Chapter VI

Human Resources Development

and Labour Legislation-

A study of employee perception of HNL

6.1 Labour Legislation

The main purpose of labour legislation is to protect the rights of

workers and employers, and to promote productive and safe workplaces and

ensure employee's benefits. Labour law defines employees’ rights and

obligations as workers, union members and employer’s rights and obligations

in the workplace. Labour laws can be classified in to two broad categories

namely collective labour law and individual labour law. Collective Labour

Law deals with the relationships between various groups, which include

employer, employee and union. Individual Labour Law is one which intends

to protect the employees' rights who are at work and during the tenure of work

contract. Further, the functional areas of existing labour laws can be identified

as industrial relations, workplace health and safety, employment standards

and service conditions, salary and other allowances including minimum wage,

compensations etc., social security, labour welfare and recruitment policy.

Conte

nts

6.1 Labour Legislation

6.2 Human Resource Development

6.3.A micro level approach to the impact of HRD

6.1.1 Indian context

In India, Central Government and the various State Governments have

enacted large numbers of labour laws, to regulate the activities of workers,

employers and unions. These laws deal with various aspects of labour market

operations. There are laws, which apply to specific industry or activity and

those apply to the entire labour force. Table 6.1 is the list of labour laws

classified according to different functional areas.

Table 6.1

List of labour laws of India based on their functional areas

Sl.

