How Have Recent Bombay High Court and Supreme Court Rulings Shaped Labour Law?

Dear all,

I want to start this session. Here, all of us will share the case laws regarding "labour law", especially by the Bombay High Court and the Supreme Court of India.

RK.

Hi!

Dear all, nowadays DVDs/VCDs/CDs are easily available on every domain of labor laws cases and latest judgments. You can easily procure them. I believe that we should discuss our opinions, views, and implications on these judgments. I am sure that these interactions will not only be interesting but also beneficial for all of us.

To start the discussions, you can refer to the recent judgment of CIC on petitions under the RTI Act, 2005. These RTI cases can be easily downloaded from the CIC/GOI website. I am looking forward to your initiative as mentioned above.

Best regards,
Alok Goel

Hi Alok,

Do you have that CD/DVD? Okay.

Now, if possible, can you help me with some of my queries?

PF Query:
1) Suppose the basic is Rs. 10,000, then the employer contribution is 12%, i.e., Rs. 1,200. Can we allocate 8.33% (i.e., Rs. 833) from that 12% towards the pension? If we do this, would it be legal or illegal?

Thanks,
RK

Hi! Nice to know your keen interest in labor law cases. As far as your specific query is concerned, I would emphatically suggest that you should use the formula "see backward, go forward." See what the prevailing practices and policies are and act accordingly. This decision you have to make as per the norms of the company permits. I hope this will help.

I am still waiting for the labor law case study that you intend to put forward for interaction on this forum.

With best regards,
Alok Goel

If a company wants to allocate 8.33% of 10,000 (i.e., Rs. 833) towards the pension, is it permissible by the PF department?

Hi! Just to substantiate the meaning of the word "meaning," let me share a story with you:

Subject: The Art of Asking a Question Effectively!

Jack and Max are walking to Church for a religious service. Jack wonders whether it would be all right to smoke while praying. Max replies, "Why don't you ask the Priest?" So Jack goes up to the Priest and asks, "Priest, may I smoke while I pray?" The Priest replies, "No, my son, you may not. That's utter disrespect to our religion." Jack goes back to his friend and tells him what the good Priest told him. Max says, "

Hi!

No, it is not mandatory to have an LLB degree to be an enquiry officer. It is at the sole discretion of the competent authority to appoint any suitable official as the Enquiry Officer.

I hope this information will be helpful. If you require any further explanation, you are welcome to ask.

Best regards,
Alok Goel

In the organization, having fewer than 50 employees, can we terminate the services of any employee without any explanation or notice thereof? (Assume that such employee has been working in that organization for the last 4 years).

RK.

Hi!

In every case, especially regarding labor laws, each decision is based on certain facts and findings, not on assumptions.

It appears from the queries addressed time and again that due to a lack of knowledge, skills, and awareness, these issues are arising repeatedly. The only available solution left is to enhance the competence level to deal with such cases/situations.

It seems that at some point, everybody goes through this phase, as I feel with myself as well. However, after pursuing LLB with specialization in Labor Laws and Industrial Relations, I found it helped me a lot. So, I suggest that for any person to deal with such situations/cases, they must be equipped with proper competence (knowledge) only then can they do justice in the job.

For acquiring elementary knowledge and skills, I would recommend studying the 'Labor and Industrial Manual (pocket edition)' published by Central Law Agency costing Rs. 80 only. This will help fulfill the bare minimum requirements to align with the domain of labor law cases.

Hope this will address the present query and future ones as well.

Best regards,

Alok Goel

Hi, I am Devarajan. I would like to join you all for an interesting discussion on PF. As per the Provident Fund Act, irrespective of the salary, any person who joins the organization becomes a member of the provident fund from day one of his/her joining. As PF is a social security scheme, it is imperative that all can be covered under the act.

Regarding the calculation, there is a 12% equal contribution from both the employee (EE) and the employer (ER). Out of the 12% from the ER, 8.33% goes to the pension fund and the remaining 3.37% goes to the provident fund of the employee. It is absolutely legal to cover the employee as a member of the fund.

Regards,
R. Devarajan

Ok, Mr. Devrajan, but I want to know if the basic salary exceeds 6500, and still, the company is deducting PF from it and also contributing its 12% share. Now, my query is this: suppose the basic salary is 10,000, and by 12% from the employer's share, if we take 8.33% (which means Rs. 833/-), can the company put that Rs. 833/- towards pension? I am asking this since the pension rule mentions that the basic salary limit is 6500.

Rk.

Hi Rakesh,

Pension can be maximally contributed as 8.33% on basic up to Rs. 6500. Anything over that amount of Rs. 780, the balance goes to the provident fund. For example, on a basic salary of Rs. 10,000, if you are contributing at a rate of 12%, which equals Rs. 1200, then 8.33% of Rs. 6500, which is Rs. 541, goes to EPS and Rs. 1200 - Rs. 541 = Rs. 659 goes to EPF.

The above is a practice followed by most companies; however, few are aware that the PF Dept gives an option where the employer's contribution of 12% goes on the actual basic salary, and the employer opts out of the ceiling limit of Rs. 6500 for EPS. In this scenario, 8.33% of the actual total contribution, which is Rs. 833, would go to EPS.

Employers usually do not opt for this clause as it increases the liability on the employer. However, certain pro-employee and cash-rich companies have chosen this option whereby they continue to contribute on the actual basic salary.

