act.

IV. INDUSTRIAL RELATIONS LAW

The individual contract of employment is known to favour the employer, who is a stronger side in the
employment relationship. The common law envisages some strong managerial prerogatives for
employers that they exercise over workers. This gives rise to the need to allow labour to unite, form
collectives, and thus struggle to seek workplace justice on its own. Unionization and collective
bargaining lie at the root of most labour relations issues. Interestingly, Article 23 of the Universal
Declaration of Human Rights adopted by the United Nations Organization as a common standard of
achievement for all people in all nations recognizes the legitimacy of union rights. It provides, among
others, for everyone “the right to form and to join trade unions, for the protection of his interests”.
The constitutional guarantee provided by Article 19 (1) (c) of the Indian Constitution, envisages
provision of association/union rights to citizens in general. The IR law provides a framework to
operationalize the spirit behind this fundamental guarantee. The disputant parties also need to be
made available a system of effective industrial dispute resolution. In India, the industrial dispute
resolution law can be found in the Industrial Disputes Act, 1947 (IDA). The Industrial Employment
(Standing Orders) Act 1946 provides that every employer should make available to its employees just
and fair terms of employment.

Perhaps, the most crucial aspect of labour laws in any country is the law of industrial relations. As
per this thinking, the state should so evolve a legal framework of IR that it is able to play the role of a
neutral referee. Also, it should enable the weaker party to safeguard itself against the use of unfair
labour practices (ULPs) by the other side. If the state is able to ensure this, then the parties can
develop some kind of bilateral bargaining framework to carve out rules of workplace working.

The principal IR legislations in India are: the Trade Unions Act 1926 (TUA); the Industrial
Employment (Standing Orders) Act 1946; and the Industrial Disputes Act 1947 (IDA). These laws
have been enacted by the central legislature. The framework of these laws can be discussed as
follows:

The Trade Unions Act, 1926

The Trade Unions Act, 1926 (TUA) is one of the oldest labour legislations in India. The early
enactment of the TUA and the constitutional provision of guaranteeing freedom of association have
helped trade unions to legitimize their existence and operations. It envisages the procedure for

9
registration of unions. A union can be organized by workers employed in industry; however, the
definition of worker is wide enough to include even managers. A trade union can be registered by any
seven or more members. But this is subject to a minimum of 10 per cent of workers employed in an
industry or 100 whichever is less. When registered, a trade union gains the status of a legal entity
distinct from the members of the union. The TUA specifies their rights and obligations, including
conferring certain immunities on a registered trade union against certain actions which otherwise
could violate civil and criminal law. The Act provides the minimum rates of subscription for union
membership in rural, unorganized and organized industries, which are Rs. 1, 3, and 12 per annum
respectively. It also contains rules relating to constitution of “general fund” and “political fund” of a
trade union, and the objectives in furtherance of which they could be spent. Provision has been made
for filing of annual returns by a trade union to the registrar of trade unions. Outsiders are permitted to
become special members of a union; the number of such persons is different in organized and
unorganized sector. The 2001 amendment to the TUA has reduced the maximum number of
outsiders in a trade union from ½ to 1/3 or 5 persons whichever is less. This is expected to promote
insider leadership.

The TUA confers on workers the immunity against civil and criminal liability for taking industrial
action for certain acts done in furtherance of an industrial dispute. It was so provided to acknowledge
the necessity of collective bargaining for securing dignified and lasting peace. The Industrial
Disputes Act 1947 (IDA) is the main law for processing of industrial disputes in India. Technically,
the structure of the IDA is such that an industrial dispute can be espoused by a substantial number of
persons. The Supreme Court has held about 20 per cent or more of the workforce can constitute
substantial number of persons in this regard. Thus, collective bargaining and collective industrial
dispute espousal in India are possible without forming a trade union. In actuality, however, it rarely
so happens.

The TUA provides only for registration and not recognition of trade unions. However, provision for
union recognition was made in the TUA by way of amendment in 1947. But this has not been
enforced till date. Today, recognition can be gained by a union only through show of its strength.

The Industrial Employment (Standing Orders) Act, 1946

The Industrial Employment (Standing Orders) Act, 1946 (IESOA) envisages framing of standing
orders by the employers to whom this legislation applies. It applies to industrial establishments
employing 100 or more workers. But its applicability can be extended by the appropriate government
to establishments employing 50 or more workers. The Act is administered by the appropriate
government, the definition of which is more or less the same as in case of the IDA. The IESOA
provides for certification of standing orders by a certifying officer, who is a government officer.
Standing orders are the conditions of employment related to matters given in the schedule to the Act
that have been so certified. When certified, each standing order is deemed to form part of a worker’s
contract of employment. Contract of employment is known to be a relationship between unequals
(Kahn-Freund, 1977: 1) and therefore the weaker side needs to be protected. The IESOA recognizes
this. The Act requires employers in industrial establishments to define with sufficient precision the
conditions of employment and make them known to the workers employed by them.

10
The IESOA provides that the draft standing orders are submitted by the employer to the certifying
officer. The certifying officer is supposed to invite workers’ representatives to discuss the draft and
take into view their point of view before certifying the draft. After certification, they are entered into
the register of standing orders. The employer is supposed to post them on the notice board. Some of
the issues that are mentioned in the schedule, among others, are classification of workmen, discipline,
shift working, attendance and late coming, conditions for applying for leaves, termination of
employment, and means of redressal of grievances. The Act also provides for suspension allowance
to be paid to a worker while s/he remains suspended for disciplinary action.

While certifying the standing orders, the certifying officer is obliged to satisfy himself that they are
“just and fair.” There is a provision of appeal against the decision of the certifying officer. The Act
provides penalty for violating the Act.

The Industrial Disputes Act, 1947

The Industrial Dispute Act, 1947 (IDA) is the principal industrial relations law in India, which deals
with machinery for industrial disputes resolution. It provides a conciliation-arbitration-adjudication
model of collective as well as individual disputes resolution. It envisages seven forums for
processing of industrial disputes. There is provision for constitution of works committee in every
industry employing 100 or more workers. This committee consists of representatives of employer as
well as workers, and is expected to promote amity and good relations especially in the shop floor
working. The conciliation machinery consists of conciliation officer (CO) and board of conciliation
(BOC). COs are government officers, who are trained in promoting negotiation among disputant
parties. There is a provision of constitution of a court of inquiry by the appropriate government for
determining matters connected with an industrial dispute. The adjudication of industrial disputes can
be done by labour courts, industrial tribunals, or a national tribunal, depending upon the nature of the
dispute. Adjudication is not automatic but depends on reference of the dispute by the appropriate
government to an adjudicatory body. Reference is discretionary on the part of the government. There
are two important schedules to the Act: the second schedule and the third schedule. The former
enumerates rights matters, which fall in the jurisdiction of a labour court, and the latter contains
interest matters, which normally are in the jurisdiction of an industrial tribunal. The central as well as
state governments have been designated as appropriate governments under this law in different sets
of employments. In case a dispute is of national importance or involves workers in more than one
state, such a dispute can be referred by the central government to a national tribunal. An adjudicatory
body delivers an award, which has to be published in government’s official gazette before it becomes
enforceable.

