P R E P A R E D A N D P R E S E N T E D B Y ,

N . G A N E S H A P A N D I A N

A S S I S T A N T P R O F E S S O R

M A D U R A I S C H O O L O F M A N A G E M E N T

M A D U R A I

Legal Aspects of BusinessUnit 3: Industrial law

Contents

An Overview of Factories Act

Payment of Wages Act

Payment of Bonus Act

Industrial Disputes Act

Factories act, 1948

Introduction

The first and foremost factories act in India was passed in the

year 1881, the act was principally designed for the protection

of children and provides for some health and safety measures

The factories Act 1881 was followed by new factories Act in

1891,1911,1922 and 1934.To implement the recommendations

of the Royal commission on Labor in India and the

conventions of the International Labor organization, the

factories Act 1934 enacted

Contd…

The effective administration was hampered by numerous shortcomings

and flaws because of inadequate and unsatisfactory safety, healthy and

welfare measures for the workers

As a result the factories Act, 1948 was passed which came into force w.e.f

1st April 1949

The Act was primarily enacted with a view to protect and defend the

workforce employed in manufacturing establishments against industrial

and occupational hazards

The Act divided into 11 chapters and 120 sections which regulates the

factories in India

Chapter 1: Preliminary (sec 1 – 7B)

Section 1: Short, title, extent and commencement

The act extends to whole of India including the state

of J&K. It has been extended to the Union territory of

Dadra and Nagar Haveli, Pondicherry, Goa, Daman

and Diu and it has also been extended to the state of

J&K in the year 1970

The provisions of this Act are applicable to all

factories including factories belonging to central or

any state government unless otherwise excluded

Section 2: Definitions

1. Adult [sec 2a]: An ‘adult’ means a person who has completed

his eighteenth year of age

2. Adolescent [sec 2b]: An ‘Adolescent’ means a person who

has completed his fifteenth year of age but has not

completed his eighteenth year of age

3. Calendar year [sec 2bb]: ‘Calendar year’ means the period of

twelve months beginning with the first day of January in any

year

4. Child [sec 2c]: ‘Child’ means a person who has not

completed his fifteenth year of age

Contd…

5. Competent person [sec 2ca]: ‘Competent person’ means a person or an

institution recognized by the chief inspector for the purpose of carrying out

test, examinations and inspections required to be done in a factory under the

provisions of this Act having regard to:

i) The qualifications and experience of the person and facilities available at

his disposal;

ii) The qualifications and experience of the persons employed in such

institution and facilities available therein,

With regard to the conduct of such tests, examinations and inspections,

and more than one person or institution can be recognized as a competent

person in relation to a factory

Contd…

6. Hazardous process [sec 2cb]: ‘Hazardous process’ means any process or

activity in relation to an industry specified in first schedule where, unless

special care is taken, raw materials used therein or the intermediate or

finished products, wastes, by-products or effluents thereof would:

i) Cause material impairment to the health of the person engaged in or

connected therewith, or

ii) Result in pollution of general environment

However the state government may, by notification in the official

Gazette, amend the first schedule by way of addition, omission or

variation of any industry specified in the said schedule

Contd…7. Young person [sec 2d]: ‘Young person’ means a person who is either a child or an

adolescent

8. Day [sec 2e]: ‘Day’ means a period of twenty four hours beginning at midnight

9. Week [sec 2f]: ‘week’ means a period of seven days beginning at midnight on Saturday

night or such other night as may be approved in writing for a particular area by the

Chief inspector of factories

10. Prime mover [sec 2h]: ‘prime mover’ means any engine, motor or other appliance

which generates or otherwise provides power

11. Transmission machinery [sec 2i]: ‘Transmission machinery’ means any shaft, wheel

drum, pulley, system of pulleys, coupling, clutch, driving belt or other appliance or

device by which the motion of a prime mover is transmitted to or received by any

machinery or appliance

12. Machinery [sec 2j]: ‘Machinery’ include prime movers, transmission machinery and

all other appliances whereby power is generated, transformed, transmitted or applied

