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However, in most cases there arises conflict of interest between both i.e.,
the workman and the industry. This fundamentally happens due to
contradictory roles played by both; individuals and institutions i.e.,
‘industry’. Although a number of issues may be involved to cause a
conflict, but factors like work culture, natural environment, corporate
governance including management , HR issues, labour union politics,
ethics in workplace, nonconductive company policies, exploitation,
financial status of the industry, etc., are predominant causes that often
roots a conflict between both.
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industry. Sometimes, even greed of the industry owners become the prime
cause. In such a case the real prey is the ‘workman’.
Albeit, the legal system has definitive Laws and Acts passed like- the
Labour Act, Workman’s Compensation Act, Workman’s Compensation
Rules, the Industrial Employment Act, the Minimum Wages Act, Payment
of Bonus Act, etc, in most of the cases the employer evade these
regulations for their vested interest by way of existing loopholes and
ignorance of the ‘workman’. These are unethical practices by the corporate
governance that runs the industry.
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In terms of corporate fraud that has been taking place from time to time
where infringement of morality and ethical conduct leads to a closure of a
company, say for example Satyam Computers, the victim in which case is
both the industry and the workman, a proper intervention by the legal
system can revive or compensate its workforce/workmen for the wrong
doing of its possessor. However, such issues are quite complex and are
beyond the discussion of this paper.
Since law is not unjust, unjust practices by the industry towards its
workman must be considered unlawful. All case studies on Industrial
Disputes point its fingers towards the fact that majority of cases on
industrial disputes ends up where industry is found to be at fault.
Thus, whenever a workman is victimized for his ‘blood and sweat’ the
Industry must compensate for all his losses. Be it the management, the
employer or the industry,
Practitioners of such unlawful and unethical activities must be penalized.
His blood has to be born by industry.
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The Industrial Disputes Act, 1947
DEFINITIONS :
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In this Act, unless there is anything repugnant in the subject or context, -
(a) "appropriate Government" means - (i) in relation to any industrial
disputes concerning any industry carried on by or under the authority
of the Central Government or by a railway company or concerning
any such controlled industry as may be specified in this behalf by the
Central Government or in relation to an industrial dispute concerning
Dock Labour Board established under section 5-A of the Dock
Workers (Regulation of Employment) Act, 1948 (9 of 1948), or the
Industrial Finance Corporation of India Limited formed and registered
under the Companies Act, 1956 (1 of 1956), or the Employees' State
Insurance Corporation established under section 3 of the Employees'
State Insurance Act, 1948 (34 of 1948), or the Board of Trustees
constituted under section 3-A of the Coal Mines Provident Fund and
Miscellaneous Provisions Act, 1948 (46 of 1948), or the Central
Board of Trustees and the State Boards of Trustees constituted under
section 5-A and section 5-B, respectively, of the Employees'
Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952),
or the Life Insurance Corporation Act, 1956 (31 of 1956), or the Oil
and Natural Gas Corporation Limited registered under the Companies
Act, 1956 (1 of 1956), or the Deposit Insurance and Credit Insurance
and Credit Guarantee Corporation established under section 3 of the
Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of
1961), or the Central Warehousing Corporation established under
section 3 of the Warehousing Corporations Act, 196 (58 of 1962), or
the Unit Trust of India established under section 3 of the Unit Trust of
India Act, 1963 (52 of 1963), or the Food Corporation of India
established under section 3, or a Board of Management established for
two or more contiguous States under section 16 of the Food
Corporations Act, 1964 (37 of 1964), or the Airports Authority of
India constituted under section 3 of the Airports Authority of India
Act, 1994 (55 of 1994), or a Regional Rural Bank established under
section 3 of the Regional Rural Banks Act, 1976 (21 of 1976), or the
Export Credit and Guarantee Corporation Limited or the Industrial
Reconstruction Corporation of India Limited, or the National Housing
Bank established under section 3 of the National Housing Bank Act,
1987 (53 of 1987) or the Banking Service Commission established
under section 3 of the Banking Service Commission Act, 1975, or an
air transport service, or a banking or an insurance company, a mine,
an oil-field, a Cantonment Board or a major port, the Central
Government; and
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(ii) in relation to any other industrial dispute, the State Government;
(aaa) "average pay" means the average of the wages payable to a workman
- (i) in the case of monthly paid workman, in the three complete
calendar months,
(ii) in the case of weekly paid workman, in the four complete weeks,
(iii) in the case of daily paid workman, in the twelve full working days,
preceding the date on which the average pay becomes payable if the
workman had worked for three complete calendar months or four
complete weeks or twelve full working days, as the case may be, and
where such calculation cannot be made, the average pay shall be
calculated as the average of the wages payable to a workman during
the period he actually worked;
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(cc) "closure" means the permanent closing down of a place of
employment or part thereof;