No

Name of the law Functional

area

1 The Employees’ Compensation Act, 1923

Social and

Financial

Security of

employees

2 The Employees’ State Insurance Act, 1948

3 The Employees’ Provident Fund & Miscellaneous

Provisions Act, 1952

4 The Payment of Gratuity Act, 1972

5 The Unorganised Workers' Social Security Act 2008

6 Employees liability act 1938

7 The Mica Mines Labour Welfare Fund Act, 1946

Labour

Welfare

8 The Limestone & Dolomite Mines Labour Welfare Fund

Act, 1972

9 The Beedi Workers Welfare Fund Act, 1976

10 The Beedi Workers Welfare Cess Act, 1976

11 The Iron Ore Mines, Manganese Ore Mines & Chrome Ore

Mines Labour Welfare Fund Act, 1976

12 The Iron Ore Mines, Manganese Ore Mines & Chrome Ore

Mines Labour Welfare Cess Act, 1976

13 The Cine Workers Welfare Fund Act, 1981

14 The Cine Workers Welfare Cess Act, 1981

15 The Employment of Manual Scavengers and Construction

of Dry latrines Prohibition Act, 1993

16 The Employment Exchanges (Compulsory Notification of

Vacancies) Act, 1959 Recruitment

& Training 17 The Apprentices Act, 1961

18 The Payment of Wages Act, 1936

Wages

19 The Minimum Wages Act, 1948

20 The Working Journalist (Fixation of Rates of Wages) Act,

1958

21 The Payment of Bonus Act, 1965

22 The Fatal Accidents Act, 1855

Miscellaneo

us

23 The Weekly Holiday Act, 1942

24 The War Injuries (Compensation Insurance) Act, 1943

25 The Personal Injuries (Emergency) Provisions Act, 1962

26 The Personal Injuries (Compensation Insurance) Act, 1963

27 The Coal Mines (Conservation and Development) Act,

1974

28 The Labour Laws (Exemption from Furnishing Returns and

Maintaining Register ) Act, 1988

29 The Public Liability Insurance Act, 1991

30 The Bonded Labour System (Abolition) Act, 1976 Deprived

and

Disadvantag

ed Sections

of the

Society

31 The Child Labour (Prohibition & Regulation) Act, 1986

32 The Children (Pledging of Labour) Act, 1933

33 The Maternity Benefit Act, 1961 Equality and

Empowerme

nt of Women 34 The Equal Remuneration Act, 1976

35 The Factories Act, 1948

36 The Dock Workers (Regulation of Employment) Act, 1948

Conditions

of Services

and

Employment

37 The Plantation Labour Act, 1951

38 The Mines Act, 1952

39 The Working Journalists and other Newspaper Employees’

(Conditions of Service and Misc.) Act, 1955

40 The Merchant Shipping Act, 1958

41 The Motor Transport Workers Act, 1961

42 The Beedi & Cigar Workers (Conditions of Employment)

Act, 1966

43 The Contract Labour (Regulation & Abolition) Act, 1970

44 The Sales Promotion Employees (Conditions of Service)

Act, 1976

45 The Inter-State Migrant Workmen (Regulation of

Employment and Conditions of Service) Act, 1979

46 The Cine Workers and Cinema Theatre Workers

(Regulation of Employment) Act, 1981

47 The Dock Workers (Safety, Health & Welfare) Act, 1986

48 The Building & Other Construction Workers (Regulation

of Employment & Service) Act, 1996

49 The Dock Workers (Regulation of Employment)

(inapplicability to Major Ports) Act, 1997

50 The Trade Unions Act, 1926 & The Trade Unions

(Amendments) Act, 2001 Industrial

Relations 51 The Industrial Employment (Standing Orders) Act, 1946

52 The Industrial Disputes Act, 1947

Source: Research data

Table 6.1 is a selection of the labour laws in India based on their

functional areas. From this list 16 statutes are selected to study the purpose

and objective of the legislation and the result of the study is given in Table

6.2. In order to examine the presence of the elements of human resource

development in these laws, various provisions of these selected laws are

analysed. This chapter examines the labour laws from the human resource

development angle. The study focused on the visibility of various elements of

human resource development in the provisions of labour laws.

Table 6.2

Purpose and objective of the legislation of selected labour laws

Name of the law Objective/purpose of the Act

1

THE APPRENTICES ACT,

1961

Improvement/refinement of old skills through

theoretical and practical training in number of trades

and occupation

2

THE CONTRACT

LABOUR

(REGULARATION &

ABOLITION) ACT,1970

To regulate the employment of contract labour in

certain establishments and to provide for its

abolition in certain circumstances and for matters

connected there with.

3

THE EMPLOYEES’

PROVIDENT FUNDS &

MISC. PROVISIONS ACT,

1952

This Act seeks to ensure the financial security of the

employees in an establishment by providing for a

system of compulsory savings. Employees covered

enjoy a benefit of Social security for which

employees and employers contribute equally

throughout the covered persons’ employment. This

sum is payable normally on retirement or death.

Other Benefits include Employees’ Pension Scheme

and Employees’ Deposit Linked Insurance Scheme.

4

THE EMPLOYEES’

STATE INSURANCE

ACT, 1948

Medical, sickness, extended sickness for certain

diseases, enhanced sickness, dependents maternity,

besides funeral expenses, rehabilitation allowance,

medical benefit to insured person and his or her

dependent family members.

5

THE FACTORIES ACT,

1948

Employer is to ensure the health of workers, safety

measures, welfare measures, working hours, spread

over & overtime of adults

6

THE EMPLOYMENT

EXCHANGES

(COMPULSORY

NOTIFICATION OF

VACANCIES)

ACT, 1959

To provide for the compulsory notification of

vacancies to employment exchanges.

7

THE INDUSTRIAL

DISPUTES ACT, 1947

Provides for the investigation and settlement of

industrial disputes in an industrial establishment

relating to lockouts, layoffs, retrenchment etc. It

provides the machinery for the reconciliation and

adjudication of disputes or differences between the

employees and the employers.

8

THE MINIMUM WAGES

ACT, 1948

The Act prescribes minimum wages for all

employees in all establishments or working at home

in certain employments.

9

THE INDUSTRIAL

EMPLOYMENT

(STANDING ORDERS)

ACT, 1946

Applicable to establishments employing more than

100 workers. The Act requires employers in

industrial establishments to clearly define the

conditions of employment by issuing standing

orders duly certified. Model standing orders issued

under the Act deal with classification of workmen,

holidays, shifts, payment of wages, leaves,

termination etc..

