Labour Laws

FACTORIES ACT, 1948
Objectives The main objectives of the Factories Act are (i) to regulate working conditions in factories, and (ii) to ensure that basic minimum requirements for the safety, health and welfare of the factory workers are provided. Besides, the Act envisages to regulate the working hours, leave, holidays, overtime, employment of children, women and young persons, etc. The Act was drastically amended in 1987 whereby safeguards against use and handling of hazardous substances and procedures for setting up hazardous industries were laid down. Study Plan Objectives Scope and Coverage Power to Make Rules Employees Entitled Administrative Set up Definitions Different departments to be separate Factories or two or more factories to be a single factory Obligations of Employers / Employees Rights of Employers / Employees Offences and Penalties 3 Lessons

THE PAYMENT OF GRATUITY ACT, 1972
Objectives The Payment of Gratuity Act, 1972 envisages to provide a retirement benefit to the workmen who have rendered long and unblemished service to the employer, and have thus contributed to the prosperity of the employer. Gratuity is a reward for long and meritorious service. The significance of this Act lies in the acceptance of the principle of gratuity as a compulsory, statutory retrial benefit. Study Plan Objectives Scope and Coverage Exemption Employees Entitled Administrative Authority Salient Provisions Obligations of Employers Rights of Employees Offences and Penalties 3 Lessons

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THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952
Objectives The Employees’ Provident Funds and Miscellaneous Provisions Act instituted a compulsory contributory fund for the future of the employee after his retirement or for his dependents in case of his early death. Study Plan 4 Lessons Objectives Scope and Coverage Exemption Inspection Charges Establishment to include all Departments and Branches Clubbing of Establishments Voluntary Application of the Act Employees Entitled Administrative Authority The Schemes Employees’ Pension Scheme, 1995 Return of Ownership/ Management Establishment Code No. Declaration of Membership Nomination Return of Membership Allotment of Account Number Employer’s Contribution Basic Wages Wages no to be reduced on account of Employer’s Contribution Employee’s Contribution Employer to Deduct Employees’ Contribution Central Government’s Contribution to Pension Fund Administrative Charges Time and Mode of Deposit Damages for default in payment Determination and Recovery Investment of Funds and Interest Contribution Cards Protection of Provident Fund Private Provident Fund Scheme Transfer of Accounts Obligations of Employers / Employees Rights of Employers/ Employees Settlement of PF / Pension Claims Provident Fund Adalats Duties & Powers of Inspectors 3

Offences and Penalties

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THE EMPLOYEES’ STATE INSURANCE ACT, 1948
Objectives The main objective of the Employees’ State Insurance Act, 1948 is to provide to the workers medical relief, sickness cash benefits, maternity benefits to women workers, pension to the dependents of the deceased workers and compensation for fatal and other employment injuries including occupational diseases, in an integrated form through a contributory fund. Where a workman is covered under ESI Scheme, no compensation could be claimed from his employer under the Workmen’s Compensation Act in respect of employment injury sustained by him. Study Plan 4 Lessons Objectives Scope and Coverage Exemption Employees Entitled Administrative Authority Salient Provisions Registers to be maintained by the Employer Return of Contributions Contribution Period and Benefit Period Sickness/ Maternity/ Disablement/ Dependent’s / Medical Benefit Funeral Expenses Payment of Benefit in case of Death Repayment of benefit improperly received Notice of Injury Accident Report by the Employer Employer to Arrange First Aid Death Report Abstention Verification Employer not to employ Sick Employees Employer not to Dismiss or Punish Employee During Sickness Inspectors – Powers & Duties Obligations of Employers / Employees Rights of Employers / Employees Employees Insurance Court Adjudication of Disputes & Claims Conditions for Admission of certain Disputes Appeal Offences and Penalties List of Specified Diseases

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THE TRADE UNIONS ACT, 1926
Objectives The Trade Unions Act, 1926 provides for registration of trade unions (including association of employers) with a view to render lawful organization of labour to enable collective bargaining. The Act also confers on a registered trade union certain protection and privileges. Study Plan Objectives Scope and Coverage Administrative Authority Meaning of Trade Union Salient Provisions Obligations of Registered Trade Unions Rights of Registered Trade Unions Offences and Penalties 2 Lessons

THE MINIMUM WAGES ACT, 1948
Objectives The Minimum Wages Act, 1948 envisages to provide minimum statutory wages for scheduled employments with a view to obviate the chances of exploitation of labour through payment of very low and sweating wages. The Act also provides for the maximum daily working hours, weekly rest day and overtime. Rates fixed under Minimum Wages Act prevail over the rates fixed under awards agreement. Study Plan 3 Lessons Objectives Scope and Coverage Employees Entitled Administrative Authority Committees & advisory Board Central Advisory Board Wages – Definition & Meaning Fixation of Minimum Rates of Wages Fixation of Working hours etc., Wages for two or more classes of work Obligations of Employers Rights of Employees Contracting out is Void Offences and Penalties Schedule : Establishments / Employments covered under the Act 6

THE PAYMENT OF WAGES ACT, 1936
Objectives The Payment of Wages Act, 1936 was enacted with the object of (i) regulating payment of wages, imposition of fines and deductions from wages, and (ii) eliminating all malpractices by laying down wage periods and time and mode of payment of wages. The Act, therefore, ensures payment of wages in a particular form at regular intervals without unauthorized deductions. Study Plan Objectives Scope and Coverage Exemption Employees Entitled Administrative Authority Wages- Definition and Meaning Obligations of Employers Rights of Employees / Employees Contracting out is Void Offences and Penalties 3 Lessons

THE MATERNITY BENEFIT ACT, 1961
Objectives The Maternity Benefit Act, 1961, aims at regulation of employment of women employees in certain establishments for certain periods before and after child birth and provisions of maternity and certain other benefits. Some State Acts also provide for additional benefits such as free medical aid, maternity bonus, provisions of crèches, additional rest intervals, etc. Study Plan Objectives Scope and Coverage Employees Entitled Administrative Authority Salient Provisions Obligations of Employers Rights of Employers/ Employees Offences and Penalties 2 Lessons

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FACTORIES ACT, 1948
HISTORY OF THE FACTORY LEGISLATION

1872 – : Report by Major Moore, Inspector in Chief, 73 Bombay Cotton Department 1875 : First Factory Commission under Bombay Govt. under instructions from Secretary of State for India 1881 : First Factories Act 1891 : The Factories (Amendment) Act, 1891 1934 : Factories Act 1948 : Factories Act, 1948 1987 : Amendment – safeguards against use and handling of hazardous substances, procedure to set up hazardous industry. MOST IMPORTANT CHANGES INTRODUCED 1. Widening of the definition of the term factory. 2. Abolition of the distinction between seasonal and non-seasonal factories 3. 3 separate chapters dealing with health, safety and welfare of workers. Clear specification in the Act itself of the minimum requirement under those heads. 4. Extention of the basic provisions to all work places, except with aid of family. 5. Raising minimum age for child employment from 12 to 14 years and reducing maximum permissible daily hours from 5 to 4 ½ . 6. Licensing and Registration of factories, prior scrutiny of plant and specifications of factory building. 7. Power to state governments to make rules. Objectives The main objectives of the Factories Act are (i) to regulate working conditions in factories, and (ii) to ensure that basic minimum requirements for the
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safety, health and welfare of the factory workers are provided. Besides, the Act envisages to regulate the working hours, leave, holidays, overtime, employment of children, women and young persons, etc. The Act was drastically amended in 1987 whereby safeguards against use and handling of hazardous substances and procedures for setting up hazardous industries were laid down. Social Enactment Scope and Coverage The Factories Act extends to the whole of India and is applicable to all “factories” including government factories. Interpretation / Definitions (a) Adult (b) Adolescent (c) Child (d) Young Person (e) Day (g) Power Manufacturing Process - Sec. 2(k) "Manufacturing process" means any process for (i). 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 or (ii). Pumping oil, substance or water, sewage or any other (bb) Calender year (f) Week

(iii). Generating, transforming or transmitting power or

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(iv). Composing types for printing, printing by letter press, lithography, photogravure of other similar process or book binding or (v). Constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels or (vi). Preserving or storing any article in cold storage. Meaning Definition as contained in Sec.2 (k) of the Factories Act, 1948 is of very wide connotation and denotation. Any process which is done in relation to an article or substance which involves making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing or otherwise treating or adopting is a manufacturing process. The definition of manufacturing process as it nowstands after amendment in 1976 is so wise that hardly any process is left which may not be covered within the purview of Section 2(k) of the Act. Whether certain premises Manufacturing process. is a factory? –

Hotel preparing food with electrical appliances Petrol Pump Making of readymade garments Making of Bread Packing of Tea Work of Film Production Conversion of sea water into salt water Cold Storage Plant
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Packing Worker - Sec. 2 (l) "Worker" means a person employed, directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer, whether for remuneration or not in any manufacturing process or in cleaning any part of the machinery or premises used for a manufacturing process or in any other kind of work incidental to or connected with the manufacturing process or the subject of the manufacturing process but does not include any member of the armed forces of the Union. MASTER AND NECESSARY SERVANT RELATIONSHIP HOW FAR

Question of fact. Relationship characterized by a contract of service between them. As stated in Halbury’s “Law of England” the following have been stated to be the indica of a contract of service namely; i. Masters power of selection of servant. ii. Payment of wages or remuneration. iii. Masters right to control the method of doing the work. iv. Masters right to supervision and control.

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In order to give a restricted meaning, the supreme court held that the concept of employment involves three ingredients; i. Employer ii. Enployee iii. Contract of employment Piece rate workers : Held by Supreme Court that such workers were within the employment of the owner and were within the meaning of the term worker e.g. Bidi rolling workers. Supervision whether necessary ? Scope of Definition: Definition of worker substantially amended in the year 1976 widening it’s scope. Certain persons expressly excluded. Following are essential requirements: 1. person in question must be employed in any manufacturing process or 2. employed in cleaning any part of the machinery or premise used for manufacturing process. 3. employed in any other kind of work incidental or connected with manufacturing process 4. employed in any other work which is subject of the manufacturing process. Eg. Raw-materials 5. must be employed in a factory within the meaning Sec. 2(m) 6. must be employed directly by the principal employer 7. may be employed through any agency, contractor with or without knowledge of principal employer 8. employed for remuneration or without remuneration 9. master-servant relationship 10.must not be a member of arm force of the union
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All workmen under Sec. 2(l) would be employees but all employees would not be worker Includes intellectual as well as aesthetic and artistic person . eg. Time keepers, workshop staff, clerks marinating leave record

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Factory Sec. 2(m) "Factory" means any premises including the precincts thereof (i). Whereon ten or more workers are working or were working on any day of the preceding twelve months and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on or (ii). Whereon twenty or more workers are working or were working on any day of the preceding twelve months and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on But does not include a mine subject to the operation of the Mines Act, 1952 or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place. [Explanation : For computing the number of workers for the purposes of this clause all the workers in different relays in a day shall be taken into account]. Definition of ‘Factory’ (i) a factory need not be situate in any one premises only, (ii) The premises must be such as in any one part thereof a manufacturing process is being carried on. (iii) Factory however, does not include a mine covered under the Mines Act, 1952, a mobile unit of the armed forces, a railway shed or a hotel, restaurant or eating place. Tests to Determine – whether any establishment is a factory :
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i.

There must be a place, premises including precincts thereof where manufacturing process is carried on. Eg. Building / Open Land ii. Manufacturing process carried on with aid of power or without aid of power in any part of the factory. iii. There must be required number of persons iv. Not necessary that a manufacturing process to be carried on in a whole building or place or premises or precincts thereof, any one part is sufficient. v. Even if condition is not fulfilled premise can be a factory if the State Govt has issued a notification under Sec.85 (1), provided manufacturing process is not carried on with the aid of his family members. Manufacturing process at two different places A fixed rate or premises necessary Separation not possible- whether both Factory. Occupier – Sec. 2(n) "Occupier" of a factory means the person who has ultimate control over the affairs of the factory, and where the said affairs are entrusted to a managing agent, such agent shall be deemed to be the occupier of the factory: Provided that in the case of a ship which is being repaired or on which maintenance work is being carried out in a dry dock which is available for hire (1). The owner of the dock shall be deemed to be the occupier for the purposes of any matter provided for by or under (a) Sections 6, 7, 11 or 12;
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(b) Section 17, in so far as it relates to the providing and maintenance of sufficient and suitable lighting in or around the dock; (c) Sections 18, 19, 42, 46, 47 or 49 in relation to the workers employed on such repair or maintenance; (2). The owner of the ship or his agent or master or other officer-in-charge of the ship or any person who contracts with such owner, agent or master or other officer-in-charge to carry out the repair or maintenance work shall be deemed to be the occupier for the purposes of any matter provided for by or under sections 13, 14, 16 or 17 (save as otherwise provided in this proviso) or Chapter IV (except Section 27) or Sections 43, 44 or 45. Chapter VI, VII, VIII or IX or Sections 108, 109 or 110 in relation to (a) the workers employed directly by him or by or through any agency; and (b) the machinery, plant or premises in use for the purposes of carrying out such repair or maintenance work by such owner, agent, master or other officer-in-charge of person.

