Labour Laws Explained

Labour Laws
Of all the factors of production, man is by far the most important. The importance of human factor in any type of co-operative
endeavour cannot be over emphasised. It is a matter of common knowledge that every business organisation depends for its
effective functioning not so much on its material or financial resources as on its pool of able and willing human resources. The
overwhelming importance of this factor is due to its unique characteristics. First , this is the only resource which is able to produce
an output greater than its input. Man alone can produce through motivated creativity an output greater than the sum of his
inputs. No other resource can do this. Second , this resource is animate, active and living. It is man alone who with his ability to
feel, think, conceive and grow shows satisfaction or dissatisfaction, resentment or pleasure, resistance or acceptance for all
types of managerial actions. All other resources which are inanimate, inert and passive do not act in this way. All emotional
problems emanate from human factor only. Third , human resource is most complex and unpredictable in its behaviour. There is no
cook book formula to guide a manager how to motivate his workers. A manager can buy his worker’s time, he can buy his physical
presence at a given place, he can buy a measured number of skilled muscular motions per hour or day, but he cannot buy worker’s
enthusiasm, he cannot buy his initiative, he cannot buy his loyalty, he cannot buy his devotion. Fourth, each individual has his
own distinct background. This makes each individual unique in his psychological framework. No two individuals have exactly similar
psychological frameworks. Hence, they cannot be interchanged, much less standardised. This implies that all individuals in an
organisation cannot be treated alike. In employing and supervising people and in endeavouring to reach their motivation, a
manager must follow tailor-made approach based on his understanding of the actions, attitudes, needs and urges of the worker
concerned. This is a very formidable and challenging task. Finally, it is only this resource which appreciates in value with the
passage of time. As time passes people become experienced and skilled. It is not so with other resources which generally
depreciate as time goes on.
Two other factors which have increased the importance of human resource are the labour enactments and the rise of labour
organisations. Various laws, such as the Factories Act, Employees State Insurance Act, and the Workmen’s Compensation Act
have been passed to dictate certain minimum standards of treatment. Fear of opposition by labour unions is another somewhat
negative reason for treating the human resource with greater respect.
All the above factors underscore the need for a manager to be more than ‘good at handling men’. He must understand and
reach the employee’s motivation and enlist the worker’s co-operative endeavour. In short, management of personnel- or
personnel management as it is often called - is of prime importance to every leader and for every type of endeavour.
The earliest roots of this branch of knowledge can be traced back to the eighteenth century to some of the writings of Robert
Owen - a successful textile manufacturer in Scotland. Owen believed that the volume and quality of a worker’s output were
influenced by his total environment, i.e., by his conditions both on and off the job. In this respect he reached the threshold of
modern thinking though many of his practices were what could now be called paternalistic. Robert Owen is regarded as the
Father of Personnel Management.
The work of a personnel department deals specifically with procuring, hiring, training, placing, utilising and maintaining an
effective work force that will aid in the accomplishment of the firm’s objectives. This does not imply that other members of the
management team do not have a part in the management and development of personnel. To the contrary, the responsibility for
good personnel administration rests on every supervisor and manager in the organisation. Personnel management is not a one-
man responsibility nor can it ever be achieved by one individual. It is a corporate, co-operative endeavour that should stem from
a common feeling and concept and should progress in a unified, co-ordinated manner.
DEFINITIONS OF PERSONNEL MANAGEMENT
There is no standard definition of the term ‘personnel management’. Different writers have given different definitions of
the term. Some of these are reproduced below :
1. “The personnel function is concerned with the procurement, development, compensation, integration, and maintenance
of the personnel of an organisation for the purpose of contributing toward the accomplishment of that organisation’s
major goals or objectives. Therefore, personnel management is the planning, organising, directing, and controlling of
the performance of those operative functions.”
2. ”Personnel management is that field of management which has to do with planning, organising, and controlling various
operative activities of procuring, developing, maintaining and utilising a labour force in order that the objectives and
interest for which the company is established are attained as effectively and economically as possible and the objectives
and interest of all levels of personnel and community are served to the highest degree.”
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3. ”Manpower management effectively describes “ the processes of planning and directing the application, development, and
utilisation of human resources in employment.”
4. ”Personnel Administration is a method of developing the potentialities of employees so that they get maximum satisfaction
out of their work and give their best efforts to the organisation.”
5. “Personnel Management is that part of management process which is primarily concerned with the human constituents of an
organisation.”
6. “Personnel Management is that part of the management function which is concerned with people at work and with their
relationships within an enterprise. Its aim is to bring together and develop into an effective organisation the men and women
who make up an enterprise and, having regard to the well- being of an individual and of working groups, to enable to make
their best contribution to its success.”
7. “Personnel Management is that part of the management function which is primarily concerned with human relationships
within an organisation. Its objective is the maintenance of those relationships on a basis which, by consideration of the well-
being of the individual, enables all those engaged in the undertaking to make their maximum personal contribution in the
effective working of the undertaking.”
FUNCTIONS OF PERSONNEL MANAGEMENT
From the above definitions it is clear that personnel management involves two categories of functions - managerial and
operative.
Basic managerial functions - planning, organising, motivating and controlling - are common to all managers including personnel
managers and are performed by all of them. That is why it is said that general management and personnel management are one
and the same.
The planning functions of a personnel manager pertains to the steps taken in determining a course of action. This involves
developing a personnel programme and specifying what and how operative personnel functions are to be performed.
After plans have been developed, the personnel manager must establish an organisation to carry them out. This function,
therefore, calls for grouping of personnel activities, assignment of different groups of activities to different individuals, delegation
of authority to carry them out and provision for coordination of authority relationships horizontally and vertically in the organisation
structure.
Motivation involves guiding and supervising the personnel. Personnel manager must inculcate in the workers a keen appreciation
of the enterprise policies. He must guide them towards improved performance and motivate them to work with zeal and confidence.
Control involves measuring performance, correcting negative deviations and assuring the accomplishment of plans. Through
direct observation, direct supervision, as well as reports, records and audit, personnel management assures itself that its
activities are being carried out in accordance with the plans.
The operative functions of personnel management are as under :
(a) Procurement, (b) Development, (c) Compensation, (d) Integration,
(e) Maintenance, and ( f ) Records, research and audit.
Procurement is mainly concerned with the hiring of personnel - the right people, in the right place, at the right time. This
function deals specifically with such subjects as the determination of manpower requirements and their recruitment, selection and
placement.
Development pertains to the training and education of the hired personnel, their morale building, effective communication
network, promotion and transfer plans, suggestion systems and similar other plans.
Compensation deals with the method and standards of remuneration with emphasis upon such activities as job evaluation,
wage systems, monetary incentives and terms of employment.
Integration is concerned with the attempt to bring about a reasonable reconciliation of individual and organisational interests.
Negotiations with labour unions, collective bargaining, human and social implications of change, etc., are some of the subjects
which constitute this function.
Maintenance function aims at maintaining good working conditions (health and safety measures) in and favourable attitudes
towards the organisation.
Records, research and audit are the final group of operative functions. Record-keeping is necessary both for exercising
control over personnel activities and for doing research. Personnel audit helps to evaluate the effectiveness of various personnel
policies and procedures and indicates a further course of action.
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OBJECTIVES OF PERSONNEL MANAGEMENT
According to Michael J. Jucius, personnel management should aim at :

(a) attaining economically and effectively the organisation goals.
(b) serving to the highest possible degree the individual goals, and
(c) preserving and advancing the general welfare of the community.
To put it in another way, personnel management has three-pronged obligations. It must satisfy the employees by
supplying them income, power, prestige, creative satisfaction or a combination of these. It must satisfy the owners by
maximising their economic efficiency. And it must satisfy the community and society at large by supplying goods & services
as efficiently as possible and by preserving and advancing goodwill, morale, loyalty & its reputation. This is not an easy
task, for the 3 sets of goals are intertwined in such a way that the neglect of any one can destroy or injure the others.
ROLE OF HUMAN RELATIONS IN PERSONNEL MANAGEMENT
There is no standard definition of the term ‘human relations’. However, it primarily represents a mode of management
which recognises the centrality of the individual in an organisation, emphasises the need of understanding him and aims at
integrating the two seemingly opposite goals in an organisation, viz., the personal goals of its members and the productivity
goals of the total organisation. Defined thus, human relations play a key role in the success of a personnel manger.
The philosophy underlying human relations has changed several times. In the early days of industrial revolution, human
relations used to be based on the authority of the boss. It was believed that the boss had the absolute power to hire, fire
and perspire the worker. Being in command he had the power to demand work from his employees. The philosophy of
human relations thus rested on negative motivation. The psychological result of this philosophy was that the employee
unprotestingly complied with the orders without enthusiasm.
Employers soon realised that human relations based on authority and fear produced dysfunctional consequences. The
employees felt insecure and frustrated. Production suffered. The philosophy underlying human relations needed a change.
As a result, material rewards were emphasised. Several welfare programmes started which provided security to the workers.
Many off- the-job fringe benefits were given. But this too did not prove flawless. Many studies showed that though economic
rewards made employees happy they did not necessarily make them productive also. The philosophy underlying human
relations, therefore, again changed. It is now believed that people are better motivated by supportive leadership than by
power or economic reward. Through supportive leadership, management can provide to each worker a climate to grow and
accomplish in the interests of the organisation the things of which he is capable. The leader should assume that workers
are not by nature passive and resistant to organisational needs, but that they are made so by an inadequate supportive
climate at work. He must show genuine concern for workers’ welfare. This will encourage workers to take responsibility and
improve themselves. Management’s emphasis should be on building workers’ sense of personal worth and importance.
Some important behaviourists whose thoughts have greatly helped in understanding and promoting human relations
are : Douglas McGregor, Abraham Maslow, Chris Argyris, and Rensis Likert, The following is a gist of their ideas :
Douglas McGregor in his book ‘The Human Side of Enterprise’ asserts that since a manager practises what he believes,
human relations depend upon the type of assumptions which he holds about the nature of his men. In most cases these
assumptions are wrong. These assumptions are as under :
1. The average worker has an inherent dislike for work and will avoid if he can.
2. Because of this dislike for work, most people must be coerced, controlled, directed, and threatened with punishment
to make them put forth adequate effort towards the achievement of organisation objectives.
3. The average worker prefers to be directed, wishes to avoid responsibility, has relatively little ambition, and wants
security above all.
Abraham Maslow tells us that in order to motivate a worker the manager should look to his unsatisfied needs and not to
needs which have been satisfied. For this purpose he classifies all human needs into five categories :
1. Basic physiological needs
2. Safety needs
3. Social needs
4. Egoistic needs, and
5. Self-actualization needs.
According to Maslow, there is a strict priority or order according to which these needs arise. First need comes first and
the second comes only when the first has been reasonably satisfied. This hierarchy helps to emphasise that human relations
can be effectively practised only after the basic physiological and security needs of workers have been reasonably satisfied. An
employer who appeals for employees ‘ co-operation and loyalty and solicits their participation in management without providing
them fair and competitive wages is only wasting his efforts.