Contd…

Occupier [sec 2n]: ‘Occupier’ of a factory means the person who has ultimate control over

affairs of the factory

Factory [sec 2m]: According to sec 2m of Factories act 1948, ‘Factory means ant premises

including the precincts thereof:

1. Whereon 10 or more workers are working or were working on any day of the

preceding twelve months, and in any part of which a manufacturing process is being

carried on with the aid of power, or is ordinarily so carried on, or

2. Whereon 20 or more workers are working or were working on any day of the

preceding twelve months, and in any part of which a manufacturing process is being

carried on without the aid of power, or ordinarily so carried on, but does not include a

mine subject to the operation of the mines Act, 1952 or a mobile unit belonging to the

armed forces of the union, a railway running shed or hotel, restaurant or eating place

Test of determining any establishment is a factory

1. There must be a place, premises including precincts thereof where

manufacturing process is carried on. There may be buildings or open land

for purpose of manufacturing process

2. There must be manufacturing process carried on with the aid of power or

without the aid of power, in any part of the premises including precincts

thereof of sought to be brought with in the purview of the term ‘factory’

3. There must be required number of persons working thereon depending on

the context.

4. It is not necessary that a manufacturing process be carried on in whole of

the building or place or premises or precincts thereof, it is sufficient if

manufacturing process is being carried on in any part thereof

Manufacturing process [sec 2k]

Any process for:

1. Making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to use, sale , transport, delivery or disposal, or

2. Pumping oil, water, sewage, or any other substance, or

3. Generating, transforming, or transmitting power, or

4. Composing types for printing by letter press, lithography, photogravure or other similar process or book-binding, or

5. Constructing, reconstructing, repairing, refitting, finishing, or breaking up ships or vessels or

6. Preserving or resorting any article in the cold storage

Workers [sec 2(1)]

“worker” means a person employed, directly or by or through

any agency including a contractor with or without the

knowledge of the principal employer whether for

remuneration or not in any manufacturing process, or in

cleaning any part of the machinery or premises used for a

manufacturing process or in any other kind of work incidental

to, or concealed with the manufacturing process, or the

subject of the manufacturing process but does not include any

member of the armed forces of Union

Contd…

Obligations of workers [sec 111]:

A worker in a factory shall not:

1. Willfully interfere with or misuse any appliance, convenience

or other thing provided in the factory for the purposes of

securing the health, safety or welfare of the workers therein

2. Willfully and without reasonable cause do anything likely to

endanger himself or others; and

3. Willfully neglect to make use of any appliance or other thing

provided in factory for the purpose of securing the health or

safety of the workers therein

Contd…

Rights of workers [sec 111-A]

As introduced by the amendment Act of 1987, every worker shall have the

right to:

1. Obtain from the occupier, information relating to workers’ health and safety

at work

2. Get trained within the factory wherever possible, or to get himself sponsored

by the occupier for getting trained in a training centre or institute, duly

approved by the chief inspector, where training is imparted for workers’

health and safety at work

3. Represent to the Inspector directly or through his representative in the

matter of inadequate provision for protection of his health or safety in the

factory

Section 3: References to time of day

Section 4: Power to declare different departments to

be separate factories or two or more factories to be

single factory

Section 5: Power to exempt during public emergency

Section 6: Approval, licensing and registration of

factories

Section 7A: General duties of the occupier

Section 7B: General duties of manufacturers etc., as

regards articles and substances for use in factories

Chapter 2: The inspecting staff [sec 8-10]

Section 8: Appointment of inspectors

1. The state government is empowered to appoint persons

possessing prescribed qualifications as Inspectors and assign

them such local limits as it may think fit [sec 8(1)]

