labor welfare

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MB 665 SOCIAL SECURITY & LABOUR WELFARE Max. Marks: 100 External Assesment : 60 Internal Assesment: 40The concept and scope of social security.

Socail assistance and social insurance.Evolution of social security

Law relating to social securityPayment of wages Act, 1936Minimum wages Act, 1948Payment of Bonus Act, 1965Workmans compensation Act, 1923Maternity Benefit Act, 1961Employees State Insurance Act, 1948Provident Fund & Miscellaneous Provision Act, 1951

Gratuity Act, 1972

I.L.O. and social securityThe concept of labour wefare: definition, scope and objectives, welfare work andsocial work.Evolution of labour welfare, classification of welfare work, agencies for welfarework.Welfare activities of Govt. of India; welfare work by trade unions, Labour welfarework by voluntary social organizations.Labour administration: agencies for administrating Labour Welfare laws in India

REFERENCES

1 Hallen : Dynamic of Social Security2 A.M.Sharma : Social Security & Labour Welfare3 I.L.O. : Social Security4 T.N.Bhagoliwal : Economics of Labour & Social Welfare5 B.D. Rawat : Labour Welfareism in India Problems and Prospectus

All mentioned limits are subject to change by Amendments soyou are advised to read news paper regularly.


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CHAPTER-1

SOCIAL SECURITY

Definition- according to Lord Beveridge social security is an attack on 5 giantsviz - want, disease, ignorance, squalor, idleness.

Concept Related to the high ideals of human dignity & social justice. Modern Schemestake care of person womb to tombSocial Security has become a fact of life for million people in present century. It

has widely influenced the economic & social policies of all the developed &developing countries.-Maintain an element of stability in stress. social security programmes are nowincreasingly being accepted as useful & necessary instruments for the protection& stability of the labour force. It is primarily an instrument of social & economic

justice as it works for horizontal & vertical redistribution of incomes in society.

Dynamic concept the contents of which change with social, economic & politicalsystem obtaining in a given country at a given time.

According to Weber & Cohen social security is a controversial & dynamicsubject with various facts- philosophical, theoretical, humanitarian, financial,administration, social, economic, political, statistical, medical & legal.

Frid lander defines social security as a programme of protection provided bysociety against the contingencies of modern life.

International Labour Organisation defines:

The security that society furnishes, through appropriate organisation, againstcertain risks to which its members are exposed. These risks are essentiallycontingencies against which the individual of small means cannot provide by hisown ability.To enjoy security, one must have confidence that the benefits will be availablewhen required, and in order to afford security, the protection must be adequate inquality & quantity. It further emphasized the importance of comprehensive socialsecurity measures in the preamble to its constitution, in which it proclaimedprotection of the worker against sickness, disease & injury arising out ofemployment, the protection of children, young persons & women, provisions forold age & injury.

Objective is to protect poor.

Aim of social security measures1) Compensation of salary/ income2) Restoration of sickness3) Prevention of poverty


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Access to social security has become a fundamental human right to which everyindividual is entitled as a member of society. This right has been embodied in theuniversal declaration of human rights adopted by the U.N. General Assembly in1948. There are two main currents in the movement towards social security viz-social assistance & social insurance. They are two sides of same coin.

Qs1) Social security should be adopted as Fundamental Right. Present your

views in the class.2) Social Security is pillar of the welfare of human society. Present your

views in the class.

CHAPTER-2SOCIAL ASSISTANCE AND SOCIAL INSURANCE

It is one of the oldest form of Social Security

- Laws of Ancient Hindu India, which contain many provisions for needy.- Zakat practice in Islamic societies in 7th century.- In Europe started with poor laws.- Social Assistance Schemes, which were established in a number of British

colonies during this century, were based on Victorian new Poor Law.

ILO as a service or scheme, which provide benefits to persons of small meansas of right in amounts sufficient to meet minimum standards of need & financedfrom taxation, has defined social Assistance. Social Assistance represents the

unilateral obligation of the community towards its dependent groups. The societyor govt. provides it to the poor & needy individuals.

The principal features of Social Security are-I. The whole cost of the programming is met by the state & local units of

govt.II. Benefits are paid as of legal in rights in prescribed categories of needIII. In assessing need , a person` s other income & resources are taken into

accountIV. The benefit grant is designed to bring a person` s total income up to

community determined maximum.

Social Insurance-

Beveridge defined social insurance as the giving in return of contribution,benefits up to subsistence level, as of right and without means tests, so that anindividual may build freely upon it. Thus, social insurance Implies that it iscompulsory and that men stand together with their fellows


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This is based upon the principles of compulsory mutual aid.The principles elements of social insurance are:

1) Social Insurance is influenced by contribution, which are normally sharedbetween employer & workers with perhaps state participation in the form of a

supplementary contribution.2) Participation is compulsory, with few exceptions3) Contributions are accumulated in special funds out of which benefits are paid4) Surplus funds are invested to earn further income5) A person` s right to benefit is secured by his contribution record without any

test of need6) The contribution & benefit rates are often related to what the person is

earning.

Social Insurance is the largest single element in & foundation for the socialwelfare system of most countries. It grew out of voluntary insurance

arrangements of the medieval European craft guilds & gradually institutionalisedin many countries of the world.

Elements of Social Insurance -1) Compulsory participation2) Govt sponsorship3) Contributory finance4) Eligibility derived from contributions5) Benefits prescribed in law6) Benefits not directly related to contribution.

Social Insurance principles have been widely adopted & today most industrialcountries have comprehensive insurance schemes, which cover a large majorityof the population & provide protection against a wide range of contingencies.

QS1) Present details element of Social Assistance definition of ILO in the class?2) Discussion will be held on diffrence between Social Assistence & Social

Insurance in the class.

CHAPTER-3EVOLUTION OF SOCIAL SECURITYA study of social security (ILO 1984) describes three stages in its modernevolution.According to this view, the initial response was paternalistic privatecharity andpoor reliefwas provided for the indigent, but harsh conditions & stigma made thisform of provisions politically unacceptable.


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As a reaction in second phase social insurance were developed based oncompulsory premia that entitled the participants to pension & sick pay. In timethese programs were extended to include wider coverage & contingencies.

In the third stage the concepts of prevention & universality were introduced

with the aim of maintaining & enhancing the quality of life.The evolution of different sets of policies that make up formal social secondary inindividual countries was a result of changing the perceptions. Differentconfigurations of interest groups influenced the directions of social securitypolicies in industrial countries.Formal social securities policies differ markedly among industrial countries,depending upon the objectives of the govt. The essential test of a social securitysystem is now well it pays benefits to the intended target groups. Thus in thecase of income poverty, it is necessary to examine to what degree socialsecurities provisions contribute to a reduction in poverty. For instance, whenbenefits are based on a set of contingencies, coverage may not include all the

eligible poor.Developing countries have had a variety of experiences with formal socialsecurities designed to provide for such contingencies as sickness, old age &unemployment. Since Governments typically face budget constraints, the choiceof policy is of central importance. Governments need to evaluate the objectivesof social security & decide whether to rely on public or private insurance. Furtherthe governments ability to identify the vulnerable & needy as well as political &administrative constraints will determine the effectiveness of the system.Schemes in different countriesThe term social security was first officially used in the title of the U.S. legislation-the social security act of 1935. It appeared again in an act passed in New

Zealand in 1938, which brought together a number of benefits. It was used in1947 in the wartime document known as Atlantic Charter. The ILO was quick toadopt the term impressed by its value. It adopted a convention of minimumstandards of social security in 1952, which has influenced a variety of socialsecurity measures all over the world. During 70` s tremendous progress in all thecountries. In developing countries where the economy is already more structuredthe social securities. Institutions have become firmly established & occupy anextremely powerful & influential position & financially. Over the years more &more categories of population have been brought within the scope. White-collarworkers, self-employed & certain categories of non-employed persons. In nearlyall highly industrialised countries, cash benefits are now provided for old age,survivors, child support, maternity, unemployment, sickness, and disability. AfterII world war the member of countries operating social securities programs rosesharply.Great Britain-The works men compensation Act of 1897 made earnings related compensation,subject to limit, payable to those incapacitated as a result of an injury sustainedat particular types of works. Compensation was paid directly by employers. Rightof compensation can be established through courts. By 1906 such compensation


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was available in most spheres of employment. In 1908 the old age pension act-pension for people aged 70yr. In 1911-national insurance act introducedcompulsory insurance against unemployment of workers in specific industriesagainst medical costs & earning losts during sickness benefits as a right in returnfor contribution. They were financed by contributions made by those covered,

their employees and an exchequer supplement 1934 unemployment actintroduced a means tested benefit for those unemployed but not covered bynational insurance. Apart from reduction in pension age of 65 for men 60 forwomen the period up to 2nd world war saw no significant further developments insocial securities legislation.1942 a detailed investigation into the existing social securities arrangements &suggestions for their reform were published.

