Category: Labour Law I

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These are the provisions we are looking at today –

• Lay off Section 2(kkk), Chapters VA and VB
• Public utility service Section 2(n), Chapter V
• Strike Section 2(q), Chapter V
• Lockout Section 2(l), Chapter V
• Retrenchment Section 2(oo), Chapters VA and VB
• Closure Section 2(cc), Chapter VB
• Transfer of undertakings Section 25FF
• Unfair labour practices Section 2(ra), Chapter VC
• Lay off Section 2(kkk)
• Lockout Section 2(l)
• If an employer shuts down his place of business as a means of retaliation or as an instrument of coercion or as a mode of exerting pressure on the employees, or, generally speaking, when his act is what may be called an act of belligerency there would be a lockout. If, on the other hand, he shuts down his work because he cannot for instance get the raw materials or the fuel or the power necessary to carry on his manufacturing or because he is unable to sell the goods he has made or because his credit is exhausted or because he is losing money, that would not be a lockout
• Retrenchment Section 2(oo)
• Strike Section 2(q)
• Unfair labour practices Section 2(ra)
• Chapter VC and Fifth Schedule
• Chapter V – Section 23, 24 and 22
• Public utility service Section 2(n)
• , Chapter V
• , Chapter V
• , Chapters VA and VB
• Closure Section 2(cc), Chapter VB
• Transfer of undertakings Section 25FF
• Working to rule, go slow, refusal to work overtime, irritation strike (staying at work but doing everything wrong), running-sore strike (disrupting lawful order), sit-in, stay-in or lie-down strike.
• The cessation or stoppage of work whether by employees or employer is detrimental to the production and economy and to the well-being of the society as a whole. Therefore, the industrial legislation, while not denying the right of workmen to strike, has tried to regulate it along with the right of the employer to lock-out and has also provided machinery for peaceful investigation, settlement, arbitration and adjudication of the disputes between them.
• Mere absence from work does not amount to a strike. There should be evidence to show that the absence was the result of some concert between the workmen, that they would not continue to work.
• When the law or contract of employment or service rules provide for a machinery to resolve the dispute, resorting to strike in such cases is prima facie unjustified.
• When provisions of law, contract or service rules are breached, the strike would in all likelihood be rendered illegal.
• The main question to be answered for determining the status of a strike is whether the dispute was of such a nature that its solution could not brook delay and await resolution by the mechanism provided.
• A strike or lock-out as a weapon should be used sparingly for redressal of urgent and pressing grievances when no other means are available, or when those means have failed to resolve it.
• Special restrictions on public utility undertakings –
  • Carrying out important functions
  • Employed by the government ensuring basic protection
  • Enjoy better working conditions than most others
  • Expectation from the management and the labour to act as trustees of the resources that are invested using public funds, and utilize them effectively and not be wasteful
• What are public utility services? Section 2 (n)
• Back-to strikes and lock-outs (Chapter V of the Act)
• Sections 23 – 28. but before that we need to look at the definition of a lock-out.
• Lock-out means the temporary closing of a place of employment or the suspension of work, or the refusal by an employer to continue to employ any number or persons employed by him. Section 2 (l).
• So essentially it is the employer’s version of a strike.
• Section 23: a general prohibition applicable to all industrial establishments, and not just public utilities
• An industrial establishment is defined under Section 2 (ka)
• Section 24: Illegal strikes and lock-outs
• Section 25: Prohibition of financial aid
• Section 26:
• 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.

• This is the first time that actual imprisonment has made an appearance!
• Section 27: Penalty for instigation, etc. – Any person who instigates or incites others to take part in, or otherwise acts in furtherance of, a strike or lock- out which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.
• Section 28: Penalty for giving financial aid to illegal strikes and lock- outs.- Any person who knowingly expends or applies any money in direct furtherance or support of any illegal strike or lock- out shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.
• We know (from Section 22 and 23) that just like strikes, there is a general prohibition on lock-outs (in public utilities and in general). It is treated like the employer’s version of a strike. Let’s also look at what lay-offs are.
• Lay-off means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster-rolls of his industrial establishment and who has not been retrenched. Section 2 (kkk)
• Why is retrenchment left out? What should be the consequence of lay-off?
• Let’s look at the Explanation to the definition and Section 25-C.
• So the consequence is compensation for the days for which a worker is laid-off are still owed to the worker. What is that likely to result in?
• Discouragement for laying-off of course!
• Retrenchment is left out because retrenchment is provided for separately under the IDA, attracting a similar but different set of provisions and consequences.
• Continue to look at 25-E, 25-M, 25-Q and 25-B.
• 25-E: among other things, striking / slowing down of production throws any chance of compensation for lay-offs out of the window.
• 25-M: special restrictions on lay-offs in certain factories, mines and plantations.
• 25-K: a certain size of the establishment is also a pre-requisite. Why is that? Agree?
• 25-Q: imprisonment as a consequence for contravention.
• 25-B: “continuous service” – meaning (relevant to 25-C).
• So what are the differences between lock-outs and lay-offs?
• Lock-out means the temporary closing of a place of employment or the suspension of work, or the refusal by an employer to continue to employ any number or persons employed by him.
• Lay-off means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster-rolls of his industrial establishment and who has not been retrenched.

