Legal Compliances Required For The Staffing Industry

Dear All,

By way of sharing knowledge in a series of Legal Compliance required for the Staffing Industry due to the coming into effect on 15-9-2010 of Industrial Disputes (Amendment) Act, 2010 (No. 24 of 2010), a Grievance Redressal Machinery has been introduced by insertion of Section 9C. By this, the following needs to be immediately done for Setting up of a Temps Grievance Redressal Machinery deputed to the Clients:

Setting up of Grievance Redressal Machinery

9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances.
(2) The Grievance Redressal Committee shall consist of an equal number of members from the employer and the workmen.
(3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on a rotation basis every year.
(4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:
Provided that there shall be, as far as practicable, one woman member if the Grievance Redressal Committee has two members and in case the number of members is more than two, the number of women members may be increased proportionately.
(5) Notwithstanding anything contained in this section, the setting up of Grievance Redressal Committee shall not affect the right of the workman to raise an industrial dispute on the same matter under the provisions of this Act.
(6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party.
(7) The workman who is aggrieved of the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of the Grievance Redressal Committee, and the employer shall, within one month from the date of receipt of such appeal, dispose of the same and send a copy of his decision to the workman concerned.

A confusion may come into the mind of the Staffing Industry whether it will come within the definition of Industry. For this, Section 2 (j) of the Industrial Disputes Act defines "industry" as any systematic activity carried on by cooperation between an employer and his workmen (whether such workmen are employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature), whether or not:
(i) any capital has been invested for the purpose of carrying on such activity; or
(ii) such activity is carried on with a motive to make any gain or profit, and includes:
(a) any activity of the Dock Labour Board established under section 5A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1949);
(b) any activity relating to the promotion of sales or business or both carried on by an establishment, but does not include:
(1) any agricultural operation except where such agricultural operation is carried on in an integrated manner with any other activity (being any such activity as is referred to in the foregoing provisions of this clause) and such other activity is the predominant one.
Explanation: For the purposes of this sub-clause, "agricultural operation" does not include any activity carried on in a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951 (69 of 1951); or
(2) hospitals or dispensaries; or
(3) educational, scientific, research, or training institutions; or
(4) institutions owned or managed by organizations wholly or substantially engaged in any charitable, social, or philanthropic service; or
(5) khadi or village industries; or
(6) any activity of the Government relatable to the sovereign functions of the Government, including all the activities carried on by the departments of the Central Government dealing with defense research, atomic energy, and space; or
(7) any domestic service; or
(8) any activity, being a profession practiced by an individual or body of individuals, if the number of persons employed by the individuals or body of individuals in relation to such a profession is less than ten; or
(9) any activity, being an activity carried on by a cooperative society or a club or any other like body of individuals, if the number of persons employed by the cooperative society, club, or other like body of individuals in relation to such activity is less than ten.

Hence, a separate Grievance Redressal Machinery for Temps needs to be set up with proper Legal advice. From the Clients' side also, they will need to ensure whether the Staffing Companies have such a redressal machinery in place. This would become a need for legal compliance.

We owe a special thanks to Mr. Johann Pillai, Director, Regional [Asia-Pacific], Manpower Services India P Ltd, a renowned expert in the Indian Staffing Industry, for inducting us into providing Legal advice for the Staffing Industry for nearly 5 years, which we continue to do.

With Regards,

Advocates & Notaries - Legal Consultants - HR

Email: rajanassociates@eth.net

Mobile: 9025792684.

Dear All,

We request you to visit the following link: [https://www.citehr.com/285851-id-act-amendment-enforced-its-impact-business-manager-hr-magazine-update.html](https://www.citehr.com/285851-id-act-amendment-enforced-its-impact-business-manager-hr-magazine-update.html) which provides an overall picture.

As we have just touched upon one aspect of the Amendment - Setting up of Grievance Redressal Machinery in relation to the Indian Staffing Industry, we shall follow up with other aspects.

With Regards,

Advocates & Notaries & Legal Consultants [HR]

E-mail: rajanassociates@eth.net

Mobile: 9025792684-9025792634

Dear All,

Subject: Effect of the Amendment- Sec 2A of the Act - Sub Section (2) & (3) Direct reference of Dispute.

Earlier, the Temp could not approach a Labour Court without the assistance of a Labour Union. Now, by the amendment, he/she can approach the Labour court directly. This is a drastic provision and will have a crippling effect on the Staffing Industry.

The remedy is:

1. First, he/she has to make an application to the Labour Department Conciliation Officer.
2. If no action is taken by the Conciliation Officer, then he/she can file an application to the Labour Court for adjudication of the Dispute.
3. The time limit for questioning all such disputes in relation to discharge, dismissal, termination, or retrenchment is 3 years.

Issues for the Staffing Industry:

1. Individual Employee grievance is subject to Conciliation by Labour Officer and thereafter by the Labour Court.
2. Will open the floodgates of Employee Litigation.

Tips for avoidance:

1. Need to have a strong Internal redressal mechanism thereby closing all issues internally.
2. Take Notices from individual Temps and their Lawyers seriously and solve them immediately.
3. A pro-temp approach even without consulting the Principal employer [Client] needs to be taken.
4. A separate provision needs to be made out of the Staffing Company's funds to effect proactive settlements.

With Regards,

Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry

E-mail: rajanassociates@eth.net

9025792684-9025792634

Dear All,

Sub: Enhancement of wage ceiling by the ID Amendment Act

In continuation of the relevance of the recent ID Act amendments for the Staffing Industry, we refer to the aspect Enhancement of the wage ceiling by the ID Amendment Act.

Prior to the amendment, the wage ceiling of a workman in the definition clause Sec 2 (s) was Rs. 1600/-. Now it is enhanced to Rs. 10,000/- per month.

Consequently, any person working in any industry doing any manual, unskilled, skilled, technical, operational, clerical, or supervisory work drawing wages up to Rs. 10,000/- will be considered a workman. The workman definition now reads like this:

(s) "workman" means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward, whether the terms of employment are express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged, or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge, or retrenchment has led to that dispute, but does not include any such person –
(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer or other employee of a prison; or
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

The exclusion is where the workmen employed in a supervisory capacity draw wages exceeding ten thousand rupees per mensem or exercise, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

In the Staffing Industry, this change is conspicuous, and Deputed Supervisors and real-time Deputed Managers drawing wages exceeding ten thousand rupees per mensem alone may be exempted. All others will come within the definition of workmen for the purposes of any proceeding under the Industrial Disputes Act in relation to an industrial dispute, including any such person who has been dismissed, discharged, or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge, or retrenchment has led to that dispute.

With Regards,

Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry

Email: rajanassociates@eth.net

9025792684-9025792634

Can anyone share a statutory checklist for conducting a Statutory Compliance Audit of staffing companies?

Dear All,

Subject: Impact of Changes in Appropriate Government for Disputes between Contractor and Contract Labour.

