Labour Code Advisor

Section 2. Definitions.

In this Act, unless the context otherwise requires,—

(1) “accounting year” means— (i) in relation to a corporation, the year ending on the day on which the books and accounts of the corporation are to be closed and balanced; (ii) in relation to a company, the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up, whether that period is a year or not;

(iii) in any other case— (a) the year commencing on the 1st day of April; or (b) if the accounts of an establishment maintained by the employer thereof are closed and balanced on any day other than the 31st day of March, then, at the option of the employer, the year ending on the day on which its accounts are so closed and balanced: Provided that an option once exercised by the employer under paragraph (b) of this sub-clause shall not again be exercised except with the previous permission in writing of the prescribed authority and upon such conditions as that authority may think fit; (2) “agricultural income” shall have the same meaning as in the Income-tax Act; (3) “agricultural income-tax law” means any law for the time being in force relating to the levy of tax on agricultural income;

(4) “allocable surplus” means— (a) in relation to an employer, being a company 1[(other than a banking company)] which has not made the arrangements prescribed under the Income-tax Act for the declaration and payment within India of the dividends payable out of its profits in accordance with the provisions of section 194 of that Act, sixty-seven per cent. of the available surplus in an accounting year; (b) in any other case, sixty per cent. of such available surplus; 2* * * * *

(5) “appropriate Government” means— (i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act,1947 (14 of 1947), is the Central Government, the Central Government; (ii) in relation to any other establishment, the Government of the State in which that other establishment is situate; (6) “available surplus” means the available surplus computed under section 5; (7) “award” means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947 (14 of 1947), or by any other authority constituted under any corresponding law relating to investigation and settlement of industrial disputes in force in a State and includes an arbitration award made under section 10A of that Act or under that law; (8) “banking company” means a banking company as defined in section 5 of the Banking Companies Act, 1949 (10 of 1949), and includes the State Bank of India, any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), 3[any corresponding new bank specified in the First Schedule to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), 1[any corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980),] any co-operative bank as defined in clause (vii) of section 2 of the Reserve bank of India Act, 1934 (2 of 1934),] and any other banking institution which may be notified in this behalf by the Central Government;

(9) “company” means any company as defined is section 3 of the Companies Act, 1956 (1 of 1956), and includes a foreign company within the meaning of section 591 of that Act;

(10) “co-operative society” means a society registered or deemed to be registered under the Co-operative Societies Act, 1912 (2 of 1912), or any other law for the time being in force in any State relating to co-operating societies;

(11) “corporation” means any body corporate established by or under any Central, Provincial or State Act but does not include a company or a co-operative society;

(12) “direct tax” means—

(a) any lax chargeable under—

(i) the Income-tax Act;

(ii) the Super Profits Tax Act, 1963 (14 of 1963);

(iii) the Companies (Profits) Surtax Act, 1964 (7 of 1964);

(iv) the agricultural income-tax law; and

(b) any other tax which, having regard to its nature or incidence, may be declared by the Central Government, by notification in the Official Gazette, to be a direct tax for the purposes of this Act;

(13) “employee” means any person (other than an apprentice) employed on a salary or wage not exceeding 1[twenty-one thousand rupees] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied;

(14) “employer” includes—

(i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and

(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;

(15) “establishment in private sector” means any establishment other than an establishment in public sector;

(16) “establishment in public sector” means an establishment owned, controlled or managed by—

(a) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956);

(b) a corporation in which not less than forty per cent. of its capital is held (whether singly or taken together) by—

(i) the Government; or

(ii) the Reserve Bank of India; or

(iii) a corporation owned by the Government or the Reserve Bank of India;

(17) “factory” shall have the same meaning as in clause (m) of section 2 of the Factories Act, 1948 (63 of 1948);

(18) “gross profits” means the gross profits calculated under section 4;

(19) “Income-tax Act” means the Income-tax Act, 1961 (43 of 1961);

(20) “prescribed” means prescribed by rules made under this Act;

(21) “salary or wage” means all remuneration (other than remuneration in respect of over- time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include—

(i) any other allowance which the employee is for the time being entitled to;

(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;

(iii) any travelling concession;

(iv) any bonus (including incentive, production and attendance bonus);

(v) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force;

(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;

(vii) any commission payable to the employee.