ADMINISTRATIVE SET UP State government Authority. Powers: 1. State government's power to declare different departments to be separate factories or two or more factories to be a single factory. 2. Power to exempt during Public emergency : except Sec 67- Prohibition of employment of young
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is

the

Chief

Administrative

children i.e persons below the of 14 years. No exemption for more than 3 months. 3. Make rules for enforcement of the Act, Registration, Licensing, and collection of License fees. 4. Apply all or any provisions of the Act to any factory, Inspite of not being covered under the Act. State government directives. bound by central government

Administration through an "Inspectorate" headed by the "Chief Inspector" and assisted by: Additional Chief Inspector, Joint Chief Inspector, Deputy Chief Inspector, Inspectors, Other Officers. • All are Government appointments. • Other appointments include Doctors and Surgeons. • Every district Magistrate shall be an inspector for his district. • All officers are Public servants. • More than 1 Inspector. H Powers of Inspectors Enter into a factory. Examination, inspection, taking of Statement. Exercise such other powers as may be prescribed for carrying out the purposes of the act.

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OBLIGATIONS OF EMPLOYER 1. Compulsory Approval (Sec. 6) ♦ Prior approval of the State Government for factory site, construction or extension. Application in prescribed form to be submitted to the Chief Inspector of factories alongwith: (a) Manufacturing process flow chart, brief description of various stages of the process. (b) Construction plan and specifications in duplicate. (c) Other particulars as may be required. ♦ No prior approval or license required for mere replacement or addition unless affects safe work area or environmental conditions of the factory. Grant of Approval : Deemed Approval if no order is communicated to the applicant within 3 months - Sec. 6 (2). In case of refusal of approval by State Government or the Chief Inspector, the applicant may appeal to the Central or State Government respectively within 30 days of such refusal. - Section 6(3) 2. Registration / License & Notice by Occupier Section 6 & Section 7 Registration for obtaining a license to operate the factory. Notice of occupation in triplicate to Chief Inspector atleast 15 days before occupation alongwith prescribed fees and other required information. ♦ Contents of Application-cum-Notice. ♦ Applicability for first time and to factories carrying manufacturing process for less than 180 working days.
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Grant and Renewal of license : By the Chief Inspector. Valid upto next 31st December. Renewal every year in prescribed form at least 30 days before its expiry alongwith prescribed fee.

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3. Notice of change of Manager Section 7(4) within 7 days. 4. General duties as to health, safety and welfare of workers - Section 7A. 5. General duties as regards Articles and Substances for use in factories - Section 7B 6. To provide Health Measures (a) Cleanliness and disposal of wastes and effluents - Section 11 & 12 (b) Ventilation, Temperature and Humidity Section 13 & 15 (c) Prevent Dust and Fumes - Section 14 (d) Avoid Overcrowding - Section 16 (e) Lighting and Drinking Water - Section 17 & 18 (f) Latrines, urinals and spittoons - Section 19 & 20 7. To Undertake Safety Measures (a) Fencing of machinery - Sec. 21 (b) Work on or near machinery in motion - Sec. 22 (c) Employment of young persons on dangerous machines - Sec. 23 (d) Striking gear and devices for cutting off power - Sec. 24 (e) Self-acting machines - Sec. 25 (f) Casing of new machinery - Sec. 26 (g) Prohibition of employment of woman of children near cotton openers - Sec. 27 (h) Hoists and lifts - Sec. 28 (i) Lifting machines, Chains ropes and lifting tackles - Sec. 29 (j) Revolving machinery - Sec. 30 (k) Pressure plant - Sec. 31 (l) Floors, stairs and means of access - Sec. 32 (m) Pits, sumps, openings in floors etc. - Sec. 33
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(n) Excessive weights - Sec. 34 (o) Protection of eyes - Sec. 35 (p) Precautions against dangerous fumes - Sec. 36 (q) Precautions regarding the use of portable electric light - Sec. 36A (r) Explosive or inflammable dust, gas etc. - Sec. 37 (s) Precautions in case of fire - Sec. 38 (t) Power to require specifications of defective parts or tests of stability - Sec. 39 (u) Safety of buildings and machinery - Sec. 40 (v) Maintenance of buildings - Sec. 40A (w) Safety Officers - Sec. 40B

8. Welfare Amenities (a) 43 (b) (c) (d) (e) (f) 47 (g) (h) Washing and drying of wet clothes - Sec. 42, Sitting arrangements - Sec. 44 First-aid boxes or cupboards - Sec. 45 Ambulance rooms A Canteen - Sec. 46 Rest-rooms / shelters and lunch rooms - Sec. Crèches - Sec. 48 Welfare Officers - Sec. 49

9. Working Hours, Holidays and Overtime (a) Restrictions on Employment of Women, Children and Adolescents - Section 68 & 69. (b) No Dual Employment - Section 60 & 71(4). (c) Working Hours - Sec. 51, 54, 71(1), 66, 70(1A) & 71(1). (d) Rest Intervals and Spread Over - Sec. 55, 56 & 71(2). (e) No Overlapping of Shifts - Sec. 58. (f) Weekly Holidays - Sec. 52, 53 & 71(3). (g) Overtime - Sec. 59 & 64.
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(h) 74. (i)

Notice of Periods of Work - Sec. 61, 63, 72 & Register of Workers - Sec. 62 & 73.

10.Leave with wages Earned Leave : Eligibility 240 days in a year If employed after January 2/3 of the total numbers of days remaining in a year. 1) 1 day for 20 worked days - in case of adults 2) 1 day for 15 worked days - in case of child Only minimum limit and not maximum - Tribunal can award leave in case of excess of these limits. Note : ♦ 240 days includes Earned Leave, Maternity Leave upto 12 weeks, lay off under contract / agreement or under standing orders but no leave shall be earned on these days. ♦ Leave exclusive of all holidays. ♦ Fraction more than half a day, deemed as one full day. Leave to be with wages – Average of preceding month. Advance wages for the period of leave in case leave allowed for more than 4 days for adults and 5 days in case of child. Accumulated Leave - Not availed leave can be carried forward upto 30 days for adults and 40 days in case of child. Refused Leave can be carried forward to next year without any limit. Sec. 79(5) Application for Leave – 15 days prior to factory manager. No application in case of illness. Factory Manager can demand medical certificate.
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Wages in lieu of leave – In case of discharge, dismissal, quitting, superannuation, death. Payment to be made before the expiry of the second working day from the date, or within 2 months from the date of such superannuation or death. Sec. 79(3) Leave Registers to be maintained – By the Manager ♦ Leave with wages register ♦ Leave book ♦ Leave register for exempted factories – Exempted factories under Sec. 84 by State Government.

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Obligation of Employees  No willful interference or misuse – Sec. 111  Do anything likely to endanger himself or others  Willful neglect Note : Contravention of any of the above provisions would entail imprisonment upto 3 months, or fine upto Rs.100 or both. Rights of Employers  Right to carry on the plan of setting up a new factory or extension of an existing one, if no adverse order within 3 months. – Sec. 6(2)  Right to appeal, in case of refusal to grant approval for his application for setting up a factory. – Sec.6(3)  Right to restrain a child or a young person from working in the factory – Sec.67 & 68  Right of appeal against the order of the Inspector or Chief Inspector within 30 days. – Sec. 107.  Right to demand an application for leave, medical certificate – Sec.79(7) Rights of Employees  Right to claim minimum health and safety measures and welfare amenities as provided by the Act.  Right to obtain information relating to workers health and safety at work.  Right to training  Right to represent to the Inspector – Sec. 111(a)  Right not to pay any fee or charge for the facilities or appliances –Sec. 114.  Right to claim wages for and in view of leave allowable to him. Sec.82

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Offences and Penalties

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THE MATERNITY BENEFIT ACT, 1961 Objectives
The Maternity Benefit Act, 1961, aims at regulation of employment of women employees in certain establishments for certain periods before and after child birth and provisions of maternity and certain other benefits. Some State Acts also provide for additional benefits such as free medical aid, maternity bonus, provisions of crèches, additional rest intervals, etc.

Scope and Coverage
 The Act extends to the whole of India and is applicable to every factory, mine or plantation (including those belonging to Government) and an Establishment engaged in the exhibition of equestrian, acrobatic and other performances, irrespective of number of employees, and to every shop or establishment wherein 10 or more persons are employed or were employed on any day of the preceding 12 months. (Sec. 2)  State Government extends the Act to other class of establishments. (Sec.3(e))  Act does not apply to any such factory/ other establishments to which the provisions of the Employees State Insurance Act are applicable for the time being.

Employees Entitled
 Every women employee whether employed directly or through a Contractor who has worked for a period of atleast 80 days during the 12 immediately preceding months from her expected date of delivery – Sec. 5(2). No. of days to include days laid off or on holidays with wages. Exception: Immigrant women into the State of Assam – Sec. 5(2)  No wage ceiling or restriction as regards to the type of work a woman is engaged in.  Benefit to include female workers engaged on casual basis or daily basis.

Administrative Authority
 Central Government - in respect of mines and establishments engaged in exhibition of equestrian, acrobatics and other performances.  State Government – Others  The Central /State Government shall appoint competent authority and Inspectors and shall make rules for enforcing the provisions of the Act. 26

SALIENT PROVISIONS

 Restriction on Employment of Pregnant Woman
No Employer to knowingly employ a women during the period of 6 weeks immediately following the day of her delivery or miscarriage or medical termination of pregnancy. Employer not to require a pregnant women employee to do any arduous work involving long hours outstanding or any other work which is likely to interfere with her pregnancy, cause miscarriage or adversely affect her health during the period of one month preceding the period of 6 weeks before the date of her expected delivery and during the said period of 6 weeks for which she does not avail the leave as provided in Sec. 6 of the Act. – Sec. 4.

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 Discharge or Dismissal to be Void - Sec. 12 (1)
Discharge or Dismissal of a pregnant women shall not disentitle her to the maternity benefit or the medical bonus; except when such dismissal or discharge is on account of gross misconduct, criminal offence, dishonesty or willful non-observance of safety measures or rules.

 Meaning of Maternity Benefit
Prior to 1989 Amendment – If a woman employee could not avail of the six weeks leave preceding the date of her delivery. She was entitled to only six weeks leave post delivery. However, by the above amendment, the position has changed. A pregnant woman can avail 12 weeks leave post delivery. A women employee is entitled to maternity benefits under the Act irrespective of the number of children she has.

 Amount of Benefit
Maternity benefit is payable at the rate of average daily wages for the period of her actual absence, during the benefit period. Wages to include basic, D.A., HRA, incentive bonus and money value of other concessions. In case of woman’s death during benefit period, the benefit is payable. i. Upto and including the day of her death, in case she dies without delivering a child. ii. For entire period in case she dies after delivering the child iii. In case the child also dies during the period upto and including the day of child’s death. Benefit payable for maximum 12 weeks of which not more than 6 weeks shall precede the date of her expected delivery. “Average daily wage” means wages payable for the days which she has worked during the period of 3 calendar months from the date of absenteeism on account of maternity, the minimum wages fixed or revised, under the Minimum Wage Act or Rs.10/- whichever is highest - Sec.5.

 Notice of Claim
In prescribed form stating o payment of maternity benefit o that she will not work during the period she receives maternity benefit o Notice of Absenteeism from work with dates – Sec. 6 (1) & (2) Notice to be given during the pregnancy or as soon as possible after the delivery. Failure to give notice however does not disentitle the woman to the benefits of the Act. 28

 Payment of Maternity Benefit
Payment of Maternity Benefit preceding the date of expected delivery, to be paid by the Employer in advance on production of proof of pregnancy, balance amount to be paid within 48 hours on production of proof of delivery. – Sec. 6(5). In case of death of woman employee amount of benefit to be paid to her nominee or legal representative as the case may be. – Sec. 7

 Leave for Miscarriage etc. and illness
In case of miscarriage or medical termination of pregnancy 6 weeks immediately following the date of her miscarriage or medical termination of pregnancy – Sec 9.

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 Leave for Tubectomy Operation
Two weeks

 Leave for illness
Leave for a maximum period of one month with wages in case of illness arising out of pregnancy, delivery, premature birth of child, miscarriage or medical termination of pregnancy or tubertomy operation – Sec.10.

 Medical Bonus
Rs.250/-, if no pre-natal confinement and post-natal care is provided for by the employer free of charge – Sec. 8.

 Nursing Breaks
2 breaks of 15 minutes duration each for nursing the child until the child attains the age of 15 months – Sec. 11.

 No Deduction of wages
Due to nature of work assigned to her or for the nursing breaks allowed to her – Sec.13

 Forfeiture of Maternity Benefit
If any woman, allowed to go on maternity leave works in any other establishment for any period during the authorized leave, then her claim to the maternity benefit for such period worked shall be forfeited.

OBLIGATIONS OF EMPLOYERS
i. To pay maternity benefit, medical bonus, allow maternity leave and nursing breaks. ii. Not to engage pregnant woman in contravention of Sec. 4 iii. Not to dismiss or discharge a pregnant woman employee during the period of her maternity leave iv. To exhibit the abstract of the provisions of the Act and the rules made thereunder in local language. – Sec. 19. v. To maintain prescribed registers, records and muster rolls and submit the prescribed returns – Sec. 20, Annual Return.

