Unit 5

CONCEPTS:

1.Unorganised workers social security act

- Define unorganised worker
- Schemes provided to unorganised workers
- Duties of employer and contractor under the unorganised workers social security act
- discuss the administrative mechanism, its composition and powers
- Constitutional mandate and the influence of ILO in the formation of the unorganised workers
social security act
- Social security board

2. Shops and establishment

- Registration procedure and authorities under Shops and Comm establishments under
Karnataka shops and comm establishments act
- Provisions relating to regulation of working conditions of women and children under
Karnataka shops and commercial establishment act
- Note on hours of work and annual leave with wages under Karnataka shops and comm
establishments

3. SEZ
- Objectives
UNORGANISED WORKERS
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 auriferous trade 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
doesn9t receive the benefits of liberalization and consequently social inequality widens.

Origin
 British Economist Keith Hart coined the term "informal sector" in 1971.
 The informal sector is often defined by the absence of characteristics typical of the organized sector.
 The unorganized sector is also known as the informal sector or unregulated sector.
 Workers in the informal sector are typically beyond the reach of government regulations and legislation,
meaning their working status is rarely legally protected.
 Social security benefits from employment, like old age pension, gratuity, and insurance schemes, are largely
confined to organized workers.
 Only 0.4% of unorganized sector workers receive benefits like provident fund, a figure unchanged since 1999-
2000.
 Many statutes and schemes aimed at unorganized workers are impractical due to chaotic labor relations and the
absence of formal employer-employee relationships.
 Given the pivotal role of the unorganized sector in the Indian economy, it requires special attention.
 The Unorganized Workers’ Social Security Act, 2008, is a labor welfare law providing social security measures
exclusively for unorganized labor.
MEANING
Unorganized sector could be described as that part of the work force who have not been able to organize in pursuit
of a common objective because of constraints such as:
 casual nature of employment
 ignorance and illiteracy
 small size of establishments with low capital investment per person employed
 scattered nature of establishments and
 Superior strength of the employer operating singly or in combination.

Unorganized Workers Social Security Act, 2008 Defines Unorganized Sector and Unorganized Worker as under:
- Sec. 2(l) Unorganized Sector means an enterprise owned by individuals or Self Employed workers and
engaged in 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.

- Sec. 2(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 of the Act. From the analysis of definitions, it is clear that the unorganized sector is
a term that eludes definition as the sector is too vast and varied to confine within a conceptual definition.

PROBLEMS FACED
 Job Insecurity
 Irregular Wages
 Long Working Hours
 Poverty and Indebtedness
 Occupational Hazards and Health Issues
 Lack of Social Security Measures
 Poor Physical Work Environment
 Health Insecurity
 Loss of Income from Accidents
 Lack of Old Age Security
 Migrant Workers' Issues
 Lack of Bargaining Power
 Weak Employer-Employee Relationship
 Vulnerability to Natural Disasters
 Exploitation of Vulnerable Labor Groups

THE UNORGANIZED WORKER9S SOCIAL SECURITY ACT, 2008

Introduction
Unorganized labor plays a crucial role in providing essential products, but due to their limited bargaining power,
they have been subject to exploitation and have not received fair compensation. Despite constituting a significant
portion of the workforce, they have not been adequately covered by social security measures. Recognizing this, the
Indian government enacted the Unorganized Workers' Social Security Act, 2008, to provide social security and
welfare to these workers.
Statement of Objects and Reasons
Workers in the unorganized sector make up over 94% of the total employment in India, yet they lack adequate social
security. Various government schemes have been implemented for specific groups within this sector, but many
workers remain without necessary protection. The Unorganized Workers' Social Security Act, 2008, addresses this
gap, aiming to ensure the welfare and security of these workers through comprehensive legislation.

Definition of Unorganised Worker

Definition of unorganised sector and unorganised worker by 15th International Conference of Labour Statisticians

- Unorganised Sector: ‘The unorganized sector is made up of every unorganized private company owned by
individuals and households engaged in the sale and production, with fewer than 10 employees, of products
and services conducted in a proprietary or collaboration manner.’
- Unorganised Workers: “The unorganized labour force is composed, without employers’ employment /
social security services, of people working within unorganized companies or households excluding ordinary
workers, who receive benefits under the social protection scheme.

ACT
Sec. 2(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 of the Act. From the analysis of definitions, it is clear that the unorganized sector is a term that eludes
definition as the sector is too vast and varied to confine within a conceptual definition.

