Is Relying on Model Standing Orders Under the IESO Act, 1946 a Legal Risk for Employers?

Analysis of the IESO Act, 1946: Sections 3, 12A, and 13

Sec. 3 of the IESO Act, 1946 mandates the submission of Draft Standing Orders within six months to the certifying officer from the date of applicability of the Act to a particular industrial establishment. Sec. 13 imposes a penalty on the erring employer who fails to submit the draft standing orders under Sec. 3 of the Act to the certifying officer. Sec. 12A speaks to the deemed adoption of Model Standing Orders from the date on which this Act becomes applicable until the standing orders are finally certified by the certifying officer, using the words "notwithstanding anything contained in Sec. 3 to 12."

Potential Contradictions and Implications

Is Sec. 12A not contradictory to Sec. 3? Does Sec. 12 not send wrong signals to industries that there is no necessity to design standing orders of their own and that merely relying on Model Standing Orders for decades is sufficient? In such a case, is there any possibility of taking up prosecution against any employer for violating Sec. 3? Please discuss.

Regards,
Kesava Panda

Discussion on the IESO Act, 1946

Sec. 3 of the IESO Act, 1946 mandates the submission of draft Standing Orders within 6 months to the Certifying Officer from the date of applicability of the Act to a particular industrial establishment. Sec. 13 imposes a penalty on the erring employer who fails to submit the draft Standing Orders under Sec. 3 of the Act to the Certifying Officer. Sec. 12A speaks to the deemed adoption of Model Standing Orders from the date on which this Act becomes applicable and ending with the date on which the Standing Orders are finally certified by the Certifying Officer, using the words "Notwithstanding anything contained in Sec. 3 to 12."

Is Sec. 12A not contradictory to Sec. 3? Does Sec. 12A not send wrong signals to industries that there is no necessity to design Standing Orders of their own and merely dwelling upon Model Standing Orders for decades is enough? In such a case, is there any possibility to take up prosecution against any employer for violating Sec. 3? Please discuss.

Regards,
Kesava Panda

I believe that although you have understood the importance of the provisions of Sec. 3 and 12A of the Standing Orders Act, 1946, the non obstante clause "notwithstanding anything contained in Sec. 3 to 12" appearing in the opening part of Sec. 12A(1) still gives rise to the confusion you have mentioned. The non obstante clause indicates that Sec. 12A is an independent section and, therefore, in case of any inconsistencies between the provisions of Sec. 12A and those of Secs. 3 to 12, Section 12A will prevail.

Reasons for the Prevailing Nature of Section 12A

The reasons are as follows:
- Section 3(1) specifies the time limit, i.e., six months within which the draft standing orders should be submitted for certification once the Act becomes applicable to the establishment. This implies that such a submission of the draft can be done even on the penultimate day of the sixth month.
- As you are aware, the certification of standing orders is an administrative process involving comparison and consultation, which requires a reasonable amount of time to complete.
- During the interim period, i.e., the time between the commencement date of the Act's application and the effective date of the certified standing orders, the employment conditions of the establishment cannot remain undefined and unknown to the workers employed there. Therefore, the model standing orders established by the Appropriate Government under its rule-making power are mandatorily applicable during this interim period.
- If you had considered the concluding part of Sec. 12A(1), the confusion would not have arisen. In other words, the explicit inclusion of the application of the provisions of Secs. 9, 13(2), and 13-A, along with the exclusion of Sec. 13 (i.e., provisions regarding penalties and procedures) in the non obstante clause of Sec. 12-A, together with its title, implies that Sec. 12-A does not allow an employer to bypass the Act's provisions by merely adopting the model standing orders indefinitely. It also does not relieve the employer of the legal obligation to comply with Sec. 3(1), (2), and (3).

I hope this clarifies the points of confusion you raised.

Best regards,
[Your Name]

I once again continue my discussion with Mr. Sri Umakanthan, who has sent his invaluable opinion.

Of course, Sec. 12A, as you have stated, the application is "Temporary." But it is categorically stated that the application of Sec. 9, Sec. 13(2), and Sec. 13A is to those model standing orders so long as they are applicable to the industrial establishment. Thus, according to Sec. 9, the management has to post the model standing orders as applicable to the certified standing orders. Sec. 13(2) is strictly applicable to certified standing orders. However, since it has been extended to Model SOs by virtue of Sec. 12A, it is nevertheless applicable to Model SOs.

If we just go a little to the later provision, i.e., 13(3), it is not that easy to file a direct prosecution obtaining the permission from the Govt. as ages would expire in obtaining the same, by which time limitation for prosecution may also be barred. As specified in 13A, it is also applicable to Model standing orders.

