Labour Laws


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Q. Notes on Lay off, Lockout, Retrenchment, Strike.

Section 2(kkk) - Lay off
Lay-off means failure, refusal, or inability of a employer to give employment to a workman whose name is on the muster rolls of his industrial establishment and who has not been retrenched, on the account of lack of coal, lack of power, lack of raw material, over stocking of output, failure of machinery, due to natural calamity, or due to any other connected reason.

Central India Spinning, Weaving, and Manufacturing Co. Ltd. Nagpur vs State Industrial Court 1959 - Held that the words, "failure, refusal, or inability" are key to the definition and means that the unemployment is due to a cause independent of any action or inaction of the workmen.

Temporary
Due to reasons beyond employer's control
Due to economic reasons
non-intentional

Rights and Obligations Resulting from lay-off
Layoff is not a right conferred upon the employer but an obligation that the unemployment is temporary in nature and in a reasonable time the laid off worker will be restored his position. However, there is no indication regarding the time layoff will continue.


25C. RIGHT OF WORKMEN LAID OFF FOR COMPENSATION
Whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid off, whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid off :

Provided that if during any period of twelve months, a workman is so laid-off for more than forty-five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty-five days, if there is an agreement to that effect between the workman and the employer :

Provided further that it shall be lawful for the employer in any case falling within the foregoing proviso to retrench the workman in accordance with the provisions contained in section 25F at any time after the expiry of the first forty-five days of the lay-off and when he does so, any compensation paid to the workman for having been laid-off during the preceding twelve months may be set off against the compensation payable for retrenchment.

Explanation : "Badli workman" means a workman who is employed in an industrial establishment in the place of another workman whose name is borne on the muster rolls of the establishment, but shall cease to be regarded as such for the purposes of this section, if he has completed one year of continuous service in the establishment.


25M. PROHIBITION OF LAY-OFF. -
(1) No workman (other than a badli workman or a casual workman) whose name is borne on the muster-rolls of an industrial establishment to which this Chapter applies shall be laid-off by his employer except with the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereinafter in this section referred to as the specified authority), obtained on an application made in this behalf unless such lay-off is due to shortage of power or to natural calamity, and in the case of a mine, such lay-off is due also to fire, flood, excess of inflammable gas or explosion.

(2) An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended lay-off and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner.

(3) Where the workmen (other than badli workmen or casual workmen) of an industrial establishment, being a mine, have been laid-off under sub-section (1) for reasons of fire, flood or excess of inflammable gas or explosion, the employer, in relation to such establishment, shall, within a period of thirty days from the date of commencement of such lay-off, apply, in the prescribed manner, to the appropriate Government or the specified authority for permission to continue the lay-off.

(4) Where an application for permission under sub-section (1) or sub-section (3) has been made the appropriate Government or the specified authority, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such lay-off, may, having regard to the genuineness and adequacy of the reasons for such lay-off, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.

(5) Where an application for permission under sub-section (1) or sub-section (3) has been made and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.

(6) An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub-section (7), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order.

(7) The appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (4) or refer the matter, or, as the case may be, cause it to be referred, to a Tribunal for adjudication :

Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.

(8) Where no application for permission under sub-section (1) is made, or where no application for permission under sub-section (3) is made within the period specified therein, or where the permission for any lay-off has been refused, such lay-off shall be deemed to be illegal from the date on which the workmen had been laid-off and the workmen shall be entitled to all the benefits under any law for the time being in force as if they had not been laid-off.

(9) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub-section (1), or, as the case may be, sub-section (3) shall not apply in relation to such establishment for such period as may be specified in the order.

(10) The provisions of section 25C (other than the second proviso thereto) shall apply to cases of lay-off referred to in this section.

Explanation : For the purposes of this section, a workman shall not be deemed to be laid-off by an employer if such employer offers any alternative employment (which in the opinion of the employer does not call for any special skill or previous experience and can be done by the workman) in the same establishment from which he has been laid-off or in any other establishment belonging to the same employer, situate in the same town or village, or situate within such distance from the establishment to which he belongs that the transfer will not involve undue hardship to the workman having regard to the facts and circumstances of his case, provided that the wages which would normally have been paid to the workman are offered for the alternative appointment also.


Section 2(oo) - Retrenchment
Retrenchment means termination of service of an employee by an employer for any reason other than as a punishment due to disciplinary action. This does not include - voluntary retirement, superannuation, non-renewal of contract, termination on the ground of continued ill-health.

For any reason what so ever -  surplusage, redundancy due to advanced machinery, slowdown in business. Reason does not matter.

DC & G Mills vs Shambhu Nath 1978 -  Due to reorganization, a few workers were made redundant. Instead of retrenching them, they were absorbed in other places. One worker was given employment in another dept. with same pay. However, due to lack of performance, he was shifted to another dept. However, he refused to go to another dept. and asked for one more chance. He was then removed from the rolls. This was held retrenchment.

Morinda Coop Sugar Mills vs Ram Kishen and others 1996 - Workers were employed in the sugar mill only during the season and then they ceased to work. Held that it is not retrenchment because it is only seasonal work.

Santosh Gupta vs SBI 1980 - A worker was removed after he failed a test that he was required to pass for confirmation of service. SC held it to be retrenchment because termination for any reason is retrenchment except if it is because of the reasons mentioned in the act.
 
VRS
Panjab National Bank vs Virendra Kumar Goel 2004 - SC held that employees who opted for voluntary retirement and availed any part of retirement benefits were not eligible for retraction.

Ill-health
Lalit Mohan Puri vs Pure Drinks 1992 - A employee was asked to appear before ESI doctor to prove ill health. He failed to appear. He was then removed. SC held merely refusal to appear for medical examination should not be construed as ill health and held it to be retrenchment.