Even though entering into conciliation in a dispute is discretionary on the part of the conciliation
officer (CO), in actuality it is usually done in all disputes. If a dispute is settled before the CO, he has
to register a settlement12. In case the CO fails to resolve the dispute, he has to send a failure report to
the appropriate government. On receipt of the failure report, or on its own motion, the appropriate
government can refer the dispute to a labour court or an industrial tribunal, which are adjudicatory
bodies under this Act. This process is technically called “reference”. The awards of adjudicatory
bodies are sent to the appropriate government which is obliged to publish them in the official gazette
within a period of 30 days from the receipt of the award. The award is enforceable after the expiry of
another 30 days from the date of is publication.

11
The IDA also provides for arbitration of industrial disputes. An arbitrator is appointed by the
disputant parties. He is supposed to give award after holding the arbitration proceedings. Ironically,
however, arbitration is almost dead in India as parties – especially workers – often fear that they can
be influenced by the employers.

The IDA also regulates strikes and lock outs in public utilities and non-public utilities. The
government interventions in strikes and lock outs are believed to be indeed quite excessive. Under
section 10 (3) of the IDA, the appropriate government can prohibit the strike that was in existence in
case it decides to refer the dispute for adjudication. It is believed that the law of strikes and lockouts
in India is so structured that a legal strike/lockout is almost impossible (Ramaswamy, 1984).

This Act prohibits lawyers to appear before COs. And, there are restrictions on their appearance
before labour courts and tribunals as well. However, with the passage of time, the presence of
lawyers in adjudication proceedings has become a reality in most cases. Penal provisions have been
made for violation of awards and settlements.

Working of the IR Laws

The three IR laws have played a key role in creating working class consciousness about their
collective and individual labour rights. Progressive interpretation of these laws by the judiciary
heightened the clash between workers’ aspiration and employers’ willingness to grant benefits.
During the 1960s and 1970s, the personnel managers in India were seen as children of the IDA; for
their main work involved maintenance of peaceful industrial relations—a sphere where labour law
played the key role.

At the same time, being a labour surplus economy, the country’s labour market realities helped the
employers to make cheap labour available to them. The situation was such that it led them to violate
minimum employment standards by colluding with the labour bureaucracy, and in many cases with
brief-case union leaders (Saini, 1995b). Thus, the IR system has so worked that employers have
learnt to subvert the legal requirements through various means. A large number of labour relations
consultants provide legal and extra legal advice to facilitate this process. The IDA model has played
the key role in shaping the IR environment in India. This model could not be replaced or even diluted
despite a 55-year debate on its fate. The influence of the adjudication system envisaged in the IDA
has been so strong that arbitration as a method of industrial disputes resolution is almost dead, except
to some extent in the Mumbai-Thane-Pune industrial belt, where it is still resorted to. Especially in
the private sector most employers make widespread use of the legal institutions to dilute the efficacy
of unions than indulging in genuine collective bargaining. Variegated unfair labour practices (ULPs)
are seen as being committed by both sides but more by the employers as they are a stronger party.

Research has revealed that the compulsory adjudication system for industrial dispute resolution has
kept the trade unions week. The adjudication system has reflected: undue delays in its working (baxi,
1994; Upadhyay, 1995); lack of accessibility from especially the viewpoint of workers as they
perceive its working as unjust; and formalism in its working including juridification13 of IR (Saini,
1999; 1995). The powers of the COs under the IDA appear small as they cannot impose their own
views on the disputant parties. But the working of the IDA shows that these powers have been

12
abundantly misused including at the instance of the political executives under whose overall direction
they work (Saini, 1995). Due to widespread presence of the IDA in the dispute process, a large
number of trade union leaders are running consultancy services for workers by representing them
before these bodies; in actuality, they have become brief-case union leaders (Saini 1995b), and hardly
involve themselves in any labour organization process.

So far as unionization in the country is concerned, it saw rapid growth in the organized sector in the
country (both private and public) during 1950s and 1960s. But unionization started declining after the
famous Bombay Textile Strike in 1982, which lasted more than a year. Thus unions have become
defensive in their fight against perceived unfairness. This has brought a sea change in the concept of
collective bargaining, which is now less and less on industry basis and more on unit basis (Business
India, 1998). The recent signals from the judiciary in the labour field have further depressed the
union power. Lately, some of the recent labour judgments in India reflect the belief that the judiciary
is more sympathetic with the employers and realizes their susceptibilities in the new environment.
The number of strikes resorted to is much less than the lockouts, (Business India, 1998; Mishra,
2001). So, the objective of the industrial relations laws are far from realized as per the projections
made.

V. THE LAW OF WAGES AND MONETARY BENEFITS

Wages and monetary benefits are perhaps the most important issues of conflict between employer
and employees. Mostly, IR issues centre around wages and bonuses. There are four important laws
that fall in this branch of labour law. They are: the Minimum Wages Act 1948; the Payment of
Wages Act, 1936 (POWA); the Payment of Bonus Act, 1965 (POBA); and the Equal Remuneration
Act, 1976 (ERA). It is interesting to note that the definition of the term ‘wage’ is not uniform under
all these laws. Also, coverage of workers under these laws is also different. POWA has a wage limit
of Rs. 6,500 for its application. POBA covers employees getting upto Rs. 3,500 per month. It has a
further limit of Rs. 2,500 for the purpose of calculation of bonus amount. Since its coverage limit is
so low, most workers remain out of the Act. The ERA has universal application, and covers all
categories of employees irrespective of the functions they perform and the wages they get. The MWA
provides only the minimum wage payable; the actual wages are fixed as per collective bargaining
agreement in the unionized sector or by wage boards in some sectors like steel or unilaterally by the
employer. We may discuss the broad features of these laws as follows:

The Minimum Wages Act, 1948

The Minimum Wages Act, 1948 (MWA) seeks to provide a comprehensive machinery for fixation
and revision of wages in certain industries. These are especially those industries which employ
sweated labour. The central as well state governments are appropriate governments for fixing
minimum wage rates in their respective jurisdictions. The Act is applicable to persons employed in
those employments that are provided in the schedule to this Act, which consists of two parts. Part I
lists a number of industries including woolen carpet making, rice mill, flour mil, construction and
maintenance of roads, municipality, public motor transport, docks and ports, and most of the mines.
Different state governments have made amendments to the schedule to list additional set of industries.
Part II includes employment in most of agricultural activities. Taking work from workers against
payment of less than the minimum wages has been held by the Supreme Court to be violative of