The impact of the amendment on the definition of the appropriate Government has been clarified. Accordingly, for industries, corporations, PSEs, and PSUs owned or controlled by the Central Government, the appropriate Government would be the Central Government. If such industries are under the control of the State Government, the appropriate Government would be the State Government. The amendment reads as follows:

Amendment of Section 2

In the Industrial Disputes Act, 1947 (14 of 1947) (hereinafter referred to as the principal Act), in section 2,—

(i) in clause (a),—

(a) in sub-clause (i), for the words "major port, the Central Government, and", the words "major port, any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or any corporation, not being a corporation referred to in this clause, established by or under any law made by Parliament, or the Central public sector undertaking, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the Central Government, the Central Government, and" shall be substituted;

(b) for sub-clause (ii), the following sub-clause shall be substituted, namely: -

"(ii) in relation to any other industrial dispute, including the State public sector undertaking, subsidiary companies set up by the principal undertaking and autonomous bodies owned or controlled by the State Government, the State Government:

Provided that in case of a dispute between a contractor and the contract labour employed through the contractor in any industrial establishment where such dispute first arose, the appropriate Government shall be the Central Government or the State Government, as the case may be, which has control over such industrial establishment.";

Another important amendment affecting the staffing industry and contractors, in general, is the inclusion of the following proviso:

Provided that in case of a dispute between a contractor and the contract labour employed through the contractor in any industrial establishment where such dispute first arose, the appropriate Government shall be the Central Government or the State Government, as the case may be, which has control over such industrial establishment.

The above proviso literally means that for the employees of the contractor of such industries, the concerned government shall be the Central Government or the State Government, as the case may be, which has control over such industrial establishment. In case the staffing company is a contractor for a central PSU, then for the employees of the contractor to raise a dispute will be the Central Government, and if deputed for a State PSU, then it will be the State Government.

With Regards,

Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry

E-mail: rajanassociates@eth.net

9025792684-9025792634

Dear All,

Changes made in Section 11 – Enforcing the Awards of the Labour Court.

In section 11 of the principal Act, after sub-section eight, the following sub-sections shall be inserted, namely:

“(9) Every award made, order issued, or settlement arrived at by or before the Labour Court or Tribunal or National Tribunal shall be executed in accordance with the procedure laid down for the execution of orders and decrees of a Civil Court under Order 21 of the Code of Civil Procedure, 1908.

(10) The Labour Court or Tribunal or National Tribunal, as the case may be, shall transmit any award, order, or settlement to a Civil Court having jurisdiction, and such Civil Court shall execute the award, order, or settlement as if it were a decree passed by it.”

By the introduction of this provision, the award of the Labour Court / Tribunals is now additionally executable by a Civil Court. After the Labour Court/Tribunal passes the award, it shall be transmitted to the Civil Court for execution. Through this process, both the moveable and immovable property of the Judgment Debtor, i.e., the person/company against whom the award is passed, can be attached. Also, the Judgment Debtor can be arrested and put in prison. Previously, the awards were executed by the Revenue Recovery process alone.

With Regards,

Legal Consultants for the Staffing & Recruiting Industry

Email: rajanassociates@eth.net

9025792684 - 9025792634

Statutory Compliance Most Relevant to Staffing Industry

Labour Welfare Fund Act: Statement of Contribution, along with a cheque, to be submitted to the Authority Concerned.

The Profession Tax Act: Monthly Returns, along with a cheque.

The Contract Labour (R&A) Act, 1970: Half-Yearly Return by Contractor to be submitted to Assistant Labour Commissioner.

The Maternity Benefit Act, 1961: Annual Return.

The (National & Festival Holidays) Act, 1963: Annual Return.

The Minimum Wages Act, 1948: Annual Return.

The Contract Labour (R&A) Act, 1970: Annual Return by Principal Employer.

The Payment of Wages Act, 1936: Annual Return.

The Employees Provident Fund Act, 1952: 3A & 6A Annual Individual Returns & Returns of Contributions to the Regional Provident Fund Commissioner.

The Employees State Insurance Act, 1948: Summary of Contribution.

The Contract Labour (R&A) Act, 1970: Renewal of Licence.

The Payment of Bonus Act, 1965: Annual Return.

Shops & Establishment Act: Renewal & Registration Certificate.

With Regards,

Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry

Email: rajanassociates@eth.net

9025792684 - 9025792634

Subject: Dealing with Temporary Employees Absconding Cases in the Staffing Industry

Dear All,

In the Staffing Industry, one can find several instances of Temporary Staff Absconding. In such cases, the Temps need to be terminated so that the F & F is done, and the name is removed from payroll records.

Securing this process is a challenge for the HR Managers of staffing businesses.

The process will depend on each Staffing Company's HR practices and the needs of the client.

There is a practice in the Staffing Industry that until the client gives the "No dues," the F & F cannot be done. Therefore, the termination practice has to be in sync with that.

Staffing companies must have a secure Legal Department or seek expert legal advice on severance and termination practices tailored to their needs. This will, in the long run, provide security for the Staffing Industry to avoid post-termination claims by Temporary Employees, which could eat away the slender margins earned from the client.

With Regards,

Advocates & Notaries & Legal Consultants for the Staffing & Recruiting Industry

E-mail: rajanassociates@eth.net,

-9025792684-9025792634

Dear All,

Sub: Severance of Employment - Temporary Employee of Staffing Companies

It is the essence of the business of the Contract Staffing Industry to place their Temporary Employees with the Client to render services. Ninety percent of such placements are supervised by the Client (This, of course, is a debatable issue, and we are not dealing with that in this post). Payrolling of the Temporary Employee will be done month after month based on the attendance received from the Client.

Suddenly, the Staffing Company will find that they are not receiving the attendance of a particular Temporary Employee or a group of such Employees. When an inquiry is made with the Client, they will just abruptly say, “We asked him to stop coming” without intimating the Staffing Company or getting their prior approval or by asking the Staffing Company to issue a proper Termination letter. What does this legally mean for the Staffing Company?

The answer is that there is no proper severance of the Employment of the Temporary Employee. Staffing Companies need to tell their Client in plain terms that such practice is not legal and their action inadvertently will create threats for the demand of back-wages and reinstatement from such Temporary Staff orally terminated by them.

In many cases, the time lag for receiving such claims will be delayed, say by 2-6 months, and a Temporary Employee not finding an alternate job or working in the unorganized sector can always threaten to sue or sue the Staffing Company for not terminating the Employment as he is the employee of the Staffing Company and not the Client. Such a claim made is to be construed as legal and valid as the Staffing Company has not caused proper termination in accordance with the terms of Employment.

The need for the Staffing Industry to be diligent and careful in dealing with such issues arises as otherwise they would be coughing up several thousand Rupees for back wages or go in for an out-of-court settlement. They should secure the process of Termination/Severance in all such cases by evolving a Safe and Secure Severance Practice (Triple S Practice) which should have the approval of the Client so that the Triple S practice of the Staffing Company is transparent and ensures risk coverage.

