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Saturday, November 14, 2009

Labour Legislation notes

The term `labour legislation’ is used to cover all the laws which have been enacted to deal with “employment and non-employment” wages, working conditions, industrial relations, social security and welfare of persons employed in industries.

Need for labour legislation in India:
=> Organized industry in a planned economy calls for the spirit of co-operation and mutual dependence for attaining the common purpose of greater, better and cheaper production.
=> Since this has not been happening voluntarily, the need for State intervention.
=> In India, labour legislation is treated as an arm of the State for the regulation of working and living conditions of workers.

The need for labour legislation may be summarized as under:
o Necessary for the health, safety, and welfare of workers;
o Necessary to protect workers against oppressive terms as individual worker is economically weak and has little bargaining power;
o To encourage and facilitate the workers in the organization;
o To deal with industrial disputes;
o To enforce social insurance and labour welfare schemes.

The objectives of labour legislations are two-fold:
o Preservation of the health, safety and welfare of workers; and
o Maintenance of good relations between employers and employees.

Principles of labour legislation:
Social Justice:
o The essence of democracy is ensuring social justice to all sections of the community.
o This demands the protection of those who cannot protect themselves.
o In modern industrial set-up, workers, left to themselves, are unable to protect their interest.
o Therefore, the State has to intervene to help them by granting them freedom of association, the power of collective bargaining and by providing for mediation or arbitration in the case of industrial conflict.

Social Equity:
o Legislation based on this principle provides for achievement of definite standards.
Standards in terms of living, position in society etc. of the working population.
These standards for the working class can be achieved by bringing about changes in the Law of our land.
o Power to change the Law is exercised by the government.
Existing laws may be amended to meet the changed standards.

National Economy:
o Measures have to be provided through legislation to:
Ensure normal growth of industry for the benefit of the nation as a whole;
Satisfy the physical and intellectual needs of the citizens;
Ensure the growth of industrial efficiency such as to adjust the wage system with a view to increase the productivity and prosperity of the workers.

International Uniformity:
o Since its inception, securing minimum standards (for the working population – worldwide) on a uniform basis in respect of all labour matters has been the main objective of ILO.
o To this end, conventions are passed at the conferences of ILO.
o As a member of the ILO, adopting these conventions would require appropriate legislation to be brought about.
o The influence of international labour conventions has been significant in shaping the course of labour legislation in India.

Labour Legislation in India:
In India, we have many labour laws that affect the labour conditions. The main laws are:
o The Factories Act, 1948.
o The Trade Union Act, 1926.
o The Industrial Disputes Act, 1947.
o The Payment of Wages Act, 1936.
o The Minimum Wages Act, 1948.
o The Equal Remuneration Act, 1976.

Background to Trade Union Legislation in India:
In India, labour organizations came into existence in the last decade of the 19th Century.
But they appeared in their modern form only in 1914.
Their numbers increased, their membership expanded and they became active in seeking to promote and safeguard the interest of workers.
But they had to face hostilities from the employers and the public authorities.
o The legality of trade unions was doubted.
o They were perceived as bodies trying to restrain others from exercising a lawful profession, trade, or business.
o For example, the Indian Penal Code and the Indian Contract Act were interpreted against them. As a result, members of trade unions who were pursuing their rights were severely punished.

The scenario was so because at that time, the Common Law was applicable to the trade unions. They did not have a separate legislation governing them.
Strong demands were made for legislation recognizing workers’ right to organize and engage in concerted activities.
In 1921, Mr. N.M. Joshi, the then General Secretary of AITUC, moved a resolution that the Legislative Assembly adopted.
o The resolution urged the Government to take immediate steps for registration of trade unions and protection of the legitimate trade union activities.
The local state Governments were requested to ascertain the view of public bodies and private persons on issues like the proposed legislation, recognition of strikes, protection of trade unions from civil and criminal liabilities, management of unions, etc.
After receiving the feed-back from the local State Governments, the Government of India drew up a Bill that was introduced in the Legislative Assembly on 31-Aug-1925.
The Bill was passed in 1926 and the Trade Union Act came into existence.
o The Act came into force on 01-Jun-1927.
The Act, with subsequent amendments, is still in force in the country.