1942 the famous Beveridge report fixed the public imagination & became aninstant best seller in UK, USA. The main recommendation of report was that thedisorganised system for the provision of social insurance & assistance that

existed before the war should be replaced by a unified system. Most of theBeveridges recommendations were incorporated in the 1946 National Insurance(industrial injury) act. In 1966 the ministry of social security replaced the ministryof pensions, which got merged in 1968 with the ministry of health to create thedepartment of health & social security. In 1971, the Joseph Plan focusedattention on retirement pensions and in particular the role that ought to be playedby the state at a time when occupational pension schemes were growing in theircoverage.In 1971, a new means tested benefit, family income supplement was introduced.In 1975, the social security provisions act was passed. The act required a reviewof social securities benefits in March in the lights of inflation which has occurred

and which is expected. The 1980 social security & housing benefits wasadministratively rationalised from April 1983, & in the first 8 weeks of sickness &injury statutory sick pay is paid in place of existing benefits. social securityexpenditure in the year ending March 1981 totaled 22.4 billion pounds around10% of G.N.P. & 21% of total government, expenditure splits conveniently into 2categories, 1st contributory benefits.2nd non contributory benefitsThe principal contributory benefits are retirement pensions. Unemployment

benefit, widow` s benefit & sickness benefit.Non-contributory benefits - guardians allowance, industrial disablementbenefit& child benefit.

QS1) What is the diffrence between UK and India insurance benefit? Discuss in

the class.2) What are the insurence services available for industrial workers? Discuss

in the class.


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USASocial security system was introduced in USA in 1935 as a programme ofinsurance protection for the workers & his family against complete loss of incomethrough old age or death.In 1950social security programme was extended to cover farm & household

employees & other persons. The social security programmes in the USA havebeen characterised by rapid expansion, significant improvements & widespreadpublic acceptance.Four separate social service programme provided financial security to Americanworkers & their families.1) The old age & survivors Insurance (OASI) programme pays monthly cash

benefits after a worker retires or dies2) The disability insurance (DI) programme pays monthly cash benefits after a

worker becomes disabled.3) The Hospital Insurance (HI or Medical Part A) programme pays for hospital

care of the aged & long-term disabled.

4) The supplementary Medical Insurance (SMI or Medical Part B) programmepays for part of costs of physician` s services , out patient hospital services, &other related medical health services, for voluntarily insured aged & disabledindividuals. Health insurance (Medicare) covers persons over 65 years &persons who have been disabled for at least 2 years.

The cash benefit provision of the programming is designed to replace partiallythe income that is lost when a worker retires, become severely disabled or dies.Unemployment Insurance programme are designed to provide cash benefits as amatter of right to unemployed workers who fulfill certain eligibility conditions.The workmen compensation legislation is the first form of insurance designed toprovide cash benefits & medical care when a worker is injured in connection with

his job & also monetary payments to his survivors if he is killed on the job.Unemployment compensation is administered by each state, with the federalgovernment setting standards. The system is financed by a federal tax on payrolls & by federal treasury.There are union negotiated welfare plans in the system of social security, whichusually cover health insurance, supplementary benefits for retires, laid offemployees and a host of other benefits, and financed by the employer. Anestimated 40 million employees in USA are beneficiaries of private pension &welfare plans. Their rights are protected under the employee retirement incomesecurity act of 1974. Major legislatives changes are introduced in the USA socialsecurity programs on December 21 , 1977. It imposes higher social securitycontributions on more than 100 million contributors to the national retirementprogramme & on their employers. The legislation was designed to meet thefinancial problems facing the social security system. According to the new law,benefits amount would be on an average5% lower than those paid previouslydue to the revision of the benefit formula. However it provides improved benefitfor retirees over 65 years of age who continue to work.


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USSRIntegral part of basic social policy. Articles 12 & 118 of constitution guaranteedemployment & payment for their work according to its quantity & quality.Article 119 guarantees the citizens the right to rest & leisure. Article 120

guarantees the right to maintain in old age & also in sickness & disability.Article 121 gives right to education & 122 accords women to equal right with menin all sphere. This guarantee is because-1) A higher rate of growth of the economy2) The socialistic character of a state3) The association of unionsSocial endurance extended to all workers & employees without exception.In 1992 - in new economic policy labour code was adopted. It provides medicalhelp, benefits in case of temporary disablement, payment of additional benefittime feeding of children, help of destitute, payment of pensions in case of incapacity, old age and death of a wage earners. Main features of social insurance

as follows-A. Only employed persons are socially insuredB. No provision for unemployment insuranceC. Membership of a trade union is a pre condition for the availability of full

insurance benefitsD. Social Insurance schemes are organised, administered & supervise by trade

unionsE. Insurance premium is paid by employer onlyF. An investment for development in the field of productionG. Dismissed employee get less benefitH. Dissatisfied worker can go to local court against union

Worker has right to non-taxable old age pension at the age of 60 & women at theage of 55. The necessary service record is 25 years for men & 20 years forwomen. Average pension is 60 to 70 % of wages earned. All working women areentitled for maternity leave equivalent to 100% of their earnings for 56 daysbefore & 56 days after confinement. Extended to 70 days in cases of multiplebirth or complications. Free Medical Treatment & free primary education. Partlyrun by unions and by industrial entrepreneurs.Special provision for unmarried mothers & their children for protection. Shereceives special allowance for her childcare.Central Trade union Council controls all unions. Have separate insurancedepartment.

QS1) What is the diffrence between UK and India insurance benefit? Discuss in

the class.2) What is the difference between USA & USSR insurance schemes?

Discuss in the class.


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3) What are the social insurance schemes are available in India? Present inthe class salient features of any one scheme?

CHAPTER-4

PAYMENT OF WAGES ACT-1936

Application: Whole of India, Payment of wages to :

(i) Person employed in any factory

(ii) Persons employ upon any railway by a railway admn. or either directly

or by contractor/sub contractor by a person fulfilling contract with

railway administration.

(iii) Persons employed in an industrial or other establishment sub sec. 5

empowers state Government to extend the application is subject to two

conditions :

(I) Issue of 3 months prior notice of its extension to do so

(II) A Notification of the extension in official gazette.

Sub sec. 6 : Shall not apply where average wage for such wages period is

exceed Rs.1600/- per month, wage period not exceed one month.

Sec. 2 : Definitions

(I) Employment person : include the legal representative of a

deceased employed person.

(Ib) Employer includes the legal representative of a deceased

employer.

(Ic) Factory Place under the Factories act.(II) Industrial or other establishment means (a) Tramway

service or motor transport engaged in carrying passengers,

goods or both by road for hire on reward (b) air transport

service other than armed forces (c) dock, wart or jetty (d)

Intend vessel, mechanically propeller (e) mine, quarry or oil


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field (f) plantation (g) workshop or other establishment in

which articles are produced, adapted or manufactured with a

view to their use, transport or sale (a) establishment in which

any work relating to the construction, development or

maintenance of buildings, roads, bridges or canals or

relating to operations connected with navigation, irrigation or

the supply of water or relating to the generation,

transmission and distribution of electricity or any other form

of power is being carried on.

Mines under Mines act, Plantation under Plantation Labour Act, prescribed

means prescribed by rules, railway Admn. under Indian Railways Act.

Wages : All remuneration whether by way of salary allowances or

otherwise expressed in terms of money or capable of being so expressed

which would if the terms of employment, express or implied were fulfilled,

be payable to a person employed in respect of his employment or of work

done in such employment. Wages includes : (a) any remuneration payable

under award settlement between the parties or order of a court (b)

Remuneration in respect of Overtime work, holidays or any leave period,

(c) any additional remuneration payable under the terms of employment,(d) any sum or termination of employment (e) any sum to which the

person employed is entitled under any scheme trained under any law for

the time being in force.

Wages does not include :

(1) any bonus which does not form part of remuneration

(2) value of any house accommodation or supply of light, water, medical

attendance

(3) contribution paid by employer to P.F. fund

(4)Traveling allowance

(5)any sum paid to defray special expenses

(6) any gratuity.


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Sec. 3 : Responsibility for payment of wages : - Employer or manager under

factories act, person who has control and supervision, in railways, railway admn.

Sec. 4 : Fixation of wage period : Responsible person will fix shall not exceed

one month.

