The Industrial Employment (Standing Orders) Act, 1946: Overview

Abstract

The Industrial Employment (Standing Orders) Act is a written contract between the employee and the employer, formulated by the Central Government for the need to restrict industrial unrest and maintain harmony with minimum friction between the management and workers.

This research article seeks to highlight the aim, importance, objective, future and requirement of this Act. It showcases the urgent reason behind the enactment. Lastly, highlights the leverage given to the government in respect to framing rules and regulations of the standing orders.

This article is written by Ridhi Jain, Law student at Xavier Law School. Read this overview on The Industrial Employment (Standing Orders) Act, 1946.

Need for Enactment

The relations and methodology between the employer and employee were drastically biased and unjust. The industry left no stones unturned to exploit the workforce. The employers always had the upper hand in the dealings with the workmen. Earlier prior to the enactment of this act, the methodology of recruitment would be the drafting of the individual contracts with workers in respect of employment. The details and provisions entailing the conditions of employment were ambiguous and undefined. The workers were kept in shadow in regard to the contracts.

There was an industrial establishment which did not even find it obligatory to form such written contracts. With no supervision control over such establishments and ignorance of the workers and blindness of the society gave rise to the supremacy of the employers who legalized such manifestations. Having less redressal and options the workers formed unions, which gave rise to industrial unrest. In addition to the above, this was also not in conformity with social justice because there was no statutory protection available to the employees. Mostly, the contract was unnatural in character. Both the parties, somehow, somewhere found themselves the victims of the caprice, which called the involvement of the government.

Origin

With the growing surge of disturbance in the industrial sector and infringement of rights, a need arose for adequate labor legislation to minimize conflict between the two parties and establish harmony. In 1944, the 6th Indian Labor Conference was held. It drafted certain specific compulsory rules and regulations for the functioning of the sector smoothly. It saw the need to define well- equipped guidelines and rules for the workmen. The meeting observed that there was an immediate need to provide and set the rules regarding conditions of employment, discharge, holidays, leave and disciplinary action, etc. On the reliability of the tripartite conference, the central government issued a Bill, which was introduced in the legislative assembly on 8^th April 1946 and thus, the result of the conference gave India: “The Industrial Employment (Standing Orders) Act, 1946“ which required 

the management to define the rules and conditions distinctly. It was enforced on 23rd April, 1946. The preamble of the Act clearly mentions the conditions to define regulations and those to be known by the employees.

Purpose of the Act

The act is applicable to industrial establishments employing 100 or more workers or employed on any day preceding 12 months. The aim of the act is regulation of the industrial system. The amended act in 1982 also gives us the provisions for payment of subsistence allowance to those whose were kept under pending enquiry related to domestic work. The act was further amended in the year 1984, which broadened the scope of the payment of subsistence allowance.

The Act may be described as a written ‘Code of Conduct’ for workmen, and the functioning against these Statutory orders would result in indiscipline and will be described as an act of misconduct. The objective of the commencement of this Act was as follows: –

1. To define the preliminary conditions of employment.
2. Also, to make the workers aware of the contract and its consequences legitimately.
3. To establish a code of conduct and regulate them periodically for better relations
4. Also, to maintain proper discipline and harmony in the industry for better performance and higher productivity.
5. Better redressal mechanism.
6. Specify the duties and rules of the workers to avoid conflict in the future.
7. To provide statutory sanctity and due regard to the Orders.

Meaning of Standing Orders

The reasoning or purpose behind the makers of this Act was to provide for a consistent and uniform Standing Order for all workmen and give them equal just position in the working environment. The Act would be binding on all the existing workers and the future ones of the particular industrial establishment.

The Act illustrates and defines the meaning to Standing Orders under section 2(g) read with the Schedule -:

1. The category of workers should be mentioned, whether “permanent, temporary, apprentices, probationers, or badlis”.
2. Procedure of intimation regarding wage rate, pay-days, holidays.
3. Any kind of Shift working requirements
4. Policy of late runners and attendance.
5. Conditions and methodology for applying for leave.
6. Need for entering from a particular gateway.
7. The reopening and the closing of any part of the industry, temporary stoppage of work, the rights and responsibilities of the employer arisen there-from should also be specified.
8. The termination letter should be intimated through notice by the employer.
9. The rules regarding acts and omission, suspension etc. should be given.
10. The redressal means should be provided for in the schedule.
11. Any other matter which seems fit and reasonable for the employer or the employee.

Though, the Act explicitly allows for alteration or modification of the standing orders but only with the agreement between the employee and the employer until the expiry of 6 months from the last alteration or operation of the order. There have been cases where the court allowed the alteration before the expiration of 6 months due to provide the parties with a fair deal.

The concerns of the judiciary have been primarily focused on the matters entailed in the schedule of the Act.

Case: Rajasthan State Road Transport Corporation

A very popular case of Supreme Court in “Rajasthan State Road Transport Corporation” held that-  “The certified standing orders framed under and in accordance with the Industrial Employment (Standing Orders) Act, 1946 are statutorily imposed conditions of service and apply both on the employer and the employee though they don’t amount to the statutory provision. Any violation of these standing orders entitles an employee to appropriate relief either before the Industrial Disputes Act forums or the civil court where recourse to civil court is open according to the principles indicated herein.” Even in “Sudhir Chandra Sarkar case” the supreme court opined that the Orders are either statutory in character or have a statutory flavor of it.

Prerequisite for certification of Standing Orders-

According to section 4 of The Industrial Employment (Standing Orders) Act, 1946, standing orders would be certifiable in this act if-

1.  provision is made therein for every matter set out in the Schedule which is applicable to the industrial establishment, and 
2. the standing orders are otherwise in conformity with the provisions of this Act; 

and it [shall be the function] of the Certifying Officer or appellate authority to adjudicate upon the fairness or reasonableness of the provisions of any standing orders.

In the case of Hindustan Lever v. Workmen, where a worker was transferred from one department to another under the same establishment through the orders of the management within the rules of the Act. But some workers contradicted the movement and accused the employer of doing so with wrong intentions. The court held that transfer was valid and the onus of proving lay with the worker.

Reasonableness of Certifying Authority-

Earlier, the certifying authority had no power to check the fairness of the draft, he was only entitled to see if all the matters and concerns have been dealt with as per the schedule, which would certify the draft. Neither the certifying authority nor the appellate had the jurisdiction on these matters. Thus, giving the drafting authority the upper hand to mistreat the workers again. With the amendment in 1956 of the Industrial Employment Act, a duty was imposed upon the certifying or the appellate authority to judge the reasonableness of the draft and if they considered it arbitrary, they had the jurisdiction to refuse certification.

The new act besides broadening the scope, also increased the check and balance points to minimize infiltration and discrimination. It was the responsibility of the certifying authority to balance the social interest of employers with the demands and needs of the worker.

Conclusion

The Industrial Employment Act, made provision for appointment of inspectors to ensure its strict implementation. Without proper implementation, the existing law is waste. For a law to be living, it must be implemented and must change with the changing social concepts and needs.

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