Contract of Employment (subclause bb)
In the case of Dilip Hanuman Shirke vs Zilla Parishad Yavatmal 1990 - Held that the sub clause bb that allows an employer to not renew the employment contract must be read restrictively. The duration of employment must be read as per the nature of work and not from just the employment letter otherwise it will be abused by the employers.

Section 25F. CONDITIONS PRECEDENT TO RETRENCHMENT OF WORKMEN
No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until -
(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice;
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months; and
(c) notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette.


Section 25G. PROCEDURE FOR RETRENCHMENT
Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman. 


Section 25N. CONDITIONS PRECEDENT TO RETRENCHMENT OF WORKMEN

  1. No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until -
    1. the workman has been given three months' notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; and
    2. the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereafter in this section referred to as the specified authority) has been obtained on an application made in this behalf. 
  2. An application for permission under sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner.
  3. Where an application for permission under sub-section (1) has been made, the appropriate Government or the specified authority, after making such inquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.
  4. Where an application for permission has been made under sub-section (1) and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
  5. An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub-section (6), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order.
  6. The appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (3) or refer the matter or, as the case may be, cause it to be referred, to a Tribunal for adjudication :Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
  7. Where no application for permission under sub-section (1) is made, or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workman and the workman shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him.
  8. Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such establishment for such period as may be specified in the order.
  9.  Where permission for retrenchment has been granted under sub-section (3) or where permission for retrenchment is deemed to be granted under sub-section (4), every workman who is employed in that establishment immediately before the date of application for permission under this section shall be entitled to receive, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months.
Section 25H. RE-EMPLOYMENT OF RETRENCHED WORKMEN
Where any workmen are retrenched, and the employer proposes to take into his employment any persons, he shall, in such manner as may be prescribed, give an opportunity to the retrenched workmen who are citizens of India to offer themselves for re-employment, and such retrenched workmen who offer themselves for re-employment shall have preference over other persons. 


Section 2(l) - Lock Out
Lockout means temporary closing of the place of employment or suspension of work or refusal by the employer to continue to employ any number of persons employed by him.

Used as a measure of coercion - Antithesis of strike.
due to a trade dispute.
intentional

4 ingradients of Lockout
  1. Temporary closure of a place of employment by employer or suspension or work by the employer, or refusal to employ any number of persons by the employer.
  2. motivate by coercion
  3. in an industry
  4. due to a dispute in such industry.
Workmen of Itakhoolie Tea Estate vs Management 1952 - In lock out workmen are asked by the employer to keep away from work and thus they are not under any obligation to present themselves for work.

Section 2(q) - Strike
Strike means a cessation of work by a body of persons employed in any industry acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons who are or have been so employed to continue to work or to accept employment.

Indian Iron and Steel Co vs Its Workmen - Held that mere cessation of work is not strike unless it is shown that it is due to an industrial demand.
Ram Sarup vs Rex - Mere absence from work is not enough but there should be a concerted refusal to accept employment to call it a strike.
Patiala Cement Co. vs Certain Workers - Cessation of work for even half an hour can be a strike.

Types of Strike - General, Go Slow, Work to Rule, Tools down/Stay In, Sympathetic, Hunger.

Section 22. PROHIBITION OF STRIKES AND LOCK-OUTS
  1. No person employed in a public utility service shall go on strike in breach of contract -
    1. without giving to the employer notice of strike, as hereinafter provided, within six weeks before striking; or 
    2. within fourteen days of giving such notice; or 
    3. before the expiry of the date of strike specified in any such notice as aforesaid; or 
    4. during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings.
  2. No employer carrying on on any public utility service shall lock-out any of his workmen - 
    1. without giving them notice of lock-out as hereinafter provided, within six weeks before locking-out; or
    2. within fourteen days of giving such notice; or
    3. before the expiry of the date of lock-out specified in any such notice as aforesaid; or
    4. during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings. 
  3. The notice of lock-out or strike under this section shall not be necessary where there is already in existence a strike or, as the case may be, lock-out in the public utility service, but the employer shall send intimation of such lock-out or strike on the day on which it is declared, to such authority as may be specified by the appropriate Government either generally or for a particular area or for a particular class of public utility services.
  4. The notice of strike referred to in sub-section (1) shall be given by such number of persons to such person or persons and in such manner as may be prescribed.
  5. The notice of lock-out referred to in sub-section (2) shall be given in such manner as may be prescribed.
  6. If on any day an employer receives from any person employed by him any such notices as are referred to in sub-section (1) or gives to any person employed by him any such notices as are referred to in sub-section (2), he shall within five days thereof report to the appropriate Government or to such authority as that Government may prescribe, the number of such notices received or given on that day.

Section 25. PROHIBITION OF FINANCIAL AID TO ILLEGAL STRIKES AND LOCK-OUTS
No person shall knowingly expend or apply any money in direct furtherance or support of any illegal strike or lock-out.

Section 26. PENALTY FOR ILLEGAL STRIKES AND LOCK-OUTS
(1) Any workman who commences, continues or otherwise acts in furtherance of, a strike which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to fifty rupees, or with both.

(2) Any employer who commences, continues, or otherwise acts in furtherance of a lock-out which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to one thousand rupees, or with both.
 
Section 2(j) - Industry
Industry means any trade, business, undertaking, manufature, or calling of service of employers and includes any calling, service, employment, handicraft, industrial occupation, or avocation or workers.

State of Bombay vs Bombay Hospital Mazdoor Sabha  - Any activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material service to the community at large or a part of such community with the help of employees is an industry.

Bangalore Water Suppy vs A Rajappa - Practially reiterated the principles in Bombay Hospital Mazdoor Sabha case.
Triple Test -
  1. Systematic Activity
  2. organized by a cooperation of employer and employees
  3. for the production and or distribution of goods or services calculated to satisfy human wants and wishes.
The following points were also observed -
  1. Does not include spiritual or religious services e.g. making, on a large scale, prasad. It only includes material services and things.
  2. Absence of profit motive or gainful objective is irrelevant be the venture public, private, or joint.
  3. The true focus is on the function and the decisive test is the nature of the activity with special emphasis on employee-employer relationship.
  4. If an organization is a trade or business, it does not cease to be an industry merely because philanthropy is animating the undertaking.
Dominant Nature Test - If an undertaking includes several activities some of which are industry and some not, the predominate nature of the business and the integration of the departments is the true test.

