Explore the Tamil Nadu Labour Welfare Fund Act of 1972. Understand the objectives and provisions of the legislation aimed at promoting the welfare of laborers in Tamil Nadu through the establishment of a welfare fund.
Labourers have historically faced challenges such as long working hours, inadequate wages, and physical or mental harassment, which impede their well-being and ability to support their families. In India, as a welfare state, there is a responsibility to safeguard the rights and welfare of workers. The establishment of the International Labour Organization in 1919 marked a significant milestone in advancing labour welfare globally
Scope and Purpose of the Act
India has enacted numerous laws to protect workers’ rights, including the Factories Act, of 1948, the Employees’ Provident Funds and Miscellaneous Provisions Act, of 1952, and the Workmen’s Compensation Act, of 1923, among others. Additionally, states like Tamil Nadu have specific legislation, such as the Tamil Nadu Labour Welfare Fund Act, of 1972, aimed at promoting the welfare of labour within the state. This Act, enacted by the Tamil Nadu Legislature, underscores the state’s authority to legislate on labour welfare, given that labour falls under the concurrent list.
The article elucidates the rules framed under Section 41(1) of the Act in 1973 and elucidates the Act’s purpose, emphasizing the creation of a labour welfare fund and its benefits. It also delineates the powers and functions of the board tasked with administering the fund. The Act applies to the entirety of Tamil Nadu and seeks to provide social security to labourers, thereby enhancing their standard of living and ensuring their well-being and that of their families. Contributions from employers and employees are utilized to offer financial assistance for various needs such as education, healthcare, transportation, and food.
Definitions to look out for
Employee
Section 2(b) defines an employee as an individual hired for skilled, unskilled, manual, supervisory, clerical, or technical work in an establishment. The individual must have worked for at least thirty days in the preceding twelve months. This definition also covers individuals declared as employees by the government. However, it excludes those in managerial or supervisory roles earning wages exceeding fifteen thousand per month, apprentices, or part-time employees.
Employer
As per Section 2(c), an employer is a person with ultimate control over an establishment’s affairs. If authority over affairs is delegated, the person entrusted with such responsibility, whether titled manager, managing director, or superintendent, is considered the employer.
Establishment
Section 2(d) defines establishment as:
- A factory or premises deemed a factory under the Factories Act, of 1948,
- A motor transport undertaking per the Motor Transport Workers Act, 1961,
- A plantation under the Plantations Labour Act, of 1951,
- A catering establishment employing five or more employees on any working day in the preceding twelve months,
- A registered society or trust with five or more employees,
- Any other establishment notified by the government.
Unpaid accumulation
Section 2(i) defines unpaid accumulation as payments, excluding gratuity, owed to an employee for over three years from the due date. This includes accrued gratuity unpaid within three years of accrual. However, employer contributions to provident funds are excluded from unpaid accumulation.
Wages
Section 2(j) defines wages as monetary remuneration payable to an employee under the employment contract. However, wages exclude:
- Termination gratuity,
- Value of excluded amenities,
- Employer contributions to pension or provident funds,
- Travel allowances or concessions,
- Special expenses incurred by the nature of employment.
Labour Welfare Fund
The Labour Welfare Fund is a government-initiated fund aimed at enhancing the economic well-being of employees in the unorganised sector. As per Section 3 of the Act, the government establishes this fund. The board is tasked with transferring all unpaid accumulations to the fund and maintaining a separate account until claims are resolved under Section 13. The fund receives various contributions, including:
- Unpaid accumulations transferred to the board under Section 13(2) of the Act,
- Fines and amounts collected under Standing Order 20 of the Model Standing Orders issued under the Tamil Nadu Industrial Employment Rules, 1947, from employees,
- Deductions made under the provisos of Section 9(2) of the Payment of Wages Act, 1936, and Section 36(2) of the Tamil Nadu Shops And Establishments Act, 1947,
- Contributions from employers and employees,
- Penalty interest under Section 14,
- Voluntary donations,
- Amounts raised by the board from various sources to bolster its resources,
- Funds transferred under Section 17(5) of the Act,
- Amounts borrowed under Section 18,
- Unclaimed amounts credited to the government under the rules of the Payment of Wages Act, of 1936, and the Minimum Wages Act, of 1948,
- Grants or advances from the government, and
- Fines imposed on employers by courts for labour law violations, excluding administrative deductions by the court.