10

THE SALES PROMOTION

EMPLOYEES

(CONDITIONS OF

SERVICE) ACT, 1976

To provide for fixing minimum rates of wages in

certain employments

11 THE TRADE UNIONS

ACT, 1926

To provide for the registration of Trade Union and

in certain respects to define the law relating to

registered Trade Unions

12

THE PAYMENT OF

BONUS ACT, 1965

The Act provides for the payment of bonus to

persons employed in certain establishments on the

basis of profits or on the basis of production or

productivity. The Act is applicable to

establishments employing 20 or more persons. The

minimum bonus, which an employer is required to

pay even if he suffers losses during the accounting

year is 8.33% of the salary.

13

THE PAYMENT OF

GRATUITY

ACT, 1972

The Act provides for a scheme for the payment of

gratuity to all employees in all establishments

employing ten or more employees to all types of

workers. Gratuity is payable to an employee on his

retirement/resignation at the rate of 15 days salary

of the employee for each completed year of service

subject to a maximum

14

THE PAYMENT OF

WAGES ACT, 1936

The Act regulates issues relating to time limits

within which wages shall be distributed to

employees and that no deductions other than those

authorized by the law are made by the employers.

15

THE WORKMEN’S

COMPENSATION ACT,

1923

The Act provides that compensation shall be

provided to a workman for any injury suffered

during the course of his employment or to his

dependents in the case of his death. The Act

provides for the rate at which compensation shall be

paid to an employee.

16

THE MATERNITY

BENEFIT ACT 1961

The Act regulates the employment of the women in

certain establishments for a prescribed period before

and after child birth and provides certain other

benefits. The Act does not apply to any factory or

other establishment to which the Employees State

Insurance Act 1948 is applicable.

Source: Research data

6.2 Human Resource Development

Key elements of human resource development are employee training,

education and development. HRD training includes those activities which

serve to improve employee performance for a currently held job (Nadler,

1979). Education is comprised of activities which are designed to improve an

employee's overall completeness in a specified direction and beyond the

current job (Nadler, 1979). Employee development strives to prepare

individuals so they can move with the organization as it changes and grows

(Mondy & Noe, 1981). Employee development can further extended to

individual development, career development and organizational development.

Logically career development and organizational development are offshoots of

individual development and hence it can be concluded that individual

development is the corner stone of human resource development. Individual

development is the outcome of various elements such as salary & service

conditions, social security measures, health & safety measures, labour welfare

measures, training and skill development. This relationship of labour laws to

the human resource development is explained with the help of Figure 6.1. For

the purpose of analysis, labour laws are classified in to employer oriented and

employee oriented. This is further divided in to duties and rights of employer

and duties and rights of employees. Further it is seen that the provisions

containing duties of employer and rights of employees are those related to the

human resource development.

Fig.6.1

Relationship diagram of labour laws and HRD

LABOUR LAWS

DUTIES OF

EMPLOYEE

EMPLOYER

ORIENTED

EMPLOYEE

ORIENTED

RIGHTS OF

EMPLOYEE

DUTIES OF

EMPLOYER

RIGHTS OF

EMPLOYER

Salary Training Recruitment

Health & safety HRD Social security

Labour welfare Development Service conditions

Table 6.3

List of labour laws containing provisions for Human Resource Development

Major

Labour

legislations

Whether any relevant Provisions related to

Recruitment

Salary and

compensation

Health &

safety

Social securit

y

Labour

welfare

Training &

Development

Service Conditio

ns

1.

The Employees’ State Insurance Act, 1948

x √ √ √ √ x √

2.

The Payment of Gratuity Act, 1972

x √ x √ √ x √

3.

The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952

x √ x √ √ x √

4.

The Workmen Compensation Act, 1923

x √ √ √ √ x √

5.

