Desired Amendments to Factories Act and Labour Laws
The Factories Act and all statutes under the domain of Labour Laws need a drastic overhaul. The spirit of the age beckons even scrapping certain existing sections, provisions, and rules on grounds of redundancy. One cannot view the vicissitudes of 2015 through 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 vicissitudes of the present period by wearing 2015 spectacles to interpret a circa 1940 enactment. In this article, an effort is made only on certain important provisions due to the 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, wherever not needed, has to be taken out of the hands of the authorities. Politicians should be totally curtailed from involving themselves in the differences or disputes between employees and employers. All 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 should 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:
The definition of 'workman' includes 'apprentice.' An apprentice, by any stretch of the imagination, cannot be a workman and hence should be taken out of this section. Employers should be empowered to terminate workmen from services on defined grounds if the latter has worked less than five years without complying with the provisions of the Act. S17B, related to the payment of full wages to workmen pending proceedings in higher courts, should be deleted. This section is a hurdle even to exercise the fundamental right of the employer to approach higher courts because of the draconian mandatory insistence on paying 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. As a result, such employers, who have constraints to approach higher courts, will only endure the unfavorable decisions of lower courts. S22(1) should extend to the private sector as well. S22(2), dealing with notice, etc., to declare a lockout, should be deleted altogether. Alternatively, S22(2)(d) has to be deleted as it causes tremendous hurdles to employers. In S25A(1)(a), the present headcount envisaged for the non-applicability of this section should be raised from its present 50 workmen to 500 workmen, and the clause 'average per working day' should be substituted by 'average per working year.' Chapter VB should be totally deleted if the ministry and framers of the law have any real vision to make India an industrial hub for both local and foreign investors. S33 and S36 are not employer-friendly sections, not conforming to the zeitgeist (spirit of the age). S33(2)(b) and S33(3), which call 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 workmen who are 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 labor, envisaging permission by way of a license, the abolition of contract labor is not practical. Employers' right to hire and the right to terminate have 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 from the regulatory department.
C) The ESIC Act, 1948:
The 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 a few decades for having worked in a job that has 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 are therefore new and not found in the schedules, which are caused by new types of work demands, even capturing the latest diseases that pass through the regions. For example, work/job specifications in both old and new economy industries like continuous night shift work, call centers, and IT jobs, which affect vocal cords and the spinal column, affect the circadian clock of the human body. The definition of Employee-S 2(9) should specifically bring under its umbrella IT, ITES, BPO, Call Centres, and allied business verticals.
D) The EPF & Miscellaneous Provisions Act, 1952:
The definition of 'employer' under S(e) should be broader and articulate its applicability to educational, charitable institutions, hospitals, and all types of new economy modern establishments. Accordingly, the definition of 'employee' under S2(f) should be amended. Opting for EPF should be made the choice of the employee once their 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, 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, and 8E, the power of the authorized officer to amend the certificate issued for the recovery of dues needs amendment to include other grounds as well. If a director or other officer of an establishment is wrongly inducted as an employer for recovery, the authorized officer should be empowered to consider such a 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 should have their tenure for eligibility to gratuity considered as the completion of 5 years, which is not articulated in S4, leading to grievances and disputes.
F) The Trade Union Act, 1926:
The Act should be made applicable only to establishments/industries with 1000 and above workmen. The minimum number of workmen envisaged under the Act to form a union should be raised from 7 to 100. Further affiliations to unions at the 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:
For 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 a bonus in previous years, 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 a 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:
The 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, the definition of family should cover the woman's lineal ascendants and descendants, the latter restricted to brothers and sisters. The 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 be in the tone of an inclusive definition and cover broad areas of harassment. A provision prohibiting floors, walls, and other spaces at the workplace having glass should be made. For example, if the first story has a floor made of glass, people standing or passing via the floor are visible to the people on the ground floor. This has been witnessed in some modern industries.
I) Minimum Wages Act, 1948:
Production bonuses, incentives linked to performance, etc., should be excluded as exemptions from the purview of minimum wages by articulation. When wages paid by an employer exceed the stipulated minimum wages, the Act should become inapplicable to such an 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 establishments/industries pay paternity benefits 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 that 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 purposes. 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 Schedule I of the Model SOs of the Industrial Employment (S.O) Central Rules, 1946, wherever it is practically possible. Acts and omissions that are to be treated as misconduct need 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 a workman.
L) The Karnataka Payment of Subsistence Allowance Act, 1988:
This Act deserves to be repealed with immediate effect, as from the date of its promulgation, the Act has only increased disputes and has not acted as a measure to resolve the differences or disputes. Otherwise, sections related to the 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 inquiry by totally suspending the subsistence allowance payment and also in instances where, due to the default of the workman, the domestic inquiry 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 the flux of time and by changes 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 the 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, have 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 rampant misuse of powers vested, and employers are harassed. All periodical returns should be self-attested and filed with the department, and inspectors should be stopped from visiting factories for inspection of records.
