PROTECTION OF UNORGANIZED LABOUR

Introduction

The working force in industries is considered as a weaker section. But the growth and
economy has led to two contradictory demands for labour, on one hand organized labour
seem to have grown into strong and to impeding the progress of liberalization. This has
led to moves to curb labour such as through amendments to the Industrial Disputes Act
and Trade Unions Act, or through some sort of exist policy.

On the other hand, manual labour is seen as weak and exploited and there are demands
for protection of such organized labour, such as child labour, garment workers,
construction workers, agricultural labour and even home workers.

This anomalous situation has arisen because, labour is now divided into two classes-

(a) Organized labour which is strongly protected by law and has their owns unions and

(b) Unorganized labour which is unprotected and more often than not, exploited before
liberalization in economy, unorganized sector workers constituted 89 percent of the work
force. Now they constitute 93 percent and yet they remain uncovered by protective
legislations. This is a dangerous situation where a large section of population doesn’t
receive the benefits of liberalization and consequently social inequality widens.

Since the unorganized sector plays pivotal role in the Indian economy, it needs special attention. The
Unorganized Workers’ Social Security Act, 2008 is a labour welfare legislation which provides social
security measures exclusively for unorganized labour.

 Categories of Unorganized Labour

The National Commission on Labour listed “illustrative” categories of unorganized labour which
are as follows:
 contract labour including construction workers;
 casual labour;
 labour employed in small scale industry;
 handloom/power-loom workers;
 beedi and cigar workers;
 employees in shops and commercial establishments;
 sweepers and scavengers;
 workers in tanneries;
 tribal labour; and
 other unprotected labour

Problems of Unorganized Workers

Unlike organized sector, this sector have not tasted the benefits or derived the advantages that can be
gained from organization. Many of them are victims of invisibility. The difficulty starts from identifying
or defining the unorganized sector itself. There is no a single or primary criterion by which the sector
could be defined. The large segment of the work force has continued to be neglected even though this
sector has a crucial role in economy in terms of employment. Hence, an attempt has been made to address
the problems faced by the unorganized workers resulting in vulnerability are as follows:

1. Insecurity of Job

The informal sector workers often undertake multiple jobs, pursuing of multiple jobs by a person may be
taken as a sign of insecurity in jobs. A single job or even two may generate income barely enough for
subsistence. For instance employment of agricultural labour is irregular and unassured. This is due to
availability of work to them only for about three months and the remaining nine months, they are mostly
unemployed and suffer from starvation. Employment in agriculture is thus available for fewer days per
year.

In India, Mahatma Gandhi National Rural Workers Employment Guarantee Act, 2005 aims to provide
employment security by guaranteeing at least 100 days of work in the most backward districts of the
country who can perform manually. But, informal workers continue to face the risk of loss of
employment as they are varied by nature and location.

2. Irregularities and Inability to Secure Even Minimum Wages

Most of the studies on conditions of employment in the unorganized sector have examined the wage
levels and earnings of workers are identified that the daily wages are below the minimum rate of wages.
But, the prevailing situation shows the reach and effectiveness of the Minimum Wages Act is limited. In
the unorganized sector casual workers tend to be the least protected and have the lowest level of earnings.
The wages for the huge informal sector cannot be left to be determined by the interplay of the market
forces. There is no uniformity in wage structure across the various States or Union Territories. This is also
due to applicability of the Act only to certain employments which does not include all workers. Hence, if
a state Government fails to include a particular employment within an industry in the employment
schedule, the Minimum Wages Act does not cover all workers in that industry.

3. Long Hours of work

Long hours work in the unorganized sector beyond the labour and regulatory norms are common in India.
In agricultural sector there is no fixed hours of work as there are no laws to act as guidelines for the
working conditions of agricultural labourers. In case of non- agricultural sectors such as fireworks, match
making, power looms and so on, workers started their work very early in the morning at 6.00 a.m. and
continue till late evening. In hand loom sector the work is organized in such a way that wages were based
on a 12-15 hours work per day. The Factories Act, 1948, The Minimum Wages Act, 1948 and the Shops
and Establishments Act stipulates that no adult worker shall be required to work more than 48 hours in a
week. But these provisions relating to working hours have been violated frequently. Thus limitation on
hours of work is almost nonexistent.

4. Poverty and Indebtedness

Workers in the unorganized sector had a much higher incidence of poverty than their counterparts in the
organized sector. Due to low level of income and uncertain employment in the unorganized sector make
the workers unable to meet their basic necessities and other social and other cultural responsibilities. In
agricultural sector, it is fact that increased indebtedness is noted as a major reason for suicide in various
states. Since the wage levels have been very low, they are worst in terms of poverty level and economic
status.

5. Occupational hazards and Health Issues

The working conditions in the unorganized sector is the main cause to have an adverse effect on the
health conditions of workers. Low nutritional intake due to low income, constant physical labour
increases health problems to the workers in the unorganized sector resulting in risks of life of unorganized
workers. With regard to home workers most of the studies reported health problems mainly related to
respiratory due to inhalation of the tobacco dust and body ach due to the peculiar posture that has to be
maintained at all times of work. In some of the sectors like fish processing units and tobacco and salt pan
industry, the working conditions can be called as horrible for workers in general and women workers in
particular. In Tobacco- processing units the workers have to do their entire job such as plucking,
winnowing, grading and packaging, while they are surrounded by heaps of tobacco, which is considered
to be unhygienic to the health. The mist of tiny particles of tobacco is found to such an extent that the
workers can9t even see the faces of each other. The factory owners do not take proper care of the
workers. They do not provide them facilities like apron, spectacles, mouth closer, socks etc.

Similarly, salt pan workers are also found to be suffering from skin diseases as they have to work
constantly in salty water. They develop severe eye problems due to the reflection of light from the heap of
salt. Agricultural sector due to extensive use of fertilizers, insecticides and pesticides and mechanization
workers suffer from certain specific health hazards. The pesticide applicators, mixers, loaders are at the
risk of exposure to toxic chemicals. Since the farming sector is unorganized in character, there is an
absence of statistics on farm related accidents and injuries.

