In this blog post, Aakansha Bansal, a student pursuing her Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses labor law compliances that need to be undertaken by the manufacturing industry. 

Labour Law: Defined

Labour law addresses the relationship between the employees, employers, trade union and the government. It highlights the employees’ right to work and social norms which ensure a decent environment for the employees to work in.

Manufacturing Industry: Defined

Manufacturing Industry is an industry that uses the tool, machines, and most importantly labor to convert raw materials into consumer goods or saleable goods.

Why Labour Laws?

The nature of the manufacturing industries makes it obligatory for them to be governed by certain laws to ensure fair and secured working conditions and environment to the workers, employees, and labor.

Labour Policy in India

After independence, it was greatly felt that the labor policy must emphasize upon self -sufficiency and self -reliance on the part of workers and labor.

The main postulates of labor policy are as follows-

1. Enhancing the status of the workers in industry.
2. Adequate enforcement of legislation.
3. Recognition of workers right.
4. Promoting industrial peace.
5. Ensuring fair wage standards and provisions of social security.

Important Labour laws in India

• THE INDUSTRIAL DISPUTES ACT, 1947
• THE TRADE UNIONS ACT, 1926
• THE EMPLOYEES’ COMPENSATION ACT, 1923
• THE EMPLOYEES’ PF AND MISCELLANEOUS PROVISIONS ACT, 1952
• THE MINIMUM WAGES ACT, 1948
• THE FACTORIES ACT, 1948
• THE PAYMENT OF BONUS ACT, 1965
• THE APPRENTICES ACT, 1961
• THE MATERNITY BENEFIT ACT, 1961
• THE PAYMENT OF GRATUITY ACT, 1972
• THE CHILD LABOUR (PROHIBITION AND REGULATION) ACT, 1986

THE INDUSTRIAL DISPUTES ACT,1947

OBJECTIVE- The main objective of the Act is industrial peace and economic justice. The production of an industry is only possible when the industry functions smoothly without any disputes or interruptions.

MAIN FEATURES OF THE ACT-

• Any industrial dispute may be referred to an industrial tribunal by an agreement of parties to the dispute or by the State Government if it deems it expedient so to do.
• An award shall be binding on both the parties to the agreement for a term not exceeding one year.
• It provides that strikes and lock-outs are prohibited during the pendency of awards, settlements or any conciliation and adjudication proceedings,
• Provision has been made for the payment of compensation to the workmen in case of lay off or retrenchment of workmen and also in the case of transfer or closure of an undertaking.
• Many authorities such as Conciliation Officers, Board of Conciliation, Works Committee, Labour Courts, Tribunals and National Tribunal has been set up to ensure industrial peace.

THE TRADE UNION ACT, 1926

The Act extends to the whole of India except the state of Jammu and Kashmir. Generally, Trade Union means an association of workers with the object of promoting and protecting the interest the interests of the working class.

OBJECTIVE- The objective of the said Act is to protect workers against exploitation by the employer, representation of workers’ grievance by the trade union to the management and to take disciplinary action against the worker who commits in-disciplinary action.

THE EMPLOYEES’ COMPENSATION ACT, 1923

The Act extends to the whole of India except the state of Jammu and Kashmir.

OBJECTIVE- It provides for the payment of compensation by a certain class of employers to their employees for injury by accident during the course of their employment. It is a guarantee against hazards of employment to which an employee is exposed because of his employment.

PAYMENT OF COMPENSATION AMOUNT-

• In the case of death of a workman- minimum compensation is Rs.120000/- or an amount equal to 50% of the monthly wages multiplied by the relevant factor, whichever is higher. This is, however, subject to maximumRs.8000/- per month w.e.f. 31^st May 2010.
• In the case of Permanent Total Disablement (PTD)- minimum compensation is Rs.140000/- or an amount equal to 60% of the monthly wages multiplied by the relevant factor, whichever is higher.

RELEVANT FACTOR- It depends on the age of the deceased or injured workman. Higher the age, lower would be the relevant factor and vice versa. It is specified in Schedule 4 of the Act.

PENALTY- In the case of default on employer’s part, he is bound to pay 50% of the compensation amount along with interest.

EMPLOYEES’ PF AND MP ACT, 1952

OBJECTIVE- The object of this Act is to provide for the institution of provident funds, pension fund and deposit linked insurance funds for employees in factories and other establishments. The employer is bound to provide the employees with Provident Fund Scheme and to make a contribution of both the employees’ and employer’s share of the fund and then deduct the employees’ share from their wages.

APPLICABILITY- Following conditions must be fulfilled-

• The establishment must be engaged in an industry specified in Schedule 1.
• At least 20 persons must have been employed in that establishment.

