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LABOUR LAW - II4 t h SEMESTERLABOUR LAW-II STUDY MATERIALSl NoIMPORTANT SHORT QUESTIONS REP1 DEFINITION OF WAGES 32 DISCUSS THE SET ON AND SET OFF OF ALLOCABLE SURPLUS IN THE PAYMENT OFBONUS ACT, 196543 LABOUR WELFARE 44 SOCIAL SECURITY LEGISLATION 55 DISABLEMENT (PARTIAL AND TOTAL) 46 EXPLAIN SALIE...

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LABOUR LAW - II 4 th SEMESTER

Harinath J, Radhakrishna ANV and Aravinda Reddy

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LABOUR LAW-II STUDY MATERIAL Sl No 1 2 3 4 5 6

IMPORTANT SHORT QUESTIONS

DEFINITION OF WAGES DISCUSS THE SET ON AND SET OFF OF ALLOCABLE SURPLUS IN THE PAYMENT OF BONUS ACT, 1965 LABOUR WELFARE SOCIAL SECURITY LEGISLATION DISABLEMENT (PARTIAL AND TOTAL) EXPLAIN SALIENT FEATURES OF THE MATERNITY BENEFIT ACT, 1961

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IMPORTANT LONG QUESTIONS 7 8 9 10 11 12

DISCUSS THE CONCEPT OF WAGES AND WHAT ARE THE CONSTITUTIONAL GOALS WITH REGARD TO WAGES? (LIVING & FAIR WAGES) DEFINE WAGES AND WHAT ARE THE AUTHORIZED DEDUCTIONS UNDER THE PAYMENT OF WAGES ACT, 1936 VARIOUS BENEFITS AVAILABLE UNDER THE ESI ACT, 1948 AND UNDER WHAT CONDITIONS EMPLOYER'S LIABILITY TO PAY THE COMPENSATION FOR THE INJURIES CAUSED IN THE COURSE OF EMPLOYMENT DEFINE GRATUITY. SALIENT FEATURES OF PAYMENT OF GRATUITY ACT, 1972 SALIENT FEATURES OF THE CHILD LABOUR (PROHIBITION AND REGULATION) ACT, 1986

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IMPORTANT CASES 13 14 15

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DEDUCTIONS FOR DAMAGES OR LOSS [SEC 7(2)(c) OF THE PAYMENT OF WAGES ACT, 1936] ANY CONTRACT FOR LESS THAN MINIMUM WAGE IS NULL AND VOID - SEC 25 OF THE MINIMUM WAGES ACT, 1936 EMPLOYEE MET WITH AN ACCIDENT WHILE GOING TO OR RETURNING FROM DUTY DOCTRINE OF NOTIONAL EXTENSION - SUPERINTENDING ENGINEER, T.N.S.E.B. v. SANKUPATHY A CONTRACT (OR CASUAL) WORKER DIES WHILE DOING THE WORK DISMISSAL DURING ABSENCE OF PREGNANCY - SEC 12 OF THE MATERNITY BENEFIT ACT, 1961 PROHIBITION OF CHILD LABOUR - SEC 3 OF THE Child and Adolescent Labour (Prohibition and Regulation) Act, 1986 NO WOMAN IS ALLOWED TO WORK BETWEEN 7 PM AND 6 AM - SECTION 66(b) OF THE FACTORIES ACT, 1948 WAGES IN-KIND - SECTION 11 OF THE MINIMUM WAGES ACT, 1948 AN EMPLOYEE WHO SERVED IN AN ESTABLISHMENT FOR LESS THAN 5 YEARS CLAIMED GRATUITY

Harinath J, Radhakrishna ANV and Aravinda Reddy

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LL.B. IV SEMESTER PAPER-I: LABOUR LAW-II SYLLABUS Unit-I: The Remunerative Aspects – Wages – Concepts of wages - Minimum, Fair, Living Wages - Wage and Industrial Policies - Whitley Commission Recommendations - Provisions of Payment of Wages Act 1936 – Timely payment of wages - Authorized deductions – Claims - Minimum Wages Act 1948 - Definitions - Types of wages - Minimum rates of wages - Procedure for fixing and revising Minimum Wages – Claims -Remedy.