2. The state government may also appoint a Chief inspector

who shall, in addition to the powers conferred on him as

chief inspector, exercise the powers of an inspector

throughout the state [sec 8(2)]

3. The state government may appoint Additional Chief

inspectors, joint chief inspectors and deputy chief inspectors

to assist chief inspector as may be specified [sec 8(2-A)]

Section 9: Powers of inspectors

Subject to any rules made under the Act, an inspector may exercise any of the

following powers within the local limits for which he is appointed

1. Enter any place which is used or which he has reason to believe is used as a factory. For

this purpose, he may take the assistance of any person

i) In the service of the government or

ii) Any local or public authority or,

iii) Of an expert

2. Make examination of the premises, plant, machinery, article or substance

3. Enquiry into any accident or dangerous occurrence whether resulting in bodily injury,

disability or not, and take on the spot or otherwise statements of any person which

he may consider necessary for such inquiry

4. Require the production of any prescribed or any other document relating to the factory

5. Seize or take copies of, any register, record or other document or any portion thereof as he may consider necessary in respect of the offence under this Act, which he has reason to believe have been committed

6. Direct the occupier that any premises or any part thereof , and anything lying therein, shall be left undisturbed for so long as is necessary for the purpose any examination

7. Take measurements and photographs and make such recording as he considers necessary for the purpose of any examination, taking with him any necessary instrument or equipment

8. In case of any article or substance found in any factory which appears to him to be dangerous to the health or safety of the workers, direct it to be dismantled or subject it to any test or destroy it, and make possession of it and detain it for so long as is necessary for making examination

9. He may exercise such other powers as may be prescribed

Section 10: Certifying surgeons

1. Appointment of certifying surgeons

Sec 10(1) – The state government may appoint qualified medical practitioners to be

certified surgeons for the purpose of this Act with in such local limits or for such

factory or class or description of factories as it may assign to them respectively

Sec 10(2) – Any certifying surgeon may, with the approval of the state government

authorize any qualified medical practitioners to exercise any of his powers under

this act on such condition and for such a period of time as the state government

may prescribe

Sec 10(3) – No person shall be appointed to be, or authorized to exercise the powers of, a

certifying surgeon, or having been so appointed or authorized, continue to exercise

such powers, who is or becomes the occupier of factory or directly or indirectly

interested therein or in any process or business carried or employ in factory

Chapter 3: Health (sec 11- 20)

section 11 : Cleanliness

Every factory shall be kept clean and free from effluent, from any drain, privy or

other nuisance and in particular

1. [sec 11(1)(a)] Accumulation of dirt and refuse shall be removed daily by

sweeping or by any other effective method from the floors and benches of

workrooms and from staircases and passage and disposed of in a suitable

manner

2. [sec 11(1)(b)] The floor of every workroom shall be cleaned once in every week

by washing, using disinfectant where necessary, or by some other effective

method

3. [sec 11(1)(c)] Where a floor is liable to become wet in the course of any

manufacturing process to such extent as is capable of being drained, effective

means of drainage shall be provided and maintained

Contd…

4. [sec 11(1)(d)] All inside walls and partitions, all ceilings or

tops of passages and staircases shall be painted or

whitewashed or varnished.

5. [sec 11(1)(dd)] All doors and window frames and other

wooden or metallic frame work and shutters shall be kept

whitewashed or color washed shall be carried out at least

once in period of 14 months

6. [sec 11(1)(e)] The dates on which the processes required by

clause (d) are carried out shall be entered in the prescribed

register

Section 12: Disposal of wastes and effluents

[section 12(1)] Effective arrangements shall be made in

every factory for the treatment of wastes and effluents due

to manufacturing process carried on therein so as render

them innocuous and for their disposal

[section 12(2)] The state government has the power to

make rules in this regard or it may require that such

arrangements shall be approved by a prescribed authority

Section 13: Ventilation and Temperature

1. Effective and suitable provision shall be made in every factory for securing

and maintaining in every workroom:

a, adequate ventilation by the circulation of fresh air and

b, such temperature as will secure to workers therein reasonable conditions of

comfort and prevent injury to health

2. Walls and roofs shall be of such material and so designed that such

temperature shall not be exceeded nut kept as low as practicable

3. Where the nature of work carried on in the factory involves, or is likely to

involve , the production of excessively high temperatures such adequate

measures as are practicable shall be taken to protect the workers there

from, by separating the process, which produces such temperature from

the workroom, by insulating the hot parts or by effective means

Section 14: Dust and fume

1. Measures for prevention of inhalation or

accumulation of dust or fume

2. Exhaust for internal combustion engine

Section 15: Artificial Humidification

In respect of all factories in which the humidity of the air is artificially

increased, the state government has been empowered to make rules as:

A, prescribing standards of humidification

B, regulating the methods for artificially increasing the humidity of the air

C, Directing prescribed tests for determining the humidity of the air to be

correctly carried out and recorded

D, prescribing methods to be adopted for securing adequate ventilation and

cooling of the air and workrooms

In any factory in which the humidity of the air is artificially increased, the water

used fir the purpose shall be taken from a public supply, or other source of

drinking water, or shall be effectively purified before it is used

Section 16: Overcrowding

1. No room in any factory shall be overcrowded to an extent injurious

to the health of the workers employed therein

2. Without prejudice to the generality of the above provision, there

shall be in every workroom of factory in existence 9.9 cu meters on

date of commencement, 14.2 cu meters after date of

commencement of this act

3. If the Chief inspector by order in writing so requires, there shall be

posted in each workroom of a factory specifying the maximum

number of workers who may, in compliance with provisions

4. The chief inspector may, by order in writing exempt, subject to such

conditions

Section 17: Lighting

In every part of factory where workers are working or passing there shall be provided and maintained sufficient and suitable lighting, natural or artificial or both

In every factory all glazed windows and skylights used for lightings of the workroom shall be kept clean on both inner and outer surfaces and so far as compliance with law

In every factory effective provision shall, so far as is practicable, be made for the prevention of:

a, Glare either directly from a source of light or by reflection from a smooth or polished surface

b, The formation of shadows to such an extent as to cause eye-strain or the risk of accident to any worker

The state government may prescribe, standards of sufficient and suitable lighting for factories or for any class or description of factories or for any manufacturing process

Section 18: Drinking water

1. Suitable points for wholesome drinking water

2. Drinking points to be legibly marked and to be away from

urinal, latrine etc

3. Cooling of drinking water where more than 250 workers

employed

4. The state government may make rules for securing

compliance with the provisions of section 18 and for the

examination by prescribed authorities of the supply and

distribution of drinking water in factories

Section 19: Latrines and Urinals

In every factory:

a, sufficient latrine and urinal accommodations of prescribed types shall be provided

conveniently situated and accessible to workers at the times while they are in the

factory

b, separate enclosed accommodation shall be provided for male and female workers

c, such accommodation shall be adequately lighted and ventilated and no latrine or

urinals shall, unless exempted in writing by the chief inspector, communicate with

any workroom except through and intervening open space or ventilated passage

d, All such accommodation shall be maintained in a clean and sanitary conditions at all

times

e, sweepers shall be employed whose primary duty it would be to keep clean latrines,

urinals and washing places

Contd…

In every factory wherein more than 250 workers are ordinarily employed:

a. All latrine and urinal accommodations shall be of prescribed sanitary

types

b. The floors and internal walls up to height of 90 cms of the latrines and

urinals and the sanitary blocks shall be laid in glazed tiles or any smooth

polished surface

c. Washed and kept clean at least once in seven days by using suitable

detergents or disinfectants

The state government may prescribe the number of latrines and urinals

to be provided in any factory in proportion to number of male and

female workers employed therein

Section 20: Spittoons

Sufficient number of spittoons

Display of notice of provision of spittoons

Whoever spits in contravention of section 20 shall be

punishable with fine not exceeding Rs.5

The state government may make rules prescribing

the type and the no. of spittoons to be provided and

location in factory and matter relating to

maintenance in clean and hygienic condition

Chapter 4: Safety (sec 21-41)

