Clra Presentation

Labour legislations

Raj Narayan Prasad

The right of workers to form, The right of workers to form, join, and assist labor unions is join, and assist labor unions is a statutorily protected right in a statutorily protected right in the United States.the United States.

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Collective BargainingCollective Bargaining

• The act of negotiating contract terms between an employer and the members of a union.

• Collective Bargaining Agreement – the resulting contract from a collective bargaining procedure.

• The employer and the union must bargain with each other in good faith.

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Subjects of Collective BargainingSubjects of Collective Bargaining

• Compulsory Subjects– Wages– Hours– Other terms and conditions of employment

• Illegal Subjects– Closed shops– Discrimination

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Check-Off ProvisionCheck-Off Provision

• Upon proper notification by the union, union shop and agency shop employers are required to:

1. Deduct union dues and agency fees from employees’ wages, and

2. Forward these dues to the union.

This is called a check-off provision.

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StrikesStrikes

• the union call a strike if a collective bargaining agreement cannot be reached.

• A majority vote of the union’s members must agree to the action before there can be a strike.

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Crossover WorkerCrossover Worker

• Individual members of a union do not have to honor the strike.

• They may:1. Choose not to strike, or

2. Return to work after joining the strikers for a time

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Replacement WorkersReplacement Workers

• Workers who are hired to take the place of striking workers.

• They can be hired on either a temporary or permanent basis.

• If replacement workers are given permanent status, they do not have to be dismissed when the strike is over.

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Illegal StrikesIllegal Strikes

• Several types of strikes have been held to be illegal.

• They are not protected by federal labor law.

• Illegal strikers may be discharged by the employer with no rights to reinstatement.

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Employer LockoutEmployer Lockout

Act of the employer to prevent Act of the employer to prevent employees from entering the employees from entering the work premises when the work premises when the employer reasonably anticipates employer reasonably anticipates a strikea strike..

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Illegal strikes are:Illegal strikes are:

• Violent Strikes

• Sit-Down Strikes

• Partial or Intermittent Strikes

• Violent Strikes

• Sit-Down Strikes

• Partial or Intermittent Strikes

• Wildcat Strikes

• Strikes during the 60-day Cooling-Off Period

• Strikes in Violation of a No-Strike Clause

• Wildcat Strikes

• Strikes during the 60-day Cooling-Off Period

• Strikes in Violation of a No-Strike Clause

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PicketingPicketing

• The actions of strikers walking in front of the employer’s premises carrying signs announcing their strike.

• The right to picket is implied from the NLRA.

• An employer may seek an injunction against unlawful picketing.

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THE CONTRACT LABOUR (REGULATION AND ABOLITION)

ACT, 1970

OBJECT OF THE ACT

An Act to regulate the employment of contract

labour in certain establishments and to provide

for its abolition in certain circumstances and for matters

connected therewith.

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Short Title, Extent, Commencement And Application.

Section 1

2. It extends to the whole of India

4. It applies:-

(a) To every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract labour

(b)To every contractor who employees or who employed on any day of the preceding twelve months twenty or more workmen

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5. Act does not apply to:-

a) Intermittent nature

b) Work not perform for more than 120 days

c) Seasonal nature

d) Establishment situated in SEZ

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Definition Section 2

Sec 2 (c) CONTRACTOR

"contractor", in relation to an establishment, means a person who undertakes to produce a

given result for the establishment, other than a mere

supply of goods or articles of manufacture to such

establishment, through contract labour or who supplies contract

labour for any work of the establishment and includes a

sub-contractor.19

Sec 2 (i) WORKMEN

"workman" means any person employed in or in connection

with the work of any establishment to do any skilled,

semi-skilled or un-skilled manual, supervisory, technical

or clerical work for hire or reward, whether the terms of employment be express or

implied, but does not include any such person.

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(A) Who is employed mainly in a managerial or administrative capacity; or

(B) Who, being employed in a supervisory capacity draws wages exceeding five hundred 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; or

(C) Who is an out-worker, that is to say, a person to whom any articles or materials are given out for certain process to return them back.

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CHAPTER III Registration Of Establishments

Employing Contract LabourSECTION 6-10

APPOINTMENT OF REGISTERING

OFFICERSSECTION 6

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SECTION 7 : REGISTRATION OF

CERTAIN ESTABLISHMENTS

1. Every principal employer of an establishment to which this Act applies shall, make an application to the registering officer in the prescribed manner for registration of the establishment

2. If the application for registration is complete in all respects, the registering officer shall register the establishment and issue to the principal employer of the establishment a certificate of registration containing such particulars as may be prescribed.

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SECTION 8: REVOCATION OF REGISTRATION

If The Registering Officer Is Satisfied

That, The Registration Of Any Establishment

Has Been Obtained By Misrepresentation

Or Suppression Of Any Material Fact, Or That For Any Other

Reason The Registration Has

Become Useless Or Ineffective

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SECTION 9: EFFECT OF

NON-REGISTRATION

In case an establishment required to be registered under Section 7 is not been registered within the

time fixed for the purpose under that

section, then punishment will be

given as per section 36.

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SECTION 10: PROHIBITION OF EMPLOYMENT OF

CONTRACT LABOUR.

1. The appropriate Government may, after consultation with the

Central Board or, as the case may be, a State Board, prohibit, by notification in

the Official Gazette, employment of contract labour in any process,

operation or other work in any establishment.

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The appropriate Government shall have

regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as –

a) Whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment

b) Whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation that is carried on in that establishment

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c) Whether it is done ordinarily through regular workmen in that establishment or an establishment similar there off

d) Whether it is sufficient to employ considerable number of whole-time workmen.

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CHAPTER IV LICENSING OF CONTRACTORS

Section 11- 15

SECTION 11: APPOINTMENT OF LICENSING

OFFICERS

Appoint such persons define the

limits, within which a licensing

officer shall exercise the

powers conferred on licensing

officers by or under this Act.

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SECTION 12: LICENSING OF

CONTRACTORS1. With effect from such

date as the appropriate government shall

undertake or execute any work through

contract labour except under and in accordance with a licence issued in

that behalf by the licensing officer.

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2. Provisions of this act may contain such conditions including,

• Hours of work

• Fixation of wages

• Other essential amenities

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SECTION 13: GRANT OF LICENCES

1. Every application for the grant of a licence under sub-section(1) of section 12 shall be made in the prescribed form and shall contain the particulars

2. The licensing officer may make investigation

3. A licence granted shall be valid for the period specified therein and may be renewed from time to time

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SECTION 14: REVOCATION,

SUSPENSION AND AMENDMENT OF

LICENCES.

1. If the licensing officer is satisfied, either on a reference made to him in this behalf or otherwise, that-

a) Obtained by misrepresentation or suppression of any material fact

b) Failed to comply with the conditions subject to which the licence has been granted

2. The licensing officer may vary or amend a licence granted under Section 12.

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Chapter 5 Welfare And HealthSections 16-21

Section 16: Canteen

1. Appropriate Government may make rules

(a) to which this Act applies,

(c) wherein contract labour numbering one hundred or more is ordinarily employed by a contractor, one or more canteens shall be provided and maintained by the contractor

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2. Without prejudice to the generality of the foregoing power, such rules may provide for:-

(a) The date by which the canteens shall be provided;

(b) The number of canteens that shall be provided, and the standards in respect of construction, accommodation, furniture and other equipment of the canteens;

(c) The foodstuffs which may be served therein and the charges which may be made thereof.

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Section 17: Rest-rooms

1. In every place wherein contract labour is required to halt at night in connection with the work of an establishment:-

(a) To which this Act applies, and

(b) In which work requiring employment of contract labour is likely to continue for such period as may be prescribed,

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2. The rest rooms or the alternative accommodation to be provided under subsection

(1) shall be sufficiently lighted and ventilated and shall be maintained in a clean and comfortable condition.

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Section 18: Other facilities

It shall be the duty of every contractor employing contract labour to provide and maintain:

a) A sufficient supply of wholesome drinking water

b) A sufficient number of latrines and urinals situated as to be convenient and accessible to the contract labour and

c) Washing facilities

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Section 19: First-aid facilities

There shall be provided and maintained by the contractor so as to be readily accessible during all working hours a first-aid box equipped with the prescribed contents at every place where contract labour is employed by him.

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Section 20: Liability Of

Principal Employer In

Certain Cases

1. If any amenity required to be provided for the benefit of the contract labour employed in an establishment is not provided by the contractor within the time prescribed thereof, such amenity shall be provided by the principal employer within such time as may be prescribed.

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2. All expenses incurred by the principal employer in providing the amenity may be recovered by the principal employer from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

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Section 21: Responsibility For

Payment Of Wages

1. A contractor shall be responsible for

Payment of wages to each worker employed by him

Shall be paid before the expiry of such period as may be prescribed.

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2. Duty of principle employer

Shall nominate a representative to be present at the time of disbursement of wages

Shall be the duty of such representative to certify the amounts paid as wages in such manner

3. It shall be the duty of the contractor to ensure the disbursement of wages in the presence of the authorized representative of the principal employer.

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4. In case the contractor fails to make payment of wages within the prescribed period or makes short payment,

Then the principal employer shall be liable to make payment of wages in full or the unpaid balance due,

Recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

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PENALTIES AND PROCEDURE

• S.22 - Obstruction to inspector, willful refusal to produce documents - punishable with imprisonment for a term which may extend to 3 months, or with fine which may extend to Rs. 500, or with both

• Sec. 23 - Contravention of provisions – Act, rules or condition of a licence granted

• Sec. 24 – Other Offences, 3 Months or/& Rs. 1000. Continuation attracts additional. fine upto Rs. 100/day

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Offences by companies

• S. 25 - Company as well as every person in charge/ responsible to the Company for the conduct of its Business is treated as guilty & liable to be proceeded against and punished

• Director, Manager etc. is also liable if it is proved that the offence is committed with the consent or connivance

• Exemption: If established that exercised without knowledge or diligently handled

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Cognizance of offences & limitation – s.26

• 1st class Magistrate Court on complaint or with pre-sanction of the inspector

• Complaint to be made within 3 months, But, if a written order of an inspector disobeyed - 6 months

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Registers & Maintenance of Records – s. 29• Principal Employer & contractor requires to keep

particulars of contract labour employed, the nature of work performed by them, the rates of wages paid etc.

• Within the premises Principal Employer & contractor requires to exhibit hours of work, nature of duty etc. (in prescribed manner).

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Exemption, Protection & Power

• The appropriate Government (in special cases) may exempt

• The appropriate Government has power to make rules

• The Central Govt. may give directions to the State reg. the carrying of execution

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Important Forms

• The Principal Employer to apply to registered in Form No. 1, get Certificate in Form No. 2 and maintain register in Form No. 3

• The Contractor has to obtain License depositing the required fees on Form No. 4 along with the PE Certificate on Form No. 5, get license in Form No. 6

• Contractor & Principal Employer to notify start & completion of work in form No 6A & 6B respectively

• Renewal in form No 7, Temp provision (8-11)53

Important forms and Returns

• Register of Contractor Form No. 12• Employment card & Service certificate Form No.

14 & 15 (contractor)• Muster roll, wage, Etc, Form No. 16 to 23, Wage

Slip Form No. 19• Principal Employer to file annual return by 15th

Feb to D/ALC (Form No. 25). Contractor to file half yearly return by 31st Jan & Jul of year ( Form No. 24)

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A Quick recap

• Advisory Committee & Apprt. Govt.• 20 no. of employee, License required by Princpal

Employer & Contractor by application• Sub-contractor is also a contractor• Amenities, Payment of wage.• Witnessing, liability & recovery by Principal

Employer• Maintenance of records, Penalty • Regulation & Abolition (Sec 10 only)

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Qs’

If any…

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THE MINIMUM WAGES ACT, 1948

APPLICABILITY OF THE ACTAPPLICABILITY OF THE ACT

• Applicable to Whole India• Central Government Act of 1948

and Rules made there under will be applicable and the directions given in the Act should be followed.

• As per the Central Government Act, the State Governments have been empowered to add schedules or to give directions.

• Applicable to Whole India• Central Government Act of 1948

and Rules made there under will be applicable and the directions given in the Act should be followed.

• As per the Central Government Act, the State Governments have been empowered to add schedules or to give directions.

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DEFINITIONS

• CHILD - Age less than 14• ADOLESCENT- Age more than 14 less than 18• ADULT - Age more than 18

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DEFINITIONSDEFINITIONS

• EMPLOYEE

(1) Employed for Hire or Reward

(2) To do skilled or unskilled work

(3) Manual or Clerical

(4) Job Worker

(5) Any person declared by the appropriate Government as Employee but, does not include any member of armed forces

• EMPLOYEE

(1) Employed for Hire or Reward

(2) To do skilled or unskilled work

(3) Manual or Clerical

(4) Job Worker

(5) Any person declared by the appropriate Government as Employee but, does not include any member of armed forces

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DEFINITIONS• EMPLOYER – Who employs persons directly or indirectly through other

person.

• DEEMED EMPLOYER IN THE CASE OF GOVERNMENT AUTHORITY

– The person appointed by the Government to Supervise and Control the Employees.

In case no person was appointed then the Head of the Department will be the Deemed Employer

• DEEMED EMPLOYER IN THE CASE OF LOCAL AUTHORITY – The person appointed by the Local Authority to Supervise and

Control the Employees. In case no person was appointed then the Chief Executive Officer of the Local Authority will be the Deemed Employer

• DEEMED EMPLOYER IN OTHER CASES – Any person responsible to the owner for the supervision and

control of the Employees or for the Payment of Wages

• EMPLOYER – Who employs persons directly or indirectly through other

person.

• DEEMED EMPLOYER IN THE CASE OF GOVERNMENT AUTHORITY

– The person appointed by the Government to Supervise and Control the Employees.

In case no person was appointed then the Head of the Department will be the Deemed Employer

• DEEMED EMPLOYER IN THE CASE OF LOCAL AUTHORITY – The person appointed by the Local Authority to Supervise and

Control the Employees. In case no person was appointed then the Chief Executive Officer of the Local Authority will be the Deemed Employer

• DEEMED EMPLOYER IN OTHER CASES – Any person responsible to the owner for the supervision and

control of the Employees or for the Payment of Wages61

DEFINITIONS• SCHEDULED EMPLOYMENT – Any employment specified in

Part – I and Part – II of the Schedule provided in Minimum Wages Act.

– Part – I specifies certain types of Industries

– Part – II deals with persons working in Agriculture, Horticulture and Live Stock or Poultry.

• SCHEDULED EMPLOYMENT – Any employment specified in

Part – I and Part – II of the Schedule provided in Minimum Wages Act.

– Part – I specifies certain types of Industries

– Part – II deals with persons working in Agriculture, Horticulture and Live Stock or Poultry.

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PART – I

• Employment in any woollen carpet making or shawl weaving establishment.

• Employment in any rice mill, flour mill or dhal mill.• Employment in any tobacco (including bidi making) manufactory.• Employment in any plantation, that is to say, any estate which is

maintained for the purpose of growing cinchona, rubber, tea or coffee.

• Employment in any oil mill.• Employment under any local authority.• Employment on the construction or maintenance of roads or in

building operations.• Employment in stone breaking or stone crushing.• Employment in any lac manufactory.• Employment in any mica works.

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PART – I

• Employment in public motor transport.• Employment in tanneries and leather manufactory.• Employment in gypsum mines• Employment in barytes mines• Employment in bauxite mines.• Employment in Manganese mines.• Employment in the maintenance of buildings and

employment in the construction and maintenance of railways.

• Employment in China clay mines• Employment in kyanite mines• Employment in Copper mines

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PART – I

• Employment in Clay Mines covered under the Mines Act, 1952.

• Employment in Mangnesite Mines covered under the Mines Act, 1952.

• Employment in white clay mines• Employment in stone mines• Employment in Steatite Mines (including the mines

producing Soeapstone and Talc).• Employment in Ochre Mines.• Employment in Asbestos Mines.• Employment in Fire clay Mines.• Employment in Chromite Mines.

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PART – I

• Employment in Quartzite Mines.• Employment in Quartz Mines.• Employment in Silica Mines.• Employment in Graphite Mines.

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PART – II

• Employment in agriculture, that is to say, in any form of farming, including the cultivation and tillage of the soil, dairy farming, the production, cultivation, growing and harvesting of any agricultural or horticultural commodity, the raising of live-stock, bees, or poultry, and any practice performed by a farmer or on a farm as incidental to or in conjunction with farm operations (including any forestry or timbering operations and the preparation for market and delivery to storage or to market or to carriage for transportation to market of farm produce).

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DEFINITIONS

• WAGES – Expressed or Implied Monetary Payment in terms of Contract of Employment and includes House Rent Allowance.

• WAGES DO NOT INCLUDE – House Accommodation, Supply of necessities like Light, Water and

Provision of Medical Attendance and Other Amenity or Service specifically excluded by the Appropriate Government.