13
article 23 of the constitution and thus forced labour.14 It has been held by the Supreme Court of India
that “no industry has a right to exist unless it is able to pay its workmen at least a base minimum
wage.”15

Wages under the Act can be fixed in the form of a time rate or a piece rate (with a guaranteed time
rate) and an overtime rate. The law provides that different rates of wages can be fixed for different
employments in the Schedule. And, different rates can be fixed for adults, adolescents, children and
apprentices. They can even be different for different localities. It has been held by the Supreme Court
that no employer has the right to carry on his industry if he pays wages that are below those fixed
under the Act.16 MWA gives a blank cheque to the wage fixation authority as it does not provide any
guidelines on the basis of which minimum wages are to be fixed. However, the judiciary has tried to
provide some broad guidelines to them.

A wage rate can be fixed per hour or per day or per month or any longer wage period. The minimum
wage rates can be fixed by any of the two methods: 1) the committee method: under this method the
appropriate government appoints a committee that studies the issue of desired minimum wage and
also takes advice of the Advisory Boards; or 2) gazette notification method: under this method the
appropriate government gives a gazette notification of the proposed minimum wage rates that it
wishes to fix and later on invites objections to them, if any, from the employers and the employees,
before finalizing the minimum wage rates.

The Act is administered by inspectors. It also envisages appointment of a quasi-judicial authority to

hear and decide claims related to payment of less than the minimum wage and making delayed
payment of minimum wage. Penal provisions have been made for violating this Act. Penalties and
procedures for violation of the provisions of the Act have been specified. The rule-making powers
have been vested in the appropriate government.

The Payment of Wages Act, 1936

In the initial stage of industrialization, some of the common malpractices adopted by employers were
delayed payment of wages and undue deduction from wages. On the recommendation of the Royal
Commission on Labour 1931, the Payment of Wages Act, 1936 (POWA) was passed so as to
overcome such practices. The main objective of this law is to ensure that wages are paid to the
workers on time, in current coins or currency and without impermissible deductions. The Act applies
to factories, railways and other establishments. The responsibility of payment of wages is of the
employer. In addition, the person who is responsible to the employer for supervision and control has
also been made responsible. The Act requires that a wage period can not be more than one month.
Wages must normally be paid before the expiry of the 7th day from the last day in the wage period.

It contains a list of permissible deductions that the employer can make from the employees’ wages.
Some of the permissible deductions that can be made from wages are: fines; absence from duty;
damage or loss of goods entrusted to employed person; accommodation and service; recovery of
advance; recovery of loans; income tax, etc. Employers are obliged to maintain registers and records.
The Act is administered by central as well state governments in their respective jurisdictions through
inspectors. Employers have been obliged to display a notice containing abstracts of the Act and the
rules made there under.

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Like the minimum Wages Act, 1948 this legislation also envisages the constitution of a quasi-judicial
authority to hear and decide claims related to non-payment of wages. An employee can approach the
prescribed authority within a period of 6 months for claiming unpaid or delayed wages. There is
provision for appeal against the decision of the authority. Penalty has been prescribed for violating
the provisions of the Act.

The Payment of Bonus Act, 1965

The Payment of Bonus Act 1965 (POBA) extends to the whole of India, and applies to every factory
as defined under the Factories Act, 1948; and every other establishment wherein 20 or more persons
are employed on any day during the accounting year. The Act seeks: 1) to impose a statutory
liability upon every establishment covered under this legislation to pay bonus to its employees; 2) to
define the principle of payment of bonus according to the formula prescribed under this Act; 3) to
provide the payment of minimum and maximum bonus and link the payment of bonus with the
scheme of set off and set on; and 4) to provide a machinery for enforcement of the payment of bonus
liability under the Act. The Act does not define the term bonus, nor does the term bonus exist in any
other Act.

The bonus formula provides that first of all the gross profit for the bonus year has to be determined as
per the relevant entries given in the second schedule of the Act. From the gross profit so derived
certain deductions have to be made. These deductions have been envisaged under sections 5, 6 & 7
of the Act. These include the notional normal depreciation, development rebate, investment
allowance and development allowance, the direct tax, and such further sums as are specified in the 3rd
schedule. The bonus has to be paid from the resulting allocable surplus. Every employee is entitled
to bonus provided he has worked for not less than 30 days in a year. And, an employee shall be
disqualified to receive bonus if he is dismissed from service for: fraud; or riotous or violent behaviour
while on the premises of the establishment; or theft, misappropriation or sabotage of any property of
the establishment.

In case in an accounting year the allocable surplus falls short of the minimum bonus, the minimum
bonus will have to be paid according to section 10. And if the allocable surplus permits, bonus
should be paid up to the maximum bonus prescribed under section 11. In any case the principle of set
on and set off comes into play. The purpose of set on and set off principle is to envisage payment of
a minimum bonus to the workman even in the cases of losses. POBA also provides for machinery for
enforcement of the Act. Qualifications and disqualifications of employees entitled to receive bonus
has also been prescribed.

POBA envisages payment of minimum annual bonus even in situations of loss. So bonus under the
Act is a deferred wage in certain situations, for Indian realities are not considered similar to those of
the developed countries where there is no such system of payment of bonus. But in the first five years
of the setting up of the establishment, bonus is payable only if it has allocable surplus. The Act
provides that the employer and employees can agree to devise their own scheme of bonus that is
linked to production or productivity in lieu of bonus based on profits as envisaged under this Act.

15
The Act is administered by the appropriate government through inspectors. Imprisonment as well as
fines is provided for violation of the Act. In case there is a dispute about payment of bonus, it is
considered as an industrial dispute under the Industrial Disputes Act, 1947.

The Equal Remuneration Act, 1976

It was during 1975––the international year of the women––that India promulgated the equal
remuneration ordinance to give effect to Article 39 of the Constitution, which envisages equal
remuneration for men and women. Later on, the ordinance was replaced by the Equal Remuneration
Act 1976 (ERA). The Act applies to all establishments, employments––public and private––including
domestic service.

The Act puts a duty on every employer to pay equal remuneration to men and women workers for
doing same work or work of similar nature. In order to warrant payment same remuneration, the work
done by a female and male employee need not be identical. Broadly, the skill, efforts, and
responsibilities required are to be the same when performed under similar conditions. The ERA also
prohibits discrimination between men and women while making recruitment for the same work or
work of a similar nature. However, this provision will be inapplicable to any priority or reservation in
favour of Scheduled Castes or Scheduled Tribes, ex-servicemen, retrenched employees or any other
class of persons. The Act provides for constitution of advisory committees for giving advice in
matters of providing increasing employment opportunities for women. The appropriate government
may appoint authorities for hearing and deciding complaints regarding contravention of the Act and
claims arising out of non-payment of equal wages. The Act is administered by the appropriate
government through inspectors. Penalties in the form of fines and imprisonment have been provided
for various violations of the Act.

