Industrial Legislation

PREPARED BY: PROF. JIGAR R.
MEVADA
12/18/2016 PROF. JIGAR R. MEVADA 1

CONTENTS
• INTRODUCTION
• NEED OF LABOUR LEGISLATION
• THE FACTORIES ACT – 1948
• THE INDUSTRIAL DISPUTE ACT – 1947
• THE INDIAN TRADE UNION ACT – 1926
• INDUSTRIAL EMPLOYMENT ACT – 1946
• PAYMENT OF WAGES ACT – 1936
• THE WORKMEN’S COMPENSATION ACT – 1923
• THE PAYMENT OF BONUS ACT – 1965
• THE EMPLOYEES PROVIDENT FUND ACT - 1952

INTRODUCTION
• Industrial legislations are the laws enacted by

the government to provide economic and
social justice to the workers in industries.
Generally these laws provide guidelines to the
employers/industrialists in dealing with the
matters of wages, wage incentives, facilities
for workers working conditions of labour.

NEED OF LABOUR LEGISLATION
• It establishes a legal system that facilitates productive
individual and collective employment relationships, and
therefore a productive economy;
• by providing a framework within which employers, workers
and their representatives can interact with regard to work-
related issues, it serves as an important vehicle for
achieving harmonious industrial relations based on
workplace democracy;
• It provides a clear and constant reminder and guarantee of
fundamental principles and rights at work which have
received broad social acceptance and establishes the
processes through which these principles and rights can be
implemented and enforced.

Principals Of Industrial Legislation
Industrial legislation is based upon the

following principles:
• Social Justice
• Social Equality / Welfare
• National Economy
• International Uniformity

THE FACTORIES ACT – 1948
OBJECTIVE OF THE ACT

To ensure adequate safety measures and to
promote the health and welfare of the
workers employed in factories. To prevent
haphazard growth of factories through the
provisions related to the approval of plans
before the creation of a factory.

Applicability Of The Act
• Applicable to the whole of India including
Jammu & Kashmir.
• Covers all manufacturing processes and
establishments falling within the definition
of ‘factory’.
• Applicable to all factories using power and
employing 10 or more workers, and if not
using power, employing 20 or more workers
on any day of the preceding 12 months.

Important Definitions
of Factories Act
1. Adult
2. Adolescent
3. Child
4. Young Person
5. Power
6. Prime Mover
7. Transmission Machinery
8. Machinery
9. Worker
10. Factory
11. Occupier of Factory

Approval, Licensing & Registration Of
Factories
The application for approval must be accompanied following documents:
1. Submission of plans of any class or description of factories to the chief

inspector or the state government.
2. Obtaining previous permission of the state government or chief
inspector, for the site on which factory which is situated and for
construction or extension of any factory or class or description of the
factory.
3. Considering application for permission for the submission of plans and
specifications.
4. Nature of plans and specification and the authority certifying them.
5. Registration and licensing of factories.
6. Fees payable for registration and licensing and for the reward of
licensing.
7. License not to be granted or renewed unless notice specified.

Measures To Be Taken By Factories For
Health, Safety And Welfare Of Workers
A. HEALTH
1. Cleanliness
2. Disposal of Waste and Effluents
3. Ventilation and Temperature
4. Dust and Fume
5. Artificial Humidification
6. Overcrowding
7. Lighting
8. Drinking Water
9. Latrines and Urinals
10. Spittoons

B. SAFETY MEASURES
1. Fencing of Machinery
2. Work on or Near Machinery in Motion
3. Employment of Young Persons on Dangerous Machines
4. Hoists and Lifts
5. Lifting Machines, Chains, Ropes and Lifting Tackles
6. Pressure Plant
7. Floors Stairs and Means of Access
8. Pits, Sumps, Opening in Floors
9. Excessive Weights
10. Protection of Eyes
11. Precautions Against Dangerous Fumes
12. Explosives or Inflammable Dust or Gas
13. Precautions in Case of Fire

C. WELFARE ACTIVITIES
1. Washing facilities
2. Facilities for sitting
3. First-Aid
4. Canteens
5. Shelters, Rest Rooms and Lunch Rooms
6. Crèches
7. Welfare Officers

Obligations Of Workers
• No factory worker shall misuse any appliances

provided for the purpose of securing health, safety
and employee welfare.
• A worker who contravenes this provision shall be
punished with up to 3 months imprisonment or a
fine of Rs. 100 or both.

