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AUGUST 2020
ISSUE 5
AUGUST 2020 | ISSUE 5
Includes state amendments and central
amendments to laws, expected amendments, case
laws and news updates
LABOUR LAW &
EMPLYOMENT NEWSLETTER
QUARTERLY
Given the current situation in India due to the corona virus, we have collated
the relevant information, including, notifications, advisories, and circulars
issued by various government departments to make them available at one
source, for the benefit of the reader.
We have provided the relevant material at the following link on our website:
https://www.pioneerlegal.com/covid-19-resource-centre/
You will find the relevant articles, ministry wise updates and judicial updates at
the above link. Our research team is continuously updating the material on the
resource centre on a weekly basis.
The contents of this newsletter should not be viewed as advice and is current
only at the time delivered.
COVID-19
https://www.pioneerlegal.com/covid-19-resource-centre/
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AUGUST 2020
2 ISSUE 5
ESIC MANDATES SUBMISSION OF MOBILE NUMBER
AND BANK ACCOUNT DETAILS
Employee’s State Insurance Corporation (ESIC) vide
notification dated April 6, 2020, has mandated the
submission of mobile number and bank account
details (bank name, branch name and IFSC) for
registration of new employees (Notification).
Employers are required to update mobile number
and bank account details of existing employees
registered under the ESI scheme. Cash benefits or any
claim reimbursements will be settled only if the
correct bank account details of the beneficiary are
available in the system.
In furtherance to the Notification, ESIC released a
circular dated July 1, 2020 providing all necessary
instructions for entering the account details and
mobile number while registering a new user.
EPFO EASES NORMS FOR CHANGING DATE OF BIRTH
The Employees' Provident Fund Organisation (EPFO),
vide a circular dated April 3, 2020, has liberalized
norms related to changing of date of birth in its
records, to facilitate individuals to link their Universal
Account Number (UAN) with Aadhaar. Simplifying the
process of linking of UAN with Aadhaar is expected to
make it easier for subscribers of the Employees'
Provident Fund (EPF) to avail EPFO's online services
such as applying for advance from EPF account,
nomination etc.
KARNATAKA EXTENDS FACTORY LICENSE FOR A
PERIOD OF 10 YEARS
Vide notification dated April 7, 2020, the Government
of Karnataka has amended Rule 5(2) of the Karnataka
Factories Rules, 1969, providing that a license may be
granted or renewed for a period of 10 (ten) years or
more but not exceeding 15 (fifteen) years at a time,
upon payment of the required fees. Prior to this, the
state rules provided that a license may be granted or
renewed for a period not exceeding 3 (three) years at
a time.
CENTRAL GOVERNMENT REVISES MINIMUM WAGES
Central Government revised the minimum wages
rates for workers engaged in various industries with
effect from April 1, 2020. The notification, inter alia,
provides the rates of minimum wages for agricultural
workers, workers engaged in industries, mines,
construction work and loading and unloading goods.
The rates of variable dearness allowance have also
been specified in the said notification.
LEGAL UPDATES
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AUGUST 2020
3 ISSUE 5
KARNATAKA AMENDS STANDING ORDERS RULES –
INCLUDES ‘FIXED TERM WORKER’
Vide a notification dated June 30, 2020, the
Karnataka government notified the Industrial
Employment (Standing Orders) (Amendment) Rules,
2019 (Rules). The Rules primarily relate to the
provisions relating to ‘fixed term workman’. An
overview of the provisions is given below:
(i) Definition of ‘fixed term workman’
A ‘fixed term workman’ is defined to mean a
workman who is engaged based on a written
employment contract for a fixed period. The
hours of work, wages, allowances and other
benefits of a ‘fixed term workman’ will be on
par with the permanent workmen.
(ii) Statutory Benefits
Similar to a permanent workman, a fixed term
workman is also entitled to all statutory
contributions during the period of service, on a
pro-rata basis. This would mean that even if the
duration of the employment does not meet the
threshold provided under the law, the fixed
term workman will be eligible for statutory
benefits.
(iii) Notice and Termination
In case the contract of a fixed term workman
has expired, and it is not subsequently
renewed, the workman is not entitled to any
notice or in case the contract of a fixed term
workman has expired, and is not subsequently
renewed, the workman is not entitled to any
notice or payment in lieu thereof. This entails
that there will be an automatic termination
upon the expiry of the employment contract.
The governments of Goa, Punjab and Bihar
have also amended the respective state rules to
include the provision for ‘fixed term workman’.