According to Chris Argyris , to promote human relations the work environment of a typical organisation should be able to meet
the needs of its workers as mature individuals. These needs are as follows :
1. Minimum control and supervision.
2. Opportunity for maximum expression of one’s abilities and skills.
3. Detailed knowledge about oneself and about the job so that one is able to plan one’s future and make it secure.
4. Aspiration to occupy an equal and/or superior position relative to one’s peers.
5. Enlargement of those areas of one’s life in which one’s own decisions determine the outcome of one’s efforts.
Rensis Likert in his book ‘New Patterns of Management’ shows that an organisation functions best when its members
function not as individuals but as groups under participative management which he calls s y s t e m - 4 m a n a g e m e n t .
Needless to say, traditional managers do not value participation and team work.
Some important research studies which have enriched the literature on human relations in industry are as
follows :
1. Hawthorne Studies
2. Harwood Manufacturing Company Studies, and
3. Prudential Company Studies
Hawthorne studies, which were carried out in the early 1920’s under the leadership of Elton Mayo at the Hawthorne
Works of the Western Electric Company in the U.S.A., point out that (1) the needs for recognition, security and sense of
belonging exert greater impact on workers’ productivity than the physical working conditions. A manager can get good
output in poor working conditions if the human relationships are good, but he cannot get good output in good working
conditions if the human relations are bad; (2) informal groups operating within the organisation exert strong social controls
over the work habits and performance of the individual workers; and (3) supervision has a great impact on the behaviour
of the work groups in determining as to whether they will react positively or negatively while working towards the
organisational objectives.
Harwood studies, which were carried out in the late 1940’s by Lester Coch and John R.P. French at the Marion Virginia
plant in the U.S.A, examine the process of overcoming resistance to change. They show that participative change produces
more favourable impact on workers than directive change.
Prudential studies which were initiated in 1974 by the Michigan Survey Research Centre at the home office of the
Prudential Insurance Company, New Jersey, show that the supervisors of high producing sections are more likely to be
employee-oriented than production-oriented. Rensis Likert, the Director of the Institute, has presented the results of this
research in his book “New Patterns of Management “.
QUALITIES OF A GOOD PERSONNEL MANAGER
One can easily see that in terms of the definitions mentioned above, personnel management is not an easy task. A good
personnel manager is no longer just a hirer and firer of men, but a blend of many talents : psychologist, negotiator,
statistician, planner, adviser on corporate policy, job analyst, interviewer, lawyer, productivity bargainer - at one moment a
strategist, at the next a personal confidant. Such varied responsibilities soon make a personnel manager realise how heavy
is his burden which his specialised assignment entails. To carry this burden one must be trained in the task and must
possess considerable range of talent. According to Richard P. Calhoon, training is needed in three interdependent areas :
administrative, behavioural and technical. For example, the success of an incentive plan would require technical knowledge
of manufacturing operations in various departments, behavioral knowledge of employees’ resistance to change and
administrative skill in gaining acceptance.
Some desirable personality traits of an effective personnel manager are as under :
(1) Insight into human nature : He must be able to understand various kinds of people and to get along with them at all
levels. He should possess immense tact, practical mind, amiable disposition and sober temperament. He should be
trained in behavioural sciences. The three disciplines comprising the core of behavioral sciences are anthropology,
psychology and sociology. Other disciplines which may be regarded as being at the periphery of the behavioural
science field are economics, political science and jurisprudence.
(2) Freedom from bias : He should be neither pro-management nor pro-labour. He should be pro-profession and should judge
and advise on issues without fear or favour on the merits of the matter under consideration. He should be known for his
honesty, integrity, strength of character, sense of balance, justice and fair play.

(3) Passion for anonymity : He should be a credit-passer and not a credit-grabber. Since the personnel manager mostly plays a
staff role, he can achieve his results only through line managers. This calls for a willingness to let credit for success go to
them. He is best when people barely know that he exists. The word ‘I’ should be least important.
(4) Communication skills : A personnel manager has not only to ‘sell’ his ideas to line people above him but he is also required to
address several oral and written communications to people below him. The two groups which are different in culture, status,
education and knowledge differ in their communication requirements also. Workers with poor education may not understand
literary expressions of difficult language. They will prefer communication in their own colloquial language. Therefore, a
personnel manager must possess linguistic facility.
(5) Leadership and organisational skills. A personnel manager must also be a good leader and organiser to be able to motivate
the workers. He must possess emotional stability, adaptability and decisiveness.
In the ultimate analysis, the socio-cultural background of the personnel manager, his own philosophy of life, his aspirations
in the industrial setting and his life experiences which mould his personality and character would have a crucial bearing on
his role and functioning in the organisation, business and industry.
Is Personnel Management a Profession ?
McFarland gives the following attributes of a profession :

1. Existence of an organised and systematic knowledge.
2. Formalised methods of acquiring training.
3. Existence of an association with professionalisation as its goal.
4. Existence of an ethical code to regulate the behaviour of the members of the profession.
5. Charging of fees based on service but with due regard to the propriety of service over the desire for monetary reward.
Personnel management, as we all know, possesses all the above attributes of a profession. There has been a phenomenal
increase in the knowledge about personnel management in recent years. Several schools of social work and institutes of
management have come to be established in the country besides diploma courses on personnel management offered by
several universities. Two institutes which deserve special mention here for their yeoman’s service in professionlising personnel
management in India are : the National Institute of Personnel Management and the National Institute of Labour Management.
The Current Status of Personnel Management in India
In the current tradition of India, the personnel officer is not invested with the necessary authority to implement the
decisions effectively and, therefore, commands relatively less respect from workers and trade unions as well as from
technical and other managerial staff of the organisation. In the framing of labour policy, he is not always consulted and in
industrial relations sphere he has a limited function to perform, since a large number of issues in many sectors of industry
and business are still dealt with through adjudication machinery. Even in the welfare administration area, where some
financial considerations are involved, the controls are exercised at some other or higher level in the administration thus
reducing the value of his function and consequently his contribution to the organisational success.
In short, it can be concluded that the personnel function in India is still playing an inactive role (as distinguished from
reactive, proactive and interactive roles) being surrounded by a web of role ambiguities and paying inadequate attention to
self-audit and research.
Factors which have impeded the growth and progress of personnel function in India can be summarised as
follows :
1. By creating welfare officers under Section 49 of the Factories Act, 1948, the Government has done more harm than
good because these statutory officers have not won the support of line management in their organisations. The
statutory sharing of functions by these officers has made others hostile to them.
2. A large number of industrial relations laws have resulted in a legalistic approach to labour relations and has made
personnel executives dependent on lawyers. A personnel officer’s preoccupation in litigation has left him with little
time to attend to several other aspects of his duties.
3. The inherent weakness of the job that its results cannot be measured in concrete terms has proved frustrating for
many personnel executives in evaluating their success.
4. The job of a personnel officer is still considered by a large number of employers as a fire-fighting function only to head
off union troubles.
5. Many personnel executives develop an exaggerated notion about their academic and training qualifications and consider line
managers as inferior. This has made line people hostile to personnel departments generally.