Sec. 5 : Time of payment of wages If no. of employees less than 1000 than

7th otherwise lo th day.

Sec 6 Wages to be paid in current coins or currency notes.

Sec. 7 Deductions No deduction can be made only authorized under 7(1)

Permissible deductions :

Fines,

absence from duty,

for damages for loss of goods,

for house accommodation supplied by employer,

recovery of advance.

Deduction for such services provided by the employer as the state government orauthorize officer has specified deductions may be made for recovery of loans, PF

contribution to National defence fund approved by Government, payments to

cooperative societies, LIC provided person has given personal authorization,

payment of contribution to union registered. ESI scheme /other Government

insurance scheme if any.

Permissible total deduction For cooperative societies up to 75% ofwagesin

any other case 50% of wages.

Fines : 3% of wages is limit, Proper notice is to given and exhibit.

Sec.14 Inspectors : 3 kinds (1) Inspector of factories (2) State Govt. can appoint

(3) State Govt. can appoint labour inspector.

Powers of Inspectors :


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Make examination and enquiry, enter, inspect and search any premises,

take assistance which they think necessary, supervise the payment of wages,

notice for producing record and registers, seize or take copies of register.

Sec. 14 : Facilities to be afforded to Inspectors Every employer shall afford

all reasonable facilities for making an entry, inspection, supervision or inquiry

under this act.

Sec. 15 : Authority to hear claims : State Government to appoint : Presiding

officer of labour court or tribunal or commissioner or civil judge of a court.

Presentation of application Application in following claim can be made to the

authority : (i) Any contrary deduction, (2) Delayed payment. By employed person

himself, any legal practitioner authorized in written on his behalf. Any official of

registered trade union authorized in writing any inspector under this act.

Within 12 months of deduction application has to made afterwards he has to

explain reason for delay. Authority heard both parties and make enquiry and give

direction - in deduction compensation Rs.25/ limit/compensation 10times of

deduction or delay wages.

Recovery of amount any amount directed to be paid may be recovered (i) if

the authority is Magistrate, by the authority as if it were a five imposed by him asmagistrate (ii) if authority is not a magistrate, by any magistrate to whom

authority has made application.

Scope of jurisdiction under sec. 15 is limited in deciding claims.

Sec. 16 : Single application in respect of claims from unpaid group from some

establishment, same deduction and same wage period.

Sec. 17 Appeal : Employer can make an appeal within 30 days in lower court of

area. 17A : conditional attachment of property of employer or other person

responsible for payment of wages.

18 : Power of authorities appointed under section 15 have all powers of civil

court (a) taking evidence enforcing the attendance of witnesses (c) compelling

the production of documents.


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Sec. 13 : Maintenance of registers and records in prescribed forms : (1)

particulars of persons employed by him, (2) the work performed by the persons

(3) the wages paid (4) receipts (5) any other particulars.

Sec. 20 : Penalty for offences under the Act - fine from Rs.200/ to 1000/-

Sec. 21 : Procedure in trial of offences before any court - shall take cognizance

of a complaint against any person for an offence the following conditions must be

fulfilled. (i) any application in respect of the facts constituting offence has been

presented under sect. 15 (ii) application must have been granted wholly or in part

(iii) authority/appellate court granting the application must have sanctioned the

making of the complaint for such offence.

Sec. 22 : Bar of suit : any court shall not entertain a suit for recovery

22 A- Protection of action taken in good faith legal proceeding shall not lie

against the govt./any officer.

Sec. 23 : Contracting out: Any contract shall be null and void for deprive of

wages.

Sec. 24 : Application of Act to railways, mines soil field : empowers Central Govt.

Sec. 25 : Display by notice of Abstract of the Act.

Sec. 25 A : Payment of un-disbursed wages in cases of death of employed

person to nominee, deposit with prescribed authority.Sec. 26 : Rule Making power : Empowers state Govt. to make rules.

QS1) Prepare a wage payment register and present your design in the class.2) Prepare a wage slip design and present in the class.

CHAPTER - 5

PAYMENT OB BONUS ACT 1965Bonus is cash payment in addition to wages as stimulus to extra work andefficiency by labor. But to enable the labor to earn bonus the following conditionsare required:1 Wages fall short of the living standard, and


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2 the industry makes huge profit part of which are due to the contribution, whichthe workmen make in increasing production.The payment of bonus became a settled principle of industrial law. SupremeCourt also affirmed Available Surplus formula or full bench formula.

OBJECTAn act to provide for the payment of bonus to persons employed in certainestablishments on the basis of profits or on the basis of production or productivityand for matters connected therewith.

Amended preambleAn act to provide for the payment of bonus to persons employed in certainestablishment and for matters connected therewith. The payment of bonus wastherefore delinked from profits and productivity and minimum bonus wasrestored.

EXTENT AND APPLICATION (sec.1)Act came into force on 29-5-1965. It, even for a single day is sufficient to attractthe provisions of the applies to every factory and to every other establishment inwhich 20 or more persons are employed on any day during an accounting year.The employment of 20 or more persons in an establishment for a day inpreceding 12 months.

EXEMPTED EMPLOYEES (sec.32)The act shall not apply to the following classesA employees employed by L.I.C. of India,B seamens as defined in Merchant Shipping Act, 1958

C employees registered under the Dock Workers (Regulation of Employment)Act 1948 and employed by registered employers.D employees engaged in industry under central Govt. or state Govt. or a localauthority.E employees employed by-(i) The Indian Red Cross Society(ii) Universities and other educational institutions,(iii) Institutions established for non-profit purposes e.g. hospitals, chambers ofcommerce and social welfare institutions.F employees employed through contractors on building operationsG employees employed by R.B.I.H employees employed by (i) I.F.C.I.(ii) Any Financial corporation established under the State Financial CorporationAct, 1951(iii) The Deposit Insurance Corporation(iv) The Agriculture Refinance Corporation(v) the U.T.I.(vi) any other financial institutions being an establishment in public sector


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(vii) employees employed by inland water transport establishment operating onroutes passing through any other country

POWER OF EXEMPTION (sec.36)if it will not be in public interest to apply all or any of the provisions, appropriate

Govt. can exempt by notification in official Gazette

APPLICATION OF CERTAIN LAWS NOT BARRED (SECS39 & 35)The provisions of this act shall be in addition to Industrial Disputes Act, 1947 orany other corresponding law relating to investigation and settlement of industrialdisputes in force in a state. Noting contained in this act shall be deemed to affectthe provisions of the Coal Mines, Provident Fund and Bonus Act,1948 or of anyscheme made their under.(sec.35)However, their is nothing in the act to preclude employees from entering intoagreement with their employer for granting them an amount of bonus under aformula which is different from the formula under the act provided that the

agreement protects the right of the employees to receive minimum bonus undersec10 of the act.

DEFINITIONSAccounting Year (sec.2 (i)):

Accounting yearmeans-(i) in relation to a corporation, the year ending on the day on which the

books and accounts of the corp. are to be closed and balanced(ii) in relation to a company, the period in respect of which any profit and

loss account of the company laid before in annual general meeting.(iii)

In any other case- (a) the year commencing on the first day of April; or(b) if the account of any establishment maintained by the employerthereof are closed and balanced on any day other than the 31st march

Appropriate Government (sec.2 (5)): in general State Govt., Central Govt. forCentral Govt. own companies.

Award ( sec. 2 (7) ): A final determination of any industrial disputes by anylabour court, Industrial Tribunal, National Tribunal constituted under IndustrialDisput Act,1947

Employee ( sec.2 (13) ): means any person(other than an apprentice)employed on a salary or wage not exceeding Rs.3500/ per mensem in anyindustry to do any skilled or unskilled, manual, supervisory, managerial,administrative, technical or clerical work on hire or reward, whether the termsof employment expressed or implied. An employee who is engaged in anywork or operation, which is incidentally connected with the main industry ofthe employer, would be a workman. Definition does not exclude casual or parttime worker.


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Employer(sec.2 (14)):Employer includes (a) the occupier of the factory, including agent of suchowner, the legal representative of deceased owner, manager of a factorydeclared under the factory act(b) Manager who has ultimate control over the establishment, managing

director or managing agent

Establishment (sec2 (16) (15) (3)):

1 Establishment in public sector-means an establishment owned controlled or managed by (i) a Govt.company defined in the companies Act, 1956(ii) a corp. in which not less than 40% of its capital is held by-(a) the Govt.(b) the R.B.I. (c) a corp. owned by the Govt. or the R.B.I.2 Establishment in private sector- means any establishment other than publicsector. (sec.2 (15))

An establishment includes departments, undertakings and branches, if (i)separate balance sheet is prepared then treated as separate. (ii) that,immediate before the commencement of that year the branch, undertaking orthe dept was not treated as the part of the establishment.Application of the Act to establishments in public sector in certain cases(sec.20)Public sector & private sector are competing in an accounting year andincome from such sale and service or both is not less than 20% of the grossincome of establishment in public sector for that year, then the provision ofthis act shall apply in relation to such establishment in public sector as they

apply in private establishment.

