Desired Amendments To Factories Act and Labour Laws

Presented by Dr. Gubbi Counselor & Advocate Dr.Gubbi & Associates & Chair, INBA, Bangalore Chapter

Desired Amendments To Factories Act and  Labour Laws

The Factories Act, all the statutes under the domain of Labour Laws need a drastic overhauling. Spirit of the age beckons even scrapping of certain existing sections, provisions and the Rules on grounds of redundancy. One cannot view a vicissitude of 2015 wearing a circa 1940 spectacles, which, at present, can be analyzed only by experts who have crossed sixty summers. At the same time the next generation having not lived through the past cannot view the vicissitude of  present period by wearing a 2015 spectacles to interpret a circa 1940 enactment.

In this article effort is made only on certain important provisions due to paucity of space and time.

The powers of the authorities have to be curtailed which at present are totally misused by them. The power to prosecute where ever is not needed has to be taken out from the hands of the authorities.

Politicians should be totally curtailed from involving in the differences or disputes between employee and employer.

All the enactments should have provisions for the employer to file periodical returns by self assessment requiring no visits by the concerned department to inspect records. If necessary the returns and records maintained to be audited by a firm of Advocates/Labour Law Consultants with their attestation which the department has to accept.

  1. A) The Industrial Disputes Act, 1947: Definition of ‘workman’ includes ‘apprentice’. An apprentice by any stretch of imagination cannot be a workman and hence to be taken out of this section.

Employer should be empowered to terminate workman from the services on defined grounds if the latter has worked less than five years without complying with the provisions of the Act.

 S17B related to payment of full wages to workman pending proceedings in higher courts should be deleted. This section is a hurdle even to excise the fundamental right of the employer to approach higher courts because of the draconian mandatory insistence to pay full wages. If the order/decree of the higher courts favors the employer there is no way to collect back the wages paid to the workman. With the result such employers who have constraints to approach higher courts will only endure with the unfavorable decisions of lower courts.

S22(1) should extend to private sectors also. S22(2) dealing with notice, etc to declare lockout should be deleted altogether. Or in the alternative S22(2)(d) has to be deleted as it causes tremendous hurdles to employers. In S25A(1)(a)- the present headcount envisaged for non-applicability of this section should be raised from it’s present 50 workmen to 500 workmen AND the clause ‘average per working day’ should be substituted by ‘average per working year’.

Chapter VB to be totally deleted if at all the ministry, framers of Law has any real vision to make India an industrial hub for both local and foreign investors.

S33, S36 are not  employer friendly sections being not confirming with the zeitgeist ( spirit of the age). S33(2)(b) and S33(3) which calls for ‘approval’ and ‘permission’ respectively from the concerned authority to discharge or punish a workman have to be deleted totally. These subsections are not contemporaneous with the new trends in work culture and act as a shield to protect workman who is unfit to be continued in service. The concept of ‘protected workman’ is no longer valid considering the history of industrial unrest caused by the latter being under the umbrella of this section. Accordingly, Sections 33A, 33C and chapter VII have to be relooked into requiring major amendments.

  1. B) Contract Labour ( Regulation & Abolition) Act, 1970:

At present the Act defines only ‘workman’-S2(i). Instead, the Act has to define an ‘employee’ covering staff and officers, knowledge based resources who are not part of the principal employer and serve under deputation. ‘Workman’ is only a sub-sect of the main sect ‘Employee’.

Since almost 70% of the employees in our country are contract labour, envisaging permission by way of license, abolition of contract labour is not practical. Employers right to hire, the right to terminate has to be articulated without recourse to license formalities. The provisions related to these have to be amended to generate more employment without hurdles and harassment of the regulatory department.

  1. C) The ESIC Act, 1948: Definition of ‘Employment Injury’ under S 2(9) has to be broadened with an extended notion of time keeping in mind that an employee can fall prey to a disease even after few decades for having worked in a job that have the propensity to cause injury not immediately but after a long lapse of time. The Second and Third Schedules have to be amended to include injuries, disablements and occupational diseases which have currently manifested and therefore new and not found in the schedules which are caused by new type of work demands even capturing latest diseases that passes through the regions. For example, work/ job specifications in both old and new economy industries like, continuous night shift work, call centre, IT jobs which affect vocal chords, spinal column, which affect the circadian clock of the human body.

Definition of Employee-S 2(9) to bring specifically under its umbrella IT, ITES, BPO, Call Centres and allied business verticals.

  1. D) The EPF & Miscellaneous Provisions Act, 1952::

Definition of ‘employer’ under S(e) should be broader and articulate it’s applicability to educational, charitable institutions, hospitals, all types of new economy modern establishments. Accordingly definition of ‘employee’ under S2(f) should be amended.

Opting for EPF should be made the choice of the employee once his wages are above the maximum wages specified and as periodically amended to come under the purview of coverage.

In Schedule I of the Act other types of establishments and as notified under S4 should be articulated.