6. Personnel executives have generally short-range perspective and remain insensitive to the organisation’s internal needs.
Their rigid and unchanging attitudes have been a major factor hindering the growth of personnel function.
7. The human relations approach to personnel management has not yet taken a firm foothold in our country. The reasons for
this lie in our socio-cultural conditions as described below :
(a) Highly authoritarian culture : We have a highly authoritarian culture, which militates against participation and free
communication - the two core ideas of human relations. Freedom is not a value per se with most Indians. Our child-
rearing practices, illiteracy and caste system - all work together to foster a feeling of dependency in an individual.
(b) Abundance of cheap labour : Labour in western countries in scarce and costly. As such there can be no arbitrary
dismissals and layoffs. Good human relations are necessary for the industry’s survival in the West. But this is not so in
India which has plenty of human hands.
(c) Weak and unenlightened labour movement : Unlike in the West, labour movement in India is neither strong nor enlightened.
The Indian working class is generally passive and depends on outside politicians for the guidance of its own affairs.
These outside leaders, who have their own axe to grind, have failed to awaken the social consciousness among the
workers about their rights on the one hand and among the employers about their responsibilities on the other.
(d) Technological backwardness : The immense technological progress in the West has raised the standard of living of their
workers so much that they are no longer after the satisfaction of economic needs. They now want their higher order
needs (e.g, ego and status) to be satisfied. But it is not so with the Indian worker whose primary needs still continue
to be money and job security. The result is that whereas the human relations approach with its emphasis on non-
monetary incentives might hold some promise for the western workers, it has no attraction for the Indian workers.
(e) Traditional management : With the growth of professional management in the West there has now come about a
complete separation of ownership from management. This has given the desired independence to business decisions
which are now based on merit and not on the owner’s wish. But professionalisation of management in India is a far cry.
In most cases it is the owner and his close relatives who form the constellation of management. These people who are
emotionally involved in every minor detail do not wish to delegate authority to their subordinates. This increases
dependency among the subordinates.
Some suggestions to vitalize personnel management in our country are as follows :
1. Organisational structures should be so designed as to promote line-staff mutuality and interdependence.
2. The limitations of the present focus on mere legal and welfare roles of personnel management should be realised and efforts
made to replace these conventional roles by more comprehensive role boundaries.
3. Formal training should be imparted to personnel managers in those areas that essentially relate to behavioural sciences such
as selection, performance evaluation, group dynamics, counselling, etc.
4. The personnel manager should reorganise his own perception about his role. Instead of keeping himself confined to drafting
charge-sheets and presiding over canteen committees he should initiate new ideas and methods pertinent to his task.
FROM PERSONNEL MANAGEMENT TO HUMAN RESOURCES DEVELOPMENT
With the advent of the new millennium organizations are moving from Personnel Management towards Human Resources
Development (HRD). The entire corporate culture is fast becoming people-oriented or employee-oriented. Hence Personnel
Management is a thing of the past. The HRD philosophy was initiated in the West as early as 1960s but it is a relatively new
concept in India and has gained momentum only after liberalization on account of MNCs coming into India. After industrial
revolution, when machines were able to perform much better than human beings both in quantity as well as quality, the employees
of the organization were considered as necessary evil and the employers would jump at any possible opportunity to do away with
human beings. But as times changed and especially with the advent of knowledge era, organizations started realizing the true
worth of human resources. Some factors responsible for the recognition of the importance of employees are :
l While every asset depreciates with time, it is only the human assets that appreciate
l Increased competition in the market
l Resource scarcity in organizations
l The turbulent rate of change

l Possibilities of employees switching over to rival organizations
l The exorbitant cost involved in recruiting, training, grooming and accustomization of the new employees
l Threats to the organizations on account of disloyalty of employees
On account of these factors, organizations started recognizing the importance of their employees. They modified their
mission statements and mottos to include concern for employees in them. Personnel Management started loosing to Human
Resources Development. The important reasons behind this transition were :
l Personnel Management is a static function with a firefighting objective while Human Resources Development is a
dynamic function with emphasis on pro-activity.
l Personnel Management clubs the employees under the group of their designation or pay scales while Human Resources
Development recognizes the individual unique worth of every employee.
l Personnel Management follows a philosophy of status-quo while Human Resources Development focuses on continuous
improvement and development much in tune with the changing times.
l Personnel Management is basically a highly mechanical and clerical function focusing on time, wage and salary
administration and labour problems while Human Resources Development focuses on developmental changes to improve
working and the environment of the organization to prevent problems and make employees happy and satisfied.
Some of the vital tools and methods employed by HRD to achieve its goals are :
l Training and Development

l Performance Planning and Appraisal
l Job Rotation
l Counseling and Mentoring
l Motivation through more challenging work
l ESOPs
l Including not only the employee but also his family in the family and programs of the company
l Services such as children education, medical benefits, holidays and small gifts
l Activities such as Kaizen, TQM, Quality Circles, Safety Weeks etc.
l Personal attention to each and every employee
No doubt, Human Resources Development presents a much more humane way of managing and developing human resources
as compared to the earlier approaches.
Trade Union
Different authors have defined a trade union in different ways. Sydney and Beatrice Webb have defined a trade union as
“a continuous association of wage earners for the purpose of maintaining or improving the conditions of their working
lives.” According to G.D.H. Cole, “a trade union means an association of workers in one or more occupations - an association
carried on mainly for the purpose of protecting and advancing the members’ economic interests in connection with their
daily work.” Lester defines a trade union as “an association of employees designed primarily to maintain or improve the
condition of employment of its members.” Cunnison defines a trade union as “a monopolistic combination of wage earners
who stand to the employers in a relation of dependence for the sale of their labour and even for its production; and that
the general purpose of the association is in view of that dependence to strengthen their power to bargain with the employers.”
Need for Trade Unions
In earlier times when industry was on a small scale and the few apprentices and craftsmen whom the master craftsman
employed usually lived with him, conditions of employment and any grievances were easily discussed individually or in
small groups and quickly settled. Modern industry is very different. It is organised on a large scale, and the maintenance of
close, direct relations between employers and workers for the settling of differences is difficult. The status and security
which workers had in earlier communities is gone, and at its place they need the protection of trade unions. Labour is much more
mobile than in former times. The machinery and other capital used in industry has become more and more costly, and there is
usually a great gulf fixed between the owners of the capital and the workmen who operate the machines. Such conditions have
led almost inevitably to the formation of organisations first by the workers and later by the employers, and to the working out of
methods of securing workable agreements reconciling, as far as possible the various interests involved.
Some important reasons why workers organise themselves into a trade union are as follows :

1. To oppose management : Workers often join unions in order to have a method of collectively resisting action of management.
When employers cut wages or pay low wages; when working conditions are unsafe or too unpleasant; or when managers
interfere in workers’ personal lives, workers may resist by joining unions. Through the union, workers may petition management
for changes and, if unsuccessful, they may resort to a concerted work stoppage – a strike.
2. To participate in union activities : Workers may join unions to obtain certain health or insurance benefits, to participate in
educational programmes, or to learn about their own business and occupation. They may also join to engage in social or
community activities.
3. To exercise leadership : Some workers join unions as an outlet for their own ambitions. They may aspire for leadership and
find that the union offers a convenient vehicle. They may hope to get ahead by obtaining an office of the union.
4. To fall in line with others : Many workers join unions simply because other workers urge them to do so. They may be made
to feel that they are traitors if they do not join.
5. To get employment : Sometimes workers join a union because it is a precondition to their getting employment.
This is known as the ‘closed shop’ system and was prevalent in America till 1947 when it was outlawed.
All of these reasons can be summarised in the following generalisation. The worker is motivated towards union membership to
the degree that he thinks it will satisfy his wants or reduce his dissatisfaction. The ties are strong when the expected want
satisfaction is strong, and vice versa.
Functions of Trade Unions
For the attainment of the above objectives, trade unions perform two types of functions - militant and ministrant. Militant
functions are strikes, boycotts and gheraos. Ministrant functions are to give financial support to members during strikes and
lockouts and to provide other benefits to them. Ministrant functions can again be either intramural or extramural. The former include
those welfare efforts of unions which are made within the factory premises (e.g, improvement in working conditions, regulation of
hours of work, provision of rest pauses, adequate wages, sanitation, safety, etc). The latter include those welfare efforts of unions
which are made outside the factory premises (e.g, provision of educational, recreational and housing facilities to workers). We list
below the various functions of a trade union under these four heads :
(A) Functions relating to members;
(B) Functions relating to organisations;
(C) Functions relating to the union; and
(D) Functions relating to the society.
(A) Functions relating to trade union members

1. To safeguard workers against all sorts of exploitation by the employer, by union leaders and by political parties.
2. To protect workers from the atrocities and unfair labour practices of the management.
3. To ensure healthy, safe and conducive working conditions, and adequate conditions of work.
4. To exert pressure for enhancement of rewards associated with the work only after making a realistic assessment of its
practical implications.
5. To ensure a desirable standard of living by providing various types of social services - health, housing, educational, co-
operative, etc, and by widening and consolidating the social security measures.
6. To guarantee a fair and square deal and social justice to workers.
7. To remove the dissatisfaction and redress the day-to-day grievances and complaints of workers.
8. To encourage workers’ participation in the management of industrial organisation and trade union, and to foster labour-
management and leader- follower co-operation.
9. To make the workers conscious of their rights and duties.
10. To impress upon workers the need to exercise restraint in the use of rights and to enforce them after realistically ascertaining
their practical implications.
11. To stress the significance of settling disputes through negotiation, joint consultation and voluntary arbitration, and not
through adjudication.
12. To raise the status of trade union members in the industrial organisation and in the society at large.
Functions relating to industrial organisation
1. To highlight industrial organisation as a joint enterprise between workers and management and to promote identity of
interests.
2. To increase production quantitatively as well as qualitatively, by laying down the norms of production and ensuring their
adequate observance.