(ee) "controlled industry" means any industry the control of which by the
Union has been declared by any Central Act to be expedient in the
public interest;
(h) (i) a person shall be deemed to be "independent" for the purpose of his
appointment as the chairman or other member of a Board, Court or
Tribunal, if he is unconnected with the industrial dispute referred to
such Board, Court or Tribunal or with any industry directly affected
by such dispute :
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(j) "industry" means any systematic activity carried on by co-operation
between an employer and his workmen (whether such workmen are
employed by such employer directly or by or through any agency,
including a contractor) for the production, supply or distribution of
goods or services with a view to satisfy human wants or wishes (not
being wants or wishes which are merely spiritual or religious in
nature), whether or not, - (i) any capital has been invested for the
purpose of carrying on such activity; or
(ii) such activity is carried on with a motive to make any gain or profit, and
includes - (a) any activity of the Dock Labour Board established
under section 5A of the Dock Workers (Regulation of Employment)
Act, 1948 (9 of 1949);
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(8) any activity, being a profession practised by an individual or body of
individuals, if the number of persons employed by the individuals or
body of individuals in relation to such profession is less than ten; or
Provided further that if he is not given any such employment even after so
presenting himself, he shall not be deemed to have been laid off for
the second half of the shift for the day and shall be entitled to full
basic wages and dearness allowance for that part of the day;
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(m) "prescribed" means prescribed by rules made under this Act;
(n) "public utility service" means - (i) any railway service or any transport
service for the carriage of passengers or goods by air;
(ia) any service in, or in connection with the working of, any major port or
dock;
(iv) any industry which supplies power, light or water to the public;
(vi) any industry specified in the First Schedule which the appropriate
Government may, if satisfied that public emergency or public interest
so requires, by notification in the Official Gazette, declare to be a
public utility service for the purposes of this Act, for such period as
may be specified in the notification :
Provided that the period so specified shall not, in the first instance, exceed
six months but may, by a like notification, be extended from time to
time, by any period not exceeding six months, at any one time, if in
the opinion of the appropriate Government, public emergency or
public interest requires such extension;
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(bb) termination of the service of the workman as a result of the non-
removal of the contract of employment between the employer and the
workman concerned on its expiry or of such contract being terminated
under a stipulation in that behalf contained therein; or
(qq) "trade union" means a trade union registered under the Trade Unions
Act, 1926 (16 of 1926);
(ra) "unfair labour practice" means any of the practices specified in the
Fifth Schedule;
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(ii) the value of any house accommodation, or of supply of light, water,
medical attendance or other amenity or of any service or of any
confessional supply of food grains or other articles;
(b) any contribution paid or payable by the employer to any pension fund
or provident fund or for the benefit of the workman under any law for
the time being in force;
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THE PAYMENT OF BONUS ACT, 1965
INTRODUCTION:
This is an Act intended to provide for payment of bonus to persons
employed in certain establishments and for matters connected therewith. It
came into force from September 25, 1965. It extends to whole of India. It
shall provide to: (a) every factory and (b) every other establishment in
which 20 or more persons are employed on any day during an accounting
year.
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been lost. Nor can the employer refuse for such bonus. [ONGC vs. Sham
Kumar Sahegal [1995] 1 LLJ].
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An employee in the following cases is not entitled to bonus:
An apprentice is not entitled to bonus.
An employee employed through contractors on building
operation is not entitled to bonus.
An employee who is dismissed from service on the ground of
misconduct.
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accounting year bonus which shall be an amount in proportion to the
salary or wage earned by the employee during the accounting year
subject to a maximum 20% of such salary or wage.
INTRODUCTION:
The Employee’s Provident Funds and Miscellaneous Provisions Act, 1952
(hereinafter referred to as ‘the Act’) extends to the whole of India except
the State of Jammu & Kashmir. It seeks to provide for the institution of
provident funds, family pension funds and deposit linked insurance funds
for employees in factories and other establishments. The Act is at present
applicable to 173 industries and classes of establishments of Schedule I.
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Subject to the exceptions contained in Section 16, this Act applies to the
following entities, namely:
(a) every establishment which is a factory engaged in any industry
specified in Schedule I & in which 20 or more persons are employed ; and
(b) any other establishment which employs 20 or more persons or class of
such establishments which the Central Government may, by notification in
Official Gazette specify in the behalf.
However, the Central Government may, after giving not less than 2 months
notice of its intention to do so, apply the provisions of this Act to any
establishment with less than 20 persons in the employment.