– Contribution made to Pension Fund or Provident Fund or under any scheme of Social Insurance – Travelling Allowance or the value of any Travelling Concession – Special Allowances provided based on the nature of Employment – Gratuity Payable

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DEFINITIONS

• APPROPRIATE GOVERNMENT – The Central Government will be the appropriate

Government in the case of scheduled employment provided by Central Government, Railway Administration, Oil-fields, Major Ports or any Corporation established by Central Government.

– The State Government will be the appropriate Government in relation to any other scheduled employment other than mentioned above.

• COMPETENT AUTHORITY – The Authority appointed by the appropriate

Government by notification in its Official Gazette to ascertain from time to time the cost of living index number applicable to the employees employed in the scheduled employments.

• APPROPRIATE GOVERNMENT – The Central Government will be the appropriate

Government in the case of scheduled employment provided by Central Government, Railway Administration, Oil-fields, Major Ports or any Corporation established by Central Government.

– The State Government will be the appropriate Government in relation to any other scheduled employment other than mentioned above.

• COMPETENT AUTHORITY – The Authority appointed by the appropriate

Government by notification in its Official Gazette to ascertain from time to time the cost of living index number applicable to the employees employed in the scheduled employments.

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FIXING OF MINIMUM RATE OF WAGES BY APPROPRIATE GOVERNMENT

• MINIMUM TIME RATE – The Minimum Wages paid for Time Work.• MINIMUM PIECE RATE – The Minimum Wages paid for Piece Work.• GUARANTEED TIME RATE – Those employed under the scheme of Piece Work but, Guaranteed Wages will be paid on the basis of Time.• OVERTIME RATE – Time Rate of Piece Rate will apply where the Employee

has worked overtime over and above his normal working

hours.

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FIXING OF MINIMUM RATE OF WAGES BY APPROPRIATE GOVERNMENT

• MINIMUM RATE OF WAGES WILL BE FIXED FOR – Employments provided in Schedule – I & II – Different Types of Employments provided in Schedule –

I&II – Adults, Adolescents, Children and Apprentices. – Different Localities

• WAGE PERIODS FIXED UNDER MINIMUM RATE OF WAGES

– By the Hour – By the Day – By the Month – By such other larger wage period as may be prescribed

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FIXING OF MINIMUM RATE OF WAGES BY APPROPRIATE GOVERNMENT• FIXING OF MINIMUM WAGES – The Minimum Wages has to be paid irrespective of the extent of Profit or Financial Condition of the Establishment. – The Minimum Wages has to be paid irrespective of availability of workmen willing to work on lower wages – The Committees appointed will recommend the Minimum Wages to be paid which is recommendatory. The final decision has to be made by the appropriate Government. – In case the Employers have not adhered to Minimum Wages then, the Employee can move to Labour Courts before proceeding to High Courts – Minimum Wages has been fixed for the bare subsistence of life and also to preserve the efficiency of the worker which will provide education, medical requirements and amenities of himself and his family. – The appropriate Government is empowered to fix the Minimum Wages irrespective of the strength (even below one thousand employees) – The Minimum Wages will be fixed based on the Nature of Work and Quantum of Work.

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COMPONENTS OF MINIMUM WAGES• Method 1 – Basic Rate of Wages + Special

Allowance called as Cost of Living Allowance• Method 2 – Basic Rate of Wages without any

Cost of Living Allowance• Method 3 – Consolidated Pay without splitting into

Basis Rate of Wages, Cost of Living Allowance or Cash Value of Concession.

• Value of Supply of Essential Commodities The Value will be computed by the Competent

Authority Periodically as per the directions given by the Appropriate Government.

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PROCEDURE FOR FIXING AND REVISING MINIMUM WAGES• Committees and Sub-Committees appointed by the

Appropriate Authority will hold enquiries, collect information and will submit the proposal for Revision of Minimum Wages to the Appropriate Authority.

• The Appropriate Authority after perusing the proposal will publish its decision by notification in the official gazette and the specific date from which the revised wages has to be paid. The specific date should not be less than two months from the date of notification.

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COMMITTEES OR BOARD

• ADVISORY BOARD An Advisory Board will be appointed by the Appropriate Government for co-

ordinating the work of Committees and Sub-Committees and also the Advisory Board will provide its valuable suggestions and recommendations to the Appropriate Government.

• CENTRAL ADVISORY BOARD The Central Advisory Board Consisting of the persons nominated by the

Central Government representing employers and employees in the scheduled employments who shall be equal in number. The Central Government will nominate independent persons not less than 1/3rd of the total number of members. The independent person will be The Chairman of the Board.

• COMMITTEES The Committees or Sub-Committees shall consist of the persons nominated

by the Central Government representing employers and employees in the scheduled employments who shall be equal in number. The Central Government will nominate independent persons not less than 1/3rd of the total number of members. The independent person will be The Chairman of the Committee.

• ADVISORY BOARD An Advisory Board will be appointed by the Appropriate Government for co-

ordinating the work of Committees and Sub-Committees and also the Advisory Board will provide its valuable suggestions and recommendations to the Appropriate Government.

• CENTRAL ADVISORY BOARD The Central Advisory Board Consisting of the persons nominated by the

Central Government representing employers and employees in the scheduled employments who shall be equal in number. The Central Government will nominate independent persons not less than 1/3rd of the total number of members. The independent person will be The Chairman of the Board.

• COMMITTEES The Committees or Sub-Committees shall consist of the persons nominated

by the Central Government representing employers and employees in the scheduled employments who shall be equal in number. The Central Government will nominate independent persons not less than 1/3rd of the total number of members. The independent person will be The Chairman of the Committee.

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PAYMENT OF WAGESPAYMENT OF WAGES

• Minimum Wages payable under this Act, shall be paid in Cash.

• Where it is customary that, Minimum Wages has to be paid partly in cash and partly in kind or wholly in kind, in those circumstances the Appropriate Government by issuing a notification in the official gazette will authorize for Payment of Wages in kind.

• The Appropriate Government will decide the value for the concessional, essential commodities provided to the employees by issuing a notification in the official gazette.

• The Minimum Wages has to be paid without any deductions other than Statutory Deductions.

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NORMAL WORKING HOURSNORMAL WORKING HOURS

• For an Adult Worker, Working in Factories the number of Working Hours should not exceed 48 Hours in a week.

• One Day should be given as a holiday as Weekly Holiday. The Day can be any day but it should be adhered for every week. The same should be displayed in the notice board of the Factory.

• The Daily Hours should not exceed more than 9 Hours with 1 Hour Rest Interval.

• Where a person has worked on a Holiday either a Compensatory Holiday may be provided or An Overtime Wages will be paid.

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EXCEPTIONS TO NORMAL WORKING HOURSEXCEPTIONS TO NORMAL WORKING HOURS• The Normal Working Hours need not be adhered

in the following cases: (1) Where the persons were employed to meet emergency or urgent work. (2) Whose Employment is dependent on Natural Factors (3) Employees those who have not completed

their duty in time for technical reasons. (4) Where the Nature of Duties has to be

necessarily carried out beyond Normal Working Hours.

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OVERTIME WAGESOVERTIME WAGES

• Where a person has worked more than the Normal Working Hours for any day, the excess hours worked will be treated as Overtime

• Where the Fixed Normal Working Hours for any day is in excess of 8 Hours we have to go by the method of weekly worked hours. If the person has worked for more than 48 hours in a week then, the excess hours worked will be treated as Overtime.

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WAGES FOR A PERSON WHO HAS WORKED LESS THAN NORMAL WORKING HOURS

WAGES FOR A PERSON WHO HAS WORKED LESS THAN NORMAL WORKING HOURS• Where an Employee worked on any day less than

the Normal Working Hours due to the fact that, Employer could not provide the activities of the job then, the Employee is entitled to receive full salary.

• Where an Employee worked on any day less than the Normal Working Hours due to the fact that, Employee has not worked due to his unwillingness then, the employee is not entitled to receive full salary.

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WAGES FOR TWO OR MORE CLASSES OF WORK• Where an Employee does two types of works

which has different Minimum Wages then, the Employer shall pay to such Employee based on working hours allocated to each type of job. Where working hours cannot be allocated on a minute basis a reasonable method can be adopted.

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MINIMUM TIME RATE WAGES FOR PIECE WORK• Where the Payment is Fixed on a piece-rate basis

by the Employer and which does not find place in the Act for piece rate then, the Employer should pay him Wages at not less than the Minimum Time Rate.

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RECORDS TO BE MAINTAINEDRECORDS TO BE MAINTAINED

• Employer should maintain a Register of Employees containing the details such as the name, address, father’s name, age, sex, the work performed, the wages paid to them.

• Every Employer should display the above particulars in the premises where the Employee works.

• The other Registers to be maintained are: (1) Register of Fines. (2) Register of Deductions for Damage / Loss caused to the

employer, by the neglect / default of the employed persons. (3) Overtime Register for Workers (4) Muster-Roll• The Registers shall be preserved for a period of 3 years

after the date of last entry made therein.

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INSPECTIONINSPECTION

• The Appropriate Government through notification in the official gazette appoint inspectors and also define the local limits for such inspectors.

• The inspectors have right to enter the premises of employers at all reasonable hours and have right to verify all the records as required to be maintained by law.

• The inspectors have right to examine any person they find in the premises.

• Inspectors have right to enquire about the work given to workers and have right to get information from the employers about the payment of wages, etc.,

• The Inspectors have right to cease or take copies of registers maintained by the Employer in case, the Inspectors feel that the Employee has committed any mistake.

• The Inspector shall be deemed to be a Public Servant.

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CLAIMSCLAIMS

• The Appropriate Government by notification in the official gazette appoint any commissioner for workmen compensation or labour commissioner for any region or any officer of the State Government not below the rank of Labour Commissioner or Judicial Magistrate to be Authority to hear and decide for any specified area all claims arising out of payment of less than the Minimum rate of Wages to Employees employed in that area.

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PROCEDURE FOR CLAIMSPROCEDURE FOR CLAIMS

• An Employee who has claim over the Employer through his legal practitioner or a official of a registered Trade Union or Employee himself may apply to the Authority for claims for getting a direction.

• The Appropriate Authority will hear the applicant and the Employer and after giving both the persons a reasonable opportunity to hear and after making such further inquiry will pass an order.

• In case the Appropriate Authority finds that the Employer is guilty then, the Appropriate Authority will direct the Employer for Payment of Compensation which may not exceed 10 times of the actual Compensation.

• In case the Appropriate Authority finds that the Employee is guilty then, no Compensation is payable.

• In case the Appropriate Authority finds that both Employer and Employee is not guilty then, Employee has to pay Rs.50/- to Employer.

• The direction given by the Appropriate Authority shall be final.• The Compensation directed by the Appropriate Authority shall be recovered

from the Employer as if the Authority is a Magistrate. The proceedings before the Authority will be treated on par with Civil Courts.

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OFFENCEOFFENCE

• Any employer who had violated the provisions of the Act will be treated as he had made an offence and Rs.500 fine will be collected from the employer.

• The Appropriate Authority will pass orders for any claims made by Employee against Employer.

• No Court shall take any case directly.• No Court shall take up a Case of Appeal against the order of the

Appropriate Authority not more than 30 days from the date of order.• In the case of a Company, the person incharge at the time of offence

happened will be responsible to discharge the liability under this Act.• In the case of a Partnership Firm, the Managing Partner at the time of

Offence happened will be responsible to discharge the liability under this Act.

87

EXEMPTIONS AND EXCEPTIONSEXEMPTIONS AND EXCEPTIONS

• The Appropriate Government depending on the situation may direct that this Act shall not be applicable in relation to Wages payable to disabled Employees.

• The Appropriate Government for any special reasons by notification in the official gazette direct that the Act shall not be applicable to any specific locality or specified group of Employees.

• The Act will not be applicable to the Wages payable by an Employer to a member of his family who is living with him and dependent on him. Family includes his / her spouse, child, parent, brother or sister.

88

POWER TO MAKE RULESPOWER TO MAKE RULES

• The Central Government may give directions to the State Government for the execution of this Act.

• The Central Government is empowered to make rules from time to time through notification in the official gazette.

• The Central Government is empowered to make rules prescribing the terms of office of the members, the procedure to be followed in conduct of business, the method of voting, the manner of filling of casual vacancies in membership and the quorum necessary for the transaction of business of the Central Advisory Board.

• The Appropriate Government is having the powers of the Central Government to make rules for the purposes as mentioned above.

89

Qs’

If any…

90

• Introduction• Applicability• Important Definitions• Rules relating to Payment of Wages• Compensation & Penalties• Case Law Studies

The Payment Of Wages Act, 1936

91

• Preamble – To regulate the proper and timely payment of wages to different classes of workers.

• Important features of the Act-– Remedies & compensations relating to:

Wrongful deductions made from wages Delay in payment of wages Non-payment of wages

– Provisions in the Act: Permissible deductions from wages Timely payment of wages Mode of payment of wages Reasonable rates of recovery

Introduction

92

The Payment Of Wages Act is applicable to the whole of India.

The Act is applicable to any employee in a factory, employees of the railway industry, including those who are employed through a sub-contractor.

It is also applicable to employees working in any Industrial or Other Establishment, or any other Establishment stated under Sections [2(i)(a) to 2(i)(g)] of the Payment Of Wages Act.

The Act covers all those employees who draw a monthly salary of less than Rs.6500

Applicability

93

Appropriate Government [S.2(i)] is the Central Government in relation to:a) Railwaysb) Air transport servicesc) Mines and oil fieldsThe State Government is the Appropriate Government in all

other cases.Industrial Establishment [S.2(ii)] means any-

a) Tramway service, or motor transport service for passengers or goods or both by hire or for reward;

b) Dock, wharf, or jetty,;c) Inland vessel, mechanically propelled;d) Mine, quarry or oil field;e) Plantation;

Important Definitions

94

f. Workshop, or other establishment, where articles arei. Produced,ii. Adapted, oriii. Manufactured,

with a view to their use, transport, or sale. Wages [S.2(vi)] means all remuneration (whether by

way of salary, allowances or otherwise) expressed in terms of money, or capable of being so expressed which would, if the terms and conditions of employment, whether expressed or implied, be payable to a person in respect of his employment or any work done in such employment, and includes-


95

a. Any remuneration payable under any award or settlement between the parties or order of court;

b. Any remuneration to which the person is employed is entitled in respect of overtime work, or holidays or leave period;

c. Any additional remuneration payable (bonus);d. Any sum paid on the event of termination of employment;e. Any sum to which the a person is entitled under any scheme

which is framed under a law currently in force.

But, it does not include-a. Value of house accommodation, medical and other facilities,

amenities and travelling, medical and other allowances;b. Contribution paid by the employer to any pension or provident

fund;c. Any special expenses and gratuity paid at termination of

employment.


96

Responsibility for Payment of Wages [S.3]: Payment means transfer of money from one person to another to satisfy a debt or an obligation.

Every employer is responsible for the payment of wages but this responsibility is also cast on other persons; they are:a. In case of factories, the manager of the factoryb. In case of an Industrial Establishment, the person in the post

having control and supervision in the establishmentc. In case of railways, the person nominated for the payment of

wagesd. In case of a contractor, the person designated by the contractore. In any other case, the person designated by the employer as a

person responsible for complying with the provisions of the Act.

Rules relating to Payment of Wages

97

Fixation of Wage Periods and time of Payment of Wages [S.4&5]Every person responsible for payment of wages shall fix

wage periods.A wage period shall not exceed one month.Wage period can be daily, weekly, fortnightly, or monthly.In case of a Factory or Industrial Establishment or

Railways, wherein less than 1000 employees are employed, the wages shall be paid within 7 days after the expiry of the wage period.

In any other case, wages shall be paid before the expiry of the 10th day after the last day of the wage period.

In case of docks, wharfs, jetties and mines, wages are to be paid before the expiry of the 7th day on completion of final tonnage account of the material loaded or unloaded.

All payment of wages shall be made on a working day.


98

Mode of Payment of Wages [S.6]Under the Payment of Wages Act, wages cannot be paid in

kind. They must be paid in current coins or currency notes or both.

The employer may, if he desires, after obtaining the written authorization of the employed person pay his wages either by cheque or by crediting the wages in the bank account.

Deductions which may be made from Wages [S.7]The usual rule of the payment of wages is that the

employed person shall be paid his wages without any kind of deductions except those authorized under this Act.

Thus, the Section 7 of this Act is critical.


99

Fines [S.8]: An employer may impose a penalty or fine on an employed person. While imposing such fine, the employer has to obtain prior

approval from the Appropriate Government to the acts and omissions for which the fine many be imposed.

The employed person will be given a chance to show cause against imposing of the fine.

Fine cannot be recovered at a rate more than 3% of the total wages in the respective wage periods.

Fine cannot be imposed on a person below the age of 15 years.

Fine cannot be recovered in installments. Fine should be recovered within 3 months from the date of

imposition of fine.