Efforts at Amendments:
Trade Unions (Amendment) Act, 1947:
o The issue of employers’ reluctance in recognizing trade unions was felt since the very enforcement of the Act.
o To this end, in 1946, the Trade Unions (Amendment) Bill was put before the Central Legislature.

The Bill provided for the compulsory recognition of registered trade unions.
o The Bill was referred to the Select Committee for their vetting and suggestions.
o On the basis of their recommendations, the Bill was passed on 13-Nov-1947.
o The Governor General of India gave his consent on 20-Dec-1947.
o The Indian Trade Unions (Amendment) Act, 1947:
Introduced penalties for certain unfair labour practices by recognized trade unions as well as employers.
Provided for compulsory recognition of trade unions on the basis of certain prescribed conditions.
A registered trade union could apply for recognition to the employer.
In case such recognition could not be received within three months, the trade union could approach the Labour Court.
If the Labour Court believed that the trade union fulfilled conditions of recognition, it could pass an order directing such recognition.
The executive of a recognized trade union was empowered to act as an authorized bargaining agent of the employees and negotiate with the employers.
o However, the Act has not been brought into force so far.

Trade Unions Bill, 1950:
o Further amendments were suggested at the Labour Ministers’ Conference in 1949.
o On the basis of these discussions, the Trade Union Bill was introduced in the Parliament on 23-Feb-1950.
o The Bill:
Provided for the registration and recognition of trade unions;
Defined the law relating to registered and recognized trade unions;
Recognized unfair labour practices.
o The Bill was discussed at the 10th session of the Indian Labour Conference in March 1950.
o This Bill too was referred to the Select Committee who submitted their report on 01-Dec-1950.
o The Bill lapsed owing to the dissolution of the Parliament.
o Some minor amendments were introduced in 1960 and 1964.

Industrial Relations Bill, 1978:
o The first National Commission on Labour (1969) gave certain recommendations.
o On the basis of these recommendations, the Central Government, in consultation with the State Governments, employers’ and workers’ organizations, formed a comprehensive Industrial Relations Bill in 1978.
o But the Bill could not be passed.

Trade Unions (Amendment) Bill, 1982:
o This Bill contained:
Provisions relating to machineries for the resolution of inter and intra-union disputes;
Modifications in the procedures for registration and cancellation of registration; and
Reduction in the proportion of outsiders in the executive of trade unions.
o This Bill also could not be passed.

Trade Unions (Amendment) Act, 2001:
o The broad features of the amending Act of 2001 are:
Requirement of 10% or 100 workmen (whichever is less) employed in an establishment or industry with a minimum of 7 workmen as members for being eligible for registration as workers’ trade union in place of only 7 persons provided for earlier, and subsequent maintenance of this membership after registration;
Election of members of executive and office-bearers at an interval of not more than 3 years;
Prescribing minimum subscriptions for rural, unorganized, and other workers;
Designation of appellate courts;
Limiting the proportion of outsiders to 1/3rd of the total number of office-bearers or 5, whichever is less, generally 50% in the organized sector; and
Debarring members of Council of Ministers or persons holding office of profit in the Union or State (excluding those persons who are employed in an establishment or industry with which the trade union is connected) from membership of the executive or other office-bearer of a registered trade union.

The Trade Unions Act, 1926
The Act came into force on 01-June-1927.
The Act was passed to regulate:
o Conditions governing the registration of trade unions;
o Obligations imposed on registered trade unions; and
o Rights and liabilities of registered trade unions.
The Act extends to the whole of India, and since 1970 also includes Jammu and Kashmir.

Appropriate Government [Sec. 2]:
o Trade Unions whose objectives are not confined to one state, the ‘appropriate government’ means the central government.
o In relation to other trade unions, the appropriate government means the state government.
Trade Dispute [Sec. 2(g)]: Means any dispute
o Between employers and workmen, or
o Between workmen and workmen, or
o Between employers and employers, which is connected with
The employment or non-employment, or
The terms of employment, or
The conditions of labour,
Of any person.
Trade Union [Sec. 2(h)]: It means any combination, whether temporary or permanent, formed
o Primarily for the purpose of regulating the relations
Between workmen and employers, or
Between workmen, or
Between employers and employers, or
o For imposing restrictive conditions on the conduct of any trade or business.
o It includes any federation of two or more trade unions.

