This article is written by Monesh Mehndiratta, of Graphic Era Hill University, Dehradun. This article is an overview of the Act and explains the provisions contained therein. It gives the features of the Act, its background, and the necessity of standing orders, and further provides the important case laws.
It has been published by Rachit Garg.
Table of Contents
Have you ever met a worker employed in an industry where he has been paid low wages for long working hours with no time to rest?
It’s a shocking but bitter truth. These were the conditions of workers employed in the industry during the 18th century. Nobody can imagine the harsh conditions in which they had to work. The employer hired them on his terms and conditions and terminated them at any time without giving any reasons. Huge deductions were made from their low wages for small and petty mistakes, which left them with no money at all, as a result of which their conditions worsened and they lived a harsh and pathetic life.
This grabbed the attention of the government, and so discussions and conferences were held on the issue of better working conditions for labourers and workers. This led to the enactment of a number of pieces of legislation in this regard that regulated the freedom of employers and provided better working conditions for employees. One such piece of legislation is the Industrial Employment (Standing Orders) Act, 1946. The present article gives an overview of the Act and the provisions contained therein. It explains the objective and features of the Act and mentions the requirement of submitting and certifying the standing orders.
Background of the Act
Earlier, the working conditions and conditions of employment were governed by the contracts between employer and employee. The terms and conditions were not specified in detail, which led to confusion and chaos. It often led to friction between them in an industry. In the 18th century, with the advent of trade unions and workers’ unions in the country, the problems of workers and their pathetic conditions were taken into consideration. The focus of the government was shifted to industrial peace and better working conditions for the employees. The settlement of labour problems became a major concern for the state. This is because it affected the productivity of industries and their role in the economy of the nation.
This need to precisely define employment conditions became a burning topic of discussion in the Tripartite Labour Conferences, as a result of which the Industrial Employment (Standing Orders) Act, 1946, was enacted. The Act makes it compulsory for the industries governed by it to define the working conditions of employees, that they must be known to them, and that they must give consent to all the conditions. The aim is to regulate the conditions of employment, the appointment of employees, their discharge, disciplinary actions to be taken against them, if any, holidays, etc. It helped in creating uniformity in the conditions and a better working environment for the employees belonging to the same category of employment.
Objectives of the Act
The following are the objectives of the Act:
- One of the most important objectives of the Act is to provide provisions for standing orders setting out rules and regulations of the working conditions in the factories and industries covered under the Act.
- To make it compulsory for the employers to abide by the terms and conditions to provide better working conditions for the employees and their welfare.
- To promote harmonious relationship between employer-employee.
- The Act also aims at promoting peace and harmony in an industry.
Industries to which the Act does not apply
The Act aims at making it mandatory for employers to mention their working conditions to employees, deduce them in writing, and get the consent of the employees in order to prevent and reduce industrial disputes and chaos. It is applicable to all the industries established in India except the State of Jammu and Kashmir and having 100 or more employees in any month of the preceding twelve months. However, there are certain exceptions, i.e., industries to which the Act does not apply. These are:
- Industries covered under the Bombay Industrial Relations Act, 1946.
- Industries covered under the M.P. Industrial Employment Standing Orders Act, 1946.
- According to Section 13B of the Act, certain industries that are regulated by the following rules and regulations are not covered under the Act:
- The fundamental and supplementary rules,
- The Civil Service (Classification, Control, and Appeal) Rules,
- The Civil Services (Temporary Service) Rules,
- The Revised Leave Rules,
- The Civil Service Regulations,
- The Civilians in Defence Service (Classification, Control and Appeal) Rules,
- The Indian Railway Establishment Code,
- Any other rules and regulations notified in the Official Gazette by the appropriate government.
Features of the Act
The Act provides:
- Every employer whose industry is covered under the Act is required to make Standing Orders and submit them to the certifying authority.
- The certifying authority is generally the labour commissioner.
- The certifying officer is given the power to modify or add contents to the Standing Orders in order to certify it.
- Any group of employers in the same category of industries is allowed to submit a joint standing order.
- In order to make it easy for the employers, the government can set out a model standing order with which all the standing orders prepared by the employers must comply.
- The Act applies to industries with 100 or more employees.
- The certifying officers and authority have all the powers of a civil court for matters under the Act.
- An employer can be held liable for not submitting the standing order or contravening its provisions when finalised. Moreover, he can be penalised for the same.
- The appropriate government has the power to exempt any industry from the ambit of the Act by notification in the official gazette.
- The following are the certificate officers under the Act:
- Labour Commissioner
- Regional Labour Commissioner
- Any other person appointed by the appropriate government to carry out the functions of a certificate officer under the Act.
Meaning of standing orders
Standing orders set out rules and regulations for employees and working conditions in any employment relationship. For example, many online streaming platforms require their customers to subscribe and pay annual fees. This is a kind of standard order that sets out conditions for customers to enjoy online streaming.
