Background Study Tirupur - Fair Wear Foundation

der the Factories Registration Act, 1948. This is how the employment
lationship is to be registered.
4.8.2. Compliance situation
Most of the employers do not comply with the extensive laws protecting the
workers’ rights.
In most companies workers are sent home if the company has no work for them that day,
without any payment, although the should be entitled to have 50% of their wages paid. They
are most of the time not notified the day before.
Companies most of the time lack appointment letters. If they are available they hardly ever
mention the salary. Still many larger companies have a core of workers that work for the
company for over 3-4 years.
Workers seem to accept the absence of any job security as the way things are. Officially
workers cannot be laid off because of lack of work without permission of the government.
Workers that have been working for more than 1 year for the same company have a right to
one-month period of notice and 15 days average pay for every competed year of service or
any part thereof in excess of 6 months.
‘The 1976 amendment to India’s ID Act (1947) makes layoff (Section 25 M), retrenchment
(Section 25N), and closure (Section 250) illegal except with prior permission of the government.
The permission requirements cover all industrial establishments employing
100 or more workers. The penalty for layoff, retrenchment, or closure without government
permission includes both a prison sentence and a fine for the employer. If an
employer closes down a unit even after refusal by the government, he or she can be imprisoned
for up to one year or fined up to Rs. 5,000 or both. The legislation does make an exception
for retrenchment resulting from a power shortage or natural disaster.
However (..), the industry has always tackled the problem in its own way, by engineering
an exit. If a company becomes sick, there is not even money to pay the electricity bills, so
the power is shut off. Thus, Section 25 O of the ID Act 1947 is circumvented, and the fine
imposed for this violation is a paltry sum of Rs. 500 (as determined by the Gujarat High
Court in 1995). When a unit is closed in this manner, workers do not get their statutory dues,
such as provident fund, gratuity, current salary, leave salary, and so on. This is precisely
what happened to the 50,000 workers of Ahmedabads textile industry, which was
closed down because electricity was cut off for nonpayment, even though the government
had not given permission to close the mills.’ (Agarwala& Khan)
The Factories act and the TN Factories rules give clear indications for the kind of records
that has to be kept. But many companies lack a lot of these required records. During audits it
is often found that they had only very recently started keeping them. Thus for instance the
period of service is not adequately recorded.
Even registered companies lack time cards and pay slips, officially registered Standing Orders,
a full register of adult workers (as required by the FA art. 62). One company had the
general policy only to start keeping records after a worker had finished 1 year of employment
other companies may lack any records of temporary workers, workers on probation, apprentices,
etc.
Attendance registers do exist but are often not signed. The company fills it in.
Time records keeping are maintained separately.
Accidents registers are maintained but always show nil. Companies are afraid to run into
problems with the factory inspector. Some auditors ask management to maintain an informal
register to at least see what is happening or what prevention measures should be taken.
PF slips must be given every year. But their registration number may be different for every
year. The account breaks and the worker does not have a consistent account. This also hap-
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