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Labour Policies
The Labour Policies for Small Scale Industries is governed by
comprehensive laws. The following laws and policies are applicable for
Small Scale Industries in India:
- Apprentices Act, 1961
- The Bidi and Cigar Workers (Conditions of
Employment) Act, 1966
- Bonded Labour System (Abolition) Act, 1976
- Child Labour (Prohibition & Regulation) Act, 1986
- The Children (Pledging of Labour) Act, 1933
- The Contract Labour (Regulation &
Abolition) Act, 1970
- The Employees Provident Funds and Misc.
Provisions Act, 1952
- Employees State Insurance Act, 1948
- Employers Liability Act, 1938
- Employment Exchange (Compulsory Notification of
Vacancies) Act, 1959
- Equal Remuneration Act, 1976
- The Factories Act, 1948
- The Industrial Disputes Act
- The Industrial Employment (Standing Orders) Act,1946
- The Inter-state Migrant Workmen (Regulation
of Employment and Conditions of Service) Act, 1979
- Labour Laws (Exemption from Furnishing Returns & Maintaining
Registers by Certain Extablishments) Act, 1988
- Maternity Benefit Act, 1961
- The Minimum Wages Act, 1948
- The Payment of Bonus Act, 1965
- The Payment of Gratuity Act, 1972
- The Payment of Wages Act, 1936
- The Sales Promotion Employees (Conditions of Service) Act, 1976
- The Shops and Establishments Act, 1953
- The Trade Union Act, 1926
- Workmen’s Compensation Act, 1923
- The Weekly Holidays Act, 1942
There are certain reforms in labour laws by certain states, which
are illustrated below:
The Factories Act, 1948
Objectives
- To ensure adequate safety measures and to promote the health and
welfare of the workers employed in factories.
- To prevent haphazard growth of factories through the provisions
related to the approval of plans before the creation of a factory.
Scope and coverage
- Regulates working condition in factories.
- Basic minimum requirements for ensuring safety, health and
welfare of workers.
- Applicable to all workers.
- Applicable to all factories using power and employing 10 or more
workers, and if not using power, employing 20 or more workers on any
day of the preceding 12 months.
Main provisions
- Compulsory approval, licensing and registration of factories.
- Health measures.
- Safety measures.
- Welfare measures.
- Working hours.
- Employment of women and young persons.
- Annual leave provision.
- Accident and occupational diseases.
- Dangerous operations.
- Penalties.
- Obligations and rights of employees.
When to consult and refer
- On starting a factory.
- Throughout the life of the factory.
The Minimum Wages Act, 1948
Objectives
- To determine the minimum wages in industry and trade where labour
organisations are non-existent or ineffective.
Scope and coverage
- Applicable to all employees engaged to do any work, skilled,
unskilled manual or clerical, in a scheduled employment, including
out-workers.
- Fixation of minimum wages.
Main provisions
- Fixation of minimum wage of employees.
- Procedure for fixing and revising minimum wages.
- Obligation of employees.
- Rights of workers.
When to consult and refer
- At the time of fixation of salary of new/existing employees.
The Payment of Wages Act, 1936
Objectives
- To ensure regular and prompt payment of wages and to prevent the
exploitation of a wage earner by prohibiting arbitrary fines and
deductions from his wages.
Scope and coverage
- Application for payment of wages to persons employed in any
factory.
- Not applicable to wages which average Rs 1600/- ($35.83) per
month or more.
- Wages include all remuneration, bonus, or sums payable for
termination of service, but do not include house rent reimbursement,
light vehicle charges, medical expenses, TA, etc.
Main provisions
- Responsibility of the employer for payment of wages and fixing
the wage period.
- Procedures and time period in wage payment.
- Payment of wages to discharged workers.
- Permissible deductions from wages.
- Nominations to be made by employees.
- Penalties for contravention of the Act.
- Equal remuneration for men and women.
- Obligations and rights of employers.
- Obligations and rights of employees.
When to consult and refer
- Deciding wages and salary administration at all times.
The Employees Provident Funds and Misc.
Provisions Act, 1952
Objectives
- To make provisions for the future of the industrial worker after
he retires or for his dependents in the case of his early death.
- Compulsory Provident Fund
- Family Pension
- Deposit linked insurance
Scope and coverage
- Application to factories and establishments employing 20 or more
persons.
- Can be made applicable by central government to establishments
employing less than 20 persons or if the majority of employees
agree.
