LABOUR LAW-2:

Problem No. 1

A canteen situated in a hospital was run by a Contractor. The ESI Authorities directed the hospital
owner to pay contribution towards employees working in the canteen. But, the hospital owner
refused. Examine the liability of the hospital owner.

Answer
Sec. 1 of the Employees’ State Insurance Act, 1948 speaks about the application and scope of the
Act.

The extension of the E.S.I Act does not depend upon the number of persons employed in any
factory. Persons employed by Contractors are entitled to the benefit of the Act, if such Contractors
are immediate employers under a principal employer and such principal employer is liable to pay the
contribution under the Act.

In the above case, the Canteen is run by a Contractor and he is employed by the Hospital Owner
who is legally bound to make the contribution towards the E.S.I benefit of the employees, as ruled
under the above section.

Under the circumstances, the Hospital Owner is liable to pay contribution towards employees
working in the canteen. under the Act.

Problem No. 2

A pregnant worker who was employed in an establishment on 1.5.08 claims maternity benefits on
her eighth month of pregnancy. The management refuses to entertain her petition on the ground
that she has not even completed one year after her employment in this establishment and rejected
her petition. She files a petition before the Court of Law. Decide.

Answer
As per Sec. 5 (2) of the Maternity Benefit Act, 1961, a woman is eligible to maternity benefit only if
she has actually worked for not less than 160 days during the 15 months preceding the date of her
expected delivery.

In the above case, assuming that the woman employee was not pregnant as on the date of her
employment in the establishment ie. 1.5.08, her service up to her eighth month of pregnancy works
out to more than the required period of 160 days in order to be entitled to the benefit under the
Maternity Benefit Act.

The contention of the management that the employee had not completed 12 months of service in the
establishment shall not hold as the latter had worked for the required number of days during the
preceding 15 months of her expected date of delivery and hence on 1.5.08 she can claim maternity
benefits on her eighth month of pregnancy.
Problem No. 3

The appropriate government, through a notification, fixed minimum wages in respect of

employment in brick manufacturing industry. An employer challenged the notification on the
ground that he has no capacity to bear the burden of the minimum wages fixed under the Minimum
Wages Act. Can the employer succeed?
Answer
Sec. 12 of the Minimum Wages Act, 1948 states that, in any scheduled employment, the employer
must pay to every employee-wages at a rate not less than the minimum rate of wages fixed by
notification for the class of employees in that employment without any deductions except as are
authorised.

The capacity of the employer to pay is irrelevant in fixing the minimum wages.

In any event, the minimum wage must be paid irrespective of the extent of profits, the financial
condition of the establishment or the availability of workmen at lower wages.

In the famous case, M/s. Crown Aluminium Works Vs. their workmen, the Hon’ble Court held that if
an industry is unable to pay to its workmen atleast a bare minimum wage, it has no right to run the
industry.

Going by the above, in the instant case, the employer’s plea that he has no capacity to bear the
burden of the minimum wages fixed by the appropriate government in respect of his brick
manufacturing industry is not tenable and he cannot succeed.

Problem No. 4

“A” is the owner of a petrol pump. Customers bring their vehicles for washing, cleaning and oiling
etc. The Inspector under the Factories Act, takes action against the owner of the pump since the
latter refuses to comply with the provisions of the Factories Act. The owner of the pump contends
that it will not come under the Factories Act since there is no manufacturing process. Decide.
Answer
Sec. 2 (m) of the Factories Act, 1948 defines ‘Factory’ as any premises including the precincts
thereof,

- Where 10 or more workers are working or were working in any day in the preceding 12 months with
the manufacturing process being carried on with the aid of power or

- Where 20 or more workers are working or were working in any day in the preceding 12 months with
the manufacturing process being carried on without the aid of power

The Petrol Pump falls under the ambit of the Factories Act as held by the Hon’ble Court in the
famous case, ‘Qasi Noorul Hasan Hamid Hussain Petrol Pump and another Vs. Dy. Director, E.S.I.
Corporation, Kanpur wherein it was observed that the activity of pumping petroleum with the aid of
power and by employing more than 10 persons constituted manufacturing process under the
Factories Act, 1948.

The contention of the Petrol Pump that there is no manufacturing process involved is not tenable as
essentially petrol is pumped out from the tank using power. Further, the activities of washing,
cleaning and oiling carried out by the workers towards the customers’ vehicles also fall under the
manufacturing process defined under Sec. 2 (k) of the Factories Act, 1948.
Problem No. 5

‘A’ an employee with more than one year’s continuous service in a company was dismissed from
service on account of insubordination. The company refuses to pay bonus due to him. ‘A’ challenges
the refusal. Decide.
Answer
Sec. 9 of the Payment of Bonus Act, 1965 provides that an employee shall be disqualified from
receiving bonus if he is dismissed from service for the reason of: fraud or riotous or violent behavior
while on the premises of the establishment or theft, misappropriation or sabotage of any property of
the establishment.

From the above provision of Sec. 9, it is very clear that any employee who is dismissed for any
reason other than the above shall not be denied of the bonus for the period he has put in his service.

In the instant case, ‘A’ has served for more than a year of continuously in the company and was
dismissed for the reason of insubordination. However, ‘insubordination’ not being an offence where
forfeiture of bonus is warranted, he is bound to receive the bonus due to him for the period due.

Problem No. 6

Balan, a factory worker was suffering from heart disease. When he was coming out of the factory,
he fell down and died after 4 hours of work inside the factory premises. His wife filed a case against
the management for compensation. Decide.
Answer
Balan’s widow is entitled for compensation from the employer.

Sec. 3 of the Workmen’s Compensation Act, 1923 states that an employer is liable to pay
compensation to the workman for personal injury caused to him by accident arising out of and in the
course of his employment.

In the instant case, Balan was suffering from heart disease. However, on the material day, he fell
down accidentally in the factory premises and as a result of which he died (as he was a heart patient
already). Balan’s fall inside the factory premises purports that he was in the course of employment at
that time. It is not relevant here that he had worked for 4 hours during that day.

It is pertinent to note the decision of the Hon’ble Court in the famous case, ‘Lakshmibai Vs.
Chairman, Port Trustees, Bombay wherein it was held that the legal heirs of the workman were
entitled to claim compensation though it was known that the employee was suffering from heart
disease, as the cause of death was due to a personal injury.

As per the decision in the above case, Balan’s wife is entitled to claim compensation from the
management of her deceased husband’s employer.

Problem No. 7

A workman while performing his duties, under the influence of drinks, met with an accident and
died. His widow claimed compensation from the employer. Is the employer liable to pay
compensation?
Answer
No. The employer is not liable to pay compensation.
As per Sec. 3 of the Workmen’s Compensation Act, 1923, an employer is liable to pay compensation
to a workman for personal injury caused to him by accident arising out of and in the course of his
employment.

However, Sec — of the Act exempts an employer from liability under certain circumstances, one of
which is when the workman was at the time of accident under the influence of drinks or drugs.

In the instant case, the workman had consumed alcoholic drinks and in an inebriated state had met
with an accident in his workplace resulting in death. As the above cause of accident (resulting in
death) is a clear exemption under the Act, his widow is not entitled for any compensation by the
employer for his death.