Compensation Management Laws

Compensation Management Saket Jeswani

MBA Sem - 3 RCET, Bhilai

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai Page 1

[SAKET JESWANI]

[2013]

Compensation

Laws

Saket Jeswani, Associate Professor, MBA, RCET, Bhilai

Unit - IV


THE WORKMEN’S COMPENSATION

ACT, 1923

Saket JeswaniAssociate Professor,MBA,RCET, Bhilai

Introduction

1. A beginning of social security in India was the passing ofthe workmen’s Compensation Act, 1923.

2. In 1921, the government formulated some proposals forthe grant for compensation and circulated them foropinion. The proposals received general support.

3. As a result, the workman’s Compensation Act was passedin March 1923 and was put into force on July 1, 1924.Subsequently there were a number of amendments to theact.

Saket Jeswani, Associate Professor, RCET, Bhilai 2


Objective of the Act1. The object of the Act is to impose an obligation upon

employers to pay compensation to workers for accidents

arising out of and in the course of employment i.e. to pay

compensation for the injury sustained to him.

2. The Workmen’s Compensation Act, aims to provide workmen

and/or their dependents some relief in case of accidents

arising out of and in the course of employment and causing

either death or disablement of workmen.

3Saket Jeswani, Associate Professor, RCET, Bhilai

Employers Liability

1. The employer of any establishment covered under thisAct, is required to compensate an employee Who hassuffered an accident arising out of and in the course of hisemployment, resulting into

(i) death,

(ii) permanent total disablement,

(iii) permanent partial disablement, or

(iv) temporary disablement whether total or partial, orWho has contracted an occupational disease.



The Employer Shall Not Be Liable 1. In respect of any injury which does not result in the total or

partial disablement of the workmen for a period exceedingthree days;

2. In respect of any injury not resulting in death, caused by anaccident which is directly attributable to the workmenhaving been at the time thereof under the influence ordrugs, or

3. the willful disobedience of the workman to an orderexpressly given, or to a rule expressly framed, for thepurpose of securing the safety of workmen.


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1. Disablement means any loss of capacity to work or move

2. May result in loss or reduction of his earning capacity

3. Disablement may be1) Total {sec.2.1(g)}2) Partial {sec 2.1(l)}3) Temporary4) permanent

Disablement

Saket Jeswani, Associate Professor, RCET, Bhilai


1. Disablement, is said to be total when if Incapacitates a worker forall work he was capable of doing at the time of the accidentresulting in such disablement.

2. "Total disablement" is considered to be permanent if a workman, asa result of an accident, suffers from the injury specified in Part I ofSchedule I or suffers from such combination of injuries specified inPart l of Schedule I as would be the loss of earning capacity whentotaled to one hundred per cent .

3. Disablement is said to be permanent partial when it reduces for alltimes, the earning capacity of a workman in every employmentwhich he was capable of undertaking at the time of the accident.Every injury specified in Part II of Schedule I is deemed to result inpermanent partial disablement.

4. Where the disablement is of a temporary nature and reduces theearning capacity of a workman in the employment in which he wasengaged at the time of the accident it is "temporary partialdisablement.

Disablement


Distribution of Compensation

• The employer will not be liable to pay compensation for any kindof disablement (except death)

1) Which does not continue for more than three days,2) if the injury is caused when the workman was under the

influence of drink or drugs or

3) willfully disobeyed a clear order or violated a rule expresslyframed for the purpose of securing his safety or willfullyremoved or disregarded a safety device



Claims and Appeals

1. The claim shall be filed within a period of two years of theoccurrence of the accident or death.

2. An appeal by an employer against an award of compensationis incompetent unless the memorandum of appeal isaccompanied by a certificate that the employer hasdeposited the amount of such compensation.

3. The period of limitation for an appeal under Section 30 issixty days.


Three approaches for settling workers compensation claims

1. Direct Settlement: The employer or its insurance companybegins making what it thinks are the prescribed payments. Theinsurer sets the period over which payments will be made. Bothfactors are subject to review by the designated state agency.

2. Agreement Settlement: The injured employee and theemployer or its insurance company work out an agreement onhow much compensation will be paid and for how long.Typically the agreement is reviewed by the designated stateagency.

3. Public Hearing: An injured worker can request a hearing. Thehearing commission reviews the facts surrounding the injuredworker’s case and renders a judgment concerning the amountand duration of compensation. Should the employee disagreewith the decision rendered, civil action through the courts is anoption. Saket Jeswani, Associate Professor, RCET, Bhilai 10


The functions of the Commissioner

1. Settlement of disputed claims;

2. Disposal of cases of injuries involving death; and

3. Revision of periodical payments (Section 20).




Minimum Wages Act, 1948


Introduction

1. Over the years, in a country like India, except certain highlyorganized industries, the labour as a whole was not able to puta face of collective bargaining and look after their owninterests.