ILO AND SOCIAL SECURITY

Concept of social security.
It is mainly a 20th century concept. The State gives security to its citizens as a condition of human existence. The
security to man against ravages of social conflicts and inadequacies is an important aspect of social justice. Social
justice leads to social security. In a way both are the two sides of the same coin, because where there is social
justice, there is social security. Unemployment benefits, maternity benefits, family allowances, old age grants, death
grants, industrial injury benefits, nationalised health services, adventitious aids to the weaker sections of the society
are the social measures which every Welfare State should endeavour to provide for its citizens?
Social Security Measures and International Labour Organisation.-
The ill consequences of the industrial revolution in the Western world compelled the Governments of those
countries to introduce a spate of welfare measures and social assistance schemes since the 19th century. The role of
the International Labour Organisation since its inception in 1919 gave an added dimension to the effectuation of the
social security measures not only in the advanced countries but in the developing world as well. Through many
conventions and recommendations, the International Labour Organisation exerted its influence to extend the range
of security and the classes of persons protected thereunder. Its 1944 recommendations on income security and
medical care and the social security (minimum standards) Convention in 1952 embodying universally accepted
basic principles and common standards of social security are influencing the social security measures throughout the
world.
The International Labour Organization (ILO) has significantly influenced the formation of the Unorganized
Workers' Social Security Act in India. Here’s how:
1. Standards and Guidelines: ILO sets international labor standards and guidelines for the protection and
welfare of workers, including those in the unorganized sector. The Act aligns with ILO’s principles by
aiming to provide social security to unorganized workers.
2. Recommendations: ILO has issued recommendations focusing on improving social security coverage for
workers in informal and unorganized sectors. The Act reflects these recommendations by establishing a
framework to extend social security benefits.
3. Policy Framework: ILO’s work in advocating for decent work and social protection influenced Indian
policy-making. The Act incorporates ILO’s emphasis on ensuring social protection and access to welfare
schemes for all workers.
4. Capacity Building: ILO supports capacity-building initiatives to help countries develop and implement
social security systems. The Act’s implementation is supported by such initiatives, enhancing the
administrative and operational mechanisms.
5. Monitoring and Reporting: ILO monitors the implementation of international labor standards. The Act
includes mechanisms for monitoring and reviewing the progress of social security schemes, reflecting ILO’s
emphasis on accountability and transparency.
Current ILO social security standards include:
o Social Security (Minimum Standards) Convention, 1952 (No. 102)
o Equality of Treatment (Social Security) Convention, 1962 (No. 118)
o Employment Injury Benefits Convention, 1964 (No. 121)
o Invalidity, Old-Age, and Survivors' Benefits Convention, 1967 (No. 128)
o Medical Care and Sickness Benefits Convention, 1969 (No. 130)
o Maintenance of Social Security Rights Convention, 1982 (No. 157)
o Employment Promotion and Protection against Unemployment Convention, 1988 (No. 168)
o Maternity Protection Convention, 2000 (No. 183)

These conventions build on the model of Convention No. 102, offering more comprehensive protection and
benefits.
Constitutional Framework:
The Indian Constitution offers a broad framework for regulating work conditions and protecting labor rights
through: The Fundamental Rights guaranteed by the Constitution provides equality before law; abolish
untouchability and prohibits discrimination and exploitation of labour whether of organized or unorganized sector.
Fundamental Rights:
o Article 14: Ensures equality before the law and equal protection for all individuals, aiming to provide
"equality of status."
o Article 15: Prohibits discrimination based on religion, race, sex, caste, or place of birth.
o Article 17: Abolishes untouchability, addressing issues particularly affecting unorganized sector workers.
o Article 19(1)(c): Guarantees the right to form associations or unions, though this can be restricted for public
order.
o Article 21: Protects the right to life and personal liberty, including rights to dignity, livelihood, and health.
Supreme Court rulings have emphasized its importance for workers' rights.
o Article 23: Prohibits human trafficking, forced labor, and similar practices, placing a duty on the state to
combat these issues.
o Article 24: Bans employment of children under 14 in factories and hazardous jobs to protect their health and
safety.
Directive Principles of State Policy:
• Article 38-The state to secure a social order for the promotion of the welfare of the people.
• Article 38 (1)- The State to promote the welfare of the people by securing and protecting as efficiently as it
may a social order in which justice "social, economic and political" shall inform all institutions of national life.
• Article 38 (2)- The state to minimize the irregularities in income, and to endeavour to eliminate inequalities in
status, facilities and opportunities not only amongst individuals but also groups of people residing in different
areas or engaged in different vocations.
• Article 39- It provides for equal rights to adequate means of livelihood to all citizens and distribution of wealth
and material resources to subserve common good and prevention of concentration of wealth and means of
production etc.,
• Article 41-Securing the right to work, education and public assistance in case of unemployment, old age,
sickness and disablement and in other cases of undeserved want are significant measures of social security.
• Article 42- Providing just and human conditions of work and maternity relief.
• Article 43- Living wage for workers.
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SCHEMES
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-
 Life and disability cover;
 Health and maternity benefits;
 Old age protection; and
 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:
1. Indira Gandhi National Old Age Pension Scheme
2. National Family Benefit Scheme
3. Janani Suraksha Yojana
4. Handloom Weavers' Comprehensive Welfare Scheme
5. Handicraft Artisans' Comprehensive Welfare Scheme
6. Pension to Master craft persons
7. National Scheme for Welfare of Fishermen and Training and Extension
8. Janshree Bima Yojana. Aam Admi Bima Yojana
9. Rashtriya Swasthya Bima Yojana
In detail:

 Indira Gandhi National Old Age Pension Scheme (IGNOAPS): This scheme provides financial
assistance to senior citizens who are 60 years or older and belong to a household living below the poverty
line (BPL). The aim is to offer a basic level of social security to the elderly, helping them meet their daily
needs.
 National Family Benefit Scheme (NFBS): Under this scheme, a one-time financial assistance is provided
to BPL families upon the death of the primary breadwinner (aged 18-59). The scheme aims to support
families in coping with the sudden loss of income due to the death of the main earning member.
 Janani Suraksha Yojana (JSY): JSY is a safe motherhood intervention under the National Health Mission
(NHM) that encourages institutional delivery among pregnant women by offering cash incentives. The
scheme aims to reduce maternal and neonatal mortality by promoting safe deliveries.
 Handloom Weavers' Comprehensive Welfare Scheme: This scheme is designed to support handloom
weavers by providing them with life insurance, health insurance, and other welfare measures. It aims to
improve the living and working conditions of weavers and preserve the traditional craft.
 Handicraft Artisans' Comprehensive Welfare Scheme: Similar to the scheme for weavers, this program
provides life insurance, health insurance, and financial assistance to artisans engaged in handicrafts. It seeks
to safeguard the livelihood of artisans and promote the handicraft sector.
 Pension to Master Craftspersons: This scheme offers a monthly pension to master craftspersons who have
significantly contributed to the handicraft sector. The goal is to honor and support senior artisans who have
dedicated their lives to preserving traditional crafts.
 National Scheme for Welfare of Fishermen and Training and Extension: This scheme provides financial
assistance, training, and infrastructure development for fishermen. It covers areas like housing, group
accident insurance, and livelihood support, aiming to improve the socio-economic conditions of fishermen
and their families.
 Janshree Bima Yojana / Aam Admi Bima Yojana: These are insurance schemes targeted at the rural and
urban poor, providing life insurance coverage for natural and accidental death, as well as disability. The
schemes are designed to offer affordable insurance to low-income groups.
 Rashtriya Swasthya Bima Yojana (RSBY): RSBY is a health insurance scheme for BPL families,
providing cashless health insurance for hospitalization in both public and private hospitals. The aim is to
protect poor households from the financial burden of health emergencies.

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-

 provident fund;
 employment injury benefit;
 housing;
 educational schemes for children;
 skill upgradation of workers;
 funeral assistance; and
 old age homes.

Section 4: Funding of Central Government Schemes.-

- Funding Sources:

 Wholly Funded by the Central Government: The entire cost of the scheme is covered by the Central
Government.
 Partly Funded by Central and State Governments: The costs are shared between the Central and State
Governments.
 Partly Funded by Central Government, State Government, and Contributions from Beneficiaries or
Employers: Funding comes from the Central Government, State Government, and also includes
contributions from the beneficiaries of the scheme or employers, as specified by the scheme.

- Scheme Implementation:

 Scope of the Scheme: Defines the extent and objectives of the scheme.
 Beneficiaries: Specifies who will benefit from the scheme.
 Resources: Details the financial and other resources required for the scheme.
 Implementing Agencies: Identifies the organizations or bodies responsible for executing the scheme.
 Redressal of Grievances: Establishes mechanisms for addressing complaints or issues related to the
scheme.
 Other Relevant Matters: Includes any additional details necessary for effective implementation of the
scheme.

Administrative mechanism, its composition and powers

1. National Social Security Board for Unorganized Workers (Sec. 5)

Composition

1. Central Government Notification: Establishes the National Social Security Board.

2. Members:
o Chairperson: Union Minister for Labour and Employment (ex officio).
o Member-Secretary: Director General (Labour Welfare) (ex officio).
o Nominated Members:
 Seven representing unorganised sector workers.
 Seven representing employers of unorganised sector.
 Seven representing eminent persons from civil society.
 Two from Lok Sabha and one from Rajya Sabha.
 Five from Central Government Ministries and Departments.
 Five from State Governments.
3. Qualifications: Members should be eminent in labour welfare, management, finance, law, and
administration.
4. Terms and Conditions:
o Number of members, term of office, and conditions are prescribed by the Central Government.
o Adequate representation for Scheduled Castes, Scheduled Tribes, Minorities, and Women.
5. Term: Three years.
6. Meetings: At least thrice a year with prescribed rules of procedure.
7. Allowances: Members may receive prescribed allowances for attending meetings.

Functions

1. Recommendation: Propose suitable schemes for unorganised workers.

2. Advisory Role: Advise Central Government on administration-related matters.
3. Monitoring: Oversee social welfare schemes administered by the Central Government.
4. Review:
o Progress of registration and identity card issuance.
o Record-keeping at the State level.
o Expenditure from scheme funds.
5. Additional Functions: Perform other tasks assigned by the Central Government.

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

Composition and Functions

1. State Government Notification: Establishes the State Social Security Board.

2. Members:
o Chairperson: Minister of Labour and Employment of the State (ex officio).
o Member-Secretary: Principal Secretary or Secretary (Labour) (ex officio).
o Nominated Members:
 Seven representing unorganised workers.
 Seven representing employers of unorganised workers.
 Two from the State Legislative Assembly.
 Five representing eminent persons from civil society.
 Seven from State Government Departments.
3. Qualifications: Members should be eminent in labour welfare, management, finance, law, and
administration.
4. Terms and Conditions:
o Number of members, term of office, and conditions are prescribed by the State Government.
o Adequate representation for Scheduled Castes, Scheduled Tribes, Minorities, and Women.
5. Term: Three years.
6. Meetings: At least once a quarter with prescribed rules of procedure.
7. Allowances: Members may receive prescribed allowances for attending meetings.