Exceptions -  Certain gurukuls, or research labs, or clubs operating on a small scale are not industry.

In the Bangalore Water Suppy case, Bombay Hospital Mazdoor Sabha case was rehabilitated and Hospital is considered an industry.

DN Banerjee vs PN Mukherjee -  Municipal Corporation is an industry.

Brahmo Samaj Education Society vs WB College Employees Associaltion - Whether a University or Educational institution is an industry or not depends on the evidence in each case. If the evidence points that there is no much importance of individual teachers and the focus is mainly profit, it is an industry. In general Universities are industry even though its workers may not be Workers as per the the act.

Clubs such as Cricket Club of India, Lawyers Office, Indian Standards Institute are all Industry.



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Q. Define Trade Union. Is the registration of a Trade Union necessary? Write down the procedure of registration, amalgamation, and cancellation of a trade union. Under what conditions can a Registrar of Trade Unions cancel the registration of a Trade Union? State the appellate provisions against the decisions of the Registrar. What are the rights, privileges, immunities, and liabilities of a registered trade union? What are the various functions performed by a trade union and how do they promote the welfare of the workers (what is the utility of a Trade Union)?

Due to a surge in industrial activity in the later part of 19th century, the population of working class increased. Since the employers were mainly interested only in profitability, workers were at a mercy of the employers. Slowly, the concept of a union started taking hold in India. In 1890, mill workers of Bombay associated under the name of Bombay Millhands Association. Although it was not a trade union in a strict sense, it was nevertheless a start in India.
After the first world war the cost of living increased and the workers frequently agitated to demand more pay. In the early 20th century Royal Trade Commission studied the condition of workers and suggested the formations of Trade Unions. As per the recommendations of the Royal Commission, Indian Trade Unions Act was passed in 1926. However, due to strong opposition from employers, it was enforced only in 1927.  The original act lacked teeth in the sense that the formation of a Trade Union itself dependent on the recognition by the employer. Later on several amendments were made to fix the issues. In 1947, the act was amended widely as per the socialist inclination of the polity. 

Definition
Section 2(h) of the Trade Unions Act 1926 defines Trade Union as a combination, temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employer, workmen and workmen, or employers and employers, or for imposing restrictive condition on the conduct of any trade or business, and includes the federation of two or more trade unions.

It is the object of the association or combination that determines whether it is a trade union or not.
A society or authors, publishers, and other owners of copyright meant to protect their copyright in music and songs, was held NOT to be a Trade Union by the House of Lords.
In the case of Tamil Nadu NGO Union vs Registrar, Trade Unions, AIR 1962, Madras HC held that Tamil Nadu NGO Union, which was an association of sub magistrates of the judiciary, tahsildars, etc., was not a trade union because these people were engaged in sovereign and regal functions of the State where were its inalienable functions.
In the case of GTRTCS and Officer's Association, Bangalore and others vs Asst. Labor Commissioner and anothers AIR 2002, Kar. HC held that the definition of workmen for the purpose of Trade Unions is a lot wider than in other acts and that the emphasis is on the purpose of the association rather than the type of workers and so it is a valid Trade Union.

The registration of a trade union is not necessary. However, upon registration, a trade union gets several benefits including some immunities that are not available to an unregistered Trade Union.  In the case of Workers of B and C Co vs Labor Commissioner, AIR 1964 Mad it was held that a Trade Union can raise or sponsor a trade dispute and represent on behalf of its members in legal proceedings arising out of a trade dispute.
Section 13 specifies that upon registration, a trade union gets a legal entity status, due to which it
  • has perpetual succession and a common seal.
  • can acquire and hold movable as well as immovable properties.
  • can contract through agents.
  • can sue and can be sued.

Procedure of Registration

Section 3 (Appointment of the Registrar) : The appropriate government appoints a person to be the registrar or trade unions for each state.

Section 4 (Mode of registration) says that to register a Trade Union, 
  • an application must be sent to the Registrar of Trade Unions appointed by an appropriate government. 
  • the application must be made by seven or more persons who are engaged in the trade or industry in connection to which the Trade Union is to be formed. 
  • all the applicants must subscribe their names to the rules of the Trade Union and comply with the provisions of this act regarding registration.
  • there must be at least 10% or 100, whichever is less, members who are engaged or employed in the establishment or industry to which it is connected.
  • there must be not be less than seven members who are engaged or employed in the establishment or industry to which it is connected.
If more that half of the persons who applied for the registration cease to be members of the union or expressly disassociate themselves from the application, the application will be deemed to be invalid.

Section 5 (Application of Registration) gives the details of the application. It says that the application should be sent to the registrar along with the copy of the rules of the trade union and a statement of the following particulars
  • The name, occupation, and addresses of the applicants.
  • The name of the trade union and the address of its head office.
  • The titles, names, ages, addresses, and occupations of the office bearers of the trade union.
  • If the trade union has been in existence for more than 1 yr, a general statement of its assets and liabilities.
Section 6 (Provisions to be contained in the rules of a Trade Union) specifies the provisions that should be contained in the rule book of the trade union. A copy of this rule book must be supplied along with the application for registration of the trade union. This rule book details the internal administration of the trade union and also determines and governs the relationship between the trade union and its  members. It must contain the rules for the following matters:
  1. name of the trade union
  2. the whole object of the trade union
  3. the whole purposes for which the general funds can be used.
  4. the maintenance of the list of members and adequate facilities to inspect it by the members of the trade union.
  5. the membership of ordinary members who are actually engaged or employed in an industry with which it is connected as well as the membership of the honorary or temporary members.
  6. the appointment of members of the executive body.
  7. the membership or subscription fee, which shall not be less that 25 paisa per member per month
  8. the conditions under which a member can get the benefits or has to pay fines.
  9. the safe custody of funds and provisions for inspecting or auditing the statements, or other documents of the trade union.
  10. dissolution of the trade union.
In the case of M T Chandersenan vs Sukumaran AIR 1974, SC held that if a member fails to pay subscription fee, he cannot be considered a member of the trade union. However, subscriptions cannot be refused under some pretext which results in the denial of membership.
In the case of Bokajan Cement Corporation Employees Union vs Cement Corporation of India, 2004, SC held that membership of the union does not automatically cease upon termination of the employment.