VI. THE LAW OF SOCIAL SECURITY

The Directive Principles of State Policy as enshrined in the Constitution of India recognize the right
to social protection for all citizens. Following these directives, the Indian state has provided for, or
reinforced the existing provisions of, some measures of social protection through legislation and
policy. Collective agreements in the formal sector between employers and unions also reflect
provision of social security measures by the employers.

At the global level, social security consists of two forms of protections: social insurance and social
assistance. The Indian system of social security in the organized sector can be divided into five broad
types, namely: creation of employer’s unilateral liability; social insurance; provident fund; social
assistance; and welfare funds. The most usual type of Indian social security with widest coverage
envisages creation of employer’s unilateral liability. Four laws can be said to fall under this heading:
Workmen’s Compensation Act 1923 (WCA); Maternity Benefit Act 1961 (MBA); Payment of
Gratuity Act 1972 (PGA); and Industrial Disputes Act 1947 (IDA). The key law falling in the
category of social insurance laws is the Employees’ State Insurance Act 1948 (ESIA). Countries in
South Asia including India have a unique system of social protection called the provident funds. They
are envisaged, among others, by laws such as the Employees Provident Funds (and Miscellaneous
Provisions) Act, 1952 (EPFA). The state Governments also provide for some amount of social
protection, especially to senior citizens and disabled people. This falls in the category of social

16
assistance. In some spheres of employment—like bidi making, film production, etc.––welfare funds
have been created by the Central Government for protecting the employees concerned.

The Workmen’s Compensation Act 1923

India had no social security system before the British Indian Government enacted the Workmen’s
Compensation Act 1923 (WCA). This Act symbolizes the beginning of social security in India. It was
passed in 1923 on the model of a similar Act in Britain. It provides for payment of compensation
unilaterally by the employer to his workmen in certain cases. Compensation under this Act is also
payable to the dependants in case of death of the employee. Certain categories of occupational
diseases too are covered. Injuries by accident also include contracting of some diseases in certain
circumstances. The WCA applies to any person who is employed, otherwise than in a clerical
capacity, in railways, factories, mines, plantations, construction, electricity generation, cinemas,
circus, and other hazardous employments as specified in Schedule II of the Act. The Act excludes
those who are covered by the Employees’ State Insurance Act 1948 (ESIA).

Interestingly, the employer’s liability is not based on any negligence on the part of the employer.
However, cases covered must have a rational nexus with the employment. The accident resulting in
injuries or death must normally take place during the working hours and at the employer’s premises,
except where the premises are notionally extended. Compensation is payable for death or disablement
(temporary or permanent) resulting from accidents “arising out of and in the course of employment.”
Thus, the WCA overrides the common law rule of voluntary assumption of risk under which the
employer was mostly not responsible to pay damages to his employees as they were presumed to be
working subject to the risk involved in the work. “The facts and circumstances of each case will have
to be examined very carefully in order to determine whether the accident arose out of and in the
course of employment of a workman, keeping in view at all times the theory of notional extension
[of employer’s premises]”17

All persons covered by the definition of workman are entitled to compensation in the event of
specified contingencies. But there is wage ceiling of Rs. 4000 per month for the purpose of
calculation of compensation. Compensation depends on wage and the relevant factor as specified in
Schedule IV of the Act. The relevant factor depends on the age of the worker concerned.

In case of death the compensation payable is an amount equal to 50 per cent of the monthly wages of
the deceased workman multiplied by the relevant factor; or an amount of eighty thousand rupees,
whichever is more. Where the worker suffers permanent total disablement, he is paid an amount
equal to sixty per cent of the monthly wages of the injured workman multiplied by the relevant factor,
or an amount of ninety thousand rupees, whichever is more. In case the permanent disability is not
total, then the workman is given that percentage of the compensation payable for total disablement as
is the reduction in the earning capacity. In case of temporary disablement, the compensation is paid
fortnightly at the rate of around 25 per cent wages per fortnight.

The WCA is administered by the state government; it has a unique method of administration. The
administrative and adjudicatory powers are vested in the same person called the commissioner. The
functions of the commissioner include: settlement of disputed claims; deciding cases of injuries
involving death; and revision of periodical payments. In exercise of his adjudicatory powers, the

17
commissioner distributes the amount of compensation to the dependents as defined under the Act in
his discretion. In case of persons under legal disability, the commissioner may invest the money the
way he likes. The commissioner also advises the workers about the available course of action to a
workman in different situations. The Act does not allow contracting out. In case the employer does
not pay compensation as per the Act, the workman concerned can make an application to the
commissioner within a period of two years from the date of the accident. The commissioner can
recover the amount due to a worker as arrears of land revenue.

The Employees’ State Insurance Act 1948

The key social insurance law in India is the Employees’ State Insurance Act 1948 (ESIA), which
envisages an employees’ state insurance scheme (ESIS) administered by the Employees’ State
Insurance Corporation (ESIC) created by this Act. The ESIA applies in the first instance to factories
employing 20 or more persons. The provisions of the Act have been gradually extended to smaller
power-using factories employing 10 to 19 persons, shops, hotels and restaurants, and cinemas. It
applies to workers getting salary up to Rs. 7,500 per month. It also covers administrative staff. The
ESIS is contributory in character whereby employers, employees and to a little extent the State
contribute to a fund, out of which various types of benefits are provided to the beneficiaries. The
amount of benefit is usually proportionate to the average daily wage of the employee concerned.

The present rates of contribution to be made by the employer and the employee are 4.75 per cent and
1.75 per cent of the employee’s monthly wages respectively. Employees whose average daily wages
are below Rs. 40 per day are exempted from making any contribution. The responsibility of the
employer is to pay contribution in respect of his own employees as well as of contract labour. He
can deduct contract labour’s contribution from his bills. In case of default: Employer has to pay 15
per cent interest per annum. In addition, the ESIC may impose damages, not exceeding the arrears
due. These contributions are deposited in the ESI Fund, which is administered by the Employees
State Insurance Corporation (ESIC), which is an autonomous institution. The State Governments
contribute only a portion of the expenditure on the provision of medical care, whose share presently
is one-eighth (12.5 per cent) of the medical expenditure of the ESIC. The Standing Committee of the
ESIC looks after its working.