RIGHTS OF EMPLOYERS
Right to appeal within 30 days - Sec. 17 (3) & (4)

RIGHTS OF EMPLOYEES
 Right to make a complaint to the Inspector and claim the amount of maternity benefit improperly withheld by the employer. Sec. 17(1)  To appeal against the Employers order within 60 days – Sec. 12(2)(b) 30

OFFENCES AND PENALTIES

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THE PAYMENT OF GRATUITY ACT, 1972
Objectives The Payment of Gratuity Act, 1972 envisages to provide a retirement benefit to the workmen who have rendered long and unblemished service to the employer, and have thus contributed to the prosperity of the employer. Gratuity is a reward for long and meritorious service. The significance of this Act lies in the acceptance of the principle of gratuity as a compulsory, statutory retrial benefit. Scope and Coverage Extends to whole of India and is applicable to a) Every factory, mine, oil filed, plantation, port and railway company b) Every shop or establishment governed by the shops and Establishments Act of that State, in which 10 or more persons are or were employed on any day of preceding 12 months. c) Any other shop or establishment so notified by Central Government. Sec 1(3) Also applicable educational institutions, trusts and societies, motor transport undertakings, clubs, chamber of commerce and industry associations, Federation of Chambers of Commerce & Industry, local bodies & solicitors offices. Different departments or branches, situated in same place or different places to be treated as part of the same establishment. Once Act is applicable which shall continued to be governed by the Act, irrespective of number of employees. Not applicable to apprentices and persons holding post under Central or State Government governed by any other Act or any other rule providing for payment of gratuity. Exemptions Appropriate Government is empowered to exempt, by notification if the Government is of the opinion that the employees of such establishment are in receipt of gratuity or pensionary benefits not less favourable than the benefits confirmed under the Act. It may also exempt any employee or class of employees, similarly. Sec. 5 32

Employees Entitled Every employee irrespective of wages after rendering continuous service of 5 years or more. Gratuity payable at the time of termination of his services, either on i) Superannuation ii) on retirement or resignation iii) On death or disablement due to accident or disease. Includes retrenchment. 5 years continuous service not necessary if termination due to death or disablement. Meaning of disablement – Permanent inability or incapacity of an employee to do the work, which he was capable of doing before the accident or disease. In case of death of the employee gratuity payable to his nominee or legal heir. Note : Reckitt & Colman of India v/s Fifth Industrial Tribunal 1980 -1 LLN 129; 1977(51) FJR102. Continuous Service i) He has been in uninterrupted service, including service interrupted by sickness, accident, absence from duty with or without leave, lay-off, strike or lock-out or cessation of work not due to the employee’s fault. Note : Jewan Lal (1929) Ltd. v/s Controlling Authority (CA) under payment of Gratuity Act 1982 –1 LLN 217. ii) In case of mine or a non-seasonal establishment working for less than 6 days in a week, he has actually worked for at least 190 days during the preceding 12 months or 95 days during the preceding 6 months, he shall be deemed to have rendered continuous service for a period of one year or six months respectively. In case of any other non-seasonal establishment, he has actually worked for at least 240 days during the preceding 12 months or 120 days during the preceding 6 months, he shall be deemed to have rendered continuous service for a period of one year or six months, respectively. In case of a seasonal establishment, he has actually worked for at least 75% of the days of which the establishment was in operation.

iii)

iv)

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Notes : For this purpose an employee shall be deemed to actually worked on a day on which – a) he has been laid off under an agreement or in accordance with standing orders b) he has been on leave with full wages, earned in the previous years c) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment and d) in the case of female, she has been on maternity leave not exceeding 12 weeks.

Administrative Authority Provisions enforced by both Central and State Government. Sec. 2(a) Central / State Government shall appoint the Controlling Authorities for different areas and inspectors. The Central / State Government shall also frame rules for administration of the act. Salient Provisions  What is Gratuity ?  Calculation of Gratuity In case of non-seasonal establishment = 15 days wages X number of completed years of service In case of seasonal establishment = 7 days wages X number of seasons which employed  Maximum Gratuity Rs. 3,50,000/- Sec 4(3) Limit enhanced from Rs. 1,00,000 vide Payment of Gratuity (Amdt.) Act, 1998 w.e.f. 24.09.1997. Earlier the limit had been raised from Rs. 50,000 to 1,00,000 vide payment of gratuity (Amendment Act) 1994 w.e.f. 24.05.1994  Meaning of Wages Sec 4(2) Wages shall be In case of piece-rated employees

15 days = Wages of 3 months (excluding O.T.) immediately preceding termination X 15 Number of working days in such period of 3 months

34

In case of monthly rated employees

15 days = monthly wages last drawn X 15

26 Wages means all emoluments earned while on duties or on leave, as per condition of employment includes D.A. but excludes bonus, commissions, HRA, OT and any other allowance. Sec 2(s) In case of re-employment of disabled employee at reduced wages, predisablement wages to be taken into account for calculating gratuity in respect that period and reduced wages for the balance period. Sec 4(4).

 Deductions permissible from Gratuity Gratuity payable on termination for any willful omission, negligence, damage, loss or destruction of employer’s property, gratuity can be reduced to the extent of such damage or loss. Sec 4(6)(a)  Forfeiture of Gratuity Whole or part forfeiture if termination of employee due to employee’s riotous or disorderly conduct or any other act of violence of any offence including moral turpitude committed in the course of his employment. Sec 4 (6)(b) A statutory provision of forfeiture must be construed strictly. In the absence of such termination the employee does not forfeit his right to gratuity.  Nomination Sec 6 Every employee to submit nomination in prescribed form in duplicate, either personally or through Registered AD within 30 days of completion of 1 year of service. Only family members viz. Spouse, children (married or unmarried), dependent parents, dependent parents of spouse and the widow and children of pre-deceased son. If no family, any of the person can be nominated and subsequently fresh nomination to be made. More than one nominee possible. Employer to verify particulars of application and return attested copy to the employee within 3 days of receipt. Original to be kept in safe custody. 35

Nominee can be changed at any time. If the nominee pre-deceases the employee interest to revert back to the employee.  Intimation of Gratuity becoming payable As soon as gratuity becomes payable, employer to determine the amount of gratuity and give a notice in the prescribed form to the payee, viz. the employee, nominee, legal heir and to the controlling authority of that area. Sec 7(2)  Application for payment of Gratuity Employee to make an application in prescribed form, within 30 days from the date of gratuity becoming payable, either personally through Registered A.D. Where date of superannuation or retirement is known employee may apply even 30 days before such date.

36

Legal heir may apply within 1 year from the date gratuity becomes payable. Succession Certificate not necessary. Any delayed application for payment of gratuity should also be entertained by the employer, if there is sufficient cause for the delay.  Notice in response to Employee’s Application In response to employee’s application employer to issue a notice of receipt in 15 days. In case the claim is accepted a notice should specify the amount of gratuity payable and date of payment which should be within 30 days of receipt of application. Sec 7(2) and (3) In case the claim is rejected notice should specify the reasons of rejection. A copy of notice should be sent to the controlling authority of the area. If the claimant is a nominee or legal heir the employee may ask for such witness or relevant evidence for establishing his identity and entitlement. Note : To be served personally or sent through Registered AD.  Mode of payment Generally payable by cash, cheque or Demand Draft. If the amount of gratuity is less than Rs. 1000/- it may be paid by postal money order at the desire of the payee. Details of payment should be intimated by the employer to the Controlling Authority Assistant Labour Commissioner (Central of the area)  Time limit for payment Gratuity to be paid by employer within 30 days from the date it becomes payable or after such date alongwith simple interest @ 10% p.a.(or as notified by Government by time to time) on the amount of gratuity, unless the delay is on the part of the payee. Sec 7 (3A) w.e.f. 01.10.1987

37

 Gratuity to be deposited with the Controlling Authority in certain cases Admitted amount of Gratuity payable by the employer to be deposited with the Controlling Authority, of that area, if ; i. Nominee or the legal heir of the employee is a minor. Sec 4(1) ii. Dispute as to amount or admissibility of the claim of gratuity or as to the person entitled. Sec. 7(4) In case of (i) above the Controlling Authority shall deposit such sum in term deposit with SBI or any of it’s subsidiaries or any nationalised bank.  Employers to obtain Compulsory Insurance / Approved Gratuity Funds. Sec 4A w.e.f. 01.02.1991 Establish

Employer to obtain an insurance from LIC for his liability to pay Gratuity or should establish an approved Gratuity Fund [U/S 2(5) of Income Tax Act] or who are having atleast 500 employees should establish an Approved Gratuity Fund. Employer to register establishment with the Controlling Authority (Assistant Labour Commissioner) Payment of premium, contribution is compulsory. In case of failure, employer liable to pay Gratuity payable alongwith interest to Controlling Authority  Protection of Gratuity against attachment Gratuity payable under the act cannot be attached in execution of any decree / order of civil revenue or criminal court sec 13. However, if it is payable to the heirs of the employee, it may be attached Ramvati v/s Krishan Gopal and Ors. (1988) 1 CLR 253; (1988) Lab 1.c 1298 (Del). Obligations of Employers 1. Employer to submit a notice of opening an establishment to the Controlling Authority of the area in the prescribed form containing name, address of establishment, employer, nature of business, any change to be intimated or intention to close down business. 38

2. Employer to correctly ascertain amount of gratuity payable and pay the same. 3. To obtain insurance or establish approved gratuity fund. 4. Display notice at or near main entrance in bold letters in English and in the Local language.

39

Notice to contain a) Name of the officer, designation, authorised to receive notice of payment of gratuity under the Act or rules. b) Abstract of the Act & rules in prescribed form (Form U). Rights of Employers 1. 2. 3. 4. To make authorised deductions To forfeit wholly or partly amount of gratuity To refer any dispute as to admissibility of claim or as to person entitled to the Controlling Authority of the area Sec 7(4)(b). To appeal against an order of the Controlling Authority to the appellate authority (or the State Government) within 60 days of the receipt of the order Sec. 7(7).

Rights of Employees 1. 2. 3. 4. 5. Appoint family member or any other person as his nominee Claim the amount of gratuity Apply to the Controlling Authority for recovery of gratuity payable which remains unpaid Sec 8. Refer any dispute as to admissibility of claim or as to person entitled to the Controlling Authority of the area. Appeal against an order of the Controlling Authority to the appellate authority within 60 days of the receipt of the order.

Offences and Penalties Problem : Mr. X joined an establishment in Jan. 1981 at Rs. 2600 p.m. His wages were raised to Rs. 3,250 p.m. in July 1985, further Rs. 3640 p.m. in Jan. 1991 and further to Rs. 6000 p.m. in January 1996. In April 1998, Mr. X retired on superannuation when his last drawn wages were Rs. 6000 p.m. The amount of gratuity payable to Mr. X shall be calculated as under : Mr. X retired on Joined on Total service 98.4.1 81.1.1 17.3.0 i.e.17 complete years.

His last drawn salary was Rs. 6000/- p.m. Since in April 1998, there is no salary ceiling for eligibility for gratuity the last drawn salary for computation would be Rs. 6000/- p.m. Therefore gratuity for the period of 17 complete years = 15 day’s wages X 17 = Monthly wages last drawn X 15 X 17 26 40

= Rs. 6000 X 15 X 17 = Rs. 58,846. 26

41

Problems Gratuity
1. Mr. Raj was employed with ABC Ltd. employing 15 people on 3rd March 1992. Mr. Raj resigned from ABC Ltd. on 31st January 1995. By when should give notice to the employer under Sec 6 ? Calculate the amount of gratuity payable to Mr. Raj on his resignation. 2. Mr. Mohan was employed in Rohini Watches, earning a wages of Rs. 100/- for every watch assembled by him. Mr. Mohan assembled 2 watches per day. Mr. Mohan retired on 30th June 2000. His last 6 months performance is as follows : Period Jan 2000 Feb 2000 March 2000 April 2000 May 2000 June 2000 No. of working days 26 22 26 26 26 26 Watches assembl ed 52 44 52 52 52 52 Days worked 24 20 26 26 24 20 O.T. 1000/Nil 1000/1000/500/1000/-

Calculate Mr. Mohan’s wages for 15 days under Payment of Gratuity Act. 3. Mr. Sohan was employed in Vega Watches, earning a salary of Rs. 5000/- p.m. For every watch assembled by him Mr. Sohan got Rs. 10/as commission. He assembled 2 watches per day. Mr. Sohan retired on 30th June 2000. His last 6 months performance is as follows : Period Jan 2000 Feb 2000 March 2000 April 2000 May 2000 June 2000 No. of working days 26 22 26 26 26 26 Watches assembl ed 52 44 52 52 52 52 Days worked 24 20 26 26 24 20 O.T. 1000/Nil 1000/1000/500/1000/-

Calculate Mr. Sohan’s wages for 15 days under Payment of Gratuity Act. 4. Mr. Rohan joined ABC Ltd. on 1st February 1996. Mr. Rohan was drawing a salary of Rs. 10,000/- p.m. On 25th July 1999, when he met with a fatal accident in the factory, causing Mr. Rohan permanent disablement. Calculate the amount of gratuity payable to Mr. Rohan.