PROVISIONAL PENSION FOR CENTRAL
GOVERNMENT EMPLOYEES RETIRING DURING
COVID-19 PANDEMIC
The Minister of Personnel, Public Grievances and
Pension has announced that Central Government
employees retiring during the Covid-19 pandemic will
be eligible for a ‘provisional pension’ and ‘provisional
gratuity’ till the regular Pension Payment Order (PPO)
is issued and other formalities are completed. The
Office Memorandum issued by the ministry stated
that the ‘provisional pension’ will continue for a
period of 6 (six) months commencing from the date
of retirement, and may be further extended for a
period of 1 (one) year, for exceptional cases.
GOA INTRODUCES ‘SELF-CERTIFICATION’ SCHEME
FOR FACTORIES
Inspectorate of Factories and Boilers, Government of
Goa vide notification dated May 21, 2020 has notified
the ‘Self Certification Scheme’ for the factories
covered under the Factories Act, 1948 (Scheme). The
objective of the Scheme inter alia includes reduction
in visits of Inspectors to factories, remove the
requirement of maintenance of registers and
submission of returns. The Scheme can be availed on
voluntary basis by all factories registered under
Section 2 (m) of Factories Act, 1948. Once the
occupier opts for the Scheme, it is valid for a period
of 5 (five) years subject to a renewal of further 5 (five)
years. However, an occupier can opt to withdraw
from the Scheme before the expiry of the said 5 (five)
years.
The Scheme provides for exemptions from
maintenance of registers in hard format such as
register of compensatory holiday in Form No. 17,
register of adult workers in Form No. 20, register of
leave with wages in Form No. 23 etc.
MADHYA PRADESH AMENDS MADHYA PRADESH
SHRAM KALYAN NIDHI ADHINIYAM, 1982
Vide ordinance dated May 6, 2020 amendment to
Madhya Pradesh Shram Kalyan Nidhi Adhiniyam,
1982 has been issued to the extent of providing the
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AUGUST 2020
4 ISSUE 5
state government the power to exempt any
establishment or any category of establishments
from any or all of the provisions of the said
legislations.
INDUSTRIAL EMPLOYMENT (STANDING ORDERS)
ACT, 1946 AMENDED BY VARIOUS STATES
➢ Government of Madhya Pradesh Vide
ordinance dated May 6, 2020 has amended the
applicability of Industrial Employment
(Standing Orders) Act, 1946 (IESO Act). The IESO
will now be applicable to establishments having
more than 100 (hundred) workmen. Earlier, the
threshold was 50 (fifty) workmen.
➢ Ministry of Labour and Employment,
Government of Goa vide notification dated May
21, 2020 has notified amendments to Industrial
Employment (Standing Orders) Central Rules,
1946 (Amendment). Like the state of
Karnataka, the Goa government has also
introduced the concept of ‘fixed-term’
workman. The said notification provides for
amendments which inter alia provides as
follows:
(i) A ‘fixed-term employment workman’ is a
workman who is engaged on the basis of
a written contract of employment for a
fixed period of time;
(ii) The Amendment prevents establishments
from converting the posts of permanent
workmen to that of a fixed-term
employment workman; and
(iii) The Amendment provides that a
workman employed on a fixed-term
employment basis is not entitled to any
notice or payment in lieu thereof if his
services are terminated by virtue of non-
renewal of his employment contract.
STATE AMENDMENTS TO CONTRACT LABOUR
(REGULATION AND ABOLITION) ACT, 1970 (CLRA)
➢ Vide a notification dated June 26, 2020, the
state government of Goa has amended the
provisions of the CLRA, as applicable in the
state. The amendments govern two aspects: (i)
the number of workers required in an
establishment for coming under the purview of
CLRA has been increased to 50 (fifty) workmen
as against 20 (twenty) workmen in the CLRA,
and (ii) a new section, Section 25A has been
introduced which assigns a threshold on the
amount payable, for compounding any offence.
For an establishment with 50 (fifty) to 100
(hundred) workmen, the amount is INR 20,000,
whereas for establishments with 101 (one
hundred one) to 500 (five hundred) workmen
and more than 500 (five hundred) workmen, it
is capped at INR 35,000 and INR 50,000
respectively. The monetary cap is applicable
only when the establishment commits a
compoundable offence under the CLRA.
➢ Labour Department, Government of
Puducherry vide notification dated June 9, 2020
has notified the Puducherry Contract Labour
(Regulation and Abolition) Amendment Rules,
2020 (PCLRA Amendment Rules).