3. To help in the maintenance of discipline.
4. To create opportunities for workers’ participation in management and to strengthen labour-management co-operation.
5. To help in the removal of dissatisfaction and redressal of day-to-day-grievances and complaints.
6. To promote cordial and amicable relations between the workers and management by settling disputes through negotiation,
joint consultation and voluntary arbitration, and by avoiding litigation.
7. To create favourable opinion of the management towards trade unions and improve their status in industrial organisation.
8. To exert pressure on the employer to enforce legislative provisions beneficial to the workers, to share the profits equitably,
and to keep away from various types of unfair labour practices.
9. To facilitate communication with the management.
10. To impress upon the management the need to adopt reformative, and not punitive, approach towards workers’ faults.
Functions relating to trade union organisation
1. To formulate policies and plans consistent with those of the industrial organisation and society at large.
2. To improve financial position by fixing higher subscription, by realising the union dues and by organising special fund-raising
campaigns.
3. To preserve and strengthen trade union democracy.
4. To train members to assume leadership position.
5. To improve the network of communication between trade union and its members.
6. To curb inter-union rivalry and thereby to help in the creation of unified trade union movement.
7. To resolve the problem of factionalism and promote unity and solidarity within the union.
8. To eradicate various types of ‘isms’ like casteism, regionalism and linguism within the trade unions movement.
9. To keep away from advocating the adoption of unfair labour practices.
10. To save the union organisation from the exploitation by vested interests - personal and political.
11. To continuously review the relevance of union objectives in the context of social change, and to change them accordingly.
12. To prepare and maintain the necessary records.
13. To manage the trade union organisation on scientific lines.
14. To publicise the trade union objectives and functions, to know ‘people”s reaction towards them, and to make necessary
modifications.
Functions relating to society
1. To render all sorts of constructive co-operation in the formulation and implementation of plans and policies relating to
national development
2. To actively participate in the development of programmes of national development, e.g., family planning, afforestation,
national integration, etc.
3. To launch special campaigns against the social evils of corruption, nepotism, communalism, casteism, regionalism, linguism,
price rise, hoarding, black marketing, smuggling, sex inequality, dowry, untouchability, illiteracy, dirt and disease.
4. To enable unorganised sector to organise itself.
5. To create public opinion favourable to government’s policies and plans, and to mobilise people’s participation for their
effective implementation.
6. To create public opinion favourable to trade unions and thereby to raise their status.
7. To exert pressure, after realistically ascertaining its practical implications, on the government to enact legislation
conducive to the development of trade unions and their members.
TRADE UNIONS IN INDIA
Current Scenario
At present there are about 43,000 registered workers’ unions and 10 central labour organisations in our country. Some
important features of these unions are as follows :
(a) As the National Commission on Labour in India points out the structure of our unions and their types do not admit of any
simple generalisation. Of the three types of unions (viz. general union, craft union and industrial union) it is the third type
which is most prominent in our country. But workers in India are unionised mostly on the basis of plants rather than on the
basis of industry. Craft unions are found among non-industrial and professional workers only. Thus we have the unions of
taxi-drivers, tonga-drivers, rickshaw-pullers, journalists, teachers, bank employees, etc. On the basis of hierarchy we may
classify our unions into the following 3 categories :
(1) Primary unions which operate at the plant level,
(2) Regional Federations which work at the regional level, and
(3) Central Labour Organisations which operate at the national level.

(b) The extent of unionisation in our country has not been uniform in all industries. Some industries are better unionised than
others. Thus in the cotton textile industry nearly 65% of its workers are unionised whereas this percentage in only 54 in coal
and 12 in plantations. In fact, our textile industry has given rise both to some of the worst strikes in the country and to some
of the best trade union leaders and labour organisations. How can one forget the trade union leaders such as N.M.
Lokhande, B.P. Wadia, Mahatma Gandhi, Hariharnath Shastri, N.M. Joshi, Khandubhai Desai, G.D. Ambekar, S.A. Dange and
Gulzari Lal Nanda - all of whom were drawn from the textile industry of the country ? Similarly, how can one forget the role
of the textile centre of Ahmedabad in the formation of the Indian National Trade Union Congress (INTUC) - India’s most
representative labour federation today ?
(c) The State-wise distribution of unions in our country also does not seem to follow any pattern. In some States there is very
heavy concentration of unions but in some others there are only a few unions. The following table gives figures of the
number of unions and the estimated average daily number of workers employed (in factories, mines, plantations and motor
transport ) in respect of some States in the country :
Average daily number of Number of

State workers employed workers'
('000) unions
1 Assam 108 51
2 Bihar 732 711
3 Gujarat 711 816
4 Haryana 233 269
5 Karnataka 579 44
6 Madhya Pradesh 577 239
7 Orissa 166 178
8 Punjab 255 459
9 Rajasthan 248 152
10 Tamil Nadu 896 2422
11 Uttar Pradesh 610 1484
(d) There is very close alliance between our trade unions and politics. This is because in the pre-Independence days our trade
union movement could not remain aloof from the country’s struggle for freedom. Motivated by a strong nationalistic sentiment
it had close alliance with the Congress. Leaders like C.R. Das, Subhas Bose and Pandit Jawahar Lal Nehru acted as President
of both the Indian National Congress and the All-India Trade Union Congress. But several splinter groups have now developed
which have weakened the movement.
(e) Being of the ‘one shop’ variety our unions are small in size. The average membership of a union has come down to 600 from
over 3,500 nearly 5 decades ago.
(f) With the membership of the unions becoming smaller, their financial condition has also become more and more weak with the
average annual income per union being under Rs. 4,000. Financial weakness has made several unions militant in their
approach to their problems. Conscious of their inability to carry on prolonged fights with their employers unions become
prone to violence.
(g) The traditional distinction between the blue-collar and the white-collar workers is being obliterated and there is a growing
proletarianization of all classes of workers.

(h) Our shop unions are loosely affiliated to different central unions. At present we have 10 such unions. As can be seen from
their membership figures in the following table the INTUC continues to be the most dominant of the 10 central organisations.
Average daily number of Number of

State workers employed workers'
('000) unions
1 Assam 108 51
2 Bihar 732 711
3 Gujarat 711 816
4 Haryana 233 269
5 Karnataka 579 44
6 Madhya Pradesh 577 239
7 Orissa 166 178
8 Punjab 255 459
9 Rajasthan 248 152
10 Tamil Nadu 896 2422
11 Uttar Pradesh 610 1484
As such it still continues to recommend workers’ delegates to the International Labour Conference. Our central organisations
maintain their affiliations with international organisations. At present there are two such organisations - one communist-dominated
World Federation of Trade Unions with its headquarter in Paris and the other non-communist dominated the international
Confederation of Free Trade Unions with its headquarter in Brussels. Two of our central organisations (viz., INTUC and HMS) are
affiliated with the International Confederation of Free Trade Unions. AITUC is affiliated with the World Federation of Trade
Unions.
A few of our national organisations such as All India Bank Employees’ Federation, the National Federation of Indian Railway
Employees and the National Federation of Post and Telegraph Employees are not affiliated to any of the above central organisations.
Future Role
Historically, unions in our country have been playing the role of agitators and bargainers. The thrust of their activities has
been towards the economic well being of the workers. In future unions should be encouraged to make a thrust towards the
psychological and social well-being of workers. Some important areas in which they can be asked to participate are as follows :
(a) Communication : Unions can pass on greater and more varied information to the workers about themselves and the
organisation. At present they only communicate on service conditions and related issues under the belief that workers are
not interested in receiving information on any other issues. This is wrong.
(b) Counselling. Unions can play a very positive role in providing counselling services to employees. Cases of excessive drinking,
smoking, drug addiction, indebtedness, etc, are not infrequent and need to be attended to by the unions. Defending a
workman during a departmental enquiry for these misconducts is not enough.
(c) Education and training. Another important area in which unions can play a development role is education of workers. Unions
can help them acquire new human relations and work-related skills. The former would include skills of collaboration, empathy,
collective action, etc. The latter would include skills to do new jobs and new projects.
(d) Welfare. Unions can help management in developing innovative welfare schemes for employees such as workers’
cooperatives, workers’ banks, nursery schools, etc.
(e) Family and vocational guidance. Unions can help workers’ families in several ways. For example, they can provide guidance
in respect of the education and career of workers’ children. They can provide conciliation services in settling family quarrels.
They can help in creating jobs for the wives of workers and so on.
(f) Research. Unions can play a very significant role in generating data on various dimensions of workers needs, aspirations,
standard of living, etc. For this purpose they can launch research projects either independently or in collaboration with
academic institutions.

