Tag Archives: labour laws


16 Nov

An Overview By Shivaji Rao, Executive (Law), NDDB (India)

The first National  Labour Commission 1929, had promised lot in the direction of social security, social welfare, wages, social insurance, industrial relations, industrial adjudication, collective bargaining etc,. In sequel to the recommendations made in the report of the first national commission on labour series of labour enactments were passed.

After the gap of almost 72 years the Second National Labour Commission has been  constituted and submitted its report in the year 2002 to the Government of India. At the outset the terms of reference to the commission are as under:

1. To suggest rationalisation of existing laws relating to labour in the organised sector, and
2. To suggest an umbrella legislation for ensuring a minimum level of protection to the workers in the unorganised sector.


Before penning down the report, the Commission followed the following methodology:

a)  arranged consultation / conferences in the major cities of India to get the opinion of the Industry, public, educationalists  and so on institutions’;
b) circulated a questionnaire across the industry and the society in terms of the reference
c) surveys conducted both in organised and unorganised sector

The recommendations of the Commission consists of the chapters, namely –
1). The terms of the reference of the Commission
2).Introductory review,
3).Industrial Development and Progress after independence,
4).Impact of globalisation – in comparison with neighbouring countries,
5).Approach to review laws,
6).Review of laws,
7).Unorganised sector,
8).Social security,
9).Women and Child labour,
10).Skill development,
11).Labour administration,
12).Other matters.

Only relevant part of important chapters with special reference  to the organised sector and major recommendations of Commission thereof are dealt verbatim herein below:

I – General Recommendations

1. We recommend that the Central Government and the State Government should have a uniform policy on holidays, only 3 national holidays be gazetted – namely Independence Day, Republic Day and Gandhi Jayanti Day, two more days may be added to be determined by each State according to its own tradition and apart from these each person must be allowed to avail of 10 restricted holidays in the year, Government holidays should be delinked from holidays under the Negotiable Instruments Act.(5.29)

2. Flexibility in the hours of work per week and compensation for overtime. (5.32)

3. Attempt to change the basis of tenure in all jobs (permanent as well as non-permanent) to contractual and for stipulated periods, involves a basic change in attitude and notion. If transforming the basis of all  employment is a social necessity because it has become economic necessity for industrial and commercial enterprises, then, it is equally necessary to create social acceptability for the change and the social institutions that can take care of the consequences. (5.34 & 35).The fundamental change of this type has to be preceded by :
i)  evolution of socially accepted consensus on the new perceptional jobs
ii)  the evolution of a system of constant up-gradation of employability through training in a wide spectrum of multiple skills
iii) the setting up of a system of social security that includes unemployment insurance and provisions for medical facilities; and
iv) the institution of a mandatory system of two contracts – one, an individual contract and two, a collective contract with workers union.

4. The commission recommends that government may laid down list of highly paid jobs who are presently deemed as workman category as being outside the purview of the laws relating to workman and included in the proposed law for protection of non-workmen. Another alternative is that the Govt. fix a cut off limit of remuneration which is substantially high enough, in the present context such as Rs.25,000/- p.m. beyond which employee will not be treated as ordinary  “workman”. (6.19) wage ceiling of Rs.25000/-

5. Further the Commission recommended that it would be logically to keep all the supervisory personnel, irrespective of their wages / salary, outside the rank of worker and keep them out of the purview of labour law meant for workers. All such supervisory category of employees should be clubbed along with the category of persons who discharge managerial and administrative functions. The Commission would also recommend that such a modified definition of worker could be adopted in all the labour laws. We expect management to take care of the interest of supervisory staff as they will now be part of managerial fraternity. (6.20)  Modified definition of worker

6. Existing set of labour laws should be broadly grouped into  four or five groups of laws pertaining to:

(i)  Industrial relations
(ii) Wages
(iii) Social security
(iv) Safety
(v) Welfare and working conditions and so on

7. The Commission is of the view that the coverage as well as the definition of the term ‘worker’ should be the same in all Group of laws subject to the stipulation that social security benefits must be available to all employees including administrative, managerial, supervisory and other excluded from the category of workmen and others not treated as workmen or excluded from the category of workmen. (6.21)

I-A: Approaches in drafting the Law on Labour Management Relations:

Firstly, the Commission would prefer the gender neutral expression ‘worker’ instead of the currently used word ‘workman’.

Secondly, the law will apply uniformly to all such establishments.

Thirdly, we recognise that today the extent of unionisation is low and even this low level is being eroded, and that it is time that the stand was reversed and collective negotiations encouraged. Where agreements and understanding between two parties is not possible, there, recourse to the assistance of a third party should as far as possible be through arbitration or where adjudication is the preferred mode, through Labour Courts and Labour Relations Commissions of the type be proposed later in this regard and not governmental  intervention. A settlement entered into with recognised negotiating agent must be binding on all workers.

Fourthly, we consider that provisions must be made in the law for determining negotiating agents, particularly on behalf of workers.

Fifthly, the law must provide for authorities to identify the negotiating agent, to adjudicate disputes and so on, and these must be provided in the shape of labour courts and labour relations Commissions at the State, Central and National levels.

Sixthly, The Commission is of the view that changes in labour laws be accompanied by a well defined social secuirty package that will benefit all workers, be  they in ‘organised’ or ‘unorganised’ sector and should also cover those in the administrative, managerial and other categories which have been excluded from the purview of the term worker.