2. Thus, Minimum Wages Act, 1948 was enacted in the country toprovide minimum wages to workers and to prevent them fromexploitation.



1. To provide minimum wages to the workers working inorganized sector(scheduled employment).

2. To stop exploitation of the workers.

3. To empower the government to take steps for fixingminimum wages and to revise this wages within a periodof five years.

4. To provide for appointment of Advisory Committees &Advisory Boards, having equal representatives ofemployers and workers.

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Objective


Applicability of the Act

1. The Act extends to whole of India.

2. To any employment in any State if it employs 1000employees.

3. The Act will not apply to employees in any undertakingowned by the Central Govt. or of Federal railway, exceptwith the consent of the Central Govt.

4. Thus, the wages have to be statutorily paid.



Who is an employee?

• EMPLOYEE is anyone

(1) Employed for Hire or Reward

(2) To do skilled or unskilled work

(3) Manual or Clerical

(4) Job Worker

(5) Any person declared by the appropriate Governmentas employee but, does not include any member ofarmed forces.


What is wages? Section 2(h) explains Wages means all remuneration capable ofbeing expressed in terms of money. It includes house rentallowance but does not include:

1. value of house accommodation, supply of light, water,medical attendance

2. Value of any other amenity provided, if excluded byGovernment order

3. Contribution to pension fund or provident fund or insurance

4. Traveling allowance

5. Special expenses incurred by he nature of employment

6. Gratuity payable on discharge.



Minimum wage fixation (section 3)

1. The appropriate government shall fix and revise theminimum wages payable to employees employed in anemployment specified in part I & II of the Schedule.

2. The rate can be fixed on

1) time work basis2) piece work basis3) guaranteed rate basis4) overtime rate basis.


3. Different minimum wage rates can be fixed for

1) different scheduled employments 2) different class of work in the same scheduled employment 3) adults, adolescents, children and apprentices 4) Different localities.

4. Minimum rates can be fixed on basis of hour, day or month, or even longer period.

5. BASIS: the fixation of minimum wages depends on variousfactors like Socio-economic and agro-climatic conditions, pricesof essential commodities, paying capacity and the local factorsinfluencing the wage rate.

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Minimum wage fixation (section 3)



Minimum Rate of wages (section 4)

Any minimum rate of wages fixed or revised by the appropriategovt. may consist of:

1. a basic rate of wages and a special allowance at a rate to beadjusted at such intervals and in such a manner as the govt.may direct OR

2. A basic rate of wages with or without allowance for cost ofliving allowance based on cost of living index number. OR

3. An all inclusive rate allowing for basic wage, cost of livingallowance and cash value of concession, if any


Procedure for fixation of min wages(sec.5)

1. Committee method : a committee is appointed tohold enquiry and suggest minimum wages to befixed.

2. Notification Method : notification is published inthe official gazette and 2 months period is given todifferent parties to suggest their case. Based onthe representations, the govt. will fix the minimumwages. The notification can apply fromretrospective effect also.



Authorities

Advisory board• Government is required to constitute Advisory Board to

recommend minimum wages. The recommendations ofAdvisory Board are not binding on Government.

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Central Advisory Board• It is constituted from persons nominated by central

government.

• And consist of representatives of employers, employees andindependent members (up to 1/3rd of the total strength).


Can you pay wages in kind?

1. Sec. 11 of Min. Wages Act says that you can only make thepayment in cash.

2. If it is a custom to make payment wholly or partly in kind, theappropriate govt. may permit it.

3. It may by notification in the Official gazette, authorize theprovision of essential commodities at concessional rates.



Are working hours fixed? • Sec. 13: the govt. may fix the hours of work. It may provide for

rest day and interval also.

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Will there be overtime? • Sec. 14: if minimum wages is fixed by hours, then the workers

will be paid overtime if he works more than the hoursprescribed. The overtime rate will be as fixed in this law orother law as applicable.

• He will receive minimum wages

• However, he will not receive minimum wages if he is not willingto work or circumstances as may be prescribed.

if a worker works less than normal hours


Employer to close the unit, if minimumwages cannot be paid…

1. If employer cannot pay minimum wages, he has to close downthe undertaking. Paying capacity is not relevant consideration forrate of minimum wages.

2. Minimum wages are payable irrespective of financial position ofindividual employer.



If you pay more than minimum wages

1. Even if State Government notification prescribes variabledearness allowance which is linked with cost of living index,amount paid on basis of DA is not to be taken as anindependent component of minimum wages, but as part andparcel of process of computing minimum wages.

