LABOUR LAW

Problem No. 1

The appropriate Government referred an Industrial dispute which existed in a coffee estate for
adjudication. During the pendency of the dispute, the Management and the Trade Union arrived at a
settlement. Decide the legality of the settlement.

Answer
Sec. 2 (p) of the Industrial disputes Act, 1947 states that “settlement” means a settlement arrived at
in the course of conciliation proceeding.

A written agreement between the employer and workman arrived at otherwise than in the course of
conciliation proceeding is also conciliation.

Such a written agreement must be signed by the parties to the agreement in the prescribed manner.

A copy of the agreement must also be sent to an officer authorised in this behalf by the Appropriate
Government and to the Conciliation Officer.

Since the Management of the Coffee Estate and the Trade Union arrived at a settlement pending the
completion of the conciliation proceeding, a copy of the Agreement mutually arrived at and signed,
shall have to be sent to the Officer authorised by the Court which the Appropriate Government has
referred the dispute to, as prescribed by the above section of the Act.

Therefore, this type of settlement is legal and binding on the parties concerned.

Problem No. 2

A medical doctor was appointed in a tea estate to provide medical service to the workers, was terminated
from the service. The workers demanded reinstatement of the doctor. Can their demand become an
industrial dispute?
Answer
Sec. 22(k) of the Industrial Disputes Act, 1947 states that “industrial dispute” means any dispute or
difference between employers and employers, or between employers and workmen, or between
workmen and workmen, which is connected with the employment or non-employment or the terms of
employment or with the conditions of labor, of any person.

It is amply clear from the above section of the Act that any demand concerning withdrawal of
concession or privilege by the workers of an Organisation also qualifies to be an Industrial dispute.

In the light of the above, the demand of the workers of the Tea Estate for reinstatement of the Doctor
for providing medical assistance to them, qualifies to be an Industrial dispute.

Problem No. 3
Murugan was appointed as a clerk in a Bank in the year 2010. One year afterwards in the year 2011,   he
was terminated on the ground that he did not pass the test prescribed for confirmation in the Bank service.
Murugan claimed 'Retrenchment Compensation' under the Industrial Disputes Act. Decide.
Answer
Retrenchment is the termination of service of a workman for some reason or other by the employer.

However, all cases of termination of service by the employer do not become retrenchment. For eg.,

- In a case where termination of service is inflicted as a punishment by way of disciplinary action. 

- Retirement at the age of superannuation. 

- Continuing ill health. 

- Due to non renewal of the contract between employer and employee on the expiry or termination of
such contract etc.

In the above case, Murugan who was appointed as a clerk in a Bank was required, as per the rules
of the Bank, to pass a test prior to confirmation in the Bank service. This was within his knowledge
when he entered into service in the Bank. As he did not clear the test, he was terminated from
service as per the rules laid down.

Hence, the above case of termination of service by the Bank would not fall under ‘retrenchment’ and
consequently, Murugan is not entitled for any ‘Retrenchment compensation’ by the Bank.

Problem No. 4

London Confectionary Pvt. Ltd. has nearly 600 workers employed in various sections of the Company. The
workers in the Oven section went on strike. Hence the Management could not provide work to the workers
in the packing and marketing sections and declared lay-off in these two sections. The laid-off workers
claimed compensation. Decide.
Answer
According to Sec. 2 (gg) (kkk) of the Industrial Disputes Act, 1947, Every workman whose name is
borne on the muster rolls of the industrial establishment and who presents himself for work at the
establishment at the time appointed for the purpose during normal working hours on any day and is
not given employment by the employer for various reasons, within two hours of his so presenting
himself shall be deemed to have been laid- off for that day.

In the above case, the workers in the Oven section of London Confectionary Pvt. Ltd. resorted to
strike and as a consequence, the Packaging and Marketing sections were rendered without work as
there was no production. In effect, it amounts to lay-off for the workers in the packaging and
Marketing sections and therefore, they are entitled to lay off compensation by the Management on
account of lay-off.

Problem No. 5
An employer declared lay off to his workmen and offered them alternate employment in his Branch Office
situated at 12 km away from his main factory. The workers refused to accept the work and claimed
compensation for lay off. Decide.
Answer
According to Sec. 2 (gg) (kkk) of the Industrial Disputes Act, 1947, Lay-off is the failure or refusal or
inability of an employer to provide employment to his workmen due to certain reasons.

However, Sec. 25 (c) of the Industrial disputes Act, 1947 states that if the employer offers any
alternative employment in the same establishment or any other establishment of the Industry within
a radius of 5 miles (approx., 8.047 Km), then, no lay-off compensation is payable to the workman.

In the above case, the employer declared lay-off but offered alternative employment at his Branch
Office which is situated at about 12 Kms away from the Main factory. As the distance between the
two work spots exceeds the prescribed limit of 5 miles, the workers have a choice of refusing to
accept the alternative employment and claim compensation for lay-off.

The employer in this case is liable to pay lay-off compensation to the workers who refuse to accept
the alternative work arrangement.

Problem No. 6

Twelve members of a trade union sent an application for registration. Six members gave notice in writing of
their dissociation from the application before it was registered. Registrar of the trade union refused to
register the trade union. Decide.
Answer
The Registrar of the trade union cannot refuse to register the trade union. 

The provision regarding 'Registration of trade union' is contained in Sec. 4 of the Trade Union Act,
1926. It speaks about the mode of registration of Trade Union. 