The Act envisages sickness and extended sickness benefit, maternity benefit, disablement benefit,
dependents’ benefit, reimbursement of funeral expenses, and medical benefit. Sickness benefit is
payable in case of certified sickness at the standard daily benefit rate (SBR), which is roughly 50 per
cent of wages. This is specified in the Standard Benefit Table. The maternity benefit is payable for
12 weeks at twice the SBR. The extended sickness benefit is payable for 309 days in two
consecutive benefit periods. The rate of extended sickness benefit is about 25 per cent more than the
ordinary SBR. The disablement benefit is payable at SBR plus 40 per cent of it per month. If injury
suffered is not given in the schedule, the disablement is determined by the Medical Board. There is
appeal against the Board’s decision which can be made to the Medical Appeal Tribunal

The medical benefit consists of restricted medical care, expanded medical care, and full medical care.
The State Governments are obliged to provide to the insured persons (i.e. the employees covered
under the Act) and their families in the State reasonable medical, surgical and obstetric treatment
through dispensaries, hospital and diagnostic care centers run by it. However, it may with the

18
approval of the ESIC arrange for their medical treatment at clinics of private medical practitioners.
The State Government also enters into an agreement with the ESIC in regard to the nature and scale
of the medical treatment that should be provided by it to the insured persons and their families.

Cash benefits payable under the Act are not liable to attachment in relation to payment of any debt by
the employee. Any dispute under the provisions of the Act can be decided by the Employees’
Insurance Court and not by any civil court. The Act provides for penalties and imprisonment for
various offences.

The Employees’ Provident Fund (and Miscellaneous Provisions) Act 1952

Along with the ESIA, the Employees’ Provident Fund and Miscellaneous Provisions Act 1952 (EPF
Act) too is a key social security legislation in India. It applies to any factory relating to any industry
specified in Schedule I to the Act in which 20 or more persons are employed, and also to other
establishments employing 20 or more persons which may be specified by the central government by a
notification in this regard. As on 31 March 2005, this includes 180 industries; and covers 41.11
million workers under the Employees’ Provident Fund Scheme (EPFS) both in exempted and
unexampled sectors. An all, 408,831 establishments are covered under this Act. The Act covers
employees getting salaries up to Rs. 6,500 per month. For workers employed in coal mines, the
relevant law is the Coal Mines Provident Fund and Miscellaneous Provisions Act 1948.

The EPF Act provides for creation of three important schemes. These are: the Provident Fund
Scheme; the Deposit-linked Insurance Scheme; and the Employee Pension Scheme. The Employees’
Provident Fund Scheme (EPFS) is a kind of savings and pension scheme in which the employees as
well as their employers pay regular contribution into a fund. Such contributions are credited to the
accounts of the subscribers concerned. The fund is invested as per the norms laid down in this regard.
Annual interest is credited to the account of the employee on the total amount of provident fund (PF)
deposit in his/her account. When an employee superannuates or dies or seeks retirement, the balance
standing to the account is refunded.

The Employees’ Pension Scheme 1995 (EPS) provides for pension on superannuation, retirement,
permanent total disablement and death. The Employees’ Deposit-Linked Insurance Scheme 1976
(EDLIS) provides an insurance cover to the persons covered without payment of any premium for
this purpose. The insurance cover has been linked to the average balance in the provident fund
account of the deceased during 12 months preceding his or her death subject to a ceiling.

The Employees’ Provident Fund Scheme (EPFS) is financed through contributions from employees
with matching contributions from employers. The normal rate of contribution to the provident fund
by the employees and the employers prescribed under the EPF Act earlier was 10 per cent of wages
for unnotified industries and establishments. This rate has been hiked to 12 per cent of wages for
employees working in notified18 industries and establishments employing 50 or more persons.

The EPS derives its financial resource from and out of the contributions payable by the employer in
each month under the EPF Act and the rules framed under it. Contribution representing 8.33 per cent
of the employees’ pay has to be remitted by the employer to the pension fund The Central

19
Government also contributes to the Pension Fund at the rate of 1.6 per cent of the employee’s pay.
Neither the employer nor the employee is required to make any additional contribution.

The Act is administered by the Employees Provident Fund Organization, which works under the
overall supervision and direction of the Central Board of Trustees and Committees. The Central
Provident Fund Commissioner (CPFC) is the Chief Executive Officer of the Organisation. The Board
of Trustees (BOT) is a body corporate having perpetual succession and a common seal. Unlike the
ESIC, however, the Board of Trustees of the EPFO enjoys much less autonomy; the control of the
Central Government in its working is much stronger.

CBOT is empowered to appoint such officers and employees as it may consider necessary for the
efficient administration of the schemes under the Act. These officers have been conferred quasi-
judicial powers. Thus, they conduct inquiry as they deem necessary to determine the liability of the
employer and make order on the basis of the inquiry so conducted. These authorities under the Act
have a statutory duty to see that the provisions of the Act are complied with.

Maternity Benefit Act, 1961

The Maternity Benefit Act, 1961 (MBA) seeks to regulate the employment of women workers in
certain establishments for certain period before and after child birth. This law provides that all
women employees shall be paid maternity benefit in case of child birth, miscarriage or sickness
arising out of pregnancy. A worker when governed by the ESI Act cannot claim maternity relief
under the Maternity Benefit Act. This Act also envisages a unilateral responsibility of the employer
and the scheme contains no insurance element in it. It applies to factories, mines, circus, plantations,
and shops and establishments employing 10 or more persons. However, in case a women employee
is covered by the ESI Act, then this Act does not apply to her. The application of this legislation can
be extended to other establishments by a State government after the prior approval of the central
government. The central government is responsible for administering this Act in mines and circuses,
and the state governments are responsible for its administration in factories, plantations and other
establishments. The central Act has been adopted in nearly all the states in the country except
Manipur, Nagaland19 and Sikkim.

The maximum periods for which the maternity benefit is available to any woman worker is 12 weeks
of which not less than six weeks shall precede the date of her expected delivery. In case of
miscarriage, a woman is entitled to leave with wages at the rate of maternity benefit for a period of
six weeks immediately following the day of her miscarriage. In case of illness arising out of
pregnancy, delivery, premature birth of a child or miscarriage, the woman is entitled to leave with
wages at the rate of maternity benefit for a maximum period of one month.

A woman whose maternity benefit is improperly withheld may make a complaint to the inspector.
Inspectors have been conferred powers, including quasi-judicial. If the inspector after making the
inquiry is satisfied that the benefit was improperly withheld, he may direct the payment of maternity
benefit in accordance with his orders. An appeal over the decision of the inspector lies to the
prescribed authority in this regard. Any amount payable under the Act is recoverable by the collector
in the same manner as an arrear of land revenue.

