Royal Commission on Labour in India: Report(1929)||
Before leaving the discussion of factors affecting the worker's income, it is convenient to deal with the deductions made from his wages. In 1926 the Government raised the question of the desirability of legislation regulating the extent to which fines and other deductions from wages might be made by employers. As a result enquiries were instituted and a, considerable mass of information on the subject was collected, especially in Bombay by the Labour Office. With the exception of Bombay provincial Governments appear to have agreed that there was no need for legislation. We have had at our disposal the results of the enquiries made at that time and received a considerable amount of further evidence bearing on the subject. It appears that fining is a fairly general practice in perennial factories and on railways. It is much less common in mines and other forms of industrial activity and is practically unknown on plantations. So far as factories are concerned, the practice appears to be most prevalent in cotton textile mills, and for this reason it probably attains greater dimensions in the Bombay Presidency than elsewhere. The aggregate loss of wages by fines is nowhere large, and in all but a few centres it is extremely small. When the Bombay Labour Office made its enquiries in 1926, it found that in the Ahmedabad textile mills which furnished returns the workers lost in fines no less than one per cent of the total wages bill. But this is altogether exceptional, as, we hope, is the practice also found in Ahmedabad of permitting the individual who inflicts the fine to benefit by it. The average loss per worker, however, is little indication of the hardship involved in fines, and this can be serious in individual cases. It has to be remembered that numerous deductions of other kinds are also made by some employers. For example, medical attendance, education, reading rooms, interest on advances of their own wages, charities, religious purposes selected by the employer and various other benefits or causes are made the ground of compulsory deductions. A common practice in the cotton textile mills is the handing over to the weaver of cloth from his own loom spoilt in the course of manufacture and the deduction from his wages of the wholesale selling price. Another practice followed in some mills is the deduction of two days' pay for one day's absence.
Deductions from wages fall roughly into three classes, namely. fines which are imposed for disciplinary reasons, deductions on account of damage sustained by the employer and deductions for the use of material and tools and for other benefits provided by the employer. In all three cases we consider that, there are strong grounds for legislative regulation. In the first place, the worker is utterly helpless in the matter. The employer, or more commonly his subordinate, determines when a deduction should be made and fixes its amount which is recovered from the wages due to the worker. Similar practices in other countries have led in a number of cases to statutory regulation. Moreover in many of these countries organisation on the part of the workers gives some security against excessive and inexcusable deductions. In India both forms of protection are generally lacking. Further, the fact that in many cases the workers' wages suffice for little more than the purchase of the primary necessities of life makes even a small deduction a definite hardship, while the larger deductions may increase their indebtedness and even cripple their resources for some time.
Even when actual hardship is not caused, fines have an irritating effect on the worker and create a sense of injustice. In the case of the other compulsory deductions, the worker usually pays for something definite; but even here experience elsewhere shows that protection is necessary to ensure that the deductions are made for a legitimate purpose and that the worker secures in return commensurate benefits. The enquiries which were instituted in 1926 disclosed instances of deductions, such as compulsory contributions to charities selected by the employer, which appear to be wholly unjustified. Our conclusion, therefore, is that legislation is both necessary and desirable, and we proceed to consider separately the protection which the law should provide in regard to each of the three classes of deductions.