The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959

√ x x x x x x

6. The Apprentices Act, 1961

√ x x x x x* x

7. The Payment of Wages Act, 1936

x √ x x √ x √

8.

The Minimum Wages Act, 1948

x √ x x √ x √

9.

The Maternity Benefit Act, 1961

x x √ √ √ x √

10. The Payment of Bonus Act, 1965

x √ x x √ x √

11. The Equal Remuneration Act, 1976

x √ x √ x x x

12.

The Contract Labour (Regulation & Abolition) Act, 1970

x x x √

√

x x

13. The Trade Unions Act, 1926

x x x √

√

x x

14.

The Industrial Employment (Standing Orders) Act, 1946

x x √

x x x

√**

15.

The Industrial Disputes Act, 1947

x x x √

x x x

16.

The Factories Act, 1948

x x √

x

√

x x

2 8 5 9 11 0 9

Source: Research data

* Though the Apprentices Act is a law to regulate the training to candidates, the apprentices are not

considered as regular employees .Hence the provisions are not directly related to HRD.

** This Act is applicable to organizations which employ more than 100 persons.

Table 6.3 shows the presence of human resource development

provisions in various labour legislations enacted by the Central Government.

From the Tables 6.2 and 6.3, it can be seen that the major component of

human resource development, training and development do not find a place in

any of the provisions of the labour laws examined. Provisions, which regulate

the recruitment of staff in various organisation are found in 2 Acts, though

only to a limited extent. There are 8 laws which regulated the payment of

salary and other compensations. Provisions to ensure the health and safety of

the workers are present in 5 statutes. Social security and labour welfare

measures are given statutory protection in 9 and 11 Acts respectively. There

are 9 laws which regulate the service conditions of the staff. The above data is

represented in Figure 6.2.

Fig.6.2

HRD FACTORS

2

8

5

911

0

9

0

2

4

6

8

10

12

NU

MB

ER

OF

LA

WS

HRD provisions in labour laws

Table 6.4

Statistics of HRD provisions in various labour laws

HRD Factors No. of laws

analysed

No. of laws in which

relevant HRD

provisions present

Percentage

Recruitment 16 2 12.50

Salary and compensation 16 8 50.00

Health & safety 16 5 31.25

Social security 16 9 56.25

Labour welfare 16 11 68.75

Training & Development 16 0 0.00

Service Conditions 16 9 56.25

Source: Research data

Fig.6.3

Percentage of HRD provisions in major labour laws

6.3. Micro level approach to the impact of HRD provisions in the

existing labour laws

6.3.1 HRD Practices in HNL

In the foregoing section, a macro level scrutiny of selected labour laws

were carried out to find whether these laws contain any provisions that give

prominence for Human Resource Development (HRD). In order to examine

whether the provisions contained in these laws have any impact on the micro

level, a case study of the working environment of Hindustan Newsprint

Limited was conducted.

In the annual report of the HNL for the year ended on 31 March 2012, it

is stated that as a visionary in development, the company has given great

12.5

50

31.25

56.25

68.75

0

56.25

0

10

20

30

40

50

60

70

80

Per

centa

ge

HRD factor in various laws

prominence to HRD. It further stated that by imparting need based training

with the help of internal and external resource persons; key competencies of

the employees were developed so as to enable them to perform current and

future jobs through planned learning activities and to manage change. It is

stated that the growth and advancement needs of the employees are the major

factors of the Human Resources Management policies of the company. During

the year 2011-12, the company had conducted 11 in-house and 11 external

programmes.

The company is promoting participative work culture management, by

constituting various Committees like Works Committee, Safety Committee,

Canteen Committee, Grievance Committee and Bi-partite participative fora

like Shop Floor Councils and Plant Floor Councils. Constant interactions with

the Trade Unions and their representatives at political levels resulted in having

a very healthy industrial relations which ensured zero man days loss due to

strike. The company is offering various welfare measures to the employees

and their dependents. The report further states that the health and safety

aspects of employees are given emphasis by the company.

