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/

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

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

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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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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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/

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

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

AUGUST 2020

9 ISSUE 5

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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10 ISSUE 5

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

AUGUST 2020

11 ISSUE 5

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,

AUGUST 2020

13 ISSUE 5

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

AUGUST 2020

14 ISSUE 5

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.

AUGUST 2020

15 ISSUE 5

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