THE INDUSTRIAL DISPUTE ACT – 1947
DEFINATION OF INDUSTRIAL DISPUTES
“As per Section 2(k) of Industrial Disputes Act,
1947, an industrial dispute is defined as any
dispute or difference between employees and
employers, or between employers and
workmen, or between workmen and which
is connected with the employment or non-
employment or the terms of employment or
with the conditions of labour, of any person.”

Objective Of The Act
The Act also lays down:
1. The provision for payment of compensation to
the Workman on account of closure or lay off or
retrenchment.
2. The procedure for prior permission of
appropriate Government for laying off or
retrenching the workers or closing
down industrial establishments
3. Unfair labour practices on part of an employer
or a trade union or workers.
Important Provisions of the Act
• Defines industry, industrial dispute, layoff, lockout,
retrenchment, trade union, strike, wages, workman etc.
• Provides machinery for investigating and settling disputes
through works committees, conciliation officers, boards of
conciliation, courts of enquiry, labour courts, tribunals and
voluntary arbitration.
• Payment of wages to workers pending proceedings in High Courts.
• Notice of change in employment conditions.
• Protection of workmen during pendency of proceedings
• Strike and lockout procedures.
• Retrenchment compensation.
• Proceedings for retrenchment.
• Recovery of money due from employer.
• Obligations and rights of employees.

Important Definitions of Industrial
Disputes Act
1. Average Pay
2. Award
3. Employer industry
4. Industrial dispute
5. Suspension of workman
6. Closure
7. Lockout
8. Retrenchment
9. Settlement
10. Strike
11. Workman

Authorities Empowered By This Act
• Central Government
• State Government
• Conciliation Officer
• Court of Inquiry
• Board of Conciliation
• Labour Courts

THE INDIAN TRADE UNION ACT – 1926
• The Trade Unions Act, 1926 provides for registration of trade unions with a
view to render lawful organization of labour to enable collective
bargaining. It also confers on a registered trade union certain protection
and privileges.
• Trade Union is a combination whether temporary or permanent,
formed for regulating the relations not only between workmen and
employers but also between workmen and workmen or between
employers and employers.

Registration of Trade Union
• Registration of a trade union is not compulsory but is desirable since a
registered trade union enjoys certain rights and privileges under the Act.
Minimum seven workers of an establishment (or seven employers) can
form a trade union and apply to the Registrar for it registration.
• The application for registration should be in the prescribed form and
accompanied by the prescribed fee, a copy of the rules of the union
signed by at least 7 members, and a statement containing,
(a) the names, addresses and occupations of the members making the
application,
(b) the name of the trade union and the addresses of its head
office, and
(c) the titles, names, ages, addresses and occupations of its office bearers.

Appointment of Office Bearers
in Trade Union
• At least 50% of the office bearers of a union should be actually engaged or
employed in the industry with which the trade union is concerned, and
the remaining 50% or less can be outsiders such as Lawyers, politicians,
social workers etc.
• To be appointed as an office bearer or executive of a registered trade

union, a person must have
A. attained the age of 18 years; and
B. not been convicted of any affiance involving moral turpitude
and sentenced to imprisonment, or a period of at least 5 years has
elapsed since his release.

Obligations of Registered Trade Unions
1. The account books and membership register of the

union should be kept open for inspection by any of its
office-bearers.
2. A copy of every alteration made in the rules of the
union should be sent to the Registrar within 15 days
of making the alteration.
3. An annual statement of receipts and expenditure and
assets and liabilities of the union for the year ending
on the 31st December, prepared in the prescribed
forms and duly audited should be sent to the
Registrar within the prescribed time.

INDUSTRIAL EMPLOYMENT ACT – 1946
• The Industrial Employment Act, 1926 requires employers in

industrial establishments to define with sufficient precision
the conditions of employment under them and to make the
said conditions known to workmen employed by them.