THE MINIMUM WAGES ACT, 1948

This Act applies to the whole of India.

OBJECTIVE- It was passed for the welfare of laborers. This Act aims at securing the welfare of the workers in a competitive market by providing them with the minimum wages in certain employments. The appropriate Government is empowered to fix the minimum rates of wages in the manner prescribed under this Act.

APPLICABILITY- It applies to the employments specified in the schedule of the Act and in certain cases may extend to any other employment if the appropriate Governments thinks that it is expedient to do so.

THE FACTORIES ACT, 1948

This Act applies to the whole of India, except the State of Jammu and Kashmir.

OBJECTIVE- This Act aims at safeguarding the interest of workers, and it also provides for the certain standards with regard to safety, working hours and welfare of the workers.

APPLICABILITY- This Act applies to all industrial establishments employing ten or more workers where power is used and twenty or more in all other cases. It is applicable to both the seasonal as well as non- seasonal factories.

DUTIES OF EMPLOYER-

• The factory should be kept clean with adequate lighting ventilation and drinking facilities.
• Reasonable temperature for the comfort of the workers should be maintained.
• Overcrowding should be avoided.
• In the case of hazardous substances, additional safety measures have been prescribed from section 41A to 41H.

MAXIMUM WORKING HOURS-

• It cannot be more than 9 hours a day.
• It cannot be more than 48 hours in a week.

OVERTIME WAGES-

• It is double the rate of wages.
• Total working hours including overtime should not exceed 60 hours in a week and total over time hours in a quarter should not exceed 50 hours.

PENALTY- In the case of contravention of any of the provisions of the Act, an employer shall be punishable with imprisonment up to 2 years or a fine up to 1 lakh or both.

THE PAYMENT OF BONUS ACT, 1965

This Act extends to the whole of India.

OBJECTIVE- This Act provides for the payment of bonus to the employees on the basis of the profits earned by the establishment or on the basis of production.

APPLICABILITY- This Act applies to-

• Every factory as per the Factories Act,1948
• Every other establishment in which 20 or more persons are employed on a day during an accounting year.

ELIGIBILITY FOR BONUS- Every employee working in an establishment and drawing a salary for not less than thirty days in that year shall be eligible for the bonus.

DISQUALIFICATION FOR BONUS- Any employee who is dismissed from the service for fraud or violent behavior while on the premises of the establishment or theft or misappropriation of any property of the establishment, shall be disqualified from receiving a bonus.

QUANTUM OF BONUS- Minimum 8.33% and maximum up to 20% of the salary or Rs. 100/-, whichever is higher.

PENALTY- For any contravention of the provision of the Act, the defaulter shall be liable for the imprisonment up to 6 months or fine up to Rs. 1000/-, or both.

THE APPRENTICES ACT, 1961

The Act extends to the whole of India.

OBJECTIVE- The main object of the Act to ensure better training of the workers and to organize lay down standards for the said purpose. It strives to meet an increasing demand for a skilled craftsman. The Act also provides for the regulation and control of training of apprentices in trade.

MEANING OF APPRENTICE- Apprentice is a person who is undertaking the training in pursuance of a contract of Apprenticeship.

QUALIFICATION FOR BEING ENGAGED AS AN APPRENTICE- The person should not be less than 14 years of age and shall also satisfy the standards of education and physical fitness as may be prescribed.

POINTS TO BE TAKEN CARE OF BY THE EMPLOYER-

• Stipend at the rate not less than the prescribed minimum rate
• Proper health and safety measures for the apprentices.
• Hours of work, overtime, leave and holidays should be in compliance with the rules provided by the Act.
• Apprentices are the trainees and not workers.

THE PAYMENT OF GRATUITY ACT, 1972

This Act applies to the whole of India except the state of Jammu and Kashmir.

OBJECTIVE- It provides a scheme for the payment of gratuity to employees.

APPLICABILITY- It applies to every factory, mine, oilfield, plantation, port, railway companies and to every shop and establishment in which 10 or more persons are employed or were employed at any time during the one preceding year. This Act applies to all employees irrespective of their salary.

MEANING OF GRATUITY- It is a lump sum payment to the employee after his retirement or when he leaves his service. However, the term of service of the employee should be at least 5 years to claim the gratuity.

AMOUNT OF GRATUITY PAYABLE- @ 15 days wages for every completed year of service and @ 7 days wages in case of service in a seasonal establishment.

MAXIMUM GRATUITY- 10 LAKHS

PAYMENT ON GRATUITY- (last drawn basic salary + DA) / 26 days *15 *total service period.