The Factories Act 1948

Objective & Applicability

The Factories Act, 1948 has been enacted to consolidate and amend the law regulating the
workers working in the factories. It extends to whole of India and applies to every factory wherein
20 or more workers are ordinary employed. Since the aim and object of the Act is to safeguard
the interest of workers and protect them from exploitation, the Act prescribes certain standards
with regard to safety, welfare and working hours of workers, apart from other provisions.

Factory

Means any premises including the precincts thereof where ten or more persons are working in
any manufacturing process being carried on with aid of power and where twenty or more workers
are working without the aid of power.

Health

• Every factory should be kept dean and free from effluvia arising from any drain, privy or
other nuisance. {Section 11}
• Effective arrangements should be made in every factory for the treatment and effluents
due to the manufacturing process carried on therein, so as to render them innocuous,
and for their disposal. {Section12}
• Effective and suitable provisions should be made in every factory for securing and
maintaining in every workroom; adequate ventilation by the circulation of fresh air; and
such a temperatures will secure to workers therein reasonable conditions of comfort and
prevent injury to health. {Section 13}
• Effective measures should be taken to prevent inhalation of dust to prevent inhalation of
dust and fume that may produce in the course of manufacturing process. {Section 14}
• In any factory where the humidity of air is artificially increased, the State Government
may make rules prescribing standards of humidification; regulating the methods used for
artificially increasing humidity of the air; and directing prescribed test for determining the
humidity of the air to be correctly carried out and recorded; and prescribing methods to
be adopted for securing adequate ventilation and cooling of the air in the workrooms.
{Section 1S}
• No room in any factory should lie overcrowded to an extent injurious to the health of the
workers employed therein. {Section 16}
 • In every part of a factory where workers are working or passing, there should be provided
and maintained sufficient and suitable lighting, natural or artificial, or both. {Section 17}
• In every factory effective arrangements should be made to provide and maintain at
suitable points conveniently' situated for all workers employed therein a sufficient supply
of wholesome drinking water. {Section 18}
• In every factory sufficient latrine and urinal accommodation of prescribed types should be
provided conveniently situated and accessible to workers, separately for male and female
workers, at all times while they are at the factory. {Section 19}

• In every factory there should be provided a sufficient number of spittoons in convenient

places and they shall be maintained in a clean and hygienic condition. {Section 20}

Safety

• The machinery in every factory should be properly fenced. {Section 21}

• Only the trained adult male worker, wearing tight fitting clothing which should be supplied
by the Occupier, should be allowed to work near the machinery in motion. {Section 22}
• No young person shall be employed on dangerous machinery, unless he is fully
instructed as to the danger arising in connection with the machine and the precautions to
be observed and he has received sufficient training in work at the machine. {Section 23}
• Suitable arrangements should be made to provide striking gear and devices for cutting off
power in case of emergencies. {Section 24}
• Sufficient precautions should be taken with regard to self-acting machines to avoid
accidents. {Section 25}
• To prevent danger, all machinery driven by power should be encased and effectively
guarded. {Section 26}
• Woman worker and children should not be employed in any part of the factory for
pressing cotton in which a cotton-opener is at work. {Section 27}
• Hoists and Lifts in a factory should be periodically inspected by the Competent Person.
{Section 28}
• Lifting Machines, Chains, Ropes and Lifting Tackles in a factory should be periodically
inspected by the Competent Person. {Section 29}
• Where process of grinding is carried on, a notice indicating the maximum safe working
peripheral speed of every grind-stone or abrasive wheel etc., should be fixed to the
revolving machinery.{Section 30}
 • Where any plant or machinery or any part thereof is operated at a pressure above
atmospheric pressure, effective measures should be taken to ensure that the safe
working pressure of such plant of machinery or part is not exceeded.{Section 31}
• Floors, stairs and means of access should be soundly constructed and properly
maintained. {Section 32}
• Pits, sumps opening in floor etc., should be either securely covered or fenced. {Section
33}
• No workman shall be employed in any factory to lift, carry or move any load so heavy as
to be likely to cause him injury. {Section 34}
• Necessary protective equipment should be provided to protect the eyes of the workman,
where the working involves risk of injury to the eyes. {Section 35}
• Suitable precautionary arrangements should be taken against dangerous fumes, gases
etc. {Section 36}
• Every practicable measures should be taken to prevent any explosion where the
manufacturing process produces dust, gas, fume or vapour etc. {Section 37}
• Every practicable measures should be taken to prevent the outbreak of fire and its
spread, both internally and externally. {Section 38}
• The Inspector of Factories can ask the Occupier or the Manager of the Factory to furnish
drawings, specification etc., of any building, machinery or a plant, in case he feels that
condition of such building, machinery or the plant may likely to cause danger to human
life. {Section 39}
• The Inspector of Factories can suggest suitable measures of steps to take by the
Occupier or Manager for implementation, when he feels the condition of any building,
machinery or a plant may likely to cause danger to human life. {Section 40}
• Wherein 1000 or more workmen are employed in a factory, the Occupier should appoint
a Safety Officer to look after the safety aspects of the factory. {Section 40-B}