Regards,
Dr. Gubbi
Counselor & Advocate
Dr. Gubbi & Associates
[Phone Number Removed For Privacy Reasons]
The Factories Act and all statutes under the domain of Labour Laws need a drastic overhaul. The spirit of the age beckons even scrapping certain existing sections, provisions, and rules on grounds of redundancy. One cannot view the vicissitudes of 2015 through 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 vicissitudes of the present period by wearing 2015 spectacles to interpret a circa 1940 enactment. In this article, an effort is made only on certain important provisions due to the 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, wherever not needed, has to be taken out of the hands of the authorities. Politicians should be totally curtailed from involving themselves in the differences or disputes between employees and employers. All 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 should 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:
The definition of 'workman' includes 'apprentice.' An apprentice, by any stretch of the imagination, cannot be a workman and hence should be taken out of this section. Employers should be empowered to terminate workmen from services on defined grounds if the latter has worked less than five years without complying with the provisions of the Act. S17B, related to the payment of full wages to workmen pending proceedings in higher courts, should be deleted. This section is a hurdle even to exercise the fundamental right of the employer to approach higher courts because of the draconian mandatory insistence on paying 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. As a result, such employers, who have constraints to approach higher courts, will only endure the unfavorable decisions of lower courts. S22(1) should extend to the private sector as well. S22(2), dealing with notice, etc., to declare a lockout, should be deleted altogether. Alternatively, S22(2)(d) has to be deleted as it causes tremendous hurdles to employers. In S25A(1)(a), the present headcount envisaged for the non-applicability of this section should be raised from its present 50 workmen to 500 workmen, and the clause 'average per working day' should be substituted by 'average per working year.' Chapter VB should be totally deleted if the ministry and framers of the law have any real vision to make India an industrial hub for both local and foreign investors. S33 and S36 are not employer-friendly sections, not conforming to the zeitgeist (spirit of the age). S33(2)(b) and S33(3), which call 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 workmen who are 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 labor, envisaging permission by way of a license, the abolition of contract labor is not practical. Employers' right to hire and the right to terminate have 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 from the regulatory department.
C) The ESIC Act, 1948:
The 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 a few decades for having worked in a job that has 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 are therefore new and not found in the schedules, which are caused by new types of work demands, even capturing the latest diseases that pass through the regions. For example, work/job specifications in both old and new economy industries like continuous night shift work, call centers, and IT jobs, which affect vocal cords and the spinal column, affect the circadian clock of the human body. The definition of Employee-S 2(9) should specifically bring under its umbrella IT, ITES, BPO, Call Centres, and allied business verticals.
D) The EPF & Miscellaneous Provisions Act, 1952:
The definition of 'employer' under S(e) should be broader and articulate its applicability to educational, charitable institutions, hospitals, and all types of new economy modern establishments. Accordingly, the definition of 'employee' under S2(f) should be amended. Opting for EPF should be made the choice of the employee once their 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, 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, and 8E, the power of the authorized officer to amend the certificate issued for the recovery of dues needs amendment to include other grounds as well. If a director or other officer of an establishment is wrongly inducted as an employer for recovery, the authorized officer should be empowered to consider such a 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 should have their tenure for eligibility to gratuity considered as the completion of 5 years, which is not articulated in S4, leading to grievances and disputes.
F) The Trade Union Act, 1926:
The Act should be made applicable only to establishments/industries with 1000 and above workmen. The minimum number of workmen envisaged under the Act to form a union should be raised from 7 to 100. Further affiliations to unions at the 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:
For 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 a bonus in previous years, 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 a 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:
The 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, the definition of family should cover the woman's lineal ascendants and descendants, the latter restricted to brothers and sisters. The 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 be in the tone of an inclusive definition and cover broad areas of harassment. A provision prohibiting floors, walls, and other spaces at the workplace having glass should be made. For example, if the first story has a floor made of glass, people standing or passing via the floor are visible to the people on the ground floor. This has been witnessed in some modern industries.
I) Minimum Wages Act, 1948:
Production bonuses, incentives linked to performance, etc., should be excluded as exemptions from the purview of minimum wages by articulation. When wages paid by an employer exceed the stipulated minimum wages, the Act should become inapplicable to such an 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 establishments/industries pay paternity benefits 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 that 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 purposes. 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 Schedule I of the Model SOs of the Industrial Employment (S.O) Central Rules, 1946, wherever it is practically possible. Acts and omissions that are to be treated as misconduct need 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 a workman.
L) The Karnataka Payment of Subsistence Allowance Act, 1988:
This Act deserves to be repealed with immediate effect, as from the date of its promulgation, the Act has only increased disputes and has not acted as a measure to resolve the differences or disputes. Otherwise, sections related to the 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 inquiry by totally suspending the subsistence allowance payment and also in instances where, due to the default of the workman, the domestic inquiry 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 the flux of time and by changes 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 the 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, have 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 rampant misuse of powers vested, and employers are harassed. All periodical returns should be self-attested and filed with the department, and inspectors should be stopped from visiting factories for inspection of records.
Regards,
Dr. Gubbi
Counselor & Advocate
Dr. Gubbi & Associates
[Phone Number Removed For Privacy Reasons]