Legum Baccalaureus (LLB) -PAPER-I: LABOUR LAW - 2 4th Semester Syllabus Short Notes
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PAPER-I
UNIT – 1
THE REMUNERATIVE
ASPECTS
WAGES - Sec 2(h) of the Minimum
Wages Act, 1948
According to the Act,
"wages" means all remuneration, capable of being expressed in terms
of money, which would, if the terms of the contract of employment, express or
implied, were fulfilled, be payable to a person employed in respect of his
employment or of work done in such employment. [and includes house rent
allowance]
In other words,
Wage refers to the payment that employers provide to employees in exchange
for the work they perform. It is a monetary reward for the services
rendered by the employee to the employer.
Wages can take
various forms, including hourly rates, salaries, piece-rate payments,
commissions, bonuses, and other forms of remuneration.
§
“A wage may be defined as the sum of money paid
under contract by an employer to the worker for services rendered.” -Benham
§
“Wages is the payment to labour for its
assistance to production.” -A.H. Hansen
§
“Wage rate is the price paid for the use of
labour.” -Mc Connell.
CONCEPTS OF WAGES
The concept of wages encompasses
the various aspects and principles related to the compensation that employers
provide to employees for their work. Here are some key elements of the concept
of wages:
1.
Compensation for Work: At its core, wages
represent the compensation or payment that employees receive in return for the
work they perform for their employers. This compensation can be in the form of
money, goods, services, or other benefits.
2.
Mutual Agreement: The payment of wages
involves a mutual agreement between the employer and the employee, either
explicitly through a contract or implicitly through custom, industry norms, or
legal requirements.
3.
Exchange of Value: Wages reflect the
value of the labor contributed by employees to the production process or the
services provided by them. Employers compensate employees based on factors such
as the quantity and quality of work performed, skills and expertise required, and
prevailing market conditions.
4.
Legal and Regulatory Framework: Wages are
subject to various legal and regulatory frameworks established by governments
to ensure fair and equitable compensation practices. These frameworks may
include minimum wage laws, wage payment regulations, anti-discrimination laws,
and collective bargaining agreements.
5.
Fairness and Equity: The concept of wages
also embodies principles of fairness and equity, ensuring that employees
receive compensation that is commensurate with the value of their contributions
and consistent with prevailing norms and standards in the industry or society.
6.
Social and Economic Considerations: Wages
play a crucial role in addressing social and economic issues such as poverty
alleviation, income inequality, and social mobility. Policies related to wages
often seek to balance the interests of employers, employees, and society at
large.
MINIMUM, FAIR, LIVING WAGES
Minimum, fair, and living wages
are different concepts related to compensation, each with its own distinct
characteristics and objectives:
Minimum Wage:
-
The minimum wage is the lowest wage rate that
employers are legally required to pay their employees for their work.
-
It is typically established by government
legislation or regulation and serves as a floor to protect workers from
excessively low wages.
-
The minimum wage aims to ensure that workers
receive a basic level of compensation that allows them to meet their basic
needs, such as food, shelter, and clothing.
-
Minimum wage rates may vary based on factors
such as the geographic location, industry, and cost of living.
Fair Wage:
-
A fair wage refers to a compensation level that
is just and equitable, taking into account factors such as the nature of the
work, skill required, and economic conditions.
-
Unlike the minimum wage, which sets a legal
floor, the concept of a fair wage is more subjective and may vary depending on
individual perspectives and circumstances.
-
Fair wage principles may include considerations
of distributive justice, ensuring that workers receive a reasonable share of
the value they contribute to the production process.
Living Wage:
-
A living wage is a wage level that enables
workers to meet their basic needs and maintain a decent standard of living.
-
It goes beyond merely providing subsistence and
aims to ensure that workers can afford necessities such as housing, healthcare,
education, and transportation, as well as participate in social and cultural
activities.
-
Living wage calculations often take into account
local cost-of-living factors, such as housing costs, healthcare expenses, and
family size.
-
Living wage campaigns advocate for employers to
pay wages that allow workers to live with dignity and without relying on
government assistance programs.