Fines constitute the commonest form of deduction and the one which is most open to abuse, and there is some justification for the view that they should be made illegal. But the main purpose of fining, namely, the maintenance of efficiency and discipline, is legitimate, and if fines are abolished, other means must be employed for securing this end. It is admitted that the fine, and particularly the harsh fine, does, at a cost, achieve its purpose; thus an employer, who abolished the system of deducting two days' pay for one day's absence, was subsequently faced with increased absenteeism. It is necessary, therefore, to consider the possible alternatives. One large company informed us that it had practically eliminated fining, and we found on enquiry that the practice of suspension had taken its place. This was said to be less unpopular with the men as, unlike a fine, suspension does not enable the employer to obtain work for which he has not paid. It is probable, too, that, were suspension generally substituted for fining, punishments would be fewer and more carefully imposed. On the other hand, suspension involves loss for both worker and employer, for presumably the employer has to secure a less competent substitute or leave the work undone. Moreover, suspension would involve for the worker greater hardship than a system of fines. Another alternative has been adopted by some employers, namely, a system of marking, deducting marks for irregular attendance and other causes, and paying a bonus on the total marks obtained. This has the advantage of securing a definite irreducible wage to the worker and of minimising the possibility of arbitrary action, and its psychological effects are better in that it substitutes for punishments what appear to be rewards. We fear, however, that if fines were abolished the bonus system might easily be developed into something almost indistinguishable from a system of fines. Finally, there is the possibility of dismissal or of the threat of dismissal for repeated offences. The main argument always adduced in favour of fines is that the worker would rather be fined than dismissed. As a rule this is true, but the argument is not as strong as it looks, for employers would not dismiss all the men who are now fined. Even if inefficient or lazy men were dismissed more frequently than at present, the effect might be good, for there would be a bigger premium on efficiency.
But the wider resort to dismissal and to the threat of dismissal which would follow the abolition of fines might result in greater hardship and tend to aggravate the workers' sense of insecurity. It would also give rise to more resentment. While, therefore, we recognise the objections to fines and consider that employers should do their utmost to reduce them to a minimum, we do not recommend their abolition by law. In the case of children, however, on account of their helplessness, inexperience and low scale of wages, we recommend that fining should be prohibited. In the case of adult workers we recommend the regulation of fines, and proceed to show how this can be most effectively accomplished.
The object of regulation should be to prevent excessive and arbitrary fines. In our opinion, legislation should be based on four broad principles. In the first place, the payment of a fine should not be spread over too long a period, and we recommend that the maximum period should be one month from the date on which the fine was imposed. Secondly, we consider that fines should not constitute more than a fixed amount out of the worker's wage. As regards the limit, we observe that the draft standing order, prepared by the Bombay Millowners' Association and endorsed by the Fawcett Committee, fixed the limit at two per cent of a worker's monthly wages. We would prefer, however, a method of calculation which is more easily understood by the worker, and we recommend that the maximum amount deducted in fines should not in any month exceed half an anna in the rupee of the worker's earnings. The payment of wages by other periods than a month may necessitate special provisions, but the same limit should be imposed. The third principle is in regard to the disposal of fines. A number of employers accept no benefit from this source and apply the proceeds to welfare work in various forms. It is particularly important that the fine should in no case benefit the individual responsible for imposing it. We recommend that the sums received from fines should be credited to a purpose beneficial to the employees as a whole and approved by some recognised authority. In the fourth place, in order to give workers some security against arbitrary fines, employers should be required to specify the acts or omissions in respect of which a fine may he imposed. These should be embodied in notices posted where they can be easily seen by the workers, and fines inflicted for any act or omission which is not specified in the notice should be illegal.
Deductions on account of damage differ from fines in that the employer has sustained some definite loss which is attributed to the carelessness or negligence of the worker. Such deductions do not always represent the full value of the loss incurred and the main purpose, as in the case of fines, is the maintenance of discipline. The worker's grievance is that both the amount of the damage and the extent of his personal responsibility are left to the determination of the employer. In India the commonest types of deductions under this category are the debits made on
railways and the practice in the cotton textile mills, already mentioned, of handing over spoilt cloth. We have dealt with railway debits elsewhere So far as spoilt cloth is concerned, where the wholesale price is deducted from the weaver's wages, there can be no undue profit to the employer. Further, it is a tenable position that the worker is entitled only to payment for satisfactory cloth and that he is liable to make good the damage done to the employer's material. While there is evidence to show that in some mills the practice is carried too far. there are no reliable figures to indicate the actual loss sustained by the weaver which obviously depends on the price which he can secure for the cloth. We recommend that the law should provide that the deduction should in no case exceed the wholesale price of the goods damaged. This, together with the registration of deductions proposed later, may be sufficient to prevent abuses, but the registers will in any case provide the material necessary to determine whether or not further regulation is required.