The PCLRA Amendment Rules provides for
amendments in Puducherry Contract Labour
(Regulation and Abolition) Rules, 1973 which
inter alia include as follows:
(i) Register of Contractors:
Maintenance of register of contractors
(Form- XII) by the principal employer in
electronic form;
(ii) Register of persons employed:
Every employer to maintain a register of
contract labour (Form- XIII) in electronic
form; and
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AUGUST 2020
5 ISSUE 5
(iii) Payment of fee:
Any fee which is required to be paid under
the rules to be paid online through the
online portal of Government of
Puducherry.
STATE AMENDMENTS TO FACTORIES ACT, 1948
➢ Madhya Pradesh government vide a
notification dated May 13, 2020 has amended
the Madhya Pradesh Factories Rules, 1962 (MF
Rules). The notification substitutes Rule 112 of
the MF Rules which deals with ‘Returns’ and
provides for furnishing and uploading of one
unified return on the web portal annually on or
before February 1 each year. However, it will
not be necessary for an occupier/manager to
furnish the return in the event an annual return
has already been uploaded on the web portal
under Labour Laws (Exemption from Furnishing
Returns and maintaining Registers by certain
Establishments) Amendment Act, 2014.
➢ Labour Department, Chandigarh
Administration vide notification dated June 03,
2020 has notified that factories registered
under Factories Act, 1948 shall be exempted
from the provisions of Section 51 (weekly
hours), Section 54 (daily hours), Section 55
(intervals of rest) and Section 56 (spread over),
provided, the following conditions are met:
(i) No worker to be allowed to work for more
than 12 (twelve) hours in a day and 72
(seventy two) hours in a week;
(ii) Period of working hour each day for every
worker should not exceed 6 (six) hours
and no worker should work for more than
6 (six) hours without an interval of 30
(thirty) minutes; and
(iii) Female worker should not be allowed to
work between 07:00 pm to 06:00 am.
STATE AMENDMENTS TO THE SHOPS AND
ESTABLISHMENTS ACT
➢ Labour and Employment Department,
Government of Gujarat vide notification dated
June 23, 2020 has notified the Gujarat Shops
and Establishments (Regulation of Employment
and Conditions of Service) Rules, 2020 (Gujarat
S&E Rules). The Gujarat S&E Rules inter alia
provides for the following:
(i) Registration and Intimation:
The Gujarat S&E Rules prescribes that
every establishment which employs 10
(ten) or more workers are required to
obtain a registration. Such an application
for registration can now be made online
as well. Further, under the earlier rules,
an exemption was given to small
establishments, i.e. establishments with
less than 10 (ten) workers. However,
under the Gujarat S&E Rules, where the
establishment employs less than 10 (ten)
workers, an intimation in the relevant
form is required to be made.
(ii) Employment of women in night shifts:
Women workers can be required to work
in the establishment between the hours
of 9:00 pm and 6:00 am after obtaining
consent from such women workers, in the
prescribed form.
(iii) Intimation of persons doing confidential
work:
Under the Gujarat S&E Rules, every
employer is required to submit a form
containing the particulars of persons who
are occupying a position of confidential
character within the establishment. It also
provides that the number of such persons
should not be more than 1% (one percent)
of the total strength of workers in the
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AUGUST 2020
6 ISSUE 5
establishment, subject to a cap of 50
(fifty) persons.
(iv) Part-time employment:
The Gujarat S&E Rules provides that an
employer can engage any worker as a
part-time worker, provided that he will
not be allowed to work more than 5 (five)
hours in a day.
(v) Notice of accumulated leave:
The Gujarat S&E Rules provide that the
employer / manager is required to display
a notice in the prescribed form by January
31 each year which would provide names
of the workers who have reached the
maximum accumulation limit. The notice
would also state that no further leave can
be carried forward. A copy of such notice
is also required to be given to each
concerned worker.
➢ Labour Department, Government of Rajasthan
vide notification dated May 9, 2020 has
provided for an exemption vis-à-vis closure of
shops and establishments, registered under
Rajasthan Dukan and Vanijiyak Sansthan
Adhiniyam, 1958, for atleast a day during a
week. Such exemption will be in force for a
period of 3 (three) years from the date of the
notification. However, to avail the exemption
the shops and establishments will be required
to comply with conditions which inter alia
include:
(i) Granting of leaves to employees on a turn
basis for at least a day in a week;
(ii) Employees to work for a period of 9 (nine)
hours a day and 48 (forty eight) hours a
week, if an employee is required to work
more than the mentioned hours then, the
same should be recorded; and
(iii) Every employee will be issued an
appointment letter and a copy of the
same will be given to the regional
inspector.
