Social Justice and Labour Jurisprudence

INTRODUCTION

For the efficient functioning of a working unit an amicable environment, cooperation between the workers and the employers, reasonable remuneration and proper working condition are the prerequisites. From the laissez faire to the ‘welfare state’, the socio-economic conditions have faced drastic changes, not only in India but also across the world.

The industrial position that prevailed in the pre-independence era of India does not remain pristine. The industrial revolution in India brought with it certain inhumane as well as unjust aspects of the colonial era. To cope with these problems, industrial legislations were enacted in India. To keep pace with the changing socio-economic conditions in India, the Legislature as well as the Courts had to check the unfavourable growth of the industrial legislations.
Industrial legislation finds its origin from the industrial jurisprudence, which is a development of the 20th century world. In India, industrial jurisprudence prevailed before the Independence, but it was in the rudimentary form. Industrial revolution was the emanating factor behind the growth of the industrial jurisprudence. Industrial revolution brought with it the most inhumane aspect of the human life. It saw the exploitation of a man by a man. The maximization of profit, even at the cost of the life of the labourers, was paramount goal of the employer. ‘Freedom of contract’ was the evident result of the laissez faire. The employer was free to fire the employee, at his arbitrariness. Thus the employees were always at the loss.
To protect the interest of the employees, the legislature and courts, in India took a giant step to give birth to the industrial jurisprudence in India- former trough the enactments and the latter through the judgments. The scope of industrial jurisprudence not only covers the protection of interests of the employees but it also aims at securing a cordial relationship between the employers and employees in a working unit.

EVIL IMPACT OF INDUSTRIAL REVOLUTION ON INDIA

As per the economic policy of the British government, they never wanted to make India an industrial base, rather they wanted to make India a supplier of raw materials for their industries. Instead of promoting industries in India, they continued to de-industrialise and ruralise the Indian economy.
Further with the advent of industrial revolution in England, the British government revved up its efforts to further exploit the Indian economy. As a result, in 1947, when the British left, India represented a ruined economy, a sick society and the present danger of the evil effects of neo-colonialism. However, the evil impact of industrial revolution can be classified into Social Evils and Economic Evils, which are discussed as below:
Economic Evils
The artisans lost the psychological satisfaction that they derived in producing goods themselves. In the industries, they had to produce only a part of the finished goods.
The labourers were underpaid. They could just earn from hand to mouth. The wages were sufficient to provide them with the daily bread, but at the cost of other necessities of their life.
The term of employment was not secure. The employers were free to exercise their arbitrariness in sacking the labourers. The factory workers had to suffer from the periodic unemployment and under-employment.

Social Evils

The overcrowded cities, due to the large-scale immigration of the village population in the cities led to the industrial slums and acute housing problems. It had its adverse impact on the health of the workers and also led to the sanitation problems in the cities.
The working condition in the factories was hazardous. Moreover, the long hours of duty, with no rest and no facility of recreation marred the welfare of the workers. The machines were taken care of by the factory owners, with little regard for the safety of the workers.
Workers were exposed to serious accidents caused by the improperly managed machines in the factory. These accidents were not taken seriously by the factory owner. The victims of such accidents did not have any right to compensation.
    Due to the inadequate wages, the wives and children of the workers were exposed to the exploitation by the factory owners. They were employed at low wages without regard to their physical conditions.
LABOUR PROBLEMS IN INDIA
The factory owners paid their sole attention towards the maintenance of the machines irrespective of the health and working conditions of the workers. The employers neglected the conditions of the workers as the manual labour was abundantly available to them. The workers were underpaid. They could not raise their voice. They were illiterate and poor, so were ignorant of their rights. Taking the advantage of this situation, the employers dictated their own terms.
    The government also did not interfere in the matter as it was deemed to be a freedom of contract. The situation worsened further. The government could not just see it as a neutral player and it had to interfere. Moreover, some of the philanthropic agencies like the Servants of India Society and Social Service League raised voice against these problems. Later some industrial social workers also raised voice against these problems. Initially, they lacked in the resources and bargaining power but they were successful in mobilising the public voice against these problems.
    Later, the factory owners also realised the seriousness of the problem and also that a contended worker will add to the productivity of the factory.
    Later the Government also, could not confine itself to a neutral spectator. The Government also realised that it was in the interest of the national economy as well as the labourers that constitute a bulk of population in India. Thus the drive for the welfare of the labourers and for the protection of the Indian economy compelled the Government to intervene in the situation.

EVOLUTION OF INDUSTRIAL JURISPRUDENCE IN INDIA
The evolution of Industrial Jurisprudence in India can be traced back to the period of post Independence. Before the Independence, the industrial jurisprudence existed in a rudimentary form. The paramount concern of the Pre-independence industrial jurisprudence was the amelioration of the working condition of the workers at the factories. There was hardly any deal with the social justice to the working class. It was only after the commencement of our Constitution, that the adequate provisions for the social justice to the workers were inserted.
    Before the Independence, India was not only a great agricultural country, but also a manufacturing country. But the British Government, as a matter of their policies always tended to discourage the Indian industries. This led to a widespread nationalism in India, which laid emphasis on the boycott of the foreign goods. Further a non-cooperation movement saw its birth that is also called swadeshi movement, which emphasized on the use of indigenous goods and boycott of the foreign goods.
    The aspect of industrialization in India was based on the program of planning, which was accepted after thirties.
    It is important to take into consideration that the plantation industry of Assam was the first to attract the industrial legislation. The situation there was that the employers  exercised hard practices against the employees. The employees were not allowed to leave the tea gardens. A number of Acts were passed from 1863 onward, but they only protected the interests of the employers. Some other Acts were also passed to regulate the condition. But the Workmen’s Compensation Act, 1923 was the landmark Act.

INDIAN CONSTITUTION AND SOCIAL JUSTICE
Industrial Jurisprudence was not in a much developed form before the commencement of the Constitution of India. Before the Independence, the paramount concern of the Government was to ameliorate the condition of the factory workers. It was after the commencement of the Constitution that the paramount concern of the Government shifted towards the social justice for the labourers, who constituted the bulk of the population. 
    Bhagwati J., in a landmark case opined that concept of justice does not emanate from the fanciful notions of any particular adjudication but must be founded on a more solid foundation. Justice Gajendragadkar opined that “the concept of social and economic justice is a living concept of revolutionary import; it gives sustenance to the rule of law and meaning and significance to the idea of welfare state”.
    The Indian Constitution also enshrines the idea of social justice as one of the objectives of the State. Some of those provisions are as follows:
    The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life.
     The State shall, in particular, strive to minimise 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.
    The State shall, in particular, direct its policy towards securing -
    that the citizen, men and women equally, have the right to an adequate means of livelihood;
    that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good;
     that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;
     that there is equal pay for equal work for both men and women;
    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 avocations unsuited to their age or strength;
    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.

SOME IMPORTANT LABOUR ENACTMENTS IN INDIA
The salient features of the Central and State Labour Acts in force in the district are given hereunder:
    The Indian Factories Act of 1948 provides for the health, safety and welfare of the workers.
    The Punjab Shops and Commercial Establishment Act, 1958, regulates the conditions of work and terms of employment of workers engaged in shops, commercial establishments, theatres, restaurants, etc.
    The Punjab Maternity Benefit Act, 1943, provides for the grant of cash benefits to women workers for specified periods before and after confinements.
    The Employment of Children Act, 1938, prohibits the employment of young children below the age of 15 years in certain risky and unhealthy occupations.
    The payment of wages Act, 1936, regulates the k\timely payment of wages without any unauthorized deductions by the employers.
    The Minimum Wages Act, 1948, ensures the fixation and revision of minimum rates of wages in respect of certain scheduled industries involving hard labour.
    The Industrial Disputes Act, 1947, provides for the investigation, and settlement of industrial disputes by mediation, conciliation, adjudication and arbitration. There is scope for payment of compensation in cases of lay-off and retrenchment.
    The Industrial Employment (Standing Orders) Act, 1946, requires employers in Industrial establishments to define precisely the conditions of employment under them and make them known to their workmen.  These rules, once certified, are binging on the parties for a minimum period of six months.
    The Workmen’s Compensation Act, 1923, provides for compensation to injured workmen of certain categories and in the case of fatal accidents to their dependants if the accidents arose out of and in the course of their employment.  It also provides for payment of compensation in the case of certain occupational diseases.
    The Indian Trade Unions Act, 1926, recognizes the right of workers to organise into trade unions, when registered, have certain rights and obligations and function as autonomous bodies.
    The Employees’ State Insurance Act, 1948, provides for sickness benefit, maternity benefit, disablement benefit and medical benefit.
    The Employees’ Provident Fund Act, 1952, seeks to make a provision for the future of industrial worker after he retires or in case he is retrenched, or for his dependents in case of his early death.
    The Punjab Industrial Housing Act, 1956, provides for the administration allotment, realization of rent, etc., in connection with quarters constructed under the Subsidized Industrial housing Scheme.

RECENT TRENDS IN LABOUR LAW
The experience in India during the last 50 years has been that the Supreme Court of India, various High Courts, Industrial Tribunals and Labour Court have enriched the country with a variety of precedents of labour demands by their sweat and toil and missionary research from almost a barren and fallow field of labour jurisprudence. They have handed down to the world community jurisprudence, as living as dynamic, as valid as sound, which has redeemed the lost faith of industrial masses in law and justice. Their contribution to the development of labour law and redemption of social values of law and justice, is unparalled in the world history of jurisprudence, far exceeding the contribution made by Equity in England. Adjudication of industrial demands being a complicated task, the Tribunals have to go into the merits of each issue which necessarily means examination, analysis and appreciation of the labour economics, the sociological approach and the relevant technical aspects of every issue. The demands concerning labour problems have often been subjected to expert studies and researches by high powered bodies of International Labour Organization, Indian Labour Conference, Labour Investigation Committees, Wage Boards, Pay Commissions and various Government bodies, etc.
In fact, these Reports and Recommendations have often been adopted by the Supreme Court, High Courts and Industrial Tribunals as guidelines. According to Section 10 of the Industrial Disputes Act 1947, the appropriate government is empowered to refer a dispute to the Tribunal. This power of the appropriate government is independent of the fact whether conciliation proceedings have been held or not. However, in practice, a dispute is referred to the Tribunal/ Labour Court for adjudication by the appropriate government after considering the failure of conciliation report received from the conciliation officer.

ROLE OF LABOUR COURTS IN  SETTLEMENT OF INDUSTRIAL DISPUTES
Adjudication has dug deep roots in the field of labour. Though collective bargaining caters to long-term peace and organised trade unions and established concerns prefer to bargain and amicably settle labour demands, failure to settle amicably often makes adjudication the preferred trial of strength. Except for a handful who resort to strikes and lockouts, exceptions which only prove the general rule, labour has come to cultivate the habit of adjudication. This confidence in adjudication has been inspired by the benefits earned by labour through this system. Employers in the country have found adjudication beneficial to them in as much as it not only curbs the habit of labour to direct action but also serves as a powerful check and control on the extravagances of the demands and costs of labour. The State can hardly find a better substitute for effecting social and economic justice through rule of law in the labour field. Industrial adjudication has, therefore, very much come to stay in our country. The technique of industrial adjudication is a dynamic and revolutionary process of transforming traditional jurisprudence — which has proved wholly ineffective and impotent in protecting the poor industrial masses from social injustice and economic exploitation (resulting from industrial revolution) — into a progressive and flexible legal institution of social regeneration and economic justice. It has, to some extent, redeemed the infamy of individualistic legal systems and demonstrated that with the injection of right doses of progressive social philosophy, law and jurisprudence can become potential agents of social and economic progress.

Competence and Jurisdiction of Labour Courts/Industrial Tribunals
Under Section 7 of the Industrial Disputes Act 1947, a Labour Court constituted by the appropriate government is competent to adjudicate and render awards on the matters mostly relating to rights, such as:
1. Discharge or dismissal of workmen, including reinstatement of, or grant of relief to, workmen wrongfully dismissed;
2. Withdrawal of any customary concession or privilege;
3. Illegality or otherwise of a strike or lockouts; and
4. All matters other than those specified in Schedule Ill.

INDUSTRIAL TRIBUNALS
Industrial Tribunals under Section 7A of the Industrial Disputes Act 1947 have also been constituted to adjudicate upon the issues falling within Schedules II and III, i.e. rights disputes and interests disputes.
Under Section 7-8 of the Industrial Disputes Act 1947, the Central Government may also constitute national Tribunal to adjudicate the disputes if it involves any question of national importance or it is of such nature that industrial establishments situated in more than one State are likely to be interested or affected by such dispute whether or not it is the appropriate government in relation to that establishment. Labour courts or industrial tribunals are also competent to inquire into and investigate industrial disputes referred to them and upon adjudication, render awards which are binding on the parties. The Labour Courts and Industrial Tribunals also act as forum of appeal under Section 11A in the matter of discharge, dismissal or termination of employment.

CONCLUSION
Industrialisation creates a number of social and economic problems like employment of women and children, minimum wages, trade unions, insanitary living quarters and deplorable working conditions in the factories, etc.  Labour laws are, therefore, enacted to facilitate their solutions, as ordinary civil laws are inadequate to meet them.  The State has adopted a progressive policy, and is keeping pace with the labour policy of the Government of India and the standard laid down by the International Labour Organisation.  This has produced a plethora of legislation and their administration.  These laws also deal with the regulation of industrial relations between the management and the workers.
    Both the Legislature as well as the Judiciary in India have played their due role in shaping the Labour Legislation in India.

WHAT IS LABOUR LAW?

Wikipedia, the internet encyclopedia defines labour law as “Labour Law is the body of laws, administrative rulings, and precedents which address the relationship between and among employers, employees, and labor organizations, often dealing with issues of public law”. The terms Labour Laws and Employment Laws, are often interchanged in the usage. This has led to a big confusion as to their meanings. Labour Laws are different from employment laws which deal only with employment contracts and issues regarding employment and workplace discrimination and other private law issues.

Employment Laws cover broader area than labour laws in the sense that employment laws cover all the areas of employer/employee relationship except the negotiation process covered by labour law and collective bargaining.

Labour Laws harmonize many angles of the relationship between trade unions, employers and employees. In some countries (like Canada), employment laws related to unionised workplaces are different from those relating to particular individuals. In most countries however, no such distinction is made.

The final goal of labour law is to bring both the employer and the employee on the same level, thereby mitigating the differences between the two ever-warring groups.

Origins of Labour Laws
Labour laws emerged when the employers tried to restrict the powers of workers' organisations and keep labour costs low. The workers began demanding better conditions and the right to organise so as to improve their standard of living. Employer’s costs increased due to workers demand to win higher wages or better working conditions. This led to a chaotic situation which required the intervention of Government.  In order to put an end to the disputes between the ever-warring employer and employee, the Government enacted many labour laws.

In India the labour laws are so numerous, complex and ambiguous that they promote litigation rather than the resolution of problems relating to industrial relations. The labour movement has contributed a lot for the enactment of laws protecting labour rights in the 19th and 20th centuries. The history of labour legislation in India can be traced back to the history of British colonialism. The influences of British political economy were naturally dominant in sketching some of these early laws. In the beginning it was difficult to get enough regular Indian workers to run British establishments and hence laws for chartering workers became necessary. This was obviously labour legislation in order to protect the interests of British employers.

The British enacted the Factories Act with a really self-centered motive. It is well known that Indian textile goods offered serious competition to British textiles in the export market. In order to make India labour costlier, the Factories Act was first introduced in 1883 because of the pressure brought on the British parliament by the textile moguls of Manchester and Lancashire. Thus we received the first stipulation of eight hours of work, the abolition of child labour, and the restriction of women in night employment, and the introduction of overtime wages for work beyond eight hours. While the impact of this measure was clearly for the welfare of the labour force the real motivation was undoubtedly the protection their vested interests.

India provides for core labour standards of ILO for welfare of workers and to protect their interests. India has a number of labour laws addressing various issues such as resolution of industrial disputes, working conditions, labour compensation, insurance, child labour, equal remuneration etc. Labour is a subject in the concurrent list of the Indian Constitution and is therefore in the jurisdiction of both central and state governments. Both central and state governments have enacted laws on labour issues. Central laws grant powers to officers under central government in some cases and to the officers of the state governments in some cases.

Classification of Various Labour Laws

There are over 45 legislations on labour from the Central Government and the number of legislations enacted by the State Governments is close to four times that of the Central Acts.

Labour Laws can be classified into the following eight categories:
    Laws related to Industrial Relations
    Laws related to Wages
    Laws related to Specific Industries
    Laws related to Equality and Empowerment of Women
    Laws related to Deprived and Disadvantaged Sections of the Society
    Laws related to Social Security
    Laws related to Employment & Training
    Others

Laws related to Industrial Relations

1. The Trade Unions Act, 1926
2. The Industrial Employment (Standing Orders) Act, 1946
3. The Industrial Employment (Standing Orders) Rules, 1946
4. The Industrial Disputes Act, 1947

Laws related to Wages
1    The Payment of Wages Act, 1936
    The Payment of Wages Rules, 1937
2    The Minimum Wages Act, 1948
    The Minimum Wages (Central) Rules, 1950 3    The Working Journalist (Fixation of Rates of Wages) Act, 1958
    Working Journalist (Conditions of service) and Miscellaneous Provisions Rules, 1957 4    The Payment of Bonus Act, 1965
    The Payment of Bonus Rules, 1975
Laws related to Specific Industries
1    The Factories Act, 1948 2    The Dock Workers (Regulation of Employment) Act, 1948 3    The Plantation Labour Act, 1951 4    The Mines Act, 1952 5    The Working Journalists and other Newspaper Employees’ (Conditions of Service and     Misc. Provisions) Act, 1955
             The Working Journalists and other Newspaper Employees’ (Conditions of                             Service and Misc. Provisions) Rules, 1957 6    The Merchant Shipping Act, 1958 7    The Motor Transport Workers Act, 1961 8    The Beedi & Cigar Workers (Conditions of Employment) Act, 1966 9    The Contract Labour (Regulation & Abolition) Act, 1970 10    The Sales Promotion Employees (Conditions of Service) Act, 1976
    The Sales Promotion Employees (Conditions of Service) Rules, 1976 

11    The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service)     Act, 1979
12    The Shops and Establishments Act
13    The Cinema Workers and Cinema Theatre Workers (Regulation of Employment) Act,     1981
    The Cinema Workers and Cinema Theatre Workers (Regulation of Employment) Rules,     1984
    The Cine Workers’ Welfare Fund Act, 1981.   

14    The Dock Workers (Safety, Health & Welfare) Act, 1986
15    The Building & Other Construction Workers (Regulation of Employment & Conditions of     Service) Act, 1996 16    The Dock Workers (Regulation of Employment) (inapplicability to Major Ports) Act, 1997 17    The Mica Mines Labour Welfare Fund Act, 1946 18    The Limestone & Dolomite Mines Labour Welfare Fund Act, 1972 19    The Beedi Workers Welfare Fund Act, 1976 20    The Beedi Workers Welfare Cess Act, 1976 21    The Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines Labour Welfare Fund     Act, 1976 22    The Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines Labour Welfare Cess     Act, 1976 23    The Cine Workers Welfare Fund Act, 1981 24    The Cine Workers Welfare Cess Act, 1981 25    The Employment of Manual Scavengers and Construction of Dry latrines Prohibition Act,     1993
26    The Coal Mines (Conservation and Development) Act, 1974
Laws related to Equality and Empowerment of Women
1    The Maternity Benefit Act, 1961 2    The Equal Remuneration Act, 1976
Laws related to Deprived and Disadvantaged Sections of the Society
1    The Bonded Labour System (Abolition) Act, 1976 2    The Child Labour (Prohibition & Regulation) Act, 1986
Laws related to Social Security
1    The Workmen’s Compensation Act, 1923
2    The Employees’ State Insurance Act, 1948 3    The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952
4    The Payment of Gratuity Act, 1972
Laws related to Employment & Training
1    The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
    The Employment Exchanges (Compulsory Notification of Vacancies) Rules, 1959 2    The Apprentices Act, 1961 
Others
1    The Fatal Accidents Act, 1855 2    The War Injuries Ordinance Act, 1943 3    The Weekly Holiday Act, 1942 4    The National and Festival Holidays Act 5    The War Injuries (Compensation Insurance) Act, 1943 6    The Personal Injuries (Emergency) Provisions Act, 1962 7    The Personal Injuries (Compensation Insurance) Act, 1963 8    The Labour Laws (Exemption from Furnishing Returns and Maintaining Register by     Certain Establishments) Act, 1988 9    The Public Liability Insurance Act, 1991
1.3 Labour Jurisdiction-State vs Central
Under the Constitution of India, Labour is a subject in the Concurrent List where both the Central & State Governments are competent to enact legislation subject to certain matters being reserved for the Centre.
Constitutional Status
Union List    Concurrent List
Entry No. 55 : Regulation of labour and safety in mines and oil fields    Entry No. 22: Trade Unions; industrial and labour disputes.
Entry No. 61: Industrial disputes concerning Union employees    Entry No.23: Social Security and insurance, employment and unemployment.
Entry No.65: Union agencies and institutions for "Vocational ...training..."    Entry No. 24: Welfare of about including conditions of work, provident funds, employers 'invalidity and old age pension and maternity benefit.

Matters relating to Social Security are Directive Principles of State Policy and the subjects in the Concurrent List. The following social security issues are mentioned in the Concurrent List (List III in the Seventh Schedule of the Constitution of India) –

Item No. 23: Social Security and insurance, employment and unemployment.

Item No. 24: Welfare of Labour including conditions of work, provident funds, employers’ liability, workmen’s compensation, invalidity and old age pension and maternity benefits. 
Part III Fundamental Rights
Article16. Equality of opportunity in matters of public employment.- 
(1) There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State. 
(2) No citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect of, any employment or office under the State. 
(3) Nothing in this article shall prevent Parliament from making any law prescribing, in regard to a class or classes of employment or appointment to an office under the Government of, or any local or other authority within, a State or Union territory, any requirement as to residence within that State or Union territory] prior to such employment or appointment. 
(4A) Nothing in this article shall prevent the State from making any provision for reservation in matters of promotion to any class or classes of posts in the services under the State in favour of the Scheduled Castes and the Scheduled Tribes which, in the opinion of the State, are not adequately represented in the services under the State.
(4B) Nothing in this article shall prevent the State from considering any unfilled vacancies of a year which are reserved for being filled up in that year in accordance with any provision for reservation made under clause (4) or clause (4A) as a separate class of vacancies to be filled up in any succeeding year or years and such class of vacancies shall not be considered together with the vacancies of the year in which they are being filled up for determining the ceiling of fifty per cent reservation on total number of vacancies of that year.
(5) Nothing in this article shall affect the operation of any law which provides that the incumbent of an office in connection with the affairs of any religious or denominational institution or any member of the governing body thereof shall be a person professing a particular religion or belonging to a particular denomination.

Article24. Prohibition of employment of children in factories, etc. —No child below the age of fourteen years shall be employed to work in any factory or mine or engaged in any other hazardous employment.

Part IV Directive Principles of State Policy

Article 41 Right to work, to education and to public assistance in certain cases

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.

Article 42 Provision for just and humane conditions of work and maternity relief

The State shall make provision for securing just and humane conditions of work and for maternity relief.

Article43. Living wage, etc., for workers.—The State shall endeavour to secure, by suitable legislation or economic organisation 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.

Article43A. Participation of workers in management of industries.—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 organisations engaged in any industry.
Labour Policy of India
Labour policy in India has been evolving in response to specific needs of the situation to suit requirements of planned economic development and social justice and has two-fold objectives, viz., maintaining industrial peace and promoting the welfare of labour.
Labour Policy Highlights
     Creative measures to attract public and private investment.
     Creating new jobs
     New Social security schemes for workers in the unorganised sector.
     Social security cards for workers.
     Unified and beneficial management of funds of Welfare Boards.
     Reprioritization of allocation of funds to benefit vulnerable workers.
     Model employee-employer relationships.
     Long term settlements based on productivity.
     Vital industries and establishments declared as `public utilities`.
     Special conciliation mechanism for projects with investments of Rs.150 crores or more.
     Industrial Relations committees in more sectors.
     Labour Law reforms in tune with the times. Empowered body of experts to suggest required changes.
    Statutory amendments for expediting and streamlining the mechanism of Labour Judiciary.
    Amendments to Industrial Disputes Act in tune with the times.
    Efficient functioning of Labour Department.
    More labour sectors under Minimum Wages Act.
    Child labour act to be aggressively enforced.
    Modern medical facilities for workers.
    Rehabilitation packages for displaced workers.
    Restructuring in functioning of employment exchanges. Computerization and updating of data base.
    Revamping of curriculum and course content in industrial training.
    Joint cell of labour department and industries department to study changes in laws and rules.
 The Factories Act, 1948
Objectives
    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.

Scheme of the Act
    The Act consists of 120 Sections and 3 Schedules.
    Schedule 1 contains list of industries involving hazardous processes
    Schedule 2 is about permissible level of certain chemical substances in work environment.
    Schedule 3 consists of list of notifiable diseases.

Important provisions the Act
Facilities and Conveniences - The factory should be kept clean. [Section 11]. There should be arrangement to dispose of wastes and effluents. [Section 12]. Ventilation should be adequate. Reasonable temperature for comfort of employees should be maintained. [Section 13]. Dust and fumes should be controlled below permissible limits. [Section 14]. Artificial humidification should be at prescribed standard level. [Section 15]. Overcrowding should be avoided. [Section 16]. Adequate lighting, drinking water, latrines, urinals and spittoons should be provided.  [Sections 17 to 19].  Adequate spittoons should be provided. [Section 20].
Welfare - Adequate facilities for washing, sitting, storing cloths when not worn during working hours. [Section 42]. If a worker has to work in standing position, sitting arrangement to take short rests should be provided. [Section 44]. Adequate First aid boxes shall be provided and maintained [Section 45].
Facilities in case of large factories - Following facilities are required to be provided by large factories - * Ambulance room if 500 or more workers are employed * Canteen if 250 or more workers are employed. It should be sufficiently lighted and ventilated and suitably located. [Section 46]. * Rest rooms / shelters with drinking water when 150 or more workmen are employed [Section 47] * Crèches if 30 or more women workers are employed. [Section 48] * Full time Welfare Officer if factory employs 500 or more workers [Section 49] * Safety Officer if 1,000 or more workmen are employed.
Safety - All machinery should be properly fenced to protect workers when machinery is in motion. [Section 21 to 27]. Hoists and lifts should be in good condition and tested periodically. [Section 28 and 29]. Pressure plants should be checked as per rules. [Section 31]. Floor, stairs and means of access should be of sound construction and free form obstructions. [Section 32]. Safety appliances for eyes, dangerous dusts, gas, fumes should be provided. [Sections 35 and 36]. Worker is also under obligation to use the safety appliances. He should not misuse any appliance, convenience or other things provided. [Section 111]. In case of hazardous substances, additional safety measures have been prescribed. [Sections 41A to 41H]. - - Adequate fire fighting equipment should be available. [Section 38]. - - Safety Officer should be appointed if number of workers in factory are 1,000 or more. [Section 40B].
Working Hours - A worker cannot be employed for more than 48 hours in a week. [Section 51]. Weekly holiday is compulsory. If he is asked to work on weekly holiday, he should have full holiday on one of three days immediately or after the normal day of holiday. [Section 52(1)]. He cannot be employed for more than 9 hours in a day. [Section 54]. At least half an hour rest should be provided after 5 hours. [Section 55]. Total period of work inclusive of rest interval cannot be more than 10.5 hours. [Section 56]. A worker should be given a weekly holiday. Overlapping of shifts is not permitted. [Section 58]. Notice of period of work should be displayed. [Section 61].
Overtime Wages - If a worker works beyond 9 hours a day or 48 hours a week, overtime wages are double the rate of wages are payable. [Section 59(1)]. A workman cannot work in two factories. There is restriction on double employment. [Section 60]. However, overtime wages are not payable when the worker is on tour. Total working hours including overtime should not exceed 60 in a week and total overtime hours in a quarter should not exceed 50. Register of overtime should be maintained.  - - An employee working outside the factory premises like field workers etc. on tour outside headquarters are not entitled to overtime. – R Ananthan v. Avery India 1972(42) FJR 304 (Mad HC) * Director of Stores v. P S Dube 1978 Lab IC 390 = 52 FJR 299 = 1978 I LLN 464 = 36 FLR 420.
Employment of Women - A woman worker cannot be employed beyond the hours 6 a.m. to 7.00 pm. State Government can grant exemption to any factory or group or class of factories, but no woman can be permitted to work during 10 PM to 5 AM. Shift change can be only after weekly or other holiday and not in between. [Section 66].
Night Shift for women:
Factories Act is proposed to be amended to allow night shift for women workers. The Government has decided to amend Section 66 of the Factories Act, 1948 to allow employment of women workers between 7.00 pm and 6.00 am. The demand of women’s organisations and in tune with the present economic globalization, the Government has decided to bring in then required changes in the Act. This flexibility would be available to all manufacturing units including the apparel sector. This decision has been taken after meetings with the representatives of the employers and the trade unions. The proposed Bill will empower the State Governments for allowing the necessary flexibility in employment of women during night shift in factories.

The proposed amendment would inter-alia provide that the employer has to ensure occupational safety and adequate protection to the women workers.  However, the State Government or any person authorised by it would be allowing employment of women during night only after consulting the workers or their representative organisations and concerned employers or their representatives. The State Governments are also empowered to frame their own rules for allowing such permissions.
Record of Workmen - A register (muster roll) of all workers should be maintained. No worker should be permitted to work unless his name is in the register. Record of overtime is also required to be maintained. [Section 62].
Leave - A worker is entitled in every calendar year annual leave with wages at the rate of one day for every 20 days of work performed in the previous calendar year, provided that he had worked for 240 days or more in the previous calendar year. Child worker is entitled to one day per every 15 days. While calculating 240 days, earned leave, maternity leave upto 12 weeks and lay off days will be considered, but leave shall not be earned on those days. [Section 79]. – Leave can be accumulated upto 30 days in case of adult and 40 days in case of child. Leave admissible is exclusive of holidays occurring during or at either end of the leave period. Wage for period must be paid before leave begins, if leave is for 4 or more days. [Section 81]. Leave cannot be taken for more than three times in a year. Application for leave should not normally be refused. [These are minimum benefits. Employer can, of course, give additional or higher benefits].
Wages for OT and Leave Salary - 'Wages' for leave encashment and overtime will include dearness allowance and cash equivalent of any benefit. However, it will not include bonus or overtime.
Child Employment - Child below age of 14 cannot be employed. [Section 67]. Child above 14 but below 15 years of age can be employed only for 4.5 hours per day or during the night. [Section 71]. He should be certified fit by a certifying surgeon. [Section 68]. He cannot be employed during night between 10 pm to 6 am. [Section 71]. A person over 15 but below 18 years of age is termed as ‘adolescent’. He can be employed as an adult if he has a certificate of fitness for a full day's work from certifying surgeon. An adolescent is not permitted to work between 7 pm and 6 am. [Section 70]. There are more restrictions on employment of female adolescent.  - - Register of child workers should be maintained. [Section 73].
Display on Notice Board - A notice containing abstract of the Factories Act and the rules made thereunder, in English and local language should be displayed. Name and address of Factories Inspector and the certifying surgeon should also be displayed on notice board.  [Section 108(1)].
Notice of Accidents, Diseases Etc. - Notice of any accident causing disablement of more than 48 hours, dangerous occurrences and any worker contacting occupational disease should be informed to Factories Inspector. [Section 88]. Notice of dangerous occurrences and specified diseases should be given. [Sections 88A and 89].
Obligation regarding Hazardous Processes / Substances - Information about hazardous substances / processes should be given. Workers and general public in vicinity should be informed about dangers and health hazards. Safety measures and emergency plan should be ready. Safety Committee should be appointed.
List of Industries Involving Hazardous Processes
THE FIRST SCHEDULE
[See Section 2(cb)]
1. Ferrous metallurgical Industries
- Integrated Iron and Steel
- Ferro-alloys    
- Special Steels
2. Non-ferrous metallurgical Industries
- Primary Metallurgical Industries, namely, zinc, lead, copper manganese and aluminium
3. Foundries (ferrous and non-ferrous)
- Castings and forgings including cleaning or smoothing/roughening by sand and shot blasting.
4. Coal (including coke) industries. - Coal, Lignite, Coke, etc.
- Fuel Gases (including Coal gas, Producer gas, Water gas)
5. Power Generating Industries
6. Pulp and paper (including paper products) industries
7. Fertiliser Industries
- Nitrogenous
- Phosphatic
- Mixed
8. Cement Industries
- Portland Cement (including slag cement, puzzolona cement and their products)
9. Petroleum Industries
- Oil Refining
- Lubricating Oils and Greases
10. Petro-chemical Industries
11. Drugs and Pharmaceutical Industries
- Narcotics, Drugs and Pharmaceuticals
12. Fermentation Industries (Distilleries and Breweries)
13. Rubber (Synthetic) Industries
14. Paints and Pigment Industries
15. Leather Tanning Industries
16. Electro-plating Industries
17. Chemical Industries
- Coke Oven by-products and Coaltar Distillation Products
- Industrial Gases (nitrogen, oxygen, acetylene, argon, carbon-dioxide, hydrogen, sulphur-dioxide, nitrous oxide, halogenated hydro-carbon, ozone etc.)
- Industrial Carbon
- Alkalies and Acids
- Chromates and dichromates
- Leads and its compounds
- Electrochemicals (metallic sodium, potassium and magnesium, chlorates, perchlorates and peroxides)
- Electrothermal produces (artificial abrasive, calcium carbide)
- Nitrogenous compounds (cyanides, cyanamides and other nitrogenous compounds)
- Phosphorous and its compounds
- Halogens and Halogenated compounds (Chlorine, Fluorine, Bromine and Iodine)
- Explosives (including industrial explosives and detonators and fuses)
18. Insecticides, Fungicides, herbicides and other Pesticides Industries
19. Synthetic Resin and Plastics
20. Man-made Fibre (Cellulosic and non-cellulosic) Industry
21. Manufacture and repair of electrical accumulators
22. Glass and Ceramics
23. Grinding or glazing of metals
24. Manufacture, handling and processing of asbestos and its products
25. Extraction of oils and fats from vegetable and animal sources
26. Manufacture, handling and use of benzene and substances containing benzene
27. Manufacturing processes and operations involving carbon disulphide
28. Dyes and Dyestuff including their intermediates
29. Highly flammable liquids and gases.
PERMISSIBLE LEVELS OF CERTAIN CHEMICAL SUBSTANCES IN WORK ENVIRONMENT
THE SECOND SCHEDULE
[See Section 41F]
Sl. No.    Substance    Permissible limits of exposure
r     e     Time-Weighted average concentration (TWA)    (TWA)     Short-term exposure limits (15 min.)     (STEL)
a    A    PPm     mg/m3     PPm     mg/m3
1    2    3    4    5    6
1    Acetaldehyde     100    180    150    270
2    Acetic Acid     10    25    15    37
3    Acetone    750    1780    1000    2375
4    Acrolein     01    0.25    0.3    0.8
5    Acrylonitrile-skin (S.C)     2    4.5    -    -
6    Aldrin-skin    -    0.25    -    -
7    Allyl Chloride     1    3    2    6
8    Ammonia     0.25    18    35    27
9    Aniline-skin    2    10    -    -
10    Anisidine (O.P.isomers)-skin    0.1    0.5    -    -
11    Arsenic & Soluble compounds (as As)    -    0.2    -    -
12    Benzene (S.C)    10    30    -    -
13    Beryllium & Compounds (as Be) (S.C)    -    0.002    -    -
14    Boron trifluoride C    1    3    -    -
15    Bromine     0.1    0.7    0.3    2
16    Butane     800    1900    -    -
17    2-Butanone (Methyle ethyle Ketone MEK)    200    590    300    885
18    N-Butyl acetate     150    710    200    950
19    N-Butyl alcohol-skin-C    50    150    -    -
20    Sce/tert, Butyl acetate    200    950    -    -
21    Butyl Mercaptan    0.5    1.5    -    -
22    Cadmium-dust and salts (as Cd)    -    0.05    -    -
23    Calcium oxide     -    2    -    -
24    Carbaryl (Sevin)    -    5    -    -
25    Carbofuran (Furadan)    -    0.1    -    -
26    Carbon disulphide-skin    10    30    -    -
27    Carbon monoxide    50    55    400    440
28    Carbon tetrachloride-skin (S.C.)     5    30    -    -
29    Chlordane-skin    -    0.5    -    2
30    Chlorine     1    3    3    9
31    Chlorobenzene (monochlorobenzene)    75    350    -    -
32    Chloroform (S.C.)    10    50    -    -
33    bis-(Chloromethyl) ether (H.C.)    0.001    0.005    -    -
34    Chromic acid and chromates (as Cr) (Water soluble)    -    0.05    -    -
35    Chromous Salts (as Cr)    -    0.5    -    -
36    Copper fume    -    0.2    -    -
37    Cotton dust, raw    -    0.2    -    -
38    Cresoal, all isomers-skin    5    22    -    -
39    Cyanides (as Cn)-skin    -    5    -    -
40    Cyanogen    10    20    -    -
41    DDT (Dichlorodiphenyl Trichloroethane)     -    1    -    -
42    Demeton-skin     0.01    0.1    -    -
43    Diazinon-skin     -    0.1    -    -
44    Dibutyl Phythalate    -    5    -    -
45    Dichlorous (DDVP)-skin    -    1    -    -
46    Dieldrin-skin    -    0.25    -    -
47    Dinitrobenzene (all isomers)-skin    0.15    1    -    -
48    Dinitrotoluene-skin    -    1.5    -    -
49    Diphenyl (Biphenyl)    0.2    1.5    -    -
50    Endosulfan (Thiodan)- skin    -    0.1    -    -
51    Endrin-skin     -    0.1    -    -
52    Ethyl acetate    400    1400    -    -
53    Ethyl alcohol    1000    1900    -    -
54    Ethylamin    10    18    -    -
55    Fluorides (as F)    -    2.5    -    -
56    Fluorine     1    2    2    4
57    Formaldehyde (S.C.)    1.0    1.5    2    3
58    Formic Acid    5    9    -    -
59    Gasoline    300    900    500    1500
60    Hydrazine-skin (S.C.)     0.1    0.1    -    -
61    Hydrogen Chloride-C    5    7    a    a
62    Hydrogen Cyanide skin-C    10    10    -    -
63    Hydrogen Fluoride (as F)-C    3    2.5    -    -
64    Hydrogen Peroxide     1    1.5    -    -
65    Hydrogen Sulphide     10    14    15    21
66    Iodine-C    0.1    1    -    -
67    Iron Oxide Fume (F0203) (as Fe)    -    5    -    -
68    Isoamyl acetate    100    525    -    -
69    Isoamyl alcohol    100    360    125    450
70    Isobutyl alcohol    50    150    -    -
71    Lead, inorg, dusts, dusts and fumes (as Pb)    -    0.15    -    -
72    Lindane-skin    -    0.5    -    -
73    Malathion-skin    -    10    -    -
74    Manganese dust and compounds (as (Mn)-C    -    5    -    -
75    Manganese Fume (as Mn)    -    1    -    3
76    Mercury (as Hg)-skin     a    a    a    a
a    (i) Alkyle compounds    -    0.01    -    0.03
a    (ii) All forms except alkyle vapour    -    0.05    -    -
a    (iii) Aryle and inorganic compounds    -    0.1    -    -
77    Methyl alcohol (Methanol)-skin    200    260    250    310
78    Methyl cellosolve (2-methoxyethanol)-skin    5    16    -    -
79    Methyl isobutyl Ketone     50    205    75    300
80    Methyl Isocyanate-skin    0.02    0.05    -    -
81    Naphthalene    10    50    15    75
82    Nickel carbonyl (as Ni)    0.05    0.35    -    -
83    Nitric acid     2    5    4    10
84    Nitric Oxide    25    30    -    -
85    Nitrobenzene-skin     1    5    -    -
86    Nitrogen dioxide    3    6    5    10
87    Oil mist mineral     -    5    -    10
88    Ozone     0.1    0.2    0.3    0.6
89    Parathion-skin    -    0.1    -    -
90    Phenol-skin    5    19    a    a
91    Phorate (Thimet)-skin    -    0.05    0.2    -
92    Phosgene (Carbonyl Chloride)    0.1    0.4    -    -
93    Phosphine    0.3    0.4    1    1
94    Phosphoric acid    -    1    -    3
95    Phosphorus (yellow)    -    0.1    -    -
96    Phosphorus penta- chloride    0.1    1    -    -
97    Phosphorus trichloride    0.2    1.5    0.5    3
98    Picric acid-skin    -    0.1    -    0.3
99    Pyridine    5    15    -    -
100    Silans (silicon tetrahydride)    5    7    -    -
101    Sodium hydroxide-C    -    2    -    -
102    Styrene, monomer (phanylethlene)    50    215    100    425
103    Sulphur dioxide     2    5    5    10
104    Sulphur hexafluoride     1000    6000    -    -
105    Sulphuric acid    -    1    -    -
106    Tetraethyl lead (as Pb) - Skin    -    0.1    -    -
107    Toluene (Toluol)    100    375    150    560
108    O-Toluidine-skin (S.C.)    2    9    -    -
109    Tributylphosohate    0.2    2.5    -    -
110    Trichloroethylene    50    270    200    1080
111    Uranium natural (as U)    -    0.2    -    0.6
112    Vinyl Chloride (H.C.)    5    10    -    -
113    Welding fumes     -    5    -    -
114    Xylene (O-m-P-isomers)     100    435    150    655
115    Zinc oxide    d    a    a    a
f    (i) Fume    -    5.0    -    10
d    (ii) Dust (Total dust)    -    10.00    -    -
116    Zirconium compounds (as Zr)    -    5    -    10
THE THIRD SCHEDULE
[See Sections 89 and 90]
LIST OF NOTIFIABLE DISEASES
1. Lead poisoning, including poisoning by any preparation or compound of lead or their sequelae.
2. Lead tetra-ethyl poisoning
3. Phosphorus poisoning or its sequelae.
4. Mercury poisoning or its sequelae.
5. Manganese poisoning or its sequelae.
6. Arsenic poisoning or its sequelae.
7. Poisoning by nitrous fumes.
8. Carbon disulphide poisoning.
9. Benzene poisoning, including poisoning by any of its homologues, their nitro or amido derivatives or its sequelae.
10. Chrome ulceration or its sequelae.
11. Anthrax.
12. Silicosis.
13. Poisoning by halogens or halogen derivatives of the hydrocarbons of the aliphatic series.
14. Pathological manifestations due to
(a) radium or other radio-active substances.
(b) X-rays.
15. Primary epitheliomatous cancer of skin.
16. Toxic anaemia.
17. Toxic jaundice due to poisonous substances.
18. Oil acne or dermatitis due to mineral oils and compounds containing mineral oil base.
19. Byssionosis.
20. Asbestosis.
21. Occupational or contract dermatitis caused by direct contract with chemicals and paints. These are of two types, that is primary irritants and allergic sensitizers.
22. Noise induced hearing loss (exposure to high noise levels).
23. Beriyllium poisoning.
24. Carbon monoxide
25. Coal miners' pnoumoconiosis.
26. Phosgene poisoning.
27. Occupational cancer.
28. Isocyanates poisoning.
29. Toxic nephirits.
Child Labour (Prohibition & Regulation) Act, 1986
In India, there are a number of Acts which prohibit the employment of children below 14 years and 15 years in certain specified employments. However, there is no procedure laid down in any law for deciding in which employments, occupations or processes the employment of children should be prohibited. There is also no law to regulate the working conditions of children in most of the employments where they are not banned from working and are working under extremely shady and questionable conditions.
Objectives of Child Labour (Prohibition & Regulation) Act, 1986
    Ban the employment of children, i.e. those who have not completed their fourteenth year, in specified occupations and processes;
    Lay down a procedure to decide modifications to the Schedule of banned occupations or processes;
    Regulate the conditions of work of children in employments where they are not prohibited from working;
    Lay down enhanced penalties for employment of children in violation of the provisions of this Act, and other Acts which forbid the employment of children;
    To obtain uniformity in the definition of 'child' in the related laws.
Scheme of the Act The Act consists of 26 Sections and 1 Schedule with 2 Parts.
    Part A consists of list of occupations where child labour is banned.
    Part B consists of list of processes where child labour is banned.
Important Provisions of the Act
Who is a child? According to the definition given u/s 2(ii) of the Act, a child means a person who has not completed his fourteenth year of age.