Object & Scope of the Act
The objects of the act are:
1. Firstly, to enforce uniformity in the conditions of services under different
employers in different industrial establishments.
2. Secondly, the employer, once having made the conditions of
employment known to his employed workmen cannot change them to
their detriment or to the prejudice of their rights and interests.
3. Thirdly, with express or written conditions of employment, it is open for
the prospective worker to accept them and join the industrial
establishment.
4. Fourthly, for maintaining industrial peace and continued productivity, the
significance of the express written conditions of employment cannot be
misused or exaggerated.

of Industrial Employment Act
1. Appellate Authority
2. Appropriate Authority
3. Certifying Officer
4. Employer
5. Industrial Establishment
6. Standing Orders
7. Wages and Workmen

PAYMENT OF WAGES ACT – 1936
“The Payment of Wages Act, 1936 regulates the payment of wages of
certain classes of employed persons.”
OBJECT AND SCOPE

The main object of the Act is to eliminate all malpractices by laying down
the time and mode of payment of wages as well as securing that the
workers are paid their wages at particular intervals, without any
unauthorised deductions. In order to enlarge its scope and provide for
more effective enforcement of the Act empowering the Government to
enhance the ceiling by the notification in future. The Act extends to the
whole of India.

of Industrial Employment Act
1. Employed Person: includes the legal representative of a deceased
employed person.
2. Employer: includes the legal representative of a deceased
employer.
3. Factory: It is any premises where a manufacturing process is
carried out on Machines installed in Rooms, Sheds and Godowns.
4. Industrial Establishment: “Industrial Establishment” means any
tramway or motor omnibus service; dock, wharf of jetty, inland
steam vessel, mine, quarry or oil field, plantation, workshop of
other establishment in which articles are produced, adopted or
manufactured.
5. Wages: Wages means of remuneration, which can be expressed in
terms of money which would be payable to a person.

Important Terms of Payment of Wages
• Responsibility of Payment Of Wages
It is the responsibility of every employer to make payment of wages to the
persons employed by him. However, the employer may authorize a person
who would act as ‘paymaster’ for the purpose of making payment to the
workers.
• Time of Payment of Wages

The wages of every person employed in any factory or industrial
establishment, in which less than 1000 persons are working, shall be paid
before the expiry of the seventh day of the month.
Where the number of workers in any factory is over 1000 the payment
should be made within the first ten days of the month, for the wages
earned in the previous month by its workers.

Deductions Incurred From Wages
The following kinds of deductions can be made from the wages of a
person, under the Wage Payment Act.
Compulsory Deductions
1. Income-tax if applicable under the IT provisions.
2. Overpayment of wages if made
3. Absence from duty during working period.
4. Court attachment
5. Deductions for damage or loss of goods/items in the custody of the
employed person.
6. Loss of money which he is required to keep with himself for making
payment or purchase of certain small items.
7. PF subscriptions
8. Repayment of advance taken from PF.

Deductions Incurred From Wages
• Employer’s Dues for Amenities
1. House rent
2. Electricity charges.
• Optional Deductions
1. Life Insurance Premium
2. Purchase of securities
3. Saving Deposit Scheme
4. Cooperative Societies
5. Refund of loan taken from welfare fund or from some society

Penalties For Offences Under Payment of
Wages Act
Penalty cannot be imposed on any person except for such acts or
omissions as specified in a notice. The notice shall be exhibited in the
prescribed manner, at the appropriate places in the factory premises.
The following is the list of acts and omissions for which the penalties may
be imposed:
1. Disregard or disobedience of orders.

2. Insubordination or breath of discipline.
3. Late or irregular attendance as a routine.
4. Improper behaviour such as drunkenness, quarrelling or sleeping on
duty.
5. Causing inconvenience to the public in general by objectionable acts.
6. Inefficient, careless, wastefulness of dangerous working.
7. Causing loss or damage to the property of the enterprise/organization.

THE WORKMEN’S COMPENSATION ACT –
1923
• “The workmen Compensation Act, 1923 provides for the payment by

certain classes of employers to their employees of compensation for
injury by accident.”
• The Workmen’s Compensation Act, aims to provide workmen and/or their

dependents some relief in case of accidents arising out of and in the
course of employment and causing either death or disablement of
workmen. It provides for payment by certain classes of employers to their
workmen compensation for injury by accident.