Salary or wage ( sec.2 (21 ) )- means all remuneration ( other thanremuneration in respect of overtime ) capable of being expressed in terms ofmoney which are paid in fulfillment of conditions of employment by whatevername called, but does not include-(i) any other allowance which the employee is time being entitled to;(ii) the value of any house accommodation or the supply of light, water,medical attendance, any supply of food grains on concession or other articles(iii) any traveling concessions;(iv) any bonus (including incentive, production and attendance bonus)(v) any contribution paid or payable by employer to any pension fund,provident fund, or the benefit of employees under any law);(vi) any commission payable to employee;where any employee is given in lieu of whole and part of the salary or wagespayable to him, free food allowance or free food by his employer, suchallowance shall be deemed to part of salary or wages. Bonus payable underAct is wages and is not liable to attachment.


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Computation of bonus under this act - The Act requires 60% (67% in caseof a foreign company ) of the available surplus to be allocated for payment ofbonus. First calculate gross profit as first schedule, if the company is bankingcompany then according to second schedule. From the gross profit are to bededucted such as depreciation and development rebate or investment

development allowance, direct taxes and prior charges. The figure so arrivedat is available surplus and 60% of there of is allocable surplus for payment ofbonus.1 The net profits: The starting point for determination of bonus under the Actis the net profit shown in the profit and loss account.(a) Balance sheet and profit and loss account of corporations and companies-Balance sheet must be certified by certified C.A.. It shall be necessary for acompany.Any union asked clarification then employer has to provide the same. In caseof doubt, Court may take necessary step as it may think fit duringinvestigation.

(b) Audited accounts of banking companies (sec.24): Under the dispute courtshall not permit for challenging the duly audited balance sheet of any bank.( c) Audit of accounts of employers, not being corporations or companies (25):Where any dispute has been referred and when said authority find thatbalance sheet is not properly audited by any such auditor, it may by orderdirect the employer to get to get his accounts audited within such time bysuch auditor as it thinks fit. If employer get failed to comply with, to theprovision of penalty vide sec28 , get the accounts audited by the auditor theythink fit and charges shall be borne by the employer or in default in paymentcharges shall be recovered in the manner provided in sec21.Computation of gross profits (sec4):

(a) In the case of banking company to be calculated in the manner specifiedin the first schedule(b) In any other case may be calculated in the manner specified in the second

schedule

Available surplus (sec.5 & 6) The available surplus in respect of anyaccounting year shall be the gross profits for that year after deducting fromthe gross profits following sums- depreciation, development rebate orinvestment development allowance, direct taxes (the income tax, the superprofits Act, The companies (profits) surtax Act).

Allocable surplus (sec.2(4) ): means(a) in relation to an employer, being a company(other than bankingcompany)which has not made the arrangements prescribed under the incometax Act for the declaration and payment with in India of the dividends payableout of its profits in accordance with the provisions ofsec194 of the income TaxAct,67% of the available surplus in an accounting year.(b) In any other case, 60% of such available surplus.


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Amount of bonus (sec10): The Act provides for the payment of bonus out ofthe allocable surplus. If no amount is left then minimum 8.33% and maximumis 20%.

Customary puja or interim bonus (sec7): Where in any accounting year

aforesaid bonus has been paid the employer shall be entitled to deductamount of bonus so paid from the amount of bonus payable to the employeein the accounting year.Payment of bonus in respect of employee drawing above Rs.2500Where the salary or wage of an employee exceeds Rs. 2500 per mensem,the bonus payable to such employee shall be calculated as if his salary orwage were Rs. 2500 per mensem.

Set on and set off of the allocable surplus (sec15): If amount exceedsthen maximum limit is 20% and rest amount is set on for utilization in future. Ifamount is not available for payment necessary amount shall be set off from

succeeding accounting year as in accordance with 4

th

schedule.

Grant of bonus under different formula(sec34& 34A): Employeesemployed in any establishment may enter into an agreement for bonus underdifferent formula but minimum and maximum limit is to be observed.

Eligibility for bonus (sec8): provided employee has worked in that year30days.

Computation of number of working days (sec14): An employee shall bedeemed to have worked in an establishment in any accounting year also on

the days on which-(i) laid off days(ii) leave with wages(iii) absent due to temporary disablement caused by accident arising out ofand in the course of employment(iv) maternity leave with wages

Disqualification for bonus (sec8): If he is dismissed from services for(a) fraud(b) violent behavior while on the premises of establishment(c) theft, misappropriation, or sabotage of any property of the establishment.When deduction permissible(sec13&18):( i ) When employee has not worked for all the working days in anyaccounting year, proportionate reduction.(ii) Where an employee is found guilty of misconduct causing financialloss to the employer


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Time limit for payment of bonus(sec19):within a month from the date onwhich the award becomes enforceable, In other case, the bonus shall be paidwithin 8 months from the close of the accounting year.Govt. can extend the 8 months period but not beyond 2 years.

Applicability of bonus to establishments newly set up (sec16):(a) In the first 5 accounting years year in which the employer derives profitfrom such establishment such bonus shall be calculated but without applyingset on and set off of allocable surplus.(b) In the 6th&7th accounting years (i) for the 6th accounting year Set onor set off, as the case may be, shall be made in the manner illustrated in thefourth schedule taking in to account the excess or deficiency of the allocablesurplus for set on or set off in respect of the fifth and sixth accounting years;(ii) For the 7th accounting year- fourth schedule taking into account of theallocable surplus in respect of 5th,6th,7th accounting years.(iii)From the 8th accounting year following the accounting year in which the

employer sells the goods produced or manufactured by him or rendered theservices.Further an employer shall not be deemed to have derived profit in anyaccounting year unless:(i) he has made provision for that years depreciation to which he isentitled under the Income Tax Act(ii) the arrears of such depreciation and losses incurred by him in respectof the establishment, for the previous accounting years have been fully set offagainst his profits.

Recovery of bonus due from an employer (sec21): Employee, or any

authorized person, or in case of death of employee his heirs may make anapplication to the appropriate Govt. for the recovery of money due to him. Ifthe appropriate Govt. is satisfied that any money is so due, it shall issue acertificate for that amount to the collector who shall proceed to recover thesame in the same manner as an arrear of land revenue. Every suchapplication shall be made with in one year from the date on which the moneybecame due to the employee. In late case employee shall be called to giveexplanation.

Reference of disputes (sec22)Where any dispute arises between an employer and his employees withrespect to the bonus payable under this act or with respect to the applicationof this act to an establishment in public sector, then such dispute shall bedeemed to be an industrial dispute with in the meaning of the IndustrialDisputes Act,1947.

Maintenance of registers and records (sec26)Rule 4 of the payment of Bonus Rules,1975 provides that every employershall prepare and maintain the following registers-


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( i ) a register showing the computation of the allocable surplus in form A;(ii) a register showing the set on and set off of the

allocable surplus in form B;(iii) a register showing details of the amount of bonus due to each of the

employees and deductions and the amount actually disbursed in form

C.Inspectors (sec27)Appropriate Govt. may appoint such persons as it thinks fitto be inspectors for the purposes of this act and may define limits with inwhich they shall exercise jurisdiction.

Powers of inspector(a) ask for information(b) at any reasonable time enter any establishments, examine registers,

accounts, and other document related to the employment of persons, canexamine an employee in the establishment.

(c) Take extract from any book register maintained in relation to the

establishment(d) Exercise such other powers as may be prescribed.

Penalties (sec28) Fails to comply with the direction or requiting, punishablewith imprisonment for a term which may extend up to six months or with finewhich may extend to Rs.1000 or with both.

Offences by the companies (sec29)Person who has ultimate control over the affairs shall be liable for any offenceNo such persons shall be punishable if he proves that the offence has beencommitted without his knowledge or that he exercised all due diligence to

prevent the commission of such offence.

Cognizance of offencesNo court shall take cognizance of any offence punishable under this Act, saveon complaint made by or under the authority of appropriate Govt.No court inferior to metropolitan Magistrate or a Magistrate of a first classshall try any offence punishable under this Act.

Protection of action taken under the Act (sec31): No legal proceeding shalllie against the Govt. or any officer for anything which is to be done inpursuance of this Act.