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frame a scheme to be called the Employees' Pension Scheme for the
purpose of providing for :
(a) superannuation pension retiring pension or permanent total disablement
pension to the employees of any establishment or class of establishments to
which this Act applies; and
(b) widow or widower's pension children pension of orphan pension
payable to the beneficiaries of such employees.
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entitled to draw the benefits not less than the benefits they were entitled to
under the ceased scheme from the Pension Fund.
4. The Pension Fund shall vest in and be administered by the Central Board
in such manner as may be specified in the Pension Scheme.
5. Subject to the provisions of this Act the Pension Scheme may provide
for all or any of the matters specified in Schedule III.
6. The Pension Scheme may provide that all or any of its provisions shall
take effect either prospectively or retrospectively on such date as may be
specified in that behalf in that Scheme.
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Scheme for the purpose of providing life insurance benefits to the
employees of any establishment or class of establishments to which this
Act applies.
3. The employer shall pay into the Insurance Fund such further sums of
money not exceeding one-fourth of the contribution which he is required to
make under sub-section (2) as the Central Government may from time to
time determine to meet all the expenses in connection with administration
of the Insurance Scheme other than the expenses towards the cost of any
benefits provided by or under that Scheme.
4. The Insurance Fund shall vest in the Central Board and be administered
by it in such manner as may be specified in the Insurance Scheme.
5. The Insurance Scheme may provide for all or any of the matters
specified in Schedule IV.
6. The Insurance Scheme may provide that any of its provisions shall take
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effect either prospectively or retrospectively on such date as may be
specified in this behalf in that Scheme.
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(b) from the employer in relation to an exempted establishment in respect
of any damages recoverable under section 14B or any charges payable by
him to the appropriate Government under any provision of this Act or
under any of the conditions specified under section 17 or in respect of the
contribution payable by him towards the Pension Scheme or the Insurance
Scheme under the said section 17 may if the amount is in arrears be
recovered in the manner specified in sections 8B to 8G.
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THE PAYMENT OF GRATUITY ACT, 1972
INTRODUCTION:
The Payment of Gratuity Act, 1972 extends to the whole of India :
Provided that in so far as it relates to plantations or ports, it shall not
extend to the State of Jammu and Kashmir.
It shall apply to –
(a) every factory, mine, oilfield, plantation, port and railway company;
(b) every shop or establishment within the meaning of any law for the time
being in force in relation to shops and establishments in a State, in which
ten or more persons are employed, or were employed, on any day of the
preceding twelve months;
(c) such other establishments or class of establishments, in which ten or
more employees are employed, or were employed, on any day of the
preceding twelve months, as the Central Government may, by notification,
specify in this behalf.
A shop or establishment to which this Act has become applicable shall
continue to be governed by this Act notwithstanding that the number of
persons employed therein at any time after it has become so applicable
falls below ten.
CONTINUOUS SERVICE:
For the purposes of this Act, -
1. an employee shall be said to be in continuous service for a period if he
has, for that period, been in uninterrupted service, including service which
may be interrupted on account of sickness, accident, leave, absence from
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duty without leave (not being absence in respect of which an order treating
the absence as break in service has been passed in accordance with the
standing order, rules or regulations governing the employees of the
establishment), lay off, strike or a lock-out or cessation of work not due to
any fault of the employee, whether such uninterrupted or interrupted
service was rendered before or after the commencement of this Act.
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standing orders made under the Industrial Employment (Standing Order's)
Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of
1947), or under any other law applicable to the establishment;
(ii) he has been on leave with full wages, earned in the previous year;
(iii) he has been absent due to temporary disablement caused by accident
arising out of and in the course of his employment; and
(iv) in the case of a female, she has been on maternity leave; so, however,
that the total period of such maternity leave does not exceed twelve weeks.
CONTROLLING AUTHORITY:
The appropriate Government may, by notification, appoint any officer to be
a controlling authority, who shall be responsible for the administration of
this Act and different controlling authorities may be appointed for different
areas.
PAYMENT OF GRATUITY:
1. Gratuity shall be payable to an employee on the termination of his
employment after he has rendered continuous service for not less than five
years, -
(a) on his superannuation, or
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(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease : Provided that
the completion of continuous service of five years shall not be necessary
where the termination of the employment of any employee is due to death
or disablement :
Provided further that in the case of death of the employee, gratuity payable
to him shall be paid to his nominee or, if no nomination has been made, to
his heirs, and where any such nominees or heirs is a minor, the share of
such minor, shall be deposited with the controlling authority who shall
invest the same for the benefit of such minor in such bank or other
financial institution, as may be prescribed, until such minor attains
majority.
Explanation: For the purposes of this section, disablement means such
disablement as incapacitates an employee for the work which he was
capable of performing before the accident or disease resulting in such
disablement.
