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Industrial management

Industrial management  

Unit 2rd   

Trade Unions  

Definition: Labour unions or trade unions are organizations formed by workers from related fields that work for the common interest of its members. They help workers in issues like fairness of pay, good working environment, hours of work and benefits. They represent a cluster of workers and provide a link between the management and workers. 

Description: The purpose of these unions is to look into the grievances of wagers and present a collective voice in front of the management. Hence, it acts as the medium of communication between the workers and management. 

Regulation of relations, settlement of grievances, raising new demands on behalf of workers, collective bargaining and negotiations are the other key principle functions that these trade unions perform. 

The Indian Trade Union Act, 1926, is the principle act which controls and regulates the mechanism of trade unions. In India, political lines and ideologies influence trade union movements. This is the reason why today political parties are forming and running trade unions. 

Grievance        means      any type of     dissatisfaction or discontentment’s arising out of factors related to an employee’s job which he thinks are unfair. A grievance arises when an employee feels that something has happened or is happening to him which he thinks is unfair, unjust or inequitable. In an organization, a grievance may arise due to several factors such as: 

  1. Violation of management’s responsibility such as poor working conditions 
  2. Violation of company’s rules and regulations 
  3. Violation of labour laws 
  4. Violation of natural rules of justice such as unfair treatment in promotion, etc. 

Various sources of grievance may be categorized under three heads: (i) management policies, (ii) working conditions, and 

(iii) personal factors 

  1. Grievance resulting from management policies include: 
    1. Wage rates 
    1. Leave policy 
    1. Overtime 
    1. Lack of career planning 
    1. Role conflicts 
    1. Lack of regard for collective agreement 
    1. Disparity between skill of worker and job responsibility 
  2. Grievance resulting from working conditions include: 
    1. Poor safety and bad physical conditions 
    1. Unavailability of tools and proper machinery 
    1. Negative approach to discipline 
    1. Unrealistic targets 
  3. Grievance resulting from inter-personal factors include 
    1. Poor relationships with team members 
    1. Autocratic leadership style of superiors 
    1. Poor relations with seniors 
    1. Conflicts with peers and colleagues 

It is necessary to distinguish a complaint from grievance. A complaint is an indication of employee dissatisfaction that has not been submitted in written. On the other hand, a grievance is a complaint that has been put in writing and made formal. 

Grievances are symptoms of conflicts in industry. Therefore, management should be concerned with both complaints and grievances, because both may be important indicators of potential problems within the workforce. Without a grievance procedure, management may be unable to respond to employee concerns since managers are unaware of them. Therefore, a formal grievance procedure is a valuable communication tool for the organization. 

Grievance Procedure  

Grievance procedure is a Step by step process an employee must follow to get his or her complaint addressed satisfactorily. In this process, the formal (written) complaint moves from one level of authority (of the firm and the union) to the next higher level. 

Grievance procedure is a formal communication between an employee and the management designed for the settlement of a grievance. The grievance procedures differ from organization to  organization. 

  1. Open door policy  
  2. Step-ladder policy  

Open door policy: Under this policy, the aggrieved employee is free to meet the top executives of the organization and get his grievances redressed. Such a policy works well only in small organizations. However, in bigger organizations, top management executives are usually busy with other concerned matters of the company. Moreover, it is believed that open door policy is suitable for executives; operational employees may feel shy to go to top management. 

Step ladder policy: Under this policy, the aggrieved employee has to follow a step by step procedure for getting his grievance redressed. In this procedure, whenever an employee is confronted with a grievance, he presents his problem to his immediate supervisor. If the employee is not satisfied with superior’s decision, then he discusses his grievance with the departmental head. The departmental head discusses the problem with joint grievance committees to find a solution. However, if the committee also fails to redress the grievance, then it may be referred to chief executive. If the chief executive also fails to redress the grievance, then such a grievance is referred to voluntary arbitration where the award of arbitrator is binding on both the parties. 

How to handle an employee grievance? 

  1. Establish whether the grievance needs to be resolved formally or informally. 
  2. Choose an appropriate manager to deal with the grievance. 
  3. Carry out a full investigation and gather all relevant evidence, sending it to the employee in advance of the meeting. 
  4. Arrange the grievance meeting, inviting the employee and reminding them of their statutory right to be accompanied. 
  5. Make sure accurate notes are taken throughout by a person who is not involved in the case. 
  6. Give the employee the opportunity to explain the details of their grievance and what they would like the outcome to be. 
  7. Adjourn the meeting consider the evidence before making a decision. 
  8. Inform the employee in writing of the decision, explaining how and why the decision was reached. 
  9. Notify the employee of their right to appeal against the outcome of the grievance procedure. 