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5. Mrs. Shah joined Sunder Cosmetics on 15th January 1990 as a Clerk at a salary of Rs. 3000/- p.m. Mrs. Shah was blessed with a Baby on 20th June 1995. She took maternity leave from 15th June 1995 to 10th September 1995. Finally she retired on 30th September 1999 as manager. Her salary slip for 30th September 1999 was : Basic Salary : Rs. 6000/Rs. 500/Rs. 1000/Rs. 500/Rs. 8000/Deductions P.T. : Rs. 200/-

Dearness Allowance : House Rent : Allowance Over Time :

Rs. 200/-

Net Salary Rs. 7,800/Calculate Gratuity payable to Mrs. Shah. 6. Mr. Rahim joined ABC Exports Ltd. on 1st July 1950 as a Manager at a salary of Rs. 5000/- p.m. Mr. Rahim reached superannuation on 30th October 2000 after completing 50 years of illustrious service. He retired as Regional Head India drawing a salary of Rs. 20,000/- p.m. Mr. Rahim got an ex-gratia bonus of Rs. 10,00,000/- on 15th September 2000. Calculate gratuity payable to Mr. Rahim under Payment of Gratuity Act. 7. Mr. John joined Ganesh Traders on 5th January 1990 as a Clerk at a salary of Rs. 3000/- p.m. Mr. John failed to discharge his duties and his services were terminated on 30th October 1999 as Manager, due to negligence and causing damage to the Company’s property which was valued at Rs. 15,000/-. His salary slip for 30th October 1999 was : Basic Salary Dearness Allowance House Allowance Over Time : : Rs. 8000/Rs. 2000/Rs. 1000/Rs. 500/Rs.11,50 0/to Deductions P.T. : Rs. 200/-

Rent : :

Rs. 200/Mr. John after permissible 43

Net Salary Rs. 11,300/Calculate Gratuity payable deductions.

8.

Mr. Vijay joined Zen Ltd. on 1st February 1986. Mr. Vijay was drawing a salary of Rs. 10,000/- p.m. On 25th July 1996, when he met with a fatal accident in the factory, causing Mr. Vijay permanent disablement of his left Limb. Mr. Ajay Managing Director of Zen Limited re-employed Mr. Vijay as an Office Assistant at a monthly salary of Rs. 8,000/- p.m. At the time of retirement on 18th July 1999, Mr. Vijay drew a salary of Rs. 9,000/- p.m. Calculate the amount of gratuity payable to Mr. Vijay.

THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952
Objectives The Employees’ Provident Funds and Miscellaneous Provisions Act instituted a compulsory contributory fund for the future of the employee after his retirement or for his dependents in case of his early death. Scope and Coverage Act extends to the whole of India except the state of J & K. applicable to; sec 1(3) a) b) c) It is

Every factory engaged in any industry specified in schedule I in which 20 or more persons are employed. Every other establishment employing 20 or more persons or class of such establishment which the Central Govt. may modify. Any other establishment so notified by the Central Government even if employing less than 20 persons.

Contract labour is included but casual labour is excluded for counting the strength of employees. An apprentice is only a learner and not an employee. Trainees cannot be taken as employees, sweepers and chowkidars drawing paltry sums per month & not borne on the regular staff sheet to be excluded from the employment strength. Directors, working partners, managing partners, domestic servants and contractors are not employees. The onus of proving employment strength is on the establishment. Change of ownership is immaterial for the applicability of the act. Composite factories come within the purview of section 1(3). Also applicable to educational institutions, but does not apply to such charitable institutions as are working solely for the benefit of such employees. 44

Once the act is applicable, it shall continue to be governed by the Act, irrespective of the fact that the number of employees working therein was subsequently fallen below 20 Sec 1(5) provided the establishment continues. Exemption 1. 2. Co-operative society employing less than 50 persons & working without the aid of power. Any Central/State Government establishment having it’s own scheme of provident fund or pension Sec 16. Now omitted vide EPF (Amdt.) Act 1998 w.e.f. 22.09.1997. 3. Newly set up establishment for an initial period of 3 years.

The appropriate Government is empowered to exempt any of the following establishments Sec.17 from the operation of all or any of the provisions of any scheme. a) Any establishment to which this Act applies if, i) Rates of contribution are not less favourable than these specified in Sec.6. ii) Employees enjoy other PF benefits which on the whole are not less favourable to the employees than benefits provided under the Act or the schemes. b) Employees enjoy PF, Pension or Gratuity benefits that are separately or jointly not less favourable than the benefits provided under the Act or the schemes. Exemption may be allowed either prospectively or retrospectively & subject to specified conditions. Inspection Charges Payable to E.P.F. w.e.f. 01.08.1998 by employees or any person or class of persons exempted under Sec. 17 of the Act @ 0.18% of the pay (Basic wages, DA, Retaining Allowance, if any, and cash value of food concession admissible thereon) within 15 days of the close of every month. Establishment to include all Departments and Branches

45

Establishments consists of different departments or branches whether or not situated in same place or in different places, all such departments and branches shall be treated as parts of the same establishment. Sec. 2A, completely independent units cannot be said to be departments or branches of the firm. Even persons working at home for a covered establishment will be employees to be covered under the EPF Act. Clubbing of Establishments Does not have any provision. Despite this the Provident Fund Authorities tend to club establishments. Test to determine as to what constitutes one establishment. No single absolute test for this purpose. If in their true relation they constitute one integrated whole, the establishment is said to be one. True relationship is judged having regard to unity of ownership, management, control, employment, functional integrity, finance and geographical proximity. Clubbing order to be passed by Commissioner only after offering a reasonable opportunity to the affected establishments.

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Partition of Establishment Disruption of covered establishment on account of a real and bonafide partition, and if the separated establishment employ less than 20 persons, the Act does not apply. In such situation one of the allottees alone cannot be called upon to pay administration charges under the Act. Voluntary Application of the Act The establishment and employee to which the act is not applicable may voluntarily opt for its application and can also withdraw at any time. Employer & majority of Employees to agree for voluntary application of the provisions of the Act. For this purpose, they should make an application to the Central Provident Fund Commissioner, who may, by notification, extend the provisions of the Act to that establishment, w.e.f the date of such agreement or any subsequent date specified in such agreement. Sec.1(4). Voluntary coverage amounts to complete and full governance by the Act. But their liability to make contribution is controlled by section 6. They can agree to pay contributions at a rate less then what had already been agreed to but equal to or above the statutory limit fixed by section 6. Employees Entitled Every employee including contract labour but excluding an apprentice, casual labourer who is in receipt of wages upto Rs. 6,500/- p.m. shall be eligible for becoming a member of the funds. The condition of three months continuous service or 60 days of actual work, for membership of the scheme, has been done away with, w.e.f. 01.11.1990. Workers will now be eligible for joining the scheme from the date of joining the service. Notes : 1. If the pay of a member-employee increases beyond Rs. 6,500/after his having become a member, he shall continue to be a member but the contribution payable in respect of him shall be limited to the amount payable on monthly pay of Rs. 6,500/-. An employee ceases to be member of the Employees Family Pension Fund at the age of 60 years.

2.

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Administrative Authority Act Administered by both the Central and State Governments in their respective spheres. The Central Government is empowered to frame and amend the Employees Provident Fund Scheme, Family Pension Scheme and Deposit Linked Insurance Plan. The centre shall also constitute a Central Board of Trustees and in consultation with the State Government, a State Board of Trustees. Central Government shall appoint a Central Provident Fund Commissioner, Deputy/Regional Provident Fund Commissioners and other officers. The State Board shall with the approval of the State Government, appoint the necessary staff for enforcement of the provisions of the act. The Schemes Central Government has framed three schemes under the Act : 1. 2. 3. Employees Provident Fund Scheme 1952, for establishment of Provident Funds for the Employees. Employees Family Pension Scheme, 1971, for providing family pension and life assurance benefit to the employees, which has now been merged into Employees Pension Scheme, 1995. Employees Deposit Linked Insurance Scheme, 1976 for providing life insurance benefit to the employees.

Financing of these schemes is done by establishment of a fund by Central Government to which both employer and employees are required to contribute. Return of Ownership/ Management To be furnished in Form 5A (in duplicate) to the Commissioner, particulars of all the branches and departments, owners, occupiers, directors, partners, managers or any other person controlling it’s affairs within 15 days of the applicability of the scheme. Any change in such particulars should also be intimated within 15 days of the change. Establishment Code On receipt of Form 5A(Return of Ownership) Commissioner to verify & if satisfied allot an establishment code. Code to be mentioned on all forms, challans, statements, returns and future correspondence.

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Declaration of Membership Employer to obtain Form 11 – A declaration from the employee If already a member, his previous account number and particulars to last employer to be communicated in the Return of Membership (In Form 9 or 5 as the case may be). Nomination Every member employee to submit a nomination in Form No. 2. One or more persons can be changed at anytime. Person having family can nominate family members only. If a member has no family nomination may be made in favour of any person(s) whether or not related to him or even an institution. Return of membership Employer to submit a list of all entitled employees within 15 days in Form 9. To be accompanied by nomination of each employee in Form 2. Further employer to submit a monthly return in Form 5 within 15 days giving the names, other particulars and nomination of new employees. If no new member joins the fund, a ‘NIL’ return should be sent. Besides employer to submit a copy of Wages Payment Register of Members who cease to be employed during a month for any reason Viz. Resignation, retrenchment, dismissal, discharge, retirement on superannuation or on account of total or partial in capacity to work, death, transfer or any other case. Alongwith contribution card, retrenchment - details of compensation paid. If no such case ‘NIL report. Allotment of Account Number Every member of the Provident Fund / Pension Fund to be allotted on account number by the employer. The number is the serial number of the employees as entered in Form 9 or 5, prefixed by the code number allotted to establishment. Eg. If establishment code is 123/5 the account numbers would be 123/5/1, 123/5/2, 123/5/3 and so on. The account number allotted to a member should not be allotted to another member. Employer’s Contribution The employer is required to contribute 1. Towards employees provident fund and pension fund. 49

a)

b)

In case of establishments employing less than 20 persons or sick industrial (BIFR) company or sick establishment or any establishment is the jute, beedi, brick, coir or gaur gum industry – 10% of the basic wages, dearness allowance and retaining allowance, if any. In case of all other establishments employing 20 or more persons – 12% of the wages, D.A.,etc.

Contribution to pension fund to be restricted to Rs. 5,000/- in case employees pay exceeds Rs. 5,000/-. 2. Towards Deposit – Linked Insurance Fund: 0.5% of the wages, D.A, etc.

50

Basic Wages Under Sec. 6 means the “Basic Wages” payable at the relevant time. Combined reading of Sec. 2(b) and 6 shows that the expression ‘basic wages’ means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages, in accordance with the terms of contract of employment and which are paid or payable in cash and are payable for the time being to each of the employees. Basic wages does not include : 1. 2. 3. Cash value of any food concession. D.A., HRA, OT, Bonus or any other similar allowance. Any presents made by the employers.

Similarly compensation for period of lay off lockout, value of rent free quarter and payment in lieu of notice in termination of service are not included. Dearness Allowance For purpose of calculation DA shall include cash value of any food concession allowed to the employee. Explanation 1 to sec. 6. Retaining Allowance Means and allowance payable to an employee, in respect of any period during which the establishment is not working, for retaining his services. Explanation 2 to Sec. 6. It has been held in number of cases that the employer and employee can agree to exclude a particular sum from the purview of basic wages to attract EPF contribution. Wages no to be reduced on account of Employer’s Contribution The employer cannot reduce the wages or other benefits such as pension, gratuity or provident fund of an employee, on account of the employer’s contribution or administrative charges payable by him. An employer is, however, entitled to deduct the employee’s contributions from his wages. The employee’s contribution shall be equal to the contribution payable by the employer in respect of him, i.e. 10% or 12%, as the case may be. The employee is, however, not required to contribute towards Deposit Linked Insurance Fund. If an employee so desires, he may opt to contribute at a higher rate also. The employer shall not be, however, under an obligation to contribute at such higher rate. Employer to Deduct Employees’ Contribution The employer is required to deduct the employee’s contribution from the wages and deposit the same into the provident fund account alongwith his own contribution.

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In case of failure to collect workmen’s share employer is liable to pay his contribution.

52

Central Government’s Contribution to Pension Fund The Central Government shall also contribute @1.16% of the pay of the members of the Employee’s Pension Scheme to the Pension Fund. Where, however, the pay of the member exceeds Rs. 6,500/- p.m., the contribution payable shall be limited to the amount payable on his pay of Rs. 6,500/- only. Rounding of to nearest rupee. Administrative Charges The employer is required to pay the following administrative charges : 1. 2. W.e.f. 01.08.1998 @ 1.10% (0.65% upto 31.07.1998) of the employee’s wages subject to a minimum of Rs. 5 every month, for administration of Provident Fund. 0.01% of the employee’s wages subject to a minimum of Rs. 2 every month, for administration of Deposit Linked Insurance Fund.

Time and Mode of Deposit The employer should within 15 days of the close of every month deposit the total amount of the employer’s and employee’s contributions and administrative charges with P.F. Commissioner into the respective accounts maintained at the State Bank of India. Amounts to be paid either in cash or by means of cheques drawn in favour of Bank in which deposits are made. Separate cheques for contribution and administrative charges. Damages for default in payment If the employer defaults in making payment of any contribution /arrears / accumulations / administrative charges to the Fund, he shall be liable to pay, by way of penalty, damages at the following rates : Period of Default i.) Less than 2 months ii.) 2 months and above but less than 4 months iii.) 4 months and above but less than 6 months iv.) 6 months and above Rate of Damages (% p.a.) 17 22 27 37

Rounding of to nearest Rupee. Below 50 paise to be ignored. Para 32-A. For computing period of default appropriate date shall be the date of payment of draft / cheque and not date of encashment.