All funds mentioned above must be disbursed to appropriate agencies, with accounts maintained and audited as prescribed by regulations.
Contribution by Employee and Employer
To support the objectives of the fund, both employers and employees are required to make contributions, as outlined in Section 15 of the Act. The contribution amounts are subject to periodic adjustments, typically with the employer’s contribution being higher than the employee’s. As per the notification dated 02.12.2022, the employee is required to contribute ₹20 per year, while the employer’s contribution stands at ₹40 per year. Additionally, the government is obligated to contribute ₹20 per year for each employee.
Benefits for the Employee
The establishment of the labour welfare fund is anticipated to foster greater employee commitment and job security. Here are some of the benefits or implications for employees:
- Improved medical facilities for employees and their dependents due to increased fund contributions.
- Enhanced social security leads to improved worker growth and performance.
- Better working conditions, including transportation, training, and recreational activities.
- Special privileges and concessions such as housing loans.
- Utilization of fund contributions solely for employee and dependent welfare, including training, community initiatives, recreational activities, and provision of nutritious food for employees’ children and part-time employment opportunities for housewives.
Benefits for the Employer
In addition to the advantages accrued by employees, employers also stand to benefit from the welfare fund, as it acts as a morale booster for their workforce. This enhancement in morale is expected to lead to increased efficiency and productivity, thereby benefiting the employer.
Furthermore, the fund’s establishment can contribute to improved employer-employee relationships and foster better mutual understanding between the two parties.
Establishment and Constitution of the Board Members: Their Appointment and Disqualification
Under Section 4 of the Act, the State Government of Tamil Nadu is mandated to establish the Tamil Nadu Labour Welfare Board. This board is constituted as a body corporate, possessing perpetual succession, a common seal, and the authority to institute legal proceedings.
Composition of the Board
As per Section 5, the board is comprised of a chairman and various other members, all appointed by the government. The chairman, typically the minister-in-charge of labour, is joined by an equal number of representatives from both employees and employers, members of the state legislature, as well as other officials and non-officials as prescribed.
Appointment and Disqualification of Members
According to Section 6, the appointment of the chairman and other members is publicized in the Tamil Nadu Government Gazette. Non-official members serve a term of three years, with the possibility of reappointment. They continue in their roles until successors are appointed. Additionally, Section 7 stipulates that a member of the state legislature ceases to hold board membership upon cessation of their legislative position.
Disqualification, Removal, and Resignation of Members
Sections 8 and 9 outline the disqualifications and processes for the removal and resignation of board members. A person may be disqualified if they become a board officer, an undischarged insolvent, mentally incapacitated, or convicted of a crime involving moral turpitude. The government has the authority to remove a member for such disqualifications or prolonged absence from board meetings without consent. Members also have the right to resign by providing written notice to the government. Casual vacancies must be expeditiously filled, with appointees serving the remainder of the term.
Functions of the Board
The Tamil Nadu Labour Welfare Board, established under this Act, primarily administers the labour welfare fund as mandated. Additionally, it undertakes various other functions delineated below in Section 12 of the Act.
Under Section 13, the board is tasked with publicly notifying employees, their heirs, or legal representatives regarding any due payments. This notice is displayed on the establishment’s notice board and published in the Tamil Nadu Government Gazette upon receiving unpaid accumulations from employers. The funds received are then deposited in designated bank accounts, to be managed by the board according to Section 19.
Moreover, Section 18 empowers the board to borrow funds, subject to governmental approval, for fulfilling its statutory obligations.
The board’s actions under this Act remain valid notwithstanding any vacancies or procedural irregularities, as stated in Section 11.