Thus, workers in unorganized sectors such as fireworks and match industry, leather tanning industries,
construction sectors etc., are dangerous and full of hazards. Loss of limbs and amputations occur often
when workers operate unguarded or inadequately safeguarded machines. Occupational illness and
diseases have also been reported among workers in many industries of unorganised sector.

6. Non-Applicability of Social Security Measures

There are many times when a worker cannot economically active. Due to biological circumstances such
as modernity, sickness or old age; on account of personal calamities such as widowhood, or an accident;
social or natural calamities such as unemployment, flood, fire drought or high unemployment or closure
of an industry. During these spells of risk the worker needs support, in the form of some social insurance
to survive the crisis and resume work after it. Social security measures are indispensable for unorganized
workers to protect them from contingencies and deprivation. The existing social security legislations are
not applicable to most of the unorganized sectors. There are no social security measures to provide risks
coverage and ensure maintenance of basic living standards at times of crises such as unemployment or
health issues.

7. Lack of Proper Physical Environment at Place of Work

Lack of sanitation facilities has an impact on health of the workers. But, sanitary conditions are so
uncertain in most of the industries in the unorganized sector due to lack of proper toilet facilities. The
facilities such as washing, urinal and toilet facilities at work are found to be low standard. It could be said
that no such facilities were provided to workers in the industries. Apart from that, physical conditions
such as space, lighting, ventilation etc., are very poor.
9. Loss of Income Arising Out of Accident

An accident either during the course of work or otherwise is a major crisis for informal workers due to
loss of income. It further implies additional income expenditure of medicines, hospitalization etc. If the
accident leads to partial or permanent disability the loss is much greater. In the case of death of a
breadwinner, it is a permanent loss of income and the family has to borrow money, spend savings or sell
assets.

10. Lack of Old Age Security

Most of the provisions relating to provident fund did not reach the construction workers and contract
labourers. The old age is a major concern of the workers in the unorganized sector workers. Agricultural
workers and construction workers are feared of not being able to work during old age. For the large
proportion of old age persons expected in the future, the insecurities will arise due to various reasons such
as inability of adult workers to support the needs of old age person in the family, inadequate public health
care facilities and increasing cost of private health care facilities of the aged etc.

11. Migrant Workers

Migrant workers are the most disadvantaged segment of workforce facing adverse working and living
conditions. For instance, sugarcane labourers are generally staying in open place in the absence of proper
space. Also, they have to cook their food in open space, which causes hardship during monsoon season.
Since the labourers are staying in open space, they are continuously worried about the menace from
snakes, scorpions, mosquitoes etc. In most of the cases, the resident sugarcane cutters have no basic
facilities like electricity, water, sanitation etc.

The Problems faced by migrant workers are as follows:

 Vast majority of migrant workers fall in the unorganized sector.
 No working hours are fixed.
 They belong to poorest sections of population and inadequate access to basic amenities.
 People who migrate from rural to urban areas have absolutely no rights when they arrive as
they lack bargaining power and forced to accept work for lesser wages.

12. Lack of Bargaining Power

Lack of organization or least unionization among the unorganized workers is mainly on account
of illiteracy and lack of awareness. Despite the increased recognition of informal sector9s
contribution to employment and gross domestic product among others the lack of worker9s rights
and legal status has tended to adversely affect worker9s prospects. This is due to lack of
organization or least organized in the sense that they are not able to voice their feelings or dissent
against the attitude of employers in order to protect their interests. Due to long working hours,
social isolation of migrant workers, high level of unemployment, illiteracy and lack of awareness
are the major hurdles in organizing themselves.

1. 14. Insecurity Arising Out of Natural Disasters

There are many natural disasters like floods, drought, famine, earth quake etc., which also have a
devastating impact on the informal sectors. Natural disasters do not only wipe out the productive
base of the informal sector, but can also affect the limited household assets of the own.

THE UNORGANIZED WORKERS SOCIAL SECURITY ACT, 2008

The unorganised worker's social security Act was enacted by the parliament of
India in 2008 by president's assent. It is implemented by the Ministry of Labour
and Employment worker's sector. Recently, the honorary Supreme Court dismissed
the PIL filed by Shri R Subramanian which was seeking directions to compensate
the financial loss of the workers employed in the unorganised sector.
The persistence of Covid-19 pandemic has expedited the misery of India's working
population. It came to light that more than 90% of the Indian population is
employed in the unorganised sector and they neither have access to social security
nor minimum wages despite them contributing an approximate of 60% to the
Indian GDP.

Objective And Purpose

The UWSS Act 2008 was implemented with the objective to ensure social security, good
wellbeing and to protect the unorganised sector workers from several contingencies.
The importance of the act came to light in 2012 in National Domestic Workers Welf. v. State of
Jharkhand & Ors. wherein it was highlighted that the current labour laws in force such as the
Industrial Disputes Act, the Minimum Wages Act, Maternity Benefit Act, the Workmen's
Compensation Act, Factories Act, etc. are applicable to a restricted number of workers.

In India, the social security laws have derived their basis from Part IV of the Directive Principles
of State Policy (DPSP). The Social security and Labour Laws form a part of the concurrent list
therefore both, the Central and the State Governments are approved to make laws for the
same. It is the obligation of the state to lay down provisions which grant social security to
organised as well as unorganised sector workers.

Another purpose of the act is to ensure that the needs of the workers employed in the
unorganised sector are addressed as it contributes to the sustainable economic growth in the
country. Apart from Social security the needs include availability of credit, upskilling, use of
modern technology, infrastructure and the requirement of a contractual obligation between the
employer and employee.

Definitions (Sec. 2)

Section 2, contains definitions of certain terms used in the Act providing that unless the context otherwise
requires the meaning of these terms shall be attached as contained herein.