Sec4(1) reads-Any seven or more members of a trade union, by subscribing their names to the rules
of the trade union and by otherwise complying with the provisions of this Act with respect to
registration, may apply for registration of the trade union. 

Sec. 4(2) reads - If an application has been made for the registration of a trade union, such
application does not become invalid merely for the reason that, at any time after the date of the
application, but before the registration of the trade union, some of the applicants, but not exceeding
half of the total number of persons who made the application, have ceased to be members of the
trade union or have given notice in writing to the Registrar dissociating themselves from the
application.

In the above problem, twelve members of a trade union sent an application for registration. Six of the
members out of twelve gave notice in writing of their dissociation from the application before the
trade union was registered. As per Sec. 4(2) of the Act, the application becomes invalid, only if
exceeding half of the total number of persons who made the application, at any time after the date of
the application, but before the registration of the trade union, have given notice in writing to the
Registrar dissociating themselves from the application, the Registrar of the trade union has the right
to refuse to register the trade union. 
In the above case, only half the number of total members (ie., 6 in number) who made the
application have given notice in writing to the Registrar dissociating themselves from the application.
The number of dissociating members are only half and not exceeded half of the total members. 

So the Registrar of the trade union has no authority to refuse registration of the trade union. 

 Problem No. 7

The Registrar cancels the registration of a trade union for participating in an illegal strike. Is the
cancellation valid?
Answer
The cancellation of the registration of a trade union by the Registrar for the reason that the members
of the trade union have participated in an illegal strike is not valid as u/s 10 of the Trade Union Act,
1926. 

Sec. 10 furnishes the grounds for cancellation of registration of a trade union. 

A certificate of registration of a trade union may be withdrawn or cancelled by the Registrar in the
grounds. 

If the Registrar is satisfied that 

- the registration certificate has been obtained by fraud or mistake or 

- the trade union has ceased to exist or 

- has willfully and after notice from the Registrar, contravened by provision of this Act or 

- allowed any rule of the trade union to continue in force which is inconsistent with any such
provision, or 

- has rescinded any rule providing for any matter provision for which is required by section 6.

There is no provision in the Act that the Registrar can cancel the registration of a trade union for
having participated in an illegal strike. 

Further, the Registrar must give not less than two months’ previous notice in writing to the Trade
Union before the certificate is withdrawn or cancelled. In the said notice, he must specify the
ground/s on which he has proposed to withdraw or cancel the registration certificate. 

The cancellation of registration of trade union in the above case is therefore illegal and void. 

Problem No. 8

A Trade Union member who was poor but very popular and who has not contributed to political fund,
requests the help from general fund for his election. Trade Union refuses to help from general fund for his
election. Decide.
Answer
The Trade Union can refuse to help from general fund for his election, but cannot refuse to help the
member from the political fund of the Trade Union.

As per Sec. 16 (3) of the Trade Unions Act, 1926, a member cannot be compelled to contribute to
the political fund. Such member who does not contribute to the political fund shall not be excluded
from any benefits of   the Trade Union, or placed in any respect either directly or indirectly under any
disability or at any disadvantage as compared with other members of the Trade Union (except in
relation to the  control or management of the said fund) by reason of his not contributing to the said
fund; and the  contribution to the said fund should  not be made a condition for admission to the
Trade Union.

So, in the above problem, the Trade Union cannot refuse to help the member from the political fund.
However, the Trade Union can refuse to help the member from the general fund for his election,
because as per Sec 17, the general funds of a registered Trade Union cannot be spent on any
other  objects than the objects specified in Sec 17 of the Act, which does not include election
expenses.  

Problem No. 9

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

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

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

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

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

Problem No. 10

A workman while performing his duties, under the influence of drinks, met with an accident and died. His
widow claimed compensation from the employer. Is the employer liable to pay compensation?
Answer
No. The employer is not liable to pay compensation.

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

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

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

Problem No. 11

A canteen situated in a hospital was run by a Contractor. The ESI Authorities directed the hospital owner to
pay contribution towards employees working in the canteen. But, the hospital owner refused. Examine the
liability of the hospital owner.
Answer
Sec. 1 of the Employees’ State Insurance Act, 1948 speaks about the application and scope of the
Act.

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

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

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

Problem No. 12

A pregnant worker who was employed in an establishment on 1.5.08 claims maternity benefits on her eighth
month of pregnancy. The management refuses to entertain her petition on the ground that she has not even
completed one year after her employment in this establishment and rejected her petition. She files a petition
before the Court of Law. Decide.
Answer
As per Sec. 5 (2) of the Maternity Benefit Act, 1961, a woman is eligible to maternity benefit only if
she has actually worked for not less than 160 days during the 15 months preceding the date of her
expected delivery.

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

The contention of the management that the employee had not completed 12 months of service in the
establishment shall not hold as the latter had worked for the required number of days during the
preceding 15 months of her expected date of delivery and hence on 1.5.08 she can claim maternity
benefits on her eighth month of pregnancy. 

Problem No. 13

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

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

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

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

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

Problem No. 14

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

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

- Where 20 or more workers are working or were working in any day in the preceding 12 months with
the manufacturing process being carried on without the aid of power
The Petrol Pump falls under the ambit of the Factories Act as held by the Hon’ble Court in the
famous case, ‘Qasi Noorul Hasan Hamid Hussain Petrol Pump and another Vs. Dy. Director, E.S.I.
Corporation, Kanpur wherein it was observed that the activity of pumping petroleum with the aid of
power and by employing more than 10 persons constituted manufacturing process under the
Factories Act, 1948.

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

Problem No. 15

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

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

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