Unit-II: Bonus – concept - Right to claim Bonus – Full Bench formula - Bonus Commission - Payment of Bonus Act 1965 - Application – Computation of gross profit, available, allocable surplus - Eligibility of Bonus - Disqualification of Bonus - set on – set-off of allocable surplus- Minimum and Maximum Bonus-Recovery of Bonus.

Unit-III: Employees Security and Welfare aspect - Social Security - Concept and meaning Social Insurance - Social Assistance Schemes. Social Security Legislations - Law relating to workmen’s compensation – The Employee’s Compensation Act 1923 – Definitions Employer’s liability for compensation - Nexus between injury and employment - payment of compensation - penalty for default - Employees State Insurance Act 1948 –Application Benefits under the Act - Adjudication of disputes and claims – ESI Corporation.

Unit-IV: Employees Provident Fund and Miscellaneous Provisions Act 1952 – Contributions -Schemes under the Act - Benefits. The Maternity Benefit Act 1961 – Definitions - Application - Benefits. The Payment of Gratuity Act 1972 – Definitions – application - Payment of gratuity - eligibility – forfeiture – Nomination – Controlling authorities.

Unit-V: The Factories Act 1948 - Chapters dealing with Health, Safety and Welfare of Labour. Child Labour - Rights of child and the Indian Constitution - Salient features of the Child Labour (Prohibition and Regulation) Act 1986 – The Equal Remuneration Act, 1976. Suggested Readings: 1. S.N.Misra, Labour and Industrial Laws, Central law publication 2. V.G. Goswami, Labour and Industrial Laws, Central Law Agency. 3. Khan & Kahan, Labour Law-Asia Law house, Hyderabad 4. K.D. Srivastava, Payment of Bonus Act, Eastern Book Company 5. K.D. Srivastava, Payment of Wages Act 6. K.D. Srivastava, Industrial Employment (Standing Orders) Act 1947 7. S.C.Srivastava, Treatise on Social Security 8. Sukumar Singh, Labour Economics, Deep& Deep, New Delhi 9. V.J.Rao, Factories Law

Harinath J, Radhakrishna ANV and Aravinda Reddy

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SHORT ANSWERS 1. Definition of Wages. Answer: Definition:  In economics, the price paid to labour for its contribution to the process of production is called wages.  “A wage may be defined as the sum of money paid under contract by an employer to the worker for services rendered.” -Benham  “Wages is the payment to labour for its assistance to production.” -A.H. Hansen  ‘Wage rate is the price paid for the use of labour.” -Mc Connell.  Cambridge dictionary ‘the money earned by an employee, esp. when paid for the hours worked’.

Definition of Wages as per Section 2(h) of the Minimum Wages Act, 1948, "wages" means all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract 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, and includes house rent allowance but does not include (i) the value of – (a) any house- accommodation, supply of light, water, medical attendance, or (b) any other amenity or any service excluded by general or special order of the appropriate Government; (ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under any scheme of social insurance; (iii) any travelling allowance or the value of any travelling concession; (iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (v) any gratuity payable on discharge.