Authorized Deductions

100

Deductions for absence from duty [S.9]: An employer has the power to deduct wages for absence from duty. The deduction may be for absence for a whole, or part of a

day. The deduction shall be in proportion to the time for which an

employed person is absent from duty. A person shall be considered as absent from duty, in case

although present in the establishment,i. When he is absent from the place of work where he is required to

be present and work, or

ii. When he refuses for any unreasonable cause, or

iii. In case of a stay-in-strike to carry out his work.


101

Deduction for Damage or Loss [S.10]: If the goods are expressly entrusted to the employed person for custody or in case he loses money which he is required to account, where loss/damage is directly attributable to damage or neglect or the default on his part, deductions from wages can be made. The deducted amount shall not exceed the amount of the

damage or loss caused to the employer. The employer shall give an opportunity to the employee to

show cause against the fine before making deductions. Such deductions have to be recorded in the prescribed

register and kept by the person responsible for payment of wages.


102

Deductions for Services Rendered [S.11 & 7(2)]: House accommodation: Supplied by the employer or the

Government or any housing board; such deductions cannot be made unless the employed person has accepted the amenity as term of employment and such deduction shall not exceed an amount equal to the value of actual house accommodation amenity.

Deductions for such amenities and service supplied by the employer ad the Appropriate Government may, by a general or special order authorize; these deductions can be made only when such supply is accepted as term of employment by the employed person.

The term ‘services’ does not include the supply of tools and raw materials, or protective measures required by nature of the employment.


103

Deductions for Recovery of Advances [S.12]: This is subject to the following conditions-a. Recovery of an advance of money given before employment

began can be made from the first payment of wages in respect of complete wage period.

b. Recovery of advance of money given after employment began and of wages not already earned is subject to the conditions imposed by the Appropriate Government.

c. Recovery of advances of wages not already earned shall be according to the rules made by the Appropriate Government including the installments by which they may be recovered.

Deductions for Recovery of Loans [S.12-A]: can be made as per the rules approved by the Appropriate Government regulating the extent to which such loans may be granted and rate of interest payable on it.


104

Deductions for Payments to Cooperative Societies and Insurance Schemes [S.13 & 7(2)]: These deductions shall include-a. Deductions for payments to cooperative societies

approved by the Appropriate Government or to a scheme of insurance maintained by the Indian Post office.

b. Deductions made with the written authorization of the employed person for-

i. Payment of any premium on his life insurance policy to LIC of India, or

ii. Purchase of Government securities, oriii. Payment of contribution to any fund or a trade union.iv. Payment of membership fees to trade union.v. Contribution to Prime Minister’s National Relief Fund


105

Other Deductions:Deduction of Income Tax payable by an employed person.Deductions according to the order of a court or other authorities

competent to make such order.Deductions for subscriptions to and repayment of advances from

any provident fund approved by the Appropriate Government.Deductions for payment of insurance premium on Fidelity

Guarantee Bonds. Limit on Deductions [S.7(3)]: The deductions from

wages for the permissible deductions shall not exceed-75% including payments to cooperative societies.50% in any other casesIn case of exceeds in limits of deductions, balance may be

recovered in the manner prescribed by the Appropriate Government.


106

The Payment of Wages Act provides for the constitution of a separate authority for any specified area to hear and decide claims arising out of deductions from the wages or delay in the payment of wages.

The authorities include:a. Commissioner of Workmen’s Compensation, or

b. Regional Labour Commissioner, or

c. Assistant Labour Commissioner,

d. Presiding officer of Labour Court or Industrial Tribunal, or

e. Judicial Magistrate.

f. Experienced Judge of a civil Court

Remedy & Compensations

107

Application: A person himself or any legal practitioner or any official of a Registered Trade Union authorized in writing to act on behalf of such person or any inspector under this Act

Period: Such a claim is to be made within 12 months from the date on which the deductions were made, or from the date on which payment of wages was to be made.

Compensation: If the authority is satisfied that there were wrongful deductions, it may in addition to the refund of the amount wrongfully deducted require the employer to pay compensation not exceeding 10 times the actual amount of deductions.

In case of delayed wages, the employer may be directed to pay the wages immediately and also impose a penalty not exceeding Rs.3000, but not less than Rs.1500.

Remedy & Compensations

108

Arumugham V/s Jawahar MillsHELD:- The expression in Sections [15-17] not only includes

‘delayed wages’ but also covers ‘refused wages’.

Upper India V/s J.C.MathurHELD:- The word ‘deduction’ in Section 15 appears to have

been used in a very wide sense so as to include the ‘entire deficiency’ which the employee alleges to have been caused in the Payment of Wages as a result of withholding of the same by the employer partially or wholly.

Parmeshwar V/s AttiHELD:- Payment signifies satisfaction of a claim.

Case Law Studies

109

Qs’

If any…

110

• Introduction• Important Definitions• Authorities under the Act• Payment & Provisions• Nomination• Case law Studies

The Payment of Gratuity Act, 1972

111

Originally gratuity was considered as an amount given freely and could not be demanded as a matter of right by the employees.

In many cases gratuity was given as a matter of favor. Employees used to pay gratuity as a reward for long,

continuous and meritorious service. Various courts recognized the claim for gratuity and

awarded gratuity schemes. This custom of payment of gratuity became, in the later

days, a matter of right for the employees.With a view to ensure a uniform pattern of payment of

gratuity to the employees throughout the country, the Central Government enacted the Payment of Gratuity Act.

Introduction & Preliminary

112

Appropriate Government [S.2(i)] is the Central Government in relation to:a) Railways

b) Air transport services

c) Mines and oil fields

The State Government is the Appropriate Government in all other cases.

Employer [S.2(g)]: means-i. In relation to an industry carried on by or under the authority of

any department of the Central Government or a State Government – the authority prescribed in this behalf;

ii. In relation to an industry carried on by or on behalf of a local authority – the Chief Executive Officer of that authority.


113

Employee [S.2(i)]: means any person:a. Who is employed for hire or reward,b. To do any work,c. Skilled or unskilled,d. Manual or clerical,e. In Scheduled Employment,f. In respect of which minimum wages have been fixed.

But, it does not include-a. Value of house accommodation, medical and other facilities,

amenities and travelling, medical and other allowances;b. Contribution paid by the employer to any pension or provident

fund;c. Any special expenses and gratuity paid at termination of

employment.


114

Wages [S.2(s)] means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money, or capable of being so expressed which would, if the terms and conditions of employment, whether expressed or implied, be payable to a person in respect of his employment or any work done in such employment, and includes-a. Any remuneration payable under any award or settlement between

the parties or order of court;

b. Any remuneration to which the person is employed is entitled in respect of overtime work, or holidays or leave period;

c. Any additional remuneration payable (bonus);

d. Any sum paid on the event of termination of employment;

e. Any sum to which the a person is entitled under any scheme which is framed under a law currently in force.


115

• Retirement [Section 2(q)]:It means the termination of service of an employee

otherwise than on superannuation. This definition is framed in the widest sense. Retrenchment is also termination of service. It implies discharge of surplus labour.

• Superannuation [Section (2)]:In relation to an employee, it means-• The attainment by the employee of such age as is

fixed in the sontract, or conditions of service, as the age on the attainment of which the employee shall vacate the employment.


116

Inspectors [Section 7(A)]a) The Appropriate Government may appoint as many

inspectors as it deems fit.b) The Appropriate Government may define the area to

which the authority of an inspector shall extend.c) Every inspector shall be deemed to be a public servant.

Powers of Inspectors [Section 7(B)]: An inspector maya) Require an employer to furnish any information.b) Enter and inspect any premises or place in any factory,

shop or establishment for the purpose of examining any register, record or notice or other documents, in relation to the employment of any person or the payment of gratuity to the employees

c) Examine the employer or any person who is present in such premises.

Authorities Under The Act

117

Controlling Authority [Section 3]The Appropriate Government by a notification may appoint

any officer to be the controlling authority who shall be responsible for Administration of this Act. Different controlling authorities may be appointed for different areas.

Powers of Controlling Authorities [Section 7(5)]a)Enforcing the attendance of any person or examining him

on oath.

b)Requiring the discovery and production of documents.

c) Receiving evidence on affidavits.

d)Issuing commissions for the examination of witnesses.

Authorities Under The Act

118

Circumstances under which Gratuity becomes payable to an employee [Section 4]a) On termination of employment after he has rendered

continuous service of not less than 5 years, on his superannuation, retirement, resignation, death or disablement due to accident or disease.

b) In case of death of employee, the gratuity payable to him shall be paid to his nominee. If there is no nomination then to his legal heirs.

c) If any nominee or heir is a minor, the share of such minor shall be deposited with the controlling authority, who shall invest the same for the benefit of such minor in such Bank or Financial Institution as may be prescribed, until the minor reaches the age of majority.

Payment & Provisions

119

Rate of Gratuity [Section 4(2)]a) An employee who is eligible for gratuity shall be paid for every

completed year of service or part of it in excess of 6 months, gratuity at the rate of 15 days wages for each completed year of service.

b) Such gratuity is to be calculated on the basis of the rate of wages last drawn by the employee.

c) In case of a piece rated employee, the rate of daily wages shall be calculated o the basis of average of the total wages earned by him for a period of 3 preceding months before the termination of his employment.

d) In case of an employee employed in as seasonal establishment, the rate of gratuity payable to him shall be 7 days wages for each completed season.

e) In the case of a daily rated employee, he is to be paid gratuity at the rate of daily wages multiplied by 15 for every year of service.

f) In case of a monthly rates employee, the daily rate of wages is arrived at by dividing the rate of wages last drawn by 26. This rate is to be multiplied by 15 for deciding the quantum of gratuity payable for a year.


120

Maximum Amount of Gratuity [Section 4(3)]Payable to an employee shall not exceed Rs.10,00,000

Employment after disablement [Section 4(4)]In case of an employee employed after disablement, the

gratuity shall be calculated in 2 parts:a) For the period of employment before disablement

andb)For the period after disablement at the reduced rate.

Better Gratuity Scheme [Section 4(5)]a)If the employer has his own gratuity scheme which is better

than the scheme provided under this Act, then the employees shall be entitled to gratuity as per that scheme.

b)The Appropriate Government has powers to exempt by a notification any establishment, factory, mine, oil field, plantation, port, railway company or shop if the employees are gratuity and pensionary benefits under this Act.


121

Forfeiture of Gratuity [Section 4(6)]It gives the circumstances in which the gratuity payable to an

employee may be forfeited either partly or wholly.1)Partial Forfeiture: The gratuity of an employee whose

services are terminated for any act, willful omission, negligence causing any damage, loss to, or destruction of property belonging to the employer; only to the extent of damage or loss so caused.

2)Full Forfeiture: The gratuity payable to an employee can be wholly forfeited:a) If the services of an employee are terminated for his riotous or

disorderly behaviors or any other act of violence on his part, orb) If the services are terminated for any act which constitutes an

offence involving moral turpitude; provided, that such an offence is committed by him in the course of his employment.


122

Determination of Gratuity [Section 7]a) As soon as the gratuity becomes payable, the employer shall

determine the amount of gratuity and give notice in writing to that person to whom the gratuity is payable.

b) Notice is also given to the controlling authority specifying the amount of gratuity so determined.

c) Calculation of gratuity is to be done by the employer whether an application has been made or not.

Mode of Payment of Gratuity [Sections 7(3),(3-A)]a) The employer shall arrange to pay the amount of gratuity within

30 days from the date it becomes payable to the person.b) If the gratuity is not paid in time the employer shall pay interest

at the rate notified by the Central Government.c) No interest will be paid if the delay is due to the fault of the

employee and the employer has obtained permission in writing from the controlling authority.


123

Dispute as to Gratuity [Section 7(4)]a) If there is any dispute about-

i. Amount of gratuity payable to an employee.ii. Admissibility of any claim.iii. As to the person entitled to gratuity, the employer shall deposit the

amount which he admits is payable with the controlling authority.

b) Where there is a dispute about the above matters the employee can also make an application to the controlling authority for taking necessary action.

c) The controlling authority, after making the enquiry and giving the amount of gratuity payable to the employee. Further, as a result of the enquiry if any additional amount is payable to the employee, he shall direct the employer to pay the additional amount.

d) The controlling authority shall pay the amount deposited including the additional amount, if any, to the person entitled.


124

Recovery of Gratuitya) If the employee is not paid gratuity by the employer the employee

can make an application to the controlling authority for the same. The controlling authority, if satisfied, shall issue a certificate for recovery of the amount to the collector.

b) The collector shall recover the amount as arrears of land revenue.c) Such arrears are payable to the employee together with compound

interest at such rate specified by the central government.d) This amount is to be recovered after the date of expiry of the

prescribed time.e) The controlling authority, before issuing a certificate, shall give a

reasonable opportunity for the employer of showing cause against issue of the certificate.

f) The amount of interest payable shall not exceed the amount of gratuity.

g) The interest becomes payable only when the collector issues a Certificate of Recovery of the dues as a public demand.


125

Meaning- naming the person or persons, who shall be entitled to the amount of gratuity if the employee dies before receiving the amount.

Family [Section 2(h)]: in relation to an employee, shall be deemed to consist of:

1) Male Employees:a) Himself.b) His wife.c) His children (whether married or unmarried)d) His dependent parents.e) Dependent parents of his wife.f) Widow and children of his predeceased son, if any.

2) Female Employees:a) Herself.b) Her husband.c) Her children (whether married or unmarried)d) Her dependent parents.e) Dependent parents of her wife.f) Widow and children of her predeceased son, if any.

Nomination

126

Every employee under this Act, is required to make a nomination as per the following rules:1) Employee to make nomination: Every employee who has

completed service of 1 year shall make a nomination within 30 days after completing 1 year’s service.

2) More than 1 nominee: An employee can, in his nomination, distribute the amount of gratuity between more than one nominee.

3) Family members to be nominated: If the employee has a family at the time of nomination, the nomination can be made favoring member or members of his family.

4) No Family: If the employee does not have a family, then nomination can be made in favor of any person.

Nomination

127

5) Family after nomination: If the employee acquires a family afterwards, such nomination becomes invalid. The employee shall make a fresh nomination within 90 days in favor of family members.

6) Modification of nomination: Can be done by the employee at anytime, after giving a notice to the employer.

7) Death of Nominee: If the nominee does before the employee, then employee shall make a fresh nomination.

8) Safe custody of nomination: Every:a) Nominationb) Fresh nominationc) Alteration of nomination, as the case may be, shall be sent by

the employee to the employer, who shall keep the same in his safe custody. Further, it shall take effect from the date of receipt by the employer.

Nomination

128

• Indian Hume Pipe Co. Ltd. V/s WorkmenHELD:- The general principle underlying gratuity schemes

is that by faithful service over a long period the employee is entitled to claim a certain amount as retirement benefit.

• Delhi Cloth and General Mills Ltd. V/s WorkmenHELD:- The object of providing a gratuity scheme is to

provide a retiring benefit to the workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer.

Case Law Studies

129

DBR Mills Ltd. V/s Appellate AuthorityHELD:- Cessation of work by the employee on these days cannot be

said to be due to any fault of the employee. Therefore, he would be deemed in continuous service if he has been actually employed by an employer during the 12 months, immediately preceding the year for not less than 240 days in an establishment.

Patel Hiralal Ramlal & Co. Vs. Smt. Chandbib PirubhaiHELD:- The workmen carrying raw materials from the employer’s

premises to their home and rolling up bidis at their home for manufacturer are employees, and as such are entitled to claim and payment of gratuity.

Case Law Studies

130

Qs’

If any…

131

The Employees’ Provident Funds and Miscellaneous

Provisions Act, 1952

Introduction

Employees Provident Funds and Miscellaneous Provisions Act, 1952 comprises of following three Schemes:-

- Employees’ Pension Scheme 1995 (earlier known as

Family Pension Scheme 1971)

- Employees’ Provident Fund Scheme 1952

- Employees’ Deposit-Linked Insurance Scheme 1976

133

OBJECTIVE

To Employees: -

The Primary objective of above mentioned three schemes is to provide social security and to inculcate amongst the workers a spirit of savings while they are gainfully employed and to make provision for benefit after they retire from service and for their family members after their death.

To Employers: -

They provide a steady labour force, which is essential for the productivity and prosperity of the Establishment.

To Government: -

They provide funds of considerable magnitude for utilisation on various projects and programmes designed to promote economic and social development of the country and well being of its people.

134

APPLICABILITY (Section 1)

• Factories or Establishments (under specified class of establishments/factories mentioned in schedule - I) employing 20 or more persons are covered from the date of its setup under section 1(3) of the Act. Under section 2A where an establishment consists of different departments or has branches, whether situated in the same place or in different places, all such departments or branches shall be treated as parts of the same establishment.

• Central Government after giving two-months notice may apply the provisions of this Act to Establishments where less than 20 persons are employed.

• Establishments to which this Act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below 20.

135

Exemptions of Establishments under this Act

1. Any Establishment registered under the Cooperative Societies Act, 1912 or under any other law for the time being in force in any State relating to Cooperative Societies, employing less than 50 persons and working without the aid of power.