II – Industrial Relations and Trade Unions

1. It is necessary to provide minimum level of protection to managerial and other (excluded) employees too against unfair dismissal or removal. This has to be through adjudication by Labour court or Labour Relations Commission or arbitration.(6.22)

2. Central laws relating to the subject of labour relations are currently the ID Act, 1947, The TU Act, 1926, Industrial Employment (SO) Act, 1946, Sales Promotion Employees (Conditions of Service) Act, 1976. There are State level legislation too on the subject.  We recommend that the provisions of all these laws be judiciously consolidated into a single law called ” The Labour Management Relations Law” or “Law on Labour Management Relations”.  (6.26)

3. We would recommend the enactment of special law for small scale units. We have come to the conclusion that the reasonable threshold limit will be 19 workers. Any establishment with workers above that number cannot be regarded as “small”.  The composite law suggested by us for small enterprises has provisions for registration of establishment, (provisions pertaining to) securing safety, health and welfare, awards of work, leave, payment of wages, payment of bonus compensation in case of lay off, retrenchment and closure, resolution of individual and collective disputes of workers etc. The law suggested by us also has provisions pertaining to social security. We are of the view that a composite law will not only protect the interest of the workers in these enterprises but will make it easier for the small enterprises to comply with the same.  (6.28)

4. The commission has avoided the term ‘Industry’  with a view that the persons engaged in domestic service are better covered under the proposed type of umbrella legislation, particularly in regard to wages, hours of work, working conditions, safety and social security. (6.40)

5. Modification in the terms like ‘strikes’, ‘work stoppage’ etc. and the terms go slow and work to rule must be regarded as misconduct under Standing Orders and Provisions relating to unfair labour practice. (6.41)

6. Commission has recommended to the withdrawal of Essential Services Maintenance Act (6.49).

7. The Commission has suggested to identify a bargaining agent on the basis of check-off system, with 66% entitling the Union to be accepted as a single negotating agent and if no union has 66% support, then Unions that have the support of more than 25% should be given proportionate representation on the college. (6.66)

8. Check-off system in an establishment employing 300 or more workers must be made compulsory for members of all registered trade unions. (6.73)

9. Commission also recommended that recognition once granted, should be valid for a period of 4 years to be co-terminus with the period of settlement. No claim by any other Trade Union / Federation / Center for recognition should be entertain till at least 4 years have elapsed from the date of earlier recognition. (6.76)

10. Establishment employing 20 or more workers should have Standing Order or Regulations. There is no need to delimit the issues on which Standing Orders can or need be framed. As long as two parties agree all manner of things including multi-skilling, production, job enrichment, productivity and so on can also be added. The appropriate Government may prescribe a separate Model Standing Orders for units employing less than 50 workers. The Commission has drafted a draft Model Standing Orders in this regard. (6.77).

11. Every establishment shall establish a grievance redressal committee consisting of equal number of workers and employers representatives. The said committee be the body to which all grievance of a worker in respect of his employment will be referred for decision within a given time frame (6.80).

12. Commission’s view on Chapter V B (Special Provisions relating to Lay-off, Retrenchment & Closure in the Establishments employing not less than 100 workmen) of the ID Act :  The Commission has felt that, in the new circumstances of global competition, it may not be possible for some enterprises to continue and meet the economic consequences of competition. In such cases, one cannot compel non-viable undertakings to continue to bear the financial burden that has to be borne to keep the concern going. They should, therefore, have the option to close down. In these circumstances, the commission came to the conclusion the best and more honest equitable course will be to allow closure, provide for adequate compensation to workers and in the event of an appeal, leave it to the Labour Relations Commission to find ways of redressal – through arbitration or adjudication. (6.87).

13. Prior permission is not necessary in respect of lay-off and retrenchment in an establishment of any employment size. Workers will however be entitled to 2 months notice or notice pay in lieu of notice, in case of retrenchment. The commission also felt that the rate of retrenchment compensation should be higher in a running organisation than in an organisation which is being closed. It would however recommend that in the case of establishment employing 300 or more workers where lay-off exceeds a period of 1 month such establishments should be required to obtain post-facto approval of the appropriate government. The Commission recommends that the provisions of Chapter V B pertaining to permission for closure should be made applicable to all the establishments to protect the interest of workers in establishment which are not covered at present by this provision if they are employing 300 or more workers. Having regard to the national debate on the issue and  the principles outlined above the commission has recommended the compensation per completed year of service @ of 30 days on account of closure in case of sick industry which has continuously running to losses for the last 3 years and @ 45 days for retrenchment by such sick industry or body where retrenchment is done with a view to become viable. The commission also recommended higher retrenchment compensation @ 60 days wages and similarly a high rate of compensation for closure @ 45 days wages  for every completed year of service for profit making organisation . For establishment employing less than 100 workers, half of the compensation mentioned above, in terms of days of wages may be prescribed. However, notice is required to be given for both the cases of retrenchment and closure as that of big industry. (6.88).

14. The commission has recommended for maintenance of panel of arbitrators by the LRC concern, to settle the disputes. (6.93).