2. Hence, in cases where employer is paying total sum which ishigher than minimum rates of wages fixed under the Actincluding the cost of living index (VDA), he is not required topay VDA separately.


Minimum Wages Paid Internationally

1. Minimum wages in Delhi (per day)1. Skilled Rs. 142.102. Semi-skilled Rs. 132.203. Unskilled Rs. 125.80

2. In Australia its 543.78 Australian dollars per week;3. NEPAL- 4,600 Nepalese rupees a month for unskilled labor (3,050 rupees

as a basic salary, and 1,550 rupees as an allowance); 4,650 NRS for semi-skilled labor; 4,760 NRS for skilled labor; 4,950 NRS for highly skilled labor

4. PAKISTAN- 6,000 Pakistani rupees per month, applying only to industrialand commercial establishments employing 50 or more workers

5. THAILAND-ranges from 148 Thai baht to 203 baht per day, depending onthe cost of living in various provinces; set by provincial tripartite wagecommittees that sometimes include only employer representatives

6. UNITED KINGDOM- £ 5.80 per hour (aged 22 and older), £4.83 per hour(aged 18-21) or £3.57 per hour (under 18 and finished compulsoryeducation)

7. USA-the federal minimum wage is US$7.25 per hour; states may also set aminimum, in which case the higher of the two is controlling




Payment of Wages Act, 1936



Objective of the Act

1. To ensure regular and prompt payment of wages and toprevent the exploitation of a wage earner by prohibitingarbitrary fines and deductions from his wages.

2. To regulate the payment of wages to certain classes ofpersons employed in industry in a particular form and atregular intervals; and to prevent unauthorised deductionsfrom the wages. The Act is concerned merely with thefixation of wage periods and not with the fixation ofwages.


Scope and coverage

1. Application for payment of wages to persons employed inany factory.

2. Not applicable to wages which average Rs 1600/- permonth or more.

3. Wages include all remuneration, bonus, or sums payablefor termination of service, but do not include house rentreimbursement, light vehicle charges, medical expenses,TA, etc.



Applicability

1. The Act is applicable to persons employed in any factory,railway, and to such other establishments to which the StateGovernment may, by notification, extend the provisions of theAct after giving three months’ notice to that effect

2. Employees whose average wage is less than rupees 1,600 amonth are covered under the Act. The Payment of Wages(Amendment) Bill, 2002 provides for the enhancement of thewage ceiling to rupees 6,500 per month.

3. Section 3, Sub section (ii), dated 20th September, 2012.Ministryof Labour and Employment, Government of India, has revisedthe wage ceiling from Rs. 10,000 to Rs. 18,000 under thepayment of wages act, with effect from 12th September 2012.


Definitions• “Wages” means all remuneration (whether by way of salary, allowances or

otherwise) expressed in terms of money or capable of being so expressedwhich, if the terms of employment express or implied were fulfilled, would bepayable to a person employed in respect of his employment or of work donein such employment. It includes:

1) Any remuneration payable under any award or settlement between theparties or order of a court;

2) Any remuneration to which the person employed is entitled in respect ofovertime work or holidays or any leave period;

3) Any sum which by reason of the termination of employment of the personemployed is capable under any law, contract or instrument which providesfor the payment of such sum, whether with or without deduction but doesnot provide for the time within which the payment is to be made.

4) Any sum to which the person employed is entitled under any scheme framedunder any law for the time being in force.



The Wage does not include:1) Any bonus (whether under a scheme of profit sharing or otherwise)

which does not form part of the remuneration payable under theterms of employment or which is not payable under any award orsettlement between the parties or order of a court;

2) The value of any house accommodation or of the supply of light,water, medical attendance or other amenity or of any serviceexcluded from the computation of wages by a general or special orderof the state government;

3) Any contribution paid by the employer to any pension or providentfund and the interest which may have accrued thereon;

4) Any travelling concession;

5) Any sum paid to the employed person to defray special expensesentailed on him by the nature of his employment; or

6) Any gratuity payable on the termination of employment


• “establishment” includes:1) tramway service or motor transport engaged in carrying passengers and

goods or both by road for hire or reward;2) air transport service other than such service belonging to, or exclusively

employed in the military, naval or air force of the Union, or the CivilAviation Department of the Govt. of India;

3) dock, wharf, or jetty;4) inland vessel mechanically propelled;5) mine, quarry or oil field;

6) plantation;7) workshop, or other establishments in which articles are produced,

adapted, or manufactured, with a view to their use, transport or sale;8) establishment in which any work relating to the construction,

development or maintenance of building, roads, bridges or canals orrelating to transmission, or distribution of electricity, or any other formof power is being carried on;

9) any other establishment, or class of establishments, which the Central ora State Government may notify in the Official Gazette.