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the employer shall pay the gratuity at the rate of seven days' wages for each
season.
Explanation: In the case of a monthly rated employee, the fifteen days'
wages shall be calculated by dividing the monthly rate of wages last drawn
by him by twenty-six and multiplying the quotient by fifteen.
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(ii) if the services of such employee have been terminated for any act
which constitutes an offence involving moral turpitude, provided that such
offence is committed by him in the course of his employment.
POWER TO EXEMPT :
1. The appropriate Government may, by notification, and subject to such
conditions as may be specified in the notification, exempt any
establishment, factory, mine, oilfield, plantation, port, railway company or
shop to which this Act applies from the operation of the provisions of this
Act if, in the opinion of the appropriate Government, the employees in
such establishment, factory, mine, oilfield, plantation, port, railway
company or shop are in receipt of gratuity or pensionary benefits not less
favourable than the benefits conferred under this Act.
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RECOVERY OF GRATUITY:
If the amount of gratuity payable under this Act is not paid by the
employer, within the prescribed time, to the person entitled thereto, the
controlling authority shall, on an application made to it in this behalf by the
aggrieved person, issue a certificate for that amount to the Collector, who
shall recover the same, together with compound interest thereon at such
rate as the Central Government may, by notification, specify, from the date
of expiry of the prescribed time, as arrears of land revenue and pay the
same to the person entitled thereto.
Provided that the controlling authority shall, before issuing a certificate
under this section, give the employer a reasonable opportunity of showing
cause against the issue of such certificate.
Provided further that the amount of interest payable under this section
shall, in no case exceed the amount of gratuity payable under this Act.
PENALTIES:
1. Whoever, for the purpose of avoiding any payment to be made by
himself under this Act or of enabling any other person to avoid such
payment, knowingly makes or causes to be made any false statement or
false representation shall be punishable with imprisonment for a term
which may extend to six months, or with fine which may extend to ten
thousand rupees or with both.
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months but which may extend to one year, or with fine which shall not be
less than ten thousand rupees but which may extend to twenty thousand
rupees, or with both.
Provided that where the offence relates to non-payment of any gratuity
payable under this Act, the employer shall be punishable with
imprisonment for a term which shall not be less than six months but which
may extend to two years unless the court trying the offence, for reasons to
be recorded by it in writing, is of opinion that a lesser term of
imprisonment or the imposition of a fine would meet the ends of justice.
PROTECTION OF GRATUITY:
No gratuity payable under this Act and no gratuity payable to an employee
employed in any establishment, factory, mine, oilfield, plantation, port,
railway company or shop exempted under section 5 shall be liable to
attachment in execution of any decree or order of any civil, revenue or
criminal court.
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POWER TO MAKE RULES:
1. The appropriate Government may, by notification make rules for the
purpose of carrying out the provisions of this Act.
2. Every rule made by the Central Government under this Act shall be laid,
as soon as may be after it is made, before each House of Parliament while
it is in session, for a total period of thirty days which may be comprised in
one session or in two or more successive sessions, and if, before the expiry
of the session immediately following the session or the successive sessions
aforesaid, both Houses agree in making any modification in the rule or
both Houses agree that the rule should not be made, the rule shall,
thereafter, have effect only in such modified form or be of no effect as the
case may be; so, however, that any such modification or annulment shall
be without prejudice to the validity of anything previously done under that
rule.
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CASE LAW INDEX
• Guru Jambheshwar University ... vs Dharam Pal on 17 January,
2007
CASE NO.: Appeal (civil) 252 of 2007
• Management of India Hume Pipe Co. Ltd. v/s K. Palaniswami
and Anr. on 14/12/1966
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Case Study-1
1. Leave granted.
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to as 'the Act') alleging that he was employed as an unskilled
workman by the appellant Guru Jambheshwar University, Hisar, on
2.10.1995, but his services were illegally terminated on 15.1.1998.
As the conciliation proceedings could not fructify, the Government
of Haryana referred the dispute under Section 10(1) of the Act for
adjudication by the Industrial Tribunal-cum-Labour Court, Hisar
(hereinafter referred to as 'the Labour Court") regarding the validity
of the termination of services of the respondent Dharam Pal and the
relief which he was entitled to get in case the termination order was
found to be illegal.
4. The respondent in his claim statement pleaded, inter alia, that he was
appointed as unskilled workman on the post of Mali (gardener) in
the University by a verbal order dated 2.10.1995; that he was
removed from service on 2.7.1997 but subsequently he was taken
back on duty on 15.10.1997; that he was illegally removed from the
service of the University on 15.1.1998; that the University was
paying wages of Rs.1638/- per month before his removal from
service; that the University had regular work and persons junior to
him had been retained in service and had been regularized; that the
University was forcing the workman to work on contract basis
despite the fact that there is work of regular nature; that the
University was adopting unfair labour practice and that his
retrenchment was illegal as neither any notice was given nor any
compensation was paid to him at the time of his retrenchment.