(a) Employer - means a person or an association of persons, who has engaged or employed an
unorganized worker either directly or otherwise for remuneration;

(b) Home-based worker - - means a person engaged in the production of goods or services for an
employer in his or her home or other premises of his or her choice other than the workplace of the
employer, for remuneration, irrespective of whether or not the employer provides the equipment,
materials or other inputs;

(c) Identity card -- means a card, document or certificate issued to an unorganized worker by the District
Administration under sub-section (3) of Section 10;

(d) National Board -- means the National Social Security Board for unorganized workers constituted
under sub-section (1) of Section 5;
(l) Unorganized Sector -- means an enterprise owned by individuals or Self Employed workers and
engaged in the production or sale of goods or providing service of any kind whatsoever, and where the
enterprise employs workers, the number of such workers is less than ten;

(m) Unorganized Worker -- means a home-based worker, self-employed worker or a wage worker in the
unorganized sector and includes a worker in the organized sector who is not covered by any of the Acts
mentioned in Schedule II to this Act; and

Social Security Benefits (Sec. 3 and 4)

➢ S. 3. Framing of Scheme

Section 3 deals with framing of schemes for social security benefits. It makes it obligatory on the part of
the Central Government to formulate and notify from time to time suitable welfare schemes for
unorganized workers on matters relating to-

(a) Life and disability cover;

(b) Health and maternity benefits;
(c) Old age protection; and
(d) Any other benefit as deemed fit by the Central Government.

Sub-section (2) of Section 3 provides that the schemes included in Schedule I shall be deemed to be the
welfare schemes under subsection (1) of Section 3.

The following Schemes are included under Schedule I:

i. Indira Gandhi National Old Age Pension Scheme
ii. National Family Benefit Scheme
iii. Janani Suraksha Yojana
iv. Handloom Weavers' Comprehensive Welfare Scheme
v. Handicraft Artisans' Comprehensive Welfare Scheme
vi. Pension to Master craft persons
vii. National Scheme for Welfare of Fishermen and Training and Extension
viii. Janshree Bima Yojana
ix. Aam Admi Bima Yojana
x. Rashtriya Swasthya Bima Yojana

The Central Government has been empowered under Section 3(3) to amend the Schedules annexed to this
Act by notification in this behalf.

Similarly under sub-section (4) the State Government is under statutory duty to formulate and notify from
time to time, suitable welfare schemes for unorganized workers including schemes relating to-

1. a) provident fund;
2. b) employment injury benefit;
3. c) housing;
4. d) educational schemes for children;
5. e) skill upgradation of workers;
6. f) funeral assistance; and
7. g) old age homes.
Sec 5 : National Social Security Boards : the CG through notification constitute the Board

1. " Union Labour and employment Minister would be the Chairperson, ex officio;
2. " The director general labour welfare would be the member secretary, ex officio;
3. " Thirty four members to be nominated by the CG out of whom

i . Seven from unorganized workers

ii . Seven from employers or unorganized sector
iii. Seven representing eminent persons from civil society
iv.Two representing members from Lok Sabha and one from Rajay Sabha
v. Five representing CG Ministers and Departments concern
vi.Five representing State Govt
Provided that adequate representation shall be given to persons belonging to the Scheduled Castes, the
Scheduled Tribes, the Minorities and Women.

4. From time to tome CG shall notifying the changes in this regard

5. The term of the National Board is three years
6. Every year atlest three meeting shall be conducted
7. The members may receive such allowances as may be prescribed for attending the
meetings of the National Board.

➢ Functions
8 . The National Board shall perform the following functions, namely:

a) recommend to the Central Government suitable schemes for different sections of

unorganised workers;

b) advise the Central Government on such matters arising out of the administration of this Act as may be
referred to it;
c) Monitor such social welfare schemes for unorganised workers as are administered by the Central
Government;

d) Review the progress of registration and issue of identity cards to the unorganised workers;
e) Review the record keeping functions performed at the State level;
f) Review the expenditure from the funds under various schemes; and
g) Undertake such other functions as are assigned to it by the Central Government from time to time.

State Social Security Board for Unorganized Workers (Sec. 6-9)

State Govt shall through notification constitute social security Board.

 Minister of Labour and Employment of the concerned would be chairperson. Exoffcio

 The principal secretary or secretary (labour) would be the Member Secretary ,exofficia
and
 Twenty eight members to be nominated by the State Govt out of whom
 Seven representing the unorganised workers
 Seven representing employers of unorganised workers
 Two representing members of Legislative assembly of the concerned state.
 Five representing eminent person from civil society
 Seven representing State Govt department concerned.
 The state govt is framing the schemes from time to time
 The term of the board is three years
 The Board shall schedule meeting quarterly
 The members shall receive the allowance of the meeting

Functions of State Board

 Recommended the State Govt in formulating suitable schemes for different sections
 Advise the state govt on labour matters
 Monitor social schemes
 Review the record keeping functions performed at the district level
 Review the progress of registration and issue of cards to unorganised sector workers
 Review the expenditure

S. 7. Funding of State Government Schemes.

(1) Any scheme notified by the State Government may be

(i) Wholly funded by the State Government; or

(ii) Partly funded by the State Government, partly funded through contributions collected from the
beneficiaries of the scheme or the employers as may be prescribed in the scheme by the State
Government.

(2) The State Government may seek financial assistance from the Central Government for the schemes
formulated by it.

(3) The Central Government may provide such financial assistance to the State Governments for the
purpose of schemes for such period and on such terms and conditions as it may deem fit.

➢ S. 8. Record keeping by District Administration

It is always necessary to keep and maintain proper records for information relating to schemes formulated
by the Government for the welfare of the unorganized workers under the Act so that improvements can be
made on the basis of past experience and also to meet out querries made under Right to Information Act.
Section 8 of the Act makes provision for record keeping by District Administration. However, the State
Government has been authorized to direct that the record keeping function shall be performed by the
District Panchayat in rural areas; and the Urban Local Bodies in urban areas

➢ S. 9. Workers Facilitation Centres

Generally unorganized labour is illiterate or less educated who may not be aware of the welfare schemes
in operation and also may not be aware of the procedure to avail the benefits thereof, it is, therefore,
necessary to establish centres to facilitate them in all these matters. Section 9 makes a clear-cut provision
in this regard. The State Government has been authorized to set up such Workers Facilitation Centres as
and when considered necessary to perform functions Specified in its clauses (a) to (d) namely:

a) Disseminate information on available social security schemes for the unorganized workers;

b) Facilitate the filling, processing and forwarding of application forms for registration of unorganized
workers;
c) Assist unorganized worker to obtain registration from the District Administration;
d) Facilitate the enrollment of the registered unorganized workers in social security schemes.