Powers

1. Recommendation: Suggest suitable schemes for unorganised sector workers to the State Government.
2. Advisory Role: Advise the State Government on administration-related matters.
3. Monitoring: Oversee social welfare schemes administered by the State Government.
4. Review:
o Record-keeping at the District level.
o Progress of registration and identity card issuance.
o Expenditure from scheme funds.
5. Additional Functions: Perform other tasks assigned by the State Government.

Sec.9: Workers' facilitation centers may be established by the State Government to:

 provide information on social security schemes,

 assist with application forms for worker registration,
 help workers obtain registration from District Administration, and
 enroll registered workers in social security schemes.

Funding of State Government Schemes (Sec. 7)

1. Funding Sources:
o Fully Funded: The State Government can cover all costs of a scheme.
o Partly Funded: Costs can be shared between the State Government and contributions from scheme
beneficiaries or employers.
2. Financial Assistance:
o The State Government can request funds from the Central Government for its schemes.
o The Central Government may provide this assistance based on its own terms and conditions.

Record Keeping by District Administration (Sec. 8)

 Importance: Proper record keeping is crucial for managing welfare schemes for unorganized workers,
allowing for improvements and responses to Right to Information queries.
 Responsibility:
o District Administration: Generally responsible for maintaining these records.
o State Government Authority: Can direct record keeping to be handled by District Panchayats in
rural areas and Urban Local Bodies in urban areas for better accuracy and management.

CASE LAWS

Peoples Union for Democratic Rights v. Union of India (AIR 1982 SC 1473):

 Judgment: The Supreme Court ruled that paying less than the prescribed minimum wages violates the
fundamental right of workers, as enshrined in Article 23. It also held that begar (forced labor) violates
human dignity and fundamental rights.

Sanjit Roy v. State of Rajasthan (AIR 1983 SC 328):

 Judgment: The Court found that paying less than the minimum wages to workers on famine relief was a
violation of Article 23. It emphasized that the state cannot exploit the workers’ desperation during drought
or scarcity.

Deena v. Union of India (AIR 1983 SC 1155):

 Judgment: The Supreme Court decided that labor from prisoners without proper remuneration constituted
forced labor and violated Article 23. Prisoners are entitled to fair wages for their work.

Bandhua Mukti Morcha v. Union of India (AIR 1984 SC 802):

 Judgment: The Court ruled that in public interest litigation concerning bonded labor, the government must
investigate and take steps to eradicate bonded labor systems. The state has a constitutional duty to uphold
labor laws and ensure workers' dignity.

Kotchu Velu v. Joseph (1987 II LLJ 174, Kerala):

 Judgment: The Court held that a coconut climber employed regularly on a periodic basis cannot be
classified as a casual employee. Regular employment should not be deemed casual, and workers are entitled
to compensation.

Daily Rated Casual Labour v. Union of India (1988) 1 SCC 122:

 Judgment: The Court found that distinguishing between regular and casual employees for lower wages
violates Articles 14 and 16 of the Constitution. It emphasized that denial of minimum wages constitutes
labor exploitation and that the government should lead by example as an employer.
KARNATAKA SHOPS AND COMM ESTABLISHMENTS ACT
The liberalization, privatization, and globalization (LPG) policies in India have increased informal sector work.
Globalization has changed capitalism, with companies seeking higher profits by moving to countries with lower
labor costs and adopting informal employment methods. This shift puts pressure on low-skilled workers and small
producers by reducing their bargaining power and increasing competition. Companies often lay off employees
during economic crises, making the informal sector a fallback option. Additionally, even within formal sectors, jobs
are increasingly outsourced to subcontractors.
To protect unorganized labor in shops and establishments, regulations under the Shops and Establishments Act
govern working conditions, including wages, leave, and work hours. Shop and trade licenses, required for all
business entities including home-based ones, vary by state and cover various types of businesses. Each
establishment must register within 30 days of starting, and registration processes and working conditions differ from
state to state.