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Definitions



1. The responsibility for the payment of wages under the ACT isof the employer or his representative.

2. Wages may be payable daily, weekly, fortnightly andmonthly. Should not extend a period longer than one month

3. If there are 1000 person employed in a company there thewage shall be paid before the 7th day

4. If there are more than 1,000 employed the wage shall bepaid before the 10th day.

5. Terminated employee is entitled to receive the wage earnedby him before the expiry of the 2nd working day from the dayon which his service has been terminated (Section 5(2) ).

Wage Payment







Conditions and limits subject to which fines may be imposed

1) A fine can be imposed only for such acts or omissions as arespecified by the employer and previously approved by the StateGovernment;

2) A notice specifying such acts or omissions must be exhibited onthe premises in which employment is carried on;

3) A person involved must be informed in writing the reasons forimposing fine;

4) No fine shall be imposed on an employed person who is underthe age of 15 years.

5) No fine shall be recovered from an employed person byinstallments after the expiry of 60 days from the day on which itwas imposed;

6) The total amount of fine in one wage period shall not exceed anamount equal to 3 per cent for that wage period;

7) All realisations by way of fine have to be recorded in a registerand must be applied only for such purpose as are beneficial tothe persons employed in the factory or establishment as areapproved by the prescribed authority.


List of Authorised or Permissible Deductions

1) Deductions for fines.

2) Deductions for absence from duty.

3) Deductions for damage or loss.

4) Deductions for house accommodation.

5) Deductions for amenities and services.

6) Deductions for recovery of advances or for adjustment of over payment of wages.

7) Deductions for recovery of loans made for the welfare of labour.

8) Deductions for recovery of loans granted for house building.



9) Deductions for payment to co-operative societies and insurance schemes.

10) Deductions of income tax.

11) Deductions made under orders of court.

12) Deductions for contributions to provident fund.

13) Deductions for the welfare of the employed persons.

14) Deductions in respect of fees payable for the membership of trade union.

15) Deductions for payment of insurance premium on fidelity guaranteebonds.

16) Deductions for recovery of losses sustained by railway administration.

17) Deductions for contribution to the Prime Minister’s National Relief Fund.

18) Deductions for contributions to any insurance scheme.

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List of Authorised or Permissible Deductions


Obligations of Employers

1) To fix the wage-period not exceeding one month.

2) To pay wages in cash or by cheque after taking writtenauthorisation of the employed person.

3) To pay wages on any working day.

4) To make deductions permissible from the wages of theemployed person.

5) To ensure that deductions do not exceed 75% wherepayment to a cooperative society is to be made, and in othercases, deductions do not exceed 50%.

6) To seek, before imposing fines approval of list of acts andomissions from the prescribed authority.



7) Not to impose fines exceeding 3% of the wages on the employee.

8) To give show-cause notice to the employed person before imposing fines.

9) To recover fines within 60 days of the date of offence.

10) To afford facilities to Inspectors for entry, inspection, supervision, examination or inquiry under the Act.

11) To display abstract of the Act and the Rules in English and in a language understood by the majority of workmen.

12) To maintain following register in the prescribed forms:i) Register of wages;

ii) Register of fines;

iii) Register of deductions for damage or loss;

iv) Register of advances.

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Obligations of Employees• Every employee is entitled:

1) To receive his wages in the prescribed wage period in cashor by cheque or by credit to his bank account.

2) To refuse to agree to any deductions and fines other thanthose authorised under the Act.

3) To approach within six months the prescribed authority toclaim unpaid or delayed wages, unauthorised deductions andfines along with compensation.

4) To appeal against the direction made by the authority if theamount of wages claimed exceeds rupees one hundred.




THE PAYMENT OF BONUS ACT, 1965



Objective of the Act

• The object of the Act is to maintain peace and harmonybetween labour and capital by allowing the employees toshare in the prosperity of the establishment reflected by theprofits earned by the contributions made by capital,management and labour.

Applicability

• The Act applies to all factories and establishmentsemploying 20 or more persons on any day during anaccounting year.


Definitions1. Employee: The definition of “employee” includes any

person (other than an apprentice) employed on a salary orwage not exceeding rupees 3,500 per month in any industrydoing any skilled or unskilled, manual, supervisory,managerial, administrative, technical, or clerical work forhire or reward. There must, however, be a contract ofservice between the person employed and the employer.

2. Appropriate Government: The term “appropriategovernment” means:

1) in relation to an establishment in respect of whichappropriate government under the Industrial DisputesAct, 1947 is the Central Government;

2) in relation to any other establishment, the Governmentof the State in which that establishment is situated.