WAGE AND INDUSTRIAL POLICIES
Wage and industrial policies are
frameworks established by governments or organizations to regulate wage rates,
working conditions, and labor relations within industrial sectors. These
policies play a crucial role in shaping the employment landscape, ensuring fair
treatment of workers, and fostering economic development. Here are key aspects
of wage and industrial policies:
Wage Policies:
Wage policies refer to
guidelines, regulations, and mechanisms put in place to govern wage rates and
compensation practices within the labor market.
These policies may include
minimum wage laws, collective bargaining agreements, industry-wide wage
standards, and government-sponsored wage-setting mechanisms.
The objectives of wage policies
often include ensuring that workers receive fair compensation for their labor,
addressing income inequality, and promoting social justice.
Industrial Policies:
Industrial policies encompass a
broader set of regulations and strategies aimed at promoting the growth and
development of specific industries or sectors within the economy.
These policies may include
measures to stimulate investment, enhance productivity, promote innovation, and
create employment opportunities.
Industrial policies often address
issues such as trade barriers, infrastructure development, technology adoption,
and skills training to support industrial growth and competitiveness.
Objectives of Wage and
Industrial Policies:
Promoting Social Justice: Wage
and industrial policies aim to ensure that workers receive fair and equitable
compensation for their contributions to economic production. They seek to
address income disparities and promote social inclusion.
Ensuring Labor Market Efficiency:
These policies aim to balance the interests of employers and workers while
maintaining the efficiency and competitiveness of the labor market. They seek
to prevent exploitation of labor and encourage productive employment
relationships.
Supporting Economic Development:
Wage and industrial policies play a crucial role in fostering economic growth
and development by creating a conducive environment for investment,
entrepreneurship, and job creation. They aim to build resilient and sustainable
industrial sectors that contribute to overall economic prosperity.
Implementation and
Enforcement:
Effective implementation and
enforcement mechanisms are essential for ensuring the success of wage and
industrial policies.
Governments may establish
regulatory bodies, such as labor departments or wage boards, to oversee
compliance with labor laws and regulations.
Collective bargaining agreements
between employers and labor unions also play a significant role in determining
wage rates and working conditions within specific industries.
WHITLEY COMMISSION RECOMMENDATIONS
The Whitley Commission was a
British royal commission established in the early 20th century to investigate
and make recommendations on public sector pay and working conditions.
The commission's recommendations
aimed to improve labor standards, promote fair wages, and enhance industrial
relations within the public sector.
Recommendations covered various
aspects, including wage levels, working hours, job classifications, and
employee benefits.
While the specific
recommendations varied over time, they often emphasized the importance of
equitable pay scales, transparency in wage-setting processes, and mechanisms
for resolving disputes.
PROVISIONS OF CODE ON WAGES, 2019
The Code on Wages, 2019, is a
comprehensive legislation in India that consolidates and amends laws related to
wages and bonus payments.
The code establishes uniform
provisions for wage payments across various sectors and industries, replacing
multiple existing laws.
Key provisions of the Code on
Wages, 2019, include definitions of terms related to wages, rules for timely
payment of wages, guidelines for authorized deductions from wages, and
mechanisms for resolving wage-related disputes.
The code also sets standards for
minimum wages and provides procedures for fixing and revising minimum wage
rates.
TIMELY PAYMENT OF WAGES
Timely payment of wages refers to
the obligation of employers to pay wages to their employees within the
stipulated time frame, as specified by law or employment contracts.
Ensuring timely payment of wages
is essential for meeting the financial needs of employees, maintaining trust
and morale in the workplace, and complying with legal requirements.
Many countries have laws and
regulations that mandate timely payment of wages, setting forth deadlines for
wage payments, such as weekly, bi-weekly, or monthly intervals.
Failure to pay wages on time may
result in penalties, fines, or legal action against employers, as it violates
workers' rights and protections.
AUTHORIZED DEDUCTIONS
Authorized deductions refer to
the specific types of deductions that employers are legally permitted to make
from employees' wages.
These deductions are typically
outlined in labor laws, employment contracts, or collective bargaining
agreements.
Examples of authorized deductions
may include taxes, social security contributions, pension contributions, health
insurance premiums, union dues (if applicable), and court-ordered garnishments.
Employers must adhere to legal
requirements and obtain consent from employees before making authorized
deductions from their wages.