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The Payment of Gratuity Act 1972

Payment of gratuity is another important social security benefit in India. Gratuity is a lump sum
payment which is payable under the Payment of Gratuity Act 1972 (PGA). Gratuity is believed to be
an award which the employer pays to the employee on retirement out of gratitude for a long and
meritorious service. It replaces at least partly the loss of income at the time of superannuation,
retirement or resignation, and death and disablement due to accident or disease. The PGA applies to
factories, mines, oilfields, plantations, ports, railway companies, shops and other establishments
where 10 or more persons are employed.

Gratuity is a benefit payable by the employer for termination of service of an employee. But it is also
payable in case of superannuation, retirement, resignation, death or disablement due to accident or
disease. It is payable to every employee, other than apprentice, employed in an establishment to
which the provisions of the Act apply. It is payable at the rate of 15 days’ wages for every completed
year of service or part thereof, in excess of seven months. There is no wage ceiling for coverage
under the Act. Ordinarily, for being entitled to gratuity, an employee must have completed with the
employer concerned at least five years of continuous service. The maximum amount of gratuity
payable under the Act was raised from Rs. 100000 to Rs. 350000 with effect from 24 September,
1997.

Gratuity can be forfeited wholly or in part to the extent of loss if the service of an employee is
terminated for an act or willful omission or negligence causing damage or loss to employer’s property.
Also, it can be forfeited if services of an employee are terminated for riotous or disorderly conduct or
other act of violence or for moral turpitude in the course of employment. There is provision for
compulsory insurance of his liability on the part of the employer unless he constitutes an approved
gratuity fund. Quasi-judicial powers are vested in the “controlling authority” which decides matters
related to any disputes arising from non-payment. The Act is administered by central as well state
governments in their respective jurisdictions.

Labour Welfare Funds

In many work areas India has found it difficult to reach contribution-oriented social security for
various reasons. So a unique method has been coined for protecting workers employed in certain
specified employments. The concept of “Labour Welfare Fund” was evolved to this end. Five welfare
funds were set up under the Ministry of Labour and Employment. These funds are aimed to provide
housing, medical care, water supply, educational and recreational facilities to workers employed in
beedi industry, certain mines and cine workers. Such funds are financed out of the proceeds of cess
levied under respective Cess/Fund Acts. The various legislation have been enacted to set up these
funds. These include: the Mica Mines Labour Welfare Fund Act, 1946; the Limestone and Dolomite
Mines Labour Welfare Fund Act, 1972; the Iron Ore Mines, Manganese Ore Mines & Chrome Ore
Mines Labour Welfare Fund Act, 1976; the Beedi Workers Welfare Fund Act, 1976; and the Cine
Workers Welfare Fund Act, 1981 (For details, see Saini, 2001). These Acts provide that the fund may
be applied by the Central Government to meet the expenditure incurred in connection with measures
and facilities which are necessary to provide the welfare of the workers concerned.

Chapter V-A and V-B of Industrial Disputes Act 1947

21
As such, India has no system of providing social security in the contingencies of unemployment. This
is so despite the ‘right to work’ having been provided for in the Constitution as a Directive Principle
of State Policy. Perhaps, the unemployment and the underemployment situation in the country is so
acute that no government has gone into the feasibility of introducing a system of unemployment
insurance.

The Industrial Disputes Act 1947 (IDA) provides some semblance of unemployment security in a
limited sense under its provisions relating to lay off, retrenchment, closure, and transfer of industrial
establishments. The idea underlying the retrenchment and closure compensation is to help the
workers to maintain themselves until they are able to find alternative jobs.

Review of Social Security law

It is noticeable that a large part of social security legislation in India is in the form of creation of
unilateral liability of the employer. However, it is important to note that this form is also believed to
be the most primitive and is sometimes described as the “decaying form” of social security; for it
does not contain any insurance or assistance element in it. It merely involves a statutory liability of
the employer in the event of certain contingencies so as to provide certain protection to the employee.
It is for this very reason that such laws are prone to being violated by the employers. The employer
has the option to insure its liability under some of these laws or create a fund for meeting its liability.
But despite this, the tendency to avoid his/its liability is quite high. Therefore, a progressive social
security system should replace such schemes with professionally organized social insurance schemes.
Further, there is a strong need for extending the scope of the ESI Act. The ESIC needs structural
reforms, as many unions do not want to be covered by it, and seek exemption from its coverage so as
to negotiate for devising alternative schemes (Saini, 2001). At the same time, better enforcement
mechanism is needed for the Maternity Benefit At 1961. The incidence of violation of this Act is very
high.

It should also be noted that protections envisaged in most of these schemes apply to the organized
sector. In effect, the informal sector employees enjoy very little or no social protection through law.
However, some sections of these employees in the informal sector are covered under certain laws.
For example, the Workmen’s Compensation Act, 1923 and the Minimum Wages Act apply to many
types of establishments in the unorganized sector.

VII. CONCLUDING REMARKS

Post-independence India sought to implement the concept of welfare state as envisaged in the
Preamble of the Constitution of India and its chapter on the Directive Principles of State Policy. A
number of labour laws were enacted in all its four broad categories. The Indian judiciary gave liberal
interpretation to many provisions of these laws; often rooting the liberal interpretation in the
Directive Principles of State Policy in doing so. A plethora of public interest litigation (PIL) was
initiated in this sphere by public-spirited citizens in the last 25 years or so. This also energized many
non-governmental organizations (NGOs) in the informal sector to play a more active role in labour
law implementation. But cases of labour law violation were still too many (Patel and Desai, 1995;
Advani and Saini, 1995). Many strong nexuses worked to neutralize the legislative intention by
forging alliances to serve personal interests. For example, almost negligible number of reinstatement

22
decisions of labour courts and industrial tribunals were implemented (Saini, 1999, 1994). This
included even some of the Supreme Court and high Court decisions.

The Indian labour law model, as also those of the advanced Europe, was built on the basic postulates
of the welfare state. The new economic policy of India in 1991 promised reform, but they were never
carried out due to lack of strong central (federal) governments and fear of public reaction. Changes in
labour policy were more at the executive and implementation level than by amending the labour laws.
Globalization warrants laws promoting greater flexibility in the formal labour market. A study by
Budhwar (2001: 82) found that a large percentage of Indian managers (61.5 per cent) believe that
Indian national labour laws influence their HRM practices the most. This study also found that their
actions and prerogatives are constricted by these laws. Employer would want more freedom in
operating in the labour market especially in view of the chaotic competition caused by the new
dispensation. Therefore, amendment in labour law framework is long overdue.