Welfare

• Adequate and suitable 'washing facilities' should be provided in every factory.

{Section 42}
• Provision should be made to provide suitable places for keeping clothing not worn during
working hours and for the drying of wet clothing.{Section 43}
• In every factory, suitable arrangements for sitting should be provided and maintained for
all workers obliged to work in a standing position, in order that they may take advantage
of any opportunities for rest which may occur in the course of their work.{Section 44}
 • First-Aid Boxes with the prescribed contents should be provided and maintained so as to
be readily accessible during all working hours at the rate of at least one Box for every 150
workmen. {Section 45}
• In every factory wherein more than 500 workers are employed there should be provided
and maintained an Ambulance Room of the prescribed size, containing the prescribed
equipment and in the charge of such medical and nursing staff. {Section 45(4)}
• The Occupier should provide a canteen for the use of workers in every factory, where the
number of workmen employed is more than 250.{Section 46}
• In every factory wherein more than 150 workers are employed adequate and suitable
shelters or rest rooms and a suitable lunch room, with provision for drinking water, where
workers can eat meals brought by them, should be provided and maintained for the use
of the workers. {Section 47}
• In every factory wherein more than 30 women workers are ordinarily employed there
should be provided and maintained a suitable room for the use of children under the age
of six years of such women. {Section 48}
• In every factory wherein more than 500 or more workers are employed, the Occupier
should employ in the factory such number of Welfare Officers as may be prescribed.
{Section 49}

Working Hours of Adult Workers

• Ordinarily, a worker should not be allowed to work in a factory for more than 48 hours in
any week. {Section 51}
• The workman should have one holiday for a whole day in a week. Where he was asked
to work on his scheduled weekly holiday, he should be given compensatory holiday within
three days of his scheduled weekly holiday. {Section 52}
• After obtaining approval from the Inspector of Factories, the workman shall be allowed to
avail the compensatory holidays unavailed by him, within that month during which the
compensatory holidays are due or within two months immediately following that month.
{Section 53}
• Subject to the provisions of Section 51 no worker should be allowed to work more than
nine hours in a day. {Section 54}
• The timings of work should be fixed in such a way that no worker should be required to
work continuously for more than five hours; and he should be allowed to avail an interval
for rest of at least half-an hour during his work in a day. {Section 55}
 • The period of work of a workman should be so arranged that inclusive of his interval for
rest under Section 55 should not spread over more than ten and a half hours in any day.
{Section 56}.

General Duties of the Occupier

a) Every Occupier should ensure, so far is reasonably practicable the health, safety
and welfare of all workers while they are at work in the factory.
b) Without prejudice to the generality of the provisions of sub-section (1), the matters
to which such duty extends, include -

o the provisions and maintenance of plant and systems of work in the factory that
are safe and without risks to health; .
o the arrangements in the factory for ensuring safety and absence of risks to health
in connection with the use, handling, storage and transport of articles and
substance;
o the provision of such information, instruction, training and supervision as are
necessary to ensure .the health and safety of all workers at work;
o the maintenance of all places of work in the factory in a condition that is safe and
without risks to health and the provision and maintenance of such means of
access to, and egress from, such places as are safe and without such risks;
o the provision, maintenance or monitoring of such working environment in the
factory for the workers that is safe, without risks to health and adequate s
regards facilities and arrangements for their welfare at work.

c) Except in such cases as may be prescribed, every Occupier should prepare, and,
so often as may be appropriate, revise, a written statement of his general policy with
respect to the health and safety of the workers at work and the organization and
arrangements for the time being in force for carrying out that policy, and to bring the
statement and any revision thereof to the notice of all the workers in such manner as may
be prescribed. {Section 7-A}
The Payment of Wages Act 1936
The Payment of Wages Act, 1936 regulates payment of wages to employees (direct
and indirect). The act is intended to be a remedy against unauthorized deductions made by
employer and/or unjustified delay in payment of wages.