The 15th session of Indian Labour Conference held in 1957 emphasized the need of an established grievance procedure for the country which would be acceptable to unions as well as to management. In the 16th session of Indian Labor Conference, a model for grievance procedure was drawn up. This model helps in creation of grievance machinery. According to it, workers’ representatives are to be elected for a department or their union is to nominate them. Management has to specify the persons in each department who are to be approached first and the departmental heads who are supposed to be approached in the second step. The Model Grievance Procedure specifies the details of all the steps that are to be followed while redressing grievances. These steps are: 

STEP 1: In the first step the grievance is to be submitted to departmental representative, who is a representative of management. He has to give his answer within 48 hours. 

STEP 2: If the departmental representative fails to provide a solution, the aggrieved employee can take his grievance to head of the department, who has to give his decision within 3 days. 

STEP 3: If the aggrieved employee is not satisfied with the decision of departmental head, he can take the grievance to Grievance Committee. The Grievance Committee makes its recommendations to the manager within 7 days in the form of a report. The final decision of the management on the report of Grievance Committee must be communicated to the aggrieved employee within three days of the receipt of report. An appeal for revision of final decision can be made by the worker if he is not satisfied with it. The management must communicate its decision to the worker within 7 days. 

STEP 4: If the grievance still remains unsettled, the case may be referred to voluntary arbitration. 

Lockout (industry) 

A lockout is a work stoppage or denial of employment initiated by the management of a company during a labor dispute.[1] In contrast to a strike, in which employees refuse to work, a lockout is initiated by employers or industry owners. Lockouts are usually implemented by simply refusing to admit employees onto company premises, and may include changing locks or hiring security guards for the premises. Other implementations include a fine for showing up, or a simple refusal of clocking in on the time clock. For these reasons, lockouts are referred to as the antithesis of strikes. 


A lockout is generally an attempt to enforce specific terms of employment upon a group of employees during a dispute. It is often used to force unionized workers to accept new conditions, such as lower wages. If the union is asking for higher wages, better benefits, or maintaining benefits, a manager may use the threat of a lockout – or an actual lockout – to convince the union to back down. 


Far from all labor disputes involves lockouts (or strikes), but lockouts have been used on a large scale around the world during and after the industrialization. Some of the lockout incidents are historical significant. 

Labour Welfare |Meaning and Its Importance in Industries  

Meaning of Labour Welfare:  

Labour welfare means the voluntary efforts made by the employer to provide better conditions of employment in their own industries. Its main object is to secure an improved standard of living for the workers, which effects on the worker’s psychology and results in an increase in their productive efficiencies. 

Labour welfare improves physical, mental and moral conditions of worker. Labour welfare includes housing, medical, educational, rest rooms, recreation, canteen, games and sports club facilities, adequate wages, reasonable working hours, insurance etc. By providing these facilities to the workers, efficiency increases considerably. These facilities create confidence in the worker; he feels happy and thus takes more interest in the work. 

It also provides goodwill and the relation between worker and employer becomes good, which reduces indiscipline and helps to maintain industrial peace. When worker has full facilities, he will be free from worries and will therefore work in the factory with full efforts and interest. 

Insurance facility and good working conditions create atmosphere of security and feeling of insecurity is removed from the mind of the worker and thus he takes more interest in his work. In present days workers are very much worried due to their housing problems, inadequate wages and expensive education. 

If these problems are removed then a major part of worries of the workers will be removed and if his cultural uplift by providing recreation facilities and adding cultural and social activities are looked after, then worker will work with full heartedness and more interest devoting more physical and mental efforts. 

Importance of Labour Welfare:  

  1. It improves the moral and mental conditions of the workers by providing facilities like games, cultural activities and recreation etc. 
  2. By providing facilities workers have more confidence in their employer, which leads to improve industrial peace. 
  3. When workers are promoted in a systematic way and they are heard properly then they feel and realize their duties towards enterprise. 
  • By providing all these facilities, workers feel happy and become enthusiastic. Thus worker starts taking much interest in his work, which leads to greater efficiency. 
  • Noise and vibrations caused by the machines, fumes and dust, hotness, too much wetness and lack of air ventilation are the main factors which affect the health of the worker seriously. Therefore periodical check-up and medical-facility help to maintain the health of the workers and save the worker from harmful effects. Thus when worker remains healthy, he will naturally work hard. 