15. The matters pertaining to individual workers, be it termination of employment or transfer or any other matter be determined by recourse to the Grievence Redressal Committee, conciliation and arbitration / adjudication by the Labour Court.  Accordingly, Sec.2 a of the ID Act may be amended. (6.96)

16. The system of legal aid to workers and trade unions from Public Fund be worked out to ensure that workers and their organisations  are not unduly handicapped as a result of their inability to hire legal counsel.  (6.98)

17. Strike should be called only by the recognised negotiating agent and that too only after it had conducted a strike ballot among all the workers, of whom at least 51% of support the strike.  (6.101).

18. Workers participation in management – the legislative teeth should be provided. (6.102).

The Commission urges that these recommendations are taken up as a whole and not in a piece-meal manner that may destroy the context of inter-relation and holistic approach.  (6.104).

19. The provisions in respect of small establishments can be in the form of a separate law name Small Enterprises (Employment Relations Act) or be included in the general law as a separate chapter to ensure that the interest of the workers are fully protected, even while lessening burden on the management and providing them with vigilance in exercising managerial functions. (6.106)

III – Contract Labour/Casual Temporary Workers

(i) The Commission has recommended that contract labour shall not be engaged for core production /  service activities. However, for sporadic seasonal demand, the employer may engage temporary labour for core production / service activity. As mentioned by the commission that off-loading perennial non-core services like canteen, watch and ward, cleaning, etc. to other employing agencies has to take care of three aspects – (1) there have to be provisions that ensure that ensure that perennial core services are not transferred to other agencies or establishments; (2) where such services are being performed by employees on the payrolls of the enterprises, no transfer to other agencies should be done without consulting, bargaining (negotiating) agents; and (3) where the transfer of such services do not involve any employee who is currently in service of the enterprise, the management will be free to entrust the service to outside agencies. The contract labour will, however, be remunerated at the rate of a regular worker engaged in the same organisation doing work of a comparable nature or if such workers does not exist in the organisation, at the lowest salary of a worker in a comparable grade, i.e. unskilled, semi-skilled or skilled. (6.109).

(ii) The Commission would recommend that no worker should be kept continuously as a Casual or temporary worker against a permanent job for more than 2 years. (6.110)

IV – Wages

(i) The Commission recommends that every employer must pay each worker his one-month’s wage, as bonus before an appropriate festival, be it Diwali or Onam or Puja or Ramzan or Christmas. Any demand for bonus in excess of this upto a maximum of 20% of the wages will be subject to negotiation. The Commission also recommend that the present system of two wage ceilings for reckoning entitlement and for calculation of bonus should be suitably enhanced to Rs.7500/- and Rs.3500/- for entitlement and calculation respectively.(6.113).

(ii) There should be a national minimum wage that the Central Government may notify. This minimum must be revised from time to time. It should, in addition, have a component of dearness allowance to be declared six monthly linked to the consumer price index and the minimum wage may be revised once in five years. The Commission also recommends the abolition of the present system of notifying scheduled employments and of fixing/revising the minimum rates of wages periodically for each scheduled employment, since it feels that all workers in all employments should have the benefit of a minimum wage. (6.114)

(iii) There is no need for any wage board, statutory or otherwise, for fixing wage rates for workers in any industry. (6.118).

V – Working Conditions, Service Conditions etc

The Commission recommended enactment of a general law relating to hours of work, leave and working conditions, at the work place. For ensuring safety at the work place and in different activities, one omnibus law may be enacted, providing for different rules and regulations on safety applicable to different activities. (The Commission have appended a draft indicative law on hours of work and other working conditions after this chapter, and an omnibus draft indicative law on safety in the chapter on Labour Administration). Such general law on working conditions etc. may provide for the following (6.121) :-

a) The law should have a provision for letters of appointment along with a copy of Standing Orders of the establishment (in the local language); and issue of a photo identity card giving details of the name of the worker, name of establishment, designation, and so on.

b) It should specify the maximum number of working hours in a day/week, and payment of overtime at double the rates of wages. The limitation on employing workers on overtime needs to be relaxed, and  the Commission recommended that the present ceilings be increased to double to enable greater flexibility in meeting the challenges of the market. Sub section (2) of Section 64 of the Factories Act contains a provision that the State Government can give exemptions in certain circumstances. Sub section (2) of Section 64 of the Factories Act contains a provision that the State Government can give exemptions in certain circumstances. The Commission  recommend that the list of such contingencies may be suitably expanded in consultation with the representatives of the industry to include more occupations, processes and contingencies.

c) There should be reduced working hours for adolescents, prohibition of underground work in mines for women workers, prohibition of work by women workers between certain hours and so on.

d) On the question of night work for women there need not be any restriction on this if the number of women workers in a shift in an establishment is not less than five, and if the management is able to provide satisfactory arrangements for their transport, safety and rest after or before shift hours.

e)  No exemptions like EPZ or SEZ from labour laws.

f)  Appropriate government may be empowered to grant exemptions on case to case basis.

g) Establishment having a man power over a specified limit must provide for a canteen.

h) Other refreshment facilities exclusively based on gender be provided

i)  To rope in local bodies, NGOs etc. in creation of amenities, common market etc.

