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Dr Gubbi & Associates

Desired Amendments To Factories Act and Labour Laws
The Factories Act, all the statutes under the domain of Labour Laws need a drastic overhauling. Spirit of the age beckons even scrapping of certain existing sections, provisions and the Rules on grounds of redundancy. One cannot view a vicissitude of 2015 wearing a circa 1940 spectacles, which, at present, can be analyzed only by experts who have crossed sixty summers. At the same time the next generation having not lived through the past cannot view the vicissitude of present period by wearing a 2015 spectacles to interpret a circa 1940 enactment.
In this article effort is made only on certain important provisions due to paucity of space and time.
The powers of the authorities have to be curtailed which at present are totally misused by them. The power to prosecute where ever is not needed has to be taken out from the hands of the authorities.
Politicians should be totally curtailed from involving in the differences or disputes between employee and employer.
All the enactments should have provisions for the employer to file periodical returns by self assessment requiring no visits by the concerned department to inspect records. If necessary the returns and records maintained to be audited by a firm of Advocates/Labour Law Consultants with their attestation which the department has to accept.
A) The Industrial Disputes Act, 1947: Definition of ‘workman’ includes ‘apprentice’. An apprentice by any stretch of imagination cannot be a workman and hence to be taken out of this section.
Employer should be empowered to terminate workman from the services on defined grounds if the latter has worked less than five years without complying with the provisions of the Act.
S17B related to payment of full wages to workman pending proceedings in higher courts should be deleted. This section is a hurdle even to excise the fundamental right of the employer to approach higher courts because of the draconian mandatory insistence to pay full wages. If the order/decree of the higher courts favors the employer there is no way to collect back the wages paid to the workman. With the result such employers who have constraints to approach higher courts will only endure with the unfavorable decisions of lower courts.
S22(1) should extend to private sectors also. S22(2) dealing with notice, etc to declare lockout should be deleted altogether. Or in the alternative S22(2)(d) has to be deleted as it causes tremendous hurdles to employers. In S25A(1)(a)- the present headcount envisaged for non-applicability of this section should be raised from it’s present 50 workmen to 500 workmen AND the clause ‘average per working day’ should be substituted by ‘average per working year’.
Chapter VB to be totally deleted if at all the ministry, framers of Law has any real vision to make India an industrial hub for both local and foreign investors.
S33, S36 are not employer friendly sections being not confirming with the zeitgeist ( spirit of the age). S33(2)(b) and S33(3) which calls for ‘approval’ and ‘permission’ respectively from the concerned authority to discharge or punish a workman have to be deleted totally. These subsections are not contemporaneous with the new trends in work culture and act as a shield to protect workman who is unfit to be continued in service. The concept of ‘protected workman’ is no longer valid considering the history of industrial unrest caused by the latter being under the umbrella of this section. Accordingly, Sections 33A, 33C and chapter VII have to be relooked into requiring major amendments.

B) Contract Labour ( Regulation & Abolition) Act, 1970:
At present the Act defines only ‘workman’-S2(i). Instead, the Act has to define an ‘employee’ covering staff and officers, knowledge based resources who are not part of the principal employer and serve under deputation. ‘Workman’ is only a sub-sect of the main sect ‘Employee’.
Since almost 70% of the employees in our country are contract labour, envisaging permission by way of license, abolition of contract labour is not practical. Employers right to hire, the right to terminate has to be articulated without recourse to license formalities. The provisions related to these have to be amended to generate more employment without hurdles and harassment of the regulatory department.
C) The ESIC Act, 1948: Definition of ‘Employment Injury’ under S 2(9) has to be broadened with an extended notion of time keeping in mind that an employee can fall prey to a disease even after few decades for having worked in a job that have the propensity to cause injury not immediately but after a long lapse of time. The Second and Third Schedules have to be amended to include injuries, disablements and occupational diseases which have currently manifested and therefore new and not found in the schedules which are caused by new type of work demands even capturing latest diseases that passes through the regions. For example, work/ job specifications in both old and new economy industries like, continuous night shift work, call centre, IT jobs which affect vocal chords, spinal column, which affect the circadian clock of the human body.
Definition of Employee-S 2(9) to bring specifically under its umbrella IT, ITES, BPO, Call Centres and allied business verticals.