Necessity of Protecting Unorganized Labour in Shops and Establishments

1. Definition Challenges: Unorganized labour is difficult to define due to constraints like:

o Casual nature of employment
o Ignorance and illiteracy
o Small, low-capital establishments
o Scattered nature of workplaces
o Dominance of employers
2. Scope of Unorganized Labour: Includes workers in residential hotels, restaurants, amusement parks,
theatres, and other public establishments. These workers often face:
o Casual, intermittent jobs
o Extremely low wages or poor returns
o Lack of job security and social benefits
o Long hours, poor working conditions, and health hazards
3. Lack of Protection: Despite existing labour laws, unorganized sector workers often miss out on social
security and benefits, facing high exploitation with:
o Very low or below-minimum wages
o Few trade unions or collective bargaining options
4. Discrimination: Women workers face additional discrimination due to:
o Inadequate bargaining power
o Lack of protective measures
o Increased social and economic exploitation
The Karnataka Shops and Commercial Establishments Act, 1961
Introduction
The Karnataka Shops and Commercial Establishments Act regulates the operation of shops and commercial
establishments in Karnataka. It covers work hours, annual leave, wages, compensation, and the employment of
women and children.
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. WHEREAS it is expedient to provide for the regulation of conditions of
work and employment in shops and commercial establishments and other incidental matters;
1. SRegulate Working Conditions: Ensure fair and safe working conditions in shops and commercial
establishments.
2. Protect Employee Rights: Safeguard the rights and welfare of employees, including provisions for working
hours, rest intervals, and leave entitlements.
3. Standardize Employment Practices: Establish uniform standards for employment practices, including
working hours, wages, and conditions of service.
4. Ensure Fair Wages and Benefits: Provide guidelines for payment of wages, overtime, and other
employment benefits to ensure fair compensation for work performed.
5. Promote Health and Safety: Enforce health and safety standards to protect employees from workplace
hazards and ensure a safe working environment.
6. Regulate Employment of Women and Children: Set specific regulations for the employment of women
and children, ensuring their protection and well-being.
7. Facilitate Dispute Resolution: Provide mechanisms for addressing and resolving disputes between
employers and employees related to employment conditions.
8. Ensure Compliance with Legal Provisions: Establish a framework for monitoring and enforcing
compliance with the Act's provisions to ensure adherence to legal requirements.

REGISTRATION
1. Registration of Establishments (Section 4)
 Submission Requirements (Section 4(1)):
o Employers must send a statement in the prescribed form to the local Inspector.

o The statement must include:

 The name of the employer and the manager (if any).

 The postal address of the establishment.
 The name of the establishment (if any).
 Other prescribed details.
o Fees as prescribed must accompany the statement.

 Registration Process (Section 4(2)):

o Upon receiving the statement and fees, the Inspector will verify the details.

o If satisfied, the Inspector will register the establishment in the register of establishments and issue a
registration certificate.
o The certificate must be prominently displayed at the establishment.

 Timeframe for Submission (Section 4(3)):

o Existing Establishments: Must submit the registration statement within 30 days from the date the
Act comes into force.
o New Establishments: Must submit the registration statement within 30 days from the date they
commence operations.
 Deemed Registration (Section 4(3A)):
o If the Inspector does not communicate a decision within 30 days of receiving the statement, the
establishment is deemed registered.
 Validity and Renewal (Section 4(4)):
o The registration certificate is valid for five years.

o It must be renewed before expiry by paying the prescribed fees and in the manner prescribed.

 Continuity of Registration Certificates (Section 4(5)):

o Certificates issued before certain amendments remain valid until their expiry. Renewal must be done
as per new provisions.
 Renewal Procedures (Section 4(6)):
o If the Inspector is not satisfied with the renewal application, they must inform the employer within
30 days. If not, the renewal is deemed granted.
 Self-Certification and Penalties (Section 4(7) & 4(8)):
o If the registration or renewal certificate is not received on time, the employer can display a self-
certification statement sent by registered post. If the self-certification is falsely claimed, the employer
faces imprisonment for at least six months and a fine up to ₹5,000.
2. Changes to Registration Details (Section 5)
 Employers must notify the Inspector of any changes in the registration details within 15 days after the
change.
 The Inspector will update the register and amend or issue a new registration certificate as necessary.
3. Closure of Establishment (Section 6)
 Employers must notify the Inspector in writing within 15 days of closing the establishment and return the
registration certificate.
 The Inspector will remove the establishment from the register and cancel the certificate. If the Inspector
determines that the establishment has closed, they can remove it from the register even without formal
notification.
4. Appointment Orders (Section 6A)
 Employers must issue written appointment orders within 30 days of hiring any person. The order should
include:
o The employee’s name, designation, wage scale, and terms and conditions of employment.

 For employees hired before the Act’s amendments, if no appointment order was given, it must be provided
within 30 days from the commencement of the amendments.

AUTHORITIES

Appointment of Inspectors (Section 26)

 (1) Appointment of Inspectors and Assistant Inspectors:

o The State Government has the authority to appoint individuals or classes of individuals as Inspectors
and Assistant Inspectors. These appointments are made via notification.
o Inspectors are assigned specific local limits within which they operate.
 (2) Additional Inspectors:
o The State Government may also appoint public officers as additional Inspectors for various purposes
under the Act. These appointments are also made via notification and are assigned specific local
limits.
 (3) Powers of Multiple Inspectors:
o In areas with more than one Inspector, the State Government can specify, through notification, the
particular powers each Inspector is to exercise.
 (4) Chief Inspector:
o The Commissioner of Labour in Karnataka is designated as the Chief Inspector for the whole State of
Karnataka. This role involves overseeing the implementation of the Act across the state.

Powers and Duties of Inspectors (Section 27)

 (a) Entry and Inspection:

o Inspectors can enter any establishment at reasonable times. They may bring assistants, who are state
government employees, if necessary.
o They are authorized to examine the premises, inspect prescribed registers and records, and collect
evidence as needed to enforce the Act.
 (b) Examination and Evidence:
o Inspectors can review records, registers, and notices required under the Act. They can also gather
evidence from any person to ensure compliance with the Act.
 (c) Additional Powers:
o Inspectors have any other powers necessary to fulfill the objectives of the Act. However, individuals
cannot be forced to answer questions or provide evidence that may incriminate themselves.