1. Employer: The term “employer” includes:1) in relation to an establishment which is a factory, the owner or occupier of

the factory, including the agent of such owner or occupier, the legalrepresentative of a deceased owner or occupier and the manager of thefactory;

2) in relation to any other establishment, the person who, or the authoritywhich, has the ultimate control over the affairs of the establishment.Where the said affairs are entrusted to a manager or managing director,such manager or managing director is the employer.

2. Accounting year: The term “accounting year” means:1) In relation to a corporation, the year ending on the day on which the books

and accounts of corporation are to be closed and balanced;2) In relation to a company, the period in respect of which profit and loss

account is laid before the annual general meeting (first day of April or 31stof March).

3. Salary or Wage: The term “salary or wage” includes1) basic pay and dearness allowance but not any other allowance.2) It excludes the value of any house accommodation or of supply of light,

water, medical attendance or amenity or any service or of anyconcessional supply of food grains or other articles, any travellingconcession, any contribution paid or payable by the employer to anypension fund or provident fund, retrenchment compensation, and gratuity.

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Definitions


Applicability1. Every factory (as def. in Factories Act), & (b) Every other

establishment in which 20 or more persons (less than 20 but10 or more if appropriate Govt. notifies) are employed on anyday subject to certain exemptions.

2. Employees' drawing remuneration of Rs. 3,500/- or more andthose who have worked for less than 30 days are not eligible toreceive bonus under the Act.

3. Bonus to be paid within eight months from the expiry of theaccounting year.



Eligibility

1. Every person (other than an apprentice)drawing salary up to RS 3,500 per month.

2. Every person drawing salary between RS2,501/- and RS 3,500/- per month. Thebonus payable to him is to be calculated asif his salary were RS 2,500/- p.m. – salarymeans basic pay + DA only.


Benefits• Subject to other provisions :— Minimum bonus shall be 8.33%

of salary/wages earned or RS 100 whichever is higher.

1) If allocable surplus exceeds the amount of minimum bonus,then bonus shall be payable at higher rate subject to amaximum 20% of salary/wages.

2) Computation of bonus is to be worked out as per Schedule Ito IV of the Act.



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Calculation of Bonus

The method for calculation of annual bonus is as follows:

• Calculate the Available Surplus.

• Available Surplus = Gross Profit – ( deduct) the following :

• Depreciation admissible u/s 32 of the Income tax Act.

• Development allowance


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Set On & Set Off

1. Where in any accounting year any amount has been carriedforward and set on or set off under this section, then, incalculating bonus for the succeeding accounting year, theamount of set on or set off carried forward from the earliestaccounting year shall first be taken into account.

2. The allocable surplus so computed is distributed amongstthe employees in proportion to salary or wages received bythem during the relevant accounting year.



Eligibility for Bonus1. Every employee shall be entitled to be paid bonus by his

employer in an accounting year, provided that he hasworked in the establishment for not less than 30 workingdays in that year.

2. An employee will be disqualified from receiving bonus ifhe is dismissed from service for:

1) Fraud;2) Riotous or violent behaviour while on the premises of

the establishment;3) Theft, misappropriation or sabotage of any property of

the establishment.


Amount of Bonus1. The Act imposes a statutory obligation on the employer to

pay bonus at the minimum rate of 8.33 per cent of thesalary earned by an employee or rupees 100, whichever ishigher, in an accounting year. It shall be paid irrespectiveof profits and loss or whether there is allocable surplus ornot in an accounting year. The maximum is fixed at 20 percent.

2. There is also a provision under the Act for proportionatereduction in bonus where the employee has not workedfor all the working days in any accounting year.

3. The excess of allocable surplus, if any, after distributingthe maximum bonus as provided shall be set-on and takeninto account up to the fourth accounting year



1. Newly set-up establishments get exemption from payment ofbonus for a period of six years following the accounting yearin which the goods produced or manufactured are sold forthe first time and, in the alternative, up to the year when thenew establishment shows profits, whichever is earlier.

2. Under the Act, adjustment can be made towards payment ofcustomary or puja bonus against bonus payable under theAct.

3. If an employee is found guilty of misconduct causing financialloss to the employer, then the employer can deduct theamount of loss from the amount of bonus payable to theemployee for the year in which he was found guilty ofmisconduct.

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1. Work out and pay annual bonus to the employees asrequired under the Act.

2. Maintain the following registers:1) Register showing the computation of allocable surplus.

2) Register showing set on and set off of the allocablesurplus.

3) Register showing the details of the amount of bonus dueto each employee, deductions there from and theamount disbursed.