D) The EPF & Miscellaneous Provisions Act, 1952::
Definition of ‘employer’ under S(e) should be broader and articulate it’s applicability to educational, charitable institutions, hospitals, all types of new economy modern establishments. Accordingly definition of ‘employee’ under S2(f) should be amended.
Opting for EPF should be made the choice of the employee once his wages are above the maximum wages specified and as periodically amended to come under the purview of coverage.
In Schedule I of the Act other types of establishments and as notified under S4 should be articulated.
The powers of the EPF Commissioner to withdraw the ‘certificate’ issued to the recovery officer should be enlarged and this authority should be even empowered to make an act of withdrawal even after the recovery steps are initiated. In Sections 8D, 8B, 8E power of the authorized officer to amend the certificate issued for recovery of dues need amendment to include other grounds also. If director or other officer of an establishment is wrongly inducted as an employer for recovery the authorized officer should be empowered to consider such person’s application and upon satisfaction the authorized officer should have the power not to make the person a party to the recovery proceedings.
E)) Payment of Gratuity Act, 1972:
Employees who have completed 4 years and 6 months of continuous service with an employer their tenure for eligibility to gratuity should be considered as completion of 5 years which is not articulated in the S4 leading to grievances and disputes.
F) The Trade Union Act, 1926: The Act should be made applicable only to establishments/industries which has 1000 and above workmen. Minimum workmen envisaged under the Act to form a union should be raised from 7 to 100. Further affiliations to unions at State or National level should be only when there are 5000 workmen in an industry and not otherwise.
G) The Payment of Bonus Act, 1965: Employers to come under the purview of the Act the present holiday period of 5 years should be made to 10 years for SSIs and 7.5 years for MSMEs. Further even though an employer has paid bonus in previous year/s, a provision has to be made to protect the interest of the employer to the effect that the employer need not be under obligation to pay bonus for periods when there is no profit and as a sequel there is no available surplus.
H) The Sexual Harassment of Women at Workplace( Prevention, Prohibition & Redressal ) Act, 2013: Definition of ‘aggrieved woman’ under S2(a) should cover on behalf of the woman subjected to harassment her parents, husband, guardians and family. As a sequel definition of family should cover the woman’s lineal ascendants and descendants, the latter restricted to brothers and sisters. Definition of ‘sexual harassment’ at present covers only 4 acts or behaviors and the 5th only says that ‘any other……conduct of sexual nature’. This should me in the tone of an inclusive definition and cover a broad areas of harassment. A provision prohibiting floors, wlaas and other spaces at workplace having glass should be made. For example, if the first storey has a floor made of glass people standing or passing via the floor are visible to the people at ground floor. This has been witnessed in some of the modern industries.
I) Minimum Wages Act, 1948: Production bonus, incentives linked to performance, etc should be excluded as exemptions from the perview of minimum wages by articulation. When wages paid by an employer exceeds the stipulated minimum wages, the Act should become inapplicable to such industry/establishment. As a sequel restructuring of wages by employers should not be under the purview of this Act and also should not be considered as ‘alteration of conditions of service’.
J) The Maternity Benefits Act, 1961: Since some of the establishments/ industries pay paternity benefit in the form of leave, etc, such best practices should be encouraged by including the practice as a cover in the Act. The medical bonus should be drastically increased from the present Rs1000 to Rs5000 for establishments which are large scale.
K) The Industrial Employment (Standing Orders) Act, 1946: For certification of S.Os Only workmen employed under the principal employer should be considered for headcount for certification purpose. Temporary workmen, badlis, casuals and others should not be counted for this. The applicability of the Act should be made for establishments where there are more than 1000 workmen. The Karnataka Model SOs should take certain clauses found in the Schedule I of the Model SOs of the Industrial Employment (S.O) Central Rules, 1946 where ever it is practically possible. Acts and Omissions that are to be treated as misconduct needs further elaboration as the present acts and conducts defined are not elaborative to the current period. Subsistence allowance should not exceed 50% of the wage at any period of suspension of workman.
L) The Karnataka Payment of Subsistence Allowance Act, 1988: This Act deserves to be repealed with immediate effect as from the date of it’s promulgation the Act has only increased the disputes and has not acted as a measure to resolve the differences or disputes. Otherwise sections related to payment of subsistence allowance have to be amended restricting the payment to a maximum of 50% of the last drawn wages of the workman. It should also make provisions to safeguard the employer in cases of the employee not attending the domestic enquiry by totally suspending the subsistence allowance payment and also in instances where due to the default of the workman if the domestic enquiry is unnecessarily prolonged due to his non-cooperation. If there are criminal proceedings existing or initiated against a workman payment of subsistence allowance should be suspended in the interest of justice.
M) The Factories Act, 1948:
Many of the sections have become redundant by flux of time and by change in circumstances. All such sections have to be either deleted or suitably modified to apply to the present and future context.
There should not be any restrictions on number of hours of work to be performed per day, shift changes, overtime and provisions related to permission on these matters have to be removed.
There should not be any permission required to shift or relocate machinery. Prosecution clauses which are currently a threat to the employer has to be removed. Instead penalties can be increased.
The prevailing practice of ‘Inspector Raj’ should be totally curbed by way of drastic amendments in the Act and Rules. Empowerment to punish an employer should vest only with the Director of Factories and Boilers and should not be delegated to lower grades. At present there is total rampant misuse of powers vested and employers are harassed.
All periodical returns should be self attested and filed with the department and the inspectors should be stopped from visiting factories for inspection of records.
Counselor & Advocate
Dr.Gubbi & Associates