Appointment of Registrars: [Sec.3]
The state government appoints the Registrar, and if need be, the Additional Registrar and Deputy Registrar for the state.
The state government also defines the local limits within which these persons will exercise and discharge the powers and functions so specified.

Registration of trade unions: [Sec. 4-5]
Application: Any seven or more members of a trade union may by subscribing their names to the rules of the trade union and by otherwise complying with the provisions of the Act with respect to registration, apply for registration.
o The application has to be made to the registrar of trade unions.
o The application has to be accompanied by:
A copy of the rules of the trade union;
The names, occupations and addresses of the members making the application;
The name of the trade union and the address of its head office;
The titles, names, ages, addresses and occupations of the officers of the trade union; and
If the trade union has been in existence for more than one year before making such application, then a general statement of its assets and liabilities prepared in the prescribed form has also to be delivered.
Registration: [Sec.8]
o The Registrar, on being satisfied as to the compliance of all the requirements for registration, shall register the trade union.
o The Registrar does this by entering the details relating to the trade union in his register.

Certificate of Registration:
o This is the conclusive evidence that the trade union is duly registered under the Act.
o Now the trade union acquires the characteristics of a Body Corporate.
 Separate legal entity, perpetual existence and a common seal, power to acquire and hold both movable and immovable properties, power to contract, and it can, by the name under which it is registered, sue and be sued.

Rules of trade union: [Sec.6]
Rules are to be prepared by the trade unions as a pre-condition to registration.
The following points must be included:
o The name of the trade union;
o The whole of its objects;
o The whole of the purposes for which the general funds of the trade union shall be applicable;
o The maintenance of a list of the members of the trade union and adequate facilities for the inspection thereof by the office-bearers and the members of the trade unions;
o The admission of ordinary members (persons actually working in the establishment or industry with which the trade union is associated) and also the admission and the number of the number of honorary or temporary office bearers to the executive of the trade union.
o The payment of subscription by the members of trade union;
Rural workers – Re.1/yr.
Workers in other unorganized sectors – Rs.3/yr.
Remaining workers – Rs.12/yr.
o The conditions for receiving any benefit assured by the rules and conditions for imposition of fines on the members;
o The manner in which the rules shall be amended, varied or cancelled;
o The manner in which the members of the executive and other office-bearers shall be appointed and removed (keeping in mind that elections have to be held within a gap of three years);
o The safe custody of the funds of the trade union and annual audit of the accounts, and facilities for the inspection of the account books by the office-bearers and members of the trade union; and
o The manner in which the trade union may be dissolved.

Change of name: [Sec. 23, 25 and 26]
Consent of not less than 2/3rd of the total number of members is required
Notice of the change has to be sent to the registrar in writing.
The notice has to be signed by the secretary and by seven members of the trade union.
On being satisfied as to the compliance of the regulations regarding change of name, the Registrar will record the changes in his register.
The change in name does not affect any rights or obligations of the trade union or render defective, legal proceedings by or against the trade union.

Cancellation of registration: [Sec. 10]
The Registrar could take this step in the following situations:
o On application of the trade union;
o If the Registrar is satisfied that the certificate has been obtained by fraud or mistake; or
o If the Registrar is satisfied that the trade union has:
Ceased to exist;
Willfully contravened any provisions of the Act;
Allowed any rule to continue in force, which is inconsistent with any provision of the Act; or
Cancelled any rule that ought to be there.

Appeal against cancellation of Registration: [Sec.11]
The aggrieved party or the trade union may appeal to the court within 60 days of such a cancellation order.
Appeal has to be made to:
o The High Court, if the registered office of the trade union lies within the limits of a presidency town;
o The Labour Court or to the Industrial Tribunal, if the registered office of the trade union lies within its limits;
o To such a Court (as appointed by the appropriate government) that is equivalent or superior to the Court of Additional or Assistant Judge of a principal Civil Court, if the registered office is situated in any other area.
The orders of such an appellate court have to be complied with.
The aggrieved party can still resort to the High Court if a Government appointed Court has passed the order.