QS1) Whether employer should pay more money

exceeding 20% bonus and some % in form ofexgretia? Discuss in 4 groups and presentoutcome in the class.

2) II Day ABC company earned a huge profit in2003 and distributed 20% bonus + 2% exgretia.


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In the year 2004 company profits became nil butcompany distributed 20% bonus for its image ininternational market. This year company has gone inlosses and union has demanded 20% bonus. 2003was the sixth year of the company. Discuss in 4

groups and present in the class.

CHAPTER- 6

MINIMUM WAGES ACT-1948

Object:

To secure the welfare of works in a competitive market by proceeding fora minimum limit of wages in certain employments.

Sec 1 Application extends to the whole of India applies to the employmentswhich are enumerated in schedule. Appropriate Govt. has power to extend and

cover any other employment.

Sec. (2)(a): Adolescent completed 14 years of age and below 18 years.

(b) Adult completed 18 years of age.

Appropriate Govt. Means under the authority of central Govt. or a railwayadmn. in relation to mine, oil field, parts Central Govt.

(bb) Child who has not completed 14 years.Competent Authority The authority appointed by Appropriate Govt. by

notification in official gazette to ascertain from time to time the cost of living indexnumber applicable to the employees employed in Scheduled employmentsspecified in such notification.

Cost of living index number in relation to the employees in any scheduleemployment in respect of which Minimum wages rates have been fixed mean theindex number ascertained and declared by the comp. authority by notification in


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official gazette to be the cost of Living Index number applicable to employers insuch employment.

Employer : means any person who employees directly or through authorisedperson, one or more employees in any scheduled employment in respect of

which in rate of wages have been fixed under the Act.Employer includes Manager under the Factories Act, in Govt. appointed authority for supervision ofemployers, under local authority person appointed by such authority, if no personthan Chief Executive officer. Any other person responsible to owner forsupervision and control. Managing agent is an employer.

Prescribed means prescribed by rules made under this act.

Scheduled employment : Employment specified in schedule or any process orbranch of work forming part of such employment. Schedule is decided in 2 parts.

Part I( I ) Employment in any woolen carpet making or shawl weaving establishmentsrice mill, floor mill, dal milltobacco (including bidi making) manufactoryPlantation- any estate use for growing cinchona, rubber, tea or coffeeemployment in any oil millEmployment under any local authority.Employment on the construction or maintenance of roads or in building operationStone breaking and stone crushing incidental to the mining operation but thestone breaking and crushing which are carried on in mines are not included. Themin. wages fixed for the employment of stone breaking and crushing will not

apply to the operation of quarrying Sahabad state.Employment in any lac manufacturingMica worksPublic motor transportEmployment in tanneries and leather manufactory.

Part II Employment in agriculture, any form of farming including the cultivationand tillage of the soil, dairy farming, the production, cultivation growing andharvesting of any agriculture or horticulture commodity, the raising of live stock,bees or poultry and any practices performed by a farmer or on a farm asincidental to or in conjunction with farm operation (including any forestry ortimbering operations and the preparation for market and delivery to storage or tomarket or to carriage for transportation to market of farm produce.

Wages : All remuneration, capable of being expressed in terms of money, whichwould if the terms of the contract of employment express or implied were fullfilled be payable to person employed in respect of his employment or of workdone in such employment and includes HRA. wages do not include :

the value of


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any house accommodation, supply of right, medical attendance orany other amenity or any service excluded by general or special order of the app.Govt.any contribution paid by the employer to any pension fund or PF or under anyscheme of social insurance.

any traveling allowance or the value of any traveling concessions.any term paid to the person employed to defray special expenses entailed on himby the nature of his employment.any gratuity payable on discharge.

Employee Any person who is employed for hire or reward to do any work,skilled or unskilled , manual or electrical in a schedule Employment in respect ofMinimum rate of wages has been fixed. It includes An out work to whom any articles or materials are given out by another person tobe made up, cleaned, washed, altered, ornamented finished repaired, adopted orotherwise processed for sale for the purposes of the trade or business of that

other person where the process is to be carried out either in the home of the outworker or in some other premises not being premises under the control andManagement of that other person.An employee declared to be an employee by the appropriate Govt.

Wage structure Certain principles on which wages are fixed have been statedby the supreme court:First principle is that there is a minimum wages, which in any chance must bepaid, irrespective of the extent of profits, the financial condition of theestablishment or the availability of workmen on lower wages. This minimumwages is independent of the kind of industry and applied to all alike big or small.

It sets the lowest limit below which wages cannot be allowed to sink in allhumanity.The second principle is that wages must be fair, that is to say, sufficiently high toprovide a standard family with food, shelter, clothing, medical care and educationof children appropriate for the workmen but not at a rate exceeding his wageearning capacity in the clans of establishment to which he belongs. A fair wagesis thus related to the earning capacity and the workload. It must however, berealised that fair wage is not living wage by which is meant a wage which issufficient to provide not only the essential above mentioned but a fair measure offrugal comfort with an ability to provide for old age and evil days. Fair wage liesbetween minimum wage, which must be paid in any event, and the living wage,which is the goal.

Minimum wages: It is not defined in the act because it would not be possible tolay down a uniform min. wages for all industries throughout the country onaccount of different and having conditions prevailing from industry to industry andfrom one part of the country to another.


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Components of a minimum wages: The Tripartite committee of the Indian laborconference (1957) accepted the following five norms for the fixing of minimumwages.1 In calculating the minimum wages, the standard working class familyshould be taken to consist of 3 consumptions unit for one earner, the earnings of

workmen, children and adolescents should be disregarded.2 Minimum food requirement should be calculated on the basis of a netintake of calories, as recommended by Dr. Ay Kroyd for an average Indian adultof moderate activity.3 Clothing requirements should be estimated at per capita consumption of18 years p.a., which would give for the average workers family of 4 a total of 72years.In respect of housing, the rent corresponding to the minimum area provided forunder Govt. Industrial housing scheme should be taken into consideration infixing the minimum wages.Fuel, lighting and other miscellaneous items of expenditure should constitute

20% of the total minimum wages.Keeping in view the socio economic aspect of the wage structure one morecomponent to minimum wage should be added, namely, children education,medical requirement, minimum recreation including festivals/ ceremonies andprovision for old age, marriages etc. should further constitute 25% of the totalminimum wage.

Fair wages:There is a difference between minimum wages and fair wages. In case of

fair wages, besides the principle of industry cum region, the companys capacityto bear the financial burden must receive due consideration.

Sec .3: Fixation of Minimum rates of wages Lay down that the appropriateGovernment shall be empowered to fix Minimum rates of wages in the prescribedmanner. Sub. Sec. (1A). appropriate Govt. may refrain from fixing minimum ratesin respect of and schedule employment in which them are in the whole state lessthan 1000 employees engaged in such employment. If number exceed can fix atany time.Sub sec. (2) provide Government may fix (a) minimum rate of wages for timework(b) minimum rate of wages for pieceworka minimum of remuneration to apply in case of employees employed on piecework for the purpose of securing to such employees a minimum rate of wages ona time work basis which is known as a guaranteed time rate.a minimum rate in respect of overtime. Minimum rate of wages shall not apply inthe following cases during the period in which proceeding is pending and theaward made therein is in operation or where the notification is issued during theperiod of operation of an award during that period where in respect of an industrial dispute relating to rate of wages payable to anyof the employees employed in a schedule employment any proceeding is


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pending before a tribunal or National Tribunal or before any like authority (ii)where an award made by such authority as aforesaid is in operation (iii) anotification fixing minimum rates is issued during the pendency of suchproceeding or the operation of the award.

In fixing or revising minimum rates :(a) different minimum rates of wages may be fixed for(1) different schedule employments(2) different classes of work in the same schedule

Employment(3) adults, adolescents, children and apprentices

(4) different localities.(b) Minimum rates of wages may be fixed by one or more of the following wageperiods namely : (1) by the hour (2) by the day (3) by the month (4) by such otherlonger wage period as may be prescribed.

Sec. 4 : Minimum rates of wages may consist of: (1) Basic rate of wages anda special allowance at a rate to be adjusted, at such intervals andin such manner as the app. Govt. may direct, to accord as nearlyas practicable with the variation in the cost of living index numberapplicable to such works.

( II ) A basic rate of wages with or without the cost of living allowance and thecost value of concession in respect of supplies of essential commodities atconcession rate.In all-inclusive rate allowing for the basic rate, the cost of living allowance andcash of the concessions if any.