OVERTIME WAGES TO BE TWICE THE RATE OF
ORDINARY WAGES IN HIMACHAL PRADESH
The Government of Himachal Pradesh, vide an
ordinance dated July 9, 2020, has brought in similar
changes to the Factories Act, 1948, as implemented
by the state of Haryana. The key change brought in
by the ordinance is regarding overtime hours and
wages. The number of overtime hours in a quarter
cannot exceed 115 (one hundred fifteen) hours,
subject to the condition that wages for overtime
hours should be paid twice the rate of ordinary
wages.
HARYANA NOTIFIES FACTORIES (HARYANA
AMENDMENT) ACT, 2018
The Government of Haryana vide notification dated
July 20, 2020 has notified the Factories (Haryana
Amendment) Act, 2018 (Amending Act) to further
amend the Factories Act 1948 (Act) as in force in the
state of Haryana with immediate effect. The
Amending Act, inter alia, has increased threshold
limit for applicability of the Act and has also increased
the number of hours allowed to work overtime in any
quarter. The changes brought in by the Amending Act
are available on our website here.
OTHER STATE AMENDMENTS TO FACTORIES ACT,
1948
➢ Madhya Pradesh government vide a
notification dated May 13, 2020 has amended
the Madhya Pradesh Factories Rules, 1962 (MF
Rules). The notification substitutes Rule 112 of
the MF Rules which deals with ‘Returns’ and
provides for furnishing and uploading of one
unified return on the web portal annually on or
before February 1 each year. However, it will
not be necessary for an occupier/manager to
furnish the return in the event an annual return
has already been uploaded on the web portal
under Labour Laws (Exemption from Furnishing
https://www.pioneerlegal.com/highlights-of-the-factories-haryana-amendment-act-2018/
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AUGUST 2020
7 ISSUE 5
Returns and maintaining Registers by certain
Establishments) Amendment Act, 2014.
➢ Labour Department, Chandigarh
Administration vide notification dated June 3,
2020 has notified that factories registered
under Factories Act, 1948 will be exempted
from the provisions of Section 51 (weekly
hours), Section 54 (daily hours), Section 55
(intervals of rest) and Section 56 (spread over),
provided, the following conditions are met:
(i) No worker to be allowed to work for more
than 12 (twelve) hours in a day and 72
(seventy two) hours in a week;
(ii) Period of working hour each day for every
worker should not exceed 6 (six) hours
and no worker should work for more than
6 (six) hours without an interval of 30
(thirty) minutes; and
(iii) Female worker should not be allowed to
work between 07:00 pm to 06:00 am.
TELANGANA CONSOLIDATES INSPECTION UNDER
VARIOUS LABOUR LAWS FOR EASE OF DOING
BUSINESS
In a bid to improve ease of doing business, the
Telangana government has issued a comprehensive
order relating to Computerized Risk Assessment
based labour inspections under various labour laws.
The order dated July 14, 2020, provides for the
consolidation of inspections under various labour
laws in the state, including, (a) The Payment of Wages
Act, 1936, (b) The Factories Act, 1948, (c) The
Minimum Wages Act, 1948, (d) The Payment of
Bonus Act, 1965, (e) The Payment of Gratuity Act,
1972, (f) Telangana Shops and Establishment Act,
1988 etc. (Order). The key highlights of the Order are
as follows:
(i) There will be a single joint inspection without
duplication, under all labor laws.
(ii) Establishments are categorized into Low Risk,
Medium Risk and High Risk, depending on the
number of workers employed.
(iii) The frequency of inspection for establishments
under the Low Risk category is once in 5 (five)
years, whereas the frequency is 3 (three) years
and 2 (two) years respectively for Medium and
High Risk categories.
(iv) Under the Order, an organization falling under
low or medium risk category may seek an
exemption from the labour inspections based
on self-certification / third party audit scheme.
It also exempts start-ups which are registered
with DPITT from labour inspection during the
first year, which can be extended further for
another 4 (four) year period provided, timely
submission of integrated returns are made and
no complaints are made against them.
(v) Scheduling and allotting inspection will be
determined through an online module.