Obstacles in the Growth of Strong Trade Unionism
Our labour movement cannot claim to have come as yet anywhere near the standards long ago attained in the West. The
reasons for this are not far to seek. They are as follows :
1. Labour leaders are mostly outsiders, professional and public men, politicians and social workers who have little genuine
sympathy for the aspirations of the industrial workers. They have their own axe to grind and have very often too many irons
in the fire, that is, they are interested not in one union but in many to further their own ends. Such spurious labour leaders
do not work with the labouring class, they work for it instead. The movement can gain real strength only from within. It must
be led by the workers themselves.
2. The workers’ poverty, often combined with indebtedness, makes even a small subscription a considerable burden to them.
The Trade Union Act provides for a minimum subscription fee of 25 paise per member. Meagre financial resources makes it
impossible for the unions to provide any welfare work or other financial help to their members when the latter are on strike.
They cannot even afford to maintain an adequate paid staff. The task, therefore, becomes intolerably irksome and heavy
unless those who undertake it have the means of their own and can be independent of the unions.
3. Differences of caste, religion and language among heterogeneous mass of labourers drawn from far and near the industrial
centres cannot yet be obliterated by the leaven of proletariat consciousness and they still pose as disintegrating forces
which do not allow close association among workers. Except in a few industrial centres where workers are attached to their
class, they are still peasants at heart with their attachment to village and joint family.
4. Many workers’ relationship with their employers is still conditioned by a paternal outlook. They regard their employer as their
‘mai-baap’ and cannot show disloyalty to him by siding with the union. There is a historical reason also. In the pre-
independence days the trade union movement was an integral part of the freedom movement. It is significant that some of
the Indian capitalists actively helped the cause of India’s freedom. How can workers now stand as a class against those
capitalists who stood by them in the colonial setting.
5. The labour organisations in India have to contend with opposition of employers. For many decades, employers have followed
a policy of intimidation and victimisation of labour leaders, started rival unions, subsidised or bribed union officials and taken
advantage of or actually fomented communal differences. There is systematic espionage through what is euphemistically
called the “Intelligence Department” and the activities of workers are vigilantly watched. In many ore mines and plantations,
the employers are known to have prohibited or restrained meetings of workers in their grounds and even to have objected
to union men visiting the workers’ quarters for collection of subscriptions or for propaganda. In recent years employers have
come to oppose unions for their unprincipled militant activities.
6. Different shades of political opinion divide the various wings of the labour movement resulting in an example of a house
divided against itself. On account of this the activities of the trade unions have not much impressed either workers or the
general public. Multiplicity of unions has not only resulted in inter-union rivalries but has also made them financially weak.
This is because while the number of unions has increased in recent years, the average membership per union has declined
!
In the words of late V.V Giri, President of India, the use of the trade union movement as pawn on the political chessboard
will never help the cause of the workers nor can it promote healthy trade unionism. According to Giri there should be “one
union in one industry”. However where legislation makes it so easy for the formation of a number of unions, it is difficult to
enforce this concept. For example, our Trade Unions Act today allows any seven persons to form a union. Thus, a handful
of disgruntled employees can always join together to form their own union. What is, therefore, needed is stronger legislation
making at least, say, 30 per cent representation necessary for recognising a trade union as being representative of the
group concerned.
Shortcomings of the Trade Union Act, 1926
1. Under the Act the registration of trade union is not compulsory but is merely voluntary. The National Commission on Labour
is of the view that the registration of trade unions should be made compulsory because this will ensure application of uniform
standards of functioning and organisation to all unions and will prevent fraud, embezzlement and deception practised by
some of the unscrupulous office-bearers of these unions.
2. At present, any seven persons can form a union and claim to represent the workers. This has resulted in a mushroom growth
of unions in every organisation. For example, there are as many as 124 workers’ unions in the Steel Authority of India
Limited, 79 in Heavy Engineering Corporation and 48 in Damodar Valley Corporation. So many unions not only compete with
each other for the same jurisdiction but also try to outbid each other in militancy. Multiplicity of unions can be checked in

several ways. One way is to raise the minimum requirement of 7 persons. NCL, for example, has suggested that this minimum
should be raised to 10% of the regular employees of a plant or 100 whichever is lower subject to a minimum of 7. Another
way is to withhold certain roles, privileges and immunities under the Act from all those unions which have not been granted
the bargaining status. They will thus be forced to think about consolidating their strength and ending their rivalries. It can
be suggested that any union enjoying the support of less than 20% of the employees of a plant should be assigned only
supportive roles, such as :
- to represent cases of dismissal and discharge of their members before the labour court,
- to represent their members on bipartite committees at the plant level, and
- to take up the grievances of their members under the grievance procedure.
3. The Act does not prescribe any time-limit for the grant or refusal or registration by the Registrar. It only imposes a statutory
duty upon the Registrar to register a trade union if he is satisfied that the requirements of the statute have been complied
with. NCL has suggested 30 days excluding the time which the union takes in answering queries from the Registrar. This may,
however, not achieve its desired objective if some Registrar makes vexatious enquiries simply to gain time. It is, therefore,
better if some specific time, say, for example, 60 days, is prescribed from the date of the receipt of application for granting
or refusing to grant registration of a trade union.
4. The Act does not empower the Registrar to refuse registration of trade union in cases where one or more unions are already
in existence in that plant or industry. It is therefore, suggested that in order to curb multiplicity of unions the Registrar of
Trade Unions should be empowered to refuse to register more than one union in one plant or industry. But this is not correct
for two reasons : First, this may run contrary to Article 19 of the Constitution, and second, the problem of multiplicity of
trade unions can be solved to a great extent by providing recognition to a representative union.
5. At present 50% of the executives of a union can be outsiders. The role of outsiders, of late, has come under fire. It is said
that these outsiders are generally professional agitators or ex-employees of the company whose services have been
terminated for misconduct and whose job now is to fish in troubled waters. Their entry in the executives of trade unions
should therefore be completely banned. But the opposite view is that these outsiders bring with them a wider exposure,
experience and contacts and are, therefore, a boon to the union in several ways. As a solution to this problem NCL has
recommended that the proportion of outsiders in a union executive should vary according to its total membership as given
below :
Where the membership of a The percentage of outsiders

union is : should not be more than :
Below 1,000 10
Between 1,000 and 10,000 20
Above 10,000 30
Industrywise 30
Moreover, all ex-employees should be treated as insiders and a convention be established that no office-bearer will
concurrently hold office in a political party.
Another solution of the problem can be to demarcate separate areas of operation to inside and outside leaders. Thus, union
leadership at the plant level may be given only to inside leaders who are supposed to have more intimate knowledge of plant
conditions, and union leadership at the national or industry level may be given to outside leaders who claim to possess wider
exposure and experience.
6. Under the present Act a trade union leader can hold office in any number of trade unions without limit. He is thus unable to
devote full time, energy and attention to any one union. A ceiling should, therefore, be placed on the number of unions in
which a leader can simultaneously hold office.
7. The Act provides for the payment by each member of minimum monthly subscription of not less than 25 paise. This is too
meagre an amount to make any union financially strong. It should, therefore, be raised to a minimum of Re. 1 and adequate
machinery be prescribed for the realisation of all dues. NCL has recommended the introduction of check-off system under
which the employer regularly deducts membership subscription from the wages of employees and hands over the amount to
the union. However, this system cannot be introduced till a workable formula is evolved for removing trade union rivalry and
the principle of “one union in one industry” is implemented. It will also be necessary to amend the Payment of Wages Act,
1936 to authorise the employer to deduct union dues from the wages of his employees.
8. The Act provides for raising a separate political fund by a registered trade union to further the political objectives of its
members. This has encouraged trade unions to act as appendages to political parties and we find a number of unions of
different political hues in an establishment vying with each other to establish that they are the only genuine friends of the
workmen. Raising of political funds should be abolished and trade unions should be delinked from political parties.

9. At present the Act is silent as to how a union is to be granted the status of a bargaining agent. It neither requires the
appointment of a bargaining agent nor prescribes any criterion for this purpose. The result is that today every registered
union considers itself capable of acting as a bargaining agent and regulating tripartite relations. To avoid this situation it is
suggested that the law should prescribe the majority following as the qualification for the recognition of a union.
Mode of determination of representative character
On the question of ‘how should the majority following of a union be determined’ there are 3 modes. First and ostensibly
the most democratic is through a secret ballot in which a worker makes his preference for a union known in guaranteed
secrecy. Second is the “click-off” method in which a union is expected to maintain a membership register and entries are
verified by comparing the number of names with the subscription paid by members. Third is a simple verification in which
a union submits its claims of membership and the other unions are invited to file their objections to such claims. After
examining all the claims and counter-claims, a labour Commissioner gives his verdict. The chief demerit of the verification
method is that it produces inflated and unreliable membership figures which do not convey the real following of a union.
Many members retain their membership of more than one union and many times no proper records of a union’s subscription
list are maintained. The demerits of the secret ballot method are the same as are experienced by us during general
elections. This method may further politicise unionism. Workers may be intimidated to bear the election costs. A lot of time
may be lost in elections and this may result in a loss of production and productivity. However, it is said that the fear about
this method is exaggerated. When workers can elect a government for the country why cannot they elect their own
bargaining agent ?
Some Important Labour Legislations
Ø The Payment of Wages Act, 1936.

