industrial law

RAJARSHI SCHOOL OF MANAGEMENT AND TECHNOLOGY

Industrial relations &labor enactment(performing)-Industrial law

RAMESHWARI SONKERASSISTANT PROFESSORMANAGEMENT

Concept of labour legislation

Meaning of labour legislations Are used to cover all the law of the govt Which have been enacted to deal with employment, non-employment,

wages, working conditions, industrial relations, social and economic security, and welfare of persons employed in industries.

Also called labour law or employment law Is the body of law, ruilling of administrative, and precedents (guides) Which address the relationship between employee, eR, Labour law emerge(appear) when the eR tried to restrict the powers of

workers or keep labor cost low The worker began demanding better conditions or improve their standard

of living

The eR costs increased due to worker demand This led to a chaotic (confuse) situation which required the involvement of govt In order to put an end to the disputes between the ever warring (opposing)

employer and employee The govt enacted many labor laws LL Harmonize (match) many angles of the relationship between trade union, eE and

eR LLs in India are so numerous(many), complex and ambiguous (unclear) They promote resolution of problems relating to industrial relation The labor movement has been enacting in the 19th and 20th centuries

Nature of Labor legislationProduct of industrial revolution The labor laws are the product for industrial revolution Because of LL industrial revolution is possibleRegards individual as a worker Whereas social law consider him primarily as a citizen but LL treat as

individual These set of laws go out of the way in protecting workers and securing

justice to them The influences of discrimination justice and distributive justice can be clearly

seen over themDeals with problems of labor LLs seek to deal with the problems arising

Labour Legislation

Labour legislation refers to the body of laws that deals with matters arising out of the occupational status of the workers.

It is the body of laws , administrative rulings that address the legal rights of and puts restrictions on working people and their organizations .

Objective of Labour Legislation

The objectives of Labour legislation is of two folds .

To improve the service conditions of industrial labour so as to provide for them ordinary amenities of life,

To bring about industrial peace which could in its turn accelerate and fast track the productivity of the country resulting in its prosperity.

Factors influencing Evolution of Labour legislation

Several factors which urged for the evolution of labour legislation in India :-

• Early Industrialism • Influence of colonial (foreign)rules• The rise of Trade Union• The growth of Humanitarian ideas and the concept of

Social justice• Establishment of ILO• National movement• Indian constitution

Types of Labour legislation

Welfare and Protective Labour legislation

Social security legislations Legislations concerning wages Industrial relations legislations

Legislations on working conditions (Protective and welfare labour legislations )

These are legislations that are meant to protect the working conditions of the workers at the workplace. These legislations provide the following provisions to the workers at the work place.

Health and safety provisions Welfare provisions Provisions to regulate annual leaves of

workers Provisions to regulate working hours

The various legislations for regulation of working conditions are

Factories Act – 1948 Mines Act – 1952 Contract Labour (Regulation and Abolition

Act )- 1970 Plantation Labour act , 1951 Dock Workers (Regulation of Employment

Act ),1948 A.P.Shops and Establishments Act , 1988

Social Security Legislations

These are the legislations that are meant to protect the employee and his family during the days of his unemployment may be because of

Death Accident Sickness Retirement

Different types of Social Security Legislations

1. The workmen’s Compensation Act – 19232. The ESI Act – 19483. The EPF Act- 19524. The payment of Gratuity Act- 1972

Legislations concerning Wages

These are the legislations that are meant to regularize the payment of the employees in both organized and unorganized industries and also to provide them with minimum amount of payment.

Various legislations concerning wages are

Payment of wages Act, 1936 Minimum Wages Act , 1948 Payment of Bonus Act, 1965 Equal remuneration Act, 1976

Industrial Relations Legislations

These are the legislations that provide guidelines to both the employer and the employees for the maintenance of sound industrial relations in the organizations.

The various types of industrial relations legislations are

Industrial Disputes Act, 1948 Industrial Employment Standing Orders

Act, 1946 Indian Trade Union Act, 1926

Factories Act , 1948

In order to regulate the working conditions of the workers in factories and to protect the workers there of a legislation named Factories act, 1948 came into existence.

The act is a piece of social welfare provision meant to Regulate the health, safety and welfare of the workmen . Regulate the working hours of workmen Provide them with annual leaves (with wages) Regulate and control the employment of women and

young persons in factories .

Major Industrial Laws

The Industrial Dispute Act, 1947

The Payment Of Wages Act, 1936

The Minimum Wages Act, 1948

The Payment Of Gratuity Act, 1972

The Industrial Disputes Act, 1947

Important Definitions Authorities under the Industrial Disputes Act Award & Settlement Strikes Lock-outs Lay Offs Retrenchments Closure Case Law Studies

Important Definitions

Industry [S.2(j)]: means any business, trade, undertaking, manufacture or calling of employers and includes any calling means business, service, employment means service, handicraft, or industrial occupation or avocation means calling of workmen.

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

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

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


Industrial Dispute [S.2(k)]: means any dispute or difference between-i. Employers and Employers, orii. Employers and Workmen, oriii. Workmen and Workmen,which is connected with-iv. The employment or non-employment, orv. The terms of employment, orvi. The conditions of labour.of any person related directly or indirectly to the industry.


Workman [S.2(s)]: means any person (including an apprentice) employed in any industry to do any-i. Manualii. Skillediii. Unskillediv. Technicalv. Operationalvi. Clericalvii. Supervisory

work for hire or reward, whether the terms of employment be expressed or implied, and in relation to an Industrial Dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute or whose dismissal, discharge or retrenchment has led


Workman (contd.): to that dispute. Workman does not include any such person, who is:-i. Subject to the Air Force Act, 1950, the Army Act, 1950, or the Navy Act,

1957, orii. Employed in the police service or as an officer or other employee of a

prison, oriii. Employed mainly in a managerial or administrative capacity, oriv. Employed in a supervisory capacityv. Exercises functions mainly of managerial nature, by the duties attached

to the office or by the reason of power vested n assigned in him.


Public Utility Service [S.2(n)]: means-i. Any railway service or any transport service for the carriage n way of

moving of passengers or goods by air;ii. Any service in, or in connection with the working of, any major port or

dock;iii. Any section of an industrial establishment, on the working of which the

safety of the establishment or the workmen employed therein depends;iv. Any postal, telegraph or telephone service;v. Any industry which supplies power, light or water to the public;vi. Any system of public conservancy n safety or sanitation n public health;

Authorities under the Act

The Act has set up machinery to deal with the Industrial Disputes. These authorities are meant for dealing with the Industrial Disputes. Even though the name authority is used, it does not mean each and every authority has power to make a binding n mandatory decision.The Authorities are:

i. Works Committee (Section 3)ii. Conciliation n resolution Officer (Section 4,11 & 12)iii. Board Of Conciliation n bargain (Section 11 & 13)iv. Court Of Inquiry (Section 6,10,11 &14)v. Labour Court (Section 7,11 &15)vi. Industrial Tribunal n court (Section 7A,11 & 15)vii. National Tribunal (Section 7b,11 & 15)

Award & Settlement

Award: means an interim or final determination of any Industrial Dispute to any question relating thereto, by any Labour Court, Industrial or National Tribunal and includes arbitration award made under section 10A.

Settlement (Section 18-21): means a settlement arrived at in the course of conciliation proceedings and includes a written agreement between the employer and workman arrived at, otherwise than in the course of conciliation proceedings where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorized in this behalf by the Appropriate Government and the Conciliation Officer.

Strikes

Strike: means cessation of work by a body of persons in any Industry:-a. Acting in combination, orb. A concerted refusal, orc. A refusal under a common understanding,

of any number of persons who are or have been so employed to continue to work or accept employment.

Strike is a weapon in the hands of the workmen, in the process of collective bargaining. Strike tests the economic bargaining power of each side and forces each of them to face the need it has for others contribution. The economic pressure of the strike is the catalyst which makes the agreement possible. Collectively bargaining is a process of reaching agreement and strikes are an integral and frequently necessary part of that process.

Strikes: in Public Utility Services

Section 22 says “In case an industry is a public utility service, no person employed in it shall g o on strike in breach of contract-a. Without giving to the employer notice of a strike,

provided within 6 weeks before striking,b. Within 14 days of giving such notice, orc. Before the expiry of the date of strike specified in

any such notice; ord. During the pendency of any conciliation

proceedings before a conciliation offices and 7 days after the completion of these proceedings”


Notice of strike should be in prescribed form. The copy of this notice is to be submitted to the conciliation

officer, or such authority as may be prescribed by the Appropriate Government.

The employer, on receipt of notice of strike from employees, shall report within 5 days to-a. Appropriate Governmentb. Authority prescribed by the Appropriate Government- which

states the number of notices received on that day. The date on which the workman proposed to go on strike

should be specified in the notice. A fresh notice is necessary when the date of strike specified

in the original notice expires.


A new notice is necessary, when the conciliation proceedings fail, which have started after the notice.

The object of giving the notice is to allow the other party to come to terms, or to approach the authorities to intervene and stop the strike, if possible.

During the period of notice, the parties can respond to each other.

Illegality attaches only to that period which remains to expire before the commencement of action.

Strikes: General Prohibition

Section 23 states the general prohibition of strike. No workman who is employed in any Industrial Establishment

shall go on strike in the following circumstances:a. During the pendency of conciliation proceedings before a Board

and 7 days after the completion of these proceedings;b. During the pendency of proceedings before a Labour Court,

Industrial Tribunal or National Tribunal, and 2 months after the completion of these proceedings;

c. During the pendency of arbitration proceedings before an arbitrator and 2 months after the completion of these proceedings; where notification has been issued under S 10A(3A)

d. During any period in which a settlement or award is in operation in respect of any of the matters covered by the settlement or award.

Lock-outs Lock-out [Section 2(I)] means-

a. The temporary closing down of a place of employment,b. The suspension of work, orc. The refusal by an employer to continue to employ any number of

persons employed by him. As strike is a weapon in the hands of workmen for enforcing their

demand, lock-out is a weapon in the hands of the employer to persuade the workers to agree to his point of view and accept his demands in the struggle between capital and labour.

The notice of lock-0ut shall be given in prescribed manner. On event of employer giving notice of lock-out on any day to any

person employed by him, he shall report the number of notices given to the Appropriate Government, within 5 days of giving such a notice.

Prohibition of Lock-outs

The conditions of lock-outs in public utility services are dictated under Section 22 and are same as the conditions of Strikes.

The provisions for general prohibition of lock-outs are dictated under Section 23, same as the provisions of Strikes.

The notice of lock-out is not necessary when a lock-out is already existent in case of a public utility service.

However, the employer shall send intimation of lock-out to the authority specified by the Appropriate Government, on the day of declaration of lockout itself.

Strikes & Lockouts: Wages & Justification

Wages are generally not provided during the period of strikes when it is proven illegal under the Act.

However, the factor of justification of reasons leading to the Act of going on strike, also decide the payment or non-payment of wages to the workmen.

If a strike is not justified, but legal; or if a strike is illegal, but duly justified, the workmen are entitled to receive wages for the period of the strike.

A lock-out in violation of the statutory requirements is illegal and unjustified and workers are entitled to wages for the lock-out period.

For a legal lock-out, no wages are payable to the workmen.