j)  Irrespective of number of women workers, a creche should be provided

k) Deletion of Employers’ Liability Act, 1938, Fatal Accident Act 1855 and relevant provisions of these Acts may be incorporated into the W.C. Act, 1923. (6.126)

l) A provision may be made in the Laws that all cases must be disposed of in a span of 3 hearings, and where this is not possible, the Labour Court should in its award give reasons for taking more hearings. The Labour Relations Commissions may also be entrusted with the responsibility to assess the work of the LCs particularly in the matter of expeditious disposal of cases. With the constitution of an All India Labour Judicial Services that the commission is recommending with a hope that to have a dedicated and competent set of man and woman as presiding officers of LCs who will be able to discharge responsibilities efficiently and expeditiously. (6.139)

VI – Social Security

The Commission has suggested the recommendations on social security.  The main recommendations amongst the other are  stated herein below :

i) Our Commission accepts the need to consider social security as a fundamental human right. (8.30)

ii) We recommend a system in which the State bears the responsibility for providing and ensuring an elementary or basic level of security, and leaves room for partly or wholly contributory schemes. This will mean that the responsibility to provide a floor will be primarily that of the State, and it will be left to individual citizens to acquire higher levels of security through assumption of responsibility and contributory participation. Such a system will temper and minimise the responsibility of the State, and maximise the role and share of individual and group responsibility. Thus, there will be three levels in the system.  (8.32)

iii) The Task Force on Social Security recommended that wage ceiling and employment threshold can and should be uniform with a provision for raising the wage ceiling and its eventual removal and lowering employment threshold and its ultimate removal. The Commission also agrees with it. (8.93)

iv) The term ‘workman’ may be replaced by the term ’employee’ so as to make the Workers’ Compensation Act applicable to all categories of employees; the term ’employee’ may be defined to mean any person employed in any employment specified in Schedule II; the entries in Schedule II may be revised so as to make it applicable to all classes of employees progressively; and restrictive clauses, wherever they occur in the Schedule, may be omitted. (8.96)

v) The Workmen’s Compensation Act should be converted from an employers’ liability scheme to a social insurance scheme, its coverage should be progressively extended to more employments and classes of employees, and the restrictive clauses in Schedule II of the Act should be removed. (8.97)

vi) The management of ESI Scheme should be professionalised (8.113)

vii) The PF Act be made applicable to all classes of establishment subject to such exception.(8.117)

viii)  The Commission suggests that EPFO organised an enquiry into the working of all exempted funds by an independent agency and review the entire scheme of granting exemptions from the provisions of the EPF Act. (8.126)

ix)  The Payment of Gratuity Act may be integrated with the EPF Act and converted into a social insurance scheme. (8.149)

x)  An unemployment insurance scheme could play substantial role in coping with unacceptable levels of employment resulting from the implementation of structural adjustment programmes and other economic reforms. (8.175)

xi)  The National Renewal Fund (NRF) was established in Feb-92 to provide a form of wage guarantee which had to be used for re-training, re-deployment, counselling etc. but in practice, NRF has mostly been utilised for implementing the VRS. There is need to restructure this fund to serve as a wage guarantee fund. (8.179)

xii) A provision be made for Payment of Educational Allowance to all employees (8.182).

xiii)  The insurance companies be required to develop two or more plans providing coverage for major risks faced by people leaving it to individual to choose from among them according to their capacity. (8.242)

xiv) A National Scheme for pension for physically handicap be introduced (8.365).

xv) A National Scheme be drawn up for payment of pension to leprosy affected persons, mentally sick people on the same lines as the pension for physically handicap person. (8.380)

xvi) Able bodied beggars should be given training and help to get employment. (8.386)

xvii) A permanent commission for disaster management should be set up on the lines of election commission. (8.393)

xviii) The Commission strongly recommends the constitution of high powered national security authority preferably under the Chairmanship of a Prime Minister of India. (8.415).

xix) A social security fund of India and social security of each State may be set up. (8.433)

xx) There will be three kinds of social security schemes :  1) social insurance type of contributory scheme, 2) subsidised insurance / welfare fund type of partly contributory and partly socially assisted schems and 3) social assistance scheme which will be wholly non-contributory. (8.343)

VII – Other  Recommendations

–  Recommendations on women & child labour :
–  Recommendations on skill development :
–  Labour Administration
–  Workers participation in management
–  Employment scenario in the country :
–  Review of wages and wage policy :
–  Labour statistic and research work :

VIII – Conclusions

The Commission in its 2700 pages long report inter-alia has stressed on the following:

Bilateral agreement, collective bargaining, identification of parties to bargain and for recognition.
Review on existing provisions in the Trade Union Act with regard to recognition / registration of trade union i.e.  10% support of the work force with method of identification of parties,  consequences – 66% support to recognise as TU Dispute Settlement
Grievance Settlement Committees,
Power to the labour  machinery to enforce awards
Disposal of disputes within 3 hearings
Independent from government interference
Self contained code / procedure
Review on strikes and lock outs
Essential Services Maintenance Act should be scrapped
Hire – fire policy, economic necessity
Social acceptability of contract system of appointments
Management (wants) to decide the working force – Sec. 9 A is must
Contract Labour  (R&A) Act, 1970 :  No contract labour should be deployed Core functions

The  Commission has suggested the above recommendations along-with 7 draft bills so that the concerned Ministry should not sit over the drafting exercise.