In fact, Indian labour market can be said to be characterized by a sharp dichotomy. It is

understandable that labour law is creating inflexibility for the organized sector which is difficult to
sustain the era of globalization. At the same time, a large number of establishments in the
unorganized sector remain outside any regulation, while the organized sector has been regulated
fairly stringently. The organized sector is believed to have provided too much of job-security for too
long, resulting into inertia and inefficiency, while the unorganized sector has provided too little to too
many. In their present form, many aspects of Indian labour laws do not suit the globalizing
environment. These laws apply only to the organized sector. Consequently, these laws have restricted
labour mobility, have led to capital-intensive methods in the organized sector and adversely affected
the sector's long-run demand for labour. Since labour is a subject in the Concurrent List in the
Constitution of India, state-level labour regulations are also an important determinant of industrial
performance. States like Kerala which have enacted more pro-worker regulations have lost out on
industrial production in general. Interestingly, countries like China learnt to adjust to the environment
much faster. With a history of extreme employment security, China has drastically reformed its
labour relations and created a new labour market, in which workers are highly mobile.

An enlightened society would like to enact labour laws that are relevant to the societal values adopted
in a particular country. But it is important that they change when new values are adopted. But this has
not happened in India. Especially the labour laws that fall in the category of “industrial relations
laws” need to be re-looked.

The most talked-about provision in the Indian industrial relations law is Chapter V-B of the IDA.
This chapter requires all employers employing 100 or more workers in factories, mines and
plantations to seek permission from the Government in matters of lay-off, retrenchment, and closure.
It has been seen that this has led to unnecessary bureaucratization and harassment of employers. The
Indian bureaucracy has been arbitrary in granting permission under this chapter; often extraneous
considerations have dominated in these decisions. Many times, organizations which have been
perennially sick have been refused permission under this chapter. Presently, a thinking is surfacing
that the number of workers for application of this chapter should be raised to 300, though at time it
was sought to amend the chapter to make it applicable to industries emphasizing 1000 or more
workmen. Another area of controversy is section 9-A of the IDA. This section requires that a notice
of 21 days should be given by the employer to workmen for effecting change in any of their service

23
conditions. This section has also resulted in workers’ resistance to flexibility needs of the employers
in this regard. When such a notice is given employee unions raise an industrial dispute, which creates
resistance for implementing the desired change.

More and more employers want to implement variable service conditions for different sets of
workers. Competency mapping is being used for creating a greater degree of differentiation amongst
workers. So find the Industrial Employment (Standing Orders) Act, 1946 (IESOA) to be problematic.

The labour laws in India are known to be very complex. Some of the problems in this regard relate to
applicability; definition of worker/employee, appropriate government, wages; different administrative
mechanisms; and different quasi-judicial bodies. This creates confusion and dependency on lawyers.
For example, the term “wages” has been differently defined under different Acts. Some laws cover
employees receiving monthly wages as low as Rupees 3500 per month (e.g. the Payment of Bonus
Act, 1965), others cover even clerical and administrative employees (e.g. the Employee State
Insurance Act 1948; the Employees’ Provident Fund Act, 1952; and the Gratuity Act 1972). For
some there is no wage limit for coverage (e.g. highly paid pilots are workmen under the IDA). A
plethora of case law has been delivered by the judiciary to clarify these complexities in variegated
situations. This has made the grasping of labour laws a very complex affair (for a detailed discussion,
see Debroy, 1996). In fact, labour law complexity has converted union leaders into full time pleaders,
who have set up labour law practice as a vocation (Saini, 1995; 1994).

There is a case for harmonization and unification of labour laws. This is an important area of reform,
for tremendous ambiguities have been caused by complexities of the labour legislation. The National
Labour Law Association (NLLA) has drafted a proposal to enact a National Labour Code 1994
(Draft), which has been appreciated as laudable. But if one looks at its contents, it is surely not likely
to be acceptable to employers as they will fear that their competitive position will be adversely
affected by extremely high rates of contribution that have been suggested in it.

The social security laws in the country reflect lack of a comprehensive vision about the future of
Indian society (Saini, 2001: 260). The system caters to only less than 7 per cent of the workforce.
The definition of social security in developing countries including India is bound to be different as a
large chunk of population does not have access to basic minimum needs. There is a need to integrate
social security policy with anti-poverty policies (Guhan, 1994) and Indian laws have to reflect this
thinking. Especially, there is a need to create low-cost group insurance scheme to meet the needs of
self-employed people in rural as well as urban areas (Saini, 2001).

In a country like India, the executive branch of the state has many constraints in performing its
constitutional duties. There is a need for greater degree of public interest litigation for enforcing
minimum labour standards and developing some basic postulates of sound labour relations. It can be
a very useful instrument in the Indian context. But this needs to involve people who are genuinely
interested in poverty alleviation. Globalization can not take away the need for labour law. The state
needs to focus on better implementation and ensure that these laws do not become a mockery.

REFERENCES:

24
Advani, R. and Saini, D.S. (1995) “The Constitutional Vision of Development, Unorganized Labour,
and Accessibility to Justice System,” In Saini (ed.) (1995c).

Baxi, U. (1994) “industrial Justice Dispensation: The dynamics of delay,” in Saini, Debi S. (ed.)
(1994).

Budhwar, P. (2001), “Human Resource Management in India,” in Budhwar, P. and Yaw A.

Debrah (Eds.) Human Resource Management in Developing Countries. London: Routledge.

Business India (1998) “Clutching at Straws,” Business India, March 9–22.

Debroy, B. (1996) “The Agenda for Labour Market Reform in India”, Paper presented at the
International Conference on Law and Economics, Project LARGE (A project of the UNDP and
National Labour Law School for the Ministry of Finance, Government of India), New Delhi,
11-13 January.

Dhavan, R. (1989): 'Introduction' in Galanter (ed) (1989).

Galanter, M. (ed.) (1989), Law and Society in Modern India, Delhi: Oxford University Press.

Guhan, S. (1994), “ Social Options for Developing Countries,” International Labour Review, Vol;.
33, No. 1.

Government of India (2002) Report of the National Commission on Labour (Second). Ministry
Labour, New Delhi.

Johri, C. K. (1998) “INDIA,” in International Encyclopaedia of Laws: Labour Law and

Industrial Relations (General Editor: R. Blanpain), The Hague: Kluwer Law International.

Kahn-freund, Sir Otto, Labour and the Law, 2nd edition, London: Stevens & Sons.

Mishra, L. (2001) Economy & Labour. New Delhi: Manak Publications Pvt. Ltd.

National Labour Law Association (NLLA), Indian Labour Code, National Labour Law Association,
New Delhi, 1994.

Ramaswamy, E.A. (1984) Power and Justice, Delhi: Oxford University Press.