Explanation.—Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to from part of the salary or wage of such employee;

(22) words and expressions used but not defined in this Act and defined in the Industrial Disputes Act, 1947 (14 of 1947), shall have the meanings respectively assigned to them in that Act.

View Act Footnotes

Note: In the legacy archives, footnotes are grouped by original PDF page numbers rather than by section.

Page 3

  • 1. The Act has been extended to Goa, Daman and Diu by Act 6 of 1977, s. 2 and the Schedule.
  • 2. Subs. by Act 43 of 1977, s. 3, for the long title (w.e.f. 3-9-1977).
  • 3. The words “except the State of Jammu and Kashmir” omitted by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971).
  • 4. The proviso added by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
  • 5. The proviso added by Act 51 of 1970, s. 2 and the Schedule (w.e.f. 1-9-1971).
  • 6. The proviso inserted by Act 23 of 1976, s. 3 (w.e.f. 25-9-1975).
  • 7. The words, brackets, letter and figure “under clause (b) of sub-section (3)” omitted by s. 3, ibid. (w.e.f. 25-9-1975).
  • 8. Certain words, brackets and figure added by s. 3, ibid. (w.e.f. 25-9-1975).*. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammuand Kashmir and the Union territory of Ladakh.

Page 4

  • 1. Ins. by Act 66 of 1980, s. 2 (w.e.f. 21-8-1980).
  • 2. The words, brackets and figures “and includes any amount treated as such under sub-section (2) of section 34” omitted byAct 23 of 1976, s. 4 (w.e.f. 25-9-1975).
  • 3. Ins. by s. 4, ibid. (w.e.f. 25-9-1975).

Page 5

  • 1. Subs. by Act 6 of 2016, s. 2, for “ten thousand rupees” (w.e.f. 1-4-2014).

Page 6

  • 1. Subs. by Act 66 of 1980, s. 3, for section 4 (w.e.f. 21-8-1980).

Page 7

  • 1. The proviso added by Act 8 of 1969, s. 2 (w.e.f. 26-3-1965).
  • 2. Subs. by Act 66 of 1980, s. 4, for “development rebate or development allowance” (w.e.f. 21-8-1980).
  • 3. Subs. by s. 4, ibid., for “Second Schedule” (w.e.f. 21-8-1980).
  • 4. Subs. by Act 8 of 1969, s. 3, for “For the purpose of clause (c) of section 6, any direct tax payable by the employer”(w.e.f. 26-3-1965).

Page 8

  • 1. Subs. by Act 66 of 1980, s. 5, for “(other than development rebate or development allowance)” (w.e.f. 21-8-1980).
  • 2. Subs. by s. 6, ibid., for section 10 (w.e.f. 21-8-1980).
  • 3. Ins. by Act 67 of 1985, s. 3 (w.e.f. 7-11-1985).
  • 4. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014).

Page 9

  • 1. Subs. by Act 6 of 2016, s. 3, for “three thousand and five hundred rupees” (w.e.f. 1-4-2014).
  • 2. The Explanation inserted by s. 3, ibid. (w.e.f. 1-4-2014).
  • 3. Subs. by Act 66 of 1980, s. 8, for section 13 (w.e.f. 21-8-1980).
  • 4. Subs. by s. 9, ibid., for section 15 (w.e.f. 21-8-1980).
  • 5. Subs. by Act 23 of 1976, s. 12, for sub-section (1) and the Explanation thereto (w.e.f. 25-9-1975).

Page 10

  • 1. Subs. by Act 66 of 1980, s. 10, for “Third Schedule” (w.e.f. 21-8-1980).
  • 2. Subs. by Act 23 of 1976, s. 12, for “sub-section (1)” (w.e.f. 25-9-1975).

Page 11

  • 1. Subs. by Act 23 of 1976, s. 13, for “(1) Subject to this provisions of this section, all amounts” (w.e.f. 25-9-1975).
  • 2. Sub-sections (2) to (7) omitted by s. 13, ibid. (w.e.f. 25-9-1975).
  • 3. Sub-section (8) omitted by Act 55 of 1973, s. 2 (w.e.f. 1-9-1973).
  • 4. Section 20 renumbered as sub-section (1) thereof by Act 66 of 1980, s. 11 (w.e.f. 21-8-1980).
  • 5. Ins. by s. 11, ibid. (w.e.f. 21-8-1980).