Establishments will be picked randomly based
on the inspection frequency and a computer
generated notice will be provided to the
establishment 15 (fifteen) days prior to the
inspection.
(vi) The inspection report will be uploaded by the
Inspecting Officer within 48 (forty eight) hours
after the completion of inspection. An alert will
be sent to the employer, enabling him to view
or download the inspection report.
EPFO ISSUES NOTIFICATION FOR PRIORITY
SETTLEMENT OF DEATH CLAIMS
EPFO vide notification dated July 17, 2020, has
directed all Regional Offices to take immediate
initiative to settle death claims owing to industrial
accidents. The notification directs that, immediately
upon learning about an industrial accident, the
concerned Regional PF Commissioner is required to
depute an officer to ascertain the complete details of
the incident, deaths etc. from the concerned
establishment. The officer is also required to provide
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AUGUST 2020
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guidance to the family members / beneficiaries of the
deceased for immediate filing of claims under the
Employee’s Provident Fund and Miscellaneous
Provisions Act, 1954. The notification also provides
that a complete action report must be submitted
within two days of the incident. The EPFO decision
will aid in faster settlement of claims, especially for
the members of the deceased member.
DRAFT RULES FOR CODE ON WAGES
Vide notification dated July 7, 2020, the Central
Government released the draft rules under the Code
on Wages, 2019, for objections and suggestions from
the public (Rules). The Rules will be read with the
Code on Wages, 2019 (Code), which was given assent
to on August 8, 2019. Once notified, the Rules will
supersede the rules framed under: (i) the Payment of
Wages Act, 1936, (ii) Minimum Wages Act, 1948, (iii)
Payment of Bonus, 1965 and (iv) Equal Remuneration
Act, 1976.
The key features of the Rules are as follows:
(i) Manner of calculating minimum wages
The Rules lay down the criteria for fixing the
minimum rate of wages per day for
employees. These criteria include: (a) three
adult consumption units per household, (b)
daily intake of 2700 (two thousand seven
hundred) calories per consumption unit, (c)
10% (ten percent) expenditure on rent, (d) 20%
(twenty percent) expenditure of fuel,
electricity, and miscellaneous items, and (e)
25% (twenty five percent) expenditure on
education, medical requirements and
contingencies.
(ii) Norms for fixing minimum wages
Under the Rules, the minimum wages will be
calculated based on the geographical area of
the employee, which is divided into 3 (three)
categories namely, metropolitan area, non-
metropolitan area and rural area. In addition to
geographical area, it will also be based on the
skill category of an employee, which is
categorized as unskilled, semi-skilled, skilled
and highly skilled. The Central Government will
form a technical committee to advise on
modifications in skill categorisation of these
categories of occupations.
(iii) Floor Wages
The Rules provide that the Central
Government, in consultation with Central
Advisory Board, will decide the floor wage
based on minimum living standards taking into
account food, clothing, and housing for a family
of three consumption units. The floor wage
may be revised every 5 (five) years, and periodic
adjustments may be made to accommodate
variations in the cost of living. Inputs from state
governments will also be taken, if deemed
necessary by the Central Government.
(iv) Work Hours
The Rules state that a normal working day will
constitute a maximum of nine hours of work per
day, with a maximum spread over of 12 (twelve)
hours including one hour of rest intervals. The
spread over may be increased to 16 (sixteen)
hours in cases where (a) employment is
intermittent, (b) the employee is engaged in an
unforeseen emergency etc.
(v) Constitution of the Central Advisory Board
The Rules govern the constitutional aspects of
the Central Advisory Board (Board) The
functions of the Board, as under the Code,
includes fixation or revision of minimum wages
and other connected matters, providing
increasing employment opportunities for
women, the extent to which women may be
employed in such establishments or
employments as the Central Government may
specify.
KARNATAKA AND BIHAR INCREASE THRESHOLD
UNDER SECTION 25K OF INDUSTRIAL DISPUTES ACT
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Vide ordinances dated July 7, 2020 and July 31, 2020,
the state governments of Bihar and Karnataka,
respectively, have amended the threshold of number
of workmen under Section 25K of the Industrial
Disputes Act, 1947. In Bihar and Karnataka, the
provisions under Chapter VB governing lay-off and
retrenchment will now be applicable only to an
industrial establishment where the number of
workmen employed is not less than 300 (three
hundred), instead of the existing provision of 100
(one hundred) workmen.
