Are We Legally Safe with Our Comp Off Policy Under the Delhi Shop & Establishment Act?

Dear All,

In my company falling under the Delhi Shop & Establishment Act, we follow the practice of giving Comp Off only if a worker in the cadre or executive cadre does double duty. In the case of any festive or national holiday, we provide staff in a particular category with an amount based on Basic+DA+VDA using a formula.

To the best of my knowledge, if a staff cadre worker exceeds the prescribed work limit or works on a national holiday, they are entitled to double wages based on hours worked. For executive cadre employees, we adhere to the comp-off policy. Legally, this practice is correct; however, from a financial perspective, it serves as a cost-saving method.

Could we potentially face any legal complications in the future if a labor inspector conducts an inspection at any point in time? I would appreciate your assistance.

With Warm Regards,
Ranjeet

Ranjeet,

Owing to some problems with the internet (I was not able to get connected to citehr only), I could not get back. Please bear with me.

Overtime work and payment for employees other than those classified as workmen shall be regulated by an order of the competent authority of the company or by an amendment of standing orders. Normally, these will be provided in the standing orders of the company. Therefore, it is not worth challenging the legality of OT wages or even the compensatory holidays. A measure of cost-cutting approved by employees in general shall be implemented, and such a step will not be questioned by Labour/Factory department officials provided the initiative is for a short period.

Regards,
Madhu.T.K

Dear Madhu,

It is a policy that we are not going to pay double wages while in certain provisions in the Factory Act or other acts, they are all entitled to double wages. If something is missing from the standing order, can we amend it? What is the procedure to be followed?

In my father's company, leaves are now maintained from June to June. Have there been any changes made?

If in a company's standing order, nothing is written about the OT, and now they are not paying, what should be done?

Can you give me an idea about when double wages are to be paid, in which conditions and categories we have to pay? What is the legal obligation, and from where are these provisions derived? References, etc., just for my knowledge.

Please, sir.

Regards,
Ranjeet

Dear Sir,

If any person works more than the prescribed limit of 8 hours in a day or 48 hours in a week, they are entitled to overtime at a double rate. This is the law. Whatever policy you are adopting is against the law, i.e. the Delhi Shop and Establishment Act. However, if the policy you are adopting and nobody is objecting, then keep quiet. Legally, you cannot show your existing policy to the labor department.

As you mentioned regarding the amendment in standing orders, that can be done, and standing orders can be amended. However, no authority will certify your standing orders if you insert your compensatory off clause in place of overtime. Leave to be calculated on a calendar year basis.

Thank you.

J.S. Malik

Dear Mr. Malik,

Thank you for your reply. Is it 8 hours or 9 hours? Because when I am going through the provision for overtime (OT) in the act, it is written as 9 hours or 48 hours in a week. Can you explain the policy or method that is legally correct if an employee works on their festival off, weekly off, or national holidays? In the staff category, do we have to give wages, or in the executive cadre, compensate with a day off?

In my father's company, a Navratna PSU, they previously adopted the policy of a calendar year, while now they have adopted June to June. If they have adopted this, what is the procedure they opt for the same?

Please reply.

Regards,
Ranjeet

OT is payable only when an employee works beyond 9 hours, but as Mr. Mallik said, OT is calculated from the period that exceeded 8 hours. That means if anybody works for 9 hours a day, he cannot legally claim for OT wages at double the rate. However, if he works, say, for 10 hours, he will be entitled to 2 hours of OT wages.

If an employee is asked to work on a holiday due to an emergency, he shall be given compensatory holiday within a period as decided by the employer.

Regards,

Madhu T.K

Dear Ranjeet,

I totally agree with Mr. Mallik and Mr. Madhu. Furthermore, for more clarification on OT & Compensatory Holiday:

1. For Compensatory Holiday as defined in the Factory Act - Section 53 (1) and (2) clearly state that where a worker is deprived of any of the weekly holidays, he shall be allowed within the month in which holidays were due to him or within the two months immediately following that month.

2. For OT as defined in the Factory Act - Section 59, where a worker works in a factory for more than nine hours in any day or for more than 48 hours in any week, they shall be entitled to overtime at the rate of twice their ordinary rate of wages. Furthermore, for calculation, a minimum of 4 hours after the full 8 hours of working is being calculated for OT.

It is good if this matter is clearly defined/described in the Standing Orders (so workers are aware). For example, in an establishment where every Saturday is a half-day, then if totaled up, it would be 44.5 hours in a week. Even if a worker works more than 2 hours, say 46.5, then also OT is not calculated/given. The Factory Act clearly defines a maximum of 48 hours in a week.

With Regards,

Vivek

Dear Madhu & Vivek,

Thanks for your replies.

So finally, I can derive that if an employee works on a holiday like their festival off or national holiday, weekly off, they are only entitled to a Comp Off, not for double wages for that day.

But in Vivek's reply, it was written that only in the case of a weekly off, we have to give Comp Off.

Double wage is only calculated for overtime that is cleared.

Now, my question is if an employee works on a national holiday or on their festival off, then what to do:

a) Give a Comp Off.

b) Double Wages

c) Or Both.

In the light of labor laws, which practice should we adopt.

Please suggest.

With warm regards,

Ranjeet

For work on a holiday, give him a compensatory holiday and not double the wages, considering it as OT. Overtime (OT) is given for extra time worked over and above actual time, and there is logic in giving double the rate for OT because it is for applying extra energy by the concerned employee. OT at double rate is paid when a person works afresh on a holiday, it is to be deemed as if he is working on a regular day, and there is no need to pay at double the rate. However, for the holiday lost, he shall be given a compensatory day off.

This is purely my own judgment about the situation, and the employees can be convinced accordingly.

Regards,

Madhu.T.K

Dear Madhu,

Thanks!

In my company, a trade union also exists, which I think is much more management-friendly. I believe there is an agreement between management and the unions for the same. In March, when the settlement takes place again, can we review it?

These people are only good for themselves, but when it comes to settlement, they talk about the workers. What procedure should be adopted to deal with these people? I am facing a lot of problems while working in payrolls.

These people never fill in their leaves but still enjoy a full salary, which I feel is a wrong practice. How should we deal with these individuals?

Regards,
Ranjeet

If you have a management-friendly trade union, the matter can be settled very easily. You can submit your proposal for compensatory leave and OT wages and get it approved. In the meeting, you can condemn the attitude of workers who refuse to submit leave applications as well. You can state that "non-submission of a leave application will be viewed as an act of abstaining from the workplace when a worker is supposed to engage in work," which will, in turn, be considered a serious misconduct. In the present scenario of recession and cut-throat competition, if workers do not put in their best efforts, the company's objectives will not be achieved, possibly leading to the closure of the company.

Regards, Madhu.T.K

Dear Madhu,

Thanks! But I clearly mentioned that these people united during the time of the Charter of Demand. Secondly, union members are not filing their own leaves instead of the common worker. These people always think for themselves, as in my company, there is no such labor problem. We are providing welfare to our employees as my company belongs to TATAS. Can you let me know how I can have command over different labor laws?

Regards,
Ranjeet

Dear sir,

I would like to know about Labour Day. We are covered under the Delhi Shops & Establishments Act. Shall we have to pay salary to the labour workers for Labour Day (1st May) every year? Is it calculated as overtime, or can compensatory off be given? Shall we have to pay wages for Labour Day? Is it compulsory to pay wages?

Hi,

Labour Day is a holiday for employees. It falls under non-negotiable labor laws. If work is extracted from any worker on the said day, then they are entitled to receive double wages for the work done on Labour Day. Labour Day is a paid holiday.

Mohan Rao Manager HR