MEANING OF WAGES -

Wages means all remuneration expressed in terms of money and include remuneration payable
under any award or settlement, overtime wages, wages for holiday and any sum payable on
termination of employment. However, it does not include bonus which does not form part of
remuneration payable, value of house accommodation, contribution to PF, traveling allowance or
gratuity. [section 2(vi)]

Time of payment of wages [sec 5]

(1) The wages of every person employed upon or in -

(a) any railway factory or industrial or other establishment upon or in which less than 1000
persons are employed, shall be paid before the expiry of the 7th day,
(b) any other railway factory or industrial or other establishment shall be paid before the expiry of
the 10th day, after the last day of the wage-period in respect of which the wages are payable :
Provided that in the case of persons employed on a dock wharf or jetty or in a mine the balance of
wages found due on completion of the final tonnage account of the ship or wagons loaded or
unloaded as the case may be shall be paid before the expiry of the 7th day from the day of such
completion.
(2) Where the employment of any person is terminated by or on behalf of the employer the wages
earned by him shall be paid before the expiry of the second working day from the day on which
his employment is terminated :
Provided that where the employment of any person in an establishment is terminated due to the
closure of the establishment for any reason other than a weekly or other recognised holiday the
wages earned by him shall be paid before the expiry of the second day from the day on which his
employment is so terminated.
(4) Save as otherwise provided in sub-section (2) all payments of wages shall be made on a
working day.
Responsibility for payment of wages [sec 3]

HOW WAGES SHOULD BE PAID -

Wages can be paid on daily, weekly, fortnightly or monthly basis, but wage period cannot be
more than a month.

[section 5]. Wages should paid on a working day. Wages are payable on or before 7th day after
the ‘wage period’. In case of factories employing more than 1,000 workers, wages can be paid on
or before 10th day after ‘wage period’ is over.

[section 5(1)]. [Normally, ‘wage period’ is a ‘month’. Thus, normally, wages should be paid by 7th
of following month and by 10th if number of employees are 1,000 or

in the case of persons employed on a dock wharf or jetty or in a mine the balance of wages found
due on completion of the final tonnage account of the ship or wagons loaded or unloaded as the
case may be shall be paid before the expiry of the seventh day from the day of such completion.

Wages to be paid in current coin or currency notes - [sec 6]

All wages shall be in current coin or currency notes or in both :

employed person pay him the wages either by cheque or by crediting the wages in his bank
account.

DEDUCTIONS PERMISSIBLE - Maximum deduction can be 50%. However, maximum

deduction upto 75% is permissible if deduction is partly made for payment to cooperative
society. [section 7]. Deduction on account of absence of duty, fines, house accommodation if
provided, recovery of advance, loans given, income tax, provident fund, ESI contribution, LIC
premium, amenities provided, deduction by order of Court etc. is permitted. Maximum deduction
can be 50%.

Deductions Relating to Payment of Wages:-

• Deductions which may be made from wages (Sec. 7).

• Deductions for absence from duty (Sec. 9).
• Deductions for damage or loss (Sec. 10).
• Deductions for services rendered {Sec. 11 & 7(2)}.
• Deductions for recovery of advances (Sec. 12).
• Deductions for recovery of loans (Sec. 12-A).
 • Deductions for payments to co-operative society and insurance schemes {Sec. 13 &
7(2)}.
• Limit on deduction {Sec. 7(3)}.

Inspectors [sec 14] -

The State Government may appoint Inspectors for the purposes of this Act

(4) An Inspector may,

(a) make such examination and inquiry as he thinks fit in order to ascertain whether the
provisions of this Act or rules made there under are being observed;
(b) with such assistance if any as he thinks fit enter inspect and search any premises of any
railway factory or industrial or other establishment at any reasonable time for the
purpose of carrying out the objects of this Act;
(c) supervise the payment of wages to persons employed upon any railway or in any factory or
industrial or other establishment;
(d) require by a written order the production at such place as may be prescribed of any register
maintained in pursuance of this Act and taken on the spot or otherwise statements of any
persons which he may consider necessary for carrying out the purposes of this Act;
(e) seize or take copies of such registers or documents or portions thereof as he may consider
relevant in respect of an offence under this Act which he has reason to believe has been
committed by an employer;

Penalty for offences under the Act [sec 20]-

(1) Whoever being responsible for the payment of wages to an employed person contravenes any
of the provisions of any of the following sections namely section 5 except sub-section (4) thereof
section 7 section 8 except sub-section (8) thereof , section 9 section 10 except sub-section (2)
thereof and section 11 to 13 both inclusive shall be punishable with fine which shall not be less
than 200/- s but which may extend to 1000/-.

