This article is the creation of Yamini Jain , a student of IIIrd year, BA LLB at ILS Law College, Pune, and provides a brief overview of the Industrial Employment (Standing Orders) Act, 1946 along with relevant case laws.
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The concept of ‘Standing Orders’ is one of the recent growth in relation to Indian labour- management. Prior to 1946, there existed chaotic conditions of employment, wherein the workmen were engaged on an individual basis with uncertain and vague terms of employment. The Act was enacted as a simple measure to remedy this situation – by bringing about uniformity in the terms of employment in industrial establishments so as to minimize industrial conflicts.
The Preamble of the Act imposes a compulsion upon the employers, “to define with sufficient precision the conditions of employment” and make the same known to the workmen.
Section 1 of the Act provides that the Act shall apply to the industrial establishments (within India) with an engagement of more than a hundred workmen at present or as noted on any day in the preceding year unless provided by the appropriate Government for application to any such industrial establishment – with less than a hundred employees.
Certain industrial establishments have been excluded from its application via various statutory provisions enlisted in this Act:
Section 14 empowers the appropriate Government to exempt any industrial establishment from being subject to all or any of the provisions of this Act, either conditionally/unconditionally.
The Act envisages three important features, they are:
CSOs cannot be deemed as a statutory concept, but can also not be confined to the individualistic notions of a contract, as they transcend its limits. Hence, standing orders effectuated in compliance with the statutory provisions may be considered as a special kind of contract or a ‘statutory contract’.
Herein, to answer the question of whether a contract can override in the CSO, it can be concurred from the Western India case , that “the employer & workmen cannot enter into a contract overriding the statutory contract as embodied in the CSO, except when such a contract is entered into in compliance with Section 10(1), so as to modify such CSO, but not otherwise.” [1]
Section 2(g) of the Act states that “standing orders” are the rules relating to matters set out in the Schedule, i.e. with reference to:
A statutory obligation is imposed by the Act upon the employer(s) to submit, individually/ jointly, five copies of a ‘Draft Standing Order’ within six months of its applicability to the industrial establishment, which should be inclusive of the matters enlisted in the Schedule and of the MSOs (short for – Model Standing Orders), if any, and to which shall be annexed such documents containing particulars of the workmen employed.
In this case , the Hon’ble Karnataka High Court held that, as long as the Standing Orders fall within the Schedule to the Act, irrespective of the fact that they contain additional provisions which are not accounted for in the MSOs, the Standing Orders would not be deemed to be invalid or ultra vires of the Act. The MSOs only serve as a model for framing the Standing Orders.
In the present case , the issue relating to the ‘transfer of workmen’ was highlighted by concurring that, the Manager is vested with the discretion of transfer of workmen amongst different departments of the same company, so far as the terms of the contract of employment are not affected. Further, if the transfer is found to be valid, the onus of proving it to be invalid lies on the workmen in dispute.
In the instant case , the employer’s right to terminate the service of a probationer was recognised by declaring that, if a person is an employee on probation, it is an inherent power of the employer to terminate during/ at the end of the probationary period, provided, that even while acting in accordance with the CSO, the employer’s action be fair and consistent with the principles of natural justice.
Section 4 of the Act declares the conditions upon the fulfilment of which, a standing order can be certified. It thereby requires a standing order to provide for all the matters set out in the Schedule of the Act and be in conformity with the provisions of this Act.
Section 4(b) when read with Section 3(2) of the Act, requires the draft standing order to, as far as practicable, be in conformity with the MSO, hence, in cases where it cannot be so claimed, the appropriate authority may permit deviation from the MSO, and negate the addition of such impracticable provision in the Standing Order.
The proviso to Section 4 of the Act, as amended by Act 56 of 1956, necessitates the Certifying Officer or appellate authority to adjudicate upon the fairness or reasonableness of the contents of such Draft Standing Order in order to proceed with its certification.
The Act contemplates by itself that the Standing Orders must cover matters included in the Schedule initially, and those which may be added to the Schedule by the appropriate Government in exercise of the authority conferred on it under Section 15. Any other provisions of such kind may be made if so certified by the Certifying Officer to be fair and reasonable under Section 4 of the Act.
“Once the standing orders are certified, they constitute the conditions of the service binding upon the management and the employees serving already and in employment or who may be employed after certification.” This implies that different set of standing orders cannot exist in respect of distinct sections of workmen or the employer(s), for that would frustrate the intent of the legislature by rendering the conditions of employment as indefinite & diversified, just as existed prior to the enactment of the said Act. [2]
The procedure for certification of Standing Order, as prescribed under Section 5 of the Act, is threefold:
Any related party aggrieved by the order of the Certifying Officer may appeal to the ‘appellate authority’ within 30 days, provided that its decision, of confirming such Standing Order or amending it, shall be final. The appellate authority shall thereafter send copies of the Standing Order, if amended, to the related parties within seven days.
A CSO cannot be modified, except on agreement between the related parties, until six months from the last modification or operation of such standing order under Section 7. Further, subject to Section 10(1) and other provisions of this Act, the parties may apply to the Certifying Officer for modifications in the standing order by annexing five copies of the proposal or a certified copy of the agreement for modifications.
Section 10-A of the Act stipulates for the payment of subsistence allowance by the employer to a workman who is suspended, pending the investigation/ inquiry of his misconduct, at the rate of 50% for the first 90 days, and 75% for the remaining period if the delay is not attributable to the workman. The Act also allows an appeal to the Labour Court constituted under IDA-1947 in case of a dispute relating to such subsistence allowance, whose decision shall be final. Moreover, it declares that the provisions applicable to a particular State, if more beneficial, shall prevail over this Section.
Section 12-A provides that in spite of the provisions under Section 3 – 12, in the period between the applicability of this Act and operation of the CSO, MSOs to be adopted, with Sections 9, 13(2), and 13-A applying in the same way as would apply to a CSO. it also declares that if there exist two categories of workmen, and the daily rated have a CSO in existence for them, then the MSO be adopted for the monthly rated workmen.
The Act makes it a penal offence in case of a violation of Section 3 or 10 of the Act by the employer, by imposing a fine of Rs. 5000 and an additional Rs. 200 per day for a continuing offence. Further, in case of an infringement of the CSO, a fine of Rs. 100 and an additional of Rs. 25 per day for a continuing offence. The Section declares that no prosecution shall be instituted under it except on prior approval by the appropriate Government, and whence instituted, be tried only by such Courts not inferior to the Metropolitan/Judicial Magistrate of Second Class.
Any question relating to the application/interpretation of this Act may be referred to the Labour Courts constituted for this purpose, whose decision shall be final and binding on all parties.
The appropriate Government may delegate its powers under the Act to an Officer/Subordinate Authority to the Central or the State Government, as the case may be, and subject to such directions as may be provided under the notification.
The Act empowers the appropriate Government to make rules for the purpose of this Act, in consultation with representatives of related parties, relating to:
Provided that the rules made by the Central Government be passed/annulled through each House of Parliament without prejudice to the validity of anything done under it.
The Act is a regulatory regime to formally define the employment relations between the workmen/trade union and the employer. A very prominent initiative of this Act is the concept of ‘standing orders’ which is amorphous in nature being a contract promulgated statutorily, that represent the will of the parties so regulated. Finally, it may be stated that, though it lays an exemplary notion, it requires thorough reforms in respect of the present scenario of employment practised by the principal employer so as to fulfil the Constitutional objective of securing socio-economic justice substantially.