Critics on the Report:-

a) The report is not consonance with the National Policy on Industry – some of the parts of the Report consist number of negative covenants.
b) Inter union rivalry – 66% check off system is a myth
c) Validity of 4 years recognition of the Trade Unions
d) Strikes are weapons in the hands of few misled employees – Commission has recommended ballot system i.e. 51% of voting majority;
e) Employers features not dealt in the Report
f) CLRA Act  – out sourcing not in the employers interest
g) Closure – 300 is not adequate & is unrealistic
h)  Festival bonus – not in the interest of the employer
i)  Employment generation should be our goal accompanied by social benefit net
j)  Using of the words “outsourcing”,  “agri business”, “small scale industries”, “small and medium scale industries”, “manufacturing industry”  without defining them.


Pinal Mehta

Legal FAQs

15 Nov

Here are some questions that are frequently asked by HR
Q1. Is Bonus right of every employee. For calculating bonus does the interest earned by Company in FDRs is also to be counted.

A. Bonus is something given in addition to what is usual or strictly due; money or anything given in addition to an employee’s usual pay or salary. The payment of Bonus Act 1965 provides for payment of bonus to persons employed in a factory and in every other establishment employing twenty or more persons. In calculating bonus, interest earned by a company on fixed deposits is to be excluded.

Q2. I am a Research Scientist working in University of Delhi. I have been working on various projects for a period of five years. Do I have a right to be regularized?

A. Being a Research Scientist though you don’t have a right to be regularized but your association with the University should be given due consideration at the time of the appointment .You stand a better chance than any other candidate.

Q3. I am a Lecturer in a College, Delhi. A person has been appointed as a Lecturer of History in my college. The person who has been appointed as not even studied History as a specialized subject in his graduation. Can his appointment be challenged ?

A. Yes, you can challenge the appointment on the ground of lack of proper qualification by filing a Petition in this regard.

Q4. I am in Government Servant working in Ministry of Defence. A Departmental Enquiry was ordered against me. I was not convicted by the report of the enquiry. My senior had again ordered enquiry into the same charges. Can he do so?

A. Your senior has no power whatsoever to order another enquiry on the basis of the same facts and materials against you. But in case some new facts and materials come into light such enquiry can be ordered.

Q5. I had been working in Pvt. Ltd. Company for 2 and half years as a permanent employee. As per the company rules I was eligible for medical and LTC benefits. When I leave the job they suppose to give me the whole Medical and LTC benefits plus 15 days salary. I had served one month notice also. They promised me to pay after some time since the financial condition of the company was not good at that time. After repeated telephonic reminder and subsequent letters they kept quiet. It is almost 2 years since then, and I came to know that this company continue to do such things with other employees also. What I can do now? Can I still get money back?

A. Yes, you can claim all the benefits, which the company has not paid you after your resignation. You can file a civil suit against the company and claim those dues. In case you are a “workman” within the definition of Industrial Disputes Act, you can file a petition under Section 33 (c) (ii) of the said Act and claim your benefits.

Q6. I am working with a government enterprises company since last 7 years on a contract basis. They renewing my contract on every year. Relation are good with my employer, but if they are not continuing my job in any case what I will do. Is there any chance to see them?

A. From your query it is not clear in which category of employment are you working, Whether you are in the “Workman” category or you are in the “Management” Cadre and whether you are employed on contract basis or otherwise. In case you are in the Management category, then the Company has every right to enter into an agreement with you on a contractual basis and continue your job till the time they want. In case you are working in the office staff then in case the company does not renew your contract then you can approach the Labour Court under the provisions of Industrial Disputes Act and seek appropriate remedy. You can ask for regularization under the Industrial Disputes Act if you are a workman as defined under the said Act.

Q7. Can any employer send his employee on forced leave for not to initiate disciplinary proceeding but to legally punish him?

A. The employer can not send an employee on forced leave without initiating any disciplinary proceedings against an employee. Only after necessary show cause or charge sheet has been issued and after holding disciplinary inquiry or proceedings, the employer can legally punish you. If the employee fails to receive the payment from the employer after having entered into full and final settlement of the account, the employee can file a civil suit for recovery of office dues. In case gratuity has not been paid then the employee can proceed under the provisions of Payment of Gratuity Act and then in case Provident Fund has not been released after the employee leaving, then he can proceed under the provisions of the Provident Fund Act.

Q8. What does an employees do if his employer does not make his full and final settlement of Account, once the employee leave or is forced to leave the service in the private sector. How soon and with what documents the employees should fight the case?

A. If the employee fails to receive the payment from the employer after having entered into full and final settlement of the account, the employee can file a civil suit for recovery of office dues. In case gratuity has not been paid then the employee can proceed under the provisions of Payment of Gratuity Act and then in case Provident Fund has not been released after the employee leaving, then he can proceed under the provisions of the Provident Fund Act

Q9. How to get my passport back from my previous employer?

A. It is not clear from your question, in what capacity the previous employer is holding the passport. However, it is advisable to send a letter in writing to the previous employer for return of passport. If he still does not return the same, you can lodge a criminal complaint with local police station.

Q10. What are my rights if a contract has no mention of salary breakups and the employers PF is included as part of the Gross Salary?

A. There is nothing illegal if there is no mention of salary breakup and employers PF included as part of the Gross Salary. The PF can be deducted as a Contribution of employee from the Gross Salary. In addition the employer has to contribute his share of PF subject to maximum privilege prescribed in Section 6 of Act.