Then the entire situation comes to one point: what is the time to be considered as temporary? Since it was not specified in the enactment, any management can now dwell upon years together on model standing orders. Thus, under the above circumstances, the provision appears to be a blanket permission to the management, of course under disguise, to resort to model standing orders for years. Can you offer your opinion on this?

To me, the most difficult part of law to remember is the numbers of sections and corresponding rules, which are not frequently referenced in our practical compliance. So, let me do away with the section numbers as I don't have the Act book on hand right now and present my views as simply as I can understand.

Purpose of the Standing Orders Act, 1946

The purpose of the Standing Orders Act, 1946, is to require industrial employers to exactly define the conditions of service of their employees and bring them to their notice. This ensures that employees are well aware of their contractual rights and responsibilities, thus avoiding unnecessary friction in employment relations.

Applicability of the Act

The Act is applicable to every industrial establishment where 100 or more workmen are/were employed.

Mutual Compliance and Tripartite Consultative Arrangement

Since the conditions of employment thus defined require mutual compliance, arbitrariness should not be present in its framing. Therefore, there is a tripartite consultative arrangement involving the employer, employees, and the certifying officer under the Act, which is a time-consuming process.

Model Standing Orders

In order to avoid interpretative tussles and to serve as model conditions of service, and to temporarily give effect to the purpose of this unique legislation during the entire intervening period between the date of application of the Act to the concerned industrial establishment and the date of formal certification of the original standing orders, Model Standing Orders are made temporarily applicable. Though it is just a stop-gap arrangement, in order to confer the efficacy of the certified orders, it is also required to be made known to the workmen.

Draft Standing Orders

Draft standing orders submitted need not be a replica of the model orders. For example, take the case of the prohibition of smoking except in earmarked places within the establishment, which is listed as misconduct in the model orders. If it is an explosives manufacturing factory, not only smoking but also having inflammable articles like matchboxes or cigar lighters is to be prohibited, bringing these into the list of misconducts. So, it becomes imperative for the employer to complete the certification process as expeditiously as possible according to the specific requirements of the establishment.

Liability for Submission of Draft Standing Orders

Mere adoption of the model orders even after the expiry of six months cannot absolve the employer of his liability to submit draft standing orders for certification by the efflux of time because it is a continuing offense escaping the ambit of limitation for prosecution.

Therefore, in my considered opinion, the operation of the model standing orders to an establishment until the certification of its draft standing orders is not only a temporary concession but also an ad hoc arrangement. As such, by no stretch of the imagination could it be considered a blanket permission.

Thank you very much for your opinion. Can I now interpret that the management has to apply for certification of standing orders within six months? Until the draft standing orders are certified by the certifying officer, the model standing orders come into play. In the case of those who have not applied within 6 months, they have to be subjected to penal provisions.

According to you, the period of application of model standing orders is between the application, i.e., within 6 months and thirty days from the date of certification made by the certifying officer. The management has to face prosecution after the expiry of 6 months from the date when the provisions are made applicable to their industry. Even if they submit their draft standing orders after the expiry of 6 months, the law does not prevent the certifying officer from taking up prosecution against the employer.

Have there been any decisions from any courts to uphold your version? It's very much appreciated if a piece of judgment in support of your version is available.

I would like to further add that I came across a similar situation where a pharmaceutical company in Gujarat has not certified their standing orders. Under RTI, the DLC has stated that they have not certified their standing order. The company is 110 years old, and they claim in writing that they are following the Standing Orders by attaching ID cards of workers in the factory. However, this is not a valid certification of the standing orders.

Violation of Model Standing Order

For field workers, they are transferring them across India, which is a violation of the Model Standing Order. How can employers navigate this tricky situation? How can they be penalized? Please provide some insights.

Response to Kesava Panda's Query on Industrial Employment (Standing Orders) Act, 1946:

Sec. 12A of the IESO Act, 1946 indeed raises a valid concern regarding the potential contradiction with Sec. 3. While Sec. 3 mandates the submission of Draft Standing Orders within 6 months, Sec. 12A allows for the deemed adoption of Model standing orders until certification. This provision may inadvertently signal to industries that designing their standing orders is unnecessary. However, it is crucial to note that this deemed adoption is a temporary measure until certification is obtained.

Regarding the situation with the pharmaceutical company in Gujarat, the failure to certify standing orders poses legal risks. Merely attaching ID cards does not constitute valid certification. The practice of transferring field workers across India also violates the Model Standing Order. Employers can navigate this by:

- Engaging legal counsel to guide the process of drafting and certifying standing orders.
- Conducting an internal audit to ensure compliance and rectify any discrepancies.
- Implementing a comprehensive training program for HR personnel and management on legal compliance.

Non-compliance can lead to penalties under Sec. 13 of the Act. To address this, the company should take immediate steps to rectify the situation, seek certification, and ensure adherence to the stipulated regulations to avoid legal repercussions.