(2) Whoever contravenes the provisions of section 4 sub-section (4) of section 5 section 6 sub-
section (8) of section 8 sub-section (2) of section 10 or section 25 shall be punishable with fine
which may extend to 500/-.

(3) Whoever being required under this Act to maintain any records or registers or to furnish any
information or return -
(a) fails to maintain such register or record; or
(b) willfully refuses or without lawful excuse neglects to furnish such information or return; or
(c) willfully furnishes or causes to be furnished any information or return which he knows to be
false; or
(d) refuses to answer or willfully gives a false answer to any question necessary for obtaining any
information required to be furnished under this Act
shall for each such offence be punishable with fine which shall not be less than 200/- but which
may extend to 1000/-.
(4) Whoever -

(a) willfully obstructs an Inspector in the discharge of his duties under this Act; or
(b) refuse or willfully neglects to afford an Inspector any reasonable facility for making any entry
inspection examination supervision or inquiry authorised by or under this Act in relation to any
railway factory or industrial or other establishment; or
(c) willfully refuses to produce on the demand of an Inspector any register or other document kept
in pursuance of this Act; or
(d) prevents or attempts to prevent or does anything which he has any reason to believe is likely
to prevent any person from appearing before or being examined by an Inspector acting in
pursuance of his duties under this Act;
shall be punishable with fine which shall not be less than200/-0 but which may extend to 1000/-.

(5) If any person who has been convicted of any office punishable under this Act is again guilty of
an offence involving contravention of the same provision he shall be punishable on a subsequent
conviction with imprisonment for a term which shall not be less than one month but which may
extend to six months and with fine which shall not be less than five hundred rupees but which
may extend to three thousand rupees.

Provided that for the purpose of this sub-section no cognizance shall be taken of any conviction
made more than two years before the date on which the commission of the offence which is being
punished came to the knowledge of the Inspector.

(6) If any person fails or willfully neglects to pay the wages of any employed person by the date
fixed by the authority in this behalf he shall without prejudice to any other action that may be
taken against him be punishable with an additional fine which may extend to one hundred rupees
for each day for which such failure or neglect continues.
The Trade Unions Act 1926
Notes

In the year 1925 the Government of India, after consulting the State Governments drew up a Bill
providing for the registration of trade unions and introduced the same in the Legislative Assembly
on the 1st August,1925. The Indian Trade Union Act was passed in 1926and came into force on
the 1st June,1927.

Definitions. Sec 2 - In this act the appropriate Government means in relation to Trade Unions
whose objects are not confined to one State, the Central Government, and in relation to other
Trade Unions State Government, and unless there is anything repugnant in the subject or
context,

Sec 2 (a) "Executive" means the body, by whatever name called to which the management of the
affairs of a Trade Union is entrusted;

Sec 2 (b) [Subs. By Trade Unions (Amendment) Act 38 of 1964] In the case of a Trade Union,
includes any member of the executive thereof, but does not include an auditor;

Sec 2 (c) "Prescribed" means prescribed by regulations made under this Act;

Sec 2 (d) "Registered office" means that office of a Trade Union which is registered under this Act
as the Head office thereof.

Sec 2 (e) "Registered Trade Union" means a Trade Union registered under this Act;

(i) A Registrar of Trade Unions appointed by the appropriate Government under section 3, and
includes an additional or Deputy Registrar of Trade Unions; and

(ii) In relation to any Trade Union, the Registrar appointed for the State in which the head or
registered office, as the case may be, of the Trade Union is situated;

(a) "Trade dispute" means any dispute between employers and workmen or between workmen
and workmen, or between employers and employers which is connected with the employment, or
non-employment, or the terms of employment or the conditions of labour, of any person, and
"workmen" means all persons employed in trade or industry whether or not in the employment of
the employer with whom the trade dispute arises; and
(b) "Trade Union" means combination, whether temporary or permanent, formed primarily for the
purpose of regulating the relations between workmen and employers or between workmen and
workmen, or between employers and employers, or for imposing restrictive condition on the
conduct of any trade or business, and includes any federation of two or more Trade Unions;

Provided that this Act shall not affect -

(c) Any agreement between partner to their own business;

(i) Any agreement between an employer and those employed by him as to such employment; or

(ii) Any agreement in consideration of the sales of the goodwill of a business or of instruction in
any profession, trade or handicraft.