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5. The Registrar of the University filed a reply on the grounds, inter
alia, that the respondent was engaged as Mali on daily wages on
2.12.1995 and not on 2.10.1995, as claimed by him; that he was
appointed for doing specific job of Mali in the Farming/Horticulture
Wing of the University; that the Government of Haryana on the basis
of the orders passed in CWP No.4522 of 1994 (Kulbhushan v.State
of Haryana) by the High Court had issued instructions to the
University vide letter No.12/5-96/Ad.I(5) dated 17.1.1996 that no
appointment on daily wage basis should be made and all
appointments should be made on contract basis; that in accordance
with the instructions all existing employees in the University who
were working on daily wage basis were put on contract basis; that
the respondent and some other employees engaged on contract basis
had been appointed without following any procedure; that
meanwhile the University advertised the post of
Mali for making regular appointments in order to comply with the
requirements of Articles 14 and 16 of the Constitution; that the
respondent also applied for the said post of Mali and appeared in
interview but he was not selected yet he was allowed to continue;
that consequent upon the closure of the farming operations in the
University and cessation of other seasonal work, the respondent was
given one month's notice vide University letter no.485-500 dated
15.12.1997; that on completion of one month, the services of the
respondent were retrenched vide order dated 15.1.1998; that a
cheque bearing no.416869 dated 15.1.1998 was also given to the
respondent in compliance of Section 25F(b) of the Act as
retrenchment compensation; that as there was some work in the
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University all the employees who were retrenched earlier were
called but the respondent did not turn up for duty though 14 other
employees reported for duty and were engaged and a letter in this
regard was sent to the Labour and Conciliation Officer, Hisar on
21.5.1998. It was specifically pleaded that the services of the
respondent were retrenched after duly complying with the provisions
of Section 25F of the Act and that in the regular selection held for
the post of Mali the respondent was not selected by the selection
committee.
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so, it was held that one day's average pay of the respondent would be
Rs.63.15 (Rs.1642/26) and thus the compliance of Section 25F(b)
required payment of Rs.63.15x15x 2 = Rs.1,894.50. It was
accordingly held that the retrenchment compensation of Rs.1642/-
paid by the University to the respondent fell short of the amount
which was required to be paid under law and, therefore, there was
non- compliance of Section 25F(b) of the Act which rendered the
retrenchment of the respondent as illegal. It was further held that the
University had not produced any evidence to show that the
respondent had been gainfully employed after termination of his
service, but looking to the fact that he was engaged in a job which
did not require any qualification, it could not be held that he
remained totally out of job during the intervening period and,
therefore, he was entitled to 50% back wages. The Labour Court,
accordingly, gave an Award directing that the respondent be
reinstated with continuity in service and all other consequent service
benefits along with 50% back wages from the date of issuance of
demand notice dated 21.1.1998 till publication of the Award and full
wages thereafter till his reinstatement.
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8. Sections 2(aaa) and 25F of the Industrial Disputes Act, 1947 read as
under:-
2(aaa) "average pay" means the average of the wages payable to a
workman--
(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
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has been paid in lieu of such notice, wages for the period of
the notice:
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mean of four complete weeks. Clause (iii) deals with daily wage workman
and in this case the average pay would be the average or mean of wages in
twelve full working days. The fourth category would be a case where it is
not covered by any of the sub-clauses (i), (ii) or (iii) and in this case the
average pay shall be calculated as the average of the wages payable to a
workman during the period he had actually worked.
9. The language used in Section 2(aaa) is absolutely plain and clear and
there is not the slightest ambiguity in the same. It is well settled
principle that the words of a Statute are first understood in their
natural, ordinary or popular sense and phrases and sentences are
construed according to their grammatical meaning, unless that leads
to some absurdity or there is something in the context or in the
object of the statute to suggest to the contrary. The true way is to
take the words as the legislature have given them, and to take the
meaning which the words given naturally imply, unless where the
construction of those words is, either by the preamble or by the
context of the words in question, controlled or altered. As is often
said the golden rule is that the words of a statute must prima facie be
given their ordinary meaning and natural and ordinary meaning of
the words should not be departed from unless it can be shown that
the legal context in which the words are used requires a different
meaning. (See Principles of Statutory Interpretation by Justice G.P.
Singh Ninth Edition2004 pg.78-79).