Workers Participation in Management  


  • According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share the responsibility of achievement. 
    • According to Walpole, Participation in Management gives the worker a sense of importance, pride and accomplishment; it gives him the freedom of opportunity for self-expression; a feeling of belongingness with the place of work and a sense of workmanship and creativity. 

Workers participation in management is an essential ingredient of Industrial democracy. The concept of workers participation in management is based on Human Relations approach to Management which brought about a new set of values to labour and management. Traditionally the concept of Workers Participation in Management refers to participation of nonmanagerial employees in the decision-making process of the organization. Workers’ participation is also known as ‘labour participation’ or ‘employee participation’ in management. In Germany it is known as co-determination while in Yugoslavia it is known as self-management. The International Labour Organization has been encouraging member nations to promote the scheme of Workers’ Participation in Management. Workers’ participation in management implies mental and emotional involvement of workers in the management of Enterprise. It is considered as a mechanism where workers have a say in the decision-making.  The concept of workers’ participation in management encompasses the following: 

  • It provides scope for employees in decision-making of the organization. 
    • The participation may be at the shop level, departmental level or at the top level. 
    • The participation includes the willingness to share the responsibility of the organization by the workers. 

Features of Workers Participation in Management 

  • Participation means mental and emotional involvement rather than mere physical presence. 
    • Workers participate in management not as individuals but collectively as a group through their representatives.  Workers’ participation in management may be formal or informal. In both the cases it is a system of communication and consultation whereby employees express their opinions and contribute to managerial decisions. 

Levels of Workers Participation In Management 

There can be 5 levels of Management Participation or WPM: 

  1. Information participation: It ensures that employees are able to receive information and express their views pertaining to the matter of general economic importance. 
  2. Consultative importance: Here workers are consulted on the matters of employee welfare such as work, safety and health. However, final decision always rests with the top-level management, as employees’ views are only advisory in nature. 
  3. Associative participation: It is an extension of consultative participation as management here is under the moral obligation to accept and implement the unanimous decisions of the employees. Under this method the managers and workers jointly take decisions. 
  4. Administrative participation: It ensures greater share of workers’ participation in discharge of managerial functions. Here, decisions already taken by the management come to employees, preferably with alternatives for administration and employees have to select the best from those for implementation. 
  5. Decisive participation: Highest level of participation where decisions are jointly taken on the matters relating to production, welfare etc. 

Characteristics of Workers Participation In Management 

  • Participation implies practices which increase the scope for employees’ share of influence in decision-making process with the assumption of responsibility. 
  • Participation presupposes willing acceptance of responsibility by workers. 

Workers participate in management not as individuals but as a group through their representatives. 

  • Worker’s participation in management differs from collective bargaining in the sense that while the former is based on mutual trust, information sharing and mutual problem solving; the latter is essentially based on power play, pressure tactics, and negotiations. 
  • The basic rationale tor worker’s participation in management is that workers invest their labour and their fates to their place of work. Thus, they contribute to the outcomes of organization. Hence, they have a legitimate right to share in decision-making activities of organisation. 

Objectives of Workers Participation in Management 

  • To establish Industrial Democracy. 
  • To build the most dynamic Human Resources.  To satisfy the workers’ social and esteem needs. 
  • To strengthen labour-management co-operation and thus maintain Industrial peace and harmony. 
  • To promote increased productivity for the advantage of the organization, workers and the society at large. 
  • Its psychological objective is to secure full recognition of the workers. 

Importance of Workers Participation In Management 

  • Unique motivational power and a great psychological value. 
  • Peace and harmony between workers and management. 
  • Workers get to see how their actions would contribute to the overall growth of the company. 

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  • They tend to view the decisions as `their own’ and are more enthusiastic in their implementation. 
  • Participation makes them more responsible. 

They become more willing to take initiative and come out with cost-saving suggestions and growth-oriented ideas. 

Essential conditions for of Workers Participation In Management 

The success of workers portion in management depends upon the following conditions. 