These centres have been entrusted with the very important functions and they are to play key role in the
success of such welfare schemes.

Eligibility for Registration and Social Security Benefits (Sec. 10)

Section 10 lays down eligibility conditions for registration for social security benefits under the schemes.
Like Child Labour (Prohibition and Regulation) Act, 1986 there is also age requirement that is, he or she
must have completed fourteen years of age and he or she is required to make a self-declaration that he /
she is an unorganized worker.

Such eligible candidate is required to make an application in the prescribed form to the District
Administration for registration. The District administration is under duty to register and issue an identity
card which shall be a smart card carrying a unique identification number and shall be portable. It has been
made clear that he may be asked to pay contribution to avail the benefits of the scheme in terms of
scheme concerned. For financial assistance the Central or the State Government are required to contribute
regularly in terms of the Scheme if the scheme requires such contribution to be paid by the said
Government.

LAW RELATING TO SHOPS AND ESTABLISHMENTS

Introduction
Liberalization, Privatization and Globalization (LPG) policies adopted in India lead to an increase in
the informal sector work. With the advent of globalization, the concept of capitalism has changed. The
motive for more profit is driving the capitalists to make huge profits by adopting new methods of
production. More companies are moving to countries having lower labour costs and are shifting to
informal employment arrangements. All these resulted a lot of pressure on low skilled workers and petty
producers by weakening their bargaining power and subjecting them to increased competition. Lay off of
employees has become a strategy of the companies to cope up with the economic crisis. The informal
sector will again become the lender of last resort for the employees. Also, informalization is happening
within the formal sector, where some jobs are outsourced to Sub contractors.
There is a need to protect the unorganized labour in shops and establishments by regulating their
working conditions. Shops and Establishment Act governs the working conditions and rights of workers
engaged in the unorganized sector. This includes wage payments, leaves and holidays, work hours, etc.
Shop/Trade licenses are State subject and the rules differ accordingly. The license is mandatory for all
business entities, even if you are working from home. It covers - shops, commercial establishments,
restaurant, hotel, theatre, public amusement, and retail trade/business. Every establishment needs to
register itself within 30 days of commencement. Similarly, every state follows their specific registration
process. The working conditions will also differ from state to state.

Necessity of protection of unorganized labour in shops and establishments by regulating their

working conditions

The problem of unorganized labour has problem in defining and identifying itself because they cannot be
defined but would be described as that part of the workforce who have not been able to organize in
pursuit of common objective because of constraints such as:

a) The casual nature of employment;

b) Ignorance and illiteracy;
c) Small size of establislaments with low capital investment per person employed;
d) Scattered nature of establishments; and
e) Superior strength of the employer operating singly or in combination.

The unorganized labour under shops and commercial establishments include vast majority of work
force such as labourers working in residential hotels, restaurants, amusement parks, theatres, and other
entertainment houses, as well as any other such public amusement places and other shops and
establishments. This sector is characterized by a high incidence of casual labour mostly doing intermittent
jobs at extremely low wages or doing their own account work at very uneconomical returns. There is a
total lack of job security and social security benefits. The areas of exploitation are high, resulting in a
long hours unsatisfactory work conditions, and occupational health hazards.

It cannot be denied that this category of unorganized sector does not get enough protection through labour
legislation. Despite the existence of labour laws, for various reasons, the workers in this sector do not get
social security and other benefits, as do their counterpart in the formal sector. Here workers are highly
exploited by entrepreneurs. They are employed on casual basis. They use to get very low wages and in
certain cases less than minimum wages. With the exception of very few cases, there is hardly any trade
union or other institutional machinery to fight for the workers. Up to now, collective bargaining has not
been able to get any visible space in this sector. Therefore the women workers are particularly
discriminated due to inadequate bargaining power and lack protection. So they are socially and
economical1y exploited by the haves of our country.

The Need for Ensuring Minimum Conditions of Work

The recognition of the need to ensure socially acceptable conditions of work is based on the
basic principles of moral philosophy and human dignity and rights, which have also been adopted as
international covenants by bodies such as the International Labour Organization and others concerned
with human rights and development. In practice they have been followed at varying pace in different
countries dictated by, among other things, social norms and the resultant national ethos governing
development and human dignity.
In India the basic principles governing state policy as enshrined in the Constitution, directly or
implicitly, ask for ensuring these conditions for all workers. They have also been put in practice by
passing several legislations prescribing the principles and procedures to be followed by the enterprises in
to the employment of workers. Some of them apply to all workers but most cover only the workers in
larger enterprises, namely, those employing more than a certain number of workers. The principle that the
standards should be applied to all workers is accepted but their application by law has been confined to
only the larger enterprises, or what has come to be known as the "organized sector", presumably because
of non-affordability of the compliance cost by small or unorganized sector enterprises and difficulties in
implementation. In view of the fact that the conditions of work prevailing in the unorganized sector are
found to violate some of the basic tenets of human dignity, these assumptions need to be seriously
examined for their validity and for explaining ways of ensuring the minimum standards at workplace for
all the workers.

• The Shops and Establishment Act

The Shops and Establishment Act has been enacted by various State Governments to regulate the
conditions of work of employees in shops, commercial undertakings, restaurants, etc., All commercial
establishments must abide by The Weekly Holiday Act, 1942 enacted by the Central Government which
governs the grant of holidays. However, there is no specific Central Government Act which
comprehensively governs hours of work, payment of wages, health and safety in commercial
establishments. To bridge this gap, state Governments have enacted a Shops and Establishment Act to
help regulate the conduct of commercial establishments within their jurisdiction.