Ø The Weekly Holidays Act, 1942.
Ø The Minimum Wages Act. 1948.
Ø The Factories Act, 1948.
Ø The Plantations Labour Act, 1951.
Ø The Working Journalists & other Newspaper Employees (Conditions of Service) & Miscellaneous provisions Act. 1970
Ø The Contract Labour (Regulation and Abolition) Act, 1970.
Ø The Sales Promotion Employees (Conditions of Service) Act. 1976.
Ø The Equal Remuneration Act, 1976.
Ø The Industrial Disputes Act 1947
Ø The Trade Unions Act 1926
Ø The Workmen’s Compensation Act 1923.

A Brief Summary of Important Labour Legislations
Important Note : This brief summary which is being presented for your benefit is merely introductory in nature and should not
be relied upon exclusively for your preparation of relevant entrance exams. It should be supplemented by a intense and focussed
study of important sections of the labour legislations indicated.
FACTORIES ACT, 1948
Scope and Coverage

Ø The Act covers all workers employed in the factory premises or precincts thereof 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 any kind of work incidental or connected thereto.
Ø There must be a nexus between the employment of the worker concerned and the manufacturing process.
Ø The worker need not necessarily do manual labour or receive remuneration for his services. Thus, piece-rated workers are
also covered under the Act.
Ø Employees in the canteen established under the Act, shall be the employees of the occupier of the factory, and thus covered
under the Act. But, where the workmen are employed in a canteen run by a Co-operative Society, they do not become
employees of the occupier of factory, and are not covered by the Factories Act but by the law governing the Co-operative
Societies.
Ø Persons employed only for selling the manufactured article are not covered under this Act, since sale, distribution or
transport of an article after its manufacturing, is not a process.
Ø Any member of the armed forces of the Union is not covered by the definition of worker.
Work Environment Obligations
The occupier of factory is obliged to undertake following measures for ensuring good health and physical fitness of workers.
Ø Cleanliness and disposal of wastes and effluents’
Ø Adequate ventilation, temperature and humidity
Ø Prevent accumulation and inhalation of dust and fumes of such a nature as is likely to be injurious to health of workers.
Ø Avoiding overcrowding - The workplace should not be overcrowded by workers and minimum space of 14.2 cubic mtrs. per
worker in a new factory and 9.9 cubic mtrs. per worker in an existing factory should be provided.
Ø Adequate lighting, drinking water and sanitation facilities need to be provided
Service Conditions
Restrictions on Employment of Women, Children -and Adolescents
Ø Women workers are not to be employed or allowed to work during night or between the hours of 7 p.m. and 6 a.m.
Ø No child below the age of 14 years is to be employed in any factory.
Ø Working hours for an adult worker, or an adolescent certified to work as an adult, should not exceed 48 hours in a week and
9 hours in a day, while for a child the working hours should not exceed 4½ hours in a ‘day.’
Ø Rest intervals and spread over-Every worker is to be allowed at least half-an-hour rest interval after a maximum working of
5 hours at a stretch.
Ø No overlapping of shifts-Shifts to be worked in a factory should be so arranged that they do not overlap each other.
Ø Weekly Holidays-Every worker is to be allowed one holiday (period of 24 consecutive hours), in a week, on any day, so that
it does not result in more than 10 days continuous work without a holiday.

Ø Whenever a worker is required to work on a weekly holiday, he is to be allowed a compensatory holiday for each holiday so
lost, within the same month, or within two months immediately following that month.
Ø Overtime worker working for more than 9 hours on any day or for more than 48 hours in any week shall be entitled to wages
in respect of such overtime work at twice the ordinary rate of wages.
Ø The total working hours in a week including overtime hours should not exceed sixty and the total overtime hours in a quarter
should not exceed 50.
Rights of Employees under the Act
Ø The workers have a right to claim the minimum health and safety measures and welfare amenities as provided for in the Act,
observance of working hours, holidays, overtime, annual leave and special protection against hazardous processes and
dangerous substances, etc.
Ø A worker has the right to obtain from the occupier, information relating to workers health and safety at work.
Ø A worker has the right to get himself trained by or through the occupier, in respect of workers’ health and safety.
Ø A worker has the right to claim wages for or in lieu of leave allowable to him, under the provisions of the Payment of Wages
Act
TRADE UNION ACT 1926
Scope and Coverage
Ø The Trade Unions Act, 1926 provides for registration of trade unions (including association of employers) with a view to
render lawful organization of labour to enable collective bargaining. The Act also confers on a registered trade union certain
protection and privileges.
Ø The Act is a Central enactment but it is administered by and large, by the State Governments. Trade Unions, whose activities
and objectives are not restricted to one State, are the subject of the Central Government.
Ø The Act extends to the whole of India and it applies to all kinds of unions of workers and associations of employers, which
aim at regularizing the labour management relations.
Ø A ‘Trade union’ is a combination, whether temporary or permanent, formed for regulating the relations not only between
workmen and employers but also between workmen and workmen or between employers and employers.
Obligations of Registered Trade Unions
Ø The general funds of a registered trade union should be spent only for the objects specified such as payment of salaries,
allowances and expenses of its office-bearers its administrative and audit expenses, prosecution or defence of any legal
proceedings for securing or protecting its rights, conduct of trade disputes, compensation for loss arising out of trade
disputes, provision of educational, social or religious benefits and allowances on account of death, old age, sickness,
accident or unemployment to its members, publication of labor journals, etc.
Ø The trade union may set up a separate political fund for furtherance of civic and political interests of members; contribution
to this fund shall not be compulsory.
Ø The account books and membership register of the trade union should be kept open for inspection by any of its members or
office-bearers.
Ø A copy of every alteration made in the rules of the union should be sent to the Registrar within’ 15 days of making the
alteration.

Registration of Trade Unions
Ø Registration of a trade union is not compulsory but is desirable since a registered trade union enjoys certain rights and
privileges under the Act.
Ø Mode of Registration : Any ten or more members of a Trade Union may 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, apply for registration of
the Trade Union under this Act.
Ø The rules of the trade union should clearly mention:

l Its name and objects
l The purposes for which its funds can be used
l Provision for maintenance of a list of members
l Procedure for admission of ordinary, honorary or temporary members
l Rate of subscription (being not less than Re. 0.25 p.m. per member)
l Procedure for amending or rescinding rules, manner of appointing executive committee and other office-bearers, safe
custody of funds, audit and inspection of account books, procedure for dissolution of the union and changing its union.
Ø On being satisfied with all the requirements, the Registrar shall register the trade union and issue a certificate of registration,
which shall be a conclusive evidence of its registration.
Legal Status of registered Trade Union
Ø A registered trade union is a body corporate with perpetual succession and a common seal.
Ø It can acquire, hold, sell or transfer any movable or immovable property and can be a party to contracts.
Ø A registered trade union can sue and be sued, in its own name.
Ø No civil suit or other legal proceeding can be initiated against a registered trade union in respect of any act done in
furtherance of a trade dispute under certain conditions.
Ø No agreement between the members of a registered trade union shall be void merely on the ground that any of its objects
is in restraint of trade.
Withdrawal of Registration
The Registrar can withdraw or cancel registration of a trade union on an application being made for its cancellation or by giving
at least 2 months’ notice under any of the following circumstances :
Ø If registration has been obtained by fraud or mistake
Ø The union has ceased to exist.
Ø The union has willfully contravened any of the provisions of the Act.
THE EMPLOYEES’ STATE INSURANCE ACT, 1948
Administrative set up
Ø The Employees State Insurance Scheme is administered by a corporate body called the Employees State lnsurance Corporation
(ESIC) which has members representing employees, the Central Government, State Government, Medical profession and the
parliament.
Ø A Standing Committee constituted from among the members of the Corporation Acts as the Executive Body for the
administration of the Scheme.
Ø A Medical Benefit Council advises the Corporation regarding matters connected with the provision of medical benefits.

Scope and Coverage
Ø The Act is applicable in areas where adequate medical arrangements have been made by the State Governments concerned.
Ø Under the Act, workers who draw remuneration up to Rs.6500 per month are eligible for the membership of ESI.
Benefits Under the Act
Employees covered are entitled to following types of benefits :
Ø Sickness benefits : Periodical payments to any insured person in case of his sickness certified by a duly appointed medical
practitioner.
Ø Maternity benefits : Periodical payments to an insured woman in case of confinement or mis-carriage or sickness arising out
of pregnancy.
Ø Disability benefits : Periodical payments to an insured person suffering from disablement as a result of an employment injury
sustained as an employee under this Act.
Ø Dependants benefits : Periodical payments to such dependants of an insured person who dies as a result of an employment
injury sustained as an employee under this Act, as are entitled to compensation under this Act.
Ø Medical benefits : Medical treatment for and attendance on insured persons.
Ø Funeral expenses : Payment to the family of an insured person who has died, towards the expenditure on the funeral of the
deceased insured person.
Contributions :
Ø Contributions under the Act are to be made by the employer and the employee.
Ø The expenditure on medical care is shared between the State Governments and the employers’ and employees’ contributions
are related to the wages.
Ø The present rate of employers’ contribution is 4.75% and 1.7% for the employees.
THE INDUSTRIAL DISPUTES ACT, 1947
Scope and Coverage
Ø The Act is aimed at bringing about conciliation or settlement of the industrial disputes.
Ø It provides for constitution of Works Committees, Board of Conciliation, Labour Courts, Industrial Tribunals and National
Tribunals.
Ø The conciliation officers are entrusted with the task of getting disputes settled by the parties.
Ø In case the disputes are not settled, they are required to submit their reports to the appropriate government.
Ø In case the appropriate government is satisfied that the dispute should be referred for adjudication, the appropriate
government refers the same to the Labour Courts/Industrial Tribunals.
Definition of Industry
The definition of the industry includes business, trade, undertaking, manufacture or any calling, service, employment, handicraft
or industrial evocations of workmen.
Definition of Workman
A worker earning a minimum salary of Rs. 1600 per month comes under the definition of workman.