  1. The attitude and outlook of the parties should be enlightened and impartial so that a free and frank exchange of thoughts and opinions could be possible. Where a right kind of attitude exists and proper atmosphere prevails the process of participation is greatly stimulated. 
  2. Both parties should have a genuine faith in the system and in each other and be willing to work together. The management must give the participating institution its right place in the managerial organization of the undertaking and implementing the policies of the undertaking. The labor, on the other hand, must also whole heartedly co-operate with the management through its trade unions. The foremen and supervisory cadre must also lend their full support so that the accepted policies could be implemented without any resentment on either side. 
  3. Participation should be real. The issues related to increase in production and productivity, evaluation of costs, development of personnel, and expansion of markets should also be brought under the jurisdiction of the participating bodies. These bodies should meet frequently and their decisions should be timely

implemented and strictly adhered to. Further, 

  • Participation must work as complementary body to help collective bargaining, which creates conditions of work and also creates legal relations. 

There should be a strong trade union, which has learnt the virtues of unit and self-reliance so that they may effectively take part in collective bargaining or participation. 

  • A peaceful atmosphere should be there wherein there are no strikes and lock-outs, for their presence ruins the employees, harms the interest of the society, and puts the employees to financial losses. 
  • Authority should be centralized through democratic management process. The participation should be at the two or at the most three levels. 
  • Programs for training and education should be developed comprehensively. For this purpose, Labour is to be given education not to the head alone, not to the heart alone, not to the hands alone, but it is dedicated to the three; to make the workers think, feel and act. Labour is to be educated to enable him to think clearly, rationally and logically; to enable him to feel deeply and emotionally; and to enable him to act in a responsible way. 

Labour Laws In India – (Indian) Industrial Disputes Act, 1947 

The Industrial Disputes Act, 1947 (the “ID Act”) has been enacted for the investigation and settlement of industrial disputes in any industrial establishment. 

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The Industrial Disputes Act defines “Industrial dispute” as a dispute or difference between workmen and employers or between workmen and workmen, which is connected with employment or non-employment or the terms of employment or with the conditions of labour. Dismissal of an individual workman is deemed to be an industrial dispute. 

The ID Act provides for the constitution of the Works Committee, consisting of employers and workmen, to promote measures for securing and preserving amity and good relations between the employer and the workmen and, to that end, endeavours to resolve any material difference of opinion in respect of such matters. 

The ID Act provides for the appointment of Conciliation Officers, Board of Conciliation, Courts of Inquiry, Labour Courts, Tribunals, and National Tribunals for settlement of disputes. Another method recognised for settlement of disputes is through arbitration. The Industrial disputes Act provides a legalistic way of settling disputes. The goal of preventive machinery as provided under the Act is to create an environment where the disputes do not arise at all. The ID Act prohibits unfair labour practices which are defined in the Fifth Schedule—strikes and lockouts (except under certain defined conditions and with proper notice). It also provides for penalties for illegal strikes and lockouts and unfair labour practices and provisions regarding lay off and retrenchment as well as compensation payable thereof. 

The ID Act provides that an employer who intends to close down an industrial establishment shall obtain prior permission at least ninety days before the date on which he intends to close down the industrial establishment, giving the reasons thereof. 

Trade Unions Act, 1926 

The Trade Unions Act, 1926 (the “Trade Unions Act”) seeks to provide for the registration of Trade Unions in India and for the protection of the same. Further, the Trade Unions Act also in certain respects defines the law relating to registered Trade  Unions like mode of registration, application for registration, provisions to be contained in the rules of a Trade Union, minimum requirement for membership of a Trade Union, rights and liabilities of registered Trade Unions, etc. 

Industrial Disputes Act, 1947  

The Industrial Disputes Act, 1947 extends to the whole of India and regulates Indian labor law so far as that concerns trade unions as well as Individual workman employed in any Industry within the territory of Indian mainland. It came into force 1 April 1947. 

The objective of the Industrial Disputes Act is to secure industrial peace and harmony by providing mechanism and procedure for the investigation and settlement of industrial disputes by conciliation, arbitration and adjudication which is provided under the statute. The main and ultimate objective of this act is “Maintenance of Peaceful work culture in the Industry in India” which is clearly provided under the Statement of Objects & Reasons of the statute. 