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EMPLOYEE ENTITLED TO HIGHER GRATUITY ONLY WHEN
THERE ARE ALTERNATE OPTIONS UNDER THE TERMS OF
EMPLOYMENT
Court: Supreme Court of India
Subject: Eligibility of employee for higher gratuity amount
Parties: BCH Electric Limited v. Pardeep Mehra
Decided on: April 29, 2020
Facts
BCH Electric Limited (Company) had formulated a
gratuity scheme (Company Scheme) for employees
who are not covered under the Payment of Gratuity
Act, 1972 (the Act). The Company also executed a
trust deed and created a gratuity trust, to make
payment of gratuity to employees under the Act and
the Company Scheme (Trust Deed). The Respondent,
at the time of his retirement in 2012, claimed a
gratuity amount of roughly INR 1.8 crores. However,
the Company denied the claim and stated that the
Respondent was entitled to a gratuity of INR 10 lakh
only, as per the ceiling fixed under the Act.
The Respondent challenged the decision of the
Company before the Claims Commissioner under the
Act on the grounds that the Company Scheme did not
have any ceiling on the amount of gratuity payable to
an employee. The Claims Commissioner held that by
virtue of Section 4(5) of the Act, the Respondent was
entitled to receive higher gratuity amount as per the
Company Scheme. Section 4(5) of the Act states that
“Nothing in this section shall affect the right of an
employee to receive better terms of gratuity under
any award or agreement or contract with the
employer.” The Company challenged the decision
before the High Court, which upheld the decision of
the Claims Commissioner. Hence the present appeal
was filed before the Supreme Court.
Arguments
The Company argued that the Company Scheme was
implemented for those employees who were outside
the purview of the Act. They also argued, citing
judicial precedents, that an employee is entitled to
receive payments based on either the statutory
provisions or the Company scheme, and not a
combination of both.
The Respondent argued that Section 4 (5) of the Act
has been given overriding effect over other
provisions of Section 4 of the Act, and all that the
Respondent needed to show was that the Company
had a scheme for its employees (contract) and that it
did not prescribe any ceiling and that such a scheme
would be protected by Section 4 (5) of the Act.
Judgement
The court observed that in 2012, at the time of
Respondent’s resignation, the maximum amount of
gratuity payable under Section 4(3) of the Act was INR
CASE LAWS
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10 lakh. It also noted that the definition of ‘employee’
under the Act do not provide a wage bracket or
ceiling. Under this circumstance, the intent of the
Trust Deed was not to afford to the employees who
are covered by the provisions of the Act, a package
better than what was made available by the Act, but
it was to extend similar benefit to those who would
not be covered by the Act.
It also stated that for Section 4 (5) of the Act to get
triggered, there must be better terms of gratuity
available and extendable to an employee "under any
award or agreement or contract with the employer"
as against what has been provided for under and in
terms of the Act. The court held that the calculation
of gratuity under the Company Scheme was to apply
only to employees who are not covered under the Act
and held that the Claims Commissioner and the High
Court erred in granting higher gratuity to the
Respondent.
WITHHOLDING GRATUITY OF A SUPERANNUATED
EMPLOYEE DURING PENDENCY OF DISCIPLINARY
PROCEEDINGS PERMISSIBLE
Court: Supreme Court of India
Subject: Withholding gratuity during pendency of disciplinary proceedings
Parties: Chairman, Mahanadi Coal Fields v. Rabindranath Choubey
Date: May 27, 2020
Facts
The Respondent, an employee of the Appellant, was
subject to the Conduct, Discipline and Appeal Rules,
1978 (CDA Rules) framed by the Appellant. While the
Respondent was in service, an allegation of
misconduct was made against him on the grounds
that he dishonestly caused coal stock shortages,
resulting in a severe loss to the Appellant company,
for which a charge sheet was served upon him. He
was suspended from service under the relevant CDA
Rules however, the departmental enquiry was
pending. On completion of 60 (sixty) years of age, the
Respondent was superannuated and at the time of
superannuation, the departmental enquiry which
was initiated against him remained pending.
Nonetheless, the Appellant withheld the gratuity due
and payable to the Respondent.
The Respondent challenged the Appellant’s decision
before various fora, and finally approached the High
Court, who ruled in his favour.