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• Among other things, the IDA aims at the settlement of all industrial disputes arising between the employer and labour by peaceful means and through the machinery of conciliation, arbitration and if necessary, through the adjudication under the Act.
• The term “industrial dispute” connotes a real and substantial difference having some element of persistency, and likely to endanger the industrial peace of the community, if not adjusted
• Definition of ‘industrial dispute’ – means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any persons.
• As per the definition of ‘industrial dispute’, three things are required –
  • There should be a dispute or difference.
  • The dispute / difference should be between employers and / or workmen.
  • The dispute / difference must be connected with
    • the employment or non-employment i.e.. retrenchment
    • terms of employment; or
    • the conditions of labour
  • Note that the definition makes a reference to any person – needless to say, this significantly broadens the scope of what kinds of disputes will fall within the purview of ‘industrial dispute’.
  • Who can raise the dispute?
    • The term “industrial dispute” conveys the meaning that the dispute must be such that would affect large groups of workmen and employers.
    • The disputes can be raised by workmen themselves or their union or federation on their behalf.
    • This is based on the fact that workmen have right of collective bargaining. Thus, there should be community of interest in the dispute.
    • A dispute in relation to an individual can also develop into an industrial dispute if it is taken up by the union or substantial number of workmen
    • Section 36
  • The Supreme Court has interpreted the expression any person in the case of Workmen of Dimakuchi Tea Estate Management of Dimakuchi Tea Estate (AIR 1958 SC 353).
  • The facts of the case are that one Dr. K. P. Banerjee, Assistant Medical Officer, had been dismissed unheard, with a month’s salary in lieu of notice and was not given any reasons for his dismissal. He had accepted such payment and left the estate. This person was not a workman, however, the workmen of Dimakuchi Tea Estate, espoused the cause and a dispute was raised and referred by the Government for adjudication under s. 10 of the Act.
  • The question came before the court whether a dispute raised by the workmen’ relating to a person who was not a workman could be an ‘industrial dispute’ as defined by S. 2(k) of the IDA.
  • Both the Tribunal and the Appellate Industrial Tribunal took the view that as Dr. Banerjee was not an workman within the meaning of the Act, and the dispute was not an industrial dispute as defined by S. 2(k).
  • Can there be an ‘industrial dispute’ between the employer and an employee who is nor a workman?
  • The court held that having regard to the scheme and objects of the Act and its other provisions, the expression any person must be read subject to such limitations and qualifications as arise from the context. The two crucial limitations are –

(a) the dispute must be a real dispute between capable of settlement;

(b) the person regarding whom the dispute is raised, must be one in whose employment etc., the parties to the dispute have a direct or substantial interest.

• In the absence of such interest, the dispute cannot be said to be a real dispute between the parties.
• The conditions referred to in the first and second parts of the definition clause are clearly fulfilled in the present case, because

(a) there is a dispute or difference over the termination of service of Dr. K. P. Banerjee; and

(b) the dispute or difference is between the employer, namely, the management of the Dimakuchi tea estate on one side, and its workmen on the other

The real difficulty arises when we come to the third part of the definition clause. The expression ” of any person ” occurring in the third part of the definition clause is an expression of very wide import and therefore with include a dispute that relates to Dr. Banerjee even though he is not a workman. The definition of “industrial dispute” does not require that the person be a workman.

• Where the workmen raise a dispute as against their employer, the person regarding whose employment etc. the dispute is raised, need not be strictly speaking a “workman” within the meaning of IDA – BUT must be one in whose employment etc. the workmen as a class have a direct or substantial interest.
• In the present case, the person was not a workman as he belonged to the medical / technical staff, which was altogether a different category from that of the workmen. The workmen of the establishment had neither a direct or substantial interest in his employment / non-employment. Even if he is the member of the same trade union, this dispute does not amount to an industrial dispute under the IDA because of absence of direct / substantial interest.