Definition of Wages as per Section 2(vi) of the Payment of Wages Act, 1936, “wages” means 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, And includes— (a) Any remuneration payable under any award or settlement between the parties or order of a Court; (b) Any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; (c) Any additional remuneration payable under the terms of employment (whether called a bonus or by any other name); (d) Any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made; (e) Any sum to which the person employed is entitled under any scheme framed under any law for the time being in force, But does not include— (1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a Court;

Harinath J, Radhakrishna ANV and Aravinda Reddy

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(2) the value of any house accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of 2 [appropriate Government]; (3) Any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; (4) Any travelling allowance or the value of any travelling concession; (5) Any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or (6) Any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d). Wages include: • Salary, • Allowances, • Award or settlement, • Any sum for termination, • Over time, • Leave wage. Wages do not include: • Bonus, • Travelling allowance, • Provident fund, • Contribution, • Gratuity, • Value for house accommodation, or supply of light, • Water and medical attendance of any service. 2. DISCUSS THE SET ON AND SET OFF OF ALLOCABLE SURPLUS IN THE PAYMENT OF BONUS ACT, 1965. Answer: Bonus is a cash payment made to employees in addition to wages. It is not an ex-gratia payment. Bonus differs from wages in that it does not rest on contract, but still payments for the bonus are made because legally due, but which parties do not contemplate indefinitely.

As per Section 4 of the Payment of Bonus Act, 1965 “allocable surplus” means(a) in relation to an employer, being a company other than a banking company which has not made the arrangements prescribed under the Income-tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of section 194 of that Act, sixty-seven per cent of the available surplus in an accounting; year; (b) in any other case, sixty per cent of such available surplus.

Section10, Payment of minimum bonus. —Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year: Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effecting relation to such employee as if for the words “one hundred rupees”, the words “sixty rupees” were substituted.

Harinath J, Radhakrishna ANV and Aravinda Reddy

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Section 11, Payment of maximum bonus. —(1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting; year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent, of such salary or wage. (2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.

Section 15, Set on and set off of allocable surplus. — (1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 11, then, the excess shall, subject to a limit of twenty per cent of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilized for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule. (2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 10, and there is no amount of sufficient amount carried forward and set on under sub-section (1) which could be utilized for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner illustrated in the Fourth Schedule. (3) The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other cases not covered by sub-section (1) or sub-section (2) for the purpose of payment of bonus under this Act. (4) Where in any accounting year any amount has been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account. 3. LABOUR WELFARE. Answer: Labour Welfare – Meaning Labour welfare relates to taking care of the well-being of workers by employers, trade unions, governmental and non-governmental institutions and agencies. Welfare includes anything that is done for the comfort and improvement of employees and is provided over and above the wages. Welfare helps in keeping the morale and motivation of the employees high to retain the employees for a longer duration. The welfare measures need not be in monetary terms only but in any kind/forms. Employee welfare includes monitoring of working conditions, creation of industrial harmony through infrastructure for health, industrial relations and insurance against disease, accident and unemployment for the workers and their families. According to International Labour Organization, labour welfare can be defined as a term, which is understood to include such services, facilities, and amenities as may be established in or in the vicinity of undertakings to enable the persons employed in them to perform their work in healthy, congenial surroundings and to provide them with amenities conducive to good health and high morale.

Harinath J, Radhakrishna ANV and Aravinda Reddy

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Oxford dictionary- “Labour welfare is efforts to make life worth living for workmen.” The need for providing such services and facilities arise from the social responsibility of industries, a desire for upholding democratic values and a concern for employees. Welfare includes anything that is done for the comfort and improvement of employees and is provided over and above the wages. Labour welfare entails all those activities of the employer, which are directed towards providing the employees with certain facilities and services in addition to wages or salaries. Labour welfare implies providing better work conditions, for example, proper lighting, cleanliness, low noise, etc. and amenities viz. recreation, housing, education, sports, gym etc. Arthur James Todd- “Labour welfare means anything is done for the comfort and improvement, intellectual and social, of the employees over and above the wages paid which is not a necessity of the Industry.”