Under section 7, the registrar has the power to ask for further information from the trade union to satisfy himself that the trade union complies with section 5 and is eligible to be registered under section 6. The registrar can refuse to register the trade union until he receives the information. Further, he has the power to ask to change the name of the trade union if a union with the same name already exists or if he feels that the name could be deceiving or confusing to the public or the members of the trade union.

Under section 8, upon satisfaction of all the requirements, the Registrar of the Trade Unions will register the trade union. It is mandatory for the registrar to register a trade union if the union satisfies all the technical requirements of this act.
In the case of re Indian Steam Navigation Workers Union AIR 1936 SC held that a Registrar only has to see whether all the technical requirements are being fulfilled and not whether it could be described as unlawful.
In the case of ACC Rajanka Limestone Quarries Worker's Union vs Registrar of Trade Unions, AIR 1958, it was held that if the registrar does not register the trade union within 3 months of application, an appeal can be made to the High Court under art 226.

Under section 9, the registrar will issue the certificate of registration in the prescribed form, which shall be a conclusive evidence that the trade union is registered under this act.

Procedure for amalgamation
Section 24 says that any two or more registered trade unions may become amalgamated together into one trade union with or without dissolution or division of the funds of such trade unions or either or any of them, provided that votes of at least one half of the members of each trade union are recorded and at least 60% of the votes of each trade union are in favor of the proposal.
The notice of such amalgamation, signed by the secretary and seven members of each of the trade unions, should be sent to the registrar of the state where the head office of the amalgamated trade union is to be located. If the registrar is satisfied that all the provisions of this act have been complied with and the trade union formed thereby is entitled to registration under section 6, he will register the new trade union under section 8 and the amalgamation will take effect from the date of registration.

Cancellation of Registration
Under section 10, the Registrar of Trade Unions has the power to cancel the registration of a trade union in the following conditions:
  1. On the application of the trade union to be verified in the prescribed manner.
  2. If the registrar is satisfied that registration was obtained by fraud or mistake.
  3. If the trade union has ceased to exist.
  4. If the trade union willfully, upon notice of the registrar, has contravened or allowed any rule to continue in force, which is inconsistent with the provisions of this act.
  5. If the trade union rescinds any rule providing for any matter, provision for which is required to be made in section 6.
  6. If the registrar is satisfied that a trade union of workmen has ceased to have the requisite number of members.
In the case of Tata Electric Companies Officer's Guild vs Registrar of Trade Unions, 1994, Bombay HC held that for a registrar to cancel the registration, willful neglect of the notice is a must. If the trade union sends the account statement upon notice of the registrar, the registrar cannot cancel the registration on the ground that the account statement was not filed earlier.

Under section 27, upon dissolution of a trade union, seven or more members must send a notification to the registrar within 14 days of dissolution and the registrar shall register ir after verifying that the dissolution has been done as per the provisions of this act. Further, if the rules of the trade union do not provide for distribution of the funds upon dissolution, the registrar may distribute the funds in such manner as may be prescribed.

Appeal against the decision of Registrar
Section 11 grants a limited right to appeal the decisions or orders passed by the registrar.

An appeal may be made to
  1. the high court, if the head office of the trade union is located in a presidency town.
  2. the labour court or industrial tribunal, if the head office of the trade union is located in its jurisdiction.
  3. if the head office of the trade union in any other location, to such court, not inferior to the court of an additional or assistant judge of a principal civil court of original jurisdiction, as the appropriate govt. may appoint in this behalf for that area.
An appeal must be made within 60 days of the date on which registrar passed the order against which the appeal is made.
In the case of Registrar of Trade Unions, West Bengal vs Mihir Kumar Guha 1963, Cal, it was settled that a trade union whose head office is in a presidency town has only a single chance of appeal against the decision of the registrar, which is to the high court while a trade union whose head office is in muffasil has two chances of appeals, first in the local court and second in the high court.

Liabilities of a registered Trade Union

A registered trade union must follow the provisions of the Trade Unions Act 1926. In particular, the following are some restrictions in a registered trade union:
  1. A Trade Union cannot spend the funds on anything the office bearers want. It can spend funds only on the activities specified in Section 15. These include:
    1. salaries of the office bearers.
    2. expenses required for the administration of the trade union
    3. compensation to workers due to loss arise of any trade dispute.
    4. welfare activities of the workers including housing, clothing, or any such activity.
    5. benefits to the workers or their dependents in the case of unemployment, disability, or death.
    6. publishing material for creating awareness in the workers.
    7. legal expenses required for defending or bringing a suit.
    8. education of workers or their dependents.
    9. expenses for medical treatment of workers.
    10. taking insurance policies for workers.
Mario Raposo vs H M Bhandarkar and others 1994 - Office bearers of a trade union invested the money from general fund into shares of UTI. This was held invalid because it is a speculative investment.
  1. A trade union cannot force members to subscribe to political fund under section 16.
  2. Under section 20 a trade union must make available all its record books of accounts and list of membership for inspection upon request of any member or his representative.
  3. Section 21 allows minors more than 15 yrs of age to be members of a trade union. However, such minors cannot hold office.
  4. Under section 21-A, a trade union cannot appoint a person who has been convicted of a crime involving moral turpitude and has been imprisoned for 6 months or more within last 5 years.
  5. As per section 22, at least half of the office bearers of a trade union of workers of unorganized sector must be engaged or employed in an industry to which the trade union is connected. Also, while a union has a right to remove any office bearer, this power must be used judiciously and rules of natural justice must be followed.
  6. Under section 28, a general statement, audited in a prescribed manner, of all income and expenses must be sent to the registrar every year.