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• The issue arose whether the workmen employed in a canteen, which was run in the premises of Coates of India Ltd., could be regarded as the workmen of the respondent-company. It was urged that it was the statutory obligation on the part of the company to provide a canteen in the premises and, therefore, the employees of the canteen must be presumed to be the workmen employed by the respondent-company and no one else. The SC agreed with the view expressed by the High Court which had opined that the canteen employees were neither directly appointed by the company nor the company had any supervisory control over them and hence, they could not be treated as workmen employed by the respondent-company.

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• The appellant Shri S.K. Maini was working as the Shop Manager of the respondent-Company M/s Carona Sahu Company Limited. On an allegation of misconduct against the appellant, a domestic enquiry was caused by the respondent-Company and by order dated March, 1981 the service of the appellant was terminated.
• The questions to be answered here are, whether the termination of service of Shri S.K. Maini is justified? If not, to what relief and amount of compensation is he entitled?
• It was contended that S.K. Maini was not a workman within the definition of Section 2(s) because being a Shop Manager, he was discharging mainly managerial and administrative functions and had been supervising the works of other employees subordinate to him for running the said shop.
• Maini, under the terms and conditions of service, was to be held responsible for any loss suffered by the Company due to deterioration of the quality of the stock and loss of any of the other articles lying in the shop caused by reason of any act of negligence and / or omission to take any precaution by the employees. Mr. Maini was also required to notify the Company not later than three hours after the discovery in the said shop of any fire, theft, burglary, loot or arson. He was required to investigate into the matter immediately and get the cause and amount of loss established by local authorities. Mr. Maini as in- charge of the shop was required to keep and maintain proper accounts as approved by the Company indicating the exact amount to be paid from the receipts from the respective staff.
• Also, in the event of a salesman being absent, the shop in-charge was empowered to appoint temporary helper. Such functions appear to be administrative and managerial. By virtue of his being in-charge of the shop, he was the principal officer-in-charge of the management of the shop. Even if he was required to do some works of clerical nature, by and large he was discharging administrative and managerial work. Shri Maini was authorized to take decisions in the matter of temporary appointments and all reasonable steps incidental to the proper running of the shop. The High Court was justified in holding that the appellant was not a workman.

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• There is a factory owner manufacturing ropes. A number of workmen were engaged to make ropes from within the factory, but those workmen were hired by contractors who had executed agreements with the owner to get such work done. Therefore, the owner contended that the workmen were not his workmen but the contractors’ workmen.
• The work done by these workmen was an integral part of the industry concerned. The raw material was supplied by the Management. The factory premises belonged to the Management. The equipment used also belonged to the Management and that the finished product was taken by the Management for its own trade. The workmen were broadly under the control of the Management and defective articles were directed to be rectified by the Management. Even cases where this impressive array of factors were not present, would have persuaded an industrial court to the conclusion that the economic reality was employer-employee relationship and, therefore, the industrial law was compulsively applicable.
• Where workers labour to produce goods or services and these goods or services are for the business of another, that other is in fact the employer. He has economic control over the workers’ subsistence, skill, and continued employment. He is in a position to lay-off the worker. If the livelihood of the workmen substantially depends on labour rendered to produce goods and services for the benefit and satisfaction of an enterprise, the absence of direct relationship or the presence of contractors or the make-believe trappings of detachment from the Management cannot snap bond. The liability cannot be shaken off.

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• The villagers of the villages surrounding Nilgiris, for their livelihood depend on growing of vegetables and tea. To ensure that the small vegetable growers are not exploited by the vegetable merchants, a society known as ‘Nilgiris Cooperative Marketing Society Limited’ was formed in 1935 with only 116 members, and now has grown to 22000 members. There are two classes of members – voting and non voting members. Any disputes between sellers and purchasers of goods are settled through arbitration.
• All members are entitled to participate in auction mela to sell their goods. During this time, third parties are hired to pack, load, unload vegetables in the auction organized by the society. These workers are made available for use by the members and payments are made by the members usually and the society maintains no wage registers, attendance records etc.
• These workers have asked to be regularized as employees of the society and be given the same benefits.
• The tribunal held that they are not workers and the High Court agreed.
• The SC held that this case presents a peculiar situation. The society is a service society which has been formed with the object of protecting the growers from being exploited at the hands of the traders. It has been found that the employment of the workmen for doing a particular piece of work is at the instance of the producer or the merchants on an ad hoc basis or job to job basis and, thus, the same may not lead to the conclusion that relationship of employer and employee has come into being. Furthermore, when an employee has a right to work or not when an offer is made to him in this behalf by the producer or by the merchants will also assume significance.
• The workmen are engaged both by the growers as also the traders. On some occasions, payment is made to the workmen through third parties in a case the grower is not in a position to pay the same immediately. The totality of the circumstances clearly go to show that although certain activities are carried out in the market yards, the Society in general does not have the necessity of employing any workman either for the purpose of loading, unloading or grading. Ultimately, the remuneration to the concerned workmen are borne either by the farmers or by the merchants. The workers are therefore not workmen in our view.