Do you believe that if the employers opt for the second option, then a person whose basic salary is Rs. 10,000 now and suppose he gets an average increment of 10% every year, then his pension after 30 years of working would be something around one lakh per month, maybe more, whereas as per the ceiling option, it would be around Rs. 3250 per month only.

Rolly

Hi Rakesh,

This is Devarajan again, regarding the pension clarification. As per the act, if the salary of an employee exceeds Rs. 6500 per month, the normal PF and pension deduction is as follows:

Suppose an employee's salary is Rs. 10,000 per month, his PF calculation would be as follows:
- Employee contribution: Rs. 1200 (12%)
- Out of the employer contribution (12%), only Rs. 541 will go to the pension fund. The remaining amount, i.e., 1200 minus 541, which is 659, will go to the employees' provident fund. The normal procedure of 8.33% and 3.67% share from the employer never applies in this case, as the salary ceiling is over Rs. 6500. Therefore, a flat amount of Rs. 541 only is deducted from the employer's share for the pension (6500 * 8.33% = 541).

I hope this clarifies your query. If you have any further doubts, please revert back to me.

Regards,
R. Devarajan

Dear Mr. Devrajan,

You are right as far as the option to opt for a ceiling of 6500/- goes. However, if an employer opts out of this option and instead starts to contribute based on the actual basic salary every year, then in that case, 8.33% of the actual basic may go to EPS, which is 833/- rupees.

I shall elucidate it further:

(1) If the employer goes for the clause putting a ceiling limit then:
The person with a basic salary of 10,000 will have 541/- as EPS and the rest (1200-541= 659/-) as EPF.

(2) If an employer chooses to keep on contributing as per the actual basic salary without putting any ceiling of 6500/-, then the person with a 10,000 basic salary will have 833/- going into EPS and (1200-833= 367/-) going into EPF.

ROLLY

Hi Rolly,

As per your definition in point No. 2, if the employee opts to contribute without considering the ceiling, then he can do so. PF is a social security scheme. If an employee wishes to contribute any amount, it will be considered a voluntary contribution to the scheme. Ultimately, the employee develops a saving habit and derives benefits from the scheme.

Am I right?

Devarajan

Mr. Rolly and Devrajan, just concentrate here.

Though if we contribute Rs. 833 as 8.33% of Rs. 10,000, the pension amount after retirement may not rise accordingly for the said employee. I believe the maximum limit of pension is specified in the pension act. However, I am unsure about this maximum limit of pension after retirement, which is why I initiated this discussion. If you can clarify my doubt, please help me.

We are discussing industrial employees, so please do not compare it with government employees. Government employees have a different scheme designed specifically for them, where the pension can increase. Please check if there is a maximum limit of pension after retirement related to the 8.33% contribution of Rs. 6,500 for the pension scheme related to the industry. If such a maximum limit exists, contributing more than Rs. 541, i.e., 8.33% of Rs. 6,500, would serve no purpose.

This is very important, so please clarify if anyone knows the details about this.

RK.

Dear Rakesh,

There is a pension limit if the employer is contributing, taking into account the ceiling of 6500. However, if the employer contributes at 8.33% of the actual basic salary, then in that case, the pension amount is decided according to the average of the basic salary (actual) drawn during the last year, i.e., the year preceding the retirement.

So, in such a case, the pension amount becomes directly proportional to the average of the last year's salary drawn.

Ms. Rolly

Hi All,

I am Poonam, and I have cleared the written exam of SAIL in the HR domain. My GD and interview are scheduled for 12th November. Could you please help me with how and what I should prepare for it? Along with this, I want to have a thorough knowledge of labor laws and industrial relations too. Could you please help me by mentioning good books, e-books, or materials on HR topics? Kindly forward them to my email ID pnm_rani@yahoo.co.in.

Please help.

Regards,
Poonam Rani

Hi,

I recently joined this HR forum and am very much interested in hearing from you HR people. I would like to inform you that without a notice period, an employer cannot retrench/terminate. Serving the notice period is a mandatory requirement. I am looking forward to hearing more from your end.

Regards,
Akansha

Guys, this is not the case in recent cases. Whatever we are discussing is what we already have in the books. I went through this just because I thought that I could get some real cases that happened and required documentation, etc., not the provisions that are already available.

Sir, things are not the same. It is true that every employee should be enrolled for EPF from the date of joining. What about exempted employees who fill up Form 11? What about the maximum slab of 6500 prescribed for exemption?

There are many aspects of this law. I am a practitioner of this Act for more than 12 years, observing the pros and cons of this act. To me and to most establishments, the act is a mere confused tool for the EPFO to extort money originally not due under the pretext of practicing powers under the act.

Adv Prasiddh Narayan, Goa
9765664475 / guidancepoint@sify.com

For a domestic inquiry, it is not compulsory for an inquiry officer to be a law graduate. It is a temporary nature quasi-judicial proceeding. However, the inquiry officer should conduct the inquiry using all fair means and provide equal opportunities to both parties to present their statements, replies, and to document the grounds, justifications, and arguments of the matter. Since the matter may be subject to appeal, the inquiry officer may need to testify in court proceedings.

Thanks and regards,

Prasiddh Narayan
9765664475
guidancepoint@sify.com