A Bird’s eye View of Legislations on Shops and Establishments in Different States and the Necessity
of Common Legislation

One of the important regulation to which most businesses in India are subject to is the Shop and
Establishment Act, enacted by every state in India. The Act is designed to regulate payment of wages,
hours of work, leave, holidays, terms of service and other work conditions of people employed in shop
and commercial establishments.

➢ Shop and Establishment Act in India

The Shop and Establishment Act is regulated by the Department of Labor and regulates premises wherein
any trade, business or profession is carried out. The act not only regulates the working of commercial
establishments, but also societies, charitable trusts, printing establishments, educational institutions run
for gain and premises in which banking, insurance, stock or share brokerage is carried on. This act
regulates areas such as working hours, rest interval for employees, opening and closing hours, closed
days, national and religious holidays, overtime work, rules for employment of children, annual leave,
maternity leave, sickness and casual leave, etc.,

➢ Premises Regulated by the Shop & Establishment Act

The Shop and Establishment Act in India is promulgated by the state and may slight differ from state to
state. However, as per the Act, all shops and commercial establishments operating within each state are
covered by the respective Shop & Establishments Act. Shops are defined as premises where goods are
sold either by retail or wholesale or where services are rendered to customers, and includes an office, a
store-room, Godown, warehouse or workhouse or work place. Establishments are defined as shop, a
commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public
amusement or entertainment. Further, establishments as defined by the act may also include such other
establishments as defined by the Government by notification in the Official Gazette. However, factories
are not covered by the shops & establishments act and are regulated by the Factories Act, 1948.

➢ Aspects Regulated by Shop and Establishment Act

The Shop and Establishment Act regulates a number of aspects relating to the operation of a shop or
commercial establishment. Some of the key areas regulated by the shop and establishment act include:

 Hours of work
 Interval for rest and meals
 Prohibition of employment of children
 Employment of young person or women
 Opening and closing hours
 Close days
 Weekly holidays
 Wages for holidays
 Time and conditions of payment of wages
 Deductions from wages
 Leave policy
 Dismissal
 Cleanliness
 Lighting and ventilation
 Precautions against fire and Accidents
 Record keeping

More details relating to the above aspects can be found in the shop and establishment act
promulgated by each state government. Such as:

a) The Maharashtra Shops and Establishments (Regulation of Employment and Conditions of

Service) Act, 2017
b) The Delhi Shops and Establishments Act, 1954.
c) The Tamil Nadu Shops and Establishments Act, 1947
d) Karnataka Shops and Commercial Establishments Act, 1961. etc.

➢ Shop and Establishment Act License

Any shop or commercial establishment that commences operation must apply to the Chief
Inspector for a Shop and Establishment Act License within the prescribed time. The application for
license in the prescribed form must contain the name of the employer, address of the establishment, name
of the establishment, category of the establishment, number of employees and other relevant details as
requested. On submission of the application and review by the Chief Inspector, the shop or commercial
establishment will be registered and a registration certificate will be issued to the occupier. The
registration certificate must be prominently displayed at the shop or commercial establishment and
renewed periodically, as per the act.

In case the shop or establishment would like to close down the business, the occupier should
notify the Chief Inspector in writing within fifteen days of the closing. The Chief Inspector after
reviewing the request for closure can remove the shop or commercial establishment from the register and
cancel the registration certificate.
Conclusion

It would be useful and necessary to examine the problems of unorganized labour in shops and
establishments so that an all out attempt to improve the application and extension of social security
measures could be taken to ameliorate economic and social conditions of the these labourers. Most of
them receive very low wages and face discrimination in labour market. They live and work in unhygienic
conditions and are susceptible to many infectious and chronic diseases. A vast majority of them do not get
any statutory social security allowance such as health care benefits, paid leave for illness, maternity
benefits, insurance, old age pension, etc. In spite of these problems, they contribute a major share of GDP.

THE KARNATAKA SHOPS AND COMMERCIAL ESTABLISHMENTS

ACT, 196
Introduction

The Karnataka Shops and Establishment Act regulates the operations of shops and commercial
establishments. The Karnataka Shops and Establishment Act was introduced to regulate the hours of
work, annual leave with wages, wages and compensation, employment of women and children and other
aspects of a shops or commercial establishment. The Act consist of IX Chapters, 44 Sections and a
Schedule.

Objectives

The Preamble of the Act states, this as an Act to provide for the regulation of conditions of work and
employment in shops and commercial establishments

Commencement and Application (Secs. 1 and 2)

• This act has been enforced from 01-03-1962 in Karnataka state and time to time amendments are made.
• This Act applies to the areas specified in the Schedule and to the areas as notified by the Karnataka
Government.

Important Definitions (Sec. 2)

• S. 2(e) Commercial Establishment
Commercial Establishment --- means a commercial or trading or banking or insurance establishment, an
establishment or administrative service in which persons employed are mainly engaged in office work, a
hotel, restaurant, boarding or eating house, a cafe or any other refreshment house, a theatre or any other
place of public amusement or entertainment and includes such establishments as the State Government
may by notification declared to be a commercial establishment for the purposes of this Act;

• S. 2(g) Employee

Employee -- means a person wholly or partially employed in or in connection with, any establishment
whether working on permanent, periodical, contract or piece-rate wages, or on commission basis, even
though he receives no reward for his labour and includes an apprentice, any clerical or other member of
the staff of a factory or industrial establishment who falls outside the scope of the Factories Act, 1948, but
does not include a member of the employer’s family; and “employed”shall be construed accordingly;

• S. 2(h) Employer

Employer. -- means a person having charge of or owning or having ultimate control over the affairs of an
establishment and includes members of the family of an employer, a manager, agent or other person
acting in the general management or control of an establishment;

• S. 2(i) Establishment Establishment. -- means a shop or a commercial establishment;

