The Industrial Employment (Standing Orders) Act, 1946

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Introduction

The Industrial Employment (Standing Orders) Act, 1946, is a crucial piece of labour legislation in India. Its primary objective is to define with precision the conditions of employment in industrial establishments and to make them known to the workmen employed therein. Prior to this Act, the terms and conditions of employment were often vague and left to the discretion of the employers, leading to frequent disputes and industrial unrest. This Act mandates employers in industrial establishments to formally define the terms and conditions of employment, known as “Standing Orders,” and get them certified by a competent authority. This ensures uniformity, clarity, and transparency in the employer-employee relationship, thereby promoting industrial peace and harmony.

Purpose and Scope of the Act

The Act was enacted to minimize friction between employers and employees by clearly defining their rights and obligations concerning various aspects of employment. It covers matters such as working hours, holidays, pay days, shifts, attendance, late coming, leave, termination of employment, disciplinary action, and redressal of grievances.

Applicability

The Act extends to the whole of India. It applies to every industrial establishment wherein one hundred or more workmen are employed or were employed on any day of the preceding twelve months. However, the appropriate Government is empowered to extend the provisions of this Act to any industrial establishment employing such number of persons less than one hundred as may be specified in the notification. State Governments also have the power to apply the Act to establishments employing fewer than 100 workmen.

The Act does not apply to:

• Any industrial establishment to which the provisions of the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, the Civil Services (Temporary Service) Rules, the Revised Leave Rules, the Civil Service Regulations, or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply.
• Workmen to whom the Conduct and Discipline Rules made under the Railways Act, 1890, or the Police Acts, apply.

Key Definitions

• “Appropriate Government”: In relation to any industrial establishment under the control of the Central Government or a railway company or a major port, mine, oilfield, or factory owned by the Central Government, the Central Government; and in relation to any other industrial establishment, the State Government.
• “Certifying Officer”: A Labour Commissioner or a Regional Labour Commissioner, and includes any other officer appointed by the appropriate Government, by notification in the Official Gazette, to perform all or any of the functions of a Certifying Officer under this Act.
• “Employer”: The owner of an industrial establishment to which this Act applies, and includes:
  • In a factory, any person named as manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948.
  • In any industrial establishment under the control of any department of any Government in India, the authority appointed by such Government in this behalf, or where no authority is so appointed, the head of the department.
  • In any other industrial establishment, any person responsible to the owner for the supervision and control of the industrial establishment.
• “Industrial Establishment”:
  • An industrial establishment as defined in clause (ii) of section 2 of the Payment of Wages Act, 1936, or
  • A factory as defined in clause (m) of section 2 of the Factories Act, 1948, or
  • A railway as defined in clause (4) of section 2 of the Indian Railways Act, 1890, or
  • The establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial establishment, employs workmen.
• “Standing Orders”: Rules relating to matters set out in the Schedule to the Act.
• “Workman”: Any person employed in any industrial establishment to do any skilled, manual or clerical work for hire or reward, but does not include any such person:
  • Who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957; or
  • Who is employed in the police service or as an officer or other employee of a prison; or
  • Who is employed mainly in a managerial or administrative capacity; or
  • Who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per month or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

Matters to be Provided in Standing Orders (The Schedule)

The Schedule to the Act lists the matters for which Standing Orders must make provisions. These include:

1. Classification of workmen, e.g., permanent, temporary, apprentices, probationers, badlis.
2. Manner of intimating to workmen periods and hours of work, holidays, pay-days and wage rates.
3. Shift working.
4. Attendance and late coming.
5. Conditions for grant of leave and holidays, procedure for applying for leave and holidays, and the authority which may grant such leave and holidays.
6. Conditions for grant of casual leave and sick leave.
7. Procedure for applications for leave.
8. Closing and re-opening of sections of the industrial establishment, and temporary stoppages of work and the rights and liabilities of the employer and workmen arising therefrom.
9. Termination of employment, and the notice thereof to be given by employer and workmen.
10. Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct.
11. Means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants.
12. Any other matter which may be prescribed.

Certification of Standing Orders

The Act mandates that every employer to whom the Act applies shall, within six months from the date on which this Act becomes applicable to his industrial establishment, submit to the Certifying Officer five copies of the draft standing orders proposed by him for adoption in his industrial establishment.