Table- 6.5

Training programmes conducted by HNL during 2011-12

Type of trainings No. of trainings Participants

In house 11 273

External 11 18

Source: Annual report of HNL, 2012

6.3.2 Analysis of employee perception on HRD practices in HNL

In the previous section, the employer’s version of the various HRD

practices prevalent in the organization is examined. But, this version is to be

verified with the feedback from the employees. In order to analyse the impact

and effectiveness of these practices on the workforce, a questionnaire with five

point Likert scale was prepared with 25 questions, 3 each from the 7 key

elements of individual development and 4 additional questions on training and

development. Responses from 250 employees of HNL randomly selected from

a universe as given in Table 6.6 are collected and average score was

calculated. (The Likert scale question was invented by the educator and

psychologist Rensis Likert in his thesis at Columbia University.)

Table 6.6

Category of employees

Category Frequency

Worker 150

Supervisor 25

Executive 75

Total 250

Source: Research data

To prepare the questionnaire, the aspect of individual development,

which is the outcome of the seven key elements listed in Table 6.7 are

emphasised. Further, the element of training and development, which is a

major contributing factor of HRD, is given importance by adding four more

questions on this area.

Table - 6.7

Key elements affecting individual development

Sl.No Factors affecting individual development

1 Recruitment

2 Salary & compensation

3 Social security measures

4 Health & safety measures

5 Labour welfare measures

6 Training & development

7 Service conditions

Source: Research data

The seven key elements listed in Table 6.7 are selected on the basis of

their contribution to overall development of individual. Also, provisions to

ensure these elements are present in various labour laws enacted by the

Central and State governments. Since HRD is a universal concept, the

responses of all categories of employees were clubbed and all the 250

responses were considered as responses from a homogeneous group. The

qualitative data obtained was then converted in to numerical value by

assigning values from 1 to 5 for each response. The values of each response

were then aggregated and the average score is calculated. To find out whether

this score is significant to the extent that the respondents are satisfied with the

current HRD practices at HNL, percentage of this average was calculated

based on the maximum score of 5. The maximum expected score is 125 and

the calculated score is 71.24, which is 57% of the maximum score. The

average scores of each responses and the average of the aggregate score are

given in Table 6.8.

Table 6.8

Average scores of the perception of employees on HRD practices in HNL

Sl.

No.

Items Average

Score

1 How transparent was the recruitment process of the

company?

2.64

2 Are you satisfied with the recruitment standards of the

company?

2.78

3 How much do your qualifications mattered in the

selection process?

3.27

4 How well are you paid for the work you do? 3.48

5 Are you satisfied with your employee benefits? 3.76

6 How realistic were the expectations of your salary? 3.75

7 How proud are you of your employer's brand? 3.67

8 Are you satisfied with the perks provided by the

company?

4.36

9 How easy was it to balance your work life and personal

life?

3.16

10 How safe did you feel at your employer's workplace? 3.48

11 How often did you feel stressed at work? 3.68

12 How much the stress at work affects your health? 2.12

13 Are you satisfied with your job? 3.56

14 How positive is your employer's work environment? 3.48

15 How is your employer's health insurance plan? 3.18

16 How effective is the training you receive from your

employer?

1.25

17 How often does your employer give you skill

development training?

2.05

18 How much room for professional growth did you have

at this company?

1.98

19 How often do the tasks assigned to you help you grow

professionally?

2.08

20 How well did your team work together to reach a

common goal?

2.76

21 How effectively are your skills used at this company? 3.25

22 How effective is the existing provisions to ensure career

development?

2.00

23 How effective is the opportunity for outside

training/development?

1.00

24 Are you satisfied with the initiative of the management

to impart training/development?

2.00

25 Are you satisfied with promotion policy of the

company?

2.50

Average score 2.85

Percentage of Average score 57%

Source: Research data

Table 6.9

Classification of the average scores based on ranking

Ranking Sl.