Where is the child labour prohibited to work? No child is permitted to work in any the occupations set forth in Part A of the Schedule or any workshop wherein any of the processes set forth in Part B of the Schedule is carried on. (Section 3)

Exemption: The above prohibition does not apply to any workshop wherein any process is carried on by the occupier with the aid of his family or to any school established by, or receiving assistance or recognition from, Government.

Where child labour is permitted? Except the prohibitory occupations set forth in Part A or processes set forth in Part B of the Schedule, child labour is permitted to be employed but the conditions of their work is required to be regulated in accordance with Part III of the Act.

Responsibilities of employers towards child labour: Please refer to the note regarding the responsibilities of the employer for the proper implementation of the Act and the Rules.

Penalties: For the contravention of Section 3 a person is punishable with not less than three months imprisonment which may extend to one year or with fine not less than Rs.10,000/- rupees which may be extended up to Rs. 20,000/- or with both. For other offence, the punishment may be simple imprisonment up to one month or with fine up to Rs. 10,000/- of both. A conviction u/s 67 of the Factories Act, 1948 or u/s 21 of the Motor Transport Workers Act, 1961 will attract the penalties under the Child Labour (Prohibition & Regulation) Act, 1986.

Salient Features of Legislative Provisions Prohibiting and Regulating Employment of Children
    As per the Child Labour (Prohibition & Regulation) Act, 1986 “child” means a person who has not completed is 14th year of age.

    The Act prohibits employment of children in 13 occupations and 57 processes contained in Part A & B of the Schedule to the Act (Section 3).

    Under the Act, a Technical Advisory Committee is constituted to advice for inclusion of further occupations & processes in the Schedule.

    The Act regulates the condition of employment in all occupations and processes not prohibited under the Act (Part III).

    Any person who employs any child in contravention of the provisions of Section 3 of the Act is liable for punishment with imprisonment for a term which shall not be less than three months but which may extend to one year or with fine which shall not be less than Rs 10,000 but which may extend to Rs 20,000 or both (Section 14).

    The Central and the State Governments enforce the provisions of the Act in their respective spheres. 

Employment of children as domestic servants and in dhabas banned from October 2006:
The government has decided to prohibit employment of children as domestic servants or servants or in dhabas (roadside eateries), restaurants, hotels, motels, teashops, resorts, spas or in other recreational centres. The ban has been imposed under the Child Labour (Prohibition & Regulation) Act, 1986 and will be effective from 10th October 2006. The Ministry of Labour has recently issued a notification to this effect giving three-month mandatory notice. The Ministry has warned that anyone employing children in these categories would be liable to prosecution and other panel action under the Act.

It may be recalled that the government servants have already been prohibited from employing children as domestic servants. By issuing this notification, the Government has imposed these restrictions on everyone.

The decision has been taken on the recommendation of the Technical Advisory Committee on Child Labour headed by the Director General, ICMR. The Committee considers the occupations mentioned in the above notification as hazardous for children and has recommended their inclusion in the occupations which are prohibited for persons below 14 years under the Child Labour (Prohibition & Regulation) Act, 1986. The Committee while recommending a ban on employing children in these occupations had said that these children are subjected to physical violence, psychological traumas and at times even sexual abuse. It said that invariably such incidents go unnoticed and unreported as they take place in the close confines of the households or dhabas or restaurants. It said that these children are made to work for long hours and are made to undertake various hazardous activities severely affecting their health and psyche. The Committee has said that the children employed in road-side eateries and highway dhabas were the most vulnerable lot and were easy prey to sex and drug abuse as they came in contact with all kinds of people. The measure is expected to go a long way in ameliorating the condition of hapless working children. The Labour Ministry is also contemplating to strengthen and expand its rehabilitative Scheme of National Child Labour Project, which already covers 250 child labour endemic districts in the country.
THE SCHEDULE
PART A
OCCUPATIONS

Any occupation connected with - (1) Transport of passengers, goods or mails by railway;

(2) Cinder picking, clearing of an ash pit or building operation in the railway premises;

(3) Work in a catering establishment at a railway station, involving the movement of a vendor or any other employee of the establishment from one platform to another or into or out of a moving train;

(4) Work relating to the construction of a railway station or with any other work where such work is done in close proximity to or between the railway lines;

(5) A port authority within the limits of any port.

(6) Work relating to selling of crackers and fireworks in shops with temporary licences.

(7) Abattoirs/slaughter Houses.
PART B
PROCESSES
(1) Bidi-making.
(2) Carpet-weaving.
(3) Cement manufacture, including bagging of cement.
(4) Cloth printing, dyeing and weaving.
(5) Manufacture of matches, explosives and fire-works.
(6) Mica-cutting and splitting.
(7) Shellac manufacture.
(8) Soap manufacture.
(9) Tanning.
(10) Wool-cleaning.
(11) Building and construction industry.
(12) Manufacture of slate pencils (including packing).
(13) Manufacture of products from agate.
(14) Manufacturing processes using toxic metals and substances, such as, lead, mercury, manganese, chromium, cadmium, benzene, pesticides and asbestos.
(15) "Hazardous processes" as defined in Sec. 2 (cb) and dangerous operations as defined in rules made under Sec. 87 of the Factories Act, 1948 (63 of 1948).
(16) Printing as defined in Sec. 2(k) (iv) of the Factories Act. 1948 (63 of 1948).
(17) Cashew and cashew nut decaling and processing.
(18) Soldering processes in electronic industries.
Bonded Labour System (Abolition) Act, 1976

Objective: The object of the Act is to provide for the abolition of bonded labour system with a view to preventing the economic and physical exploitation of the weaker Sections of the people and for matters connected therewith or incidental thereto.

Scheme of the Act
The Act consists of 27 Sections with some of the important Sections listed below:
2    Definitions
3    Act to Have Overriding Effect
4    Abolition of Bonded Labour System
5    Agreement, Custom, Etc., to be Void
6    Liability to Repay Bonded debt to Stand Extinguished
7    Property of Bonded Labourer to be freed from Mortgage, Etc.
8    Freed Bonded Labourer Not to be Evicted from Homestead, etc.
9    Creditor not to Accept Payment Against Extinguished Debt
10    Authorities Who may be Specified for Implementing the Provisions of this Act
11    Duty of District Magistrate and other officers to ensure credit
12    Duty of District Magistrate and Officers Authorised by Him
13    Vigilance Committee
14    Functions of Vigilance Committee
15    Burden of Proof
16    Punishment for Enforcement of Bonded Labour
17    Punishment for Advancement of Bonded Debt
18    Punishment for Extracting Bonded Labour under the Bonded Labour System
19    Punishment for Omission or Failure to restore possession of Property to Bonded Labourers
20    Abetment to be an Offence
21    Offences to be Tried by Executive Magistrates
22    Cognizance of Offences
23    Offences by Companies
24    Protection of Action Taken in Good Faith
25    Jurisdiction of Civil Courts Barred

System of Bonded Labour and its forms: It is outcome of customary obligations, forced labour, beggar or indebtedness under which a debtor agrees to render service. In different parts of the country, it was known by the different names such as Adiyamar, baramasia, basahya, bethu, bhagela, cherumar, garru-galu hari, harwai, holya, jana jeetha, kamiya, khundit-mundit, kuthia, lakhari, munjhi, mat, munish system, nit-majdoor, paleru, paduyal, pannayilal, sagri, sanji, sanjawat, sewak, sewakia, seri, vetti.

Who is bonded Labour? According to the definition given in Section 2(g) of the Act, bonded labour means service arising out of loan/debt/advance. It represents the relationship between a creditor and a debtor wherein the debtor undertakes to mortgage his services or the services of any of his family members to the creditor for a specified or unspecified period with or without wages accompanied by denial of choice of alternative avenues of employment, or to deny him freedom of movements, then the person would normally be covered under the definition of a bonded labour.

Whom to approach in case of bondage? The aggrieved person or any person on his behalf can approach to the District Magistrate who is chairman of the Vigilance Committee constitute under the Act and has been entrusted with certain duties and responsibilities for implementing the provisions of the Act. Matter can also be brought to the notice of the Sub Divisional Magistrate of the area or any other person who is a member of the Vigilance Committee of District or Sub-division.

Relief available to the victim: The bonded labour is to be immediately released from the bondage. His liability to repay bonded debt is deemed to have been extinguished. Freed bonded labour shall not be evicted from his homesteads or other residential premises which he was occupying as part of consideration for the bonded labour. A rehabilitation grant of Rs. 120,000/- to each of the bonded labour is to be granted and assistance for his rehabilitation provided.

Penalties: The offence under the Act is cognizable and bailable any person who is contravenes provisions of the act is punishable with imprisonment for a term which may extend to three years and also with a fine which may extend to two thousand rupees.  W.e.f. 1.5.2000 (Rs. 4000/- from 1978, Rs. 6250/- w.e.f. 1.2.86 & Rs. 10,000/- w.e.f. 1.4.95)

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
The main purpose of the Act is to provide for the compulsory notification of vacancies to employment exchanges. The employer is required on a compulsory basis, to notify to the Employment Exchanges all vacancies other than vacancies in unskilled categories, temporary vacancies and vacancies proposed to be filled through promotion and tender to the Employment Exchanges, return relating to the staff strengths at regular intervals.
The Act extends to the whole of India.
Scheme of the Act
There are only 10 Sections in total and some of the important Sections are:
Section 2             Definitions
Section 3             Act not to apply in relation to certain Vacancies
Section 4             Notification of Vacancies to Employment Exchanges
Section 5             Employers to furnish information and returns in prescribed form
Section 6             Right of access to records or documents
Section 7             Penalties
Section 8             Cognizance of Offences
Section 9             Protection of Action taken in good faith
Application of the Act:
The Act covers the employers in establishments both in public and private sectors. The Act is applicable to establishments which are engaged in non-agricultural activities and employing 25 or more workers. The enforcement of the Act is the responsibility of States and Union Territories. Most of the States/Union Territories have set up special enforcement machinery for this purpose.
Act not to apply in relation to certain vacancies:
The Act shall apply to the following category of vacancies:
    In any employment in agriculture (including horticulture) in establishment in private sector other than employment as agricultural or farm machinery operatives;
    In any employment in domestic service;
    In any employment the total duration of which is less than 3 months;
    In any employment which requires unskilled office work;
    In any employment related to the staff of Parliament.
In addition, the Act shall not apply to the following vacancies unless the Central Government otherwise directs through notification in its Official Gazette:
    Vacancies which are proposed to be filled through promotion
    Vacancies which are proposed to filled through absorption of surplus staff of any branch or department of the same establishment
    Vacancies which are proposed to be filled through the result of any examination conducted or interview held by, or on recommendation of, any independent agency such as Union or State Public Service Commission and the like.
    Vacancies in an employment which carries a remuneration of less than sixty rupees in a month. (Section 3).
Notification of vacancies to Employment Exchanges:
Section 4 of the Act provides for notification of vacancies to employment exchange. The employer in every establishment in public sector is required to notify any vacancy before filling it up, to the prescribed employment exchanges.
The Section further requires an employer in every establishment tin private sector or every establishment pertaining to any class or category of establishments in private sector to notify to the prescribed employment exchanges from such date as may be specified in the notification issued by the appropriate Government in the Official Gazette.
Section 4(3) provides that the manner of notification of vacancies and the particulars of employments having such vacancies should be such as may be prescribed.
Section 4(4) says that the employer’s obligation is only to notify the vacancy to the employment exchange. The Act does not impose any obligation on an employer to recruit any person through employment exchange to fill the vacancy merely because the vacancy has been notified as required by this Act.
Employment Exchanges to which vacancies are to be notified:
Rule 3 of The Employment Exchanges (Compulsory Notification of Vacancies) Rules, 1960, says that the vacancies are to be notified either to the Central Employment Exchange or Local Employment Exchange, as the case may be.
The Central Employment Exchange means the Employment Exchange established by the Government of India, Ministry of Labour and Employment and to which the following vacancies shall be notified:
    Vacancies in posts of a technical and scientific nature carrying a basic pay of Rs. 1,400 or more per month occurring in establishments in respect of which the Central Government is the appropriate Government under the Acct; and
    Vacancies which an employer may desire to be circulated to the employment exchanges outside the State or Union Territory to which the establishment is situated.
The Local Employment Exchange means the employment exchange (the Central Employment Exchange) notified in the Official Gazette by the State Government or the Administration or Union Territory as having jurisdiction over the area in which the establishment concerned is situated or over specified classes or categories of establishments of vacancies.
Vacancies of all types other than those which are required to be notified to Central Employment Exchange, shall be notified to these local employment exchanges.
Furnishing of Information or Returns:
Section 5 requires an employer in every establishment in public sector to furnish, such information or return as may be prescribed in relation to vacancies that have occurred or are about to occur in the establishment to such employment exchanges as may be prescribed. In the case of private sector or every establishment pertaining to any class or category of establishments in private sector, the appropriate Government, by notification in the Official Gazette, may require that from such date as may be prescribed in relation to vacancies that have occurred or are about to occur in that establishment to such employment exchanges as may be prescribed and the employer shall thereupon, comply with such requisition.
The above return shall be furnished to the Director or other authorized officer of the Directorate administering employment exchanges in a State or Union Territory.
Right of Access to Records or Documents:
Such officer of the Government as may be prescribed in this behalf, or nay person authorized by him in writing, shall have access to any relevant record or document in the possession of any employer required to furnish any information or returns under Section 5 of this Act. Such officer is also empowered to enter at any reasonable time, any premises where he believes that such record or document to be and inspect and take copies of relevant records or documents or ask any question necessary for obtaining information required under that Section (Section 6).
Penalties (Section 7)
(1) If any employer fails to notify to the employment exchanges prescribed for the purpose any vacancy in contravention of sub-Section (1) or sub-Section (2) of Section 4, he shall be punishable for the first offence with fine which may extend to five hundred rupees and for every subsequent offence with fine which may extend to one thousand rupees.
(2) If any person - (a) required to furnish any information or return - (i) refuses or neglects to furnish such information or return, or
(ii) furnishes or causes to be furnished any information or return which he knows to be false, or
(iii) refuses to answer, or gives a false answer to, any question necessary for obtaining any information required to be furnished under Section 5; or
(b) impedes the right of access to relevant records or documents or the right of entry conferred by Section 6, he shall be punishable for the first offence with fine which may extend to two hundred and fifty rupees and for every subsequent offence with fine which may extend to five hundred rupees.
Cognizance of Offences - No prosecution for an offence under this Act shall be instituted except by, or with the sanction of, such officer of Government as may be prescribed in this behalf or any person authorised by that officer in writing (Section 8).

Protection of action taken in good faith - No suit, prosecution or other legal proceedings shall lie against any person for anything which is in good faith done or intended to be done under this Act (Section 9).
Apprentices Act, 1961
The main purpose of the Act is to provide practical training to technically qualified persons in various trades. The objective is promotion of new skilled manpower. The scheme is also extended to engineers and diploma holders.
The Act applies to areas and industries as notified by Central government. [Section 1(4)].
Scheme of the Act
There are 38 Sections in total and 1 Schedule.  This Schedule is about modifications in the Workmen’s Compensation Act, 1923 w.r.t its application to apprentices under the Apprentices Act, 1961.
Obligation of Employer –
    Every employer is under obligation to provide the apprentice with the training in his trade in accordance with the provisions of this Act and the rules made there under.
    If the employer is not himself qualified in the trade, he has to ensure that a person who possesses the prescribed qualification is placed in charge of the training of the apprentice.
    Every employer has to provide adequate instructional staff, possessing such qualifications as may be prescribed for imparting practical and theoretical training and facilities for trade test of apprentices; and
    Every employer is under obligation to take apprentices in prescribed ratio of the skilled workers in his employment in different trades. [Section 11].
    In every trade, there will be reserved places for scheduled castes and schedules tribes. [Section 3A]. Ratio of trade apprentices to workers shall be determined by Central Government.
    Employer can engage more number of apprentices than prescribed minimum. [Section 8(1)].
    The employer has to make arrangements for practical training of apprentice [Section 9(1)].
    Employer will pay stipends to apprentices at prescribed rates. If the employees are less than 250, 50% of cost is shared by Government.  If employer is employing more than 250 workers, he has to bear full cost of training.
Obligations of Apprentices:
Every trade apprentice undergoing apprenticeship training shall have the following obligations, namely:
    To learn his trade conscientiously and diligently and endeavour to qualify himself as a skilled craftsman before the expiry of the period of training;
    To attend practical and instructional classes regularly;
    To carry out all lawful orders of his employer and superiors in the establishments; and
    To carry out his obligations under the contract of apprenticeship.
In case of graduate or technician apprentice or technician (vocational) apprentice, apart from the aforestated obligations, the Act imposes further obligation to learn his subject in Engineering or Technology or Vocational Course. (Section 12)
Who can be an Apprentice - Apprentice should be of minimum age of 14 years and he should satisfy the standard of education and physical fitness as prescribed. [Section 3].
Reservation of training places for scheduled castes:
Section 3A provides that in every designated trade, training places shall be reserved by the employer for the Scheduled Castes and Scheduled Tribes (as defined in clauses (24) and (25) of Article 366 of the Constitution) and where there is more than one designated trade in an establishment, such training places shall be reserved on the basis on the total number of apprentices in all the designated trades in such establishment. The reservation shall be such as may be prescribed having regard to the population of the Scheduled Castes and Scheduled Tribes in the State concerned.
Duration of Training - Duration of training period and ratio of apprentices to skilled workers for different trades has been prescribed in Apprenticeship Rules, 1991. Duration of Apprenticeship may be from 6 months to 4 years depending on the trade, as prescribed in Rules. Period of training is determined by National Council for training in Vocational Trades (established by Government of India)-(Section 6).
Contract with Apprentice – Apprentice appointed has to execute a contract of apprenticeship with employer. The contract has to be registered with Apprenticeship Adviser. If apprentice is minor, agreement should be signed by his guardian. [Section 4(1)] Apprentice is entitled to casual leave of 12 days, medical leave of 15 days and extraordinary leave of 10 days in a year.
Date of commencement of apprenticeship training:
The apprenticeship training shall be deemed to have commenced on the date on which the contract of apprenticeship has been entered into.
Registration:
    The employer shall send the contract to the Apprenticeship adviser for registration within three months of the date on which it was signed (Rule 6).
    The contract shall be registered by the Apprenticeship Adviser on being satisfied that the person described as an apprentice in the said contract is qualified under this Act.
    Registration of contract of apprenticeship under Section 4(4) is not a necessary ingredient of definition of apprentice. (Bhaskaran v. KSEB (1986) 1 LLN 869).
Terms and conditions of contract:
The contract may contain such terms and conditions as may be agreed to by the parties to the contract. In case, the Central Government after consulting the Central Apprenticeship Council makes any rule varying the terms and conditions of apprenticeship training of any category of apprentices undergoing such training then the terms and conditions of every contract relating to that category of apprentices and subsisting immediately before the making of such rule shall be deemed to have been modified accordingly.
Novation of contract of apprenticeship:
Where an employer is for any reason unable to fulfill his obligations under the contract and with approval of the Apprenticeship Adviser it is agreed between the employer, the apprentice or his guardian and any other employer that the apprentice shall be engaged as an apprentice under the other employer for the unexpired portion of the period of apprenticeship training, the agreement, on registration with the Apprenticeship Adviser shall be deemed to be the contract of apprenticeship between the apprentice or his guardian and other employer. Such contract on and from the date of such registration shall be terminated with the first employer and no obligation under that contract shall be enforceable (Section 5).
Payment to apprentices:
This is a contractual as well as statutory obligation imposed under Section 13 of the Act that an employer pays to every apprentice during the period of training such stipend at a rate not less than the prescribed minimum rate and this rate will be specified in the contract. An employer shall pay such stipend at such intervals and subject to such conditions as may be prescribed. However, an apprentice shall not be paid on the basis of piece-work nor he shall take part in any output bonus or other incentive scheme.
Termination of contract:
The contract of apprenticeship training shall terminate on the expiry of the period of apprenticeship training. Either party can make application for termination of contract to the Apprenticeship Adviser and thereafter send a copy of the same to the other party, who on being satisfied that the parties have failed to carry out the terms and conditions of the contract and it is desirable in the interests of the parties or any of them to terminate the contract, shall register the same. However, the employer shall pay the prescribed amount of compensation to the apprentice where the contract is terminated for failure on the part of the employer to honour the contract. Where the contract is terminated for failure on the part of the apprentice, he or his guardian shall refund the cost of the training to the employer. (Section 7)
Legal Position of Apprentices - An apprentice is not a workman during apprentice training. [Section 18] Provisions of labour law like Bonus, PF, ESI.
Act, gratuity, Industrial Disputes Act etc. are not applicable to him. However, provisions of Factories Act regarding health, safety and welfare will apply to him. Apprentice is also entitled to get compensation from employer for employment injury. [Section 16].
An employer is under no obligation to employ the apprentice after completion of apprenticeship. [Section 22(1)]. However, in UP State Road Transport Corpn v. UP Parivahan Nigam Shishukh Berozgar Sangh AIR 1995 SC 1114 = (1995) 2 SCC 1 , it was held that other things being equal, a trained apprentice should be given preference over direct recruits. It was also held that he need not be sponsored by the employment exchange. Age bar may also be relaxed, to the extent of training period. The concerned institute should maintain a list of persons already trained and in between trained apprentices, preference should be given to those who are senior. – same view in UP Rajya Vidyut Parishad v. State of UP 2000 LLR 869 (SC).
Stipend payable- The minimum rate of stipend payable per month is as follows  - (a) Engineering graduates - Rs 1,970 p.m. for post-institutional training (b) Sandwich course students for degree examination - Rs 1,400 p.m. (c) diploma holders - Rs 1,400 p.m. for post-institutional training (d) Sandwich course students for degree examination - Rs 1,140 p.m. (e) Vocational certificate holder - Rs 1,090 p.m. [w.e.f. May 2001]
In case of 4 year training, the stipend is as follows – first year – Rs 820 pm. Second year – Rs 940 pm. Third year – Rs 1,090 pm. Fourth year – Rs 1,230 pm. [From May 2001].
Test and Proficiency certificate - On completion of training, every trade apprentice has to appear for a test conducted by National Council. If he passes, he gets a certificate of proficiency.
Apprenticeship Adviser - Government is empowered to appoint Apprenticeship Adviser, Dy Apprenticeship Adviser etc. to supervise the scheme. Various powers have been conferred on them under the Act.
Disputes under contract and settlement thereof:
Section 20 of the Act provides that if out of the terms and conditions of the contract any dispute arises, it will be referred to Apprenticeship Adviser for decision. An appeal can be preferred by the aggrieved party within 30 days of the communication of the Adviser’s decision to the Apprenticeship Council and such appeal shall be heard and determined by the Committee of that Council appointed for the purpose, and such decision of the Committee shall be final.
Holding of Test and Grant of Certificate and Conclusion of Training (Section 21) - (1) Every trade apprentice who has completed the period of training shall appear for a test to be conducted by the National Council to determine his proficiency in the designated trade in which he has undergone his apprenticeship training.
(2) Every trade apprentice who passes the test referred to in sub-Section (1) shall be granted a certificate of proficiency in the trade by the National Council.
(3) The progress in apprenticeship training of every graduate or technician apprentice, technician (vocational) apprentice shall be assessed by the employer from time to time.
(4) Every graduate or technician apprentice or technician (vocational) apprentice, who completes his apprenticeship training to the satisfaction of the concerned Regional Board, shall be granted a certificate of proficiency by that Board.
Offer and Acceptance of Employment (Section 22) - (1) It shall not be obligatory on the part of the employer to offer any employment to any apprentice who has completed the period of his apprenticeship training in his establishment, nor shall it be obligatory on the part of the apprentice to accept an employment under the employer.
(2) Notwithstanding anything in sub-Section (1), where there is a condition in a contract of apprenticeship shall, after the successful completion of the apprenticeship training, serve the employer, the employer shall, on such completion, be bound to offer suitable employment to the apprentice, and the apprentice shall be bound to serve the employer in that capacity for such period and on such remuneration as may be specified in the contract:
Provided that where such period or remuneration is not, in the opinion of the Apprenticeship Adviser, reasonable, he may revise such period or remuneration so as to make it reasonable, and the period or remuneration so revised shall be deemed to be the period or remuneration agreed to between the apprentice and the employer.
Offences And Penalties (Section 30) - (1) If any employer - (a) engages as an apprentice a person who is not qualified for being so engaged, or
(b) fails to carry out the terms and conditions of a contract of apprenticeship, or
(c) contravenes the provisions of this Act relating to the number of apprentices which he is required to engage under those provisions, he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
(2) If any employer or any other person - (a) required to furnish any information or return - (i) refuses or neglects to furnish such information or return, or
(ii) furnishes or causes to be furnished any information or return which is false and which he either knows or believes to be false or does not believe to be true, or
(iii) refuses to answer, or gives a false answer to any question necessary for obtaining any information required to be furnished by him, or
(b) refuses or willfully neglects to afford the Central or the State Apprenticeship Adviser or such other person, not below the rank of an Assistant Apprenticeship Adviser, as may be authorised by the Central or the State Apprenticeship Adviser in writing in this behalf any reasonable facility for making any entry, inspection, examination or inquiry authorised by or under this Act, or
(c) requires an apprentice to work overtime without the approval of the Apprenticeship Adviser, or
(d) employs an apprentice on any work which is not connected with his training, or
(e) makes payment to an apprentice on the basis of piecework, or
(f) requires an apprentice to take part in any output bonus or incentive scheme, he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
Penalty where no specific penalty is specified (Section 31) - If any employer or any other person contravenes any provision of this Act for which no punishment is provided in Section 30, he shall be punishable with fine which shall not be less than one thousand rupees but may extend to three thousand rupees.

Offences by Companies (Section 32) - (1) If the person committing an offence under this Act is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-Section shall render any such person liable to such punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-Section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary, or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation: For the purposes of this Section, - (a) "company" means a body corporate and includes a firm or other association of individuals; and
(b) "director" in relation to a firm means a partner in the firm.

Cognizance of Offences (Section 33) - No court shall take cognizance of any offence under this Act or the rules made there under except on a complaint thereof in writing made by the Apprenticeship Adviser or the officer of the rank of Deputy Apprenticeship Adviser and above within six months from the date on which the offence is alleged to have been committed.
Employees Provident Fund and Miscellaneous Provisions Act, 1952
Objectives
•    To make provisions for the future of the industrial worker after he retires or for his dependents in the case of his early death.
•    Compulsory Provident Fund
•    Family Pension
•    Deposit linked insurance
Scope and coverage
•    Application to factories and establishments employing 20 or more persons.
•    Can be made applicable by central government to establishments employing less than 20 persons or if the majority of employees agree.
•    Excludes establishments employing 50 or more persons or 20 or more persons but less than 50 persons, until the expiry of three years in the case of the former, and five years in the case of the former, and five years in the case of the latter, from the date of setting up of establishment.
•    Applicable to all persons who are employed directly or indirectly through contractors in any kind of work.
Eligibility
•    Employees drawing pay not exceeding Rs. 6,500/- per month.
Schemes framed under the Act
    The Employees’ Provident Funds Schemes, 1952;
    The Employees’ Pension Scheme, 1995 and
    The Employees’ Deposit Linked Insurance Scheme, 1976
Benefits
•    Apart from terminal disbursal of non-refundable withdrawals for Life Insurance Policies
•    House building
•    Medical treatment
•    Marriage
•    Higher education
•    Family pension
•    Retirement-cum-withdrawal benefits
•    Deposit linked insurance Amount equal to the average balance in Provident Fund of deceased subject to a maximum of Rs. 65,000/ -
As per Preamble to the Act, the EPF Act is enacted to provide for the institution of provident funds, pension fund and deposit lined insurance fund for employees in factories and other establishments.  The Employees’ Provident Funds and Miscellaneous Provisions Act is a social security legislation to provide for provident fund, family pension and insurance to employees. Employee has to pay contribution towards the fund. Employer also pays equal contribution. The employee gets a lump sum amount when he retires, which will be useful to him after retirement. The Act covers three schemes i.e. PF (Provident Fund scheme), FPF (Family Pension Fund scheme) and EDLI (Employees Deposit Linked Insurance scheme).
The EPF Act contains basic provisions in respect of applicability, eligibility, damages, appeals, recovery etc. The three schemes formed by Central Government under the Act make provisions in respect of those schemes.
Applicability of the Act - The Act applies to (a) Every establishment which is a factory engaged in industry specified in Schedule I to the Act and in which 20 or more persons are employed and (b) any other establishment or class of establishment employing 20 or more persons which may be specified by Central government by notification in official gazette. - - Central Government can also apply provisions of the Act to any establishment even if it employs less than 20 persons. [Section 1(3)].
In RPFC v. T S Hariharan 1971 Lab IC 951 (SC), it was held that temporary workers should not be counted to decide whether the Act would apply.
Even if the provisions of PF Act are not applicable in a particular establishment, if employer and majority of employees agree, the Central Provident Fund Commissioner can apply the provisions to that establishment by issuing a notification in Official Gazette. [Section 1(4)]. Once the provisions of Act become applicable, it continues to be applicable even if number of employees fall below 20. [Section 1(5)].
Coverage of Act - The Act has been extended to * Factories * Mines other than coal mines * Hotels and restaurants * Plantation of tea, coffee, rubber [Tea factories in Assam have been excluded vide para 1(3)(a) of EPF Scheme] * Trading and commercial establishments engaged in purchase, sale or storage of goods * Establishments of exporters, importers, advertisers, stock exchanges * Canteens * Establishments of Attorneys, CA, ICWAs, Engineers and Contractors, architects and medical practitioners * Hospitals * Travel agencies * Banks doing business only in one State * General Insurance * Expert services * Clubs and societies rendering services to their members * Agricultural farms * Financial Establishments other than banks * Building and construction Industry * Poultry farming * University, college or schools. - - The Act has been extended w.e.f. 1.4.2001 vide notification dated 22.3.2001, to * courier services * Aircraft or airlines other than aircraft or airline owned or controlled by Government * Establishment engaged in rendering cleaning and sweeping services.
Once an establishment is covered under PF, all its departments and branches wherever they are situated are also covered.
Other Non-Factory Establishments Covered - Besides factories, other establishments employing 20 or more persons can be covered under the Act u/s 1(3)(b). Various notifications have been issued extending the provisions of PF Act to non-factory establishments. Some major among them are - plantation, mines, coffee, hotels and restaurants, cinema and theatres, trading and commercial establishments, laundry, canteens, establishments of attorneys/CA/ ICWA/engineers/ architects/medical practitioners, hospitals, financial establishments (other than IFCI, UTI, IDBI, SFC), building and construction industry, poultry, university, college, schools, scientific institutions etc.
Transitory Provisions when Act is extended - It is possible that when PF Act is extended to certain establishment, some PF scheme may be already in existence. Such scheme will continue and the balance amount in such scheme to credit of the employee will be transferred to the Provident Fund under statutory scheme of PF Act. [Section 15].
Establishment to include all departments and branches - Where an establishment consists of different departments or has branch¬es, whether situate in the same place or in different places, all such departments or branches shall be treated as parts of the same establishment. [Section 2A]. - - Thus, if factory is covered, the head office and branches will also be covered under the Act.
Act not applicable to certain establishments - As per Section 16(1), the PF Act does not apply to (a) any establishment registered under Cooperative Societies Act or State law relating to cooperative societies, employing less than 50 persons and working without paid of power (b) to any establishment belonging to or under Control of Central Government or a State Government and whose employees are entitled to benefit of contributory provident fund or old age pension. (c) to any establishment set up under any Central or State Act and whose employees are entitled to benefit of contributory provident fund or old age pension..
Where PF Act is not applicable - The PF Act is not applicable to certain establishments—* Factories or establishments employing less than 20 employees. However, once Act becomes applicable, it continues to apply even if subsequently, the number is lower than 20 * Banks doing business in more than one State * Coal mines * Units established under Cooperative Societies Act employing less than 50 workers and working without aid of power * Other establishments belonging to or under control of Central Government or State Governments and whose employees are entitled to benefits of contributory provident fund or pension. * Tea factories in Assam *
Exemption granted by Central Government by a special notification.
Administration of the Fund - Both employer and employee have to pay contribution at prescribed rates. These amounts are credited to a fund. The fund vests in and is administered by Central Board. [Section 5(1A)].
Employees covered under the scheme - As per Section 2(f), “employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer. It includes any person - (i) employed by or through a contractor in or in connection with the work of the establishment (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 or under the standing orders of the establishment.
Thus, (a) Persons employed through contractor in connection with work of establishment are covered (b) Apprentices employed under Apprentices Act or under standing orders of establishment are excluded, i.e. they are not employees. [The model standing orders merely state that an ‘apprentice’ is a learner who is paid an allowance during the period of his training].
Non-Eligible employees under PF - * Employee whose ‘pay’ is more than Rs. 6,500 per month are not eligible. (It may be noted that limit of pay was Rs 5,000 upto 31.5.2001 and Rs. 3,500 upto 30th Sept., 94) * Apprentices as per certified standing orders or under Apprentices Act * Casual employees. However, employees employed through contractors have also to be covered under PF.
Employee to become member of Fund immediately on joining – Every employee employed in or in connection with work of a factory or establishment to which the Act applies is entitled and required to become member of Provident Fund, unless he is an excluded employee.  [para 26(1) of EPF Scheme]. An employee who is drawing ‘pay’ above prescribed limit (presently Rs 6,500) can become member with permission of Assistant PF Commissioner, if he and his employer agree. [para 26(6) of EPF Scheme].
Contribution by employer and employee - As per Section 2(c) “contribution” means a contribution payable in respect of a member under a Scheme or the contribution payable in respect of an employee to whom the Insurance Scheme applies.
As per Section 6, contribution shall be paid by employer @ 10% of basic wages plus dearness allowance plus retaining allowance. This amount is defined as ‘pay’ as per explanation to para 2(f)(ii) of EPF Scheme. Equal contribution is payable by employee also. This contribution can be increased to 12% by Central Government and in fact, has been increased to 12% w.e.f September 22, 1997.
A person who is already a member continues to be a ‘member’ even if his ‘pay’ exceeds Rs 6,500. However, the contribution is limited to Rs 6,500 only. [para 26A(2) of EPF Scheme].
RPFC is liable under Consumer Protection Act - The Regional Provident Fund Commissioner is providing service under the Act and hence he is liable under Consumer Protection Act. - RPFC v. Shiv Kumar Joshi (1996) 4 CTJ 805 = 1996 LLR 641 (NCDRC 5 member bench) - confirmed in RPFC v. Shiv Kumar Joshi 1999 AIR SCW 4456 = 1999(7) SCALE 453 = 2000 LLR 217 = AIR 2000 SC 331 = 99 Comp Cas 347 = (2000) CLA-BL Supp 26 = 24 SCL 46 (SC).
Employees Provident Fund Scheme - This is the main scheme under the Act. Both employer and employee have to pay contribution to Provident Fund. The employer has to deduct contribution of employee from the salary of employee and has to pay both employees’ contribution as well as employer’s contribution by a challan in prescribed form. The amount has to be paid in approved bank.
Employee Can Pay Higher Contribution - Employee has to contribute 12/10% of his 'pay' as contribution. The employee can voluntarily pay higher contribution above the statutory rate. However, employer does not have to match the voluntary contribution, over and above the statutory rate. [para 26(2) of EPF Scheme].
Contribution payable under PF Scheme - The Principal Employer is liable to pay contribution of his own employees as well as employees employed through contractor. Principal Employer can recover from contractor the amount paid by him on behalf of contractor. The contribution is 12% of ‘pay’ i.e. basic wages, plus dearness allowance, cash value of food concession and retaining allowance. Contribution of both employer and employee is same i.e. 12% each. [para 29 of EPF Scheme].
Employer has to pay his contribution to EPF. He cannot deduct his contribution from wages of the employee. [Para 31 of EPF Scheme]. However, he has to deduct employee’s share from his salary and pay the same in EPF scheme. This deduction can be only from the wages pertaining to period for which contribution is paid. However, if there is accidental omission, the amount can be recovered later. Amount deducted from salary of employees is held in trust by the employer or contractor. [Para 32 of EPF Scheme].
Out of employer’s contribution of 12/10%, the Employer’s contribution of 8.33% will be diverted to Employees’ Pension Scheme. The balance will be retained in the EPF scheme. Thus, on retirement, the employee will get his full share plus the balance of Employer’s share retained to his credit in EPF account. [This diversion is only w.e.f. 16th November, 95. Earlier Employer’s contribution to their credit will continue to remain to their credit].
Lower contribution in certain cases - The employer's and employee’s contribution is 12% each. This is applicable to many of industries and establishments. However, this contribution is not applicable to - * any establishment employing less than 20 persons * any establishment registered with Board for Industrial and Financial Reconstruction (BIFR) as a sick company - the lower rate of contribution continues till its net worth is positive * any other establishment which has accumulated loss equal to or more than its assets and has also suffered cash loss in last two years. * Jute industry * Beedi industry * Brick industry * Coir industry other than the spinning sector * Guar gum factories. In these cases, the contribution is 10%.
Interest on account – PF Commissioner shall maintain account of each member of EPF scheme. [Para 59 of Scheme]. Interest is credited to the account of employee. The Interest is calculated on monthly running balance basis. Amount standing to credit at end of the month is considered for calculation of interest for the following month. The interest rate is declared every year by Central Government in consultation with Central Board of Trustees of Provident Fund. [Para 60 of EPF Scheme].
EPF for Employees
For New Entrants:
Enrolment:
    An employee is eligible for membership from the day he joins the covered establishment.
    If the employee’s emoluments exceed Rs. 6,500/- per month, he has the option to join the Scheme(s)  with the consent of employer.
    Declare previous employment details, if any, in  Form No. 11  to the employer.
    On becoming a member of the Schemes file details in Form No. 2 ( family particulars/ nominations) through the employer.
    Rate of contribution payable by a member shall be @ 12% of his emoluments.
    A member can contribute statutorily over and above the prescribed rate.
For Existing Members:
Enrolment:
    Any change in the family status, such as, -
    Marriage of the member.
    Additions / deletion in the family.
    Legal adoption of the children.
    Change of nominee, is to be filed in Form No. 2 through the employer.
    In the event the member is holding a Scheme Certificate (under EPS, 95), he should surrender the same to the concerned EPFO office, through his employer.
    A member is entitled to various benefits & facilities such as withdrawals, advances, pensions, death insurance etc.
Employees’ Pension Scheme - This scheme has been introduced w.e.f. 16th November, 95. The Scheme is applicable to all subscribers of Employers’ Provident Fund. It is also compulsory to persons who were subscribers as on 16.11.95.
Contribution - The employer’s contribution of 8.33% will be diverted to the fund of Pension Scheme. Employee does not have to make any contribution. Employer’s contribution is 12%/ 10%. In such cases, 8.33% is diverted to Pension scheme and balance 1.67%/3.67% as the case may be, will be in credit of employee’s name in Provident Fund account. The 8.33% is on maximum salary of Rs. 6,500. If some employers are paying contribution on salary in excess of Rs. 6,500, the excess contribution will be credited to Provident Fund account and not to Pension scheme.
No separate administration charges or inspection charges are payable, as these are already paid along with Provident Fund contribution.
Benefits Under The Scheme - Members will get pension on superannuation or retirement from service and upon disablement during employment. Family pension will be available to widow/widower for life or till he/she remarries. In addition, children will be entitled to pension, upto 25 years of their age. In case of orphans, pension at enhanced rate is available upon death of widow/widower or ceasing payment of widow pension. Benefit of pension to children or orphan is only restricted for two children/orphans.
If the person is unmarried or has no family, pension is available to nominee for a specified period.
Commutation of Pension - The member can commute 33.33% of the pension, so as to receive hundred times the monthly pension so commuted as commuted value of pension. Balance will be paid on monthly basis.
Employees Deposit Linked Insurance Scheme - The purpose of the scheme is to provide life insurance benefits to employees who are already covered under PF/FPF. The employer has pay contribution equal to 0.50% of the total wages of employees In addition, administrative charges of 0.1% of total wages. [Notification No. AO 503(E) dated 28-7-1976 issued u/s 6C(2) of PF Act].
The employee does not contribute any amount to the scheme. The salary limit for coverage of employees is same as that of Provident Fund.
Exemption from the scheme can be obtained from RPFC if LIC Group Gratuity scheme is adopted by employer.  If exemption is granted, only inspection charges @ 0.005% are payable to PF authorities.
Benefit to nominee of employee - If an employee dies during employment, his nominee or family member gets an amount equal to average balance in the Provident Fund Account of the deceased employee during last 12 months. If such balance is more than Rs. 35,000, the insurance amount payable is Rs. 35,000 plus 25% of the amount in excess of Rs. 35,000, subject to overall limit of Rs. 60,000. If the employees are covered under another life insurance scheme whose benefits are better than this scheme, an exemption from this scheme can be obtained. [Increased to 35,000 and 60,000 w.e.f. 13.6.2000]
The Central Government with the motive of providing additional Social Security in the form of Life Insurance to the family of the deceased member of the Provident Fund, introduced the Employees Deposit Linked Insurance Scheme with effect from 1-8-1976 as provided under Section 6(C) of the Employees' Provident Fund & MP Act, 1952. The benefit under the Scheme is so devised that it acts as an incentive to the members to save more in their Provident Fund Account. As the name of the Scheme says, the benefit is linked to the amount of accumulation in the Provident Fund Account of the member.
Applicability:
The Scheme applies to all the establishments to which the Employees' Provident Fund Scheme applies.
Membership:
All the members of the Employees' Provident Fund Scheme are covered as members of the Employees' Deposit Linked Insurance Scheme also.
Contribution:
Under this Scheme, the members do not contribute any amount as contribution. However, the employer pays an amount equal to 0.5% of the total wages paid to the members as contribution.
Administrative Charges:
As regards Administrative charges, the employer is required to pay an amount equal to 0.01% of the wages subject to a minimum of Rs. 2/- per month.
Exemption: (Section 17(2A) of the Act and Para 28 of Employees' Deposit Linked Insurance Scheme, 1976)
The provisions are available as per Section 17(2A) of the Act and para 28(1) and 28(4) of the Employees' Deposit Linked Insurance Scheme , 1976 for grant of exemption to an establishment or to an employee or to a class of employees as the case may be, from the operation of all or any of the provisions of the Scheme, where the Life Assurance benefit of the Scheme in the establishment is more beneficial than the benefits provided under the statutory Scheme.
Inspection Charges:
An employer of an establishment exempted from the provisions of the Employees' Deposit Linked Insurance Scheme is required to pay inspection charges at the rate of 0.005% subject to a minimum of Re.1/- per month.
Assurance Benefit:
The benefit provided under the Employees' Deposit Linked Insurance Scheme is called Assurance Benefit. On the death of the member while in service, the nominee or any other person entitled to receive the Provident Fund benefits will, in addition to the Provident Fund, receive the Assurance Benefit under Employees' Deposit Linked Insurance Scheme.
Scale of Assurance Benefit:
From 1-4-93 onwards the amount of Assurance Benefit payable is an amount equal to the average balance in the amount of deceased in the Fund during the preceding 12 months or during the period of his membership whichever is less, except where the average balance exceeds Rs. 25,000/- amount payable shall be Rs. 25,000/- plus 25% of the amount in excess of Rs.25,000/- subject to a ceiling of Rs. 65,000/-. The Form prescribed for claiming the Assurance Benefits under the Employees' Deposit Linked Insurance Scheme, 1976, is Form 5(IF).
What are the periodical returns to be sent by an employer to the Provident Fund Office?
The employer of an un-exempted establishment has to forward the following returns. These returns will include details required under the three schemes namely, Employees Provident Fund Scheme, 1952, Employee Deposit Linked Insurance Scheme,1976 and Employee Pension Scheme, 1995.