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• Contractors took leaves and tobacco from Dewan and employed workmen for manufacturing bidis. After bidis were manufactured, the contractors took them back from the workmen and delivered them to Dewan.
• The workmen took the leaves home and cut them there, however the process of actual rolling by filling the leaves with tobacco took place in what was called contractors’ factories.
• The contractors kept no attendance register for the workmen, there was no condition for their coming and going at fixed hours, nor were they bound to come for work every day. Sometimes they informed the contractors if they wanted to be absent and some times they did not. The contractors said that they could take no action if the workmen absented themselves even without leave.
• The payment was made to the workmen at piece rates after the bidis were delivered to Dewan. The system was that Dewan paid a certain sum for the manufactured bidis, after deducting therefrom the cost of tobacco and the leaves already fixed, to the contractors who in their turn paid to the workmen their wages. Whatever remained after paying the workmen would be contractors’ commission for the work done.
• If the bidis were not rolled, raw materials had to be returned to Dewan and the contractors were forbidden from selling the raw materials to anyone else.
• The manufactured bidis could only be delivered to Dewan who supplied the raw materials. Price of raw materials and finished products fixed by the appellants always remained the same and never fluctuated according to market rate.
• It was held that the contractors were merely branch managers appointed by the management and the relationship of employers and employees subsisted between Dewan and the bidi rollers.

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• The appellants were lessees holding a license for the manufacture of salt on the demised lands. The salt was manufactured by a class of professional labourers known as agarias from rain water that got mixed up with saline matter in the soil. The work was seasonal in nature and commenced in October after the rains and continued till June. Thereafter the agarias left for their own villages for cultivation work. The demised lands were divided into plots called Pattas and allotted. Generally the same patta was allotted to the same agaria every year. After the manufacture of salt the agarias were paid.
• No hours of work were prescribed, no muster rolls maintained, nor were working hours controlled by the appellants. There were no rules as regards leave or holidays and the agarias were free to go out of the factory after making arrangements for the manufacture of salt.
• The question for decision was whether the agarias were workmen under the IDA? The Industrial Tribunal and the High Court held that they were workmen.
• The SC ruled that the essential condition of a person being a workman within the terms of the definition in S. 2(s) of the IDA is that he should be employed to do the work in the industry.
• In other words, there should be an employment of his by the employer or as master and servant.
• Unless a person is so employed, there can be no question of his being a workman under the IDA.
• The prima facie test for the determination of relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant in the matter of
  • Directing what work the servant is to do; and
  • The manner in which s/he shall do the work
• The extent of control will vary from activity to activity
• The correct approach would be to consider whether having regard to the nature of work, there was due control and supervision by the employer
• The broad distinction between a workman and an independent contractor is that the former agrees himself to work, the latter agrees to get other persons to work.
• A person doing the work is a workman and does not cease to be so merely because he gets other persons to work along with him and those persons are controlled and paid by him.

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• “Workman” means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be expressed or implied.
• For the purposes of any proceeding under the Act in relation to an industrial dispute, a “workman” includes: (a) any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of that dispute, or (b) any person whose dismissal, discharge or  retrenchment has led to that dispute.
• Specifically, a “workman” does not include (among others) any such person who is employed mainly in a managerial or administrative capacity, or who is exercising functions mainly of a managerial nature. [Section 2(s)]
• To be a workman, a person must have been employed in an activity which is an “industry” as per Section 2(j)
• The relationship of employer and workman is typically supported by a contract of employment, which may be expressed or implied.
  • Here one must distinguish between contract for service and contract of service
  • In the former, the employer can require what is to be done
  • In the latter, he can not only order what is to be done, but also how it shall be done
  • In the case of contract for employment, the person will not be held as a “workman” but only an “independent contractor”
  • There should be due control and supervision by the employer for a master and servant relationship

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