Chapter 5

Compensation and salary Administration

Laws governing employee service condition

Labour

• The term ‘labour’ means productive work especially physical work done for wages.

• Labour law also known as employment law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations.

• There are two broad categories of labour law: First, collective labour law relates to the

tripartite relationship between employee, employer and union.

Second, individual labour law concerns employees' rights at work and through the contract for work.The law relating to labour and employment

Factories Act , 1948

• The Factories Act provides for the health, safety, welfare, service conditions and other aspects of workers in factories.

• It applies to all factories employing more than 10 people and working with the aid of power or employing 20 people and working without the aid of power. It covers all workers employed in the factory premises or precincts directly or through an agency including a contractor, involved in any manufacture.

• Some provisions of the Act will vary according to the nature of work of the establishment.

• Licensing and renewal of license under the Act.• Provision of adequate safety measures within the

factory premises.• Provision of adequate welfare measures like

crèche, canteen, wash room etc for the workers.• Payment of wages as per the provisions of the Act.• Payment of overtime wages.• Maintenance of registers.• Submission of returns.

Employee StateInsurance Act , 1948

• This Act provides for the provision of• benefits to employees in case of• sickness, maternity and employment• injury. All employees including• casual, temporary or contract• employees drawing wages less than• Rs 10000 per month are covered.

• Remittance of contribution every month.• Maintenance of registers.• Submission of returns as per the provisions of

the Act.

Employee's ProvidentFund and

MiscellaneousProvisions Act , 1952

• The PF Act provides for the compulsory institution of contributory provident funds, pension funds and deposit linked insurance funds for employees.

• This Act applies to industries specified in Schedule I employing 20 or more persons and any other class of establishments employing 20 or more persons notified by the Government.

Maternity Benefit Act ,1961

• Maternity Benefit Act aims to regulate the employment of women in certain establishments for certain periods before and after child-birth and to provide for maternity benefits including maternity leave, wages, bonus, nursing breaks etc.

• It is applicable to every factory, mine or plantation including those

• belonging to Government, irrespective of the number of employees, and to every shop or establishment wherein 10 or more persons are employed or were employed on any day of the preceding 12 months.

Payment of GratuityAct , 1972

• The Act provides for a scheme for the payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments.

• The Act enforces the payment of 'gratuity', a reward for long service, as a statutory retrial benefit. Every employee irrespective of his wages is entitled to receive gratuity if he has rendered continuous service of 5 years or more than 5 years.

• Payment of gratuity to employees leaving the establishment after completion of 5 years.

• Notice of opening to concerned labour authority.

• Displays required under the Act.• Maintenance of registers of allocable surplus,

bonus etc.• Submission of annual returns.

The Weekly HolidaysAct , 1942

• The Weekly Holidays Act provides for grant of weekly holidays to persons employed in shops, restaurants and theatres.

• Provision of weekly holidays.

Facilities to be provided to contract labourers

• 1) Rest rooms• 2) Canteen• 3) Latrines and urinals• 4) Drinking water• 5) First aid facilities

Maintenance of records

• 1) Register of persons employed.• 2) Muster roll• 3) Register of wages• 4) Register of deductions for damage or loss• 5) Register of fines• 6) Register of advances• 7) Register of overtime

Salary administration

Trade unions

• Trade Unions are voluntary organization of Workers as well as Employers formed to protect and promote the interest of their members. They are the most suitable organizations for balancing and improving the relations between the employer and the employees. Trade Unions have made headway due to rapid industrial development. The workers come together to maintain and improve their bargaining power on wages and working conditions. The first organized Trade Union

• in India named as the Madras Labour Union was formed in the year 1918. From the beginning itself, Trade Unions were not confined to workers alone. From 19thCentury itself there were Employer’s associations in the form of Chamber of Commerce, Industrial Associations etc. to protect and promote the interests of their members in a concerted manner. After independence, expansion of industrial activity and grouping worker’s Trade Unions acted as a spur for strengthening and expansion of employers’ organization

• Collective bargaining is process of joint decision making and basically represents a democratic way of life in industry. It is the process of negotiation between firm’s and workers’ representatives for the purpose of establishing mutually agreeable conditions of employment. It is a technique adopted by two parties to reach an understanding acceptable to both through the process of discussion and negotiation.

• ILO has defined collective bargaining as, negotiation about working conditions and terms of employment between an employer and a group of employees or one or more employee, organization with a view to reaching an agreement wherein the terms serve as a code of defining the rights and obligations of each party in their employment/industrial relations with one another.

• Collective bargaining involves discussions and negotiations between two groups as to the terms and conditions of employment. It is called ‘collective’ because both the employer and the employee act as a group rather than as individuals. It is known as ‘bargaining’ because the method of reaching an agreement involves proposals and counter proposals, offers and counter offers and other negotiations.

Important Prerequisites for a Successful Collective Bargaining are listed below:

(1) The parties must attain a sufficient degree of organisation. If the workers’ organisation is weak, employers can say that it does not represent the workers and will refuse to negotiate with it. Unless the workers are able to form strong and stable unions, collective bargaining will not be successful.

(2) Freedom of association is essential for collective bargaining. Where there is no freedom of association, there can be no collective bargaining. Freedom of association implies that the workers as well as the employers will have the right to form an organisation of their own to protect their interests.

(3) There should be mutual recognition between both the groups. Collective bargaining cannot begin if the employers do not recognise the workers’ organisation. The conflict of interests makes the two groups hostile to each other. They must recognise each other and realise that adjustment and understanding is essential for the achievement of organisational goals.

(4) There must exist a favourable political climate, essential for successful collective bargaining. If the government encourages collective bargaining as the best method of regulating conditions of employment, it will be successful. Where the governments restrict trade union activities, there can be no collective bargaining.

(5) Agreement must be observed by those to whom they apply. The workers’ organisation must be strong enough to exercise its authority over its members. If the trade union has no power over its members, collective bargaining will not be effectively implemented.

(6) A give and take policy must prevail in the organisation. The difference between two parties can be adjusted only by compromise so that an agreement can be reached. Neither side should be too rigid on its demand. Their attitudes should be flexible and both sides should be ready to give up some of its demands. Unions should not rigidly insist upon unreasonable demands and should be ready to reduce its demands to come to an agreement.

(7) Sometimes unfair labour practices are resorted to by both the employers and the trade unions. These will restrict the development of collective bargaining. Unfair labour practices should be avoided by both the sides, as this will create an atmosphere of goodwill.

• Maruti suzuki strike case study

• http://www.citehr.com/354574-details-about-maruthi-suzukis-strike.html