Q11. My company is not relieving me. I have got a job elsewhere and want to quit the notice period of one month expired one week ago. What can/should I do?

A. If one month notice period has expired as prescribed in the contract of employment, intimate to your employer in writing that as notice period has already expired you will stop coming to their office from ______ (specific date) and also write about settling your accounts.

Q12. Kindly give the citation of the latest ruling given by Supreme Court wherein promotion has been declared as the fundamental right. The Article was published in the newspaper but no reference to the citation is available.

A. The citation and the ratio of the case you have asked for is given hereunder : Ajit Singh II v. State of Punjab, (1999) 7SCC 209 : 1999 SCC (L&S) 1239 “The word “employment ” being wider, there is no dispute that it takes within its fold, the aspect of promotions to posts above the stage of initial level of recruitment. Article 16(1) provides to every employee otherwise eligible for promotion or who comes within the zone of consideration, a fundamental right to be “considered” for promotion. Equal opportunity here means the right to be “considered ” for promotion. If a person satisfies the eligibility and zone criteria but is not considered for promotion, then there will be a clear infraction of his fundamental right to be “considered” for promotion , which is his personal right.” (para 22) “It is not possible to accept the view expressed in Ashok Kumar Gupta ,(1997) 5 SCC 201 and followed in Jagdish Lal, (1997) 6 SCC 538 and other cases, if it is intended to lay down that the right guaranteed to employees for being “considered” for promotion according to relevant rules or recruitment by promotion (i.e. whether on the basis of seniority or merit) is only a statutory right and not a fundamental right.” (Para27)

Q13. Today if I get a job and leave then they will crib about it and would refuse to pay my severeance benefits, which to me is nothing unreasonable but the cost of closing down the office and leaving people to look out for a job and unsetting. In the current circumstances, badly hit as I am, how can I safeguard my interests and make sure that I do not loose my benefits if I have to leave early.

A. You have not disclosed about your term and condition of Employment. Anyhow if the company terminates your services and they have to pay the severeance benefit as the contract. If as per the terms and conditions of your contract or service if no severeance amount or benefit is payable on resignation then you can demand the same from the company if you resign from the service. However if the company has paid the severeance benefits to other employees who have resigned then in that case if you file a case in the court of law on the ground that other person or employees have been paid the severeance benefit after they have resigned and you are accordingly entitled then you must get this severeance benefit. It is advised that persons who have resigned and have been paid severeance benefits you can collect the documents from them to show that severeance benefits were paid to the employees who have resigned from the company .

Q14. I wish to know the consequences of breach of employment bond given by an employees: On the employee himself, On the company that employs him subsequently. If the bond states that the employees can be used for criminal breach of trust on breach of the bond, how enforceable is this clause?

A. As regard the breach of the employment bond given by an employee in this regard it is advised that if an employee has signed a bond after he get specialized training from the company then a civil case can be filed against him for recovery of the amount mentioned in the bond if there is any breach. As regard the company that employs him subsequently, there is no liability of the company, which employs him subsequently. Breach of bond is not criminal breach of trust it is of civil consequences and that also have to be proved in the Court of Law. In no manner it can be termed as criminal breach of trust.

Q15. A Writ Petition was duly filed and was admitted by Honorable High Court in Oct. 1994 against wrong and illegal dismissal orders of State Bank of India and for my reinstatement too. But nothing has been done so far inspite of my various request and reminders. In this regards, what immediate step I should take to get maintenance allowances or nurse my family smoothly as well as to meet highly legal expenses till disposal of the said writ?

A. When a writ petition is filed against the illegal dismissal on termination of service legally it is not possible by any court to grant any maintenance allowance or legal expenses till disposal of the writ petition. There is no precedent in this regard nor any court pays the maintenance allowance. The only remedy available to you is to file an application for early hearing and get the matter decided as early as possible.

Q16. A civil appeal against recovery orders in lying pending in Honorable High Court. At present, neither there is any movable/immovable property in my name nor I am in position to pay the amount of recovery as ordered by Single Judge Bench or likely to be ordered in futures. Under these circumstances, what maximum severe action can be taken by this Court, in case, my appeal is not decided in my favour onwards? What are the point & steps/measures in defense in that position?

A. You have not disclosed in your query as to what order has been passed by the Appellate Court. Whether any stay has been granted by the Appellate Court or not. If any stay has been granted then what conditions. Normally when any appeal is admitted or put for hearing the Appellate Court always passes an order for payment of decretal amount with a condition that the decree holder can withdraw the amount on furnishing some security. If any order has been passed in this regard by the Appellate Court then you have to deposit the amount. If you don’t deposit the amount then normally the appeal is dismissed. If the decree passed is totally illegal then in that case you can tell the court that no amount is payable. And you also pray to the court that you are in very bad financial condition otherwise your appeal will be dismissed.
If you have any questions please post over here….


Pinal Mehta

Legal Tip of the Day

15 Oct

Legal Tip of the Day

An employer can be prosecuted for obtaining undertaking from an employee that she will not claim maternity benefit on her third delivery

Under Maternity Benefit Act, a female employee will be entitled  to such benefits without any ceiling on number of deliveries since special care and assistance of motherhood is one of the basic rights.If an employer takes an undertaking from an employee that she will not claim maternity benefit on her third delivery, such employer can be prosecuted.

