Labour Law: Take Home Assignment: CAT II

Question: Explain various Constitutional Provisions Relating to Labour Law in India.

Refer relevant cases.

Constitutional Provisions of Labor Laws1:

The goals set by the Indian Constitution have a bearing on the industrial legislation and
adjudication. From this point of view, the setting of the individual legislation in the
Constitutional framework may be considered under the following three topics:

i. Distribution of Powers

In the Government of India Act 1935, entry 29 in list 3 (concurrent list) of the Seventh
Schedule, empowered the Central as well as the provincial or the presidency legislatures, to
legislate on trade unions, industrial and labour disputes. In the Constitution of India, entry 55
in list 1 (Union list) of the Seventh Schedule, empowers the Parliament to legislate on the
subject of regulation of Labour and Safety in Mines and Oil-fields; entry 61 deals with
industrial disputes concerning Union employees; entry 97 gives the residual power to the
parliament to legislate on any other matter not enumerated in list 2 or list 3. List 2 (state list)
does not contain any entry pertaining to labour orindustrial disputes. No doubt, the state
legislatures also have ample powers under entry 24 of list 2 in respect of industries not covered
by entries 7 and 52 of the Union list, but this does not mean that the Central law relating to
industrial disputes, generally falling under entry 22 of the concurrent list, will have no
application to the industries covered by entry 24 of list 2.2

In list 3, entry 22 relates to trade union, industrial and labour disputes; entry 23 deals
withsocial security and social insurance, employment and unemploymentand entry 24 deals
with welfare of labour, including conditions of work, provident funds, employers liability,
workmens compensation, invalidity and old-age pensions and maternity benefits. Thus, the
parliament as well as the state legislatures, have been empowered to legislate on these subjects.

1
Malhotras, O.P., The Law of Industrial Disputes, LexisNexis Butterworths Wadhwa, Sixth Edn., Volume 1.,
Fourth Reprint, 2014, Nagpur.
2
ZillaParishad, Bhandra v. Khushal1986 Lab IC 117, 120 (Bom), per Mohta J.

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Article 245(1) empowers the Parliament to make laws for the whole, or any part of the territory
of India, and the legislature of a state to make laws for the whole, or any part of the state. The
parliament has an exclusive power to make laws with respect to any of the matters enumerated in
list I of the Seventh Schedule of the Constitution, while the parliament and the legislature of any
state have the power to make laws with respect to any of the matters enumerated in list 3 of the
Seventh Schedule of the Constitution, while the state legislature has exclusive power to make
laws for such state or any part thereof, with any of the matters enumerated in list 2, in the second
schedule.

Article 245 (1) further provides that if any provision of law, made by the legislature of the state,
is repugnant to any provision of any law, made by the parliament, which it is competent to enact,
or to any provision of any existing law, with respect to any of the matters enumerated in the
concurrent list, the law made by the parliament, whether passed before or after the law, made by
the legislature of such state or the existing law, as the case may be, shall prevail and the law
made by the legislature of the state shall, to the extent of the repugnancy, be void. The rule is,
however, subject to the provisions of cl (2) of article 254, which lays down that where a law
made by the legislature of a state, with respect to any one of the matters enumerated in list 3
(concurrent list), contains any provision repugnant to the provisions of earlier law made by the
parliament, or an existing law, with respect to that matter, then, the law so made, by the
legislature of such state shall, if it has been reserved for the consideration of the president and
has received hi assent, prevail in that state. The Industrial Disputes act 1947received the assent
of the governor general on 11th March 1947 and came into force on 1st April 1947. This law is a
law with respect to entry 22 of the concurrent list.That entry has no relation to a particular
industry and governs disputes in relation to all, without any exception.

Section 38 of this Act empowers the appropriate government to make rules for the purpose of
giving effect to the provisions of the Act in general and for making provisions for the matters
specifically enumerated in sub-s 2 thereof, in particular. This enables the state governments to
operate the machinery created by the Central Act, because the appropriate government also
includes the state government. Thus, there is a certain amount of play in the joints of the statute,
with a view to make it workable, for coordinating the endeavors of the central and

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stategovernments, aimed at resolving the complex and complicated problems in the field of
industrial disputes.