Rights and Priviledges of a registered Trade Union
  1. As per section 13, upon registration, a trade union becomes a legal entity and as a consequence, it gets perpetual succession and a corporate seal, it can acquire and hold movable and immovable property, contract through agents, and can sue and get sued.
  2. Under section 15 a registered trade union has a right to establish a general fund.
  3. Under section 16, a registered trade union has a right to establish a political fund. Subscription to this fund is not necessary for a member.
  4. Under section 17, 18, and 19 a registered trade union gets immunity in certain criminal, civil, and contractual proceedings.
  5. Under section 24, trade unions have the right to amalgamate.
  6. Under section 28-F, the executive of a registered trade union has a right to negotiate with the employer the matters of employment or non-employment or the terms of employment or the condition of labor of all or any of the members of the trade union and the employer shall receive and send replies to letters and grant interviews to such body regarding such matters. It further provides that the executive is entitled to post notices of the trade union meant for its members at any premises where they are employed and that the employer shall provide reasonable facilities for that.
Immunites available to a registered Trade Union
  1. Section 17 confers immunity from liability in the case of criminal conspiracy under section 120-B of IPC, committed by an office bearer or a member. However, this immunity is partial in the sense that it is available only with respect to the legal agreements created by the members for the furtherance of valid objects of a trade union as described in section 15 of the act. The immunity cannot be claimed for an act that is an offence. Registered Trade Unions have certain rights to do in furtherance of their trade disputes such as calling for strike, persuading members.

    In the case of West India Steel Company Ltd. vs Azeez 1990 Kerala, a trade union leader obstructed work inside the factory for 5 hrs while protesting against the deputation of a workman to work another section. It was held that while in a factory, the worker must submit to the instructions given by his superiors. A trade union leader has no immunity against disobeying the orders. A trade union leader or any worker does not have any right by law to share managerial responsibilities. A trade union can espouse the cause of workers through legal ways but officials of a trade union cannot direct other workers individually or in general about how to do their work. They do not have the right to ask a worker to stop his work or otherwise obstruct the work of the establishment. An employer may deal with a person causing obstruction in work effectively.

  2. Section 18 confers immunity from civil proceedings in certain cases to a trade union or its office bears or members. In general, a person is liable in torts for inducing another person to breach his contract of employment or for interfering with the trade or business of another. However, a trade union, its officers, and its members are immune from this liability provided that such an inducement is in contemplation or furtherance of a trade dispute. Further, the inducement should be lawful. There is no immunity against violence, threats, or any other illegal means.

    In the case of P Mukundan and others vs Mohan Kandy Pavithran 1992 Kerala, it was held that strike per se is not an actionable wrong. Further, it was held that the trade union, its officers, and its members are immune against legal proceedings linked with the strike of workmen by the provisions of section 18.
    In the leading case of Rohtas Industries Staff Union vs State of Bihar AIR 1963, it was held that employers do not have the right to claim damages against the employee participating in an illegal strike and thereby causing loss of production and business.
    In the case of Simpson & Group Companies Workers & Staff Union vs Amco Batteries Ltd 1992 Karn., it was held that physical obstruction of movement of management officials, contractors, goods, or vehicles carrying raw materials, is not a trade union right or a fundamental right under art 19. Immunity under section 18 cannot be claimed for such activities. Right to picket is a very intangible right and it extends only up to the right of free movement of others. The methods of persuasion are limited to oral and visual and do not include physical obstruction of vehicles or persons.

  3. Section 19 Enforceability of agreements - In India, an agreement in restraint of trade is void as per section 25 of Indian Contract Act. However, such an agreement between trade union members is neither void nor voidable. It is important to note that this right is available only to registered trade unions. An unregistered trade union must follow the principles of general contract law.
Activities of a Trade Union
Fatta

Problems with Trade Unions
  1. Too many unions causes intra-union and inter-union rivalry and thus loss of precious resources that can be used for worker's welfare.
  2. Due to politicization of unions causes the union to overlook the true welfare and benefits of the worker.
  3. Outside Leadership causes unions to lose focus because such leadership does not understand the problems of the laborers.
  4. Closed Shop/Union Shop companies forces laborers to join the union and thus causes monopoly. Close shops/Union Shops are now illegal in many countries.
  5. Sometime the employers do not recognize unions.



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Q. What do you understand by Collective Bargaining? Write down the bargaining process. What are its benefits?

Collective Bargaining is a term adopted for the negotiation process between workers, represent by a Union such as a Trade Union, and their employer, represented by the management, for issues related to the terms and conditions of their employment.such as wages, working hours, benefits, and workload. An agreement arrived at by this negotiation process is called as Collective Bargaining Agreement (CBA) or Collective Employment Agreement (CEA).
Practically, a worker and his employer are not on an equal footing because of the financial power of the employer and as such, it is extremely difficult, if not impossible, for a single worker to pressure his employer to provide equitable benefits for his work. Historically, this has proven to be the main cause of dissatisfaction among workers, resulting in decreased productivity, and poor condition of workers. The objective of collective bargaining is to mitigate the disadvantage of economic disparity between the worker and the employer by bargaining with the employer collectively instead of individually.

Approaches to Collective Bargaining 

1. Traditional  or Positional or Adversarial or Distributional or Win-Lose Bargaining
- In this type of bargaining both the parties, i.e. the union and the management, come out with their own agenda with little or no understanding of each others problems. The process mostly involves a give and take type of negotiation. This is the most common type of collective bargaining and is used all over the world.

