Tuesday, December 2, 2014

Applicability of Industrial Employment (Standing Orders) Act, 1946

I got few queries related to applicability of the standing orders Act in two type of organisation- one a distribution company in Maharashtra State and another again a distribution company i.e. they both are  not in manufacturing set up and not producing any products  and even not in the manufacturing / engineering or similar kind of set up. Before answering the question of applicability, let us understand first what is Standing Orders Act. 

The Industrial Employment (Standing Orders) Act, 1946 came into force on April 23, 1946 and extends to the whole of India. Though the Act applies to every industrial units/undertaking/establishments wherein 100 or more workers were employed on any day of the preceding 12 months, it empowers the appropriate Governments to extend the provisions of this Act to establishments employing less than 100 workers after giving not less than two months’ notice, of its intention to do so, in the official gazette. The Act, however, does not apply to workmen who are governed by the Fundamental and Supplementary Rules, Civil Service Temporary Service Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railways Establishments Code or any other rules or regulations that may be notified in this behalf by the appropriate Government. 

Industrial Employment (Standing Orders) Act, 1946 
There had been always the exploitation of workers in the Industrial organisation such as factories, engineering companies, mining companies etc. in terms of working conditions, rules and regulations governing the same, job descriptions of the workers etc., it was necessary to have a framework to protect the same. This Act makes it mandatory  for employers in industrial establishments to define
with sufficient precision the conditions of employment under them and to make the said conditions known to workmen employed by them. It basically contains all the essence of modern HR handbook or employee handbook. It is applicable to any industrial establishment which has employee strength of 100 or more. (In Maharashtra, it is 50, for other state, please refer rule of your state). Once the employee strength reaches 100/ 50, it becomes applicable even if the number reduces. You have to make a standing order and need to get it certified from the assistant labour commissioner's office. If you do not have it, in that case, you may take the model certified standing orders from labour commissioner's office and use the same. 

What is the content of standing orders
It contains following :
1. Classification of workmen, e.g., whether permanent, temporary, apprentices, probationers, or badlis.

2. Manner of intimating to workmen periods and hours of work, holidays, pay-days and wage rates.

3. Shift working- type of shifts, timings etc. 

 4. Attendance and late coming- timing, policy governing the same

 5. Conditions of, procedure in applying for, and the authority which may grant leave and holidays- including name of the authority granting leave, time needed to apply the same.

 6. Requirement to enter premises by certain gates, an liability to search.

 7. Closing and reporting of sections of the industrial establishment, temporary stoppages of work and the rights and liabilities of he employer and workmen arising there from.

 8. Termination of employment, and the notice thereof to be given by employer and workmen.

 9. Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct.

 10. Means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants.

 11. Any other matter which may be prescribed. 

What is the applicability then?
standing orders is applicable as per the definition Industrial Employment (Standing Orders) Act, 1946 , hence only to industrial organization not to commercials,. Industrial organizations means those who are involved in manufacturing activities or fall under factories Act and the definition as per the section 2.e. of Industrial Employment (Standing Orders) Act, 1946. 

Now, let us look at the section 2.e of The Industrial Employment (Standing Orders) Act, 1946. 

(e) “industrial establishment” means
 (i) an industrial establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act, 1936, or
 15[(ii) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948, or ]
 (iii) a railway as defined in clause (4) of Section 2 of the Indian Railway Act,
1890, or
 (iv) the establishment of a person who, for the purpose of fulfilling a contract with
the owner of any industrial establishment, employs workmen; 

So, to understand whether your organisation is an industrial organisation or not to determine the coverage, let us go through the definition as mentioned above. 

an industrial establishment as defined in clause (ii) of Section 2 of the Payment of Wages Act, 1936,
"industrial or other establishment" means any -
(a) tramway service or motor transport service engaged in carrying passengers or goods or both by road for hire or reward;
(aa) 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;
(b) dock wharf or jetty;
          (c) inland vessel mechanically propelled;
          (d) mine quarry or oil-field;
(e) plantation;
(f) workshop or other establishment in which articles are produced adapted or manufactured with a view to their use transport or sale;
(g) 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;
(h) 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.

So you should ask following questions:
1. Are you in a transportation business (Car rental. bus rental. ferry, tram etc.?- if not, then not applicable.
2. Are you from Airline transportation industry?- Spicejet, Jet, Indigo, GoAir, Air India etc., No? Then it is not applicable. 
3. Do you have dock, wharf or Jetty or a shipping transportation company?  No, then it is not applicable
4. Do you have mine, quarry (stone grinding etc.), oil field like ONGC, IOC and so on- no, then not applicable.
5.  Is your company in any kind of construction business whether road or bridges or building, if not, then not applicable. 
6. Are you in any kind of manufacturing, production, engineering activities (not software development; there should be end visible, physical product). if not, then it is not applicable. 
7. Are you from a industry which provides such manpower to railways, to factories, to engineering, mining and such other companies, if not then it is not applicable. 

I hope it clears the picture. Apart from the category, the minimum employee should be 100 (50 for Maharashtra). 

Above 2 companies
These two companies are independent from the company manufacturing the product. They are neither supplying manpower, nor producing it for them hence they do not need to comply with the Standing Orders Act. 

State wise applicability 

In Assam, even if the employee strength is 20, standing orders Act is applicable. 

In Gujarat, it is applicable to organisation with employee strength of 10 or more

In Rajasthan: It is 50

Which form do I need to use under various provision of The Industrial Standing Orders Act for compliance

Form I - Rule 4: Application For Certification 

Form II -Rule 6: Notice Inviting Objections to Draft Standing Order

Form III - Rule 8: Register of Standing Orders to be maintained by certifying officer 

Form IV - Rule 7-A Memorandum of Appeal

Form IV-A - Standing Order 7-A of Schedule I: Notice of Discontinuance or restarting 

Form V - Sanding Order 1, Schedule 1-B: Service Card 

I hope I have answered your query, Please ask if you have any further query


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