The laws apply only to the organized sector. Chapter V talks about the most important and often in news topic of ‘Strikes and Lockouts’. It talks about the Regulation of strikes and lockouts and the proper procedure which is to be followed to make it a

Legal instrument of ‘Economic Coercion’ either by the Employer or by the Workmen. Chapter V-B, introduced by an amendment in 1976, requires firms employing 300 or more workers to obtain government permission for layoffs, retrenchments and closures. A further amendment in 1982 (which took effect in 1984) expanded its ambit by reducing the threshold to 100 workers. The Act also lays down: 

1. The provision for payment of compensation to the workman on account of closure or lay off or retrenchment.  2. The procedure for prior permission of appropriate Government for laying off or retrenching the workers or closing down industrial establishments 

3. Unfair labor practices on part of an employer or a trade union or workers. 


The Industrial Disputes Act extends to whole of India and applies to every Industry and its various industrial establishment  carrying  on any business, trade, manufacture or distribution of goods and services irrespective of the number of workmen employed there in. 

Every person employed in an establishment for hire or reward including contract labour, apprentices and part-time employees to do any manual, clerical, skilled, unskilled, technical, operational or supervisory work, is covered by the Act. This Act though does not apply to persons mainly in managerial or administrative capacity, persons engaged in a supervisory capacity and drawing > 10,000 p.m. or executing managerial functions and persons subject to Army Act, Air Force and Navy  Act or those in police service or officer or employee of a prison.  


Minimum Wages Act, 1948  

The Minimum Wages Act, 1948 (the Minimum Wages Act) provides for fixing of minimum rates of wages in certain employments. The minimum wages are prescribed by States through notifications in the State’s Gazette under the Minimum Wages Rules of the specific State. 

In terms of the provisions of the Minimum Wages Act, an employee means (i) any person who is employed for hire or reward to do any work, skilled or unskilled manual or clerical, in a scheduled employment in respect of which minimum rates of wages have been fixed; (ii) an outworker, to whom any articles or materials are given out by another person to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that other person; and (iii) an employee declared to be an employee by the appropriate Government. 

The term “wages” has been defined to mean all remuneration capable of being expressed in terms of money which would, if the terms of the contract of employment express or implied were fulfilled, be payable to a person employed in respect of his employment or work done in such an employment and includes house rent allowance but does not include: 

  1. The value of: 
    1. Any house accommodation or supply of light, water and medical attendance; or 
    1. Any other amenity or any service excluded by general or special order of the appropriate Government; 
  2. Any contribution paid by the employer to any personal fund or provident fund or under any scheme of social insurance; 
  3. Any travelling allowance or the value of any travelling concession; 
  4. Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or 
  5. Any gratuity payable on discharge. 

Further, the Minimum Wages Act requires the employer to pay to every employee engaged in schedule employment wages at a rate not less than minimum rates of wages as fixed by a notification without any deduction (other than prescribed deductions, if any). 

Payment of Wages Act, 1936  

The Payment of Wages Act, 1936 (the Payment of Wages Act) is an Act to regulate the payment of wages to certain classes of employed persons. The Payment of Wages Act seeks to ensure that the employers make a timely payment of wages to the employees working in the establishments and to prevent unauthorized deductions from the wages. 

According to the Payment of Wages Act, all wages shall be in current coin or currency notes or in both. It is, however, provided that the employer may, after obtaining the written authorisation of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account.  Payment of Bonus Act, 1965 

The Payment of Bonus Act, 1965 (the “Bonus Act”) provides for the payment of bonus to persons employed in certain establishments in India either on the basis of profits or on the basis of production or productivity and is applicable to every establishment in which 20 or more persons are employed and to all employees drawing a remuneration of less than Rs 10,000. Those employees who have worked for less than thirty days are not eligible to receive bonus under the Bonus Act. The Bonus Act provides for the payment of bonus between 8.33% (minimum) to 20% (maximum). However, for the calculation of bonus, a maximum salary of Rs 3,500 is considered. 

The term ‘Fair Wages’ has been defined as under:  “Fair wages mean the remuneration which is paid to the workers for the jobs requiring equal efficiency, difficulty and pains.” 

Prof. Marshall, “Rate of wages in a particular industry can be regarded as fair wages only when it is almost equal to the wages which is paid in other industries for the works which are of the same calibre and equally difficult and require almost equal efficiency and training.” 