CLAIMS
Claims in the context of wages
refer to complaints or grievances raised by employees regarding issues related
to their wages or employment conditions.
Employees may file claims for
various reasons, such as unpaid wages, unauthorized deductions, wage disputes,
non-compliance with labor laws, or violations of employment contracts.
Claims are typically submitted to
relevant authorities, such as labor departments, wage boards, or labor courts,
depending on the jurisdiction and nature of the claim.
Employers are required to address
claims promptly and in accordance with applicable laws and regulations, and
failure to do so may result in legal consequences.
MINIMUM WAGES UNDER THE CODE OF WAGES, 2019
The Code on Wages, 2019, sets out
provisions for minimum wages, which are the lowest wage rates that employers
are legally required to pay their employees.
Minimum wage rates are determined
based on factors such as the type of work, skill level, geographical location,
and prevailing economic conditions.
The code establishes uniform
standards for minimum wages across various sectors and industries, replacing
multiple existing laws.
It also provides procedures for
fixing and revising minimum wage rates and outlines penalties for
non-compliance by employers.
TYPES OF WAGES
Types of wages refer to the
various forms of compensation that employers may provide to employees for their
work.
Common types of wages include:
1.
Hourly Wage
An hourly wage is when an employee is paid depending
on the number of hours they work. This sort of payment is common in businesses
with varying work hours and is governed by labour laws to ensure fair pay for
employees.
2.
Salary
A salary is the amount of money paid to an employee
regularly, usually monthly or annually, regardless of how many hours they work.
Salaries are typically agreed upon in the employment contract, providing
employees with a consistent income. They are more popular in higher-level
employment and may come with benefits such as health insurance and retirement
programmes. Salaries, unlike wages, are not determined by the number of hours
worked or the amount produced.
3.
Piece Rate
A piece rate is one in which employees are paid based
on the number of units or tasks accomplished rather than the number of hours
worked. They are paid a specific sum for each finished unit, which encourages
them to work effectively. This sort of wage is commonly utilised in industries
with easily measurable productivity, such as manufacturing and agriculture.
4.
Commission
A commission is a sort of payment in which someone is
paid a percentage of the sales or transactions they complete. It’s common in
sales and retail, where employees get a commission for each sale they make. The
more sales they create, the higher their earnings. Commission can take various
forms, such as a fixed percentage of sales or rates that fluctuate based on
performance levels.
5.
Overtime Pay
Overtime Pay is the extra money paid to employees for
working more than the customary number of hours in a week or day. It is
typically paid at a greater rate than the standard hourly salary, often 1.5
times more, defined by the labour rules or in the work agreements. This
increased remuneration encourages employees to work longer hours and pays them
fairly for their efforts.
6.
Bonuses
Bonuses are additional payments or awards provided to
employees by their employers to recognise exceptional performance, goal
achievement, or contributions to the organisation’s success. They are usually
elective and can take several forms, including cash bonuses, stock options,
profit-sharing, and non-monetary rewards like trips or gifts. Bonuses are
intended to stimulate staff, boost morale, and encourage sustained good
performance. They can be presented regularly, such as once a year every
quarter, or when certain accomplishments are met.
7.
Tips and Gratuities
Tips and Gratuities are extra payments that customers can
give to service personnel to express their gratitude for exceptional service.
These tips are not required, although they are frequently offered in industries
such as hospitality, food service, and personal services. The quantity of the
tip varies depending on how satisfied the consumer is with the service. While
tips can significantly boost an employee’s earnings, certain establishments may
automatically add a service charge to the bill, which may or may not be shared
with the staff.
MINIMUM RATES OF WAGES
Minimum rates of wages refer to
the lowest wage rates that employers are legally required to pay their
employees for their work.
These rates are established by
government authorities through legislation, regulations, or wage-setting
mechanisms.
Minimum wage rates may vary based
on factors such as the type of work, geographic location, industry, and
prevailing economic conditions.
The purpose of minimum wage laws
is to ensure that workers receive a fair and decent level of compensation to
meet their basic needs and maintain a decent standard of living.
Employers are obligated to comply
with minimum wage laws and pay their employees at least the prescribed minimum
wage rate.