Registration of Trade Unions

Appointment of Registrars. sec 3 - (1) [The appropriate Government] shall appoint a person to
be the Registrar of Trade Unions for [each] (State)].

[Note: The principal section re-numbered as sub-section (1) and sub-section (2) inserted by Act
48 of 1960]

Sec 3 (2) The appropriate Government may appoint as many Additional and Deputy Registrars of
Trade Unions for the purpose of exercising and discharging, under direction of the Registrar,
powers and functions of the Registrar under this Act as it may, be order, specify and define the
local limits within which any such Additional or Deputy Registrar shall exercise and discharge the
powers and function so specified.

Sec 3 (3) Subject to the provisions of any order under sub-section (2), where an Additional or
Deputy Registrar exercises and discharges the powers and function of a Registrar in an area
within which the registered office of a Trade Union is situated, the Additional or Deputy Registrar
shall be deemed to be Registrar in relation to the Trade Union for the purposes of this Act.

Mode of registration. sec 4- (1) Any seven or more members of a Trade Union may be
subscribing their names to the rules of the Trade Union and by otherwise complying with the
provisions of this Act with respect to registration, apply for registration of the Trade Union under
this Act.
Application for registration. Sec 5 - (1) Even application for registration of a Trade Union shall
be made to the Registrar, and shall be accompanied by a copy of the rules of the Trade Union
and a statement of the following particulars, namely:-

sec 5 (a) The names, occupations and addresses of the members making the application;

Sec 5 (b) the name of the Trade Union and the address of its head office, and

Sec 5 (c) The title, names, ages, addresses and occupations of the Trade Union.

Provisions to be contained in the rules of Trade Union sec 6. – A Trade Union shall not be
entitled to registration under this Act, unless the executive thereof is constituted in accordance
with the provisions of this Act, and the rules thereof provided for following matters, namely:-

sec 6 (a) The name of the Trade Union;

sec 6 (b) The whole of the object for which the Trade Union has been established;

sec 6 (c) The whole of the purposes for which the general funds of the Trade Union shall be
applicable, all of which purposes shall be purpose, to which such funds are lawfully applicable
under this Act;

sec 6 (d) The maintenance of a list of the members of the Trade Union and adequate facilities for
the inspection thereof by the [Subs. by Trade Unions (Amendment) Act No.33 of 1954] and
members of the Trade Union;

sec 6 (e) The admission of ordinary members who shall be persons actually engaged or
employed in an industry with which the Trade Union is connected, and also the admission of the
number of honorary or temporary members as [Subs. by Trade Unions (Amendment) Act No.33
of 1954] required under Section 22 to form the executive of the Trade Union;

sec 6 (ae) the payment of a minimum subscription by members of the Trade

Union which shall not be less than-

(i) one rupee per annum for rural workers;

(ii) three rupees per annum for workers in other unorganised sectors;
and
(iii) twelve rupees per annum for workers in any other case;;

Power to call for further particulars and to require alteration of name. sec 7 - (1) The
Registrar may call for further information for the purpose of satisfying himself that any application
complies with the provisions of Sec; 5 and may refuse to register the Trade Union until such
information is supplied.

(2) If the name under which a Trade Union is proposed to be registered is identical any other
existing Trade Union has been registered. The Registrar shall require the persons applying for
registration to alter the name of the Trade Union stated in the application, and shall refuse to
register the Union until such alteration has been made.

Registration. Sec 8 - The Registrar, on being satisfied that the Union has complied with all the
requirements of this Act in regard to registration, shall register the Trade Union by entering in a
register to be maintained.

Certificate of Registration. Sec 9 - The Registrar registering a Trade Union under Section 8,
shall issue a certificate of registration.