No.

Items Average

Score

1 8 Are you satisfied with the perks provided by

the company?

4.36

2 5 Are you satisfied with your employee benefits? 3.76

3 6 How realistic were the expectations of your

salary?

3.75

4 11 How often did you feel stressed at work? 3.68

5 7 How proud are you of your employer's brand? 3.67

6 13 Are you satisfied with your job? 3.56

7 4 How well are you paid for the work you do? 3.48

8 10 How safe did you feel at your employer's

workplace?

3.48

9 14 How positive is your employer's work

environment?

3.48

10 3 How much do your qualifications mattered in

the selection process?

3.27

11 21 How effectively were your skills put to use at

this company?

3.25

12 15 How is your employer's health insurance plan? 3.18

13 9 How easy was it to balance your work life and

personal life while working at this company?

3.16

14 2 Are you satisfied with the recruitment

standards of the company?

2.78

15 20 How well did the members of your team work

together to reach a common goal?

2.76

16 1 How transparent was the recruitment process of

the company?

2.64

17 25 Are you satisfied with promotion policy of the

company ?

2.5

18 12 How much the stress at work affect your

health?

2.12

19 19 How often do the tasks assigned to you by your

employer help you grow professionally?

2.08

20 17 How often does your employer give you skill

development training?

2.05

21 22 How effective is the existing provisions to

ensure career development?

2

22 24 Are you satisfied with the initiative of the

management to impart training/development?

2

23 18 How much room for professional growth did

you have at this company?

1.98

24 16 How effective is the training you receive from

your employer?

1.25

25 23 How effective is the opportunity for outside

training/development?

1

Source: Research data

Tables 6.8 and 6.9 clearly depicts a trend which reveals that though the

employees are satisfied on the areas of salary and other benefits, the efforts of

the company to give prominence to HRD by imparting internal and external

trainings did not evoked the expected impact on the employees. The pattern of

the responses show that many of the training and skill development

programmes lack teeth. Ranking of the responses based on the scores clearly

show that the HRD practices at HNL mainly centre around the enhancement of

salary and other benefits to the employees and the efforts from the part of the

employer aimed at the career and organizational development are not

producing the desired results. The main reason behind this embarrassing

situation may be that while all the six out of the seven elements of individual

development examined in this chapter had the statutory protection in various

labour laws, the remaining element of training and development do not find

any such protection. This situation permits the individual management to

formulate their own rules and regulations to carry out this important function.

The implementation of these rules and regulations are not subjected to any

legal scrutiny by any authority and the management is free to fix their own

standards to evaluate the outcome of their training and development

programmes.

Table 6.10

Details of training cost incurred by the company during the last 5 years

Year

Total No.

of

employees

Average

annual

employee

cost

Gross

training

cost

Per

employee

training

cost

Percentage

of training

cost to

total cost

2006-07 1000 663350 388310 388.3 0.06

2007-08 1003 639511 486692 485.2 0.08

2008-09 1036 565425 149236 144.05 0.03

2009-10 978 435727 117830 120.48 0.03

2010-11 909 425834 122592 134.86 0.03

Source: Primary data

Table 6 is the details of average salary cost, per employee training cost and the

percentage of per employee training cost to per employee salary cost. The per

employee training cost had dwindled during the last five years and it can be

seen that only a meager Rs.135 was spent for training during the year 2010-11.

Though the management claims to give prominence to HRD, the reality is that

they are not investing any amount for this purpose.

Conclusion

A scrutiny of the provisions of various labour laws containing

clauses related to human resource development and the analysis of various

HRD practices followed at the HNL reveals that HRD provisions in the

statutes are mainly related to the salary, social security and other welfare

measures ensuring monetary and other social benefits to the employees.

Absence of any provisions to ensure training and development of the

employees aimed at individual, career and organizational development are

causing confusion in the process of formulating and implementing effective

and uniform HRD practices in the industry.