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Damages may be reduced or waived of in certain cases of change in management, transfer, merger, amalgamation etc. Para 32-B of EPF Scheme W.e.f. 01.09.1991

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Determination and Recovery In case of dispute regarding applicability Central P.F. commissioner or any other Officer whom powers of determinations are delegated may decide the dispute and determine the amount due from an employer, under the Act or the Scheme. Before any order the Officer should conduct necessary inquiry and allow reasonable opportunity to the employer for representing his case. Sec. 7A. In case an Officer has reason to believe that an amount due from employer has escaped determination, he may re-open the case within 5 years and redetermine the amount due from the employer. Sec. 7-C. Review – Sec 7- B Appeal Any person agrevied by an order of determination / re-determination may prefer an appeal to the PF appellate tribunal sec. 7-I. However, he shall have to deposit 75% of the amount determined in the order being appealed against, before filing an appeal. Sec. 7-O. Interest Employers liable to pay simple interest @ 12% p.a. on any amount due from him under the Act from the due date till the date of actual payment. Sec. 7 – Q. Mode of Recovery Any amount of contribution, damages, accumulations required to be transferred or administrative charges due from an employer may be recovered from him in any of the following modes (Sec 8-B & 8-F) : a) Attachment and sale of movable or immovable property of the establishment / employer. b) Arrest of employer and his detention in prison. c) Appointment of receiver for the management of the movable or immovable properties of the establishment / employer. d) Recovery from any person of amount due from him to employee who is in arrears. e) Application for release of money, to the court in whose custody there is money belonging to employer. f) Recovery by distraint and sale of movable property. Recovery to be made by Recovery Officer pursuant to a Recovery Certificate issued by the Authorised Officer specifying the amount of arrears. Stay on Recovery Proceedings Authorised officer may grant time for payment of amount, until then he shall stay the proceedings until the time granted. Sec. 8 – E.

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Investment of Funds and Interest Amounts deposited in PF Account are invested in specified securities under Special Deposit Scheme. The Commissioner shall credit to the PF Account of each member, interest at such rate as the Central Govt. may determined on the balance standing to his credit on the first day of April each year. Interest is also earned on the Pension Fund and Deposit Linked Insurance Fund Account. Contribution Cards Employer to prepare contribution cards in form 3A for each member employee. Card is valid for 1 year. Thereafter, new card is to be prepared every year. The wages of employee, Provident Fund and Pension Fund contribution recovered and remitted every month and break in reckonable service should be entered therein. Member employee or the Inspector should be afforded all facilities for inspection of cards. After expiry contribution cards together with an annual contribution statement in form 6-A should be forwarded to the Commissioner by 30th April each year. Protection of Provident Fund Amount standing in credit cannot in any way be assigned or charged, nor is liable to attachment under any decree order of the court in respect of any debt or liability incurred by the member. Sec. 10. Private Provident Fund Scheme Establishments employing 100 or more persons may opt for private provident fund scheme after getting it approved by the Commissioner u/s 16A. Application to be made by the employer alongwith majority employees of the establishment provided such private scheme is in no way less beneficial to the employees then the government scheme. The fund accumulation are to be invested in specified securities, special deposit schemes and bonds / securities of public sector financial institutions / banks in specified investment pattern. Sec. 17-A. No private provident fund scheme to be allowed if the employer had committed any default in payment of PF contribution or had committed any other offence under the act during the preceding 3 years. The authorisation may be cancelled in case the employer fails to comply any of the terms and conditions of authorisation or where he commits any offence under the act. Transfer of Accounts When an employee obtains re-employment in any other establishment, his PF accumulations shall be transferred at the option of the employee, if the rules of PF so permit. Under new pension scheme (1995) on leaving an establishment a worker to be given a Scheme Certificate by the Commissioner, specifying pensionable

56

service, pension salary and amount of pension due on date of exit on employment. This certificate to be produced to the new employer. The aggregate of all the periods of service will count for pension.

57

Obligations of Employers 1. 2. To pay the employer’s and employee’s contribution administrative charges as required under the act / schemes. and

To furnish the following returns to the Provident Funds Commissioner. a) Return of ownership / management in Form 5-A, within 15 days of applicability of the scheme. b) Return of membership of employees – first return in Form 9 and subsequently in Form 5 (together with declaration in Form 2 – Nomination) within 15 days of close of every month. c) A return in the prescribed form in respect of employees leaving the service during the month, within 15 days of close of every month. d) A monthly return of contributions in the prescribed form within 25 days of close of each month, alongwith receipted triplicate copies of challans for the amounts and contribution and administrative charges deposited into State Bank of India. If no contributions have been recovered during a month, a NIL return shall be furnished by the employer. e) Annual return of contribution in Form 6-A, within one month of the close of each year. To maintain following records / registers ii.) i.) Contribution cards in Form 3A. Eligibility Register – The employer to record the particulars of every eligible employee and the number of working days during each month. iii.) Provident Fund Register – In the form of contribution cards for each employee. iv.) Provident Fund Ledger – Contains total monthly contributions, withdrawals, payment of loans and balance at the end of each month. v.) Inspection Book – For an Inspector to record his observation on his visit to the establishment.

3.

4.

To allow employees to avail of temporary / permanent withdrawal of their contributions out of their contributions, pension, life assurance benefit, insurance benefit etc. permissible under the schemes. To transfer within specified time the accumulated balance in the account of an employee leaving the service and obtaining reemployment. Sec. 17-A Every contractor to submit within 7 days of the close of every month to the principle employer a statement showing particulars of 58

5.

6.

employees employed by or through him in respect of whom contribution to the fund are payable.

59

Obligations of Employees 1. 2. To furnish declaration & nomination in the prescribed forms to the employer at the time of employment or joining the fund. Allow the employer to deduct the employees contribution every month and deposit the same with the PF Commissioner.

Rights of Employers 1. 2. 3. Right to deduct employee’s contribution from their wages or from contractors bill in case of contract labour. Right of representation before an order of determining the amount due from him passed under section 7A or 7C. Right to prefer an appeal against and notification issued or an order passed by the Central Government or any other authority, before E.P.F. appellate tribunal.

Rights of Employees 1. 2. Right to nominate An employee entitled to following benefits under various schemes : A) Under Provident Fund Scheme i) A member can withdraw to a certain extent, from his Provident Fund A/c, for any of the following purposes :  Paying premium on Insurance Policy  Purchase or construction of house / Acquisition of sites  Addition, Alteration, Improvement or Repair of dwelling house  Repayment of loan  In case of closure / lock out of establishments without paying any compensation to the employees.  In case of illness, daughter’s marriage, post metric education of children, damage of property due to natural calamities or unemployment due to power cuts. ii) A member can withdraw a full amount of PF at the time of retirement on superannuation or otherwise, retrenchment or discharge from services in accordance with the terms of the schemes. In case of death of the member accumulated balance is payable to the nominee or his legal heirs.

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B) Under Family Pension Fund Scheme (for cases arising upto 16-111995) a) b) c) d) e) Family Pension Enhanced Family Pension Life Assurance Benefit Refund Retirement-cum-withdrawal Benefit

C) Under Pension Fund Scheme a) Monthly Member’s Pension on superannuation / Retirement and Short Service Pension b) Monthly Reduced Pension c) Commuted Pension d) Return of Capital e) Withdrawal Benefit f) Permanent and Total Disablement Pension g) Monthly Widow Pension h) Monthly Children Pension i) Monthly Orphan Pension j) Monthly Pension to Permanently and Totally – Disabled Son or Daughter D) Under Deposit Linked Insurance Fund Scheme Assurance Benefit – On death of member while in service, an amount equal to average balance in his PF Account during the preceding 12 months or period of membership whichever is less, except where the average balance exceeds Rs. 35,000/-, the amount payable shall be Rs. 35,000/- plus 25% amount in excess of Rs. 35,000/- subject to a maximum of Rs. 60,000/-. Settlement of PF / Pension Scheme The employer’s liability ends with payment of prescribed contribution within the prescribed time and manner. The PF / Pension Benefits under the various schemes are made available to the employees from the office of PF Commissioner. Claims, complete in all respects, to be settled within 30 days of the application being made. Failing which the PF Commissioner is personally liable for the delay and a penal interest @ 12% p.a. on the benefit amount may be charged and recovered from the Commissioner’s salary. In case of incomplete claims, reason for delay has to be communicated to the Applicant within 30 days. 61

Provident Fund Adalats With a view to resolve grievances and disputes of complex nature, all regional employees provident fund offices are required to hold Lokadalats on the 10th of every month. Duties & Powers of Inspectors Inspectors to be appointed by appropriate government for the purposes of this Act. The duties of the Inspector are :     Inquire into correctness of information furnished. Ascertain compliance of provisions of the Act or the Schemes. Ascertain whether provisions of the Act or Schemes are applicable to any establishment. Determine whether the conditions subject to which exemption was granted u/s 17 are being complied with by the employer in relation to an exempted establishment.

Inspector has been vested with the following powers :   To require an employer or contractor from amount is recoverable, to furnish necessary information. To enter, at any reasonable time, and search any establishment or premise connected therewith and require any person found in charge thereof to produce for examination any accounts, books, registers and other documents relating to employment of persons or payment of wages. To examine the employer, any contractor from whom any amount is recoverable u/s 8A, or his agent or servant or any other person found in charge of the establishment or any premises connected therewith. To make copies of, or take extracts of book, register or other document maintained in relation to the establishment and, where he has reason to believe, also to cease such books, register or documents or portions thereof as may be relevant in respect of any offence. To exercise such other powers as may be provided under the schemes.







Offences and Penalties

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THE EMPLOYEES’ STATE INSURANCE ACT, 1948
Objectives The main objective of the Employees’ State Insurance Act, 1948 is to provide to the workers medical relief, sickness cash benefits, maternity benefits to women workers, pension to the dependents of the deceased workers and compensation for fatal and other employment injuries including occupational diseases, in an integrated form through a contributory fund. Where a workman is covered under ESI Scheme, no compensation could be claimed from his employer under the Workmen’s Compensation Act in respect of employment injury sustained by him. Scope and Coverage The Act applies to whole of India, and applies to all factories (including Government factories but excluding seasonal factories) employing 10 or more persons and carrying on a manufacturing process [Sec. 2(k) of Factories Act 1948] with the aid of power or employing 20 or more persons and carrying on a manufacturing process without the aid of power and such establishments as the Government may specify. (Sec. 1) The Act cannot be applied voluntarily. Once the Act applies to any factory or establishment, it shall continue to be governed by its provisions even if the number of workers employed therein falls below the specified limit or the manufacturing process therein ceases to be carried on with the aid of power subsequently. Wherein manufacturing process is carried on at two different premises but the entire work carried thereon pertain to one single process, the two units were liable to be clubbed. Hence the strength of employees of both the units will be counted for application of the Act. Exemption 1. 2. 3. 4. 5. 6. 7. Factories working with the aid of power wherein less than 10 persons are employed. Sec. 2(12)(a) Factories working without the aid of power wherein less than 20 persons are employed. Sec. 2(12)(b) Seasonal Factories. Sec. 1(4) A factory which was exempted from the provisions of the Act as being a ‘seasonal factory’ will not lose the benefit of the exemption on account of the amendment of the definition of ‘seasonal factory’. Mines subject to the Mines Act, 1952. Sec.2(12) Railway running sheds. Sec.2(12) Government factories or establishments whose employees are in receipt of benefits similar or superior to the benefits provided under the Act. Sec.1(4) 63

8.

Indian naval, military or air forces. Sec. 2(9)

Besides the appropriate Government may exempt any factory or establishments or class of factories or establishments or any employee or class of factories or establishments or any employee or class of employees from the provisions of this Act. Exemption from Maternity Benefit Act, 1961 and Workmen’s Compensation Act, 1923. An employer / establishment covered under the ESI Act is exempt from the provisions of Maternity Benefit Act and Workmen’s Compensation Act. Section 53 and 61 specifically provide that when a person is entitled to any of the benefits provided by he Act, then he shall not be entitled to recover any similar benefits admissible under the provisions of any other enactment. Employees Entitled Every employee (including casual and temporary employees), whether employed directly or through a contractor who is in receipt of wages upto Rs. 6,500/- p.m. is entitled to be insured under the E.S.I. Act. However, apprentices engaged under the Apprentices Act are not entitled to the E.S.I. benefits. Coverage of part time employees under the ESI Act will depend on whether they have contract of service or contract for service with the employer. The former are covered whereas the later are not covered under the ESI Act. The band boys engaged through Band Master for playing music in the premises of a bar and restaurant are covered under the E.S.I. Act. In case, it was held that workmen engaged for construction and expansion of existing factory are also ‘employees’ and the employer was liable to pay contributions in respect of such employees. Besides in the following cases, the employees have been held to be covered undr the Act : i.) ii.) iii.) iv.) Persons employed in a canteen of a club. Drivers employed by the Transport organisation Persons engaged in distribution and sale of products Persons carrying administrative work of processing the orders and executing sales. v.) Hawkers employed for sale of products vi.) Employees of cycle stand and canteen run in cinema theatres by contractors. vii.) Members of editorial and administrative staff of a printing press publishing newspaper. viii.) A home worker rolling beedis at home. ix.) Medical representative 64

x.)

Persons employed in a hospital attached to and maintained by factory. xi.) Part time doctor employed for abulance room. xii.) Book binders engaged by a contractor and xiii.) Sales clerk working in a factory.