Cancellation of Registration. Sec 10 - A certificate of registration of a Trade Union may be

withdrawn or cancelled by the Registrar -

(a) On the application of the Trade Union to be verified in such manner as may be prescribed, or

(b) If the Registrar is satisfied that the certificate has been obtained by fraud or mistake., has
rescinded any rule providing for any matter, provision for which is required by Section 6

Appeal. sec 11 - (1) Any person aggrieved by any refusal of the Registrar to register a Trade
Union or by the withdrawal or cancellation of a certificate of registration may, within such period
as may be prescribed, appeal -

(a) the head office of the Trade Union is situated within the limits of Presidency-town to the High
Court, or
(b) The head office is situated in any outer area, to such Court, not inferior to the Court of an
additional or assistant Judge of a principal Civil Court of original jurisdiction, as the [appropriate
Government] may appoint in this behalf for that area.

Registered office. Sec 12 - All communications and notice to a registered Trade Union may be
addressed to its registered office. Notice of any change in the address of the head office shall be
given with fourteen days of such change to the Registrar in writing, and the changed address
shall be recorded in the register referred to in Section 8.

Incorporation of registered Trade Unions. Sec 13 - Every registered Trade Union shall be a
body corporate by the name under which it is registered and shall have perpetual succession and
a common seal with power to acquire and hold both movable and immovable property an
contract, and shall, by the said name sues and be sued.

Rights and liabilities of registered trade unions

Objects on which general funds may be spent. Sec 13 - The general funds of a registered
Trade Union shall not be spent on any other objects than the following, namely:-

(a) The payment of salaries, allowances and expenses to "officers" office bearers of the Trade
Union;

(b) The payment of expenses for the administration of the Trade Union including audit of the
accounts of the general funds of the Trade Union;

(c) The prosecution of defence of any legal proceeding to which the Trade Union or any member
thereof is a party. when such prosecution or defence is undertaken for thee purpose of securing
or protecting any rights of the Trade Union as such or any rights arising out of the relations of any
member with his employer or with a person whom the member employs;

(e) The compensation of members for loss arising out of trade disputes;
(f) Allowance to members or their dependants on account of death, old age, sickness, accidents
or unemployment of such members;

(g) The issue of, or the undertaking of liability under policies of assurance on the lives for
members or under policies insuring members against sickness, accident or unemployment;

(h) The provision of educational, social or religious benefits for members (including the payment
of the expenses of funeral or religious ceremonies for deceased members) or for the dependants
of members;

(j) Trade Union may be spent, of contributions to any cause intended to benefit workmen in
general, provided that the expenditure in respect of such contributions in any financial year shall
not, at any time, during that year be in excess of one-fourth of the combined total of the gross
income.

Constitution of a separate fund for political purposes. Sec 16 - (1) A registered Trade Union
may constitute a separate fund, from contributions separately levied for or made to that fund, from
which payments may be made, for the promotion of the civic and political interest of its members,
in furtherance of any of the objects specified in sub-section (2).

(2) The objects referred to in sub-section (1) are:-

(a) The payment of any expenses incurred, either directly or indirectly, by a candidate or
prospective candidate for election as a member of any legislative body constituted under the
Constitution or of any local authority, before, during or after the election in connection with his
candidature or election; or

(b) The holding of any meeting or the distribution of any literature or documents in support of any
such candidate or prospective candidate; or

(c) The maintenance of any person who is a member of any legislative body constituted
under the Constitution or for any local authority; or

(e) The holding of political meetings of any kind or the distribution of political literature or political
documents of any kind.

(3) No member shall be compelled to contribute to the fund constituted under sub-section (2 ),
and a member who does not contribute to the said fund shall not be excluded from any benefits of
the Trade Union, or placed in any respect either directly or indirectly under any disability or at any
disadvantage as compared with other members of the Trade Union. and contribution to the said
fund shall not be made a condition for admission to the Trade Union.

Criminal conspiracy in trade disputes. Sec 17 - No officers or members of a registered Trade

union shall be liable to punishment under sub-section (2) of Section 120-B of the Indian Penal
Code, in respect of any agreement made between the members for the purpose of furthering any
such object of the Trade Union unless the agreement is an agreement to commit an offence.

Immunity from civil suit to certain cases. Sec 18 - (1) No suit or other legal proceeding shall
be maintainable in any Civil Court against any registered Trade Union or member. thereof in
respect of any such act induces some other person to break a contract of employment, or that it is
in interference with the trade, business or employment of some other person or with the right of
some other person to dispose of his capital of his labour as he wills.

Right to inspect books of Trade Union. Sec 20 - The account books of a registered Trade
Union and the list of members thereof shall be open to inspection by member of the Trade Union
at such times as may be provided for in the rules of Trade Union.