Inspectors as Public Servants (Section 28)

 Public Servant Status:

o Inspectors appointed or declared under Section 26 are considered public servants according to
Section 21 of the Indian Penal Code. This designation ensures they are recognized as officials
carrying out their duties in a legal capacity.

Employer’s Obligation to Produce Records (Section 29)

 Production of Records:
o Employers must produce all required registers, records, and notices for inspection upon the demand
of an Inspector. This obligation ensures that Inspectors can verify compliance with the Act’s
provisions.

Duties of Employer with Sections

1. Appointment Order:
o Employers must issue an appointment order in writing (Form 8P9) to every new employee within 30
days of their appointment.
2. Attendance Registration:
o Employers are required to register employee attendance daily using Form 8T.
3. Weekly Holidays:
o For establishments exempt from weekly holidays, a mandatory holiday must be given on the 7th day
after 6 consecutive workdays. If this is not feasible, the 11th day must be given as a mandatory
holiday.
4. Salary Payment:
o Salaries must be paid before the 7th day of the following month.
5. Working Hours:
o The maximum working hours per week should not exceed 48 hours. Including overtime, the total
should not exceed 58 hours.
6. Leave Calculation:
o At the end of the year, earned leave should be calculated as 1 day per 20 working days and sick leave
as 1 day per 30 working days. This leave must be recorded in Form 8F9.
7. Dismissal Notice:
o Employees who have completed 180 days of service cannot be dismissed without prior notice.

Employees' Rights

 Weekly Holiday: Every employee has the right to one compulsory holiday per week.
 Overtime Pay: Employees working extra hours are entitled to wages at twice the normal rate for overtime.
 Earned Leave: Employees can preserve up to 40 days of earned leave.
 Leave Encashment: Employees can encash any unavailed earned leave.
 Appeal Rights: Employees who are removed or dismissed without reasonable cause can appeal to a
jurisdictional officer.
 Compensation: If dismissed without reasonable cause or proof of misconduct, employees are entitled to one
month’s pay for each year of service as compensation.

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Provisions relating to regulation of working conditions of women and children under

Karnataka shops and commercial establishment act

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 8R9 with necessary information.

Article 24 of the Constitution of India prohibits the employment of children in any factory, mine, or other
hazardous form of employment. However, it is Section 24 of the Act that prohibits the employment of children
under the age of 14 in any establishment.

Section 25 of the Act before the Amendment of 2020 contained a prohibition on the employment of women during
the night in any establishment; however, the state government could have exempted only information technology
services-related establishments from the operation of this Section upon such establishments fulfilling requisite
conditions pertaining to transportation and security of women. However, Section 25 was substituted by amendment
on 19th October 2020 whereby, all establishments were able to employ women during the night given that they
follow a set of 16 conditions enumerated in the Section and also provides cancellation of registration certificate as
an effect of non-compliance with any condition in Section 25.

2002 amendment

1. Night Work for Women: Normally, women cannot work during the night (usually from 8 PM to 6 AM) in
certain establishments.
2. Exemption for IT and ITES: The State Government can allow exceptions for establishments in the
Information Technology (IT) and Information Technology Enabled Services (ITES) sectors.
3. Conditions for Exemption: For these IT/ITES businesses to have women working at night, they must:
o Provide safe transportation for women.
o Ensure security for women employees.
o Meet any other specific conditions set by the State Government.

In summary, IT and ITES companies can have women working at night if they meet safety and security
requirements specified by the government.

Section 30(3)-Punishment

- Punishment for Offenses:

o First Offense: Imprisonment for 3 to 6 months.

o Subsequent Offenses: Imprisonment for 6 months to 1 year.
o Fines: ₹10,000 to ₹20,000, either in addition to or instead of imprisonment.

- Compounding of Offenses:

o Section 33A: A labor officer can settle (compound) offenses without prosecution, except for violations of
Sections 24 and 25.

A written complaint made by the Inspector initiates prosecution under this Act. Such a complaint should be made
within 6 months from the date of the commission of the alleged offence. Further, only courts of Judicial Magistrate
Second Class and above can try such offences.

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Note on hours of work and annual leave with wages under Karnataka shops and comm
establishments
Hours of Work

Daily and Weekly Hours (Section 7)

 Daily Limit (Section 7(1)): No employee should work more than 9 hours a day.
 Weekly Limit (Section 7(1)): Total work hours must not exceed 48 hours per week.
 Overtime Limits (Section 7(1) Proviso):
o Total work including overtime should not exceed 10 hours a day, except for stock-taking and account
preparation days.
o Overtime should not exceed 50 hours in any 3-month period.
 Young Workers (Section 7(2)): Young persons cannot work more than 5 hours per day.

Extra Wages for Overtime Work (Section 8)

 Overtime Rate (Section 8(1)): Overtime work must be paid at twice the normal wage rate.
 Normal Wages (Section 8(2)): Includes basic wages plus allowances; excludes bonuses.
 Cash Equivalent Calculation (Section 8(3)): Based on the maximum quantity of food grains and other
articles permissible to a standard family.

Interval for Rest (Section 9)

 Work Periods (Section 9): No work period should exceed 5 hours. Employees must have at least 1 hour of
rest after 5 hours of work.

