Impact of recent ID Act Amendments to Staffing Industry

As everyone must be aware   Industrial Disputes (Amendment) Act, 2010 (No. 24 of 2010)  had come into effect on 15-09-201.This article discusses its imapact on the Indian Staffing  Industry . 

Setting up of Grievance Redressal Machinery

9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances.

(2) The Grievance Redressal Committee shall consist of equal number of members from the employer and the workmen.

(3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on rotation basis every year.

(4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:

Provided that there shall be, as far as practicable one woman member if the Grievance Redressal Committee has two members and in case the number of members are more than two, the number of women members may be increased proportionately.

(5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal Committee shall not affect the right of the workman to raise industrial dispute on the same matter under the provisions of this Act.

(6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party.

(7) The workman who is aggrieved of the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of Grievance Redressal Committee and the employer shall, within one month from the date of receipt of such appeal, dispose off the same and send a copy of his decision to the workman concerned.


A confusion may come into the mind of the Staffing Industry whether it will come within the definition of Industry For this Sec 2 (j) of the Industrial Disputes Act defines "industry" means any systematic activity carried on by co-operation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not, -

(i) any capital has been invested for the purpose of carrying on such activity; or

(ii) such activity is carried on with a motive to make any gain or profit, and includes –

(a) any activity of the Dock Labour Board established under section 5A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1949);

(b) any activity relating to the promotion of sales or business or both carried on by an establishment, but does not include - (1) any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one.

Explanation : For the purposes of this sub-clause, "agricultural operation" does not include any activity carried on in a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951 (69 of 1951); or

(2) hospitals or dispensaries; or

(3) educational, scientific, research or training institutions; or

(4) institutions owned or managed by organizations wholly or substantially engaged in any charitable, social or philanthropic service; or

(5) khadi or village industries; or

(6) any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space; or

(7) any domestic service; or

(8)  any activity, being a profession practised by an individual or body of individuals, if the number of persons employed by the individuals or body of individuals in relation to such profession is less than ten; or

(9) any activity, being an activity carried on by a co-operative society or a club or any other like body of individuals, if the number of persons employed by the co-operative society, club or other like body of individuals in relation to such activity is less than ten;

Hence a separate Grievance Redressal Machinery for Temporary Staff  needs to be set up with proper Legal advice.From the Clients /Principal Employer side also they will need to ensure whether the Staffing Companies have such a redressal machinery in place.This would become a need of legal compliance.

Sub : Effect of the Amendment- Sec 2 A of the Act - Sub Section (2) & (3) Direct reference of Dispute.

Earlier the Temporary Staff  could not approach a Labour Court without the assistance of a Labour Union for reference of a dispute touching upon discharge, dismissal, termination or retrenchment . Now by the amendment he/she can approach the Labour court directly. This a drastic provision and will have a crippling effect on the Staffing Industry.

The remedy is:

1. First he/she has to make an application to the Labour Department Conciliation Officer.

2. If no action is taken by the Conciliation Officer then he/she can file an application to the Labour Court for adjudication of the Dispute.

3. Time limit for questioning all such disputes in relation to discharge, dismissal, termination or retrenchment is 3 years.

Issue for Staffing Industry:

1. Individual Employee grievance in relation to discharge, dismissal, termination or retrenchment is subject to Conciliation by Labour Officer and thereafter by Labour Court.

2. Will open the floodgates of Employee Litigation.


Tips for avoidance:

1. Need to have a strong Internal redressal mechanism thereby closing all issues internally.

2. Take Notices from individual Temporary Staff s and their Lawyers seriously and solve them immediately.

3. A pro-Temporary Staff  approach even without consulting the Principal employer [Client] needs to be taken.

4. A separate provision in the Budget needs to be made out of the Staffing Company's funds to effect pro-active settlements by making provision for contigent liabilities.

Sub: Enhancement of wage ceiling by the ID Amendment Act 

In continuation of the relevance of the recent ID Act amendments for the Staffing Industry we refer to the aspect Enhancement of wage ceiling by the ID Amendment Act.