From India, Bangalore
Dinesh Divekar

Dear Dr Gubbi,

You have copied the the whole article from the following link and pasted on this forum:

This forum is not for promotion of one's blog. Members raise their queries and other members respond to their queries to the best of their capacity. Occasionally members do share the articles or links but these are not necessarily their blogs. If everybody starts promoting his/her blog then it would create chaos on this forum and we will end up in missing wood for the trees!

At least you could have done copy and paste work little better by correcting the garbled text. But then it appears that your views are more garbled than text!

About your article: - Views given by you in the article are your personal views. While I would not like to give point by point counter, let me quote one of the sentences given in paragraph 8(M) of your article. It reads as "There should not be any restrictions on number of hours of work to be performed per day, shift changes, overtime and provisions related to permission on these matters have to be removed."

If restriction on number of hours are removed then employers will have right to force employees to work any number of hours. In that case will not be deja vu of pre-industrialisation era of 17th or 18th century?

Your article is only on amendments of the existing laws. But then what about compliance of the existing labour laws? Who measures it? On what parameters it is measured? What is the compliance percentage? Nothing is mentioned about it.

The article gives a impression that Indian employers effuse with magnanimity and labour laws are their major impediments. Remove the villainous labour laws and India would usher to become superpower!

If you had spent some time browsing this forum then you would have found lot of posts employers have thrown labour laws to the wind. What appears on this forum is just a fraction and lot of things happen beyond this forum. Why there is no mention about such employers? Take the case of Dr Vijay Mallaya. A national figure who did not pay salaries to his staffs yet his merriment continued without any trace of guilt. Why intellectuals like are so bothered for the laws that can be bent, twisted by the high and mighty?

Gentleman, what you have done is to flip one side of the coin called labour laws. The other side of the coin is employers. Both are equally good and both are equally bad. India's growth is let down by both. As a third party, we should keep off ourselves into tussle of blackness between pot and kettle.

Nothing stops Indian businesspersons in spending more R and D. Nothing stops them from from coming up with innovative products or services. Talk to Mechanical Engineers and ask them how many times they have used techniques of Operations Research (OR) which they learnt in their Engineering course. Very few engineers do that. What is hold up in optimising the resources by using these techniques? Is labour law hold up?

Talk to the purchase managers and ask them how many times they calculated Break Even Point (BEP). Which labour law is prohibiting them from doing this calculation?

How many business persons calculate Internal Rate Return (IRR) at the time of purchase of capital equipment and later do the variance analysis on projected Vs actual IRR? Which labour law is responsible for this languour?

Talk to the Training Managers and ask them for how many training programmes they have calculated Return on Investment (ROI) on the training? Which labour law says not to calculate the ROI?