Spreadover (Section 10)

 Daily Spreadover (Section 10): Total work period, including rest, should not exceed 12 hours in any day.

Opening and Closing Hours (Section 11)

 Regulated Hours (Section 11(1)): Establishments must operate within hours fixed by the State
Government.
 Service During Closing Time (Section 11(1) Proviso): Customers being served at closing time may be
served for an additional 15 minutes.
 Different Hours (Section 11(3)): Government may set different hours for different establishments or areas.

Weekly Holidays (Section 12)

 Weekly Closure (Section 12(1)): Establishments must close one day each week. The closure day must be
fixed and notified to the Inspector.
 No Alteration (Section 12(1) Proviso): The closure day can be changed only once every 3 months.
 Exemption (Section 12(2)): Establishments may stay open all week if additional staff is employed.
 Holiday Rights (Section 12(3)): Employees must receive one full day off each week. No deductions are
made for weekly holidays.

Selling After Hours (Section 13)

 Prohibition (Section 13): No sales after closing hours, except for newspapers and items exempted by the
State Government.
Annual Leave with Wages

Annual Leave Entitlement (Section 15)

 Leave Calculation (Section 15(1)):

o Adults (Section 15(1)(i)): 1 day for every 20 days worked.
o Young Persons (Section 15(1)(ii)): 1 day for every 15 days worked.
 Sickness Leave (Section 15(3)): Up to 12 days per year for sickness or accident.
 Leave on Termination (Section 15(4)): Employees are entitled to leave wages even if not worked the full
period.

Leave Accumulation (Section 15(7))

 Carry Forward (Section 15(7)): Unused leave can be carried over to the next year—30 days for adults and
40 days for young persons.
 Unlimited Carry Forward (Section 15(7) Proviso): Unused leave due to non-granting can be carried
forward without limit.

Application for Leave (Section 15(8) & (9))

 Notice (Section 15(8)): Apply for leave at least 10 days in advance. Leave can be taken up to 3 times per
year or as agreed.
 Payment (Section 15(9)): Leave must be granted even if applied late, with wages paid within 15 days from
the start of leave.

Leave Payment and Recovery (Sections 16 & 18)

 Advance Payment (Section 17): Wages for leave must be paid before the leave starts if it’s 4 days (adults)
or 5 days (young persons) or more.
 Recovery (Section 18): Unpaid leave wages can be recovered under the Payment of Wages Act, 1936.

Exemptions (Section 20)

 Exemption by Government (Section 20): Establishments with better leave rules may be exempted from
some provisions of this Chapter.

This summary outlines the regulations for working hours, overtime, rest periods, leave entitlements, and related
provisions under the Karnataka Shops and Commercial Establishments Act, with sections specified for each point.

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PRIVATISATION

LPG-INTRO
In 1991 after India faced a balance of payments crisis, it had to pledge 20 tons of gold to Union Bank of Switzerland
and 47 tons to Bank of England as part of a bailout deal with the International Monetary Fund. In addition the IMF
required India to undertake a series of structural economic reforms. Thus, Government had decided to bring about
major economic reforms to revive Indian economy. These reforms were popularly known as 'structural adjustments'
or “liberalization, privatization and globalization".
The government announced a New Economic Policy on July 24, 1991.This new model of economic reforms is
commonly known as the LPG or Liberalization, Privatization and Globalization Model. Prime Minister of the
country, P.V. Narasimha Rao initiated economic reforms with the help of Dr. Manmohan Singh. The reforms did
away with the License Raj, reduced tariffs and interest rate and ended many public monopolies, allowing automatic
approval of foreign direct investment in many sectors.

Privatisation
Privatization is closely associated with the phenomena of globalization and liberalization. Privatization is the
transfer of control of ownership of economic resources from the public sector to the private sector. It means a
decline in the role of the public sector as there is a shift in the property rights from the state to private ownership.
The public sector had been experiencing various problems, since planning, such as low efficiency and profitability,
mounting losses, excessive political interference, lack of autonomy, labour problems and delays in completion of
projects. Hence to remedy this situation with Introduction of NIP91991 privatization was also initiated into the
Indian economy. Another term for privatization is Disinvestment. The objectives of disinvestment were to raise
resources through sale of PSUs to be directed towards social welfare expenditures, raising efficiency of PSUs
through increased competition, increasing consumer satisfaction with better quality goods and services, upgrading
technology and most importantly removing political interference.
Privatisation is the opposite of Nationalisation. It is the transfer of ownership, property, or business from the
government to the private sector and the government stops being the owner of the entity or business. In other words,
the government becomes either a minority stakeholder i.e holding less than 50% equity or completely transferring
the ownership in the earlier government-managed enterprises. In Jan 2022, Air India was privatized and transferred
to the Tata Group.

Meaning
 Privatization is the process of transferring ownership, property, or a business from the government to the
private sector.
 The corporation or business is no longer owned by the government.
 Privatization is the polar opposite of nationalization, which is a policy used by governments to maintain
earnings from significant companies, particularly those that could be controlled by foreign interests.
 Privatization also indicates deregulation as it prevents restrictions on competition between privately and
publicly owned corporations.
 Privatization reduces State dominance in the economic sphere and also helps in protecting the private sector.