Prior to the amendment Wage ceiling of workman in the definition clause Sec 2 (s) was Rs. 1600/- .Now it is enhanced to Rs. 10,000/- per month,.

Consequently any person working in any industry doing any manual, unskilled, skilled, technical, operational, clerical or supervisory work drawing wages up to Rs. 10000/- will be considered as a workman. Workman definition now reads like this:

(s) "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, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person –

(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or

(ii) who is employed in the police service or as an officer or other employee of a prison; or

(iii) who is employed mainly in a managerial or administrative capacity; or

(iv) who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

The exclusion is where the workmen employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

In the Staffing Industry this change is conspicuous and Deputed Supervisors and real time Deputed Managers drawing wages exceeding ten thousand rupees per mensem alone may be exempted .All others will come within the definition of workmen for the purposes of any proceeding under the Industrial Disputes Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute.

Sub: Impact of changes in Appropriate Govt for disputes between Contractor and Contract Labour. 

The impact of the Amendment on the definition of appropriate Govt has been clarified Accordingly Industry, corporation, PSEs and PSU owned or controlled by the Central Govt., for them appropriate Govt. would be Central Govt. and if such industry under the control of State Govt., appropriate Govt. would be State Govt. The amendment reads as follows:

Amendment of section 2

2. In the Industrial Disputes Act, 1947 (14 of 1947) (hereinafter referred to as the principal Act), in section 2,—

(i) in clause (a),––

(a) in sub-clause (i), for the words “major port, the Central Government, and”, the words “major port, any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or any corporation, not being a corporation referred to in this clause, established by or under any law made by Parliament, or the Central public sector undertaking, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the Central Government, the Central Government, and” shall be substituted;

(b) for sub-clause (ii), the following sub-clause shall be substituted, namely: -

“(ii) in relation to any other industrial dispute, including the State public sector undertaking, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the State Government, the State Government:

Provided that in case of a dispute between a contractor and the contract labour employed through the contractor in any industrial establishment where such dispute first arose, the appropriate Government shall be the Central Government or the State Government, as the case may be, which has control over such industrial establishment.”;

Another important Amendment affecting the Staffing Industry and Contractors in general is inclusion of the following proviso :

Provided that in case of a dispute between a contractor and the contract labour employed through the contractor in any industrial establishment where such dispute first arose, the appropriate Government shall be the Central Government or the State Government, as the case may be, which has control over such industrial establishment.


The above proviso literally means that for the Employees of the Contractor of such Industries the concerned Government shall be the Central Government or the State Government, as the case may be, which has control over such industrial establishment. In case the Staffing Company is a Contractor for a central PSU then for the employees of the Contractor to raise a dispute will be the Central Govt and if deputed for a State PSU then it will be the State Govt.

Changes made in the Section 11 –Enforcing the Awards of Labour Court.

In section 11 of the principal Act, after sub-section eight , the following sub-sections shall be inserted, namely:

“(9) Every award made, order issued or settlement arrived at by or before Labour Court or Tribunal or National Tribunal shall be executed in accordance with the procedure laid down for execution of orders and decree of a Civil Court under order 21 of the Code of Civil Procedure, 1908

(10) The Labour Court or Tribunal or National Tribunal, as the case may be, shall transmit any award, order or settlement to a Civil Court having jurisdiction and such Civil Court shall execute the award, order or settlement as if it were a decree passed by it.”

By introduction of the provision the award of Labour Court / Tribunals is now additionally executable by a Civil Court. After the Labour Court/Tribunal passes the award it shall be transmitted to the Civil Court for execution. By this process both the moveable and immovable property of the Judgment Debtor i.e. the person/company against whom the award is passed can be attached. Also the Judgment Debtor can be arrested and put in prison. Earlier the awards were executed by the Revenue Recovery process alone.

With Regards


VS Rajan Associates,
Legal Consultants for Staffing & Recruiting Industry
No.27, Ist Floor, Singapore Plaza,
No.164, Linghi Chetty Street,
Chennai - 600 001.
E-mail : rajanassociates@eth,net,
Off : 044-42620864, 044-65874684,
Mobile : 9840142164-9025792684-9025792634