With Regards,

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

Sub: Gratuity Payment

Please note that Contract Labour are entitled to gratuity as per the decision of the High Court of Judicature at Madras dated 20.11.2006 by The Honourable Mr. Justice P.D. Dinakaran and The Honourable Mr. Justice P.P.S. Janarthana Raja in the case of The Management of Cruickshank & Company Ltd. vs. The Appellate Authority under the Payment of Gratuity Act, 1992 and Regional Labour Commissioner (Central), Shastri Bhavan, Chennai. The Court held:

"The entitlement of contract labourers for gratuity cannot be dislodged or denied on account of tussle between the principal employer, who engaged the service of the contract labourers, and the contractor, who employed the contract labourers."

The Court went on to further say:

...the gratuity claimed by the claimants herein being a welfare benefit created and payable by operation of law under the provisions of the Payment of Gratuity Act, which are included under clause (d) of Section 2(vi) of the Payment of Wages Act within the meaning of wages payable to the contract labourers, it would be the basic responsibility of the petitioner (i.e. the Principal Employer) to make payment of gratuity to the claimants in full or in part as per Section 21(4) of the Contract Labour Act, of course, without prejudice to the right of the petitioner (i.e. the Principal Employer) to recover the same from the third respondent, contractor, even though the initial responsibility to make such payment of gratuity lies with the third respondent, contractor, as the welfare legislations such as:

(i) Payment of Wages Act, 1936;
(ii) Contract Labour (Regulation and Abolition) Act, 1970; and
(iii) Payment of Gratuity Act, 1972,

are to be interpreted liberally and in widest possible construction in favor of the laborers, the claimants herein. Therefore, for deciding whether the wages payable to the claimants include gratuity within the meaning of Contract Labour Act, 1970, whereunder the definition of wages is traceable to the definition of wages in the Payment of Wages Act, 1936, and the centrifugal issue whether the gratuity payable under the Payment of Gratuity Act is protected under Section 2(vi)(d) of the Payment of Wages Act, 1936, in spite of exclusion under sub-clause (6) of Section 2(vi) of the Payment of Wages Act, 1936, we are constrained, as a rule of interpretation, to refer to the object and reasons of the legislative intention of all the three statutes referred to above and the scope and ambit of the provisions contained thereunder and are satisfied that the gratuity being a benefit created and payable by operation of law under the provisions of the Payment of Gratuity Act, 1972, is protected within the definition of wages for having included under clause (d) of Section 2(vi) of the Payment of Wages Act, 1936. Therefore, the Court has to give full effect to the legal/statutory fiction, and such fiction has to be carried to its logical conclusions, as any other view would only frustrate the legislative intention of all the enactments."

By virtue of this judgment, employees of the Contractor deployed at the place of the Principal Employer who become entitled to gratuity as per the Payment of Gratuity Act are to be settled gratuity on their severance. In case the Contractor fails to settle it, the Employees can make a claim on the Principal Employer who needs to settle it and becomes liable and thereafter recover it from the Contractor.

Further details of the judgment can be provided on request.

With Regards,

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

Email: rajanassociates@eth.net

9025792684 - 9025792634

Dear All,

Deduction in Salary

In the Staffing Industry, you will have requests from the Client from time to time wanting deduction of certain amounts from the Temporary Employees' Salary. The Consultant handling the Client has to ensure that deduction from the Salary falls within Sec 7 of the Payment of Wages Act which provides:

Sec 7. Deductions which may be made from wages

(1) Notwithstanding the provisions of sub-section (2) of section 47 of the Indian Railways Act 1890 (9 of 1890), the wages of an employed person shall be paid to him without deductions of any kind except those authorized by or under this Act.

Explanation I: Every payment made by the employed person to the employer or his agent shall, for the purposes of this Act, be deemed to be a deduction from wages.

Explanation II: Any loss of wages resulting from the imposition, for good and sufficient cause upon a person employed of any of the following penalties, namely:

(i) the withholding of increment or promotion (including the stoppage of increment at an efficiency bar);

(ii) the reduction to a lower post or time scale or to a lower stage in a time scale; or

(iii) suspension;

shall not be deemed to be a deduction from wages in any case where the rules framed by the employer for the imposition of any such penalty are in conformity with the requirements, if any, which may be specified in this behalf by the State Government by notification in the Official Gazette.

(2) Deductions from the wages of an employed person shall be made only in accordance with the provisions of this Act and may be of the following kinds only, namely:

(a) fines;

(b) deductions for absence from duty;

(c) deductions for damage to or loss of goods expressly entrusted to the employed person for custody or for loss of money for which he is required to account where such damage or loss is directly attributable to his neglect or default;

(d) deductions for house-accommodation supplied by the employer or by government or any housing board set up under any law for the time being in force (whether the government or the board is the employer or not) or any other authority engaged in the business of subsidizing house-accommodation which may be specified in this behalf by the State Government by notification in the Official Gazette;

(e) deductions for such amenities services supplied by the employer as the State Government or any officer specified by it in this behalf may, by general or special order, authorize.

Explanation: The word "services" in this clause does not include the supply of tools and raw materials required for the purposes of employment;

(f) deductions for recovery of advances of whatever nature (including advances for traveling allowance or conveyance allowance) and the interest due in respect thereof or for adjustment of over-payments of wages;

(ff) deductions for recovery of loans made from any fund constituted for the welfare of labor in accordance with the rules approved by the State Government and the interest due in respect thereof;

(fff) deductions for recovery of loans granted for house-building or other purposes approved by the State Government and the interest due in respect thereof;

(g) deductions of income-tax payable by the employed person;

(h) deductions required to be made by order of a court or other authority competent to make such order;

(i) deductions for subscriptions to and for repayment of advances from any provident fund to which the Provident Funds Act 1952 (19 of 1952) applies or any recognized provident funds as defined in section 58A of the Indian Income Tax Act 1922 (11 of 1922) or any provident fund approved in this behalf by the State Government during the continuance of such approval;

(j) deductions for payments to co-operative societies approved by the State Government or any officer specified by it in this behalf or to a scheme of insurance maintained by the Indian Post Office and

(k) deductions made with the written authorization of the person employed for payment of any premium on his life insurance policy to the Life Insurance Corporation Act of India established under the Life Insurance Corporation 1956 (31 of 1956) or for the purchase of securities of the Government of India or of any State Government or for being deposited in any Post Office Saving Bank in furtherance of any savings scheme of any such government.

(kk) deductions made with the written authorization of the employed person for the payment of his contribution to any fund constituted by the employer or a trade union registered under the Trade Union Act 1926 (16 of 1926) for the welfare of the employed persons or the members of their families or both and approved by the State Government or any officer specified by it in this behalf during the continuance of such approval;

(kkk) deductions made with the written authorization of the employed person for payment of the fees payable by him for the membership of any trade union registered under the Trade Union Act 1926 (16 of 1926);

(l) deductions for payment of insurance premiums on Fidelity Guarantee Bonds;

(m) deductions for recovery of losses sustained by a railway administration on account of acceptance by the employed person of counterfeit or base coins or mutilated or forged currency notes;

(n) deductions for recovery of losses sustained by a railway administration on account of the failure of the employed person to invoice to bill to collect or to account for the appropriate charges due to that administration whether in respect of fares freight demurrage wharfage and cranage or in respect of the sale of food in catering establishments or in respect of the sale of commodities in grain shops or otherwise;

(o) deductions for recovery of losses sustained by a railway administration on account of any rebates or refunds incorrectly granted by the employed person where such loss is directly attributable to his neglect or default;

(p) deductions made with the written authorization of the employed person for a contribution to the Prime Minister's National Relief Fund or to such other Fund as the Central Government may by notification in the Official Gazette specify;

(q) deductions for contributions to any insurance scheme framed by the Central Government for the benefit of its employees.