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10. In the demand notice served by the respondent upon the University
under Section 2-A of the Act on 20.1.1998, it was stated "that the
University was paying him Rs.1638/- per month before removal."
Again in para 2 of the claim statement which was filed by the
respondent before the Labour Court, wherein he described himself as
petitioner, it was stated "that the University was paying the
petitioner Rs.1.638/- per month before the removal." In the reply, it
is also the specific case of the University that the respondent was
being paid on monthly basis at the rate of Rs.1642/- per month.
Therefore, there is no dispute that the respondent was being paid
wages on monthly basis though there is slight difference in the actual
amount which was being paid to him. The Labour Court has
recorded a finding that a cheque for Rs.1642/- was given by the
University to the respondent as retrenchment compensation. Since
the respondent was being paid wages on monthly basis, his average
pay has to be calculated in accordance with the formula given in
clause (i) of Section 2(aaa) of the Act which would mean the sum
total of wages paid to him in three complete calendar months
immediately preceding his retrenchment and dividing the said
amount by three.
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compensation in order to comply with requirement of Section 25F(b)
of the Act. The "average pay" of the respondent being Rs.1642/- per
month and he being entitled to 30 days' average pay by way of
retrenchment compensation, he was required to be paid Rs.1642/- as
retrenchment compensation. The University gave him a cheque for
Rs.1642/- at the time of his retrenchment and, therefore, there was
full compliance of Section 25F(b) of the Act.
11. The Labour Court has basically relied upon a decision of this Court
rendered in Jeevanlal (1929) Ltd. V. Appellate Authority under the
Payment of Gratuity Act and Ors. (1984) Lab IC 1458 for coming to
the conclusion that the respondent's average pay has to be calculated
on per day basis by dividing the monthly salary drawn by him by 26
and the quotient so arrived at should be multiplied by 30 in order to
determine the retrenchment compensation under Section 25F(b) of
the Act. It, therefore, becomes necessary to consider the aforesaid
decision in detail. The issue involved in the said case related to
payment of gratuity. Section 2(s) and sub-sections (1), (2) and (3) of
Section 4 of Payment of Gratuity Act at the relevant time read as
under :- "2(s) "wages" means all emoluments which are earned by an
employee while on duty or on leave in accordance with the terms
and conditions of his employment and which are paid or are payable
to him in cash and includes dearness allowance but does not include
any bonus, commission, house rent allowance, overtime wages and
any other allowances."
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"4(1) : Gratuity shall be payable to an employee on the termination
of his employment after he has rendered continuous service for not
less than five years:
Provided that the completion of five years shall not be necessary where
thetermination of the employment of any employee is due to death or
disablement:
Provided further that in the case of death of the employee, gratuity payable
to him shall be paid to his nominee or, if no nomination has been made; to
his heirs.
(2) For every completed year of service or part thereof in excess of six
months, the employer shall pay gratuity to an employee at the rate of
fifteen days' wages based on the rate of wages last drawn by the
employee concerned :
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Provided that in the case of a piece rated employee, daily wages shall
be computed on the average of the total wages received by him for a
period of three months immediately preceding the termination of his
employment, and, for this purpose, the wages paid for any overtime
work shall not be taken into account :
While interpreting the aforesaid provisions, the Court held as under in para
10 of the reports :
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advanced by the learned counsel for the appellants based upon the
decision of the learned single Judge of the Andhra Pradesh High
Court in Associated Cement's case (1976) Lab IC 926) which was
later approved by a Division Bench of the Court in Swamy's case
(1978 Lab IC 1285). But the legislature did not stop with the words
"fifteen days' wages" in sub-section (2) of Section 4 of this Act. The
words "fifteen days' wages" are preceded by the words "at the rate
of" and qualified by the words "based on the rate of wages last
drawn" by the employee concerned. The emphasis is not on what an
employee would have earned in the course of fifteen days during the
month when his employment was last terminated, but on the rate of
fifteen days' wages for every completed year of service based on the
rate of wages last drawn by the employee concerned. The word 'rate'
appears twice in sub-section (2) of Section 4 and it necessarily
nvolves the concept of actual working days. In Digvijay Woollen
Mills' case (AIR 1980 SC 1944) the Court rightly observed that
although a month is understood to consist of 30 days, gratuity
payable under the Act treating the monthly wages as wages for 26
working days is not new or unknown."
(emphasis supplied)
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12. It is not correct to say that the decision in Shri Digvijay Woollen
Mills' case (AIR 1980 SC 1944) does not lay down any principle.