a) Form-9(Revised):
The details of employees enrolled as members of Employees' Provident FundS'52, Employees' Deposit Linked Insurance'76 & Employees' Pension Scheme'95 on coverage of the establishment- This is to be submitted immediately after coverage, within 15 days of coverage.

b) Form-12A:
The details of the contributions recovered form the members & paid along with details of employers' contribution & administrative charges- This is to be submitted monthly by 25th of following month.

c) Form-5:
The details of the employees enrolled newly to the Provident Fund- To be submitted along with Form-12A every month within 15 days of the following month.

d) Form-10:
The details of the employees leaving service during the month- To be submitted along with form-12A.

e) Challans:
The triplicate copy of challans in token of having remitted the Provident Fund dues in the bank- to be submitted along with form-12A every month.

f) Form-2(Revised):
Nomination form- To be submitted along with form-5/9.

g) Form-3A:
The details of wages & contributions in respect of each member, to be prepared financial year wise- To be submitted to the Provident Fund office by 30th of April every year.

h) Form-6A:
Yearly consolidated statement of contributions- To be forwarded yearly along with form-3A. It should be ensured that all the form-3A are entered in form-6A, irrespective of whether the form-3A was forwarded for the broken period and the total dues as per the form-12A for the whole year agrees with the total of form-6A within 30th April.

i) Form-5A:

Return of ownership of the establishment- To be forwarded immediately after coverage & whenever there is a change in the ownership, it has to be intimated with in 15 days of change.

j) Specimen signature:
Specimen signature of the officer/officers who are authorized to sign the returns/documents relating to Provident Fund forwarded immediately after coverage & whenever there is a change in
authorized officer.
The Employees State Insurance Act (ESI Act), 1948
The ESI Act has been passed to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provisions for related matters. As the name suggests, it is basically an ‘insurance’ scheme i.e. employee gets benefits if he is sick or disabled.
ESIC - Employees State Insurance Corporation (ESIC) has been formed to supervise the scheme under Section 3 of the Act. The Corporation supervises and controls the ESI scheme.
No Dismissal or Punishment During Period of Sickness - Section 73 of the Act provides that no employer shall dismiss, discharge or reduce or otherwise punish an employee during the period employee is in receipt of sickness benefit or maternity benefit. He also cannot dismiss, discharge or otherwise punish employee when he is in receipt of disablement benefit or is under medical treatment or is absent from work due to sickness.
This gives protection to employee when he is in receipt of sickness benefit or maternity benefit. Employer cannot take disciplinary action against employee in such cases. This provision is grossly misused by employees.
However, in Buckingham & Carnatic Co v. Venkatayya  - AIR 1964 SC 1272 = 1963(7) FLR 343 = (1964) 4 SCR 265 = (1963) 2 LLJ 638 = 25 FJR 25 (SC), it was rightly held that this provision (of Section 73) is applicable only in case of punitive action for all kinds of misconduct during which employee has received sickness benefits. This protection is not applicable in case of abandonment of employment or when termination is automatic as per contract. – followed in Rajveer Singh v. Judge 1996 LLR 61 (Raj HC), where it was hold that provisions of Section 73 are not applicable when termination of an employee is automatic.
Applicability of ESI Scheme - The scheme is applicable to all factories. [Section 1(4)]. The Appropriate Government can also make it applicable to any other industrial, commercial, agricultural or other establishments, by issuing notification and giving 6 month notice. [Section 1(5)].
Thus, ESI Act can be made applicable to ‘shops’ also. However, since Government has to provide for hospitals and medical facilities, the Act can be made applicable to different parts of State at different dates. Thus, if a factory is at a place where ESIC is unable to provide medical facilities, ESI Act may not be made applicable to that area. Government can exempt a factory or establishment or persons or class of persons from provisions of ESI Act, if the employees are getting better medical facilities/ [e.g. if Government is convinced that the factory itself is providing very good medical facilities e.g. like TISCO].
Regional Offices / Branch Offices Get Covered - Regional offices of a factory, which have their connection to the factory and where the Principal Employer has control over the regional offices, the regional offices will be covered under ESIC - Hyderabad Asbestos Cement Products v. ESIC - AIR 1978 SC 356 = (1978) 2 SCR 345 = (1978) 1 SCC 194. If head office is covered under ESIC, branch offices are also covered when branch and principal office are inter-dependent and there is unity of relationship. - Transport Corporation of India v. ESIC 1999(7) SCALE 63 = 2000 LLR 113 = 83 FLR 970 = 1999 AIR SCW 4340 = AIR 2000 SC 238 (SC 3 member bench).
Outside agencies can be covered - In PM Patel v. UOI (1986) 1 SCC 32 = AR 1987 SC 447 = 1985 II CLR 322 (SC), workers were given work of making 'bidis' as home. Right of rejection of bidis was with employer. It was held that test of control and supervision lies in the right of rejection. It was held that employees working outside can be covered under ESIC, if there is master servant relationship.
Definition of ‘factory’ as per ESI Act - The ‘Factory’ means any premises where manufacturing process is carried out. If manufacture is without aid of power, the Act is applicable if persons employed are at least 20. If manufacture is with aid of power, the Act applies if persons employed are at least 10. [Section 2(12)]. - - However, ‘mines’ have been excluded. - - ‘Manufacturing process’ has same meaning as defined under Factories Act. [Section 2(14AA)].
One a factory or establishment is covered, it continues to be covered even if number of employees reduce. [Section 1(6)]
Construction Workers Not Covered – Construction workers employed in construction activities are not covered under ESIC. – ESIC circular No. P-12(11)-11/27/99 Ins.IV dated 14-6-1999.  - - However, if administrative office employs 20 or more eligible employees, that establishment and employees working in administrative office will be covered.
Employer under ESI Act – ‘Principal Employer’ means * owner or occupier of factory * Head of department in case of Government department and * Person responsible for supervision and control, in case of any other establishment. [Section 2(17)]. - - Employees working though contractor are also covered. ‘Contractor’ is termed as ‘Immediate Employer’. ‘Immediate employer’ means a person who has undertaken the execution, on the premises of factory or establishment to which this Act applies. He may do on his own or under the supervision of Principal Employer. The work should be part of work of factory or establishment of principal employer or is preliminary or incidental to the work of factory or establishment. [Section 2(13)]. Primary liability of ESI contribution is of Principal Employer. [Section 40(1)]. He can recover the contribution paid by him from the ‘immediate employer’ i.e. contractor. [Section 41].
Employee under ESI Act - ‘Employee’ means any person employed for wages in or in connection with work of a factory or establishment to which the ESI Act applies. Earlier employees drawing wages upto Rs. 6,500 per month were covered under the ESI Act scheme. [Section 2(9)].  However, w.e.f 1st April 2004, this wage ceiling has been increased to Rs. 7,500 per month.
Employees include * persons employed through contractor * Apprentices other than those covered under ‘Apprentices Act’ * Persons employed in administration office, department or branch for purchase or sale of products. * Casual workers engaged in work incidental to or connected with work of factory or establishment * Employees working at head office when factory is located at different place * Canteen staff, watch and ward staff are employees * Staff in hospital attached to factory are employees. - - Members of Indian Naval, Military or Air Forces are excluded.
Following are not Employees - * Persons drawing wages over Rs. 7,500 per month * member of Army, Navy or Air Force. * Partners of firm are not employees even if they are drawing wages - RD, ESIC v. Ramanuja Match Industry AIR 1985 SC 278 = 1985(1) SCC 218 = 1998(6) SCALE 38 * Persons employed in Government establishments. * construction workers engaged in raising additional building subsequent to initial set up of factory.
Contribution to ESIC Fund - Both employee and employer have to make contribution to ESIC. The employer has to deduct contribution from wages of employee and pay to ESIC both the employer’s contribution as well as employees’ contribution. [Section 39(1)].
The contribution is payable for ‘wage period’ i.e. the period in respect of which wages are payable to employee. [Section 39(2)]. Normally, ‘wage period’ is a month. The employee’s contribution is 1.75% of wages. It should be rounded off to next 5 paise. Employees contribution is not payable when daily wages are below Rs 15/-.
Employer’s contribution is 4.75% of total wage bill of all employees in respect of every wage period. Thus, it is not necessary to calculate employer's contribution separately for each employee. 4.75% of gross wages should be calculated and rounded off to next 5 paise. Employees drawing wages lower than Rs 25 per day do not have to pay employee's share. The contribution has to be paid within 21 days from close of the month. It is payable by a challan in authorised bank. - - If the contribution is not paid in time, interest @ 12% is payable. [Section 39(5)(a)].
In addition, ESIC authorities can impose ‘damages’ varying between 5% to 25% of arrears of contribution u/s 85B.
Employer cannot deduct employer’s contribution from the salary of employee. [Section 40(3)].
Liability of Principal Employer – In case of employees of contractor, liability is of Principal Employer. In Britannia Industries v. ESIC (2001) 98 FJR 520 (Mad HC), it was held that Principal Employer will be liable to penalty and damages also if contribution is not paid on due date. – same view in Padmini Products v. ESIC 2000(2) Kar LJ 369 (Karn HC).
Wage for purpose of ESI Act - ‘Wages’ means all remuneration paid or payable in cash to employee according to terms of contract of employment and includes any payment made to an employee in respect of period of authorised leave, lock-out, lay-off, strike which is not illegal and other additional remuneration paid at interval not exceeding two months. It does not include * contribution paid by employer to any pension fund or provident fund * Travelling allowance * Reimbursement of expenses made by nature of employment of the employee * gratuity. [Section 2(22)].
Thus, wages include basic pay, dearness allowance, city compensatory allowance, payment of day of rest, overtime wages, house rent allowance, incentive allowance, attendance bonus, meal allowance and incentive bonus. However, wages do not include annual bonus, unilateral rewards scheme (inam), ex gratia payments made every quarter or every year travelling allowance, retrenchment compensation, encashment of leave and gratuity.
Contribution period and Benefit period - Contribution period is (a) 1st September to 31st March (b) 1st April to 30th September. The corresponding benefit period is (a) following 1st July to 31st December (b) following 1st January to 30th June. Thus, ‘benefit period’ starts three months after the ‘contribution period’ is over. The relevance of this definition is that sickness benefit and maternity benefit is available only during ‘benefit period’. Thus, an employee gets these benefits only after 9 months after joining employment and paying contribution. However, other benefits are available during contribution period also.
Benefits to employees covered under ESI Act - An employee is entitled to get benefits which are medical benefits as well as cash benefits. He also can get disablement benefit.
The Employees State Insurance Corporation, ESIC, has on the 15th of June’06, taken a historic decision to takeover the ESI scheme in the States subject to the willingness of the State Governments. The decision was taken at the 136th meeting of the ESI Corporation held under the chairmanship of the former Labour and Employment Minister, Shri Chandrasekhar Rao.
Payment of Gratuity Act, 1972
Gratuity is a lump sum payment to employee when he retires or leaves service. It is basically a retirement benefit to an employee so that he can live life comfortably after retirement. However, under Gratuity Act, gratuity is payable even to an employee who resigns after completing at least 5 years of service.
In DTC Retired Employees v. Delhi Transport Corporation 2001(4) SCALE 30 = 2001 AIR SCW 2005, it was observed that gratuity is essentially a retiring benefit which as per Statute has been made applicable on voluntary resignation as well. Gratuity is reward for good, efficient and faithful service rendered for a considerable period.
ACT PROVIDES FOR MINIMUM GRATUITY ONLY – The Gratuity Act provides only for minimum gratuity payable. If employee has right to receive higher gratuity under a contract or under an award, the employee is entitled to get higher gratuity. [Section 4(5)].
Employers liable under the scheme - The Act applies to every factory, mine, plantation, port, and railway company. It also applies to every shop and establishment where 10 or more persons are employed or were employed on any day in preceding 12 months. [Section1(3)]. Since the Act is also applicable to all shops and establishments, it will apply to motor transport undertakings, clubs, chambers of commerce and associations, local bodies, solicitor’s offices etc. , if they are employing 10 or more persons.
Employees eligible for gratuity – ’Employee’ means any person (other than apprentice) employed on wages in any establishment, factory, mine, oilfield, plantation, port, railway company or shop, to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether terms of such employment are express or implied, and whether such person is employed in a managerial or administrative capacity. However, it does not include any Central/State Government employee. [Section 2(e)]. Thus, the Act is applicable to all employees - workers as well as persons employed in administrative and managerial capacity.
Gratuity is payable to a person on (a) resignation (b) termination on account of death or disablement due to accident or disease (c) retirement (d) death. Normally, gratuity is payable only after an employee completes five years of continuous service. In case of death and disablement, the condition of minimum 5 years’ service is not applicable. [Section 4(1)].
The Act is applicable to all employees, irrespective of the salary.
Amount of gratuity payable - Gratuity is payable @ 15 days wages for every year of completed service. In the last year of service, if the employee has completed more than 6 months, it will be treated as full year for purpose of gratuity. - - In case of seasonal establishment, gratuity is payable @ 7 days wages for each season. [Section 4(2)].
Wages shall consist of basic plus D.A, as per last drawn salary. However, allowances like bonus, commission, HRA, overtime etc. are not to be considered for calculations. [Section 2(s)].
In case of employees paid on monthly wages basis, per day wages should be calculated by dividing monthly salary by 26 days to arrive at daily wages e.g. if last drawn salary of a person (basic plus DA) is Rs. 2,600 per month, his salary per day will be Rs. 100 (2,600 divided by 100). Thus, the employee is entitled to get Rs. 1,500 [15 days multiplied by Rs. 100 daily salary] for every year of completed service. If he has completed 30 years of service, he is entitled to get gratuity of Rs. 45,000 (Rs. 1,500 multiplied by 30). Maximum gratuity payable under the Act is Rs. 3.50 lakhs (the ceiling was Rs. 1,00,000 which was increased to 2.50 lakhs on 24.9.97 by an ordinance which was later increased to Rs 3.50 lakhs while converting the ordinance into Act].
MAXIMUM GRATUITY PAYABLE – Maximum gratuity payable is Rs 4 lakhs. [Section 4(3)]. [Of course, employer can pay more. Employee has also right to get more if obtainable under an award or contract with employer, as made clear in Section 4(5)].
INCOME-TAX EXEMPTION - Gratuity received upto Rs. 3.50 lakhs is exempt from Income Tax. Gratuity paid above that limit is taxable. [Section 10(10) of Income Tax Act]. - - However, employee can claim relief u/s 89 in respect of the excess amount.
No Compulsory insurance of gratuity liability – Section 4A provides that every employer must obtain insurance of his gratuity liability with LIC or any other insurer. However, Government companies need not obtain such insurance. If an employee is already member of gratuity fund established by an employer, he has option to continue that arrangement. If an employer employing more than 500 persons establishes an approved gratuity fund, he need not obtain insurance for gratuity liability. - - However, this Section has not yet been brought into force. Hence, presently, such compulsory insurance is not necessary.
Gratuity cannot be attached - Gratuity payable cannot be attached in execution of any decree or order of any civil, revenue or criminal court, as per Section 13 of the Act.
Payment of Bonus Act, 1965
The term “bonus” has not been defined in the Payment of Bonus Act, 1965. Webster’s International Dictionary, defines bonus as “something given in addition to what is ordinarily received by or strictly due to the recipient”. The Oxford Concise Dictionary defines it as “something to the good into the bargain (and as an example) gratuity to workmen beyond their wages”.
L.A.T Formula regarding payment of bonus:
A dispute relating to payment of bonus by the Cotton Mills of Bombay was decided by the Industrial Court, Bombay. An appeal against the award of the Industrial Court was considered by the Full Bench of the then Labour Appellate Tribunal (Mill Owners’ Association, Bombay v. Rashtriya Mill Mazdur Sangh, Bombay, 1959 II LLJ 1247).
In its decision, the LAT laid down the principles involved in the grant of bonus to workers. These principles are known as the LAT Formula. According to the formula, the following prior charges were to be deducted from gross profits:
    Provision for depreciation;
    Reserve for rehabilitation;
    Return of 6 per cent on the paid up capital; and
    Return on the working capital at a lower rate than the return on paid-up capital.
The balance, if any, was called “available surplus” and the workmen were to be awarded a reasonable share out of it by way of bonus for the year.
Bonus is really a reward for good work or share of profit of the unit where the employee is working. Often there were disputes between employer and employees about bonus to be paid. It was thought that a legislation will solve the problem and hence Bonus Act was passed. Unfortunately, in the process, bonus has become almost as deferred wages due to provision of payment of minimum 8.33% and maximum 20% bonus. Bonus Act has not in any way reduced the disputes.
The Act is applicable to (a) any factory employing 10 or more persons where any processing is carried out with aid of power (b) Other establishments (established for purpose of profit) employing 20 or more persons. Minimum bonus payable is 8.33% and maximum is 20%. Bonus is payable annually within 8 months from close of accounting year. Bonus is payable to all employees whose salary or wages do not exceed Rs 3,500 per month provided they have worked for at least 30 days in the accounting year. However, for calculation of bonus, maximum salary of Rs 2,500 is considered.
Once the Act is applicable, it continues to apply even if number of employees fall below 20. The Act is applicable to Government companies and corporations owned by Government which produces goods or renders services in competition with private sector. However, the Act is not applicable to Government employees, the employees of Municipal Corporation or Municipality, railway employees, university and employees of educational institutions, public sector insurance employees, employees of RBI and public sector financial institutions, charitable hospitals, social welfare organisations and defense employees. The Act does not apply to any institution established not for purposes of profit.
Establishments to which the Act is applicable - The Act applies to— (a) every factory; and (b) every other establishment in which twenty or more persons are employed on any day during an accounting year. [section 1(3)].
Act not to apply to certain classes of employees:
Section 32 of the Act provides that the Act shall not apply to the following classes of employees:
    Employees employed by any insurer carrying on general insurance business and the employees employed by the Life Insurance Corporation of India;
    Seamen as defined in clause (42) of Section 3 of the Merchant Shipping Act, 1958;
    Employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948 and employed by registered or listed employers;
    Employees employed by an establishment engaged in any industry called on by or under the authority of any department of Central Government or a State Government or a local authority;
    Employees employed by:
    The Indian Red Cross Society or any other institution of a like nature including its branches;
    Universities and other educational institutions;
    Institutions (including hospitals, chambers of commerce and social welfare institutions) established not for the purpose of profit;
    Employees employed through contractors on building operations;
    Employees employed by the Reserve Bank of India;
    Employees employed by:
    The Industrial Finance Corporation of India;
    Any Financial Corporation established under Section 3, or any Joint Financial Corporation established under Section 3A of the State Financial Corporations Act, 1961;
    The Deposit Insurance Corporation;
    The National Bank for Agriculture and Rural Development;
    The Unit Trust of India;
    The Industrial Development Bank of India;
fa)    The Small Industries Development Bank of India established under Section 3         of the Small Industries Development Bank of India Act, 1989;
fb) The National Housing Bank;
Any other financial institution (other than Banking Company) being an establishment in public sector, which the Central Government may by notification specify having regard to (i) its capital structure; (ii) its objectives and the nature of its activities; (iii) the nature and extent of financial assistance or any other concession given to it by the Government; and (iv) any other relevant factor.
Apart from the above, the appropriate Government has necessary powers under Section 36 to exempt any establishment or class of establishments from all or any of the provisions of the Act for a specified period having regard to its financial position  and other relevant circumstances and it is of the opinion that it will not be in the public interest to apply all or any of the provisions of this Act thereto. It may also impose such conditions while according the exemptions as it may consider fit to impose.
Important Definitions:
Accounting Year
“Accounting Year” means-
    In relation to a corporation, the year ending on the day on which the books and accounts of the corporation are to be closed and balances;
    In relation to a company, the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up;
    In any other case-
    the year commencing on the 1st day of April; or
    if the accounts of an establishment maintained by the employer thereof are closed and balances on any day other than the 31st day of March, then, at the option of the employer, the year ending on the day on which its accounts are so closed and balanced.
Provided that an option once executed by the employer under paragraph (b) of this sub-clause shall not again be exercised except with the previous permission in writing of the prescribed authority and upon such conditions as that authority may think fit. [Section 2(1)]
Allocable Surplus:
It means (a) in relation to an employer, being a company (other than a banking company) which has not made the arrangements prescribed under the Income-tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of Section 194 of that Act, 67% of the available surplus in an accounting year.
(b) In any other case, 60% of such available surplus [Section 2(4)].
Available Surplus:
It means the available surplus under Section 5. {Section 2(6)}.
Award:
“Award” means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947 or by any other authority constituted under any corresponding law relating to investigation and settlement of industrial disputes in force in a State and includes an arbitration award made under Section 10A of that Act or under that law [Section 2(7)].
Employee
“Employee” means any person (other than an apprentice) employed on a salary or wages not exceeding Rs.3,500 per mensem in any industry to do any skilled or unskilled, manual, supervisory, managerial, administrative, technical or clerical work or hire or reward, whether the terms of employment be express or implied. [Section 2(13)]
Part time permanent employees working on fixed hours are employees.
Employer
“Employer” includes:
    In relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as a manager of the factory under clause (f) of Sub-section 7(1) of the Factories Act, 1948, the person so named; and
    In relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent. [Section 2(14)]
Establishment in Private Sector:
It means any establishment other than an establishment in public sector.[Section 2(15)]
Salary or Wages:
The “Salary or Wage” means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living) but does not include:
    any other allowance which the employee is for the time being entitled to;
    the value of any house accommodation or of supply of light, water, medical attendance or any other amenity or of any service or of any concessional supply of foodgrains or other articles;
    any traveling concession;
    any bonus (including incentive, production and attendance bonus);
    any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;
    any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex-gratia payment made to him;
    any commission payable to the employee [Section 2(21)]
‘Factory’ has same meaning as per Factories Act. [section 2(17) of Bonus Act].
The words used are ‘number of persons employed’. Hence, all persons employed are to be considered, including those who are not eligible for bonus. Thus, all employees including those, whose salary or wages exceed Rs 3,500 per annum will have to be considered for purpose of deciding eligibility.
MEANING OF ‘ESTABLISHMENT’ - The word ‘establishment’ is not defined in the Act. Normally, ‘establishment’ is a permanently fixed place for business. The term ‘establishment’ is much wider than ‘factory’. It covers any office or fixed place where business is carried out.
ESTABLISHMENT IN PUBLIC SECTOR COVERED ONLY IN CERTAIN CASES - The Act applies to establishment in public sector only if the establishment in public sector sells the goods or renders services in competition with an establishment in private sector, and the income from such sale or services or both is not less than twenty per cent, of the gross income of the establishment in public sector for that year. [section 20(1)]. In other cases, the provisions of this Act do not apply to the employees employed by any establishment in public sector. [section 20(2)]. As per section 32(v)(c), the Act does not apply to any institution established not for purposes of profit.
Establishment in public sector means an establishment owned, controlled or managed by— (a) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) (b) a corporation in which not less than forty per cent of its capital is held (whether singly or taken together) by the Government; or the Reserve Bank of India; or a corporation owned by the Government or the Reserve Bank of India. [section 2(16)]. Establishment which is not in public sector is ‘establishment in private sector’ [section 2(15)].
“Corporation” means any body corporate established by or under any Central Provincial or State Act but does not include a company or a co-operative society. [section 2(11)].
ESTABLISHMENTS TO INCLUDE DEPARTMENTS, UNDERTAKINGS AND BRANCHES - Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act.  [section 3]
Who are eligible for bonus - Employees drawing salary or wages upto Rs 3,500 per month are entitled to bonus, if he has worked for at least 30 working days in an accounting year. Even a worker working in seasonal factory is eligible if he has worked for at least 30 working days. Apprentices are not eligible for bonus.
Salary above Rs. 2,500 is not considered for calculation of Bonus. [section 12]. Employee drawing salary/wage exceeding Rs 3,500 is not entitled to any bonus under the Act.
Thus, minimum bonus @ 8.33% will be Rs 2,500 and maximum @ 20% will be Rs 6,000 for the year, when salary of employee exceeds Rs 2,500 but is less than Rs 3,500.
DUTIES / RIGHTS OF EMPLOYER

DUTIES
    To calculate and pay the annual bonus as required under the Act
    To submit an annul 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.
    To co-operate with the Inspector, produce before him the registers/records maintained, and such other information as may be required by them.
    To get his account audited as per the directions of a Labour Court/Tribunal or of any such other authority.
RIGHTS
    An employer has the following rights:
    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.
    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.
    Right to refer any disputes relating to application or interpretation of any provision of the Act, to the Labour Court or Labour Tribunal.
 
ELIGIBILITY FOR BONUS IF WORKED FOR MINIMUM 30 DAYS - Every employee shall be entitled to be paid be his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year. [section 8]
Computation of amount available for distribution as bonus - The establishment has to prepare a balance sheet and profit and loss account of the year and calculate the ‘gross profit’, ‘available surplus’ and ‘allocable surplus’ as per method and formula given in Bonus Act.
The first step is to calculate ‘Gross Profit’. As per section 4, the gross profit in respect of any accounting year is required to be calculated as per First Schedule to Act in case of banking company and as per second schedule in case of other establishments. After calculation of ‘Gross Profit’ as per section 4, next step is to calculate ‘Available Surplus’. As per section 5, ‘available surplus’ is calculated by deducting sums as specified in section 6 from ‘gross profit’ arrived at as per section 6 and adding difference equal to income tax on the bonus paid in the preceding year.
Thus, Available Surplus is equal to Gross Profit [as per section 4] less prior charges allowable as deduction u/s 6 plus amount equal to income tax on bonus portion calculated as per proviso (b) to section 5.
Allocable surplus is equal to 60% of ‘available surplus’ calculated as per provisions of section 5. [In case of company which does not deduct tax at source as per provisions of section 194 of Income Tax Act, ‘allocable surplus’ will be 67% of ‘available surplus’]. This ‘allocable surplus’ has to be distributed as bonus among employees in proportion to the salary or wages actually earned by each employee during the year. However, this is subject to minimum 8.33% and maximum 20% as explained below.
CALCULATION OF BONUS SIMPLIFIED:
The method for calculation of annual bonus is as follow:
1. Calculate the gross profit in the manner specified in-
    First Schedule, in case of a banking company, or
    Second Schedule, in any other case.

2. Calculate the Available Surplus.

    Available Surplus = A+B, where A = Gross Profit – Depreciation admissible u/s 32 of the Income tax Act - Development allowance - Direct taxes payable for the accounting year (calculated as per Sec.7) – Sums specified in the Third Schedule.

    B = Direct Taxes (calculated as per Sec. 7) in respect of gross profits for the immediately preceding accounting year – Direct Taxes in respect of such gross profits as reduced by the amount of bonus, for the immediately preceding accounting year.

3. Calculate Allocable Surplus
    Allocable Surplus = 60% of Available Surplus, 67% in case of foreign companies.
    Make adjustment for ‘Set-on’ and ‘Set-off’. For calculating the amount of bonus in respect of an accounting year, allocable surplus is computed after considering the amount of set on and set off from the previous years, as illustrated in Fourth Schedule. The allocable surplus so computed is distributed amongst the employees in proportion to salary or wages received by them during the relevant accounting year.
4. In case of an employee receiving salary or wages above Rs. 2,500 the bonus payable is         to be calculated as if the salary or wages were Rs. 2,500 p.m. only.
Set off and set on provisions - It may happen that in some years, the allocable surplus is more than the amount paid to employees as bonus calculating it @ 20%. Such excess ‘allocable surplus’ is carried forward to next year for calculation purposes. This is called ‘carry forward for being set on in succeeding years’. The ceiling on set on that is required to be carried forward is 20% of total salary and wages of employees employed in the establishment. In other words, even if actual excess is more than 20% of salary/wages, only 20% is required to be carried forward. The amount set on is carried forward only upto and inclusive of the fourth accounting year. If the amount carried forward is not utilised in that period, it lapses  [section 15(1)].
Similarly, in a particular year, there may be lower ‘allocable surplus’ or no ‘allocable surplus’ even for payment of 8.33% bonus. Such shortfall is also carried to next year. This is called ‘carry forward for being set off in succeeding years’. Thus, in every year, ‘allocable surplus’ is calculated. To this amount, set on from previous years is added. Similarly, set off, if any, from previous years is deducted. This gives amount which is available for distribution as bonus. The amount set off is carried forward only upto and inclusive of the fourth accounting year. If the amount carried forward is not set off in that period, it lapses. [section 15(2)]
Minimum bonus - Every employer shall be bound to pay to every employee in respect of any accounting year, a minimum bonus which shall be 8.33 per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year. Where an employee has not completed fifteen years of age at the beginning of the accounting year, the minimum bonus payable is 8.33% or Rs 60 whichever is higher. [section 10].
While computing number of working days, an employee shall be deemed to have worked in an establishment even on the days on which (a) He was laid off (b) He was on leave with salary/wages(c) He was absent due to temporary disablement caused by accident arising out of and in course of employment and (d) Employee was on maternity leave with salary/wages. [section 14].
Payment of maximum bonus - Where in respect of any accounting year, the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage. [section 11(1)]. - - In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section. [section 11(2)].
Thus, maximum bonus payable to employee is 20% in any accounting year.
Salary or wages for calculating bonus - Where the salary or wage of an employee exceeds Rs 2,500 per month, the bonus payable to such employee under sections 10 or 11 shall be calculated as if his salary or wages were Rs 2,500 per month. [section 13]. In other words, employees drawing salary or wages between Rs 2,500 to Rs 3,500 per month, are entitled to bonus on the basis of Rs 2,500 per month salary only.
Special Provisions with respect to certain newly set up establishments:
In the case of newly set up establishments following provisions have been made under Section 16 for the payment of bonus:
    Where an establishment is newly set up whether before or after commencement of this Act, the employees of such establishment shall be entitled to be paid bonus under this Act in accordance with the provisions of sub-sections (1-A), (1-B) and (1-C).

(1-A)   In the first five accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of this Act in relation to that year, but without applying the provisions of Section 15.

(1-B)  For the sixth and seventh accounting year in which the employer sells the goods produced or manufactured by him or renders services as the case may be, from such establishment, the provisions of Section 15 shall apply subject to the following modifications, namely:
    For the sixth accounting year:
Set on set off, as the case may be, shall be made in the manner illustrated in the Fourth Schedule taking into account the excess or deficiency, if any as the case may be, of the allocable surplus set on or set off in respect of the fifth and sixth accounting year.
    For the seventh accounting year:
Set on or set off, as the case may be, shall be made in the manner illustrated in the  Fourth Schedule taking into account the excess or deficiency, if any, as the case may be of the allocable surplus set on or set off in respect of the fifth, sixth and seventh accounting years.

(1-C)  From the eighth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be from such establishment, the provisions of Section 15 shall apply in relation to such establishment as they apply in relation to any other establishment.
Explanation I-For the purpose of sub-section (1) an establishment shall not be deemed to be newly set up merely by reason of a change in its location, management or ownership.
Explanation II- For the purpose of sub-section(IA), an employer shall not be deemed to have derived profit in accounting year unless-
    He has made provision for that year’s depreciation to which he is entitled under the Income-tax Act or, as the case may be, under the Agriculture Income tax law, and
    The arrears of such depreciation and losses incurred by him in respect of the establishment for the previous accounting years have been fully set off against his profits.
Explanation III-For the purposes of sub-section (1A), (1B) and (1C), sale of the goods produced or manufactured during the course of the trial running of any factory or of the prospecting stage of any mine or an oil field shall not be taken into consideration and where any question arises with regard to such production or manufacture, the decision of the appropriate Government, made after giving the parties a reasonable opportunity of representing the case, shall be final and shall not be called in question by any court or other authority.
(2) The provisions of sub-sections (1A), (1B) and (1C) shall, so far as may be, apply to new departments or undertakings or branches set up by existing establishments:
Provided that if an employer in relation to an existing establishment consisting of different departments or undertakings or branches(whether or not in the same industry) set up at different periods has, before the 29th May, 1965, been paying bonus to the employees of all such departments or undertakings or branches were set up, on the basis of the consolidated profits computed in respect of all such departments or undertakings or branches, then, such employer shall be liable to pay bonus in accordance with the provisions of this Act to the employee of all such departments or undertakings or branches (whether set up before or after that date) on the basis of the consolidated profits computed as aforesaid.

Within the meaning of Section 16(1-A) the word “profit” must obviously be construed according to its ordinary sense. A sense which is understood in trade and industry because the rationale behind Section 16(1-A) is that it is only when the employer starts making profits in the commercial sense that he should become liable to pay bonus under the Act.

Profit in the commercial sense can be ascertained only after deducting depreciation and since there are several methods of computing depreciation, the one adopted by the employer, in the absence of any statutory provision to the contrary, would govern the calculation. Explanation II to Section 16(1-A) says that the employer shall not be deemed to have derived profits unless he has made provision for that years’ depreciation to which he is entitled to under the Income-tax Act. This explanation embodies a clear legislative mandate that in determining for the purpose of sub-section(1A) of Section 16 whether the employer has made profit from the establishment in accounting year, depreciation should be provided in accordance with the provisions of the Income-tax Act.

Clearly, therefore, if depreciation is as prescribed in the Income Tax Act, There is no profit for the year in question and there is no liability on the part of the employer to pay bonus under the Act (The Management of Central Coal Washery v. Workmen, 1978-II Labour Law Journal 350).

Adjustment of customary or interim bonus:
Where in any accounting year-(a) an employer has paid any Puja bonus or other customary bonus to an employee; or (b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable; then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance (Section 17).

Deductions of certain amounts from bonus:
Where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act, in respect of that accounting year only and the employee shall be entitled to receive the balance, if any. (Section 18)

Time limit for payment of bonus:
    Where there is a dispute regarding payment of bonus pending before any authority under Section 22, all amounts payable to an employee by way of bonus under this Act shall be paid in cash by his employer, within a month from the date from which the award becomes enforceable or the settlement comes into operation, in respect of such dispute.
    In any other case, the bonus should be paid within a period of eight months from the close of the accounting year. However, the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of 8 months to such further period or periods as it thinks fit, so, however, that the total period so extended shall not in any case exceed two years (Section 19).

Reference of disputes under the Act:
Where any dispute arises between an employer and his employee with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State and provisions of that Act or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly. (Section 22)

Accuracy of Accounts:
Where any industrial dispute arises with respect to bonus payable under the Act, the audited balance sheet and profit and loss account of a corporation or a company or a banking company shall be presumed to be correct. Similarly, in the case of employers not being corporation, company or banking company, audited accounts will be presumed to be correct for the purpose of payment of bonus.

Bonus linked with production or productivity:
Section 31A enables the employees and employers to evolve and operate a scheme of bonus payment linked to production or productivity in lieu of bonus based on profits under the general formula enshrined in the Act. However, bonus payments under Section 31A are also subject to the minimum of 8.33 % and maximum of 20%. In other words, a minimum of 8.33% is payable in any case and the maximum cannot exceed 20 % (Section 31A).

Agreements inconsistent with the Act:
Subject to the provisions of Section 31A, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State.

Power of Exemption:
If the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act. (Section 36)

Government should consider public interest, financial position and whether workers contributed to the loss, before grant of exemption (J.K Chemicals v. Maharashtra, 1996 III CLA Bom 12).
Application of certain laws not barred:
Save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State (Section 39).

RECOVERY OF BONUS DUE
    Where any bonus is due to an employee by way of bonus, employee or any other person authorised by him can make an application to the appropriate government for recovery of the money due.
    If the government is satisfied that money is due to an employee by way of bonus, it shall issue a certificate for that amount to the collector who then recovers the money.
    Such application shall be made within one year from the date on which the money became due to the employee.
    However the application may be entertained after a year if the applicant shows that there was sufficient cause for not making the application within time.
 
OFFENCES AND PENALTIES
    For contravention of the provisions of the Act or rules the penalty is imprisonment upto 6 months, or fine up to Rs.1000, or both.
    For failure to comply with the directions or requisitions made the penalty is imprisonment upto 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.

Payment of Wages Act, 1936
Objectives
•    To ensure regular and prompt payment of wages and to prevent the exploitation of a wage earner by prohibiting arbitrary fines and deductions from his wages.
Applicability of the Act
•    Application for payment of wages to persons employed in any factory.
•    Not applicable to wages which average Rs 6,500 per month or more.
•    Wages include all remuneration, bonus, or sums payable for termination of service, but do not include house rent reimbursement, light vehicle charges, medical expenses, TA, etc.
Important provisions of the Act
•    Responsibility of the employer for payment of wages and fixing the wage period.
•    Procedures and time period in wage payment.
•    Payment of wages to discharged workers.
•    Permissible deductions from wages.
•    Nominations to be made by employees.
•    Penalties for contravention of the Act.
•    Equal remuneration for men and women.
•    Obligations and rights of employers.
•    Obligations and rights of employees.
The Act is to regulate payment of wages to certain class of employed persons. The main purpose of this Act is to ensure regular and timely payment of wages to the employed persons, to prevent unauthorized deductions being made from wages and arbitrary fines being imposed on the employed persons. The Act extends to the whole of India.
Application of the Act:
The Act applies to payment of wages to persons employed in factory or railways. It also applies to any ‘industrial or other establishment’ specified in Section 2(ii).  [Section 1(4)].  ‘Factory’ means factory as defined in Section 2(m) of Factories Act. - - Industrial or other establishment specified in Section 2(ii) are - * Tramway or motor transport services * Air transport services * Dock wharf or jetty * Inland vessels * Mines, quarry or oil-field * Plantation * Workshop in which articles are produces, adopted or manufactured. - - The Act can be extended to other establishment by State/Central Government.
Presently, the Act applies to employees drawing wages upto Rs 6,500. [Section 1(6)]. Every employer is responsible for payment to persons employed by him on wages. [Section 3].
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)]
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 4]. 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 the number of employees are 1,000 or more].  - - Wages should be paid in coins and currency notes. However, with authorisation from employee, it can be paid by cheque or by crediting in his bank account. [Section 6].
DEDUCTIONS PERMISSIBLE - 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%. However, maximum deduction upto 75% is permissible if deduction is partly made for payment to cooperative society. [Section 7].
FINES – Specific notice specifying acts and omissions for which fine can be imposed should be exhibited on notice board etc. Such notice can be issued only after obtaining specific approval from State Government. Fine can be imposed only after giving employee a personal hearing. Fine can be maximum 3% of wages in a month. Fine cannot be recovered in instalments. [Section 8].
 
LABOUR LAW CONCESSIONS
Labour Laws and SSI
The Government of India has made several attempts to revamp, relax and simplify labour laws relating to Small Scale Industries. One of them is the simplification procedure envisaged by the Labour Act enacted in 1988 to assist the small establishments. The Act, namely "Labour Laws (exemption from furnishing returns and maintaining registers by certain establishment) Act, 1988" covers labour related acts and thus provides:
    Establishment employing 10-19 persons is required to maintain only 3 register and to submit an annual core return only. 
    Establishment employing less than 10 persons to maintain only 1 register and submit only an annual core return. 
    Only one Inspector will be responsible for various labour laws, except in case of Factory Act and Boiler Act.
The Labour Policies for Small Scale Industries is governed by comprehensive laws. The following laws and policies are applicable for Small Scale Industries in India:
    Apprentices Act, 1961
    The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
    Bonded Labour System (Abolition) Act, 1976
    Child Labour (Prohibition & Regulation) Act, 1986
    The Children (Pledging of Labour) Act, 1933
    The Contract Labour (Regulation & Abolition) Act, 1970
    The Employees Provident Funds and Misc. Provisions Act, 1952
    Employees State Insurance Act, 1948
    Employers Liability Act, 1938
    Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
    Equal Remuneration Act, 1976
    The Factories Act, 1948
    The Industrial Disputes Act
    The Industrial Employment (Standing Orders) Act,1946
    The Inter-state Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
    Labour Laws (Exemption from Furnishing Returns & Maintaining Registers by Certain Establishments) Act, 1988
    Maternity Benefit Act, 1961
    The Minimum Wages Act, 1948
    The Payment of Bonus Act, 1965
    The Payment of Gratuity Act, 1972
    The Payment of Wages Act, 1936
    The Sales Promotion Employees (Conditions of Service) Act, 1976
    The Shops and Establishments Act, 1953
    The Trade Union Act, 1926
    Workmen’s Compensation Act, 1923
    The Weekly Holidays Act, 1942
    The Plantation Labour Act, 1951
The Small Industries Development Organization under the Ministry of Small Scale Industries plays the role of a nodal agency for the development of small industries in India. This agency has identified the labour reforms carried out by various State Governments which are as under:
Andhra Pradesh
ORDER/NOTIFICATION/DATE    SUBJECT
Labour Laws
G.O. Ms.No.33 Dt.5-7-99
Amendment notified vide Andhra Pradesh Gazette No.30     Amendment to labor Enactments

Amendment to the provisions of State Act shall apply to every industrial establishment where in 50 or more workmen are employed on any day of the preceding Twelve months.
G.O Ms.No.34 Dt.5-7-1999    Factories Act, 1948

Exempting establishments engaged in manufacturing processes from the rules 4, 5, & 6 under the Factories Act 1948
G.O Ms.No.37 Dt.3-8-1999    Exemption from rule 22,23 and 29 under Factories Act 1948 And under ANDHRA PRADESH SHOPS AND ESTABLISHMENTS ACT - for those engaged in manufacturing processes (relate to national holidays and other festivals)
G.O Ms .No.38 Dt.3-8-1999    Amendment to the ANDHRAPRADESH PAYMENT OF GRATUITY RULES 1972 and omitting rule 32 from ‘U’ Substitution of the words "employee nominee" in place of employees.
G.O Ms .No.34 Dt.5-7-1999 Amendment to the ANDHRA PRADESH FACTORIES AND ESTABLISHMENTS (NATIONAL FESTIVALS & OTHER HOLIDAYS) RULES, 1974     6-A:Manufacturing process: Nothing in rules 4,5,and 6 shall apply to a factory under the Factories Act 1948 (Central Act 63 of 1948) or an establishment in manufacturing process as designated in section 2(k) of the Factories Act,1948.
Assam
ORDER/NOTIFICATION/DATE    SUBJECT
Notification No: LGL 86/83/62 dated 7th April, 1984

The Assam State Industrial Relief Undertaking (Special Provisions) Act, 1984 (Assam Act No. VII of 1984)

Received the Assent of the President on 7th April 1984    Under this Act, industrial units which have become sick may be declared as a relief undertaking for a total period of 10 years.

Objective:
    To enable the State Government to make special provisions for a limited period in respect of industrial relations, financial obligations and other like matters in relation to industrial undertakings the running of which is considered essential as a measure of prevention or of providing relief against unemployment
    The State Government may, if it is satisfied that it is necessary or expedient so to do, direct, by notification, that the operation of all or any of the contracts, assurances of property agreements, settlements, awards, standing orders or other instruments in force immediately before the date on which the State industrial undertaking is declared to be a relief undertaking, shall remain suspended or shall be enforceable with such modifications and ins such manner as may be specified in such notification.
    The State Government may, subject to the condition of previous publication, make rules to carry out the provisions of this Act. Such Rules may provide for all or any of the following matters:
    rates of wages payable to the workmen and their workloads and the salary payable to the staff, the payment of bonus, gratuity, compensation and other benefits;
    the manner in which the relief undertaking should be run;
    the strength of staff and labour to be employed for running the relief undertaking economically
    the manner in which the net profits or net losses or surplus funds should be appropriated or disposed of;
    the percentage of profits to be utilised for the benefit of persons employed in the undertaking and the manner of its utilisation;
    the manner in which and the extent to which the representatives of the workmen may be associated with or may participate in the management of the relief undertaking.
    The Assam State Industrial Relief Undertaking (Special Provisions) Ordinance, 1983 (Assam Ordinance No. VI of 1983) is hereby repealed.
The Assam Preferential Stores Purchase Act, 1989 (to replace the Assam Preferential Stores Purchase Rules, 1972)    This enactment is aimed to encourage growth of industries in the State and to implement the Industrial Policy announced and published by the Govt. of Assam vide Notification No. CL 586/85 dated 24th December, 1986

Objectives
    to encourage small scale and cottage industries by preferential purchase of their products
    to rationalize the procedure for purchase of stores required by the State Government, companies and undertakings.
The Act lays down the following :
    Definitions
    Constitution of the State Board
    Terms of the Board
    Power and Functions
    Eligibility: To be registered under this Act and be eligible for the incentive under this Act, a unit in the small scale sector has to have 100 per cent employment of local people
    The location of administrative /registered controlling officers shall be within the State of Assam
    The unit should be in regular production having requisite machinery
Preferences:
    Small Industries, Khadi and Cottage industries registered under this Act shall be exempted from payment of earnest money and security deposit for items in respect of which the units are registered.
    Items of stores mentioned in Schedule II be known as "Reserved Items", shall be purchased by all requiring authorities from registered industries
    The State Govt. shall from time to time publish a list of stores which shall be purchased by requiring authorities only from industrial units having valid Store Purchase Registration and in accordance with the policy laid down by the State Board.
    In respect of items of stores other than those mentioned in Schedule II or covered by the Act, price preference shall be given to registered industries (or their authorised agents and dealers) upto 10 per cent in case of Small Industries and 5 per cent in case of other industries of Assam.