(3) Notwithstanding anything contained in this Act, the total amount of deductions which may be made under sub-section (2) in any wage-period from the wages of any employed person shall not exceed -

(i) in cases where such deductions are wholly or partly made for payments to co-operative societies under clause (j) of sub-section (2) seventy-five per cent of such wages and

(ii) in any other case fifty per cent of such wages:

Provided that where the total deductions authorized under sub-section (2) exceed seventy-five per cent or as the case may be, fifty per cent of the wages, the excess may be recovered in such a manner as may be prescribed.

(4) Nothing contained in this section shall be construed as precluding the employer from recovering from the wages of the employed person or otherwise any amount payable by such person under any law for the time being in force other than the Indian Railways Act 1890 (9 of 1890).

In case the deduction falls within the above, the Consultant can authorize deduction and simultaneously obtain a Salary Adjustment Letter from the Temporary Employee. Thereafter, the deduction can be done, or else the penal provisions of the Payment of Wages Act can operate if the deduction is done arbitrarily.

With Regards,

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

-9025792684.

Subject - Unpaid Salaries & Gratuity Payment - Statutory Compliance

In the Staffing Industry all unpaid Salaries/Dues and Gratuity ( in accordance with the Payment of Gratuity Act ) are payable even without demand. It is the Temporary Employee’s legal entitlement and not gratis which all may note.

Unpaid Salaries ie dues and Gratuity is covered by Sec 2 (10) of THE BOMBAY LABOUR WELFARE FUND ACT,1953 by way of illustration:

"unpaid accumulation" means all payments due to the employees but not made to them within a period of three years from the date on which they became due whether before or after the commencement of this Act including the wages, and gratuity legally payable but not including the amount of contribution, if any, paid by an employer to a provident fund established under the Employees' Provident Funds Act, 1952 (XIV of 1952);

In accordance with Sec 3 constituting Welfare Fund

(1)The Administrator shall constitute a fund called the Labour Welfare Fund, and notwithstanding anything contained in any other law for the time being in force or in any contract or instrument; all unpaid accumulations shall be paid at such intervals as may be prescribed to the Board, which shall keep a separate account therefor until claims thereto have been decided in the manner provided in section 6A, and the other sums specified in sub-section (2) shall be paid into the Fund.

(2)The Fund shall consist of-

(a)all fines realized from the employees;

(b)unpaid accumulations transferred to the Fund under section 6A;

Sec 7 A deals with Unpaid accumulations and claims thereto:

(1)All unpaid accumulations shall be deemed to be abandoned property.

(2) Any unpaid accumulations paid to the Board in accordance with the provision of section 3 shall on such payment, discharge an employer of the liability to make payment to an employee in respect thereof but to the extent only or the amount paid to the Board, and the liability to make payment to the employee to the extent aforesaid shall subject to the succeeding provisions of this section be deemed to be transferred to the Board

Similarly each State have their own Welfare Fund which would be relevant for that particular Staffing Company .

The impression that when a person is terminated, resigns or absconds or severance taking place or does not claim his dues the Employer can appropriate the amounts due the Employee is not the correct approach. These are in the nature of their entitlement. What the Employer in the maximum deducts is notice pay if proper notice is not given. That too in the Staffing Industry enforcing the Notice period is an issue.

Just because the Employment market is vibrant and volatile as the Temporary Employees easily find an alternate job they may appear not to be bothered of their past entitlements. Staffing Companies by way of ethics cannot be expected to take advantage of the situation.

Please note it is the Temporary Employees money which is in the Staffing Companies hands. Such amounts must be immediately transferred to unpaid Salaries Account and after three years deposited with the Welfare Fund.

The above is an essence of statutory compliance and what is not the Staffing Companies money but the Temps cannot be retained or sought to be illegally enriched. Compliance Team /Auditors need to monitor this closely.

With Regards

Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry

-9025792684-9025792634

Subject: Andhra Pradesh Contract Labour Act 2003 Amendment

The State amendment of Andhra Pradesh in 2003 introduced a clause restraining the employment of Contract Labour in core activities of any establishment if the same was prohibited by notification. It also introduced the following exemptions:

[a] The normal functioning of the establishments is such that the activity is ordinarily done through contractors; or
[b] The activities are such that they do not require full-time workers for the major portion of the working hours in a day or for longer periods, as the case may be;
[c] Any sudden increase in the volume of work in the core activity which needs to be accomplished in a specified time.

Furthermore, the Andhra Pradesh Amendment introduced a definition clause for "core activities" of an establishment, meaning any activity for which the establishment is set up, which includes any activity essential or necessary to the core activity, and it provides certain exceptions as follows:

1. Sanitation works, including sweeping, cleaning, dusting, and the collection and disposal of all kinds of waste;
2. Watch and ward services, including security services;
3. Canteen and catering services;
4. Loading and unloading operations;
5. Running of hospitals, educational and training institutions, guest houses, clubs, and the like where they are in the nature of support services of an establishment;
6. Courier services which are in the nature of support services of an establishment;
7. Civil and other constructional works, including maintenance;
8. Gardening and maintenance of lawns, etc.;
9. Housekeeping and laundry services, etc., where they are in nature of support services of an establishment;
10. Transport services, including ambulance services;
11. Any activity of an intermittent nature, even if that constitutes a core activity of an establishment; and
12. Any other activity which is incidental to the core activity.

Additionally, a rider was introduced by the Andhra Pradesh Amendment that the above 12 activities by themselves should not be the core activities of such establishment.

It should be noted that the Andhra Pradesh Amendment is enforceable only in Andhra Pradesh State and not in the rest of the country. This was the first step initiated by a State Govt to put India on the path of globalization.

With Regards,

Advocates & Notaries & Legal Consultants

Email: rajanassociates@eth.net

Contact: 9025792684.

Absence From Duty

The Bombay Shops and Establishments Act Section 66 proviso (a) states that notice of termination is not required under Section 66 if an employee absents from service without notice in writing or without sufficient reasons for seven days or more, which can be construed as misconduct.

Consequently, the severance of the temporary employee for absence from duty has to be in tune with the legal requirement. Though the legal provision says that termination is possible without notice, it may not be a practical solution when in the staffing industry, especially when dealing with large numbers. Documenting the absence is a legal compliance issue. The need for issuing a call letter requiring the employee to report for the job is the first step. This can be followed by the termination letter. However, a synthesis of combining both may require legal acumen and be a perfect solution for fast-tracking the legal compliance on this aspect.