3. Submit an annual return of bonus paid during the year.



Time Limit for Payment of Bonus

1.The bonus shall be paid within a period of 8 months from theclose of the accounting year. If there is a dispute, it shall be paidwithin one month from the date on which the award becomesenforceable. The appropriate government may extend the saidperiod up to a maximum of 2 years.

2. Claim for Bonus: If any bonus is due to an employee under asettlement, award or agreement, the employee himself, or anyother person authorised by him in writing in this behalf, or inthe case of death of the employee, his assignee or heirs, maymake an application for its recovery to the appropriategovernment. The application must be made within one year

3.Mode of Payment: Employees can enter into an agreement or asettlement with their employer for grant of bonus under aformula different from that under the Act, i.e., bonus linked withproduction or productivity; but subject to the provisions of theAct in respect of payment of minimum and maximum bonus.


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Rights of Employees

1.Right to claim bonus payable under the Act and to make anapplication to the Government, for the recovery of bonus dueand unpaid, within one year of its becoming due.

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

3. Employees, to whom the Payment of Bonus Act does notapply, cannot raise a dispute regarding bonus under theIndustrial Disputes Act.

4.Right to seek clarification and obtain information, on any itemin the accounts of the establishment



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Disputes under the Bonus Act

Where any dispute arises between an employer and hisemployees with respect to the bonus payable under this Act orwith respect to the application of this Act to an establishment inpublic sector, then, such dispute shall be deemed to be anindustries dispute within the meaning of the Industrial DisputesAct, 1947 (14 of 1947), or of any corresponding law relating toinvestigation and settlement of industrial disputes in force in aState and the provisions of that Act.


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Employees not eligible for Bonus

Nothing in this Act shall apply to –

1. Employees employed by any insurer carrying on generalinsurance business and the employees employed by the LifeInsurance Corporation of India;

2. Seamen

3. Employees registered or listed under any scheme made underthe Dock Workers

4. Employees employed by an establishment engaged in anyindustry carried on by or under the authority of anydepartment of the Central Government or a StateGovernment or a Local authority



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5. Employees employed by --1) the Indian Red Cross Society or any other institution of a like

nature (including its branches);

2) universities and other educational institutions;

3) institutions (including hospitals, chambers of commerce andsocial welfare institutions), established not for purposes ofprofit;

6. Employees employed through contractor on buildingoperations;


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7. Employees employed by the Reserve Bank of India;

8. Employees employed by --

1) the Industrial Finance Corporation of India;2) any Financial Corporation established under section 3, 3) or any Joint Financial Corporation established under

section 3A,4) of the State Financial Corporations Act, 1951 (63 of 1951);5) the Deposit Insurance Corporation;6) the National Bank for Agriculture and Rural Development;]7) the Unit Trust of India;8) the Industrial Development Bank of India;



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Recovery of Bonus Due from an Employer (Sec-22)

Where any money is due to an employee by way of bonus from

his employer under a settlement or an award or agreement,

the employee himself or any other person authorized by him in

writing in this behalf, or in the case of the death of the

employee, his assignee or heirs may, without prejudice to any

other mode of recovery, make an application to the appropriate

Government or such authority as the appropriate Government

may specify in this behalf is satisfied that any money is so due,

it shall issue a certificate for that amount to the Collector who

shall proceed to recover the same in particular employee.


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Maintenance of Register, Records & Inspectors

1. Every employer shall prepare andmaintain such registers, records andother documents in such form and insuch manner as may prescribed.

2. The appropriate Government may, bynotification on the Official Gazette,appoint such person as it think fit tobe Inspectors for the purposes of thisAct and may define the limits withinwhich they shall exercise jurisdiction.



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Inspectors Duties

• An Inspector appointed under sub-section (1) may, for thepurpose of ascertaining whether any of the provisions of this Acthas been complied with –

1. Require an employer to furnish such information as he mayconsider necessary;

2. At any reasonable time and with such assistance, if any, as hethinks fit enter any establishment or any premises connectedtherewith and require any one found in charge thereof toproduce before him for examination any accounts, books,registers and other documents relating to the employment ofpersons or the payment of salary or wage or bonus in theestablishment.


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OFFENCES AND PENALTIES

1. For contravention of the provisions of the Act or rules thepenalty is imprisonment upto 6 months, or fine up toRs.1000, or both.

2. For failure to comply with the directions or requisitions madethe penalty is imprisonment upto 6 months, or fine up toRs.1000, or both.