Rights and privileges of a Registered Trade Union:
Body Corporate [Sec.13]
Separate fund for political purposes: [Sec.16] This fund would be specially constituted for the promotion of the civil and political interest of its members.
Immunity from punishment for criminal conspiracy: [Sec.17]
o This immunity is granted under sec. 120B(2) of the IPC.
o This immunity is in respect of the actions of the members of registered trade unions, taken in the pursuit of their interests on which general funds may be spent.
o Immunity is not available in case of say a strike is accompanied by violence, assault, intimidation, threat etc.
o Similarly, a union leader is not entitled to claim immunity from punishment for breach of discipline.

Immunity from civil suits: [Sec.18]
o Civil suit shall not be maintainable against a registered trade union in respect of:
Act that is done as an indicator of, or as a result of a trade dispute arising out of employment and conditions of employment.
Following arguments against the above action(s) will not be considered:
Convincing employees to break their employment contracts.
Interference with the trade, business, or employment or somebody else.
It is a person’s right to use his capital or his labour in any manner he wishes.
o A registered trade union is not liable in any suit or other legal proceedings in any civil court in respect of any tortuous act done in contemplation of or furtherance of a trade dispute by an agent of the trade union, if it is proved that such person acted without the knowledge of, or contrary to the express instructions given by the executive of the trade union.

Enforceability of agreements: [Sec.19]
o Whatever the laws applicable at the time, an agreement between the members of a registered trade union shall not be void or void able merely by reason of the fact that any of the objects of the agreement is in restraint of trade.

Right to inspect books of trade union: [Sec.20]
o The accounts books, the list of members is to be kept open for inspection by an office bearer or member of the trade union.
o The inspection time will be provided for in the rules of the trade union.

Right of minors to be members: [Sec.21]
o Unless the rules of the trade union mention otherwise, any person who has attained the age of 15 years may be a member of a registered trade union.
o This member will enjoy all the rights of a full-fledged member.

Duties and Liabilities of a Registered Trade Union:

Change of registered office: [Sec.12]
o Any change in the address of the registered office of a trade union takes place; notice of change must be given to the Registrar in writing.
Object on which general funds may be spent: [Sec.15]
o If the union funds are spent on any object other than those enumerated in Sec.15, the expenditure will be considered unlawful and ultra vires the Act and the Union can be restrained by injunction from applying its funds for any such object.
o Some purposes for which this fund may be used:
Payment of salaries, allowances and expenses of the office-bearers;
Administrative expenses and audit expenses;
Expenses for any legal proceeding against the trade union or any member while they were securing or protecting any right of the trade union;
Compensation to members for loss arising out of trade disputes, or even on account of death, old age, sickness, accident or unemployment;
Payment of contributions to any cause intended to benefit workmen in general;
Provision of educational, social or religious benefits for members.
Constitution of a fund for political purposes: [Sec.16]
o This fund may be created by a registered trade union only.
o From this fund, payments may be made for the promotion of the civic and political interests of its members.
o This fund may be utilized for objects like:
Any expenses incurred by a candidate or prospective candidate for election as a member of any legislative body constituted under the constitution of India or of any local authority;
Holding of any meeting or the distribution of any literature or documents in support of any such candidate or prospective candidate;
Maintenance of any person who is a member of any legislative body constituted under the constitution of India or of any local authority;
Holding of political meeting of any kind or the distribution of political literature or political documents of any kind.
o Expenditure for political purposes will never be permitted out of the general funds.
o There are certain conditions for the creation of political funds:
Fund to be created only from the contributions separately levied or made to that fund;
No member to be compelled to contribute to this fund;
A member who does not contribute to the fund must not be excluded from any benefits of the trade union;
No ill treatment or unfair treatment of such a member;
Contribution to the political fund not to be made a condition for admission to the trade union.