2. Any other Establishment belonging to or under the control of the Central or State Government and whose employees are entitled to the benefit of contributory provident fund or old age pension in accordance with any scheme laid by Central/State Government governing such benefits.

3. Any Establishment setup under any Central, Provincial or State Act and whose employees are entitled to the benefits of Contributory Provident Fund or old age pension in accordance with any scheme or rule framed under that Act governing as may be specified.

136

VOLUNTARY COVERAGE

Any Establishment not covetable under Employees’ Provident Funds and Miscellaneous Provisions Act (EPFMP), can also apply for coverage under the provisions of the Act on voluntary basis under Section 1(4) of the Act, where majority of the employees are in favour.

The Establishments covered on voluntary basis are required to comply with the provisions of the Act at par with other covered establishments and can not opt of coverage on a subsequent date.

137

DEFINITIONS

“Employee” as defined in Section 2(f) of the Act means any person who is employed for wages in any kind of manual or otherwise, in or in connection with the work of an establishment and who gets wages directly from the employer and includes any person employed by or through a contractor in or in connection with the work of the establishment.

Continued …

“Employer” as defined in Section 2(e) (i) & (ii) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier OR in relation to any other establishment, the person who or the authority which, has the control over the affairs of the establishment and where the said affairs are entrusted to a Manager, MD or managing agent.

138

“Factory” as defined in Section 2(g) of the Act, any premises where a manufacturing process in carried on or is ordinarily carried on, whether with the aid of power or without the aid of power.

“Manufacture” or “Manufacturing Process” as defined in Section 2(h)(i)(b) of the Act means any process for making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal.

Continued …

An “Apprentice” as defined under Section 2(f)(iv) means a person who, according to the certified standing orders applicable to the factory or establishment, in an apprentice, or who is declared to be an apprentice by the authority specified in this behalf by the appropriate Government

139

“Family” defined in Section 2(g)(i) of the Act means

In case of a MALE member – his wife, his children,whether married or unmarried, his dependent parents and his deceased son’s window and children, provided that if a member proves that if a member proves that his wife has ceased, under the personal law governing him or the customary law of the community to which the spouses belong, to be entitled to maintenance she shall no longer be deemed to be a part of the member’s family for the purpose of this Scheme, unless the member subsequently intimates by express notice in writing to the Commissioner that she shall continue to be so regarded, and

Section 2(g)(ii)

In case of a FEMALE member - her husband, her children, whether married or unmarried, her dependant parents, her husband’s dependant parents and her deceased son’s widow and children.

Continued …140

“Financial year” as defined under Section 2(h) means the year commencing on the first day of April.

“Appropriate Government” defined Section 2(a) means in relation to an establishment belonging to, or under the control of the Central Government or in relation to an establishment connected with a railway company, a major port, a mine or an oilfield or a controlled industry [or in relation to an establishment having departments or branches in more than one State] the Central Government and in relation to any other establishment, the State Government.

Continued …

“Superannuation” as defined under Section 2(ll) in relation to an employee, who is the member of the Pension Scheme means the attainment, by the said employee, of the age of 58 (Fifty eight) years.

141

“Wages” as defined under Section 2(b) means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of contract of employment and which are paid or payable in cash but exclude:

# Cash value of any food concession.

# House rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of employment or of work done in such employment.

# Any presents made by the employer.

142

EMPLOYEES PROVIDENT FUND (EPF) SCHEME

Employees’ Provident Fund Scheme takes care of the following needs of the members:

• Retirement

• Medical Care

• Housing

• Family Obligations

• Education of Children

• Financing of Insurance Policy

143

HOW THE EPF SCHEME WORKS ?

As per amendment dated 22.9.1997 in the Act, both the employees and employers contribute to the fund at the rate of 12% of the basic wages, DA and retaining allowance. The rate of contribution is 10& in the following establishments:

- Any covered establishment with less than 20 employees.

- Any sick industrial company as defined in clause (O) of sub-section (I) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 and which has been declared as such by the Board for Industrial and Financial Reconstructions.

- Any establishment which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth; and

- Any establishment in the (a) Jute (b) Beedi (c) Brick (d) Coir and (e) Guar gum Industries / Factories.

144

EMPLOYEES’ PROVIDENT FUND SCHEME

(Eligibility to Membership)

1. Every employee (including part-time workers and those employed by or through contractors) shall be entitled to members of the Scheme from the date of joining the factory or the other establishment.

2. Every excluded employee shall be entitled to become a member from the date he ceased to be such employee.

3. Every member of an exempted Provident Fund on joining establishment to which the scheme applies.

4. Any employee who is not otherwise eligible to become member of the scheme, on request by him and his employer.

Continued...145

EMPLOYEES’ PROVIDENT FUND (EPF) SCHEME


5. Every newspaper employee other than an excluded employee shall be entitled to become member of the Fund after completion of 3 months continuous service or if he has actually worked for 60 days during 3 months or less (the wage ceiling in the case of newspaper employee).

6. Every Cine worker other than an excluded employee shall be entitled to become a member of the Fund if he has not less three feature films with one or more producers provided his pay at the time of joining the Fund does exceed Rs. 1600.00 p.m. or Rs. 15000.00 pa.

Note: w.e.f. 01-11-90, an employee is eligible for membership from the very first date of joining a covered establishment.

Continued...146

EMPLOYEES’ PENSION SCHEME


1. Every employee who became member of the Employees’ Provident Fund Scheme or or after 16.11.1995 (Employee above the age of 58 on the date of joining the Employees’ Provident Fund Scheme shall not be enrolled).

2. Every employee who is a member of Employees’ Provident Fund Scheme 1952 and who has not opted for erstwhile Employees’ family pension scheme, May also become a member if he opts for Employees’ Pension scheme.

3. Every employee who was a member of Employees’ Provident Fund Scheme and has left service between 01.04.1993-95 can also join the Employees’ Pension Scheme by submission of option.

Note: The Employees’ Pension Scheme membership will cease from the date of the member attains 58 years of age. However, a member of Employees’ Provident Fund till he/she leaves the service and withdraws the Provident Fund accumulations.

Continued...147

EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME


- Every employee who becomes member of the Employees’ Provident Fund Scheme / Exempted Provident Fund Scheme.

148

CONTRIBUTION TOWARDS EPF & PENSION FUND

Employee Employer

Provident Fund Pension Fund

12% 8.33%3.67%

Continued …149

CONTRIBUTION TOWARDS EPF,EDLI & PENSION FUND

Like employee, the employer equally pays 12% of contribution to Pension Fund (8.33%) and Provident Fund (3.67%) towards the Employee Provident Fund and Pension scheme every month. Beside this, employer is need to pay the followings:

• 1.10% of total wages towards PF Admin. Charges subject to a minimum of Rs. 5/-.

• Rate of contribution of EDLI is @ 0.05% of total wages.

• Administration charge @ 0.01% of total wages towards Employee Deposit Linked Scheme (EDLI) scheme (if this scheme is taken) subject to a minimum of Rs. 2/-.

• 1% of total wages towards EDLI contribution if EDLI scheme is not taken by the employer.

Continued …150

CONTRIBUTION TOWARDS EPF & PENSION FUND

• 0.18% of the total wages towards Employee Provident Fund Scheme Inspection charges.

• 0.005% of total wages towards EDLI Inspection charges and minimum of Rs. 1/-.

• There is no fee paid by employer towards pension fund.

NOTE: Each contribution shall be calculated to the nearest rupee, 50 paise or more to be counted as the next higher rupee and fraction of a rupee less than 50 paise to be ignored.

151

DUTIES OF EMPLOYER

a). EMPLOYEES’ PROVIDENT FUND SCHEME (Para 36 & 36A)

1. Enroll the eligible employees as Employees’ Provident Fund subscriber from the right date.

2. Send initial returns in Form 5A, Form 9 (Revised), accompanied by Form 10, Form 12A, accompanied by challans and annual returns in Form 3A accompanied by Form 6A.

3. To maintain the inspection note book for an inspector to record his observation.

4. Maintain such accounts in relation to the amounts contributed to the fund and by his employees.

5. To comply with all the directives issued by the Central Board for proper implementation of the scheme.

Pay to the fund within 15 days of the close of the month both the shares of contribution and administrative charges or inspection charges.

Continued …152

DUTIES OF EMPLOYER

b). EMPLOYEES’ PENSION SCHEME (Para 20 EPS ’95)

There is no need to furnish a separate return by the employers. Pay to the Fund within 15 days of the month Pension Fund contributions.

c). EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME (Para 10)

There is no need to furnish a separate return by the employers. Pay to the Fund within 15 days of the close of the month both the contributions and administrative charges or inspection charges.

153

EPF INTEREST RATE

The rate of interest is fixed by the Central Government in consultation with the Central Board of Trustees, Employees’ Provident Fund every year during March/April. The interest is credited to the members account on monthly running balance with effect from the last day in each year. The rate of interest in FY 2006 – 2007 has been notified as 8.5% p.a.

Note: The total amount of interest shall be rounded to the nearest whole rupee (fifty paise counting as the next higher rupees)

154

BENEFITS UNDER EPF SCHEME

• A member of the Provident Fund can withdraw full amount at the credit in the fund on retirement from service after attaining the age of 55 years. Full amount in Provident Fund can also be withdrawn by the member under the following circumstances:-

(i). A member who has not attained the age of 55 years at the time of termination of service.

(ii). A member is retired on account of permanent and total disablement due to bodily or mental infirmity.

(iii). On migration from India for permanent settlement abroad or for taking employment abroad.

(iv). In case of mass or individual retrenchment.

Continued …155

(v). In case of the following contingencies, the payment of provident fund be made after completing a continuous period of not less than two months immediately preceding the date on which the application for withdrawal is made by the member :

(a). Where employees of closed establishments are transferred to other establishment, which is not covered under the Act.

(b). Where a member is discharged and is given retrenchment compensation under the Industrial Dispute Act, 1947.

WITHDRAWAL BEFORE RETIREMENT

A member can withdraw up to 90% of the amount of Provident Fund at credit after attaining the age of 54 years or within one year before actual retirement on superannuation whichever is later. Continued …

156

PARTIAL WITHDRAWAL / ADVANCES

A member of Provident Fund is allowed non-refundable advances for the following contingencies:

(i). For acquiring immovable property.

(ii). Advances in special cases such as lock out in factory /establishment, where a member has challenged the retrenchment/dismissal by the employer in a Court of Law.

(iii). For treatment of illness.

(iv). For marriages or post matriculation education of children.

(v). Under abnormal conditions such as damage to movable or immovable property by calamity of exceptional nature.

(vi). Financing of member’s Life Insurance Policy.

Continued… 157

WITHDRAWAL OF FUND (Section 69)

(1) A member may withdraw the full amount standing to his credit in his fund –-

(a) On retirement from service after attaining the age of 55 years [Provided that a member, who has not attained the age of 55 years at the time of termination of his service, shall also be entitled to withdraw the full amount standing to his credit in the Fund if he attains the age of 55 years before the payment is authorized.

(b) On retirement on account of permanent and total incapacity for work due to bodily or mental infirmity duly certified by the medical officer of the establishment or where an establishment has no regular medical officer, by a registered medical practitioner designated by the establishment.

(c) Immediately before migration from India for permanent settlement abroad (or for taking employment abroad).

Continued …158

(d) On termination of service in the case of mass or individual retrenchment:

(dd) On termination of service under a voluntary scheme of retirement framed by the employer and the employees under a mutual agreement specifying, inter alia, that notwithstanding the provisions contained in sub- clause (a) of clause (oo) of section 2 of the Industrial Dispute Act,1947, excluding voluntary retirements shall for the purpose be treated as retrenchments by mutual consent of the parties;

(e) In any of the following contingencies , provided the actual payment shall be made only after completing a continuous period of not less than [Two months] immediately preceding the date on which a member makes the application for withdrawal :-

Continued …159

(i) Where a factory or other establishment is closed but certain employees who are not retrenched, or transferred by the employer to other factory or establishment, not covered under the Act.

(ii) WHERE A member is transferred from a covered factory or other establishment to another factory or establishment not covered under the Act, but is under the same employer and

(iii) where a member is discharged and is given retrenchment compensation under Industrial Disputes Act, 1947.

Under Section (1A): On retirement on account of permanent and total incapacity for work due to bodily or mental infirmity:-

(i) Where an establishment has been closed, the certificate of any registered medical practitioner may accepted.

(ii) Where there is no medical officer in the establishment, the employer shall designate a registered medical practitioner .

Continued …160

(iii) Where the establishment is covered by the ESIC, medical certificate from a medical officer of the ESIC dispensary with which or from the Insurance Medical Practitioner with whom the employee is registered under that scheme, shall be produced. (see bare act)

(iv) A member suffering from tuberculosis or leprosy [or cancer even if contracted after leaving the service of an establishment on grounds of illness but before payment has been authorised shall be deemed to have been permanently and totally incapacitated for work.]

Note: Partial withdrawals are allowed on completion of min. 5 yrs. of membership of the fund and such other certain conditions for house building and 7 years of membership in other cases.

Continued …161

ACCUMULATION OF A DECEASED MEMBER

Amount of Provident Fund at the credit of the deceased member is payable to nominees/legal heirs.

TRANSFER OF PROVIDENT FUND ACCOUNT

Transfer of Provident Fund account from one region to other, from Exempted Provident Fund Trust to Unexempted Fund in a region and vice-versa can be done as per Scheme.

162

NOMINATION

… The member may furnish the particulars concerning himself and his family. These particulars furnished by the member of Provident Fund in Form 2 will help the Organisation in building up the data bank for use in the event of death of the member.

ANNUAL STATEMENT OF ACCOUNTS

As soon as possible and after the close of each period of currency of contribution, annual statement of accounts will be sent to each member through employer of the factory or other establishment where the member was last employed. The statement of accounts in the fund will show the opening balance at the beginning of the period, the total amount of interest credited at the end of the period or any withdrawal during the period and the closing balance at the end of the period. Members should satisfy themselves as to the correctness of the annual statement of accounts and any error should be brought through employer to the notice of the concerned Provident Fund Office within 6 months of the receipt of the statement.

163

BENEFITS UNDER EMPLOYEE PENSION SCHEME

Employee is not required to contribute separately under the Employees’ Pension Scheme 1995. Employer share of Provident Fund Contribution at the rate of 8.33% is diverted to Pension Fund every month.

1. Monthly Member pension – Superannuation pension/ retirement on attaining the age of 58 years.

2. Pension Scheme Certificates – Document indicating pensionable service and the amount of reduced pension on the date of exit from employment which shall be counted for determination of pension along with fresh service where the member has not attained the age of retirement.

3. Invalidity Pension – In case of permanent and total disablement during the course of employment.

4. Widow Pension – Pension from the date following the date of death of the member whether in service or after exit of employment or after retirement/commencement of monthly member pension.

Continued …164

DETERMINATION OF ELIGIBLE SERVICE

1. The eligible service shall be determined as follows:-

(a) In the case of “new entrant”the “actual service” shall be treated as eligible service. The total actual service shall be rounded off to the nearest year. The fraction of service for six months or more shall be treated as one year and the service less than six months shall be ignored.

5. Children Pension – Pension to two children of deceased member up to the age of 25 years in addition to widow.

6. Orphan Pension – Two orphan children up to the age of 25 years entitled for monthly orphan pension equal to 75% of the amount of widow pension.

7. Nominee Pension – In case of unmarried members, a person nominated by the member will get pension equal to widow pension.

Continued …165

Explanation – In the case of employees employed seasonally in any establishment the period of “actual service” in any year, notwithstanding that such service is less than a year shall be treated as a full year.

(b) In the case of “existing member” the aggregate of actual service and “past service” shall be treated as eligible service.

Provided that if there is any period in the “past service” for which the contributions towards the Family Pension Scheme, 1971 has not been received, the said period shall count as eligible service only if the contributions thereof have been received in the Employees’ Pension Fund.

Explanation – For the purpose of this sub-paragraph the total past service for less than six months shall be ignored and the total past service for six months and above shall be rounded to a year.

Continued …166

DETERMINATION OF PENSIONABLE SERVICE

(1)The Pensionable service of the member shall be determined with reference to the contributions [received or receivable] on his behalf in the Employees’ Pension Fund.

(2) In the case of the member who superannuates on attaining the age of 58 years, and/or who has rendered 20 years pensionable service or more, his pensionable service shall be increased by adding a weightage of 2 years.

DETERMINATION OF PENSIONABLE SALARY

(1) Pensionable salary shall be the average monthly pay drawn [in any manner including on piece-rate basis] during the contributory period of service in the span of 12 months preceding the date of exit from the membership of the Employees’ Pension Fund.

Continued …167

MONTHLY MEMBERS PENSION

(1) A member shall be entitled to –-

(a) Superannuation pension, if he has rendered eligible service of 20 years or more and retires on attaining the age of 58 years.

(b) Retirement pension, if he has rendered eligible service of 20 years or more and retires on otherwise ceases to be in the employment before attaining the age of 58 years.