• S. 2(u) shop

Shop -- means any premises where any trade or business is carried on or where services are rendered to
customers, and includes offices, storerooms, godowns, or warehouses, whether in the same premises or
otherwise, used in connection with such trade or business, but does not include a commercial
establishment or a shop attached to a factory where the persons employed in the shop fall within the scope
of the Factories Act, 194

Exemptions from Applicability (Sec. 3)

Establishments Exempted from Karnataka Shops and Establishment Act

1. Federal, state government or local authority offices

2. Any industry or entity that provides power, light, or water to the public, or any water
transport service, postal, railway survice, telephone or telegraph service, any system of
public sanitation
3. Railway dining cars
4. Establishments for the care or treatment of the mentally unfit, infirm
5. The food corporation of India’s establishments;
6. The offices of legal and medical practitioners provided that they have not employed more
than three persons;
7. A banking company’s offices;

Registration of Establishments (Secs. 4-6A)

Under the Act registration is mandatory for all shops and commercial establishments in Karnataka, expect
those exempted.
New shops or commercial establishments in Bangalore or Karnataka are required to apply for
Registration under the Karnataka Shops and Establishment Act within 30 days of commencing
operations. Registration must be submitted in the prescribed format to the Labour Inspector of the area
concerned.

The following information must be provided as a part of the Shop and Establishment Act Registration
application:

 The name of the employer and manager, if any

 The postal address of the establishment;
 The name, if any, of the establishment; and
 Such other particulars as may be prescribed.

On submission of the application, the Inspector would verify and provide the Registration Certificate.
Registration certificate must be displayed on visible place inside the office premises. Registration
certificate is valid for 5years period. Before the expiry of the period, renewal application to be submitted
for the next period.

It shall be the duty of an employer to notify to the registration authority, in the prescribed form, any
change with respect to any information contained in his statement during registration/renewal within 15
days after the change.

Ex. Change in address, change in ownership, change in number of employee etc.

Every employer, employing any person in or in connection with his establishment, shall issue an
appointment order in writing indicating the name, designation, wage scale of such person and terms and
conditions of his employment and serve the same on such person within thirty days from the date of
appointment in his establishment.

After closing the business of his establishment, should surrender the registration certificate to the
registration authority.

Hours of Work (Secs. 7-13)

Daily and weekly hours and extra wages for overtime work

As per the Act, employees can only work for nine hours on any day and forty-eight hours in any week. If
the employee works more hours, then wages need to be provided for overtime. Further, the period of
work of an employee in an establishment should be fixed so that, no period or work exceeds five hours
without an interval.

Working hours (Opening and closing hours)

Any establishment shall not run its business before and after following hours.
➢ In Bangalore city; Morning before 6 am and Night after 9 pm.
➢ Other places; Morning before 8 am and Night after 8 pm

Weekly holiday

Every establishment shall remain closed for one day of the week. The employer shall fix such day in the
beginning of the year and notify it to the registration authority and specify it in a notice prominently
displayed in a conspicuous place inside the establishment. Any employer is taking exemption from
weekly holiday, shall fix different days as holiday for his establishment and shall obtain the weekly
holiday break by submitting the report to the deputy labour commissioner.

Annual leave with wages

Every employee working in an establishment in Karnataka is allowed to avail a leave with wages
at the rate of one day for every twenty days of work performed. For young persons, the provision
is more relaxed offering a leave with wages at the rate of one day for every fifteen days of work
performed.

Employment of Child, Young Persons and Women (Secs. 24 and 25)

The Act prohibits the employment of child at any establishment. A child is any person who has not
completed fourteen years of age.

Also, young person and woman cannot be required or allowed to work whether as an employee or
otherwise in any establishment during night. A young person is anyone who has completed the age of
fourteen, but not eighteen.
However IT/BT organizations can get permission to allow women to work after 8 pm by submitting Form
R with necessary information.

Authorities

To enforce this act labour commissioner will be the Chief Inspector. It is notified that
Inspector/Senior Inspector as Inspector and all department level authorities as Additional
Inspector

Duties of Employer
Employment and Regulation:

 Every employer, employing any person in or in connection with his establishment shall issue an
appointment order in form P.

 Every day, employee attendance shall be registered in form T.

 The organizations having weekly holiday exemption, after taking continuous service of 6 days
th th
from any employee, shall give 7 day as mandatory holiday for him. In special cases 7 day
th
cannot be given as holiday, 11 day should be given as mandatory holiday.
th
 After each month salary shall be paid before 7 date of next month.

 Working period of any employee should not exceed 48 hours and 58 hours including extra
working hours.

 End of the year, counting the working day of the employees for present year; 1 day per 20 days as
earned leave and 1 day per 30 days as sick leave shall be calculated. This leave account shall be recorded
in the format F.

 Any employee who has completed 180 days service to the establishment can not be dismissed without
prior notice.

Submission of annual report:

Annual report ending with 31st December shall be submitted before 31st January of next year in the
format 'U'

Employees’ Rights

 Every employee have rights to take weekly one day as compulsory holiday.

 Where an employee works in any establishment for extra hours in any day or any week, he shall in
respect of such overtime work to be entitled to wages at twice the rate of normal wages.

 Every employee shall be entitled to preserve earned leave for 40 days.

 Every employee shall be entitled to encash unavailed earned leaves.

 An employee, removed or dismissed shall have a right of appeal to jurisdiction officer on the ground
that there was no reasonable cause for the removal or dismissal.

 Where an employee has been removed or dismissed without reasonable cause or without proof of
misconduct is proved, the employee shall be entitled to get compensation as one month’s pay for every
year of service.

Penalties

Certain penalties have been prescribed for the contravention of provisions of the Act. All of them are in
terms of fine except employment of children for which imprisonment for three months may be awarded
and in case the offence is repeated same may be increased up to one year.