Meaning of Workman
• "Workman" means any person (other than a person whose employment is

of a casual nature and who is employed otherwise than for the purposes
of the employer's trade or business) who is –
a) a master, seaman or other member of the crew of a ship,

b) a captain or other member of the crew of an aircraft,
c) a person recruited as driver, helper, mechanic, cleaner or in any other
capacity in connection with a motor vehicle,

Employers Liability For Compensation
(Accidents)
• The employer of any establishment covered under this Act, is
required to compensate an employee:
• Who has suffered an accident arising out of and in the course of his
employment, resulting into (i) death, (ii) permanent total
disablement, (iii) permanent partial disablement, or (iv) temporary
disablement whether total or partial.
• Employer Shall Not Be Liable to pay Compensation if:

a) In respect of any injury which does not result in the total or partial
disablement of the workmen for a period exceeding three days;
b) In respect of any injury not resulting in death, caused by an
accident

Definition of Disablement
• Disablement is the loss of the earning capacity resulting from injury
caused to a workman by an accident.
• Disablements can be classified as (a) Total, and (b) Partial. It can further
be classified into (i) Permanent, and (ii) Temporary, Disablement, whether
permanent or temporary is said to be total when it incapacitates a worker
for all work he was capable of doing at the time of the accident resulting
in such disablement.
Accident arising out of and in the course of employment

• An accident arising out of employment implies a casual connection
between the injury and the accident and the work done in the course of
employment. Employment should be the distinctive and the proximate
cause of the injury.

Important Terms of Workmen’s
Compensation Act
• Notice of Accident: A worker injured in an accident should first of all give
in writing a notice of the accident to the employer.
• Medical Examination: An injured worker who has submitted a notice,
must present himself for the medical examination, if the employer wants.
• Distribution of Compensation: Payment of compensation in respect of
death of workmen or under legal disability shall be deposited by the
employer with the commissioner.
• Occupational Disease: If a worker suffers from any of the specified
occupational disease and he worked in the factory for at least six months,
then the employer has to pay compensation.
• Appointment of Commissioner: The State Government may by
notification in the Official Gazette appoint any person to be commissioner
for workmen’s compensation for the areas specified in this modification.

General Principles of the Act
1. There must be a casual connection between the injury
and the accident and the work done in the course of
employment;
2. The onus is upon the applicant to show that it was the
work and the resulting strain which contributed to or
aggravated the injury;
3. It is not necessary that the workman must be actually
working at the time of his death or that death must occur
while he was working or had just ceased to work; and
4. Where the evidence is balanced, if the evidence shows a
greater probability which satisfies a reasonable man that
the work contributed to the causing of the personal injury
it would be enough for the workman to succeed.

THE PAYMENT OF BONUS ACT – 1965
• DEFINATION AND OBJECTIVE
• “Payments of Bonus Act, 1952 provides for the payments of bonus to

persons employed in certain establishments and for matters connected
therewith.”
• The payment of Bonus Act provides for payment of bonus to persons
employed in certain establishments of the basis of profits or on the basis
of production or productivity and for matters connected therewith.
• It extends to the whole of India and is applicable to every factory and to
every other establishment where 20 or more workmen are employed on
any day during an accounting year.

Eligibility For Bonus
• Every employee receiving salary or wages up to Rs. 10,000 p.m. and
engaged in any kind of work whether skilled, unskilled, managerial,
supervisory etc. is entitled to bonus for every accounting year if he has
worked for at least 30 working days in that year.
• Where an employee has not worked for all the working days in an
accounting year, the minimum bonus of one hundred rupees or, as the
case may be, of sixty rupees, if such bonus is higher than 8.33 per cent, of
his salary or wage for the days he has worked in that accounting year, shall
be proportionately reduced.
• However employees of L.I.C., Universities and Educational institutions,
Hospitals, Chamber of Commerce, R.B.I., IFCI, U.T.I., IDBI, NABARD, SIDBI,
Social Welfare institutions are not entitled to bonus under this Act.

Minimum & Maximum Bonus Payable
• Minimum Bonus
The minimum bonus which an employer is required to pay even if he suffers
losses during the accounting year or there is no allocable surplus is 8.33 % of
the salary or wages during the accounting year, or Rs. 100 in case of
employees above 15 years and Rs 60 in case of employees below 15 years, at
the beginning of the accounting year, whichever is higher.
• Maximum Bonus
If in an accounting year, the allocable surplus, calculated after taking into
account the amount ‘set on’ or the amount ‘set of’ exceeds the minimum
bonus, the employer should pay bonus in proportion to the salary or wages
earned by the employee in that accounting year subject to a maximum of 20%
of such salary or wages.

Duties / Rights of Employer
• Duties
1. To calculate and pay the annual bonus as required under the Act.
2. To submit an annual return of bonus paid to employees during the year (,
in Form D), to the Inspector, within 30 days of the expiry of the time limit
specified for payment of bonus.
3. To co-operate with the Inspector, produce before him the
registers/records maintained, and such other information as may be
required by them.
4. To get his account audited as per the directions of a Labour
Court/Tribunal or of any such other authority.