Miscellaneous Provisions:
Proportion of Office-Bearers to be connected with the Industry: [Sec.22]
o Unorganized Sector:
This sector to be specified by the appropriate government by notification in the official gazette.
Not less than ½ the total number of office-bearers of every registered trade union must be persons engaged or employed in the industry with which the trade union is connected.
But the appropriate government may grant exemptions.
o All other cases:
Not more than 1/3rd of the total number of office-bearers or five (whichever is less) can be outsiders.
o Retired and retrenched employees are considered ‘outsiders’ for this purpose.
o We already know the provision regarding Council of Ministers and other persons who hold offices of profit (not employment) in an establishment or industry with which the trade union is connected.
Disqualifications of the Executive or any other office-bearers of Trade Unions: [Sec.21A]
o Not attained the age of 18 years;
o Convicted by a court in India of an offence involving moral turpitude and sentenced to imprisonment. Five years have not elapsed since his release.

Returns: [Sec.28]
o A registered trade union is required to send annually:
A general statement of all receipts and expenditure, of the assets and liabilities as on 31-Dec.;
A statement showing all changes in office-bearers during the year;
A copy of the up-to-date rules.
A copy of every alteration made in the rules has to be sent to the Registrar within 15 days of making the alteration.
o The Registrar or any of his authorized officers may examine the documents of a registered trade union at its registered office or may require their production at a place to be specified by him.
Such a place should be up to ten miles from the registered office of the trade union.

Penalties: [Sec.31-32]
o In case of a default in sending returns required under the Act:
Every office-bearer or the responsible person(s) is/are punishable with a fine of up to Rs.5/week after the first week of default;
Total fine not to exceed Rs.50/.
o In case of a person making or causing false entry in, or any omission from the general statements or rules sent to the Registrar:
Punishable with a fine of up to Rs.500/.
o In case of a person who, with the intent to deceive, gives false information in the form of a document purporting to be copy of its rules etc. to a person intending to become a member, or
o In case of a person knowingly projecting an unregistered trade union as a registered trade union:
Punishable with a fine of up to Rs.200/.
Regulations: [Sec.29-30]
o The Central and State governments are empowered to make regulations with respect to:
Registration of trade unions, rules of trade unions, fees payable on registration;
Transfer of registration in case of a registered trade union changing its head office from one state to another;
The qualifications of the auditors and the manner in which the accounts of such trade unions are to be audited;
The conditions subject to which inspection of documents kept by the Registrar are to be allowed, and the fees chargeable in respect of such inspection;
Any matter which may be prescribed.
o Regulations so made, shall be published in the Official Gazette of the appropriate government.
Amalgamation of Trade Unions: [Sec.25-26]
o Any two or more registered unions may be amalgamated together as one trade union with or without dissolution of the funds of such trade unions.
o This process will take place only when:
Votes of at least one-half of the members of each trade union entitled to vote, are recorded; and
At least 60% of the recorded votes are in favour of the proposal of amalgamation.
o Notice of amalgamation (in writing), signed by the secretary and by seven members of each and every trade union that is a party to this amalgamation, shall be sent to the Registrars of the individual trade unions.
If the head-office of the amalgamated trade union is situated in a different state, such notice shall be sent to the Registrar of such state also.
If the Registrar of the state in which the registered head-office of the amalgamated trade union is situated, is satisfied that all the necessary formalities are completed, he may register the amalgamated trade union and the amalgamation shall have effect from the date of such registration.
o Effect of amalgamation:
Amalgamation shall not prejudice any right of any such trade unions or any right of a creditor on any of them.

Dissolution of Trade Union:
o When the trade union is dissolved (process to be mentioned in the rules), notice of the dissolution signed by seven members and by the secretary of the trade union shall be sent to the Registrar within 14 days of the dissolution.
o If the Registrar is satisfied that the dissolution has been effected according to the rules of the trade union, he shall register the fact of the dissolution.
o The dissolution shall take effect from the date of such registration.
o Where the dissolution of a registered trade union has been registered and the rules of the trade union do not provide for the distribution of funds of the trade union on dissolution, the Registrar shall divide the funds amongst the members in such manner as may be prescribed.
Assessment of the Act:
This Act can be assessed on the following points:
o Registration of a Trade union is not compulsory and the duties, liabilities are applicable only to registered trade unions.
o Encouragement to formation of small sized unions.
o No time limit to the Registrar for registration.
o Encouragement to persistence of outsiders.
o Light punishment for violations.
o Absence of provision for recognition.
o No mention of unfair labour practices.


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