Strikes & Lock-outs: Penalties Prohibition of financial aid to illegal strikes or lock-outs (S.25) Penalty for illegal strike (S.26): Any workman who commences,

continues or acts in furtherance of an illegal strike shall be punishable with imprisonment up to 1 month, or fine up to Rs.50 or both.

Penalty for instigation (S.27): Any person who instigates or incites other to take part in a strike or lock-out which is illegal shall be punishable with imprisonment up to 6 months or with fine up to Rs.1000 or both.

Penalty for giving financial aid to illegal strikes and lock-outs (S.28): Punishable with imprisonment up to 6 months or fine up to Rs.1000 or both.

Lay-Offs Lay-Off means:

i. The failureii. Refusal, oriii. Inability of an employer on account of shortage of:

a. Coal,b. Power or raw materials, orc. The accumulation of stocks, ord. The break-down of machinery, ore. Natural calamity, orf. For any other connected reason to give employment;

to a workman whose name is borne on the muster rolls

of his industrial establishment and who has not been retrenched.

Lay-Offs

Lay-Off means putting aside workmen temporarily. The duration of a Lay-Off should not be longer than that of

the current emergency. The employer – workman relationship does not come to an

end, but is suspended during the period of emergency. The workman’s name should be essentially present on the

muster rolls of the industry for claiming relief. The workman should not have been retrenched. If work is given by the employer on a different shift, it would

be considered as a half-day lay-off. If employment is not given within two hours, it would be

considered as having laid-off that whole day.

Lay-Offs: Rules and Provisions

The payment of compensation for a lay-off is dependent upon-a. Status of a workman, i.e., badli, casual, or permanentb. Type of service, i.e., continuous or seasonalc. Number of workmen in the Industrial Establishment

Industrial Establishments are classified into three groups depending on the number of workers employed in that establishment:

i. Where the number of workmen is less than 50ii. Where the number of workmen is 50 – 100iii. Where the number of workmen is more than 100.

Lay-Offs: Compensation Compensation is provided to the workmen in an Industrial

Establishment on the basis of the category they fall in from the above mentioned three groups:i. Nil compensation for IEs with less than 50 workmen.ii. Compensation at the rate of 50% of the total basic pay and dearness

allowance to a time limit of 45 days for IEs with 50 – 100 workmen.iii. Compensation at the rate of 50% of the total basic pay and dearness

allowance to a time limit of 45 days for IEs with more than 100 workmen.

Workmen are not entitled to any compensation if alternate employment is provided by the employer in a radius of 5 miles, or if the lay-off is a result of a strike.

Lay Offs: Penalties

The employer of the Industrial Establishment is required to prepare a muster register that shows the name and other requisite details of all workmen in the prescribed format.

Section 25M states that an employer of an Industrial Establishment employing 100 or more workmen on average per day in the preceding 12 months is required to obtain previous permission of specified authority appointed for the purpose by the Appropriate Government, by a notification by the official Gazette.

Section 25Q says any employer who contravenes the provision of Section 25M shall be punishable with imprisonment up to one month, or fine up to Rs.1000 or both.

Retrenchment Retrenchment [S.2(oo)]: means the termination by the employer

of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include-a. Voluntary retirement of workman, orb. Retirement of the workman on reaching the age of superannuation, if

his contract contains a stipulation in this behalf, orc. Termination of the service of a workman as a result of non-renewal of

the contract of employment, ord. Termination of employment of a workman on the ground of continued

ill health. The word ‘ill health’ means cataract, physical unfitness, infirmity

due to old age, incapacity to work, leprosy, etc.

Retrenchment

Retrenchment means the discharge of surplus labour. It is not necessary that removal must be only when the

establishment is in loss. The Supreme Court has interpreted the term retrenchment in

stricter sense of it, that is to say, it means termination of service for any reason whatsoever.

Retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff of labour force is discharged a surplusage.

Where a worker suffers an accident during the course of employment making him unfit for the job, termination on this ground is illegal.

Where seasonal worker ceases to do work due to closure of season, it is not retrenchment.

Retrenchment: Provisions & Rules Provisions are divided into two main categories which are as

follows:i. Where number of workmen employed is less than 100,ii. Where number of workmen employed is more than 100.

Section 25F: No workman employed in any industry who is in continuous service for not less than one year under an employer shall be retrenched until-

a. The workman is given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or

b. In case one month’s notice is not given, the workman is paid wages for the period of the notice, in lieu of the notice period.

Retrenchment: Provisions & Rulesc. The workman is paid at the time of retrenchment,

compensation which shall be equal to 15 days average pay for every completed year of continuous service or any part thereof in excess of six months, and

d. Notice in the prescribed manner is served on the Appropriate Government.

• Section 25G: The normal rule is to retrench first of all the junior most workman. If an employer has sufficient reasons to depart from this rule, only then he can do so, but the reasons have to be recorded.

• The LIFO (Last In First Out) Principle is mentioned in the Section 25G, which states that the workman who is employed last will be retrenched first.

Retrenchment: Provisions & Rules Section 25H gives a statutory right of reemployment to

the retrenched workmen. If the employer wants to take the workmen in future, the

retrenched workman has a right of preference over the others.

This provides for preferential reemployment of the retrenched workmen.

The employer should take precaution that he pays the retrenchment compensation at the time of retrenchment.

In case the workman denies to accept compensation for the same, the employer should have sufficient proof that retrenchment compensation was offered to the workman, and clearly denied by him.

Retrenchment: Provisions & Rules Section 25K points out that the provisions of this chapter

are applicable to Industrial Establishments employing 100 or more workmen on average per working day for the preceding 12 months.

This establishment should not be of a seasonal character or in which work is performed only intermittently.

Section 25N specifies that no workman who is in continuous service for not less that one year under an employer shall be retrenched until-a. The workman has been given three months notice in writing

indicating the reasons for retrenchment and the notice period has expired or the workman has been paid in lieu of such notice, wages for the period of notice.

b. Notice in the prescribed manner has been given to the Appropriate Government and permission is granted.

Retrenchment: Provisions, Penaltiesc. Workman has been paid compensation at the time of

retrenchment which shall be equal to 15 days average pay for every completed year of continuous service or any part thereof in excess of six months.

d. Inquiry is made by the Appropriate Government or specified authority and granting or refusing permission for the reasons to be recorded in writing.

e. In case retrenchment is effected without making an application or where the permission for retrenchment is refused retrenchment shall be deemed to be illegal from the date on which it is effected and the workman shall be entitled to all the benefits that are available to him under the law.

• Section 25Q specifies that any employer who contravenes the provisions of Section 25N shall be punishable with imprisonment up to one month or fine up to Rs.1000 or both.

Closure: Definition & Provisions

Closure [Section 2(cc)]: means permanent closing down of a place of employment or part thereof.

The provisions about closure are to be understood with reference to-a. Type of service:- i.e., continuous service or not (same as

layoff)b. Number of workmen employed;-

i. No. of workmen less than 50ii. No. of workmen 50 – 100iii. No. of workmen 100 or more.

• The closure of an undertaking is subject to the restrictions imposed by the statutory provisions.

Closure: Rules & Provisions Where number of workmen employed is less than 50 [Section 25 FFA &

Section 25 FFF], if an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less that one year in that undertaking immediately before such closure shall be entitled to notice and compensation as if the workman has been retrenched.

If the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation payable to the workman shall not exceed his average pay for three months.

If an undertaking is set up for the construction off buildings, bridges, roads, canals, dams, or other construction work and it is closed down on account of completion of the work within 2 years from the date on which the undertaking is set up, then no workman employed by the undertaking shall be entitled to any compensation.

In case the construction work takes more that 2 years for completion after it is set up, then the workman will be entitled to both notice and compensation as per the rules of retrenchment.

Closure: Rules & Provisions Where number of workmen employed is more than 50, but less

than 100 [Section 25 FFA]:-a. The employer who intends to close down his undertaking shall have to

serve at least sixty days notice in the prescribed manner on the Appropriate Government before the date on which the intended closure is to become effective. The reasons for the same have to be clearly stated.

b. No notice is required when:-i. The number of workmen employed is less than 50, orii. An undertaking is set up for the construction of buildings, bridges, canals,

roads, dams or for other such projects.iii. The Appropriate Government is satisfied than; owing to exceptional

circumstances like accident in the undertaking, death of employer or similar reason, no notice is required.

Closure: Rules & Provisionsc. The compensation payable is the same as if applicable to an

undertaking employing less than 50 workmen.d. The notice to be given is only information to the Appropriate

Government. The notice does not mean that any previous sanction of the Appropriate Government is required for the closure of an undertaking.

• Where the number of workmen is 100 or more [Section 25-O], an employer who intends to close down his undertaking shall apply to the Appropriate Government for prior permission, 90 days before the intended date of closure.

• Copy of this application should also be served on the representatives of the workmen in the prescribed manner.

• No such application to the Appropriate Government is required when the construction is the case of canals, bridges, buildings, etc.

• Workmen shall be entitled to compensation in case of a legal closure, at the rate of 15 days wages for every completed year of continuous service.

Closure: Penalties Penalty for closure [Section 25R]:- Any employer who closes

down an undertaking without complying with the provisions of Section 25-) shall be punishable with imprisonment up to six months or fine up to Rs.5000 or both.

Penalty for closure without notice [Section 30A]:- An employer who closes down any undertaking without complying with the provisions of Section 25FFA shall be punishable with imprisonment up to six months or fine up to Rs.5000 or both.

Any employer who contravenes an order refusing to grant permission to close down an undertaking under Section 25-O(2) shall be punishable with imprisonment up to one year, or fine up to Rs. 5000 or both.

Where the contravention is continuing even then, with a further fine up to Rs.2000 for every day during which the contravention after conviction continues can be imposed.

Case Law Studies

1) Syndicate Bank V/s Umesh NayakHELD:- The Supreme Court has observed that strike or

lock-out is to be resorted to, only in unavoidable circumstances and to compel the other party to see the justness of the demands and is not intended to cause nuisance or physical danger to their employers or others.

2) Hindustan Cables V/s Labour CourtHELD:- Resorting to strikes or lock-outs without

negotiations or conciliations is unjustified.

Case Law Studies

3) Central India Spinning, Weaving & Manufacturing Co. Ltd., V/s State Industrial Court

HELD:- The Bombay High Court said the key words “the failure, refusal, or inability of an employer” in the definition of lay-off make it clear that the unemployment has to be on account of a cause which is independent of any action or inaction on part of the workmen themselves.

4) Morinda Co-op. Sugar Mills V/s RamakrishnanHELD:- Where seasonal worker ceases to do work due to

closure of the season it is not retrenchment.

The Payment Of Wages Act, 1936

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

Introduction Preamble – To regulate the proper and timely payment of wages

to different classes of workers. Important features of the Act-

Remedies & compensations relating to: Wrongful deductions made from wages Delay in payment of wages Non-payment of wages

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

Applicability The Payment Of Wages Act is applicable to the whole of India. The Act is applicable to any employee in a factory, employees of

the railway industry, including those who are employed through a sub-contractor.

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

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

Important Definitions Appropriate Government [S.2(i)] is the Central Government in

relation to:a) Railwaysb) Air transport servicesc) Mines and oil fieldsThe State Government is the Appropriate Government in all other cases.

Industrial Establishment [S.2(ii)] means any-a) Tramway service, or motor transport service for passengers or goods

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

Important Definitionsf. Workshop, or other establishment, where articles are

i. Produced,ii. Adapted, oriii. Manufactured,

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

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

Important Definitionsa. Any remuneration payable under any award or settlement between the

parties or order of court;b. Any remuneration to which the person is employed is entitled in respect

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

framed under a law currently in force.