Arguments
The counsel for the Appellant argued that the CDA
Rules prescribe that if a disciplinary action was
instituted while the employee was in service, such
proceedings would be continued in the same manner
as if the employee had continued service. It was also
argued that the CDA rules permit the disciplinary
authority to withhold the payment of gratuity, or
order the recovery from gratuity of the whole or part
of any pecuniary loss caused to the company if such
an employee has been guilty of offences/misconduct
as mentioned in Sub section (6) of Section 4 of the
Payment of Gratuity Act, 1972 or to have caused
pecuniary loss to the company by misconduct or
negligence, during his service.
The counsel for the Respondent made a dual
submission that the (i) CDA Rules only prescribe that
the disciplinary proceedings will be deemed to be
continued and concluded as if he was in service and
(ii) under Section 4(1) of the Payment of Gratuity Act,
1972, gratuity becomes payable as soon as the
employee retires subject to the condition that the
employee has 5 (five) years continuous service.
Judgement
After perusing the CDA Rules, the court held that the
CDA Rules were in consonance with the provisions of
the Payment of Gratuity Act, 1972 (Act). Under the
Act, the gratuity of an employee can be forfeited to
the extent of the damage or loss caused to the
employer. Thus, the court held that the Appellant
was right in withholding the gratuity payable to the
Respondent.
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TRAINEES COME UNDER THE AMBIT OF
‘WORKMAN’ UNDER ID ACT, 1947
Court: High Court of Karnataka
Subject: Termination of trainees from service
Parties: The Management of Recipharm Pharma Services Pvt. Ltd. v. G. Vasanthkumr and Others.
Decided on: May 8, 2020
Facts
Petitioner, a private limited company engaged in the
activity of manufacture of pharmaceutical medicines,
have challenged the award passed by the Labour
Court whereby, it directed the Petitioner to reinstate
all the Respondents to their original posts with
continuity of service along with backwages from the
date of their termination, till the date of
reinstatement with all other consequential benefits.
The Respondents have contended that they by virtue
of being ‘trainees’ come under the ambit of the
definition of ‘workman’ as stated under Section 2 (s)
of the Industrial Dispute Act, 1947. Hence, the
termination done by the Petitioner amounts to
retrenchment and attracts compliance under Section
25 (F) of the Industrial Dispute Act, 1947.
Arguments
The counsel on behalf of the Petitioner argued that
the Labour Court has ignored the essential requisite
regarding relationship of employer and employee
between the Petitioner and Respondents vis-à-vis
definition of ‘workman’ under the provisions of the
Industrial Disputes Act, 1947. The finding of the
Labour Court vis-à-vis trainees is not in consonance
with Section 2 (s) of the Industrial Disputes Act, 1947
more particularly in the context of the certified
standing orders of the Petitioner contemplating the
appointment of trainees for a specific period. The
appointment letters issued to the trainees were for a
fixed term of 36 (thirty six) months as trainee-
production. It is also pertinent to note that there is
no bar to extend additional benefits to the trainees,
merely for the reason that the Respondents were
engaged for more than 36 (thirty six) months and the
additional benefits extended, if any, would not create
a status of regular workman.
The Respondent’s counsel submitted that the
certified standing orders of the Petitioner is not in
conformity with the model standing orders. Indeed,
the trainees had earlier worked with the Petitioner
on contract basis for several years and thereafter
they were engaged as trainees on a fixed term. As
such, they come within the ambit of ‘workman’ as
defined under the provisions of the Industrial
Disputes Act, 1947. The trainees being treated on par
with the regular employees regarding the pay slips
issued and certain benefits extended like wage
increase, over time benefits and bonus etc.,
termination of the respondents amounts to
'retrenchment' attracting the compliance of Section
25(F) of the Industrial Disputes Act, 1947. The
Petitioner also gave assurance of providing
permanent job to the Respondents. However, after
extracting the regular work from the Respondents,
Petitioner has turned down the assurances made as
far as regularization of their services. Therefore, the
Labour Court has rightfully given the direction to
reinstate the Respondents with continuity of service
along with backwages and consequential benefits.
Judgement
After perusing the provisions of the Industrial
Disputes Act, 1947 the court held that It is well settled
that designation of an employee is not of importance
and it is the real nature of the duties being performed
by the employee which would decide as to whether
an employee is a workman under Section 2(s) of the
Industrial Dispute Act, 1947. The determinative
factor is the work/duties performed by the employee
which depends upon the facts of the case. The
nomenclature and the period of the appointment are
immaterial. In this regard, the Petitioner did not place
on record that any trainer was appointed to impart
training to the Respondents. Whereas the evidence
put forth by the Respondent establishes the
relationship of employer and employee. Therefore,
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AUGUST 2020
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the decision of the Labour Court requires to be
confirmed.