Maharashtra
ORDER/NOTIFICATION    SUBJECT
Labour Law Reforms
Notification from Directorate of Industries, Government of Maharashtra June 2000    The Factories Act, 1948:
    Amendments in the Definition of "Factory"
    Small Establishments with power and employing upto 25 workers without power and upto 50 workers be exempted
Trade Unions Act, 1926:
    Trade Union should not be affiliated to Political Parties
    There should be one Union per Company
    7 or more workers combine to form a Union. It is recommended that the minimum number of workers should be increased to 25 or 30 per cent of the work force, whichever is higher.
    It is also recommended that Under Section 22, the Executive Body of such Union should comprise outsiders not exceeding 1/3rd or 2 persons whichever is less.
    Rationalization of the provisions with regard to lay-offs and retrenchments, if necessary with enhanced retrenchment compensation should be considered
    The minimum number of workers Under Section 25(K) should be increased from 100 to 300.
    Section 25 (N) should contain the following proviso -
"Notwithstanding anything contained in the foregoing provisions of this Section, the provisions of this Section will not apply to any workman who has been in continuous service for not less than one year under an employer and at the time of retrenchment paid compensation which shall be equivalent of 45 days average pay for every completed year of continuous service or any part thereof in excess of six months".
Minimum Wages Act,1948:
    Minimum Wages should be fixed for unskilled temporary workers. For other categories, they will get higher wages as per their skills and market demand.
    The number of schedules under the Act should be reduced, and only the lowest scale of minimum wages (i.e., for unskilled workers) should be stipulated in these schedules.
Inspections:
    Visits by Inspectors of various agencies under the Labour Department would be rationalised as follows:
    There would be no restriction on the conduct of statutory inspections (which may to the extent possible, be conducted jointly by the different inspectional agencies), and in the case of accidents.
    In the case of inspections based on complaints or information received, prior approval from the concerned GMDIC would be necessary. In case of disagreement, or when GMDIC is not available approval may be taken from the Collector.
    In the case of inspections for collection of statistics, Labour Department may examine the possibility of collection of statistics on a trial basis through selected local associations or outside agencies.
    In the case of technical inspection, the possibility of authorizing technical agencies such as VJTI, VRCE etc. may be examine and an approved list drawn up.
    For all Boiler Inspections, reputed technical Organizations should be empowered to conduct such inspections.
Contract Labour (Regulation and Abolition) Act, 1970
    The Act should be amended to increase the number of workers in the definition of applicability to 50, subject to further relaxation to the extent of a minimum 100 workers in respect of units in backward areas.
Maharashtra Trade Union (MRTU) & Prevention of Unfair Labour Practices (PULP, 1971) Acts :
    It is suggested that these Acts be tally abolished as the required purpose is being efficiently served with the use of the industrial disputes Act, 1947.
Uttar Pradesh
ORDER/NOTIFICATION    SUBJECT
Notification No.432/6-PR, Kanpur,
Dt. 10-8-2000    Labour Laws:
The Factories Act, 1948
    Section 92
    There should be a classification of offences/violations depending upon their seriousness. The punishment provided should be commensurate to the seriousness of the violation.
U.P. Factories Rules, 1950
    Rule 7 Registration and Grant of License
    It is suggested that there is an urgent need to move toward long period licensing so that Entrepreneurs do not have to face problems of annual renewals.
U.P. Industrial Disputes Act, 1947
    Section 2(F) Retrenchment
    The utility of the UP Industrial Disputes Act, 1947 is no more; therefore it should be repealed. If such repealment is not considered proper, Section 2(bb) and 2(c) be added to Section 2 (s) of the UP ID Act, 1947.
    Section 2(bb) relates to termination of the service of the workmen as a result of non-renewal of the contract of employment.
    Section 2(c) relates to termination of the service of the workmen on the ground of continued ill-health.
    Section 6 (B) Settlement outside conciliation proceedings
    It is suggested that Section 18(3) of the Industrial Disputes Act, 1947 be substituted in place of Section 6 B.
    Section 18(3) relates to a settlement arrived at in the course of conciliation proceedings under this Act.
Minimum Wages Act, 1958
    Section 3 fixing of Minimum Rates of Wages
    It is suggested that 23 categories of employment in Part I of the Schedule and Employment in Agriculture of Part II are excessive categories. It should be limited to two categories: skilled and unskilled workers.
Trade Unions Act, 1926
    Section 22 relating to proportion of officers to be connected with the Industry.
    It is suggested that not less than 3/4th of the total number of office bearers be substituted to one half of the total number of Section 22.
Contract Labour (Regulation and Abolition Act, 1970)
    Section 10 prohibition of employment of Contract Labour
    It is suggested that Exemption under the Contract Labour Act to export oriented shall be granted by the appropriate Government in Time Bound Schedule. So that Export Oriented Units can fulfil the export in the scheduled time.
G O Dt. 3-3-1994 (Labour Department)    Approval of Plants of the Non-hazardous factories (Delegation of Power to Industries Department Officers).
    It was issued by Labour Department for one year on experimental basis. It is suggested that the validity of this GO be extended permanently.
West Bengal
ORDER/NOTIFICATION    SUBJECT
Labour Laws
G.O. Ms.No.33 Dt.5-7-99
Amendment notified vide Andhra Pradesh Gazette No.30    Amendment to labor Enactments

Amendment to the provisions of State Act shall apply to every industrial establishment where in 50 or more workmen are employed on any day of the preceding Twelve months.
G.O Ms.No.34 Dt.5-7-1999    Factories Act, 1948

Exempting establishments engaged in manufacturing processes from the rules 4, 5, & 6 under the Factories Act 1948
G.O Ms.No.37 Dt.3-8-1999    Exemption from rule 22,23 and 29 under Factories Act 1948 And under ANDHRA PRADESH SHOPS AND ESTABLISHMENTS ACT - for those engaged in manufacturing processes (relate to national holidays and other festivals)
G.O Ms .No.38 Dt.3-8-1999    Amendment to the ANDHRA PRADESH PAYMENT OF GRATUITY RULES 1972 and omitting rule 32 from ‘U’ Substitution of the words "employee nominee" in place of employees.
G.O Ms .No.34 Dt.5-7-1999 Amendment to the ANDHRA PRADESH FACTORIES AND ESTABLISHMENTS (NATIONAL FESTIVALS & OTHER HOLIDAYS) RULES, 1974     6-A:Manufacturing process: Nothing in rules 4,5,and 6 shall apply to a factory under the Factories Act 1948 (Central Act 63 of 1948) or an establishment in manufacturing process as designated in section 2(k) of the Factories Act,1948.

Labour Laws and SEZ
The Government of India has offered a number of incentives both monetary as well as non-monetary to the units operating in SEZ. In order to create a conducive business environment in which the entrepreneurs and enterprises have complete freedom to conduct their business operations and to remain globally competitive, State Governments have been empowered to amend the Labour Laws according to their requirements.
Normal Labour Laws are applicable to SEZs, which are enforced by the respective state Governments. The State Governments have been requested to simplify the procedures/returns and for introduction of a single window clearance mechanism by delegating appropriate powers to Development Commissioners of SEZs. The following are some of the changes brought in by State Governments with respect to Labour Law Regulations:
    The powers of the Labour Commissioner are delegated to the designated Development Commissioner or other authority in respect of the area within the SEZs.
    Modalities have been devised for the grant of various permissions required from the Labour Commissioner within the SEZs themselves through the stationing of exclusive personnel for the purpose or through other means so that clearances relating to various labour laws can be provided at a single point in the SEZs.
    Except in emergent circumstances, the prior permission of the Development Commissioner or other designated authority of the SEZs would be required for the conduct of inspections of these agencies of industrial units and other establishments within the SEZs.
    The Powers of the Chief Inspector of Factories & Boilers are delegated to the designated Development Commissioner or other authority in respect of the area within the SEZs.
    Modalities have been devised for grant of various permissions required from the Chief Inspector of Factories & Boilers within the SEZs themselves through the stationing of exclusive personnel for the purpose or through other means so that clearances relating to various labour laws can be provided at a single point in the SEZs.
    Except in emergent circumstances, the prior permission of the Development Commissioner or other designated authority of the SEZs would be required for the conduct of inspections by these agencies of industrial units and other establishments within the SEZs.
    All industrial units and other establishments in the SEZs area declared as “Public Utility Service” under the provisions of the Industrial Disputes Act.
    Subject to the State Legislature approval and Government of India’s assent, amendments shall be proposed to the Industrial Disputes Act. The proposed amendments include, inter-alia, limiting the applicability of Chapter VB to industries employing 300 or more workmen, etc. Similarly, the Contract Labour (Regulation & Abolition) act is proposed to be amended to exclude certain peripheral service activities. Incase it is not found feasible to amend these statues as proposed, similar amendments will be proposed only for units and establishments within the SEZs.

    Several provisions of Industrial Disputes Act and Factories Act have been identified which have created unnecessary hindrances in the smooth functioning of the SEZs. The State Governments have resolved to do away with those provisions or simplify them.
    Apart from this, the State Governments are also empowered to get the inspection done by some external agency regarding the health and safety aspects of the labourers working in the units of the SEZ.
    Many State Governments have notified have a single reporting format for SEZ units which would cover all the applicable labour laws.
The following list provides a list of the some of the amendments proposed with respect labour law regulations:
 
WHICH COURT TO APPROACH IN CASE OF A LABOUR DISPUTE?
Judicial System in India
The judicial system in India is quite well-established and independent. The Supreme Court of India in New Delhi is the highest Court of Appeal. Each State has a High Court along with subsidiary District Courts, which enforce the rule of law and ensure fundamental rights of citizens, guaranteed by the Constitution of India.

India has a three-tier court system with a typical Indian litigation starting from a District Court and reaching its logical conclusion in the Supreme Court of India. The High Courts along with the various State level forums, situated mostly in the State capitals, constitute the middle rung of this three-tier system. District level courts are the courts of first instance in dispute resolution except in cases where they are prevented from being so by virtue of lack of pecuniary jurisdiction. Cases involving violation of fundamental rights are filed in respective High Court or Supreme Court.

A number of special courts and tribunals have been constituted in India to deal with specific disputes: -
1. Tax Tribunals
2. Consumer Dispute Redressal Forums
3. Insurance Regulatory Authority of India
4. Industrial Tribunals
5. Debts Recovery Tribunals
6. Company Law Board
7. Motor Accidents Claims Tribunals
8. Labour Courts
Where to file?
Most of the labour disputes are referred to the Labour Courts/Industrial Tribunals through the Department of Labour under the respective State Government. The process for labour dispute starts with filing of a petition before Labour Conciliation Officer and in case no compromise is possible, the said officer sends a failure report to the Government. After consideration of the said
report, the Government may send a reference to the Labour Court/Industrial Tribunal. In certain matters, the labour dispute can be directly filed in the court concerned.

Labour Courts These courts are found in every district and they form the courts of original jurisdiction under which various labour laws and rules are enforced.

Appellate Labour Courts These courts hear only the Appeals and revisions originating from the judgements and orders of the subordinate original labour courts and officers, under the provisions of various labour and related laws.

    When an industrial dispute has been referred to a Labour Court for adjudication, it is the duty of the Labour Court to
    Hold proceedings expeditiously, and
    To submit its award to the appropriate Government soon after the conclusion of the proceedings.
    However, no deadline has been laid down with respect to the time within which the completion of proceedings has to be done. Nonetheless, it is expected that these Courts hold their proceedings without getting into the technicalities of a Civil Court.
    It has been held that the provisions of Article 137 of the Limitation Act do not apply to reference of disputes to the Labour Courts.  These Courts can change the relief granted by refusing payment of back wages or directing payment of past wages too.
Court Fee
No Court fee is payable on the petitions filed before Labour Courts and Industrial Tribunals.
What matters fall within the jurisdiction of Industrial Tribunals?
1. Wages, including the period and mode of payment
2. Compensatory and other allowances
3. Hours of work and rest intervals
4. Leave with wages and holidays
5. Bonus, profit sharing, provident fund and gratuity
6. Shift working otherwise than in accordance with standing orders
7. Classification by grades
8. Rules of discipline
9. Retrenchment of workmen and closure of establishment
What matters fall within the Jurisdiction of Labour Courts?
1. The propriety or legality of an order passed by an employer under the standing orders
2. The application and interpretation of standing order
3. Discharge or dismissal of workmen including re-instatement of, or grant of relief to, workmen wrongfully dismissed.
4. Withdrawal of any customary concession or privilege
5. Illegality or otherwise of a strike or lock-out; and
6. All matters other than those being referred to Industrial Tribunals.

Stages of adjudication in labour or industrial disputes
The first is receiving a reference from the appropriate Government or filing of the labour dispute in the Labour Court. The next step is sending notice to the Management and after filing of the response by them, the matter is fixed for adjudication. The fourth step is recording the evidence of the parties and hearing the arguments. It is appropriate to mention here that advocates cannot appear in Labour Courts/Industrial Tribunals, unless permitted.

The final conclusion of the dispute
After hearing the parties, the Labour Court/Industrial Tribunal decides the dispute and the said final decision is called an Award. A copy of the award is to be published by the Labour Department as per rules. Copies of the same are also sent to the parties concerned.

Execution of Awards
In case the management does not comply with the terms of the award, the workman may pray for its execution by moving an application before the concerned Conciliation Officer.

Mediation in Labour Disputes
Mediation is an exercise of resolving a dispute by settlement with the help of a Mediator who is a neutral third party. The mediator may be:
    A judicial officer (retired or sitting judge)
    An Advocate
    An otherwise trained professional
When a sitting judicial officer acts as a mediator in a case, his services are available free of cost and without any other charges on any of the parties.
Role of the Mediator
A mediator helps the parties in arriving at an amicable solution through negotiation. He facilitates the parties in reaching a mutually acceptable agreement. The parties need not agree to the terms of settlement, if they are not satisfied. Judges and arbitrators make decisions that are imposed on parties but a mediator helps the parties to evaluate the probable outcome of a dispute and then leads them to an acceptable settlement.
Process of Mediation
A mediator meets both the parties in a joint mediation session. The initial meeting provides for:
    An introduction to the participants and the mediation process.
    An opportunity to discuss issues affecting settlement that are important for the mediator to know.
    An opportunity to determine what information would be helpful for the mediator to have at or in advance of the mediation.
The joint session provides an opportunity for each participant, either directly or through counsel, to express their view of the case to the other participants and how they would like to approach settlement. The opening statements are intended to begin the settlement process, not to be adversarial or a restatement of positions.
MEDIATION PROCEDURE
Formal procedures as in a Court or arbitration are completely absent in mediation proceedings. Both parties and their advocates participate freely without any set procedures or any rules of evidence. The absence of formality provides for an open discussion of the issues and allows a free interchange of ideas making it easier for the parties to determine their interest and fashion a solution accordingly.  A mediator may, if necessary, meet the disputing parties individually and in private. Such meetings are completely confidential and are intended to understand the needs of each participant and what prevents him or her from reaching a settlement. In these private meetings, the mediator often assists parties to prioritize their interest and options for settlement and to assess the relative strengths and weaknesses of their positions. Once a settlement is reached, the mediator records it with the signatures of the parties.

Some important points in the Mediation Process
    All mediation proceedings are confidential. Documents generated for the mediation are also confidential and may not be introduced during a subsequent trial should the case not settle.
    Counsel and parties with settlement authority must attend mediation sessions. Certain exceptions may be granted for institutional parties or if a party is a unit of government.
    Unless the presiding judge indicates otherwise, referral of a case to mediation does not stay other proceedings in the case or alter applicable litigation deadlines. A judicial officer may, while referring a case to mediation, fix a time limit for completing the mediation process.

Advantages of Mediation Method for Dispute Resolution
(i) Procedures more satisfying results
    Helps settle all or part of the dispute much sooner than regular trial.
    Permits a mutually acceptable solution that a court would not have the power to order.
    Saves time and money
    Preserve ongoing business or personal relationships
    Increases satisfaction and thus results in a greater likelihood of a lasting resolution.

(ii) Allows more flexibility, control and participation
    Tailors the procedures used to seek a resolution
    Broadens the interests taken into consideration
    Fashions a business-driven or other creative solution that may not be available from the court.
    Protects confidentiality
    Eliminates the risks of litigation

(iii) Enables a better understanding of the case
    Provides an opportunity for clients to communicate their views directly and informally
    Helps parties get to the core of the case and identify the disputed issues.
    Helps parties agree to exchange key information directly.

(iv) Improves case management
Narrows the issues in dispute and identifies areas of agreement and disagreement.

(v) Reduces hostility
    Improves the quality and tone of communication between parties.
    Decreases hostility between clients and lawyers.
    Reduces the risk that parties will give up on settlement efforts.

How to Initiate Mediation?
Where both the parties agree in a pending case to try to get their dispute settled through Mediation, the Court will record the same and send the file to Mediation Centre.

 Contemporary Issues on Labour Law Reform in India
In spite of labour laws been widely studied for almost a decade and various recommendations to re-invent/evolve labour laws in the current leg of globalization, the issues pertaining to welfare of labour and flexibility of the firms to grow in sync with market conditions for better industrial relations, persists even today. For the past six to seven years it has been argued (especially by employers) that labour laws in India are excessively pro-worker in the organized sector and this has led to serious rigidities that has resulted in adverse consequences in terms of performance of this sector as well as the operation of the labour markets. There have been recommendations by the government to reform labour laws in India by highlighting the need for flexibility in Indian labour laws that would give appropriate flexibility to the industry that is essential to compete in international markets. But the attitude has mainly been towards skill enhancement and focus on flexible labour markets rather than assessment of proper enforcement of the laws, assessment of the situation of different categories of employers and coverage of the social protection system. This paper makes an attempt to present an overview of existing literature pertaining to this issue and brings forth some major concerns that ought to need attention before any alternate framing of labour laws.
INTRODUCTION
For the past six to seven years it has been argued (especially by employers) that labour laws in India are excessively pro-worker in the organized sector and this has led to serious rigidities that has resulted in adverse consequences in terms of performance of this sector as well as the operation of the labour markets. There have been recommendations by the government to reform labour laws in India by highlighting the need for flexibility in Indian labour laws that would give appropriate flexibility to the industry that is essential to compete in international markets. The main issue has been slow employment growth despite increasing GDP growth termed as ‘jobless growth’ the arguments for which are that the existing labour laws are less employment friendly and biased towards the organized labour force, they protect employment and do not encourage employment or employability, they give scope for illegitimate demands of the Trade Unions and are a major cause for greater acceptance of capital-intensive methods in the organized sector and affect the sector’s long run demand for labour. It has been argued that due to inflexibility in the labour laws the opportunity to expand employment in the organized manufacturing sector has been denied since there is a lack of consensus between the employer’s side and the worker’s side. The employer’s view flexibility in labour markets as a pre-requisite for promoting economic growth and generating jobs, whereas, the trade unionists view flexibilisation in labour markets as a strategy for profit maximizing of the firms and reducing their bargaining power without generating sufficient employment opportunities as has been said. For them insecurity has been the major cause of concern. In the wake of labour market flexibility post economic liberalization, which is believed to enhance competitiveness in an environment of rapidly changing markets and technologies, the government is in a dilemma as most of the labour laws and social protection laws has been labour friendly. But in order to introduce reforms in the labour market, the government has to respond to the requirements of the various stakeholders (employers, workers, multinational firms and international financial agencies). The urgency for the need to reform labour laws was brought into front after the recent spat in Gurgaon (Honda Motorcycle and Scooter India case)1. It is considered to be a watershed event that turned all eyes towards the urgency to delve into the matter seriously. Yet the labour and the management communities differ in their opinion in what reforms can actually be done to the laws. The employees are of the opinion that the central and the state labour laws have been flouted continuously, whereas, the employers are of the opinion that the ‘labour laws in the country seek employment at the cost of employability’ (Business Standard, August 6, 2005).
The three main labour laws that are the major point of debate in this regard are the Industrial Disputes Act (1947), the Contract Labour Act (1970) and the Trade Union Act (1926). But though on one hand we have the accusation on the rigid labour laws, on the other hand this argument has been contested on grounds that there are weak linkages between labour regulations and industrial outcomes. Some of these studies found that neither employment growth nor fixed capital investments of firms were constrained by labour laws. So, in this context of current debates related to rigidity of labour laws and hence the impediments to employment generation in this sector, it becomes extremely important to understand firstly the jobless growth in organized manufacturing since 1980’s and especially in the post reform period; secondly the need for flexible markets and skill development in the country; thirdly the labour laws that are the current concern; fourthly the task force and SNCL recommendations and the objections to those recommendations and lastly the need for safety nets and social security for labour in the current wake of flexible labour markets.
NEED FOR FLEXIBLITY IN LABOUR MARKETS AND LABOUR LAWS
Eyck (2003) states three basic theories for perceived need for flexibility in labour markets. The first one emphasizes on the need for labour force to change according to the market fluctuations which happens because of increase in specialized products that requires firms to quickly change the size, composition, and at times the location of the workforce. The second emphasizes on lowering the labour costs and increasing productivity because of rising competitiveness. The third is the political economy perspective which advocates free markets where there would be no government intervention and interference of trade unionism. He says that this kind of new employment relations and occupations have the potential to generate more employment and also make available a range of opportunities to both workers and employers. So in for any state to achieve this kind of flexibility would depend on the how it will be introduced through legislative reforms. He also mentions that “in those countries where labour market rigidities are caused by excessive legislative regulation, flexibility tends to focus on how national legislative reform may grant greater freedom for individual employers or social partners to negotiate the terms of flexibility”.
The basic idea behind flexible labour markets was ‘market fundamentalism’ put forward by Stiglitz (2002) as stated by Sharma (2006):
“…free market forces are efficient and Pareto optimal. The free play of market forces results in employment of resources at the market clearing prices; this leads to both efficiency (as almost all resources are employed) and equity (all are rewarded according to their marginal contribution). Regulation of the market by state leads to deviation from full employment of resources. Hence, attempts should be made to remove as many of these imperfections as possible so as to achieve full employment of resources and optimal social welfare. In the case of labour market, trade unions and protective labour legislations are said to be market distorting agents, which curtail the free operation of the market forces to ensure full employment of labour.”
Sharma (2006) states that there is a ‘strong’ argument for labour market regulation to enhance investment and employment which would bring about equality in the labour market and provide for flexibility in free entry and exit. He says that because of excessive institutional interventions markets do not clear and make wages ‘sticky’ which affects the freedom of employers to adjust the quantities of resources leading to unemployment. Hence, in order to protect the existing employees, potential employees (even retrenched workers) remain unemployed or enter the unorganized sector with no social security or political power.
Sundar (2005) opines that employers view flexibility in the labour markets as essential because in this era of economic liberalization and growing competition between firms and countries, production should be organized to suit the changing market conditions. This would promote economic growth and also generate jobs. He mentions that the Second National Commission on Labour also advocates the need for flexibility in the labour markets saying that it would promote ‘competitiveness’ and ‘efficiency’ in the current wake of globalization and rapid technological progress.
According to Dr. Rangarajan (2006), in order to achieve faster growth rate emphasis should be laid on labour intensive sectors by skill development of the labour force and flexibility of labour laws. He also stressed on the fact that flexibility is not just related to ‘hire and fire strategy’ and that business units will have to function under legitimate restrictions. Flexibility in labour laws has also been advocated by the Planning Commission Deputy Chairman Mr. Montek Singh Ahluwalia. According to him flexibility in labour laws would attract more investment and would be able to create more jobs albeit ruling out the hire and fire policy (The Hindu Business Line, 2006). Debroy (2001) mentions that labour market flexibility varies from state to state and labour laws contribute to these disparities between states.
LABOUR LAWS THAT ARE OF CURRENT CONCERN
As we have seen above, bringing in flexibility in the labour market and hence flexibility in labour laws is therefore, an important matter in any agenda on structural reforms. The main accusation against the labour laws is that in the absence of flexible labour markets in the organized sector growth in output is not leading to a proportionate growth in employment hence the employers are going for more capital intensive production processes because of labour becoming a fixed input. Hence though the labour laws are meant to protect the jobs of the workers, the scope for creation of more job opportunities in future is being lost. Therefore India’s comparative advantage of enormous labour abundance is not being adequately utilized because of the high wage lands created by the labour legislation in the organized sector (Debroy, 2001). There is a lack of consensus amongst the employers and workers which is being an impediment to any proposed changes in the labour laws. To understand this, we first begin with a brief description of the labour legislation and then move on to the particular laws that are the major causes of concern.
Under Article 246 of the Indian constitution, issues related to labour and labour welfare come under List –III that is the Concurrent List2. Exceptional matters related to labour and safety in mines and oilfields and industrial disputes concerning union employees come under Central List. In all there are 47 central labour laws and 200 state labour laws. The three main acts that are the cause of contention are the Industrial Disputes Act (1947), the Contract Labour (Regulation and Abolition) Act (1970) and the Trade Union Act (1926).
Industrial Disputes Act (1947)
The Industrial Disputes Act provides for machinery and procedure for investigation and settlement of industrial disputes and applies to all industries irrespective of size. Apart from this it has conditions for lay offs, retrenchment and closure of an industry. It has 40 sections with five chapters and five schedules. Various amendments to the act were made since 1947. The main amendments were as follows: 1972- any industrial establishment employing more than 50 persons would have to give 60 days notice to the appropriate government before the closure of the industry stating reasons for the closure, 1976- a special chapter (Chapter V-B) was introduced which made compulsory prior approval of the appropriate government necessary in the case of lay offs, retrenchment and closure in industrial establishments employing more than 300 workers, again in 1982- lowered the limit of the employment size to 100 for mandatory permission before closure and increased the number of days of notice to 90 days. In 1984, this amendment was again redrafted and lay offs, retrenchments and closures in establishments having more than 100 employees had to follow the same procedures for seeking permission from the government.
The inclusion of Chapter V-B and its consecutive amendments is construed as causing rigidity in the labour market. This provision means that if establishments employing more than 100 workers may need to lay off some workers, they have to seek permission from the government. An example cited by Nagaraj (2007) best explains how stringent are the rules of this clause and hence how it forms the heart of the current dispute on labour market rigidity. He says that according to this provision, employers and employees are expected to inform the labour commissioner in case of any dispute. Hence, in order to retrench a single worker, the employer has to seek the permission of the labour commissioner (in case of factories employing more than 100 workers) (Anant, et al, 2006). Besley and Burgess (2004) in their study found that the amendments of this act by states taking in the interests of the workers lowered their output and employment levels which also led to poverty. They also experienced reduced investment in their organized manufacturing. Bhattacharya (2006) however, has a different opinion. In his article on the review of papers relating labour relation to industrial performance, he criticizes Besley and Burgess (2004) saying that though there were two approaches to understand the effect of amendments of the ID Act (1947) on manufacturing performance, the first approach gives conflicting results and the second approach which studied the variations in the state level amendments to the ID Act was based on a ‘flawed’ index of regulation. But still he advocates for reforming labour laws by rationalizing them, avoiding inconsistencies and making compliance less arduous. He also raises an important point saying that where organized manufacturing sector comprises of only 6 per cent of the total labour force, the rest 94 per cent being in the unorganized sector, where chapter V-B is applied to the smaller figure, whether reforming labour laws would make any difference to the national employment situation in spite of labour flexibility creating employment in this small portion of the sector.
Section 9 A of the act has also been a cause of concern. It lays down conditions for service rules, according to which employees should be given at least 21 days notice before modifying wages and other allowances, hours of work rest intervals and leave. It has been said that this could cause problems when employees have to be redeployed quickly to meet certain time bound targets and also could constrain industrial restructuring and technological upgrading.
An important negative effect of the Chapter V-B is that foreign investors who are keen on investing in labour intensive countries are dettered from investing in India, whereas other labour intensive countries that have a strong export orientation has benifitted in terms of more foreign investment in their countries and creation of high quality employment based on exports (Report of Task Force, Planning Commission, 2001).
Contract Labour (Regulation and Prohibition) Act (1970)
There is a cry amongst workers that the Contract Labour act is been flouted by employers. They say that in the event of contract workers being abolished in a firm, they should be absorbed by the firm (Sundar, 2005). It is said that contract labour allows flexibility and permits outsourcing but provisions of the Contract Labour Act was never meant to protect contract labour. First in 1960 and then again in 1972, there was a ruling by SC that if the work done by a contract labour is essential to the main activity of any industry, then contract labour in that industry should be abolished. It was this ruling that affected flexibility. In different judgement in different years, there was a need for clarification whether after abolition of contract labour whether they should be absorbed as permanent labour in the industry or not. There was an argument about whether Contract Labour Act should be done away with. But the problem lies in the fact that decisions on abolition would then slip back to industrial tribunals from government (Debroy, 2001).
The workers say that if the government changes the definition under the Act from ‘perennial and permanent jobs’ to ‘core and peripheral jobs’, then the employers would take the benefit of it to engage contract workers in only peripheral jobs as these kind of jobs constitute the most. According to them it would finally result in employers employing only contract workers and would ‘sack’ all regular workers. Hence, instead of generation of more jobs as promised by the employers, it would lead to more exploitation and poorer working conditions. But the employers have a different opinion. They say that more emphasis should be laid on core activities and peripheral activities should be contracted out as that would be more efficient and would lead to lesser costs and for that they should have greater freedom to employ contract workers. So employers are of the opinion that the Act should be scrapped (Sundar, 2005).
But trade unions are of a different opinion. For instance, in the 41st Indian labour Conference held in New Delhi on April 2007 (see Sen, 2007), members of CITU had proposed amendments to the Act which not only says that they are for it but also looking forward to strengthening it. The following was a list of amendments suggested by them:
“1) Redefining employment relationship on the basis of the linkage between the final recipients of the gains of production, i.e., the principal employer, vis-à-vis the producer at the lowest rung of the production process deployed through various decentralised agencies.
2) Outsourcing should be treated as contract and should be covered by Contract Labour-Legislation.
3) Reiterating the equal pay for same and similar work both for regular and contract/temporary workers in the main body of the legislation (at present similar provision is there in the rules framed under the present statute.
4) Regularisation of contract workers deployed in permanent/perennial jobs in the permanent roll of the company and stringent punishment (This is required to negate the pernicious impact of the Supreme Court Judgments on rights of the contract workers)
5) Payment of the minimum wage prevalent in the company/establishment to the contract workers of the said company if it is higher than the statutory-Minimum-wage
6) All contractors must obtain license from the appropriate authority for running its operations.
7) Even if contractor changes, the contract workers engaged by previous contractor should continue to be deployed without any interruption and change in service conditions: this provision should be incorporated as a condition in the tender for appointment of contractor.
8) The Annual Return on employment to be submitted to labour department by the principal employer should compulsorily include details of the contract workers including the contractors and their licence-details.
9) In case of death owing to accident or otherwise in course of employment, contract workers should be paid same compensation as the regular-workers
10) The Principal employer should be held responsible for implementation of all labour laws for the contract workers including maintenance of employment register, submission of annual returns to labour department, PF, ESI and other social security measures and workmen's compensation any violation of those laws should attract stringent punishment on the principal employers as well.
11) A separate inspectorate with adequate manpower has to be established in all states only for the purpose for inspection of the contract-employment-related-matters.
12) Contract labour monitoring board must be constituted in all states and central level with the representatives of unions, employers and government to monitor implementation of labour laws in respect of contract workers. etc.
13) Appropriate legislation to negate the pernicious impact of the Supreme Court judgment in setting aside its own judgment (Air India case) in the case Vs SAIL”.
Regarding the issue of minimum wages, a chairman of an automotive component maker had said that there is a need to liberate labour laws so that it brings greater space for contract labour which is just not about hire and fire but which will have tenure of three years or so and more temporary workers. He also added that if the minimum wages are low then the government must take initiative to raise the level of minimum wages (Business Standard, August 6, 2005). In a situation where permanent workers are almost impossible to be removed according to the employers and contract workers are seen as a ‘necessary evil’ and an easier option, one needs to pay attention to the growing grievances of the contract workers in the industries. There have been recent cases of agitation by the contract workers in certain organizations including the Hyundai Motors case in May 2007 and the NTPC-Simhadri case in January 2007 where contract workers in the first case had been agitating for pay hikes and in the second case they went on for a strike demanding for increase in allowances.
Trade Union Act (1926)
Firstly, it should be mentioned that there is no nationwide law that recognizes trade union and also there is no compulsion for the employers to enter into a collective bargaining so even though there is a right to form an association or form a trade union, it is not mandatory for an employer to recognize it (Anant et al, 2006). Secondly, it allows outsiders to be office bearers and members of unions. So workers who are not directly employed under a particular employer also stand against that employer in the event of any dispute. The whole idea of outsiders intervening in disputes between the workers and employers of a particular organization does not exist in other countries (Nath, 2006). Citing an example of Trade Union Act in Singapore, Nath (2006) says that while trade union policies in Singapore aim at promoting country’s productivity and economic growth, India’s policies restrict productivity and economic growth. Thirdly, Nath (2006) points out the lack of democracy in trade unions in India which leads to inexplicable behaviour of the unions and their office bearers. He says that while countries like UK and Japan follow a democratic way of electing their members by letting the unions consult members through a process of secret ballot, laws in India follow a different strategy. There is no representativeness through secret ballots and they also do not hold any strike ballot before any strike.
It has been said that there has been a long term trend in India of losing number of persondays because of strikes and lockouts. Though it is said to have decreased since 1985 yet compared to other countries it shows a greater loss of persondays. The average annual loss of person days due to strikes and lockouts in India is said to be the second highest in the world (Nath, 2006). An example would be the strike at Uttarpara’s (Near Kolkata) Hind Motor plant by one of the five registered trade unions protesting against the alleged non-payment of wages for the past two months. This plant produces ambassador cars. The strike continued for over a month. First the management calls the five trade unions for talks then calls off the meeting when the unions do not respond to their invitation. The management stated that the strike was unlawful whereas the president of one of the 5 trade unions says that according to the high court verdict their strike was a lawful trade union activity. This resulted in a supply crunch of ambassador cars. According to an official of a car distributor company instead of selling 100 ambassador cars in a month in the month of March 2007 when the unrest took place, he was able to sell only 70 cars because the purchase orders were not met because of the lack of supply (The Hindu Business Line, 2007). So one can imagine the amount of loss incurred due to such strikes. The Economic Survey (2005-2006) though says that even if the number of strikes had come down since 1990’s but there was a sharp decline in strikes compared to lockouts. It gives a comparison of strikes and lockouts since 1999 to 2005.
Table 1: Strikes and Lockouts in Years 1999-2005

Year    Strikes    Lockouts

    No.    Mandays lost    No.    Mandays lost
1999
2000
2001
2002
2003
2004
2005 (till
Sept)    540 426 372 295 255 236 155    10.62
11.96
5.56
9.66
3.21
4.83
2.83    387 345 302 284 297 241 185    16.16 16.80 18.20 16.92 27.05 19.04 4.47
Source: Economic Survey (2005-2006) Table 7.21 pg-150
The above table shows that overall there has been a reduction in the number of strikes and lockouts in the industries since 1999 to 2005. But an important feature that is noticeable is that there has been a greater reduction in the number of strikes compared to the number of lockouts over the years. The number of strikes came down form 540 in 1999 to 155 in 2005 but the number of lockouts came down to 185 in 2005 from 387 in 1999. The loss in mandays was also more in the case of lockouts. Figure 1 above shows the trend of strikes and lockouts. We see that after 2002 there has been a decrease in the number of strikes compared to that of lockouts.
GOVERNMENT AND OTHER RECOMMENDATIONS
In the prolonged situation of ‘jobless growth’ and current wake of labour unrest, the government had come up with certain recommendations to reform labour laws, first in 2001 in its Report on Task Force on Employment Opportunities, by the Planning Commision of India and again in 2002 when the Second National Commision on Labour (SNCL) had come up with its recommendations. The task force points out the various problem areas in the labour legislation where immediate reforms were needed. It focuses on the three main Acts and their features and suggests changes. Other than Chapter V-B in the Industrial disputes Act which is a major cause of concern, another main area where it emphasizes was Section 9A which concerns the job content and the area and nature of work of an employee. It says that in case the job content or the nature of work needed to be changed of an employee or group of employees, a 21 day notice has to be given to the employee and in practice also required the consent of the employee. This proves to be a serious impediment in case of a firm trying to introduce a new technology where some workers need to be retrenched. If the employers want to redeploy the workers, it becomes virtually impossible if the employee or employees do not give their consent. Had the process of retrenchment been easier to be implemented, the workers would have been willing to accept redeployment in order to avoid retrenchment. Apart from retrenchment the task force also points out another problem of dismissal of any worker. It says that though in case of dismissal no prior government approval is needed, yet in practice it is difficult because of unions which lead to protracted litigation. It mentions that this inflexibility proves to be severe for smaller establishments that are more labour intensive and other establishments with large number of workers because the transactions cost involved in such cases are too high.
Though the SNCL had come up with certain recommendations taking into broader interests of the employers and the workers into consideration, its recommendation to use contract labour in non-core activities and also to some extent in core activities first of all creating a distinction between core and non-core activities instead of perennial and non-perennial activities was vehemently opposed by trade unionists and also employers to a smaller extent. First of all the trade unionists do not believe that greater flexibility in the labour market would lead to employment generation, they are of the opinion that even if jobs are created they will be of poorer quality. Their greatest threat is the freedom of ‘hire and fire’ that will be given to the employers would be a threat to their income security and also would lead to greater unemployment in the long run instead of more employment opportunities as promised. They fear that it would also affect their bargaining power in the organized sector. The employers, on the other side have also expressed their disagreements with some of the recommendations. They were dissatisfied with the commission not raised the cut off limit for closure permission to establishments with 1000 and more workers that was earlier indicated to them (Sundar, 2005). Though they have been satisfied with other recommendations and want them to be implemented.
Another major issue put forward by many economists and policy makers is the multiplicity of labour laws. Unification and harmonization of the labour laws has been highly recommended by Debroy (2001, 2005). He says that apart from the seventh schedule there are separate statutes for cine workers, dock workers, motor transport workers, sales promotion employees, plantation labour, working journalists and workers in mines. There are varied definitions on child, contract labour, wages, employee, workman, factory, industry, etc. In the Case Law6, under the ID Act; a lot of things come under the categorization of industry. So, there is a suggestion to unify all the definitions to give way for a Uniform Labour Code where for instance, all provisions related to social security or wage can come under single statutes respectively. Debroy (2001) also points out excessive state intervention in areas other than industrial relations. He gives an instance of Section 10 of factories Act where there are provisions regarding number of spittoons, Section 43 where there are rules regarding space for keeping clothes that are not worn during working hours, etc. he says that there are numerous such provisions where state intervention is generally not required.
ENFORCEMENT OF LABOUR LAWS IN THE COUNTRY
An important function of the Central Industrial Relations Machinery (CIRM) is the enforcement of labour laws. The machinery enforces various labour laws including Minimum Wages Act, 1948, Payment of Wages Act, 1936, Contract Labour Act, 1970, Inter-State Migrant Workmen Act, 1979. According to the Annual report, 2005-06 of Ministry of Labour, there are 1.5 lakh establishments in the central sphere. The inspection officers of the CIRM inspect these establishments under different labour enactments through routine inspections and prosecute the persistent defaulters in respect of major violations. The following table shows the number of inspections, number of prosecutions and number of convictions that have taken place over the years.
Table 2: Enforcement of Various Labour Laws

Year    No. of Inspections    No. of Prosecutions    No. of Convictions
2004-05    38250    10264    6738
2005-06    40306    13457    8105
2006-07    30834    10681    10152
Source: Annual Report, Ministry of Labour (Various Issues).
From Table 2 above, we see that the number of inspections in 2006-07 has gone down compared to the previous year and also correspondingly the number of prosecutions. Even though the number of convictions in 2006-07 is more than the previous years of 2004-2005 and 2005-06, yet instead of an increase in inspections and prosecutions, a decrease is evident.
The CIRM is supposed to be giving special emphasis on the enforcement of certain acts like Minimum Wages Act, 1948 and the Contract Labour Act, 1970. the following table gives the figures for inspections, prosecutions and convictions for the Minimum wages Act, 1948 over the years 1885-86 to 2006-07.
Table 3: Enforcement of Minimum Wages Act, 1948

Year    No. of Inspections    No. of Prosecutions    No. of Convictions
1985-86    9217    5956    -
2001-02    13222    3903    2019
2003-04    15212    5260    3904
2004-05    18587    8838    5599
2005-06    19815    8906    5801
2006-07    12392    4620    4616
Source: Annual Report, Ministry of Labour (Various Issues). Figures for 1985-86 were obtained from Anant et al, 2006.
The table above shows that though there was an increase in the number of inspections over the years since 1985, year 2006-07 again shows a decline in the number of inspections. The prosecutions and convictions on the other hand have been quite tardy.
THE SOCIAL SECURITY CONCERNS
In the wake of international competitiveness and the need for flexibility in labour markets, it becomes increasingly essential to accommodate social security concerns in reform movements. Extension of the social security benefits to cover majority who had been excluded, is perhaps the greatest challenge facing the developing countries today. In fact Ghai (2002) points out to a certain correlation between the degree of economic progress in a country and the development of its national security system wherein those countries with a higher per capita income and larger proportion of working population in the formal sector had more social security due to state subsidized schemes. Though the schemes had varying degrees of effectiveness depending on countries and systems are social security are hence, very complex in these countries. In the developing world, majority of the population is bereft of even basic social security. For instance in India, social security covers only 6 per cent of the workforce that belongs to the organized sector. The remaining 94 per cent that is in the unorganized sector and those who are self employed has very limited social security. The social security system in India is indeed dualistic in nature where only a very small proportion of the workforce which is in the organized sector are in a relatively privileged position to have access to protective social security benefits whereas the remaining majority remains unprotected due to not being able to organize themselves (Datta, 2001). In the organized sector the main social security programmes include Workmen’s Compensation Act, 1923 for accidents in the place of work, Employees’ State Insurance Act, 1948 for health benefits, Maternity Benefit Act, 1961 for expectant women workers and retirement benefits like Payment of Gratuity Act, 1972 and Employees’ Provident Fund Act, 1952. But inspite of a wide coverage the schemes lack appropriate planning, inappropriate coverage, the applicability depends on wage ceilings, number of employees in an establishment, type of establishment, etc. The five year plans of government do not deal with the social security issues (Anant et al, 2006). On the other hand on the unorganized sector whatever minimum level of social security exists, they have not been implemented appropriately.
Sharma and Mamgain (2001) opine that Indian Labour Market cannot be called rigid since they attribute the decline in employment in manufacturing to the structural and technological characteristics of the industrial growth. Although they say that stringent job security measures in the organized manufacturing may be one of the reasons but according to them it cannot be the sole reason for the decline. Hence irrespective of the impact of ‘rigid’ labour legislation to employment, they opine that a degree of protection to labour would lead to inflexibility of labour adjustment that is required for restructuring of the enterprises to adjust to competitiveness. This leads to slow and tardy process of adjustment of the firms. Hence, several issues regarding social security comes into picture that need attention. The concept of social security also hence, needs to be widened to encompass the changing patterns of employment keeping in mind the various types and groups of workers and social security programmes made accordingly. Ginneken (1998) emphasizes on the need to improve the existing systems. Guhan (1998) points out that the existing formal security system not only has structural problems but also has administrative problems hence the reform agenda cannot be confined only to ‘piecemeal improvements to individual enactments’ but should also include ‘radical restructuring of the entire framework along with legal and administrative reforms’.
From the table below, we can see that Singapore ranks first in terms of regular employment protection whereas India ranks 69th in terms of regular employment protection. So any measures to enhance the growth of employment and productivity in the country must take into consideration the social security issues of the workers. The SNCL report also advocates for a well defined social security package that would benefit workers in both organized as well as unorganized sectors (Sethuraman, 2002).