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

and travelling, medical and other allowances;g. Contribution paid by the employer to any pension or provident fund;h. Any special expenses and gratuity paid at termination of employment.

Rules relating to Payment of Wages Responsibility for Payment of Wages [S.3]: Payment means

transfer of money from one person to another to satisfy a debt or an obligation.

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

control and supervision in the establishmentc. In case of railways, the person nominated for the payment of wagesd. In case of a contractor, the person designated by the contractore. In any other case, the person designated by the employer as a person

responsible for complying with the provisions of the Act.

Rules relating to Payment of Wages Fixation of Wage Periods and time of Payment of Wages [S.4&5] Every person responsible for payment of wages shall fix wage periods. A wage period shall not exceed one month. Wage period can be daily, weekly, fortnightly, or monthly. In case of a Factory or Industrial Establishment or Railways, wherein less

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

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

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

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

Rules relating to Payment of Wages Mode of Payment of Wages [S.6] Under the Payment of Wages Act, wages cannot be paid in kind. They

must be paid in current coins or currency notes or both. The employer may, if he desires, after obtaining the written

authorization of the employed person pay his wages either by cheque or by crediting the wages in the bank account.

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

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

Thus, the Section 7 of this Act is critical.

Authorized Deductions

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

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

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

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

Fine cannot be imposed on a person below the age of 15 years. Fine cannot be recovered in installments. Fine should be recovered within 3 months from the date of

imposition of fine.

Authorized Deductions

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

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

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

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

required to be present and work, orii. When he refuses for any unreasonable cause, oriii. In case of a stay-in-strike to carry out his work.

Authorized Deductions Deduction for Damage or Loss [S.10]: If the goods are expressly

entrusted to the employed person for custody or in case he loses money which he is required to account, where loss/damage is directly attributable to damage or neglect or the default on his part, deductions from wages can be made. The deducted amount shall not exceed the amount of the damage or

loss caused to the employer. The employer shall give an opportunity to the employee to show cause

against the fine before making deductions. Such deductions have to be recorded in the prescribed register and

kept by the person responsible for payment of wages.

Authorized Deductions Deductions for Services Rendered [S.11 & 7(2)]:

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

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

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

Authorized Deductions Deductions for Recovery of Advances [S.12]: This is subject to the

following conditions-a. Recovery of an advance of money given before employment began

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

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

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

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

Authorized Deductions Deductions for Payments to Cooperative Societies and Insurance

Schemes [S.13 & 7(2)]: These deductions shall include-a. Deductions for payments to cooperative societies approved by the

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

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

i. Payment of any premium on his life insurance policy to LIC of India, orii. Purchase of Government securities, oriii. Payment of contribution to any fund or a trade union.iv. Payment of membership fees to trade union.v. Contribution to Prime Minister’s National Relief Fund

Authorized Deductions Other Deductions:

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

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

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

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

permissible deductions shall not exceed- 75% including payments to cooperative societies. 50% in any other cases In case of exceeds in limits of deductions, balance may be recovered in

the manner prescribed by the Appropriate Government.

Remedy & Compensations The Payment of Wages Act provides for the constitution of a

separate authority for any specified area to hear and decide claims arising out of deductions from the wages or delay in the payment of wages.

The authorities include:a. Commissioner of Workmen’s Compensation, orb. Regional Labour Commissioner, orc. Assistant Labour Commissioner,d. Presiding officer of Labour Court or Industrial Tribunal, ore. Judicial Magistrate.f. Experienced Judge of a civil Court

Remedy & Compensations

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

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

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

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

Case Law Studies

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

‘delayed wages’ but also covers ‘refused wages’. Upper India V/s J.C.Mathur

HELD:- The word ‘deduction’ in Section 15 appears to have been used in a very wide sense so as to include the ‘entire deficiency’ which the employee alleges to have been caused in the Payment of Wages as a result of withholding of the same by the employer partially or wholly.

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

The Minimum Wages Act, 1948

Introduction Important Definitions Fixation & Revision Of Wages Other Provisions Case Law Studies

Intoduction The object of this Act is to secure the welfare of the workers in a

competitive market by fixing the Minimum rates of wages in certain employments.

The justification for statutory fixation of minimum wages is clear form the following facts: Poorly developed workers organization. Poor bargaining power of workers. Continuous labour struggle demand for increase in wages, resistance to

decrease in wages, and grant of benefits, allowances, etc. The Act has been modified in the recent past to apply to all

industrial establishments and their employees that are involved in any work or job that fits in the schedule to this Act, fitting the description of ‘Scheduled Employments’

The Act intends to prevent exploitation of labour and also has many provisions that ensure the minimum wages, wages for overtime, maximum duration of daily work & weekly day of rest.

Important Definitions Employer [S.2(e)]: means- any person who:

a. Employsb. Whether directly or through another personc. Whether on behalf of himself or any other persond. One or more employees in any scheduled employmente. In respect of which rates of minimum wages have been fixed.

Cost of Living Index Number [S.2(d)]: in relation to employees in any scheduled employment in respect of which minimum rates of wages have to be fixed, means:a. The index numberb. Ascertained and declaredc. By the competent authority by notification in the Official Gazetted. To be the cost of Living Index Numbere. Applicable to employees in such scheduled employments.

Important Definitions Scheduled Employment [S.2(g)] means-

a. An employment specified in the schedule, orb. Any process or branch of work forming part of such employment.

The schedule is divided into two parts:Part-I:c. Woolen carpet making or shawl weaving, etc.d. Rice mill, Flour mill, Dal mill, etc.e. Bidi, Tea, Oil, Coffee, Rubber, Stone, etc.f. Glass industryg. Employment under any local authorityPart-II:h. Agriculture, Horticulture, Poultry, Dairy Farming, etc.i. Cleaning and sorting of onions and other incidental work.

Important Definitions Wages [S.2(vi)] means all remuneration (whether by way

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

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

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

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

currently in force.

Important Definitions Employee [S.2(i)]: means any person:

a. Who is employed for hire or reward,b. To do any work,c. Skilled or unskilled,d. Manual or clerical,e. In Scheduled Employment,f. In respect of which minimum wages have been fixed.

But, it does not include-g. Value of house accomodation, medical and other facilities, amenities

and travelling, medical and other allowances;h. Contribution paid by the employer to any pension or provident fund;i. Any special expenses and gratuity paid at termination of

employment.



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

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


Minimum Wages: Fixation & Revision Appointment of Committee:

a) The Government may appoint as many committees an sub committees as it consider necessary to hold inquiries and advise it in respect of such fixation or revision.

b) After considering the advise of such committees or sub committees the Appropriate Government notifies the fixation or revision of Minimum Rates of Wages.

c) Such wages come into force on the date determined in the notification.

d) If no date is mentioned, then on the expiry of 3 months from the date of issue of notification, the rates of wages and other conditions attached to it will expire.

e) The object of the procedure is to enable the Government to reach a balanced conclusion relating to fixing minimum wages

Minimum Wages: Fixation & Revision

By a Notification:a) The Appropriate Government may, by a notification, publish

its proposals about the fixation of Minimum Rates of Wages.b) For the information of all the persons likely to be affected

thereby.c) It shall specify in the notification the date on which the

proposals shall be taken into consideration.d) Such date shall not be less than 2 months from the date on

which the proposals have been notified.e) After considering all the representations received by it within

the specified time.f) It shall notify the minimum wages was fixed or revised by it.

Minimum Wages: Fixation & Revision By a Notification (contd.):

f) Such Minimum Rates of Wages come into force from the date mentioned in the notification.

g) If no date is mentioned, then on the expiry of 3 months from the date of issue of notification, the rates of wages and other conditions attached to it will expire.

h) While adopting this method the Appropriate Government is also required to consult the Advisory Board.

i) The Advisory board is appointed by Appropriate Government for the purpose of coordinating the work of different committees and sub committees and also for advising the Government in matters of fixation and revision of minimum wages, and also for general consultation.

Minimum Wages: Fixation & Revision The provision relating to fixation of minimum rates of wages are

given in Section 3 as follows:1) Fix the Minimum Rates of Wages payable to employees employed in

an employment specified in the schedule, and2) In the employment added to the schedule by a notification.3) The Appropriate Government may, in respect of employees employed

in an employment specified in Part-II of the schedule, fix rates fori. Part of the State, orii. For any specified class or classes of such employment in the whole state or

part of state.iii. Instead of fixing Minimum Rates of Wages for the whole State.

4) The Appropriate Government shall review at such intervals not exceeding 5 years, the Minimum Rates of Wages and revise them if necessary.

Minimum Wages: Fixation & Revision

5) When the Appropriate Government fails to revise the rates of Minimum Wages within 5 years, it can do so even after the expiry of 5 years as it feels necessary.

6) Until the rates of Minimum Wages are revised, the rates of Wages before the expiry of 5 years shall continue to be in force.

7) The Appropriate Government my not fix the rates of Minimum Wages in respect of any schedules employment in which there are less than 1000 employees engaged in the whole State.

8) The Appropriate Government may fix rates of Minimum Wages which may be in the form of Minimum Rates for:-

a) Time Work (Minimum Time Rate)

b) Piece Work (Minimum Piece Rate)

c) Remuneration; time work basis (Guaranteed Time Rate)

d) Minimum rate in respect of overtime (Overtime Rate)

Other Provisions Sections [3-5] deal with the fixation and revision of Minimum Wages Section 3 says the Appropriate Government has powers to fix the

Minimum Wages payable to the employees employed in any scheduled employment.

Section 4 gives the content of Minimum Wages. Section 5 gives the procedure for fixing and revising the Minimum

Wages. Section 12 says that it is absolutely necessary for an employer to

pay every employee engaged in Scheduled employment in the Minimum Rates of Wages fixed by the Government without any deductions except those as may be authorized.

Section 16 says that in case an employee does 2 or more classes of work to each of which a different Minimum Rates of Wages is applicable, the employer shall pay to such employee in respect of time occupied by

Other Provisionshim in each class of work, wages not less than the Minimum Rates of Wages applicable to each such class.

Maintenance of Registers and Records (Section 18)Every employer shall maintain Registers and Records giving:i. Particulars of Employeesii. Work performed by Employeesiii. Wages paid to Employeesiv. Receipt given by the Employersv. Other particulars in such form as may be prescribed

Rates of Overtime (Section 14)i. Where an employee works overtime, the employer shall pay him over

time wages for every hour worked in excess at the rates fixed by the Appropriate Government.

ii. The provisions of Minimum Wages Act shall not affect the provisions of Factories Act relating to payment of over time at twice the minimum rate of normal wages.

Other Provisions Claims (Section 20)

The Appropriate Government may appoint an authority to hear out and decide the claims relating to –

i. Payment of less than Minimum Rates of Wages.ii. Payment for days of rest.iii. Payment for work done on days of rest.iv. Wages for the overtime work.

Who may apply to:v. Employee himself, orvi. Any legal practitioner, vii. Registered Trade Union,viii. Any Inspector, orix. Any person with the permission of authority.

Other Provisions Fixing Hours for Normal Working Day (Section 13)

(A) In regard to any Scheduled Employment the Appropriate Government may –

1) Fix the number of hours of work which will constitute a normal working day including intervals.