Rights of minors to membership of Trade Union. Sec 21 - Any person who has attained the
age of fifteen years may be a member of registered Trade Union.

Disqualification of office bearers of Trade Union. Sec 21A - (1) A person shall be disqualified
for being chosen as, a member of the executive or any other office-bearer or registered Trade
Union if-

(i) He has not attained the age of eighteen years;

(ii) He has been convicted by a Court in India of any offence involving moral turpitude and
sentenced to imprisonment, unless a period of five years has elapsed since his release.

Proportion of office-bearers to be concerned with the industry. Sec 22 - Not less than one
half of the total number of the every registered Trade Union shall be persons actually engaged in
an industry with which the Trade Union is connected.

Change of name. Sec 23 - Any registered Trade Union may, with the consent of not less than
two-thirds of the total number of its members and subject to the provisions of Section 25 change
its name.
Dissolution. Sec 27 - (1) When a registered Trade Union is dissolved, notice for the dissolution
signed by seven members and by the Secretary of the Trade Union shall, within fourteen days of
the dissolution, be sent to the Registrar. he is satisfied the dissolution has been effected in
accordance with the rules of the Trade Union, and the dissolution shall have effect from the date
of such regulation.

Regulations

Power to make regulations. Sec 29 –

(1) The [appropriate Government] may make regulations for the purpose of carrying into effect the
provisions of this Act.

(2) In particular and without prejudice to the generality of the generality of the foregoing power,
such regulations may provided for all 0r any of the following matters, namely;

(a) The manner in which Trade Union and the rules of Trade Unions shall be registered and the
fees payable on registration;

(b) The transfer of registration in the case of any registered Trade Union which has changed its
head office from one State to another;

(c) The manner in which, and the qualifications of persons by whom, accounts of registered Trade
Unions or of any class of such Unions shall be audited;

(d) The conditions subject to which inspection of documents kept by Registrars shall be allowed
and the fees which shall be chargeable in respect of such inspections; and

(e) Any matter which is to be or may be prescribed.

Publication of regulations. Sec 30 –

(1) The Power to make regulations conferred by section 29 is subject to the condition of the
regulations being made after previous publications.

(3) Regulations so made shall be published in the (Official Gazette) and on such publication shall
have effect as if enacted in this Act.
 Penalties and procedure
Failure to submit returns. Sec 31 - (1) If default is made on the part of any registered Trade
Union in giving any notice or sending any statement or other document as required by or under
any provision of this Act, every (office-bearer) or other person bound by the rules of the Trade
shall be punishable with fine which may extend to five rupees and in the case of a continuing
default, with an additional fine which may extend to five rupees for each week after the first during
which the default continues:

Provided that the aggregate fine shall not exceed fifty rupees.

(2) Any person who willfully makes, or causes to be made, any false entry in, or any omission
from the general statement required by section 28, or in or form any copy of rules or of alterations
of rules sent to the Registrar under that Section, shall be punishable with fine which may extend
to five hundred rupees.

Supplying false information regarding Trade Union. Sec 32 –

Any person who, with intent to deceive, gives to any member of a registered Trade Union or to
any document purporting or applying to become a member of such Trade Union, any document
purporting to be a copy of the rules of the Trade Union or of any alterations to the same which he
knows, or has reason to believe, is not a correct copy of such rules or alterations as are for the
time being in force, or any person who, with the like intent gives a copy of any rules of an
unregistered Trade Union to any person on the pretence that such rules are the rules of a
registered Trade Union, shall be punishable with fine which may extend to two hundred rupees.

The Payment of Gratuity Act 1972

The Payment of Gratuity Act 1972 is a social security enactment. It is derived from the word
‘gratuitous’, which means ‘gift’ or ‘present’. However, having being enacted as a social security
form, it ceases to retain the concept of a gift but it has to be seen as a social obligation by an
employer towards his employee.
Application

The Payment of Gratuity Act 1972 applies to the whole of India and so far as it relates to ports
and plantations it does not apply to the State of Jammu and Kashmir. It applies to:

(a) every factory, mine, oilfield, plantation, port and railway company.

(b) Every shop or establishment within the meaning of any law for the time being in force
in relation to shops and establishment in a State, in which 10 or more persons are or
were employed on any day in the preceding 12 months.