Examples of ham-handedness or half-heartedness in the execution are plenty. It is not possible to go on giving examples like this. Success of American companies like Google, Microsoft, FedEx, Walmart can never be attributed to the their labour laws. They have created their industrial empires because of their faith on the management science. They are working in 250+ countries because of difference in their organisation's culture. The trouble with Indian industries is lack of faith on management science. Situations aggravates when intellectuals like you support them widening this deficit of faith further.

My views could be assertive. I request you not to take these personally. These are professional differences.


Dinesh Divekar

From India, Bangalore

Mr Dinesh,
I fully agree with your view.
Wholehearted endorsement to every line of yours above.
Industry consists of a partnership between management and labour.
They should not work at cross purposes.The problem is that the pendulum of supervision swings excessively.Inspector raj is pronounced in our nation.
But on the other hand if inspector raj is not permitted,many of the factories would be run like those sweat shops with no care for health and safety of poor workers.
Unorganised sector is still treated poorly while organised labour especially PSU and Government sector are over pampered.
No wonder India has not come up with a Google or Microsoft.
India needs capitalism with a human face and worker who refuse to get politically active.
Making India an easy place for business will have to rest on the maturity and sensitivity of the management class and equally a responsible labour force which looks beyond mere increase in pay.

From India, Pune
Harsh Kumar Mehta

1. Sir, the initiator of this thread is learned Counselor and an Advocate and I appreciate his efforts to raise the issue regarding amendments in certain labour laws as mentioned in the said thread.

2. I may, however, add for kind information of initiator of this thread that section 2(9) of ESI Act, 1948 (for which case has been made for amendment) defines the term "employee". This term is already very exhaustive and almost cover all employees except as specifically excluded in the Act. The employees working in "IT, ITES, BPO, Call Centres and allied business verticals" are already covered under said Act either as "factory" under section 1(3) or as "shop" under section 1(5) of the said Act depending upon facts of each establishment. Further in case of diseases having long sickness spells, ESIC provides for Enhanced Sickness Benefit (ESB) to the insured persons.

3. Further, under section 7 of the Maternity Benefit Act, 1961 present rate of "Maternity Bonus" is Rs. 3500/- and not Rs.1000/- as mentioned by the initiator of this thread. This rate has been revised long back vide notification dated 19/12/2011.

4. I will request the initiator of this thread to kindly re-consider his proposals as mentioned in the thread so that the same may be in accordance with the laws as it stands at present so that we may be able to up-date our knowledge accordingly. The proposals can be sent to the Ministry of Labour & Employment, Central Govt for consideration, if desired.

5. I may, however, also submit that the welfare of the workers or of the middle and small scale employer is only an excuse of the government. In the year 2002, the 2nd National Labour Comission had submitted its report and action on major recommendations of the Commission is still pending with the Govt. Nothing is expected from the Govt. which is already discussing about major amendments in the labour laws including curtailing the scope of social security and expanding the scope of free economy. I have heard that few years earlier, there was a major accident in one of factory in UP and in the said factory accident about 40 workers were killed. The names of majority of such killed workers were neither on muster-rolls, nor on wages register of the said factory. The Govt. itself like that the compliance of labour laws should continue to be on the same pattern and therefore is pressing hard to abolish and curtail visits of Inspectors to the units to check the compliance of various labour laws.

From India, Noida

It is all very nice to copy and paste something as our senior member has pointed out.

But what is the reason of posting that here ? Please state that.

Are you actually telling that these are the changes that are needed ?

Why tell us that ? We already discuss these things on the forum from time to time.

Or are you just trying to make a presence felt (in which case thinking no one will notice a copy paste is a bad idea)

If you want to have changes in the law, there is a tripartite mechanism at Center where this is done. There are provisions in the ministry of labour for public suggestion for changes, corrections and reactions to the changes they propose.

You can go and meet the labour secretary (or under secretary at least). They are pretty open to accepting public help these days. Or if you want, employers federation of india has a HR committee that works like a think tank and interacts with the government to make these changes. Plus, FICCI, CII, chambers of commerce, they all have committees which work in these. By all means offer your expertise to them. It will do much more good than pasting the article here.