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A Director and the Managing Director of a Company who is paid a certain remuneration per month, have been held to be an employee for the purposes of the Act. However, the Punjab and Haryana High Court has held that a director being a principal employer is not an employee. A partner engaged for the work of the factory or establishment and being paid monthly is not an employee as defined in the ESI Act. An employee whose wages (excluding overtime wages) exceed Rs. 6,500/p.m. at any time after the beginning of the contribution period, shall continue to be covered until the end of that period. Employees in Branch of a Main Establishment – Whether covered The definition of ‘employee’ under section 2(9), includes any person employed for wages in or in connection with any work, including administrative work, of a factory or establishment or any branch thereof. Thus, a branch of a main establishment covered by the ESI Act, is also covered by the Act even if the number of Branch employees is less than 20 persons. Administrative Authority The provisions of the E.S.I. Act are administered both by the Central and the State Governments. Establishments controlled by the Central Government, railways, mines, major ports and oil fields are looked after by the Central Government whereas all other establishments are controlled by the State Governments. E.S.I. Corporation The E.S.I. Scheme is administered by an autonomous body constituted by the Central Government, namely the Employees State Insurance Corporation. The ESI Corporation consists of representatives of the Central Governments, employers, employees, medical profession and members of Parliament. The corporation functions through Regional Boards, Local Committees and regional and local medical benefit councils. Powers of ESI Corporation a) To promote measures for the improvement of the health and welfare of insured employees and for the rehabilitation and re-employment of those who have been disabled or injured. (Sec 29) b) To acquire, hold, sell or otherwise transfer any movable and immovable property, invest any money, take and discharge any loans. (Sec 29) c) To appoint Inspectors for the purposes of the Act. (Sec 45) d) To determine the amount of contribution payable in respect of employees of a factory or establishment which has not furnished or maintained any particulars, registers or record.(Sec 45A)

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Standing Committee The Standing Committee is the executive body of the E.S.I. Corporation, constituted from among the members of the Corporation. (Sec 8) Subject to the general superintendence and control of the Corporation, the Standing Committee shall administer the affairs of the Corporation and may exercise the powers and perform the functions of the Corporation. It shall submit for the consideration and decision of the Corporation all such cases and matters as may be specified in the regulations and any other case or matter in its discretion. (Sec 18) Medical Benefit Council The Medical Council has been constituted : a) To advise the corporation and the Standing Committee on matters relating to the administration of medical benefit, the certification for purposes of the grant of benefits and other connected matters; b) To exercise such powers and duties of investigation as may be prescribed in relation to complaints against medical practitioners in connection with medical treatment and attendance and c) To perform such other duties in connection with medical treatment and attendance as may be specified in the regulation. (Sec 22) Regional Boards, Local Committees, Regional and Medical Benefit Councils The E.S.I. Corporation has constituted Regional Boards, Local Committees and Regional and Medical Benefits Councils to execute some of its powers and functions in their area. (Sec.25) Salient Provisions Registration of Establishment or Factory. Sec 2-A & Regulation 10-B By the Employer with the ESI Corporation (at its appropriate Regional Office) within 15 days of the applicability of the Act. Declaration to be filled in Form 01 alongwith a separate sheet containing the name and address of the Establishment, No. of Employees, Nature of Duty, Name, Designation & Address of the Manager controlling such persons. Regional office to allot code no. to the Employer which must be quoted on all documents and correspondence.  Registration of Employees All entitled Employees are required to be insured in the prescribed manner (Sec.38). Employer to determine all covered employees and obtain a declaration in Form 01 (which includes the Temporary Identification Certificate). Declaration from female employees should

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be rubber stamped “FEMALE”. All declarations to be countersigned by the employer. Employer to send return of declaration forms in Form 3, in duplicate within 10 days of submission alongwith the Declaration form to the Regional offices. Separate form to be prepared for male and female employees. Every employee shall be allotted an Insurance Number. The Temporary Identification Certificate (T.I.C) with the insurance number marked thereon shall be detached and returned to the employer alongwith copy of Form3. The employer should deliver the T.I.C. to the employees and enter the Insurance Number in the register of Employees.(Reg.11, 12, 14 & 15)

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

Identity Cards Permanent Identity Card to be issued to every member employee. Employer to handover ID Cards to only those employees who have been in employment for atleast three months and obtain his signature / thumb impression on the ID Card in a register as a token of receipt of the Card. In case the employee leaves service before three months his ID Card and T.I.C. should be returned to the Regional Office (Reg.17) Contributions Employer to contribute @ 4.75% of the wages paid/ payable in respect of every wage period. Employees to contribute @ 1.75% of their wages, except when the average daily wages in a wage period are equal to or less than Rs.40/-. It is employer’s responsibility to deposit his own as well as employees contribution in respect of all employees including contract labour into ESI Account. Deduction for Employee’s Contribution from Wages. Sec. 40(2) Employer’s Contribution not to be Deducted. Sec 40(3) Recovery of Contribution in respect of Contract Labour. Sec. 41(1) and 41(2) Principal Employer entitled to recover contributions in respect of employees engaged through a contractor from the bills of the Contractor. Contractor in turn is entitled to deduct the employees contribution from the wages payable to such contract employees. Employer not to reduce wages, benefits etc. Sec. 72 The employer shall not reduce wages or discontinue or reduce any benefits conferred under the conditions of services payable to an employee, on account of his liability for contributions payable under the Act. Notes : 1. ‘Wages’ means all remuneration paid or payable in cash including any payment for the period of authorized leave, lock out, strike (legal), lay off and any other additional remuneration paid at intervals of less than 2 months, but excludes a. employer’s contribution to any pension, provident or ESI funds, b. any traveling allowance/ concession, e.g. cycle allowance, c. reimbursement of any special expenses, d. gratuity payable on discharge 2. ‘Wage period’ may be daily, weekly, fortnightly or monthly. 3. ‘Average daily wages during a wage Period’ means a) In case of monthly rated employee



  



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Amt. Of Wages payable for all working days in a month 26 b) In case of fortnightly rated employee Amt. Of Wages payable for all working days in a fortnight 13

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c) In case of weekly rated employee Amt. Of Wages payable for all working days in a week 6 d) In case of daily rated employee Amt. Of Wages payable for a working day e) In case of an employee not employed on time rate basis Amt. Of Wages earned during the complete wage period Number of days in full or part for which he has Worked for wages in that wage period 4. The employer’s and employee’s contribution should be rounded off to the nearest 5 paise.  Time and Mode of Deposit. Sec. 43 & Regulations 29 & 31. The amount of contribution should be paid into the E.S.I. Account with an authorised branch of State Bank of India, through an E.S.I. challan in quadruplicate on or before the 21st of the month following the calendar month in which the wages fall due. The aggregate amount should be rounded off to the next higher rupee.  Levy of Interest Interest payable @ 12% p.a. in respect of each day of default or delay in payment of contributions.  Advance Payment Scheme New system of advance payment of ESI contributions by employers. Adoption of the system is optional provided employer willing to do so for at least 1 year. Payment under the amended scheme will be adjusted by the ESIC against ESI contributions payable monthly by the employers, including the employee’s share. The employers will not be entitled to any interest from the ESIC.  Damages for Delay in Payment of Contributions and other amounts Any employer who fails to pay the contributions or any amount due under the Act, within the specified period, shall be liable to pay damages as under : Period of delay Rate of damages in % p.a. of the amount due 5 10

i.) ii.)

Upto 2 months 2 months and above but less than 4

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months iii.) 4 months and above but less than 6 months iv.) 6 months and above

15 25

The E.S.I. Corporation may reduced or waive damages in relation to sick industrial company subject to BIFR sanctioned terms and conditions.

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

Recovery for contribution

any

short

payment

/

non-payment

of

any

Where an employer (or the occupier) fails or neglects to pay any contribution in respect of any employee, due to which such employee becomes dis-entitled to any benefit or entitled to a benefit on a lower scale, the Corporation may pay to the employee the benefit at the rate to which he would have been entitled had there been no such failure or neglect on the part of the employer. However, the Corporation shall recover from the employer either – a) The difference between the amount of benefit actually paid and the amount of benefit which would have been payable on the basis of the contributions actually paid by the employer; or b) Twice the amount of the contribution not paid or paid in short as the case may be, whichever is greater. The sum shall be recoverable as an arrears of land revenue Sec. 68.  Recovery of contribution after closure

Where the liability for contributions arose prior to the closure of the establishment, the contributions could be recovered even after its closure. It could not be contended that a demand could not be enforced against a closed business. It was equally fallacious to say that there was no liability to contribute since the employees had gone away and it would be impossible for the authorities to give the benefit to them because their whereabouts were not known. Registers to be maintained by the Employer 1. 2. 3. Register of Employees (Regulation 32) in Form 7 Accident Book (Regulation 66) in Form 1 Inspection Book (Regulation 102-A)

Return of Contributions The employer should prepare a ‘Return of Contributions’ in Form 6, in quadruplicate (4 copies) by entering details in the ascending order of insurance numbers and draw totals. This return alongwith the receipted copies of challans of monthly payment should be submitted to the regional office, within 30 days of end of contribution period or closure of the factory or the establishment Regulation 26. Contribution Period and Benefit Period (Regulation 4) The period, during which an employee is entitled to, or avails of a benefit, is called the ‘benefit period’. The amount of benefit is calculated with

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respect to the contributions paid during the corresponding ‘contribution period’, which are as follows : Contribution Period i) 1st April to 30th September ii) 1st October to 31st March of the following year Standard benefit rate The benefit available under the E.S.I. Scheme are linked to the standard benefit rate which is in turn linked to the ‘average daily wages’ of the employee. The table 3 given below indicates the ‘standard benefit rate’ corresponding to the group of employees. Sr. No. 1. 2. 3. 27. 28. Average Daily (Group) Below Rs. 28 Wages Standard Benefit Rate (In Rs.) 14 or full average daily wage, whichever is less. Rs. 28 and above but below Rs. 16 32 Rs. 32 and above but below Rs. 18 36 Rs. 226 and above but below Rs. 236 Rs. 236 and above 118 125 Benefit Period 1 January of the following year to 30th June
st

1st July to 31st December

Sickness Benefit Every insured employees is entitled to the cash benefit for the period of sickness occurring during any benefit period and certified by a duly appointed medical practitioner if the contributions in respect of him were payable for not less than (78 days) in the corresponding contribution period. Sickness benefit shall be allowed to an employee for any day on which he remains on strike, if : i.) he is receiving medical treatment and attendance as an indoor patient in any E.S.I. hospital or a hospital recognised by the E.S.I. Corporation for such treatment or ii.) he is entitled to receive extended sickness benefit for any of the diseases for which such benefit is admissible; or iii.) he is in receipt of sickness benefit immediately preceding the date of commencement of notice of the strike given by the Employees Union to the Management of the factory / establishment.

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No sickness benefit shall be payable for the first two days of sickness following, at n interval of not more than 15 days, after the sickness in respect of which sickness benefits were last paid. Further no sickness benefit shall be payable to any person for more than 91 days in any two consecutive benefit periods. Conditions to be observed Any person in receipt of sickness benefit: a) shall remain under medical treatment at the ESI dispensary or hospital and carry out the instructions of the medical office; b) shall not do anything which retards or reduces his chances of recovery; c) shall not leave the area where medical treatment is provided without medical officer’s permission; d) shall get himself examined by the medical officer. Liability for Excessive Sickness Benefits (Sec. 69) Where the ESI Corporation finds that the incidence of sickness among the employees by reason of insanitary conditions in a factory or establishment or any tenements or lodgings occupied by the employees, which are attributable to the neglect of the owner or the occupier in observing any health regulations stipulated in the regard, then the Corporation may claim from him the amount of the extra expenditure incurred by way of sickness benefit. Maternity Benefit A periodical cash benefit is payable to an insured woman employee in case of confinement, miscarriage, medical termination of pregnancy, premature birth of a child, or sickness arising from pregnancy, miscarriage etc. occurring or expected to occur in a benefit period, if the contributions in respect of her were payable for atleast (70 days) in the two immediately preceding contribution periods. Benefit payable at twice the standard benefit rate or Rs. 20/- whichever is higher for all days on which she does not work for the prescribed periods. The benefit is payable only if the woman employee does not work during the said period, and the prescribed medical certificate and other information are furnished. Medical Bonus Rs. 250 on account of confinement expenses shall be paid to an insured woman and an insured person in respect of his wife, if confinement occurs at a place where necessary medical facilities under ESI Scheme are not available.

