Dear All

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

What can keep Staffing Companies secure from litigation wherever a claim is received from the Temporary Employee ?

At the first instance when Legal notice or claim is received from the temporary Employee without waiting for the Client to take a stand work out a settlement with the candidate in compliance of Legal Provisions of Sec 25(F) of the Industrial Disputes Act and corresponding provision of the Shops and Establishments Act.

This is where specialist legal advice is required .The problem will be solved then and there.Due to the monetary factor involved as to who is to bear the liability whether Client or the Staffing Company the matter gets dragged to Court and Staffing Companies will have to pay through their nose. In cases where the Client is made to bear the liability the Staffing Entity will lose the business.

With Regards

V.Sounder Rajan

Advocates & Notaries -Legal Consultants

E-mail : rajanassociates@eth,net,

.
23rd July 2011 From India, Bangalore
Dear All

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

The Supreme Court on 14-12-2010 in the matter of General Manager (OSD), Bengal Nagpur Cotton Mills Rajnandgaon Vs. Bharat Lal & anr decided has laid down the law on Two of the well-recognized tests to find out whether the Contract Labour are the direct employees of the principal employer are

(i) Whether the Principal Employer pays the salary instead of the contractor; and

(ii) Whether the Principal Employer controls and supervises the work of the employee.

Now it is therefore for the Principal Employer [Client] and Contractor [Staffing Company] to avoid the risk of the Contract Employees being termed as Direct Employees of the Principal Employer [Client].

This is definitely a Grey area where Specialist Legal advice will be required for the Staffing Companies on a continuing basis .Top Management of every Staffing Company needs to have a compliance Audit on applying the test enunciated by the Apex Court on each and every contract.

On the other side Principal Employers also need to conduct a similar Compliance Audit for availing a 100 % compliance by their Contract so that unwittingly they are not caught napping and running the risk of the Contract Employees being termed as Direct Employees of the Principal Employer [Client].

With Regards

V.Sounder Rajan

Advocates & Notaries -Legal Consultants

E-mail : rajanassociates@eth,net,


27th July 2011 From India, Bangalore
Dear All

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

Mere filing of an Appeal before the Appellate Authority will not operate as Stay of Recovery of EPF dues.

EPF Organization has come out with this Important Circular

EMPLOYEES’ PROVIDENT FUND ORGANISATION
(Ministry of Labour & Employment, Govt. of India), Head Office – Bhavishya Nidhl Bhawan, 14, Bhlkaiji Camaji Place, New Delhi – 110 066.

LC/4/Cir. Judgement/2011/ 19184 dated 25/07/2011

Sub: Forwarding of landmark judgment delivered by Hon’ble Division Bench of Gujarat High Court in LPA No. 12/2010 in SCA No. 3347/2009 reg.

Sir,

Please find enclosed herewith a copy of judgment dated 15/6/2011 delivered by Hon’ble Division Bench of Gujarat High Court in the matter of EPFO Vs. Rollwell Forge Ltd. on the issue of initiating recovery action before expiry of limitation period of appeal prescribed under Sec.7-1 of the Act. While overturning the decision of Single Bench,
Hon’ble Division Bench has held that:

I. In the absence of any specific provision in the Act prohibiting or restraining the authorities from taking any further action of recovery of the amount due and payable by the employer, it is always permissible for the authorities to proceed ahead without waiting for the expiry of the statutory time period of appeal as provided under Section 7-1 of the Act. Any other interpretation in this regard would render provisions and the object of the Act otiose.

2. Mere filing of appeal without obtaining any relief from the Appellate authority shall not preclude or prohibit the authorities to proceed further in the matter for recovery of the amount.

The above judgment may be utilized for expediting recovery action and relied upon in similar situation cases.

End: As above

Yours faithfully,
(Anils S. Dixit)
Regional PF Commissioner-I(Legal)

For Staffing Entities the High Court apart from laying down the law that mere filing of appeal without obtaining any relief from the Appellate authority shall not preclude or prohibit the authorities to proceed further in the matter for recovery of the amount the Circular has also a serious impact on Staffing Companies as immediately on fixation of the liability the Department can also go for recovery action as in the absence of any specific provision in the Act prohibiting or restraining the authorities from taking any further action of recovery of the amount due and payable by the employer, it is always permissible for the authorities to proceed ahead without waiting for the expiry of the statutory time period of appeal as provided under Section 7-1 of the Act.

With Regards

V.Sounder Rajan

Advocates & Notaries -Legal Consultants

E-mail : rajanassociates@eth,net,

2nd August 2011 From India, Bangalore
Dear All

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

PF Department has recently come out with the following Circular:

EMPLOYEES’ PROVIDENT FUND ORGANISATION
(Ministry of Labour & Employment, Govt. of India), Head Office
Bhavishya Nidhl Bhawan, 14, Bhlkaiji Camaji Place, New Delhi – 110 066.

No. Coord./4(6)2003/Clarification/Vol.II/2482 Dated: 21.06.2011

Sub: Forwarding of Landmark Judgment delivered by the Hon’ble Division Bench of Madhya Pradesh High Court on the issue of considerable components of Basic Wages – regarding

Sir,

Please find enclosed herewith a copy of Judgment dated 24.03.2011 in the matter of Montage Enterprises Pvt. Ltd versus Employees Provident Fund, Indore & one another delivered by the Hon’ble Divisional Bench of Madhya Pradesh High Court Bench at Gwalior whereby, the Hon’ble Court has laid down a principle for treatment of certain allowances like Conveyance/Transportation allowance, Special Allowance etc. as component of “Basic Wages” for the purpose of Provident Fund liabilities if the same are being paid uniformly, necessarily and ordinarily to all employees. The same may be utilized as per merits of the case.
Yours faithfully
End: As above.
(Anita S. Dixit)
Regional PF Commissioner-I (Coord.)

Staffing Entities need to adhere to this dictum of Hon’ble Divisional Bench of Madhya Pradesh High Court Bench at Gwalior whereby, the Hon’ble Court has laid down a principle for treatment of certain allowances like Conveyance/Transportation allowance, Special Allowance etc. as component of “Basic Wages” for the purpose of Provident Fund liabilities if the same are being paid uniformly, necessarily and ordinarily to all employees apart from laying down the law .

The Department can re-open the Returns for earlier period of non compliance and the penal provisions will be incurred.

The rate of penal damages for belated payment of EPF dues is as follows:

If the period of default less than 2 months -5 %
If the period of default is 2 months above but less than 4 months – 10 %
If the period of default is 4 months above but less than 6 months – 15 %
If the period of default is 6 months above–25 %

The above is in addition to 12 % simple interest .

Apart from the above the further consequences for default are:

Attachment of Bank Accounts

Realization of dues from Debtors[ Garnishee Order]

Attachment of moveable and immovable properties.

Arrest and detention in Prison.

Action under section 406/409 of the Indian Penal Code[ Criminal Law] and Section 110 of Cr .P.C

Prosecution.Prosecution for Non payment of contributions normally end in favour of the Department.Mandatory punishment of detention in Prison is provided .

Managing Director or CEO of Staffing entities on their part need to direct their Head of Compliance to file adherence reports on the Circular issued by the Department and arrange for a Board of Directors directed Compliance Audit on the following EPF Circulars :

1. No.: Coord/4(6)2003/Clarification/Vol-II/ Dated: 23-05-2011
2. No. Coord./4(6)2003/Clarification/Vol.II/2482 Dated: 21.06.2011

If a negative report on compliance of the above EPF Department Circulars is indicated by the Board directed compliance Audit Team then immediate remedial action is to be taken to avoid penal action by the Department.

With Regards

V.Sounder Rajan

Advocates & Notaries -Legal Consultants

E-mail : rajanassociates@eth,net,

8th August 2011 From India, Bangalore
Dear All

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Clients want the Staffing Entities you to Hire and fire? Is it possible?

Yes when Staffing Companies have their Associates on their permanent rolls and can be moved from one Client to another .This is a long shot. In the present Industrial Law scenario this is not feasible. The Indian Staffing Industry should aim for this.

In that scenario the Staffing Entity can have the following dedicated class of workmen/Staff on their pay roll coming within the following parameters

Classification of workmen.--(a) Workmen /Staff shall be classified as --

(1) permanent,

(2) Probationers,

(3) badlis,

(4) temporary,

(5) casual,

(6) apprentices.

(b) A “permanent workman” is a workman who has been engaged on a permanent basis and includes any person who has satisfactorily completed a probationary period of three months in the same or another occupation in the industrial establishment, including breaks due to sickness, accident, leave, lock-out, strike (not being an illegal strike) or involuntary closure of the establishment.

(c) A “probationer” is a workman who is provisionally employed to fill a permanent vacancy in a post and has not completed three months’ service therein. If a permanent employee is employed as a probationer in a new post he may, at any time during the probationary period of three months, be reverted to his old permanent post.

(d) A “badli” is a workman who is appointed in the post of a permanent workman or probationer who is temporarily absent.

(e) A “temporary workman” is a workman who has been engaged for work which is of an essentially temporary nature likely to be finished within a limited period.

(f) A “casual workman” is a workman whose employment is of a casual nature.

(g) An “apprentice” is a learner who is paid an allowance during the period of his training.

The Recruitment of personnel for deputation for the Staffing Entity should be on the above classification and the letter of Appointment [LOA] needs to be issued on the classification. The terms of Termination needs to be embedded in the LOA .Of course specialist legal help will be required to mould the Hiring and Firing process.

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684-9025792634
13th August 2011 From India, Bangalore
Dear HR Professionals

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Recently the Gujarat High Court in the case of Medical vs Dashrathsinh decided on 10 May, 2011 has held

“If the workman is retrenched by an oral order or communication or he is simply asked not to come for duty, the employer will be required to lead tangible and substantive evidence to prove compliance of Clauses (a) and (b) of Section 25-F of the Act.”

The above reference is to the Industrial Disputes Act .Therefore Staffing Industry Professionals need to impress upon their Clients not to indulge in the practice of oral order or communication of termination of the Temporary Employee without getting clearance from them for termination as the burden of proof of Statutory Compliance would rest on the Employer. In case the Staffing Company points out the hand to the Client then the Principal Employer will become liable to compensate the Staffing Company for any out flow .Of course in such a scenario the Staffing Company may lose the Client .In the context of Staffing Companies working on wafer thin margins the liability arising on the Staffing Company by Client generated retrenchment arising out of an oral order or communication will eat into their Margins and ultimately claims emerging out of illegal retrenchment arising out of an oral order or communication may result in the Staffing Contracts ending with minus margins.

The success of a Staffing Company is to anticipate contingencies of illegal retrenchment arising out of an oral order or communication by Client and include clauses in the Staffing Contract to pass on the liability to the Client. For this the Staffing Company needs to have well tailored Staffing Contracts with a solid legal foundation.

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684-9025792634
22nd August 2011 From India, Bangalore
Dear All The Tamil Nadu Govt has come out with amendments to the State CLRA Rules . Pls see the Attachment .Compliance of the rules is necessitated for the Staffing Industry. rajanlawfirm
25th August 2011 From India, Madras

Attached Files
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File Type: pdf CONTRACT ACT NOTIFICATION AUG'11.pdf (30.8 KB, 105 views)

Dear All

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

In our recent post we had highlighted the need for the Staffing Entity to comply with Sec 25 F of the Industrial Disputes Act while retrenching a Temporary Employee by an oral order or communication or he is simply asked not to come for duty, the employer will be required to lead tangible and substantive evidence to prove compliance of Clauses (a) and (b) of Section 25-F of the Ac as decided by the Gujarat High Court in the case of Medical vs Dashrathsinh decided on 10 May, 2011.

There is a request from an experienced Staffing Professional from one of the prime players in the Industry to highlight the relevance of Section 25 F of the ID Act vis-a-vis the Staffing Industry .The same is dealt with in this post:

For Compliance of Sec 25 F of the ID Act the following is to be done :

i. The employee of the Staffing Entity sent for work to the Client on oral or verbal termination by the Client or Staffing Entity must be given a one month's notice in writing, indicating the reasons for retrenchment. The retrenchment can take effect only after the notice period has expired, or if the employee of the Staffing Entity sent for work to the Client on oral or verbal termination by the Client or Staffing Entity has been paid wages in lieu of such notice.

ii. The employee of the Staffing Entity sent for work to the Client on oral or verbal termination by the Client or Staffing Entity must be paid, at the time of retrenchment, compensation, which is equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months.

iii. A notice must be served in the prescribed manner, on the appropriate Government. (Section 25F of the ID Act).It has become a practice in the Industry to dispense with this Notice.Government can take steps to delete this provision .

Absolutely it is a water tight process and a safeguard for avoidance of wrongful Termination claims/litigation arising out of on oral or verbal termination by the Client or Staffing Entity .In the field you will find Clients will hesitate to minimum provide the 15 days’ notice for terminating the candidate.

Developing a well secured Exit/termination Policy for any Staffing Company is an intangible asset and a Marketing advantage .

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684.
27th August 2011 From India, Bangalore
Dear All

LEGAL UPDATE -EPF prosecution statistics

The Minister of State for Labour and Employment Shri Mallikarjun Kharge in reply to a question in the Lok Sabha during August 2011 has provided the following :

As per the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, it is mandatory for the establishments covered under the Act to submit the Provident Fund returns as per the time stipulated in this respect. However, there are cases where the management of various companies do not submit returns or submit the returns after due dates. As a result, the workers become victims as they do not get up-to-date statement of their Provident Fund accounts in the form of account slips in time.



LIST OF COMPANIES (STATE-WISE) WHERE PF RETURNS ARE PENDING



S. No. Name of the State No. of establishments defaulted in submission of PF returns

1. Andhra Pradesh 20213

2 Bihar 927

3. Chhattisgarh 570

4. Delhi 11842

5. Goa 500

6. Gujarat 6165

7. Haryana 4508

8. Himachal Pradesh 1230

9. Jharkhand 1573

10. Karnataka 8068

11. Kerala 3696

12. Madhya Pradesh 3489

13. Maharashtra 18666

14. North East Regions 78

15. Orissa 1780

16. Punjab 7285

17. Rajasthan 2237

18. Tamil Nadu 13734

19. Uttar Pradesh 8757

20. Uttaranchal 638

21. West Bengal 4209

TOTAL 120165



As per section 14(2) of the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 read with para 76 of the Employees’ Provident Fund Scheme, 1952 default in submission of return is a punishable offence and liable for prosecution.



The number of prosecution cases filed against chronic defaulting establishments including non-submission of returns are mentioned is given below:-



PROSECUTION CASES – AS ON 31.03.2010



Region EPF Emp- Pension ELDI

Dehradun 4 4 4

Delhi – North 382 264 210

Delhi – South 300 130 181

Chandigarh 424 251 452

Ludhiana 498 306 319

Shimla 75 0 0

Kanpur 152 45 40

Meerut 55 55 55

Patna 1546 1336 1336

Faridabad 334 302 296

Gurgaon 187 177 186

Jaipur 334 80 85

Ahmedabad 1419 216 203

Baroda 489 346 442

Indore 1378 1013 1412

Surat 369 161 167

Kandivali 517 77 76

Mumbai- I Bandra 657 327 344

Mumbai– II Thane 70 70 70

Nagpur 202 172 77

Pune 1270 1252 1272

Raipur 516 283 356

Bangalore 491 436 400

Gulbarga 549 370 353

Mangalore 561 243 248

Panaji 168 178 153

Peenya 178 178 175

Bhubaneshwar 906 477 617

Guntur 344 326 317

Hyderabad 2219 1780 1343

Nizamabad 178 149 139

Chennai 270 233 250

Coimbatore 640 303 306

Madurai 467 321 237

Tambaram 223 227 226

Thiruvananthapuram 1318 954 759

Guwahati 647 470 589

Jalpaiguri 838 838 838

Kolkata 1746 431 417

Ranchi 856 854 726

During the year 2010-11, 1,56,578 complaints were received of which 1,38,745 complaints were disposed off.

The Hon'ble Minister further stated that the Employees’ Provident Fund Organisation deals with the Employees Provident Fund (EPF) and not PPF. Rate of interest is declared on the basis of earnings and balance available in the Interest Suspense Account. Since balance in the Interest Suspense Account was sufficient to allow 9.5 percent rate of interest, hence 9.5 percent rate of interest was declared for the year 2010-11.

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684.
31st August 2011 From India, Bangalore
Subject - Latest supreme court decision on contract labour

Dear Friends

Here is the latest decision of the Hon'ble Supreme Court of India of their Lordships Markandey Katju, Chandramauli Kr. Prasad in the matter of Bhilwara Dugdh Utpadak Sahakari ... vs Vinod Kumar Sharma Dead By Lrs & decided on on 1 September, 2011 wherein the Honble Supreme Court was deciding an Appeal which had been filed against the impugned judgments dated 23.08.2004 and dated 21.09.2004 passed by the High Court of Judicature at Rajasthan.

The Apex Court has held as follows :

"This Appeal reveals the unfortunate state of affairs prevailing in the field of labour relations in our country. In order to avoid their liability under various labour statutes employers are very often resorting to subterfuge by trying to show that their employees are, in fact, the employees of a contractor. It is high time that this subterfuge must come to an end. Labour statutes were meant to protect the employees/workmen because it was realised that the employers and the employees are not on an equal bargaining position. Hence, protection of employees was required so that they may not be exploited. However, this new technique of subterfuge has been adopted by some employers in recent years in order to deny the rights of the workmen under various labour statutes by showing that the concerned workmen are not their employees but are the employees/workmen of a contractor, or that they are merely daily wage or short term or casual employees when in fact they are doing the work of regular employees. This Court cannot countenance such practices any more. Globalization/liberalization in the name of growth cannot be at the human cost of exploitation of workers. The facts of the case are given in the judgment of the High Court dated 23.08.2004 and we are not repeating the same here. It has been clearly stated therein that subterfuge was resorted to by the appellant to show that the workmen concerned were only workmen of a contractor. The Labour Court has held that the workmen were the employees of the appellant and not employees of the contractor. Cogent reasons have been given by the Labour Court to come to this finding. The Labour Court has held that, in fact, the concerned workmen were working under the orders of the officers of the appellant, and were being paid Rs 70/- per day, while the workmen/employees of the contractor were paid Rs. 56/- per day.

We are of the opinion that the High Court has rightly refused to interfere with this finding of fact recorded by the Labour court.

The Judgment of this Court in Steel Authority of India vs. National Union Waterfront Workers (2001) 7 SCC 1 has no application in the present case. In that decision the question was whether in view of Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970 the employees of contractors stood automatically absorbed in the service of the principal employer. Overruling the decision in Air India Statutory Corporation vs. United Labour Union, (1997) 9 SCC 377 this Court held that they did not.

In the present case that is not the question at all. Here the finding of fact of the Labour Court is that the respondents were not the contractor's employees but were the employees of the appellant. The SAIL judgment (Supra) applies where the employees were initially employees of the contractor and later claim to be absorbed in the service of the principal employer. That judgment was considerating the effect of the notification under Section 10 of the Act. That is not the case here. Hence, that decision is clearly distinguishable.

Mr. Puneet Jain, learned counsel for the appellant submitted that the High Court has wrongly held that the appellant resorted to a subterfuge, when there was no such finding by the Labour Court. The Labour Court has found that the plea of the employer that the respondents were employees of a contractor was not correct, and in fact they were the employees of the appellant. In our opinion, therefore, it is implicit in this finding that there was subterfuge by the appellant to avoid its liabilities under various labour statutes. For the reasons given above, there is no infirmity in the impugned judgment of the High Court. The Appeal is dismissed accordingly. No costs. "

This decision can be considered to be a landmark decision and importance need to be given to the finding in the Judgment of their Lordships "In order to avoid their liability under various labour statutes employers are very often resorting to subterfuge by trying to show that their employees are, in fact, the employees of a contractor. It is high time that this subterfuge must come to an end. Labour statutes were meant to protect the employees/workmen because it was realised that the employers and the employees are not on an equal bargaining position. Hence, protection of employees was required so that they may not be exploited. However, this new technique of subterfuge has been adopted by some employers in recent years in order to deny the rights of the workmen under various labour statutes by showing that the concerned workmen are not their employees but are the employees/workmen of a contractor, or that they are merely daily wage or short term or casual employees when in fact they are doing the work of regular employees. This Court cannot countenance such practices any more. Globalization/liberalization in the name of growth cannot be at the human cost of exploitation of workers.The facts of the case are given in the judgment of the High Court dated 23.08.2004 and we are not repeating the same here. It has been clearly stated therein that subterfuge was resorted to by the appellant to show that the workmen concerned were only workmen of a contractor. The Labour Court has held that the workmen were the employees of the appellant and not employees of the contractor. Cogent reasons have been given by the Labour Court to come to this finding. The Labour Court has held that, in fact, the concerned workmen were working under the orders of the officers of the appellant, and were being paid Rs 70/- per day, while the workmen/employees of the contractor were paid Rs. 56/- per day. "

HR Professionals need to take note of this Landmark decision ..

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684.
6th September 2011 From India, Bangalore
Hi, Please let me know what are the HR / LEGAL compliances involved in R&D companies, do we have to register under companies Act, kindly let me know.
8th September 2011 From India, Bangalore
Dear All

In one of our earlier posts we had highlighted the exemption provisions of the EPF Act which are once again highlighted :

Section 17 provides for it :

17. Power of exempt

(1) The appropriate government may by notification in the Official Gazette and subject to such conditions as may be specified in the notification exempt whether prospectively or retrospectively from the operation of all or any of the provisions of any Scheme :

(a) any establishment to which this Act applies if in the opinion of the appropriate government the rules of its provident fund with respect to the rates of contribution are not less favourable than those specified in section 6 and the employees are also in enjoyment of other provident fund benefits which on the whole are not less favourable to the employees than the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of similar character or

(b) any establishment are in enjoyment of benefits in the nature of provident fund pension or gratuity and the appropriate government is of opinion that such benefits separately or jointly are on the whole not less favourable to such employees that the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of a similar character :

Provided that no such exemption shall be made except after consultation with the Central Board which on such consultation shall forward its views on exemption to the appropriate government within such time limit as may be specified in the Scheme.

Sec 17 1 (a ) is with reference to exemption from PF Contribution and Sec 17 1 (b) is with reference to Pension and Gratuity.

A common question arises in preparing payroll of Temporary Employees by Staffing Entities whether exemption from coverage under EPF Act of any Temporary Employee is the right of the Staffing Company ?

Yes .But substantiating evidence by way of Documents has to provided to the EPF Department for claiming the exemption . Initially if the same is rejected by the Department then it is better to go in for the coverage thereby limiting the liability .Further the Delhi High Court in the case of J K COLLEGE OF NURSING & PARAMEDICALS Versus UOI & ORS decided on 24th May, 2011 by the Judgment of His Lordship Mr Justice RAJIV SAHAI ENDLAW, J.has held that if any establishment or employer claims to be not covered under the said Act, then it is for the employer to place sufficient cogent and convincing material before the designated authority in an enquiry under Section 7A of the Act, so as to satisfy the Authority with regard to non-applicability of the Act and further held that on failure to place any such material, the onus cannot be shifted on the EPF authorities to prove the applicability of the Act.

It was yet further held that the EPF authorities under no circumstances can be in possession of necessary records evidencing the extent of strength of employees in any particular establishment.

It was also held that in matters like this, the question of onus of proof is immaterial; the Provident Funds Commissioner is an authority created by the statute who has to administer the statutory provisions according to law and for this purpose he is entitled to collect material by resort to powers under various provisions of law including by examination of the books of accounts and others records of establishments.

Next time when any Employer is before the PF authority under Section 7 A the burden of proof is on the Employer and the Employer has to provide all details/ proof to claim exemption.Time need not be wasted to say the Authority has to prove their assertion.

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684.
11th September 2011 From India, Bangalore
Dear Friends

As per the ID Act Amendment Section 9 C was introduced .By that setting up of Grievance Redressal Machinery became a statutory need :

Section 9 C is extracted :

9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances.

(2) The Grievance Redressal Committee shall consist of equal number of members from the employer and the workmen.

(3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on rotation basis every year.

(4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:

Provided that there shall be, as far as practicable one woman member if the Grievance Redressal Committee has two members and in case the number of members are more than two, the number of women members may be increased proportionately.

(5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal Committee shall not affect the right of the workman to raise industrial dispute on the same matter under the provisions of this Act.

(6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party.

(7) The workman who is aggrieved of the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of Grievance Redressal Committee and the employer shall, within one month from the date of receipt of such appeal, dispose off the same and send a copy of his decision to the workman concerned.

HR professionals may provide their feedback in this thread on their experience in setting up this Grievance Redressal Machinery in their respective organization.

rajanlawfirm
15th September 2011 From India, Madras
Immediate question for Staffing Entities

Dear All

What can keep Staffing Entities secure from litigation?

At the first instance when Legal notice or claim is received from the Temporary Employee or his/her Advocate the Staffing Entity without waiting for the Client to take a stand work out a settlement with the Temporary Employee in compliance of Legal Provisions of Sec 25(F) of the Industrial Disputes Act and corresponding provision of the Shops and Establishments Act. Staffing Entities need to take specialist legal advice from their own Legal Department or outside Counsel .The problem will be solved then and there thereby saving huge outflow later.

Unfortunately due to the monetary factor involved as to whether the Staffing Entity or the Client is to bear the liability the matter gets dragged to Court.In fact Staffing Entities hesitate to portray the correct position to the Client for fear of losing business.This must be avoided.

On seeing the trend of the Court decision wherever proper Retrenchment compensation is paid at the time of retrenchment i.e when the Temporary Employee is fired the Employers have been protected.

But every Employer will learn the Hard way.For example if a Temporary Employee has worked for 3 years when he is fired the Temporary Employee ought to be given one months notice or pay together with 45 days salary as retrenchment compensation.But this will not be paid and he will be sent just like that.In the event of the Temporary Employee going to Court and the case is pending for 2 years and claims for re-instatement with back wages and wins the case then the Employer has to pay 2 years back wages together with the retrenchment compensation or even give the .By this time the Staffing Entity would have finished their Contract with the Client and the whole liability would be on their head.In fact by this settlement whatever the Staffing Entity earned in the whole Contract will be lost.

The success of Staffing Business is to foresee this risk and curtail it.


With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684.
17th September 2011 From India, Bangalore
Dear
Pls see
9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances.
(4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:
Pointing out to " one or more Grievance Redressal Committee" and "The total number of members of the Grievance Redressal Committee shall not exceed more than six".
rajanlawfirm
19th September 2011 From India, Madras
Thx Sir,
but i want to know that One Grievance Redressal Committee of six members is sufficient for 1000 employees or we have to maintain more Committee's, if yes then what will be the criteria.
Thanks & Regards
Manish
20th September 2011 From India, Patiala
Dear
The Section does not provide any cap .Depending upon the class of workmen you can have multiple GRM.It is for the Management to decide.Starting with one GRM may be ideal.If the complaints are not manageable then you can go in for the multiple mode.
rajanlawfirm
20th September 2011 From India, Madras
Immediate concern for Staffing Entities

Dear All

The Gujarat High Court in the matter of Chemical vs Secretary decided on 26 April, 2011 by HONOURABLE MR.JUSTICE H.K.RATHOD on describing the possibilities of a Contract worker raising an Industrial Dispute before the Industrial Dispute has listed out the following contingencies:

In this connection, it will be necessary to note that even if contract labour is in vogue in a concern, employees employed by the contractor can validly raise the following contentions which may buttress their grievance that even though they are the direct employees of the principal employer, they have wrongly been treated as employees of the contractor who is not a real intermediary. Such types of disputes under the ID Act can legitimately be raised in the following cases which are mentioned by way of illustrations only without suggesting that they are exhaustive;


(1) when it is alleged that the employees were directly employed by the principal employer and subsequently contract system was introduced for the same activities resulting in snapping of relationship of employee-employer between the workmen on the one hand and the main employer on the other, thus, violating sec. 9A of the ID Act.


(2) When there is absence of proper registration of concerned principal employer under the Contract Labour Act.


(3) When there is absence of proper licensing of the concerned contractor who employs contract labour at a given point of time.


(4) Even though principal employer may be registered employer under the Act and the concerned contractor may be licensed contractor under the Act, his licence may not cover the activity which is carried on by the contract labour.


(5) Even though principal employer may be registered employer under the Contract Labour Act and the contractor may be having a valid license to employ contract labour, under the Contract Labour Act, for a given activity, still licence issued to him may not cover exact number of permissible employees employed by him meaning thereby member of permissible employees under the licence may be less than number of employees actually employed and qua such excess number of employees, protective umbrella of licence would not be available to the contractor so far as the activity covered by the licence is concerned.


(6) Even though principal employer may be registered employer and the contractor may be licensed contractor and the workmen employed by him might be covered by the permissible number of employees as recognised by the licence and even though such activities may be covered by licence, in fact and in substance, control including disciplinary control and supervision of the entire activity may be with the principal employer and the wages of the employees may in fact be coming out of coffers of the principal employer, and may be getting paid through the contractor who may operate as a mere conduit pipe. Such type of control, supervision and payments being outside the scope of sec. 10(2) read with secs. 20 and 21 of the Contract Labour Act would give rise to a legitimate contention that the principal employer is in fact and substance the real employer and the so called contract is an eye wash."

Staffing Industry professionals need to note the above Industrial adjudication possibilities and steer clear of them.

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684.
22nd September 2011 From India, Bangalore
Immediate concern for Staffing Entities Dear All Are there any State Government Statutes providing for claiming permanency? A:Yes.The State Government of Tamil Nadu by Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 has conferred this power on the Industrial Adjudicators.The State of Assam has also the Assam Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1985 which provides for employees to claim permanency.But there is a procedure for it. These enactments were enacted before the advent of globalization . With Regards V.Sounder Rajan Advocates & Notaries & Legal Consultants E-mail : rajanassociates@eth,net, -9025792684
26th September 2011 From India, Bangalore
The Tamil Nadu Industrial Establishments (Conferment of Permanent Status to Workmen) Act, 1981 [Tamil Nadu Act 46 of 1981] was upheld by the Hon'ble Supreme Court in State of Tamilnadu vs Nellai Cotton Mills Limited .
rajanlawfirm
29th September 2011 From India, Madras
IMPORTANT ISSUES IN STAFFING INDUSTRY Dear All Is there any decision of Indian Courts referring to Contractors being used to be changed but the new contractors were under the terms of the agreement required to retain the workers of the predecessor contractors. Yes in R. K. Panda v. Steel Authority of India Ltd. (1994) 5 SCC 304 : (1994 AIR SCW 2460), the contract labourers by filing a writ petition under Article 32 claimed party in pay with direct employees and also regularization in the employment of the respondent-authority. They were continuing in employment for periods ranging from 10 to 20 years. The contractors used to be changed but the new contractors were under the terms of the agreement required to retain the workers of the predecessor contractors. The workers were employed through the contractors for different purpose like construction and maintenance of roads and buildings within plant premises, public health, horticulture, water supply etc. In the agreement with the contractors, it was stated that the parties shall be governed by the provisions of the Act as well as by the provisions of the payment of Bonus Act. On these facts, the Apex Court observed as follows (at p. 2466 of AIR) :- It is true that with the passage of time and purely with a view to safeguard the interests of workers, many principal employers while renewing the contracts have been insisting that the contractor or the new contractor retains the old employees. In fact such a condition is incorporated in the contract itself. However, such a clause in the contract which is benevolently inserted in the contract to protect the continuance of the source of livelihood of the contract labour cannot by itself give rise to a right to regularisation in the employment of the principal employer. Whether the contract labourers have become the employees of the principal employer in course of time and whether the engagement and employment of labourers through a contractor is a mere camouflage and a smokescreen, as has been urged in this case, is a question of fact and has to be established by the contract labourers on the basis of the requisite material. It is not possible for the High Court or this Court, while exercising writ jurisdiction or jurisdiction under Article 136 to decide such questions, only on the basic of the affidavits. It need not be pointed out that in all such cases, the labourers are initially employed and engaged by the contractors. As such at what point of time a direct link is established between the contract labourers and the principal employer, eliminating the contractor from the scene, is a matter which has to be established on material produced before the Court. Normally, the labour Court and the Industrial Tribunal, under the Industrial Disputes Act are the competent for a to adjudicate such disputes on the basis of the oral and documentary evidence produced before them. It is now imperative for the Indian Contract Staffing Industry to evolve a Code of Inherent risks so that Principal Employers are forewarned in deploying Contract Staff. With Regards Advocates and Notaries & Legal Consultants for Recruiting & Staffing Industry E-mail : rajanassociates@eth,net, -9025792684-9025792634
30th September 2011 From India, Bangalore
Dear Friends
For more details pls see the link https://www.citehr.com/366609-p-f-contributions-minimum-wages-stay-ap-high-court.html.
rajanlawfirm
Pls also visit https://www.citehr.com/285737-legal-...-industry.html
1st October 2011 From India, Madras
Dear All

Extracting the copy of the EPF Circular that has been stayed in the interim by the Hon'ble Delhi & AP High Court:

EMPLOYEES’ PROVIDENT FUND ORGANISATION
EMPLOYEES’ PROVIDENT FUND ORGANISATION, (Ministry of Labour & Employment, Govt. of India), Head Office, Bhavrshya Yidhr Bhawan, 14, Bhikaiji Cama Place. New Delhi - 110 066.

No.: Coord/4(6)2003/Clarification/Vol-II/ Dated: 23-05-2011

Sub:Splitting of Minimum Wages for the purpose of PF contribution not permissible.

Sir,

Attention of all concerned is invited towards this office circular no. Coord./4(6)2003/Clarification/13633 dated 06.06.2008 vide which it was advised to ensure that P.F. Contributions on at least Minimum Wages are remitted by the establishments. It was also directed to review all such cases disposed of u/s 7A of the Act where determination of dues has taken place on wages lesser than Minimum Wages.

2. However, it has been observed that still uniform approach in this regard is not followed by all the field offices which is viewed seriously. It is also observed that the field offices are not duly defending the issue in spite of the fact that the Division Bench of Hon’ble High Court, Karnataka in the matter of Group 4 Securities Guarding Ltd Vs. RPFC has categorically upheld the view that RPFCs u/s 7A of the Act can examine and look into the nature of contract entered between the employer and its employees as well as the pay structure to decide whether the pay is being split up under several heads as a subterfuge to avoid PF Contribution.

3. The order of the Division Bench was challenged by the establishment before the Apex Court. While tentatively upholding the order of the Division Bench, the Hon’ble Supreme Court in its order dated 23.07.2004 again granted liberty to the authorities to decide the matter in accordance with law on its merits. As such the authorities have to consider the order of the Division Bench of Hon’ble High Court, Karnataka unless there is substantial evidence to lead otherwise.

4. Accordingly, the matter has been examined in view of the Apex Court’s direction and the following guidelines are issued which should be adhered to and followed by all strictly.

5. The EPF & MP Act, 1952 is a beneficial social security legislation. In construing the provisions of the Act, it has already been settled earlier* that where ever two views are reasonably possible, the view which helps the achievement of the object should be preferred and accordingly the assessing authority while determining dues under Section 7A should curb any attempt to curtail the legitimate social security benefits of the employees. It is needless to reiterate the impact of contribution on lesser wages by splitting the wages into different heads, which results in lesser accumulations in PF account and miniscule pension to the member/family.

[*The RPFC, Punjab Vs Shibu Metal Works — 1965 (1) LU.473].

6. As you are aware, section 2(b) of EPF & MP Act, 1952 defines the basic wage which excludes all kind of allowances from being considered as basic wage. As the term suggests, ‘basic wage’ or ‘basic salary’ is the base salary which is provided to a person in lieu of his services. It is without any allowances which may or may not be added to basic wages in terms of employment.

7. However, it appears that some confusion is prevailing among field offices as to whether basic wages can be lower than the minimum wages or whether an establishment paying minimum wages to its employees can be allowed to split up the wages into various allowances reducing the PF contribution by making it a part of ” terms of employment or Contract” .

8. It would be worth to see that the terms ‘basic’, ‘basic wage’and ‘minimum wage’ are defined in Oxford Dictionary as below:
(i). “basic. Adj.1. forming an essential foundation; fundamental. 2. consisting of the minimum required or offered”
(ii). “basic wage . n. 1 a minimum wage earned before additional payments such as overtime. 2. Austral/NZ/ the minimum living wage, as determined by industrial tribunal”
(iii). “minimum wage, n. the lowest wage permitted by law or by agreement.”

9. Thus, whereas the minimum wage is the lowest permitted wage ought to be paid to a worker as per law as upheld and revisited on various occasions by the Hon`ble Supreme Court *, basic wage is only relevant for allowing additional allowances by treating it (basic wage) as a basic/floor level.

(*Crown Aluminum Works Vs Workers Union, [1958 Vola LU,

Page I], Unichoyi Vs State of Kerala [1961 Voll LL.3 P. 631], Kaman’ Metals & Alloys Ltd. Vs. Their Work Men [1967 Vil.11- 55; (1967) 2 SCR Page 463]).

10. Another aspect of basic wage/salary i5 that it is provided to all classes of employees irrespective of quantum of their salary and its quantum varies with every class/post of an employee where as minimum wage is prescribed only for the lowest paid employee to whom any lesser payment of wages is not permitted by law.

11. From above, it is abundantly clear that basic wage in no case can be lesser than the minimum wage as the same is not only contrary to law of land but is also beyond logic and rationale that an establishment which can not pay even minimum wages to its employees, would be willing to pay allowances to them and if such instances exist, there is certainly a malafide motive which may be considered as knowingly making or causing to make false statement/representation punishable u/s 14(1) of EPF & MP Act, 1952. It may also attract the provision of section 418 of IPC.

12. Further, it also needs to be kept in mind that any agreement which negates any law of land is ab-initio-void and would have effect of non-existence. Therefore, any such terms of agreement for employment where minimum wages is splitted to reduce the liability under EPF & MP Act, 1952 would be governed by the same logic as it is against the provisions of Minimum Wages Act and hence illegal.

13. Also Minimum Wage being a state matter, clarifications were sought from various state Governments. The replies received reveal that minimum wage is a lump sum composite amount arrived at by following the permissible procedure of fixation as revised from time to time and it can not be segregated and reclassified. Thus the State governments have also observed that splitting of minimum wages is not permissible in the eye of law,

14. Accordingly, all concerned are directed to ensure that P.F. Contributions are not remitted on wages less than Minimum Wages since every employer is legally bound to pay at least minimum wages to his/her employees and minimum wages are not amenable to split up. It is one pay package.*

(*Civil Appeal 4259 of 1999 Air Freight Ltd. Vs State of Karnataka and Ors., 1999 Supp. (1) SCR 22]

15. It is needless to mention that wherever the matter regarding splitting of wages is challenged or pending in a court of law, the stand of department along with all rules and guidelines of Hon’ble Supreme Court should be effectively utilized to defend the case. It is also mentioned that nothing said above shall come in way of implementation/execution of any order of a court of law.

16. The assessing officers shall examine full facts about the wage structure, minimum wages prescribed by the appropriate govt. for the relevant class and provide reasonable opportunity to the establishment before deciding the subterfuge, if any.

All the concerned officials/officers are requested to strictly comply with above said guidelines in regard to subject matter.
Please acknowledge receipt.

(This issues with the approval of CPFC)

(K.C. Pandey)
Addl. Central P.F. Commissioner(Compliance)

----------------------------------------------------------------------------------------------------------------------------

Copy to:
• FA & CAO/ CVO
• All Add I. CPFC5, Head Office
• Director, NATRSS
• All RPFC-I ,Head Office
• All RPFC II, HO
• All DD (Vig.)/DD ( Audit)
• All RPFCs (ZTIs)
• Web Administrator for uploading the circular on the central website of EPFO.
• DD (OL.), Head Office – for release of Hindi Version
(Anita S. Dixit)
Regional P.F. Commissioner-I(Coordination)

rajanlawfirm
3rd October 2011 From India, Madras
ORIGIN OF 240 DAYS CLAUSE

The 240 days clause has its birth from Sec.25-B of the Industrial Disputes Act which is extracted below:


25-B. Definition of continuous service: -- For the purpose of this Chapter,-

(1) a workman shall be said to be in continuous service for a period if he is, for that period, in uninterrupted service, including service which may be interrupted on account of sickness or authorized leave or an accident or a strike which is not illegal, or a lock-out or a cessation of work which is not due to any fault on the part of the workman;

(2) Where a workman is not in continuous service within the meaning of clause (1) for a period of one year or six months, he shall be deemed to be in continuous service under an employer—

(a) for a period of one year, if the workman, during a period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than—

(i) one hundred and ninety days in the case of a workman employed below ground in a mine; and
(ii) two hundred and forty days, in any other case;

(b) for a period of six months, if the workman, during a period of six calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than—

(i) ninety five days, in the case of a workman employed below ground in a mine; and
(ii) one hundred and twenty days, in any other case;

Explanation: -- For the purpose of clause (2), the number of days on which a workman has actually worked under an employer shall include the days on which—

(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment [Standing Orders] Act, 1946 (20 of 1946), or under this Act or under any other law applicable to the Industrial establishment;

(ii) he has been on leave with full wages, earned in the previous years;
(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.

Continuous Service is applied in Section 25 F

25-F. Continuous precedent to retrenchment of workmen.—No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until—

(a) the workman has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice:

(b) the workman has been paid, at the time, of retrenchment, compensation which shall be equivalent to fifteen days’ average pay [for every completed year of continuous service] or any part thereof in excess of six months; and

(c) notice in the prescribed manner is served on the appropriate Government [or such authority as may be specified by the appropriate Government by notification in the Official Gazette.]

Both the definition and the application has been extracted.Viewers would need to understand the Statutory provision in its original form and reach their own understanding.

rajanlawfirm

6th October 2011 From India, Madras
Extracting the relevant portion of the Andhra Pradesh Govt State Policy
14. Review of Labour Laws
The strength of the small scale units lies in their flexibility in production. However, the existing labour laws restrict such flexibility. There is a multiplicity of labour laws enacted by the Central and State Governments which need to be reviewed and combined into one single piece of legislation. The One Man Commission has examined this issue. The recommendations will be examined and action will be taken to simply the laws and, wherever necessary, communicated to Government of India.
The AP Govt has appointed a one Man Commission and the Govt will examine the recommendations and action is expected to be taken to simply the laws.
rajanlawfirm
9th October 2011 From India, Madras
Hi,
I am working with an IT company and being into HR i am asked to find out statutory compliances related to an IT (US Staffing) company and certifications that can be acquired by such companies like ISO etc. I would really appreciate if somebody can provide an expert opinion on this.
Thanks and Regards,
Deepali
HR Executive
15th October 2011 From United States, Fremont
IMPORTANT ISSUES IN CONTRACT STAFFING INDUSTRY -F & F SETTLEMENT

Dear All

The essence of compliance of Section 25 F of the Industrial Disputes Act has been made clear by the Supreme Court of India in the reported case of Pramod Jha & others Vs State of Bihar reported in 2003(3) SBR 617. To quote the very words of the Supreme Court it has been held that

“the underlying object of Section 25 F[ the retrenchment provision in the Industrial Disputes Act] is two fold. Firstly, retrenched employee and must have one month's time available at his disposal to search for alternative employment, and so, either he should be given one months notice of the proposed termination or he should be paid wages for the notice period. Secondly the worker must be paid retrenchment compensation at the time of retrenchment, or before, so that once having been retrenched there should be no need for him to go to his employer demanding retrenchment compensation and the compensation so paid is not only a reward earned for his previous services rendered to the employer but is also a sustenance to the worker for the period which may be spent in searching for another employment."

Retrenchment can be simply termed as termination .Two points therefore emerge ;

Firstly, terminated Contract Staffing employee must have one month's time available at his disposal to search for alternative employment, and so, either he should be given one months notice of the proposed termination or he should be paid salary for the notice period.

Secondly the Contract Staffing Employee must be paid retrenchment compensation at the time of retrenchment, or before, so that once having been retrenched there should be no need for him to go to the Contract Staffing Company demanding retrenchment compensation and the compensation so paid is not only a reward earned for his/her previous services rendered to the Contract Staffing Company but is also a sustenance to the Contract Staffing Employee for the period which may be spent in searching for another employment.

With Regards

V.Sounder Rajan ,

Advocates and Notaries & Legal Consultants





E-mail : rajanassociates@eth,net,

-9025792684-9025792634
15th October 2011 From India, Bangalore
Sub: Central Minimum Wages
In view of the fact that Minimum Wages have a bearing on the Contract Staffing Industry please see https://www.citehr.com/369020-latest-central-wages.html for the latest revision .You get the downloads in the post of Major (Retired) D Bhushan Rao.
Thanks to Major.
rajanassociates
18th October 2011 From India, Bangalore
IMMEDIATE ISSUES FOR CONTRACT STAFFING ENTITIES

What are the circumstances in which the Central Government can prohibit the employment of Contract Labour under CLRA ?

Prohibition

Apart from the regulatory action under the Contract Labour (Abolition Regulation )Act CLRA provides the Authority , the "appropriate Government" under Sec 10 (1) after consultation with the Central or State Board employing agency to prohibit any establishment in an Process operation or other work. Such restrictions are often adopted on following these criteria .



if the work is in the nature of perennial;

if the work incidental or necessary for the work of a Operation;

if the work sufficient to employ a significant number the whole time workers;

if the work is usually done through periodic Workers at this factory, or a similar setting.

The Central Government on the recommendations of Central Advisory Board has prohibited employment of contract labor in various operations and categories of jobs in different establishments. These details are available by checking up the Notifications.

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684-9025792634
19th October 2011 From India, Bangalore
Certain important provisions which Payroll of a Staffing Company may over look under ESI Act

Legal provisions

Section 72

Section 72 of the Act, places a bar upon the powers of an employer with regard to reduction of wages of an employee for reasons of his liability to pay contribution.

Section 73

Under Section 73, an employer cannot dismiss or punish an employee during the period of his certified sickness etc. Contravention of these provisions attracts penalties provided under Section 85 of the Act.

Many a times the Clients report Sick cases as absconding leading to legal complication .

Regulation 97

Regulation 97 permits an employer to discontinue or reduce benefits payable to his employees under conditions of their service which .are similar to the benefits conferred by the Act, to the extent specified below, namely

a) From the date of the commencement of the first benefit period following the Appointed Day for his factory or establishment -

*Sick leave on half pay to the full extent;

*Such proportion of any combined general purposes and sick leave on half pay as may be assigned as a sick leave but in any case not exceeding 50 per cent of such combined leave.

b) Any maternity benefits granted to a woman employee to the extent to which such a woman employee may become entitled to the Maternity Benefit under the ESI Act.

Where an employee avails himself/herself of any leave from the employer for sickness, maternity or temporary disablement, the employers shall be entitled to deduct from the leave salary of the employee the amount of benefit to which he/she may be entitled under the Act for the corresponding period.

It is only when a workman actually obtains or receives cash benefit under the ESI Scheme that the employer can exercise his right to make a suitable deduction from the wages due to him by way of leave salary.

rajanlawfirm
24th October 2011 From India, Madras
Gratuity Entitlement for Contract Staff.

Dear Friends

Recently Mr Justice K.Chandru of the Madras High Court -Madurai Bench in the matter of Special Officer-Srirangam Co-operative Urban Bank Ltd has held that every Employee who has worked in an organization for five or more years is entitled for Gratuity irrespective of the following:

superannuation;

retirement;

resignation;

death;

disablement ; or

any other terminology used by the Employer to send the Employee out of service.

The only exception is under Section 4 (6) of the Payment of Gratuity Act which enabled the Employer to forfeit the Gratuity under certain circumstances and by following a specified procedure if the Employee had not been allowed to retire or reached the age of superannuation.

Our understanding of the verdict on its application in the Contract Staffing Industry invocation of Sec 4 (6)of the Payment of Gratuity Act may be totally difficult is because of the Contract Staff being deployed with a Client

Consequently the entitlement for Gratuity of the Contract Staff cannot be denied on any account.



With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684-9025792634
27th October 2011 From India, Bangalore
Section 4(6)(b) in The Payment Of Gratuity Act, 1972 is extracted below:
(b) the gratuity payable to an employee may be wholly or partially forfeited
(i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act violence on his part, or
(ii) if the services of such employee have been terminated for any act which constitutes an offence involving moral turpitude, provided that such offence is committed by him in the course of his employment.
The termination has to be done after conduct of a Domestic Enquiry by appointing an Enquiry Officer.In the Contract Staffing Industry conduct of a Domestic Enquiry is next to impossible.Therefore Section 4(6)(b) in The Payment Of Gratuity Act, 1972 literally becomes inapplicable.
rajanlawfirm
27th October 2011 From India, Madras
Sub: Non Payment of Salary-Illegal Deduction from Salary of Contract Staff

Dear Friends

The Contract Staffing Industry may note that under the Payment of Wages Act, 1936 in case of delay in payment of wages or unlawful deductions in Salary of the Contract workers there is a remedy under Section 15 of the Payment of Wages Act, 1936 which is extracted below:

15. Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims -

(1) The State Government may by notification in the Official Gazette appoint a presiding officer of any Labour Court or Industrial Tribunal constituted under the Industrial Disputes Act 1947 (14 of 1947) or under any corresponding law relating to the investigation and settlement of industrial disputes in force in the State or any Commissioner for Workmen's Compensation or other officer with experience as a Judge of a Civil Court or as a Stipendiary Magistrate to be the authority to hear and decide for any specified area all claims arising out of deductions from the wages or delay in payment of the wages of persons employed or paid in that area including all matters incidental to such claims :

Provided that where the State Government considers it necessary so to do it may appoint more than one authority for any specified area and may by general or special order provide for the distribution or allocation of work to be performed by them under this Act.

(2) Where contrary to the provisions of this Act any deduction has been made from the wages of an employed person or any payment of wages has been delayed such person himself or any legal practitioner or any official of a registered trade union authorised in writing to act on his behalf or any Inspector under this Act or any other person acting with the permission of the authority appointed under sub-section (1) may apply to such authority for a direction under sub-section (3) :

Provided that every such application shall be presented within twelve months from the date on which the deduction from the wages was made or from the date on which the payment of the wages was due to be made as the case may be :

Provided Further that any application may be admitted after the said period of twelve months when the applicant satisfies the authority that he had sufficient cause for not making the application within such period.

(3) When any application under sub-section (2) is entertained the authority shall hear the applicant and the employer or other person responsible for the payment of wages under section 3 or give them an opportunity of being heard and after such further inquiry (if any) as may be necessary may without prejudice to any other penalty to which such employer or other person is liable under this Act direct the refund to the employed person of the amount deducted or the payment of the delayed wages together with the payment of such compensation as the authority may think fit not exceeding ten times the amount deducted in the former case and not exceeding twenty-five rupees in the latter and even if the amount deducted or the delayed wages are paid before the disposal of the application direct the payment of such compensation as the authority may think fit not exceeding twenty-five rupees :

Provided that no direction for the payment of compensation shall be made in the case of delayed wages if the authority is satisfied that the delay was due to -

(a) a bonafide error or bonafide dispute as to the amount payable to the employed person or

(b) the occurrence of an emergency or the existence of exceptional circumstances such that the person responsible for the payment of the wages was unable though exercising reasonable diligence to make prompt payment or

(c) the failure of the employed person to apply for or accept payment.

(4) If the authority hearing an application under this section is satisfied -

(a) that the application was either malicious or vexatious the authority may direct that a penalty not exceeding fifty rupees be paid to the employer or other person responsible for the payment of wages by the person presenting the application; or

(b) that in any case in which compensation is directed to be paid under sub-section (3) the applicant ought not to have been compelled to seek redress under this section the authority may direct that a penalty not exceeding fifty rupees be paid to the State Government by the employer or other person responsible for the payment of wages.

(4A) Where there is any dispute as to the person or persons being the legal representative or representatives of the employer or of the employed person the decision of the authority on such dispute shall be final.

(4B) Any inquiry under this section shall be deemed to be a judicial proceeding within the meaning of sections 193 219 and 228 of the Indian Penal Code (45 of 1860).

(5) Any amount directed to be paid under this section may be recovered -

(a) if the authority is a Magistrate by the authority as if it were a fine imposed by him as Magistrate and

(b) if the authority is not a Magistrate by any Magistrate to whom the authority makes application in this behalf as if it were a fine imposed by such Magistrate.

There is also a provision for class action under Section 16 of the Payment of Wages Act, 1936 which is also extracted below:

16. Single application in respect of claims from unpaid group -

(1) Employed persons are said to belong to the same unpaid group if they are borne on the same establishment and if deductions have been made from their wages in contravention of this Act for the same cause and during the same wage-period or periods or if their wages for the same wage-period or periods have remained unpaid after the day fixed by section 5.

(2) A single application may be presented under section 15 on behalf or in respect of any number of employed persons belonging to the same unpaid group and in such case every person on whose behalf such application is presented may be awarded maximum compensation to the extent specified in sub-section (3) of section 15.

(3) The authority may deal with any number of separate pending applications presented under section 15 in respect of persons belonging to the same unpaid group as a single application presented under sub-section (2) of this section and the provisions of that sub-section shall apply accordingly.



In case the Employer delays the payment of Salary or F & F the aggrieved Employee will normally send a demand or a Legal Notice and the Contract Staffing Company would need to comply with the demand to avoid the Legal proceedings .On failure it would be followed up with an application to the Local Appropriate Authority under the Payment of Wages Act as extracted below:

Form of Individual Application

[See sub-section (2) of section 15 of the Payment of Wages Act]

In the Court of the Authority appointed under the Payment of Wages Act, 1936 (4 of 1936) for ……………….. area.

Application No. ……….. of …….

Between A.B.C. ………………………………….. Applicant (through a legal practitioner/an official of …………………………….. which is a registered Trade Union.)

And X.Y.Z………………………………………………………opposite party:

The applicant states as follows:

1. A.B.C. is a person employed in the/on the factory/railway/industrial establishment entitled and resides at ……………………………………..

The address of the applicant for the service of all notices and processes is:

…………………………………………………………………………………

2. X.Y.Z., the opposite party, is the person responsible for the payment of his wages under section 3 of the Act, and his address for the service of all notices and processes is:…………………………………………………………………………………..

3. (1) The applicant’s wages have not been paid for the following wage-period(s)………………………………….(give dates)

Or A sum of Rs…………….. has been unlawfully deducted from his wages of amount for the wage-period(s) which ended on ……………… (give dates)

(2) [Here give any further claim or explanation].

4. The applicant estimates the value of the relief sought by him at the sum of Rs………………

5. The applicant prays that a direction may be issued under sub-section (3) of section 15 for –

(a) Payment of delayed wages as estimated or such greater or lesser amount as the Authority may find to be due.

Or Refund of the amount illegally deducted.

(b) Compensation amounting to ………………………

The Applicant certifies that the statement of facts contained in this application is to the best of his knowledge and belief accurate.

Signature or thumb impression of the

employed person, or legal practitioner or official

of a registered trade union duly authorized.

There is also a provision for Group action as per the following format :

Form of Group Application

[See sub-section (2) of sections 15 and 16 of Payment of Wages Act]

In the Court of the Authority appointed under the Payment of Wages, Act, 1936 (4 of 1936) for ………………….. area

application No………………… of …………

Between A.B.C…………………………………………………

Applicants

A legal practitioner

(through a legal practitioner/an official of …………………………….. which is a registered union).

And X.Y.Z………………………………………………. Opposite Party.

The applicants state as follows:

1. [The applicants whose names and permanent addresses] appear in the attached schedule are persons employed in the /on the /factory/railway/insustrial establishment entitled and resides at …………………………….

The address of the applicants for service of all notice and processes is:

………………………………………………………………………….

2. X.Y.Z. the opposite party, is the person responsible for the payment of wages under section 3 of the Act, and his address for the service of all notices and processes is:

…………………………………………………………………………….

3. The applicants’ wages have not been paid for the following wage-period(s):

……………………………………………………………………………..

4. The applicants estimate the value of the relief sought by them at the sum of Rs…

5. The applicants pray that a direction may be issued under sub-section (3) of section 15 for:

(a) Payment of the applicants’ delayed wages as estimated……………. or such greater or lesser amount as the Authority may find to be due.

(b) Compensation amounting to…………….

The Applicants certify that the statement of facts contained in this application is, to the best of their knowledge and belief, accurate.

Signature of thumb impression of two of the

Applicants, or legal practitioner, or an official of

A registered trade union duly authorized.

SCHEDULE

__________________________________________________ ______________________

S.No. Name of Applicant Permanent Address

__________________________________________________ ______________________

1 2 3

rajanlawfirm
29th October 2011 From India, Madras
Penal provisions the punishment for non compliance of the ESI Act ?



Dear All

The ESI Act contains adequate provisions to Employers for violating its provisions. The relevant penal sections, so far as violations in the matter of coverage, are sections 84, 85, 85-A, 86 and 86-A. The prosecutions under these sections can be filled in the criminal courts and adjudication of the same matter by Employee’s Insurance Court is not a condition precedent.

Contract Staffing Companies who qualify for coverage need to strictly adhere to this.When they are concentrating on securing more Business they tend to over-look the coverage under ESI Act.

The important provisions are these:-

Section 84: This section inter alia states that whoever, for the purpose of avoiding any payment to be made by himself under the said Act or enabling any other person to avoid any such payment, knowingly makes or causes to be made any false statement or false representations, shall be punishable with imprisonment for a term which may extend to six months or with fine not exceeding two thousand rupees, or with both.



Thus, if any employer, whose factory or establishment is coverable, knowingly makes a false representation / statement about the coverage, he is liable to be punished under this section.

Section-85: Under this section, inter alia, any person who is guilty of any contravention of or non-compliance with any of the requirements of the Act/rules/regulations, shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to four thousand rupees, or with both.





Section-85-A: This section lay down that if any person, already convicted for any offence punishable under the Act, commits the same offence, he shall be punished with imprisonment for a term which may extend to two years and with a fine of five thousand rupees.

Section-86: According to this section, the prosecution against employer or any other person shall be instituted with the previous sanction of the Insurance Commissioner or any other authorized officer of the Corporation. Under this provision, the power to sanction prosecution has been delegated to the Regional Directors and in charges of sub-regions.



A complaint for any offence under the Act has to be filed in writing in any court having jurisdiction but not inferior to that of Metropolitan Magistrate or First Class Judicial Magistrate.

This apart the Penal provisions of the Indian Penal Code which is stringent are there .It is found in Explanation 2 :

Section 405. Criminal breach of trust

Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust".

xxxx



Explanation 2

A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.

With Regards

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684-9025792634
3rd November 2011 From India, Bangalore
Dear I have a doubt regarding the following.
(6) any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space; or
Though it is incorporated, it is not gazetted and hence not operative. 1) Hon. Supreme Court is also kept this portion in abeyance. 2) Group of Ministers and Group of Secretaries differed and 3) In the Parliament it was presented that this portion is in operative. It is hanging in the fire because alternative remedy is not shown. Hence, please check and guide us.
5th November 2011 From India, Nellore
The Supreme Court in the matter of State Of U.P vs Jai Bir Singh on 5 May, 2005 comprising of the Bench of Hon'ble Justices N S Hegde, K.G Balakrishnan, D Dharmadhikari, A Kumar had to say on the definition of `industry' by including within its meaning some activities of the government and excluding some other specified governmental activities and `public utility services' involving sovereign functions like this :

"In response to the Bangalore Water Supply and Sewerage Board case, the Parliament intervened and substituted the definition of `industry' by including within its meaning some activities of the government and excluding some other specified governmental activities and `public utility services' involving sovereign functions. For the past 23 years, the amended definition has remained unenforced on the statute book. The government has been experiencing difficulty in bringing into effect the new definition. Issuance of notification as required by sub-section 2 of sub-section 1 of Amendment Act, 1982 has been withheld so far. It is, therefore, high time for the court to reexamine the judicial interpretation given by it to the definition of `industry'. The Legislature should be allowed greater freedom to come forward with a more comprehensive legislation to meet the demands of employers and employees in the public and private sectors. The inhibition and the difficulties which are being exercised by the legislature and the executive in bringing into force the amended Industrial Law, more due to judicial interpretation of the definition of `industry' in the Bangalore Water Supply and Sewerage Board case, need to be removed. The experience of the working of the provisions of the Act would serve as a guide for a better and more comprehensive law on the subject to be brought into force without inhibition.

The word industry seems to have been redefined under the Amendment Act keeping in view the judicial interpretation of the word industry in the case of Bangalore water . Had there been no such expansive definition of industry given in Bangalore Water case, it would have been open to the parliament to bring in either a more expansive or a more restructive definition of industry by confining it or not confining it to industrial activities other than sovereign functions and public welfare activities of the State and its departments. Similarly, employment generated in carrying on of liberal professions could be clearly included or excluded depending on social conditions and demands of social justice. Comprehensive change in law and/or enactment of new law had not been possible because of the interpretation given to the definition of industry in Bangalore Water case. The judicial interpretation seems to have been the one of the inhabiting factors in the enforcement of the amended definition of the Act for the last 23 years.

In the Bangalore Water case not all the judges in interpreting the definition clause invoked the doctrine of noscitur-a-sociis. We are inclined to accept the view expressed by the six judges' Bench in the case of the Management of Safdarjung Hospital, (supra) that keeping in view the other provisions of the Act and words used in the definition clause, although profit motive is irrelevant, in other to encompass the activity within the word industry the activity must be `analogous to trade or business in a commercial sense'. We also agree that the mere enumeration of `public utility services' in section 2(n) read with the First Schedule should not be held decisive. Unless the public utility service answers the test of it being an `industry' as defined in clause (j) of section 2, the enumeration of such public utility service in the First Schedule to the Act would not make it an `industry'. The six judges also considered the inclusion of services such as hospitals and dispensaries as public utility services in the definition under section 2(n) of the Act and rightly observed thus:-

``When Parliament added the sixth clause under which other services could be brought within the protection afforded by the Act to public utility services, it did not intend that the entire concept of industry in the Act, could be ignored and anything brought in. Therefore, it said that on industry could be declared to be a public utility service. But what could be so declared had to be an industry in the first place.''

The decision in the case of Management of Safdarjung Hospital (supra) was a unanimous decision of all the six judges and we are inclined to agree with the following observations in the interpretation of the definition clause:-

``But in the collocation of the terms and their definitions these terms have a definite economic content of a particular type and on the authorities of this Court have been uniformly accepted as excluding professions and are only concerned with the production, distribution and consumption of wealth and the production and availability of material services. Industry has thus been accepted to mean only trade and business, manufacture, or undertaking analogous to trade or business for the production of material goods or wealth and material services.''

The six judges unanimously upheld the observations in Gymkhana Club case (supra):-

``... before the work engaged in can be described as an industry, it must bear the definite character of `trade' or `business' or `manufacture' or `calling' or must be capable of being described as an undertaking resulting in material goods or material services''.

In construing the definition clause and determining its ambit, one has not to lose sight of the fact that in activities like hospitals like hospitals and education, concepts like right of the workers to go on `strike' or the employer's right to `close down' and `lay off' are not contemplated because they are services in which the motto is `service to the community'. If the patients or students are to be left to the mercy of the employer and employees exercising their rights at will, the very purpose of the service activity would be frustrated.

We are respectfully inclined to agree with the observation of Shri Justice P.B. Gajendragadkar [AIR 1964 SC 903 at pg. 906] in the case of Harinagar Cane Farm (supra):-

``As we have repeatedly emphasized, in dealing with industrial matters, industrial adjudication should refrain from enunciating any general principles or adopting any doctrinaire considerations. It is desirable that industrial adjudication should deal with problems as and when they arise and confine its decisions to the points which strictly arise on the pleadings between the parties. .....''

We conclude agreeing with the conclusion of the hon'ble judges in the case of Hospital Mazdoor Sabha and Ors. (supra):-

``Though section 2(j) used words of very wide denotation, a line would have to be drawn in a fair and just manner so as to exclude some calling service or undertakings. ...''

[Emphasis supplied]

This Court must, therefore, reconsider where the line should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in section 2(j). That no doubt is rather a difficult problem to resolve more so when both the legislature and executive are silent and have kept an important amended provision of law dormant on the statute book.

We do not consider it necessary to say anything more and leave it to the larger Bench to give such meaning and effect to the definition clause in the present context with the experience of all these years and keeping in view the amended definition of `industry' kept dormant for long 23 years. Pressing demands of the competing sectors of employers and employees and the helplessness of legislature and executive in bringing into force the Amendment Act compel us to make this reference.

Let the cases be now placed before Hon'ble Chief Justice of India for constituting a suitable larger Bench for reconsideration of the judgment of this Court in the case of Bangalore Water, (supra)."



rajanlawfirm
5th November 2011 From India, Madras
Dear All,
Sub Splitting up of Minimum Wages -EPF Contribution.
Mr B .Murugavel Manager HR Hyundai Hysco India has sent this E Mail to us on 31-10-2011 which we would like to share.
"All of you aware that, EPF Appellate tribunal is the right forum to decide on EPF contribution and grievances related thereof. The Appellate given clear verdict that, minimum wages can be split as allowances and the authority has no power to question or equate the definition basic wages as per EPF and Minimum/Payment of Wages Act. Hence, there is no need to worry about interim stay and review thereof."
Attached is the News item with the case reference.
rajanlawfirm
6th November 2011 From India, Madras

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For the purpose of EPF, it is debated whether we can split the minimum wage and DA or ADA or living Allowance, and others, but from Labour Authority,s point of view, minimum wage is the bearest minimum and not possible to split. Splitting, I mean, other allowances such as HRA, CA etc, but not minimum wage and living allowance. If you get into ingredients of minimum wage and splitting, it will be opening the pandora,s box. If minimum wage is allowed, each company works out its own minimum wage, which puts the worker in disadvantage in case of PF, bonus and other benefits. Regards.
6th November 2011 From India, Nellore
this is to inform that mr.prithviraj has received the salary for 15days rupees 7,500 and absconded without receiving the pay slip /with out writing his resignation letter.
the company is not liable to any misuse of company name if he does in the future as he already mis used his x company name during his work time.
. if you are coming to know that he is misusing the name plz do inform to
mr.prabhu advocate high court
legaldesk(at)sparkinfotech(dot).in
11th September 2012 From India, Bangalore
Dear All

Section 9 C was introduced in the Industrial Disputes Act Industrial Disputes (Amendment) Act, 2010 (No. 24 of 2010) a Grievance Redressal Machinery has been introduced by insertion of Section 9 C. We are being inquired whether the Section 9 C comes into effect after issue of a Notification the Section 9 C comes into effect .

We find that the wordings used in Section 9 C is self operative as is seen below and a further Notification may become superfluous as the very provision is clear :

Setting up of Grievance Redressal Machinery

9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances.

(2) The Grievance Redressal Committee shall consist of equal number of members from the employer and the workmen.

(3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on rotation basis every year.

(4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:

Provided that there shall be, as far as practicable one woman member if the Grievance Redressal Committee has two members and in case the number of members are more than two, the number of women members may be increased proportionately.

(5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal Committee shall not affect the right of the workman to raise industrial dispute on the same matter under the provisions of this Act.

(6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party.

(7) The workman who is aggrieved of the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of Grievance Redressal Committee and the employer shall, within one month from the date of receipt of such appeal, dispose off the same and send a copy of his decision to the workman concerned.

Further Section 9 C has already been Notified.

rajanassociates
13th September 2012 From India, Bangalore
Dear All

Sub: Changes in Section 1(6) of the Payment of Wages Act-

Recently, the Government of India issued a Notification S.O. No.2260(E) dated 20th September, 2012 by which Section 1(6) of the Payment of Wages Act has been amended. The monthly ceiling on the wages is now Rs.18,000/- per month.

What is the effect of the amendment?

By this change, the payment of Wages Act provisions does not apply to those drawing Rs.18,000/- per month and above. Those below the ceiling alone will have the benefit of the provisions of the Payment of Wages Act.

Similar to what is done now by the Central Govt when the ceiling was increased the Andhra High Court in the matter of The Singareni Collieries ... vs The Singareni Collieries Company decided on 7 th July, 2011, the HON'BLE SRI JUSTICE K.C.BHANU has held as follows:

“Therefore, when the Central Government issued a Gazette notification extending all the provisions of the Act to all classes of persons, it can be made applicable to all the persons working in the first respondent company irrespective of their wages. While substituting the present provision under Section 1(6) of the Act, the statement of objects and reasons of the Amendment Act 1947 of 2003 is very clear that, the then existing ceiling of Rs.1,000/- per month was last revised to Rs.1,600/0 per month in 1982 and since then a large number of persons have gone out of the purview of the Act due to successive rise in wage levels resulting from rise in the cost of living, and with a view to cover more employed persons, it is proposed to enhance the wage ceiling from Rs.1,600/- per month to Rs.6,500/- per month. So, the legislature thought it fit to regulate the payment of wages to certain classes of persons as indicated in this Act so as to benefit certain classes of employed persons.”

Further His Lordship Mr Justice K.Chandru of the Madras High Court in a recent judgment of 28.02.2011 in the matter of P.Palani vs The District Manager on 28 February, 2011 has observed that:

“Under Section 1(6) of the Payment of Wages Act, the Act has been made applicable to persons who are drawing wages not exceeding Rs.10000/- per month which limit can be increased periodically at the interval of every five years. The said notification has been issued on 8.8.2007 by the Central Government's notification in S.O.1380 (E).”

With Regards

V.Sounder Rajan

Advocate -Labour & HR & Consumer Law Consultant -Chennai

Legal Consultant for Indian Staffing & Recruiting Industry

By appreciation, we make excellence in others our own property.

Voltaire
21st October 2012 From India, Bangalore
Subject: Need for Indian Labour Contract Law

Dear All

The topic ‘Does India require faster Labour Law Reforms ” is a much debated topic at every Global and Indian Contract Staffing Forum.

Recently in the October 2012 in the Annual conference of the Indian staffing Federation in their Indian Staffing Industry Research Paper 2012 the items where specific reforms are required has been outlined .In fact the need for adopting the The Private Employment Agency Convention of International Labour Organisation (Convention No. 181 of 1997) was raised in the same document. By adopting the The Private Employment Agency Convention of International Labour Organisation (Convention No. 181 of 1997) it will be a step forward in giving Statutory recognition to the Contract Staffing Industry .

Adapting and adopting Indian Laws to International Conventions has been an ongoing process .It is a simple legislative process .But adopting The Private Employment Agency Convention of International Labour Organisation (Convention No. 181 of 1997) will have serious resistance from the Trade Unions.

Everyone echoes that India should follow the China example in Economic reforms and the path of globalization .Then without waiting for the adoption of The Private Employment Agency Convention of International Labour Organisation (Convention No. 181 of 1997) we can just replicate the Labor Contract Law (LCL) which was enacted by the Chinese Parliament during 2008.The Chinese Political system modeled on the socialist pattern has enacted a Labor Contract Law (LCL) and adopting a similar one in India may not be difficult for the Government to convince the Trade Unions . The Trade Unions will support the move as it contains many pro-labour provisions and provides better bargaining strength for the Unions .

The further reason for the delay for India to implement the reforms in the Labour Law sphere is due to the fact that changes in Laws are to be brought about by the Centre for the Central acts and the respective State Governments for the State laws.This is a time consuming process. Before making any change the stake holders have to be consulted. It is a long drawn process .It would be better to start the process by enacting a similar law as done in China .For enacting this law the Contract Labour (Regulation & Abolition ) Act has to be either amended suitably or a New law enacted on the Chinese model .

Who can be the movers for enacting the Indian Labor Contract Law (ILCL).Definitely it will be the Business Associations and each of the Indian Staffing companies in India need to move the Government to enact a special law. The Association and Federations of Employers can take up this cause as they are the ultimate Principal Employers who will employ the Contract Labour.

To narrate the history when the Chinese Law was enacted the Chinese legislature during March 2006 launched the public consultation process for its draft Labor Contract Law. By April the legislators received 191,849 responses, a majority of them from workers. Meanwhile, foreign investors and commercial groups also studied the draft law and submitted their comments. The process included recommendations from the following bodies:

European Union Chamber of Commerce in China (EUCCC)

American Chamber of Commerce in Shanghai (ACCS)

U.S China Business Council

The first two largest foreign investors’ organizations in China and both of them submitted recommendations and opinion papers on the Draft Labour Contract Law to the Legal Affairs Committee of the Standing Committee of the National People's Congress.ACCS is said to represent over 1,300 corporations, including 150 Fortune 500 companies and the big names include Dell, Ford, General Electric, Microsoft and Nike. EUCCC in China represents more than 860 members. The U.S.-China Business Council represents 250 U.S. companies doing business across all sectors in China.

In India the Trade Unions have more stakes in Labour Law legislative process more than the Industry or its Association and Forum. Therefore the whole legislative process hinges on Trade Union acceptance /consent. The Association Federation would need invite the Top Trade Union Leaders of the Country for a dialogue on a Draft Labour Contract Law to be drafted by the Federation .This needs to be done on an emergent basis

Until the reforms are implemented Staffing business in India have to operate within the existing parameters of labour laws. The Business and legal team of every Staffing Company would need to tune operations to the existing provisions and help the business team to operate in an optimum manner within the prevalent labour law frame work without incurring additional cost till the reforms are implemented. This is where the success of any Staffing entity is.

With Regards

V.Sounder Rajan

Advocate -Labour & HR & Consumer Law Consultant -Chennai

Legal Consultant for Indian Staffing & Recruiting Industry
1st December 2012 From India, Bangalore
Dear All

Recently there was a fur ore on the Employees' Provident Fund Organisation(Ministry of Labour & Employment, Govt. of India)Head Office Dated 30 Th November 2012 internal instructions were given for Assessment under Section 7 A of the EPF Act .

That part of the Circular which has serious impact on the Payrolling in the Contract Staffing Industry is the following:

SPLITTING OF WAGES - Basic wages by its own definition encompasses all the payments except the specified exclusions. All such allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as part of the basic wages. The confusion in definition of wages (and hence the issue of splitting of wages) primarily arises from the expression "commission or any other similar allowance payable to the employee" in Section 2(b) (ii) of the Act as "commission" and "any other similar allowance" are read as two separate expressions and hence "any other allowance" is read as an omnibus exclusion, thereby encouraging the subterfuge of splitting of wages to exclude the PF liabilities.

The expression "commission or any other similar allowance payable to the employee" is one continuous term meaning commission or any other "commission" like allowance by whatever nomenclature referred. Thus "basic wages" is subject to exclusions expressly referred to in the above definition and no other.

These instructions were drastic thereby giving a free hand to the Department to calculate contributions on the gross salary instead of basic plus DA including all or any allowance by whatever name it is called.

Fortunately on 14-12-2012 news report in the Hindu reports that the Hon'ble Minister for Labour has assured that the Circular is kept in abeyance. This is good new news for the Principal Employers and Contract Staffing players. As of now there is nothing to worry.

rajanassociates
17th December 2012 From India, Bangalore
(6) any activity of the Government relatable to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with [U][B]defence research, atomic energy and space; I request the respectable VS Rajan Associates, to check this particular para that it is not gazetted and hence not in operation. Against one of the RTI queries Labour department clarified that it is not gazetted. And in the First para itself, it is said that it will come into operation from the date of gazettification. Pl. check and confirm. Regards.
17th December 2012 From India, Nellore
Dear HR Friends It was informed earlier that the EPF Circular of 30 th November 2012 has been kept in abeyance.The Abeyance Circular is attached for reference. rajanassociates
22nd December 2012 From India, Bangalore

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Dear Seniors, I am working in Pvt Sector having external union, since last few months repeately demana for Overtime to be started for workers are being raised officially by the union leaders. We have optimum work force and need not require overtime by a workman. Hence please guide me how to handle the issue. And can stay worker for Overtime every day at least 3-4 hrs?
29th April 2013 From India, Pune
Extracting the News report in CLR Posted in Labour Law :News on May 28, 2013 which is also reported in the Times of India of even date:-
The Employees Provident Fund Organization(EPFO) readying to re-notify a new definition of “compensation” that will include all allowances. Currently, employers contribute only 12% of the basic salary and dearness allowance, which in fact is not paid by most companies currently, towards their share of “matching” provident fund and the Employees Pension Scheme contribution. Hence, for several thousands of employees, the basic salary actually remains constant, while increments are passed by way of enhanced or new allowances. In most cases, the tax liability for the employee goes up due to the salary hike — and companies earn tax credits on salary-related expenses over the same — however the statutory provident fund contribution remains unchanged in most cases.
As a result of the above stated logic, EPFO had notified similar changes last year. They
10th June 2013 From India, Bangalore
Dear Friend,
Kindly contact us for any Disciplinary matters, Compliance, Industrial Dispute or HR Process related query, we assure you for best solution on same.
Regards,
For Red Star Group
9910503928
20th June 2013 From India, New Delhi

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Dear Friends

We are starting this multi - part over view of Contract Staffing law in the light of judicial precedents and the Contract Labour (Abolition and Regulation Act 1970) sure it will be informative for the Indian Contract Staffing Industry players .

Many Staffing Industry players are not aware of the earliest Case Law in Outsourcing as decided by the Indian Supreme Court.

Earliest Apex Court decision on Out-sourcing-

Way back in 1968 the case law was laid down by the Hon’ble Supreme Court in the matter of GHATGE & PATIL CONCERN\'S EMPLOYEES\' UNION Vs. GHATGE & PATIL (TRANSPORTS) PRIVATE LTD. & ANR.It is a very interesting case .

The facts are like this:-

GHATGE & PATIL (TRANSPORTS) PRIVATE LTD the Company carried on the business of transport and removal of goods by road. It owned a fleet of trucks and employed drivers and cleaners to run them. In 1963, finding difficulty in observing the provisions of the Motor Transport Workers Act 1961 GHATGE & PATIL (TRANSPORTS) introduced a scheme whereby the trucks, instead of being run by the them were hired out to contractors at a fixed rate per mile. It is the first reported case of organized Out-sourcing in India.To aid the process of out-sourcing employees of the company who were engaged in running the trucks resigned their jobs and most of them who had been erst-while drivers became contractors under the scheme. This Out-sourcing move was resisted by the Union GHATGE & PATIL CONCERN\'S EMPLOYEES\' UNION.The Union raised a dispute asking for the reinstatement of the ex-employees who had been given work on contract basis. The matter was agitated in the Tribunal .Th e Tribunal held that the contract system could not be said to be an unfair labour practice, for the ex-employees were never coerced or forced to resign their jobs, and they got more benefits from the contract system than from their original contract of employment.

In appeal to the Apex Court the GHATGE & PATIL CONCERN\'S EMPLOYEES\' UNION contended that the ex-employees of the company continued to be workmen notwithstanding that they were posed as independent contractors and the beneficent legislation conceived in the interests of transport workers was being set at naught by the Management and that the setting up of the contract system amounted to unfair labour practice.

In our next part we will deal with the manner in which the Hon\'ble Bench of the Apex Court steered the matter for a landmark resolution when the very word \"out-sourcing\" was unknown.


7th November 2013 From India, Pune
Dear V.S. Rajan
I have no words to express my sincere appreciation on your contribution !!!
Its a gem !!!
"Way back in 1968 the case law was laid down by the Hon’ble Supreme Court in the matter of GHATGE & PATIL CONCERN\'S EMPLOYEES\' UNION Vs. GHATGE & PATIL (TRANSPORTS) PRIVATE LTD. & ANR.It is a very interesting case ."
attribution https://www.citehr.com/285737-legal-...#ixzz2k46LotSD
I am waiting for the next installment of your post.
The Hon'ble Supreme Court has been so futuristic and amazing in its judgement on an issue which was unknown at that time but would become so ubiquitous fifty years later !!!
Warm regards.
8th November 2013 From India, Delhi

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