Saini, D. S. (2003) “Alleviating Poverty through Skills Development: Lessons for Law-making in
Developing Countries”. Paper presented at Workshop on Law and Poverty V, organized by
CROP programme of the Internatioinal Social Science Council and the Social Science
Academy of Nigeria at Abuja (Nigeria) November 24-26, 2003.

Saini, D.S. (2001) “Social security: India” In Blanpain, R.(ed.), International Encyclopaedia of Laws,
Hague: Kluwer Law International.

25
Saini, D.S. (1999), ‘Labour Legislation and Social Justice’, Economic and Political Weekly, 25
September, L-32–L-40.

Saini, D.S. (1998), “Liberalisation, Human Face and the Labour Justice System' in Paramanand Singh
(ed) Legal Dimensions of Market Economy, New Delhi: Faculty of Law, University of Delhi
and Universal Book Traders.

Saini, D S (1995) “Compulsory Adjudication Syndrome in India: Some Implications for Workplace
Relations” in Debi S. Saini (ed) (1995c).

Saini, D.S. (ed.) (1995a.). Cases on Labour Law: Minimum Conditions of Employment, New Delhi:
Oxford & IBH.

Saini, D.S. (1995b) “Leaders or Pleaders: The Dynamics of Brief-case Trade Unionism under the
Existing Legal Framework,” Journal of the Indian Law Institute, Vol.37, No. 1.

Saini, D.S. (ed.) (1995c), Labour Law, Work and Development, New Delhi: Westvill Publishers.

Saini, D. S. (ed.) (1994), “Introduction: Socio-legal Issues in Industrial Justice Dispensation in

India,” in Saini, D.S. (ed.) (1994).

Saini, D. S. (ed.) (1994a), Labour Judiciary, Adjudication and Industrial Justice. New Delhi: Oxford
& IBH.

Shrouti, A. and N. Kumar (1994), New Economic Policy, Changing Management Strategies––Impact
on Workers and Trade Unions. Friedrich Ebert Stiftung: New Delhi.

Patel, A. and K. Desai (1995), “Rural Migrant Labour and Labour Laws” in Saini, Debi S. (ed.)
Labour Law, Work and Development, New Delhi: Westwill.

Upadhyay, Sanjay. (1995), Delay in Industrial Adjudication: A Case Study of Central Government
Industrial Tribunal (mimeo), V.V. Giri National, Labour Institute, Noida (India).

Wedderburn, K.W., R. Lewis and J. Clark. (1983), Labour Law and Industrial Relations: Building
on Kahn-Freund, Oxford: Clarendon Press.

END NOTES:
1
. Later on, this right was more specifically provided by the Bonded Labour System (Abolition) Act in 1976, which apart
from specifying the manner of freeing the bonded labourers also envisages their rehabilitation after their release.

This legislation prohibits making of any advance to a worker which can become a bonded debt and prohibits to compel
any person to render bonded labour. It declares any custom of bonded labour in a family void, abolishes liability to pay
bonded debt, and frees any attachment of the bonded labourer. The District Magistrate has been obliged to promote
welfare of freed bonded labourers and protect their economic interests. It creates Vigilance Committees to identify and
ensure abolition of bonded labourers. An important social protection question in the country is the rehabilitation of
bonded labourers.

26
2
. Article 38(1) obliges the State to “strive to promote the welfare of the people by securing and promoting as effectively
as it may a social order in which justice, social, economic and political, shall inform all the institutions of national life”.
3
. Article 38(2) provides that “the State shall, in particular, strive to minimize the inequalities in income, and endeavour to
eliminate inequalities in status, facilities and opportunities, not only
amongst individuals but also amongst groups of people residing in different areas or engaged
in different vocations”.
4
. Article 39 envisages State policies to be directed towards securing:
“a) that the citizens, men and women equally, have the right to an adequate means of livelihood;
b) that the ownership and control of the material resources of the community are so distributed as best to subserve the
common good;
c) that the operation of the economic system does not result in the concentration of wealth and means of production to the
common detriment;
d) that there is equal pay for equal work for both men and women;
e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens
are not forced by economic necessity to enter vocations unsuited to their age or strength;
f) that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and
dignity and that childhood and youth are protected against exploitation and against moral and material abandonment.”
5
. Article 41 states that “the State shall, within the limits of its economic capacity and development, make effective
provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness
and disablement, and in other cases of undeserved want.”
6
. Article 42 provides that “the State shall make provision for securing just and humane conditions of work and for
maternity relief.”
7
. Article 43 provides that “the State shall endeavor to secure, by suitable legislation or economic organization or in any
other way, to all workers agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent
standard of life and full enjoyment of leisure and social and cultural opportunities and, in particular, the State shall
endeavour to promote cottage industries on an individual or co-operative basis in rural areas.
8
. Article 43A provides that “the State shall take steps, by suitable legislation or in any other way, to secure the
participation of workers in the management of undertakings, establishments or other organization engaged in any industry.
9
. Article 45 provides that “the State shall endeavor to provide, within a period of ten years from the commencement of
this Constitution, for free and compulsory education for all children until they complete the age of fourteen years.”
10
. Article 47 provides that the State shall regard ‘the raising of the level of nutrition and the standard of living of its
people and the improvement of public health as among its primary duties . . .’
11
Two most important cases on this Act are : 1) People Union of Democratic Rights v. Union of India, 1982 II LLJ 454
(SC); and 2) Labourers Working on Salal Hydro Project v. State of Jammu & Kashmir, AIR 1984 SC 177.
12
. Such a settlement is popularly known as a 12 (3) settlement as it is envisaged by section 12 (3) of the IDA. Its
applicability and implications are different from that of a voluntary settlement.
13
. Juridification refers to “the extent to which behaviour of line and personnel managers, shop stewards and full-time
officers in dealing with individual- and collective-employment issues (is) determined by reference to legal (or what are
believed to be legal) norms and procedures, rather than voluntarily-agreed norms and procedures or to custom and
practice” (Clark and Wedderburn, 1983: 188).
14
. People’s Union For Democratic Rights v. Union of India (1982) 3 SCC 235.

27
 15
. Crown Aluminum Works v. Their Workmen, AIR (1958, S.C. 30.
16
. Bijaj cotton Mills Ltd. V. State of Ajmer, AIR 1955 C 33.
17
. Saurashtra Salt manufacturing Co. v. Bai Valu Raju and Others [AIR 1958 SC 881]
18
. Notified industries and establishments for the purpose of the EPF Act are those which are notified by the Central
Government for contributing enhanced PF contributions. They are known to be comparatively stronger in their paying
capacity. That is why the Act provides a higher rate of contribution in respect of these industries. The Central
Government has notified 172 categories of establishments for the purpose of enhanced contribution to the provident fund.
19
. The reason given by the States of Manipur and Nagaland claim that there are hardly any factories or establishments in
these States.

28

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