Labour Laws : Bombay Shop & Establishment Act 1948

13 Oct

n 1. The Act extends to the State of Maharashtra.
n 2. Is intended to regulate the conditions of work and employment in commercial establishments, shops, eating houses, restaurants, theatres, etc.
n 3. The Act applies to all employees (including apprentices) and also covers indirect labour, that is contract labour.


1. Obtain a license from the authorities.
2. Display it in the premises.
3. Inform the authority of any changes.
4. Renew the license to maintain validity.
5. Opening Hours not earlier than 8.30 AM.
6. Closing hours not later 8.30 PM.
7. Working Hours: Maximum 9 hours a day and 48 hours in any week
8. Rest interval: At least 1 hour – Within 5 hours from starting time.
9. Spread-over in a CE shall not exceed 11 hours
10. Overtime at double the rate of payment for work done beyond the limits of hours of work.
11. Special provisions regarding hours of work, etc. for ‘Young persons’ (those are more than 15 years of age but are less than 17 years)
12. A paid weekly-off if employee has put in employment for 6 days.


1. Leave:

a. 5 days for every 60 days worked, if the person has been employed for not less than 3 months in a year.
However, where an employee has worked not less than 240 days during a year shall be allowed leave for not less than 21 days in a year.
b. Above leave is inclusive of intervening weekly-offs and paid holidays.
c. In case of termination of service unavailed leave is to be encashed.
d. Advance of 50% of leave wages to be paid before he proceeds on approved leave.

2 Holidays: January 26th, May 1st, August 15th, and October 2nd. are compulsory paid holidays under the Act.

Note: If an employee is required to work on any of these holidays he will be eligible for a compensatory holiday in addition to double the payment for the holiday on which he has worked.


1. The Act brings in the applicability of:
? The Payment of Wages Act,
? Maternity Benefit Act,
? Workmen’s Compensation Act, and
· The Industrial Employment Standing Orders Act where there are more than 50 workmen.


2. Notice of termination of Service: Notice of termination will be governed as under:
a. Upto 3 months of Employment: NIL.
b. More than 3 months: 14 days notice in writing (or wages in lieu thereof).
c. Employment one year or more:- at least 30 days notice in writing (or wages in lieu thereof).


3. Restrictions on double employment are imposed on the employee as well as the employer.
4. Various provisions exist for maintenance of registers, records and display of notices.



• 1. The ESI Act,1948 provides for the following benefits to employees:
• · Sickness Benefit
• · Medical Benefit
• · Maternity Benefit
• · Disablement Benefit
• · Dependent’s Benefit
• · Rehabilitation Allowance
• · Funeral Expenses.
• 2. A Unique Multi-dimensional Contributory Social Security Scheme based on Insurance.
• 3. Coverage of employed persons as per the Act COMPULSORY .


1. The Act is applicable to:
a. All factories.
b. Section 1(5) permits, extension of the provisions of the Act, to any other class of establishments, industrial, commercial or agricultural.
2. Although “shop” is not defined it has been held by judicial interpretation to cover an activity where goods or services are sold. No premises is necessary.
3. The Act applies to all employees drawing salary, exclusive of overtime earnings, upto Rs.10,000 per month. Rs. 25,000/- for persons with disability(Rule 50).
4. “Employee” includes:
· indirect labour (contract workers)
· trainees and apprentices other than those engaged under the Apprentices Act,1961.


1. Contributions based on ‘wages’.
2. Definition of ‘wages’ in Section 2(22) is very wide.
3. Contribution Rates (Rule 51):
· Employer’s Contribution: 4.75% of wages.
· Employees’ Contribution: 1.75% of wages.
Note: For payment of contributions overtime earnings are to be included.


1. The quantum of benefits that employees are eligible to receive during a benefit period is linked to the contributions actually paid in the respective contribution period. (Regulation 4).
1st. April to 30th. September. 1st.Jan to 30th. June
1st. October to 31st. March 1st. July to Dec. 31st.


The Employer must ensure to:
• 1. Register the factory/establishment. (Regulation 10B).
• 2. Complete filling the Declaration Forms the same day the employees join employment. (Regulation 11).
• 3. Submit declarations forms in Form 3 within 10 days. (Regulation 14).
• 4. Issue Temporary Identification Certificates (TIC) received from ESIC to the Insured Persons.
• 5. Assist the ESIC. (Regulation 16).
• 6. Help in issuing Identity Cards. (Regulation 17).
• 7. Issue a certificate of employment to employee who falls sick before issuance of the TIC to enable him to get treatment.
• 8. Remit the ESI contributions every month before the 21st.of the month. (Regulation 31).
• 9. Send Return of Contribution Cards within 42 days of the end of the Contribution Period. (Regulation 26). In case of Closure: 21 days.
• 10. Contractor maintains register in Form 7.
• 11. Pay 15% p.a. interest for delay/default in sending contributions. (Regn.31-A)
• 12. Pay damages, where levied, for delayed payments. (regulation 31- C).
• 13. Keep challans in proper custody. In case of contractor’s employees retain xerox of all challans. (VERY IMPORTANT).
• 14. Maintain Register of employees.
• 15. Maintain Inspection Book. (Regulation 102-A).
• 16. Arrange immediate First Aid assistance.
• 17. Maintain Accident Book. (Form 13).
• 18. Prepare and send Accident Report (Regulation 68). (Form 16).