Gupta, J. speaking for the Court set out the following passage from
the judgment of the Gujarat High Court in Shri Digvijay Woollen
Mills' case (para 4) : "The employee is to be paid gratuity for every
completed year of service and the only yardstick provided is that the
rate of wages last drawn by an employee concerned shall be utilized
and on that basis at the rate of fifteen days' wages for each year of
service, the gratuity would be computed. In any factory it is well
known that an employee never works and could never be permitted
to work for all the 30 days of the month. He gets 52 Sundays in a
year as paid holidays and, therefore, the basic wages and dearness
allowance are always fixed by taking into consideration this
economic reality.
A worker gets full month's wages not by remaining on duty for all the 30
days within a month but remaining on work and doing duty for only 26
days. The other extra holidays may make some marginal variation into 26
working days, but all wage boards and wage fixing authorities or ribunals
in the country have always followed this pattern of fixation of wages by
this method of 26 working days."
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The learned Judge then went on to say:
12. It may be noted that Section 4(2) of the Payment of Gratuity Act
uses the expression "the employer shall pay gratuity to an employee
at the rate of fifteen days' wages based on the rates of ages last
drawn by the employee." On account of the language used in Section
4(2) it becomes necessary to find out the rate of wages which
necessarily involves the concept of actual working days.
It was on the basis of the aforesaid language of the provisions under the
Payment of Gratuity Act that this Court in the case of Jeevanlal (supra)
observed that "although a month is understood to consist of 30 days,
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gratuity payable under the Payment of Gratuity Act treating the monthly
ages as wages for 26 days is not new or unknown."
13. The principle laid down in the case of Jeevanlal (supra) and Shri
Digvijay Woollen Mills Ltd. v. M.P. Butch AIR 1980 SC 1944 can
have no application for determining the retrenchment compensation
under Section 25F(b) of the Act as the word "average pay" occurring
herein has been defined in Section 2(aaa) of the Act. The concept of
26 working days was evolved having regard to the definition of the
word "wages" as given in Section 2(s) of Payment of Gratuity Act,
which uses the expression "all emoluments which are earned by an
employee while on duty or on leave." Therefore, there is no warrant
or justification for importing the principle of 26 working days for
determining the compensation which is payable in terms of Section
25F(b) of the Act.
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By adding the explanation, the legislature has brought the statute in line
with the principle laid down in the case of Jeevanlal (supra) and has given
statutory recognition to the principle evolved, viz. that in case of monthly
rated employee the fifteen days' wages shall be calculated by dividing the
monthly rate of wages by twenty six and multiplying the quotient by
fifteen. But, no such amendment has been made in the Industrial Disputes
Act. If the legislature wanted that for the purposes of Section 25F(b) also
the average pay had to be determined by dividing the monthly wages by
twenty-six, a similar amendment could have been made. But the legislature
has chosen not to do so. This is an additional reason for holding that the
principle of "twenty-six working days" is not to be applied for determining
the retrenchment compensation under Section 25F(b) of the Act.
15. We are, therefore, of the opinion that the view taken by the Labour
Court is clearly erroneous in law and has to be set aside. The High
Court did not go into the question at all and summarily dismissed the
writ petition by a one line order observing that the compensation
offered to the workman was short of the amount actually due.
16.For the reasons discussed above, the appeal is allowed. The order
dated 21.3.2005 passed by the High Court and the award of the
Labour Court dated 9.11.2004 are set aside. It is held that the
University had paid the retrenchment compensation to the
respondent Dharam Pal in accordance with law and there is no
infirmity in the order passed whereby his services were terminated.
No costs.
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Case Study-2
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2 The situation in which the issue arose before Srinivasan J. in W. P.
No. 568 of 1964 (the judgment in which is reported in Palaniswami
v. India Hume Pipe Co., 1965-2 Lab LJ 541 (Mad), is not in dispute.
The company, which is the appellant before us, closed down on 30th
June 1963. 47 workmen were retrenched, consequent on the closure,
and they admittedly became entitled to retrenchment compensation
under Section 25(F) of the Industrial Disputes Act. Section 25(F)(b),
uses the expression "equivalent to fifteen days' average pay for every
completed year of continuous service", and the question before the
learned Judge was how average pay was to be computed, on the facts
and under Industrial law.