PROCEDURE FOR FIXING AND REVISING MINIMUM WAGES
The procedure for fixing and
revising minimum wages typically involves consultation and deliberation among
stakeholders, including employers, employees, labor unions, government
authorities, and other relevant parties.
Factors considered in fixing and
revising minimum wages may include the cost of living, inflation rates,
productivity levels, prevailing wage rates in similar industries, and
socio-economic conditions.
Governments may establish wage
boards, commissions, or advisory bodies tasked with conducting research,
gathering input from stakeholders, and making recommendations on minimum wage
rates.
The process for fixing and
revising minimum wages may include public hearings, studies, surveys, and
analysis of relevant data to inform decision-making.
Once minimum wage rates are
determined or revised, governments typically issue formal notifications or
enact legislation to enforce compliance by employers.
CLAIMS
Claims in the context of wages
refer to complaints or disputes raised by employees regarding issues related to
their wages, such as unpaid wages, unauthorized deductions, underpayment,
non-payment of minimum wages, or violations of labor laws or employment
contracts.
Employees may file claims with
relevant authorities, such as labor departments, wage boards, labor courts, or
other dispute resolution mechanisms, depending on the jurisdiction and nature
of the claim.
Claims may be investigated,
adjudicated, and resolved through administrative processes, conciliation,
mediation, arbitration, or litigation, depending on the legal framework and
procedures established by law.
REMEDY
Remedies for wage-related claims
typically aim to provide relief or redress to affected employees and ensure
compliance with labor laws and regulations.
Remedies may include monetary
compensation for unpaid or underpaid wages, reimbursement for unauthorized
deductions, payment of statutory benefits or entitlements, and penalties or
fines imposed on non-compliant employers.
In cases of dispute resolution,
remedies may also include reinstatement of employment, back pay, injunctive
relief, or other forms of equitable relief to address violations of employee
rights or protections.
Employers found to be in
violation of wage laws or regulations may be required to take corrective
action, such as adjusting wage rates, rectifying payroll errors, or
implementing measures to prevent future violations.
UNIT – 2
BONUS - CONCEPT
Bonus refers to an additional
financial compensation given to employees beyond their regular salary or wages.
It serves as a reward for their contribution to the company's profitability and
success.
RIGHT TO CLAIM BONUS
Employees have the right to claim
a bonus if they fulfill certain eligibility criteria as specified by the
relevant laws or company policies.
FULL BENCH FORMULA
The Full Bench Formula is a
method used to calculate the allocable surplus for bonus distribution. It
considers factors like gross profit, depreciation, and other adjustments to
determine the surplus available for distribution as bonuses.
BONUS COMMISSION
The Bonus Commission is a body or
committee established to review and recommend policies regarding the payment of
bonuses to employees.
PAYMENT OF BONUS UNDER THE CODE ON WAGES, 2019
The Code on Wages, 2019
consolidates various wage-related laws, including the Payment of Bonus Act. It
outlines the procedures and guidelines for calculating and distributing bonuses
to employees.
APPLICATION COMPUTATION OF GROSS PROFIT, AVAILABLE, ALLOCABLE
SURPLUS
The application of bonus laws is
typically limited to specific types of establishments and categories of
employees, as defined by the legislation.
Computation of Gross Profit,
Available, Allocable Surplus
Gross Profit: The total revenue
of an establishment minus the cost of goods sold.
Available Surplus: The gross
profit after deducting certain allowable expenses.
Allocable Surplus: The portion of
the available surplus that is designated for distribution as bonuses to
employees.
ELIGIBILITY OF BONUS
Employees are generally eligible
for a bonus if they have worked for a certain number of days during the
accounting year. Specific eligibility criteria may vary based on the law or
company policy.
DISQUALIFICATION OF BONUS
Employees can be disqualified
from receiving a bonus if they are dismissed for reasons such as fraud, theft,
or other misconduct causing financial loss to the employer.
SET ON AND SET OFF OF ALLOCABLE SURPLUS
Set On: The process of carrying
forward the allocable surplus to future years if it exceeds the maximum bonus
payable.
Set Off: The process of adjusting
the allocable surplus if it is insufficient to pay the minimum bonus in
subsequent years.