Sec. 5 Procedure for fixing and revising minimum wages AppropriateGovt. shall either : (a) appoint committees to hold enquiries and advice in respectof revision (b) by notification in official gazette, publish its proposal specify a datenot less than 2 months, the proposal will be taken into consideration.After consider the advice of committee, the app. Govt. by notification fix or revisethe rates which shall come in-force after the expiry of 3 months where the app.Govt. proposal to revise the minimum rates under 56(i)(b) shall consult Advisoryboard also.

Sec. 7 Advisory Board coordinating the work of committee, advising app.Govt. in the matter of revision.

Sec. 8 Central Advisory Board Central Govt. to appoint a board for advisingcentral and state governments and coordinating the work of Advisory board.

Sec. 9 Composition of committees Nominated by app. Govt. employer andEmployees representative of Schedule Employment industries, Shall be equal innumber app. Govt. shall appoint a chairman who will be an Independent person.


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Sec. 10 : Correction of errors Govt. may at any time by notification correctclerical or Arithmetical errors.

Sec. 11 wages in kind : Minimum wages under this act shall be paid cash. Ifapp. Govt. thinks it appropriate to pay a part of Minimum wages in kind may do

so by notification.

Sec. 12 Payment of Minimum rate of wages : If a notification under sec. 5 thanemployer has to pay revised wages.Sec. 13 ; Fixing hours of Normal working day : App. Govt. mayFix the number of hours, which shall constitute a normal working day with one ormore specified intervals.Provide for day of rest in every period of 7 days which shall be allowed to allemployees or to any specified class of employees and for the payment ofremuneration in respect of such day of rest.Provide for payment for work on a day of at a rest not less than the overtime rate.

Sec. 14 : Overtime : Payment for extra additional hrs. worked, Sec. 59 FactoryAct Double rate.

Sec. 15 : Wages of workers who work for less than normal working day entitled for full day payment unless (i) failure to work byunwillingness (ii) in other case as may be prescribed.

Sec.16 : Wages for two or more classes of work where any employee does2 classes of work at different rates he will get proportionately onbase of hours.

Sec.17 : Minimum time rate wages of piece work the employer to pay piecerated workmen wages at not less than the minimum rate ofwages.

Sec 18 : Maintenance of registers and records : As prescribed, Notice in theprescribed form, wage slip to workers, wage register asprescribed.

Sec. 19 : Inspectors : App. Govt. can appoint through notification, also definelocal limits of Inspector.

Powers of Inspector: Enter in premises at reasonable hrs., examine registers,notice board, examine any person, can obtain information, seize records.Sec.20 claims : App. Govt. can appoint an authority and decide for claimsthrough notification to hear.


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Sec. 23 Exemption of employer from liability in certain cases Employercan file complaint against actual offender, both shall be tired, onactual complaint. Employer has to proof actual offence of theoffender.

Sec. 24 Bar of suits Any other court has no jurisdiction to entertain any suit.Sec. 25 : Contracting out Any contract reduce min. wage shall be null and void.

Sec. 26 : Exemptions and exceptions App. Govt. has been given powers todirect that provision of this act shall not apply to wages payable to disabledemployers. Due to special reasons exemption may be granted.

Sec. 27 : Power of state Govt. to add to schedule.

Sec. 28 : Power of central Govt. to give direction to State Govts.Sec. 29 : Power of central govt. to make rules.

Sec. 30 : Power of appropriate Govt. to make rules.Sec. 30 A Rules made by the Central Govt. to be laid before parliamentSec. 31 : Validation of fixation of certain minimum rates of wages.

QS

1) search the following case and present in the class A Piece-rated employees cannot be deprived of minimum wages as fixedand/or revised under the minimum wages ActB When disability of an employee is incurred during his employment, hisminimum wages cannot be reduced

C Minimum wages Act will be applicable on the weavers who, after lifting cottonfrom the petitioners center, return the finish product to the centre

CHAPTER-7

WORKMAN`S COMPENSATION ACT-1923

Workmen` s compensation act passed in March 1923 put into force on July 1,1924Object of the Act :

Act is to impose an obligation upon employers to pay compensation to workersfor accidents arising out of and in the course of employment. The scheme of theact is not to compensate the workman in lieu of wages but to pay compensationfor the injury caused.ApplicabilityThe act extends to the whole of India and applies to any person who isemployed, otherwise than in a clerical capacity, in railways, factories, mines,plantations, mechanically propelled vehicles, loading and unloading work on a


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ship, construction, maintenance and repairs of roads and bridges, electricitygeneration, cinemas, catching or training of wild elephants, circus, and otherhazardous occupations and employments specified in schedule II to the act.Under sub section (3) of section 2 of the act, the state govt are empowered toextend the scope of the act to any class of persons whose occupations are

considered hazardous after giving three months notice in the official gazette. Theact, however, does not apply to members serving in the armed forces of IndianUnion, and employees covered under the provisions of the employees stateinsurance act, 1948 as disablement and dependents benefit is available underthis act.In order to be a workman within the meaning of section 2(1)(n) of the workmen`s compensation act, firstly, a person should be employed; secondly, hisemployment should not be of a casual nature; thirdly, he should be employed forthe purposes of the employer` s trade or business; and lastly. The capacity inwhich he works should be one set out in the list in schedule II of the act.

Payment of compensation:The compensation has to be paid by the employer to a workman for any personalinjury caused by an accident arising out of and in the course of his employment(section 3). In schedule I of the act, the percentage loss of earning capacity ordisablement caused by different types of injuries has been listed. However, theemployer will not be liable to pay compensation for any kind of disablement(except death) which does not continue for more than three days, if the injury iscaused when the workman was under the influence of drink or drugs or willfullydisobeyed a clear order or violated a rule expressly framed for the purpose ofsecuring the safety of workmen or willfully removed or disregarded a safetydevice. A workman is also not entitled for compensation, if he does not present

himself for medical examination when required or if he fails to take propermedical treatment, which aggravates injury or disease. In case it is not fatal, anemployment injury may cause any injury resulting in (1) permanent totaldisablement (2) permanent partial disablement (3) temporary disablement.The rate of compensation in case of death is an amount equal to 50% of themonthly wages of the deceased workman multiplied by the relevant factor or anamount of Rs 50000 whichever is more. Where permanent total disablementresults from the injury, the compensation will be an amount equal to 60% of themonthly wages of the injured workman multiplied by the relevant factor or anamount of Rs 60000 whichever is more. Where the monthly wages of aworkman exceed 2000 rupees, his monthly wages for the above purposes will bedeemed to be 2000 rupees. Where permanent partial disablement results fromthe injury, if specified in part II of the schedule I, such % of the compensationwhich would have been payable in the case of permanent total disablement as isspecified therein as being the %of the loss of earning capacity caused by thatinjury. The % loss of earning capacity depends on the loss of limbs and variesfrom 1 to 90 %. In the case of an injury not specified in schedule I, such % of thecompensation payable in the case of permanent total disablements isproportionate to the loss of earning capacity (as assessed by the qualified


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medical practitioner) permanently caused by the injury. Where more injuries thanone are caused by the same accident, the amount of compensation payableunder this head shall be aggregated but not so in any case as to exceed theamount, which would have been, payable if permanent total disablement hadresulted from the injuries. In case of temporary disablement, a half- monthly

payment of the sum equivalent to 25% of monthly wages of the workman has tobe paid. Half-monthly payment as compensation will be payable on the 16th dayfrom the date of disablement. In cases where the disablement is 28 days ormore, compensation is payable from the date of disablement. In other cases, thesame is payable after the expiry of a waiting period of 3 days. Thereafter, thecompensation will be payable half-monthly during the disablement or during aperiod of five years whichever period is shorter. There is also a provision forcommutation of half-monthly payments to a lump sum amount by agreementbetween the parties or by an application by either party to the commissioner if thepayments continue not for less than 6 months. Deduction can be made from anylump sum or half-monthly payments to which the workman is entitled the amount

of any payment or allowance which the workman has received from the employerby way of compensation during the period of disablement prior to the receipt ofsuch lump sum or of the first half monthly payment, as the case may be.It is provided that all cases of fatal accidents should be brought to the notice ofthe commissionerfor workmen` s compensation and in case the employer admitsthe liability the amount of compensation payable should be deposited with him.Where the employer disclaims the liability for compensation to the extentclaimed, he has to make provisional payment based on the extent of liabilitywhich he accepts, and such payment must be deposited with the commissionerorto be paid to the workman as the case may be . In such cases Commissionermay, after such enquiry as he thinks fit, inform the dependents that it is open to

them to prefer a claim and may give such other information a he thinks fit.Advances by the employers against compensation are permitted to the extent ofan amount equal to 3 months wages. The commissioner is also empowered todeduct an amount not exceeding Rs 100 from the amount of compensation inorder to identify the person who incurred funeral expenses. The employer is alsorequired to file annual return giving details of the compensation paid, number ofinjuries and other particulars. The amount deposited with the Commissioner ispayable to the dependents of the workmen.For the purposes of the Act dependents have been grouped into 2 classes

(1) those who are considered dependents without any proof(2) those who must prove that they are dependents.The first group includes a widow, a minor legitimate son, an unmarried legitimate

daughter or a widow mother.The following are included in the second group if they are wholly or partially

dependent on the earnings of the worker at the time of his or her death; awidower, a parent other than a widowed mother, a minor illegitimate son, anunmarried illegitimate daughter or a daughter legitimate or legitimate if marriedand a minor or if widowed and a married brother or unmarried sister or widowedsister if a minor, a widowed daughter -in law, a minor child of a predeceased


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son, a minor child of a predeceased daughter where no parent of the child isalive or a parental grandparent if no parent of the women is alive.The amount of compensation is to be apportioned among the dependants of the

deceased workman or any of them in such proportion as the commissioner thinksfit.