(c) Such other establishments or class of establishment, in which 10 or more employees

are or were employed on any day in the preceding 12 months, as the Central
Government may notify in this behalf.

Any shop or establishment shall continue to be governed by the Act even if the no. of its
employees comes below 10 persons at any time in the future.

Applicability to NGOs

Public charitable and religious trusts are also covered by this Act, provided that they are shops
or establishments within the meaning of the Shops and Establishment Act applicable to their
area of operation and that 10 or persons have been employed by them on any day in the
preceding 12 months.

Payment of Gratuity

Gratuity shall be paid to an employee on the termination of his employment after s/he has
rendered continuous service of not less than 5 years i.e. on superannuation, retirement,
resignation, death or disablement due to accident or disease (Sec 4).
The period of 5 years is not necessary if the termination of the employee is because of death
or disablement. In the case of death the amount is paid to the legal heirs

“Continuous Service” means uninterrupted service which may be interrupted on account of

sickness, accident, leave, absence from duty without (not being treated as break in service), lay-
off, strike, lockout or cessation of work not due to the fault of the employee. (Sec 2A).

Calculation of Gratuity

Gratuity is calculated at 15 days wages last drawn by the employee for each completed year of
service. The monthly wage is divided by 26 and multiplied by 15. In computing a completed year
of service the period in excess of six months shall be taken as a full year.

Gratuity = Monthly salary x 15 days x No. of years of service

26

Maximum amount of Gratuity payable

The maximum amount of gratuity payable under the Act is Rs. 3,50,000.00.

Forfeiture of Gratuity

Gratuity can be forfeited {Sec 4(6)} where an employee has been terminated:

(i) for any act, willful omission or negligence causing any damage or loss to or destruction of any
property belonging to the employer, to the extent of such loss or damage.

(ii) for riotous or disorderly conduct or any act of violence on his part.

(iii) For any act which constitutes an offence involving moral turpitude, provided the offence
has been committed by him in the course of his employment.
Compulsory Insurance

The Payment of Gratuity (Amendment) Act, 1987 has prescribed provisions for compulsory
insurance for employer’s liability for payment towards the gratuity under the Act from the Life
Insurance Corporation of India establishment under the Life Insurance Corporation of India
Act,1956 or any other prescribed Insurer.

However, employer of an establishment belonging to or under the control of the Central

Government or the State Government are exempted from operations of these provisions. (Section
4A)

Nomination (Sec 6)

Each employee who has completed one year of service is required to make a nomination for the
purposes of gratuity in case of his death. There can be more than one nominee. (Form F).

Nominees may be changed at any time by the employee, by giving a written notice to the
employer. (Form H).

If no nomination has been made, it shall be paid to the legal heirs of the deceased employee or if
the heirs are minor, the share of such minor shall be deposited by the controlling authority with a
bank till he attains majority.

Protection of Gratuity

No gratuity payable under the Act shall be liable to attachment in execution of any decree or
order of any civil, revenue or criminal court. However if the employee had agreed to a deduction
from the amount due as gratuity then that amount can be recovered. (Jaganatha Dasik v Bina
Khadi & Village Industries Board 1995 Lab. IC 923. (Sec. 13)

Notice of Opening, change, closing of Establishment (Rule 3)

Once the Payment of Gratuity Act becomes applicable to the establishment, a notice in Form
‘A’ has to be given by the employer to the controlling authority within 30 days. Notice in Form
‘B’ is to be given to the controlling authority within 30 days of any change in name, address,
employer or nature of business. Where an employer proposes to close down the business he
shall submit a notice in Form ‘C’ to the Controlling Authority at least 60 days before the
intended closure.

Penalties

Failure to comply with the Payment of Gratuity Act 1972 entails certain penalties (Sec. 9),
which are the following:

S.No. Details of Violation Penalty

1 For avoiding any payment knowinglyShall be punishable with imprisonment upto 6
makes any false statement ormonths or fine upto Rs. 10,000.00 or both.
representation
2 Failure to comply with any provision of theShall be punishable with imprisonment upto 1
Act or Rules year but will not be less than 3 months or with
fine, which will not be less than Rs. 10,000.00
but may extend upto Rs. 20,000.00 or with
both.
3 Any offence relating to non-payment ofEmployer shall be punishable with
gratuity under the Act imprisonment for a term which shall not be
less than 6 months but may extend to 2
years, unless the court for reasons recorded
decides for a lesser term of imprisonment or a
fine, which would meet
.