WOMEN CONTRACTUAL WORKERS CANNOT BE
DENIED CHILDCARE LEAVE
Court: High Court of Uttarakhand
Subject: Childcare leave for women contractual workers
Parties: Tanuja Tolia v. State of Uttarakhand
Date: July 24, 2020
Facts
The Petitioner is an Ayurvedic doctor, in the State
Medical Health Services, and is employed on a
contractual basis since 2009. The last extension of the
contract was valid until March 23, 2018. The
Petitioner was granted maternity leave from April to
October 2017, after which she applied for Child Care
Leave (CCL), relying on the 2015 judgement of the
High Court Shanti Mehra v. State of Uttarakhand,
which held that a contractual employee is entitled for
CCL of 730 (seven hundred thirty) days. The
application was rejected on the grounds that a child
care leave can only be given to a “regular
Government employee” and not to employees who
are working on contractual basis, as their service
conditions are given in their contract, where there is
no mention of child care leave. Aggrieved by the
order, the petitioner filed a writ petition before the
High Court.
Arguments
The Petitioner argued that CCL is a beneficial
provision made in law primarily for female work force
in the country. Such a provision must be given a
liberal construction and all female employees,
irrespective of the nature of their job.
The Respondent pointed out that it is a contradiction
in terms to suggest that a contractual employee,
whose employment itself is for a period of 12 (twelve)
months, should be given 730 (seven hundred thirty)
days of CCL.
Judgement
Agreeing with the contention that that a contractual
employee, whose employment itself is for a period of
12 (twelve) months, should not be given 730 (seven
hundred thirty) days of CCL, the court reversed its
earlier judgement, with some modifications.
The court held that contractual employees can be
granted paid CCL for 31 (thirty one) days, on the same
terms and principles as “earned leave”, as is given to
other employees. The court also held that the CCL is
more for the benefit of the child than for the mother,
and it cannot be denied to a contractual employee.
Also, it stated that when such CCL is denied, valid
reasons must be given for the same.
ORISSA HIGH COURT INTERPRETS THE WORD ‘MAY’
UNDER ID ACT, 1947
Court: Orissa High Court
Subject: Settlement agreement in contravention to Industrial Disputes Act and interpretation of the word ‘may’
Parties: Tisco Sukinda Chromite Mines Contractor Workers Union v. Union of India and Others
Date: July 14, 2020
Facts
By order dated March 2, 2020 and March 26, 2020,
the Respondent has granted permissions to
undertakings vis-à-vis their closure and termination
of workmen employed therein. In this regard, a
settlement agreement was also entered into
between the undertakings and workmen.
Arguments
The Petitioner had raised an objection to the
aforementioned orders regarding the said orders
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AUGUST 2020
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violating Section 25O of the Industrial Dispute Act,
1947 read with Rule 76-C of the Industrial Dispute
(Central) Rules, 1957. Such a violation is being
committed because to apply for closure of
establishment under the mentioned provisions an
application for closure in Form-QA is required to be
submitted at least 90 (ninety) days before the date on
which the intended closure is to become effective
after serving copies of such application along with all
the enclosures on the President or the Secretary of
the registered trade union and displaying a notice
conspicuously on the notice board at the main
entrance of the establishment for information
purposes of all concerned workmen, which was not
done by the Respondents.
Additionally, the members of the Petitioner had
resolved and constituted a ‘Core Committee’ to
represent the petitioner for negotiation, with both
the undertakings, regarding various issues including
unpaid salary and other unpaid allowances and dues
and upgradation of salary. However, settlement
agreement entered into between a few handful
members of the said core committee and the
undertakings is in violation of Section 25N of the
Industrial Dispute Act, 1947.
The Respondents in their reply have stated that the
present writ petition is premature as the review
applications filed by the petitioner for both the
orders are still pending.
Judgment
The court relying on Orissa Textile and Steel Ltd. v.
State of Orissa and Others noted that the word ‘may’
used in Section 25O of the Industrial Dispute Act,
1947 would necessarily mean and be interpreted as
‘shall’, and that in the event an application seeking
review of the order passed by the appropriate
Government is filed, the appropriate Government
'shall' mandatorily review the order. Additionally, by
relying on precedents, it was held that a settlement
even though binding on all workmen under Section
18 of the ID Act cannot be entered into in
contravention of the provisions of Chapters VA and
VB of the Industrial Disputes Act, 1947.
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