3. In case of offences by companies, firms, body corporate orassociation of individuals, its director, partner or a principalofficer responsible for the conduct of its business, shall bedeemed to be guilty of that offence, unless the personconcerned proves that the offence was committed withouthis knowledge or that he exercised all due diligence




THE EMPLOYEES’ PROVIDENT FUNDS &

MISCELLANEOUS PROVISIONS ACT 1952 (EPF& MP ACT)

Saket JeswaniAssociate Professor,MBA, RCET, Bhilai


OBJECTIVE

1. The Employees’ provident Funds and Miscellaneousprovisions Act, 1952 is enacted to provide a kind of socialsecurity to the industrial workers. The Act mainly providesretirement or old age benefits, such as Provident Fund,Superannuation Pension, Invalidation Pension, FamilyPension and Deposit Linked Insurance.

2. The Act provides for payment of terminal benefits in variouscontingencies such as retrenchment, closure, retirement onreaching the age of superannuation, voluntary retirementand retirement due to incapacity to work.


APPLICABILITY OF THE ACT

1. To every factory employing 20 or more persons.

2. Any establishment to which the Act applies shallcontinue to be governed by the Act even if the numberof persons employed therein at any time falls below.



Excluded Employee

1. An employee who, having been a member of the fund, haswithdrawn the full amount of his contribution in the fund

1) on retirement from service after attaining the age of 55years

2) before migration from India for permanent settlementabroad; or for taking employment abroad.

2. An employee whose pay at the time he is otherwise entitledto become a member of the Fund, exceeds Rs. 6,500/- permonth.

3. A person who, is an apprentice, or who is declared to be anapprentice by the authority specified in this behalf by theappropriate Government.


Rates of Contribution

SCHEME EMPLOYEE’S EMPLOYER’S CENTRAL GOVT’S

Provident Fund

Scheme12% Amount >

8.33

Nil

Insurance

Scheme NIL 0.5 Nil

Pension Scheme NIL 8.33 1.16%



Contribution under EPF Scheme,1952

1. Employees : 12% on Basic + DA

2. Employer :

(a) 3.67% on Basic + DA

(b) Administrative Charges : 1.10% on

Basic +DA


Purpose of the Act

The purpose of the scheme is to provide for

1. superannuation pension, retiring pension orpermanent total disablement pension to employeescovered by the Employees’ Provident Funds andMiscellaneous Provisions Act, and

2. widow or widower’s pension, children pension ororphan pension payable to the beneficiaries of suchemployees.



Contribution

1. Employee: Not required

2. Employer :


It is to be noted that where the pay of the memberexceeds Rs. 6,500/- per month, the contributionpayable by the employer will be limited to the amt.payable on his pay of Rs. 6,500/- only.


Formalities under EPF Act

1. Employees have been appointed on salary ( Basic+ DA orConsolidated ) of Rs. 6500 or less or covered under theprovision of the EPF Act, right from the day ofcommencement of their work. Employee can contributemore behind Rs.6500. similarly employer also at hisdiscretion can do so but not mandatory

2. EPF Act is applicable to such of the establishments who areengaging 20 or more persons or had engaged 20 or morepersons at any time during calendar year.




1. Casual workers/ Temporary workers/ Probationary, even ifthey had performed work even for a day, are technicallytaken into account for the purpose of assessments ofstrength of 20 for the purpose of applicability of the act andare also covered under the act. Apprentices/ Trainees areexcluded from the definition of employees.

2. Percentage of contribution to be deducted from employeescontribution is 12% of his salary, namely Basic + DA , butdoes not include HRA, CCA, Incentive, Bonus, Washingallowance etc.



Employer contribution of 12% of the salary of employees isto be paid as under

1) 3.67% to be remitted in Account No.1 ( EmployeesAccount)

2) 8.33% to be remitted in Account No.10 towards pensionfund

In addition to 12% of the employer has to remit 1.61% paidas under

1) 1.10% Administrative charges in Account No.2

2) 0.5% EDLI in Account No.21

3) 0.01% Inspection charges in Account No.22



Employees’ Deposit-Linked Insurance Scheme, 1976

Purpose

To provide life insurance benefits to the employees ofthe establishments covered by the EPF & MP Act,1952


Contribution under EDLI Scheme,1976

1. Employees : Not required

2. Employer :


(b) Administrative Charges : 0.01% on

Basic +DA

• Where the monthly pay of an employee is more thanRs. 6,500 the contribution payable in respect of himby the employer is limited to the amts payable on amonthly pay of Rs. 6,500 only.



Benefits of EDLI scheme

• The benefit provided under the scheme in the nature of lifeinsurance as follows:

1. On the death of an employment while in service a lumpsum insurance amount is payable to his nominee or familymembers.

2. The insurance amount is equal to the average balance in theaccount of the deceased employee in the Provident Fundduring a period of 12 months immediately preceding hisdeath. In case the average balance exceeds Rs.35,000/- theinsurance amount payable is Rs. 35,000/- plus 25% of theamount in excess of Rs. 35,000/- subject to a ceiling of Rs.60,000/-.