From India, Mumbai

Change of labour laws,inspector raj,ease of doing business are terms being bandied about freely in the press nowadays.

Present Government came into power on a sweeping mandate of bringing positive change and putting India on a track of fast developing economy.

Frequent comparison with China is being done.

We are in no way comparable to China-other than in population where we can enter our name in world book of records as the most populated country in the universe.

Chinese attitude and mental outlook is far different from ours and what and how China developed cannot be replicated by India.

India has potential as is always being repeated ad nauseum.

What stops us from development is clearly lack of leadership,a leader with PAN India vision and who is not linked to lobbies of whatsoever nature.

Diversity of India implies that one cannot push any particular agenda on to people,there will be resistance and unstated lack of cooperation.

The main road block is the amazing maze of laws in the country.

You have a law for everything,but still India remains a lawless land.

The rich and powerful always escape from the rigours of law.

India needs to cut down babudom and make them accountable to the nation.

Similar laws to protect worker welfare,jobs exist in other countries and they have still progressed,but our attitude is the roadblock.

Every babu thinks of power in his hand and every owner thinks how much moolah he can earn and avoid tax and every worker thinks how to garner as many benefits as possible with least amount of hard work.In this background the millions of unorganised labour sweat their life out in construction sites with nary a safety feature and welfare mechanism.Skinny half clad children of labour roam around -no school,no safety from open pits dug during construction.

All this is known to Government since most realty players are linked closely to political outfits.

The sheer scale of over population overwhelms the nation.But population control word is taboo for the political class.

For India to change, cosmetic changes in the provisions of labour law, making it owner friendly and easing regulatory controls without owners showing necessary good faith is not going to bring about change in India to super power status.

Population control,simplified laws but enforced strictly without fear or favour can bring changes.

For all those who criticise Emergency trains ran on time,schools/colleges ran and were not on strike and most important babus had a fear of their over protectedjob and worked.(I off course realise that motive of Emergency was not to bring in good change but to preserve some persons seat of power)

We have understand that liberty,democracy can survive only where the people exercise their rights with maturity and duties with even greater promptness.

If this post is off track,dont mind,it is the heartfelt feeling of a poster who wants India to shine and be a genuine superpower-wealth,happiness and nationalcharecter

From India, Pune

Instead of writing such a long essay, Dr. Gubbi should have written a single sentence that "the entire labour laws enforced in India should be scrapped and the old feudal system should be reintroduced".

From India, Kannur

Dear All,

It is good to at least see that somebody is not posting a questing on how to face unethical practices in their workplace.... :-)

Though I agree with statement made by Mr. Dinesh that.... "The article gives a impression that Indian employers effuse with magnanimity and labor laws are their major impediments. Remove the villainous labor laws and India would usher to become superpower!"

After the independence, we have continued with many laws made by British during their "rule times". (Some sections like the "provision for different Allowances" is a really outdated scheme after independence. These allowances were provided separate from the basic compensation by British, mainly to differentiate salary structure of high positioned British employees against the low positioned Indian employees in the organizations. Unfortunately even the 6th / 7th pay commission still points to these laws & allowances like DA are reaching to about 100% today....)

A drive to ask "Why" is needed today for many of these old laws & it is admirable that private associations like INBA are thinking on these lines.

Though it is very important that individual / intuitional aspirations & influences should be kept aside, which is a difficult thing to be achieved by an "Non government organization" with ambitions.

Before suggesting any updates in the labor laws (Even on a public forum for discussion), I think a statistical analysis needs to be done on current laws adequacy & changed market needs, in order to maintain the justifiable balance between the laborer & proprietor benefits. The above post fails to provide such evidence or mere mention of such statistical study behind the amendment requests, hence most of them can be seen as "Change for the sake of change"....

Best Regards,

Amod Bobade.


After going through the reply of Dinesh-ji there is little one can add.He has covered all the aspects.To make a small addition to his post I would like to state that all the organisations mentioned by him ,namely Google,Walmart etc.are top ranking employers in several surveys conducted by different agencies.
From India, New Delhi

Cross section of opinions are flashed. It is worth to note and also it is appropriate time for the experts to express their opinions, since amendments are expected shortly. Please continue the debate for information of all stake holders.
From India, Nellore
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