With Regards,

Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry

E-mail: rajanassociates@eth.net

9025792684 - 9025792634

Dear All

The portion of Maharashtra Govt Draft Labour Policy 2010 on Contract Labour is very impressive which reads like this:

Contract Labour

The issue of contract labour is one on which employers and unions are strongly divided. Employers see contract labour as an essential component of labour market flexibility that will contribute to economic efficiency and competitiveness. Trade unions see contract labour as a form of exploitation and a means to deny workers permanent jobs.

Contract labour must be distinguished from outsourcing of tasks to particular entities for cleaning and security services, computer technology expertise, and consultancy services. These are commercial contracts for service as between the user and service-provider and fall outside the scope of labour legislation. The provider-entity, however, is an employer and thus is required to comply with all appropriate labour laws.

Out-sourcing and commercial contracts are not the real issue. The real issue is the employment of labour, under contract, for specific durations or specific tasks as a means of cost-cutting, or to provide flexibility, or as a substitute for jobs that would normally be regular and permanent.

The Department of Labour proposes to facilitate discussions with the social partners on the issue of contract labour with a view to deciding on a model that provides both fairness and flexibility. This may involve some discussion on possible amendments of existing laws as, for example, preventing employers from using lower-cost contract labour as a substitute for permanent workers, and by paying a loading to contract workers to compensate for their loss of benefits including leave and access to social security. It might also consider whether the current system of contracting agents as the employers of contract workers, as distinct from the direct employment of such workers by the principal employer, is in the best interests of works and employers.

The productivity of contract workers is also an issue for tripartite discussions.The Department of Labour, through discussions with social partners as mentioned above, would like to evolve models and/or structures through which a win-win situation can be developed, both for the employers and the workers in a globalized scenario. The win-win situation could be developed if the employer is given flexibility to engage labour and the labour is ensured protection of rights. One such proposal could also be to engage contract labour with a loading factor as a premium for flexibility.

It is also suggested that in order to develop a long term solution on contract labour and develop models to meet the twin concerns of flexibility to industry and fairness to labour, it may be necessary to go through a transition phase in which, the first step could be to study the present labour laws and their actual implementation to identify on what is incentivising contract labour and disguised employment? It would also be necessary to define fairness in terms of “equal treatment”. What is “equal treatment” would also have to be agreed upon more specifically between all social partners in a clear-cut manner.

Further, there would be need to work out solutions along with changes in law if required, which would further the objective to reach towards the end goal of increased productivity in a situation of ‘flexibility’ and ‘fairness’ as defined by ‘equal treatment’.

We are optimistic to see how far the above is translated into Law.

With Regards

Advocates & Notaries & Legal Consultants[HR]

E-mail : rajanassociates@eth,net,

-9025792684-9025792634

Dear All,

By way of refurbishing HR knowledge for the staffing industry, we have attached the historic ESI Circular which, in effect, recognized outsourcing as a legal practice in India.

With Regards,

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

9025792684 | 9025792634

Dear All,

In order to share valuable insights on the trends in Labour Law from 1960 to 1999, Mr. C Niranjan Rao, Advocate, has posted a valuable article in the CTE HR Legal Issue trail. To view it, please click on the following link: https://www.citehr.com/294538-recent...#axzz152qqfpnY.

With Regards,

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

Phone: 9025792684, 9025792634

Dear All,

Sub: Statistics of Enforcement of Labour Laws by the Central Govt:

The enforcement of the provisions of various labour laws has been prescribed under provisions of the relevant Acts and is secured through the officers of the Central Industrial Relations Machinery (CIRM) in the Central Sphere, and through the State enforcement machinery in the State Sphere. Some of the labour enactments are also enforced by the Employees' State Insurance Corporation and Employees' Provident Fund Organization.

The information regarding inspections conducted, prosecutions launched, claim cases filed and decided, and the amount awarded under the Minimum Wages Act and Payment of Bonus Act in the Central Sphere is found in the attachment.

In regard to the Employees' Provident Fund, over 80 complaints alleging Provident Fund evasion had been received during 2007-2010 by the Vigilance Wing of the Employees' Provident Fund Organization.

Shri Harish Rawat, Minister of Labour and Employment, gave this information in reply to a question in the Lok Sabha.

The above data will give a picture of the realistic enforcement scenario in respect of these two enactments.

Presently, the level playing field available for the Indian Staffing Industry to operate in the present liberalised regime of the Central Government is quite adequate and commendable, and will be an invitation to International Staffing Companies to open shop in India.

With Regards,

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

9025792684 - 9025792634

Subject: NO EPF Contribution on Leave Encashment

Dear All,

In the decision of the Madras High Court by Mr. Justice K. Chandru in the case of Thiru Arooran Sugars Ltd. and Five Ors. vs. Asst. Provident Fund Commissioner (Enf) Employees' Provident Funds Organisation And Anr, decided on 12/10/2007, it was the stand of the respondent/PF Department that the leave encashment given to the workman is covered by the term of basic wages. They relied on the judgments of the Bombay High Court and the Karnataka High Court, claiming that all the petitioners/managements were bound to make contributions in terms of the leave encashment given to the workman as part of the basic wages.

However, the Court rejected the Department's contention and held that "If the two decisions of the Supreme Court in Bridge & Roof Company (India) Ltd's case (supra) as well as TI Cycles of India's case (supra) are read together, there will be no difficulty in arriving at the conclusion that the basic wage was never intended to include in the leave with wages for which encashment is allowed. The term basic wage includes all emoluments earned by an employee while on duty or on leave or on holidays with wages. In accordance with the terms of the contract of employment, it cannot mean it can only mean the weekly holidays, national festival holidays. In many cases, employees do not take leave and encash it only at the time of retirement or as legal heirs at the time of his death, which is an uncertain contingency. Even though the employer makes annual provisions for such a contingency, unless the contingency of encashing of leave takes place, the question of the actual payment to the workmen never takes place. In case he avails the entire leave during his tenure, then the question of payment of any contribution may not arise. Any payment of contribution cannot be based upon different contingencies and uncertainties."

Finally, the Court precluded the Department from claiming Contribution on Leave Encashment and further held: "By allowing the deduction on the encashment of annual leave, in no way, the employees are benefited and at the time of death or retirement or resignation, a lump-sum amount in his hand will give him a greater relief because at that time only, he is receiving the entire PF contributions standing to his credit as well."

In the Staffing Industry, if a Client permits Leave Encashment, then the application of the essence of the decision will become relevant.

With Regards,

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

9025792684, 9025792634

Subject: CLRA Mutual Rights and Duties

Dear All,

In fact, many of the clients of the Staffing Industry insist on compliance with the Contract Labour (Abolition & Regulation) Act 1970 [CLRA]. The clients, without understanding the implications of CLRA and the industry reciprocating it just for the sake of getting the business, undertake its compliance without understanding that compliance with CLRA is not a one-way route. It involves mutual duties and responsibilities.

