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Corporate Legal Framework

ask people to forget all the hard work they've done, and say 'sorry, can't give you any
increments because we've had a bad year'. Believe me, it will take less than six months to
clean out talent from this company. Don't forget that the next year is going to be equally
bad for FMCG companies."
"The IT industry is not only benching people, but asking them to take pay cuts," pointed
out Shastri.

"May be," retorted Sinha. "But how many code-jocks can join insurance, banking, pharma,
or any other industry as marketing heads or even CEOS? And asking people to deliver 15
per cent growth in a market that is shrinking is the surest way of losing them."
"Actually it is worth looking at what is going wrong with the system," said Behl. "As I
understand it, even shop-floor workers – whose variable pay is linked to productivity –
are affected since the company has cut back on production to liquidate dealer inventory."
"As far as I can see," said Kesaria, "it seems to be a problem of implementation. May be we
didn't communicate adequately, perhaps we need to tweak our measurement systems,
review them more frequently and reward people closer to the date of their achievements."
"That is a good idea," said Behl. "Money may not be the only reason why people work, but
it is one of the biggest reasons. Besides, a change like this needs significant lead time. It's
a cultural change and people must be prepared for it."
"I would have loved to do this over a period of one year," defended Arora. "But I was asked to
implement it within three months of the board deciding on it. Besides, where is the top
management commitment to this initiative? Who is the champion of this variable pay? I could
be, but it will have more credibility if the CEO also showed that he was committed to it."
Questions
1. How to convince people like Mathur that variable pay will actually help them in the
long run?
2. How to achieve a buy-in across the organisation?
3. How to rectify some of the errors the company may have made in its implementation?
4. Finally, should the company scrap variable pay and return to the fixed system?

Source: Business Today, June 9, 2002.

12.8 Summary

The Factories Act, 1948 protects human beings from being subject to manual laborer and
long hours of bodily strain.
This Act is applicable to whole of India.
Occupier has the control over the affairs of the factory.

Responsibility for getting the premises approved when the factory is to be established lies
on the responsibility on the occupier.
There are health, safety and welfare measures included in this Act.

Second national commission on labor provided recommendation on welfare measures of
the workers.

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