Conclusion

This is an act to provide for the regulation of conditions of work and employment in shops and
commercial establishments in the state of Karnataka. The accurate name for this legislation is The
Karnataka Shops and Commercial Establishments Acts, 1961 and Rules, 1963. This act covers shops and
commercial establishments (offices, storerooms, Godowns, or warehouses). The act is applicable even if
you have one employee or none. In spite of this Act, the workers are subject to severe exploitation by the
rest of the society. They work under poor working conditions, get wage much below than in the formal
sector and even for closely comparable jobs where labour productivity is not different. The work status is
of inferior quality in terms of both remuneration and employment. Hence there is a need for effective
implementation of the Act.

THE SPECIAL ECONOMIC ZONES ACT, 2005

INTRODUCTION

Every country stands for its economic development. Economic development refers to the sustained
and concentrated actions by the government which increase employment opportunities ,extend export &
import of the country and that promote standard of living, economic and health. It can involve and include
different areas of development like human, capital, critical infrastructure, regional competitiveness,
environment stability, health, safety, literacy and other initiatives. Economic development requires
development of political economy of the country. Political Economy refers to study of production, buying
and selling and their relations with law, custom and government as well as with the distribution of
national income and wealth. It deals with the relationship between the individual and the society, between
the markets and the state using techniques from economics, politics and sociology.

A Special Economic Zone (SEZ) is a trade capacity development tool, with the goal to promote rapid
economic growth by using tax and business incentives to attract foreign investment and technology. It is
trend in the economic development of a country. India for the sake of economic development enacted
Special Economic Zones Act, 2005 to achieve economic objectives. However the act implies certain
relations in labour laws to the industries falling under the SEZs.
The constitutional mandates of Welfare State policy including the labour welfare is very much necessary
and this is possible by effective implementation of all the labour welfare legislations. But at the same time
economic development of a country is equally important which includes adoption of open economy
system in which the employers seek relaxation in labour laws. The responsibility of balancing these two
issues is shouldered on the State. The State is under obligation to handle the situations in the adoption of
labour welfare policies and as well as economic development policies.

Emergence of Special Economic Zones

For the development and up liftment of the country, its political and economy growth are required and for
this purpose the states introduces and implement New Policies and Programmes like Foreign direct
Investment, Export Import Act, Custom Act and Special Economic Zone Act and many more. Different
countries use different words for special economic zone as export processing zone, free trade zone or
foreign trade zone and it is an area within which goods may be landed, handled, manufactured or
reconfigured, and re-exported without the intervention of the customs authorities.

India, for economic development and development of political economy introduced lots of policies and
programs and even after 60 years of its independence India has 110 crores population had evolved a new
paradigm of its political economy which is confusing. The policies and programs initiated by Indian
government to create a global village based on free market economy and free trade among nations cutting
across all barriers, abolition of national boundaries and dismantling the nation state system giving priority
to market over the state. For free market economy and promote the export and import business, Export
Processing Zone introduced first time in 1960 at Kandla as a free trade in a country. But there were some
difficulties and loopholes so after the enactment of Special Economic Zone Act 2005. It created
tremendous effects on political economy of the country.

India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ)
model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view to overcome the
shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-
class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in
India, the Special Economic Zones (SEZs) Policy was announced in April 2000.

This policy intended to make SEZs an engine for economic growth supported by quality infrastructure
complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum
possible regulations. SEZs in India functioned from 1.11.2000 to 09.02.2006 under the provisions of the
Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant
statutes.

• Meaning of Special Economic Zone

The Special economic zone or SEZ refers to a totally commercial area specially established for the
promotion of foreign trade. A Special Economic Zone (SEZ) is a geographical region that has economic
laws more liberal than a country's typical economic laws. Usually the goal is flourishment in foreign
investment. In other words SEZs are specifically delineated enclaves treated as foreign territory for the
purpose of industrial, service and trade operations, with relaxation in customs duties and a more liberal
regime in respect of other levies, foreign investments and other transactions. Typically they are regions
designated for economic development oriented toward inward FDI and exports fostered by special policy
incentives. The SEZs in India are the outcome of the present government’s industrial policy which
emphasizes deregulation of Indian industry and to allow the industries to flexibly respond to the market
forces. All undertakings other than the small scale industrial undertakings engaged in the manufacture of
items reserved for manufacture in the small scale sector are required to obtain an industrial license and
undertake an export obligation of 50% of the annual production.

The concept of Special Economic Zones is not new. In an International Labour Organization (ILO) report
traces the roots of the concept to 13th century Spain and in more recent times to Ireland and Puerto Rico,
which established Export Processing Zones (EPZ).

Export Processing Zones is the former name of the Special Economic Zones. The countries like China,
United Arab Emirates, Malaysia, India, Jordan, Philippines and Russia have utilized the concept of SEZ.
In 1986, there were 176 zones across in 47 countries. Now the number has increased to over 5000 across
in 147 countries.

The zones are known by different names in different parts of the world. Most often these are Free Trade
Zones (FTZ), Industrial Free Zones (IFS) Export Processing Zones (EPZ) Bonded Free Zones and Special
Economic Zones (SEZ). Export Processing Zone is the ancestor of SEZ. An Export Processing Zone is
relatively small geographically spread area within a country. The purpose of which is to attract export-
oriented industries by offering them especially favorable investment and trade conditions as compared
with the reminder of the host country. The EPZ is just an industrial enclave but SEZ is an integrated
township with fully developed infrastructure. The UN Industrial Development Organization (UNID)
identifies five basic attributes of EPZs are:

a) EPZs are dominated by market mechanisms;

b) EPZ are restricted to a limited region;

c) EPZs specialize in the production of exports goods and offer special incentives for such

production;

d) Their major aims are to attract foreign investments, earn foreign exchange and to generate
employment;

e) Secondary aims are technology transfer, development linkages and regional development.

• Definition of Special Economic Zone

According to the SEZ Act 2005, A SEZ is a specially delineated duty free enclave and shall be deemed
foreign territory for the purpose of trade operations and duties and tariffs. A SEZ also been viewed as a
geographical region with different economic laws than a countries typical economic laws with the main
goal of attracting foreign investment.