It is the basic rule of CLRA compliance that the contractor cannot get a license without registration by the principal employer. Therefore, one needs two hands to clap.

The relevant provisions for beginning the compliance under CLRA are:

The principal employer needs to do the following:

7. Registration of certain establishments.-

(1) Every principal employer of an establishment to which this Act applies shall, within such period as the appropriate Government may, by notification in the Official Gazette, fix in this behalf with respect to establishments generally or with respect to any class of them, make an application to the registering officer in the prescribed manner for registration of the establishment: Provided that the registering officer may entertain any such application for registration after the expiry of the period fixed in this behalf if the registering officer is satisfied that the applicant was prevented by sufficient cause from making the application in time.

(2) If the application for registration is complete in all respects, the registering officer shall register the establishment and issue to the principal employer of the establishment a certificate of registration containing such particulars as may be prescribed.

8. Revocation of registration in certain cases.- If the registering officer is satisfied, either on a reference made to him in this behalf or otherwise, that the registration of any establishment has been obtained by misrepresentation or suppression of any material fact, or that for any other reason the registration has become useless or ineffective and, therefore, requires revocation, the registering officer may, after giving an opportunity to the principal employer of the establishment to be heard and with the previous approval of the appropriate Government, revoke the registration.

9. Effect of non-registration.- No principal employer of an establishment, to which this Act applies, shall--

(a) in the case of an establishment required to be registered under section 7, but which has not been registered within the time fixed for the purpose under that section,

(b) in the case of an establishment the registration in respect of which has been revoked under section 8, employ contract labour in the establishment after the expiry of the period referred to in clause (a) or after the revocation of registration referred to in clause (b), as the case may be.

An application has to be made in Form I, and a certificate will be issued in Form II.

The contractor is required to do the following:

12. Licensing of contractors.-

(1) With effect from such date as the appropriate Government may, by notification in the Official Gazette, appoint, no contractor to whom this Act applies shall undertake or execute any work through contract labour except under and in accordance with a license issued in that behalf by the licensing officer.

(2) Subject to the provisions of this Act, a license under subsection (1) may contain such conditions including, in particular, conditions as to hours of work, fixation of wages, and other essential amenities in respect of contract labour as the appropriate Government may deem fit to impose in accordance with the rules, if any, made under section 35 and shall be issued on payment of such fees and on the deposit of such a sum, if any, as security for the due performance of the conditions as may be prescribed.

13. Grant of licenses.-

(1) Every application for the grant of a license under subsection (1) of section 12 shall be made in the prescribed form and shall contain the particulars regarding the location of the establishment, the nature of the process, operation, or work for which contract labour is to be employed and such other particulars as may be prescribed.

(2) The licensing officer may make such an investigation in respect of the application received under subsection (1), and in making any such investigation, the licensing officer shall follow such a procedure as may be prescribed.

(3) A license granted under this chapter shall be valid for the period specified therein and may be renewed from time to time for such a period and on payment of such fees and on such conditions as may be prescribed.

14. Revocation, suspension, and amendment of licenses.-

(1) If the licensing officer is satisfied, either on a reference made to him in this behalf or otherwise, that--

(a) a license granted under section 12 has been obtained by misrepresentation or suppression of any material fact, or

(b) the holder of a license has, without reasonable cause, failed to comply with the conditions subject to which the license has been granted or has contravened any of the provisions of this Act or the rules made thereunder, then, without prejudice to any other penalty to which the holder of the license may be liable under this Act, the licensing officer may, after giving the holder of the license an opportunity to show cause, revoke or suspend the license or forfeit the sum, if any, or any portion thereof deposited as security for the due performance of the conditions subject to which the license has been granted.

(2) Subject to any rules that may be made in this behalf, the licensing officer may vary or amend a license granted under section 12.

An application is to be made under Form IV, and the license will be issued under Form VI.

Next time when you undertake compliance with CLRA, the industry needs to inform the client of mutual duties and responsibilities.

With Regards,

Advocates & Notaries - Legal Consultants - HR

E-mail: rajanassociates@eth.net

Mobile: 9025792684.

Subject: Insubordination in the Temping Industry

Dear All,

Insubordination is a major issue that needs to be addressed in HR within the Temping and Staffing Industry. Clients often report instances of insubordination by the temporary employees.

Upon receiving such reports from the client, the Temping Company must ensure that the alleged insubordination is proven and intentional. In the context of employment matters, insubordination may manifest as acts such as challenging the authority of a superior, engaging in behaviors that undermine or humiliate a superior, using disrespectful language towards a superior, or engaging in actions that compromise loyalty. The determination of insubordination depends on the specific circumstances of each case. The impact on office administration and discipline is also a crucial consideration.

In cases of reported insubordination, the appropriate follow-up action may involve issuing a warning letter documenting the insubordinate behavior. It is essential to phrase the warning letter in a manner that acknowledges the direct supervision by the client, while also being tactful.

This process is an integral part of the protocol that the Temping Company must adhere to in managing instances of insubordination.

With Regards,

Advocates & Notaries - Legal Consultants - HR

Email: rajanassociates@eth.net

Mobile: 9025792684

Subject: Whether Staffing Industry is Considered an Industry?

A confusion may arise in the minds of HR practitioners in the Staffing & Flexi Staffing Industry regarding whether it falls within the definition of an industry. Section 2(j) of the Industrial Disputes Act needs to be referred to, which defines "industry" as any systematic activity carried out through cooperation between an employer and their workers (whether directly employed or through an agency, including a contractor) for the production, supply, or distribution of goods or services aimed at satisfying human wants or wishes (excluding spiritual or religious desires). This definition includes activities such as those of the Dock Labour Board under the Dock Workers (Regulation of Employment) Act, 1948, and sales or business promotion activities by an establishment. However, it excludes certain operations like agricultural activities that are not integrated with other activities, hospitals, educational institutions, charitable organizations, among others.

The definition provided above clarifies that the Staffing & Flexi Staffing Industry falls within the realm of providing services through a contractor, thereby making the relevant provisions of the Industrial Disputes Act applicable.

With Regards,

Advocates, Notaries, and Legal Consultants for the Staffing and Recruiting Industry

E-mail: rajanassociates@eth.net

Phone: 9025792684, 9025792634

Subject: Inclusion of Arbitration Clause in Flexi Staffing Agreements

Dear All,

The Flexi Staffing Industry is burdened with the problem of chasing payments from the Clients, which has become a perennial issue. The reward for the effort, which is the essence of the Staffing Industry, is taken away, and these unpaid invoices become bad debts.

This is on account of the absence of protective clauses in the Staffing Agreement.

The solution for this is to include an Arbitration clause. This will help the Industry to have some hold on the Client in recovering the dues.

The advantage of including this clause will result in a protective step being initiated in accordance with this clause when there is a default without incurring heavy costs of Court Fees by invoking the Arbitration Court's help by requesting the Court to issue a direction to the Client pending the Arbitration proceedings. This will ultimately protect the recovery process of outstanding invoices.