In case of fatal accidents, the employer must send intimation by telegram/special messenger to:
• a. Inspector of Factories.
• b. Administrative Medical Officer, ESIC.
• c. District Magistrate.
• d. Police Station.
• e. Nearest Relative.
• f. Form 24 to Factory Inspector.
• g. Form 16 to AMO, ESIC.

• In case of fatal accidents, the employer must send intimation by telegram/special messenger to:
• a. Inspector of Factories.
• b. Administrative Medical Officer, ESIC.
• c. District Magistrate.
• d. Police Station.
• e. Nearest Relative.
• f. Form 24 to Factory Inspector.
• g. Form 16 to AMO, ESIC.
1. Section 53: Bars an injured employee (or his/her dependents) from claiming/receiving benefits under the Workmen’s Compensation Act or any other law, including a claim under tort.
• 2. Section 61: Bars an employee entitled to receive benefits under the ESIS from any other enactment.
• 3. Section 68: Provides that the employer will pay twice the contribution or difference in benefits received due to default in payment of contributions by him (whichever is higher).
• 4. Section 73: Prohibits the employer from dismissing, discharging or punishing an employee who is receiving sickness, disablement or maternity benefit during such period

• 5. Sections 45 to 45-I: Wide powers given to the Corporation.
• 6. Regulation 97 deals with discontinuation or reduction of benefits.
• 7. Regulation 98 states that if the service conditions of the employer permit the employer may discharge/reduce on due notice an employee:
• · Receiving TDB for 6 months or more.
• · Receiving medical treatment for 6 months or more.
• · Receiving medical treatment for infectious diseases like TB, for 18 months or more.


1. Rule 54 gives Table of Average Daily Wages and Standard Benefit.
• Except first 2 days, cash benefit approx. equal to 50% wages upto 91 days – Rule 55.
• For TB, leprosy, & Mental Diseases: upto 309 days, provided he is in employment for 2 years. (By Notification).
• Qualifying Period of Contribution: Min. 70 days.
• 12 weeks benefit @ twice the Standard Benefit. (Rule 56)
• 5. MISCARRIAGE: Upto 6 weeks benefit. (Rule 56-A).
• 6. Medical Bonus: Rs.250.
• Excluding first 3 days, TBD @ Standard Benefit + 40% till incapacity remains. (Rule 57).
• 8. DEPENDENT’S BENEFIT: @ Standard Benefit + 40% – Rule 58.
• 9. MEDICAL BENEFIT: Medicines from panel doctor — Section 56.
• 10. FUNERAL BENEFIT: Rs.2500 – Rule 59.
• 11. MEDICAL BENEFIT (POST RETIREMENT): For self and spouse medical benefit on payment of Rs.10 per month. Or lump-sum payment. Conditions: Minimum 5 years as an Insured Person and must superannuate. (Rule 61).

• 12. REHABILITATION ALLOWANCE: For attending to artificial limbs centre. (By Notification).
• DEBARRING OF BENEFITS: Regulation 99A debars an IP from receiving SB or TDB on any day of strike except:
• · Where he is receiving medical treatment as an indoor patient.
• · Where he is receiving extended sickness benefit.
• · Where he is receiving SB or TDB immediately before commencement of strike.
• · Where the IP has undergone vasectomy/tubectomy operation.

• 1. A State enactment to provide for minimum house rent allowance to workmen employed in Maharashtra.
• 2. Applies to factories and establishments employing fifty or more workmen in the area in which it is in force by notification. Does not cover contract workmen or indirect workmen.
• 3. ‘Workman’ in this Act means workman as defined in the I.D.Act.
• 4. ‘Wages’ means basic and dearness allowance.


1. 1. Section 4 mandates payment of HRA not less than 5% of the workman’s Basic + DA, or Rs.20, which ever is higher,
a) provided where the service is less than a month he shall be paid proportionate HRA.
b) ‘Service during the month’ includes lay-of, any kind of paid leave, including weekly offs, lockout where wages are paid, days of disablement for employment injury, maternity leave of 12 weeks for which HRA is to be paid.
2. Where more favourable terms through agreement, settlement or award are available the workmen will be eligible for such terms.


3. Where workmen are provided residential accommodation by the employer and a deduction is made then,
a) If the amount deducted is higher than HRA, then the deduction stands reduced to the extent of the HRA under the Act and no HRA is payable. (Section 4[4] a)
b) If the amount deducted is lesser than the HRA payable under the Act, the HRA payable will stand reduced to the extent of the deduction and the balance shall be paid to the workman. (Section 4[4] b)
c) When free accommodation is provided, and no deduction is made, then no HRA is payable. (Section 5).

4. In case of non-payment of HRA application can be made to the Controlling Authority (CA). The CA after giving opportunity to the applicant and the employer can determine the HRA payable and issue directions as required.
5. In case of a dispute regarding HRA such dispute shall be deemed to be in industrial dispute under the ID Act and the provisions of such Act shall apply.
6. Section 8 read with Rule 4 provides for registers and records to be maintained and permits records already maintained by the employer to be adequate compliance.


Pinal Mehta