2) Provide a day of rest in every 7 days and payment of remuneration for such days.

3) Provide for working on the day of rest at over time rate or more.(B) For the following classes of Employees the above provisions will apply subject to the prescribed conditions–

4) Employees engaged in urgent or emergency work.5) Employees engaged in intermittent work.6) Employees engaged in work dependent on irregular action of natural

forces.

Other Provisions

Wages in Kind (Section 11)1) Wages under the Minimum Wages Act have to be paid in cash.2) However, if there is a custom to pay wages fully or partly in

Kind, the Appropriate Government may authorize the payment of Minimum Wages either-

a. Fully, orb. Partly, in Kind.

3) If the Appropriate Government is satisfied, then it may authorize the supply of essential commodities at concessional rates.

4) The value of wages in kind and of concessions in respect of supplies of essential commodities shall be estimated in the prescribed manner.

Case Law Studies Arvind Mills Ltd. V/s K.R. Gadgil

HELD:- The Bombay High Court has observed that “the general purpose of the Act is to provide that employed persons shall be paid their wages in a particular form and at regular intervals without any unauthorized deductions”

D.P. Kelkar V/s AmbadasHELD:- The definition of wages is not limited to remuneration payable

under an agreement or contract. It applies to all kinds of remuneration, whether arising from-

• A contract,• An award,• A settlement, or• Under a statute.

Case Law Studies Upper India V/s J.C. Mathur

HELD:- The word deduction in Section 15 appears to have been used in a very wide sense so as to include the ‘entire deficiency’ which the employee alleges to have been caused in the payment of wages as a result of the withholding of the same by the employer partially or wholly.

Gopalan V/s Augmati Chit FundHELD:- Statutory bonus of 8 1/3% is payable whether there are profits to the

accounting year or not. After coming into force of the Payment of Bonus Act, bonus has become an implied term of employment not dependent upon the profits and therefore comes under the category of remuneration. Viewed in this light the wages as a general term would include bonus.

The Payment of Gratuity Act, 1972

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

Introduction & Preliminary Originally gratuity was considered as an amount given freely and

could not be demanded as a matter of right by the employees. In many cases gratuity was given as a matter of favor. Employees used to pay gratuity as a reward for long, continuous

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

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

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

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



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

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


Important Definitions Employee [S.2(i)]: means any person:

a. Who is employed for hire or reward,b. To do any work,c. Skilled or unskilled,d. Manual or clerical,e. In Scheduled Employment,f. In respect of which minimum wages have been fixed.

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

and travelling, medical and other allowances;h. Contribution paid by the employer to any pension or provident fund;i. Any special expenses and gratuity paid at termination of employment.

Important Definitions Wages [S.2(s)] means all remuneration (whether by way

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

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

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

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

currently in force.

Important Definitions Retirement [Section 2(q)]:

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

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

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

Authorities Under The Act Inspectors [Section 7(A)]

a) The Appropriate Government may appoint as many inspectors as it deems fit.

b) The Appropriate Government may define the area to which the authority of an inspector shall extend.

c) Every inspector shall be deemed to be a public servant. Powers of Inspectors [Section 7(B)]: An inspector may

a) Require an employer to furnish any information.b) Enter and inspect any premises or place in any factory, shop or

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

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

Authorities Under The Act Controlling Authority [Section 3]

The Appropriate Government by a notification may appoint any officer to be the controlling authority who shall be responsible for Administration of this Act. Different controlling authorities may be appointed for different areas.

Powers of Controlling Authorities [Section 7(5)]a) Enforcing the attendance of any person or examining him on oath.b) Requiring the discovery and production of documents.c) Receiving evidence on affidavits.d) Issuing commissions for the examination of witnesses.

Payment & Provisions Circumstances under which Gratuity becomes payable to an

employee [Section 4]a) On termination of employment after he has rendered continuous

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

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

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

Payment & Provisions Rate of Gratuity [Section 4(2)]

a) An employee who is eligible for gratuity shall be paid for every completed year of service or part of it in excess of 6 months, gratuity at the rate of 15 days wages for each completed year of service.

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

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

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

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

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

Payment & Provisions Maximum Amount of Gratuity [Section 4(3)]

Payable to an employee shall not exceed Rs.3,50,000 (w.e.f. 24.9.97) Employment after disablement [Section 4(4)]

In case of an employee employed after disablement, the gratuity shall be calculated in 2 parts:

a) For the period of employment before disablement andb) For the period after disablement at the reduced rate.

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

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

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

Payment & Provisions Forfeiture of Gratuity [Section 4(6)]

It gives the circumstances in which the gratuity payable to an employee may be forfeited either partly or wholly.

1) Partial Forfeiture: The gratuity of an employee whose services are terminated for any act, willful omission, negligence causing any damage, loss to, or destruction of property belonging to the employer; only to the extent of damage or loss so caused.

2) Full Forfeiture: The gratuity payable to an employee can be wholly forfeited:

a) If the services of an employee are terminated for his riotous or disorderly behaviors or any other act of violence on his part, or

b) If the services are terminated for any act which constitutes an offence involving moral turpitude; provided, that such an offence is committed by him in the course of his employment.

Payment & Provisions Determination of Gratuity [Section 7]

a) As soon as the gratuity becomes payable, the employer shall determine the amount of gratuity and give notice in writing to that person to whom the gratuity is payable.

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

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

Mode of Payment of Gratuity [Sections 7(3),(3-A)]a) The employer shall arrange to pay the amount of gratuity within 30

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

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

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

Payment & Provisions Dispute as to Gratuity [Section 7(4)]

a) If there is any dispute about-i. Amount of gratuity payable to an employee.ii. Admissibility of any claim.iii. As to the person entitled to gratuity, the employer shall deposit the amount

which he admits is payable with the controlling authority.b) Where there is a dispute about the above matters the employee can

also make an application to the controlling authority for taking necessary action.

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

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

Payment & Provisions Recovery of Gratuity

a) If the employee is not paid gratuity by the employer the employee can make an application to the controlling authority for the same. The controlling authority, if satisfied, shall issue a certificate for recovery of the amount to the collector.

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

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

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

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

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

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

Nomination Meaning- naming the person or persons, who shall be entitled to the amount of

gratuity if the employee dies before receiving the amount. Family [Section 2(h)]: in relation to an employee, shall be deemed to consist of:1) Male Employees:

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

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

Nomination Every employee under this Act, is required to make a nomination

as per the following rules:1) Employee to make nomination: Every employee who has completed

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

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

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

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

Nomination5) Family after nomination: If the employee acquires a family afterwards,

such nomination becomes invalid. The employee shall make a fresh nomination within 90 days in favor of family members.

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

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

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

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

Case Law Studies

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

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

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

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

Case Law Studies DBR Mills Ltd. V/s Appellate Authority

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

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

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

industrial law TOPICS FACTORY ACT 1948 WORKMEN COMPENSATION ACT 1923 EMPLOYEE STATE INSURANCE ACT 1948 MINIMUM WAGES ACT 1948 EMPLOYEE PROVIDENT FUND ACT 1952 INDUSTRIAL DISPUTE ACT 1947 PAYMENT OF GRATUITY ACT 1972

Factory Act 1948

Introduction The Factories Act, is a social legislation which has been enacted for occupational safety, health and

welfare of workers at work places.

Applicability:- It applies to factories covered under the Factories Act, 1948.

Background:- In India the first Factories Act was passed in 1881. This Act was basically designed to

protect children and to provide few measures for health and safety of the workers. This law was applicable to only those factories, which employed 100 or more workers.

In 1891 another factories Act was passed which extended to the factories employing 50 or more workers.

On the basis of the recommendations of the Factory Labour Commission, more comprehensive Law was introduced in 1911, which got amended in 1923, 1926 and 1931

With the amendments made by Royal Commission of Labour (1931), Comprehensive Factory Act, 1934 was introduced.

Following recommendations of the Rage Committee, the Govt. of India enacted Factories Act, 1948

Definitions

The term “Factory” under Section 2(m) of the act means :

Any premises in which 10 or more workers are employed and are engaged in manufacturing process being carried out with the aid of power or

Any premises in which 20 or more workers are employed in manufacturing process being carried out without the aid of power

SOME IMPORTANT TERMS TO UNDERSTAND FACTORY

The term “Manufacturing Process” under Section 2(K) of the act means :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; orPumping oil, water, sewage or any other substance; orGenerating, transforming or transmitting power; orComposing types for printing, by letter press, lithography or other similar processes; orConstructing, reconstructing, repairing, refitting or breaking up ships or vessels; orPreserving or storing any article in cold storage

The term “Power” under Section 2(g) of the act means not only electrical energy but also any other form of energy, which is mechanically transmitted, but is not generated by human or animal energy

The term “Worker” under Section 2(I) of the act means a person employed (Directly or through any agency including a contractor), with or without the knowledge of principal employer, whether for remuneration or not in any manufacturing or not in manufacturing process, but does not include any member of the armed forces of the Union

prelimiary

It extends to the whole of India It came into force on the 1st day of April, 1949

Interpretation adult- 18 & above adolescent-15 & above and Below 18 calendar year -the period of twelve months beginning with

the first day of January in any year child – below 15 young person - either a child or an adolescent day - period of twenty-four hours beginning at midnight

occupier

Occupier [sec.2(n)]:- the person, who has ultimate control over the affairs of the factory.

A firm or other association of individuals - any one of the individual partners or members.

A company - the directors. A factory owned or controlled by the Central Government or

any State Government, or any local authority - the person or persons appointed to manage the affairs of the factory by the Central Government, the State Government or the local authority, as the case may be.

Every occupier shall ensure, so far as is reasonably practicable, the health, safety and welfare of all workers while they are at work in the factory.

the provision and maintenance of plant and systems of work in the factory that are safe and without risks to health

ensuring safety and absence of risks to health in connection with the use, handling, storage and transport of articles and substances

information, instruction, training and supervisions as are necessary to ensure the health and safety of all workers at work

maintenance work place condition that is safe and without risks to health the provision, maintenance or monitoring of such working environment in the factory

for the workers that is safe, without risks to health and adequate as regards facilities and arrangements for their welfare at work.

GENERAL DUTIES OF THE OCCUPIER

THE INSPECTING STAFF

Certifying Surgeons

Inspectors:- The State Government may, by notification in the Official Gazette, appoint as many Additional Chief Inspectors, Joint Chief Inspectors and Deputy Chief Inspectors and as many other officers as it thinks fit to assist the Chief Inspector and to exercise such of the powers of the Chief Inspector as may be specified in such notification.

Cleanliness• kept clean and free from effluvial

arising from any drain, privy or other nuisance, and in particular

• floor of every workroom shall be cleaned at least 1 in every week by washing, using disinfectant where necessary, or by some other effective method

• floor is liable to become wet in the course of any manufacturing process to such extent as is capable of being drained, effective means of drainage shall be provided and maintained

HEALTH

• Once in 5 years – repaint or re varnish• Once in 3 years –repaint with washable water paint

and washed at least once in every period of six months• Once in 14 months – clean where they are painted or

varnished or where they have smooth impervious surfaces

• Once in 5 years – repaint or varnish all doors and window-frames and other wooden or metallic framework and shutters

Disposal of wastes and effluents• Effective arrangements shall be made in every

factory for the treatment of wastes and effluents due to the manufacturing process carried on

• there in, so as to render them innocuous• and for their disposal.

