Unit 1: Summary – Economic and Industrial Law

1: The Factories Act, 1948

Overview

The Factories Act, 1948 is one of India’s foundational labor laws, primarily aimed at ensuring the health, safety, welfare, and proper working conditions for workers in factories. It establishes legal responsibilities for employers and provides rights to employees. It is especially vital in the context of industrial law, where mass production and factory labor are involved.

Key Definitions

Understanding the basic terminology is crucial for applying the Act:

1. Factory [Section 2(m)]

A premises is considered a “factory” if:

·       10 or more workers are employed with power being used, or

·       20 or more workers are employed without using power.

It must be engaged in manufacturing activities.

2. Worker [Section 2(l)]

A “worker” is someone employed—directly or through an agency—whether for wages or not, in any manufacturing process.

3. Manufacturing Process [Section 2(k)]

Refers to any process involving:

·       Making, altering, repairing, packaging, or finishing any article.

·       Pumping, generating power, or printing.

·       Adapting any item for sale.

4. Occupier [Section 2(n)]

The person who has ultimate control over the factory. In a company, it’s usually one of the directors.

5. Adult

A person who has completed 18 years of age.

6. Adolescent

A person who is between 15 to 18 years, allowed to work only with a medical fitness certificate.

7. Child

Anyone below 14 years is strictly prohibited from working in any factory.

Important Provisions

Let’s explore some of the critical areas of the Factories Act.

1. Health Measures (Sections 11–20)

Every factory must maintain a clean and hygienic environment. This includes:

·       Whitewashing walls and surfaces.

·       Disposal of waste and effluents.

·       Provision of drinking water.

·       Adequate ventilation and temperature control.

2. Safety Measures (Sections 21–41)

The employer must:

·       Fence machinery to prevent accidental contact.

·       Install emergency stop buttons.

·       Provide protective gear.

·       Train workers in safety protocols.

·       In factories dealing with hazardous substances, there must be emergency plans and medical examinations.

3. Welfare Measures (Sections 42–50)

Welfare amenities include:

·       Washrooms and lockers.

·       Canteens (if more than 250 workers).

·       First-aid boxes and restrooms.

·       Crèches (for factories with more than 30 women workers).

4. Working Hours (Sections 51–66)

·       An adult cannot be made to work for more than 48 hours/week and 9 hours/day.

·       A weekly holiday is mandatory.

·       For overtime, workers must be paid twice the regular wages.

·       Women are allowed to work only between 6 a.m. to 7 p.m.

5. Employment of Young Persons (Sections 67–77)

·       Children under 14 are strictly prohibited from working.

·       Adolescents (15–18) can work with a fitness certificate.

·       Their working hours are restricted and night shifts are not allowed.

6. Leave with Wages (Sections 78–84)

·       Workers are entitled to one day of leave for every 20 days worked in the previous calendar year.

·       Accumulation of leave is allowed to a certain limit.

7. Penalties (Sections 92–106)

·       Breaching the law can result in fines, imprisonment, or both.

·       For serious violations leading to injury or death, heavier penalties apply.

Part 2: The Workmen’s Compensation Act, 1923

Overview

The Workmen’s Compensation Act was established to provide compensation to workers (or their families) for injuries or death caused during the course of employment. It’s a welfare legislation ensuring that workers aren’t left financially vulnerable after workplace accidents.

Though the Act was renamed as the Employees’ Compensation Act in 2009, its original purpose and structure remain intact.

Who Is Covered?

The Act applies to:

·       Workers employed in factories, mines, construction, railways, and other hazardous industries.

·       It does not apply to members of the Armed Forces.

·       Domestic servants and casual workers may not be included unless the employment is directly related to the employer’s trade or business.

Determination of Amount of Compensation

Compensation depends on:

1. Type of injury

·       Death

·       Permanent total disablement

·       Permanent partial disablement

·       Temporary disablement (total or partial)

2. Wage of the employee

3. Age of the employee

·       Younger workers have higher compensation factors because of longer expected work life.

Formula for Compensation

Let’s take two key scenarios:

1. In case of death:

50% of the monthly wage × Relevant factor (based on age)

OR ₹1,20,000 (whichever is higher)

2. In case of permanent total disablement:

60% of monthly wage × Relevant factor

OR ₹1,40,000 (whichever is higher)

For temporary disablement:

The worker receives half-monthly payments equal to 25% of monthly wages, payable for the period of disability.

Types of Injuries

·       Scheduled Injuries: Predefined injuries listed in the Act which guarantee compensation. For example: loss of thumb, loss of a limb.

·       Non-Scheduled Injuries: Injuries not listed require medical certification and evidence of loss in earning capacity.

Employer’s Liability

The employer is liable to pay compensation when:

·       Injury occurs during the course of employment.

·       Injury is caused due to accidents arising out of work.

But employer is not liable if:

·       The injury was caused due to the worker’s intoxication or willful disobedience.

·       The worker was not following safety instructions.

Latest Provisions: Workmen’s Compensation (Amendment) Act, 2009

This amendment was significant in modernizing the law. Key updates include:

1. Name Change

·       The Act is now officially called the Employees’ Compensation Act, 1923 to reflect inclusivity and modernization.

2. Increased Compensation

·       Minimum compensation for death increased to ₹1,20,000.

·       Minimum compensation for permanent total disablement increased to ₹1,40,000.

3. Funeral Expenses

·       The amendment mandates that the employer must pay ₹5,000 for funeral expenses, up from ₹2,500.

4. Interest and Penalty

·       If the employer delays compensation:

·       Interest is applicable from the date it falls due.

·       A penalty up to 50% of the compensation can be levied by the Commissioner.

5. Notice of Accident

·       The amendment relaxed the rule on mandatory notice before making a compensation claim.

Compensation Process

1.     Filing a claim with the Commissioner for Workmen’s Compensation.

2.    Submission of medical reports.

3.    Calculation and order by the Commissioner.

4.    Appeal to High Court can be made in case of disputes (only on substantial questions of law).

Conclusion

Both the Factories Act, 1948 and the Workmen’s Compensation Act, 1923 (Amended in 2009) form the backbone of industrial and economic law in India. These laws not only ensure the safety and welfare of workers but also help maintain discipline and accountability in industrial operations.