Procedure for Certification:

1. Submission of Draft Standing Orders: The employer submits draft standing orders to the Certifying Officer. The draft should be in conformity with the provisions of the Act and should cover all matters specified in the Schedule. It should also be accompanied by a statement giving particulars of the workmen employed in the industrial establishment, including the name of the trade union, if any, to which they belong.
2. Forwarding to Trade Union/Workmen: On receipt of the draft standing orders, the Certifying Officer forwards a copy to the trade union, if any, of the workmen, or where there is no such trade union, to the workmen in such manner as may be prescribed, together with a notice requiring objections, if any, from the workmen within fifteen days from the receipt of the draft.
3. Hearing and Certification: The Certifying Officer considers the objections raised by the workmen or the trade union and gives both the employer and the workmen or their representatives an opportunity of being heard. After hearing, the Certifying Officer certifies the standing orders, with or without modifications, ensuring that they are in conformity with the provisions of the Act and are reasonable and fair.
4. Appeal: Any person aggrieved by the order of the Certifying Officer may, within thirty days from the date on which copies of the certified standing orders are sent, appeal to the Appellate Authority. The Appellate Authority, after giving the parties an opportunity of being heard, passes orders confirming, modifying, or reversing the order of the Certifying Officer. The decision of the Appellate Authority is final.
5. Commencement: The certified standing orders come into operation on the expiry of thirty days from the date on which authenticated copies thereof are sent by the Certifying Officer to the employer and to the trade union or other prescribed representatives of the workmen.

Model Standing Orders

The appropriate Government may frame “Model Standing Orders” covering the matters set out in the Schedule. These model standing orders serve as a guide for employers in drafting their own standing orders. If an industrial establishment does not have certified standing orders, the model standing orders, if any, framed by the appropriate Government, are deemed to be adopted by that establishment until its own standing orders are certified.

Modification of Standing Orders

Certified standing orders cannot be modified until the expiry of six months from the date on which they came into operation, or where an appeal is preferred, from the date on which the decision of the Appellate Authority is communicated to the parties.

Either the employer or any workman (or their representative) may apply to the Certifying Officer to modify the standing orders. The procedure for modification is similar to the initial certification process, involving notice to the other party, hearing of objections, and certification by the Certifying Officer, with a provision for appeal to the Appellate Authority.

Enforcement and Penalties

The Act provides for penalties for non-compliance.

• Failure to submit draft standing orders: An employer who fails to submit draft standing orders as required by the Act is punishable with fine which may extend to five thousand rupees, and in the case of a continuing offence, with a further fine which may extend to two hundred rupees for every day during which the offence continues.
• Acting in contravention of certified standing orders: An employer who acts in contravention of the certified standing orders of his industrial establishment is punishable with fine which may extend to one hundred rupees, and in the case of a continuing offence, with a further fine which may extend to twenty-five rupees for every day during which the offence continues.
• Other offences: Any other offence under the Act is punishable with fine which may extend to five hundred rupees.

No prosecution for an offence punishable under this Act shall be instituted except with the previous sanction of the appropriate Government or an officer authorised by it.

Importance of Standing Orders

• Clarity and Certainty: They provide clear and precise terms and conditions of employment, eliminating ambiguity and reducing the scope for disputes.
• Uniformity: They ensure uniform application of rules for all workmen in the establishment, promoting fairness.
• Industrial Peace: By defining rights and obligations, they foster a stable and harmonious industrial environment.
• Protection for Workmen: They protect workmen from arbitrary actions of employers, especially concerning disciplinary matters and termination.
• Efficiency: Clear rules contribute to better discipline and efficiency in the workplace.
• Legal Basis: They provide a legal framework for the employer-employee relationship, making it easier to resolve grievances and enforce compliance.

Conclusion

The Industrial Employment (Standing Orders) Act, 1946, plays a vital role in regulating industrial relations in India. By mandating the formalization and certification of employment conditions, it brings transparency, fairness, and stability to the workplace. Its provisions ensure that workmen are aware of their rights and duties, and employers operate within a defined legal framework, thereby contributing significantly to industrial harmony and productivity.

Frequently Asked Questions (FAQs)

1. What is the main objective of the Industrial Employment (Standing Orders) Act, 1946? The main objective is to define with precision the conditions of employment in industrial establishments and to make them known to the workmen employed therein, thereby reducing industrial disputes.