Ventilation and temperature Dust and fume Artificial humidificationthe State Government may make rules prescribing standards of humidificationregulating the methods used for artificially increasing the

humidity of the airdirecting prescribed tests for determining the humidity of

the air to be correctly carried out and recordedprescribing methods to be adopted for securing adequate

ventilation and cooling of the air in the workrooms.the water used for the purpose shall be taken from a public

supply, or other source of drinking water, or shall be effectively purified before it is so used.

Overcrowding• Before commencement of this Act at least 9.9 cubic

metres • after the commencement of this Act at least 14.2 cubic

metres of space for every worker employed Lighting

• In every part of a factory where workers are working or passing, there shall be provided and maintained sufficient and suitable lighting, natural or artificial, or both.

• windows should kept clean on both the inner and outer surfaces

• the prevention of glare, either directly from a source of light or by reflection from a smooth or polished surface

• the formation of shadows to such an extent as to cause eye-strain or the risk of accident to any worker.

Drinking water• effective arrangements shall be made to provide and maintain

at suitable points conveniently situated for all workers employed.

• legibly marked "drinking water" in a language understood by a majority of the workers employed in the factory.

• no such points shall be situated within 6m of any washing place, urinal, latrine, spittoon, open drain or any other source of contamination unless a shorter distance is approved in writing by the Chief Inspector.

• >250 workers - provisions shall be made for cooling drinking water during hot weather by effective means

The State Government may prescribe the no : of latrines and urinals to be provided in any factory in proportion to the number of male and female workers ordinarily employed therein, and provide for such further matters in respect of sanitation in factories

Spittoonssufficient number of spittoons in convenient place. and they shall be maintained in a clean and hygienic condition. State Government makes the rules• a notice containing this provision and the penalty for its violation

shall be prominently displayed at suitable places in the premises.

Latrines and urinals sufficient latrine and urinal accommodation of prescribed types shall be provided conveniently situated and accessible to workers at all times while they are at the factory.

Fencing of machinery• safe to every person employed in the factory Work on or near machinery in motion• specially trained adult male worker wearing tight fitting clothing• No woman or young person shall be allowed to clean, lubricate or adjust any

part of a prime-mover Employment of young persons on dangerous machines• Young person -has received sufficient training in work at the machine, or is

under adequate supervision by a person who has a thorough knowledge and experience of the machine.

SAFETY

suitable striking gear or other efficient mechanical appliance shall be provided and maintained and used to move driving belts to and from fast and loose pulleys which form part of the transmission machinery, and such gear or appliances shall be so constructed, placed and maintained so as to prevent the belt from creeping back on to the first pulley

driving belts when not in use shall not be allowed to rest or ride upon shafting in motion.

In every factory suitable devices for cutting off power in emergencies from running machinery shall be provided and maintained in every workroom

When a device, which can inadvertently shift from "off" to "on" position, is provided in a factory- to cut off power, arrangements shall be provided for locking the device in safe position to prevent accidental starting of the transmission machinery or other machines to which the device it fitted.

Striking gear and devices for cutting off power

Casing of new machineryevery set screw, bolt or key on any revolving shaft, spindle, wheel or pinion shall be so sunk, encased or otherwise effectively guarded as to prevent danger;

all spur, worm and other toothed or friction gearing which does not require frequent adjustment while in motion shall be completely encased, unless it is so situated as to be as safe as it would be if it were completely encased.

Prohibition of employment of women and children near

cotton-openers• No woman or child shall be employed in any part of a factory

for pressing cotton in which a cotton-opener is at work• Provided that if the feed-end of a cotton-opener is in a room

separated from the delivery end by a partition extending to the roof or to such height as the Inspector may in any particular case specify in writing, women and children may be employed on the side of the partition where the feed-end is situated

Hoist and lifts• In every factory-• every hoist and lift shall be of good mechanical construction, sound material and adequate

strength

• properly maintained and at least 1 in every period of 6 months examined by competent person

• register shall be kept containing the prescribed particulars of every such examination

• the hoist or lift and every such enclosure shall be so constructed as to prevent any person or thing from being trapped between any part of the hoist or lift and any fixed structure or moving part

• the maximum safe working load shall be plainly marked on every hoist or lift, and no load greater than such load shall be carried

• the cage of every hoist or lift used for carrying persons shall be fitted with a gate on each side from which access is afforded to a landing

shall be fitted with inter-locking or other efficient device to secure that the gate cannot be opened except when the cage is at the landing and that the cage cannot be moved unless the gate is closed.

where the cage is supported by rope or chain, there shall be at least two ropes or chains separately connected with the cage and balance weight, and each rope or chain with its attachments shall be capable of carrying the whole weight of the cage together with its maximum load

efficient devices shall be provided and maintained capable of supporting the cage together with its maximum load in the event of breakage of the ropes, chains or attachments

Lifting machines, chains, ropes and lifting tacklesall parts, including the working gear, whether fixed or movable, of every lifting machine and every chain, rope or lifting tackle shall be-of good construction, sound material and adequate

strength and free from defects.

properly maintained.thoroughly examined by a competent person at least once in

every period of 12 months, or at such intervals as the Chief Inspector may specify in writing, and a register shall be kept containing the prescribed particulars of every such examination.

no lifting machine and no chain, rope or lifting tackle shall, except for the purpose of test, be loaded beyond the safe working load which shall be plainly marked there on together with an identification mark and duly entered in the prescribed register.

while any person is employed or working on or near the wheel track of a travelling crane in any place where he would be liable to be struck by the crane, effective measures shall be taken to ensure that the crane does not approach within 6 metres of that place.

Revolving machinery• maximum safe working peripheral speed of every

grindstone or abrasive wheel, the speed of the shaft or spindle upon which the wheel is mounted, and the diameter of the pulley upon such shaft or spindle necessary to secure such safe working peripheral speed.

• The speeds indicated in notices shall not be exceeded.

Pressure plant• If in any factory, any plant or machinery is operated at a

pressure above atmospheric pressure, effective measures shall be taken to ensure that the safe working pressure of such plant or machinery or part is not exceeded.

Floors, stairs and means of

access

• shall be of sound construction, and properly maintained and shall be kept free from obstructions and substances likely to cause persons to slip and where it is necessary to ensure safety, steps, stairs, passages and gangways shall be provided with substantial handrails

• when any person has to work at a height from where he is likely to fall, provision shall be made, so far as is reasonably practicable, by fencing or otherwise, to ensure the safety of the person so working.

Pits, sumps, openings in floors, etcIn every factory every fixed vessel, sump, tank, pit or opening in

the ground or in a floor which, by reason of its depth, situation, construction or contents, is or may be a source of danger, shall be either securely covered or securely fenced.

Excessive weightsNo person shall be employed in any factory to lift, carry or move

any load so heavy as to be likely to cause him an injury. The State Government may make rules prescribing the maximum

weights which may be lifted, carried or moved by adult. • Men, adult women, adolescents and children employed in factories or in any class or description of factories or in carrying on in any specified process.

Protection of eyes. risk of injury to the eyes from particles or fragments thrown off in the course of the process, or risk to the eyes by reason of exposure to excessive light, the State

Government may by rules require that effective screens or suitable goggles shall be provided for the protection of persons employed on, or in the immediate vicinity of, the process.

Precautions against dangerous fumes, gases, etc.No person shall be required or allowed to enter any chamber, tank,

vat, pit, pipe, flue or other confined space in any factory in which any gas, fume, vapour or dust is likely to be present to such an extent as to involve risk to persons being overcome thereby, unless it is provided with a manhole of adequate size

No person shall be required or allowed to enter any confined space until all practicable measures have been taken to remove any gas, fume, vapour or dust, which may be present so as to bring its level within the permissible limits and to prevent any ingress of such gas, fume, vapour or dust and unless

a certificate in writing has been given by a competent person, based on a test carried out by himself that the space is reasonably free from dangerous gas, fume, vapour or dust

such person is wearing suitable breathing apparatus and a belt securely attached to a rope the free end of which is held by a person outside the confined space.

PRECAUTIONS AGAINST DANGEROUS FUMES

Precautions regarding the use of portable electric light. In any factoryno portable electric light or any other electric appliance of voltage exceeding

24V shall be permitted for use inside any chamber, tank, vat, pit, pipe, flue or other confined space unless adequate safety devices are provided

if any inflammable gas, fume or dust is likely to be present in such chambers tank, vat, pipe, flue or other confined space, no lamp or light other than that of flame-proof construction shall be permitted to be used therein.

Explosive or inflammable dust, gas, etcWhere in any factory any manufacturing process produces dust, gas, fume or

vapour of such character and to such extent as to be likely to explode on ignition, all practicable measures shall be taken to prevent any such explosion by

effective enclosure of the plant or machinery used in the process removal or prevention of the accumulation of such dust, gas, fume or vapour.exclusion or effective enclosure of all possible sources of ignition.

Precautions in case of fire

In every factory, all practicable measures shall be taken to prevent outbreak of fire and its spread, both internally and externally

to provide and maintain Safe means of escape for all persons in the event of a fire

the necessary equipment and facilities for extinguishing fire ensure that in every factory all the workers are familiar with the means of escape in case of fire and have been adequately trained in the routine to be following in such cases

Power to require specifications of defective parts or tests of stability

If it appears to the Inspector that any building ,part of a building , any part of the ways, machinery or plant in a factory be dangerous to human life or safety, he may serve on the occupier or manager or both of the factory an order in writing requiring him before a specified date

to furnish such drawings, specifications and other particulars as may be necessary to determine whether such buildings, ways, machinery or plant can be used with safety,

to carry out such tests in such manner as may be specified in the order, and to inform the Inspector of the results thereof.

Safety of buildings and machinery

If it appears to the Inspector that any building or part of a building or any part of the ways, machinery or plant in a factory is in such a condition that it is dangerous to human life or safety, he may serve on the occupier or manager or both of the factory an order in writing specifying the measures, which in his opinion should be adopted and requiring them to be carried out before a specified date.

prohibiting its use until it has been properly repaired or altered.

Maintenance of buildings. If it appears to the Inspector that any building or part of a building in a factory

is in such a state of disrepair as is likely to lead to conditions detrimental to the health and welfare of the workers, he may serve on the occupier or manager or both of the factory an order in writing specifying the measures which in his opinion should be taken and requiring the same to be carried out before such date as is specified in the order.

Safety Officers In every factory- >=1000 ordinarily employed, wherein, in the opinion of the State Government,

any manufacturing process or operation is carried on, which process or operation involves any risk of bodily injury, poisoning or disease or any other

hazard to health, to the person employed in the factory the occupier shall, if so required by the State Government by notification in

Official Gazette, employ such number of Safety Officers as may be specified in that notification.

PROVISION RELATING TO HAZARDOUS PROCESS

Constitution of Site Appraisal CommitteesThe State Government may, for purposes of advising it to consider applications for grant of permission for the initial location of a factory involving a hazardous process or for the expansion of any such factory, appoint a Site Appraisal Committee consisting of-the Chief Inspector of the State who shall be its Chairman a representativeof the Central Board for the Prevention and Control of Water Pollution appointed by the Central Governmentof the Central Board for the Prevention and Control of Air Pollution a representative of the State Board appointed under section 4 of the

water the State Board for the Prevention and Control of Air Pollution

the Department of Environment in the State the Meteorological Department of the Government of India an expert in the field of occupational healtha representative of the Town Planning Department of the State GovernmentThe Site Appraisal Committee shall examine an application for the

establishment of a factory involving hazardous process and make its recommendation to the State Government within a period of 90days of the receipt of such application in the prescribed form.