Prohibition of Strikes and Lock-outs under the Act
Ø No person employed in a public utility service shall go on strike in breach of contract :

(a) Without giving to the employer notice of strike, as hereinafter provided, within six weeks before striking; or
(b) Within fourteen days of giving such notice; or
(c) Before the expiry of the date of strike specified in any such notice as aforesaid; or
(d) During the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion
of such proceedings.
Ø No employer carrying on any public utility service shall lock-out any of his workmen :
(a) Without giving them notice of lock-out as hereinafter provided, within six weeks before locking-out; or
(b) Within fourteen days of giving such notice; or
(c) Before the expiry of the date of lock-out specified in any such notice as aforesaid; or
(d) During the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion
of such proceedings.
Ø The notice of lock-out or strike under this section shall not be necessary where there is already in existence a strike or, as
the case may be, lock-out in the public utility service, but the employer shall send intimation of such lock-out or strike on the
day on which it is declared, to such authority as may be specified by the appropriate Government either generally or for a
particular area or for a particular class of public utility services.
Ø The Act prohibits strike and lockout under certain conditions and lays down the procedure for retrenchment, lay off and
closure of the industrial undertakings.
Ø The Act lays down the procedure for bringing about conciliation or settlement of disputes and for the constitution of Works
Committees, Board of Conciliation, Courts of Enquiry, Labour Courts, Industrial Tribunal and National Tribunal. The first
three are entrusted with the task of negotiations and conciliation and the other with the adjudication of industrial disputes.
THE PAYMENT OF BONUS ACT, 1965
Scope and Coverage
Ø Eligibility for bonus : Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance
with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year
Ø Payment of minimum bonus : Every employer shall be bound to pay to every employee in respect of the accounting year
commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall
be 8.33 per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees,
whichever is higher, whether or not the employer has any allocable surplus in the accounting year.
Ø Payment of maximum bonus : Where in respect of any accounting year the allocable surplus exceeds the amount of minimum
bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to
every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage
earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage
Ø Applicability of the Act : The Payment of Bonus Act applies to every factory and every other establishment in which twenty
or more persons are employed on any day during the accounting year.
Ø The Act empowers the appropriate government to apply the Act to any establishment or class of establishments including a
factory under the scope of Factories Act, 1948, employing ten or more workers, by giving two months notice in the Official
Gazette.
Ø Perpetuity : Once the Bonus Act becomes applicable to an establishment which includes a shop also, it will continue to apply
irrespective of the fact that the number of employees working therein falls below twenty or the number specified in the
notification applying the Act.
Ø Beneficiaries under the Act : Every employee drawing wages up to Rs.3500/- per month shall be entitled to be paid by
employer in an accounting year, bonus in accordance with the provisions of this Act, provided he has worked in the
establishment for not less than thirty working days in that year.
Ø Disqualification of Bonus : An employee shall be disqualified from receiving bonus under this Act, if lie is dismissed from
service for fraud, or riotous or violent behavior while on the premises of the establishment, or theft, misappropriation or
sabotage of any property of the establishment.

THE PAYMENT OF GRATUITY ACT, 1972
Scope and Coverage
The act applies to every factory, mine, oilfield, plantation, port and railway company, every shop or establishment with in the
meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are
employed, or were employed on any day of the preceding twelve months.
The educational institutions employing ten or more persons on any day preceding 12 months have been covered by the Act vide
notification.
Procedure of calculation and mode of payment
Ø A gratuity becomes payable to an employee on the termination of his services after he has rendered continuous service for
not less than five years on his superannuating, or on his retirement or resignation, or on his death or disablement due to
accident or disease.
Ø In case of death of the employee, gratuity payable to him shall be paid to his nominee or to his heir.
Ø In case the nominee or heir is a minor, the share of such minor, shall be deposited with the controlling authority who shall
invest the same for the benefit of such minor in such bank or other financial institution, as may be prescribed, until such
minor attains majority.
Ø For the purposes of this Act, disablement means such disablement as incapacitates an employee for the work which he was
capable of performing before the accident or disease resulting in such disablement.
Ø For every completed year of service or part thereof in excess of six months, the employer shall pay gratuity to an employee
at the rate of fifteen days’ wages based on the rate of wages last drawn by the employee concerned.
Ø In the case of a piece-rated employee, daily wages shall be computed on the average of the total wages received by him for
a period of three months immediately preceding the termination of his employment, and, for this purpose, the wages paid for
any overtime work shall not be taken into account.
Ø In the case of an employee who is employed in a seasonal establishment and who is not so employed throughout the year,
the employer shall pay the gratuity at the rate of seven days’ wages for each season.
Ø In the case of a monthly rated employee, the fifteen days’ wages shall be calculated by dividing the monthly rate of wages
last drawn by him by twenty-six and multiplying the quotient by fifteen.
Ø The amount of gratuity payable to an employee shall not exceed three lakhs and fifty thousand rupees.
Ø When Gratuity becomes forfeited : The gratuity payable to an employee can be forfeited :
l To the extent of the damage or loss caused by an employee whose services have been terminated for an omission or
negligence causing any damage or loss to, or destruction of property belonging to the employer.
l If the services of such employee have been terminated for any act, which constitutes an offence involving moral
turpitude provided the offence is committed in the course of his employment.
Ø Meaning of Wages-The expression ‘wages’ means all emoluments which are earned by an employee while on duty or on leave
in accordance with the terms and conditions of his employment and which are paid or are payable to him.
Ø The expression ‘completed years of service’ means continuous service for one year.
THE WORKMEN’S COMPENSATION ACT, 1923
Scope and Coverage
Ø The rationale behind the enactment of Workmen’s Compensation Act, 1923 is that a workman who suffers an injury in the
course of his employment should be entitled to compensation and in case of any fatal injury his dependants should be
compensated.
Ø If an injury is caused to a workman by accident arising out of or in the course of his employment his employer shall be liable
to pay compensation in accordance with the provisions of the Act.

Ø The employer is also liable to pay compensation to the workmen in the case a workman contracts any occupational disease
peculiar to that employment as per the provisions of the Act.
Exemption from the Act
The employer is not liable to pay compensation in the following cases :
Ø In respect of any injury, which does not result in total or partial disablement of the workman for a period exceeding a period
of three days.
Ø In respect of any injury, not resulting in death or permanent total disablement caused by an accident which is directly
attributable to the workman having been at the time thereof under the influence of alcohol or drugs or the willful disobedience
by the workman of an order expressly given, or to a rule expressly framed for the purpose of securing the safety of the
workmen.
Ø The willful removal or disregard by the workman of any safety guard or other device that he knows to have been provided
for the purpose of securing the safety of workmen.
Eligibility for compensation and method of calculating compensation
The amount of compensation payable is calculated as follows :
Ø The expression “monthly wages” under the Act means the amount of wages deemed to be payable for a month’s service
(whether the wages are payable by the month or by whatever other period or at piece rates), and calculated as follows.
Ø Where the workman has, during a continuous period of not less than twelve months immediately preceding the accident,
been in the service of the employer who is liable to pay compensation, the monthly wages of the workman shall be one-
twelfth of the total wages which have fallen due for payment to him by the employer in the last twelve months of that
period.
Ø Where the whole of the continuous period of service immediately preceding the accident during which the workman was in
the service of the employer who is liable to pay the compensation was less than one month, the monthly wages of the
workman shall be the average monthly amount which, during the twelve months immediately preceding the accident, was
being earned by a workman employed on the same work by the same employer, or, if there was no workman so employed, by
a workman employed on similar work in the same locality.
Ø In other cases including cases in which it is not possible for want of necessary information to calculate the monthly wages,
the monthly wages shall be thirty times the total wages earned in respect of the last continuous period of service immediately
preceding the accident from the employer who is liable to pay compensation, divided by the number of days comprising such
period.
Ø A period of service shall, for the purposes of this section be deemed to be continuous which has not been interrupted by a
period of absence from work exceeding fourteen days.
Ø Where death results from the injury, an amount equal to fifty percent of the monthly wages of the de ceased workman
multiplied by the relevant factor or an amount of fifty thousand rupees, whichever is more shall be payable.
Ø Where permanent total disablement results from the injury, an amount equal to fifty percent of the monthly wages of the de
ceased workman multiplied by the relevant factor or an amount of fifty thousand rupees whichever is more shall be payable.
THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970
Scope and Coverage
Ø This Act applies all over India to every establishment and contractors who employed on any day 20 or more persons (10 by
notification of the appropriate government) during the preceding 12 months as contract labour.
Ø The establishments, where work is of a casual or intermittent nature are not covered by the Act.
Ø The work performed for more than 120 days in the preceding 12 months, or if it is of a seasonal character and is performed
for more than 60 days in a year is included under the Act.