THE EQUAL REMUNERATION ACT,

1976

Saket JeswaniAssociate Professor,MBA, RCET, Bhilai

Intoduction

1. The principle of equal work to men and women worker hasbeen gaining increasing acceptance all over the world. Inmany countries, law have been passed prohibitingdiscrimination between men and women in matters relatingto payment of wages for similar work.

2. The State Policy article 39 of the Constitution envisagesthat the State shall direct its policy, among other things,towards securing that there is equal pay for equal work forboth men and women.

3. The International Women’s Year, President of Indiapromulgated the Equal Remuneration Ordinance, 1975 on26th September, 1975 to provide for the payment of equalremuneration to men and women workers



1. Article 39(a) states that the citizens, men and women,equally, have the right to an adequate means of livelihood.

2. Article 39(d) “that there is equal pay for equal work forboth men and women”.

3. Article 16(2) makes a specific mention that “no citizenshall on ground only of ….sex …be ineligible for ordiscrimination against in respect of any employment oroffice under state.”

Intoduction


Equal Remuneration Act, 1976

1. The Equal Remuneration Act, 1976 aims to provide for thepayment of equal remuneration to men and womenworkers and for the prevention of discrimination, on theground of sex, against women in the matter of employmentand for matters connected therewith or incidental thereto.

2. Objective of the Act

1) provide for the payment of equal remuneration to menand women workers

2) the prevention of discrimination, on ground of sex,against women in the matter of employment.

3) provide for increasing opportunities for women in thespecified employments.



1. It is the duty of the employer to pay equal remuneration tomen and women workers for the same work or work of asimilar nature.

2. No discrimination shall be made while making recruitmentfor the same work or work of a similar nature betweenmen and women workers,

3. The Act prohibits discrimination against women not only inrecruitment but also in relation to the conditions of servicesubsequent to employment, such as promotions, training,and transfers.


Equal Remuneration Act, 1976

Duty of employer to pay equal remuneration (sec.2(h))

“Same work or work for similar nature”

The act define “work in respect of which the skill, effort andresponsibility required are the same, when performed undersimilar working conditions, by a man or a women and thedifference, if any between the skill, effort and responsibilityrequired of man and those required of a women are not ofpractical importance in relation to the terms and condition ofemployment .”



Prohibition of discrimination in recruitment or other condition of service(sec 5)

1. This Act, no employer shall while making recruitment for thesame work or work of a similar nature, or in any condition ofservice subsequent to recruitment such as promotions,training or transfer, make any discrimination against womenexcept where the employment of women in such work isprohibited or restricted by or under any law for the timebeing in force.

2. Provided that the provisions of this section shall not affectany priority or reservation. for Scheduled Castes orScheduled Tribes, ex-servicemen, retrenched employees orany other class or category of persons in the matter ofrecruitment to the posts in an establishment or employment.


Advisory Committee (increasing employment opportunities for women)

1. Every Advisory Committee shall consist of not less than tenpersons, to be nominated by the appropriate Government, ofwhich one-half shall be women.

2. Every Advisory Committee shall consist of not less than tenpersons, to be nominated by the appropriate Government, ofwhich one-half shall be women.

3. The Advisory Committee shall regulate its own procedure.

4. The appropriate Government may, after considering the advicetendered to it by the Advisory Committee and after giving to thepersons concerned in the establishment or employment anopportunity to make representations, issue such directions inrespect of employment or women workers, as the appropriateGovernment may think fit.



Authorities for hearing and deciding claims and complaints

• The appropriate Government may, by notification, appointsuch officers, not below the rank of a Labour Officer, as itthinks fit to be the authorities for the purpose of hearingand deciding claims and complaints regarding equalremuneration act.

Maintenance of registers (Sec 8)

• Every employer is required to maintain prescribed registersand documents in relation to workers employed by him


Administration1. The appropriate government may constitute one or more Advisory

Committees.

2. The appropriate government may appoint an authority, not belowthe rank of a Labour Officer, to hear and decide claims andcomplaints.

3. The authority appointed for this purpose shall have all the powersof a civil court

4. The aggrieved employer or worker may prefer appeal to theappellate authority within 30 days from the date of the order.

5. It is the duty of employers to maintain prescribed registers andother documents in relation to the workers employed by them.

6. The appropriate government may appoint inspectors for thepurpose of enforcing the provisions of the Act.

7. The Act provides for penalties for violation of provisions of the Act.



Exemption

1. The terms and conditions of a workmen’s employmentare, in any respect, affected by compliance with the lawregulating the employment of women;

2. Any special treatment is accorded to women in connectionwith the birth, or expected birth, of a child.



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