- Excludes establishments employing 50 or more persons or 20 or
more persons but less than 50 persons, until the expiry of three
years in the case of the former, and five years in the case of the
former, and five years in the case of the latter, from the date of
setting up of establishment.
- Applicable to all persons who are employed directly or indirectly
through contractors in any kind of work.
Eligibility
- Employees drawing pay not exceeding Rs. 3500/- ($78.37) per
month.
Benefits
- Apart from terminal disbursal of non-refundable withdrawals for
Life Insurance Policies
- House building
- Medical treatment
- Marriage
- Higher education
- Family pension
- Retirement-cum-withdrawal benefits
- Deposit linked insurance Amount equal to the average balance in
Provident Fund of deceased subject to a maximum of Rs. 25,000/-
($559.79).
Workmen’s
Compensation Act, 1923
To provide compensation for workmen in cases of industrial accidental /
occupational diseases in the course of employment resulting in
disablement or death. Coverage for persons employed in Factories, Mines,
Plantations, the Railways and others mentioned in Schedule II of the
Act.
Benefits
Compensation for Death
- Minimum - Rs. 20,000 ($447.83) Maximum - Rs. 1,14,000 ($2,552.62)
- Compensation for Permanent disablement
- Minimum - Rs. 24,000 ($537.4) Maximum - Rs. 70,000 ($1567.4)
- Temporary disablement
- 50% of wages for a maximum period of 5 years.
The Contract Labour (Regulation & Abolition)
Act, 1970
- Not to be required to work beyond 9 hours between 6 A.M. and 7
P.M.
- with the exception of midwives and nurses in plantations.
The Inter-state Migrant Workmen (Regulation of
Employment and Conditions of Service) Act, 1979
- Separate toilets and washing facilities to be provided in
employment covered by the 3rd and 6th laws.
Maternity Benefit Act, 1961
- Maternity benefits to be provided on completion of 80 days
working.
- Not required to work during six weeks immediately following the
day of delivery or miscarriage.
- No work of arduous nature, long hours of standing likely to
interfere with pregnancy/normal development of foetus or may cause
miscarriage or likely to affect health to be given for a period of
one month immediately preceding the period of six weeks before
delivery.
- On medical certificate, advance maternity benefit to be allowed.
- Rs. 250 ($5.6) as medical bonus to be given in case when no
prenatal confinement and post-natal care is provided free of charge.
Equal Remuneration Act, 1976
- Payment of equal remuneration to men and women workers for same
or similar nature of work protected under the Act and also under the
provisions at ISMW Act, mentioned above.
- No discrimination permissible in recruitment and service
conditions except where employment of women is prohibited or
restricted by or under any law.
The Children (Pledging of Labour) Act, 1933
- Any agreement to pledge the labour of children is void.
The Bidi and Cigar Workers (Conditions of
Employment) Act, 1966
- Employment of children under 14 years of age prohibited under the
laws at Sl. Nos. 2 to 5.
- Except in the process of family based work or recognised
school-based activities, children not permitted to work in
occupations connected with: Passenger, goods mail transport by
Railway Cinder picking, cleaning of ash pits Building operations,
construction Catering establishments in Railway premises or port
limits Beedi making Carpet weaving Cement manufacturing Cloth
printing Dyeing, weaving Manufacture of matches, explosives,
fireworks Mica cutting, splitting Wool cleaning
- In occupations and processes other than the above mentioned, work
by children is permissible only for six hours between 8.00 A.M. and
7.00 P.M. with one day's weekly rest.
- Occupier of establishment employing children to give notice to
local Inspector and maintain prescribed register.
The Payment of Gratuity Act, 1972
Objective
- To provide for payment of gratuity on ceasing to hold office
Coverage
- Factories, Mines, Oil fields, Plantations, Ports, Railway
Companies, Shops & Commercial Establishments and to other
establishments to which the Government extends the law.
Eligibility
- Employees drawing wages not exceeding R. 3500/- ($78.37) per
month.
Benefits
- 15 days wages for every completed year of service or part thereof
in excess of six months subject to a maximum of Rs. 50,000 ($119.58)
Employees State Insurance Act, 1948
Objective
To provide for health cover, Medical care and Cash benefits for
- Sickness
- Maternity
- Employment injury
- Pensions to dependents in case of Death (or) Employment injury
Eligibility
- Employees drawing wages not exceeding Rs. 3000/- ($67.17) per
month
Benefits
- Compensation for Death Minimum - Rs. 20,000 ($447.83 Maximum) -
Rs. 1,14,000 ($2552.62)
- Compensation for Permanent disablement Minimum - Rs. 24,000
($537.4) Maximum - Rs (70,000) $1,567.4
- Temporary disablement 50% of wages for a maximum period of 5
years.