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Disablement Benefit Disablement benefit is payable in the form of cash in installments to an employee who is injured in the course of his employment and is permanently or temporarily, disabled, or contacts any occupational disease. The employee claiming any disablement benefit is required to furnish a medical certificate as prescribed under the regulations. The employee is also required to observe certain conditions as to medical examination etc. as prescribed for sickness benefit. No benefit payable for any day on which the employee works remains on leave, holiday or strike in respect of which he receives wages. However, subject to conditions he shall be allowed disablement benefit for any day on which he remains on strike. Benefits not to be combined An employee shall not be entitled to receive for the same period a) Sickness benefit b) Maternity benefit c) Disablement benefit The employee shall be entitled to choose any one of the aforesaid benefits, at his option. (Sec. 65) Dependent’s Benefit If an employee dies as a result of any injury sustained in the course of his employment or an occupational disease, his dependents shall be entitled to a benefit in the form of pension. The dependent’s benefit is payable at 40% more than the standard benefit rate. Benefit shall be divisible among the widow, minor sons and minor unmarried daughters of the deceased employee in the prescribed percentage. If the deceased employee does not leave any widow or child, the benefit can be claimed by his parents or other dependents. A claim for dependent’s benefit should be submitted in the prescribed form to the appropriate local office. With the documents showing that the death of the employee was due to an employment injury, that the claimant is a dependent as specified in the Act and that the claimant is below the specified age-limit, if any. Medical Benefit An insured employee and his family members, who require medical treatment and attendance, is entitled to receive medical benefit in the form of treatment and attendance at an E.S.I. hospital, dispensary or

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clinic. A person is entitled to medical benefit during any period for which contributions are payable in respect of him, or in which he is qualified to claim sickness benefit or maternity benefit or he is in receipt of such disablement benefit as does not disentitle him to medical benefit under the regulations. In case an insured person ceases to be in an insurable employment on account of permanent disablement caused due to an employment injury, he shall be eligible to receive medical benefits for himself and his spouse at the prescribed scales, till the date on which he would have superannuated subject to furnishing of necessary proof of such disablement and pays a contribution @ Rs. 10/- p.m. in lumpsum for 1 year in advance. Also, an insured person who superannuates after being insured for atleast 5 years shall be eligible to receive Medical benefits for himself and his spouse at the prescribed scales subject to furnishing necessary proof of his superannuation and having been in insurable employment for a minimum of 5 years and pays a contribution @ Rs. 10/- p.m. in lumpsum for 1 year in advance. Funeral Expenses If an insured employee dies, the eldest surviving member of his family or the person who incurs the expenditure of funeral of the deceased employee, is entitled to reimbursement of such expenditure subject to a maximum of Rs.1,500/-. The claim for the payment of funeral expenses should be submitted in the prescribed form alongwith prescribed documents within 3 months of the death of the insured employee. [Sec. 46(1)(f)] Payment of Benefit in case of Death If an employee dies during any period for which he is entitled to a cash benefit, the amount of such benefit shall be payable upto and including the day of his death. The amount of benefit shall be paid to the nominee r where there is no nomination, to the heir or legal representative of the deceased employee.(Sec 71)

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Repayment of benefit improperly received Where any person has received any benefit or payment under the Act, to which he is not legally entitled, he shall be liable to repay the same to the Corporation. In case of his death, his representatives shall be liable to repay the same from the assets of deceased if any in his hands.(Sec. 70) Notice of Injury The insured employee who sustains an employment injury should give a notice of the same to the employer or manager or supervisor or foreman, etc., by means of an entry in the Accident Book or otherwise in writing or even orally. This notice is very important for claiming the disablement benefit.(Regulations 65,66 & 67) Accident Report by the Employer In case of an accident in the establishment, the employer should prepare an ‘Accident Report’ in Form 16 (in triplicate) and submit to the local office and the Insurance Medical Officer. The third copy is the office copy. The reports are to be submitted within 48 hours in ordinary cases and immediately in death cases. (Regulation 68) Employer to Arrange First Aid The employer shall make arrangements for the first aid and medical treatment and transport as an insured person may require in case of an accident. (Regulation 69) Death Report In case of the death of an insured employee at the place of employment, the employer should immediately report to the local office and to the nearest E.S.I. dispensary or hospital.(Regulation 77) Abstention Verification The employer should furnish and verify the particulars in Form 28, in respect of the abstention of an employee from work, for which sickness/maternity/temporary disablement benefit has been claimed. (Regulation 52-A) Employer not to Employ Sick Employees The employer must not put to work any sick employee unless he submits a certificate of fitness from the E.S.I. dispensary or hospital (in Form 8 or 9).

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Employer not to Dismiss or Punish Employee during Sickness (Sec. 73) The employer shall not dismiss, discharge or reduce or otherwise punish any employee during the period – i.) When the employee is in receipt of sickness benefit or maternity benefit, except in accordance with the regulations, or ii.) When the employee is in receipt of disablement benefit for temporary disablement or is under medical treatment for sickness or is absent from work as a result of illness arising out of the pregnancy or confinement. Inspectors – Powers & Duties (Sec. 45) The E.S.I. Corporation may appoint Inspectors to carry out the purposes of the Act, within the local limits assigned to each of them. Duties : a) Enquiring into the correctness of any of the particulars stated in any return of contribution; b) Ascertaining whether any of the provisions of the Act has been complied with; and c) Such other duties as may be authorised by the Corporation or specified in the regulations. Powers : i.) To require any employer or contractor to furnish to him necessary information; ii.) To enter at any reasonable time, any office, establishment, factory or other premises of the employer or contractor, and require the person in change thereof to produce for examination accounts, books and documents relating to the employment of persons and payment of wages, or to furnish to him necessary information; iii.) To examine the employer or contractor, his agent or servant, or any person found in the factory, establishment, office or other premises or any employee and iv.) To make copies of or take extracts from any register, account books or other document maintained in such factory establishment, office etc. Obligations of Employers 1. The employer should get his factory or establishment registered with the ESI Corporation within 15 days after the Act becomes applicable to it, and obtain the employer’s Code Number. 2. The employer should obtain the declaration form from the employees covered under the Act and submit the same alongwith the return of declaration forms, to the ESI office. He should arrange

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for the allotment of Insurance Numbers to the employees and their Identity Cards. 3. The employer should deposit the employees’ and his own contributions to the ESI Account in the prescribed manner. Whether he has sufficient resources or not, his liability under the Act cannot be disputed. He cannot justify non payment of ESI contribution due to non-availability of finance. 4. The employer should furnish a Return of Contributions alongwith the Challans of monthly payment, within 30 days of the end of each contribution period. 5. The employer should not reduce the wages of an employee on account of the contribution payable by him (employer). 6. The employer should cause to be maintained the prescribed records/ register namely - the register of employees, the inspection book and the accident book. 7. The employer should report to the E.S.I. authorities of any accident in the place of employment, within 24 hours or immediately in case of serious or fatal accidents. He should make arrangements for first aid and transportation of the employee to the hospital. He should also furnish to the authorities such further information and particulars of an accident as may be required. 8. The employer should inform the local office and the nearest E.S.I. dispensary / hospital, in case of death of any employee, immediately. 9. The employer must not put to work any sick employee and allow him leave, if he has been issued the prescribed certificate. 10. The employer should not dismiss or discharge any employee during the period he/she is in receipt of sickness/maternity/ temporary disablement benefit, or is under medical treatment, or in absent from work as a result of illness duly certified or due to pregnancy or confinement. Obligations of Employees 1. The employees should assist their employer for their registration with the E.S.I. authorities and in obtaining the Insurance Numbers and Identity Cards. 2. The employees who are in receipt of sickness or temporary disablement benefit, should remain under medical treatment and observe the instructions of the medical officer of the E.S.I. dispensary / hospital and should not do anything to retard the process of recovery. 3. The employee who sustains an employment injury, should give a notice of accident to the employer by means of an entry in the Accident Book or otherwise. 4. The employee should submit the claims for the benefits within the prescribed time and alongwith the prescribed documents. Rights of Employers 1. Right to recover the employee’s share of contribution from his wages.

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2. Right to discharge any employee after giving the requisite notice, provided the terms of employment so allow, under the following circumstances : i.) If the employee has been in receipt of temporary disablement benefit for a continuous period of atleast 6 months. ii.) If the employee has been under medical treatment or has been absent from work as a result of illness due to pregnancy, etc. for a continuous period of atleast 6 months; or iii.)If the employee has been under medical treatment for any of the specified diseases, for a continuous period of atleast 18 months. 3. Right to appeal against an order of the Employee’s Insurance Court, involving a substantial question of law, to the High Court within 60 days. (Sec. 82) Rights of Employees 1. Right to claim the medical and cash benefits allowable in accordance with the Act and the regulations. 2. Right to appeal against an order of the Employees’ Insurance Court to the High Court within 60 days.

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Employees Insurance Court A dispute arising under the Act shall be decided by the Employees Insurance Court and not by a Civil Court. The Employees Insurance Court shall be constituted by the State Government for such local areas as may be specified and consisting of such number of judges as the Government may think fit. (Sec. 74) Adjudication of Disputes & Claims The Employees Insurance Court shall adjudicate upon the following disputes and claims : (A) Disputes as to – i.) Whether an employee is covered by the Act or whether he is liable to pay the contribution; or ii.) The rate of wages or average daily wages of an employee; or iii.) The rate of contribution payable by the employer in respect of any employee; or iv.) The person who is or was the principal employer in respect of any employee; or v.) The right to any benefit and the amount and duration thereof; or vi.) Any direction issued by the Corporation on a review of any payment of dependents benefit; or vii.) Any other matter in respect of any contribution or benefits or other dues payable or recoverable under the Act. (B) Claims as to – i.) Recovery of contributions from the principal employer; ii.) Recovery of contributions from a contractor; iii.) Recovery for short payment or non-payment of any contribution u/s 68; iv.) Recovery of the value or amount of benefits received improperly u/s 70; v.) Recovery of any benefit admissible under the Act. Conditions for Admission of certain Disputes No matter which is in dispute between an employer and the E.S.I. Corporation in respect of any contribution or any other dues, shall be admitted unless the employer deposits with the Court 50% of the amounts due from him as claimed by the Corporation. The court may, however, waive or reduce the amount to be deposited for reasons to be recorded in writing.

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Appeal An appeal shall lie to the High Court against an order of an Employee’s Insurance Court, if it involves a substantial question of law. The appeal should be preferred within 60 days.

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THE MINIMUM WAGES ACT, 1948
Objectives The Minimum Wages Act, 1948 envisages to provide minimum statutory wages for scheduled employments with a view to obviate the chances of exploitation of labour through payment of very low and sweating wages. The Act also provides for the maximum daily working hours, weekly rest day and overtime. Rates fixed under Minimum Wages Act prevail over the rates fixed under awards agreement. Scope and Coverage The Act extends to the whole of India and applies to all establishments employing one or more persons and engaged in any of the scheduled employments. Employees Entitled The Act covers every employee engaged in any Scheduled Employment, including an ‘out-worker’ to whom the materials are given out for manufacturing or processing at his own premises. Administrative Authority The Minimum Wages Act is a Central legislation; however, its enforcement is administered by the Central and State Governments in their respective spheres. The State Government shall fix the minimum rates of wages in respect of the various scheduled employments, make the rules, appoint Inspectors and an Authority to decide claims relating to non-payment of minimum wages. Committees & advisory Board The appropriate Government shall appoint such committees and subcommittees as may be necessary, to hold inquiries and advise it in respect of fixation or revision of minimum rates of wages. (Sec. 5) The Government has also appointed Advisory Boards for the purpose of co-ordinating the work of the committees and sub-committees and advising it generally in the matter of fixing and revising minimum rats of wages. (Sec. 7) Each committee, sub-committee and the Advisory Boards to be constituted by persons nominated by the Central Government, equally representing the employers and employees in the scheduled 84

employment. One third shall be independent person one of whom shall be appointed as the Chairman.

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Central Advisory Board The Central Government has appointed a Central Advisory Board for advising the Central and State Governments in the matters of the fixation and revision of minimum rates of wages and other matters, and for co-ordinating the work of the Advisory Boards. Wages – Definition & Meaning As per Section 2(h) of the Act – (h) “wages” means all remuneration, capable of being expressed in terms of money, which would , if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment [and includes house rent allowance], but does not include i.) The value of – a) any house accommodation, supply of light, water, medical attendance or b) any other amenity or any service excluded by general or special order of the appropriate Government; ii.) any contribution paid by the employer to any Pension Fund or Provident Fund or under any scheme of social insurance; iii.) any travelling allowance or the value of any travelling concession; iv.) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or v.) any gratuity payable on discharge. Commission on turnover if paid as per terms and conditions of employment, then it would constitute the part of the wages. However, the employee should not be paid wages including commission, which are less than the prescribed minimum wages. Fixation of Minimum Rates of Wages The State Government is empowered to fix minimum rates of wages for different classes of employees – skilled, unskilled, clerical, supervisory etc. employed in any Scheduled employment and to review and revise the same from time to time, the interval between two revisions not exceeding 5 years considering the change in price index and dearness allowance. Fixation of working hours etc.,

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In regard to any scheduled employment in respect of which minimum rates of wages have been fixed, the Government may –

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a) fix the number of working hours constituting a normal working day, inclusive of one or more intervals; b) provide for a rest day with wages, in every period of 7 days; and c) provide for payment for work on a rest day at a rate not less than the overtime rate. Wages for two or more classes of work Where an employee does two or more classes of work, to each of which a different minimum rate of wages is applicable, the employer shall pay to such employee in respect of the time respectively occupied in each such class of work, wages at not less than the minimum rate in force in respect of each such class. (Sec. 16) Obligations of Employers 1. Payment of Minimum Wages The employer is bound to pay to every employee engaged in a scheduled employment under him wages at a rate not less than the minimum rates of wages fixed for that class of employee in that employment, without making any deduction therefrom except those permitted under the Payment of Wages Act. (Sec. 12) 2. Wages in Cash/Kind As a rule the wages payable under the Act should be paid in cash. The appropriate Government may, however, permit the payment of wages wholly or partly in kind, keeping in view the prevailing custom, and also allow the supply of essential commodities at concessional rates. (Sec. 11) 3. Overtime Wages If an employee works on any day in excess of the normal working hours, the employer shall pay to him overtime wages for every hour or for part of an hour, so worked in excess, at the rate prescribed under this Act, or under any other law, whichever is higher. As per Factories Act, overtime wages are to be paid at twice the normal rate of wages. 4. Return, Registers and Records The employer is required to furnish an annual return in Form No. III by the 1st February of the succeeding year.