Scope of the Labour Welfare: Welfare service are divided into two groups – (a) Welfare services within the premises of the factory (intramural) such as – drinking and washing facilities, bathing, crèche, canteen, restroom, shelter, gym, prevention of fatigue and safety devices and (b) Welfare amenities outside the establishment (extra-mural) include social security measures like social insurance, social assistance, recreation, sports, workers’ education, etc. It also includes cooperative credit societies, transportation, and housekeeping. Scope of labour welfare takes care of workers’ life from cradle to grave as employees’ state insurance scheme provides medicine to a worker child and provides funeral benefit to a worker after his last minutes in this world. Scope of labour welfare includes statutory and non-statutory welfare amenities which are also increasing day-by-day and in most of the workers’ welfare is by and large acceptable to society. On the whole labour, welfare aims at minimizing stress and strains of industrial workers. It observes that workers get a clean and neat environment of work. They should get safe working conditions with minimum hazards of work life. They should be able to live a life with dignity, status and self-respect Scope differs from industry-to-industry and country-to-country. As per 1981 census, women workers constitute about 19 per cent of the total workforce (i.e., 45 million out of 222 million). Out of 45 million, a small fraction of about 2 million women workers were employed in the organized sector. They were not covered by any protective labour legislation. Majority of women are employed in the cotton textile, bide making, garment industries, rice mills, tobacco cutting, Cashewnut, matches, construction work, plantations, and household and small-scale industries. On account of scientific and technological development of the country, there is an increase in the employment of women in electronics industries. 4. SOCIAL SECURITY LEGISLATION. Answer: What is Social Security?  any of the measures established by legislation to maintain individual or family income or to provide income when some or all sources of income are disrupted or terminated or when exceptionally heavy expenditures have to be incurred (e.g., in bringing up children or paying for health care)

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 social security may provide cash benefits to persons faced with sickness and disability, unemployment, crop failure, loss of the marital partner, maternity, responsibility for the care of young children, or retirement from work  Social security benefits may be provided in cash or kind for medical need, rehabilitation, domestic help during an illness at home, legal aid, or funeral expenses  It acts as a facilitator – it helps people to plan their own future through insurance and assistance. History of Social security  Germany was the first country to introduce Social security scheme (1883)  each member of a particular trade (blacksmiths, painters, weavers etc.) was required to contribute at regular intervals;  Money from this fund was used for food, lodging, hospital and funeral expenses of aged and disabled members.  In the USA, the Social Security Act came into existence in 1935. Social Security in India  India has always had a Joint Family system that took care of the social security needs.  However, with rising of migration, urbanization, nuclear families and demographic changes, Joint family system has declined. Hence we need a formal system of social security. SOCIAL SECURITY LAWS in India

1. Employees’ State Insurance Act, 1948 (ESI Act)  covers factories and establishments with 10 or more employees  Provides medical care to employees and their families.  Provides cash benefits during sickness and maternity  Monthly pension after death or permanent disability. 2. Employees’ Provident Fund Act, 1952  Applies to specific scheduled factories and establishments employing 20 or more employees and ensures terminal benefits to provident fund, superannuation pension, and family pension in case of death during service. 3. Workmen’s Compensation Act, 1923 (WC Act)  Requires payment of compensation to the workman or his family in cases of employmentrelated injuries and occupational diseases resulting in death or disability. 4. Maternity Benefit Act, 1961 (M.B. Act)  Provides for 12 weeks of wages, which is split up into two periods viz., pre-natal and postnatal, during maternity as well as a paid leave in certain other related contingencies. 5. Payment of Gratuity Act, 1972 (P.G. Act)  Provides 15 days wages for each year of service to employees who have worked for five years or more in establishments having a minimum of 10 workers.

Harinath J, Radhakrishna ANV and Aravinda Reddy

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5. DISABLEMENT (PARTIAL AND TOTAL). Answer: Partial Disablement – Section 2(1)(g) of the Employees Compensation Act, 1923, defines partial disablement is of two kinds – 1. Temporary partial disablement. 2. Permanent partial disablement. The test of such disablement is the reduction in the earning capacity of the employee. If the earning capacity of an employee is reduced in relation ...