The Payment of Bonus Act, 1965
Objectives
- To provide statutory obligations for payment of bonus to persons
employed in certain establishments on the basis of profits or
productivity.
Scope and Coverage
- Applicable all over India to factories under the Factories Act
and to other establishments employing 20 or persons on any day
during a year.
- Government can extend its coverage to establishments employing
between 10 and 20 workers.
- Covers all workers including supervisors, managers,
administrators, technical and clerical staff employed on salary or
wages not exceeding Rs 2,500 ($55.97) per month.
Main Provision
- Eligibility for bonus.
- Payment of minimum and maximum bonus.
- Time limit for payment of bonus.
- Deductions from bonus.
- Computation of gross profits and available allocable surplus.
- Rights of employees.
When to Consult And Refer
- When the factory if registered under the Factories Act.
- When the number of employees in the establishment reaches 20 or
above.
- When calculating the bonus.
The Shops and Establishments Act, 1953
Objectives
- To provide statutory obligation and rights to employees and
employers in the unorganised sector of employment, i.e., shops and
establishments.
Scope and Coverage
- A state legislation; each state has framed its own rules for the
Act.
- Applicable to all persons employed in an establishments with or
without wages, except the members of the employer's family.
- State government can exempt, either permanently or for a
specified period, any establishments from all or any provisions of
this Act.
Main Provisions
- Compulsory registration of shop/establishment within thirty days
of commencement of work.
- Communications of closure of the establishment within 15 days
from the closing of the establishment.
- Lays down the hours of work per day and week.
- Lays down guidelines for spread-over, rest interval, opening and
closing hours, closed days, national and religious holidays,
overtime work.
- Rules for employment of children, young persons and women
- Rules for annual leave, maternity leave, sickness and casual
leave, etc.
- Rules for employment and termination of service.
- Maintenance of registers and records and display of notices.
- Obligations of employers.
- Obligations of employees.
When to Consult And Refer
- At the time of start of an enterprise.
- When framing personnel policies and rules.
The Trade Unions Act, 1926
Objective
- To confer a legal and corporate status on registered trade
unions.
Scope and Coverage
- Applicable to unions of workers as well as associations of
employers.
- Extends to the whole of India.
- A central legislation but administered and enforced by the state
governments.
Main Provisions
- Defines trade union.
- Registration of a trade union by any seven or nine workers of an
establishment on applying with a copy of the rules of the union, the
name and address, and the list of office bearers.
- Cancellation and dissolution of trade unions.
- Obligations of registered trade unions.
- Rights of registered trade unions.
When to Consult And Refer
- At the time of start of an enterprise.
- Throughout the running of the enterprise.
The Industrial Disputes Act
Objectives
- To provide a machinery for peaceful resolution of disputes and to
promote harmonious relation between employers and workers.
Scope and coverage
- Applicable to all industrial and commercial establishments
- Covers all workers and supervisors drawing salaries up to Rs.
1600/- ($35.82) per month.
- Not an applicable to person employed in managerial and
administrative capacities.
Main provisions
- Defines industry, industrial dispute, layoff, lockout,
retrenchment, trade union, strike, wages. workman, etc.
- Provides machinery for investigating and settling disputes
through works committees, conciliation officers, boards of
conciliation, courts of enquiry, labour courts, tribunals and
voluntary arbitration.
- Reference of dispute for adjudication.
- Awards of labour courts and tribunals.
- Payment of wages to workers pending proceedings in High Courts.
- Rights of appeal.
- Settlements in outside conciliation.
- Notice of change in employment conditions.
- Protection of workmen during pendency of proceedings
- Strike and lockout procedures.
- Lay-off compensation.
- Retrenchment compensation.
- Proceedings for retrenchment.
- Compensation to workmen in case of transfer of undertakings.
- Closure procedures.
- Reopening of closed undertakings.
- Unfair labour practices.
- Recovery of money due from employer.
- Penalties.
- Obligations and rights of employees.
When to consult and refer
- When a dispute arises with the workers' union.
- When you plan changes in employment conditions.
- When there is a strike.
- When there is a lockout.
- When retrenchment of workmen.
- When undertaking is being transferred
- On closure of an establishment.
- On re-opening establishment.
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