(c) Short service pension, if he has rendered eligible service of 10 years or more but less than 20 years.

(2) In the case of a new entrant the amount of monthly superannuation pension or retiring pension, as the case may be, shall be computed in accordance with the following factors, namely: -

Pensionable salary x Pensionable Service

Monthly Member’s Pension = -----------------------------------------

70

Continued …168

BENEFITS UNDER EDLI SCHEME

Employees’ Deposit-Linked Insurance (EDLI) Scheme was notified with effect from 01.08.1976. The scheme is applicable to all the members of the Employees’ Provident Fund (EPF) scheme 1952.

All members of EPF scheme are deemed to be the members of Employees’ Deposit-Linked Insurance Scheme 1976, unless exemption has been obtained for EDLI scheme, in favour of Life Insurance Corporation Policy as approved.

Employees are not required to contribute under EDLI.

The Employer is required to contribute at the rate of 0.5% of the wages of the members on which the Provident Fund has been paid.

Continued …169

The maximum ceiling amount of the Employees’ Deposit-Linked Insurance benefit has been enhanced to 60,000 rupees from Rs. 35,000 rupees. Under the Scheme, the family of a member who dies in service, is entitled to insurance benefit to deposit in the provident fund account of the deceased member. According to the revised provisions, if the average balance of the deceased subscriber exceeds Rs. 35,000 rupees, his family will receive Rs. 35,000 rupees plus 25 percent of the amount in excess of Rs. 35,000 rupees subject to a ceiling of Rs. 60,000 rupees.

170

INFORMATION ABOUT FORMS USED

S NS N Form No.Form No. DescriptionDescription

1.1.ProformaProforma

Regn.Regn.Registration of Employer under EPF Registration of Employer under EPF Act.Act.

2.2.Form 2Form 2

(Revised)(Revised)Declaration and Nomination Form (To Declaration and Nomination Form (To be filled in a upon new joining)be filled in a upon new joining)

3.3. From 3AFrom 3A

The details of wages & contributions in The details of wages & contributions in respect of each member, to be respect of each member, to be prepared financial year wise- To be prepared financial year wise- To be submitted to the Provident Fund office submitted to the Provident Fund office by 30th of April every year.by 30th of April every year.

4.4. Form 5Form 5 Return of new employees joining within Return of new employees joining within the month (with monthly return)the month (with monthly return)

5.5. Form 5(IF)Form 5(IF)Application for claiming benefits under Application for claiming benefits under Employees’ Deposit-Linked Insurance Employees’ Deposit-Linked Insurance (EDLI) Scheme(EDLI) Scheme

Continued ...171

S.NoS.No Form No.Form No. DescriptionDescription

6.6. Form 6AForm 6AFor submitting the Annual Return of For submitting the Annual Return of contributions made by the Employee and contributions made by the Employee and Employer during a financial yearEmployer during a financial year

7.7. Form 9 Form 9 (Revised)(Revised)

The details of employees enrolled as The details of employees enrolled as members of EPF, EDLI & Employees' members of EPF, EDLI & Employees' Pension Scheme'95 on coverage of the Pension Scheme'95 on coverage of the establishment- This is to be submitted establishment- This is to be submitted immediately after coverage, within 15 immediately after coverage, within 15 days of coverage.days of coverage.

8.8.Form 10Form 10 Return of employees leaving the service Return of employees leaving the service

during the monthduring the month

9.9. Form 10CForm 10C For the withdrawal of Employee’s For the withdrawal of Employee’s Provident Fund at the time of leavingProvident Fund at the time of leaving

10.10. Form 10DForm 10DFor the withdrawal of Employee’s For the withdrawal of Employee’s Pension Fund at the time of leaving or Pension Fund at the time of leaving or for pension/superannuationfor pension/superannuation


Continued ...172

S.NoS.No Form No.Form No. DescriptionDescription

11.11. Form 12AForm 12A Consolidated monthly statement of all Consolidated monthly statement of all contributions payable in a monthcontributions payable in a month

12.12. Form 13Form 13 Application for transfer of E.P.F. Fund Application for transfer of E.P.F. Fund from One employer to anotherfrom One employer to another

13.13. Form 31Form 31 Application for Advance From the Fund


173

DAMAGES IN CASE OF DEFAULT OR LATE PAYMENT OF EPF CONTRIBUTION

Less than 2 months …………………………………. @ 17% p.a.

2 months and above but less than 4 months ------- @ 22% p.a.

4 months and above but less than up to 6 months - @ 27% p.a.

6 months and above Less than 2 months ------------ @ 37% p.a.

174

IMPORTANT CASES

# Manipal Academy of Higher Education V. Provident Fund Commissioner, 2004 LLR 321 (Karnataka)

The contract of employment of the service conditions by which the employment are governed provides for encashment of earned leaves, there cannot be any doubt that it is an emolument paid to the employees which they earn while on duty hence for EPF contribution it will form “Basic Wages”

# Prakash D. Shah V. Union of India, 2004 LLR 218 (Bombay)

A partner of a firm having a status of beneficiary will not be an employee either to be covered or counted under the Act.

175

# Katari Colouring Factory V. Regional Provident Fund Commissioner, 2000 LLR 169 (Delhi)

In case of clubbing of two units which are closely interconnected, separate registration is not required and as per the definition of the “employee” under sec. 2(f) whether the employer pays the wages directly or indirectly is of no consequence.

# Ram Singh V. State of U. P. 2005 LLR 349 (All)

Once an employee has opted for the Employees’ Provident Fund Scheme and had withdrawn the entire amount, then such employee cannot be permitted to switch over to the Employees’ Pension Scheme

# K. Streetlite Electric Corp. V. Regional Provident Commissioner Haryana, 2001 LLR 712 SC

Where the amount due towards provident fund has already been deposited and an interim order of relief to the extent of 75% of damage is sought to be recovered and the rest 25% of the total amount of damage.

176


Where the amount due towards provident fund has already been deposited and an interim order of relief to the extent of 75% of damage is sought to be recovered and the rest 25% of the total amount of damage.

# Ahmedabad Manufacturing and Calico Printing Co. Ltd. V. Ramthel Ramanand AIR 1972 SC 1958

A sweeper who works twice or thrice a week, a night watchman keeps watch on other shops also and a gardener who comes for 10 days in a month, will be treated as ‘employee’ under the EPF Act, eve though there are not directly connected with the establishment.


Where the amount due towards provident fund has already been deposited and an interim order of relief to the extent of 75% of damage is sought to be recovered and the rest 25% of the total amount of damage. 177

- Chennai Petroleum Corp. Ltd. V. APFC Chennai 2006 LLR 507(Mad-HC)

- The petitioner is a public sector Corporation manufacturing petroleum product, having its factory at Manali employing 1700 permanent workmen and that apart, it engage contractors. The respondents directed to the petitioner company to produce attendance register in r/o employees employed by the Contractor from 1.1.1967 onwards. The petitioner pleaded that it is not possible for the company to produce the said documents as the records are available with the Contractor’s concerned. The petitioner filed a petition requesting the respondent to implead the contractors as parties. Without considering the said petition, the respondent passed order directly to pay the contribution to the workmen employed by the contractors.Hence, this writ petition. Held, the respondent should have impleaded and proceeded against them for determining the quantum of PF contribution payable by them.

Continued ...178

Therefore, the respondent has committed an illegality is not considering the petition filed by the petitioner for impleading the Contractors. The court also directed the respondent commissioner to implead the Contractors as parties to the proceedings.

Mohammad Ali V Union of India, 1963 (6) FLR 251: 1963 (1) LLJ 536: AIR 1964 SC 980

- There is no distinction between salary and wages under the EPF Act, as both are the emoluments paid to an employee by way of compensation for his work. Therefore, there is nothing to show that the EPF Act does not apply to salaries servants.

179

Frequently Asked Questions (FAQ)

- Employee engaged by franchises if covered ?

The franchise type of arrangement involves pursuing the activities of establishment through Contract and as such are covered by the EPF & MP Act 1952 schemes. A yoga center covered under the EPF & MP, if approaches the franchise under a contract that the franchise will have their own staff to work under the name, expert guidance and advice of the establishment, shall attract the provisions of the Act.

- Engaging of Consultants if covered ?

Consultants who extend their services regularly to the establishment on remuneration are employees as per sec. 2 (f) of EPF & MP Act, 1952 and are liable to be covered under the Act.

Continued ...180

- Employee drawing salary of more than Rs. 6500 per month if employee ?

An employee whose pay at the time when he is otherwise entitled to become a member of the fund, exceeds Rs. 6500/- p.m. as per para 26 of EPF scheme 1952, have been specifically excluded from the benefit of the EPF scheme, 1952.

- What and what not consists in the Basic wages ?

- Basic wages means (I) All emoluments which are earned by an employee while on duty on leave or on holidays with wages in accordance with the terms of the contract of employment, and

- Which are paid or payable in cash to him

- Basic wages doesn’t include:

-The cash value of any food concession

- Any DA, HRA, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment

- Any presents made by the employer

Continued ...181

Qs’

If any…

182

THE EMPLOYEE’S

STATE INSURANCE

ACT 1948 183

ESI Scheme …

• ESI Scheme for India is an integrated social security scheme tailored to provide Social Production to workers and their dependents, in the organised sector, in contingencies, such as Sickness, Maternity and Death or Disablement due to an employment injury or Occupational hazard

184

COVERAGE …

The ESI Act 1948 applies to • Non – seasonal Factories using power in and

Employing ten (10) or More persons • Non – seasonal and non- power using factories

and establishments employing twenty(20) or more persons

• Employees of the Factories and Establishments in receipt of wages not exceeding Rs.7500 /- Per month are covered under this Act.

185

WAGES Defined …

• Wages means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock out, strike which is not illegal or layoff and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include :-

a). Any contribution paid by the employer to any pension fund or Provident fund, or under this act;

b). Any traveling allowance or the value of any traveling concession;

c). Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment ; or

d). Any gratuity payable on discharge.

186

WAGES Defined …

The above definition has three parts 1. All remuneration paid or payable in cash to an

employee following from the term of employment (including agreement) express or implied. The periodicity of payment is not relevant in this case.

2. Any additional remuneration even if not flowing from any agreement or settlement but paid at intervals not exceeding two months.

3. The exceptions as provided in Clause (a) to (d) above. Any remuneration paid or payable under para 1 and 2 is wages and chargeable to contribution whereas any amount paid towards items mentioned in clause (a) to (d) are not wages and therefore no contribution is chargeable on the amount.

187

Finances …• The Scheme is primarily funded by contribution

raised from Insured Employees and their employers

• Payable such as 1. Employees’ Contribution – 1.75% of the Wages 2. Employers’ Contribution – 4.75% of the Wages

TOTAL - 6.5 % of the Wages

Employees in receipt of an average daily wage of Rs.40/- or Less, are exempted from Payment of their share of contribution (w.e.f 8.4.00) but are entitled to all social security benefits under the Scheme. 188

Contribution & Benefit Period …

• Employees covered under the ESI Act, are required to pay contribution towards the scheme on a monthly basis. A contribution period means a six month time span from 1st April to 30th September and 1st October to 31st March.

• Cash benefits under the scheme are generally liked with contributions paid. The benefit period starts three months after the closure of a contribution period. The two type of periods are elucidated below.

Contribution Period Benefit Period 1st April to 30th September 1st January to 30th June of the following year 1st October to 31st March 1st July to 31st Dec. 189

ADVANTAGES OF EMPLOYERS …

• 1. Employers are absolved of their liabilities of providing medical facilities to employees and their dependents in kind or in the form of fixed cash allowance, reimbursement of actual expenses, lump sum grant or opting for any other medical insurance policy of limited scope unless it is a contractual obligation of the employer

190

2). Employers are exempted from the applicability of the : -

(a). Maternity Benefit Act

(b). Workmen's’ Compensation Act

in respect of employee covered under the ESI Scheme

3). Employers have their disposal, a productivity , well secured workforce, an essential ingredient for better productivity


191

4). Employers are absolved of any responsibility in times of Physical distress of workers such as sickness, employment injury or Physical disablement resulting in loss of wages, as the responsibility of Paying cash benefits shits to the corporation in respect of insured employees

5). Any sum paid by way of contribution under the ESI Act is deducted in computing ‘income’ under the Income Tax Act


192

Benefits to Employees …

• ESI Scheme Major Social Security Benefits in Cash and Kind include …

1. Medical Benefit – for self & Family 2. Sickness Benefit – for self 3. Maternity Benefit - for self 4. Disablement Benefit a). Temporary Disablement Benefit – for self b). Permanent Disablement Benefit – for self 5. Dependents’ Benefit – for dependents in case

of death due to employment injury

193

• In addition, the Scheme also provides some other need based benefits to insured workers. These are:

i). Funeral Expenses – to a person who

performs the last rites of IP

ii). Rehabilitation allowances – for self

iii). Vocational Rehabilitation - for self

iv). Old age Medicare – for self and spouse

v). Medical Bonus – for insured women and

IP’s wife


194

Medical Benefit …

• Medical Benefit means Medical care of IPs and their families, wherever covered for medical benefit.

• The Standard medical care consists of out-door treatment, in-patient treatment, all necessary drugs and dressing, pathological and radiological specialist consultation and care, ante-natal and post natal care, emergency treatment etc.,

• Out-door medical care is provided at the state Insurance Dispensaries or Mobile Dispensaries manned by full-time doctors (service’ system) or at the private clinics of Insurance Medical Practitioners (Panel System)

195

• Insured worker and members of his family are eligible for medical care from the very first day of the worker coming under ESI Scheme.

• A worker who is covered under the scheme for first time is eligible for medical care for the period of three months. If he/she contributes at least for 78 days in a contribution period the eligibility is there up to the end of the corresponding benefit period.

• A worker is also eligible for extended sickness benefit when he/she is suffering from any one of the long term 34 diseases listed in the Act. This is admissible after the worker has been under ESI these conditions are satisfied medical benefit is admissible for a maximum period of 730 days for the IP and his/ her family.

Medical Benefit …

196

Sickness Benefit …

• Sickness signifies a state of health necessitating Medical treatment and attendance and abstention from work on Medical grounds. Financial support extended by the corporation is such a contingency is called sickness Benefit

• Sickness Benefit represents periodical payments made to an Insured Person for the period of certified sickness after completing 9 Months in insurable employment.

197

• To qualify for this benefit, contributions should have been payable for atleast 78 days in the relevant contribution period.

• The Maximum duration for availing sickness Benefit is 91 days in two consecutive benefit periods

• Standard benefit rate – this rate corresponds to the average daily wage of an Insured person during the corresponding contribution period and is roughly half of the daily wage rate.


198

Extended Sickness Benefit …

• Extended Sickness Benefit is a Cash Benefit paid for prolonged illness (Tuberculosis / Leprosy, Mental and Malignant diseases) due to any of the 34 Specified diseases

• The IP should have been in continuous employment for a period of 2 years and should have contributed for atleast 156 days in 4 preceding contribution periods

199

• The daily rate of Extended Sickness Benefit is 40% more than the standard Sickness Benefit rate admissible

• After exhausting sickness Benefit Payable for 91 days the Extended Sickness Benefit is payable upto further period of 124 / 309 days that can be extended upto 2 years in special circumstances

Extended Sickness Benefit …

200

Enhanced Sickness Benefit …

• Is Cash Benefit for IP undergoing sterilisation operation of vasectomy / tuberctomy for family planning.

• The contributory conditions are the dame as for claiming sickness benefits

• The daily rate of this benefit is double the standard benefit rate. Say, not less than the daily wage.

• The benefit rate of this benefit is double the standard benefit rate. Say, not less than the daily wage.

• The benefit is available upto 7 days for vasectomy and upto 14 days for tubectomy operations.

201

Maternity Benefit…

• Maternity Benefit is cash payable to an Insured women for the specified period of abstention from work for confinement or mis-carriage or for sickness arising out of pregnancy, “confinement” “premature birth of child or miscarriage” “confinement” connotes labour after 26 weeks of pregnancy whether the result issue is alive or dead,

• “Miscarriage” means expulsion of the contents of a pregnant uterus at any period prior to or during 26th week of pregnancy.

202

• Criminal abortion or miscarriage does not, however, entitle to benefit.

• The contribution condition is the same as for Sickness Benefit.

• The daily benefit rate is double the sickness Benefit rate and is thus roughly equivalent to the full wages. Benefits is paid for Sundays also.


203


• The Benefit is paid as follows (Duration)

a). For Confinement

For a total period 12 Weeks beginning not more than 6 weeks before the expected date of child birth, if the insured women dies during confinement or with in 6 weeks thereafter, leaving behind the living child, the benefit continues to be payable for the whole of the period. But the child also die during that period, the benefit will be paid upto and including the day of the death of the child.

204

b). For Miscarriage For the period of 6 weeks following the date of miscarriage c). For sickness arising out of pregnancy, confinement, Premature birth of child or miscarriage : For an additional period or upto four weeks. In all the cases, the benefit is paid only if the

insured women does not work for remuneration during the period for which benefit is claimed. There is no waiting period.