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The employer should maintain the prescribed registers and records giving particulars of employees employed by him, the work performed by them, the wages paid to them, the receipts given by them, etc. The employer shall also issue wage-books or wage-slips to the employees if required by the Government and make authenticated entries therein. (Sec.18) 5. Payment of Undisbursed Amounts If any amount payable to an employee as wages or otherwise under this Act, remains undisbursed on account of death of the employee or his whereabouts not being known, then the same shall be deposited by the employer with the prescribed authority. (Sec. 22-D) Rights of Employees The obligation of employers are practically the rights of the employees. The employees have a right to file claims arising out of payment of less than minimum rates of wages or wages for rest days, overtime etc. before the appropriate authority within 6 months from the date the wages become payable. Delayed application can also be entertained provided there is sufficient cause for the delay. Contracting out is Void Any contract or agreement whereby an employee relinquishes or reduces his right to minimum wages or any privilege or concession accruing under the Act, shall be null and void. (Sec. 25) Offences and Penalties

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THE PAYMENT OF WAGES ACT, 1936
Objectives The Payment of Wages Act, 1936 was enacted with the object of (i) regulating payment of wages, imposition of fines and deductions from wages, and (ii) eliminating all malpractices by laying down wage periods and time and mode of payment of wages. The Act, therefore, ensures payment of wages in a particular form at regular intervals without unauthorized deductions. Scope and Coverage The Payment of Wages Act extends to the whole of India. It applies to any factory, any railway establishment and any industrial or other establishment or any other establishment notified by the Central or State Government. Employees Entitled The Act is applicable to the employees receiving wages below Rs. 1,600 p.m. Persons employed in a railway establishment, either directly or through a contractor, are also covered under the Act. Administrative Authority The Act is administered by the State Governments in their respective States. However, in case of railways, mines, oil-fields and Central air transport service, it is administered by the Central Government. The Central and State Governments are empowered to appoint the inspectors and payment of wages authority and make rules for enforcement of the provisions of the Act. (Secs. 24 & 26) Wages- Definition and Meaning As per section 2(vi), ‘wages’ 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 of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment and includes – a) Any remuneration payable under any award or settlement between the parties or order of a court; b) Any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; c) Any additional remuneration payable under the terms of employment (whether called as bonus or by any other name); 90

d) Any sum which by reason of termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made; e) Any sum to which the person employed is entitled under any scheme framed under any law for the time being in force; In other words, ‘wages’ means all emoluments expressible in terms of money and payable to the employee including any sum payable for termination of service, wages in lieu of holidays or leave, overtime wages and bonus payable under the Bonus Act or under the terms of employment. However, ‘wages’ does not include value of any house accommodation, supply of light, water, medical attendance or any other amenity, contribution to any pension or provident fund, travelling allowance, reimbursement of any special expense and gratuity. Nor does it include suspension / subsistence allowance given during suspension period of an employee. Obligations of Employers 1. Responsibility for payment of wages Every employer is primarily responsible for payment of wages to his employees. Besides the manager of a factory, or the person responsible for supervision and control of an industrial or other establishment or the person nominated by the employer is also responsible for payment of wages to the employees of the factory or establishment. 2. Fixation of Wage-Periods Every employer or the person responsible for payment of wages, should fix the wage-period, which may be per day, per week or per month, etc. But in no case it should exceed one month. (Sec. 4) 3. Time of Payment Every employer / manager should make timely payment of wages. If the number of persons employed in an establishment is less than 1000, then wages must be paid within 7 days of the expiry of the wage period and in other cases within 10 days of the expiry of the wage period. (Sec. 5) In case of termination of employees service within 2 days of date of termination. 91

4.

Mode of Payment The employer should pay the wages in cash i.e. in current coins or currency notes. However, wages may be paid either by cheque or by crediting in employee’s bank account, after obtaining his written consent. (Sec. 6)

5.

Not to make Unauthorised Deductions The employer should not make any deduction from wages other than the following : a) Fines in respect of an act or omission which has been approved by the Government and notified at the factory or establishment. No fine should be imposed on an employee, unless he has been given an opportunity of showing cause against the fine. Imposition of fines on employees below 15 years of age is prohibited under the Act. The amount of fine imposed during a wage period, should not exceed 3% of the wages payable, in respect of that wage period and should be recovered within 60 days from the day of its imposition. Fines are not to be recovered in installments. b) Deduction for absence from duty which should not exceed an amount equal to – Wages Payable for the wage period X Period for which he was absent Total period for which he was required to work during the wage period c) Deduction for damage or loss of goods or money, expressly entrusted to the employee’s custody, not exceeding the amount of actual damage or loss caused due to his neglect or default. d) Deduction for house accommodation and other amenities or services as notified by the Government provided by the employer. The housing accommodation, amenity or service should have been accepted by the employee as a term of employment or otherwise. The amount of deduction should not exceed the value of the accommodation, amenity or service provided. Supply of tools and protectives is not an amenity or service provided. e) Deduction for recovery of advances (including those for travelling and conveyance allowance) and interest thereon, 92

shall be made in accordance with section 12 and the rules made by the State Government. f) Deduction for recovery of loans made from any labour welfare fund, and housing loans, alongwith interest thereon shall be made in accordance with section 12A and the rules made by the State Government. g) Deduction for income tax payable by the employee. h) Deduction required to be made by order of a court or other competent authority. i) Deduction for subscription to provident fund and repayment of advances from provident fund. j) Deduction for payment to co-operative societies approved by the Government, or an insurance scheme of Post Office.

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k) Deductions can be made, with the written authorisation of the employee, for payment of any life insurance premium, purchase of the government securities, deposits in any post office Saving Bank, contribution to any labour welfare fund set up by the employer or the trade union, membership fees of any trade union, contribution to the Prime Minister’s National Relief Fund etc. l) Deductions for payment of insurance premia on Fidelity Guarantee Bonds and contribution to any insurance scheme framed by the Central Government. Limit of Deductions The total amount of permissible deductions in any wage period should not exceed : a) In case where deductions are wholly or partly made for payment to co-operative societies, 75% of the wages; and b) In any other case, 50% of the wages. 6. Payment of wages in case of death of an employee In case of death of an employee, or in case his whereabouts are not known, all amounts payable to him as wages shall be either paid to his nominee or where there is no nominee for any reason it shall be deposited with the prescribed authority, whereupon the employer shall be discharged of his liability to pay those wages. 7. Return, Registers and Records The employer is required to submit an annual return of wages in Form No. IV in respect of every year by the 15th February of the succeeding year. The employer / manager is required to maintain the following registers and records : a) Register of payment of wages giving particulars of persons employed, nature of the work performed by them, wages paid and the deductions made therefrom, the receipts given by them and other prescribed particulars. (Sec. 13A) b) Register of fines imposed and realisation thereof, in the prescribed form. Sec.8(8) c) Register of deductions for damage or loss and realisations thereof in the prescribed form. Sec. 10 (2) 94

8.

Display of Notice The employer / manager should ensure that a notice containing the abstracts of the Act and the rules made thereunder, is displayed at a prominent place in the factory/establishment. The notice shall be in the prescribed form, in English and in the local language of the majority of the persons employed. (Sec. 25)

Rights of Employers 1. Right to make permissible deductions from the wages of an employee. (Sec. 7) 2. Right to appeal against an order directing the employer to refund deductions wrongfully made or to pay the delayed wages or compensation to the employee under section 15(3) or an order imposing penalty under Section 15(4). Rights of Employees The obligations of employers are really the rights of employees. Besides these, the employees have some more rights – 1. Right to claim unpaid or delayed wages, unauthorised deductions from wages and fines imposed, alongwith some compensation. The application for such claims may be presented within 12 months, by the employee himself or through a legal practitioner or an official of a registered trade union, authorised in this behalf. 2. Right to appeal against an order of the payment of wages authority if the amount of wages claimed to have been withheld exceeds Rs. 20/or against an order imposing penalty under Section 15(4) for making a malicious or vexatious claim against an employer. (Sec. 17) Contracting out is Void Any contract or agreement whereby an employee relinquishes his right under the Act, shall be null and void in so far as it purports to deprive him of such right. (Sec. 23) Offences and Penalties

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THE TRADE UNIONS ACT, 1926
Objectives The Trade Unions Act, 1926 provides for registration of trade unions (including association of employers) with a view to render lawful organization of labour to enable collective bargaining. The Act also confers on a registered trade union certain protection and privileges. Scope and Coverage The Act extends to the whole of India and it applies to all kinds of unions of workers and associations of employers, which aim at regularising the Labour Management relations. Administrative Authority The Act is a Central enactment but it is administered by and large by the State Governments. Trade Unions whose objectives are not restricted to one State, are the subject of the Central Government. The State Government shall appoint a Registrar of Trade Unions assisted by Additional or Deputy Registrars, for each state. The State Government shall also make regulations for enforcing the provisions of the Act. Meaning of Trade Union A trade union connotes as association of workers in a particular trade or industry. As per Section 2(h), a trade union means any combination, whether temporary or permanent, formed primarily to regulate the relations between workmen and employers, or workmen and workmen or employers and employers and for imposing any restrictive conditions on the conduct of any trade or business. Further, any federation of 2 or more trade unions shall also be a trade union. Salient Provisions Registration of Trade Unions Registration of a trade union is not compulsory but is desirable since a registered trade union enjoys certain rights and privileges under the Act. Minimum seven workers of an establishment can form a trade union and apply to the Registrar for its registration. The application for registration should be in the prescribed form and accompanied by the prescribed fee, a copy of the rules of the union signed by atleast 7 members and a statement containing – (a) the names, addresses and occupations of the members making the application (b) the name of the trade union and the address of its head office (c) the titles, names, ages, addresses and occupations of its office-bearers. If the union has been in existence for 96

more than a year, then a statement of its assets and liabilities in the prescribed form should also be submitted alongwith the application. (Secs. 4 & 5) The executive committee / office bearers of the union should be constituted in accordance with the provisions of the Act. Who can be a member Any person who has attained the age of 15 years is eligible to be a member of a registered trade union, subject to the rules of the union. (Sec. 21) Appointment of Office-bearers At least 50% of the office-bearers of a union should be actually engaged or employed in the industry with which the trade union is concerned and the remaining 50% (or less) can be outsiders such as lawyers, politicians, social workers etc. For being appointed as an office-bearer or executive of a registered trade union, a person must have – a) Attained the age of 18 years and b) Not been convicted of any offence involving moral turpitude and sentenced to imprisonment or a period of atleast 5 years has elapsed since his release. (Secs. 21-A and 22) Legal Status of a Registered Trade Union i.) ii.) iii.) iv.) v.) A registered trade union is a body corporate with perpetual succession and a common seal. It can acquire, hold, sell or transfer any movable or immovable property and can be a party to contracts. A registered trade union can sue and be sued in its own name. (Sec. 13) No civil suit or other legal proceeding can be initiated against a registered trade union in respect of any act done in furtherance of a trade dispute under certain conditions. (Sec. 18) No agreement between the members of a registered trade union shall be void or voidable merely on the ground that any of its objects is in restraint of trade. (Sec. 19)

Cancellation of Registration The Registrar can withdraw or cancel registration of a trade union on an application being made for its cancellation or by giving atleast 2 months notice under any of the following circumstances – a) If registration has been obtained by fraud and mistake; b) If the union has ceased to exist; c) If it has willfully contravened any of the provisions of the Act; or 97

d) If any rule which is required under Section 6, has been deleted. (Sec. 10) Change of Name A registered trade union may change its name, with the consent of atleast 2/3 of the total number of its members. Notice of change of name in writing and signed by the secretary and 7 members of the union, should be sent to the Registrar. The Registrar shall register the change in name if it is satisfied that the proposed name is not identical with the name of any other existing union and the requirements in respect of change of name have been complied with. (Secs. 23 7 25) Change of Registered Office All notices and correspondence to a registered trade union are addressed to its registered office. Notice of any change in registered office address should be given to the Registrar in writing, within 14 days of such change. (Sec. 12) Dissolution of Trade Union A registered trade union can be dissolved in accordance with the rules of the union. A notice of dissolution signed by any seven members and the Secretary of the Union should be sent to the Registrar within 14 days of the dissolution. On being satisfied the Registrar shall register the notice and the union shall stand dissolved from that date. The funds of the union shall be divided by the Registrar amongst its members in the manner prescribed under the rules of the union or as laid down by the government. (Sec. 27) Amalgamation of Trade Union Any registered trade union may amalgamate with any other union(s), provided that atleast 50% of the members of each such union record their votes and atleast 60% of votes so recorded are in favour of amalgamation. A notice of amalgamation signed by the Secretary and atleast 7 members of each amalgamating union should be send to the Registrar, and the amalgamation shall be in operation after the Registrar registers the notice. (Sec. 25) Obligations of Registered Trade Unions 1. The general funds of a registered trade union should be spent only for the objects specified under section 15. The trade union may set up a separate political fund for furtherance of civic and political interests of members; contribution to this fund shall not be compulsory. (Sec. 16) 2. The account books and membership register of the trade union should be kept open for inspection by any of its members or officebearers. (Sec. 20) 98

3. A copy of every alteration made in the rules of the union should be sent to the Registrar within 15 days of making the alteration. Sec. 28(3) 4. An annual statement of receipts and expenditures and assets and liabilities of the union for the year ending on 31st December prepared in the prescribed forms and duly audited should be sent to the Registrar within the prescribed time. This statement should be accompanied by a statement showing changes in office-bearers during the year and a copy of the rules as amended up to date. Sec 28(1) & (2) Rights of Registered Trade Unions A trade union has a right to demonstrate. A trade union has a right to appeal against an order of the Registrar either refusing or cancelling registration, to the civil court/High court, within the prescribed time. (Sec. 11) Offences and Penalties

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1. Employees Fund 2. Employees Insurance 3. Factories

Provident

State

4. Maternity Benefits 5. Minimum Wages 6. Payment of Gratuity 7. Payment of Wages
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8. Trade Unions

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