EFFECTS OF PRIVATISATION

 Increased Efficiency and Productivity

 Enhanced Competition
 Economic Growth
 Reduction in Government Burden
 Improved Financial Health
 Social Implications
 Regulatory and Structural Changes
 Public Perception and Trust
 Sector-Specific Impacts
 Global Integration

Limitations of Privatisation
 Increased dominance of certain private players can lead to the development of
a monopolistic environment.
 The profit-driven nature of private enterprises is generally not advisable in social sectors
like health, education, etc. which should be non-profit oriented.
 Increased privatization of industries could also lead to them being fragmented, with no
person taking responsibility in their hands.
 Certain strategic sectors cannot be privatized due to security and strategic concerns.
 Privatization may become politically motivated and could be pursued for the vested
interests of different interest groups rather than as a coherent part of encouraging private
investment.

GLOBALISATION

Advantages and Disadvantages of Globalization in India

Advantages

1. Economic Growth
o Example: The IT sector's growth, driven by global demand, has significantly contributed to India's
GDP. Companies like Infosys and TCS have become global players.
2. Foreign Direct Investment (FDI)
o Example: Walmart's investment in India has created job opportunities and stimulated the retail
sector.
3. Technological Advancements
o Example: Bengaluru's emergence as a tech hub, with global companies like Google establishing
R&D centers.
4. Export Growth
o Example: Indian pharmaceutical companies like Dr. Reddy's Laboratories have become major
exporters of generic drugs.
5. Employment Opportunities
o Example: The growth of BPO and call center industries in cities like Gurgaon and Hyderabad has
created millions of jobs.
6. Cultural Exchange
o Example: The global popularity of Bollywood films and Indian cuisine reflects India's cultural
influence.
7. Education and Skill Development
o Example: Increased global recognition and investment in Indian educational institutions like IITs
and IIMs.

Disadvantages

1. Challenges to Local Industries

o Example: The Indian textile industry has struggled against cheaper international imports.
2. Income Inequality
o Example: Disparities between urban and rural areas have widened, with urban regions benefiting
more from globalization.
3. Environmental Impact
o Example: Increased industrialization has led to severe pollution in cities like Delhi and Mumbai.
4. Cultural Erosion
o Example: The spread of global brands and lifestyles may lead to the erosion of traditional Indian
culture and practices.
5. Labor Exploitation
o Example: Some global companies may exploit labor in lower-cost regions, impacting working
conditions and wages.
6. Dependence on Global Markets
o Example: Economic fluctuations in global markets can impact India's exports and economic
stability.
SEZ
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 Special economic zone or SEZ refers to a totally commercial area specially established for the promotion
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.

Emergence of Special Economic Zones (SEZs)

To boost economic and political growth, India introduced various policies such as the Foreign Direct Investment
and Special Economic Zone (SEZ) Acts. SEZs are areas where goods can be imported, handled, manufactured, and
re-exported without customs intervention.
India’s first Export Processing Zone (EPZ) was established in Kandla in 1965, marking Asia's first EPZ. However,
issues with multiple controls and lack of infrastructure led to the creation of the SEZ Act in 2005. The SEZ Policy,
introduced in 2000, aimed to enhance economic growth by providing quality infrastructure, attractive fiscal
packages, and minimal regulations. SEZs in India operated under the Foreign Trade Policy and related statutes until
February 2006.

SEZ ACT
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 welldefined 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.
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.
Objectives of Special Economic Zones (SEZs)
1. Promote Export Growth: Enhance export performance by creating areas with favorable conditions for
manufacturing and trading.
2. Attract Foreign Investment: Encourage foreign direct investment (FDI) by offering incentives and
streamlined procedures.
3. Create Employment Opportunities: Generate jobs through the establishment of new industries and
expansion of existing ones.
4. Improve Infrastructure: Develop world-class infrastructure including transportation, utilities, and facilities
to support business operations.
5. Boost Economic Development: Foster regional and national economic development by stimulating
industrial growth and increasing economic activity.
6. Encourage Technological Innovation: Promote the adoption of advanced technologies and practices
through specialized industries and businesses.
7. Simplify Regulatory Processes: Reduce bureaucratic hurdles and provide a more efficient regulatory
environment for businesses.

Controversies Affecting SEZs

1. Relaxation of Labor Laws: SEZs often have relaxed labor regulations compared to the rest of the country,
leading to concerns about worker welfare and social justice.
2. Land Acquisition Issues: Valuable lands are often given at concessional prices to SEZs, raising concerns
about fair land distribution and compensation.
3. Constitutional Violations: The establishment of SEZs has been criticized for potentially violating
fundamental rights guaranteed by the Indian Constitution, such as the right to livelihood.
4. Environmental and Local Governance Concerns: SEZs may bypass environmental regulations and local
self-governance laws, impacting community rights and environmental protection.
5. Discrimination Against Existing Industries: SEZs enjoy special fiscal incentives, which may disadvantage
existing industries not located within SEZs and exacerbate uneven economic development.
6. Human Rights Violations: SEZs have been accused of violating international human rights conventions,
particularly concerning land rights and local community control.