The Industry should make a beginning if the clause is already not there in their Template. This is critical for Business and reduces the risk and will aid in the timely collection of dues.

With Regards,

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

Subject: Typical Arbitration Clause

Following the earlier post, arbitration by itself means referring the dispute between the client and the agency to an arbitral panel instead of rushing to court. This saves time and money. The typical clause can be like this:

"In the event of any dispute, difference, or question arising out of or in respect of this agreement or the commission of any breach of any terms thereof or of compensation payable thereof or claim made by either of the parties against the other in any manner whatsoever in connection with it, the same shall be referred to a Sole Arbitrator to be selected and appointed by mutual agreement for arbitration as provided in the Arbitration and Conciliation Act 1996 and Rules framed therein. The decision or award so given by the Single Arbitrator shall be final and binding on the parties hereto. Initially, the costs of the arbitration shall be borne equally by both parties, and the award shall tax the costs of the arbitration the party against whom the award is passed."

Suitable modifications can be made depending upon the need. The advantage of having a sole arbitrator is to reduce costs. Please see the Arbitration and Conciliation Act 1996 for more details on the process.

With Regards,

Advocates & Notaries & Legal Consultants for the Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

Tim Roth, Chief Legal Officer of Manpower Inc. in Milwaukee, a Fortune 500 Company, reported in his blog that he conducted a survey of the finest Employment Lawyers in the USA to get their answers to the following question: What are the top ten employment law issues most likely to wake you up screaming in the middle of the night? Here are the answers:

1. Inadequate knowledge of employment law basics
2. Executive misconduct
3. Any form of discrimination
4. Wage and hour violations
5. Retaliation
6. Inadequate investigation
7. Failure to follow policies
8. Bad documentation/communication
9. Emotional rather than fact-based decisions
10. Inconsistency

This information equally applies to the Indian Staffing and Recruiting Industry. Thanks to Tim for bringing this to our attention.

For more information, please visit the link [link no longer exists - removed].

With Regards,
Advocates & Notaries & Legal Consultants for the Recruiting & Staffing Industry
E-mail: rajanassociates@eth.net
-9025792684-9025792634

Subject: Misconduct Termination

Dear All,

Many times Staffing Industry Consultants and HR Managers are confronted with the following question:

Can we fire a Temporary Employee sent to the Client for working without giving a notice period due to misbehavior, or if he is found drunk during working hours, do we still have to pay the notice period?

Section 13 of the Delhi Shops Act lists the Acts and omissions constituting misconduct. For the purpose of Section 30, misconduct shall include the following acts and omissions on the part of an employee:
(a) willful insubordination or disobedience, whether or not in combination with another, of any lawful and reasonable order of a superior;
(b) going on an illegal strike or inciting, abetting, or instigating or acting in furtherance thereof;
(c) willful slowing down in the performance of work, or abetment, or instigation thereof;
(d) theft, fraud, misappropriation, or dishonesty in connection with the employer's business or property;
(e) habitual absence without leave, overstaying the sanctioned leave without sufficient grounds, or proper and satisfactory explanation, or habitual late attendance;
(f) commission of any act subversive of discipline or good behavior on the premises of the establishment, such as drunkenness, riotous, disorderly, or indecent behavior, gambling, or holding meetings without the previous permission of the employer or taking or giving bribes or any illegal gratification whatsoever;
(g) habitual neglect of work or gross or habitual negligence;
(h) willful damage to work in process or to any property of the establishment;
(i) disclosing to any unauthorized person any information regarding the processes of the establishment which may come into the possession of the employee in the course of his work.

Therefore, drunkenness will come under (f) above.

Section 30: Notice of dismissal

(1) No employer shall dispense with the services of an employee who has been in his continuous employment for not less than three months without giving such person at least one month's notice in writing or wages in lieu of such notice:

Provided that such notice shall not be necessary where services of such employee are dispensed with for misconduct, after giving him an opportunity to explain the charge or charges against him in writing.

Therefore, you will have to follow the procedure of first getting a report from the Client on the misconduct and then issue a Show cause Notice and conduct an Enquiry by appointing an Enquiry Officer's report and act based on the Enquiry officer's report. This is a safe and secure process. However, many of the Temporary Employees, considering their future, will opt to resign, facilitating the exit process.

The reference to the Delhi Act is for illustration, and each report of "Misconduct" has to be tackled in accordance with the Shops and Establishments Act applicable to that State where the Temporary Employee is working.

With Regards,

Advocates & Notaries - Legal Consultants - HR

E-mail: rajanassociates@eth.net

Mobile: 9025792684

IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES

Having been focused on the Staffing Industry in India, which is at its crucial stage, and with our long-standing experience of 30 years in direct Litigation Support and acting for PSUs and Corporates, along with present counseling in the Staffing Business for important players in the Staffing Industry, we have always been focused on the analysis of proactive and preventive steps Staffing Companies can and should take to avoid claims and liability.

Despite these efforts, it seems that Lawyers and Consultants end up doing more damage control in Courts and Tribunals. Through this damage control, many lessons are learned. This is a continuing effort and cannot be viewed on a short-term basis.

With each matter, the Staffing Company's legal team has always made an effort, and during the course of the case and certainly at the end, to talk about lessons learned. While there are numerous lessons, and each perspective could be the subject of a book on the topic, the following are a few among the many key questions, of which this is the first part:

1. Many times the contract signed with the employee is styled as a Fixed-Term Contract with a stipulation for termination. Why is there litigation on termination?

The law is not clear since there is no positive provision in the Industrial Disputes Act as the action for termination in a Fixed-Term Contract hinges on the exclusion provided under Sec 2(oo) of the Industrial Disputes Act. Therefore, the application of the exclusion by the Employer is subject to the Redressal Mechanism provided in the Act, and with different layers of redressal, the damages that it could cause to the Staffing Company on an order of reinstatement could be onerous. Clients may insist on termination without Notice pay, but the best bet is to have a secure termination process based on sound legal advice.

With Regards,

Advocates & Notaries - Legal Consultants-HR

E-mail: rajanassociates@eth.net

Mobile: 9025792684 - 9025792634

Subject: ID Card for Temporary Workers

Dear All,

In continuation of our earlier post on the subject of IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES:

In the Temping Industry, a common question like this keeps cropping up:

I am designing ID cards for temporary employees. Is it important to mention the employee status as "temporary employee" or is the name and designation enough?

Answer: There need not be any doubt, the form is mandated in the CLRA Rules.

76. Employment card.-
(I) Every contractor shall issue an employment card in Form XIV to each worker within three days of the employment of the worker.
(II) The card shall be maintained up to date, and any change in the particulars shall be entered therein.

Therefore, if you just say Form XIV of the CLRA Rules 1971, it is sufficient. You can refer to the form in the rules and go by it.