This Act now extends to whole of India. State legislations on the subject of industrial disputes,
dealing with the same matter, viz industrial disputes, and covering the same field as that covered
by the Central Act, have been held to have been repealed and the Central Act alone governs the
field of the settlement of industrial disputes.3 Accordingly, the Travancore-Cochin Industrial
Disputes Act, 1950, was held to have been repealed by the central act, because it was clear that
the parliament intended to make the legislation upon the subject of Industrial dispute exhaustive,
so as to exclude any state legislation upon the subject.4 Likewise, the definition of the term
industry, in section 2(j) of the Industrial Disputes Act, being covered by entries 27 and 29 of
list 3 of Schedule 7 of the Government of India Act was held to be within the legislative
competence of the central legislature and was not bad or ultra vires. 5 The Industrial Disputes
(Madras Amendment) Act 1949, amending the Central Act was held to be within the competence
of the state legislature by virtue of entries 27 and 29 in list of schedule 7 of the Government of
India Act 1935. But section 5 of this provincial amendment act, being inconsistent with section
10(1) of the Central Act 1947, was held to be invalid as if it had not been passed at all.6

ii. Directive Principles of State Policy

The social and economic upliftment of the labour is important for securing industrial peace,
which is essential to increase the national productivity.7Part 4 of the Constitution of India
enshrines the goals and values to be secured by the Republic of India, as a welfare state. Article
36, which is the first article in this part, provides a link between part 3 and part 4, while article
37 lays down that though these principles are not justiciable, they are nevertheless fundamental
in the governance of the country. In other words, though these principles are not enforceable in a
court of law, surely, they have not been introduced in the Constitution as a mere pious

3
AyyaswamiNadar v Joseph (1952) 2 LLJ 9 (Trav& Co.)
4
NagalingaNadar Sons v ATHL Workers Union AIR 1951 Trav& Co 203, 207 per Koshi J.
5
Niemala Textile Finishing Mills Ltd v Second Industrial Tribunal, Punjab (1957) 1 LLJ 460, 471 (SC)
6
CP Sarathy v State of Madras AIR 1951 Mad 191, 198-99 (DB)
7
Hindustan Antibiotics Ltd. vTheir Workmen (1967) 1 LLJ 114, 120 (SC)

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declaration. These principles give certain directions to the legislature and the executive, to show
that in what manner they are to exercise the legislative and executive power vested in them.
Hence, with a view to ensure that both the legislature and the executive do not merely pay lip-
service to these principles, by that they should be made the basis of all legislative and executive
action.in the matter of governance of the country,8 the state has been enjoined these
principles while making laws. It is, therefore expected, that whatever party comes to power in
future, either in the state or at the center, it will be committed to the implementation of the
philosophy laid down in these principles.9 Article 38 provides a preamble to the general selling
for the specific lines of policy in the articles that follow it. These principles are an amalgam of
several elements, which could be broadly classified under four principal groups, viz,

a) the general principles of Social Policy;

b) the principles of administrative policy;
c) the socio-economic rights, which constitute a very important section of the principles;
and
d) the statement on the international policy of the Indian Republic.

Articles 39, 41 and 43 have a special relevance in the field of the industrial legislation and
adjudication. In fact, these articles are the substratum of industrial jurisprudence. Article 39
accentuates the basic philosophy of the idealistic socialism, which is enshrined in the preamble
of the Constitution and provides a motivating force to the directive principles by laying down
that the state shall direct its policy towards equal pay for equal work, for both men and women.
Article 41, inter alia, recognizes, every citizens right to work. Article 42 enjoins the state
government to make provisions for securing just and humane conditions of work, while article
43 makes it obligatory for the state, inter alia, to secure by a suitable legislation or economic
organization or in any other manner, to all its workers, agricultural, industrial or otherwise, work,
a living wage, a condition of work ensuring a decent standard of life and a full enjoyment of
leisure and social and cultural opportunities.10 Thus, article 39-43 would appear to be the Magna