A SEZ or a Free Trade Zone (FTZ) is typically an enclave of units operating in a well defined area within
the geographical boundary of a country where certain economic activities are promoted by a set of policy
measures that are generally not applicable to the rest of the country.

Policies taken by the governments for the development of the nation obviously affect the people. SEZ
policies are for the development of the country. These Developmental projects have economic, political
and social impact. In Gandhian political economy, village level development is needed. Land needed for
the establishment of the SEZs projects also affected the political economy of the country.
Tax incentives, Foreign Direct Investment, New type of employment generation also affect the political
economy of the country. The macroeconomic changes driven by SEZs will push the countries down the
path of increasing socio-political crisis

• Features of Special Economic Zone Scheme

The salient features of the SEZ scheme are:

 No licenses required for import;

 Manufacturing or service activities allowed;
 SEZ units to be positive net foreign exchange earner within three years;
 Domestic sales subject to full customs duty and import policy in force;
 Full freedom for Sub Contracting; and
 No routine examination by customs authorities of export/import cargo.

Implications of Special Economic Zones Act, 2005

The Parliament of India enacted Special Economic Zone Act, 2005 which was passed in June 2005 and
came into force on 10th February 2006 with the notification of the SEZ Rule in 2006.

The main objectives of the SEZ Act are:

a) generation of additional economic activity

b) promotion of exports of goods and services

c) promotion of investment from domestic and foreign sources

d) creation of employment opportunities

e) development of infrastructure facilities

The Act provides for drastic simplification of rules and single window clearance on matters
relating to the union and state governments. The state governments have also enacted their own SEZ laws
to cover State subjects. The Act provides for single window clearance mechanisms for developers and
operators for ensuring orderly development of SEZs, the responsibility is assigned to the Board of
Approval, constituted by the union Government. The Union Government may set up a SEZ on its own or
on the basis of proposals of the state government or private developers after the Board of Approval has
duly screened them. At the regional level, the Development Commissioner and his /her office will
exercise administrative control of SEZs.

The Ministry of Commerce and Industry lays down the regulations that govern the setting up and
administering of the SEZs. The Central Government is involved in notifying SEZs and in overseeing their
functioning, while the State Governments play a significant lead role in the development of SEZs in their
respective States by stipulating the conditions to be adhered to by a SEZ and granting the necessary
approvals
The Labor Commissioner’s power is also delegated to the Development Commissioner. There is
an approval committee to approve or reject or modify proposals for setting up units in SEZs. All suits of
civil nature and notified offences in SEZs will be tried and settled by specially notified courts and
affected parties may appeal to high courts against the orders of the designated courts. The corporate units
operating under SEZs will enjoy special privileges and protection granted by law.

The Act offers a special fiscal package to the units set up in the SEZs. This package includes
exemption from customs duties, central excise duties, service tax, central sales taxes, and securities
transaction tax to the developer and the units9 set-up, tax holiday for 15 years, income tax exemption for
SEZ developers.

The Benefits of SEZ are as follows:

a) Exemption from payment of stamp duty and registration fees on the lease/license of plots to the SEZ
developer.

b) External commercial borrowings of up to 500 million USD a year without any restriction of maturity
to the SEZ developers.

c) To augment additional economic activity by attracting foreign direct Investments.

d) To promote of exports of goods and services.

e) To promote of investment from domestic and foreign sources.

f) To create more employment opportunities.

g) To develop infrastructure facilities of global standards.

• Controversy Affecting SEZs

Despite the huge rate of approval and establishment of SEZs, and their apparent success, the development
of SEZs has faced considerable opposition and is stalling in some cases. This resistance has arisen
because of various controversial aspects regarding the establishment of SEZs.

The main issue is rising from different parts of the country, the labour laws applicable to the rest of the
country have relaxed for the SEZs. The existing laws are well intentioned and they promote worker
welfare. Relaxing such laws exclusively for the SEZs shows the government lack of conviction in its own
commitment to social justice. The state governments are joint venture partners. In the case of some,
special incentives by way of concessional electricity and water tariffs have offered. In almost all the
cases, valuable lands have given away at concessional prices.

The Constitution of India guarantees Fundamental Rights to every citizen including the right to live and
as the Supreme Court has pointed out the right to livelihood is inherent in the right to life. The ultimate
aim of social security is to ensure that every one has the means of livelihood. In the light of the Act of
2005, the establishment of SEZs clearly violates the letter and spirit of the Indian Constitution. It violates
the fundamental rights of citizens as guaranteed by the Part III of the Constitution.
Realizing this fact, the Act was subjected to amendments in the State Assemblies of Uttar Pradesh and
Haryana with the approval of the President of India. Later on, the Act got incorporated into the Ninth
Schedule of the Constitution. It may be argued that by being incorporated into the Ninth Schedule, this
law is exempted from judicial

Relaxation / inapplicability of many labour Laws including under the Industrial Dispute Act, Contract
Labour Act, Factories Act, Minimum wages Act, Trade Union Act and Environment (Protection) Act is
inapplicable to SEZs, No environmental clearance needed. It Violates Panchayat Raj Act (1996) for local
Self Government and violating laws granting rights and control to adivasi communities over their land
and violating many international conventions on human rights.

• Discrimination against existing industries

There is a criticism that due to fiscal incentives enjoyed by units in as SEZ, they will be relatively outside
SEZs and as a result of this there may be a tendency to establish industrial units only in SEZs, which can
aggravate uneven economic development of the country. However, it is also true that many EPZ-related
incentives are equally applicable and units in an SEZ are required to undertake many obligations too.
Many critics have argued for providing special incentives for similar units located outside as SEZs. 6.5.

Conclusion

SEZs and other emerging developmental issues can be seen in a broad perspective and theoretical
underpinnings of neo-liberalism. As far as Indian policy is considered the implications emerging from
SEZs may cause increasing socio-political crisis because the society is far more complex than we
assumed and that will result in organized or unorganized resistance and that may even cause anti-neo
liberal political forces. So, in order to avoid the polarization of the society, civil society should engage to
create a consensus on developmental issues.