In the case of Saroj Kumar Ghosh v. Chairman, Orissa State (1969), it was observed that ‘termination of employment’ and superannuation cannot be equated. The former is a positive act by which one of the parties can end the employment of the other, while the latter is an automatic process. It was further observed that fixing the age for retirement, because of which the employment of a person may cease, does not violate the Act.
If the standing order provides for a notice to be served on the employee to give him an opportunity to present his side and reasons against the dismissal order, it must be obeyed and treated as a condition precedent in order to make the dismissal order valid. This was held in the case of Lakshmiratan Cotton Mills v. Workmen (1975). In the case of Associated Cement Companies Ltd. v. T.C. Srivastava (1984), it was held that a second opportunity to appear and give reasons to the employee is not necessary, neither under ordinary land law nor under industrial law. It can be given only if it is mentioned in the standing order. But if no such opportunity is given, it does not vitiate any inquiry that is otherwise valid.
The issue in Freewheels India Ltd. v. State of Haryana (1984) pertains to the standing order, which provides that if an employee was absent for 8 consecutive days, he would be automatically terminated. An employee produced a medical certificate and requested to rejoin his duty after being on leave for eight consecutive days. The Punjab-Haryana High Court held that according to the standing order, his employment is terminated, but he has the option of converting his period of absence into leave without pay by giving an explanation for his absence. No such explanation was given by him, and the Court observed that a medical or fitness certificate cannot be considered an explanation in this regard.
Reasonableness of standing order
According to Section 3 of the Act, the certifying officer or appellate authority is empowered to inquire into the impracticality, if any, while Section 4 gives them the power to adjudicate and decide the issue of fairness and reasonableness of the drafted standing order.
In the case of Jeewanlal Ltd. v. Workmen (1972), the Supreme Court held that the present day tendency to fix the age of superannuation is usually 60 years unless and until the tribunal feels that the work is hazardous or needs hard work and the workmen might lose efficiency. Further, in the case of Associated Cement Co. Ltd. v. PD Vyas (1960), the Supreme Court modified the standing order related to misconduct due to strikes and their incitement in order to include illegal strikes within its ambit. This was considered reasonable and fair.
Matters not covered by the schedule
In the case of Rohtak and Hisar District v. State of Uttar Pradesh and others (1965), the Supreme Court held that the employer cannot be compelled to add a condition related to matters not included in the schedule in the standing order. However, provisions related to the rights and liabilities of employers and employees can be added, along with their enforcement.
In another case, Binoy Kumar Chatterjee v. M/S Jugantar Ltd. and Others (1983), the Supreme Court rejected the contention that since there was no sanction regarding the age of superannuation in the Schedule, the employee could be allowed to continue his service and employment. It was held that the retirement age, i.e., 60 years according to the standing order, is within the power of the employer and so the subsequent service that arose because of a fresh contract cannot be considered the continuation of the original employment.
The aim and objective of drafting a standing order and its certification are to regulate the terms and conditions of employment. The process provides that, after certification, the order will be binding on the employees in that employment. The Supreme Court in the case of Barauni Refinery Pragatisheel v. Indian Oil Corporation Ltd. (1990) held that no modification can be made to the standing orders when a settlement related to them is pending or in operation.
In another case, Hyderabad Allwyn Ltd. v. Add. Ind. Tribunal, Labour Court, Hyderabad (1990), employer had the discretion under the certified standing order to retire a workman at the age of 58 years or at the completion of 35 years of full service. This was held binding on all workers working in that employment, whether prior to the standing order or after its certification. In Uptron India Ltd. v. Shammi Bhan (1998), the Court held that any provision in the standing order related to automatic termination of employment without direct relation to production in an industry, is bad if no opportunity to be heard is given to the employee.
In the case of B.H.E.L. Employees’ Association v. Chief Labour Commissioner (1986), it was held that the petitioner cannot be made liable for any delay in transit when he used sufficient means and care while sending the required documents to the appellate authority, and so the appeal was directed to be decided on merits. Further, in the case of Badar Pur Power Engineers Association v. Deputy. Chief Labour Commissioner (1992), the Delhi High Court held that according to Section 6 of the Industrial Employment (Standing Orders) Act, 1946, the time period to file an appeal is within 30 days from the date on which copies of certified standing orders are sent to the employer.
Operation of standing orders
According to Section 7 of the Act, if no appeal is made, the certified standing order can be implemented on the expiry of 30 days from the date on which copies were sent. However, if the appeal is made, then the standing order will come into operation within seven days from the day on which copies of the judgement of the appellate authority were sent. After coming into operation, the standing order is considered binding on the employer and employees. This was held in the case of Agra Electricity Supply Co. Ltd. v. Alladin (1970).