The Site Appraisal Committee shall have power to call for any information from the person making an application for the establishment or expansion of a factory involving a hazardous process.

Emergency standardsWhere the Central Government is satisfied that no standards of safety have

been prescribed in respect of a hazardous process or class of hazardous processes, or where the standards so prescribed are inadequate, it may direct the Director-General of Factory Advice Service and Labour Institutes or any Institution specialised in matters relating to standards of safety in hazardous processes, to lay down emergency standards for enforcement of suitable standards in respect of such hazardous processes.

Permissible limits of exposure of chemical and toxic substances

The maximum permissible threshold limits of exposure of chemical and toxic substances in manufacturing processes (whether hazardous or otherwise) in any factory shall be of the value indicated in the Second Schedule.

Workers' participation in safety management. set up a Safety Committee consisting of equal no: of

representatives of workers and management .Where the workers employed in any factory engaged in a hazardous

process have reasonable apprehension that there is a likelihood of imminent danger to their lives or health due to any accident, they may, bring the same to the notice of the occupier, agent, manager or any other person who is in-charge of the factory or the process concerned directly or through their representatives in the Safety Committee and simultaneously bring the same to the notice of the Inspector.

Where in any factory the plant or machinery used in a process such as is referred - all practicable measures shall be taken to restrict the spread and effects of the explosion by the provision in the plant or machinery of chokes, baffles, vents or other effective appliances.

Where any part of the plant or machinery in a factory contains any explosive or inflammable gas or vapour under pressure greater than atmospheric pressure, that part shall not be opened except in accordance with the following provisions, namely:-

before any such fastening as aforesaid is removed, all practicable measures shall be taken to reduce the pressure of the gas or vapour in the part or pipe to a atmospheric pressure

where any such fastening as aforesaid has been loosened or removed effective measures shall be taken to prevent any explosive or inflammable gas or vapour from entering the part or pipe until the fastening has been secured, or, as the case may be, securely replaced.

gives the right to workers of a factory in which a hazardous process takes place to bring to the notice of the occupier, agent, manager or any other person who is in-charge of the factory or the Inspector of the area

enquire immediately on receipt of the information and take remedial action.

washing facilities • adequate and suitable facilities for washing shall be provided and maintained for use of the workers •separate and adequately screened facilities shall be provided for the use of male and female workers such facilities shall be conveniently accessible and shall be kept clean. Facilities for storing and drying clothing

• the provision therein of suitable place for keeping clothing not worn during working hours and for the drying of wet clothing.

Facilities for sitting• the workers in any factory engaged in a particular manufacturing process or working in a particular room, are able to do their work efficiently in a sitting position, he may, by order in writing, require the occupier of the factory to provide before a specified date such seating arrangements as may be practicable for all workers so engaged or working.

WELFARE

First - aid appliances

CANTEENS• >250 workers are ordinarily employed, a

canteen or canteens shall be provided and maintained by the occupier for the use of the workers.

• Without prejudice in the generality of the foregoing power such rules may provide for

• the date by which such canteen shall be provided• the standard in respect of construction, accommodation,

furniture and other equipment of the canteen• the foodstuffs to be served therein and the charges which may be

made therefore• the constitution of a managing committee for the canteen and

representation of the workers in the management of the canteen• the items of expenditure in the running of the canteen which are

not to be taken into account in fixing the cost of foodstuffs and which shall be borne by the employer

Shelters, rest-rooms and lunch-rooms

• >150 workers -suitable shelters or rest-rooms & a

suitable lunch-room, with provision for drinking water.

• If a lunch-room exists no worker shall eat any food in the work-room.

• The shelters or rest-room or lunch-room shall be sufficiently lighted ,ventilated and maintained in a cool and clean condition.

Creches • >30 women workers. • children under the age of 6 years. • Such rooms shall provide adequate

accommodation, shall be adequately lighted and ventilated, shall be maintained in a clean and sanitary condition and shall be under the charge of women trained in the care of children and infants.

The State Government may make rules• prescribing the location and the standards in respect of construction,

accommodation, furniture and other equipment of rooms to be provided,• requiring the provision in factories to which the section applies, of additional facilities

for the care of children belonging to women workers, including suitable provision of facilities for washing and changing their clothing

• requiring the provision in any factory of free milk or refreshment or both for such children

• requiring that facilities shall be given in any factory for the mothers of such children to feed them at the necessary intervals

Welfare Officers• In every factory wherein >=500 workers are ordinarily employed the occupier shall

employ in the factory such number of welfare officers as may be prescribed.

Working hours of adults

1. Weekly hours adult worker shall not >48h in any

week

2. Daily hours. Not work >9h in any day.

3. Intervals for restwork for not >5 h before he has had an

interval for rest of at least 1/2 hourtotal no : of hours worked by a worker

without an interval not > 6h

WORKING HOURS.

Spread over• spread over not > 10& 1/2 hours in any day (inclusive of his intervals for rest )

Extra wages for overtimeWhere a worker works in a factory for >9 hours in any day or for

>48 hours in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice his ordinary rate of wages.

Restriction on double employmentNo adult worker shall be required or allowed to work in any

factory on any day on which he has already been working in any other factory, save in such circumstances as may be prescribed.

Register of adult workersmaintain a register of adult workers- the name ,the nature of his

work ,the group, shift, & the relay

HOLIDAYS1. Weekly holidays

No adult work are allowed to work in a factory on first day of the week unless

a holiday for whole day on one of 3 days immediately before or after the said day

2. Compensatory holidayswithin the month or within the months immediately

following that 2 month

Employment of young person Prohibition of employment of young children• < 14 not allowed to work• a certificate of fitness granted

Certificate of fitness• certificate of fitness to work in a factory• It is valid for 12 months

Working hours for children. • Not > 4 1/2hrs in any day• Not during the night (interval between 10 P.M. and

6 A.M)

Register of child workers• maintain a register of child workers -the name , the nature of his

work ,the group or the relay to which he is allotted & the number of his certificate of fitness granted

• limited to 2 shifts which shall not overlap • spread over not >5h• each child shall be employed in only 1 of the relays • Change in rely - only 1 in 30days not before that• No child shall be required or allowed to work in any factory on any day

on which he has already been working in another factory• female child are allowed to work between 8 A.M. and 7 P.M

• No adult worker shall be required or allowed to work in any factory unless his name and other particulars have been entered in the register of adult workers

Power to make exempting rule• the State Government have power• total no. of hours of work not > 10hrs per day• the spread over inclusive of intervals for rest not > 12

hours per day

• total no: of hours of work (including overtime) not > 60hrs per week

• total no: of hours of overtime shall not >50h for any one quarter

• no overtime > 7 days at a stretch

Further restriction on employment of women

• woman allowed to work 6 A.M. and 7 P.M

• no change of shifts except after a weekly holiday or any other holiday.

EMPLOYMENT OF WOMEN

• Every worker who has worked for a period of > = 240 days or more have leave with wages

• adult -1 day : 20 days of work• child -1 day :15 days of work• Discharged, dismissed , superannuated ,dies while in

service, he - his heir or nominee shall be entitled to wages• In calculating leave under • >1/2 a day treated as 1 day's leave• <1/2 a day shall be omitted• leave add to succeeding calendar year• leave that may be carried forward should not exceed 30

( adult) or 40 (child)

Annual leave with wages

• A worker should apply in writing to the manager of a factory not < 15 days before the date on which he wishes his leave to begin, to take all the leave or any portion thereof allowable to him during the calendar year

• If a worker wants to avail himself of the leave with wages due to him to cover a period of illness, he shall be granted such leave even if the application for leave is not made within the time specified

• If the employment of a worker is terminated , the worker quits his employment before he has taken the leave, the occupier of the factory shall pay him the amount payable in respect of the leave not taken, before the expiry of the second working day after such termination

• Payment in advance in certain cases• adult not < 4 days and• Child not < 5days be paid the wages due for the periods of the leave allowed.

Offences and Penalties- Sec.92 to 106OFFENCES PENALTIES

For contravention of the Provisions of the Act or Rules

Imprisonment up to 2 years or fine up to Rs.1,00,000 or both

On Continuation of contravention Rs.1000 per dayOn contravention of Chapter IV pertaining to safety or dangerous operations.

Not less than Rs.25000 in case of death.

Subsequent contravention of some provisions

Not less than Rs.5000 in case of serious injuries.

Obstructing Inspectors Imprisonment up to 3 years or fine not less than Rs.10,000 which may extend to Rs.2,00,000.

Wrongful disclosing result pertaining to results of analysis.

Imprisonment up to 6 months or fine up to Rs.10,000 or both.

For contravention of the provisions of Sec.41B, 41C and 41H pertaining to compulsory disclosure of information by occupier, specific responsibility of occupier or right of workers to work imminent danger.

Imprisonment up to 7 years with fine up to Rs.2,00,000 and on continuation fine @ Rs.5, 000 per day. Imprisonment of 10 years when contravention continues for one year.

Workmen Compensation Act, 1923

Objectives

The Act, aims to provide workmen and/or their dependents some relief or compensation in case of accidents arising out of and in the course of employment and causing either death or disablement (partial or total) of workmen.

167

Scope and Coverage

It applies to workmen employed in factories, mines, plantations, transport establishments, construction work, railways, ships, other hazardous occupations & employments specified in Schedule II to the Act.

The coverage of this act is also to cooks employed in hotels and restaurants.

The Act does not apply to members of Armed Forces police forces of the Union & workmen who are covered by the ESI Act, 1948.and AT Anti Terrorism

Act or army Act 1953.

168

Disablement Disablement means loss of capacity to work

Disablement of workman may result in loss or reduction of his earning capacity. In the later case, he is not able to earn as much as he used to earn before his disablement.

There are two types of Disablement Partial Disablement Total Disablement

169

Employer’s Liabilities For Compensation[Sec.3]

An Employer is liable to pay compensation to workman for-

1. Personal injury by accident- An employer is liable to pay compensation to workman if personal injury is caused to him by accident arising out of & in the course of his employment.

2. Occupational diseases- workers employed in certain occupations are exposed to certain diseases which are inherent in those occupation.

3 At the time of injury, worker must have been engaged in the business of the employer and must not be engaged in any work for his personal benefit.

170

Amount Of Compensation[Sec.4]

The amount of compensation payable to a workman depends on the nature of injury caused by accident, the monthly wages of the workman concerned.

171

Compensation For Death In case of death resulting from injury, the amount of

compensation shall be equal 50% of the monthly wages of the deceased workman multiplied by the relevant factor.