Table 4: Regular Employment Protection Index of Select Countries

Country    Regular employment protection index    Rank
Singapore    0.11    1
Bangladesh    0.38    39
India    0.51    69
Pakistan    0.57    72
Source: Edited from Economic and Social Survey of Asia and the Pacific, 2006 (Table: III.7)
CONCLUSION
In the context of above discussions, there are many things needed to be looked upon. The first is that of the whole question of whether improving the status of the organized sector manufacturing by reforming the labour laws would practically make a difference to the growth of employment considering that labour in the organized sector forms only 6 per cent of the total labour force the rest being in the unorganized sector. Secondly, whole debate on whether rigidity of the labour laws is hindering growth of the manufacturing sector and hence employment generation in this sector seems vague if large scale flouting or violations of labour laws are taken into consideration. Again, even though steps involving greater flexibility in labour laws making it easier to implement greater flexibility in the labour market are taken leading to creation of greater employment opportunities, one need to know whether this would lead to long term generation of employment creation or would it result in just a short term planning. And above all any step should take into account the interests of both the employers and the workers with greater emphasis on social protection of workers. Because labour in the new industries would face different types of insecurities like job security in the wake of contractual work, lack of minimum wages legislation, housing and health facilities and most importantly old age benefits. Emphasis should first and foremost be laid on decent work practices along with proper implementation of minimum wages in both formal and informal sectors which call for commitment from he employer’s side as well. For instance, if a small level trader in the informal sector hires a handful of workers we do not know whether the trader himself is capable enough to provide minimum wages to its handful of employees. Another instance cited by Datta (2001) where he points out the fact that in Mumbai since the Mathadis did not have an employer and because their work did not fall under any ‘Scheduled Employment’, they were bereft of the benefits of the Minimum Wages Act. Another important issue is the enforcement of labour laws which is of particular concern. So any alternative framing of labour laws need to reconsider and assess these aspects before moving forward with the conception of ‘rigid labour laws and its hindrance to employment growth’.
 
GLOBALIZATION : ITS IMPACT ON LABOUR IN INDIA
The Contours of Globalization
Globalization is shaping a new system of international economic relations - be it in the fields of investment, production, trade, finance or technology. The canvas of globalization, however, is very vast as it means different things to different people. The wider view equals globalization with the notion of "Vasudhaiv Kutumbakam" (the whole world is one family) and the narrower economic interpretation with increasing the ratio of foreign trade and investment in a country’s output. On a philosophical plane, India has been a votary of globalization since ages. It is reflected in hymns like 'Aa no bhadra rutavo yantu viswatah' (let noble thoughts come from all over the universe).
Manusmriti says: "Sarve bhavantu sukhinah, sarve santu niramayah, sarve bhadrani pashyantu, maa kaschit dukhabhag bhavet". The Saints and seers in ancient India had a global view of mankind in which all human beings could lead a happy life, nobody practised deceit, everybody wished happiness for others, and nobody suffered hardship (Krishna, 2002). Globalization, however, refers to a process of deepening economic integration, increasing economic openness and growing economic interdependence between countries in the world economy. This process is driven by the lure of profit, and the threat of competition in the market.
The Second National Commission on Labour, while quoting the Human Development Report of South Asia, 2001 has defined globalization as:
“The free movement of goods, services, people and information across national boundaries. It creates and, in turn, is driven by an integrated global economy, which influences both economic as well as social relations within and across countries. The opening up of the economy increases competition internationally as well as externally, leads to structural changes in the economy, alters consumer preferences, life styles and demands of citizens” (NCL, 2002).
The definition of globalization with intellectual rigour notwithstanding globalization has been viewed quite differently from the individual perspective. A few such opinions recorded during the dialogue on Social Dimension of Globalization (ILO, 2004) provide interesting insights :
•    “We were sleeping  on the shore when  a  big wave came,”  said  a participant.
•    A participant in the Philippines said, “There is no point to a globalization
that reduces the prices of a child’s shoes but costs the father his job.”
•    A participant from Poland gave an analogy of a force which could be
harnessed : “If globalization is a river, we must build dams to generate
power.”
In other words, globalization in its scope, content and application has become quite controversial. According to Stiglitz (2002) globalization has the potential to enrich everyone in the world, particularly the poor. But the way globalization has been managed, including the international trade agreements that have played such a large role in removing barriers, and the policies that have been imposed on the developing countries in the process of globalization, need to be carefully and critically scanned.
Current Scenario
Globalization is a complex phenomenon that has had far-reaching effects. Not surprisingly, therefore, the term “globalization” has acquired many emotive connotations and become a hotly contested issue in current political discourse. At one extreme, globalization is seen as an irresistible and benign force for delivering economic prosperity to people throughout the world. At the other, it is blamed as a source of all contemporary ills.
The social impact of globalization is not confined just to countries that have been marginalized from the process or have been less successful in their attempts to integrate themselves into the global economy. Even in the relatively successful countries significant social costs are involved in the form of transitional adjustment costs. China, for example, despite a sustained high GDP rate of growth, has faced the problem of transitional unemployment that is likely to intensify with the stepping up of the reform of State-owned enterprises. Similarly, as evidenced by the Asian financial crisis, even countries with exemplary positive records of economic performance can suffer heavy social costs.
The fallouts of growth have also been unevenly distributed across countries, among both industrialized and developing countries. In terms of per capita income growth, only 16 developing countries grew at more than 3 per cent per annum between 1985 and 2000. In contrast, 55 developing countries grew at less than 2 per cent per annum, and of these, 23 suffered negative growth. At the same time, the income gap between the richest and poorest countries increased significantly.
This uneven pattern of growth is shaping a new global economic geography. The most striking is the rapid economic growth in China over the last two decades, together with a more gradual but significant improvement in the economic growth performance of India and two countries which together account for more than one-third of the world’s population.
Though some countries have benefited from globalization, in several countries there has been a phenomenal reduction in the growth of employment opportunities. Many workers in the organized sectors lost their jobs.
The official line from the former Prime Minster Atal Behari Vajpayee’s Economic Advisory Council is unequivocal, arguing, “Globalization is an unavoidable process which is taking place independent of us. It forces us to cope with it. There is no room in a globalised world for an economy delinked from world trade and foreign investment.” The Advisory Council candidly says, “The truth is that if we do not reform rapidly, and position ourselves to compete, we will be marginalized. There is no divine dispensation that gives India alone the power to survive and prosper as an isolationist island in a globalized world.”
Under the new Prime Minister Mr. Manmohan Singh that conviction is undiminished. Nonetheless, universal consensus on this view is far from apparent. As a Financial Times columnist wrote in October 2004, “Globalization means many things to many people, particularly in India, which is host to probably the widest range of anti-globalization groups in the world.” ( Jessica Einhorn, Business Line – 4.3.2005)
In India economic reform process got accelerated after 1991. In 1991, the country’s GDP growth rate had dipped to a snaillike 1.1 per cent. In the years of Rao’s Prime Ministership, India has witnessed an average growth of 5.5%. Today, successive prime ministers have started calling for 7-8 per cent growth. Other comparisons of the situation in 1991 and 2004 are more dramatic.
In the early 90’s, inflation was at 17%. Now the Government is worried when it crosses 7%. Foreign Direct Investment then was $133 million; it annually measures about $4 billion today. Forex reserves were $1 billion then; today, they stand at $130 billion and many experts perceive a crisis of abundance. The market capitalization of Indian bourses has increased from Rs.1,103 billion to Rs. 15,560 billion; and exports from $18 million to $64 billion during the same period. (Business India – January 3-16, 2005).
The 1991 crisis forced the Indian political establishment to embrace reforms quite simply because the status quo was not viable. While the first emphasis was to tackle the macro-economic crisis, success in that arena also paved the way for reforms of domestic industrial investment policy, foreign investment regulations, and foreign trade.
Since the dark days of 1991, India has come a long way. It has healthy foreign exchange reserves (despite high levels of domestic debt), a booming software and services export market, and a burgeoning knowledge economy. Clearly, India has tremendous potential to benefit from globalization, but there is also consensus that the challenges confronting Indian development are substantial, even daunting.
India remains handicapped by enormous infrastructure and institutional (labour and capital) constraints. The question is not whether India has not begun to produce an impressive record in growth, employment, and poverty reduction, but rather how to overcome the obstacles impeding even faster progress, as the global economic system becomes increasingly competitive.
According to the Report of the 2nd National Commission on Labour, the perceived benefits of globalization are as follows:
Ø Sustained economic growth, as measured by gross national product is the
path to human progress. Ø Free markets, with little or no intervention from government, generally
result in the most efficient and socially optimal allocation of resources. Ø Economic globalization, achieved by removing barriers to the free flow of
goods and money anywhere in the world, spins competition, increases
economic efficiency, creates jobs, lowers consumer prices, increases
economic growth and is generally beneficial to everyone. Ø Privatization, which shifts functions and assets from government to the
private sector, improves efficiency. Ø The   primary   responsibility   of   the   government   is   to   provide   the
infrastructure necessary to advance commerce and enforce rule of law
with respect to property rights and contracts.
However, there is a growing realization that globalization is not an unmixed blessing. It can at best be an outcome, not a prerequisite for successful growth strategy.
The following are among the several demerits or pitfalls of globalization:
    The process of globalization seems to be driven by a few in a uni-polar
    world whereby it is benefiting few and hurting many.
    It is another form of imperialism.
    It is leading to growing inequalities between the rich and the poor, both at the level of individuals and among countries.
    It is destroying jobs and local communities.
    It is ruthless, root less, jobless, fruitless…(UNDP, 1996).
Changes in Labour market structure
Globalisation has resulted in global division of labour. The huge expansion in cross border capital, trade technology and information flows have become a defining feature of globalisation. The advent of WTO coupled with the lending policies of IMF and the World Bank have resulted in globalisation and privatization. The poor worker in a developing country may be working for long hours but his productivity is low as this worker lacks access to technology and skills. Productivity has become a central issue.
Unemployment weakens the bargaining position of the workers and enables employers to hire workers on terms and conditions of work they dictate. Some of the emerging flexible labour categories are – casual and temporary workers, consultants, agency workers, home workers, daily workers, part-time workers and ‘badli’ workers.
Advent of libralisation, privatization and globalisation
Policies of privatization and disinvestment are being pursued as part of economic reforms in India. The objectives of disinvestment basically are:
•    To enhance budgetary receipts.
•    To minimize budgetary support towards loss making units.
•    To improve performance by bringing out changes in ownership and
performance
•    To ensure long term viability and sustainable levels of employment
in public sector enterprises.
•    Broad based dispersal of shares, especially in the profit-making
public sector enterprises among investors (Venkata Ratnam &
Naidu 2002, p. 19).
Three broad reasons why privatization is being pursued are greater economic democracy through increased private initiatives in economic activities, achieving higher levels of economic growth and employment, and reducing budgetary deficits. In other words, privatization, basically, refers to removal of administrative controls and regulations and transfer of public enterprises to private sector.
Whatever form it takes, social effects of privatization or restructuring will be as follows :
•    Initial overstaffing will lead to rationalization, retrenchment and
displacement of labour
•    Informalisation of the economy
•    Stagnation of employment in organized sector
•    Growing casualization of labour
In dealing with the redundant workers, several options are available though not all are equally attractive in solving the problem of unemployment. These are:
    Voluntary retirement scheme (VRS)
•    Cash compensation or golden handshake
•    Retraining of workers
•    Redeployment
•    Counselling
•    Eventual Rehabilitation
•    Creation of unemployment benefit and social security.
Small Scale Industries
So far as India is concerned, the small scale industrial sector accounts for about 28 million units, 16 million employment and production of over 7500 items with export share of about 34%. The New Economic Policy pursued since 1991 has brought this sector face to face with competition through delicensing, reduction in customs and excise duties. Several small scale units have withered away but those who have adopted modern production practices like auto ancillary sectors have benefited substantially.
Benefits of Globalisation
The global economy is undergoing a major change-shift towards knowledge-based growth. India is preparing for and participating in the emerging knowledge-based economy. The new economy and high-tech sectors are exhibiting openness, competitiveness and knowledge intensity. Using its intellectual manpower India has developed an expertise in producing generic drugs and has been able to increase its exports in a highly competitive market. The international capital market is providing increased opportunities to India to attract FDI. India’s established credentials in IT and ITEs can be leveraged to develop a competitive advantage in other fields such as different branches of engineering, scientific research, bio-technology, medicine, pharmaceuticals, agriculture and education. Further, textiles and garment industry will expand with the phasing down of quantitative restrictions under Multi Fibre Agreement (MFA).
Internationalisation of Production Chains (Sub-contracting, outsourcing arrangements)
India is emerging as a major hub in the pharmaceutical sector. There are global alliances (as between GlaxoSmithKline and Ranbaxy Laboratories) and acquisitions (like Ranbaxy buying RPG Aventis in France, Wockhardt acquiring CP Pharmaceuticals in the UK and Zydus Cadilla buying Alpharma in France) (Oberoi & Chhabra,1990).
There is emergence of a buoyant private sector with industries like Tatas, Ranbaxy, Mahindra & Mahindra etc. becoming conglomerates. Such companies not only assimilate foreign capital and know-how but also display the ability to withstand MNC competition and becoming global players themselves.
India has produced global players in software like TCS, Wipro, Infosys, I-flex, Satyam, HCL Tech and Mphasis. NRIs are also marching ahead; after its American acquisition of Wilbur Ross’s International Steel Group, Lakshmi Mittal’s newly named Mittal Steel Company straddles four continents and fourteen countries to become the largest steel producer in the world with a 70 million tonne capacity. Even the public sector companies in India are becoming multinational majors. ONGC, GAIL and Indian Oil have investments in countries like Angola, Iran, Iraq, Libya, Myanmar, Russia, Sudan, Syria, Vietnam, Sri Lanka and Mauritius.
India has been a beneficiary of sub-contracting and outsourcing arrangements, thereby becoming an integral part of the global production chain. Outsourcing (the contracting out of business functions previously performed in-house), particularly, the increasing trend of offshoring (the contracting out to foreign as opposed to domestic affiliates), has prompted many to suggest that the phenomenon is leading to a re-allocation of jobs from developed to developing economies (For example, according to a study, in the ICT-using sector, 3.3 million jobs in   America will move offshore by 2015.
Impact on Trade Union organizations and their role in Social Dialogue institutions
Verification of membership strength of Central Trade Union Organizations is conducted by the Chief Labour Commissioner from time to time. BMS, INTUC, CITU, HMS and AITUC have emerged as the biggest five. They control the workers in coal, mining, ports and docks, railways, textiles, iron and steel, engineering and power sectors. The new entrant is Self-Employed Women’s Organisation (SEWA) which is a registered trade union and whose membership strength will be verified by the Chief Labour Commissioner as per a court directive. Several CTUOs like NLO, HMKP have lost their all India character.
Due to globalisation, contractualisation and casualisation and as a result of the entry of several multi-nationals, the unions have been losing strength and power ever since the reform process has begun. The public sector industries no longer can price their products on cost plus basis. According to a directive issued by the Department of Public Enterprises, the PSEs cannot depend on budgetary support for increasing the wages and allowances of the workmen of their work.
The mandays lost due to strikes and lockouts are very high compared to most other countries. Percentage of women members in trade unions that submit returns has increased but the figure is not a satisfactory one as a substantial section of women workers are engaged as ‘home workers’. Less than two per cent of the workers in formal and informal sectors of India are covered by collective bargaining agreements.
New Actors and the Emerging Dynamics
The industrial relations system comprises certain actors in a certain context. The actors are a hierarchy of managers or of workers and trade unions. Then, there are governmental agencies. In the post-liberalization, globalization era,   consumers and
community have begun to assert themselves and take a significant role. When the rights of consumers and community are affected, the rights of workers/unions and managers/employers are taking a back seat.
The court rulings are borne by the realization that wider public good matters most in preference to the narrow self interest of a minority. Workers and unions, in particular are asked to assert their rights without impinging on the rights of others, particularly the consumers and the community. Hence, the ban against bandhs and even restrictions even on protests and dharnas.
Increasingly, trade unions are getting isolated and see a future for themselves and their members only when they align themselves with the interests of the wider society.
Pro-labour Pro investor Policies: World over, when the State assumed a welfare role and adopted pro-labour policies, trade unions have grown in strength and power. When the State is neutral, trade union movement gets stagnant. When the State adopts pro-investor policies, trade unions are declining in power and influence, if not in number. In these circumstances, unless trade unions forge broader and wider alliances with the society – consumers and community and various civil society institutions, including non-governmental institutions – they find their power base dwindling. (Venkata Ratnam 2005).
Declining trade union density In the traditional strongholds of trade union membership – government and public sector – the workforce is declining due to non-filling of vacancies and the introduction of voluntary/early separation schemes. New employment opportunities are shrinking in these sectors. In the private sector, particularly the service and the soft ware sectors, the new, young and female workers are generally less eager to join the unions. Trade unions are still to conceive and implement meaningful strategies to make unionism relevant and appealing to these new and diverse workgroups.
It is mainly in the informal economy, thanks to the initiatives that the government is willing to consider in the realm of social security benefits, that there is a prospect of rise in trade union membership.
Here too, trade unions are finding an adversary in someone who is otherwise considered an ally: the non-governmental organizations operating under the guise of or as virtual trade unions.
The sickness, closure and non-viability of industries have forced the trade unions to re-orient their role to ensure survival of the industry. The workers appear to be willing to overlook their grievances as they are more concerned with retention of employment. Hence, they are not reporting grievances to unions. The reduction in employment has led to reduction in union membership making unions vulnerable. Issues such as survival of industry, maintaining competitive edge and productivity dominate collective bargaining. There appears to be a growing realization of the futility of a confrontationist attitude in the unions.
The threat of privatization and withdrawal of budgetary support looming large over the Ordnance Factories Board, with its nearly 40 factories manufacturing mainly defence equipment and ammunition, adopted strategies such as diversification of production for civilian market, marketing these products in domestic and international markets, stopping all recruitments, cutting over-time payment bills and going for I.S.O. certification. The federations/unions operating in Ordnance Factories have not opposed these strategies. More and more stress is given on R&D. TISCO has completely overhauled its production unit at Jamshedpur bringing in new technology. SAIL has modernized its plants at Durgapur and Rourkela.
Worker militancy replaced by Employer Militancy? Economic reforms introduced in India in 1991 signify India’s quest for global economic integration. If during the decade 1981-90, India lost 402.1 million man-days due to industrial conflict, in the subsequent decade, 1991-2000, the number has come down to a half: 210 million. This does not mean that the industrial relations situation has actually or substantially improved.
Workers are reluctant to go on strike because of fear of job insecurity, concern about the futility of strikes and recognition of the imperative need to consider the survival of enterprise as a prerequisite for job and income security.
Further, trade unions are hesitant in giving a call for a strike because it may lead to loss of jobs or closure of the unit. What is even more striking is that over 60 per cent of the man-days lost in the post-reform period was due to lockouts and less than 40 per cent due to strikes. It must be added that quite a few lockouts may have been preceded by strikes.
One measure of trade unions becoming more defensive than being on a more offensive and collision course with employers is seen from the shift in their actions from strikes to litigation.  Also, instead of pressing for higher wages and improved benefits, trade unions are pressing for maintenance of existing benefits and protection and claims over non-payment of agreed wages and benefits.
Collective bargaining
As discussed earlier and also in the Chapter III with the shift in level of coordination and bargaining from national/sectoral to enterprise/plant level, trade unions’ bargaining power is shrinking. Also, there is a gradual movement from parity to disparity. Since 1992 to date, over 100 of the 240 central public sector corporations did not have wage revision because the government announced that companies have to mobilize resources to pay for workers wages and that the government would no longer subsidize wage increases. (Venkatarantam 2005).
Other methods of dispute resolution
The conciliators both at the central and at the State level have started appreciating the impact of globalization on industrial relations and labour market institutions in the new perspective and are very sympathetic to the needs of the employer who has to face competition around the globe for their products. Accordingly, they have to make changes in the product design which entail changes in the working conditions. The workers have to retrain and improve their skills. Even, multi-skilling has become a necessity.
Workers who cannot adapt themselves to these new demands have to be given the option of going home through voluntary retirement schemes. Accordingly, the conciliation machinery is not compelling the employers to retain the existing work force under all circumstances. Interest disputes resolution through arbitration and wage boards are moving into the museum of history. The presiding officers in the arena of industrial adjudication have become more sympathetic to the needs of the managements in the globalized world. The appropriate Governments are generally permitting lay off, retrenchments and closures even though, they were adamantly, declining the same in the 70s and 80s. Even the apex court has become very strict about indiscipline and lethargy of the workers in the industry. Instances have been quoted earlier in this study.
As regards the changes in the industrial relations machinery, it is felt that inspection of establishments cannot be done away with. However, the process of inspection can be used to create awareness and to educate the employers and workers with regard to benefits of timely and genuine compliance. The role of inspector can also be modified so that he acts as a facilitator helping employers in complying with the provisions of the laws. Selective and purposeful inspections have to replace routine statistics oriented inspections.
Similarly, the conciliation officers need to be well aware of the new challenges posed by globalization before the employers and employees and equip themselves with necessary knowledge, attitude and skills to handle industrial disputes whose nature and dimensions will be very different from industrial disputes hitherto handled.
To be successful, they have to avoid 5 ‘A’s and promote 3 ‘H’s:
A1    …..    Anger    H1       …..     Honesty
A2    …..    Anxiety    H2                 Health
A3    …..    Annoyance    H3       …..     Helpfulness
A4    …..    Arrogance
A5    …..    Arguments
The process of globalisation has forced trade unions to be defensive and maintain a low profile. Therefore, there is a need for the industrial relations machinery to be more proactive and vigilant so that undercurrents of discontentment and grievances are detected in time as unions may not report the grievance in changed environment.
Labour Market Flexibility
Even within the organized sector, an increasing number of jobs are approximating the character of these in the unorganized sector as a result of the increasing labour market flexibility in the wake of globalization. A comprehensive survey of about 1300 firms scattered over 10 States and nine important manufacturing industry groups, shows that between 1991 and 1998, employment increased at the rate 2.84 per cent per annum (Deshpande et al, 2004). Non-manual employment increased at 5 per cent per annum whereas manual employment increased at 2.29 per cent. This increase is in total employment was brought by increasing the share of non-permanent employees and increase in manual employment by increasing the share of women workers.
Smaller firms grew faster than bigger firms. Firms, which increased sales, increased manual employment as did those which employed contract workers. Employers who increased fixed capital per worker reduced manual employment. Employers increased employment but only of one or other category of non-regular flexible workers.
It was found that as a whole over the 7 years of liberalization (between 1991 and 1998) dualism in the labour market did increase. The share of permanent manual workers declined from close to 68 per cent in 1991 to 64 per cent in 1998. Not only did the share of non-permanent increase but the share of casual in non-permanent increased even faster. It is the big firms that resorted to the greater use of non-permanent workers.   Holding all other factors constant, firms employing 50-99 workers and those employing 500 or more workers, increased the share of non-permanent workers significantly between 1991 and 1998. Also, firms employing 500 workers or more increased the share of temporary workers.
Casual employment did not show an association with size of employment. Women workers were mostly employed in large firms. Firms employing 1000 workers or more accounted for more than 75 per cent of all women workers. Firms, which employ a higher share of non-permanent, also employ a higher share of women. Firms employing 50-99 workers and 500 and over report an increase in the share of female workers.
From the above, one should not hasten to conclude that there is no rigidity in the Indian labour market. Irrespective of its impact on employment, a degree of excessive or unwarranted protection to labour may lead to inflexibility in labour adjustment required for restructuring of enterprises in the interest of competitive efficiency. In the wake of liberalization, this problem has been brought center stage and there has been frequent demand by the industry and foreign investors to have some kind of ‘exit’ policy – the right of hiring and firing.
In this respect the provisions of the I.D. Act which lay down conditions and procedures for retrenchment of workers have been widely criticized. It is contended that the provisions are so restrictive that reduction in workforce or closures are extremely difficult even if the employer is agreeable to pay the compensation as required under the law. This is because under the law prior permission of the government is required to retrench workers or effect closures in the case of enterprises employing more than 100 workers and such permissions in the past were generally not granted by the Central and the State Governments.
Of late, the scenario has changed in the wake of globalisation. The Labour Ministry of the Central Government and the Labour Departments of the State Governments are regularly conducting the hearing of applications for lay-off, retrenchment and closure by inviting representatives of the workers and employers. After following the principles of natural justice, orders are issued on the basis of merits of each case taking due note of the long-term viability and competitiveness of the enterprise. This has resulted in granting permission in most of the cases where applications have been made to the appropriate government. Accordingly, the existence of Chapter VB in the I.D. Act cannot be blamed for all the ills faced by industrialists.
In spite of these obstacles, many enterprises were able to adjust their workforce by rationalization and technological changes, but the process has been tardy.
Several routes have been found out – illegal closures by not paying electricity bills, etc. All these have only added to the problem of labour – they are neither paid their wages nor their due compensation. This has also resulted into significant industrial sickness as well as the prevalence of redundancies leading to their loss of competitiveness. Although, unions have generally resisted any legislative or executive move to make closure and retrenchment easier, in recent years unions at the enterprise level have generally been found to be accepting the inevitability of adjustments in the workforce in the face of globalization and industrial restructuring. (Sharma – 2005).
Static Labour Policy but changed mindset of the judiciary, legislature and
the executive
A remarkable feature of industrial relations in the wake of
globalization is the gradual withdrawal of the State in their traditional role of
actively supporting the organized labour. Though, Labour law reforms will be
explained later in greater detail are not taking place both the labour
administration and adjudication machinery have been more willing than before to
entertain the concerns of industry.    Some State governments – notably
Rajasthan, Andhra Pradesh, Maharashtra, Gujarat and Uttar Pradesh, for instance, - have taken the initiative to make small changes in labour laws and a major effort to drastically simplify the returns to be submitted by employers and ease the pressure of labour inspections.
Labour Law Reforms
In India we have a plethora of labour laws. There are certain overlapping provisions also. Hence, there is an urgent need for rationalization, codification and simplification of labour laws. The National Labour Law Association (NLLA) had conducted a study in great detail and prepared a draft legislation in this context. However, the Labour Code prepared by the NLLA could not be utilized for various reasons. As it may not be possible to introduce major labour law reforms, it is envisaged that the government may go in for piecemeal reforms in particular by amending certain provisions of I.D. Act and C.L. (R&A) Act.
It is well accepted that survival of workers depends upon survival of industry. Therefore, creation of conditions and environment conducive not only for survival but further growth of industry is the need of the hour. In this context, the concern of employers that the existing labour laws need a thorough and wholesale review with a view to rationalizing and simplifying them by consolidating them and by amending certain provisions which may be out of tune with present needs to be addressed in earnest.
At the same time, interests of workers also must be protected. In this context, Chapter VB of I.D. Act, 1947 and Section 10 C.L.(R&A) Act need amendment. The requirement of permission may be done away in a phased manner   with   improvement   in   social   security   particularly   by   enhancing retrenchment compensation.   Similarly, the ancillary work may be taken out of the purview of Section 10 so that such work can be outsourced.
Industrial Disputes Act: Mr. Yashwant Sinha, the then Finance Minister in his budget speech (2001) stated that the chapter VB would be amended to raise the existing limit from 100 workers to 1000 workers. The Chapter V-B of the I.D. Act regulates lay off, retrenchment and closure in an industrial establishment which engages more than 100 workmen, and which is not of a seasonal character. All factories, mines and plantations are covered under this chapter. This resulted in criticism from several trade union quarters. The severest criticism emanated from the founder President of BMS.
The Task Force on Employment Opportunities (Ahluwalia Committee) recommended doing away completely with the permission clause in all establishments. The threshold limit of 100 was introduced by the 1976 amendment to the ID Act. Prior to that, the limit was 300 or more workers. The Second National Labour Commission has recognized the need for providing flexibility to the employers in handling labour to promote competitiveness and improve productivity in the context of globalization. The Commission has taken care to provide a safety net cushion to the workers.
The Commission believes if the employer could decide the size of the employment at the start of the business, why should he not do so during the conduct of the business. Therefore, it has recommended the repeal of section 9A which relates to issue of notice of change in the conditions of work.
The Commission has also favoured complete freedom to the employers to lay off or retrench workers. Further, it has recommended restoration of the original threshold limit of 300 or more workers relating to the need of the employers to get prior permission from the appropriate Government for closure. However, the Commission has suggested payment of all dues to the workers and higher compensation to the workers than provided in the I.D. Act.
Just as an industrialist has a right to establishing a factory or start a mining or plantation operation, equity demands that he should have freedom to close down the establishment. In the era of globalization and severe competition in the manufacturing, mining and plantation sectors (commodity sector), it is necessary to have an urgent re-look into the provisions of the Industrial Disputes Act relating to lay off, retrenchment and closure. In several advanced countries, there is a clear-cut hire and fire policy. Even in China there are not many restrictions in this regard. Time has come to review the provisions in the I.D. Act relating to this subject. A simpler hire and fire policy can attract more FDI in the manufacturing, plantation and mining sector.
It is well neigh impossible to raise the existing limit from 100 to 1000 workers as announced by a former Finance Minister in his Budget speech. What is feasible is to initiate a continuous social dialogue to convince the trade unions to increase this figure initially to 200 though the Second National Labour Commission has given a clear-cut rationale to increase the figure to 300. As the UPA Government is supported by Left parties and Left trade unionists are opposed to any such move in view of the specific provision in the National Common Minimum Programme relating to protection of the rights of the workers, it is going to be a slow and arduous path leading to the desired goal.
Section 9-A of the I.D. Act casts responsibility on the employer to give 21 days notice of change to the workmen or to their union before effecting any change on any matter specified in the Fourth Schedule attached to the Act. The Fourth Schedule relates to conditions of service for which notice has to be given.
The two clauses which are considered out of tune in a globalised scenario cover the following aspects:-
(a)      Rationalisation,   standardization   or   improvement   of   plant   or technique which is likely to lead to retrenchment of workmen;
(b) Any increase or reduction (other than casual) in the number of persons employed or to be employed in any occupation or process or department or shift (not occasioned by circumstances over which the employer has no control)
As globalization has resulted in increased competition, the manufacturing industry was adversely affected resulting in diminishing rate of growth in this sector. The sector could not face the competition given by the Chinese goods flooding the market at affordable prices. It is reported that the rate of growth of manufacturing sector of China is almost twice that of India. This certainly calls for introspection. The time has come to deal with these two clauses of Fourth Schedule appended to the I.D. Act as rationalization, technological upgradation and improved productivity are of an imminent necessity.
Contract Labour (Regulation & Abolition) Act, 1970: The Second Labour Commission has recommended the use of contract labour for conduct of non core activities and for sporadic and seasonal demands it should be permissible even for core activities.
However, the 2nd NCL has taken care to look after the welfare of the workers and accordingly, has recommended that the contract labour should be paid at the same rate as the regular worker, following the principle of ‘equal pay for equal work’. In the event of default by the contractor, the principal employer shall be held responsible. While, the most trade unions are against relaxation of these provisions, the employers are not happy with equating the wages of the regular workers with the contract workers.
Recommendations of the Group of Ministers on amendments to section 10 of the Contract Labour (Regulation & Abolition) Act.
The National Democratic Alliance (NDA) Government had set up a Group of Ministers to look into the Labour Law reforms. This was headed by the then Deputy Chairman, Planning Commission. The Group had almost finalised the recommendations to amend Section 10 of the C.L.(R&A) Act to permit contract labour in the following operations or processes namely:
    sweeping, cleaning, dusting and gardening;
    collection and disposal of garbage and waste;
    security, watch and ward;
    maintenance and repair of plant, machinery and equipments;
    house-keeping, laundry, canteen and courier;
    loading and unloading;
(g)    information technology;
(h)    support services in respect of an establishment relating to hospital, educational and training institution, guest house, club and transport;
(i)       export oriented units established in Special Economic Zones and units exporting more than seventy five per cent or more of their production; and
(j)       construction and maintenance of buildings, roads and bridges.
Globalization has led to liberalization, contractualisation, casualisation and creation of a host of temporary jobs. The current structure of the C.L.(R&A) Act puts a severe constraint on the employers in creating temporary and casual jobs. In advanced countries, this is not the case. It is true that the contract workers must get all facilities such as minimum wages, weekly off, safe working conditions, paid leave, maternity leave and a social safety net.
Section 10 of the C.L.(R&A) Act reads as follows:-“Prohibition of employment of contract labour: -
(1) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment.
(2) Before issuing any notification under sub-section (1) in relation to an establishment, the appropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as –
    whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment;
    whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment;
    whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto;
    whether it is sufficient to employ considerable number of whole-time workmen.
Explanation – If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final.”
The Central Government and State Governments have set up tripartite Advisory Boards to advise the appropriate Government on these matters and during the last three decades, these boards have met at regular intervals and have recommended abolition of contract labour in several processes and operations in a large number of industrial establishments. However, there is no provision in the Act to compel the employers to regularize those workers who were earlier on contract.
The current thinking is that this provision is not in tune with the requirement of the Indian industry facing severe competition in a globalized world. Most employers feel that Section 10 should be repealed, whereas most trade unions are opposed to such a move. The via media could be what has been recommended by the Group of Ministers (GOM) constituted by the NDA Government, a reference to which has been made earlier in this chapter. In the current scenario, trade unions apprehend loss of jobs. Section 10 of the Act could be amended to incorporate the provisions suggested by the GOM. It can facilitate more efficient functioning of the industries.
In the fast changing scenario, new types of industries are coming up, certain old industries are getting closed. There was bird flu which hit China and South East Asia and there was a sudden spurt of demand for the Indian goods. The industrialists cannot be expected to engage permanent workers to meet such contingencies. It is found that only specialized workforce can handle certain items of work which do not require permanent workmen. Multi-storied structures have to be cleaned at regular intervals by specialized agencies. Similarly, security, gardening, housekeeping – these are all activities which can easily be outsourced without endangering the job security of core group of workers.
When the Western world is outsourcing several of its activities to India, why should there be a hindrance for the Indian industrialists to outsource some of their activities without burdening themselves with a permanent workforce for peripheral activities? Hence, there is an urgent need to amend Section 10 of the C.L.(R&A) Act to promote contract labour in 10 sets of activities enumerated above. A flexible contract based labour market framework for manufacturing would attract more domestic investment. It will also attract more FDI. The FDI would also bring with it access to cutting edge technology and it will also be critical for the next phase of globalisation.
The C.L.(R&A) Act, 1970 applies to (a) to every establishment in which 20 or more workmen are employed on any date of the preceding 12 months as contract labour and (b) to every contractor who employs or who employ on any date of the preceding 12 months 20 or more workmen. The Act does not ban temporary employment. In the era of globalization, temporary jobs have become the new buzz word in the corporate world. Temporary employment is fast emerging as the first choice for many individuals and companies.
It is estimated that in another three years, around 14 million Indians will opt for temporary jobs. World-wide temporary staffing is a $200 billion industry. While the multi national companies were the early converts, other corporates too are jumping on the bandwagon. Tata Consultancy Services (TCS) has emerged as the largest player with 44,000 temporary hands.
Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act, 1988
In a globalised scenario, it is necessary to improve the competitiveness of small-scale industries and to simplify their functioning vis-à-vis, the requirement of various labour laws. This Act provides for the exemption to employers, in relation to establishments employing a small number of persons from furnishing returns and maintaining registers under certain labour laws.
Small establishments will be required to maintain only three master registers and will be required to submit only one core return in lieu of the existing returns prescribed under the various labour laws. Similarly, very small establishments would be allowed to combine the three master registers into a single register. Further, they would be required to submit only one annual core return in lieu of the existing returns prescribed under the various labour laws. Formats of the registers and returns have been prescribed in the Act itself.
However, in view of the special requirements of social security legislation such as recovery of contribution from employers and employees their accountability, reimbursement etc. no exemption has been given in relation to social security legislation. The enactments from which exemption is sought to be given have been mentioned in the schedule to the Act.
Repeal of Chapter VB may not result in a panacea for all the ailments faced by Indian industry. Here a need has arisen to distinguish between labour reforms and labour law reforms. More than labour law reforms, there is a need for labour reforms and management reforms. A lot of time is wasted by the workers by late coming, early going, extended lunch and tea intervals, sleeping during night shifts etc. This can be avoided. Similarly, workers need to accept retraining and redeployment with equanimity.
Managements need to view workers as human beings with a humane approach and improve facilities for the health, safety and well-being of workers on the shop floor. They should take up schemes to provide social safety net for those workers who have been rationalized, retrenched and displaced. Suggestion schemes and incentive schemes to improve production and productivity and increased inter se competition between the groups of workers to excel need to be introduced.
Impact on Industrial Relations including in the newly emerging Services Sector
Most of the trade unions have opposed the policy of globalization, economic reforms, privatization and disinvestments. They attempted to demonstrate unity in such opposition and organized nation-wide strikes and bandhs. The marked feature of post globalization is that the unions in the private sector hesitate to go on strike. The public sector undertakings viz. Coal India, Singareni Collieries Ltd., Indian Airlines, Air India, ports and docks, banking and insurance sector, telecom, power sector continued to be plagued by industrial unrest.
After the great railway strike of 1974 which paralysed the railways functioning throughout India for nearly a month, it has been generally quiet on the railway front. The well established Permanent Negotiating Machinery is functioning more or less smoothly. Hence, there have been only a few local instances of unrest since the opening up of the economy. Similarly, after the historic strike of textile workers in Maharashtra in 1982 which resulted in loss of employment of more than 75,000 workers, the textile workers are generally hesitant to go on strike, barring a few exceptions viz. the prolonged strike of Delhi textile workers in 1986.
Workers of Coal India Ltd. have participated in several agitational programmes even after the advent of globalization. It appears there is no impact of globalization on the trade unions operating in Singareni Collieries Company Ltd. The workmen of public sector airlines industry have gone on sporadic strikes from time to time even after the opening up of the economy.
The trade unions operating on ports and docks have agitated on several occasions on the issue of Productivity Linked Bonus. They have demanded this bonus on all ports basis which is not a rational one. The staff of public sector banks have been opposing privatization and have also been agitating for revision of their salary. The staff had to concede for all-round computerization and also flexible deployment policy. The insurance sector workers have been agitating for revision of their salary from time to time.
Power sector reforms have resulted in unbundling and privatization of power sector companies resulting in acceleration of agitational programmes by the unions. Despite the disturbances in the public sector, the telecom industry is rapidly moving towards 250 million customers with the highly versatile phones and tariffs matched with the world class technology. The Indian telecom industry is moving forward in a revolutionary mode. The private sector has not been affected by any visible industrial relation problems.
Information Technology Sector
The profile of the professionals in the Indian Software Labour Market in terms of their social background, gender and marital status across the sampled firms is illustrative of the rather elitist nature of the industry. Though, the software industry creates a significant potential for employment, given the magnitude of unemployment in India amidst a shrinking public and private sector, the IT industry will not have the capacity to absorb the growing supply of labour force entering the labour market. The requirements of learning and adapting equally bring about a high degree of insecurity for the professionals.
Business Process Outsourcing
Nearly 75% of US and European multi-national companies now use outsourcing or shared services to support their financial functions. The findings are based on interviews with CFOs and MDs of 127Europe-based and 151 US-based companies. The trend of MNCs wanting to increase their outsourcing offers tremendous opportunity for the service providers with facilities in India, as they are cost effective and bring value to clients. The BPO industry in India in 2004 had recorded a growth of 50% over 2003.
The BPO industry is booming and a lot of companies will try outsourcing to Indian firms. Some potential areas they would consider include low-end customer care business. Besides, financial services, insurance, airline, hospitality, IT, automobile and publishing would also attract attention of going forward. There is tremendous potential in the knowledge process outsourcing space. Unlike in BPO where the focus is on executing standardized routine processes, KPO involves processes that demand advanced information search, analytical, interpretation and technical skills as well as some judgment and decision making. The workers have long working hours. Youngsters are burning both ends of the candle. It has become a virtual rat race. They face a lot of stress and even psychological problems.
BPO is an emerging IT enabled service sector which functions in unionless environment. The workers in BPOs are given fancy designations such as executives, officers etc. and are made to believe that they are not workers employed in other sectors. The workers in some BPOs are provided with some mechanism designed to create avenues to air their grievances but with least damage to the firm and through creation of empowering situations such as consultative committee, group etc.
Tourism and Retail Sector
The tourism sector is looking up with the launching of heritage-tourism, eco-tourism, health-tourism, adventure-tourism and Buddhist circuit-tourism in “Incredible India”. There are indications that medical tourism is likely to make a headway in the days to come. In view of the existence of large number of hospitals in the private sector which can offer super specialty treatment at reasonable cost and with almost no waiting period, it is attracting an international spectrum of patients.
The retail sector is a fast emerging growth sector. This can be seen in the major metropolitan cities and its suburbs and also in the major cities with the establishment of huge malls which provide almost everything under one roof. In the retail sector, the employers are trying very hard to retain workers. However, attrition rate at the front-end is manageable and not alarming now. Official estimates put the industry attrition level between 30% and 40%. There is also an element of poaching by rival outfits. Hence, many big retail stores are recruiting 10% more than required staff at the front-end level.
Wage Setting Mechanism
Less than 2% of the workforce in India is covered by collective bargaining agreements as compared to 15% in USA, 18% in Mexico, 80% in Australia, 15% in China, 20% in Japan, 3% in Malaysia and 27% in Thailand and 90% in France, Italy, Finland and Belgium (Global Report, 2004). Despite this low percentage, collective bargaining is a preferred method of resolving interest disputes. This is especially so because arbitration and wage boards are losing importance. Industrial adjudication is time consuming and can be utilized only as a means of last resort. Minimum Wages Act functions as the single most important legislation in this field and this calls for continued vigorous implementation in a mission mode by the enforcement machinery both at the Centre and at the State level. 
Informal Economy
The problems faced by the workers in the informal economy are multifarious. These can be resolved by a slew of measures:
(i)    Organizing the unorganized sector workers
(ii)    expansion of the central and State level welfare schemes
(iii)    drafting of a comprehensive Bill on unorganized sector workers’
welfare
(iv)    resolution of the problems of informal sector enterprises
(v)    skill development and
(vi)    employment generation.
The solution to the problem of the informal sector in rural areas lies in the extension of the two-fold strategy as suggested by Sheila Bhalla (1997). On the production side, the rate of growth of farm output must be pushed continuously, while on the labour supply side, the existing agricultural workers must be absorbed increasingly in non-farm jobs.
(i)       Organizing the unorganized sector workers
In Kerala and West Bengal, an appreciable degree of unionization of workers in the informal sector has taken place. Despite several efforts in this direction, much headway could not be made so far in other States except in Gujarat where a large number of women workers have been organized by SEWA. In the earlier chapter, the success story of the SEWA model has been explained in great detail. Whether this model can be replicated through out the length and breadth of the country is an important issue, which needs consideration.
Self employed women workers are there all over India. But the need of the hour is an adequate number of selfless and courageous women leaders. With the empowerment of women in rural and urban areas through the constitutional amendment of Articles 73 and 74 providing for compulsory reservation of 33 1/3% seats in the local bodies, and also through an increase in the awareness and literacy level of women workers in an atmosphere of liberal democracy, it appears that this model can be replicated in the near future.
(ii)      Expansion of the Welfare Schemes
At present, the hospitals and dispensaries run by the Employees State Insurance Corporation (ESIC) are utilized to the extent of 50% to 60% of their capacity. Some of the hospitals and dispensaries run by the Welfare Organisation of the Central Government have become defunct. It is possible to extend the ESIC medical facilities available to the beedi, mica, iron ore, manganese ore, dolomite and cinema workers who are presently covered by the welfare schemes by transfer of funds by the Welfare Organisation to the ESIC to meet the pro-rata expenditure incurred. This will result in a synergy between these two organizations and the workers will be the ultimate beneficiaries.
The implementation of the Building & Other Construction Workers Act leaves much to be desired. If this is implemented in a mission mode, the cess collected could be effectively utilized to provide the social security benefits to this big chunk of workers which is in the informal sector. The Welfare Fund Organisation can increase its activities with the same infrastructure to cover handloom workers and salt workers – both are identifiable groups. Cess can be imposed on handloom cloth sold and similarly cess can be imposed on the sale of industrial salt – both on ad valorem basis. The accrued money could be fruitfully utilized to provide housing, education and medical benefits to these workers.
As has been elucidated earlier, Kerala State has covered several categories of workers under the State level welfare schemes. Other States can also follow suit after studying the Kerala model. It is necessary for the new States to avoid the pitfalls and build on the strengths of the Kerala model because especially as in some of the welfare funds, the administration cost is very high whereas in some others it is marginal.
(iii)      Drafting of a comprehensive Bill on Unorganized Sector Workers’ Welfare
In an earlier chapter, efforts made to draft a Bill on unorganized sector workers’ has been mentioned. As this Bill did not find support from the trade unions and employers, the Government decided to introduce an Unorganized Sector Workers Welfare Scheme in 50 districts only on a pilot basis. The following steps are required to make the scheme acceptable to the social partners and beneficial to the workers concerned:
    Beneficiary oriented study based on a random sampling method has to be conducted in different parts of the country by an independent agency to give a proper feedback to the decision making authority to enable it to structure the scheme properly, and make it viable.
    The draft scheme has to be extensively discussed with the
(i)    Trade union organizations
(ii)    NGOs
(iii)    Employers’ Organisations
(iv)    Academicians
(v)    Political parties and also
(vi)    State Governments and also
(vii)    Actuaries
Based on the above, a comprehensive scheme has to be prepared and implemented. After gaining some experience, a comprehensive Bill should be introduced in the Parliament.
(iv)      Resolution of the problems of informal sector enterprises
The United Progressive Alliance Government had committed in its Common Minimum Programme to set up a National Commission on Enterprises in the Unorganized/Informal Sector. Accordingly, the Government has set up on 20th September, 2004, the National Commission on Enterprises in the Unorganized/Informal Sector as an advisory body and a watchdog for the informal sector.
The Commission will recommend measures considered necessary for bringing about improvement in the productivity of these enterprises, generating large scale employment opportunities on a sustainable basis, particularly in the rural areas, enhancing the competitiveness of the sector in the emerging global environment, linking of the sector with the institutional frame work in areas such as credit, raw materials, infrastructure, technology upgradation and the marketing and formulation of suitable arrangements for skill development.
“While addressing the Governors of the States, the Prime Minister, Manmohan Singh remarked, “There is a need to make our growth process more inclusive; to ensure that the marginalized and weaker sections benefit from income growth; and to ensure that social infrastructure, particularly in health and education improved.” (The Hindu, 16.06.2005)
Employment
Today there are 550 million people who work, but still live on less than US $1 a day. These “working poor” represent 20 per cent of total world employment. In spite of the record levels of global unemployment, the reality for most of the world’s poor is that they must work – often for long hours, in poor working conditions and without basic rights and representation – in jobs that are not productive enough to enable them to lift themselves and their families out of poverty. While it is clear that employment is central to poverty reduction, it is “decent and productive” employment that matters, not employment alone.
This employment challenge has taken center stage in the global community, most recently in the Report of the World Commission on the Social Dimension of Globalization, which drew attention to the need to make decent and productive employment a central objective of macro-economic and social policies as a key endeavour to promote fairer globalization. Also, the centrality of decent employment reaching the United Nations’ Millennium Development Goals, particularly in having the share of those in extreme poverty in the total population by 2015, is widely accepted and becoming more and more integrated as a component of national policy.
The World Employment Report shows that bridging the “global productivity divide”, particularly in parts of the economy where the majority of people work – such as in agriculture, small-scale enterprises or the urban informal economy – is essential for fighting poverty and stimulating growth in both output and “decent and productive” employment. Decent work has many components; the fundamentally economic one of an income adequate enough to escape from poverty must ultimately come from growth – growth in output, growth in productivity, and growth in jobs. (World Employment Report – 2004-05).
Slower Growth of Employment: A Major Limiting Factor
India’s growing labour surplus has been a keenly debated aspect of the country’s development dilemmas. Various committees appointed by the Government of India have investigated the key issues relating to the growth of employment and unemployment.
Food for Work Programme
The Food Corporation of India (FCI) procures rice and wheat on a massive scale during the harvest season. Whatever quantity comes to the mandies (whole-sale markets) is procured provided these grains conform to fair average quality at the support price fixed by the Government on an annual basis. Accordingly, the granaries of FCI are overflowing. Equitable distribution of food grains between different districts of the country does not take place due to lack of purchasing power, especially amongst the rural people in the poorest pockets. In September, 2004, the Prime Minister launched the Food for Work Progamme in Andhra Pradesh. The programme covers 150 poor districts of the country wherein part of the wages for those workers who are engaged in asset creation would be paid in the form of food. Therefore, the Food For Work Programme is a boon to the unemployed as well as working poor in these districts. This is a first step towards the National Employment Guarantee Programme.
National Employment Guarantee Programme
The first pledge of the Common Minimum Programme (CMP) reads: “The UPA government will immediately enact a National Employment Guarantee Act. This will provide a legal guarantee for at least 100 days of employment to begin with on asset-creating public works programmes every year at minimum wages for at least one able-bodied person in every rural, urban poor and lower middle-class household”.