Section 8 further provides that a copy of a certified standing order must be filed in a register maintained for this purpose. It can also be accessed by any person upon request and submission of the prescribed fee. Section 9 gives directions for the employer to stick or paste the certified standing order on a board where the majority of employees can access it, along with all the departments where they are working.
Modification of standing order
In Management Shahdara (Delhi) v. S.S. Railway Workers’ Union (1968), the standing order related to the termination of service of a permanent employee was modified. After the modification, the employer was required to give reasons for termination and communicate the same to the employee with a month’s notice in advance. This case provided the conditions for the modification of standing orders. An application for modification can be made:
- Where there has been any change in the circumstances.
- Where the last certified standing order resulted in inconvenience, hardship, etc.
- Where a fact was not considered during the time of the certification process.
- Where the applicant feels the need for modification and that it will be beneficial.
Further, in the case of Indian Oil Corporation Ltd. v. Joint Chief Labour Commissioner (1989), the model standing order mentioned the age of retirement as 58 years, but the workmen demanded to modify it to 60 years. It was held that the authority has jurisdiction to modify such a standing order that is in conflict with the model standing order only on the condition that the modification must be fair and reasonable. In the case of Statesman Clerical Staff and Workers Union v. State of West Bengal (2002), a writ petition was filed with the High Court for a dispute related to the application of Standing Orders under Section 10 of the Act. However, it was not maintainable as it was observed that Section 10 itself provides an alternative remedy, and where there is such a remedy, the writ is not maintainable.
Powers of certifying officer
Section 11 gives the powers of certifying authority under the Act. It provides that such authority will have all the powers of a civil court to:
- Receive evidence,
- Administer oath,
- Enforce attendance of witnesses,
- Compel discovery and production of documents
Interpretation of standing order
The Labour Court to which the question or dispute is referred will give parties an opportunity to be heard and then decide the issue. The function of such a court is limited to questions related to the application or interpretation of standing orders. It cannot address the issue of violations of rights and obligations under the standing orders. The Supreme Court in the case of Rajasthan State Road Transport Corporation v. Krishna Kant (1995) observed that the standing orders that are certified do not come under delegated or subordinate legislation under the Act. They provide the conditions of employment that are binding on both the employer and the employee.
In another case, Verma V.K. v. Hindustan Machine Tools Ltd. (1998), it was held that the provision given under the standing order regarding deduction of wages due to absence from duty cannot be said to be a penalty. It was further observed that habitual late attendance amounts to misconduct under the order, and the management can take disciplinary action other than the deduction of wages.
Important case laws
M/S Lakshmi Precision Screws Ltd. v. Ram Bhagat (2002)
Facts of the case
According to the standing order, if a workman is absent for 10 consecutive days, he will be deemed to have left the job. In this case, a notice was issued by the appellant after a workman was absent for 4 days, asking him to join the work within 48 hours. His representation was rejected, and he was removed from the work.
Issues involved in the case
Whether the removal of a worker from his employment is valid and justified.
Judgement of the Court
The Supreme Court held that the appellant acted in an arbitrary manner by issuing the notice to the workman in just 4 days, while the standing order gave the provision of 10 consecutive days of absence. Moreover, he was not given the opportunity to present his case and give reasons for his absence. It was also observed that the principles of natural justice are one of the requirements of standing orders and must be adhered to. The appeal of the appellant was thus dismissed.
N.D.M.C. v. Mohd. Shamim (2003)
Facts of the case
In this case, a person was employed as Khalasi in the electricity department of the New Delhi Municipal Committee (N.M.D.C.). There were no standing orders, and so the respondents pleaded that model standing orders were applicable to them. He was relieved from his duties and employment by an order from the petitioner without stating any reasons. As a result, he challenged the order on the ground that it violated the model standing order.
Issues involved in the case
Whether the order violated the model standing order.
Judgement of the Court
The Industrial Tribunal in this case set aside the order passed by the petitioner, which was challenged in the High Court. It was observed that a permanent employee is one who is employed on a permanent basis and has completed the probationary period according to the model standing order. It was held by the High Court that the respondent does not fall into the category of a permanent employee. Further, it said that the tribunal had no jurisdiction to entertain this application. However, the Court considered that the respondent had died, and so it was held that 50% of the wages that he drew during the pendency of the case would not be recovered from his family and representatives.
Transport Manager v. Vilas Sanu Deokar and Ors. (2003)
Facts of the case
In this case, the respondents were employed as drivers by the petitioners. Because of some misconduct, they were charged, and an inquiry was conducted against them. During this time, the petitioner did not give them any work, and a ‘no duty order’ was issued against them. As a result, they filed a complaint on the ground that the order issued against them amounted to asuspension from work and that they must be given a subsistence allowance. The industrial court ordered the employer to pay them a subsistence allowance, which was challenged by them.