2. Principled or Mutual Gains or Integrative or Win-Win Bargaining - In this type of bargaining both the parties understand the issues involved and they approach it to solve the problems jointly. Thus, an equitable solution without any acrimony can be found. This process works when there is not much disparity between the education level of both the parties, such as in IT industry.

The principle of collective bargaining is recognized by International Labor Organization (ILO) as well.

Bargaining Process
  1. The process starts with the workers uniting to form an association in the form of a Trade Union.
    In the case of Workers of B and C Co vs Labour Commissioner, AIR 1964 Mad it was held that a Trade Union can raise or sponsor a trade dispute and represent on behalf of its members in legal proceedings arising out of a trade dispute.
  2. Trade Union of registered and gets the power to represent the issues of the workers. Though it is not necessary for a TU to be registered. In the same case mentioned above, it was also held that an unregistered Trade Union that has the support of the majority of the workers has a better claim to negotiation than a recognized trade union that does not have majority support.
  3. The members of the trade union adopt a resolution to authorize the Trade Union to represent them and put their issues across to the management.
  4. Employer recognizes the Trade Union and gets ready to discuss the issues with the Trade Union representatives.
  5. The union representatives put their list of demands to the management and the management discusses those with the representatives.
  6. After a give and take either a mutually agreeable solution is found or pressurizing tactics such as strike or lock-out are adopted.
  7. If no solution is found, the matter could be referred to arbitration. If the solution is found, it is implemented and the process ends.
Bargaining Process

Benefits of Collective Bargaining



Benefits for Workers
  1. It provides uniformity and equality in conditions of labor for all laborers.
  2. It ensures progress of workers and increases their importance and respect.
  3. It prevents arbitrariness by owners regarding working conditions.
  4. It preserves personal interest of workers.
  5. It promotes welfare of workers.
  6. A worker does not feel alone and helpless, on the contrary, he feels powerful.
  7. It provides a check on employers and inspectors.
Benefits for Employers
  1. It is cheaper, easier, and safer option.
  2. It saves time and it benefits all the parties equally.
  3. Compromises reached by this process are not only applicable to the parties but also to those who are not a party.
  4. Upon success of collective bargaining, industrial peace prevails and mutual understanding and production increases.
  5. Compromises done through collective bargaining are binding on all the parties.
Benefits in General
  1. Helps in satisfactory solution of problems and allows old customs and traditions.
  2. It reduces tension in parties and establishes a tradition of industrial peace.
  3. It has been proved helpful in bringing social change.
  4. Upon failure of the process, no party is insulted or hurt.
  5. In the case of Virundhachalam vs Management, Lotus Ltd, Lord Roland said that it ends the arbitrariness of inspectors by preventing them from becoming legal kings.



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Q. Explain the terms "Dependents" and "Wages" w.r.t. WCA, 1923. What do you understand by Workers Compensation? In what situations does an employer have to compensate a worker? Explain the phrase "arising out of and in the course of employment" with reference to WCA, 1923. How far is an employer liable to pay compensation to a laborer injured in an accident arising out of and in the course of employment? Since amount of compensation depends on the nature of suffering, discuss the various sufferings on the which amount to be paid differs. What are the remedies available to a workman injured in course of an employment? How is social security is made available to the workman under WCA, 1923?  

What are the objectives behind Employees' State Insurance Act 1948 and how does it differ from Workmen's Compensation Act 1923?


Dependents
Dependents means any of the following relatives of a deceased workman. Section 2 (1) (d) of WCA 1923 classifies dependents into three classes. In the case of New India Insurance Co Ltd vs Man Singh and others, 1984, MP HC held that persons in these classes do not have mutually exclusive claim to compensation. They can simultaneously claim compensation.
  1. Widowed mother, widow, minor legitimate or adopted son, unmarried legitimate or adopted daughter. In this case it is irrelevant whether they are fully or partially dependent on the earnings of the workman.
  2. Legitimate son or daughter if -
    1. they are fully dependent on the earnings of the workman.
    2. if they are infirm.
    3. if they are above 18.
  3. The persons in this class must be dependent wholely or partially on the earnings of the workman to claim compensation.
    1. widower
    2. a parent other than widowed mother
    3. an minor illegitimate son, an illegitimate or legitimate or adopted daughter if minor and married or if minor and widowed
    4. widowed daughter in law
    5. a minor brother, an unmarried sister, or widowed sister if minor.
    6. a minor child of predeceased son.
    7. a minor child of a predeceased daughter if no parent of the child is alive.
    8. a paternal grandparent if no parent of the worker is alive.
In the case of Ramji vs Lalit Kumar Bardiya, 1995, MP HC held that the parents have to the right to claim compensation because the workman was living jointly with them. In joint families there is a sharing of income and responsibilities. Even if workman did not contribute to the family fund that was only because he was not being paid by the employer. The family would have received the benefit of his wages otherwise. 

WagesSection 2(1) m defines wages as any benefit or privilege received by a worker from an employer that can be estimated in money except
  1. traveling allowance or value of any concession given on traveling.
  2. employer's contribution to PF or pension fund
  3. any expenses reimbursed to the workman incurred due to work.
The following benefits are included in calculating wages:
  1. Bonus - was held to be wages in the case of Maharastra Sugar Mills Ltd. vs Ashru Jaiwant AIR 1966 Bom.
  2. Maternity benefits payable to a woman after pregnancy.
  3. Dearness Allowance
  4. Benefits in the form of food, clothing, and accommodation
  5. Accommodation 
  6. Overtime pay
In the case of M/s J C Mills vs Deshraj, AIR 1952, MP HC held that paid leave is not a wage unless it is stated expressly in the contract of employment that paid leave can be encashed if not taken.
Workman
Section 2(1) n defines workman as
  • A railway servant as defined in Railways Act 1989 except those who are permanently employed in an administrative office.
  • a master, seaman, or any crewman of a ship.
  • captain or a crew member of an aircraft.
  • driver, mechanic, cleaner, helper or employed to any task related to motor vehicles.
  • a person recruited for work abroad by a company.
  • a person working for any task as described in schedule 2.
        Exception: A member of the armed forces is not a workman.

