Industrial Employment (Standing Orders) Act, 1946 notes — Unit 4

Before 1946, conditions of employment in Indian factories were chaotic. Workers were hired on oral contracts, terms were vague, and employers could change the rules of the factory on a whim.

Workers never knew exactly what constituted 'misconduct' or how many leaves they were entitled to. Management used this ambiguity to exploit and arbitrarily fire workers.

⇒Objective of the Act

The Industrial Employment (Standing Orders) Act, 1946 was passed to require employers to define with sufficient precision the conditions of employment under them and to make the said conditions known to workmen employed by them.

• Standing Orders: These are the certified statutory rules that govern the relationship between the employer and the employee. They act as a binding statutory contract.

The Act does not apply to small shops or offices. It specifically targets industrial establishments.

⇒General Rule

The Act applies to every industrial establishment wherein 100 or more workmen are employed, or were employed on any day of the preceding twelve months.

• (Note: Many State Governments have used their powers to reduce this threshold to 50 workmen to bring more factories under the Act's protection).

⇒What must be included?

The Act contains a Schedule listing the matters that MUST be covered in the Standing Orders. Examples:

• Classification of workmen (permanent, temporary, apprentices, probationers).
• Shift working, attendance, and late coming.
• Conditions of procedure in applying for leave and holidays.
• Termination of employment, and the notice thereof.
• Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct.

The employer cannot just stick a set of rules on the wall. The rules must be vetted and 'Certified' by a government officer.

⇒Submission of Draft (Section 3)

Within 6 months from the date the Act applies to an establishment, the employer must submit 5 copies of the Draft Standing Orders to the Certifying Officer (usually the Labour Commissioner).

• The draft must cover every matter in the Schedule.
• It must conform, as far as practicable, to the 'Model Standing Orders' provided by the Government.

⇒Conditions for Certification (Section 4)

The Certifying Officer checks two things:

• 1. Are all required matters covered?
• 2. Are the standing orders fair and reasonable? (Prior to 1956, the officer couldn't judge fairness. Now, they act as an adjudicator of fairness).

The certification process is democratic. The workers have a say before the rules become binding.

• Step 1: The Certifying Officer forwards a copy of the Draft to the Trade Union (or directly to the workmen if there is no union), asking for their objections within 15 days.
• Step 2: The Officer gives both the employer and the workmen an opportunity of being heard.
• Step 3: The Officer decides whether any modification or addition is necessary to render the draft fair and reasonable.
• Step 4: The Officer certifies the Standing Orders and sends copies to both parties.

⇒Appeals (Section 6)

If either the employer or the workers are unhappy with the certified Standing Orders, they can appeal to the Appellate Authority (usually the Industrial Court/Tribunal) within 30 days.

⇒Date of Operation (Section 7)

Standing orders come into operation on the expiry of 30 days from the date authenticated copies are sent to the parties (if no appeal is filed).

⇒Binding Nature

Once certified, the Standing Orders have statutory force. They become the binding terms and conditions of service. Neither the employer nor the employee can deviate from them. They override any private contract of employment if the contract is less beneficial to the worker.

⇒Modification (Section 10)

Standing orders cannot be modified within 6 months of certification or the last modification (except by mutual agreement). After 6 months, either the employer or the workmen can apply to the Certifying Officer for modification.

The most litigated part of Standing Orders is the section dealing with 'misconduct'.

⇒What constitutes Misconduct?

An employer cannot fire a worker for 'misconduct' unless that specific act is listed as misconduct in the Certified Standing Orders. Common examples include:

• Wilful insubordination or disobedience.
• Theft, fraud, or dishonesty in connection with employer's business.
• Habitual late attendance or habitual absence without leave.
• Riotous or disorderly behaviour during working hours at the establishment.
• Sleeping on duty.

⇒The Domestic Enquiry

Before punishing a worker for misconduct, the employer MUST conduct a fair 'Domestic Enquiry' adhering to the principles of Natural Justice (issuing a charge-sheet, giving the worker a chance to defend themselves, leading evidence). You cannot fire a worker arbitrarily.

When a worker is accused of serious misconduct, the employer often 'suspends' them pending the domestic enquiry. Since the worker is not fired yet, but not allowed to work, how do they survive?

⇒Statutory Right to Allowance

Section 10A mandates that where a workman is suspended pending investigation or enquiry, the employer must pay a subsistence allowance:

• First 90 Days: At the rate of 50% of the wages.
• Beyond 90 Days: If the enquiry is delayed and the delay is NOT directly attributable to the workman's conduct, the allowance increases to 75% of the wages.

If the worker is ultimately found guilty and dismissed, they do not have to refund this allowance. If they are found innocent, they are reinstated with full back wages (minus the allowance already paid).

What happens during the gap between the factory opening (or crossing the 100-worker mark) and the time the Certifying Officer finally certifies the Standing Orders?

⇒Section 12A

To ensure workers are not left unprotected during this transition period, Section 12A states that the Model Standing Orders (drafted by the Central/State Government) shall be deemed to be adopted by the establishment.

They remain in force until the establishment's own specific Standing Orders are certified and come into operation. This plugs the legal loophole that allowed employers to exploit workers while delaying the certification process.

What happens if there is a disagreement between the management and the union about what a specific line in the Certified Standing Orders actually means?

⇒Section 13A

If any question arises regarding the application or interpretation of a standing order, the employer or the workman (or the union) may refer the question to a Labour Court.

The Labour Court, after giving the parties an opportunity of being heard, will decide the question, and such decision shall be final and binding on the parties.

(Note: This is an exception to the general rule in the Industrial Disputes Act where you need a government 'reference' to go to a Labour Court. Under Sec 13A, parties can approach the Labour Court directly).

⇒Summary of Master Concepts

• Applicability: Establishments with 100+ workers.
• Purpose: To codify conditions of employment and prevent arbitrary rules.
• Certification: Certifying officer checks if draft covers the Schedule and is 'fair and reasonable'.
• Binding Force: They act as statutory terms of contract.
• Misconduct: Must be strictly defined in the orders. Requires a fair domestic enquiry before punishment.
• Subsistence Allowance: 50% for first 90 days of suspension, 75% thereafter.

⇒University Exam Tips for this Unit (Premium Advice)

• Fairness Jurisdiction: A common question is "Can the certifying officer adjudicate upon the fairness of standing orders?" Yes. Highlight that this power was added by the 1956 amendment; before that, they acted merely as a rubber stamp.
• Misconduct Definition: Emphasize that an employer cannot punish an employee for an act that is NOT listed as misconduct in the certified standing orders, no matter how bad the act seems.
• Subsistence Allowance (10A): Memorize the 50% and 75% timelines. It's a very common short note.