Issues involved in the case
Whether the order given by the industrial court is correct or not.
Judgement of the Court
The Court observed that if badli workers are not given work by the employer and a no duty order is issued against them, it does not amount to a suspension from work. The contract of employment in this case comes into force on the day he is given employment, unlike in other cases where the worker has the vested right to secure work from the employer every day. Thus, it was held that if a badli worker is not given work, no question of subsistence allowance arises.
Vijaya Bank v. Shyamal Kumar Lodh (2010)
Facts of the case
In this case, an employee of Vijaya Bank filed an application before the Labour Court constituted by the state government for the computation of a subsistence allowance. The appellant, on the other hand, argued that the Labour Court has no jurisdiction as it is not constituted by the appropriate government, which is the Central Government. This objection was overruled by the Labour Court and upheld by the High Court. As a result, an appeal was filed with the Supreme Court.
Issues involved in the case
Whether the appeal is maintainable and whether the objection raised by the appellant is valid.
Judgement of the court
The Supreme Court observed that according to Section 10-A(2) of the Industrial Employment (Standing Orders) Act, 1946, a Labour Court has the jurisdiction to try and decide any issue or dispute related to subsistence allowance arising in the establishment situated within its local limits. Further, it was observed that though the employee filed an application with incorrect labels and wrong provisions, this does not affect the jurisdiction of the court. The court still has jurisdiction to try the matter. The appeal was thus dismissed.
It can be concluded that the Act has been able to prevent and reduce the problems faced by employees and workmen. It regulated the working hours, disciplinary actions, and other conditions of employment. This reduced the freedom of employers to hire workers on any terms and conditions. These conditions were usually harsh, and the workers did not have any option but to accept them in order to earn a living. Due to the doctrine of laissez faire, the government could not intervene in such matters. But with the introduction of the concept of the welfare state, there has been a change in ideology. The aim of the government in this regard now is to secure good working conditions and a decent standard of living with the help of social security measures.
However, with the enactment of the Act, the situation has changed, and there has been an improvement in the terms and conditions of employment. Workers now enjoy a friendly working environment with regulated wages and time for rest. The contract of employment signed by them contains all the clauses and provisions that provide conditions for their employment. It can be said that the Act is social legislation enacted for the welfare of the working class. With the help of such enactments, the government seeks to protect the interests of employees and undertakes to establish harmonious relations between employer and employee. Because of such ideologies and measures, one who provides work is no longer a master, and one who works is no longer a servant. There is a relationship between employer and employee.
Frequently asked questions (FAQs)
Which industries does this Act apply to?
The Act applies to all industries where 100 or more workers are, or have been, employed on any day in the preceding 12 months. The ‘appropriate government’ has the power to extend the provisions of the Act to any industry having less than 100 workers. The government shall do so through a notification in The Gazette of India and give a notice at least two months prior to that particular industry. The Act’s provisions do not apply to certain classes of industries in states including Madhya Pradesh, Maharashtra, and Karnataka, as per the laws of the states.
What does the Act say about appealing against standing orders?
Any employer, worker, or trade union aggrieved by a standing order that is also approved by a certifying officer, can appeal to an ‘appellate authority’, regarding the grievance and request to modify the order.
How are standing orders certified under this Act?
In order to certify a standing order under the Act, the following procedure must be followed:
- Five copies of a draft of standing order must be submitted by the employer to the Certifying Officer within six months from the date the Act becomes applicable on the industry.
- The draft must contain provisions related to all the matters mentioned in the Schedule.
- This must be accompanied by another statement which contains the details of workers employed in that particular industry.
- The Act also states that where employers are in a similar industrial establishment they may submit a joint draft of a standing order.
Is it mandatory for the employer to submit a standing order?
Yes, the employer under the Act is under an obligation to draft and submit the standing order defining the rules with respect to matters given in the Schedule of the Act. If an employer fails to do so, he will be punished with a fine under the Act.
Which magistrate can try an offence under Section 13 of the Act?
A Metropolitan Magistrate or a Judicial Magistrate of Second Class is authorised to try any case related to an offence under Section 13 of the Act.
When can a standing order become valid?
A standing order becomes valid when it is certified by the certifying authority and comes into operation on the expiration of 30 days from the date on which copies of the certified standing order were sent to the employer.
What are the penalties for contravening the Act’s provisions?
The provision under Section 13, provides penalties for contravening its provisions. An employer who fails to submit a standing order according to the provisions of the Act would be liable to pay a fine of five thousand rupees, and if the failure continues, he would have to pay two hundred rupees per day. Further, it provides that an employer who fails to abide by the certified standing order would be liable to pay a fine of hundred rupees, and in case he continues to do so, he would have to pay twenty five rupees every day.
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