ILO Chief backs job guarantee programme
Endorsing the Common Minimum Programme’s proposal for a National Employment Guarantee Programme, the Director-General of International Labour Organization, Juan Somavia, said in an interview to ‘The Hindu' that India has the potential to achieve “a real breakthrough internationally” with its promise of “more inclusive” growth. Mr. Somavia said that the point of departure for any discussion on poverty and growth had to be “the fact that global policies today are not producing employment.”
Calling for a change in the way the success of economic policy is measured, he said: “Today, growth is the main thing but growth is not sufficient because as the example of India and other parts of the world shows, you have jobless growth. So why not change the criterion of success to job creation and basic social protection?” Once this baseline is laid out, a country should organize its policies to serve this goal. “Of course you want growth, sound macro-management and low inflation for providing employment. But we need the policies to converge towards the goal of employment.”
Asked about the proposed Employment Guarantee Act, Mr. Somavia said this approach has enormous potential. The CMP, he said, reflected the general aspirations of the Indian people. On the controversy surrounding the cost of implementing the employment guarantee scheme, the ILO director general acknowledged that implementation would not be easy. “But unless you set objectives, like the CMP does, things won’t happen.”
National Employment Guarantee Bill
The Finance Minister in his budget speech (2004) has also announced that the Government would introduce bring a National Employment Bill to provide for a legal guarantee for at least 100 days of employment in asset creating/works programmes every year at minimum wages for at least one able-bodied adult person in every rural/urban poor and lower middle class household who volunteers himself/herself to do any kind of unskilled manual work in rural/urban areas in the country. This Bill titled “The National Rural Employment Guarantee Bill, 2004” (Bill 106 of 2004) has since been introduced in the Lok Sabha by the Minister for Rural Development on 21.12.2004. It has been referred to the Standing Committee of the Parliament.
As the Bill suffers from severe lacunae, it has to be transformed to meet the desired objective of generation of adequate employment opportunities and also to lift the workers above the poverty line by providing them decent work. Accordingly –
    the workers have to be paid as per the Minimum Wages Act for doing four categories of work – unskilled, skilled, semi-skilled and highly skilled. There is no escape from this because the Supreme Court has held that any industry which does not pay minimum wages has no right to exist. Any asset creating work under NMEP comes under the definition of industry under the I.D. Act. Further, compliance with the provisions of the M.W. Act ensures decent work.
    Artificial restriction on the number of workers from a family has to be done away with as only those who are in dire need would come for work.
    At least 100 days of work per year has to be provided.
    No distinction should be made between able bodied persons and others as has been rightly advised by the National Human Rights Commission
    Advance plan of action is to be prepared to identify and list out productive asset creating works by involving institutions of local self-government
    A synergy has to be built in between government departments, NGOs and local Panchayats and lastly
    Urban areas have to be included.
 
Labour Law and the Informal Economy
Working Group Meeting
The global network Women in Informal Employment: Globalizing and Organizing (WIEGO), organized a one and a half day meeting in Geneva to discuss key legal issues regarding how to protect the rights of informal workers. Nineteen lawyers and activists from around the world attended the meeting. Muneer Ahmad and Lora Jo Foo co-chaired the meeting. This report provides a brief background on the meeting, a summary of the presentations and discussions, and an articulation of recommendations arising from the meeting.
Background
Labour law distributes economic rights between employers, employees and the state. As a mediating force, labour law can both enable and combat exploitative conditions of the informal economy. It is thus an important aspect of any effort to improve conditions for informal workers, whether through the reversal of informalization in industrialized nations, the formalization of economic relations in developing countries, the preservation of aspects of informality that benefit workers, or through other means. Recognizing the disparate negative impact of informality on women, strategies for the reform of labour law must be designed to achieve economic equality for both men and women.
The discussion in Geneva grew out of a session at the WIEGO annual meeting in Ahmedabad, India, as well as several previous meetings organized by WIEGO to incorporate a legal analysis into the study of women in informal employment. Participants in the Ahmedabad meeting discussed the impact of both international and domestic laws on the informal economy and examined non-legal and non-traditional strategies to improve conditions of informal economy workers. Participants contributed information on domestic labour law; gaps in protection and the reforms needed; the ways in which international law can be used domestically; and non-legal strategies for workers protection, such as organizing or codes of conduct. The meeting in Geneva was designed to carry this discussion forward and to identify with greater specificity the directions that WIEGO’s work on labour law might take.
Aims and Objectives
The objective of the meeting was to identify the key legal questions concerning protection of informal workers, with two outcomes in mind: first, to begin to formulate a concrete program of action and research for WIEGO on the relation of labour law and labour law reform to conditions of informal employment; and second, to identify ways that WIEGO might use the 2003 International Labour Committee general discussion on “employment relations” to advance this agenda.
The meeting included a series of presentations by participants on their firsthand experiences working with informal workers, as well as presentations on conceptual and theoretical challenges confronted in a consideration of labour law and the informal economy. In this manner, the meeting sought to provide a discussion of labour law issues that was grounded in and informed by the lived experiences of informal workers with whom the participants were familiar.
15th June 2002
Introductory Remarks: Enrique Marin & Ike van den Burg
Enrique Marin from the ILO began the meeting with a discussion of background events leading up to the anticipated ILO 2003 discussion on ”employment relations.” He reviewed the ILO’s 1997-98 consideration of “contract labor,” and discussed the ILO’s failure to produce a convention regarding the term due to strong opposition from the employer and government representatives regarding a proposed definition of the term. At the end it was decided that more research was needed and the issue would again be taken up for discussion in four years’ time. In the meantime studies would be conducted to investigate and identify situations where workers require protection.
The ILO subsequently formulated the question as one of workers’ protection. In so doing, they focused on the ambiguity of employer relations. Through a series of country reports (29 of which have been completed, with 10 more pending), they identified four categories of workers and corresponding employment relations that reflect this ambiguity:
    dependent workers;
    non dependent workers, including own account workers;
    triangular workers (i.e., workers working through one or more intermediaries); and
    dependent-independent workers (i.e., workers who have different employment statuses and who may move back and forth between being a dependent worker and being self-employed).
The country reports studied bilateral and trilateral employment relations, and revealed several characteristics common in nearly all the countries studied. With regard to bilateral relations, the reports demonstrated: (1) an inability of legislation to capture the complexity of existing employment relations; (2) a multiplication of ambiguous working relationships all over the world; (3) certain sectoral similarities across different countries (e.g., lorry drivers); and (4) a trend toward judges’ inquiry into the economic realities of employment relations in order to determine legal liability. Similar issues arose in the context of triangular relations, in particular the difficulty of identifying the roles played by different actors and the problem of disguised worker relationships.
Enrique spoke more specifically about the legal features of Latin American countries for which reports were produced (10-12 studies). He noted four salient features: (1) labor law in these countries date from the 1920s, and has a high degree of non-applicability today; (2) worker protections are, in theory at least, articulated in both statutes and constitutions; (3) because Latin American countries primarily follow civil law (i.e., written law) systems (as opposed to the common law system of the U.S. or Great Britain, which allows for law to be more freely developed by judges through individual cases) there is less of a problem of shifting definitions of employer relations; and (4) the lack of precedential value of cases in civil law countries may be a barrier to reform of such definitions.
Apart from the ambiguities plaguing employment relations, Enrique also noted the problem of access to justice, and the limited utility of improved laws if low-income workers lack the means to enforce them. He also suggested the potential value of litigation, including class actions, to go after the real employers in informal worker cases.
Enrique reported that subsequent to the presentation of the country reports, the governing body of the ILO decided to table the question of employment relations until the ILO conference in June 2003. The topic for discussion is listed as “Employment Relationship (scope)” and is scheduled for general discussion and not for standard setting.
He noted that the ILO is not intending to craft a uniform definition of employment relations because it is too impractical to do so. Rather, the ILO would like to develop a common understanding of the problem among the stakeholders, encourage employer responsibility, and demonstrate good practices. He suggested that governments be asked for clearer definitions and basic protections for all workers. His specific suggestions are listed in the section on Recommendations and Next Steps of this report.
Ike van den Burg from European Union made a brief presentation highlighting the recent discussions in the EU on employment relationships. She said that relevant discussions on the European level are taking place with regard to “undeclared work,” telework and domestic work and undocumented immigrants.
Ike also mentioned the Commission on Equal Treatment of Temporary Agency Workers. The commission is looking at equal treatment at the level of enterprise as well as that of labour.
Panel 1: Lora Jo Foo, Dhimant Vasvada, Jan Theron & Kamala Sankaran
Lora Jo Foo from Sweatshop Watch California, USA, made a brief presentation on the Sweatshop Accountability Law, Assembly Bill 633 (AB 633), recently adopted by the California legislature.
The garment industry is California is the largest in the United States, accounting for 160,000 workers, mostly immigrant women. There are 15,000-20,000 garment workers in San Francisco and about 140,000 in Los Angeles. Sixty-one percent of the L.A. garment factories violate minimum wage and overtime laws and it was estimated in 1998 that that employers owed workers as much as $73 million in back wages to garment workers. The reasons for the emergence of sweatshops in the garment industry are multiple: subcontracting; consolidating power of retailers; forces of globalization and poor enforcement of labour laws.
Lora chronicled the struggle for law reform in the California garment industry, noting that there have been four key phases: the passage of a registration requirement for all garment manufacturers and contractors in the state, enacted in 1980; litigation and judicial expansion of the law on joint employment, from 1980-1999; passage of AB 633 in 1999; and the challenges of implementation of AB 633, particularly with regard to the definitions in the law, which are ongoing.
AB 633 is the first garment manufacturer liability law in the country with teeth. It is also an explicit recognition of the manufacturers’ responsibility for ensuring that the workers who sew theirs clothes get paid.
AB 633 imposes a wage guarantee on garment manufacturers so that the manufactures and retailers who engage in the manufacturing of private label clothing ensure with their contractors that workers are paid minimum wages and overtime. If contractors fail to pay minimum wage and overtime, the manufacturers bear legal responsibility to do so. It also provides an expedited administrative process before the California Labor Commissioner to recover unpaid wages under the guarantee. The bill also establishes successor employment liability so that garment factories cannot shut down and reopen under a different name to avoid paying the wages of its former employees.
The bill creates full joint liability for manufacturers using unregistered contractors, allows garment workers employed by unregistered contractors to bring legal action to recover wages, damages and penalties from the manufacturer who contacted with the unregistered contractor, and includes a provision that stipulates that absence of records should be presumed as falsified records and prescribes damages as twice as much as minimum wages.
Dhimant Vasvada, a lawyer with Self Employed Women’s Association in Ahmedabad, India, cited the case of beedi workers to illustrate how the workers in informal sector are deprived of welfare benefits to which they are entitled due to non-compliance and non-implementation of the labour laws in India. He argued that the main problem in India is not the labour laws themselves, but rather the poor enforcement of these laws.
Discussing the case of Patel Jivrajbhai beedi workers, Mr. Vasvada noted that India’s Employees Provident Fund commissioner has held that homeworkers rolling the beedies of a business establishment are the workers of that establishment, thereby requiring the employer to make contributions to the provident fund on the workers’ behalf. Employers have challenged this and other decisions in the High Court, and unions have been wary of seeking compliance with the orders for fear that the employers will terminate services of the homeworkers. This has occurred despite favorable outcomes from the Indian Supreme Court on related matters. The result is that, despite appropriate legislation and administrative rulings, the provident fund is unavailable to workers in the informal sector, whether working at home or in a factory.

Mr. Vasvada cited a number of cases from the Indian Supreme Court, dating back to the early 1970s, to demonstrate the broad scope that the court has attributed to the employer-employee relationship. In the case of Saruspur Mills Co. Limited And Ramanlal Chimanlal And Others, in 1973, the Supreme Court held that even the employees employed by the Co-Operative Society which managed the canteen of a factory were the employees of the factory and were entitled to all benefits.
In the same year, in the case of Silver Jubilee Tailoring House And Others And Chief Inspector Of Shop And Establishment And Others, the Supreme Court of India held that if an employer has the right to reject the end product, the element of control and supervision is also present. In 1978 the Supreme Court held that if the livelihood of the workmen substantially depends on labour rendered to produce the goods and services for the benefit and satisfaction of an enterprise, the absence of direct relationship cannot snap the real life bond.
Mr Vasavada made the following recommendations:
    The definition of the workman/employee should be so amended in all laws so as to include part timers, casuals, temporary employees engaged through the contractor or home based worker.
    Workers’ unions should be involved in ensuring compliance of the labour laws. For example, for minimum wages, the unions should be given statutory authority to secure the compliance of the provision of the act rather than leaving it to the government authority.
    For the Provident Fund, the power to implement the program should be simultaneously conferred on the office bearer of the union or the concerned employee with the aid of the office bearer of the union. Employer contributions to the fund be derived from a direct tax on employer revenue rather than being based on contributions per worker.
Jan Theron from the University of Capetown, South Africa, presented a small case study to highlight the vulnerable position of a bakery contractor. In South Africa there are many labour laws like the Basic Conditions of Work Act, the Equity Act, Skills Development Act, and the Unemployment Insurance Act. Despite the existence of this body of law, these laws are frustrated by the lack of enforcement with regard to informal sector workers. As Jan noted, “On the surface all is well. On the ground, things could hardly be worse.”
Jan described the following scenario: A supervisor in a bakery is forced into an arrangement where he is a contractor for the bakery, employing about 15 workers. He pays reasonable wages and tries to comply with the labour legislation. However, his own position is very precarious. If he loses his contract, all the workers under him lose their employment and the obligation for compensation is all his. He works under a contract that signs away many of his rights as well as those of the workers. The labour laws of South Africa fail to reach this situation both because of problems of enforceability and because of problems with the courts.
Kamala Sankaran, from the Faculty of Law at the University of Delhi, India focused her presentation on theoretical models of employment relations embodied in Indian labour legislation that could prove useful for the development of additional legal tools to protect informal workers.
For instance, under the Trade Unions Act of 1926 a workman is defined as one who is employed or engaged in an industry. This form of definition enables a self-employed person to be treated as a workman. Other laws have defined an industrial establishment as covering homes of beedi workers, and those working off-site at a premise other than that of the employer.
Another important aspect of Indian law is the creation of tripartite boards that regulate employment relations and social security payments for workers in certain sectors. This shifts the liability of providing social security from the employer to the tripartite boards. In other instances, the law stipulates that those working in triangular relationships, that is those employed via a contractor or intermediary, would have wages and other benefits provided by the user enterprise in the event of a default by the contractor. Tripartite boards offer a way to convert commercial contracts into employment contracts that directly benefit workers, including informal workers.
During the discussion following the first panel, Jennifer Gordon noted that the presentations were all industry-specific, but that there is a growing trend among immigrant workers to move between industries. She suggested that moving from an employer-employee relationship to an industry-based model does not work for these workers insofar as they have mobility among industries or occupy multiple industries simultaneously.
Jan noted that labour legislation in South Africa took a sectoral approach, and that it also distinguished between production and services. He also noted that although there was a move toward general unions in the 1970s, in recent years there has been a shift back toward a sectoral approach.
Panel 2: Arbind Singh, Leah Vosko, Jennifer Gordon & Karin Ullrich
Arbind Singh from National Alliance of Street Vendors (NASVI) presented the case of street vendors in India. There are 10 million street vendors in India and their number is on the rise. The reasons for their growth include increasing unemployment, migration from rural to urban areas, globalization and retrenchment of workers.
Cities are excluding the poor from urban planning. Street vendors have encountered massive evictions over the past ten years. In general, there is no local, state, or national policy regarding street vendors. According to the Police Act, street vending is a cognizable and punishable act. Street vendors also confront a multiplicity of authority and burdensome licensing laws. They have no access to credit (vendors pay the equivalent of 482% in interest) and lack social security. Recently, the government has started drafting the national policy on street vendors.
Proposed solutions included: networking of vendor organizers and organizations; recourse to the courts to obtain orders regarding the issuing of licenses and declarations of hawking zones (this was recently done in Bangalore); amending the Police Act; and forming street vendor cooperatives so as to get rid of middlemen.
Leah Vosko from the Alliance for Contingency Work, York University, Canada made a brief presentation on the Status of the Artists Act. In Canada, 18% of the total workforce is self-employed (11% are own account, 7% self-employed and employing others), a high rate for an industrialized country. The social security coverage for this sector of workers is quite uneven, as coverage under each program depends on different definitions of employee.
The Status of the Artist Act allows professional, independent artists to organize and bargain collectively. Instead of a labor relations board, there is a tribunal. The tribunal also sets scale agreements that become minimum terms – for hours, and prices as well as establishes a fixed term license for organizations. To come under the purview of the Act, an artist must be a professional artist and must be engaged in production. The Act is limited in two major regards: producers are not compelled to bargain, and it is unclear who counts as a “professional artist.” Nonetheless, the Act represents one example of a labor relations approach to independent contractor relations.
Jennifer Gordon, a lawyer and organizer from the United States, made a presentation on Latino immigrant workers, who work as day labourer and domestic workers, particularly in the context of the Workplace Project in the Long Island, New York.
Long Island is home to more than 165,000 Latino residents, 6.3% of its total population. The vast majority of Latino immigrants in Long Island work as day labourers for landscape and small construction contracting. In addition, many immigrant women work as domestic workers. As with much work done by immigrants around the country, these jobs belong, in varying degrees, to the underground economy. Employers are rarely registered with the appropriate authorities; many of them neither comply with labor laws nor pay taxes to the government; and often, they fail to participate in mandatory insurance programs such as workers’ compensation or disability benefits. Few workers are unionized, and those who are frequently complain that their unions do nothing for them. Non-unionized workers have neither job security nor health benefits; their wages—when they are paid—are extremely low and their hours are long and irregular. Health and safety laws are violated with impunity, leading to high rates of injury and occupational disease.
Day labourers are usually employed for landscaping and small-scale construction. They wait at a designated street corner to be picked up by landscaping employers. The street corner provides a good venue for networking and for organizing efforts. In contrast, the domestic worker workers in isolation, in the suburbs. Their isolation also makes outreach difficult. There are no networking opportunities and the job itself is a dead end.
The Workplace Project, based in Long Island, provides legal services for workers with labor problems, in the form of a weekly legal clinic, in order to draw workers into organizing efforts. It is an effective means for bringing workers into the organization. It attracts new immigrants to the Project each week by demonstrating to them that the organization is willing to fight with them and on their behalf and that challenges to employers can succeed. The new cases that workers bring to the Project occasionally serve as a starting point for organizing. The flow of workers through the clinic helps the Project to monitor what is happening in the community and in workplaces around Long Island. Finally, the legal clinic provides financial sustenance to the organization. Beyond serving financial needs, the legal program helps to recruit and incorporate volunteers.
Jennifer’s comparative analysis of day laborours and domestic workers revealed significant differences in workplace conditions and opportunities for organizing among men (day labourers) and women (domestic workers). She noted, for example, that for men day labour is often an entry point into better work, street corners are public networking and bargaining spaces, and the job offers the possibility of short-term work. In contrast, women domestic workers are typically in isolated, suburban, live-in situations from which it is hard to attain to a better job, their social contact is typically limited to that with their employer, and they are frequently dependent upon their employer for shelter. As a result, one might conclude that organizing makes more sense for domestic workers, who are long-term, than it odes for day labourers, who are short-term.
Karin Ullrich from Southwest Centre for Economic Integrity, USA presented a case study of adult homeless brokered day labourers in the U.S. There are three million homeless in US, of which 25% are day labourers. Eighty percent of the homeless are men, 20% are women. African Americans and Native Americans are overrepresented in the homeless population. Poor Latinos tend to live in overcrowded, substandard housing. Homeless day labourers often live in deep poverty and precarious living conditions. They are viewed as criminals, with the common perception being that one cannot be homeless without having broken the law. Sometimes, social security creates more problems than providing any protection. For instance, the child support debt for a prisoner is based on minimum wage even though prison labor is compensated at significantly less than minimum wage. Many men therefore leave prison with huge debts.
Homeless workers are brokered by employment agencies that becomes the employer. Men report to a labour hiring hall where they are issued a labour ticket and are given dispatches and assignments, and are frequently paid substandard wages. The strategies to combat the problems encountered by homeless day labourers could include establishment a non-profit day labour centre and assurance of minimum wages and legal protection.
Remarking on the cases presented, Muneer highlighted four conceptual issues.
    Overbreath – both of the workers in the informal economy and of the laws affecting the workers in the informal economy. While the former ranges from freelance editors in Canada to street vendors in India, the latter includes debt/credit laws in India, parental support/ prison laws and immigration laws in the U.S.;
    Problem of enforceability of good laws, access to justice and the role of the courts/ political will of the judges;
    Multiple uses of the labour law and the need to develop deeply contextualized, local strategic processes; and
    Impact of globalization – on policy decisions, legislature and on governance and the global-local paradox.
Key Questions
The plenary also identified the following key questions.
    How should one deal with multiple definitions of employee within a single nation’s laws?
    Can conditions for informal workers be improved through expanded definitions of employer and employee?
    How can labour laws be made more inclusive, to cover those who work and not just employees?
    How do we increase worker protection?

    Employer relations
    Social protection
    Other laws
    Commercial contracts
    Non-legal
5.    Can labour law be based on something other than employer-employee relations?
Guy Standing
The half-day session opened with a presentation by Guy Standing. Dr. Standing discussed modes of control as a framework for rethinking work and labour. He has argued that the ILO must shift away from labor and employment toward a broader focus on work, a shift that has been achieved. Despite this advancement, he noted that much of the debate is still about statuses that derive from industrialized economies, using traditional terms of control of the workplace. He suggested that a discussion about control opens up different way of looking at work, beyond merely status.
He suggested that the argument about flexibility that animates informalization is really about re-exerting control over workers and the workplace. He argued that control is a multiple notion. Control means setting of limits – to an object of knowledge or range of behaviour – and an exertion of pressure to induce a reaction. Controls can compel somebody to do something, can raise the cost of doing something or not doing something and prevent someone from doing something. They may also prohibit someone for doing something. Therefore controls determines the range of feasible choices, preventing some that might be desired or imposing costs on certain options that influence the choice or give incentives to take a particular choice.
Dr. Standing identified seven entities over which control is exercised:
    the self
    labour (uses of time)
    means of production
    raw materials
    development and refinement of skills
    output
    proceeds/income
Dr. Standing further distinguished between the controls that are internal and those that are external to the enterprise. External controls include economic claim enforcement mechanisms, such as wage setting or extra-economic like coercion. Internal controls have evolved out of simple controls to technical, bureaucratic and occupational control and may be linked to the character of labour, notions of skill, job and occupation.
He concluded that various forms of resistance to modes of control must be examined when thinking of work. Control (of a worker) must be accompanied by responsibility (to the worker) and rights (of the worker). Social protection should be seen as a system which enables people to make rational decisions about their work by agreeing to certain controls in exchange for guarantees of responsibility and rights.

Concluding Remarks and Recommendations
A summary of the discussion after Dr. Standing’s presentation follows:
Labour laws based on the employer-employee relationship cannot protect all categories of workers in the informal economy. By its very definition, the term employee excludes certain kinds of employment relations where a clear employer employee relationship is not present or not visible. The home-based worker, the worker working through intermediaries on a triangular or multilateral relationship, or those employed in other kinds of disguised employment are left outside the ambit of such laws. Underlying the definition is also the assumption that the employee has a single job and works for only one employer at a time. This is far from the truth for many workers in the informal economy. Workers often move across sector and may hold more than one kind of job in a year or, sometimes even in a day. There are workers who may be self-employed at one who are employees at another. Most labour laws are not incapable of capturing these transitory and multiple statuses. Then there is the question of liability. Who is responsible for the worker’s protection – particularly when it is a self-employed worker or a home-based one?
It is crucial to widen the coverage of the labour law to include all categories of workers, particularly disguised workers and own-account workers in the informal economy. In addition, there is a need for joint- or multiple- liability laws that push legal responsibilities for the wage and working conditions of home workers and others in the informal economy up the production chain to the subcontractor, contractor, manufacturing firm and multinational corporation. However, this may not be possible simply by expanding the definition of the term employee. There are limits to how much we can rely on the extending the definition of the term. Besides, definitions can exclude, too, and too much focus on definitions may distract from the main objective. It may be necessary to move away from the definition question and view worker protection in the context of controls and resistance and the workers rights and responsibilities. Labour laws must be supplemented with social security policies and schemes and other extra legal procedures. There has to be harmony between labour law, and other laws of the land like the constitutional law and contractual law, etc.
The meeting concluded that while it is necessary to extend the coverage of the labour laws beyond the traditional employment relationship in order to provide adequate coverage to a diversity of new forms of work, basic protection can also be provided by family law, social protection legislation or other laws and social security schemes.
Recommendations
Many recommendations and suggestions for action emerged from the workshop. They can broadly be categorized in two categories: first, recommendations which identified areas of documentation and action-based research that would deepen this debate, and second, recommendations that identified ILC 2003-related-activities to which WIEGO could contribute.

Identifying Areas for Documentation and Research
One of the suggestions was to document good practices already in place from around the world. Case studies should describe the judicial procedures and legal institutions as well as the law.
1.    Examine, at the national level, instances where labour laws have been extended to
protect the informal sector workers. For eample:
o Reforms in law like in Ghana o A discrete project on own account workers o Cases where special legislation has been prepared or is under consideration as in India
    Even when laws have not been changed, examine how, in certain cases, legal procedures and legal institutions have been successful, within the framework of the existing laws to extend protection to the worker in the informal economy.
    Document new and innovative cases where labour laws that protect the right to organize have been changed or legal procedures have been added to include/recognize new forms of organizations of the workers in the informal economy.
    Do a comparative study of how labour law is enforced. Study gaps and problems of enforcement, with special emphasis on dispute settlement.
    Study areas of law other than labour law that affect workers in the informal economy (e.g., commercial law, immigration law, etc.).
    Examine situations where the employee becomes a self-employed and is equally vulnerable, with the objective of granting these workers the same protection as traditional employees would get.
    Formulate a concise list of all categories of work that are vulnerable at the national level, and their relationship with employers and markets
    Study migrant workers, particularly with regard to gender.
Activities specific to or feeding into ILO-Conference, June 2003
Several suggestions were made about the various ways in which WIEGO could contribute to the ILO 2003 discussion on employment relations, particularly in the context of labour law. It was recommended that WIEGO could facilitate informal consultations on the subject, in partnership with ILO, and prepare background papers, case studies or provide any other technical support. The objective of such a consultation would be to build awareness, amongst all stakeholders, on the legal notion of the problem at the national level. The specific suggestions were as follows:
    Find grounds for common understanding between the employer, workers and government to facilitate better dialogue at the ILC 2003.
    Prepare materials for worker delegates on how to link stories and good practices with actual conference proceedings, in order to assist worker delegates with the ILO process.
    Work with the ILO and national experts already identified by the ILO.
    Work closely with ICFTU.
    Emphasize the gender dimensions of the debate.
Miscellaneous
1.   Establish linkages with WIEGO statistical department – identify how to use statistics to add to our efforts.
 
Split Legal Regime in India’s Labour Laws
Introduction
Indian Labour Laws were enacted by the British colonial power, and are still comparatively the same. These old enactments have created a discussion in India, where the Indian industry, as a collective body, has for long been of the opinion that a law enacted in 1947 or before have no relevance today. Moreover, this group has felt that despite economic reform in the country, labour policy is unchanged. Industry wants the 'fundamental right to manage' believing that certain groups of organised workers who constitute only eight percent of the total workforce are overprotected. Furthermore, it considers that employment generation is more important than employment protection. Industrial representatives, further admits that wages in India are low, but the productivity of workers is very low and thus the labour costs are high. The trade unions in response quickly demands to know the parameters industry uses to judge productivity, as this is a complicated and debatable issue. Trade unions further argue that industry and government have deliberately been exaggerating the 'overprotection of certain organised workers', to divide organised from unorganised workers. They argue that organised workers with basic rights should not be regarded as overprotected. It took decades of struggle for them to achieve those rights.
The body of legislation that forms the industrial and labour structure in India is massive. Minimum Wages Act, 1948; Trade Unions Act, 1926; Contract Labour Act, 1970; Weekly Holidays Act, 1942; Beedi and Cigar Workers Act, 1966, are few samples of this ocean of labour laws, which form a network of chaotic, overlapping and sometimes contradictory laws with a tendency to push away people who either should or are affected by them. In addition to the above there are special sectoral laws applicable to particular sectors of the unorganised. Under this category are laws like the Building and Construction Workers Act 1996, the Bonded Labour System (Abolition) Act 1976, The Interstate Migrant Workers Act 1979,The Dock Workers Act 1986, The Plantation Labour Act 1951, The Transport Workers Act, The Child Labour (Prohibition and Regulation) Act 1986, and The Mine Act 1952. Broadly speaking these sectoral laws either abolish or prohibit an abominable practice like bonded labour or they seek to regulate exploitative conditions by regulating working hours and conditions of service. A recent trend has been to seek the creation of a welfare fund through the collection of a levy from which medical benefits or pension provisions are made. Workers and management may contribute and attempt to set up tripartite boards for implementation of welfare benefits.
The Industrial Disputes Act (IDA) 1947
The single most significant labour law is the Industrial Disputes Act 1947. This was enacted a few months before India's independence, and regulates the hiring and firing rules of the industrial sector, and is an effort to pronounce a policy that is founded on old-fashioned economics and a naïve understanding of the way markets function. The IDA has doubtless done more to hold back the growth of India's manufacturing sector than any other policy. The IDA makes it very hard for firms to dismiss workers, and has an over protectionist tone. An amendment made to the IDA in the mid-1980s requires that any firm employing more than 100 workers needs to get permission from the state government before retrenching workers. However, in practise this permission is rarely given.
What is remarkably clear about the IDA, and so many other Indian labour laws is that they leave no room for free contracting. For instance a firm, which wants to manufacture a product that has volatile demand - like fashion garments, and wish to offer workers higher wages, but make it clear to them that they could be given a month's notice and asked to leave. Such a contract will have no legal standing because the IDA specifies in advance how and when workers may and or may not be retrenched. Hence such contracts are non-existent. At first sight this law looks like a balanced piece of legislation that protects and promotes the jobs of poor workers, however, a practical glance at the IDA makes it clear that it may just force an employer not to employ in many cases. As stated by Professor Basu, “while the Indian economy is booming, there is evidence that workers are not partaking in the boom adequately. Employment is not growing as fast as working age population, nor are wages rising as rapidly as per capita income”.
The Trade Union Act
The Trade Union Act facilitates unionisation both in the organised, and the unorganised sectors. It is through this law that the freedom of association that is a fundamental right under the Constitution of India is realised. However, the right to register a trade union does not mean that the employer must formally recognise the union, there is in fact no law which provides for recognition of trade unions and consequently no legal compulsion for employers, even in the organised sector, to enter into collective bargaining.5 India has ten major central union organisations of workers based on different political ideologies. Almost every union is affiliated to one of these. These central organisations have state branches, committees, and councils from where its organisation works down to the local level. The first central trade union organisation in India was the All India Trade Union Congress (AITUC) in 1920, almost three decades before India won independence. At about the same time workers at the Buckingham and Carnatic Mills, Madras went on strike led. The management brought a civil suit against the workers in the Madras High Court, and not only obtained an injunction order against the strike, but also succeeded in obtaining damages against the leader for ‘inducing a breach of contract’. This was followed by widespread protests that finally yielded in the Trade Union Act 1926 giving immunity to the trade unions against certain forms of civil and criminal action. This further facilitated registration, internal democracy, a role for outsiders and permission for raising a political fund subject to separate accounting requirements.

Protection Laws: Protecting Who?
A recent study by the Federation of Indian Chambers of Commerce and Industry and All India Organisation of Employers points out that there are more than 55 central labour laws and over 100 state labour laws. It is indeed important to note, that all labour laws provide for an inspectorate to supervise implementation, and also have penalties ranging from imprisonment to fines. Cases of non-implementation need to be specifically identified, and complaints filed before magistrates after obtaining permission to file the complaint from one authority or the other. Very few cases are filed, very rarely is any violator found guilty, and almost never will an employer be sent to prison. However, according to scholars, this does not mean that no labour laws are implemented. On the contrary experience has proved that the implementation of such laws is directly proportional to the extent of unionisation. This generalisation is particularly true of the informal sector. Moreover, data from the Ministry of Labour reveal that in the year 2000 there were 533,038 disputes pending in India's labour courts; and of these 28,864 had been pending for over 10 years.
Almost all pro-worker developments that accrued since independence are now identified as areas of rigidity and in the name of flexibility there is pressure on the government of India to repeal or amend all such laws. Interestingly, if such a proposal is fully implemented, labour law, especially for the organised sector, will go back to the colonial framework where state intervention was meant primarily to discipline labour, not to give it protection, according to Mr Babu Mathew, Professor in Labour Law.
The Contract Labour Act deals with the abolition of contract labour. Under this law, local governments can abolish some contracted labour by creating permanent jobs. The Indian industry has over and again stated this as interference in employing labour. The most distinctly visible change from globalisation is the increased tendency for offloading or subcontracting. Generally this is done through the use of cheaper forms of contract labour, where there is no unionisation, no welfare benefits, and quite often not even statutorily fixed minimum wages. Occasionally the tendency to bring contract labour to the mother plant itself is seen. This is very often preceded by downsizing, and since there is statutory regulation of job losses, the system of voluntary retirement with the so called ‘golden handshake’ is widely prevalent, both in public and private sectors. The Trade Union Act provides that seven or more members of a trade union are required for its registration, whereas industry wants to restrict the forming of unions. The government has already proposed some changes in the Trade Union Act. One of the major changes would make it compulsory for a trade union to have a membership of at least ten percent or one hundred, whichever is less. The trade unions have argued that the right to organise is a fundamental right.
Indian labour laws are such that closing down an industrial unit is perhaps more difficult than opening or running one. The law states that establishments that employ more than 100 people
will have to seek the permission of the "appropriate government" before closing it down. The industry wants the threshold limit to be increased to 1,000 workers, while unions are fighting tooth and nail to keep the number at 100. Labour law experts say the legislation is complicated and, in some cases, puts too much power in the hands of the government. J S Saroha, a management consultant on industrial laws, says, "In a few cases, the Supreme Court has judged in favour of the employer, stating just as the right to earn a living or do business is a fundamental right, the right to close a business is a fundamental right too. Legislative changes can be made where the termination compensation can be increased, but make the closure easier. Not doing this only puts power in the hands of a few in the government.10"
Social Security and Unemployment Allowance; a Government not in Favour
A permanent worker can be removed from service only for proven misconduct or for habitual absence - due to ill health, alcoholism and the like, or on attaining retirement age. In other words the doctrine of ‘hire and fire’ is not acknowledged within the existing legal framework. In cases of misconduct the worker is entitled to the protection of Standing Orders to be framed by a certifying officer of the labour department after hearing management and labour, through the trade union. In such cases, employers must follow principles of ‘natural justice’, which is an area that is governed by case-law. An order of dismissal can be challenged in the labour court and if it is found to be flawed, the court has the power to order reinstatement with continuity of service, back wages, and consequential benefits.
In contradiction to the over-flow in laws to “protect” the employee, there is no provision or guideline for social security measures in case of unemployment. ‘Social security’, and ‘social safety net’ are often talked about in the context of ‘labour law reforms.’ However, the legislator has paid meagre concern to this. A question was raised in Lok Sabha on whether the government of India proposed to take any effective measures to provide unemployment allowance to those unemployed young men/women whose names have been registered in various employment exchanges of the country for more than three years. The minister of state for labour and employment, added that "the central government is not in favour of making payment of unemployment allowance to any category of the unemployed youth."
The Working Group on Labour Policy for the Ninth Five Year Plan (1997-2002) had recommended that the ILO Convention No. 102 concerning Social Security (Minimum) Standards, 1952 should be examined and efforts be made to ratify the same during the Ninth Five Year Plan period. However, in reply to a question in Rajya Sabha, the government of India stated: "The question of ratification of the ILO Convention No. 102 was examined by the government from time to time. In India, at present there is no comprehensive social security against unemployment. However, other social security measures as envisaged by the ILO Convention No. 102 are by and large met under the existing social security schemes of the country, especially the Employees State Insurance Scheme. Yet the coverage of the scheme is not as wide as envisaged under the convention. The resource position of the country at this stage of development does not facilitate ratification of the convention immediately."

Women’s Right to Work and Labour Law
Apart from the Maternity Benefit Act, almost all the major central labour laws are applicable to women workers. The Maternity Benefit Act is applicable to notified establishments. Its coverage can therefore extend to the unorganised sector also, though in practice it is rare. A woman employee is entitled to 90 days of paid leave on delivery or on miscarriage. Similar benefits, including hospitalisation facilities are available under the law. The Factories Act restricts women working at night. One of the controversial subjects discussed has been to amend this act to allow women to work night shifts. According to Government sources, out of 407 million total workforce, 90 million are women workers, largely employed (about 87 percent) in the agricultural sector as labourers and cultivators. In urban areas, the employment of women in the organised sector in March 2000 constituted 17.6 percent of the total organised sector.
The Equal Remuneration Act was passed in 1976, providing for the payment of equal remuneration to men and women workers for same or similar nature of work. Under this law, no discrimination is permissible in recruitment and service conditions, except where employment of women is prohibited or restricted by the law. The situation regarding enforcement of the provisions of this law is monitored by the Central Ministry of Labour and the Central Advisory Committee. On occupational hazard concerning the safety of women at workplaces, in 1997 the Supreme Court of India pronounced that sexual harassment of working women amounts to violation of rights of gender equality.14 As a consequence it also amounts to violation of the right to practice any profession, occupation, and trade. Furthermore, the judgment laid down the definition of sexual harassment, the preventive steps, the complaint mechanism, and the need for creating awareness of the rights of women workers. Implementation of these guidelines has already begun by employers by amending the rules under the Industrial Employment Standing Orders Act 1946.
A Call to Liberalise Labour Laws
The Organisation of Economic Cooperation and Development (OECD) has suggested India to liberalise its labour policies which it states, if not changed, would slow down the productivity. Labour laws, if too stringent, raise the cost of adjusting the workforce. This may slow down the adoption of latest technology, which requires work-place reorganisation and substantial changes in the composition of workforce. This will create problem for a country like India, which needs to catch-up with the 'frontier' rapidly. On business regulation and tariff front, though it varies across the states, it is still burdensome. Policies that used to reserve some industries for very small firms still exist. Despite trade liberalisation, in 2003 India had one of the highest tariff rates in the world. India should liberalise business regulation by doing away with reservations for small firms, reduction in tariff rates and easing of labour laws for large firms. Such an approach could pave the way for labour market reforms. Taking note of India's infrastructure woes and comparing it to China which, spends around 3% of its GDP on infrastructure whereas in India, it’s around mere 1/2%.
Professor Basu argues that in a poor country, legislator may legislate emotionally so that workers don’t loose their jobs. Thus, making it difficult for firms to layoff workers. This is what may be called the feature of India's Industrial Disputes Act, 1947, especially through some later amendments, for firms in the formal sector and employing more than 100 workers. However, in today’s globalised world, with unpredictable and shifting demands, firms have responded to this by keeping their labour forces as small as possible, which has resulted in India having less than 10 million workers employed in the formal private sector. Some commentators have argued that India's labour laws could not have had much of a consequence since most of them apply to only the formal sector.
 