Page 12

  • 1. Subs. by Act 66 of 1980, s. 12, for “sections 22, 23 and 25” (w.e.f. 21-8-1980).
  • 2. Subs. by Act 23 of 1976, s. 16, for “and in sections 24 and 25” (w.e.f. 25-9-1975).
  • 3. Subs. by Act 66 of 1980, s. 13, for “section 25” (w.e.f. 21-8-1980).
  • 4. Ins. by s. 14, ibid. (w.e.f. 21-8-1980).

Page 13

  • 1. Ins. by Act 66 of 1980, s. 15 (w.e.f. 21-8-1980).

Page 14

  • 1. Ins. by Act 66 of 1980, s. 16 (w.e.f. 21-8-1980).
  • 2. Ins. by Act 23 of 1976, s. 19 (w.e.f. 25-9-1975).
  • 3. Ins. by Act 66 of 1980, s. 17 (w.e.f. 21-8-1980).

Page 15

  • 1. Subs. by Act 66 of 1980, s. 17, for “Provided that” (w.e.f. 21-7-1980).
  • 2. The words in brackets shall stand omitted (date to be notified) by Act 62 of 1968, s. 41.
  • 3. Clause (vi) omitted by Act 45 of 2007, s. 4 (w.e.f. 1-4-2006).
  • 4. Clause (vii) omitted by Act 66 of 1980, s. 18 (w.e.f. 21-7-1980).
  • 5. Subs. by Act 61 of 1981, s. 61 and the Second Schedule, for sub-clause (d) (w.e.f. 2-7-1982).
  • 6. Ins. by Act 39 of 1989, s. 53 and the Second Schedule (w.e.f. 7-3-1990).
  • 7. Ins. by Act 53 of 1987, s. 56 and the Second Schedule (w.e.f. 9-7-1988).

Page 16

  • 1. Ins. by Act 66 of 1980, s. 18 (w.e.f. 21-8-1980).
  • 2. Clause (x) omitted by Act 23 of 1976, s. 20 (w.e.f. 25-9-1975).
  • 3. Subs. by s. 22, ibid., for section 34 (w.e.f. 25-9-1975).
  • 4. Subs. by Act 6 of 2016, s. 4, for sub-section (1) (w.e.f. 1-4-2014).
  • 5. Subs. by Act 23 of 1976, s. 24, for “or in two successive sessions” (w.e.f. 25-9-1975).
  • 6. Subs. by s. 24, ibid., for “in which it is so laid or the session immediately following” (w.e.f. 25-9-1975).

Page 18

  • 1. Ins. by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980).
  • 2. Where the profit subject to taxation is shown in the Profit and Loss Account and the provision made for taxes on incomeis shown, the actual provision for taxes on income shall be deducted from the profit.

Page 22

  • 1. The First Schedule renumbered as the Second Schedule by Act 66 of 1980, s. 19 (w.e.f. 21-8-1980).
  • 2. Subs. by s. 19, ibid., for “(See section 4)” (w.e.f. 21-8-1980).
  • 3. Subs. by s. 19, ibid., for entry (d) (w.e.f. 21-8-1980).
  • 4. Ins. by Act 23 of 1976, s. 26 (w.e.f. 25-9-1975).

Page 25

  • 1. Subs. by Act 23 of 1976, s. 26, for sub-item (g) (w.e.f. 25-9-1975).
  • 2. Explanation inserted by s. 26, ibid. (w.e.f. 25-9-1975).

Page 26

  • 1. The Second Schedule renumbered as the Third Schedule by Act 66 of 1980, s. 20 (w.e.f. 21-8-1980).
  • 2. Subs. by s. 20, ibid., for “Company” (w.e.f. 21-8-1980).
  • 3. Ins. by s. 20, ibid. (w.e.f. 21-8-1980).

Page 29

  • 1. Subs. by Act 66 of 1980, s. 20, for “1(iii) and 3(ii)” (w.e.f. 21-8-1980).

Page 30

  • 1. Subs. by Act 66 of 1980, s. 21, for the Third Schedule (w.e.f. 21-8-1980).
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