205

• Medical Bonus

Medical Bonus is lump sum payment made to an Insured woman or the wife of an insures person in case she does not avail medical facility from an ESI hospital at the time of delivery of a child. This bonus of Rs. 250/- has been increased to Rs. 1000/- from 1st April 2003


206

Disablement Benefit …

a). Temporary disablement benefit :

• In case of temporary disability arising out of an employment injury or occupational disease.,

• Disablement benefit is admissible to insured person for the entire period so certified by an Insurance Medical officer / Practitioner for which IP does not work for wages.

• The benefit is not subject to any contributory condition and is payable at a rate which is not less than 70% of daily average wages.

• However, not payable if the incapacity lasts for less than 3 days excluding the date of accident.

207

Permanent disablement benefit …

• In case an employment injury or occupational disease results in permanent, partial or total loss of earning capacity,

• Periodical payments are made to the IP for life at a rate depending on the actual loss of earning capacity as may be determined and certified by a duly-constituted Medical Board.

• The rates of Disablement Benefits are determined in accordance with the provisions of Rule 57 of ESI (Central) Rules, 1991.

• In order to product erosion in real value of the periodical payments of Permanent Disablement benefits, against rise in the cost of living index, periodical increases are granted, based on actuarial calculation

208

• Commutation of periodical payments into lump sum (one time payment) is permissible where the permanent disablement stands assessed as final and daily rate of benefit does not exceed Rs. 1.50. per day.

• Commutation of Permanent Disablement Benefit into lump sum payment is also allowed in case the total commuted value does not exceed Rs.10000/- (The ceiling is now being raised to Rs.30000/-).

Permanent disablement benefit …

209

Dependants’ Benefit …

• Dependents Benefit is a monthly pension payable to the eligible dependents of an insured person who dies as a result of an Employment Injury or occupational disease

• Beneficiaries and Duration of benefit a). Widow / widows during life or until remarriage b). Legitimate or adopted son until age 18 or if legitimate

son is infirm, till infirmity lasts. c). Legitimate or adopted unmarried daughter until age

18 or until marriage, whichever is earlier, or if infirm, till infirmity lasts and she continues to be unmarried.

In the absence of any widow or legitimate child, the benefit is payable to a parent or grandparent for life, to any other male dependent until age 18 or to an unmarried or widowed female dependent until age 18.

210

• How much …

• The total divisible benefit is equivalent to the temporary disablement benefit rate (roughly 70% of the wage rate). The widow / widows share 3/5th of the benefit and the legitimate or adopted son and daughter 2/5th each of the benefit. If the total benefit so divided exceeds the full rate, there is a proportionate reduction in the respective shares of the beneficiaries.

• The amount of pension paid to the dependents of a deceased insured person is reviewed vis-à-vis the cost of living index and increases are granted from time to time to compensate for erosion in its real value.

Dependants’ Benefit …

211

Other Benefit …

(i). Funeral Expenses Funeral Expenses are in the nature of lump

sum payment up to a maximum of Rs.2500/- made to defray the expenditure on the funeral of deceased IP. The amount is paid either to the eldest surviving member of the family or, in his absence, to the person who actually incurs the expenditure on the funeral.

212

Rehabilitation Allowance

The corporation, vide its Resolution dated 22.12.1979, resolved to grant rehabilitation Allowance to the IPs, for each day, on which they remain admitted in an Artificial limb centre. On the rates, which generally confirm to double the Standard Sickness Benefit rate. The above benefit was introduced with effect from 1.1.1980

Other Benefit …

213

Levy of Interest & Damages …• Under Section 39(5)(a) of the ESI act, read with Regulation

31(A) of the ESI (General) Regulations 1950, the employer is liable to pay simple interest at the rate of 15 percent per annum in respect of each day of default or delay in payment contributions. In addition, under the Provision of Regulation 31-C of ESI (General) Regulations, 1950, read with sec.85(B)(i) of the ESI Act, the Corporation is empowered to recover damage as under:

Period of delay in Rate of Damages payment of Contribution on the amount due i). Up to less than 2 months 5 % ii). 2 months and above but less than 4 months 10% iii).4 months and above but less than 6 months 15% iv). 6 months and above 25% Interest and damages can also recovered as arrears of land

revenue Section 45(c) to Section 45(I) by the Recovery Officer of ESI Corporation.

214

Obligation of the Employers …

1). Get your Factory / establishment registered with in 15 days after the Act becomes applicable. Submit Form 01 to the Regional office for this purpose. Obtain Employer’s code No. for use in all ESIC Forms / documents and correspondence with the offices of the ESI Corporation.

2). Fill up Declaration Forms in respect of all coverable employees and submit the same to the Regional Office/ Local Office of the corporation well before the ‘Appointed Day’ and obtain insurance Numbers from the concerned Local Office/ Regional Office, In respect of newly appointed employees, fill up the declaration form soon after appointment of such employees and submit the same to the Local Office Concerned.

215

3). Pending receipt of identity cards/ identity certificates you may issue “certificate of employment” in Form 86 to the covered employee(s) enabling them to avail cash/medical Benefits

4). Pay ESI contribution (Employee's Share @4.75% and the Employer’s share @ 1.75% of the wages) with in 21 days of the month following, in which the wages fall due.


216

5).Maintain an Accident Book as prescribed under the Factory Act / ESI Act.

6).Submit an Accident Report to the Local Office / ESI Dispensary concerned immediately in respect of accidents that could result in death or disablement and within 24 hours of its occurrence otherwise. Minor accidents which do not cause absence from work need not be reported

7).Grant leave to insured employees on the basis of sickness certificates issued by any authorised ESI doctor.


217

Maintain the following records/ registers properly for the purpose of inspection

1. Attendance Registers / Muster Rolls (in respect of all employees including those employed through contractors)

2. Wage register 3. Cash Book / Bank Book 4. Account Books including Ledgers and Vouchers,

Balance Sheet. 5. Employees’ Register 6. Accident Book 7. Returns of Contribution 8. Return of Declaration Forms9. Copies of Challans10. Inspection Book


218


9. Submit return of contribution within 42 days of the expiry of contribution period.

10. Intimate the date of closure of shifting (Temporary or Permanent) of the Factory / Establishment to the Regional office / Local Office within seven days of its closure or shifting

11. Promptly report change in business activity, ownership of the concern or its management.

12. Ascertain the liability towards ESI dues, while taking over the ownership of any factory/establishment by purchase, gift, lease or license or in any other manner whatsoever as new owner is liable to discharge the past liabilities if any

219

Qs’

If any…

220

PAYMENT OF BONUS ACT – 1965

221

Bonus - History

• The practice of paying bonus in India appears to have originated during First World War when certain textile mills granted 10% of wages as war bonus to their workers in 1917. In certain cases of industrial disputes demand for payment of bonus was also included. In 1950, the Full Bench of the Labour Appellate evolved a formula for determination of bonus.

222

Introduction

An Act to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith.

223

Short title, extent and application

• It extends to the whole of India • Every other establishment in which twenty or

more persons are employed on any day during an accounting year.

224

Bonus - Applicability

(a) Every factory (as def. in Factories Act), & (b) Every other establishment in which 20 or more persons (less than 20 but 10 or more if appropriate Govt. notifies) are employed on any day subject to certain exemptions.

(b) Bonus to be paid within eight months from the expiry of the accounting year.

225

Cont-2

• Establishments to include departments, undertakings and branches

• Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus :

226

Bonus - Eligibility

Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year.

227

Disqualification for bonus

An employee shall be disqualified from receiving bonus under this Act :-

• (a) fraud; or• (b) riotous or violent behaviour while on the

premises of the establishment; or• (c) theft, misappropriation or sabotage of any

property of the establishment

228

Computation of number of working days

• An employee shall be deemed to have worked in an establishment in any accounting year also on the days on which,-

• (a) he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment (Standing Orders) Act, 1946, or under the Industrial Disputes Act, 1947, or under any other law applicable to the establishment;

• (b) he has been on leave with salary or wages;• (c) he has been absent due to temporary disablement

caused by accident arising out of and in the course of his employment, and

• (d) the employee has been on maternity leave with salary or wages, during the accounting year

229

Payment of minimum & Maximum bonus • A minimum bonus which shall be 8.33 per cent of

the salary or wage earned by the employee during the accounting year.

• Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of maximum bonus payable to the employees. be bound to pay to every employee in respect of that accounting; year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of 20 per cent, of such salary or wage.

230

CALCULATION OF BONUS

The method for calculation of annual bonus is as follows:

• Calculate the Available Surplus. • Available Surplus = • Gross Profit – ( deduct) the following :• Depreciation admissible u/s 32 of the Income

tax Act. • Development allowance

231

Available Surplus (Deductions)• Direct taxes payable for the accounting year

(calculated as per Sec.7) – Sums specified in the Third Schedule.

• Direct Taxes (calculated as per Sec. 7) in respect of gross profits for the immediately preceding accounting year.

• Allocable Surplus = 60% of Available Surplus, 67% in case of foreign companies.

• Make adjustment for ‘Set-on’ and ‘Set-off’. For calculating the amount of bonus in respect of an accounting year, allocable surplus is computed after considering the amount of set on and set off from the previous years

232

Set On & Set Off• Where in any accounting year any amount has

been carried forward and set on or set off under this section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.

• The allocable surplus so computed is distributed amongst the employees in proportion to salary or wages received by them during the relevant accounting year.

233

Time-limit for payment of bonus

• where there is a dispute regarding payment of bonus pending before any authority under section 22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute;

• (b) in any other case, within a period of eight months from the close of the accounting year:

234

Recovery of bonus due from an employer(Sec-22)

Where any money is due to an employee by way of bonus from his employer under a settlement or an award or agreement, the employee himself or any other person authorized by him in writing in this behalf, or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government or such authority as the appropriate Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in particular employee.

235

RIGHTS OF EMPLOYEES

• Right to claim bonus payable under the Act and to make an application to the Government, for the recovery of bonus due and unpaid, within one year of its becoming due.

• Right to refer any dispute to the Labour Court/Tribunal.

• Employees, to whom the Payment of Bonus Act does not apply, cannot raise a dispute regarding bonus under the Industrial Disputes Act.

• Right to seek clarification and obtain information, on any item in the accounts of the establishment

236

Reference of disputes under the Bonus Act

• Where any dispute arises between an employer and his employees with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industries dispute within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), or of any corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act.

237

Maintenance of register, records & Inspectors

• Every employer shall prepare and maintain such registers, records and other documents in such form and in such manner as may prescribed.

• The appropriate Government may, by notification on the Official Gazette, appoint such person as it think fit to be Inspectors for the purposes of this Act and may define the limits within which they shall exercise jurisdiction.

238

Inspectors Duties :• An Inspector appointed under sub-section (1) may,

for the purpose of ascertaining whether any of the provisions of this Act has been complied with --

• (a) Require an employer to furnish such information as he may consider necessary;

• at any reasonable time and with such assistance, if any, as he thinks fit enter any establishment or any premises connected therewith and require any one found in charge thereof to produce before him for examination any accounts, books, registers and other documents relating to the employment of persons or the payment of salary or wage or bonus in the establishment. 239

OFFENCES AND PENALTIES• For contravention of the provisions of the Act or

rules the penalty is imprisonment upto 6 months, or fine up to Rs.1000, or both.

• For failure to comply with the directions or requisitions made the penalty is imprisonment upto 6 months, or fine up to Rs.1000, or both.

• In case of offences by companies, firms, body corporate or association of individuals, its director, partner or a principal officer responsible for the conduct of its business, shall be deemed to be guilty of that offence, unless the person concerned proves that the offence was committed without his knowledge or that he exercised all due diligence

240

Qs’

If any…

241

THE APPRENTICES ACT, 1961

• The Act extends to the whole of India.• Applies to those apprentices who are

undergoing apprenticeship training in designated trades.

• From time to time, the Central Govt. has specified the designated trades.

THE APPRENTICES ACT,1961 1242

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Contract of Apprenticeship

• (1) No person shall be engaged as an apprentice to undergo apprenticeship training in a designated trade unless such person or, if he is a minor, his guardian has entered into a contract of apprenticeship with the employer.

• (2) The apprenticeship training shall be deemed to have commenced on the date on which the contract of apprenticeship has been entered into under sub-section (1).

• (3) Every contract of apprenticeship may contain such terms and conditions as may be agreed to by the parties to the contract :


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OBLIGATIONS OF APPRENTICES• Every graduate or technician apprentice,

technician (vocational) apprentice undergoing apprenticeship training shall have the following obligations, namely :

• (a) to learn his subject field in engineering or technology or vocational course conscientiously and diligently at his place of training;


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Conti.

• (b) to attend the practical and instructional classes regularly;

• (c) to carry out all lawful orders of his employer and superiors in the establishment;

• (d) to carry out his obligations under the contract of apprenticeship which shall include the maintenance of such records of his work as may be prescribed.


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OBLIGATIONS OF EMPLOYERS

• (a) To provide the apprentice with the training in his trade in accordance with the provisions of this Act, and the rules made there under;

• (b) If the employer is not himself qualified in the trade, to ensure that a person who possesses the prescribed qualifications is placed in charge of the training of the apprentice;


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Cont.

• (bb) to provide adequate instructional staff, possessing such qualifications as may be prescribed, for imparting practical and theoretical training and facilities for trade test of apprentices; and

• (c) to carry out his obligations under the contract of apprenticeship.


PERIOD OF APPRENTICESHIP TRAINING

• The period of apprenticeship training, which shall be specified in the contract of apprenticeship, shall be as follows :

• (a) in the case of trade apprentices who, having undergone institutional training in a school or other institution recognized by the National Council, have passed the trade tests or examinations conducted by that Council or by an institution recognized by that Council, the period of apprenticeship training shall be such as may be determined by that Council or by an institution recognized by that Council;


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Cont.

• In the case of trade apprentices who, having undergone institutional training in a school or other institution affiliated to or recognized by a Board or State Council of Technical Education or any other authority which the Central Government may, by notification in the Official Gazette specify in this behalf, have passed the trade tests or examinations conducted by that Board or State Council or authority, the period of apprenticeship training shall be such as may be prescribed;


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NUMBER OF APPRENTICES

• The Central Government shall, after consulting the Central Apprenticeship Council, by order notified in the Official Gazette, determine for each designated trade the ratio of trade apprentices to workers other than unskilled workers in that trade.


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Duties of the Employer

• Every employer shall make suitable arrangements in his workshop for imparting a course of practical training to every apprentice engaged by him in accordance with the program approved by the Apprenticeship Adviser.

• Where an employer employs 500 or more workers, the basic training shall be imparted in separate part of the workshop building or in a separate building set up by the employer.


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EMPLOYERS to ensure • Placement of Training Officer with

suitable qualification

• Payment of stipend at a rate not less than the prescribed minimum rate

• Not to pay on the basis of piece work

• Not to require to take part in any output bonus or other incentive scheme.


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Employer to Ensure Contd.

• HEALTH, SAFETY AND WELFARE OF APPRENTICES.• In case of employment injury

pay compensation in accordance with the provisions of the Workmen's Compensation Act,1923.


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HOURS OF WORK, OVERTIME, LEAVE AND HOLIDAYS.

• (1) The weekly and daily hours of work of an apprentice while undergoing practical training in a workshop shall be such as may be prescribed.

• (2) No apprentice shall be required or allowed to work overtime except with the approval of the Apprenticeship Adviser who shall not grant such approval unless he is satisfied that such overtime is in the interest of the training of the apprentice or in the public interest.


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Cont.

• (3) An apprentice shall be entitled to such leave as may be prescribed and to such holidays as are observed in the establishment in which he is undergoing training.


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Leave Entitlement.

• In continuation with the same, the apprentice should be entitled the leaves as prescribed.

• As per the latest notification, applicable Leaves are as follows;

15 Medical Leave.

08 Casual Leave


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CONDUCT AND DISCIPLINE.

• In all matters of conduct and discipline, the apprentice shall be governed by the rules and regulations applicable to employees of the corresponding category in the establishment in which the apprentice is undergoing training.


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APPRENTICES ARE TRAINEES AND NOT WORKERS.• (a) Every apprentice undergoing

apprenticeship training in a designated trade in an establishment shall be a trainee and not a worker; and

• (b) The provisions of any law with respect to Labour shall not apply to or in relation to such apprentice.


Rate of Stipend

• As the Apprentice is a “Trainee” & not the worker ; will be entitled for Stipend and not the Salary/Wages.

• As per the Govt. notification the rate of Stipend is Rs. 1500/- p.m.


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RECORDS AND RETURNS

• Every employer shall maintain records of the progress of training of each apprentice undergoing apprenticeship training in his establishment in such form as may be prescribed.

• Forms & Returns Apprentice Act,1961.xls (Click here to view the details)


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OFFENCES AND PENALTIES.