172

Partial disablement-2.1(g)

There are two types Partial Disablement

1) Parmanenet partial Disablement

2) Temporary partial Disablement

173

Permanent Partial disablement Permanent Partial Disablement is the most common type of

worker Compensation cases.Permanat partial disability cause by either a work related injury or occupational disease. which makes a worker unable to perform his work with full capacity. Example Knees injury, Any Problem in body part like hand, finger etc

174

Permanent Total disablement

A condition in which an individual is no longer able to work due to injuries , Permanent total disability.In this ability workman not able to work again.Example Loss of leg,or one hand or one lag etc

175

Employer is not Liable For Compensation

1. In respect of any injury which does not result in the total or partial disablement of the workman for a period exceeding three days;

2. in respect of any injury, not resulting in death or permanent total disablement, caused by an accident which is directly attributable to –

(I) the workman having been at the time thereof under the influence of drink or drugs, or

(ii) the willful removal or disregard by the workman of any safety guard or other device which he knew to have been provided for the purpose of securing the safety of workmen

176

Temporary Total Disablement Temporary total disablement include in which workman whose injuries leave them

and totally unable to work for a period of time.the benefits are no longer payable when temporary disablilty clears.

177

Temporary Partial disablement A short term circumstances where the person is unable to perform his usual

duties ,but he or she is predicted to recover totally and can work with same capacity. Example illness, little injury etc

178

Compensation For Permanent Total Disablement

In case of permanent total disablement resulting from the injury, the amount of compensation shall be 60% of the monthly wages of the injured workman multiplied by the relevant factor.

For the above example the compensation would be

60* 3000* 207.98 = 374,365 100

The Rs 374,364 Compensation will be given to Workman.

179

Compensation For Permanent Partial Disablement

Where permanent partial disablement occurs, the amount of compensation payable shall be as follows:

in case of an injury specified in part II of the schedule I, the amount of compensation shall be such percentage of the compensation which would have been payable is the percentage of loss of earning capacity caused by that injury.

in case of an injury not specified in schedule I, such percentage of the compensation is payable which is proportionate to the loss of earning capacity (as assessed by a qualified medical practitioner) permanently caused by the injury.

180

Compensation For Temporary Disablement(Total or Partial)

Where temporary disablement whether total or partial results from injury arising out of and in course of employment, Compensation payable shall be one-half of the monthly wages during the period of disablement or a period of one year from the date of injury which is less.

Thereafter only in case of chronic disease one third of the monthly wages during the period of temporary disablement or for a period of 5 years from the date of injury .whichever is less.

181

THE EMPLOYEE’S

STATE INSURANCE

ACT 1948

INTRODUCTION

Employees' State Insurance Scheme of India is an integrated social security scheme tailored to provide social protection to workers and their dependents , in the organized sector, in contingencies, such as, sickness, maternity and death or disablement due to an employment injury .

Came into force on 19th April 1948.

OBJECTIVE

The objective of the act is to secure sickness, maternity and medical benefits to employees of factories and establishments and dependents benefits to the dependents of such employees.

APPLICABILITY ACT APPLIES TO FACTORIES USING POWER not using AND EMPLOYING

20 OR MORE PERSONS. Gradually extended to the following: Smaller power-using factories with 10-19 persons Non-power factories with 20 or more persons Shops Hotels and restaurants Cinemas including preview theaters Newspaper establishments Road motor transport undertakings employing 20 or more personsState govt may cover other establishments in consultation with the esi

corporation and with approval of the central govt.

Covered employees contribute 1.75% of the wages,

Employees earning up to Rs.100/- a day are exempted from payment of their share of contribution.

Employers contribute 4.75% of the wages, payable to their employees.

The State Governments contribute 1/8th of the expenditure of medical benefit within a per capita ceiling of Rs. 1200/- per Insured Person per annum.

** These contributions are subject to change from time to time

CONTRIBUTIONS

For employerwithin 21 days of the last day of the Calendar month in which the contributions fall due, An employer (both employer share and employee share) shall pay these contributions at the above specified rates to the Corporation.

Contribution Period and Benefit Period

Contribution once started shall continue till end of the cycle even if the employee has moved out of 15000 per month wage limit. Subsequently is the benefit period.

CONTRIBUTION PERIODS

BENEFITS

1. Sickness and extended sickness benefit

2. Maternity benefit3. Disablement benefit4. Dependants’ benefit5. Medical benefit6. Funeral benefit

Benefits to Employees … ESI Scheme Major Social Security Benefits in

Cash and Kind include …

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

case of death due to employment injury

Benefits to Employees … In addition, the Scheme also provides some other need based benefits

to insured workers. These are:

i). Funeral Expenses – to a person who performs the last rites of IP ii). Rehabilitation allowances – for self iii). Vocational Rehabilitation - for self iv). Old age Medicare – for self and

spouse v). Medical Bonus – for insured women

and IP’s wife

SICKNESS AND EXTENDED SICKNESS BENEFIT Represents periodical payments made to an insured person for the

period of certified sickness after completing 9 months in insurable employment.

To qualify, contributions should be for minimum 78 days in the relevant period.

Maximum duration for benefit is 91 days. Rates of payment vary from rs.14-125 per day, i.e. Average of 50%

of daily wages. Insured persons suffering from tb, leprosy, mental and malignant

diseases or other specified long term diseases are entitled to extended benefits at higher rates, provided he has been continually employed for at least two years.

MATERNITY BENEFIT

Implies cash payment to an insured woman in case of confinement or miscarriage or sickness arising out of pregnancy or premature birth.

Woman should have contributed for minimum 70 days in the preceding two consecutive contribution periods.

Daily rate of benefits double the standard sickness benefit rate, i.e. Full wages.

Normally payable for max 12 weeks for confinement and 6 weeks for miscarriage or medical termination of pregnancy.

Payable even in the event of the death of the woman.

DISABLEMENT BENEFIT In case of temporary disability arising out of employment

injury, this benefit is admissible for the entire period certified by an insurance medical officer/practitioner for which the insured person does not work for wages.

Rate payable not less than 70% of daily wages; minimum 3 days of incapacity required.

In case injury results in permanent, partial or total loss of earning capacity, periodical payments to be made for life. One-time lumpsum is permissible in certain cases.

DEPENDANTS’ BENEFITPeriodical pension paid to dependants of deceased where death occurs

out of employment injury or disease. Widows: 3/5th of benefit rate for life or until remarriage Children: 2/5th of benefit rate until 18 Total amount distributed not to exceed ceiling of disablement benefit. Benefit not paid to married daughters. In case there is no widow or child, benefit can be paid to other

dependants including parents. Amount paid is reviewed and increases granted from time to time to

compensate for erosion in real value and cost of living.

MEDICAL BENEFIT Insured persons and their families entitled to free, full and

comprehensive medical care. Extended upto two years for chronic and long-term diseases. Treatment continues even if person goes out of coverage, till

sickness ends. Package covers all aspects of health care from primary to super-

specialist facilities, such as:1) Out-patient treatment2) Domiciliary treatment3) Specialist consultation and diagnostic facilities

MEDICAL BENEFIT (CONTD.)1) In-patient treatment2) Free supply of drugs and dressing3) X-ray and laboratory investigations4) Vaccination and preventive innoculations5) Ante-natal, confinement, post-natal care6) Ambulance service or conveyance charges7) Free diet during admission in hospitals8) Free supply of artificial limbs, aids and appliances for physical

rehabilitation9) Family welfare services and other national health programme

services10) Medical certification11) Special provisions including super-speciality treatment.

FUNERAL BENEFIT Funeral expenses are in the nature of a lump sum payment up

to a maximum of rs.2500 made to defray the expenditure of the funeral of deceased insured person.

The amount is paid either to the eldest surviving member of the family or, in his absence, to the person who actually incurs the expenditure on the funeral.

ALL BENEFITS UNDER THE ESI SCHEME ARE PAID IN CASH EXCEPT MEDICAL BENEFIT, WHICH IS GIVEN IN KIND.

MINIMUM WAGES ACT -1948

DEFINITION The Minimum Wages Act, 1948 Is Based On Article 43

Of The Constitution Of India Which States That, "The State Shall Endeavor To Secure By Suitable Legislation Or Economic Organization Or In Any Other Way To All Workers, Agricultural, Industrial Or Otherwise, Work, A Living Wage (Emphasis Added) Conditions Of Work Ensuring A Decent Standard Of Life And Full Enjoyment Of Leisure And Social And Cultural Opportunities"

The International Labour Organization Defines Minimum Wage As "The Minimum Sum Payable To A Worker For Work Performed Or Services Rendered, Within A Given Period, Whether Calculated On The Basis Of Time Or Output, Which May Not Be Reduced Either By Individual Or Collective Agreement, Which Is Guaranteed By Law And Which May Be Fixed In Such A Way As To Cover The Minimum Needs Of The Worker And His Or Her Family, In The Light Of National Economic And Social Conditions”.

OR

History of minimum wages. The initiative by Shri K.G.R.Choudhary

in 1920 set up boards for determination of wages.

The International Labour Conference adopted convention no.26 and 30 in 1928 relating to wage fixing machinery in trades or parts of trades.

A Minimum Wages Bill was introduced in the Central Legislative Assembly on 11.04.1946 and came into force with effect from 15.03.1948.

The Committee on Fair Wage was set up in 1948 to provide guidelines for wage structure.

Objectives of the act. To provide minimum wages to the workers working in organized sector.

To stop exploitation of the workers.To empower the government to take steps for fixing minimum wages and to revising it in a timely manner.

To apply this law on most of the sections in organized sector.

Short Title and Extent [Sec. 1]This Act, the Minimum Wages Act, 1948 extends to the whole of India

This Act may be called the Minimum Wages Act, 1948

FEATURES OF MIN. WAGES ACT 1948Fixing of minimum rates of wages

Fixing hours for normal working day

Overtime Maintenance of registers and records

InspectionsClaimsPenalties for Offences

APPLICABILITY OF WAGES ACT 1948 Agriculture Construction/Maintenance Of Roads And Building

Operations. Maintenance Of Buildings Construction And Maintenance Of Runways. Uranium Mines Employment In Laying Down Of Underground

Electric, Wireless, Radio, Television, Telephone, Telegraph And Overseas

Communication Cables And Similar Other Underground Cabling, Electric Lines Water Supply

Lines And Sewerage Pipe Lines. Loading And Unloading In Railways Goods Shed Stone Breaking And Stone Crushing Employment In Sweeping And Cleaning

Fixation and revision of minimum wages fixing of minimum rates of wages (sec.3)

The minimum rates of wages will be reviewed/ revised, for every five years, by the appropriate govt.

Appropriate govt. can add any employment, to the schedule(part-I or part – II), wherein one thousand or more employees are found working

Different minimum rates of wages may be fixed for different scheduled employments/ different classes of work /different localities

Different Minimum Wages May Be Fixed By The Government May consist of [Sec. 4]

1. Basic + Special Allowance (Which varies with the cost of living index)

2. Basic + Cash value of concessional supply of materials like food, clothes, etc

3. An all inclusive rate which includes Basic + Cost of living Allowance + Cash value of concessional supply of materials

Different Minimum Wages May Be Fixed By The Government For: Different employments (specified in the

schedule)Different classes (e.g. skilled, unskilled,

semis skilled, etc.) of work in the same employments

Adults, adolescents, children and apprentices

Different localities

Fixation of minimum wages Recommendation of Advisory Board for different class [unskilled, skilled, Clerk, Supervisor]

Publish recommendations in National Publications [for public comments/representations from Trade Unions etc.]

Hearing of the Representatives etc

Notification of Minimum wages

Wages in Kind [Sec. 11] Minimum wages shall be paid in cash.

