Facing Union Demands: How to Handle Bonus and Gratuity Claims for Daily Wage Workers?

Dear Mr. Harbhajan,

I have come across an issue. We have a branch in Neiveli (Chennai) where we are working for BHEL company. We have hired 25 workers on a daily wage and 2 on a monthly basis. Those on daily wages fall under the Neiveli labor license purview. Currently, some workers are engaging in agitations. However, our representative, who is on a monthly payroll, insists on unofficial negotiations for Full and Final Settlements as we intend to release 4 daily wage workers.

An important point to note is that even though they are paid daily wages, we are transferring their wages monthly into their bank accounts (number of days worked * daily wage), which classifies it as a wage rather than a salary.

It appears that the local trade union met with the Assistant Labor Commissioner in Chennai and has put forward certain demands if we wish to release the workers. I have a doubt - do these demands truly fall under the law, or is the Labor Commissioner merely supporting the union? Can we challenge this?

The demands include:

1. We must pay 20 days' leave wages for every 240 days completed.
2. We must pay 15 days' salary for every 240 days completed (possibly gratuity).
3. We must provide a Conveyance allowance of Rs. 200 every month for the service they have rendered.
4. We must offer either one month's notice or pay the equivalent of 26 days' notice immediately.

Let's assume they joined on 1.12.06 and have been working until now.

I am uncertain why, as daily laborers, we should be obligated to pay bonuses, gratuity, leave salary, conveyance (which is not mandated by law), and notice pay. How should we approach this argument with the Chennai Labor Commissioner and how can we defend our position?

Thank you.

Dear Sir,

As per the Factories Act, employees are entitled to one day of leave for every 20 days worked. Therefore, any accrued leave must be encashed. Additionally, employees are entitled to 15 days' pay for each year of service as retrenchment compensation, not gratuity, which becomes applicable after five years of service.

Employers are not obligated to provide conveyance as there is no law mandating it. However, a one-month notice pay is required if an employee is to be terminated.

These workers will be covered under all labor laws, and in most cases, the labor commissioner's points are accurate.

Thank you.

J. S. Malik

Dear,

Please go through the definition of Workman/employees under the various Enactments/Acts/Rules. If they come under the purview of that definition of the workman/employee, that Act will be applicable to them as well.

Ak Malhotra
Sr. General Manager
Dharampal Satyapal Limited