• If any employer - (a) engages as an apprentice a person who is not qualified for being so engaged, or

• (b) fails to carry out the terms and conditions of a contract of apprenticeship, or

• (c) contravenes the provisions of this Act relating to the number of apprentices which he is required to engage under those provisions, he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both. THE APPRENTICES ACT,1961 20261

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Cont.• If any employer or any other person (a) required to furnish any information or return

• (i) refuses or neglects to furnish such information or return, or

• (ii) furnishes or causes to be furnished any information or return which is false and which he either knows or believes to be false or does not believe to be true, or

• (iii) refuses to answer, or gives a false answer to any question necessary for obtaining any information required to be furnished by him, or


Cont.

• (b) refuses or willfully neglects to afford the Central or the State Apprenticeship Adviser or such other person, not below the rank of an Assistant Apprenticeship Adviser, as may be authorized by the Central or the State Apprenticeship Adviser in writing in this behalf any reasonable facility for making any entry, inspection, examination or inquiry authorized by or under this Act, or

• (c) requires an apprentice to work overtime without the approval of the Apprenticeship Adviser, or


Cont.

• (d) employs an apprentice on any work which is not connected with his training, or

• (e) makes payment to an apprentice on the basis of piecework, or

• (f) requires an apprentice to take part in any output bonus or incentive scheme, he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.


TEST AND GRANT OF CERTIFICATE & CONCLUSION OF TRAINING

• (1) Every trade apprentice who has completed the period of training shall appear for a test to be conducted by the National Council to determine his proficiency in the designated trade in which he has undergone his apprenticeship training.

• (2) Every trade apprentice who passes the test referred to in sub-section (1) shall be granted a certificate of proficiency in the trade by the National Council.


Cont

• (3) The progress in apprenticeship training of every graduate or technician apprentice, technician (vocational) apprentice shall be assessed by the employer from time to time.

• (4) Every graduate or technician apprentice or technician (vocational) apprentice, who completes his apprenticeship training to the satisfaction of the concerned Regional Board, shall be granted a certificate of proficiency by that Board.


Termination of Training • On the expiry of the period of

apprenticeship training specified in the contract.

• Premature termination by employer the employer shall pay to the

apprentice such compensation as may be prescribed.

• Premature termination by the apprentice

apprentice or his guardian shall refund to the employer as cost of training such amount as may be determined by the Apprenticeship Adviser.


Disputes

• Any dispute between an employer and an apprentice arising out of the contract of apprenticeship shall be referred to the Apprenticeship Adviser for decision.


OFFER AND ACCEPTANCE OF EMPLOYMENT

• (1) It shall not be obligatory on the part of the employer to offer any employment to any apprentice who has completed the period of his apprenticeship training in his establishment, nor shall it be obligatory on the part of the apprentice to accept an employment under the employer.


Cont.

• (2) Notwithstanding anything in sub-section (1), where there is a condition in a contract of apprenticeship shall, after the successful completion of the apprenticeship training, serve the employer, the employer shall, on such completion, be bound to offer suitable employment to the apprentice, and the apprentice shall be bound to serve the employer in that capacity for such period and on such remuneration as may be specified in the contract.


Cont.

• Provided that where such period or remuneration is not, in the opinion of the Apprenticeship Adviser, reasonable, he may revise such period or remuneration so as to make it reasonable, and the period or remuneration so revised shall be deemed to be the period or remuneration agreed to between the apprentice and the employer.


Qs’

If any…

272

THE INTERSTATE MIGRANT WORKMEN (REGULATION OF EMPLOYMENT AND CONDITIONS OF SERVICE) ACT 1979

• Act to regulate the employment of interstate migrant workers and to provide for their conditions of service.

273

Extends to the whole of India.

• Applies to every establishment wherein five or more interstate migrant workmen (whether or not in addition to other workmen) are employed and every contractor who employs (whether or not in addition to other workmen) 5 or more interstate migrant worker.

274

Interstate migrant worker

• An interstate migrant worker means any person who is recruited by or through a contractor in the state under an agreement or arrangement for employment in an establishment in another state, whether with or without the knowledge of the principal employer.

275

Provides for

• Registration of establishments employing interstate migrant workmen, licensing of contractors, appointment of licensing officers, prohibition of employment of migrant workmen without registration and duties and obligations of contractors provided under the Act.

276

Employer to ensure• Regular payment, equal pay for equal work

irrespective of sex, suitable conditions of work, medical facilities, protective clothing etc shall be ensured to such workmen.

• The contractor to maintain register of migrant employees, send report of accidents, half yearly returns (From 23) and annual returns (Form 24)

• Employer contravening the provisions liable for punishment of imprisonment or fine or both

277

Qs’

If any…

278

THE EQUAL REMUNERATION ACT, 1976• Act provides for the payment of equal

remuneration to men and women• Extends to the whole of India • Act makes it obligatory on the part of

employer to pay equal remuneration to men and women workers for same work or work of a similar nature.

• In order to make the wages equal, prevailing wages shall not be reduced but the higher rate shall be maintained.

279

No discrimination

• No discrimination while making recruitment for the same work or work of a similar nature, except where the employment of women in such work is prohibited or restricted by or under any law for the time being in force.

• No discrimination in any condition of service subsequent to recruitment such as promotions, training or transfer.

280

Qs’

If any…

281

THE APPRENTICES ACT, 1961

• The Act extends to the whole of India.• Applies to those apprentices who are undergoing

apprenticeship training in designated trades.• From time to time, the Central Govt. has specified

the designated trades.

282

Contract of apprenticeship

• A contract of apprenticeship training is entered in to between the employer and the apprentice or, if he is a minor, guardian of the apprentice.

• The contract of apprenticeship training is to be sent to the Apprenticeship Adviser of the respective area.

283

Termination of training

• on the expiry of the period of apprenticeship training specified in the contract.

• Premature termination by employer - the employer shall pay to the apprentice such

compensation as may be prescribed• Premature termination by the apprentice apprentice or his guardian shall refund to the

employer as cost of training such amount as may be determined by the Apprenticeship Adviser

284

NUMBER OF APPRENTICES

• Depends on the ratio of trade apprentices to workers other than unskilled workers and the facilities available and that may be made available by the employer for training the apprentices.

285

Duties of the employer

• Make suitable arrangements for imparting practical training

• Provide for basic training.• Where an employer employs 500 or more workers,

the basic training shall be imparted in separate part of the workshop building or in a separate building set up by the employer.

• * the employer may get easy loan from the Govt. for construction of building for conducting training classes

286

ITIs• if the number of apprentices to be trained is less

than twelve, then the employer may depute such apprentices to any Basic Training Center or Industrial Training Institute run by the Government for basic training in any designated trade.

• Where an employer deputes any apprentice as above, such employer shall pay to the Government the expenses incurred by the Government on such training, at such rate as may be specified by the Central Government.

287

RI Centre

• Apprentice to be given Related Instruction course.

• Time spent by a trade apprentice in attending classes on RIC shall be treated as part of his paid period of work.

288

EMPLOYERS to ensure

• Placement of Training Officer with suitable qualification

• Payment of stipend at a rate not less than the prescribed minimum rate

• Not to pay on the basis of piece work• Not to require to take part in any output bonus

or other incentive scheme

289

Employer to ensure (contd.)

• HEALTH, SAFETY AND WELFARE OF APPRENTICES

• Not to require or allow overtime except with the approval of the Apprenticeship Adviser.

• In case of employment injury pay compensation in accordance with the provisions of the Workmen's Compensation Act, 1923

290

disputes

• Any disagreement or dispute between an employer and an apprentice arising out of the contract of apprenticeship shall be referred to

the Apprenticeship Adviser for decision.

291

Obligation for employment

• It shall not be obligatory on the part of the employer to offer any employment to any

apprentice who has completed the period of his apprenticeship training in his

establishment,• nor shall it be obligatory on the part of the apprentice to accept an employment under the

employer.

292

Qs’

If any…

293

THE WORKMEN’S COMPENSATION ACT, 1923

• The Act provides for payment of compensation to the worker injured during the course of employment or contracted by any occupational disease peculiar to that employment

• Act extends to the whole of India.

294

The amount of compensation • for accidents resulting in death, an amount equal

to fifty per cent of the monthly wages of the deceased workman multiplied by the relevant factor; or an amount of eighty thousand rupees, whichever is more

• * for permanent total disablement, an amount equal to sixty per cent of the monthly wages of the injured workman multiplied by the relevant factor, or an amount of ninety thousand rupees, whichever is more.

295

The maximum compensation as per W.C. Amendment Act 2000

• Fatal Injury - Rs.4,57,080 • Permanent Total Disablement - Rs.5,48,496 • Permanent Partial Disablement - According to

incapacity caused• Temporary Disablement - Rs. 2000 per month

upto a period of 5 years

296

ESI Corporation and Workmen compensation

• The liability of payment of compensation shifted from the employer to the Employees State Insurance Corporation

297

Qs’

If any…

298

THE FACTORIES ACT, 1948

• Act which makes it obligatory on the part of the employer to provide for the health, safety and welfare of the workers employed.

299

Act extends to the whole of India.

• Applies to every factory wherein 10 or more workers are or were employed, if run with power and 20 or more workers are or were employed, if run without power.

• Application to factories with fewer workers u/s 85

300

PROVIDES for• Hours of work (adult) not to exceed 48 hours in a week or

9 hours in a day.• Relaxation: Where an adult worker is engaged in

urgent repairs.• Payment of Overtime wages for overstay at workplace @

twice the ordinary rate of wages.• ** Provision relating to hours of work not applicable to

supervisory staff.• Weekly Holiday: No work for more than 10 days without a

day of rest.• Intervals of rest: half an hour for 5 hours of work• No child (who has not attained the age of 15 years) be

permitted to work.• Prohibition of employment of Women: No woman shall be

employed in any factory for more than 9 hours in any day or between 7 pm and 6 am.

301

Factories Act now allows women to work night shifts PROVIDED

• adequate safeguards in the factory as regards occupational safety and health, equal opportunity for women workers, adequate protection of their dignity, honor and safety and their transportation from the factory premises to the nearest point of their residence" are made.

302

Leave with Wages

• @ 1day for every 20 days provided -----

240 days of work during preceding year.• Days of lay off, paid holidays or leave days

considered• Encashment of unavailed leave: Encashable at the

present rate of wages.

303

The occupier (Employer) to maintain a register – LEAVE WITH WAGES REGISTER- in FORM 15

• Provide each employee a Leave Book- thick bound sheet- in FORM 16 (with similar entries as in Form 15)

• Provide each worker an Attendance Card in form 28 showing the particulars of employment

* shall be substituted by Electronic cards

304

EMPLOYER TO KEEP THE FACTORY

PREMISES CLEAN • white washing at least once in every 14 months• repainting or revarnishing every 5 years• ensure proper disposal of wastes and effluents• Record the dates on which white washing, painting or

varnishing done in a register in FORM 7.• Ensure provision of sufficient number of Latrines and urinals –

separate for gents and ladies• Ensure spittoons are provided at adequate places.• Ensure workplace has adequate ventilation • Avoid overcrowding – ensure 500 cubic feet of space for every

worker without reference to any space which is more than 14 feet above the level of the floor of the room.

• Ensure proper lighting- artificial or natural or both.• Ensure supply of uninterrupted supply of Drinking Water.• Where the no. of workers is more than 250, provision for

cold water in every lunch room, rest room and canteen shall be ensured. 305

EMPLOYER TO ENSURE SAFETY OF WORKERS

• Fencing of Machines and Moving parts of machines – spindles, gears, pulleys, belts etc

• Protection of eyes using screens or goggles from excessive light or infra-red or ultra violet radiations

• Precaution in case of Fire.• No woman or young person shall, unaided by

another person, lift, carry or move by hand or head any material or tool exceeding the maximum limit prescribed.

• * Adult male 75 Kgs• * Adult female 30 Kgs• * Adolescent male 30 Kgs• * Adolescent female 20 Kgs• Safety Officer: Appoint a Safety Officer wherein 1000

or more workers are employed.306

EMPLOYER TO LOOK AFTER THE WELFARE OF EMPLOYEES

• Washing facility separately for women and men• Separate rooms for men and women for drying of clothes• Separate rest rooms for men and women• First Aid boxes equipped with prescribed medicines• Ambulance room where 500 or more are employed• Canteen for use of workers where 250 or more are

employed (150 under Plantation Labour Act)• Lunch room where 150 or more are employed• Crèches where 30 or more women are employed• Appoint WELFARE OFFICER (S) where 500 or more are

employed (300 under PLA)• The duties, qualification and conditions of service of such

welfare officers shall be in accordance with the rules of the respective State Govt.

• NOTICE OF DANGEROUS OPERATIONS 307

REGISTERS TO BE MAINTAINED • Attendance Register/ Muster roll in form 25• Register of Adult Workers in form 12• Record of Lime washing, painting etc in form 7• Register of Compensatory Holidays in form 9• Overtime Muster roll for Exempted workers in form 10• Register of Leave with Wages in form 15• Health Register in form 17 (in respect of persons employed

in occupations declared to be dangerous operations u/s 87)• Register of Accidents and Dangerous Occurrences in form

26• Particulars of Rooms in the factory in form 35.

308

RETURNS TO BE SENT TO APPROPRIATE AUTHORITIES

• Notice of accidents and dangerous occurrences resulting in death or bodily injury in form 18 (similar to the one to be sent ESI Local Office under the ESI Act)

• Half yearly returns in form 22• Annual returns in form 21• Notice of change of Manager in form 23• Details of closure in form 32• Report of examination of Pressure Vessel or Plant in

form 8• Report of examination of Water sealed Gas holder in

form 38• Report of Examination of Hoist or Lift in form 41• Certificate of Fitness for Dangerous Operations in form

39 309

THE INDUSTRIAL EMPLOYMENT (STANDING ORDER) ACT, 1946• Defines the terms and conditions of service

between the employer and his employees.• Applies to every industrial establishment wherein

100 (in some States 50)or more workers are employed

• The Act extends to the whole of India

310

SIGNIFICANCE

• Terms of appointment order issued to an employee cannot circumvent the provisions of certified standing order. Therefore, it is always desirable to get standing orders drafted and certified as it regulates the relationship between the employer and the employee.

311

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312

Standing Order drafted shall provide for

• Date on which the standing orders shall come in to force and shall remain in force

• Definitions• Classification of workmen as Permanent,

Probationer, Badlis, Casual and Trainees

313

contd• Obligations –• not to carryon any other business for gain or

to take admission in educational institution without permission

• to observe strict secrecy of company matters• not to take photographs, drawing or

documents of the process of manufacture of the company

• not to carry any lethal weapon, explosive or article dangerous to life or property

• to follow safety rules in force• to inform any change in the address • etc

314

contd• Medical examination and aid in case of

accident• Identification of workmen and issue of Identity

cards• Working time for different categories of

workmen • Record of age, qualification and experience • Entry, exit and liability for security checking• Shift working and weekly off• Attendance and late coming• Methods of applying for different kinds of

leave and extension of leave• Action for unauthorised absence

315

contd• National and festival holidays• Transfer• Apprehension of danger to the safety and

security of factory and its personnels• Date of payment of wages/ salary• Overtime wages• Increment and promotion• Stoppage, closing or lay off of establishment

and strike• Resignation – notice or payment in lieu of

notice to be given• Termination of employment and notice or

payment in lieu of notice required to be served or made

316

contd

• Deduction from wages for fine imposed or absence from duty or loss caused to the property and recovery of employees contribution to schemes like EPF, ESI and Labour Welfare fund

• Age of superannuation

• Grievance procedure

• Disciplinary action for misconduct

• Punishment for misconduct and procedure for imposition of punishment

317

contd

• Service of notice• Issue of service certificate• Amendment of Standing order• Exhibition of Notices – as whether if put in

the Notice Board or not

318

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THE MATERNITY BENEFIT ACT, 1961 • The Act extends to the whole of India• Applies to every factory, shop or

establishment• Woman entitled to maternity benefit not

withstanding the application of the Employees State Insurance Act, 1948

320

Employer to ensure……

• No woman works during the six weeks immediately following the day of her delivery or her miscarriage

• No woman does any arduous work during the period of ten weeks from the expected date of delivery

• Not to discharge or dismiss a woman during her pregnancy

321

Eligibility

• Work of 80 days in the 12 months immediately preceding the date of delivery.

• Leave days & lay offs taken as worked.

322

Benefit

• 12 weeks leave of which not more than 6 weeks shall precede the date of her expected delivery

• The benefit to be paid @ average rate of wages for the three months preceding her maternity leave

• In case of miscarriage, 6 weeks leave with pay at the same rate as applicable to maternity benefit.

323

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324

• Important Definitions• Authorities under the Industrial Disputes Act• Award & Settlement• Strikes• Lock-outs• Lay Offs• Retrenchments• Closure• Case Law Studies

The Industrial Disputes Act, 1947

325

Industry [S.2(j)]: means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.

Employer [S.2(g)]: means-i. In relation to an industry carried on by or under the

authority of any department of the Central Government or a State Government – the authority prescribed in this behalf;

ii. In relation to an industry carried on by or on behalf of a local authority – the Chief Executive Officer of that authority.