The appropriate govt. may authorize, where there has been a custom of payment in this manner, payment of minimum wages either wholly or partly in kind

The appropriate govt. may authorize supply of essential commodities at concessional rates

Normal working hours [Sec. 13]For an Adult Worker working in Factories: Number of Working Hours should not

exceed 48 Hours in a week with a weekly Holiday

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

Provision of Compensatory Holiday/ Overtime Wages if working on holiday

Claims [Sec. 20]

A Labour Commissioner or any other appointed authority is authorized to hear claims regarding non-payment of minimum wages

Any aggrieved person may apply to the authority for settling his claims within 6 months

Offence Punishment

Payment of less than Minimum Wages to employee

Imprisonment which may extend up to 6 Months or Fine which may extend up to Rs 500/- or Both

Penalties (sec. 22)

THE

EMPLOYEE'S PROVIDENT FUND ACT,

1952

Introduction

Salary consists of two parts i.e. earnings & deductions Provident Fund is one of the statutory deduction done by

the employer at the time of salary payment Provident Fund is governed by the Employee’s Provident

Fund Act 1952

215

MEANING OF PROVIDENT FUND

The Employees Provident Fund Act, 1952 had passed with a view to making some provisions for the future of the employees after her/his retirement or for her/his dependants in case of early death & inculcating the habit of saving among the workers. This Act was framed under section 5 of the Act, which came into force 1st November 1952.

Introduction to EPF

Provident Fund has come into force to give better future to employees on their retirement & his dependants in case of his death during employment

The Employees Provident Funds Act 1952 is compulsory contributory fund for the future of an employee after retirement or for his dependents in case of his early death

Act is applicable to all states of India except Jammu and Kashmir

217

APPLICATION OF ACT

Subject to the provisions contained in section 16 it applies

(a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed and

(b) to any other establishment employing twenty or more persons or class of such establishments which the Central Government may by notification in the Official Gazette specify in this behalf

An establishment to which this act applies shall continue to be governed by this Act notwithstanding that the number of persons employed therein at any time falls below twenty.a

Applicability of the Act

To every factory engaged in any industry specified in schedule 1 to the act and employing 20 or more persons.

To every other establishment employing 20 or more persons specified but the central government in this behalf.

Any establishment to which the act applies shall continue to be governed but the act even if the number of persons employed therein at any time falls below 20.

Where a factory is closed down for good and only four security men are retained for keeping a watch over the assets and properties of the establishment, the act would not continue to be applicable to the factory.

Calculation

12% contribution by the employee is directly transferred to his Provident Fund A/c

12% is contributed by the employer out of which 8.33% is credited to Employee Pension Fund and the balance 3.67% is transferred to PF A/c of the employee

1.10% Administration charges on total wages are payable by the employer

0.50% EDLI calculated on total EDLI slab (Rs. 6500) wages and payable by the employer towards EDLI fund

0.01% EDLI Administration charges calculated on total EDLI slab wages are payable by the employer

220

1. Let us calculate the contribution of an employee who is getting basic salary of rs.3500 .

Contribution towards Calculation Amount

EPF Employees share 3500*12% 420EPS Employer share 3500*8.33% 292EPF Employer Share 3500*3.67% 128EDLI Charges 3500*0.5% 17.5EPF Admin Charges 3500*1.1% 38.5EDLI Admin Charges 3500*0.01% 0.35(round up to rs.1)

Calculation of employees provident fund

2.If an employee (having EPF benefit) drawing a salary of 10,000 (Basic + DA) , then what is the calculation for monthly remittance

1) Employee Contribution (12% of 10000) : 1,200.002) Employer Contribution- Pension (8.33 %) : 541.00 (limited to 6500 )3) Employer Contribution-PF (balance ) : 659.00 ( 1200 - 541 )

TOTAL : 2,400.00

Calculation of employees provident fund

Recovery of moneys

If any dispute arises regarding the applicability of the act to an establishment or as to the amount of money due from any employer under the act or any scheme, the central provident fund commissioner, any additional central provident fund commissioner , any deputy provident fund commissioner, any regional provident fund commissioner, or any assistant provident fund commissioner may decide the same by holding an enquiry.

If a employer pays any contribution or administrative charges for or on behalf of a contractor. Then, he can recover the same from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor. The contractor can, then recover the employee’s contribution from the wages of the employee.

Interest Interest is credited to the members PF A/c

on monthly running balance. The present rate of interest is 8.5%

Nomination The member can nominate other person /

persons to receive the Fund amount in the event of his death.

The nomination details provided by the members are maintained at the Regional Provident Fund Office for use in the event of death of the member.

224

OFFENCES

If any person, for the purpose of avoiding any payment to be made under the act or the scheme, knowingly makes any false statement or false representation, he would be punished with imprisonment up to one year, or with fine up to RS.5000 or with both.

If any person makes default in complying with any other provision of the act or any condition for exemption from any scheme, he would be published with imprisonment up to six months but which shall not be less than 1 month and with fine up to 5000 Rs or with both.

If any person convicted of an offence under the act or the scheme commits it again, he would be punished with imprisonment up to 5 yrs but which shall not be less than two yrs, plus fine up to Rs. 25,000 s.14 and 14(AA).

Full Settlement

PF A/c settled immediately under the circumstances; Retirement after 58 years Retirement on account of permanent incapacity Termination of service on retrenchment Voluntary Retirement Scheme (VRS) Permanent migration from India to settle abroad /

taking employment For female members leaving service for getting

married

PF A/c settled after two months under the circumstances; Resignation from the services

226

Online Provident Fund

• Provident Fund online payment has been devised for the companies and the general masses so that they can easily know the Provident Fund online status which is also at times referred to as Provident Fund online scheme.

• Provident Fund online status is maintained by the Government of India and hence you can blindly rely upon the website that is mentioned below for knowing the Provident Fund online scheme.

http://www.epfindia.com/

• Only with one click to this EPFO site, you would be able to get complete info about almost anything related to your Provident Fund account.

• The best thing about this is that you are allowed to interact with the customer service agents who would be able to help you with any of your problems that are related to Provident Fund in some way or the other.

http://www.epfindia.com/

THE INDUSTRIAL DISPUTES ACT, 1947

THE INDUSTRIAL DISPUTES ACT, 1947

Introduction Prior to the year 1947, industrial disputes were being settled

under the provisions of the Trade Disputes Act, 1929. Experience of the working of the 1929 Act revealed various defects which needed to be overcome by a fresh legislation. Accordingly the Industrial Disputes Bill was introduced in the Legislature. The Bill was referred to the select committee. On the recommendations of the Select Committee amendments were made in the original Bill

The Industrial Disputes Bill having been passed by the Legislature received its assent on 11th March, 1947. It came into force on first day of April, 1947 as THE INDUSTRIAL DISPUTES ACT, 1947 ( 14 to 1947)

Short title, extent and commencement - (1) This Act may be called the Industrial Disputes Act, 1947. (2) It extends to the whole of India. (3) It shall come into force on the first day of April, 1947

PAYMENT OF GRATUITY

ACT, 1972

Meaning of word “Gratuity” The word ‘Gratuity’ has been derived from

the word “Gratuitous” which means ‘Gift’ or ‘Present’.

It is a lump sum payment made by an employer as the retrial reward for his past service when his employment is terminated.

Extension of Gratuity Act, 1972

The Payment of Gratuity Act, 1972 applies to the whole India except State of Jammu & Kashmir in so far as it relates to ports and plantations.

Retiring benefit-Long and Unblemished service

Object Of The Act

Application of the Gratuity Act (Sec.1)

Every factory, mine, oilfield, plantation, port and Railway Company.

Every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishment in a State, in which 10 or more persons are or were employed on any day in the preceding 12 months.

Such other establishments or class of establishment, in which 10 or more employees are or were employed on any day in the preceding 12 months, as notified by CG by way of a notification in the Official Gazette.

except

Shop and establishment covered under SHOPS AND ESTABLISHMENT ACT- 10 or more persons - immediately preceding to 12 months.

Once this act applies – continue to be governed – irrespective of no of persons

It shall come into force on such date as the central government may by notification , appoint

Applicability

Application to whom and in what manner (Sec. 7)…

Application shall be made to the employer in writing within 30 days from the date gratuity becomes payable

If the date of superannuation and retirement of the employee is known in advance , the employee may apply to the employer before 30 days of date of superannuation or retirement.

Payment of Gratuity

Time limit – Within 30 days of gratuity becoming payable

Maximum Amount – The gratuity payable to an employee shall not exceed Rs. 3,50,000.

Under the terms of an award, settlement or contract, an employee may be entitled to better terms of gratuity. Such an award, settlement or contract shall be valid & effectual.

Gratuity Disputes (Sec. 7)In case of dispute, the employer shall deposit :-

With the controlling authority such amount as he admits to be payable by him.

The controlling authority shall hold an enquiry and shall give reasonable opportunity of being heard to the parties concerned.

Thereafter the controlling authority shall determine the gratuity payable .

If amount determined by the controlling authority is more than the amount deposited by the employer , the controlling authority shall direct the employer to pay the balance amount.

Eligibility for Gratuity (Sec. 4)Gratuity shall be payable to an employee :-Who has rendered continuous service for not less than

5 years on the termination of his employment :-

on his superannuation; or on his retirement or resignation; or on his death or disablement due to accident or

disease

Note:- The completion of continuous service of 5 years shall not be necessary where the termination of the employment of any employee is due to death or disablement due to accident or disease.

Gratuity to whom…???Gratuity shall be paid to :- The Employee

Nominee of the Employee (if deceased employee had made a nomination)

Legal heir of the Employee (if deceased employee had not made any nomination)

If the nominee or legal heir is a minor, the amount of gratuity shall be deposited with controlling authority which shall invest the same for the benefit of minor in bank or financial institution, as may be prescribed, until such minor attains majority.

Calculation of the Amount of Gratuity (Sec. 4)

Monthly Rated Employee

Piece Rated Employee

Employee of a Seasonal Establishment.

Monthly Rated Employee

Last drawn wages × 15/26 × Completed years of Service (incl. a part of year in excess of 6 months)

Note: Wages = Last Drawn Month = Period of 26 Days 15 days wages = Last drawn wages × 15/26

Piece-Rated Employee

Last drawn wages × 15/26 × Completed years of Service (incl. a part of year in excess of 6 months)

Note: Last drawn Wages = Total wages received during 3

months immediately preceding termination /Days actually worked

Last drawn wages shall not include overtime wages.

Seasonal Establishment Such an employee shall be paid gratuity

at the rate of 7 days wages for each season.

Mode of Payment of Gratuity By Cash

By DD or Cheque, if so desired by the payee.

By Postal Money Order (after deducting the commission payable) if the payee so desires and the amount of gratuity payable is less than Rs. 1000.

Note: The details of payment shall be sent by the employer to the controlling authority.

Protection of Gratuity (Sec. 13)

Gratuity payable to an employee shall not be liable to attachment in execution of any decree or order of any civil, revenue or criminal court.

It is immaterial as to whether the gratuity is payable to the employee −

a) under the Act; or b) in an establishment exempted u/s 5.

Recovery of Gratuity (Sec. 8)

If the employer fails to pay the gratuity within the prescribed time (i.e., within 30 days of termination of employment), the controlling authority is empowered to issue a certificate to the Collector to recover the amount of Gratuity.

The employer shall also be liable to pay Compound Interest at such rate as may be notified by CG from time to time.

The interest shall be paid from the date of expiry of the prescribed period & ending with actual date of payment of Gratuity.

The interest payable shall not exceed the amount of Gratuity payable.

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