Mr Cliff, Mr Joshi and Diwan Chaman Lall dissent from our general conclusion on the ground that if an employer is to exercise the power of making deductions from the wages of the worker, equity demands that he should not be the final arbiter, but that a right of appeal should lie with an impartial tribunal. They are opposed to employers being able to exercise such power. In many instances, the power to make deductions is distributed indiscriminately over a large body of subordinates occupying minor supervisory posts, who do not usually possess the judicial qualities necessary for the exercise of such power. An examination of the working of the system reveals that, in many cases, fining becomes a habit and is resorted to as the line of least resistance. The workers, owing to lack of combination and other causes, are unable to exercise any effective check against the abuses which unquestionably occur. Experience teaches that, where the practice has been discontinued or where it has never been resorted to. the discipline necessary to industry can be maintained and, in their opinion, leads to a better relationship between the employer and the worker. The interests not only of the worker but also of industry dictate that the practice of making deductions from the wages of workers, except the charges for services rendered to which reference is made in the following paragraph, should be prohibited, and they recommend accordingly.
Of the other deductions to which reference has been made, namely, those in respect of specific causes or benefits, some should be recognised as legitimate and others should be prohibited. The former are deductions made on account of definite services rendered by the employer and voluntarily accepted by the worker, and in this case the only restriction we suggest is that the deduction should not exceed the equivalent of the services rendered. Deductions may be allowed on account of the provision of housing accommodation and of tools or raw materials.
In other cases deductions should only be permissible after the general or special approval of the provincial Government or some authority (e.g., the Chief Inspector of Factories) appointed by them. Approval may be given, for instance, to schemes for subscriptions to provident funds, contributions for medical facilities and for recoveries on account of cooperative stores and other activities which are in the interests of the workers.
The enforcement of the legislation recommended will not be easy, for in a number of cases operatives will be willing to pay a heavy fine rather than be dismissed. But a start should be made by applying the law only to factories coming under the Factories Act and to railways. Here, too, the law might be applicable only to employees in receipt of less than Rs. 100 a month. Employers should be required to maintain registers of all deductions from wages, showing separately fines, deductions for damage to material and other deductions. The particulars to be entered in the registers and the form in which they are to be kept should be prescribed by provincial Governments. In the case of factories, the inspection staff would be responsible for seeing that the law was observed, and the annual reports of the Chief Inspector of Factories should contain a review of the position in regard to fines and other deductions. As regards railways, we consider that the registers should be scrutinised at intervals by the audit officer, but we feel confident that the vigilance of those directing the administration and of the trade unions will ordinarily be sufficient to secure compliance.
The imposition of a deduction not permissible by law should be punishable. But we recommend that the usual form of proceeding should not be a prosecution, but an application before specially empowered magistrates and other officers for the recovery of the wrongful payment and for compensation. Commissioners for Workmen's Compensation would be officers suitable for this purpose, but the procedure should be summary and not based on that of the civil courts. The authority to whom application was made would be able, after hearing the other party, to direct a refund of the fine or deduction together with compensation to the applicant. This should amount to not more than ten times the sum wrongfully deducted and these sums should be collected by the court along with any costs payable. It should be possible for application to be made by an inspector, by the workman aggrieved or by any person acting on his behalf. This last provision would enable trade unions to take up these cases as they now take up cases for workmen's compensation. A prosecution should be instituted only with the sanction of an inspector or an officer before whom a proceeding for contravention had been taken, and we contemplate that ordinarily such action would be necessary only in serious cases, e.g., offences committed after previous contraventions or gross and deliberate exactions.