Prof. Pigou, “Fair wages is the wages which is paid at the rate which is being paid to the workers of same status in the enterprises of the same type and of near-by areas”. 

On the basis of analytical study of above definitions, it can be concluded that Fair Wages is the amount of wages that may provide the basic needs and amenities to the workers according to their social status. 

Fair Wage is more than minimum wages. Fair Wage is determined after considering several factors such as the wages paid for similar work in other trades and industries requiring same amount of ability and adjustment, productivity of the labour and paying capacity of the industry. Fair Wage is determined between the lower and upper limits. The lower limit of wage is the minimum wage and the upper limit is the capacity of the industry to pay. 

Types of Wages   

One of the most important and difficult problem of Personnel management is to determine the rate of wages and salaries. Personnel Management has to develop a method of wage payment that may be helpful in controlling the cost of production in establishing a fair and equitable remuneration for all the workers and employees, in motivating the workers and employees to increase the production and productivity, and in maintaining satisfactory relations between labour and management. In order to achieve all these objectives together, the Personnel Manager is responsible for developing the policies and procedures for the administration of wages and salaries. 

Determination of wage rate is a basic problem of an organisation. This question is an important question from all points of view— economic, social, political, and moral. The central point of all the labour problems in an organisation is the wages and salaries. 

This question determines the capacity of the production, the rate of productivity, efficiency of labour, cost of production, sale price of commodity, profits of the organisation and industrial peace in the country. So, the need is to consider the problem very carefully and to take the decision in this regard only after careful analysis of various factors scientifically and psychologically and with human approach. 

Wages can broadly be divided into three categories—Living Wages, Minimum Wages and Fair Wages. 

Brief description of these types of wages is as under:  

Type 1. Living Wages:  

Living wages means the wages that may be sufficient to provide for the bare necessities as well as certain amenities for the employee. It means the level of wages that may be sufficient to provide for the bare necessities and such amenities that are considered necessary for the well-being of the employee and his family members in accordance with his social status. 

Article 43 of the Constitution of India States that “The state shall endeavour to secure by suitable legislation or economic organisation or in any other way to all workers, agricultural, industrial or otherwise work, a living wage, conditions of work ensuring decent standard of life and full enjoyment of leisure and social and cultural opportunities….” 

The term Living Wages has been defined as -The Fair Wage Committee Report, “The living wage should enable the male earner to provide himself and his family not merely the base essentials of food, clothing and shelter but a measure of frugal comfort including education for the children, protection against ill health, requirements of essential social needs, and measures of insurance against the more import misfortunes against old age.” 

Justice Haggises, “Living wage is a wage sufficient to ensure the workman food, shelter, clothing, frugal comfort, provision for evil days etc., as regard for the skill of an artisan, if he is one.” 

Thus, Living Wage must provide not only for the bare necessities, such as—food, clothes and shelter, but also for some comforts and amenities estimated by current human standards such as—travelling, health, education of children, social needs, old age and recreation etc. 

Problems of Adequate Wages in India: 

Uttar Pradesh Labour Enquiry Committee has described four types of standards of living to determine the problem of adequate wages in India. 

These Standards of Living are as Follows: 

  1. Minimum Subsistence Level: 

When an employee gets the remuneration enough only for providing the bare necessities for himself and his family members, is called minimum subsistence level. In this situation, the remuneration of an employee can meet only the bare requirements for himself and his family members. 

  • Comfortable Level: 

When an employee can provide for all the bare necessities and can enjoy all the amenities, it is called comfortable level, in this case, the remuneration of an employee is so high that he can provide for all the bare necessities and meet all the requirements of comfort for himself and his family members. 

  • Poverty Level: 

When an employee is unable in providing for bare necessities also for himself and his family members, this situation is known as poverty. In this situation, the remuneration of an employee is less than he requires for providing food, clothes and shelter for himself and his family members. 

  • Semi-Comfortable Standard of Living: 

When the remuneration of an employee is sufficient for providing the bare necessities and meeting social needs, it is called Semi-comfortable level. In this case the employee can provide for the basic needs of clothes, food, and shelter for himself and his family members. Besides he can meet his social needs also such as—maintenance, education of children, travelling, insurance and recreation etc. 

On the basis of above classification, the adequate wage in India can be determined easily. In the present economic conditions of our country, Semi-comfortable level can be taken as the basis of wage determination. The wages of employees should enable them to maintain their efficiency. 