The powers of the EPF Commissioner to withdraw the ‘certificate’ issued to the recovery officer should be enlarged and this authority should be even empowered to make an act of withdrawal even after the recovery steps are initiated. In Sections 8D, 8B, 8E power of the authorized officer to amend the certificate issued for recovery of dues need amendment to include other grounds also. If director or other officer of an establishment is wrongly inducted as an employer for recovery the authorized officer should be empowered to consider such person’s application and upon satisfaction the authorized officer should have the power not to make the person a party to the recovery proceedings.

E)) Payment of Gratuity Act, 1972:

Employees  who have completed 4 years and 6 months of continuous service with an employer their tenure for eligibility to gratuity should be considered as completion of 5 years which is not articulated in the S4 leading to grievances and disputes.

  1. F) The Trade Union Act, 1926: The Act should be made applicable only to establishments/industries which has 1000 and above workmen. Minimum workmen envisaged under the Act to form a union should be raised from 7 to 100. Further affiliations to unions at State or National level should be only when there are 5000 workmen in an industry and not otherwise.
  2. G) The Payment of Bonus Act, 1965: Employers to come under the purview of the Act the present holiday period of 5 years should be made to 10 years for SSIs and 7.5 years for MSMEs. Further even though an employer has paid bonus in previous year/s, a provision has to be made to protect the interest of the employer to the effect that the employer need not be under obligation to pay bonus for periods when there is no profit and as a sequel there is no available surplus.
  3. H) The Sexual Harassment of Women at Workplace( Prevention, Prohibition & Redressal ) Act, 2013: Definition of ‘aggrieved woman’ under S2(a) should cover on behalf of the woman subjected to harassment her parents, husband, guardians and family. As a sequel definition of family should cover the woman’s lineal ascendants and descendants, the latter restricted to brothers and sisters. Definition of ‘sexual harassment’ at present covers only 4 acts or behaviors and the 5th only says that ‘any other……conduct of sexual nature’. This should me in the tone of an inclusive definition and cover a broad areas of harassment. A provision prohibiting floors, wlaas and other spaces at workplace having glass should be made. For example, if the first storey has a floor made of glass people standing or passing via the floor are visible to the people at ground floor. This has been witnessed in some of the modern industries.
  4. I) Minimum Wages Act, 1948: Production bonus, incentives linked to performance, etc should be excluded as exemptions from the perview of minimum wages by articulation. When wages paid by an employer exceeds the stipulated minimum wages, the Act should become inapplicable to such industry/establishment. As a sequel restructuring of wages by employers should not be under the purview of this Act and also should not be considered as ‘alteration of conditions of service’.
  5. J) The Maternity Benefits Act, 1961: Since some of the establishments/ industries pay paternity benefit in the form of leave, etc, such best practices should be encouraged by including the practice as a cover in the Act. The medical bonus should be drastically increased from the present Rs1000 to Rs5000 for establishments which are large scale.
  6. K) The Industrial Employment (Standing Orders) Act, 1946: For certification of S.Os Only workmen employed under the principal employer should be considered for headcount for certification purpose. Temporary workmen, badlis, casuals and others should not be counted for this. The applicability of the Act should be made for establishments where there are more than 1000 workmen. The Karnataka Model SOs should take certain clauses found in the Schedule I of the Model SOs of the Industrial Employment (S.O) Central Rules, 1946 where ever it is practically possible. Acts and Omissions that are to be treated as misconduct needs further elaboration as the present acts and conducts defined are not elaborative to the current period. Subsistence allowance should not exceed 50% of the wage at any period of suspension of workman.
  7. L) The Karnataka Payment of Subsistence Allowance Act, 1988: This Act deserves to be repealed with immediate effect as from the date of it’s promulgation the Act has only increased the disputes and has not acted as a measure to resolve the differences or disputes. Otherwise sections related to payment of subsistence allowance have to be amended restricting the payment to a maximum of 50% of the last drawn wages of the workman. It should also make provisions to safeguard the employer in cases of the employee not attending the domestic enquiry by totally suspending the subsistence allowance payment and also in instances where due to the default of the workman if the domestic enquiry is unnecessarily prolonged due to his non-cooperation. If there are criminal proceedings existing or initiated against a workman payment of subsistence allowance should be suspended in the interest of justice.
  8. M) The Factories Act, 1948:

Many of the sections have become redundant by flux of time and by change in circumstances. All such sections have to be either deleted or suitably modified to apply to the present and future context.

There should not be any restrictions on number of hours of work to be performed per day, shift changes, overtime and provisions related to permission on these matters have to be removed.

There should not be any permission required to shift or relocate machinery. Prosecution clauses which are currently a threat to the employer has to be removed. Instead penalties can be increased.

The prevailing practice of ‘Inspector Raj’ should be totally curbed by way of drastic amendments in the Act and Rules. Empowerment to punish an employer should vest only with the Director of  Factories and Boilers and should not be delegated to lower grades. At present there is total rampant misuse of powers vested and employers are harassed.

All periodical returns should be self attested and filed with the department and the inspectors should be stopped from visiting factories for inspection of records.


Counselor & Advocate

Dr.Gubbi & Associates

Mob: 8105671578