Power of Government Under the Act
Section 2(f) defines “government” as the State Government of Tamil Nadu, endowing it with various powers and duties stipulated in the Act:
- The government is responsible for establishing the Labour Welfare Fund, in alignment with the Act’s objectives. It, along with employers and employees, contributes to the fund.
- The government appoints and may remove board members. It can provide grants and loans to the board.
- Fund application guidelines are determined by the government to promote worker welfare.
- The government sanctions borrowing by the board.
- Accounts and audit reports of the board are presented before the State Legislature by the government.
- The government issues directives to the board regarding fund expenditure.
- It approves the appointment of the Secretary, who serves as the board’s Chief Executive Officer.
- Inspectors may be appointed by the government, with defined jurisdictions.
- Leave salary and pensionary contributions are credited to the board’s account by the government.
- The government may supervise the board’s operations and inspect its records.
- Under Section 36, the government can supersede the board for up to six months for various reasons, including non-performance or misuse of powers.
- The government may delegate powers, except rule-making, under Section 37.
- The government can exempt establishments from certain Act provisions.
- Rules can be made by the government under Section 41, leading to regulations like the Tamil Nadu Labour Welfare Fund Rules, 1973.
Offenses and Penalties
- Section 29 imposes penalties for obstructing inspectorial inspections or failing to produce documents, with imprisonment of up to three or six months and fines ranging from five hundred to one thousand rupees.
- Non-compliance with board directives under Section 34 incurs imprisonment of up to three or six months or fines ranging from five hundred to one thousand rupees.
- Section 39 shields individuals acting in good faith from legal proceedings.
Tamil Nadu Labour Welfare Fund Rules
The Tamil Nadu Labour Welfare Fund Rules, 1973, outline procedural guidelines for implementing the provisions of the corresponding Act. The rules cover various aspects including:
- Payments by Employers: Rules dictate procedures for employers to make payments for unpaid accumulations and fines.
- Mode of Payments: Guidelines are provided regarding the methods through which payments are to be made.
- Rate of Contributions: The rules specify the rates at which contributions are to be made by employers, employees, and the government.
- Quorum and Meetings of the Board: Procedures for determining a quorum and conducting meetings of the Labour Welfare Board are outlined.
- Powers of the Secretary: The rules delineate the powers vested in the Secretary of the Board.
- Budget: Guidelines are provided for formulating and implementing the budget of the Labour Welfare Board.
- Audit and Annual Report: Procedures for auditing accounts and publishing the annual report are specified.
- Remission of Penalty: Rules detail the process for remitting penalties imposed under the Act.
- Methods of Voting: Guidelines for conducting voting procedures within the Board are provided.
- Duties and Functions of the Committee: The rules outline the responsibilities and functions of committees formed under the Act.
- Powers of Inspectors: Procedures regarding the powers and duties of inspectors are delineated.
- Maintenance of Registers: Rules specify the types of registers to be maintained by employers in compliance with the Act.
Relevant Judgements
General Manager, India Cements v. Subramanian N.S., 1997
The case involved a strike notice issued by workers and subsequent wage deductions by the management. The court ordered reimbursement of deducted wages to the workers from the Labour Welfare Fund.
The Railway Employees v. The Joint Commissioner of Labour, 2010
A writ petition challenged a communication from the Labour Department regarding certified standing orders. The court dismissed the petition and directed the petitioners to credit a fine to the Tamil Nadu Labour Welfare Fund.
Tamil Nadu Labour Welfare Fund Benefits: The Takeaway
The Tamil Nadu Labour Welfare Fund Act, of 1972, serves as welfare legislation aimed at improving the economic conditions of workers. Through effective implementation of the Act and its associated rules, financial support is provided to labourers and their dependents. This legislation has been instrumental in streamlining labour laws in India, demonstrating its effectiveness in advancing the welfare of workers. There is a need for similar legislation in other states, with the establishment of committees to oversee workforce welfare and ensure the implementation of such acts for the benefit and security of workers.