Measures regarding safety:

1. Fencing of machinery (section 21)

2. Work on or near machinery in motion (section 22)

3. Employment of young persons on dangerous machines

(section23)

4. Striking gear or devices for cutting of power (section 24)

5. Self-acting machines (section 25)

6. Casting of new machinery (section 26)

7. Prohibition of employment of women and children near

cotton openers (section 27)

8. Hoists and lifts (section 28)

9. Lifting machines, chains, ropes and lifting tackles (section 29)

10. Revolving machinery (section 30)

11. Pressure plant (section 31)

12. Floors, stairs and other means of access (section 32)

13. Pits, sumps and opening in floors (section 33)

14. Excessive weights (section 34)

15. Protection of eyes (section 35)

16. Precautions against dangerous fumes (section 36)

17. Precautions against the use of portable electric lights (section

36A)

18.Explosives or inflammable dust or gas (section 37)

19. Precautions in case of fire (section 38)

20. Power to require specifications of defective parts or

tests of stability (section 39)

21. Safety of buildings and machinery (section 40)

22. Maintenance of buildings (section 40A)

23. Safety officers (section 40B)

24. Power to make rules (section 41)

Chapter 4A: Provisions relating to hazardous process (sec 41A-41H)

Chapter 5: Welfare (sec 42-50)

Section 42: Washing facilities

In every factory:

1, adequate and suitable facilities for washing shall be provided

and maintained for the use of workers therein;

2, Separate and adequate screened facilities shall be provided and

maintained for the use of male and female workers;

3, Such facilities shall be conveniently accessible and shall be kept

clean

The state government has been authorized to prescribe the

standards of adequate and suitable facilities

Section 43: Facilities for storing and drying clothing

The state government has been empowered to make

rules requiring the provision therein of suitable

places for keeping clothing not worn during working

hours and for the drying of wet clothing in respect of

any factory or class or description of factory

Section 44: Facilities for Sitting

In every factory suitable arrangements for sitting

shall be provided and maintained for all workers

obliged to work in a standing position, in order that

they may take any advantage of any opportunities for

rest which may occur in the course of their work

Section 45: First Aid appliance

There shall in every factory be provided and

maintained so as to readily accessible during all

working hours first aid boxes or cup-boards equipped

with the prescribed contents, and the number of such

boxes or cupboards to be provided and maintained

shall not be less than one for every 150 workers

ordinarily employed at any one time in the factory

Section 46: Canteens

The date by which such canteen shall be provided;

The standards in respect of construction, accommodation, furniture and

other equipment of the canteen;

The foodstuffs to be served therein and the charges which may be made

therefore;

The constitution of a managing committee for the canteen and the

representation of workers in the management of the canteen;

The items of expenditure in the running of the canteen which are not to be

taken into account in fixing the cost of foodstuffs and which shall be borne by

the employer;

The delegation to the chief inspector, subject to such conditions as may be

prescribed, of the powers to make rules

Section 47: Shelters, Rest rooms and Lunch rooms

In every factory wherein more than 150 workers are

ordinarily employed, adequate and suitable shelters or test

rooms and a suitable lunchroom, with provision for

drinking water where workers can eat meals brought by

them, are required to be provided and maintained for the

use of workers. However any canteen maintained in

accordance with the provisions under section 46

The shelters or rest rooms or lunch room to be provided

are required to be sufficiently lighted and ventilated and

required to be maintained in a cool and clean condition

Section 48: Crèches

In every factory wherein more than 30 women workers are

ordinarily employed suitable room or rooms are required

to be provided and maintained for the use of children

under the age of six years of such women workers

Such rooms shall provide adequate accommodation. those

rooms shall be adequately lighted and ventilated and shall

be maintained in clean and sanitary conditions.