MINIMUM AND MAXIMUM BONUS
Minimum Bonus: The minimum
percentage of wages that must be paid as a bonus, typically set at 8.33% of an
employee's wages.
Maximum Bonus: The maximum
percentage of wages that can be paid as a bonus, typically capped at 20% of an
employee's wages.
RECOVERY OF BONUS
Provisions are made for the recovery of unpaid bonuses through legal
channels. Employees can file claims to recover bonuses if the employer fails to
pay them within the stipulated time.
UNIT - 3
EMPLOYEES SECURITY
AND WELFARE ASPECT
SOCIAL SECURITY
Social security refers to
measures aimed at ensuring individuals' economic security and well-being,
particularly during periods of unemployment, illness, disability, or old age.
It includes both social insurance and social assistance schemes.
CONCEPT AND MEANING SOCIAL INSURANCE
A system where employees,
employers, and the government contribute to a fund that provides benefits to
workers during times of need, such as sickness, unemployment, or retirement.
SOCIAL ASSISTANCE SCHEMES
Non-contributory programs funded
by the government to provide financial assistance to individuals in need,
particularly the poor and vulnerable sections of society.
SOCIAL SECURITY LEGISLATIONS
LAW RELATING TO WORKMEN’S COMPENSATION
Social security legislations are
designed to provide financial and medical assistance to workers and their
families, ensuring their well-being and economic stability. Key social security
laws in India include:
The Employee’s Compensation Act 1923
This Act provides for the payment
of compensation to workers for injuries sustained during employment.
DEFINITIONS
EMPLOYER’S LIABILITY FOR COMPENSATION
The employer is liable to pay
compensation for any injury arising out of and in the course of employment.
NEXUS BETWEEN INJURY AND EMPLOYMENT
Compensation is payable only if
there is a direct connection between the injury and the employment.
PAYMENT OF COMPENSATION
The amount of compensation
depends on the nature and severity of the injury and the wages of the employee.
PENALTY FOR DEFAULT
Employers who fail to pay
compensation can face penalties, including fines and imprisonment.
Employees State Insurance Act 1948
APPLICATION
This Act applies to factories and
other establishments specified in the Act, providing benefits to employees in
case of sickness, maternity, and employment injury.
BENEFITS UNDER THE ACT
These include medical benefits,
sickness benefits, maternity benefits, disability benefits, and dependents'
benefits.
ADJUDICATION OF DISPUTES AND CLAIMS
Disputes and claims under the Act
are adjudicated by designated authorities and the Employees State Insurance
(ESI) courts.
ESI CORPORATION
The Employees' State Insurance
Corporation (ESIC) is the body responsible for the administration of the ESI
scheme.
LEGISLATION IN FAVOUR OF SOCIAL SECURITY
Social security legislation aims
to protect workers' rights and provide financial and medical support in times
of need, ensuring a basic standard of living and financial stability for
employees and their families.
UNIT – 4
EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT 1952
CONTRIBUTIONS
Employee Contributions: Employees
contribute a certain percentage of their salary (basic wages, dearness
allowance, and retaining allowance) to the provident fund.
Employer Contributions: Employers
contribute an equal amount to the employee's provident fund account.
SCHEMES UNDER THE ACT
Employees’ Provident Fund Scheme
(EPF): Provides retirement benefits to employees.
Employees’ Pension Scheme (EPS):
Provides pension on retirement, disability, or to the family after the death of
the employee.
Employees’ Deposit Linked
Insurance Scheme (EDLI): Provides an insurance cover to the employees.
BENEFITS
EPF: Lump-sum amount on
retirement, which includes employee and employer contributions along with
interest.
EPS: Monthly pension after
retirement.
EDLI: Financial assistance to the
family in case of the employee's death during service.
THE MATERNITY BENEFIT INCLUDING AMENDMENT ACT, 2018
DEFINITIONS
Maternity Benefit: Financial and
medical benefits provided to pregnant women employees.
APPLICATION
Applicable to all women employees
working in factories, mines, plantations, shops, and establishments employing
ten or more employees.
BENEFITS
Paid Maternity Leave: Increased
to 26 weeks for the first two children and 12 weeks for subsequent children.
Work from Home: Provision for
work from home after maternity leave, based on mutual agreement.