2. To which industrial establishments does this Act apply? It generally applies to industrial establishments employing one hundred or more workmen. However, the appropriate Government can extend it to establishments with fewer than 100 workmen.

3. What are “Standing Orders”? Standing Orders are rules that define the conditions of employment for workmen in an industrial establishment, covering matters like working hours, leave, discipline, and termination.

4. Is it mandatory for an employer to have Certified Standing Orders? Yes, for establishments covered by the Act, it is mandatory to have Certified Standing Orders.

5. What happens if an establishment does not have Certified Standing Orders? If an establishment does not have Certified Standing Orders, the Model Standing Orders framed by the appropriate Government are deemed to be adopted by that establishment.

6. Who is a “Certifying Officer” under this Act? A Certifying Officer is typically a Labour Commissioner or a Regional Labour Commissioner, or any other officer appointed by the appropriate Government to certify standing orders.

7. What is the process for certifying Standing Orders? The employer submits draft standing orders; the Certifying Officer forwards them to the trade union/workmen for objections, conducts a hearing, and then certifies them.

8. Can workmen or trade unions object to the draft Standing Orders? Yes, workmen or their trade unions have the right to raise objections to the draft standing orders within a specified period.

9. What matters are typically covered by Standing Orders? Matters like classification of workmen, working hours, holidays, leave rules, attendance, disciplinary actions, termination procedures, and grievance redressal mechanisms are covered.

10. Can Certified Standing Orders be modified? Yes, they can be modified, but generally not before six months from their operation date. The modification process is similar to the initial certification.

11. Who can apply for modification of Standing Orders? Either the employer or any workman (or their representative) can apply for modification of the certified standing orders.

12. What is the role of the “Appellate Authority”? The Appellate Authority hears appeals against the orders of the Certifying Officer. Its decision is final.

13. What are the penalties for not submitting draft Standing Orders? An employer can be fined up to five thousand rupees, with a further fine for continuing offences.

14. What are the penalties for contravening Certified Standing Orders? An employer can be fined up to one hundred rupees, with a further fine for continuing offences.

15. Does this Act apply to government employees? Generally, no. It does not apply to industrial establishments where specific government service rules (like Civil Services Rules or Police Acts) apply.

16. What is the significance of “Model Standing Orders”? Model Standing Orders serve as a template provided by the Government, guiding employers in drafting their own, and acting as default rules if an establishment lacks certified ones.

17. When do Certified Standing Orders come into operation? They come into operation after thirty days from the date on which authenticated copies are sent by the Certifying Officer to the employer and workmen’s representatives.

18. Can an employer unilaterally change the conditions of employment once Standing Orders are certified? No, an employer cannot unilaterally change the conditions. Any modification must follow the prescribed procedure under the Act.

19. How does this Act help in maintaining industrial peace? By providing clear, precise, and legally binding terms of employment, it reduces ambiguity and potential for disputes, thereby fostering industrial peace.

20. Is the Act applicable to all types of employees in an industrial establishment? It applies to “workmen” as defined in the Act, which generally excludes those in managerial, administrative, or highly supervisory capacities, or those covered by specific defense/police acts.

Disclaimer

Please Read Carefully:

This document provides a general overview and interpretation of the Industrial Employment (Standing Orders) Act, 1946, as applicable in India. It is intended for informational purposes only and does not constitute legal advice.

• Not Legal Advice: The content herein is not a substitute for professional legal counsel. Labour laws are complex and subject to interpretation by courts and authorities. Specific situations may require tailored advice.
• Jurisdictional Variations: While this document focuses on the Indian Act, labour laws and their application can vary significantly by jurisdiction. Always consult the specific laws and regulations applicable to your region or country.
• Updates and Amendments: Laws are subject to change and amendment. This document may not reflect the most current legislative developments or judicial pronouncements. It is crucial to refer to the latest official texts of the Act and relevant rules.
• No Liability: The creator of this document disclaims any liability for any loss or damage incurred, directly or indirectly, as a result of reliance on the information provided herein.
• Consult a Professional: For any specific legal questions, compliance requirements, or interpretation of the Act in a particular context, it is strongly recommended to consult with a qualified legal professional specializing in labour and employment law.

By using this information, you acknowledge and agree to this disclaimer.