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Asso.prof.(commerce & Management)

Anonymous
Some queries - pls help if any statutory/legal insights:
 What are the guidelines specific to ITES for Incentives for extra hrs of work by employees? What are the statutory/ legal obligations involved?
 In a case where we have already been paying incentives for extra hours since last 2 yrs, does the withdrawal of it in subsequent years lead to any risks- penalty for non-payment etc?
 Can there be the withdrawal of Senior Managers( higher salary band) from incentive eligibility? Can this be done post an internal communication with these managers as part of a management decision?

From India, Pune
Hi Nithya,

1) As you know most of the IT/ITeS are covered under the states' Shops & Commercial Estts Acts. Provisions of acts & rules enacted under such acts would govern w.r.t. payment of OT allowance. Whereas in respect of Incentives (may be in lieu of OT allowance) are prevalent in most of these units. There is no legal provisions to regulate payment of incentives. There also can be both OT as well as incentive payments, not restrictions.

2) Withdrawal of any employees benefits sure to create complications though there is no threat of any penalty from legal angle it's only IR/HR issues to be handled.

3) Similar to the above, senior managers also will raise the issue if you propose to withdraw any employees benefits not only incentives but also any cut in emoluments/benefits.

If you are really serious about the proposed reduction/withdrawal you should come out with convincing grounds for the proposed action and discus in an informal meeting though it cannot be guaranteed. May be you could do it when increments/raise in salary/revision of wages/promotions are implemented during which you will have possibility to camouflage by way of rationaling the emoluments.

From India, Bangalore
Thank you Prof Kumar. This is much helpful Kind Regards, Nithya
From India, Pune
Hi Nithya,
1) As you know most of the IT/ITeS are covered under the states' Shops & Commercial Estts Acts. Provisions of acts & rules enacted under such acts would govern w.r.t. payment of OT allowance. Whereas in respect of Incentives (may be in lieu of OT allowance), are prevalent in most of these units. There is no legal provisions to regulate payment of incentives. There also can be both OT as well as incentive payments, no restrictions. However if you would attempt wholesome revision of your 'Incentive Schemes' possibly you can tinker here and there.
2) Withdrawal of any employees' benefits sure to create complications though there is no threat of any penalty from legal angle, it's only IR/HR issues to be handled.
3) Similar to the above, senior managers also will raise the issue if you propose to withdraw any employees' benefits in vogue, not only incentives but also any cut in emoluments/benefits.
If you are really serious about the proposed reduction/withdrawal you should come out with convincing grounds for the proposed action and discuss in an informal meeting though it cannot be guaranteed. May be you could do it when increments/raise in salary/revision of wages/promotions are implemented during which you will have possibility to camouflage by way of rationalizing the emoluments.
Whereas at this juncture, it's also necessary to consider changes to be brought in with the introduction of 'Code on Wages 2019', may be come new year or so w.r.t. applicability of the new definitions, coverage, quantum, methodology etc will have impact in IT/ITeS sector also.

From India, Bangalore
It is a most settled myth that employees working in IT / ITES are not covered by labour laws. ID act as well as Shop and Establishments act as well as Trade Union act etc etc.

All such laws are very much applicable to employees in IT / ITES industry. If these employees work in a capacity of individual contributor and not in a "supervisory capacity" then all the protection available to a workman in a factory is equally available to such employees in IT / ITES industry. Same applies to OT payment. Any work done that is more than either 9 hours a day or 48 hours a week falls in to overtime for which wages at double the rate must be paid.

Unfortunately there is a lot of ignorance of this "right of employees" and employers end up taking disadvantage of the situation.

Not paying due OT at double the rate, is an offence.

From India, Mumbai
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