Section 49: Welfare officers

In every factory wherein five hundred or more workers are ordinarily

employed is under statutory duty to employ in factory such number of

welfare officers as may be prescribed. The state government may prescribe

the duties, qualifications and conditions of services of such officers.

Section 50: Power to make rules

The state government may make rules; exempting, subject to compliance with

such alternate arrangement for the welfare of workers as may be prescribed,

any factory or class or description of factories from compliance with any of

the provisions

Requiring in any factory or class of description of factories that

representatives of the workers employed in the factory shall be associated

with the management of the welfare arrangements of the workers

Chapter 6: Working hours of adult (sec 51-66)

1. Weekly hours (section 51)

2. Weekly holidays (section 52)

3. Compensatory holidays (section 53)

4. Daily hours (section 54)

5. Intervals for rest (section 55)

6. Spread over (section 56)

7. Night shifts (section 57)

8. Prohibition of overlapping shifts (section 58)

9. Extra wages for overtime (section 58)

10. Restriction on double employment (section 59)

11. Notice of period of work for adults (section 60)

12. Register of adult workers (section 62)

13. Restriction on employment of women (section 66)

Chapter 7: Employment of young persons (sec 67-77)

Section 67: Prohibition of employment of young children

Section 68: Non-adult workers to carry tokens

Section 69: Certificate of fitness

Section 70: Effect of Certificate of fitness granted to adolescent

Section 71: Working hours for children

Section 72: Notice of periods of work for children

Section 73: Register of child workers

Section 74: Hours of work to correspond with notice under 72

and 73

Section 75: Power to require medical examination

Section 76: Power to make rules

Section 77: Certain other provisions of law Not barred

Chapter 8: Annual leave with wages (sec 78-84)

Section 79:

1, Leave Entitlement

2, Computation of period of 240 days

3, Discharge, dismissal, superannuation, death or quitting of employment

4, Treatment of fraction of leave

5, Treatment of un availed leave

6, Application for leave to be made in writing within a specified time

7, Application for leave covering a period of illness may not be within specified time

8, Scheme for grant of leave

9, Display of scheme for grant of leave

10, Refusal of leave to be in accordance with scheme

11, Payment of wages to worker for leave period if he is discharged or if he quits

service

12, Un availed leave not be taken into account while computing period of notice

Wages during leave period (section 80)

For the leave allowed to him under section 78 or section

79, as the case may be, a worker shall be paid at rate

equal to the daily average of his total full time earnings

for the days on which he actually worked during the

month immediately preceding his leave exclusive of any

overtime and bonus but inclusive of dearness allowance

and the cash equivalent of the advantage accruing

through concessional sale to the worker of food grains

and other articles

1. Payment in advance in certain cases

(section 81)

2. Mode of recovery of unpaid wages

(section 82)

3. Power to make rules (section 83)

4. Power to exempt factories (section 84)

Other provisions related to factories Act, 1947

Chapter 9: Special provisions (sec 85-91A)

Chapter 10: penalties and procedures (sec 92-

106A)

Chapter 11: supplemental (sec 107-120)

Payment of wages Act 1936

Introduction

The payment of wages act,1936 was passed to regulate the

payment of wages to certain classes or persons employed

in industry

It is essentially meant for the benefit of industrial

employees not getting very high wages and the provisions

of the act were enacted to safeguard their interest

It also provides against irregularities in payment of wages

and unauthorized deductions therefore by the employers

Section 1: Short, title, extent, commencement and application

1. This act may be called the payment of wages Act, 1936

2. It extends to the whole of India

3. It shall came into force on such date as the central government may, by notification in

the official gazette, appoint

4. It applies in the first instance to person employed in any factory, to persons employed

(otherwise than in a factory)