Duties / Rights of Employer
• Rights
1. An employer has the following rights:
2. Right to forfeit bonus of an employee, who has been dismissed from
service for fraud, riotous or violent behaviour, or theft, misappropriation
or sabotage of any property of the establishment.
3. Right to make permissible deductions from the bonus payable to an
employee, such as, festival/interim bonus paid and financial loss caused
by misconduct of the employee.
4. Right to refer any disputes relating to application or interpretation of any
provision of the Act, to the Labour Court or Labour Tribunal.

Duties / Rights of Employee
• Right to claim bonus payable under the Act and to make an application to
the Government, for the recovery of bonus due and unpaid, within one
year of its becoming due.
• Right to refer any dispute to the Labour Court/Tribunal Employees, to

whom the Payment of Bonus Act does not apply, cannot raise a dispute
regarding bonus under the Industrial Disputes Act.
• Right to seek clarification and obtain information, on any item in the

accounts of the establishment.

Offences and Penalties
• For contravention of the provisions of the Act or rules the penalty is
imprisonment up to 6 months or fine up to Rs.1000, or both.
• For failure to comply with the directions or requisitions made the penalty
is imprisonment up to 6 months or fine up to Rs.1000, or both.
• In case of offences by companies, firms, body corporate or association of

individuals, its director, partner or a principal officer responsible for the
conduct of its business, as the case may be, shall be
• Deemed to be guilty of that offence and punished accordingly, unless the

person concerned proves that the offence was committed without his
knowledge or that he exercised all due diligence.

THE EMPLOYEES PROVIDENT FUND ACT -
1952
• “The Employees President’s Fund Act, 1952
provides for the institution of provident funds,
pension fund and deposit-linked insurance
fund for employees in factories and other
establishments. It extends to the whole of
India except the state of Jammu and Kashmir.”

THE EMPLOYEES PROVIDENT FUND ACT -
1952
• The Employees’ Provident Fund Act was passed in February, 1952. This act
is applicable to factories and establishments falling under notified
industry, which have been in existence for at least:
1. 3 years when the number of employees is 50 or more.

2. And 5 years when the number of employees is 20 to 50.
3. It does not apply to co-operative undertakings employing less than 50
persons and working without aid of power.
• The object of this act is to provide for the installation of Provident and
Family Pension Schemes for the employees in factories and
establishments.

Contribution Towards Provident Fund
• The central government shall appoint a Central Provident

Fund Commissioner who shall be the Chief Executive
Officer of the Central Board and shall be subject to the
general control. The administration of the act is rested in
Central Board of Trustees and similar boards in the states.
• The contribution towards Provident Fund shall be made by

the employees and the employers at the statutory rate as
may be specified in the act. Usually the employer and the
employee each contributes 8 percent of a workers’
emolument to provident fund.

REFRENCES
1. Industrial Engineering & Production Management by M. Mahajan,

Dhanpat Rai & Co.
2. Industrial Engineering & Organization Management by Dr. S.K. Sharma &
Savita Sharma, Kataria & Sons.
3. Executive Programme, Industrial, Labour and General Laws by The
Institute of Company Secretaries of India.

Industrial Legislation

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PREPARED BY: PROF. JIGAR R.

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• Industrial legislations are the laws enacted by

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Industrial legislation is based upon the

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OBJECTIVE OF THE ACT

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1. Submission of plans of any class or description of factories to the chief

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• No factory worker shall misuse any appliances

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• To be appointed as an office bearer or executive of a registered trade

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1. The account books and membership register of the

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• The Industrial Employment Act, 1926 requires employers in

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OBJECT AND SCOPE

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• Time of Payment of Wages

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1. Disregard or disobedience of orders.

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• “The workmen Compensation Act, 1923 provides for the payment by

• The Workmen’s Compensation Act, aims to provide workmen and/or their

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• "Workman" means any person (other than a person whose employment is

a) a master, seaman or other member of the crew of a ship,

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• Employer Shall Not Be Liable to pay Compensation if:

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Accident arising out of and in the course of employment

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• “Payments of Bonus Act, 1952 provides for the payments of bonus to

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• Right to refer any dispute to the Labour Court/Tribunal Employees, to

• Right to seek clarification and obtain information, on any item in the

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