If an employer is in default in paying the compensation within 1 month from thedate it fell due, the commissioner may direct for recovery of not only amount ofthe arrears but also a simple interest at the rate of 6% per annum on the amountdue. In the opinion of the commissioner if there is no justification for the delay, anadditional sum not exceeding 50% of such amount may be recovered from theemployer by way of penalty.If the workman contracts any occupational disease particular to that employment,that would be deemed to be an injury by accident arising out of and in the courseof his employment for purposes of this act. In case of occupational diseases, thecompensation will be payable only if the workmen has been in the service of theemployer for more than 6 months. Some of the occupational diseases, listed in

schedule III to the act are: anthrax, poisoning by lead, phosphorous or mercury,telegraphys` s cramp, silicosis, asbestos, bagassosis, and so on.A contact or agreement whereby the workman relinquishes his right ofcompensation from the employer, for the personal injury arising out of and in thecourse of employment, is null and void to the extent to which such contract oragreement purpose to remove or reduces the liability of the payment ofcompensation. The compensation payable to the workman or to his dependentscannot be assigned, attached or charged.In case the compensation is not paid by the employer, the workman concernedor his dependents can claim the same by filling an application before thecommissioner for workmen` s compensation. The claim has to be filed within a

period of two years of the occurrence of accident or death. The application, whichis filed beyond the period of limitation, can also be entertained, if sufficient causeexists.An appeal will lie to the high court against certain orders of thecommissionerif a

substantial question of law is involved.An appeal by an employer against an award of compensation is incompetentunless a certificate that the employer has deposited the amount of suchcompensation accompanies the memorandum of appeal. Unless such acertificate accompanies the memorandum of appeal, the appeal cannot beregarded as having been validly instituted. The period of limitation for an appealunder section 30 will be 60 days.The act is administered by the state govt who are required to appointcommissioners for workmen` s compensation.

The functions of the commissioner include(1) Settlement of disputed claims(2) Disposal of cases of injuries involving death(3) Revision of periodical payments.


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The commissioner has also been empowered to impose penalty on employerswho fail to pay compensation due under the act to the injured worker within onemonth from the date it fell due. Employers are required to notify the appropriateauthorities the number of accidents, and the amount of compensation paid.

Doctrine of National Extension:The supreme court explained the doctrine of notional extension of employmentthus: as a rule, the employment of a workman does not commence until he hasreached the place of employment and does not continue when he has left theplace of employment, the journey to & from the place of employment, the journeyto and from the place of employment being excluded. It is now well-settled ,however, that this is subject to the theory of notional extension of the employerspremises so as to include an area which the workmen passes and repasses ingoing to and in leaving the actual place of work. There may be some reasonableextension in both time and place and a workman may be regarded as in thecourse of his employment even though he had not reached or had left his

employers` premises. The facts and circumstances of each case will have to beexamined very carefully in order to determine whether the accident arose out ofand in the course of employment of a workmen, keeping in view at all times thistheory of notional extension.The question when does an employment begin and when does it cease dependsupon the facts of each case. But the courts have agreed that the employmentdoes not necessarily end when the actual down tool signal is given or when theworkman leaves the actual workshop where he is working. There is a notionalextension at both the entry &exit by time & space. The scope of such extensionmust necessarily depend on the circumstances of a given case. An employmentmay end or may begin not only when the employee begins to work or leaves his

tools but also when he used the means of ingress and egress to and from theplace of employment. Though the doctrine of reasonable or notional extension ofemployment developed in the context of specific workshop factories or harbors,equally applies to such a bus service (BEST); the doctrine necessarily will haveto be adapted to meet its peculiar requirements. While in a case of a factory, thepremises of the employer which gives ingress or egress to the factory is a limitedone, in the case a city transport service, by analogy, the entire fleet of busesforming the service would be the premises. A driver is given the facility in hiscapacity as a driver to travel in any bus belonging to the undertaking in theinterest of service. Hence, a driver when going home from a depot uses the bus,any accident that happens to him is an accident in the course of his employment.Doctrine of Added Peril:The doctrine of added peril has been dealt with in the case of Bhurangya CoalCompany Limited v Sahebjan Mian and Another (1957-II LLJ 522). In this casethe principle of added peril was analysed by the Patna High Court as under:The principle of added peril contemplates that if a workman while doing hismaster` s work undertakes to do something which he is not ordinarily called uponto do and which involves extra danger, he cannot hold his master liable for therisks arising there from. This doctrine therefore, comes into play only when the


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workman is at the time of meeting the accident performing his duty. Theexpression added peril means a peril voluntarily super induced on what aroseout of his employment to which the workman was neither required nor hadauthority to expose himself. This is a pithy formula which can always beemployed as the crucial test in the facts of a case which are in the debatable

region when a workman meets with an accident while he is apparentlyperforming his duties as a workman and which may yet not be incidentallythereto, in which case the accident cannot be regarded as having occurred incourse of the employment so as to entitle the workman to any compensation.Doctrine of Contributory Negligence

Under the doctrine of contributory negligence, the employer may raise thedefence that the accident occurred purely due to employee` s negligence on hisown part. Such a defence has been given no footing. The main purpose being tosafeguard the workers and not to deprive them of their rightful claim under theact as otherwise every employer would escape the claim by raising the defenceof contributory negligence. in Sundaresa Muldaliar v. Muthammal (1956-II LLJ

52) the Madras High Court held that the doctrine of contributory negligence hasno place under the act, because first of all mere negligence or carelessnesswould not be regarded as a willful disobedience and second, the doctrine ofcontributory negligence as a good defence in common law has been abrogatedin so far as the Workmen` s Compensation Act is concerned. The reasons aresaid to be twofold, vizA. That compensation is not a remedy for negligence of the employer but it is

rather in nature of an insurance of the workman against certain risks ofaccident

B. That this was made an excuse for avoiding all liability, because mostnegligences are practically accidents in the nature of what is called the act of

God. Men who are employed in factories and else where are human beings,not machines. They are subjected to human imperfections.CASE LAW:1. In Smt. Satya and others v Sub. Divisional Officer, P.W.D. Narsimhapur

(1975-I LLJ 394) it was held that the definition does not exclude workmenemployed by the departments of the government. A chowkidar, in the office ofthe PWD is a workman under the Act.

2. A workman employed with the petitioner had died as a result of snakebiteafter finishing his work of irrigating a sugarcane farm of the petitioners.Thereafter his heirs and dependants claimed a lump sum of Rs 7000 whichwas allowed by the workmen` s compensation commissioner. The petitionerdenied that the decease was a workman within the meaning of the act. It washeld that persons employed for any work having some nexus or connectionwith the tractor or other contrivances would be workmen. It would always be aquestion of fact to be determined in each case. The deceased had nexus withthe work that was being done by mechanical pumps or electric motors.Irrigation obviously is a necessary part of farming. Therefore, in thecircumstances of the case, the deceased was a workmen. ( Bhopal SugarIndustries v. Sumitra Bai Battan 1976I LLJ 452).


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3. In Pratap Narain Singh Deo v. Srinivas Sabat and Another (1976- I LLJ 235) itwas held by the supreme court that in determining the question whether thedisablement caused to an employee by an employment injury was totaldisablement, it was to be seen whether the disablement incapacities theemployee for all work he was capable of performing at the time of accident.

The levy of penalty would be justified where the employer did not pay thecompensation at the rate provided in section 4 of the act as soon as thepersonal injury is caused.