Type 2. Minimum Wages:  

According to Fair Wages Committee, “Minimum Wages should provide not only for the bare necessities of a worker. It should also provide for the maintenance of efficiency of the worker. From this point of view, minimum wages must be sufficient to provide for all requirements of education, health and other essential amenities”. 

Minimum Wages means the minimum payment to worker so that he may be able in providing for basic needs for himself and his family members and to maintain his working efficiency only. Some other scholars are of the view that minimum wages should also provide for minimum education, medical facilities and other amenities. According to them, minimum wages should ensure a minimum standard of living considering the health, efficiency and well-being of the worker. 

What should be the amount of fair wages is a question for which no specific answer can be given. It depends upon the economic, social and geographical factors of the country. Besides, it depends upon the size and paying capacity of the enterprise also. 

However, it can be said that minimum wages is the amount that is enough for providing basic needs of the worker and his family and to enable him to maintain his efficiency. 

Objects of Minimum Wages: 

Important objectives of minimum wages are as under: 

  1. To maintain the efficiency of workers, particularly in the industries where the workers do not get fair wages. 
  2. To check the unhealthy competition among entrepreneurs. 
  3. To discourage the strikes, lock-outs and industrial disturbances so that industrial peace may be maintained. 
  4. To check the exploitation of workers by the entrepreneurs. 
  5. To increase the efficiency of workers. 
  6. To protect the interests of workers, particularly when the workers are not organized. 
  7. To strengthen labour unions. 
  8. To help the workers in maintaining and increasing their standard of living. 
  9. To check the unhealthy competition among the workers. 
  10. To provide economic and social justice to the workers. 
  11. To increase the productivity of workers. 
  12. To improve the management system. 

Type # 3. Fair Wages:  

It is very difficult to give a precise definition of Fair Wages because it varies from country to country and from time to time. Therefore, it is possible that an amount of wages that is fair for one country at one time may not be fair for another country or for next time. Therefore, fair wages can be determined only after considering the specific circumstances of the industry for which the wages are to be determined. 

Factory act 1948  


The Payment of Wages Act regulates the payment of wages to certain classes of persons employed in industry and its importance cannot be under-estimated. The Act guarantees payment of wages on time and without any deductions except those authorised under the Act. The Act provides for the responsibility for payment of wages, fixation of wage period, time and mode of payment of wages, permissible deduction as also casts upon the employer a duty to seek the approval of the Government for the acts and permission for which fines may be imposed by him and also sealing of the fines, and also for a machinery to hear and decide complaints regarding the deduction from wages or in delay in payment of wages, penalty 

for malicious and vexatious claims. The Act does not apply to persons whose wage is Rs. 24,000/- or more per month. The Act also provides to the effect that a worker cannot contract out of any right conferred upon him under the Act.  

[Section 1]. Short title extent commencement and application   

  • This Act may be called the Payment of Wages Act 1936. 
  • It extends to the whole of India. 
  • It shall come into force on such date as the Central Government may by notification in the Official Gazette appoint. 
  • It applies in the first instance to the payment of wages to persons employed in any factory to persons employed (otherwise than in a factory) upon any railway by a railway administration or either directly or through a sub-contractor by a person fulfilling a contract with a railway administration and to persons employed in an industrial or other establishment specified in sub-clauses (a) to (g) of clause (ii) of section 2. 
  • The State Government may after giving three months’ notice of its intention of so doing by notification in the

Official Gazette extend the provisions of this Act or any

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

establishments specified by the 

Central Government or a State Government under sub-clause  (h) of clause (ii) of section 2: 

Provided that in relation to any such establishment owned by the Central Government no such notification shall be issued except with the concurrence of that government.  

(6)This Act applies to wages payable to an employed person in respect of a a wage period if such wages for that wage period do not exceed twenty four thousand per month or such other higher sum which, on the basis of figures of the Consumer Expenditure Survey published by the National Sample Survey Organisation, the Central Government may, after every five years, by notification in the Official Gazette, specify. 


