It is not the constitution of the establishment as to whether it is a public limited company, private limited company, cooperative society, partnership or proprietory form that decides the working hours, leaves and other service conditions of the employees but it is the labour laws applicable to the kind of business being transacted that decides these matters.

Different Acts have set out different rules pertaining to hours of work and the spread over of work with slight changes as applicable to the respective state. Shops and Establishments Act being a state Act is confined only to that state whereas the other Acts are central Acts and will be similar in many respect subject to state rules attached thereto.

Laws Lined Up for 2018                   

Enhancement of the gratuity ceiling: The Payment of Gratuity Act, 1972 (“Gratuity Act”) entitles employees who have been in continuous employment for a period of 5 years to gratuity at the rate of 15 days wages for every year of continuous service, capped at INR 10,00,000. The Payment of Gratuity (Amendment) Bill, 2017 (“Gratuity Bill”) was introduced in the Lower house of Parliament (Lok Sabha) on December 18, 2017 with a view to allow the Government the discretion to (i) prescribe the gratuity ceiling, and (ii) the period of maternity leave that would deemed to constitute continuous service.  It is anticipated that the Gratuity Bill will be passed by the Lower house in the next session of Parliament and that the ceiling is likely to be enhanced from INR 10,00,000 to INR 20,00,000.

Consolidation of Labour Laws: As part of its election manifesto, the current Government had promised to review the Indian employment laws to reduce the multiplicity of employment legislations and keep the legislations in sync with the requirements of the evolving labour market. In furtherance of the same, the Government has sought to consolidate 44 central employment laws into 4 labour codes:

1. Labour Code on Industrial Relations — Consolidating the Industrial Disputes Act, 1947, the Industrial Employment (Standing Orders) Act, 1946 and the Trade Unions Act, 1926;
2. Labour Code on Social Security and Welfare — Consolidating social security laws such as the Employees Provident Funds and Miscellaneous Provisions Act, 1952, the Employees State Insurance Act, 1948, Maternity Benefit Act, 1961, the Employees Compensation Act, 1923, etc.;
3. Code on Wages — Consolidating the Minimum Wages Act, 1949, the Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976; and
4. Labour Code on Occupational Safety, Health & Working Conditions.

The code that is likely to come into effect soon is the Code of Wages, 2017 (“Wage Code”). It is anticipated that the Government was working towards having the Wage Code passed in the lower house (Lok Sabha) of Parliament in the budget session and this might be taken up in the next session of Parliament.

National Employment Policy: The Government of India has proposed the introduction of a National Employment Policy to address the growing rate of unemployment in India. The proposed aim of the National Employment Policy is to create a comprehensive action plan to ensure that quality jobs are created across various sectors. It appears that this would be done by incentivizing employers to hire, by allowing relaxations in employment law compliances or bearing a part of the cost for social security payments.

LGBTIQ Rights: The Supreme Court of India, in its landmark judgment in August 2017, observed that the right to privacy and the protection of sexual orientation lie at the core of the fundamental rights guaranteed by Articles 14, 15 and 21 of the Indian Constitution. Further, the Supreme Court on January 8, 2018, stated that it would review its position on Section 377 of the Indian Penal Code, 1860, i.e., the criminalization of sexual intercourse between consenting adults of the same sex. With respect to transgender persons, the Transgender Persons (Protection of Rights) Bill, 2016, inter alia, seeks to prohibit the discrimination of transgender persons in terms of employment, healthcare services and access to facilities.

Law Governing Factories: Amendments to the Factories Act, 1948, has been in the pipeline for the past two years. The amendments are primarily aimed at allowing the state government to increase the number of overtime hours that employees can work and prescribe rules in relation to exemptions that could be given to various categories of employees. These measures would allow flexibility to State Governments to undertake initiatives to encourage the development of industries.

Changes to the Law on Contract Labour: The Government has released a draft bill for the amendment of the law governing the engagement of contract labour in India – the Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”). The bill primarily intends to exclude workers who are regularly employed in the establishment of the contractor from the definition of the term ‘contract labour’ for the purposes of the CLRA.

2018 Budget Proposals to Provident Fund Contributions: The Finance Minister in his 2018 Budget speech has proposed that the Government will make provident fund contributions of 12 percent of wages for new employees for a period of three years and reduce the mandatory contribution limit from 12 percent to 8 percent for women employees for the first three years of employment. We would, however, have to wait for amendments to be made to the Employees Provident Funds and Miscellaneous Provisions Act, 1952, and allied schemes, to understand the manner in which these proposals will be implemented.

Most Indian employment laws were drafted primarily for traditional models of workforce engagement in sectors such as manufacturing and infrastructure. These laws are failing to keep pace with the needs of new and emerging sectors that are driven by cutting edge technology, increased automation and creative forms of workforce engagement, including gig/on-call working. While the above reforms are much needed, standing at the threshold of the artificial intelligence revolution, India needs to relook at its employment laws to ensure that businesses are not constrained, innovation and entrepreneurship are encouraged and employee rights are not compromised.

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Labour welfare fund is a statutory contribution managed by individual state authorities. The state labour welfare board determines the amount and frequency of the contribution. The contribution and periodicity of remittance differs with every state. In some states the periodicity is annual (Andhra Pradesh, Haryana, Karnataka, Tamil Nadu etc) and in some states it is to be contributed during the month of June & December (Gujarat, Madhya Pradesh, Maharashtra etc).

What is Labour Welfare Fund?

Labour welfare is an aid in the form of money or necessities for those in need. It provides facilities to labourers in order to improve their working conditions, provide social security, and raise their standard of living.

To justify the above statement, various state legislatures have enacted an Act exclusively focusing on welfare of the workers, known as the Labour Welfare Fund Act. The Labour Welfare Fund Act incorporates various services, benefits and facilities offered to the employee by the employer. Such facilities are offered by the means of contribution from the employer and the employee. However, the rate of contribution may differ from one state to another.

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No adult shall be employed or allowed to work about the business of an establishment for more than nine hours on any day or 48 hours in any week and the occupier shall fix the daily periods of work accordingly.

Provided that during any period of stock taking or making of accounts or any other purpose as may be prescribed, any adult employee may be allowed or required to work for more than the hours fixed in this section, but not exceeding 54 hours in any week subject to the conditions that the aggregate hours so worked shall not exceed 150 hours in a year.

Provided further that advance intimation of at least three days in this respect has been given in the prescribed manner to the Chief Inspector and that any person employed on overtime shall be entitled to remuneration for
such overtime work at twice the rate of his normal remuneration calculated by the hour.

Also Read :

• How to Check Your PF Statement
• Can Companies Force Employees to Serve Notice Period?
• How to Sue an Employer for Wrongful Termination ?

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What does law say about the pension policy for employees?

In India there is an Act called as The Employees’ Pension Scheme, 1955 which is applicable to all factories and other establishments to which the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 applies. This Scheme is meant for members of the Provident Funds subscribing to Employees’ Provident Fund Scheme, 1952 or any scheme exempted thereunder. The pension policy is introduced as a social policy to the employees to survive their livelihood after the age of retirement. This is a social benefit by which the employees do not need to worry about their sustenance in their later stage of live.

What are the eligibility criteria for availing this facility of pension?

There are two forms of membership availability under the scheme:

• • Membership of the scheme under The Employees’ Pension Scheme, 1955 is compulsory for – All Provident Fund subscribers including those employed in Exempted Establishments contributing to the Employees’ Family Pension Scheme 1971, and – To all new entrants to the Provident Funds Scheme, 1952 from November 16, 1995 onwards, automatically become members of the Employees’ Pension Scheme.

• Membership under the scheme is also available on Optional basis – Existing members of exempted and un-exempted Provident Fund Scheme as on November 15, 1995 who are not members of the Family Pension Scheme, 1971. – Members of the Family Pension Scheme, 1971 who left employment between April 1, 1993 to November 15, 1995 whether they have withdraw their benefits of not. – Beneficiaries of Family Pension Scheme, 1971 who have died on or after April 1, 1993.

What are the benefits available to members under this Scheme?

The benefits that are provided to the members under the Employees’ Pension Scheme, 1995 are:

• Pension Payment for life on Retirement/Superannuation.
• Pension Payment for life on invalidation during employment.
• Lump sum amount payment to the member by way of commutation of Pension upto one third pension amount on optional basis.
• Capital return in option formula basis upon cessation of members pension payment.

What are the benefits available to family members upon death of the member?

The benefits that are provided to the family members upon the death of the member are as follows:

• • Payment of pension to spouse for life or until remarriage.
  • Payment of pension to children (two at a time) till they attain the age of 25 years additionally along with pension payment to spouse. For total and permanently.
  • Orphan Pension to children at higher rate upon cessation of Pension Payment to spouse.
  • To Nominee / Dependant parents for life in case member is unmarried or having no eligible family member.

What are the causes of death that are covered under the scheme for members for eligibility for payment of pension after death?

The scheme covers members death risk unconditionally – irrespective of whether such death occurs:

• While in service.
• Away from employment and not contributing to the fund, or
• After retirement as a pensioner.

Is there a provision facilitating benefits for seasonal or casual employees under the scheme?

 There are following provisions that are specified to facilitate the seasonal or casual employees:

• Employees engaged seasonally in any establishment, the period of “actual service” in any year, notwithstanding that such service is less than a year, shall be treated as full year.
• Pensionable salary will be worked out “Notionally” for full month in the event if drawal of salary for a part of the month.
• Pensionary benefits shall be extended to the members without co-relating compliance by the employer of the establishment

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The Ministry of Labour and Employment, Government of India has, with effect from 1 September 2014, brought into force several important amendments to the schemes framed under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”) i.e. (i) The Employees’ Provident Funds Scheme, 1952 (“PF Scheme”); (ii) The Employees’ Pension Scheme, 1995 (“Pension Scheme”); and (iii) The Employees’ Deposit-linked Insurance Scheme, 1976 (“Insurance Scheme”).

Key Amendments

PF Scheme

• • The definition of ‘excluded employee’ has been amended whereby the members drawing wages exceeding INR 15,000 per month are excluded from the provisions of the PF Scheme. Accordingly, the wage ceiling for an employee to be eligible for the PF Scheme has been increased from INR 6,500 per month to INR 15,000 per month.

Pension Scheme

• New members (joining on or after 1 September 2014) drawing wages exceeding INR 15,000 per month shall not be eligible to voluntarily contribute to the Pension Scheme.
• The maximum pensionable salary for the purpose of determining the monthly pension has been revised from INR 6,500 to INR 15,000 per month.
• The pensionable salary shall be calculated on the average monthly pay for the contribution period of the last 60 months (earlier 12 months) preceding the date of exit from the membership.
• The monthly pension for any existing or future member shall not be less than INR 1,000 for the financial year 2014-15.

Insurance Scheme

• The contribution payable under the Insurance Scheme shall now be calculated on a monthly pay of INR 15,000, instead of INR 6,500.
• In the event of death of a member (on or after 1 September 2014), the assurance benefits available under the Insurance Scheme has been increased by twenty percent (20%) in addition to the already admissible benefits.

Implications of the Amendments

The amendments to the three schemes by the Government of India, post the proposal made by the Union Minister of Finance in his Union Budget speech (for the financial year 2014-2015), have enhanced the applicability, scope and benefits provided to employees under the EPF Act. However, at the same time, it has also increased the liability of the employers who would now be responsible to enroll additional eligible employees and to contribute on the increased statutory wage ceiling.

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ESIC scheme was inaugurated in Kanpur on 24^th February 1952 (ESIC Day) by then Prime Minister Pandit Jawahar Lal Nehru. The venue was the Brijender Swarup Park, Kanpur and Panditji addressed a 70,000 strong gathering in Hindi in the presence of Pt. Gobind Ballabh Pant, Chief Minister Uttar Pradesh, Babu Jagjivan Ram, Union Labour Minister, Raj Kumari Amrit Kaur, Union Health Minister, Sh.Chandrabhan Gupt, Union Food Minister and Dr.C.L.Katial, the first Director General of ESIC.

ESIC scheme was simultaneously launched at Delhi as well and the initial coverage for both the centers was 1,20,000 employees. Our first Prime Minister was the first honorary insured person of the Scheme.

The Employees’ State Insurance Scheme is an integrated measure of Social Insurance embodied in the Employees’ State Insurance Act and it is designed to accomplish the task of protecting ‘employees‘ as defined in the Employees’ State Insurance Act, 1948 against the impact of incidences of sickness, maternity, disablement and death due to employment injury and to provide medical care to insured persons and their families. The ESI Scheme applies to factories and other establishment’s viz. Road Transport, Hotels, Restaurants, Cinemas, Newspaper, Shops, and Educational/Medical Institutions wherein 10 or more persons are employed. However, in some States threshold limit for coverage of establishments is still 20. Employees of the aforesaid categories of factories and establishments, drawing wages upto Rs.15,000/- a month, are entitled to social security cover under the ESI Act. ESI Corporation has also decided to enhance wage ceiling for coverage of employees under the ESI Act from Rs.15,000/- to Rs.21,000/-.

The ESI Scheme is financed by contributions from employers and employees. The rate of contribution by employer is 4.75% of the wages payable to employees. The employees’ contribution is at the rate of 1.75% of the wages payable to an employee. Employees, earning less than Rs. 137/- a day as daily wages, are exempted from payment of their share of contribution.

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In this article, we will try and set down the manner and procedure for termination of service, and the monetary entitlements thereto.

‘Workman’ and ‘Non-workman’

Employees in India are generally categorized as a ‘workman’ or a non-workman. The term ‘workman’ has been defined under the Industrial Disputes Act, 1947 (“ID Act”), and would inter-alia mean all persons employed in any industry but does not include an employee who is in a managerial, administrative or supervisory role. Apart from the definition under the ID Act, there is no set formula to distinguish between a workman and a non-workman, and the position has been tested and established through various judgments, depending upon the nature of work being carried out by an employee.

An employee who is considered to be a workman will be governed by the ID Act, and their termination of service will have to be in accordance with the provisions of the ID Act.

Types of Termination of employment

Termination of employment may take place due to misconduct, discharge or retrenchment.

Misconduct

Termination of employment can be for misconduct, for which the employer is required to conduct disciplinary proceedings. The procedure to terminate an employee in India, for conducting a disciplinary proceeding has been set out under the law. It includes constituting and having a disciplinary panel, serving a show cause notice to the errant employee, and giving the employee a reasonable chance to put forth his defense. Proceedings have to be conducted in a fair manner, keeping in mind principles of natural justice.

In some cases, the outcome of the disciplinary proceeding may justify dismissal without notice, and any compensation. Under law, the term misconduct provides a list of circumstances and events which would amount to misconduct. It is an inclusive list, and hence, employers have the right to include in their company policies/ service rules, such other events, as it may deem fit, which would in their line of business, amount to misconduct. Misconduct includes wilful insubordination or disobedience; theft, fraud or dishonesty; wilful damage or loss of employer’s property; bribery; habitual lateness or absence; striking unlawfully and sexual harassment.

The aforesaid procedure for termination will apply to all employees whether workman or non-workman.

Discharge

The termination of employment of employees who are not workman are governed by the notice period in their employment contract, and the shops and establishment act (“S&E’”) of the State in which they work. Generally, the State S&E’s provide for at least one month’s notice of termination, or pay in lieu of termination, and in some instances, termination needs to be with cause, and in some other cases, the employer needs to pay compensation for terminating the employment. The notice of dismissal under an employment contract should not be less favourable than what is prescribed under law.

Retrenchment

The Industrial Dispute Act sets out the steps to be undertaken for retrenchment. The term retrenchment has been defined to mean termination by the employer of employment of a worker for any reason, other than disciplinary grounds, with certain exceptions.

An employer who proposes to retrench a workman, who have been continuously employed for more than one year, must give one month’s notice (together with the reason for the retrenchment) or pay in lieu of such notice to the workman. The employer must also inform the local labour authorities of the retrenchment within a stipulated time frame.

Rules for Retrenchment Compensation

Additionally, employers are also obliged to apply the “last in-first out” rule in selecting the workman for retrenchment except for reasonable cause. A retrenched workman is entitled to retrenchment compensation as per the provisions of the ID Act, which is calculated at the rate of 15 days wages for every year of continuous service. Certain establishments (factories, mines, plantations) employing over 100 workers may not be retrenched unless three months’ written notice, stating reasons for the retrenchment, or pay in lieu of notice, is given to the worker. Furthermore, prior approval from the relevant governmental authority must be taken before the retrenchment is made.

Severance Pay

Upon termination of employment of any employee, the employer is required to clear all dues, which are payable to the employee at the time of the termination. Some of these payments are as follows:

1. Notice pay, where notice of termination has not been given;
2. Salary for the days worked, but not paid for, during the month where the employee has been terminated;
3. Payment of gratuity for employees who have completed at least 5 years of service, in terms of the Payment of Gratuity Act 1972. This act is applicable to establishments which have 10 or more employees. The gratuity is calculated at 15 days salary for every completed year of service;
4. Leave encashment, for the leaves accrued, but not used by the exiting employee;
5. Statutory bonus, if the employee is eligible for the same. Employees who are earning up to Rs. 10,000 per month and who has worked in an establishment for not less than 30 working days in a financial year will be entitled to statutory bonus under the Payment of Bonus Act, 1965;
6. Retrenchment compensation, if the employee is a workman, and his services have been retrenched;
7. Such other dues that may have been contractually agreed between the employer and the employee, or is payable under the employer’s company policies;
8. Assist the employee in making applications to the appropriate authority, for withdrawal of the provident fund dues, accumulated to the credit of the existing employee.

There may be other dues payable, and such will vary from employment to employment.

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What is ‘sexual harassment’?

Is this Act only for women?

Yes, this Act is only for women who are sexually harassed in workplaces.

Is this Act only for working women?

No, this Act is for any woman who is harassed in any workplace. It is not necessary for the woman to be working at the workplace in which she is harassed. A workplace can be any office, whether government or private.

As an employer, what do you have to do under this law?

• You need to set up an ‘Internal Complaints Committee’ if you employ more than 10 people to handle cases of sexual harassment at your workplace.
• In case your workplace has more than one office or unit, then there should be an Internal Complaints Committee in each branch.

There is no sexual harassment at my office. Do I still have to follow the instructions regarding setting up an Internal Complaints Committee?

Yes, even if there are no cases of sexual harassment at the moment, it is still necessary for the committee to be set up (if you employ more than 10 workers) and for all rules to be followed.

Am I not allowed to approach the police and courts because of this Act?

No, the Act gives you a choice between dealing with the offender within the office or approaching a court. If you wish, you can file a criminal complaint instead of approaching your Internal/Local Complaints Committee.

What if the victim makes a wrong complaint because she does not like the offender?

If the Committee finds that the woman (or her representative) made a wrong complaint because she does not like or hates the offender or that she gave them fake documents, it can ask the employer or District Officer to take action against the woman or person according to the service rules of the workplace. If there are no service rules, action can be taken in any manner recommended by the Committee (Rule 10 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013). This can be by way of:

How will the Committee decide whether the complaint is false?

• If the victim is unable to provide enough proof to the Committee, it does not automatically make her complaint false.
• The Committee will have to conduct an inquiry to find out if she made a wrong complaint on purpose.
• Example: If there is a complaint initiated by Isha against Rohit but there are no witnesses or documents or any indication whatsoever that there was sexual harassment, then this will not be regarded as a false complaint. However, if Isha wrote an email where she told a friend she was lying, this may be a malicious or false complaint.

What happens if witnesses give false accounts?

If the Committee finds that a witness has told them things that did not happen or given fake documents, it can recommend to the employer or District Officer that action be taken according to the service rules. If there are no service rules, the government can make additional rules for this purpose.

Can any information about the complaint or the inquiry be made public?

No. It is unlawful to publish any information relating to a sexual harassment complaint under this law to the media. This information includes any details of the victim, offender and witnesses, the settlement or inquiry proceedings and the Committee recommendations.Committee recommendations and settlements can be published so long as there is no information in there which can identify the victim or witnesses.Example:If Rohit is found guilty of harassing Isha, none of the information relating to their identities and contact details can be made public. However, the recommendations of the Committee which required Rohit to formally apologise to Isha and leave the organization can be made public. This information can be made public without disclosing Rohit or Isha’s names or other details.

Can a case under this Act be taken to Court?

No, no case can be taken to Court unless the victim herself or the Committee files a case before the Court.

Which Court can hear this case?

Any court, as long as it is a Metropolitan Magistrate or a Judicial Magistrate of the first class or above.

Can someone be arrested without a warrant under this Act?

No, a warrant is required for arrest.

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