8
Constituent Assembly Debates, Vol 7, p 476.
9
Report on the National Commission on Labour, Chapter 6, Our Approach, p 47.
10
Hindustan Antibiotics Ltd. vTheir Workmen (1967) 1 LLJ 114, 120 (SC)

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Carta of the working class. Article 45, deals with the provision for free and compulsory
education for children, has a direct relevance to the industrial legislation, since the education of a
worker himself and his dependents, is an important ingredient of his standard of living. The
subject matter of article 46 is the protection of the weaker section of the society, in particular, of
the scheduled caste and the schedule tribes, from social injustices and all forms of exploitation
and enjoins upon the state to promote the education and economic interest of these people.
Though couched in broad terms, the article has a direct relevance to industrial legislation, as the
working class generally emanates from this cross-section of the society. Likewise, article 47,
which deals with the duty of the state to raise the levels of nutrition and of the standard of living
and to improve public health, also has relevance to industrial legislation and adjudication,
particularly in relation to wage fixation and dearness allowance, etc.

In Excel Wear v Union of India11,the Supreme Court held that section 250 which prescribed
unreasonable restrictions on the right of the owner, to close down his undertaking to which the
provisions of chapter 5B apply, does not obviously fit in with the directive principles enshrined
in arts 31(1), 41 or 43.

Though the directive principles are not justiciable, they are the sheet-anchor of the legislation by
the center and the states, in the field of welfare relating to the working classes. As pointed out by
the National Commission on Labour: in accepting the directive principles, the country is
committed morally and ethically, to see that the governance of the country is carried on with a
view to implementing these directive principles in the course of time.12

In Delhi Development Horticulture Employees Union v. Delhi Administration,

Delhi,13speaking for the court, Sawant J observed:

This country has so far, not found it feasible to incorporate the rights to livelihood as a
fundamental right in the Constitution. This is because the country has so far, not attained
the capacity to guarantee it, and no because it considers it any the less fundamental to

11
Excel Wear v Union of India (1978) 2 LLJ 527, 543 (SC)
12
Report on the National Commission on Labour, Chapter 6, Our Approach, p 48.
13
Delhi Development Horticulture Employees Union v. Delhi Administration, Delhi1992 Lab IC 847, 853 (SC)

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life. Advisedly, therefore, it has been placed in the chapter on directive principles, article
41 of which enjoins upon the state to make effective provisions for securing the same
within the limits of its economic capacity and development. Thus, even while giving the
direction to the state to ensure the right to work, the Constitution makers thought it
prudent not to do so without qualifying it.

iii. Fundamental Rights

The idea of equal protection before the law embodied in Article 14 of our
Constitution14serves as the philosophical foundation for equal treatment of similarly situated
workers by the employer. This principle finds resonance in the idea of equal pay for equal
work enumerated in Article 39(d) which is further enforced through the Equal Remuneration
Act, 1976. This statutory intervention also holds importance from the viewpoint of gender-
justice since it was a clear command against discrimination between men and women who
performed a similar quantum of work. With respect to the liberties of individual workers and
trade unions, the most significant rights are those enumerated in Article 19(1) which includes
the freedom of speech and expression, the freedom to assemble peacefully without arms,
the right to form associations or unions and the freedom to pursue a livelihood. While
freedom of speech and expression is usually understood as a guarantee against the
curtailment of citizens rights by the State, it is also possible to describe the methods adopted
by trade unions such as demonstrations, picketing and strikes as forms of expression which
can be subjected to reasonable restrictions by the State.

Right to demonstrate: The question of the right to demonstrate can be understood both in
light of Article 19(1)(a) as well as Article 19(1)(c) in the Indian context. At one level the
right to demonstrate can be understood as a form of expression since it draws attention to the
grievances of workers and can facilitate collective bargaining with the employers. Peaceful
and orderly demonstrations enable workers to effectively communicate their demands not
only to the employers but also to governmental agencies as well as the general public. The

14
Article 14 reads as follows: Equality before Law. - The State shall not deny any persons equality before law or
the equal protection of the laws within the territory of India.