LABOUR LAW AND SPECIAL ECONOMIC ZONES IN INDIA
Upon an initial reading of the SEZ Act it is not apparent whether the labour law governing Special Economic Zones (SEZs) in India is distinguishable from the law prevailing outside the zones. However, upon closer inspection it becomes evident that within SEZs labour is subject to a new and modified regime aimed at non-implementation of any labour law. To appreciate the sig¬nificance and nature of these changes certain salient features of Indian labour law are sketched out to articulate the changes. With the changes in the labour laws spelt out, the paper proceeds to list a series of normative concerns (social costs) generated by the emergent regime.
 
Introduction
While it has been acknowledged that the Chinese endeavour to manufacture for exports in Special Economic Zones (SEZs) has resulted in the expansion of employment and wages (Ge 1999), it has also been widely reported that basic labour standards are upheld rather poorly in China (Amnesty International 2002). To the extent that poor labour standards/conditions characterise the SEZ system in China - it is important to investigate whether the Indian version of the SEZ is subject to similar hazards. The Indian State undoubtedly aspires to imitate the Chinese experience1 and success in expanding manufactured exports and employment by setting up SEZs - Indian policy documents often celebrate Chinese economic ascendancy, though rarely if ever acknowledging the concomitant controversy over labour rights. Thus, this paper aims at two tasks - First, to analytically describe the legal regime concerning labour in SEZs in India, and second, to point towards critical normative tensions, generated by the legal regime. It is important to minimally acknowledge these tensions in so much so as SEZs are central to the contemporary rhetoric of growth and development in India.
The first section of the paper attempts to isolate the content pertaining to labour from the overall law applicable to SEZs. Upon an initial reading of the law it is found that there is no apparent difference between the regime affecting labour within and outside the SEZs; however, upon a closer inspection it becomes evident that the regulation of labour inside SEZs is indeed subject to a new and modified regime. To appreciate the significance and nature of these changes, certain salient features of Indian labour law are sketched out to ensure that the context within which the changes can be understood is lucid. The next section lists a set of normative concerns engendered by the emerging legal regime within SEZs. These concerns range from the social costs associated with concentrating power in the executive office of the Development Commissioner (the office is expected to attract investment as well as look after labour interests simultaneously) - to - social costs generated by instituting a system where, de facto implementation of labour standards is, at the best, very weak. It needs to be emphasised that this paper should not be read as an attempt at an overall cost-benefit analysis2 of the Indian SEZ venture, but rather as an exercise that points to a set of costs faced by labour as a group, that need to/should be acknowledged in the act of instituting SEZs.
Section I - SEZ Aspirations
The first official mention of SEZs in India was in 2000, when the right wing NDA government announced a SEZ Policy which hoped to not only establish Special Economic Zones all over the country but also aimed to refurbish the existing Export Processing Zones3 with a view to providing an internationally competitive and ‘bother free’ environment for the manufacture of exports. The subsequent UPA government set about making this operative by ensuring that the policy was supported by an enabling law - the Special Economic Zone Act 2005. The Act was rapidly passed through the Indian Parliament with a very brief discussion on 10th May 20054. Though the law was passed with ease and very little discussion, a good deal of adverse reaction has visited the SEZ endeavour later - particularly so, once the process of land acquisition to set up the zones was initiated. There have been many protests against SEZs by both affected parties and civil society, predominantly in relation to the vexatious issues of compensation and displacement as established patterns of property and livelihoods have come under challenge5. The prominence of these concerns in the discourse has somewhat drowned out concerns regarding labour in SEZs, though some apprehensions have been expressed intermittently.
The tone of the apprehensions and degree of engagement with labour issues was set even at inception, as is evident from the brief exchange in the Indian Parliament regarding the SEZ Act, where a couple of members voiced a line or two in relation to labour - One member, Rupchand Pal, said “This piece of legislation is a welcome move, but the Government should look into the basic labour interests, the ILO Convention, basic human rights, fundamental rights etc. I have given some extreme cases and examples and these are happening in our country.” In a related comment another Member, Gurudas Dasgupta said “We wish you best, Shri Kamal Nath [the Commerce Minister and one of the key architects of the SEZ Act], but please have caution. Our task is to caution you to see that while your concessions are made use of, there should be a monitoring system also and the condition of labour has also to be protected.” After the passage of the SEZ Act, a similar uneasiness is expressed by trade unions as a part of general list of Charter of Demands accompanying a general one day strike held on 29th Sept 2005 where one of the points in the charter state “Strengthen inspection and enforcement machinery to ensure strict implementation of all labour laws including statutory minimum wages in all sectors including SEZs and EPZs; no pro-employer changes in labour laws in the name of flexibility6. It needs to be appreciated that while this disquiet indicates a general suspicion and apprehension of labour conditions in SEZs, it is also the case that the articulation on these matters is never specific or explicit. This is largely on account of the clever nature of the regime governing labour - a regime that does not explicitly strip labour of their current rights but rather reorients rules ever so slightly, leading to a potentially disproportionate impact. To understand this it is important to begin by closely looking at the rhetoric and the minutiae of the legal provisions and rules that form an integral part of the SEZ endeavour.
Labour and the Special Economic Zones Act, 2005
To best enter into the rhetoric and the enabling law associated with SEZs, it is useful to follow the contents of the official document on SEZs put out by the Ministry of Commerce and Industry, Government of India7. The document begins by stating that India has had “shortcomings” in promoting exports, which have been “on account of the multiplicity of controls and clearances; absence of world-class infrastructure” - it is to correct for these hurdles and “with a view to attract larger foreign investments in India” that “the Special Economic Zones Policy was announced in April 2000”. The document goes on to describe how this policy was translated into law by the passage of the Special Economic Zones Act, 2005. The Act is understood as having the following objectives - “(a) generation of additional economic activity, (b) promotion of exports of goods and services; (c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities; and (e) development of infrastructure facilities.” To achieve these ends, it is emphasized reiteratively throughout the document that the SEZ Act has been framed to enable “single window” approvals8. It is also emphasized that the dominant mode of transmitting information is to be self certification in the interest of simplifying compliance procedures and documentation. In view of this, the envisioned administrative structure consists of a Board of Approval at the apex which approves of a SEZ and each SEZ has an Approval Committee which approves the units and activities seeking entry into the zone. A Development Commissioner acts as the ex-officio chairperson of the Approval Committee -a reading of the SEZ Act clearly shows that an enormous amount of power is delegated to this office. The document then goes on to list the incentives and facilities offered to units in SEZs to attract investment, including foreign investment, which are specified in the Act. The list consists of a series of fiscal concessions which include exemption from customs and excise duties and exemption from income, central sales and service taxes. Next, the document provides some general information about the SEZs that have been approved - apart from the assertion that they include approvals of a number of labour intensive manufacturing industries, projected figures of anticipated growth of exports, investment and employment are provided. In particular it is suggested that if one takes into account the 130 SEZs notified so far, 17, 43,530 new jobs will be created by the year 2009 and that if all 341 SEZs that have been proposed are included in the calculation, four million new jobs will be created.
The document is silent on labour laws governing labour relations in the SEZs and an examination of the SEZ Act shows that the legal regime relating to labour has not been altered. In fact it is decreed that labour laws are excluded from the purview of Section 49 of the SEZ Act which empowers individual states to modify the SEZ Act and other related laws and regulations that enable the delivery of fiscal benefits envisioned by the SEZ policy. In relation to labour, it is stated that such powers of modification are not applicable to “matters relating to trade unions, industrial and labour disputes, welfare of labour including conditions of work, provident funds, employers’ liability, workmen’s compensation, invalidity and old age pensions and maternity benefits applicable in any Special Economic Zones.” In other words unlike fiscal laws, rules and regulations, the set of labour laws, rules, regulations and orders relating to labour maters cannot be modified invoking the provisions of the SEZ Act. The overt statement that labour laws will not be changed within a SEZ partially explains the muted response to SEZs in relation to labour - it is hard to protest when the ‘speak’ says that there is to be no change in the legal status quo. Even though labour laws cannot be modified, it is still open for state governments to make changes by notifications and other administrative means.
Upon close inspection of administrative documents generated by individual Indian states, announcing policies in relation to SEZs, it turns out that the regulatory regime faced by labour in SEZs has been modified. As a representative illustration take the case of a notification by the Government of Punjab9 that lays out the state’s policy on SEZs where under the sub heading Labour Regulations it is stated that the powers of Labour Commissioner will be delegated to the Development Commissioner, that a system of Self Certification in respect of Labour laws notified under the scheme of Labour department shall be followed by the units in SEZ and that all units and other establishments set up in SEZ shall be declared as “Public Utility Services” under the provisions of the Industrial Dispute Act, 1947. Similar statements either originating as notifications, intentions, ordinances etc. can be found in the documents released by a number of other Indian states such as Gujarat, Goa, Tamil Nadu, Andhra Pradesh and Karnataka. To more precisely understand the significance of these moves, it is important to locate these changes in the context of Indian labour law, legislation and the labour market.
The Context of the Changes - Indian Labour Legislation
The Indian labour force consists of 430 million persons10, about three fifths of which is employed in agricultural activity with the rest of the force spread over industrial and service activity. The standard institutional description of the Indian labour market charts a spectrum with rural labour at one end and labour employed in the high productivity formal sector at the other end, with the formal sector employing only eight per cent of the work force. In between these two ends there is a large and growing residual ‘urban informal’ or ‘unorganised’ sector, typically associated with the provision of services, but more importantly associated with low productivity employment - the ubiquitous underemployed or the disguised unemployed of a ‘developing’ economy.
However a complementary institutional description of the Indian labour market would additionally emphasise the fact that while formal sector labour is covered by labour laws, the bulk of the labour force - the agricultural as well as the informal sector work force, is not. In other words, the many Indian labour laws are operational only for a worker who is employed in a legally recognised category of establishment where labour benefits are sanctioned by law and if she is legally recognised as a labourer, conditions that are fulfilled typically only if the worker is employed in the formal sector. Given the overall desire of the SEZ endeavour to push for labour intensive export oriented consumer goods, the entire enterprise is probably best understood as being located at the notional border between the formal and informal sectors. At this location, the very act of employment generates a dilemma because the instant a worker is drawn from the informal/agricultural sector and employed, she becomes eligible for all the benefits provided by law to formal sector workers. If this were indeed to be allowed, it would raise labour costs which would presumably dampen national and international investment and if disallowed explicitly, the political rhetoric associated with the SEZ enterprise would end up being more widely challenged. Given the border or frontier location of the labour involved, the solution to this dilemma has been to nudge the practice of law in a manner which minimises the coverage of labour law without actually changing the law - a relatively smoothly accomplished step, given the structure of Indian labour law.
To achieve an instant and overall sense of the content of Indian labour law, the Industrial Disputes Act 1947 (IDA) can be read as a metaphor for Indian labour law in general (Singh, 2007). The IDA is the essential legislation associated with ‘industrial relations’ in India, covering labour disputes, strikes, lock-outs, lay-offs and retrenchments. The legislation gives the executive branch of the government a very important role in the resolution of labour disputes. When a dispute takes place, the legislation calls for the constitution of a Works Committee to resolve the manner internally, a step which is by and large not terminal because the decisions of such committees are not binding on the parties involved. The next stage is to initiate a conciliation process. This involves active participation of the executive branch of the government, involving officials of the Labour Commissioner. The conciliation process is an attempt to work out a settlement, but again since such a settlement is not binding on any of the parties - there is always pressure for the dispute to move to adjudication in a labour court. In this context it may be noted that it is entirely up to the involved labour department or Labour Commissioner to make a reference for adjudication, without such a reference the case cannot move into the labour courts. It may also be mentioned that when conciliation is a failure, the parties can call for arbitration under the IDA but since the agreement is not adequately legally binding, the impulse is always to seek subsequent adjudication.
The centrality of the executive involvement in the governance of labour is also manifest in the point that the Labour Department headed by the Labour Commissioner, is largely responsible for the implementation of various laws regarding work conditions. These responsibilities include monitoring for compliance through inspections and imposition of penalties for not conforming to the statute. One prominent law in this regard is the Factories Act, 1948, which is intended to protect the safety and work conditions of workers. Yet other important laws include Payment of Wages Act, 1936 the Minimum Wages Act,1948, the Contract Labour (Regulation and Abolition) Act, 1970, the Equal Remuneration Act, 1976, the Interstate Migrant Workmen (RE&CS) Act, 1979, Payment of Bonus Act 1965, Child Labour (Prohibition and Regulation) Act, 1986, Payment of Gratuity Act, 1972, Labour Laws (Exemption from furnishing and maintaining registers by certain establishments) Act, 1988, Building and Other Construction Workers (RE&CS) Act, 1996, Industrial Employment (Standing Orders) Act, 1946, and the Maternity Benefit Act, 1961 and the Employees Provident Fund Act. It must also be mentioned here that the controversial Chapter V-B of the IDA (and the bête-noir of national and international calls for reform in Indian labour legislation) which requires that firms employing more than 100 workers obtain permission before retrenching workers vests the power to grant such permissions with the state labour department or the Labour Commissioner.
Alongside acknowledging the prominence of the executive branch of the government in routing labour disputes and ascertaining the implementation of the law, it is important to take stock of the legal position of trade unions in India. While the Trade Unions Act 1926 allows any seven adults to form a trade union, there are no legal principles in operation that compel the recognition of a particular trade union as representing the interests of the workers. Court judgments in this regard have made it clear that the law does not support obligatory recognition of a particular trade union as the bargaining agent12. This creates a complicated regime because simultaneously Section 36 of the Industrial Disputes Act says that in the event of a dispute, a worker can be represented by any registered trade union. In effect this means that though the employer decides who the representative bargaining agent for workers is, any union can potentially instigate the dispute resolution process - as a result multiple unions are structurally encouraged, each having a support of a fraction of the work force. This framework clearly cannot easily be interpreted as one that encourages a cooperative bargain between workers and employers. This is not a case of direct confrontation since each side can always set into motion the conciliation-adjudication played out in an atmosphere of ambiguity as to the precise number of players. The critical participation of the executive branch of the government implies that not only is the labour department involved in the conciliation process but if the conciliation is not a success, the next stage again involves the executive since the labour department makes the crucial decision to refer the dispute for adjudication. Such involvement of the government at various steps of dispute resolution causes large scale political interference in the resolution process. It is thus no surprise that political parties control the bulk of union activity in India and the independent trade union movement is quite weak. In this context, it is, often enough not adequately highlighted and acknowledged that though India has signed some of the Conventions associated with the ILO Declaration on Fundamental Principles and Rights at Work, it has not ratified the critical Conventions regarding Freedom of Association, Right to Organise and Collective Bargaining13.
The brakes on the freedom of association and the rights to organise and collectively bargain are often made operative by exploiting the juridical device of ‘illegal strikes’ - a contrivance that derives from the provisions of the IDA which enables executive government to support certain categories of employers in relation to labour To see this, consider first the provisions of Section 22 of the IDA which states that if any person employed in “a public utility service” goes on strike without a) giving notice or b) strikes during conciliation proceedings, it will be considered to be a breach of contract. The requirements associated with ‘giving notice’ under this section are abstruse - in particular specifying very tight time schedules over which the notice needs to be given - clearly designed to make ‘going on strike’ in “a public utility service” a very difficult proposition. Section 23 which pertains to establishments other than a “public utility service” covered by Section 22 is lighter in its requirements, making it a breach of contract only if a strike is declared over arbitration, conciliation or adjudication proceedings. Next, Section 24 states that a strike is illegal if ‘it is commenced or declared in contravention of Section 22 or 23’. The stringent requirements associated with a ‘public utility service’ in contrast to other establishments, obliges one to look at the definition of the term given in Section 2 (n) where a ‘public utility service’ is defined by associating the category with railways, ports, post, telegraph, telephones, power, light, water and sanitation. In addition to this, clause 2(n) (vi) gives the government the right to in public interest to declare, by notification, any industry specified in the First Schedule of the IDA as a ‘public utility service’. Since labour is a concurrent issue as per the Indian Constitution, individual states have by amendment put in a host of industries in the First Schedule - to illustrate some of the industries labelled as ‘public utility service’ include dubious categories such as polyester, resin, flour and rice mills.
In relation to the SEZs, it may be noted that even before the advent of SEZ movement and ‘export promotion’ had reached the levels of current enthusiasm, ‘hundred percent export units’, particularly those located in export processing zones (the smaller precursors of the SEZs) have been regularly listed in the First Schedule by a number of Indian states. With the initiation of an explicit SEZ policy and the legislation of the SEZ Act, one of the key devices sought to be used to circumscribe labour rights is to have the establishments located in a SEZ to fall into the First Schedule. As mentioned earlier, various state level documents associated with SEZ policies, explicitly state that apart from delegation of the powers of Labour Commissioner to the Development Commissioner of the SEZ, respective state governments have taken steps to declare SEZ as a ‘public utility service’, making units positioned in a SEZ immune to strikes.
Section II - Promoting Regimes of Non-Implementation
To summarise from the contents above, three significant features can be identified regarding the regime governing labour in SEZs. Firstly, ostensibly speaking, standard labour laws continue to operate in the SEZs; there is no change in the legislation and as per the SEZ Act, labour laws cannot be changed invoking the Act. Secondly, while there is no change in the laws, the laws will now be implemented by the office of the Development Commissioner rather than the Labour Commissioner. As a corollary to this reorientation, in keeping with the general agenda of ‘single window clearance’, procedural change requires units in a SEZ to report details pertaining to labour conditions prevailing in the units not to the Labour Commissioner but only to the Development Commissioner. Thirdly the ability of workers to organise strikes is curtailed by undertaking a general policy measure that labels economic activity within a SEZ as a ‘public utility service’.
The Development Commissioner and the Concentration of Power
In the first instance this raises the question as to whether in fact labour laws have changed with the advent of the SEZs. Though the ‘speak’ of the SEZ Act suggests that the law has not changed, it has certainly been reinterpreted at the level of policy formulation so as to weaken implementation as far as possible. The implementation of Indian labour laws is in general, at the best, quite partial and tardy as is candidly admitted by Report of the Second National Commission on Labour (2002). The move to pass on the powers of the Labour Commissioner to the Development Commissioner will make it even more unlikely that labour laws will be implemented. In fact it can easily be surmised that the Development Commissioner would have a structural incentive to prevaricate on implementing the laws as the office seeks to balance pressures to keep earnings of the zone high and to keep costs as low as possible. As has been described above, Indian labour legislation is structured to give the Labour Commissioner enormous voice in determining labour market outcomes, whether it is in relation to work conditions or firing decisions - all this power now comes to vest with the Development Commissioner, whose job, unlike that of the Labour Commissioner is not primarily to look into labour matters but to ensure that the SEZ is able to attract sufficient investment and generate earnings. This clearly generates a conflict of interests in the office and there is no in built guarantee that labour interests will be privileged efficiently in relation to those of employers.
Apart from this concern about competency in terms of incentives, questions about the competency of the office of the Development Commissioner to deal technically with labour matters can also be raised. It is an open question as to whether the office of the Development Commissioner will be able to learn about the implementation of the plethora of labour laws14 in place, if so, it is essential to acknowledge that this will be a costly in resources and to the extent such learning is not invested in, it will be costly to the degree the office slackens in the implementation. It appears that policy makers are not incognizant of such costs - for instance a SEZ related policy document15 from the Government of Gujarat states ‘For inspections relating to workers’ health and safety, units will be permitted for obtaining inspection reports from accredited agencies as may be notified by the State Government.’ Such farming out of statutory obligations admits not only to lack of in-house competency but bespeaks of the denial of the moral hazard associated with such data being generated by private agencies.
Indeed, if these costs - many of them intangible - were to be aggregated, they are not necessarily small. Unfortunately the generation of such costs are endemic to the process of reform in India. Such reform is typically initiated by fragmentation of ongoing institutions rather than by consolidation - in the case on hand -possibly the reform of the office of the Labour Commissioner could have been more beneficial all around rather than fragmenting the office by removing the Labour Commissioner and vesting the very same powers of the office with the Development Commissioner.
It is also pertinent to raise questions about the ‘single window clearance’ as a strategy to improve ‘governance’ - this notion, as we have noted earlier, permeates all SEZ aspirations and policy including matters relating to labour. This celebration of ‘good governance’ as being tantamount to speed, is subject to question because speed of decisions and generation of quick outcomes is clearly only one dimension of governance (the notion of ‘governance’ presumably carries the burden of multiple objectives). By privileging speed alone, the lack of adequate checks and balances denies voice to other normative concerns that would operate within a SEZ. It is highly probable that the premium on speed acts primarily to reinforce the concentration of power in the office of the Development Commissioner, initiating the institution of an important centre of rent seeking activity.
Labour Standards
Possibly the most explicitly noticeable circumscription of labour rights is manifest in the relegation of all units functioning within a SEZ to the category of ‘public utility service’ and thereby curtailing the ability of workers to initiate strikes. The brakes on the right to strike take on particular significance in the face of a fragmented trade union movement - the stringent requirements mean that when unreasonable demands are placed on workers, they will have to be borne out because only very organised resistance can work around the impediments faced by a striking ‘public utility service’. It is unlikely that unions will be able to achieve a credible presence in SEZs, apart from a possible token presence. This conjecture is somewhat strengthened by observations reported in a survey performed by The International Trade Union Confederation (ITUC)16. This document reports that trade unionists are not able to enter the EPZs/SEZs in India because entry in to the zones is restricted to the workers who are transported in by their employers, making it is very hard to organise workers and rendering union activity virtually non existent. The survey proceeds to note that the bulk of the employment in these zones is confined to young women who are too frightened to form unions. These women are subjected to bad working conditions and compulsory overtime. It is also reported workers face the constant threat of immediate sacking if they make demands to implement labour laws. Studying firms in Cochin Special Economic Zone and NOIDA yet other studies repeat precisely these patterns and findings - no unions, poor working conditions, a largely female work force and threats of being sacked if moves are made to demand the implementation of labour laws. [George (2003), George (2006)] Apart from reporting these patterns these studies also observed the practice of non implementation of labour laws is consciously supported by the state particularly by limiting union activity as well as ensuring that SEZs remain listed as Public Utilities. At the level of official rhetoric of the Indian state, public policy documents tend to represent SEZs as locations where the legal regime will allow a ‘flexible labour market’ - for instance the Economic Survey 2003-2004 celebrates the delegation of the powers of the Labour Commissioner to the Development Officer of the SEZ as a means to ‘make a flexible labour policy applicable to the units in such zones.’ While the term ‘flexible labour policy’ could be read only as an euphemism indicating a regime characterised by the ease of firing workers, it more widely signals an administrative framework structured to minimise the chances of any labour law being implemented.
The fact that units in existing Export Processing Zones prefer employing women (since, it is reported, women are perceived as being docile and dexterous) has compelled some detailed studies relating gender and work in these zones. Some of this work has been reviewed by Ghosh who collates the fact young women form the bulk of the work force in most Export Processing Zones (Ghosh, 2004). Apart from reporting the pattern that union activity is widely discouraged and absent in the zones, she notes that, among other things, workers are not paid minimum wages, work very long hours to complete stringent targets, are subject to being fired without justification or compensation, denied any maternity benefits and suffer from work related illness. These concerns come noticeably alive in the narrations of women working in the Madras Export Promotion Zone assembled by Swaminathan (Swaminathan, (2005). This ethnography brings out the lived experience of work in ‘export oriented’ industries under a regime where labour laws and standards are implemented poorly, if at all - resulting in demanding work schedules, unhygienic work environments, sexual harassment and ill health arising from both the nature of the work and the ambient air quality at the work place. However the most interesting insights that emerge from this ethnography are not confined merely to the documentation of the adverse work conditions but flow from noting the mixed affects generated by the fact that employment in the export-promotion zone offers these women a higher ‘wage’ than they would earn otherwise. This admixture of the negative and positive affects of such employment causes Swaminathan to say ‘The observation that wage income has enabled families to improve the quality of food consumed has to be juxtaposed against the reports of many respondents that they were unable to eat before leaving for work for want of time and also they often say there was an odour pervading the work areas leading to a loss of appetite and reduced intake of food.’ It is precisely this juxtaposition that is challenging and is at the heart of the critical questions that can be raised in relation to the move to make ‘flexible labour policy’ applicable to SEZs. Clearly, the opportunity of employment and higher wages involves an internal trade that subjects the employed worker to some combination of long hours, sexual harassment and unhygienic and/or hazardous work conditions. What normative valuation can be made of this trade-off?
One way to initiate such an evaluation is to proceed with a standard economic welfare exercise performed over labour employed in SEZs; it may not be untoward to confine ourselves to this category, since (as noted earlier) one of the key agendas of the SEZ endeavour is to encourage the developmental goals of expanding productive employment. In this setting the worker who gains employment does so voluntarily, presumably weighing the utility of gaining productive employment and the accompanying wage increase against the disutility of hazardous/stringent/sexually exploitative work conditions. The standard precepts of welfare economics view any voluntary choice as Pareto improving and by this criterion the outcome of a single labourer taking on a job in a SEZ is unequivocally welfare improving for the worker. However what is obvious and true of such a single transaction, considered in isolation, may not hold so unambiguously if a number of such transactions were simultaneously considered. In some recent work, Basu has shown that addition over many such transactions is not necessarily welfare enhancing because there are often spillover effects on those not immediately employed[Basu (2003)]. Though he makes his argument in the context of sexual harassment laws, there is a suggestion that the argument could be more widely extended to a ‘maquiladora, or an export-processing zone’. Indeed this model extends quite easily to the Indian move to atrophy labour standards in SEZs, and since it sheds light on the issue on hand, it is useful to run through a simple version of the model.
A Model of Employment with and without a Ban on Hazardous Work
Using the category of ‘hazardous work’ as a metaphor for labour standards understood more widely, assume a perfectly competitive market where all agents are price takers. To set up the model, two regimes can be defined:
Regime I: Labour Standards are upheld and hazardous work is banned
Under this regime labour standards are upheld and therefore hazardous work is banned legally and the ban is fully implemented. Invoking the usual forces of supply and demand in the labour market a single wage (w*) will prevail in equilibrium.
Regime II: Labour Standards are not upheld and hazardous work is not banned
Under this regime there is no legal obligation to uphold labour standards and since hazardous work is not banned, some firms offer employment which is subject to hazard while others offer work free from hazard. Thus, two options are available to workers, one, workers can be employed in a firm where work is hazardous (H) and the other where work is not subject to hazards (NH). Since the firm that offers hazardous work gets a benefit from not upholding labour standards (for example, the benefit derived from not paying the cost of providing protective gear), a premium should be subtracted from the wage the firm offers and this amount will equal the wage offered by the firm providing the option for non-hazardous work in equilibrium, an equilibrium which is also characterised by the fact that all firms will be indifferent between the offers that they make, i.e. Firms are indifferent between being an ‘H firm’ or a ‘NH firm’.
Turning to workers it is fair to assume that workers find hazardous work painful (measured as ci) but though they all find it painful, some find it less painful than others. If it is further assumed that there exists at least one worker whose pain exceeds the premium that a hazardous firm enjoys and there is at least one worker whose pain is less than the premium, then both types of offers will prevail in the market. Thus some workers take up hazardous work like the women who spoke to Swaminathan [Swaminathan (2005)], while others do not. In equilibrium two wage rates will prevail: One for firms offering hazardous work (w*) and the other for firms that offer non hazardous work (w* H).
Proposition
By comparing the two regimes the model throws up a very interesting proposition - Consider the scenario where hazardous work is banned legally and the ban is fully implemented. In this case only a single wage (w*) will prevail in equilibrium. It can be proved that this single wage will be higher than the wage rate offered by firms making non-hazardous work offers if there was no legal ban on hazardous work (w* > w*NH). The significance of this proposition becomes evident in the process of spelling out the intuition behind the result.
Intuitive Proof
To see the intuition behind this result consider an initial situation where a ban on hazardous work is in place, which is replaced by a regime where there is no such ban. After the ban is removed if it is held that wage w* remains as the wage associated with firms that offer non hazardous work, this will clearly not be the equilibrium wage because of the presence of offers being made by firms that offer hazardous work, which a certain subset of workers will take up - those who value wH - ci > wNH. This higher net wage will cause labour supply to expand and cause w*NH to be less in equilibrium than the initially assumed w*. If now one were to switch back to a regime which bans hazardous work all workers who are working in firms offering non-hazardous work will benefit because w* > w*NH. Furthermore many workers whose valuations of ci are such that they lie in the interval w* > w*. - c. > w*   . also stand to benefit from a
H    i    NH
regime that bans hazardous work. Thus though a single offer of hazardous work is Pareto improving, banning hazardous work does not lead to a Pareto inferior state in relation to absence of a ban. For this result to hold it is clear that we need large numbers - it is when a large number of offers for hazardous work are taken up then adverse affects are visited on the welfare of a bulk of remaining workers17.
Welfare
To confront alternatives that cannot be ranked on purely Paretian grounds in the model - all those workers who have such a low valuation of pain from hazardous work that they value the high net wage that they get from hazardous work more than the wage they would get if they worked in a regime that banned hazardous work, Basu invokes certain ethical considerations to override their loss of welfare. To do this he classifies preferences as being maintainable and inviolable, where maintainable preferences are associated with having rights that one can pay for (I have the right to not work everyday, though I will loose income for the days I do not work) and inviolable preferences are associated with having a right but no one should have to pay for having such a right (I have the right to be free of sexual harassment at the work place). He argues that the notion of inviolable preferences should be invoked to privilege a person who is forced to take a low paying job because of her inviolable preference, and make this the basis for taking action to legally ban such outcomes18. These arguments allow one to mix ethical concerns with economics based consequentialist arguments to make a powerful case for upholding labour rights and standards.
Whereas the matter as to which right should be considered inviolable may be subject to moral/ethical discourse, the consequential argument outlined above cannot be easily dismissed. To restate the central insight - while the expansion of economic activity without upholding labour standards may lead to a set of Pareto superior contracts, this does not in turn imply that upholding labour standards is Pareto inferior to a regime that upholds standards. The impact that the diminishing of labour rights and standards envisioned in SEZs cannot just affect those who will be employed in the zone but also labour as a group - particularly if the numbers are going to be large, large numbers as has been noted are essential for the argument to hold.
There is obviously no easy way by which one can precisely say at this stage as to how labour will come to be situated once the Special Economic Zones become fully operational - the zones will provide some employment though whether such employment will be in consonance with the predictions put out by the Ministry of Commerce and Industries cannot be predicated with any accuracy. Much will depend on linkages with the rest of the economy and the extent to which skill based technical change is incorporated by the firms operating in the SEZs. However to the extent employment is generated among the unskilled labour force, one can only be pessimistic about the work conditions such employment will bring to labour given that the legal framework is oriented to promoting a regime of non-implementation of labour laws and standards.
Conclusion
A reading of both the rhetoric and the formal statue law associated with the SEZ endeavour in India seems to suggest that there is little difference between the legal regime confronting labour within and outside the SEZs. However upon closer inspection, documents associated with the articulation of the ongoing SEZ policy show that the regime of labour governance in SEZs is oriented towards the non-implementation of the existing law. While it is widely accepted that labour laws are generally poorly implemented in contemporary India, the envisioned labour regime in SEZs has been consciously structured to promote the non-implementation of laws. One of the key devices to enable this regime is to place the implementation of labour laws in the office of the Development Commissioner rather than the Labour Commissioner. The other device is to mitigate the impact of labour laws in SEZs by exploiting certain provisions of the Industrial Disputes Act that enable Indian states to label all economic activity in a SEZ as a ‘public utility service’, which in turn, acts to curtail the ability of workers to strike and therefore lower the bargaining strength of labour in a SEZ. This regime obviously generates a series of social costs.
The act of shifting the implementation of labour laws from the Labour Commissioner to the Development Commissioner undoubtedly generates a conflict of interest in the office, generating costs to the extent there is an inducement with the office not to privilege labour interests in relation to those of employers. Apart from such costs reflected in terms of incentives of the office yet other costs are generated in terms of the competency of the office to deal technically with labour matters. These costs could have been mitigated to the extent reform in the legal regime governing labour were to be targeted at the office of the Labour Commissioner rather than fragmenting the office by vesting the very same powers of the office with the Development Commissioner. Since the stated aim of the regime of governance in a SEZ is ‘speed’ of decisions, other normative concerns find very little voice in the venture - making the lack of checks and balances in the office act to centralise power in the office, possibly instituting an important centre of rent seeking activity.
Since the administrative framework governing activity in SEZs is structured to minimise the chances of any labour law being implemented, this has a negative welfare impact on labour at large. Following Basu [Basu, (2003)] it can be maintained that while the act of a single worker gaining employment and higher wages in an unregulated SEZ is a voluntary welfare enhancing move, once the effects of the unregulated regime are taken into account on labour as a group, it needs to be conceded that the beneficial affects on single individuals are clearly not ‘additive’. Thus while the unregulated regime may in tandem with the aspirations of the SEZ endeavour expand employment and wages in SEZs - this is not without a negative impact or imposition of costs on labour as a group. It is precisely this sensitivity as to how protagonists of a normative exercise are conceived that plays an important role in evaluating the legal regime that should be informing the SEZ endeavour.
Finally it needs to be noted that SEZs are locations where the aspiration to have ‘labour flexibility’ a euphemism for ‘reforming’ India’s labour laws is sought to be made operational. There is a definite case to reform the laws in a manner such that both labour and producer interests are adequately balanced - laws that enable producers to be more flexible backed by social security and labour standard legislation. This needs to be followed by the establishment of a system that ensures implementation of the laws. To do this requires serious engagement with various social and political groupings - it is to precisely avoid this engagement Indian labour law is transforming incrementally by eroding labour rights, representing a certain ‘reform by stealth’ a phrase used by Nagraj [Nagraj (2004)], a ‘reform’ process that is hurting labour as a group.
 
Labour Market Flexibility in Indian Manufacturing
There have been proposals to make the Indian Labour market further flexible, by amending the Industrial Dispute Act, 1947 and Contractual Labour Laws, 1970. But the Indian labour market has already achieved a substantial degree of flexibility through the contractualisation of factory workers. We have indexed these labour market flexibilities by the ratio between workers employed through contractors and total number of factory workers. This paper critically investigates the claims made in favour of introducing greater flexibility in the labour market. This is done through an empirical inquiry of the proposition, popular in neo-liberal policy circles, that casualisation of labour leads to higher output and employment growth. We found that there is no statistically significant dependence of employment and output growth on labour market flexibilities in Indian organized manufacturing sectors. Rather, it has helped to redistribute income away from the workers.
Introduction
The recent lay-off in aviation industry has sparked off a debate on the need for greater labour market flexibilities in the Indian organized sector. Several Indian economists and policy makers have taken the view that distortions in the labour market on account of the extant labour laws in India are obstacles to higher economic growth and expansion of employment. The argument put forward by them posit “rigidities” in the labour market as disincentives to private investment as well as the adoption of labour-intensive technologies. Following the same line of argument the Second National Commission on Labour had called for greater labour market “flexibility”. The Prime Minister’s Office, in the year 2005, has prepared a note where the proposals for introducing greater labour market flexibility are categorically stated: Amendments to Chapter V.B of the Industrial Dispute Act (IDA), 1947 and the Contractual Labour Law, 1970. The attempt is to introduce two kinds of changes in the laws governing the labour market. Firstly, to give greater freedom to the employers to retrench or lay-off permanent workers by diluting the provisions under Chapter V.B of the IDA (i.e. to introduce hire and fire) and secondly, expanding the scope of employing contractual or casual labour in greater number of jobs as well as industries. These measures, it is argued, would impart the required “flexibility” to the Indian labour market, which would enable higher growth and employment generation, especially in the manufacturing sector. Although, none of the above mentioned Acts have been amended to achieve the labour market flexibility, the enforcement of both the Acts, specially, the contractual labour laws have been poor. As a result, there is an increasing presence of temporary workers in regular work. This is actually providing a means through which the factory owners have reduced the scope of permanent employment. This tendency has not only liquidated the rigidities in labour market due to Contractual Labour Act, but also has liquidated partially the rigidities arising out of Industrial Dispute Act. So without changing these two Acts a substantial degree of labour market flexibility has already been achieved in Indian labour market. To capture the extent of these labour market flexibilities we have indexed it as the ratio between workers employed through contractors and total number of factory workers. The rising trend of contracting out the production process to the informal sector by the formal sector is another way of liquidating rigidities in labour market, which arises out of IDA, 1947. Though our labour market flexibility index does not capture this, the index reasonably indicates the current degree of labour market flexibility.
The purpose of the present paper is to critically investigate the claims made in favour of introducing greater flexibility in the labour market. This is done through an empirical inquiry of the proposition, popular in neoliberal policy circles, that casualisation of labour leads to higher output and employment growth. The focus of the study is on the organized manufacturing sector in India. In Section I we discuss the debate over labour market flexibility in the international context. A brief overview of the Indian context is undertaken in Section II. Section III proceeds with our empirical analysis of the impact of greater labour market flexibility, measured in terms of greater casualisation of the workforce, on output and employment in Indian manufacturing industries. The findings are summarized in the concluding section.
The policy debate over labour market flexibility, although quite an old one, was triggered in the recent times by the Jobs Study of OECD (1994), which revived the orthodox classical argument while explaining the high unemployment rates witnessed in Europe since the 1980s. Holding “rigid” labour markets of Europe responsible for the incidence of high unemployment, the OECD Jobs Study recommended greater labour market flexibility in terms of (a) increasing the flexibility of working time, (b) making wage and labour costs more flexible by removing minimum wage regulations, (c) reforming employment security provisions, and (d) reforming unemployment and related benefit systems. The IMF World Economic Outlook (2003) said, “A wide range of analysts and international organizations— including the European Commission, the Organization for Economic Cooperation and Development (OECD), and the International Monetary Fund (IMF)—have argued that the cause of high unemployment can be found in labour market institutions. Accordingly, countries with high unemployment have been repeatedly urged to undertake comprehensive structural reforms to reduce “labour market rigidities” such as generous unemployment insurance schemes, high employment protection, such as high firing costs, high minimum wages, non-competitive wage-setting mechanisms and severe tax distortions.” It was also claimed in the same document that “… well-designed labour reform could produce output gains of about 5 per cent and a fall in the unemployment rate of about 3 percentage points.” The World Bank’s view on this has evolved over time. The World Development Report (1990) was of the view that “labour market policies—minimum wages, job security regulations and social security—are usually intended to raise welfare or reduce exploitation. But they actually work to raise the cost of labour in formal sector and reduce labor demand…and thus (depress) labor incomes where most of the poor found.” But a World Bank publication titled Unions and Collective Bargaining: Economic Effects in a Global Environment (2003) notes that “workers who belong to trade union earn higher wages, work fewer hours, receive more training, and have longer job tenure on average, than their non-unionized counterparts… On the other hand, temporary lay-offs can be more frequent in unionized firms. At the macroeconomic level, high unionization rates lead to lower inequality of earnings and can improve economic performances (in the form of lower unemployment and inflation, higher productivity and speedier adjustment to shocks)”. The International Labour Organization (ILO) disagrees with the view that labour market rigidity has been the major cause of unemployment and greater labour market flexibility is the solution. ILO’s Jobs Report (1996-97) says, “jobless rates appear to have risen independently of levels of labour market regulations…trade union power was reduced in many countries, together with unemployment benefits and in some cases minimum wages, producing little if any positive employment effect.” Baker et. al. (2002, 2004) has noted that the findings of the time series models in the OECD Job Studies, that show labour market institutions adversely affecting aggregate outcome of the economy, are not robust. They have shown that some modest changes in the measure of institutions, countries covered or time period of analysis changes the finding of negative relationship between labour market rigidities and economic outcomes.

The Indian Constitution has listed labour as a subject in the Concurrent list whereby both the Central and State governments have the right to enact legislation, subject to certain matters being in the exclusive domain of the Central Government. There is a plethora of labour laws in India both at the Central as well as the State levels. An estimate puts the total number of Acts and rules concerning labour within the range of 25,000 to 30,000.1 Despite the plethora of laws, their efficacy remains questionable. The Second National Commission on Labour states, “It can be said that our labour laws have not flowed from any vision of a harmonious and just social order that takes into account the needs of an efficient and non-exploitative society, or a vision of the rights, duties and responsibilities of the different social partners to themselves, to each other, and to the totality of the community. They have been criticized as being ad hoc, complicated, mutually inconsistent, if not contradictory, lacking in uniformity of definitions and riddled with clauses that have become outdated and anachronistic, in view of the changes that have taken place after they were introduced many years ago.” The note prepared by the Prime Minister’s Office in the year 2005, has proposed certain Amendments in two important Central Acts in order to make the labour market more flexible. It has been proposed that the present number filter of 100 under Chapter V.B of the Industrial Dispute Act, 1947 be raised to 300. Presently the Chapter V.B of the IDA says that industrial establishment viz. factories, plantations and mines, employing not less than 100 workers have to seek prior permission from the appropriate government department to effect lay-off, retrenchment or closure. In their proposal to amend the Contract Labour Act, 1970 the PMO note has proposed that certain activities may be kept outside the purview of Section 10 of Chapter 3 of the Contract Labour (R&A) Act, 1970 which prohibits the use of contractual labour in industrial activities. The proposed activities where contract labour is sought to be allowed are:
(1) sweeping, cleaning, dusting and gardening,
2) collection and disposal of garbage and waste,
3) security, water and ward,
4) maintenance and repair of plant, machinery and equipments,
5) housekeeping, laundry, canteen and courier,
6) loading and unloading,
7) information technology,
8) support services in respect of an establishment relating to ports /dockyards, airports, railway stations, inter-state bus terminals, hospitals, educational and training institutions, guesthouse, club and transport,
9) export oriented special economic zones and units exporting more than 75% or more of their production, and
10) construction and maintenance of buildings, roads and bridges. It has been further proposed that this list can be amended from time to time.
In addition the Section 31 of Chapter 3, which provides discretionary power to the government to allow contract labour in case of emergency, is proposed to be amended to allow the government to use this discretion invoking public interest even without an emergency.
These proposals to amend the labour laws have been inspired by the works of economists who have argued strongly in favour of introducing greater labour market flexibility in India since long. Fallon and Lucas (1991), for instance, argued that employment growth in the organized segment of the manufacturing sector would have been higher by 17.5 per cent in the absence of rigid provisions on job security. Dutta Roy (1998), however, contradicted the finding and argued in a study based on ASI data for the period 1960–61 to 1993–94 that job security regulations (both the 1976 and 1982 amendments) have not been responsible for the slow-down in employment growth. Three primary survey based studies on labour flexibility in India by Sudha Deshpande et al (1998), Sharma and Sasikumar (1996) and Lalit Deshpande et al (2004) also have not been able to find any evidence that support the hypothesis that firms that have employees more than hundred face greater hurdles in laying off workers when compared to firms that employ less than hundred workers. An interesting and common finding of these studies is that firms, irrespective of size, were found to increase employment mainly by increasing the share of non-permanent workers. This shows that despite the existence of labour laws like the Contract Labour Act, contractualisation or casualisation of labour has already occurred significantly, as far as the Indian labour market is concerned. In other words, manufacturing industries have already achieved substantial labour market flexibility through increase in the share of non-permanent workers in total employment.
In this section we shall discuss the impact of labour market flexibility, caused by increasing contractualisation of labour force, on output and employment for the organized manufacturing sector in India in the 1990s. Sunanda Sen3 et al (2006) have found using the ASI data that the ratio of non-permanent workers to total number of workers for most of the manufacturing sectors at the 3 digit level have gone up during the 1990s. Their data show that the proportion of contractual workers to total number of workers in all the sectors taken together (in other words, for organized manufacturing as a whole) has gone up from 9.89 % in 1992–93 to 23 % in 2000–01 (Graph 1). In our analysis, we try to study the impact of this increase in labour market flexibility that has already taken place on output and employment.
Our analysis has used the data at 3 digit of NIC1998 sectoral level for the period of 1994-95 to 2003-04. The total number of sectors is 44. The total number of sectors at the 3 digit level of NIC1998 is slightly more. But to get a balanced panel we are limited in 44 sectors. The variables required for the analysis are output, net fixed capital stock, workers’ wage bill, total input cost, number of workers, number of workers employed through contractor and wholesale price index numbers (WPI).
For these variables, excluding net fixed capital stock and number of workers employed through contractor, we have used the Annual Survey of Industries (ASI) data provided by Economic and Political Weekly research foundation (EPWRF). This database has provided time series data of more than 25 years at the 3 digit sectoral level of NIC1998 classification. They have prepared these time series data, excluding WPI, by using ASI data of Central Statistical Organisation (CSO) and concordance table between NIC1998, NIC1987 and NIC1970. They have taken WPI series from CSO.
The variables, output wage bill of workers, total input cost, number of workers and number of workers employed through contractor, are same as that of value of output, wages to workers, total inputs, number of workers and number of workers employed through contractor respectively in ASI. To get the values at constant prices of 1993–94, we have used corresponding sectors’ Wholesale Price Index (WPI) series with base 1993-94=100. Instead of consumers’ price index (CPI) number for industrial workers, the wage bill of workers is being deflated by WPI. It is because we are interested here to know the cost of labour to entrepreneurs. For the similar reason we have used WPI to get the value of total input costs at 1993-94 price.
This EPWRF database does not include data for the workers employed through contractors. We have taken this data from ASI of CSO and by using concordance table provided by EPWRF prepared the time series data for the 1995-96 to 2003-04.
The data series for stock of fixed capital has been constructed by using both ASI and National Accounts Statistics (NAS) database of CSO. ASI has provided data on net fixed capital stock at book value. Our analysis requires current net fixed capital stock, which is available for present production. The data series provided by NAS satisfies this definition of fixed capital stock. NAS has provided it at the aggregated level of organised manufacturing sector. Since ASI provides the data at 3 digit NIC level, following Chaudhuri (2002) by using perpetual inventory accumulation method, we have combined the ASI and NAS data to estimate net fixed capital stock at 1993–94 prices for the 3 digit NIC1998 level manufacturing sectors.
To trace the relation of the growth in labour market flexibility with output growth rate at 1993-94 prices and employment growth, the correlation coefficients are calculated. We found that both the values of the correlation coefficient are close to zero. So, there is no linear relationship of growth of labour market flexibility with output growth and employment growth. The scatter diagram of growth in labour market flexibility and output growth shows no pattern of relation. This is true for the scatter diagram of growth in labour market flexibility and output growth also.