326

• Industrial Dispute [S.2(k)]: means any dispute or difference between-i. Employers and Employers, or

ii. Employers and Workmen, or

iii. Workmen and Workmen,

which is connected with-

i. The employment or non-employment, or

ii. The terms of employment, or

iii. The conditions of labour.

of any person related directly or indirectly to the industry.


327

Workman [S.2(s)]: means any person (including an apprentice) employed in any industry to do any-i. Manualii. Skillediii. Unskillediv. Technicalv. Operationalvi. Clericalvii. Supervisory

work for hire or reward, whether the terms of employment be expressed or implied, and 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


328

Workman (contd.): to that dispute. Workman does not include any such person, who is:-i. Subject to the Air Force Act, 1950, the Army Act, 1950, or

the Navy Act, 1957, orii. Employed in the police service or as an officer or other

employee of a prison, oriii. Employed mainly in a managerial or administrative

capacity, oriv. Employed in a supervisory capacity, and draws wages

exceeding Rs.1600 per mensem, orv. Exercises functions mainly of managerial nature, by the

duties attached to the office or by the reason of power vested in him.


329

Public Utility Service [S.2(n)]: means-i. Any railway service or any transport service for the

carriage of passengers or goods by air;ii. Any service in, or in connection with the working of, any

major port or dock;iii. Any section of an industrial establishment, on the working

of which the safety of the establishment or the workmen employed therein depends;

iv. Any postal, telegraph or telephone service;v. Any industry which supplies power, light or water to the

public;vi. Any system of public conservancy or sanitation;vii. Any industry specified in the first schedule.


330

The Act has set up machinery to deal with the Industrial Disputes. These authorities are meant for dealing with the Industrial Disputes. Even though the name authority is used, it does not mean each and every authority has power to make a binding decision.

The Authorities are:i. Works Committee (Section 3)ii. Conciliation Officer (Section 4,11 & 12)iii.Board Of Conciliation (Section 11 & 13)iv.Court Of Inquiry (Section 6,10,11 &14)v.Labour Court (Section 7,11 &15)vi.Industrial Tribunal (Section 7A,11 & 15)vii.National Tribunal (Section 7b,11 & 15)

Authorities under the Act

331

Award: means an interim or final determination of any Industrial Dispute to any question relating thereto, by any Labour Court, Industrial or National Tribunal and includes arbitration award made under section 10A.

Settlement (Section 18-21): means a settlement arrived at in the course of conciliation proceedings and includes a written agreement between the employer and workman arrived at, otherwise than in the course of conciliation proceedings where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorized in this behalf by the Appropriate Government and the Conciliation Officer.

Award & Settlement

332

Strike: means cessation of work by a body of persons in any Industry:-a. Acting in combination, orb. A concerted refusal, orc. A refusal under a common understanding,

of any number of persons who are or have been so employed to continue to work or accept employment.

Strike is a weapon in the hands of the workmen, in the process of collective bargaining. Strike tests the economic bargaining power of each side and forces each of them to face the need it has for others contribution. The economic pressure of the strike is the catalyst which makes the agreement possible. Collectively bargaining is a process of reaching agreement and strikes are an integral and frequently necessary part of that process.

Strikes

333

• Section 22 says “In case an industry is a public utility service, no person employed in it shall g o on strike in breach of contract-a. Without giving to the employer notice of a strike,

provided within 6 weeks before striking,

b. Within 14 days of giving such notice, or

c. Before the expiry of the date of strike specified in any such notice; or

d. During the pendency of any conciliation proceedings before a conciliation offices and 7 days after the completion of these proceedings”

Strikes: in Public Utility Services

334

Notice of strike should be in prescribed form. The copy of this notice is to be submitted to the

conciliation officer, or such authority as may be prescribed by the Appropriate Government.

The employer, on receipt of notice of strike from employees, shall report within 5 days to-a. Appropriate Governmentb. Authority prescribed by the Appropriate Government- which

states the number of notices received on that day. The date on which the workman proposed to go on

strike should be specified in the notice. A fresh notice is necessary when the date of strike

specified in the original notice expires.


335

• A new notice is necessary, when the conciliation proceedings fail, which have started after the notice.

• The object of giving the notice is to allow the other party to come to terms, or to approach the authorities to intervene and stop the strike, if possible.

• During the period of notice, the parties can respond to each other.

• Illegality attaches only to that period which remains to expire before the commencement of action.


336

Section 23 states the general prohibition of strike. No workman who is employed in any Industrial

Establishment shall go on strike in the following circumstances:a. During the pendency of conciliation proceedings before a Board

and 7 days after the completion of these proceedings;b. During the pendency of proceedings before a Labour Court,

Industrial Tribunal or National Tribunal, and 2 months after the completion of these proceedings;

c. During the pendency of arbitration proceedings before an arbitrator and 2 months after the completion of these proceedings; where notification has been issued under S 10A(3A)

d. During any period in which a settlement or award is in operation in respect of any of the matters covered by the settlement or award.

Strikes: General Prohibition

337

Lock-out [Section 2(I)] means-a. The temporary closing down of a place of employment,b. The suspension of work, orc. The refusal by an employer to continue to employ any number of

persons employed by him. As strike is a weapon in the hands of workmen for enforcing

their demand, lock-out is a weapon in the hands of the employer to persuade the workers to agree to his point of view and accept his demands in the struggle between capital and labour.

The notice of lock-0ut shall be given in prescribed manner.On event of employer giving notice of lock-out on any day to

any person employed by him, he shall report the number of notices given to the Appropriate Government, within 5 days of giving such a notice.

Lock-outs

338

The conditions of lock-outs in public utility services are dictated under Section 22 and are same as the conditions of Strikes.

The provisions for general prohibition of lock-outs are dictated under Section 23, same as the provisions of Strikes.

The notice of lock-out is not necessary when a lock-out is already existent in case of a public utility service.

However, the employer shall send intimation of lock-out to the authority specified by the Appropriate Government, on the day of declaration of lockout itself.

Prohibition of Lock-outs

339

Wages are generally not provided during the period of strikes when it is proven illegal under the Act.

However, the factor of justification of reasons leading to the Act of going on strike, also decide the payment or non-payment of wages to the workmen.

If a strike is not justified, but legal; or if a strike is illegal, but duly justified, the workmen are entitled to receive wages for the period of the strike.

A lock-out in violation of the statutory requirements is illegal and unjustified and workers are entitled to wages for the lock-out period.

For a legal lock-out, no wages are payable to the workmen.

Strikes & Lockouts: Wages & Justification

340

Prohibition of financial aid to illegal strikes or lock-outs (S.25)

Penalty for illegal strike (S.26): Any workman who commences, continues or acts in furtherance of an illegal strike shall be punishable with imprisonment up to 1 month, or fine up to Rs.50 or both.

Penalty for instigation (S.27): Any person who instigates or incites other to take part in a strike or lock-out which is illegal shall be punishable with imprisonment up to 6 months or with fine up to Rs.1000 or both.

Penalty for giving financial aid to illegal strikes and lock-outs (S.28): Punishable with imprisonment up to 6 months or fine up to Rs.1000 or both.

Strikes & Lock-outs: Penalties

341

Lay-Off means:i. The failureii. Refusal, oriii. Inability of an employer on account of shortage of:

a. Coal,b. Power or raw materials, orc. The accumulation of stocks, ord. The break-down of machinery, ore. Natural calamity, orf. For any other connected reason to give employment;

to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been

retrenched.

Lay-Offs

342

Lay-Off means putting aside workmen temporarily. The duration of a Lay-Off should not be longer than that of

the current emergency. The employer – workman relationship does not come to

an end, but is suspended during the period of emergency. The workman’s name should be essentially present on the

muster rolls of the industry for claiming relief.The workman should not have been retrenched.If work is given by the employer on a different shift, it

would be considered as a half-day lay-off.If employment is not given within two hours, it would be

considered as having laid-off that whole day.

Lay-Offs

343

The payment of compensation for a lay-off is dependent upon-a. Status of a workman, i.e., badli, casual, or permanentb. Type of service, i.e., continuous or seasonalc. Number of workmen in the Industrial Establishment

Industrial Establishments are classified into three groups depending on the number of workers employed in that establishment:i. Where the number of workmen is less than 50ii. Where the number of workmen is 50 – 100iii. Where the number of workmen is more than 100.

Lay-Offs: Rules and Provisions

344

Compensation is provided to the workmen in an Industrial Establishment on the basis of the category they fall in from the above mentioned three groups:i. Nil compensation for IEs with less than 50 workmen.ii. Compensation at the rate of 50% of the total basic pay

and dearness allowance to a time limit of 45 days for IEs with 50 – 100 workmen.

iii. Compensation at the rate of 50% of the total basic pay and dearness allowance to a time limit of 45 days for IEs with more than 100 workmen.

Workmen are not entitled to any compensation if alternate employment is provided by the employer in a radius of 5 miles, or if the lay-off is a result of a strike.

Lay-Offs: Compensation

345

The employer of the Industrial Establishment is required to prepare a muster register that shows the name and other requisite details of all workmen in the prescribed format.

Section 25M states that an employer of an Industrial Establishment employing 100 or more workmen on average per day in the preceding 12 months is required to obtain previous permission of specified authority appointed for the purpose by the Appropriate Government, by a notification by the official Gazette.

Section 25Q says any employer who contravenes the provision of Section 25M shall be punishable with imprisonment up to one month, or fine up to Rs.1000 or both.

Lay Offs: Penalties

346

Retrenchment [S.2(oo)]: means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include-a. Voluntary retirement of workman, orb. Retirement of the workman on reaching the age of

superannuation, if his contract contains a stipulation in this behalf, or

c. Termination of the service of a workman as a result of non-renewal of the contract of employment, or

d. Termination of employment of a workman on the ground of continued ill health.

The word ‘ill health’ means cataract, physical unfitness, infirmity due to old age, incapacity to work, leprosy, etc.

Retrenchment

347

Retrenchment means the discharge of surplus labour. It is not necessary that removal must be only when the

establishment is in loss. The Supreme Court has interpreted the term retrenchment in

stricter sense of it, that is to say, it means termination of service for any reason whatsoever.

Retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff of labour force is discharged a surplusage.

Where a worker suffers an accident during the course of employment making him unfit for the job, termination on this ground is illegal.

Where seasonal worker ceases to do work due to closure of season, it is not retrenchment.

Retrenchment

348

Provisions are divided into two main categories which are as follows:i. Where number of workmen employed is less than 100,ii. Where number of workmen employed is more than 100.

Section 25F: No workman employed in any industry who is in continuous service for not less than one year under an employer shall be retrenched until-a. The workman is given one month’s notice in writing

indicating the reasons for retrenchment and the period of notice has expired, or

b. In case one month’s notice is not given, the workman is paid wages for the period of the notice, in lieu of the notice period.

Retrenchment: Provisions & Rules

349

c. The workman is paid at the time of retrenchment, compensation which shall be equal to 15 days average pay for every completed year of continuous service or any part thereof in excess of six months, and

d. Notice in the prescribed manner is served on the Appropriate Government.

• Section 25G: The normal rule is to retrench first of all the junior most workman. If an employer has sufficient reasons to depart from this rule, only then he can do so, but the reasons have to be recorded.

• The LIFO (Last In First Out) Principle is mentioned in the Section 25G, which states that the workman who is employed last will be retrenched first.


350

• Section 25H gives a statutory right of reemployment to the retrenched workmen.

• If the employer wants to take the workmen in future, the retrenched workman has a right of preference over the others.

• This provides for preferential reemployment of the retrenched workmen.

• The employer should take precaution that he pays the retrenchment compensation at the time of retrenchment.

• In case the workman denies to accept compensation for the same, the employer should have sufficient proof that retrenchment compensation was offered to the workman, and clearly denied by him.


351

Section 25K points out that the provisions of this chapter are applicable to Industrial Establishments employing 100 or more workmen on average per working day for the preceding 12 months.

This establishment should not be of a seasonal character or in which work is performed only intermittently.

Section 25N specifies that no workman who is in continuous service for not less that one year under an employer shall be retrenched until-a. The workman has been given three months notice in writing

indicating the reasons for retrenchment and the notice period has expired or the workman has been paid in lieu of such notice, wages for the period of notice.

b. Notice in the prescribed manner has been given to the Appropriate Government and permission is granted.


352

c. Workman has been paid compensation at the time of retrenchment which shall be equal to 15 days average pay for every completed year of continuous service or any part thereof in excess of six months.

d. Inquiry is made by the Appropriate Government or specified authority and granting or refusing permission for the reasons to be recorded in writing.

e. In case retrenchment is effected without making an application or where the permission for retrenchment is refused retrenchment shall be deemed to be illegal from the date on which it is effected and the workman shall be entitled to all the benefits that are available to him under the law.

• Section 25Q specifies that any employer who contravenes the provisions of Section 25N shall be punishable with imprisonment up to one month or fine up to Rs.1000 or both.

Retrenchment: Provisions, Penalties

353

Closure [Section 2(cc)]: means permanent closing down of a place of employment or part thereof.

The provisions about closure are to be understood with reference to-a. Type of service:- i.e., continuous service or not (same as

layoff)b. Number of workmen employed;-

i. No. of workmen less than 50ii. No. of workmen 50 – 100iii. No. of workmen 100 or more.

• The closure of an undertaking is subject to the restrictions imposed by the statutory provisions.

Closure: Definition & Provisions

354

Where number of workmen employed is less than 50 [Section 25 FFA & Section 25 FFF], if an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less that one year in that undertaking immediately before such closure shall be entitled to notice and compensation as if the workman has been retrenched.

If the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation payable to the workman shall not exceed his average pay for three months.

If an undertaking is set up for the construction off buildings, bridges, roads, canals, dams, or other construction work and it is closed down on account of completion of the work within 2 years from the date on which the undertaking is set up, then no workman employed by the undertaking shall be entitled to any compensation.

In case the construction work takes more that 2 years for completion after it is set up, then the workman will be entitled to both notice and compensation as per the rules of retrenchment.

Closure: Rules & Provisions

355

Where number of workmen employed is more than 50, but less than 100 [Section 25 FFA]:-a. The employer who intends to close down his undertaking

shall have to serve at least sixty days notice in the prescribed manner on the Appropriate Government before the date on which the intended closure is to become effective. The reasons for the same have to be clearly stated.

b. No notice is required when:-i. The number of workmen employed is less than 50, orii. An undertaking is set up for the construction of buildings,

bridges, canals, roads, dams or for other such projects.iii. The Appropriate Government is satisfied than; owing to

exceptional circumstances like accident in the undertaking, death of employer or similar reason, no notice is required.


356

c. The compensation payable is the same as if applicable to an undertaking employing less than 50 workmen.

d. The notice to be given is only information to the Appropriate Government. The notice does not mean that any previous sanction of the Appropriate Government is required for the closure of an undertaking.

• Where the number of workmen is 100 or more [Section 25-O], an employer who intends to close down his undertaking shall apply to the Appropriate Government for prior permission, 90 days before the intended date of closure.

• Copy of this application should also be served on the representatives of the workmen in the prescribed manner.

• No such application to the Appropriate Government is required when the construction is the case of canals, bridges, buildings, etc.

• Workmen shall be entitled to compensation in case of a legal closure, at the rate of 15 days wages for every completed year of continuous service.


357

• Penalty for closure [Section 25R]:- Any employer who closes down an undertaking without complying with the provisions of Section 25-) shall be punishable with imprisonment up to six months or fine up to Rs.5000 or both.

• Penalty for closure without notice [Section 30A]:- An employer who closes down any undertaking without complying with the provisions of Section 25FFA shall be punishable with imprisonment up to six months or fine up to Rs.5000 or both.

• Any employer who contravenes an order refusing to grant permission to close down an undertaking under Section 25-O(2) shall be punishable with imprisonment up to one year, or fine up to Rs. 5000 or both.

• Where the contravention is continuing even then, with a further fine up to Rs.2000 for every day during which the contravention after conviction continues can be imposed.

Closure: Penalties

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1) Syndicate Bank V/s Umesh NayakHELD:- The Supreme Court has observed that strike or

lock-out is to be resorted to, only in unavoidable circumstances and to compel the other party to see the justness of the demands and is not intended to cause nuisance or physical danger to their employers or others.

2) Hindustan Cables V/s Labour CourtHELD:- Resorting to strikes or lock-outs without

negotiations or conciliations is unjustified.

Case Law Studies

359

3) Central India Spinning, Weaving & Manufacturing Co. Ltd., V/s State Industrial Court

HELD:- The Bombay High Court said the key words “the failure, refusal, or inability of an employer” in the definition of lay-off make it clear that the unemployment has to be on account of a cause which is independent of any action or inaction on part of the workmen themselves.

4) Morinda Co-op. Sugar Mills V/s RamakrishnanHELD:- Where seasonal worker ceases to do work due to

closure of the season it is not retrenchment.

Case Law Studies

360

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Clra Presentation

Documents

Transcript of Clra Presentation