Examples:

  • A porter even though not included in schedule II. Narayanan vs Southern Railway - Kerala 1980
  • Working for 24 days in a month on daily wages. Hastimal vs Arjunan - Madras 1993

Workmen's Compensation and Social Security
Success of an industry depends on the productivity of the workers. Thus, minimizing the labor cost is a prime objective of factory owners. In their zest to reduce the labor cost, safety of the workers gets neglected thereby increasing the chances of death or injury to the workers. An increase in the use of complex machinery, the risk for injury to worker had increased. Further, many times, because of the injury a worker may not be able to work, or in case a worker dies, his dependents have no way of making ends meet. This in turn gives rise to poverty, hopelessness, and above all insecurity among other workmen which is detrimental to the industry itself. This is unacceptable in any civilized country. Thus, to ensure that workers and their dependents get enough financial security, Workmen's Compensation Act was enacted in 1923.  It obligates the employer to compensate a worker for his loss due to personal injury while on the job. Appropriate compensation to worker and his dependents prevents unrest among other workers. This promotes a general well being among the working class.  In the absence of such compensation, the dependents may be forced into begging or illegal activities. Thus, WCA is a great mechanism to enhance social security.

This act has gone long way to protect workmen for accidental loss of life or limb and to provide social security to poverty stricken workmen. Although its main objective is to compensate the workers for injury it has also prompted the employers to implement processes that reduce risk to the workers.

Main Features of the act:
  • Modeled on the British pattern and payment is obligatory on all employers whose employees are entitled to benefit under this act.
  • The workmen or his dependents can claim compensation if the injury has been caused by an accident arising out of and in course of employment and if such an accident cannot be attributed to drug or drinks or willful neglect of safety rules.
  • Various class of workmen have been specified. Earlier clerical workers and workers making more than 1600 rs per month were excluded but now the wage limit has been removed.
  • The amount of compensation depends, in case of death, the average monthly wages, and in case of injury, the average monthly wages and the type of injury.
  • The term wages includes -overtime page, benefits like food, housing, and clothing.
Principles Governing the act:
  • The purpose is not to give a solatium but to compensate the worker or his dependents for the actual loss suffered due to an accident.
  • There must be a casual connection between the injury and the accident, and the accident and the work done in the course of employment.
  • The claimant must prove the connection between the injury and the course of work during employment.
  • It is not necessary that the worker is actually working or has just finished work.
  • If the evidence shows a greater probability which satisfies a reasonable man that the work contributed to the injury, it is enough to prove the claim.
Nature of liability

This is a different kind of liability. It is not same as a liability in torts. It arises due to the relationship between the worker and employer. An employer is only liable to pay the difference between the earning capacities of the worker before and after the accident irrespective of the loss or expenses incurred in treatment of the worker. It is also not dependent upon the neglect or wrong doing of the employer.

When is an employer liable to pay compensation?

Section 3 says that an employer is liable to pay compensation if a personal injury is caused to the workman due to an accident arising out of and in the course of employment. Thus, the following conditions must be satisfied to claim compensation:
  1. Personal injury must have been caused to a workman.
  2. The personal injury must have been due to an accident.
  3. The accident must have arisen out of and in the course of employment.
  4. The injury must have resulted in death or the worker must have received total or partial disability at least for 3 days due to the injury.
The following are the excuses or conditions in which an employer is not liable to pay any compensation:
  1. If the injury did not cause total or partial disablement for more than 3 days.
  2. If the injury did not result in death or permanent total disablement and
    1. The worker was under the influence of drinks or drugs.
    2. The worker willfully disobeyed the orders expressly given or a rule expressly framed for the safety of the workman.
    3. The worker willfully did not wear or removed protective gear as required to work while having known that such devices exist and were available.
Employer's liability in case of occupational diseases
Section 3 also discusses many diseases that can be caused due to employment in certain industries. These diseases are divided in 3 parts and are listed in Schedule 3. There are different rules for the compensation arising due to diseases of different parts.

In the case of Indian News Chronicle vs Mrs Lazarus - Punjab AIR 1961 - it was held that Injury need not only be physical. Pneumonia caused due to change in temperature is also injury because of job.
In the case of Sunil Industries vs Ram Chander Pradhan - SC 2001 - It was held that it is not necessary for a workman to be working in a factory as defined in Factories Act 1948 to claim compensation.

Arising out of and in the course of Employment


arising out of  == suggests the cause of the accident
in the course of == refers to the time, place, and circumstances of the accident

The claimant must prove that the accident has occurred due to the circumstances arising out of employment. If the risk taken by the workman was only because of the employment, it is a valid casual connection. If the risk taken was on the worker's own account and not due to employment, then the employer is not liable. Worker was doing something for the furtherance of the employer's business and not for his own benefit, it is a valid connection. Worker should not be doing something which is way out of scope of his employment - doctrine of added peril.

It is not necessary that the accident has taken place within the work place, or even within working hours but that the employment has some casual relationship with the cause of the accident. A worker might get hurt while going to quench his thirst or bodily needs, and that would be a valid ground for compensation. Thus, the activity of the worker may not necessarily be exactly the same but must be reasonably linked to the work that he is supposed to do.

Trustees Port of Bombay vs Yamunabai - AIR 1952 Bom - A worker was injured by a bomb placed by somebody in the workplace. HC held that it was arising out of employment. HC stipulated that if a particular accident would not have happened to a workmen had he not been in the employment at that time and place, it would be an accident arising out of the employment.

State of Raj vs Ram Prasad - 2001 SC - Worker died due natural lightning. SC held that since the workman was exposed to lightning only because of the job, employer is liable to pay compensation.