Ø The Act also does not cover persons who are employed in managerial and administrative capacities or as supervisors with
salaries and ‘wages’ exceeding Rs. 500 per month and/or · as workers who are given materials or articles for processing or
manufacturing in their own homes, or in the premises which are not under the control and management of the principal
employer.
THE EMPLOYEES’ PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952 AND SCHEME
Scope and Coverage
Ø The Act and the Scheme extends to the whole of India except Jammu and Kashmir.
Ø The workers in the scheduled industries / establishments enjoy the benefit of a contributory provident fund either under the
statutory scheme or under schemes voluntarily instituted by the employer.
Ø The statutory scheme applies to employees whose monthly salary or wages are up to Rs. 5000 (an upper limit of Rs. 6500
has been proposed in May 2001).
l Employed in factories, employing 20 or more persons.

l Engaged in scheduled industries and activities listed under the Act.
Ø The rate of contributions is 12% of the gross salary by both employer and employee.
Ø An interest of 11% per annum is paid on PF deposits.
The benefits are payable on termination of service either due to
Ø Retirement
Ø Discharge
Ø Retrenchment
Ø Resignation.
Withdrawal facility
A member employee can withdraw full amount standing to his credit in following cases :
Ø Resignation.
Ø Retirement from the service on attaining the age of 58 years.
Ø Retirement on account for permanent or total incapacity to work.
Ø Termination due to voluntary retirement scheme, retrenchment or closure of the factory/establishment.
THE EMPLOYEES EXCHANGES ACT (Compulsory Notification of Vacancies) ACT, 1959
Scope and Coverage
Ø Employment Exchanges have been established in various parts of India to facilitate channelising of labour (mainly skilled
workers and technicians) into employment.
Ø Employers are required on a compulsory basis, to notify to the employment exchange all vacancies that are of temporary
duration and those that are to be filled by promotion.
Ø Vacancies occurring in unskilled categories are not covered under the Act
Working of the Exchange
Ø The exchange maintains a register of the names of unemployed and furnishes to the employers a panel of names of suitable
candidates for selection.

Ø These units, apart from providing assistance in the field of vocational choice and career planning, also collect and disseminate
occupational information.
Ø There are also University Employment Information and Guidance Bureaus at 51 Universities in the country that render
guidance and placement services to Universities alumni and students.
THE EQUAL REMUNERATION ACT 1976
Scope and Coverage
Ø The Act provides for the payment of equal remuneration to men and women workers and for the prevention of discrimination
on the grounds of sex, against women in the matter of employment and for matters connected therewith or incidental
thereto.
Ø According to the Act, the employer is duty bound to pay equal emoluments to men and women workers for same work or work
of a similar nature.
Ø Similarly discrimination while recruiting men and women workers is strictly prohibited under the Act.
THE MATERNITY BENEFIT ACT 1961
Scope and Coverage
Ø The Act applies to every establishment like factory, mine, plantation or any such establishment belonging to Government.
Ø The Act applies to every shop or establishment within the meaning of any law for the time being in force in relation to shops
and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding
twelve months.
Ø Every woman entitled to the payment of maternity benefit under this Act shall, notwithstanding the application of the
Employees State Insurance Act, 1948 to the factory or other establishment in which she is employed, continue to be so
entitled until she becomes qualified to claim maternity benefit under the Act.
Ø No woman shall be employed or allowed to work during the six weeks immediately following the day of her delivery or her
miscarriage.
Ø A pregnant woman employee shall not be required to do any arduous work that may interfere with her pregnancy or affect
her health, during the period of ten weeks from the expected date of delivery.
Ø The discharge or dismissal of a woman at any time during her pregnancy is prohibited.
Ø A woman becomes entitled to maternity benefit from the employer only if she has actually worked for a period of not less
than eight days in the twelve months immediately preceding the date of her expected delivery.
Ø The maximum period for which any woman shall be entitled to maternity benefit shall be twelve weeks of which not more than
six weeks shall precede the date of her expected delivery.

Suggested Readings for XLRI, TISS, IRMA, IIFT, SIFT etc.
XLRI / TISS
1. Essentials of Management by Koontz and O'Donnell.
2. Personnel Management by C.B.Mamoria.
3. Personnel Management and Industrial relations by P.C.Tripathi.
4. Human Resource Management by Newstrom and Keith Davis.
5. Mercantile Law (read Labour Laws only from it) by N.D. Kapoor.
6. Personnel Management by Monappa and Saiyaddin.
7. Organisational Behaviour by Stephen P. Robbins.
8. Management Tasks, Responsibilities and Practices by Peter Drucker.
9. Theories of Personality by Hall and Lindzay.
10. Introduction to Psychology by T. Morgan and others.
11. Study material of IGNOU-MBA on related topics.
12. Organisation and Development by French and Bell.
13. In search of excellence by Tom Peters.
14. Labour Welfare, Trade Unionism and Industrial relations by S.D. Punekar.
Magazines / Journals :
1. The Human Capital.
2. The Seminar.
3. Indian Management (Pub. by AIMA).
4. Journal of Indian Society for Training and Development, Delhi.
5. Journal of Academy of HRD, Hyderabad.
6. Journal of National HRD network.
7. Journal of XLRI
8. Ascent. - The Times of India
9. Learning Curue - Economic Times
10. Yojana (Pub. of GOI)
11. Kurukshetra (Pub. of GOI)
12. Websites of Eicher Consultancy, Amazon.Com, McKinsey etc.
13. Journal of TISS.
IRMA
1. Survey of Indian Agriculture (Pub. The Hindu)
2. Manorama Year Book
3. Annual Reports of NABARD.
4. Readings on Panchayati Raj and Gram Sataraj.
5. Indian Economy (especially the section on Agriculture and Rural Development) by Ruddar Dutt and Sundaram.
6. Readings on TRYSEM, DPEP.
7. Readings on Five Year Plans.
8. Readings on Various NGOs such as SEVA, CRY.
9. Readings on Programmes of WHO, UNESCO.
10. Reading on operation flood and green revolution.
11. Yojana (GOI pub.).
12. Kurukshetra (GOI pub.).
13. Journal of IRMA
14. Amul.Com.
IIFT / SIFT
1. Nabhi's new export-import policy (Nabhi publication).
2. A guide on export policy, procedures and documentation by M.I. Mahajan. (Snowhite pub.).
3. International Business by Francis Cherunilam (Wheeler's).
4. Indian Foreign Trade by Raj Agarwal (Excel books).
5. GATT (A critical analysis) by A. Kulkarni, Trivedi and R. Kumar.
6. India's Foreign Trade and BOP by V.S. Mahajan.
7. Foreign Trade Management in India by M.L. Vermas (Vikas pub.)
8. Global competitiveness of Indian Industries IIFT and BICP.
9. International Economics by C. Kindel Leergar.
Magazines / Journals :
1. Business Today / Business India / Business Week.
2. Export-Import times (ABC printers)
3. Impex Times.
4. Economic and Political Weekly.
5. The Economist.
6. ICFAI Reader.
7. Indian Trade Journal.
8. Journal of Forex and International Finance.
9. Indian Economic Journal.

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Labour Laws

DEFINITIONS OF PERSONNEL MANAGEMENT

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FUNCTIONS OF PERSONNEL MANAGEMENT

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According to Michael J. Jucius, personnel management should aim at :

ROLE OF HUMAN RELATIONS IN PERSONNEL MANAGEMENT

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2. Opportunity for maximum expression of one’s abilities and skills.

4. Aspiration to occupy an equal and/or superior position relative to one’s peers.

QUALITIES OF A GOOD PERSONNEL MANAGER

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Is Personnel Management a Profession ?

McFarland gives the following attributes of a profession :

The Current Status of Personnel Management in India

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Some suggestions to vitalize personnel management in our country are as follows :

1. Organisational structures should be so designed as to promote line-staff mutuality and interdependence.

FROM PERSONNEL MANAGEMENT TO HUMAN RESOURCES DEVELOPMENT

l Increased competition in the market

l Resource scarcity in organizations

l The turbulent rate of change

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l Threats to the organizations on account of disloyalty of employees

l Training and Development

Need for Trade Unions

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Functions of Trade Unions

(A) Functions relating to trade union members

Functions relating to industrial organisation

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Functions relating to trade union organisation

Functions relating to society

TRADE UNIONS IN INDIA

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Average daily number of Number of

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Average daily number of Number of

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Shortcomings of the Trade Union Act, 1926

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Where the membership of a The percentage of outsiders

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Mode of determination of representative character

Some Important Labour Legislations

Ø The Payment of Wages Act, 1936.

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FACTORIES ACT, 1948

Scope and Coverage

Work Environment Obligations

Ø Cleanliness and disposal of wastes and effluents’

Ø Adequate ventilation, temperature and humidity

Ø Adequate lighting, drinking water and sanitation facilities need to be provided

Restrictions on Employment of Women, Children -and Adolescents

Ø No child below the age of 14 years is to be employed in any factory.

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Rights of Employees under the Act

TRADE UNION ACT 1926

Scope and Coverage

Obligations of Registered Trade Unions

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Ø The rules of the trade union should clearly mention: