Sub:EPFO Circular dated 8th October 2013

Recent Circular No C.III/110001/4/3 (71)Misc./2013/DL/12802 dated 8th October 2013 issued by EPFO to all Regional P.F. Commissioners is creating ripples amongst the PF remitters and most particularly the Staffing Industry.

On going through the circular we find that the circular is addressed to various Government Departments, the Undertakings and Autonomous bodies (Principal Employers-PE )for the activities like watch-ward, Housekeeping, data entry, etc. The intent of the circular appears to be aimed at Principal employers who pay the contribution on the whole of the salary or Rs.6,500/- whichever is lower and make that component part of the payment to the Contractor whereas the Contractor splits up the wage and deposit the contribution on a less basic salary. Therefore, the EPFO is asking PE’s to check up whether the contractors are depositing the contributions collected from the PE. Special attention may be made in para 5 & 7 of the Circular which is extracted below:

\" 5. Instances have come to notice that the placement agencies and security agencies, which provide guards and other personnel to Government Departments, Undertakings and Autonomous Bodies often take employer’s contribution on full wages from these employers and then bifurcate the wages of the personnel provided by them in to basic wages and various other allowances which do not form part of basic wages to evade the provident fund. This diversion of residual employer’s contribution tantamount to pilfering of provident fund money. Thus, Governments Departments, Undertakings and Autonomous Bodies, which settle the periodic bills of agencies and contractors, unwillingly become a party to this pilferage.

7. In this background, all the Regional Provident Fund Commissioners In-Charge of Regional/Sub Regional Offices are advised to start a dialogue with the Government Departments, Undertakings and Autonomous Bodies functioning under your jurisdiction about their duties and responsibilities while engaging personnel for watch-ward, housekeeping, data entry etc. through various agencies and contractors to check such pilferage of provident fund monies. The Officer-in-charge are also advised to collect the details of personnel engaged through various agencies and contractors from these Government Departments, Undertakings and Autonomous Bodies and check with the records available in their own offices about such agencies and contractors. Wherever pilfering of provident fund money is noticed, immediate action shall be initiated against the erring agencies and contractors to check such unhealthy practices harming the interest of the workers.”

In the light of the above the move of the Department is to ensure that there is no pilferage of PF contribution and to initiate action against the erring contractors more particularly serving various Government Departments, the Undertakings and Autonomous bodies who receive more from the PE and remit less or who do not remit at all .Those who are compliant need not fret on the Circular.

If you needs a copy of the Circular on request we can forward a copy.

With Regards

V.Sounder Rajan

Advocate -Labour & HR & Consumer Law Consultant -Chennai

Legal Consultant for Indian Staffing & Recruiting Industry


14th November 2013 From India, Pune
Dear All

In this part, we are continuing with the first reported case of outsourcing in India in the matter of GHATGE & PATIL CONCERN\'S EMPLOYEES\' UNION Vs. GHATGE & PATIL (TRANSPORTS) PRIVATE LTD. & ANR and it has been decided by the Hon’ble Supreme Court of India way back in 1968.

The most striking portion of the Judgment which is an eye opener and a biblical pronouncement .If an abridged version is provided the reader will not get the impetus of the actual words spoken by the Hon’ble Apex Court. Therefore, we extract the following relevant portion for your own comprehension:-

“ The apprehension of the Company is- that some of the regulatory provisions of the Act are incapable of being observed properly in the case of drivers and cleaners going on long journeys because there is no means of enforcing them. For example, the provisions about hours of work, hours of rest etc. are not easy to enforce enroute or at far off places. Therefore, rather than run the risk of losing the permit for want of compliance with the Motor Transport Workers Act, the Company has decided not to run transport trucks itself but to let them be run by independent hirers. There does not appear to be any bar in law to such action. Section 59 of the Motor Vehicles Act contemplates the transfer of permits with the permission of the Transport Authorities and this enables any person to whom a vehicle covered by the permit is transferred to get the right to use the vehicle in the manner authorized by the permit. Here the vehicle is not transferred but is only let out on hire and hence there is prima facie no need for permission. The Union made no attempt before us to establish that the inauguration of the contract system offended the Motor Vehicles Act or was prohibited under it. No objection to the system by the Authorities under the Motor Vehicles Act was proved in the case. The operators also seem to be happy because no operator appeared to complain and the only dissatisfaction has been registered by the Union, which apparently lost the allegiance of some of its former members and even office bearers. In view of the findings of the Tribunal, which we see no reason to disapprove, it must be held that the drivers voluntarily resigned and entered into the agreements since they apparently considered them to be more favourable than the terms of their former employment. In this view of the matter it is difficult to hold that the Tribunal was wrong in its conclusion that there was no ex- ploitation of the drivers. It is also equally true that there is no bar in law to the introduction of the system. The Union, however, contends that on the analogy of some cases of this Court in which contract labour was put down as unfair labour practice because it involved exploitation of labour, we should declare this system also to be harmful to the interests of labour. Contract labour was declared in this Court to be an unfair labour practice because the intention was to introduce a middle man to avoid observance of laws and to deny to labour the advantages it had acquired by bargaining or as a result of awards. Such is hardly the case here. The two systems were there for the drivers to choose. It is reasonable to think that the drivers must have chosen a system which was considered by them to be more beneficial to themselves. There was no compulsion for the drivers to resign their jobs and they did so voluntarily obviously thinking that the new system was more profitable to them. We cannot lose sight of the fact that some of the office-bearers of the Union were among the first to resign. Many of the drivers resigned the jobs and entered into agreements even after the dispute was taken up by the Union. The present case is, therefore, not analogous to the case of contract labour where employment of labour through a contractor or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an important weapon in its armoury.

The matter of dispute no doubt referred in the second part to ex-drivers but it referred generally to the new system in the first. The Tribunal was wrong in thinking that the first part also referred to the ex-drivers (now operators). On the whole, however, it is clear that the Company has not done anything illegal. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has, without the arrangement, no proper means of obeying. This, of course, he can do only so long as he does not break that or any other law. The Company has declared before us that it is quite prepared, if it was not already doing so, to apply and observe the provisions of the Motor Transport Workers Act in respect of its employees proper where such provisions can be made applicable. In view of this declaration we see no reason to interfere, because Parliament has not chosen to say that transport trucks will be run only through paid employees and not independent operators. The appeal fails but in the circumstances of the case we make no order as to costs.

In our next part in a nut-shell we will deal with questions that arose for consideration in the above case and the decision rendered .

With Regards

V.Sounder Rajan

Advocate -Labour & HR & Consumer Law Consultant -Chennai

Legal Consultant for Indian Staffing & Recruiting Industry


22nd November 2013 From India, Pune
Dear All

In our earlier part we had captured the verbatim operative portion of the land mark Judgment of the Bench of Hon’ble Justices Mr HIDAYATULLAH, Mr M. BHARGAVA, Mr VASHISHTHA in the matter of GHATGE & PATIL CONCERN\'S EMPLOYEES\' UNION Vs. GHATGE & PATIL (TRANSPORTS) PRIVATE LTD. & ANR which is the first recorded case on outsourcing .In continuation of our earlier part we capture the following questions which arose for consideration in the case by the Hon’ble Court and the gist of the decision :

1) Whether an Independent contractor can be considered to be the workers of the Undertaking?

For this the Hon’ble Apex Court held that on account of the drivers resigning their jobs it cannot be concluded that they are employed in the Motor Transport Undertaking. If one sees the definition of word ‘employed’ term worker is used in the padagrim to keep the person in an employer’s service. Substantially, the Apex Court concluded that the outsourced individuals are independent as they hired the vehicle of the company for their own operation for which the company pays them on the basis of fixed hire per mile.

2) Whether there was any prohibition in introduction of the Contract system ?

For this the Apex Court came to the conclusion that there was no bar in law to the introduction of the contract system. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has without the arrangement, no proper means of obeying. This, of course, he can do only so long as he does not break that or any other law.

3) The last and important question is as to whether the new system is an Unfair Labour Practice.

The Apex Court categorically held there was no exploitation of ex-employees and should resign had done so voluntarily and they get substantial benefit under the new system.

In our opinion the laissez –faire approach of the Hon’ble Supreme Court as early as 1968 is sonorous in the following words:

…. “On the whole, however, it is clear that the Company has not done anything illegal. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has, without the arrangement, no proper means of obeying. This, of course, he can do only so long as he does not break that or any other law.”……..

In our next part we will deal with the post 1968 scenario and the evolution of the first ever Contract Labour Law in India .




3rd December 2013 From India, Pune
LABOUR LAW REFORMS-STEP FOR THE FUTURE TO GENERATE EMPLOYMENT AND MAKE INDIA GLOBALLY COMPETITIVE

Recently the Union Cabinet on 31-07-2014 approved the changes to three important labour laws:

FACTORIES ACT:

Proposed changes in the Factories Act are:

(i) Employee’s safety at work place

(ii) Doubling the provisions of overtime from 50 hours a quarter to 100 hours in some cases and 75 hours to 125 hours in work of public interest

(iii) Increasing penalty for violation of the provision of the Act

(iv) Relaxing norms for workmen in some industries at night

(v) Reducing from 90 to 240 days the number of days, an employee needs to work to become eligible for the benefit like live with pay

APPRENTICES ACT:

The scope of employment as apprentices now restricted to Shop floors will be expanded to induction of Non-Engineers as Apprentices. There is a possibility of open the door of other sectors to Apprentices.

Stipend paid to Apprentices is also being increased and in the first year apprentices will get 70% what semi skilled workers get and the second year 80% and third year 90% and for those employees in small scale unit and the Government will pay 50% and the employer the balance.

LABOUR LAWS (EXEMPTION FROM FURNISHING

RETURNS AND MAINTAINING REGISTERS BY CERTAIN ESTABLISHMENTS)

ACT, 1988

The changes to the Act will enable Employer especially thousands of small scale industries to file just one return for compliance of the following labour laws

It will also exempt small-scale industries with less than 40 workers to comply separately with each of the laws. A single page return on compliance is what the amendment seeks to fulfill.The covered laws are as follows:

(1) The Payment of Wages Act, 1936

(2) The Weekly Holidays Act 1942

(3) The Minimum Wages Act, 1948

(4) The Factories Act, 1948

(5) The Plantations Labour Act, 1961

(6) The Working Journalists and Other Newspaper Employees

(Conditions of Service) and Miscellaneous Provisions Act, 1955

(7) The Contract Labour (Regulation and Abolition) Act, 1970

(8) The Sales Promotion Employees (Conditions of Service) Act, 1976

(9) The Equal Remuneration Act, 1976

Stakes for the Contract Staffing Industry on the amendments:-

(i) Blue Collared Staffing will get an impetus on Overtime from Doubling the provisions of overtime from 50 hours a quarter to 100 hours in some cases and 75 hours to 125 hours in work of public interest .

(ii) Due to inclusion of Apprentices in the Non Engineering domain ie other sectors Staffing Industry will be benefited. .

(iii) Implementation of apprenticeship training scheme in those organisations which are operating business/trade in more than four States, will rest with Central Government.Therefore Contract Staffing Companies operating business/trade in more than four States will be benefited.

(iv) The proposal to allow registers/records to be maintained in computer, floppy, diskette or on other electronic media and return submitted through email can be proceeded with.

With Regards

V.Sounder Rajan

Advocate -Labour & HR & Consumer Law Consultant -Chennai

Legal Consultant for Indian Staffing & Recruiting Industry
22nd August 2014
EPF Limit increased from Rs.6,500 to Rs.15,000/-
W.e.f 01.09.2014 Government of India, Ministry of Labour and Employment notification dated 22.08.2014 Employee Provident Fund (amendment scheme 2014) has enhanced the EPF ceiling limit from Rs.6,500/- to Rs.15,000/-.
Consequently, the changes have been made in the following:
EPF Scheme 1952
Wherever the words Rs.6,500/- occurs in the scheme it is now replaced by Rs.15,000/-.
Similarly amendments have been made to Employees Pension Scheme 1995, Employees Deposit Linked Insurance Scheme 1976.
Therefore Employer’s and Employee contribution will now be calculated on the revised ceiling of Rs.15,000/-.
Contract Staffing Pay-rolling policy will now require the changes to be made and the ceiling enhancement given effect to from 1-09-2014.
V.Sounder Rajan
Advocate -Labour & HR & Consumer Law Consultant -Chennai
Legal Consultant for Indian Staffing & Recruiting Industry
30th August 2014
Hi

Recently a Manufacturing Company wanted to hire apprentices through their Staffing Service Provider.

The COO called his Procurement Head and told him to hire Apprentices for the shop floor .

Immediately the Procurement Head – Krishna lost no time and talked to the Head of Business of the Staffing Service Provider Company -Arjun and wanted a quote . Immediately Krishna and Arjun had an interesting conversation .

Krishna- I expect a good quote from you to maintain my margins.

Arjun- Yes, I need to give the quote on the Apprentice –Month Model strictly based on some new developments in the law.

Krishna:- What is that !

Arjun : Do you know -New Apprenticeship (Second Amendment) Rules, 2014 have come into effect on 22-09-2014.The whole pay out is now Apprentice friendly.

Krishna-You are getting on my nerves –Tell me how does it affect my procurement pricing.

Arjun- Hey Krishna listen –Now you need to pay the following rates to the seconded Apprentices:-

(1) The minimum rate of stipend per month payable to trade apprentices shall be follows, namely:—

(a) During the first year of training : Seventy per cent. of minimum wage of semi-skilled workers notified by the respective State or Union territory

(b) During the second year of training : Eighty per cent. of minimum wage of semi-skilled workers notified by the respective State or Union territory

(c) During the third and fourth year of training : Ninety per cent. of minimum wage of semi-skilled workers notified by the respective State or Union territory:

Krishna - Thanks a lot Arjun for this valuable info –But can you tell me about the old rates !.

Arjun – The old rates were like this:-

During the first year of training -Rs 2100/-per month

During the second year of training –Rs 2400/- per month

During the third year of training –Rs 2800/- per month

During the Fourth year of training –Rs 3100/- per month.

Krishna- Well if what you said is true .Now our CTC per Apprentice goes for a spin , I will need to get back to you after re-working my whole annual budget for Apprentices. I will also get a legal update from my Legal Team on these changes.

Arjun- Okay shall wait for your call.

With Regards

V.Sounder Rajan

Advocate -Labour & HR & Consumer Law Consultant -Chennai

Legal Consultant for Indian Staffing & Recruiting Industry
5th October 2014
Reference to the News Report in the Hindustan Times -Sat Nov 15-2014

Labour contractors to get permits within three days: Govt

PTI Mumbai, November 14, 2014

Maharashtra chief minister Devendra Fadnavis on Friday approved necessary changes in rules to enable applicants like labour contractors, traders and industrialists get necessary permits in three days.

"Now, those applying for permits under the Shops and Establishment license and permits to start factories, will get them in three days," an official release said.

Failure to grant permits within this period would be deemed as "permit granted", the release said.

Fadnavis has also decided to modify the Contract Labour (Regulation and Abolition) Rules, 1971 to enable a labour contractor to get registration permit within three days of application, it said.

Earlier, labour contractors used to get such permissions for a one-year period, but as per the latest norms, they would get these for an indefinite period.

Our View

This is a very good News and beginning for the Contract Staffing Industry in Maharashtra.We eagerly await the follow up action from the Maharashtra Govt Labour Department.
18th November 2014
Sub:- Labour Law environment is becoming compliance friendly for Contract Staffing Business

The Labour Law environment is becoming compliance friendly for Contract Staffing Business being part of the Indian Contract Staffing Industry. In the first stage of Labour law reforms the Central Government has gone ahead with a five point agenda.

The text of the Prime Minister’s announcement on 16th October 2014 has been officially released through PIB. The announcement centers on five points:

(1) A dedicated Shram Suvidha Portal:- This would allot Labour Identification Number to nearly 6 lakhs units and allow them to file online compliance for 16 out of 44 labour laws

(2) All-new Random Inspection Scheme:- This would utilize Information technology to eliminate human discretion in selection of units for Inspection, and uploading of Inspection Reports within 72 hours of inspection mandatory

(3) Universal Account Number [UAN] for EPF Subscribers: - This will enable 4.17 crore employees to have their Provident Fund account portable, hassle-free and universally accessible.

(4) Apprentice Protsahan Yojana:- This will be mainly supporting manufacturing units and other establishments by reimbursing 50% of the stipend paid to apprentices during first two years of their training



(5)Revamped Rashtriya Swasthya Bima Yojana:- This will introduce a Smart Card for the workers in the unorganized sector seeded with details of two more social security schemes

Now let us analyze the takeaways for Contract Staffing Business .

Shram Suvidha Portal

The most important takeaway is the dedicated Shram Suvidha Portal. By this will be allotted Labour Identification Number and online compliance for 16 out of 44 labour laws can be adverted to.The salient features as indicated in the PIB Press Note are:-

Shram Suvidha Portal ( not yet operational) in central sphere to create a conducive environment for industrial development. The four main features of this Portal are:



a. Unique labour identification number (LIN) will be allotted to Units to facilitate online registration.

b. Filing of self-certified and simplified Single Online Return by the industry. Now Units will only file a single consolidated Return online instead of filing 16 separate Returns.

c. Mandatory uploading of inspection Reports within 72 hours by the Labour inspectors.

d. Timely redressal of grievances will be ensured with the help of the portal.

This will bring in the necessary ease in compliance of provisions related to labour and will be a step forward in promoting the ease of doing Contract Staffing Business .

The complete database available centrally at unified portal will also add to the informed policy process.

The portal will be operative in four central organizations namely Chief Labour Commissioner, Directorate General of Mines Safety, Employee Provident Fund and Employees’ State insurance Corporation. In this endeavor of the Ministry, complete information of all 11 lakh units for these organizations has been collected, digitized and de-duplicated reducing the total number to 6-7 lakh. It is proposed to allot LIN to all these 6-7 lakh units.



Random Inspection Scheme

The second takeaway is the benefit of the random inspection scheme. Computers generated targets and not the present form of targeting the employers for the sake of harassment and other collateral purposes will do the inspection of selected units.

Further, under all new random inspection schemes, within 72 hours of inspection, the inspection report of the inspectors who carried the inspection shall be uploaded in the specified portal.The highlights of the proposed scheme listed in the PIB Press Note are:-



Labour Inspection Scheme: So far, the units for inspection were selected locally without any objective criteria. To bring in transparency in labour inspection, a transparent Labour Inspection scheme is being developed. The four features of the inspection scheme are:

(i) Serious matters are to be covered under the mandatory inspection list.

(ii) A computerized list of inspections will be generated randomly based on pre-determined objective criteria.

(iii) Complaints based inspections will also be determined centrally after examination based on data and evidence.

(iv) There will be provision of Emergency List for inspection of serious cases in specific circumstances.

A transparent Inspection Scheme will provide a check on the arbitrariness in compliance mechanism. Immediately on inauguration, sms/email was sent to 1800 Labour inspectors of these enforcement agencies on behalf of the Prime Minister.



Portability of UAN-[EPF]

The third takeaway for Staffing Business is the portability of UAN whereby all Employees will be allotted one number that will be theirs for lifetime.

UAN will be linked with the bank account and other KYC details.

By this for the Contract Staffing Business , the earlier system of depending upon the declaration of the employee for exempting them from contribution will be regulated as if, if an employee is exempted, he will not have an UAN number at all.

The balance two items of Apprentice Protsahan Yojana and Revamped Rashtriya Swasthya Bima Yojana are not relevant for as apprentice Protsahan Yojana will support manufacturing units. Similarly, Revamped Rashtriya Swasthya Bima Yojana is for smart card for the workers in the unorganized sectors that mean that those who are covered by EPF will not come under Revamped Rashtriya Swasthya Bima Yojana.

Follow up Notification –

When the follow up notification is issued by the Ministry of Labour then the exact details and its working can be measured.

For the present, the most important points being the first three will be subject to the amendment to the three major labour laws that were presented to Parliament during the monsoon session of Parliament.

Once the amendment becomes law, the whole scheme will become clear for the Contract Staffing Business .

We need to record that again this implementation is in the Central Sphere i.e Central CLRA domain and for Staffing Business to benefit similar Amendments are to be replicated by the concerned State Government with reference to many compliance's in State based Labour Law enactments more particularly the Shops and Establishments Act of each and every State .

With Regards

V.Sounder Rajan

Advocate -Labour & HR & Consumer Law Consultant -Chennai

Legal Consultant for Indian Contract Staffing & Recruiting Industry
23rd November 2014
Sub: EPF Appellate Tribunal Bench at Bengaluru-Reg
The Government of India vide notification dated 7.11.2014 in S.O.2838(E) has constituted the Employees Provident Fund Appellate Tribunal at Bengaluru ( for entertaining Appeal against the final orders of the EPF Authorities in respect of the establishments situated within the territories of State of Karnataka, Tamilnadu, Kerala, Andhra Pradesh, Telangana and Goa and Union Territories of Andaman & Nicobar and Puducherry.
Also by the same notification, all pending cases before the Central Tribunal in New Delhi will stand transferred to the Bengaluru Tribunal.
Takeaway:
No necessity to go all the way to New Delhi to file the Appeal.Legal Redressal of EPFO orders becomes Employer friendly.
With Regards
V.Sounder Rajan
Advocate -Labour & HR & Consumer Law Consultant -Chennai
28th November 2014
Contract Staffing-Legal Knowledge base -EPF Act

Shri Shankar Aggarwal, Secretary, MOL&E through the PIB has come out with the following Press Note post the Second Round of Tripartite Consultations on March 31st, 2015 Employees Provident Fund and Miscellaneous Provisions Act,1952 (EPF &MP Act) Amendments amongst the following stake holders:-

Prsence of : Shri Bandaru Dattatreya, the Minister of State, Labour & Employment (I/C) & Shri Shankar Aggarwal, Secretary, MOL&E

a.Trade Unions- Shri A.K. Padmanabhan, CITU, Shri A.D. Nagpal, HMS, Shri B.L Sachdeva, AITUC, Shri Ashok Singh, INTUC

b.Industry- Shri Sharad Patil, EFI (Employers Federation of India), Shri S.S. Patil, AIMA (All India Manufacturers Association), Shri Bhardwaj, Laghu Udhyog Bharati, Shri Sushant Singh, CII (Confederation of Indian Industries),

c-State Govts- Representatives of various state governments

The Second Round of Tripartite Consultations on Employees Provident Fund and Miscellaneous Provisions Act,1952 (EPF &MP Act) Amendments was held on March 31st, 2015. Shri Bandaru Dattatreya, the Minister of State, Labour & Employment (I/C) chaired the second round of tripartite consultations on EPF & MP Act Amendments. The consultations gain greater importance in view of the new amendments proposed in the backdrop of the Union budget proposals impacting the functioning of EPFO.

Inaugurating the consultations, Shri Dattatreya briefly dwelt upon the major changes being mulled in the proposals. They include bringing down the minimum no. of employees required for coverage under the Act from the existing 20 to 10, doing away with the Schedule Head for coverage and bringing in a negative list instead, special provisions for encouraging the functioning of small-scale units, provisions for setting up of multiple Appellate Authorities under the Act, removing ambiguities in the implementation of the Act, ensuring greater clarity in the definitions under the Act, especially with regard to wages which qualify for deduction for the purposes of the Act, introducing greater transparency and accountability in the enforcement of the Act by having an objective inspection scheme, introducing a scheme for unorganized workers and providing a choice to the worker by giving an option to join NPS / EPFO, which is in tune with the proposals mentioned in the Union Budget.

Taking part in the discussions, the representatives of the employers’ associations and federations generally welcomed the various proposals contained in the amendments under consideration. They generally voiced the opinion that the introduction of NPS would mean greater choice for the worker. However, there were also views that NPS cannot match the benefits offered by EPFO and therefore, are not comparable. It was also felt that the amendments would help in sharpening the competitiveness of Indian Industry and would enable India to become a manufacturing hub. However, there was a need to further encourage the concessions granted to the small-scale industries. Increase of coverage also received wide acceptance, both from employers’ and employees’ side.

Opposing certain amendments proposed, representatives of the Trade Unions expressed reservations especially to the move to introduce NPS as a substitute to EPFO. They also expressed reservations regarding the inspection scheme which they argued brought about centralization in the decision making process which is contrary to the prevailing wisdom which favours decentralization.

Summing up the discussions, Shri Shankar Aggarwal, Secretary, MOL&E assured that the concerns of all stakeholders will be addressed when giving final touches to the legislative amendments. Further, the objective behind bringing in the changes is to further strengthen the delivery of social security benefits.

In his concluding remarks, Shri Dattatreya stressed upon the need to focus on the unorganized sector of the workforce which constitutes 93% of the total workforce. He said that the need of the hour is to include more segments of the workforce like Anganwadi works into the ambit of social security legislations. He also informed that the Ministry is contemplating issue of smart cards to the labour workforce so that social security benefits reach each intended beneficiary. He also assured that the Act would be amended taking into account the sensitivities of all concerned.

Shri Sharad Patil, EFI (Employers Federation of India), Shri S.S. Patil, AIMA (All India Manufacturers Association), Shri Bhardwaj, Laghu Udhyog Bharati, Shri Sushant Singh, CII (Confederation of Indian Industries), Shri A.K. Padmanabhan, CITU, Shri A.D. Nagpal, HMS, Shri B.L Sachdeva, AITUC, Shri Ashok Singh, INTUC were some of the notable representatives of employers’ associations and employees’ associations (trade unions) who took part in the deliberations in addition to the representatives of various state governments.

Our views:

The most important point in the Agenda was the move to introduce NPS as a substitute to EPFO which means that there has to be a an exemption provision introduced in the EPF Act to exempt those persons opting to switch over to NPS.The Govt has a duty to convince the Trade Unions and seek their consent so that the exemption provision when introduced has a smooth sailing in both Houses of Parliament.

Regards
V.Sounder Rajan
Advocate
6th April 2015
Dear Mr. Rajan you thread is very helpful for us. i am working in engineering staffing company as AM- HR. i need your guidance.
6th August 2015 From India
Dear Sir,
We have engaged 4 vehicles through travel agency . As per agreement agency provide vehicles with drivers for transportation for our employees. I want to know what is our legal liabilities for vehicle drivers under labour law. is there any liabilities to pay minimum wages and PF of principal employers.
Regards
Sandeep Satsangi
9992112044
23rd July 2016 From India,
yes, as a principal employer, you have to ensure that minimum wages are paid and all statutory payments are made by the travel agency to their drivers.
23rd July 2016 From India, Begusarai
Dear All 2015 and 2016 have been excellent years for new changes in Labour Law .Lets look for more.
26th October 2016
Maternity Benefit Act Amendment 2017 vsrlaw
29th March 2017

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Sub Maternity Benefit Amendment Act 2017 -Effective dates
In continuation to the earlier Notification of Notifying the amendments to the Maternity Benefit Act now GOI has notified the effective dates of implementation by the consequential Notification of the “effective dates of implementation":-
(1) maternity benefit enhancement of 26 weeks has been given effect from 1st April 2017
(2) relating to work from home will come into effect from 1st July 2017.
Attached copy of Gazette Notification dated 31st March 2017 .
6th April 2017

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The Minimum Wages (Karnataka Amendment) Act, 2017
New Amendment under Minimum wages act 1948 of Karnataka
Government of Karnataka has released the Minimum Wages (Karnataka Amendment) Act, 2017, as per the Amendment Act the Karnataka Government has increased the penalties under the Section 22 and Section 22A of The Minimum Wages Act, 1948
1. Short title and commencement.
2. Amendment of section 20.
3. Amendment of section 22.
4. Amendment of section 22A
2. Amendment of section 20.- In section 20 of the Minimum Wages Act,
1948 (Central Act XI of 1948), (herein after referred to as the Principal Act,-
(i) in sub-section (1), for the words “not below the rank of Labour Commissioner”, the words “not below the rank of Assistant Labour Commissioner” shall be substituted. (ii) in sub-section (4), for the words “fifty rupees” the words “one thousand rupees” shall be substituted.
3. Amendment of section 22.- In section 22 of the Principal Act for the
words “ which may extend to five hundred rupees” the words “which shall not be
less than five thousand rupees but which may extend to ten thousand rupees” shall be substituted.
4. Amendment of section 22 A.- In section 22A of the Principal Act, for the
words “five hundred rupees” the words “ten thousand rupees” shall be substituted
30th November 2017

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Contract Labour (Regulation and Abolition) Act, 1970,is sought to be amended.Attaching the proposed amendments.
6th December 2017

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Payment of Gratuity (Amendment) Act, 2018 (Gratuity Amendment Act) (28-03-2018)
According to the Notification, the Central Government will specify that the amount of gratuity payable to an employee shall not exceed Rs 20,00,000 (Rupees Twenty Lakhs ).
Further, for the purposes of calculation of continuous service for the payment of gratuity to employees who are on maternity leave, the Central Government has specified that the total period of maternity leave shall not exceed 26 (twenty-six) weeks.
Fixed Term Employees completing 5 years continuous service will have to be paid Gratuity
9th April 2018
Dear HR Professionals
We are coming out with an ANALYSIS on the legal environment for Indian CONTRACT Staffing industry 2018 .This will be a weekly update.
Shortly all HR Professionals can access this update on this Blog Page.Hope it will be useful.
18th April 2018
Fixed term employment allowed in Blue collared sphere of Contract Staffing Industry
The Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 (Rules) notified by the Ministry of Labour and Employment (Ministry), vide notification dated 16 March 2018 (Notification).
Labour reforms introduced.
Fixed Term employment permitted across all sectors in the manufacturing field.
Industrial Employment (Standing Orders) Central Rules, 1946 amended by Notification.
Condition introduced no existing permanent employees can be converted to fixed term employees.
19th April 2018
Attaching the FTC Notification for view by Members.
24th April 2018

Attached Files
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File Type: pdf FTE Final Notification.pdf (238.1 KB, 10 views)

In the Blue Collared sphere as per the definition Fixed Term Employee in the amended Industrial Employment (Standing Orders) Central Rules, 1946 – by Notification sub para (h) A “fixed term employment workman” is a workman who has been engaged on the basis of a written contract of employment for a fixed period:
Provided that-
(a) his hours of work, wages, allowances and other benefits shall not be less than that of a permanent workman; and
(b) he shall be eligible for all statutory benefits available to a permanent workman proportionately according to the period of service rendered by him even if his period of employment does not extend to the qualifying period of employment required in the statute.
Points to be noted:-
1. There should be a written contract i.e either an appointment letter with the acceptance of the fixed Term Employee or a Fixed Term Employment Agreement or Contract signed by both the employer and Fixed Term Employee.
2. There should be a fixed period i.e starting date and end date in the written contract i.e either an appointment letter with the acceptance of the fixed Term Employee or a Fixed Term Employment Agreement or Contract signed by both the employer and Fixed Term Employee.
3. Hours of work, wages, allowances and other benefits shall not be less than that of a permanent workman employed for the same job.
4. Fixed Term Employee shall be eligible for all statutory benefits available to a permanent workman proportionately according to the period of service rendered by him even if his period of employment does not extend to the qualifying period of employment required in the statute.
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
28th April 2018
The first case of Outsourcing reported in India was way back in 1967 ?
 GHATGE & PATIL CONCERN’S EMPLOYEES’ UNION Vs. GHATGE & PATIL (TRANSPORTS) PRIVATE LTD. 22/08/1967 –Supreme Court
 GHATGE & PATIL (TRANSPORTS) 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 the company, finding difficulty in observing the provisions of the Motor Transport Workers Act 1961, introduced a scheme whereby the trucks, instead of being run by the company itself were hired out to contractors at a fixed rate per mile.
 Employees of the company who were engaged in running the trucks resigned their jobs and most of them who had for- merely been drivers became contractors under the scheme.

 The workmen's’ Union however raised a dispute asking for the reinstatement of the ex-employees who had been given work on contract basis.
 The 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 Supreme Court the Union contended that the ex-employees of the company continued to be workmen notwithstanding that they were posed as independent contractors, that the beneficent legislation conceived in the interests of transport workers was being set at naught by the company, and that the setting up of the contract system amounted to unfair labour practice.
…… to be continued
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
12th May 2018
The Govt of India. had abolished the EPF APPELLATE TRIBUNAL at Delhi and Bengaluru vide notification dated 26-05-2017 .
Earlier Appeals against order under Section 7 A of EPF Act were filed before the EPF APPELLATE TRIBUNAL.
Now all cases to be filed before EPF APPELLATE TRIBUNAL at Delhi and Bengaluru will be heard by CENTRAL GOVERNMENT INDUSTRIAL cum LABOUR COURTS ( CGIT ) situated at 22 places in India.
Directions of the Ministry is attached .
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
13th May 2018

Attached Files
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File Type: pdf CGIT jurisdiction_0.pdf (2.22 MB, 8 views)

IMPORTANT POINTS IN GHATGE & PATIL (TRANSPORTS) CASE
i) Since the drivers had resigned their jobs they could not be said to be employed in the Motor Transport undertaking. The word ‘employed’ in the definition of Motor Transport Act. Worker is not used in the sense of using the services of a person but rather in the sense of keeping a person in one’s service. Persons who are independent and hire a vehicle for their own operation paying a fixed hire per mile from their earnings cannot be said to be persons employed in the Motor Transport Undertaking in the sense of persons kept in service. The operators were therefore not Motor Transport Workers within the definition.
(ii) There was no bar in law to the introduction of the con- tract system. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has without the arrangement, no proper means of obeying. This, of course, he can do only so long as he does not break that or any other law.
(iii) Those who resigned did so voluntarily and they got substantial benefits under the new system.
(iv) The Tribunal was right in its conclusion that there was no exploitation of the ex-employees. There was thus no unfair labour practice. The present case was not analogous to the case of contract labour when employment of labour through a contractor or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an important weapon in its armoury.
..... to be contd
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
22nd May 2018
please suggest, can we approch cgit to get stay order against 7Q i.e interest amount lived by epf authorities. If any judgement copies please share
25th May 2018 From India, Hyderabad
You need to check with CGIT -Hyderabad The Jurisdiction of CGIT is follows:-JURISDICTION OF CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL-CUM-LABOUR COURTS (CGIT-cum-LCs)
Sl. No. Name of CGIT-cum-LC State-wise jurisdiction
1 Mumbai-I Maharashtra (partly), Goa (partly), U.T of Daman and Diu (partly)
2 Mumbai-II Maharashtra (partly), Goa (partly), U.T of Daman and Diu (partly)
3 Nagpur Maharashtra (partly), Goa (partly), U.T of Daman and Diu (partly)
4 Dhanbad-I Bihar (partly), Jharkhand (partly)
5 Dhanbad-II Bihar (partly), Jharkhand (partly)
6 Jabalpur Madhya Pradesh, Chhattisgarh
7 Kanpur Uttar Pradesh (partly), Uttarakhand
8 New Delhi-I Union Territory of Delhi only
9 New Delhi-II Haryana (partly), Uttar Pradesh (partly)
10 Asansol West Bengal (partly), Bihar (partly)
11 Kolkata West Bengal
12 Chandigarh-I U.T. of Chandigarh, Punjab, HP, J and K , Haryana (partly)-Odd No
13 Chandigarh-II U.T. of Chandigarh, Punjab, HP, J and K , Haryana (partly)-Even No
14 Jaipur Rajasthan
15 Lucknow Uttar Pradesh (partly), Uttarakhand
16 Bangalore Karnataka
17 Ernakulam Kerala, U.T. of Lakshadweep
18 Chennai Tamil Nadu, U.T. of Puducherry
19 Hyderabad Andhra Pradesh, Telangana
20 Bhubaneswar Odisha
21 Guwahati North Eastern States
22 Ahmedabad Gujarat

As the Jurisdiction is newly created local practices play a major role.
7th August 2018

Attached Files
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File Type: pdf CGIT jurisdiction.pdf (1.71 MB, 3 views)

In our earlier post we have referred to GHATGE & PATIL (TRANSPORTS) CASE .Every HR person will ask Is the GHATGE & PATIL (TRANSPORTS) CASE relevant now then why refer to it ?
Actually in that Judgment LAISEZ FAIRE WAS GIVEN A SEAL OF APPROVAL
The Apex Court observed on the whole, however, it is clear that the Company has not done anything illegal.  
A person must be considered free  to so arrange his business that he avoids a regulatory law and its   penal   consequences  which  he   has, without the arrangement,  no proper means of obeying. This, of  course, he  can     do only so long as he does not break  that  or any other  law.
ULTIMATELY the judgment became irrelevant - by the enactment of Contract Labour ( Abolition & Regulation ) Act 1970
So the Judgment of the Apex Court has been overruled-MEANS IT IS JUST referred to FOR tracing history of outsourcing in India .
So Outsourcing is a very old term but in recent times it has acquired a new meaning in Business.
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
9th August 2018
Fixed Term Employment is also part of Temp Staffing
MOE & L through notification dated 16 March 2018 (Notification), had notified the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 (Rules).
It amended the Industrial Employment (Standing Orders) Central Rules, 1946 to introduce a significant labour reform – allowing fixed term employment for all sectors.
Fixed Term Employee means 'a workman who has been engaged on the basis of a written contract of employment for a fixed period: provided that, (a) his hours of work, wages, allowances, and other benefits shall not be less than that of a permanent workman; and (b) he shall be eligible for all statutory benefits available to a permanent workman proportionately according to the period of service rendered by him even if his period of employment does not extend to the qualifying period of employment required in the statute.
26th October 2018
Focus on Govt legislation in Contract Staffing Industry[CSI]
Contract Staffing can be divided broadly into "Blue Collared " and 'white collared".
The Focus of Government on Labour Law Legislation rests with main Sector i.e Industry (Manufacturing).
In relation to Contract Staffing Legislation by Govt the impetus will be on Blue Collar .
So much cannot be expected catering to the needs of the Contract Staffing Industry on White Collar front.
CSI has to be satisfied and operate within the Existing laws
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
30th October 2018
The Employees’ Provident Fund Organisation (EPFO) issued a circular on 18 October 2018 [attached] instructing regional provident offices to not coerce employers by way of prosecution in the light of the Supreme Court order on Aadhaar.
The circular is important because EPFO was asking employers to seed the Universal Account Number (UAN) of the employees with Aadhaar. UAN was launched in 2014 with the idea that every employee under the EPF will have only one account number which will be portable from one employer to another and the employee could ultimately de-link herself from the employee.
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
30th October 2018

Attached Files
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File Type: pdf LC_Aadhar_KYC_13478.pdf (77.6 KB, 4 views)

Dear All
++++++++++++++ Thanks for your inputs. Wish a happy and prosperous festival of lights, DIWALI +++++++++++++
5th November 2018 From India, New Delhi
Dear All
++++++++++++++ Thanks for your inputs. Wish a happy and prosperous festival of lights, DIWALI +++++++++++++
5th November 2018 From India, New Delhi
Common question posed : Is the Indian legal system a complex web of too many labour laws-
One needs to understand India is a Union of States.
Labour is in the concurrent list meaning both Central Govt and State Govt can legislate.
Contract Staffing Entities are free to operate in both Central & State sphere irrespective of the No of laws.
The laws are for Industry and to benefit the Workers. So change in laws to suit the CSI i.e. Employers cannot be expected.
Only aggregation can be done which the present Govt is doing i.e. old wine in a new bottle.
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
It is not at all possible to repeal any law .
8th November 2018
Have Labour laws have lost touch with current business reality ?
Reality - Indian Labour Laws are changing with the times.
The AP ,Rajasthan & Maharashtra amendment on CLRA are remarkable piece of legislation.
Labour laws have to balance all stake holders-Management, Trade Unions(Contract Workers) and Government.
India is the best place for Contract Staffing.
If evolving laws come it will only benefit Labour and may backfire on the Industry. Cosmetic changes alone are possible.
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
22nd November 2018
Distribution of the Legislative power on Labour between the Central Government and State Government
Union List-(Central Government)
Entry No. 55
Regulation of labour and safety in mines and oil fields

Entry No. 61
Industrial disputes concerning Union employees
Entry No. 65
Union agencies and institutions for “… vocational … training …”
Concurrent List-(Central as well as State Government)
Entry No. 22
Trade unions, industrial and labour disputes
Entry No. 23
Social security and insurance, employment and unemployment
Entry No. 24
Welfare of labour including conditions of work, provident funds, employers’ invalidity, and old-age pension and maternity benefits
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
24th November 2018
Functions of the Labour Department of Central and States
To implement Central and State labour laws and employment laws for ensuring basic statutory working conditions and labour standards.
To protect the interests of workers, both in organized and unorganized sectors and to maintain industrial peace and harmony.
To Ensure wages, safety, welfare, working hours, weekly & other holidays, leave etc. for workers.
To eliminate employment of all forms of child labour and rehabilitation of those released from work
To promote the welfare and social security of workers by the implementation of schemes.
To provide social security to the injured workmen and maternity benefit to the women workers.
To provide for registration and Licensing of Establishments and collection of labour welfare fund.
To provide for registration of trade union and unorganized sector.
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
8th December 2018
Have Labour laws have failed to adjust to recent labour market developments
Some of the important changes that have taken place in the Indian labour market as a result of the changes in the economic and business scenario are: need to quickly adjust workforce to transient, seasonal or structural demand volatility, both in terms of numbers and composition.
Mechanism to address such transitory needs as in the case of temporary unavailability of internal staff without any loss in productivity, need to focus on core activities and need for skilled labour.
However, identification of skilled manpower, ensuring a match with company needs and retention of staff is never an easy job, and this is further compounded by the short supply of such skilled labour and high attrition rates experienced recently.
These features of the emerging business scenario have played a pivotal role in the development of a new segment in the labour market – the flexi staffing industry.
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
24th December 2018
National Company Law Tribunal- Mumbai Bench (NCLT ) by in a land mark Judgment dated September 12, 2018 in the matter of Precision Fasteners Ltd has held that provident fund dues to Company’s workmen are excluded from the liquidation assets enabling the workmen/ employees to realize their savings as well as the employer’s contributions as a part of their fundamental right to life while the right of the creditors is merely a property right. Therefore, the dues in respect of provident/ pension/ gratuity shall not be considered as liquidation asset to be made the provisions of the Insolvency and Bankruptcy Code, 2016.
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
22nd January 2019
Mrs. JUSTICE S.VIMALA of the Madras High Court held recently on 7 January, 2019 in the matter of R.Devika vs The Chairman has held in the matter of denial of a Job on account of pregnancy had directed the Govt Authorities to take into account the constitutional provisions of India and the maternity protection and convention of the International Labour Organization, to frame guidelines by providing the best possible measures to support women candidates who are at difficult circumstances on account of pregnancy or maternity or other natural causes. as follows:
"The pregnancy and the child birth should not be considered as the impediment for discharge of duty. The concessions given to pregnant women shall not be construed as a concession towards personal comfort of the women. The child birth should be considered as a contribution to continuity of generations, without which the existence of the world is impossible."
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
3rd February 2019
Allowances for Provident Fund Contributions
LLR has been persistently notifying that the employers should rationalize the allowances which are being paid to the employees but on some of the allowances, provident fund contributions are not deducted. Repeated Seminars have been held to create awareness keeping in view that Gujarat, Madhya Pradesh and Madras High Courts have held that all allowances other than house rent allowance will form part of basic wages for provident fund contributions.
Aggrieved by the decisions, appeals were filed in the Supreme Court under the caption Surya Roshini Vs. State of Madhya Pradesh in SLP(C) No. 008781-008782/2012. After prolonged hearings, the arguments have been concluded on 06.02.2019 and now the Judgment is reserved. LLR has informed that the judgment would be notified immediately on its announcement.An important issue in EPF Law will get decided.
Source :Labour Law Reporter
V.Sounder Rajan
HR & Employment Law Attorney
Specializing for Recruiting and Contract Staffing Industry
M: 98401-42164
9th February 2019

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