5. Appropriate government may, after giving three months notice of its intention of so

doing, by notification in the official Gazette extend the provision of this act or any of

them to the payment of wages to any class of persons employs in any establishment

6. This act applies to wages payable to an employed person in respect of a wage period if

such wages for that wage period do not exceed six thousand and five hundred rupees

Section 2: Definitions

Appropriate government (section 2(i)): “Appropriate government

means, in relation to railways, air transport services, mines and

oilfields, the central government and, in relation to all other cases, the

state government

Employed person (section2(ia)): Employed person includes the legal

representatives of a deceased employer

Employer (section (2(ib)): Employer includes the legal

representatives of a deceased employer

Factory (section 2(ic)): Factory means a factory as defined in section

2(m) of the factories act 1948 and includes any place to which the

provisions of factories act, 1948 have been applied under sec 85 of

that act

5. Industrial or other establishment (section (2ii))

6. Wages (section 2 vi): “wages” means all

remuneration (whether by the way of salary,

allowances otherwise) expressed in terms of money

or capable of being so expressed which would, if the

term of employment, express or implied, were

fulfilled, be payable to a person employed in respect

of his employment or work done in such

employment

Rules for payment of wages

Responsibility of payment of wages (section 3)

Fixation of wage periods (section 4)

Time of payment of wages (section 5)

Wages to be paid before 7th or 10th day of the following

wages period

Medium of payment of wages (section 6)

Wages to be paid in current coin or currency notes

Deduction from wages (section 7)

Meaning of deduction (section 7(1))

Section 7(1) provides that notwithstanding the provisions the Railways Act

1989, the wages of an employed Person to the employer or his agent shall,

for the purpose of this act , be deemed to be a deduction from wages. Any

loss of wages resulting from the imposition, for good and sufficient

cause, upon a person employed of any of the following penalties

1, The withholding of increment of promotion including the stoppage of an

increment at an efficiency bar;

2, The reduction to a lower post or time-scale or to a lower stage in a time

scale

3, suspension

Maximum amount of deduction

Section 7(3) provides that notwithstanding anything contained in this act, the

total amount of deductions which may be made under subsection(2) in any

wage period from the wages of any employed person shall not exceed:

1. In cases where such deductions are wholly or partly made for payments to

co-operative societies under clause (j) of sub-section(2), seventy five

percent, of such wages and,

2. In any other case, fifty percent of such wages, it is provided that where the

total deductions authorized under sub-section (2) exceed seventy five

percent or, as the case may be, fifty percent, of the wages . The excess may

be recovered in such manner as may be prescribed

Section 7(2): Kinds of deductions

1. Fines (section 8)

2. Deductions for absence from duty (section9)

3. Deductions for damage or loss (section 10)

4. Deduction for house accommodation (section 7(2)d)

5. Deductions for amenities and services (section 7(2)e)

6. Deduction for recovery of advances (section 7(2)f)

Contd…

7, Deductions for recovery of loans made from any fund: (section7(2ff))

8, Deduction for recovery of loans (section 7(2fff))

9, Deduction for income tax (section 7(2g))

10, Deductions required to be made by order of a court (section (2)h)

11, Deductions for provident fund section 7(2 (i))

12, Deductions for payments to co-operative societies section ((2)j)

13, Deduction with consent of Employed person section 7(2)k

14, Deductions for welfare fund section 7(2)kk

Contd…

15, Deductions for trade union membership fees section 7(2) kkk

16, Deductions for fidelity guarantee bonds section 7(2) I

17, Deduction for recovery of losses sustained by a railway administration

section 7(2)m

18, Deduction for losses caused due to failure of proper collection charges

section 7(2)n

19, Deduction for recovery of losses due to incorrect funds etc., section 7(2)o

20, Deduction for PM’s National relief fund ,etc section 7(2)p

21, Deductions for contribution to any insurance scheme section 7(2)q

Section 13-A: Maintenance of registers and records

1. Particulars of persons employed by them;

2. The work performed by them;

3. The wages paid to them;

4. The deductions made from their wages;

5. The receipts given by them; and

6. Such other particulars and in such form as may be

prescribed;

