India is a favorite destination for the investors worldwide, the chief reason being availability of cheap labour. Systematic and regularised workforce is an essential prerequisite for the efficient functioning of an organization whether big or small. From this, stems the concept of “Standing Orders”. “Standing Orders” is a formalized set of guidelines, rules and regulations formulated by an employer touching upon certain specific issues of employment like classification of employees, shift working, grant of leave, lay-off, acts and omissions that constitute misconduct and punishment for it, retirement etc. To sum up, “Standing Orders” means the rules of conduct for the workmen1 employed in an industrial establishment primarily made for governing the service conditions of the workmen. They bind the employer and the workmen. However, they can also govern the service conditions of other employees of the establishment who may not be workmen.2
Defined conditions of employment reflecting the current concepts and practices go a long way in protecting the employees from arbitrary and high handed treatment of the employers. They also ensure the regular attendance of the employees and prevent dislocation of work. The present bulletin provides an insight into this concept and deals with the nuances attached.
1. Legal provisions
The Industrial Employment (Standing Orders) Act, 1946 (“the Act”) is the governing legislation on the concept. The Act applies to all industrial establishments employing one hundred or more workmen. The industrial establishments covered under the Act may be a factory, dock, wharf, mine quarry, oil-field, plantation, workshop or other establishments where articles are produced or manufactured or any other establishment which deals in any work relating to construction, development or maintenance of building or relating to generation, transmission and distribution of electricity etc.3 It is mandatory for the employer4 of such an establishment to frame draft “Standing Orders” for adoption in the establishment. Five copies of the draft “Standing Orders” framed by the employer must be submitted to the certifying officer5 for its registration.
Under the Industrial Employment (Standing Orders) Central Rules, 1946, the model standing orders in respect of coal mines are different from that of other industrial establishments. The “Standing Orders” or the model standing orders do not become operative and do not get the legal standing unless they are registered with the certifying officer as per the prescribed procedure.
2. Contents and matters covered
While framing the “Standing Orders”, the employer should keep in mind every matter6 which may be applicable to the industrial establishment and must prepare the draft in accordance with the requirements and policies of the industry. The business strategies of various types of industries are different. Accordingly the management of the workforce varies from industry to industry. Therefore, the “Standing Orders” of different industry may be different in its contents.
The Act does not require the employer to draft the “Standing Orders” verbatim as given in the Schedule or reproduce the format as it is. The crucial fact about the “Standing Orders” is that it should conform to the basic structure provided in law. For instance, if the workmen insist on the inclusion of certain other matters not provided in the Schedule it may be allowed if the certifying officer finds it reasonable and if the draft contains the required minimum to be provided.
Few important aspects that may form the contents of the “Standing Orders” apart from the respective rights and responsibilities of the employer and the employees are as follows:
2.1 Particulars about employees
The employees must be categorized as: (a) permanent; (b) temporary; (c) casual; (d) badlis7; (e) probationers; and (f) apprentices. The total number of all these categories must be mentioned. If the workmen belong to a particular trade union, the name of the trade union must also be stated. The description of the employees should be clearly stated against each category with his/her scope of work. Such a step will obviate any confusion in the field of activity of the employees.
Unruly behaviour from the workers of an organization may threaten the peaceful working of the establishment and adversely affect production. Settlement of unreasonable claims raised by the workers may mean litigation, wastage of money and time. Under such circumstances inclusion of provisions to systematically handle and overcome such occurrences becomes necessary. In this backdrop the legislators decided to include provisions relating to “misconduct” in “Standing Orders”. Provision for a redressal mechanism to be adopted in case of misconduct and punishment to be imposed on the wrongdoer should be clearly stated.
The scope of “Standing Orders” cannot be restricted either expressly or by necessary implication, to acts of misconduct committed by workmen within the premises of the industrial establishment. Therefore, if a quarrel takes place between workmen outside working hours and away from the industrial establishment and if it threatens breach of peace in that area it may be brought within the scope of the “Standing Orders.”8
2.3 Shift working
At the discretion of the employer more than one shift may be worked in a department or departments or any section of a department of the establishment. If more than one shift is worked, the workman may be transferred from one shift to another. No shift can be discontinued without one month’s written notice. However, such notice is not required in case of seasonal establishments where the work is carried on intermittently or when the closing of the shift is under an agreement or if the closure is due to circumstances beyond the control of the employer.
If the outcome of discontinuance means retrenchment of any workman, the provisions of “Standing Orders” do not apply; instead the Industrial Disputes Act, 1947 relating to retrenchment shall apply.