R B Moondra and Co vs Mst Bhanwari - AIR 1970 Raj - Worker entered a petrol tank to check leak. He lighted a match and died of burns. HC held that it was in due course of employment and that he did not take any additional risk because he did not believe there was any risk since the tank was partially filled with water.

Notional Extension of Employer's premises
Ordinarily, going to and coming home from work place is not considered within the course of employment. However, there may be reasonable cases where an extension of employer's premise and time may be applied if while going to or coming from work the worker has to use part of the employer's facilities.
This was discussed by the House of Lords in the case of  St Hellen's Colliery Ltd. vs Hewlston in 1924. In this case, the worker was not obligated to use employer's train to work. He could use any other means to commute. So it was held that an accident arising while on the special train was not in the course of employment.

In the case of Varadarajulu vs Masaya Boyan AIR 1953, Mad. HC held that the worker had no other means to go to the work place other than to use the employer's lorry. So, accident happening while in the lorry is in due course of employment.

Willful disobedience of orders or safety devices etc
In order to disown any claim for compensation, it is not enough to show that the workman neglected the safely measures or disobeyed the orders. The employer must show that such neglect was willful and the orders that he disobeyed were express. Mere disobedience is not enough because it could be because or forgetfulness or due to the result of impulse of the moment.

In the case, of Arya Muni vs Union of India 1965, a workman lost is right eye due to an accident. The employer claimed that there were instructions to use goggles but the worker did not use them. However, it was held that since the worker did not know English, it cannot be said that he understood the message. Also, while the worker was aware of goggles that did not mean that he understood that they were mandatory. The supervisor also did not tell him so. Thus, the employer was liable to pay compensation.

Negligence of the workman
In the case of Padam Debi vs Raghunath AIR 1950 Orrisa HC held that once it is established that an accident happened without any design and in course of employment, the question of negligence, great or small, is irrelevant.

In the case of Roshan Deen vs Preeti Lal 2002 SC held that liability to pay compensation cannot be reduced or avoided by any agreement with the worker to that affect.

Alternative Remedies
In case of an injury, a workman has the following alternative remedies
  1. he can claim compensation under WCA 1923.
  2. he can claim damages in torts.
  3. he can claim under the Employer's liability act.
However, a workman is not allowed to put his employer into double jeopardy of proceedings or compensation as per section 3(5). Thus, he cannot make any claim for compensation under this act if he has instituted any civil proceeding for the same injury. Similarly, a workman is not allowed to institute any civil proceeding for damages against the employer or any other person for the same injury if,
  1. he has made a claim for compensation before a commissioner or
  2. the amount of compensation has been settled between him and the employer in accordance with the provisions of this act.
A workman cannot get compensation twice through any means for the same injury.
Section 3(5) uses the word "instituted", which is more specific than that the just filing a claim. "Instituted" means setting on foot an inquiry. Thus, if a workman has filed a claim and then withdrawn it before any inquiry was started, it will not be considered as instituted.

Amount of compensation
The amount of compensation for an injury depends on the extent of the loss of earning capacity, which usually depends on the type of injury and resulting disablement. Section 4 defines detailed rules for determining the amount of compensation.

a) If the injury results in death, the amount of compensation is equal to the amount of 50% of the monthly wages of the deceased workman multiplied by a relevant factor or 80,000/- which ever is more.
b) If the injury results in total permanent disability, the amount of compensation is equal to the amount of 60% of the monthly wages of the workman multiplied by a relevant factor or 90,000/- which ever is more.
In these cases, if the monthly wage is more than 4000 Rs then the monthly wage considered in the calculation will be 4000/-. The relevant factor must be seen in schedule IV and it depends on the number of years in service.
c) If the injury results in partial permanent disability, the amount of compensation is equal to the amount determined under permanent total disability multiplied by the percentage of loss of earning capacity as given in schedule I, if the injury is mentioned in schedule I, or is equal to the percentage of amount determined under permanent total disability as the percentage of loss of earning capacity as determined by a qualified medical practitioner.
d) If the injury results in temporary, partial or total, disablement, the workman must be paid half monthly payments of 25% of his monthly wages for the time he is disabled.

Any payment received by the workman for the treatment of his injury from his employer will not be considered against the amount of compensation.


Employees' State Insurance Act 1948

While Worker's compensation act was instrumental in providing a secure working environment to workers to quite an extent, it still lacked the aspect of insurance.  Worker's compensation Act is geared towards providing an assistance in case of an accident causing an injury, that too only when the accident happens in due course of employment.  However, there are several other factors such as disease and age, which may cause a worker to become unable to do any job. In such cases, WCA 1923 does not provide any help.  Further, no welfare activity is done under WCA.

Dr Adarkar studied the social conditions of labor in India and made a detailed report on the problems and solutions. Based on his reports and suggestions made by several prominent experts of ILO, ESI Act was enacted. The main object of ESIA 1948 is to provide a comprehensive insurance to the workers. ESIA is the first legislation that looks after the general welfare of the labor in India. It provides health, disability, and unemployment insurance to workers. The term welfare is quite wide and includes any activity done for the physical, economical, and intellectual betterment of the workers and their dependents.

In the first instance this act applies to factories all over India. A state govt. can all extend provisions of this act to any industry or any class of industries, or establishment in any part of the state.

Section 3
Under this section, the Central Govt. has formed a corporation by the name of Employees' State Insurance Corporation, which is a legal entity.

Section 4 defines the constitution of the ESI Corporation. It details the provisions regarding president, board of directors, managers, etc.

Section 38
This sections specifies that all employees working in factories are covered. In the case of Hyderabad Asbestos vs. ESI Court AIR 1978, SC held that the term employee is wide enough to included anybody who works for the factory directly or indirectly.

Section 39
It obligates the factory occupier to contribute to the ESI fund.  This contribution includes Employer's share as well as Employee's share.

Section 46 
This section details the benefits that Employees' state insurance provides. This includes sickness, maternity, disability, medical, dependent, and funeral benefits.