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right to demonstrate can also be viewed as part of the right to form associations or unions
since such activities aid unionization by way of drawing more members into the fold of the
agitating union. Quite clearly, the governmentis within its powers to impose restraints on
demonstrations, picketing and strikes with respect to the grounds enumerated in Article
19(2), 19(3) and 19(4). It is quite understandable that for a demonstration to be effective it
ordinarily has to be conducted in close proximity to the workplace. In Kannan v.
Superintendent of Police, Cannanore15, it was observed that a lawful demonstration or
satyagraha would lose all significance if workmen are asked to choose a place far away
from the business premises of the employer. In Kameshwar Prasad v. State of Bihar and
Others16, it was observed that to ban every type of demonstration would be a breach of the
freedom of expression. However, reasonable restrictions can be imposed to prevent such
demonstrations as would cause breach of public tranquility. It must also be borne in mind
that such activities can directly interfere with the employers business, especially when the
workplace is a location for commercial exchanges.Such a situation clearly involves a
consideration of the employers right to conduct and continue trade or business, which is
constitutionally protected under Article 19(1)(g).

As far as the right to strike is concerned, it should not be understood as an absolute right
which is an extension of Article 19(1)(c) since it is subject to statutory controls. Section 22 of
the Industrial Disputes Act, 1947 lays down a prohibition against strikes in public utility
services, except in circumstances where statutory notice has been given.5 Section 23 of the
same legislation prescribes a general prohibition of strikes in all industries, during the
pendency of conciliation proceedings, arbitration or litigation between the workers and the
management, concerning the issue at hand.

Rights against exploitation: Article 23 of our Constitution lays down a prohibition against
forced labour, which is enforceable both against the State and private parties. The
expression forced labour includes a prohibition against slavery and bonded labouras well as
trafficking in women, children or disabled people. The use of the words begarand other

15
Kannan v. Superintendent of Police, Cannanore (1975) 1 LLJ 83 (Kerala HC)
16
Kameshwar Prasad v. State of Bihar and Others (1962) 1 LLJ 294 (SC)

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similar forms of forced labour contemplate a prohibition against work of an involuntary

nature without payment17. In interpreting the phrase forced labour, the idea of force must
be construed to include not only physical or legal force but also forcearising from the
compulsion of economic circumstances which compels the worker to accept exploitative
working conditions.

The understanding of Article 23 was expanded by the decision in Peoples Union for
Democratic Rights and others v. Union of India18 which was also followed in Sanjit Roy v.
State of Rajasthan19. In that case, it was held that when a person provides labour or service
to another for remuneration which is less than the prescribed minimum wages, the labour so
provided clearly falls within the ambit of the words forced labour under Article 23. The
rationale adopted was that when someone works for less than the minimum wages, the
presumption is that he or she is working under some compulsion. Hence it was held that such
a person would be entitled to approach the higher judiciary under writ jurisdiction (Article
226 or Article 32) for the enforcement of fundamental rights which include the payment of
minimum wages20.

Article 24 of the Constitution of India21 is also enforceable against private citizens and lays
down a prohibition against the employment of children below the age of fourteen years in
any factory or mine or any other hazardous employment. This is also in consonance with
Articles 39(e) and (f) in Part IV of the Constitution which emphasize the need to protect the
health and strength of workers, and also to protect children against exploitation. The Child
Labour (Prohibition and Regulation) Act, 1986 specifically prohibits the employment of
children in certain industries deemed to be hazardous and provides the scope for extending
such prohibition to other sectors.

17
Cited from: S.C. Srivastava, Industrial Relations and Labour Laws, 3rd edn. (New Delhi: Vikas Publishing House
Pvt. Ltd., 1994) at p. 16
18
Peoples Union for Democratic Rights and others v. Union of IndiaAIR 1982 SC 1473
19
Sanjit Roy v. State of Rajasthan[1983] 2 SCR 271
20
Cited from G.B Pai, Labour Law in India-Volume I (New Delhi: Butterworths India, 2001) at p. 158-159
21
Article 24 reads as follows:Prohibition of employment of children in factories, etc.- No child below the age of
fourteen years shall be employed to work in any factory or mine or engaged in any other hazardous employment.