In order to further investigate the causal link between the variables we undertake a simple econometric exercise. We shall estimate two regression equations for the period 1996-97 to 2003-04. The equations are meant to (1) estimate the relationship between output growth rate and growth in labour market flexibility, (2) estimate the relationship between employment growth rate and growth in labour market flexibility. The dataset available to us for estimating these two models are balanced panel data. It consist 8 years’ data of 44 sectors. Since, it is a panel data, to begin with, we have assumed that the constant term of both the equations consists of both sector specific and time specific effect. And then we have done some statistical test to find the existence of sector and time specific effect.
Relation Between Output Growth and Labour Market Flexibility
Each sector is the aggregation of firms which produce that particular sectoral product. A firm’s (representative of a sector) decision to set a production target for the current year depends upon four factors— first, its expectation about the demand for it’s product in the current year, seconds, the production capacity, third the choice of technology and fourth, the variable cost of production.
We assume that firm’s expectation about the demand for it’s product in the current year depends upon its previous year’s experience. So output growth of the current year depends upon the output growth of the previous year. If the manufacturing economy as a whole is booming then it is most likely that the production target for current year will be upwardly revised from the previous year’s output. And during the slowing growth period of the manufacturing economy, most likely the opposite will happen. In the study, our period of econometric analysis is 1996-97 to 2003-04. The Indian manufacturing sector has experienced slowing down of growth in the substantial part of this period. Hence, it is most likely that the output growth of current year is negatively related with the output growth of the previous year.
The production capacity of a firm depends upon the capital stock it has. Since the gestation period of investment is generally one to two years, the output growth of the current year should depend upon the investment decisions of previous years. So we assume that the output growth of the current year depends upon the growth of capital stock of the previous year and of the year before the previous year. As increase in production capacity allows firms to increase the production, it is most likely that output growth is positively dependent upon growth in capital stock.
The choice of technology decides the combination of capital and labour that is to be used in the production. Technological change can alter the factors of production mix which in effect can change the output level. So, we can say that the output growth in the current year depends upon the technological change in the current year, which is measured as ratio between growth in capital stock in the current year and growth in workers employed in the current year. Firm’s ability to increase output also depend upon its variable costs of production. The major components of the variable costs are labour, raw materials and energy. So we can say, firm’s output growth also depends upon the growth in wage bill per unit of output. This relationship is expected to be negative. The other major constituent of variable cost for the firm is the raw material, energy etc.. We have clubbed all of them together as input cost. The growth rate of input cost per unit of output should also negatively influence the growth rate of output.
Now the growth in labour market flexibilities should positively influence the output growth through its influence on greater encouragement on investment, influencing the technological choices and reducing the labour cost. The inclusion of the growth of labour market flexibilities along with the growth in capital stock, technological choice and labour cost as the factors to influence output growth may create multicollinearity problems. We have to test it statistically.
We have estimated the correlation co-efficient among all the explanatory variables to test the multicolinearity problem. The values of correlation co-efficient are very low (Table 2). So there is no multicolinearity problem here. Though theoretically there is a possibility of multicolinearity between the growth in labour market flexibilities and the three other explanatory variables, growth in capital stock, technological change and growth in wage cost per unit output, the values of correlation co-efficient between them are substantially low for having any multicolinearity problem. Only the value of correlation co-efficient of growth in labour market flexibilities with growth in wage cost per unit output is statistically significant. The values of correlation co-efficient of growth in labour market flexibilities with growth in capital stock and technological change are not statistically significant.

Initially we have assumed that in this panel data series both sectors-specific and time specific effect exists. To capture the time specific effect, we have introduced seven dummy variables to separate out the effect of each year. To start with we have estimated the random effect model. We found that for the sector specific effect ‘u’ (By using Breusch and Pagan Lagrangian multiplier test for random effects)
H0: Var (u) = 0 cannot be rejected even at 10 percent level of significance. So the pooled panel estimation may be more accurate model to estimate. Also we found that the hypothesis that the coefficients of the dummy variables are equal with zero cannot be rejected even at 10 percent level of significance. Even for the pooled panel model we cannot reject this hypothesis. So we have dropped the time specific dummy variables from the model.
The growth rate of wage cost per unit of output of the current year has statistically significant (at 5 per cent level) negative influence on the current year’s output growth. By averaging over time out of the 44 sectors, 36 sectors has negative average growth rate of cost per unit of output of the current year. And by averaging over the sectors, out of 8 years, in 6 years this growth rate is negative. So lowering of wage cost per unit output has helped the output to grow.
Growth rate of output of previous year has a statistically significant (at 5 per cent level) negative impact on output growth of the current year. Since, in the substantial portion of the period 1996-97 to 2003-04 Indian manufacturing industry has experienced downturn, it is expected that the producers has adjusted their output growth target for the current year lower from the previous year’s output growth. In fact, out of 44 sectors, in 30 sectors the previous year’s output growth on average (averaged over time) are higher than the current year’s output growth. This finding also implies that during this period the Indian organized manufacturing has suffered from lack of demand. This has further reflected from the fact that, when all most all the sectors on average (over the time) have positive growth in capital stock, growth of capital stock with lag of one and two years has no statistically significant influence on output growth of the current period. This indicates the existence of excess capacity in the Indian organized manufacturing sector.
The technological change of the current year, which measures the extent of substitution of labour by capital, has also have statistically significant positive influence on output growth of the current year. But the value of coefficient of technological change is very small. Majority of the sectors, out of 44 sectors 26 have on average (average over time) has increased capital intensity. So the increasing capital intensity has resulted in output growth by a very narrow extent.
Lastly, we found that growth rate of labour market flexibility has no statistically significant influence on growth rate of output. It is expected that increasing labour market flexibilities should reduce the wage cost per unit of output. As growth of wage cost per unit of output negatively influence the output growth, the growth in labour market flexibility should have positive influence on the output growth. But the value of the coefficient (in the regression equation) of the growth of wage cost per unit of output is less than 1, around -0.58. So the impact of the growth in labour market flexibilities on output growth through the reduction in growth of wage cost per unit of output will be low. The increasing labour market flexibility should encourage in adopting more labour intensive technologies and growth in net fixed capital stock. But more capital-intensive technologies are being adopted. So most probably increasing labour market flexibilities has very little to do with the increasing capital-intensive technologies. And growth of net fixed capital stock has no statistically significant influence on output growth. So, we are not getting any statistically significant influence of growth rate of labour market flexibility on growth rate of output.
Relationship between Employment Growth and Labour Market Flexibility
It is assumed that employment growth in a sector depends upon the demand for labour by the firms of that sector. The demand for labour in the current year is positively dependent upon the firm’s target of production in the current year. So the employment growth in the current year should be positively dependent on output growth rate in the current year. The demand for labour also depends upon the choice of technology. Choice of capital-intensive technologies will reduce the labour demand. So  the technological change in the current year, which is measured as ratio between growth in capital stock in the current year and growth in workers employed in the current year (Here, the underlying assumption is that there is no labour constraint for the Indian manufacturing sectors) should negatively influence the employment growth of the current year. Another factor to influence the demand for labour negatively is its cost. So the growth in wage rate of the current year should negatively influence the employment growth of the current year.
The growth in labour market flexibilities should positively influence the output growth, influence the technological choices towards the adoption of labour-intensive technologies and reduce the labour cost. All three should create a positive influence of growth in labour market flexibilities on employment growth. The inclusion of the growth of labour market flexibilities along with the change in technology choice and growth in wage rate as the factors to influence employment growth may create multicollinearity problems. We have to test it statistically.
The values of correlation co-efficient among the explanatory variables are very low. So there is no multicolinearity problem here. Though theoretically there is a possibility of multicolinearity between the growth in labour market flexibilities and the two other explanatory variables, technological change and growth in wage rate, the values of correlation co-efficient between them are substantially low for having any multicolinearity problem.
To identify the more accurate regression model for this equation we have followed the same procedure of the previous equation. i.e., to begin with, we have assumed that this panel data series have both sectors-specific and time specific effect. To capture the time specific effect, seven dummy variables are introduced to separate out the effect of each year. To start with we have estimated the random effect model. We found that for the sector specific effect ‘u’ (By using Breusch and Pagan Lagrangian multiplier test for random effects) H0: Var (u) = 0 cannot be rejected even at 10 percent level of significance. So the pooled panel estimation may be more accurate model to estimate. Also we found that the hypothesis that the coefficients of the dummy variables are equal with zero cannot be rejected even at 10 percent level of significance. Even for the pooled panel model we cannot reject this hypothesis. So we have dropped the time specific dummy variables from the model.
Growth rate of output has statistically significant (at 5 percent level of significance) positive influence on employment growth. The growth of wage rate also has statistically significant (at 5 percent level of significance) negative influence on employment growth. It appears that growth rate of employment is more sensitive to growth in wage rate than growth in output. Technological change does not have any statistically significant influence on employment growth. As we have mentioned that use of technologies are becoming more capital-intensive, the technological change should have negative impact upon employment growth. But this technological change has a positive impact on output growth and output growth is having a positive influence on employment growth. So, technological change is having both positive and negative impact on employment growth. As a result, we don’t have any statistically significant sign of the co-efficient for technological change in the estimated equation. Lastly, the growth in labour market flexibility does not have any statistically significant influence on employment growth
Conclusion
From the regression analysis that we have undertaken, we conclude that increasing labour market flexibility defined as an increase in the proportion of non-permanent/casual workers in total workers has no positive impact on output and employment growth. The neo-liberal proposition that an increase in labour flexibility would lead to greater output growth and labour absorption does not seem to be valid as far as Indian manufacturing industries are concerned. Therefore, the ground for the amendment to the Contract Labour Act,1970 and IDA, 1947, which are being proposed in order to facilitate greater labour market flexibilities, appears quite slippery.
It will be rather interesting to see what the other consequences of this labour market flexibility are. If we start looking from mid-80s onwards, the Indian organized manufacturing has witnessed a monotonically increasing trend in capital-labour ratio5 (Graph 2). The growth rate of the ratio is lowest in the second half of 80s. In first half of 90s, the growth was higher and thereafter, till the year 2001-02, it was highest. Then it has declined marginally. This indicates that the manufacturing companies are increasingly adopting capital-intensive technologies.
The capital-output ratio6 measured at 1993-94 prices shows a different trend (Graph 3). It has a very marginal upward trend and actually dominated by cyclical fluctuation of a narrow 5 per cent band spread in either side of the average trend. Now, if capital intensive technologies are being adopted to replace labour, which is difficult to retrench due to labour market rigidities, then there should have been a monotonic increasing trend in capital-output ratio. This is not the case with the Indian manufacturing sector in 90s. Rather, it seems capital-intensive technologies are being adopted to produce commodities for two reasons— first, the cost of capital has been reduced substantially for large companies due to financial market liberalization7 and second, the demand pattern for Indian industries has changed as even the domestic demand pattern is becoming similar to the global demand pattern under this globalised era. And this global pattern of demand is highly tilted towards capital-intensive products.
With the exception of the few years of mid-90s the total number of workers employed are more or less stagnant throughout the whole period of the year 1986-87 to the year 2003-04. Whereas, the actual manufacturing output at constant prices of 1993–94 has a monotonically increasing trend with the exception of the year 1998–99 (Graph 4). The average wage rate9 at 1982–83 prices has fluctuated within the narrow band of 15 to 20 per cent of the average wage rate. In the mid-90s the average wage rate was highest. And, in late 90s and thereafter, it is lower than the late 80s and early 90s. Lastly, the share of wages in net value addition has steadily declined from a little more than 30 per cent in the year 1986–87 to 15 per cent in the year 2003–04. The decline is at a much faster rate in last three years. On the other hand, the profit share in net value addition has increased from 18 per cent in the year 1986–87 to 45 per cent in the year 2003–04. Here also we have seen a marked jump in the increase of the profit share from mid-90s onwards.
All these trends together indicate that even if there is a substantial growth in manufacturing output, workers are not benefiting. The capitalist class is reaping the whole benefits of the output growth. This is being done through the combination of adopting capital-intensive technologies and greater labour market flexibilities. Therefore, greater labour market flexibilities have no influence on output, employment growth, apart from making a redistribution of income in favour of capitalist class.
During the period of the substantial positive growth of the manufacturing sector, if this is the situation, as stated in the above paragraph, then it is obvious that during the recession period a substantial portion of adjustment burden of the production process will be shifted to the workers. The recent lay off in the aviation industry is just this. In the mainstream economic theory, capitalists earn profit in return of taking risk of business. The Indian capitalist class, in this process of taking risk in business, wants to grab the profit of the good time but don’t want take the burden of adjustment in the business, when it goes through bad time. They want to shift the burden of adjustment towards the workers.
 
VARIOUS ACTS OF LABOUR LAWS
The Acts Relating To National And Festival Holidays & Casual And Sick Leaves
No Central labour law relating to private industry regarding these holidays is enacted. As it is a State matter. All State Governments have enacted laws regarding these holidays.
Generally all State Legislations has common provision for major matters. They provide at least seven holidays for national and other festivals. Republic day, Independence day and Mahatma Gandhi’s birthday are compulsory holidays. Employer and Employees had given right to decide remaining national and festival holidays.
Similarly minimum seven days casual leave and 14 days sick leave is provided to employees.
These leaves are paid means the employees get the wages of these leaves as they had actually worked for that day.
An employee becomes entitled for these leaves after working for a specified period.
The employee who works in establishment on national/other festival holidays is entitled to get double wages for that day.
THE APPRENTICES ACT, 1961
The apprentice means a person who is under going a course of training in any industry or establishment. The apprentices Act provides provisions for “Regulations and Conditions” of training of Apprentices.
It provides provisions for Apprenticeship Council and Apprenticeship Advisor to administer this Act.  
As per this Act and Apprentices should enter into written contract for apprenticeship. Every contract of apprenticeship is to be registered with Apprenticeship Advisor who will register the contract after satisfying that the person described as an apprentice in the contract is qualified for such. Provisions are also made to terminate this contract within its operating period. 
The act made responsible to employer to made suitable arrangements for imparting a course of practical training to every apprentice. The employer has to pay stipend to the apprentices. He is also liable for compensation to apprentice in case of any injury arising in the course of his training. He has also to maintain certain records and file certain returns to Apprenticeship Advisor  
It also contains provision about the obligations of Apprentice to learn his trade – to attend practical and instructions classes regularly and to carryout all lawful orders of his employer and superiors. He is also bound to carryout the obligations under contract of apprenticeship.
Provisions regarding hours of work, over time, leave, holidays and health safety and welfare of apprentice is also made in this act.  
Any dispute under apprenticeship contract can be referred to Apprenticeship Advisor.
Non-implement of many provisions of this act are made offence and punishable by Court of Law. The Apprenticeship Advisor is an authority to make complaint to the Court within six months of the committing of alleged offence.
THE ADMINISTRATIVE TRIBUNAL ACT, 1985: -
Our Constitution provides Tribunals for the Adjudication of certain matters. The Tribunals provides speeduy Justice as their proceedings do not consist of lengthy and complicated Judicial procedure.
This act provides Administrative Tribunals for the adjudication of disputes and complaints with respect to recritment and condition of service of person appointed to Public Services and post in connection with the Affairs of Union /State /Local /Other Authority of Government.
Section-2 describes  the persons to whom this Act is not applicable.
The Central Government is authorised to establish Tribunals for Centre /State to excercise  the juisdiction powers and Authorities confirmed on the Tribunal by this Act.
The Tribunal consist of Chairman, Voice-Chairman and members. The procedure of proceedings is given. The jurisdiction Powers and Authorities of Tribunals are also given. The Tribunals have power to punish for contemt.                

THE BEEDI AND CIGAR WORKERS(CONDITIONS OF EMPLOYMENT) ACT, 1966
This Act provides conditions of employment for workers of Beedi and Cigar industry. It also provides application of some other Acts like Industrial Employment (Standing Order) Act-1946, Maternity Benefit Act-1961 and Industrial Disputes Act-1947 on Beedi and Cigar industry.
Licensing is made necessary for premises where Beedies and Cigars are manufactured.
It has made provisions for cleanliness, ventilation, over crowding, drinking-water, latrines and urinals, first aid facility etc. for workers. It also provides for working hours, weekly holiday and leave with wages. Besides these, many other provisions are made for health-welfare of workers.
Employment of a  person less than fourteen years age is prohibited in Beedi and Cigar manufacturing industry.  Timing of Women and young persons (persons between fourteen and eighteen years age) working in this industry can be only between 6.00 a.m. and 7.00 p.m.
This Act do not apply on who carries on manufacturing of Beedies and Cigars at his residence with the assistance of his family members. Provided that person is not an employee of an employer to whom this act applies.
THE BONDED LABOUR SYSTEM (ABOLITION) ACT, 1976
This Act abolishes the Bonded Labour System and prescribes 3 years punishment for extracting bonded labour.
In our country many labourers are working on very low wages or on no wages with their creditors. They owe some debt from their creditors because of that debt they work with them with very low wages or no wages. This Act is abolished this system.
By this Act, all bonded labourers are made free. They are also made liability free for paying their bonded debts. Any property mortgaged under bonded debt is also made free without paying any amount. The creditors right to accept payment against bonded debt is also extinguished.
District Magistrates and Sub Divisional Magistrates are appointed main authority to implement this Act. Provisions for vigilance committee, to abolish this menace and to provide the economic and social rehabilitation of freed bonded labour are also made.
Offences under these Acts are tried by Executive Magistrates and not by Judicial Magistrates, which look after Criminal case.
The Executive Magistrates are given power of Judicial Magistrates for trying offences under this Act.
THE BUILDING AND OTHER CONSTRUCTION WORKERS (REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1996.
The Act provides regulations for employment and condition of services of building and other construction worker. It provides provisions regarding their safety health and welfare. It has come into force from first day of March 1996.
It applies to establishment employing ten or more building workers in any building or other construction workers. 
It provides for registration of such establishments. Registrars are  appointed for registration. It provides various provisions regarding fixing hour for normal working day, overtime wages, drinking water, latrines and urinals, creches, first-aid canteen etc., employer are also make liable to maintain certain registers and records. Safety provisions at work place are also made.
The act  provides for “building and other construction workers welfare board”. The workers has  to contribute from their wages to this board.   This board looks after various welfare activities of workers including loan and pension to them.
THE CHILD LABOUR (PROHIBITION & REGULATION) ACT, 1986.
This Act relates to Child Labour which is less than 14 year of age. It prohibits their employment in some Establishments. The list of such prohibited industries are given in Act.
It regulates the conditions of Child Labour, where their employment is not prohibited. It makes provisions of period of their work. It has also prohibited night duty and over time for child labour.
It has provisions of constituting “Child Labour Technically Advisory Committee” for advising the Central Government.
It is mandatory for occupier/employer to give notice to Inspector about employment of children. He is also required to maintain register.
Violations of provisions under this Act are offence and punishable.
 
THE CHILDREN (PLEDGING OF LABOUR) ACT, 1933
This Act prohibits pledging of children (person under the age of fifteen years)  for labour.  It makes any agreement for pledging of children void. It also provides penalty for parents or guardians for making agreement to pledge the labour of their child. Any person who makes such agreement with parents or guardians and employ the child under that agreement is also liable for punishment under this Act.
THE CINE-WORKERS AND CINEMA THEATRE WORKERS (REGULATION OF EMPLOYMENT) ACT, 1981.
Cine worker means an individual who is employed in connection with the production of a features film to work as an artiste (including Actor, Musician or Dancer)  or to do any work skilled, un-skilled, manual, supervisory, technical, artistic or otherwise.
It applies to such Cine workers whose monthly remuneration does not exceeds 1,600/- p.m. and where such remuneration is by way of lump-sum a sum of Rs. 15.000/- p.m.
It made compulsory a written agreement for employment of a Cine workers and registration of that agreement with competent authority.
It provides provisions for Conciliation Officers for settlement of any dispute between a Cine worker and film producer. It also contains provisions for Cine worker Tribunals for adjudication of disputes between Cine workers and film producers.
The dispute between Cine workers and Film Producers goes first with Conciliation Officer who tries to make a settlement, if he fails, he submits failure report to Centre Govt. which ultimately refers the dispute to Cine workers Tribunal for adjudication. The Tribunal after hearing both the parities submits its award to Central Govt., which implement this award.  The High Court has power to revise the award of Tribunal.          

PROVISIONS RELATING CINEMA THEATRE WORKERS

The provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952 and Payment of Gratuity Act, 1972 are made applicable on all Cinema Theatres where five or more workers are employed.

THE CONTRACT LABOUR (REGULATION AND ABOLITION ) ACT, 1970
This act is enacted to regulate the conditions of services of Contract Labour. It applies to every establishment and contractor who employs 20 or more workers as contract labour. It has also provisions to empower Government to prohibit contract labour system in any process, operation or other work in any establishment.
“Central Advisory Contract Labour Board” and “State Advisory Contract Labour Board” are established to advise matters arising out of the administration of this Act.  
The principal employer has to register itself with Registering Officer under this Act.  It also makes mandatory provisions of licensing for contractors.
The act has provisions for welfare and health of contract labour. It has provision of canteen and rest room in certain conditions. It also provides facilities for drinking water, washing facilities, latrines and urinals for contract labour. Provisions of first aid facilities are also made. Contractor is also made responsible for payment of wages to labour.
In case, contractor does not provide facilities, principal employer is made responsible for providing facilities to contract labour. The principal employer is authorized to recover any expenses incurred by him for providing such facilities by deducting from any amount payable to contractor.
By various judgments of courts, it is clear that provisions of ESI and PF are also applicable on contract labour.  After contract is over, contract labour has no right to employ in regular services.
THE DOCK WORKERS (SAFETY, HEALTH AND WELFARE) ACT, 1986
This Act provides inspecting staff, their powers etc. for Dock Workers safety. The Chief Inspector of Dock safety is main officer appointed for this purpose. Inspectors are given powers to stop work at any place within dock where it appears to them that conditions are dangerous to life safety of Dock Workers until measures have been taken to remove the cause of the danger to his satisfactions. Such order of inspector is appeal able with Chief Inspector of Dock safety
The State/Central Government are empowered to appoint Advisory Committee to advise upon such matters is arising out of the administration of this Act. The government may refer any such matter for advice to Advisory Committee.
Certain obligations are fixed for Dock Workers also for their safety.
Violation of any provision of this Act by Employer and Dock Workers is punishable.    

THE EMPLOYEES LIABILITY ACT, 1938
This Act barred the Courts not to fail any suit for damages in respect of injury caused to a workman only for the reason that at the time of injury, he is working with a person to whom his services are temporarily lent or let by his actual employer.
It is a very small Act with only five sections.

THE EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952
This Act is applicable on establishments public industries, employing 20 or more employees. It is a law for social benefit of employees. The Act has three schemes:-
1.   Employee’s Provident Fund Scheme.
2.   Employee’s Family Pension Scheme.
3.   Employee’s Deposit Linked Insurance Scheme.
Employee’s Provident Fund Scheme: It is a contributory fund for the future of employee after his retirement. Employee and Employer both contribute in this fund. Where the number of employee is less than 50, employees have to pay 10% of their wages towards this contribution. In case of more than 50 employees, employee has to pay 12% of their wages towards this contribution. Employer has to pay 3.67% of wages towards this contribution.
Provident fund is payable to employee after his retirement. In case of its early death, it is payable to person nominated by him or his legal heirs. Some part of Provident Fund can be withdrawn before retirement for construction of House, Children Marriage, etc.
Employee’s Family Pension Scheme:-  If contribution is made to this scheme for minimum 10 years, they employee becomes eligible for pension after retirement. In case of his early death, heirs are eligible for pension (only one time contribution is sufficient for pension in case of death - 10 years contribution is not necessary - subject to certain conditions. The contribution towards this scheme is made by Employer 8.33% of employee’s wages. Employee also gets life assurance benefits under this scheme.          
Employee’s Deposit Linked Insurance Scheme:- Under this Scheme employee’s get benefit of Insurance of Line. The contribution towards this fund is made by Employer @ .5% of Employee’s wages.
THE EMPLOYEES STATE INSURANCE ACT, 1948:
This Act provides worker Medical Relief, Sickness Cash Benefit, Maternity Benefit to Women Workers, Pension to the Dependent of Deceased Workers and Compensation for Injuries during course of Employment.
This Act is applicable on factories which falls under Factory Act. Other Establishment which have 20or more employees are generally covered by this Act. Any employee who receive wages upto Rs. 6,500/- p.m. is eligible to take benefits under this Act.
“Employees State Insurance Corporation is established for the administration of this Scheme by Central Government;
Contribution by both Employee and Employer are made to this Corporation. The rate of contribution for employees is 1.7% while in case of Employer it is 4.75% of Employee’s wages.
The Workman Compensation Act is not applicable where this Act is implemented. Similarly a woman employee exceeding wages up to Rs. 6,500/- p.m. is not entitled to receive maternity benefit from her Employer. These benefits are given by E.S.I. Corporation to them.
THE EMPLOYMENT EXCHANGES (COMPULSORY NOTIFICATION OF VACANCIES) ACT, 1959
The Government has created Employment Exchanges where any un-employed can get itself registered. The Employment Exchanges helps un-employed to get employment.  The main problem of Employment Exchanges is to find the employers. The Parliament of India has enacted this act to solve this problem of finding the employer by Employment Exchanges.
By this Act, it is made compulsory for all employers in public – private sector (where more than 24 employees are employed) to notify any vacancy to Employment Exchange before 15 days of filling that vacancy.   Section-3 of this Act describes certain vacancies for which this Act is not applicable.
It is also very clearly mentioned in this Act that employer is not under any compulsion to fill the vacancies through Employment Exchanges. He has just to inform (notify) about those vacancies.
It has also mandatory provisions of furnishing certain returns by employer to Employment Exchange.  It also provides provisions of “access to records or documents” of employer by an officer of Employment Exchange (As per rules, Director of Employment Exchange or any person having written authority from him can access these records).
Non notification of vacancies, non filling of returns and denying any authorised officer to access the records are made offence punishable by Court of Law.
THE EQUAL REMUNERATION ACT, 1976
This Act is enacted to prohibit discrimination of women in the matter of remuneration (Pay-Wages) with men.  It provides equal pay to men and women for same work or work of similar nature. It also prohibit discrimination while recruiting men and women workers (except where the employment of women in such work is prohibited or restricted by any law).
Government is empowered to appoint authorities for hearing and deciding claims and complaints. The appointment of Inspectors for implementation of this Act is also made.
Breach of provisions of this Act are offence and punishable.

THE FACTORIES ACT, 1948      
This Act provides provisions for the basic minimum requirement for safety, health, welfare and other service conditions such as working hours, leave, holidays etc.
It is applicable on all Factories where manufacturing process is carried out with the aid of power with 10 or more workers. In case manufacturing process is carried without aid of power, number of employees can go up to 20 for the application of this Act.
Registration with Chief Inspector of Factories is made necessary for all Factories coming under this Act. For new factories, a notice regarding starting of manufacturing with other required documents is to be given to Chief Inspector of Factories before 15 days of starting production.
This Act describes in detail about the working conditions and benefits for Factory workers. The knowledge of this Act is must for all who wanted to know about Indian Labour Laws.

THE INDUSTRIAL DISPUTE ACT, 1947
The Act is known for famous Indian “LABOUR COURTS” which are constituted under this Act. This is a Act which has given super protection to Indian employees. This Act also provides full machinery for conciliation  and adjudication of disputes between employee and employer and vice versa, between workman and workman & between employer and employer. 
The Act does not applies on a person employed in Supervisory or Managerial capacity and drawing wages exceeding Rs. 2,500/- per month.
It deal in detail  provisions related to strikes and lock outs, lay off and retrenchment and unfair labour practices.
It has special provisions regarding termination of services of a employee. In case, the service of employee is terminated as a punishment inflected by way of disciplinary action, subject to relevant rules and regulation in that regards,  the employee  has no protection except the provisions of natural justice or no opportunity was given to him to represent his side. In case, the services is terminated without punishment inflected by way of disciplinary action, the employee has right of retrenchment compensation (subject to some exceptions and other provisions of this Act). Its section-2 (o o) details out conditions when the service of a  person can be terminated without punishment and retrenchment benefits.
There is provision of Conciliation Officer for consoling the Industrial disputes, if no settlement arise during conciliation, Conciliation Officer gives failure report to Government which sent that Industrial dispute to labour court for adjudication. Labour Court have vast powers to adjudicate any such matter.
The Act is not applicable on Education, Scientific Research or Training Institutions, Hospitals and Dispensaries, Khaddi or Village Industries and domestic service, agriculture operation, etc. etc.

THE INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946
This Act require employer’s to clearly define the conditions of employment of its workers i.e. Standing Orders/Service Rules. It has also provisions for due information to employees about these conditions.
This Act applies to establishments who have 100 or more workmen employed. The Centre and State Governments are empowered to extend the provisions of this Act to any establishment employing less than 100 workmen. Now generally all establishments employing more than 50 workmen are covered by this Act.
The Standing Orders are to be certified by Certifying Officer appointed under this Act. The detailed procedures for certification of Standing Order are given.
The Act also provides Model Standing orders. Any establishment can accept these Model Standing Orders  also. These Model Standing Orders are temporarily applicable to a establishment which comes under the provisions of this Act and whose Standing Orders are not finally certified.
“The List of Matters” to be provided in Standing Orders under this Act is given in Schedule 1 of this Act. In all it is must for providing provisions regarding Rules in 11 matters given in this Schedule.
The conditions for certifying of Standing Orders are given in Section 4 of Act.

THE INTER-STATE MIGRANT WORKMEN (REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE) ACT, 1979
This Act defines “INTERSTATE MIGRANT WORKMEN” as any person who is recruited by or through a Contractor in one State under an agreement or other arrangement for employment in an establishment in another State, whether with or without the knowledge of the principal employer in relation such establishment.
This Act is to safeguard and regulate the conditions of such workers. It implies to every Establishment/Contractor who employ 5 or more Inter-State Migrant Workers.
It provides registration for principal employer and license for contractor to whom this Act is applicable. It also provides Registering/licensing Officer for this purpose.
It specifies duties/responsibilities of Contractor and liabilities of principal Employers.
It also provides “Displacement Allowance” and “Journey Allowance” besides other facilities to Inter-State Migrant Workers. Wages shall pay in cash to him. Section 21 and 22 deals with some other special provisions for their employment.

THE LABOUR LAWS (EXEMPTION FROM FURNISHING RETURNS & MAINTENANCE REGISTERS BY CERTAIN ESTABLISHMENTS) ACT, 1988. 
                                
 This law is enacted to reduce number of records and filling of returns under different Labour Laws by small industries, employing less than 20 persons.
This Act prescribed one single return and three registers for establishment employing more than 9 but less than 20 employees. Similarly, any establishment employing up to 9 employees is liable to maintain only two prescribed registers and one return in lieu of registers and returns maintained under following Acts:
1.   The payment of Wages Act, 1936
2.   The Weekly Holidays Act, 1942
3.  The Minimum Wages Act, 1948
4.   The Factories Act, 1948
5.   The Plantation Labour Act, 1951
6. The Working Journalists and other Newspapers Employees (Conditions of service) and miscellaneous provisions Act, 1955.   
7.   The Contract Labour (Regulation and Abolition) Act, 1970
8.   The Sales Promotion Employees (Conditions of Service) Act, 1976.
9.   The Equal Remuneration Act, 1976.
If any employer maintains registers and fill returns prescribed in this Act, he is not liable to maintain any register/fill any returns under these Acts.
THE MATERNITY BENEFIT ACT, 1961
This Act made provisions for payment of wages to a woman during leave period for giving birth to child, miscarriage, illness arising out of pregnancy, delivery and pre-mature birth of child or miscarriage.
A woman is entitled for full wages during leave for aforesaid reasons. The leave period for delivery of child is 12 weeks while in case of miscarriage, it is 6 weeks. For other reasons, it is one month.  
This benefit can be claimed by women who have worked minimum 80 days during last 12 months in establishment. This Act does not apply to any factory-establishment to which “Employees State Insurance Act” is applicable. The women getting salary of more than Rs. 6,500/- is also not entitled for this benefit.
A notice for claim of this benefit is to be given by women to employer. Employer is prohibited to dismiss the women employee during the entitlement of this benefit. Section 18 of this Act described the conditions when this benefit can be forfeiture. 
Provisions for Inspectors to implement this law are also made.  Inspectors are given to power to direct employer to make payment under this Act.

THE MINES ACT, 1952
This Act provides provisions for Health, Safety, and Welfare for Mines Workers. It also deals with some other conditions of their service i.e. Leave with Wages. This Act is applicable on Managers also.
The meaning of Mines given in Section 2 (J). The Act does not apply in certain cases, which are given in Section 3.
The Owner, Agent or Manager of a Mine are required to give notice to Chief Inspector of Mines, Controller of Indian Bureau of Mines and District Magistrate minimum before one month of starting mining.
Employer has to provide drinking water, sanitation, medical facilities etc. All workers are entitled for weekly day of rest. Their hours of work are also fixed. They are entitled for leave with wages. There are many other provision

THE MINIMUM WAGES ACT, 1948
The minimum wages Act provides minimum statutory wages to workers. It applies all industries given in Schedule-I of this Act. The Centre and State Government is empowered to any other industry in this Schedule. This Act is applicable even if there is single employee.
The minimum wages are fixed by Government. The Employer who pays wages less than minimum wages fixed by Govt. is punishable under this Act.
The Act also provides maximum hours, weekly rest days, and overtime-related provisions. The wages payable under this Act are to be paid in cash.
It also provides some registers to be maintained by Employer and returns to be filled by him.              

THE MOTORS TRANSPORT WORKERS ACT, 1961
The Act aims to provide conditions of service and welfare of Motor Transport Workers. This Act is applicable on any Motor Transport undertaking employing five or more motor transport workers. The State Govt. are empowered to apply this Act on Motor Transport undertaking employing less than five motor transport workers.
Registration of every Motor Transport undertaking with prescribed authority is made compulsory.
The Act provides about hours works, weekly rest, payment of wages and leave with wages. Besides it also provides for other health and welfare provisions such as canteen (where hundred or more Motor Transport Workers are employed), rest rooms, uniforms, medical facilities, etc. etc.     
It also prohibits employment of childs (who has not completed his 15th. years) in Motor Transport undertakings. Any person between 15 and 18 years of age can be employed only after getting certificate of fitness by certifying Surgeon.
THE PAYMENT OF BONUS ACT, 1965
This Act makes bonus payment mandatory for every factory (employing ten or more employees) and other establishment employing twenty or more employees. The Central/State Government is empowered to extend the provisions of this Act for any other establishments employing ten or more employees.
Every employee receiving salary/wages up to Rs. 5,000/- per month is entitled to bonus for every accounting year. 30 days working condition for employees in that accounting year is necessary to receive bonus. Section-9 of Act details about the conditions which disqualifies a employee to receive bonus.  
8.33% of wages/salary is minimum bonus to be paid. Maximum limit is 20%. Bonus is to be paid in cash and within 8 months of closing the accounting year.
 
THE PAYMENT OF GRATUITY ACT, 1972
The Act provides “GIFTS” for employees who had worked for more than five years at the time of leaving the service. The condition of five years service is not applicable in case of employee’s death. In case of death, gratuity is paid to persons nominated by employee or if no nomination is made, it is paid to heirs. 
It is applicable to almost all industries/establishments employing ten or more persons. 
It is paid @ 15 days salary after every year of service. Maximum 20 months of salary can be paid with limit up to Rs. 3,50,000/-. In seasonal industry it is paid @ 7 days salary after every year of service.
Section-4 (6) of this Act deals with conditions regarding forfeiture of  gratuity of an employee.
Employers has to obtain compulsory insurance from Life Corporation of India to pay gratuity or to establish any other fund for its payment as per the provision of this Act.
 
THE PAYMENT OF WAGES ACT, 1936
The Payment of Wages Act is enacted for timely payment of wages to workers. It is applicable on almost all types of establishments. The provisions of this Act is for employees receiving wages up to Rs. 1,600/-  p.m.
The Act fixes responsibility for Payment of Wages, Provisions of fixation of wage period (wage period can be fixed for maximum one month).
Wages are to be paid within 7 days of expiry of wage period (in case of less than 1000 employees) and within 10 days in other  cases. The wages are to be paid in cash, if employees permit. Wages can be paid by cheque also.
 
THE PLANTATION LABOUR ACT-1951
The Act provides conditions of service and health – welfare measures for plantation labour.
The Act is applicable on 5 hectares or more land used for growing Tea, Coffee, Rubber, Cinchona or Cardamom and on which 15 or more workers are employed. State Government is empowered to apply this Act on plantation of these plants on less than 5 hectares of land or to plantation of any other plants which fulfill 5 hectares or more land condition and employed 15 or more employees.
Registration is compulsory for every employer of Plantation. Registrars are appointed for this registration.
Employers have to provide - drinking water, latrines and urinals, medical facilities, etc.  The Act also provides for working hours, weekly holiday, leave with wages etc. It also provides houses for plantation labour.    

THE SALES PROMOTION EMPLOYEES (CONDITIONS OF SERVICE) ACT, 1976
Any person employed in any Establishment for hire or revered to do any work relating to promotion of Sales or Bushiness, except person engaged in Managerial or Administrative capacity or in Supervisory capacity earning wages more than Rs. 1,600/- p.m. is a sale promotion employee under this Act.
It applies mainly to Pharmaceutical Industry or any other Industry notified in gazette by government.
The provisions of Workmen Compensation Act - 1923, Industrial Dispute Act-1947, Minimum Wages Act – 1948, Maternity Benefit Act-1961, Payment of Bonus Act-1965 and Payment of Gratuity Act-1972 are made applicable on Sales Promotion Employees by this Act.  
The employee is entitled for appointment letter and leave with wages. The Employers are also required to maintain some records under this Act.
 
THE SHOPS AND ESTABLISHMENTS ACT
The Act is for small Establishments which are not covered by any other Act – regulating the condition of service of employees i.e. Shops, Factories having less than 10 workers.
There is no central legislation on this subject as it comes under State preview. Almost all States have passed legislation on this subject.
It normally provides “Registration of Shops and Establishments” , about health, safety, working hours, holidays and paid leaves for workers. Generally, it also require furnishing of a Appointment Letters to employees. It also contains some job protection provisions.
This Act is generally applicable in  Corporation areas and not in the whole State.
Enclosed is “Delhi Shop and Establishment” Act for your ready reference. Major provision in such all Acts are almost same.
 
THE TRADE UNIONS ACT, 1926
A general misunderstanding about this Act is that it is for Labour Unions. This is not correct, even employers have their associations registered under Trade Union Act. Any person other than labour can also make union and that can be registered under this Act.
This Act regulates the conditions of registration-dissolution and their rights & liabilities.
It has provisions for appointment of Registrars for the purpose of registering Trade Unions. It provides procedure for registration of Trade Unions. 
Minimum 7 persons are required to make a Trade Union.
It also provides provisions for amalgamation of two or more Trade Unions as one Trade Union.
It describes about objects on which Trade Union fund can be spent.  The Trade Unions are also liable to fill certain returns to Registrar. It also contains provisions regarding disqualification of office bearers of Trade Unions. The office bearers and members of Trade Unions have right to inspect Account Books and List of Members of Trade Unions.         
It also describes some duties of Registrar.
THE WORKING JOURNALISTS AND OTHER NEWSPAPER EMPLOYEES (CONDITIONS OF SERVICE) AND MISCELLANEOUS PROVISIONS ACT, 1955.
This Act provides applicability of certain other laws to working journalists/Newspaper Establishment i.e. The Industrial Dispute Act-1947 (with some modifications), The Industrial Employment (Standing Orders) Act-1946 – where twenty or more workmen are employed and The Employees Provident Fund Act-1952.
The provision of separate Wage Boards for the purpose of fixing and revising rates of wages in respect of working journalists and non-journalists newspaper employees are made in this Act. If Central Govt. feels that the Wage Board constituted under this Act is not able to function, it can constitute a tribunal for this purpose. The Central Govt. is also empowered to fix interim rate of wages with consultation of Wage Board, which are binding on all employers in relation to Newspapers establishment.
This Act also provides some provisions for job protection of Journalists and Non-journalists Newspaper employees. It has also provisions of payment of gratuity after three years service.  It has also provision for working hours and leave with wages.         

THE WORKMEN’S COMPENSATION ACT, 1923
This Act provides compensation to workers or their dependants in case of accident during their employment. This accident should cause disablement or death to worker. The Act is also applicable in case of occupational disease (which are due to certain conditions of some works).
This Act is applicable to Establishments given in Schedule-II and III of this Act. However, it is not applicable on Establishments covered by “Employees State Insurance Act”.
Any accident arising out of willful disobedience of Safety Rules, disregard of safety device or under influence of drinks – drugs, the compensation is not payable.
Employee can be medically examined by a qualified Medical Practitioner, if required by the Employer.
In most cases, this compensation is deposited with Govt. under this Act who disburses the compensation.     

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