NGO Whether An Industry - CiteHR
Madhu.T.K
Industrial Relations And Labour Laws
K C S Kutty
Labour Laws
+2 Others

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Hi,
One of my friends is associated with an NGO registered with the Charity Commissioner,and mainly involved in community development activities. The activities include, running a pre-primary school, village health social activities,a technical school on House wiring and Two wheeler repair course, counselling cell for affected persons, and slum development work. An employee working as a Driver in the project was terminated as per contractual clause. He has approached the Government Labbour Department alleging unfair termination. His contention is that he is a workman under the provisions of ID Act.
The Government Labour Offficer appears inclined to accept this contention.
I would like to know if there are any decided cases by the Courts on the subject.
Cyril

An organisation registered as charitable under any trust or as a society will fall under the purview of ID Act if there are activities which call for employment of workmen. If the technical schools are to be out of the purview of ID Act by means of registration as charitable or non profit establishments, the entire employees of schools will be out of purview of minimum wages, EPF etc, because all or 99% of schools are non profit organisations in paper. Registration as charitable or NGO should not be a defence to exploit employees and deter their rights under the EPF Act, ESI Act, Minimum Wages Act, Gratuity Act or ID Act.
Regards,
Madhu.T.K

Dear Cyril,

You have to ensure whether your institution comes under the definition of industry. The existing definition under Section 2(j) is not valid since the Supreme Court has defined it in the case Bangalore Water Supply and Sewerage Board v. A. Rajappa. The subsequent brought into the Act in 1982 is not notfied.

As such "any systematic activity" "carried on with the cooperation of employer and employees" "for satisfying human needs and wants" ( with exception of spiritual needs) is coming under the definition of Industry. Hence your organisation comes under the definition of industry.

Regarding the termination of employment, you may please go through Section 2 (OO) (bb) which reads " termination of the service of the workman as a result of the non renewal of the contract of employment between the employer and the workman on its expiry or of such contract being terminated under a stipulation in that behalf contained therein" does not amount to retrenchment.

If the employment of the Driver is terminated as a result of non renewal of the employment contract or any stipulation under the contract, he cannot have any grievance. You may present this view before the Conciliation Officer. You must attend conciliation other wise matter may be referred to adjudication.

Dear Cycil,
One more clarification. Driver is a workman under the ID Act 1947. His contention is right. However, he cannot have a legal grievance for non renewal of employment contract. Only to prevent such instances, Section 2 (OO) Sub section (bb) was inserted in the Act in the year 1984 w.e.f. 18.8.1984.

Many thanks for your views. I am now trying to find out if there are any decided cases by the Courts, particularly about the applicability of the Act on the NGOs. I am grateful for your views. Cyril
Hello Mr Madhu & Kutty,
Can Housing Societies deemed as Employers if they hire maintenance / security staff directly? Is so what are the liabilities on the Society - if less than 20 labourers are employed?
Awaiting your response.
thanks & regards,
mims

Housing Society will fall under the State's shops and Establishments Act. As such all provisions there in will be applicable to the society. If the number of employees does not exceed twenty, then EPF and ESI will not be applicable.
Regards,
Madhu.T.K

Dear mims,

I have asked a clarification on your same query of 16th October 2009 same day. I have not seen any response from you. Now since you have asked this question directly to Mr Madhu and me, and Mr Madhu has already given the right reply. I just want to add one more point. For availing some concessions in payment of stamp duty etc. ( As mentioned in the Chapter " State Aid to Cooperatives" in the Cooperative Societies Act applicable to your State), your society must have been registered under the State Cooperative Societies Act. This gives a legal status of body corporate. There are different types of housing cooperatives.

Since your society engaging employees for carrying out the maintenance work, you have to register under the State Shops and Commercial Establishment Act. This is only to regulate the service conditions, working hours, leave, etc. of employees. You have to apply for registration within 30 days of commencement of functioning of the establishment. and in December, you have to renew it and you have to pay an annual fee for the institution and fees per employee. Fees has to be paid in advance for one year or three years. Since your "location" is not known" I cannot say the exact amount period for which you can pay advance fee.

To my knowledge, in Kerala Cooperative Societies are not exempted from registration and payment of fees, they may be exempted in maintaining registers as per the Shops Act, since they are maintaining records as per the provisions of Cooperative Societies Act. Mr Madhu may be able to clarify the position in Kerala.

Hi I want to know if charitable organisation are eligible for pf if yes then what are its implication?. With Regards Kirti Arora
With reference to the contention that a housing society would come under the Shops and Establishment Act, could you please support the statement with case law?
The Shops and Establishments Act has been held to be applicable to educational institutions at the very most but I have not come across any material to suggest that a housing society would also be covered by it
thanks
ks

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