Crèche Facility: Mandatory for
establishments with 50 or more employees to provide crèche facilities.
THE PAYMENT OF GRATUITY ACT 1972
DEFINITIONS
Gratuity: A lump sum payment made
to employees as a mark of recognition for their services at the time of
retirement or resignation.
APPLICATION
Applicable to factories, mines,
oilfields, plantations, ports, railway companies, shops, and establishments
employing ten or more employees.
PAYMENT OF GRATUITY
Amount: Calculated as 15 days'
wages for every completed year of service, subject to a maximum limit.
Timing: Paid within 30 days from
the date it becomes payable.
ELIGIBILITY FORFEITURE
Eligibility: Employees who have
completed at least five years of continuous service are eligible for gratuity.
The five-year rule is relaxed in case of death or disability.
Forfeiture: Gratuity can be
forfeited partially or fully if the employee is terminated for misconduct,
moral turpitude, or causing damage to the employer’s property.
NOMINATION
Employees are required to
nominate one or more persons to receive the gratuity in case of their death.
Nominations can be updated as needed.
CONTROLLING AUTHORITIES
Appointed by the government to oversee and ensure compliance with the
provisions of the Act, adjudicate disputes, and enforce the payment of
gratuity.
UNIT - 5
THE FACTORIES ACT 1948
CHAPTERS DEALING WITH HEALTH, SAFETY AND WELFARE OF LABOUR
Health Provisions:
Cleanliness: Factories must
maintain cleanliness and hygiene, including regular cleaning and maintenance.
Ventilation and Temperature:
Adequate ventilation and temperature control must be maintained to ensure a
healthy working environment.
Lighting: Sufficient and suitable
lighting must be provided in every part of the factory.
Drinking Water: Provision of
clean and safe drinking water.
Latrines and Urinals: Adequate
and accessible sanitation facilities must be provided.
Safety Provisions:
Safety of Building and Machinery:
Ensuring that buildings and machinery are safe for workers.
Fencing of Machinery: Dangerous
parts of machinery must be securely fenced.
Precautions Against Fire:
Adequate measures for fire prevention and emergency response.
Safety Officers: Appointment of
safety officers in factories with more than a specified number of workers.
Handling Hazardous Substances:
Guidelines for safe handling, storage, and disposal of hazardous substances.
Welfare Provisions:
Washing Facilities: Sufficient
washing facilities for workers.
Facilities for Storing and Drying
Clothing: Provision for storing and drying clothes.
Sitting Arrangements: Adequate
sitting arrangements for workers required to work in a standing position.
First Aid: First aid appliances
and arrangements must be readily available.
Canteens, Shelters, and
Restrooms: Provision of canteens, shelters, and restrooms in factories with a
large workforce.
Crèches: Establishment of crèches
in factories employing a significant number of female workers.
CHILD LABOUR
RIGHTS OF CHILD AND THE INDIAN CONSTITUTION
Article 21A: Right to free and
compulsory education for children aged 6 to 14 years.
Article 24: Prohibition of
employment of children in factories and hazardous work.
SALIENT FEATURES OF THE CHILD LABOUR (PROHIBITION AND REGULATION)
ACT 1986
Prohibition of Employment: Bans
the employment of children below 14 years in hazardous occupations and
processes.
Regulation of Conditions:
Regulates the conditions of work for children in occupations where child labor
is not prohibited.
Working Hours: Limits the working
hours for children to a maximum of 6 hours per day, including a rest interval.
Health and Safety: Ensures health
and safety measures for working children.
Penalties: Prescribes penalties
for employers who violate the provisions of the Act.
THE EQUAL REMUNERATION ACT, 1976
Purpose: Ensures equal pay for
equal work for men and women and prevents discrimination on the grounds of
gender.
Key Provisions:
Equal Pay: Employers must pay equal remuneration to men and women
workers for the same work or work of a similar nature.
Non-discrimination in Recruitment: Prohibits gender discrimination in
recruitment and conditions of employment.
Advisory Committee: Establishment of advisory committees to promote the
enforcement of the Act.
Penalties: Prescribes penalties for non-compliance with the Act,
including fines and imprisonment for employers.
------------------------------ XXX-----------------------------------
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