Enforcement of Act

Inspectors (section 14)

Powers, functions and status of inspectors (section 14(4)

Appointment of authority (section15(1))

Power of authorities appointed under section 15

Appeal (section 17)

Penalty for offences under the act (section 20)

1. Penalty for delaying the payment of wages or making unauthorized deductions from

wages (section 20(1))

2. Penalty for not paying wages on a working day or in current coins (section 20(2))

3. Penalty for failure to maintain and furnish records and returns (section 20(3)

4. Penalty for obstruction etc.,:

5. Subsequent offence

6. Additional fine for failure to pay wages by the final date

Other provisions

Procedure in trial of offences (section 21)

No court contracting out (section23)

Delegation of powers (section 23)

Display by notice of abstracts of the act (section 25)

Payment of bonus Act 1965

Introduction

Bonus is concept referring to ex gratia or bounty or a

payment by way of gift.

Payment of bonus 1965, there is an obligation to pay a

minimum bonus irrespective of the financial results

has turned bonus into an additional statutory

payment by an employer to employees

Section 1: Short title, Extent and Application

This act may be called the payment of bonus act 1965

It extends to whole of India

Save as otherwise provided in this act, it shall apply to:

1, Every factory and

2, Every other establishment in which 20 or more

persons are employed on any day during an

accounting year

Section 2: Definitions

Accounting year: section 2(1) Accounting year means

1. In relation to a corporation, the year ending on the day

on which the books and accounts of the corporation are

to be closed and balanced

2. In relation to a company, the period in respect of which

any profit and loss account of the company laid before

it in AGM is made up, whether that period is a year or

not

Contd…

2. Allocable surplus : section 2(4)

3. Appropriate government : section 2(5)

4. Company : section 2(9)

5. Direct tax : section 2(12)

1, any tax chargeable under:

a, The income tax,1961

b, The super profits act,1963

c, The companies (profits) surtax act, 1964

d, The agricultural income tax laws and

2, Any other tax which, having regard to its nature or incidence may be

declared by the central govt, by notification in the official gazatte

Contd…

Employee (section 2(13))

Employer (section 2(14))

Salary or wage (section 2(21))

Number of working days:

The absence of the employee from work on account of the following causes

should not be deducted from the total number of working days

1. Period of layoff under any statue

2. Period of leave with salary or wage

3. Absence due to temp. disablement by any accident

4. Period of maternity leave with salary

Determination of bonus

Step1: Computation of gross profit (section 4)

The gross profit can be derived by an employer from an

establishment in respect of any accounting shall

1. In the case of a banking company, can calculated in the

manner prescribed

2. In any other case, be calculated in the manner prescribed

Step2: computation of Available surplus (section 5)

Step3: Allocable surplus

Eligibility and disqualification for bonus

Eligibility of bonus (section 8)

Every employee shall be entitled to be paid by his employer in an

accounting year, bonus, in accordance with the provisions of the act,

provided he has worked in this establishment for not less than 30

working days in that year

Disqualification for bonus(section 9)

An employee shall be disqualified from the receiving bonus, if he is

dismissed from service for:

1, fraud

2, riotous or violent behavior

3, Theft, misappropriation or sabotage

Amount of bonus :

1. Payment of minimum bonus (section 10) 8.33%

2. Payment of maximum bonus (section 11) 20%

Set-on and set-off of allocable surplus (section 15)

Set-on : excess of allocable surplus

Set-off : below the minimum bonus limit

Time limit for payment of bonus (section 19)

Maintenance of register, records etc., (section 26)

Inspectors (section 27)