4. A contractor doing contract work for the govt had employed persons on dailywages. But they were being paid once a week. Four of these persons wereinvolved in a fatal accident while traveling in a govt lorry along with workmenemployed directly by the govt. Out of these 4 deceased persons, 3 hadworked for more than 6 months while the fourth had worked for two daysbefore the accident. The registers produced by the employer were not of anyassistance to show whether those 4 persons were only casual workers. Onthese facts, it was held that the three deceased persons who had worked for

more than 6 months could not, in any event, be regarded as being inemployment of a casual nature. Normally, when a person is proceeding fromhis home to the place of work, he cannot be said to be in the course ofemployment. It is especially so if he proceeds by a public transport which isavailable for every citizen. But there may be circumstances which wouldindicate that even before he reaches the work spot and is on his journey fromhis home to the place of work or from the place of work back to his home, itwould still be in the course of employment. There is no hard and fast rule andthe question has to be determined with reference to the facts andcircumstances of each case. It is not necessary that workman concernedprovided by the employer or that it would be obligatory on their part to do so

to conclude that they were in the course of employment while traveling in thatconveyance. The contractor expected his workmen to make use of thetransport facility. The workmen were held to be in the course of employment. (Patel Engineering Company Limited v. Commissioner for Workmen` sCompensation, Hyderabad 1977-51 FJR 348).

QS1)Search the following case and present in the class A The rate of interest on delayed payment of compensation can be more than12% as prescribed in exceptional circumstancesB There will be no irregularity when the compensation commissioner entertainsa claim petition even after two yearsC An appeal againt the order of the Workmens Compensation Commissionerwill lie in the High Court only on a law point

CHAPTER-8

MATERNITY BENEFIT ACT-1961


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Convention of protection of Mother hood adopted in 1919 by ILO.Govt. of India could not adopt above.1924 Bill was brought in Parliament for Maternity Benefit & opposed & dropped.Royal commission in its recommendation lay stressed on Maternity Benefit &need of legislation.

1926 the Govt. of Bombay passed Maternity Benefit Act followed by Madras,U.P, Bengal, with slight variation.To remove disparity central Govt passed Act in 1961, Extended to mines in 1-11-1963. State Govt has power to exetend any of the provisions to any other class,establishment, industrial, commercial, and agriculture.ESI Act came in 1948. Maternity Benefit Act was amended w.e.f.1976 may 1st toextend the benefit to all women employees in establishment cover by ESI

- To promote welfare of working women

- 12 week maternity leave 6 week before the delivery & 6 week after thedelivery

- forentitlement of leave a woman must have worked not less than 80 days in a

year immediately preceding the day of her expected delivery. 80 day includedall holidays, weekly holidays paid leave or unpaid be deemed as workingdays.

- Women have to submit a notice for 6 weeks certificate pregnancy inprescribed form. Employer has to pay Maternity Benefit in advance to theconcerned employee or any other person nominated for this. After deliveryonce again notice & certificate of delivery within 48 hours employer has to payfailure to give notice will not disentitle a woman for benefit.

- Rs 250 \- medical bonus if no parental confinement & postnatal care has beenprovided by employer

- In case of miss carriage- notice & certificate is to be serve

- For illness due to pregnancy\ miscarriage 1 month more leave with pay. Shehas to obtain certificate in prescribe form can be taken at any time of duringpregnancy.

- With a view to provide parent hood the act providea. Medical Termination of Pregnancy (MTP) 6 weeks of leave with wagesb. Grant of leave one month with pay due to illness arising out of MTP or

tubectormyc. Two week leave to tubectomy operationd. can ask for light work during pregnancy if she does not avail leave

- employer is prohibited from knowingly employing any women in 6 week leave

- women will not take any other job during leave

- cannot give her heavy work, continuous standing work- two nursing breaks with her initial to feed baby

- no legal action can be taken during her absence, no deduction or reduction ofwage, no alter in service conditions

- death care- including day of death is payable

- death during delivery & child alive employer has to pay 6 weeks wages

- child also dies up to the day of child death payment is to be made.


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Female employee can be deprived of benefit1) if she take another employment during leave2) if she dismissed due to gross misconduct act which constitute misconduct3) willful destruction of employers property4) assaulting any superior at work place

5) theft, fraud, dishonesty in connection with the employers business6) willful non observance of safety measures7) act & rules exhibited in premisesCentral Govt is responsible for mines & circus state govt to factories &establishment & plantations

QS1) what are the benefits available in the Act? Present your views in the class.2) Are these benefit available in some other Act?3) If a pregnant woman does not avail prior leave what you will do? Suggest

legal course of action.

CHAPTER-9

EMLOYEES STATE INSURANCE ACTS 1948Object:To provide certain benefits to employees in case of sickness, maternity andemployment injury

The Act extends to whole of India. It shall apply to all factories other thanseasonal factories, and covers any person whose salary in the aggregate doesnot exceed Rs. 6500 per month.The benefit of the Act extends inter-alias to the employees whether working

inside the factory or elsewhere.It excludes any member of the Indian naval, military or air force.Registration:Every factory or establishment to which this Act applies shall be registered with insuch time and in such manner as may be specified in the regulations made inthis behalf.

Factory means any premises including precincts thereof where 20 or morepersons are employed or were employed for wages on any day of the preceding12 months, and in any part of which a manufacturing process is carried on with


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the aid of power or is ordinarily so carried on but does not include a mine or arailway running shed.

Seasonal Factory means a factory which is exclusively engaged in cottonginning, cotton or jute pressing, decoration of groundnuts, the manufacture of

coffee, indigo, lac, rubber, sugar. It includes a factory, which is engaged for aperiod not exceeding 7 months in a year.The appropriate Govt. may extend the provisions of this Act, after giving 6months notice in official Gazette of its intension of doing so.

Exemption of a factory or establishment:Appropriate Govt. exempt any factory or establishment in any notified area fromthe operation of this Act for a period of one year. (Renew every year)

Exemption of persons:The appropriate Govt. may exempt any person or class of persons employed in

any factory or establishment to which this Act applies, from the operation of thisAct.

Exemption of factory or establishment belonging to Govt. or any other localauthority:After consultation with corporation, by notification in official gazette, if theemployees are in receipt of benefits similar or superior to the benefits providedunder this Act.

DEFINITIONS1. Appropriate Govt.: means, in respect of establishments under the control of

the central Govt. or a railway administration or a major port or a mine or oilfield, the central Govt., in all other cases state Govt.2. Benefit period: 6 consecutive months corresponding to the contribution

period3. Confinement: means labour resulting in the issue of a living child, or labour

after 26 weeks of pregnancy resulting in a issue of a child whether alive ordead.

4. Contribution: means the sum of money payable to the corporation by theprincipal employer in respect of an employee.

5. contribution period: 6 consecutive months as may be specified inregulations.

CONTRIBUTION PERIOD CORRESPONDING BENEFIT PERIOD1st April to 30th September 1st January to 30th June of the year

following1st October to 31st March of the 1st July to 31st Decemberyear following


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6. Dependent: means any of the following relatives of deceased insured person,namely-(a) A widow, a minor legitimate or adopted son, an unmarried legitimate or

adopted daughter or a widowed mother; and(b) if wholly dependent on the earnings of the insured person at the time of his

death, a legitimate or adopted son or daughter who has attained the age of18 years and is infirm;(c) if wholly or in part dependent on the earnings of the insured person at the

time of his death;(a) a parent other than a widowed mother(b) a minor illegitimate son, an unmarried illegitimate daughter or a daughter

legitimate or illegitimate if married and a minor if widowed and a minor(c) a minor brother or an unmarried sister or a widowed sister if a minor(d) a widowed daughter in law(e) a minor child of a pre deceased son(f) a minor child of a predeceased daughter where no parent is alive

(g) a paternal grand parent if no parent of the insured person is alive5. Employment injury: means a personal injury to an employee caused byaccident or an occupational disease arising out of and in the course of hisemployment with in or out side the territorial limits of India.

6. Employee- means any person employed for wages in or in connection withthe work of a factory or establishment to which this act applies. It includes anyperson-

(a) who is directly employed by the principal employer on any work whether suchwork is done by the employee in the factory or establishment or elsewhere; or

(b) who is employed by the immediate employer on any work; or(c) whose services are temporarily lent on hire to the principal employer, or

(d) Who is employed for wages or any work connected with the administration ofthe factory or establishment or any part of the factory or establishment.Persons working in the canteen though employed by a contractor are alsoemployees.Employee does not include-

(a)any member of Indian navy, military or air force, or(b)

labor welfare

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