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every fortnight. But, indisputably, the determinate basis of the wages
was per diem; in other words, each of these workmen could claim to
be "a daily-rated worker". The learned Judge pointed out that the
learned counsel (Sri Ratan,) did not dispute that a wage period of
14days has been fixed, at no time. Before us also, the relevant
standing orders were referred to and scrutinised, and we can find no
such decision in that regard. All that has happened in these cases is
that wages have been determined per diem, but that, as a matter of
practice, the workmen were paid once every fortnight. Under those
circumstances, the learned Judge held that the residual clause did not
apply, nor could it be argued that these workmen were persons who
could be said to be either 'weekly paid' or 'monthly paid'. The
learned Judge finally summed up the discussion in the following
form:
"The result would be that the average pay in the instant case is really
equivalent to the daily wage of the worker". We have been at some
pains to scrutinise the available authorities, to see whether any light
is thrown in them upon the definition and categories in Section
2(aaa) of the Industrial Disputes Act. We are unable to find anything
which is directly in point, but we think that it can be made clear, by
virtue of a brief analysis, that, on the present facts, the decision of
the learned Judge (Srinivasan J.) is correct and that, indeed, it is the
only possible conclusion.
5 T.S.T. Co., Ltd. v. Perumal Naidu, AIR 1958 Mad 25, a decision of
the Bench consisting of Rajagopalan and Rajagopala Aiyangar JJ. is
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relevant, as showing that the learned Judges came to the conclusion
that where a remuneration was calculated on the basis of wage
periods extending over a month, such remuneration did not cease to
be 'wages' under the Payment of Wages Act 1936, merely because
the wage period was one month, and not a lesser period. The point
which is helpful here is that the learned Judges thought that the
concept of "wage period" logically implied some period of time, on
the basis of which, or in determine relation to which the
remuneration was specified. Our attention has been drawn to Section
4(1) of the Payment of Wages Act IV of 1936, and we find that the
periods "in respect of which such wages shall be payable" are to be
the "wage periods" specified in that section. Our attention has also
been drawn to the Minimum Wages Act XI of 1948 and to Section
3(3)(b), which refers to minimum wages which may be fixed 'by the
hour, by the day or by any larger wage period".
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7 Sri Ratan argues that we must have regard only to the strict and
literal meaning of the words of the statute; according to hi, "daily
paid workmen" simply implies workmen who are paid per diem, in
actual fact. The workmen in the present case were receiving their
wages once every fortnight, and they do not fall into any of the three
categories of Section 2(aaa). They fall, it is claimed, only into the
residual category. But, as the learned Judge (Srinivasan J.) has
shown, this mode of calculation may involve considerable hardship
to several of these workmen, who have been in employment for long
periods, and whose wages have hence accelerated from low levels to
higher levels. We do not think that we can accept the contention of
the learned counsel, as it is indefensible. As we have earlier stressed,
the question is not whether theactual occasions of payment were at
fortnightly intervals, but whether the determinate basis of the wage
was a 'wage period' of a day, or a longer period. In the present case,
there was simply no wage determination on the basis of a fortnight,
and this is not disputed. The 'wage period' was the day, the
determinate basis was that and all that has happened is that the
employer added up the totals of the daily wage each fortnight, and
paid his workmen. The issue is not materially different because of
leave rules, which enabled the employees to earn wages, even when
they were absent on leave, and here also we must overrule the
contention of the learned counsel for the appellant organisation. In
Stroud's Judicial Dictionary, under the word "Paid" we find an
illuminating note based on Gether v. Capper, (1855) 15 CB 701, to
the effect that the word "paid" should be read as meaning
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"contracted to be paid". In the present case, the workmen contracted
with the employer and the employer contracted with them, to pay
wages per diem.
The first respondent will have costs in this appeal Rs. 100.
9. Appeal dismissed.
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Bibliography
• The Industrial Disputes Act, 1947 with exclusive notes by S.D Puri,
Advocate, Publisher:Snow White Pulications, Mumbai
• Law, Ethics and Communication, Author and publisher: Board of
Studies The Institute of Chartered Accountants of India
REFERENCE WEBSITES
• www.manupatra.com
• www.legalpandit.com
• www.supreemcourt.com
• www.indiankanoon.org
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EPILOGUE
The main findings about the subject are astounding. Within this project
conflicts between various industries and the workman is studied upon
keenly.
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Industrial Employment Act, the Minimum Wages Act, Payment of Bonus
Act, etc., the concluding result may be as follows:
• Unethical Practices are practiced by managements or the governing
‘corporate bodies’ of the industry at the cost of the workman’s
blood.
• Sometimes, an industry with inappropriate management
deliberately attempts to exploit its workmen eventually ending up
in disputes.
• Disputes like salaries, wages, bonuses etc becomes the main cause
of conflict between the industry and the workman. This often ends
up with the ‘blood’ of the work man eventually resulting in his
elimination/exit.
• Lack of communication between the management and the
workman also results a conflict between the both where the
workman ends up as the looser.
However, it is necessary to maintain a certain level of cautiousness with
respect to the above conclusions, since these conclusions are based upon
the findings with respect to a limited amount of case studies and
investigations. The findings are not at all contradictory as they are based on
real legal battle through a court of law.
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