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Conclusion:

We must also turn our attention to the legislations which have tried to advance the interests of a vast
majority of our workforce, 91% of which is in the informal sector. The protections contemplated in
statutes such as the Factories Act, Employees State Insurance Act and the Employees Provident Fund
Act among others are only applicable in establishments that employ more than ten people on a regular
basis. The rights of workers in the formal sector are also safeguarded to an extent by the bargaining
powers of trade unions. Moreover, the reach of the insurance and pension-fund sectors has been
confined to a small portion of the population which can afford to pay the requisite premiums or
contributions.

Since construction workers in the cities as well as smaller towns usually consist of a large number of
migrants from the rural areas, they are often at the receiving end of discrimination and exploitation by
employers. Even if the aggrieved persons complain to the authorities - in most cases there is no basis
for showing a legal relationship between employers and workers, thereby making it very difficult to
guarantee basic entitlements such as the payment of fair wages and the provision of proper facilities
at the working sites. Keeping these realities in mind, the legislation had empowered the Appropriate
Government to take specific measures for safeguarding the rights of the unorganized workers who are
involved in the building and construction sectors.

The challenge of course has been the implementation of the statutory scheme since there are
numerous practical hurdles in properly identifying the beneficiaries and ensuring that the earmarked
funds reach the right persons. In recent times, the Unorganized Workers Social Security Act, 2008
has also been modelled on a similar philosophy of governmental intervention. The vast portion of our
economy consists of small enterprises and operations, which depend on the services of self-
employed workers, home-based workers and those employed on a casual basis. In most of these
small establishments, there is no reliable documentation or record-keeping. Individuals are engaged
for work on an oral basis and there are no guarantees with regard to the remuneration and conditions
of service. Instances of exploitation by employers and contractors are also widespread in the absence
of any effective monitoring by government agencies.

The machinery for implementing these schemes will consist of a National Social Security Board and
State-level Social Security Boards. These Boards will perform the tasks of supervising the collection
of contributions, maintenance of Social Security Funds and ensuring the proper dispersal of benefits.

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The nodal role will be played by the District Level authorities who will be responsible for the
registration of workers for the scheme and unique identification cards will be issued to the intended
beneficiaries. In keeping with the philosophy of decentralization, the actual registration of workers
will be performed by Worker Facilitation Centres (WFC) which could be run by Panchayati Raj
institutions, trade unions or recognized NGOs. The funds for the various schemes will be raised
through contributions from the government, the employer and the workers. Since some categories of
workers such as those who are Below Poverty Line (BPL) may not be able to make the necessary
contributions, it has been suggested that the Central and State governments can raise funds through a
special tax or cess.

While this statutory scheme is laudable, one can foresee some problems with its implementation. The
foundational problem will be that of comprehensively identifying the intended beneficiaries. Since the
intention is to reach out to those who are poor, illiterate and unorganized, special efforts will have to
be made to generate mass awareness about the various schemes. There may also be difficulties in
registering the workers on account of the suppression of facts by employers and contractors. Owing to
the absence of any written records in small enterprises, government officials as well as NGO workers
could find it hard to verify the fact of a persons employment in many cases. Employers may also be
reluctant to accurately report the number of workers on account of social realities such as the
prevalence of child labour and the pervasive exploitation of female workers. In the same vein, there
may be obstructions to the timely collection of contributions from employers in the first place. There
have also been problems with the dispersal of funds in many other government schemes such as the
NREGS, where the wages meant for the workers have been siphoned off by intermediaries and
corrupt officials. It has been suggested that this problem can be avoided by conferring benefits in a
cashless form and relying on the unique identification cards of the intended beneficiaries.

Despite the potential problems with implementation, these progressive measures have created some
attainable targets for our public institutions. If we can successfully expand our social security system
to make it more inclusive and reliable, it will indeed be a major achievement for our democracy22.

22
Dr. B.R. Ambedkar Foundation lecture on Constitutional values and the promotion of labour welfare by
Honble Mr. K.G. Balakrishnan, Chief Justice of India (New Delhi November 30, 2009)

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