“Employed person” [sec 2 (i)] includes the legal representative of a deceased employed person;  

“employer”[sec 2 (Ia)] includes the legal representative of a deceased employer; 

“Industrial or other establishment”[sec 2 (i1)] means any – (a) tramway service or motor transport service engaged in carrying passengers or goods or both by road for hire or reward; 

  • air transport service other than such service belonging to or exclusively employed in the military naval or air forces of 

the Union or the Civil Aviation Department of the 

Government of India; 

  • Dock wharf or jetty; 
  • inland vessel mechanically propelled; 
  • mine quarry or oil-field; 
  • plantation; 
  • workshop or other establishment in which articles are produced adapted or manufactured with a view to their use transport or sale; 
  • establishment in which any work relating to the construction development or maintenance of buildings roads bridges or canals or relating to operations connected with navigation irrigation or to the supply of water or relating to the generation transmission and distribution of electricity or any other form of power is being carried on; 
  • any other establishment or class of establishments which the Central Government or a State Government may having regard to 

The nature thereof the need for protection of persons employed therein and other relevant circumstances specify by notification in the Official Gazette. 

“wages” [sec 2 (iv)] means all remuneration (whether by way of salary allowances or otherwise) expressed in terms of money or capable of being so expressed which would if the terms of employment express or implied were fulfilled by payable to a person employed in respect of his employment or of work done in such employment and includes –  

  • Any remuneration payable under any award or settlement between the parties or order of a court; 
  • Any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; 
  • Any additional remuneration payable under the terms of employment (whether called a bonus or by any other name); 
  • Any sum which by reason of the termination of employment of the person employed is payable under any law contract or instrument which provides for the payment of such sum whether with or without deductions but does not provide for the time within which the payment is to be made; 
  • Any sum to which the person employed is entitled under any scheme framed under any law for the time being in force, but does not include – 
  • any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a court; 
  • The value of any house-accommodation or of the supply of light water medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the State Government; 
  • Any contribution paid by the employer to any pension or provident fund and the interest which may have accrued thereon; 
  • Any travelling allowance or the value of any travelling concession; 
  • Any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or 
  • Any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d). 

Responsibility for payment of wages [Section 3].   

Every employer shall be responsible for the payment to persons employed by him of all wages required to be paid. 

  • In the case of the factory, manager of that factory shall be liable to pay the wages to employees employed by him.   In the case of industrial or other establishments, person’s responsibility of supervision shall be liable for the payment of the wage to employees employed by him.  
    • In the case of railways, a person nominated by the railway administration for specified area shall be liable for the payment of the wage to the employees.  
    • In the case of contractor, a person designated by such contractor who is directly under his charge shall be liable for the payment of the wage to the employees. If he fails

to pay wages to employees, person who employed the employees shall be liable for the payment of the wages.  

[Sec 5 (3)] 

With the consultation of the central government, state government having power and can change the person responsible for the payment of the wages in Railways, or person responsible to daily-rated workers in the Public Works Department of the Central Government or the State Government.  

Fixation of wage-periods. [Section 4] 

Every person responsible for the payment of wages under section 3 shall fix periods in respect of which such wages shall be payable. No wage-period shall exceed one month. That means wage can be paid on daily, weekly, fortnightly (for every 15 days) and monthly only. Wage period for payment of wages to employees by employer should not exceed 30days i.e. one month according to this act.  

But wages cannot be paid for quarterly, half yearly or once in a year. 

Time Of Payment Of Wages. [Section 5] 

  • In railway factory or industrial or other establishment, if there are less than 1000 employees, wages of employees should be paid before the expiry of the 7th day after the last day of the wage period. (ex:- wages should be paid on starting of present month within 7 days i.e. before 7th date if wage is paid on 1st in previous month )  
  • In other railway factory or industrial or other establishment, if there are more than 1000 employees, wages of employees should be paid before the expiry of the 10th day after the last day of the wage period. (ex:- wages should be paid on starting of present month within 10 days i.e. before 10th date if wage is paid on 1st in previous month )  
  • For employees of port area, mines, wharf or jetty, wages of employees should be paid before the expiry of the 7h day after the last day of the wage period.  

[Sec 5 (2)] 

If the employee is terminated or removed for the employment by the employer the wage of that employee should be paid within 2 days from the day on which he was removed or terminated.  

Illustration: if the employee was terminated or removed from the employment by the employer on 10th of this month, his wage should be paid within 2 days from the day on which he was removed or terminated, i.e. his/her wage should be paid by 12th date of this month and this date should not exceed. 

[Sec 5 (4)]   

Except the payment of wage of the terminated employee, all the wages of the employees should be paid by their employer on the working day only  “

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