2.4 Procedure for grant of leave
The procedure for taking leave must be clearly spelt out. There is no exclusive policy for leave in India. Different establishments follow different policies. Generally, the employee makes an application to the designated official in the human resource department. Three types of leaves viz. privileged/earned leave, casual leave and sick leave are provided to the employees. Privileged leave can be encashed suitably if not availed by the employee. Casual leave cannot be encashed and sick leave, as the name suggests, is granted on medical grounds. Number of leaves for each category and the method of calculating such number must be specified with utmost clarity along with the procedure for encashment.
2.5 Provisions of termination and lay-off
Not all workmen of the organization can contribute efficaciously to the development of the organization. The reasons can be non-performance, other forms of incapacity like old age, mutation etc. Therefore, the provisions of termination of employees are an essential requirement of the “Standing Orders” which should outline the procedure clearly. There should not be any confusion regarding dismissal due to misconduct and dismissal due to termination of employment by the employer. There should be clear demarcation between the two.
Business exigencies and emergencies sometimes compel the employers to discontinue the services of a class of employees. Under such circumstances, lay-off becomes necessary. Provisions for lay-off are contained in the Industrial Disputes Act, 1947. Therefore, while drafting the “Standing Orders” these provisions should be kept in mind. The situations under which lay-off can be effected and the amount of compensation to be paid thereafter should be etched out specifically in the “Standing Orders”
4. Establishments where workforce is below hundred (100)
For establishments which are not covered under the Act, the conditions and terms of service of the workmen need not be certified. The terms of service are governed according to the agreement, either direct or implied, between the employer and the employees or by practice prevailing in similar establishments.9
The employees of certain establishments are governed by specific rules framed by the government. For example conditions of employment for bureaucrats are regulated in terms of Civil Services (Classification Control and Appeal) Rules which contains the procedure to be followed in disciplinary cases, and Civil Services (Temporary Services) Rules which details the procedure for termination of employees. The terms and conditions for the employees of the railway department are provided in the Indian Railways Establishment Code. These employees will not be covered by the Act.
An employer who does not submit the “Standing Orders” for certification or makes changes to the certified “Standing Orders” before the expiry of the period of sixty days from the date of certification and without the consent of the workers or the trade union or other representative body representing the workers, will be punishable with a fine of INR 5,000 (USD 126.8).10 There is an additional penalty of INR 200 (USD 5) per day on the employer if the offence is of a continuing nature.
The penalty for contravention of the provisions of the certified “Standing Orders” is INR 100 (USD 2.5) and a further fine of INR 25 (USD 0.6) per day till the offence continues. This is a very nominal penalty for contravention and this leaves a lot of room for most organizations to deviate from their “Standing Orders”. However, with the increasing awareness among the Indian workforce it is important to adhere to the “Standing Orders” so that there is no scope for any unnecessary litigation.
The Act also lays down that prosecution for an offence may not be instituted except with the prior approval of the appropriate government.11
The workforce of a particular organization is its backbone. A properly organized system can be established with perfect balance in the “Standing Orders” which enables the organization to achieve qualitative and quantitative work from the workers. The “Standing Orders” should be drafted with utmost care keeping in mind the interests of the workers as well as the organization and blending the two in a perfect proportion. This will help in keeping litigation involving employees at bay.
1 According to section 2(s) of the Industrial Disputes Act, 1947, “workman” means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied.
2 Tata Iron & Steel Co Ltd V. Sudhir Chandra Sarkar AIR 1969 Pat 53.
3 Section 2(e) of the Act.
4 According to section 2(d) of the Industrial Employment (Standing Orders) Act, 1946, “employer” means the owner of an industrial establishment and includes (1) in a factory, the person named as manager of the factory; (2) in any industrial establishment under the control of any department of the Government of India, the authority appointed by the Government in this behalf or where no authority is so appointed the head of the department; (3) in any other industrial establishment, any person responsible to the owner for the supervision and control of the industry.
5 According to section 2(c) of the Act, “certifying officer” means a labour commissioner or a regional labour commissioner, and includes any other officer appointed by the appropriate government, by notification in the official gazette, to perform all or any of the functions of a certifying officer under the Act.
6 Schedule to the Act.
7 Casual or temporary workmen.
8 Aluminium Industries Employees Union V. Aluminium Industries Ltd. AIR 1963 Ori 169; Central India Coalfields V. Ram Bilas Shobnath AIR 1961 SC 1189.
9 Malabathi Tea Estate V. Bhakta Munda AIR 1959 Tri 8.
10 1 USD= 39.4 INR.
11 In respect of industrial establishments under the control of Central Government or a railway administration or in a major port, mine or oil-field it is the Central Government and in all other cases it is the State Government.