With Regards,

Advocates & Notaries & Legal Consultants for Staffing & Recruiting Industry

Email: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

In the Staffing or Temping Industry, the following can be considered as pillars of Legal Compliance:

1. Compliance-Statutory - Liaison with Departments on the following:

- Labour Welfare Fund Act Statement of Contribution along with a cheque to be submitted to the Authority Concerned.
- The Profession Tax Act Monthly Returns along with a cheque.
- The Contract Labour (R&A) Act, 1970 Half-Yearly Return - by Contractor to be submitted to Asst. Labour Commissioner.
- The Maternity Benefit Act, 1961 Annual Return.
- The (National & Festival Holidays) Act, 1963 Annual Return.
- The Minimum Wages Act, 1948 Annual Return.
- The Contract Labour (R&A) Act, 1970 Annual Return by Principal Employer.
- The Payment of Wages Act, 1936 Annual Return.
- The Employees Provident Fund Act, 1952 3A & 6A Annual Individual Returns & Returns of Contributions to the Regional Provident Fund Commissioner.
- The Employees State Insurance Act, 1948 Summary of Contribution.
- The Contract Labour (R&A) Act, 1970 Renewal of Licence.
- The Payment of Bonus Act, 1965 Annual Return.
- Shops & Establishment Act Renewal & Registration Certificate.

Temporary Employees

Joining Compliance

Monthly Compliance of Statutes in respect of the Temps.

Exit/Resignation/Severance/Termination Compliance.

2. Compliance-Audit - Conduct Audit, i.e., verification of the Compliance done under (1) either monthly/quarterly, Half-yearly, and improve/enforce compliance. An audit report should follow the Audit.

3. Legal Consultation & Litigation Support - Provide Legal Support and advisory services for (1) & (2).

The above can be done Branch-wise. If all three are independent and existing and report their activities by way of MIS, any Staffing or Temping organization can have trouble-free functioning. These can exist within the very organization itself or "out-sourced." Of course, the cost is involved, but the cost will be nothing when compared to encountering and settling claims out of violations.

With Regards,

Advocates & Notaries - Legal Consultants-HR

Email: rajanassociates@eth.net

Mobile: 9025792684.

IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES

In continuation of our earlier post on the subject:

Clients want the Staffing or Temping Company to terminate the Employee for dishonesty, theft, misconduct, etc. Is it correct?

There is nothing like summary termination in Indian Law except if it is for proven misconduct.

It has to be proven beyond doubt in an Enquiry done for the purpose. In Staffing & Temping Business, such an Enquiry cannot be practically done as the incident would have occurred in the Client's place. Definitely, the risk is there in such termination action without conducting an enquiry. There is an element of practical and high risk in such terminations. All such terminations can bounce back with possible Labour Claims.

A definitive process with expert Legal support has to be chalked out with the concurrence of the Client at the time of signing the Contract with the Client itself.

With Regards

Advocates & Notaries - Legal Consultants - HR

E-mail: rajanassociates@eth.net

Mobile: 9025792684-9025792634

Dear All,

We have found an interesting post on "What you need to know before buying background checks online" at What you need to know before buying background checks online which may be relevant in this post when hiring agencies for conducting background checks while recruiting personnel for the Staffing Business.

In the Indian context, the availability of online checks is still to start. NASSCOM has made a beginning for the Software Industry by opening a "National Skills Registry." Please see http://nationalskillsregistry.com <link updated to site home>.

With Regards,

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

-9025792684-9025792634

IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES

Dear All,

In continuation of our earlier post on the subject:

Questions are raised on the rotation of employees of contractors working with Principal Employers.

The Contractor's employees are working in XYZ Co. [Client], and the employees are on the Contractor's payroll. The Contractor provides them PF, ESIC, Gratuity, bonus, leave salary, etc. But the Principal Employer wants rotation of the Contractor Employees who have completed 180 days and wants the appointment of new employees in the place of the left employees.

Can the request be acceded because all the employees are on the permanent rolls of the Contractor and not on a contract basis?

The request of the Client can be accepted and is meant to provide a break of service from continuous employment. Otherwise, the Staffing Company or Contractor will lose business. The concept of continuous employment is found in Sec 25 B of the Industrial Disputes Act.

25-B. Definition of continuous service: -- For the purpose of this Chapter,

(1) a workman shall be said to be in continuous service for a period if he is, for that period, in uninterrupted service, including service which may be interrupted on account of sickness or authorized leave or an accident or a strike which is not illegal, or a lock-out or a cessation of work which is not due to any fault on the part of the workman;

(2) Where a workman is not in continuous service within the meaning of clause (1) for a period of one year or six months, he shall be deemed to be in continuous service under an employer&mdash;

(a) for a period of one year, if the workman, during a period of twelve calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than&mdash;

(i) one hundred and ninety days in the case of a workman employed below ground in a mine; and (ii) two hundred and forty days, in any other case;

(b) for a period of six months, if the workman, during a period of six calendar months preceding the date with reference to which calculation is to be made, has actually worked under the employer for not less than&mdash;

(i) ninety-five days, in the case of a workman employed below ground in a mine; and (ii) one hundred and twenty days, in any other case;

Explanation: -- For the purpose of clause (2), the number of days on which a workman has actually worked under an employer shall include the days on which&mdash;

(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment [Standing Orders] Act, 1946 (20 of 1946), or under this Act or under any other law applicable to the Industrial establishment;

(ii) he has been on leave with full wages, earned in the previous years; (iii) he has been absent due to temporary disablement caused by an accident arising out of and in the course of his employment; and (iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve weeks.

The Client from their end wants to overcome the "continuous employment of the Contractor's employee with them" for various reasons like avoiding a claim for permanency from the Contractor's employees, and this cannot be faulted. In case the employees are permanent on the Contractor's rolls, which means you need to swap your employees between different Clients. From the "dedicated" mode of deputation, a need may arise to switch to "multiple" modes. This is where the Indian Temp Staff Industry must aim to go. The Appointment Letter and Agreement with the Contractors' Staff have to be tuned to take care of all this with expert legal help.

There are many inter-related issues to this, which we will address in our further posts.

With Regards,

V. Sounder Rajan

Advocates & Notaries - Legal Consultants-HR

E-mail: rajanassociates@eth.net

Mobile: 9025792684.

Dear All,

By way of refurbishing HR knowledge for the staffing industry, we have attached the historic ESI Circular, which, in effect, recognized outsourcing as a legal practice in India. In our earlier post on the same subject, we did not highlight the gist, which we are doing in this post.

As per the ESI Circular, the following types of outsourcing contracts are recognized. It categorizes the outsourcing process and calls outsourcing in simple terms of "Job work":

(a) The job work done inside the factory/establishment premises through contractors/immediate employers having independent ESIC Code Nos.

(b) Job work done inside the factory premises through contractors/immediate employers not having independent ESIC Code Nos.

(c) Job work done outside the factory/establishment premises through factories/establishments which are having independent Code Nos.

(d) Job work done outside the factory/establishment premises through factories/establishments which are not having independent Code Nos, but the supervision is being exercised by the principal employer.

(e) Job work done outside the factory premises through units engaging less than 10/20 employees but working exclusively for the principal employer.

(f) Job work done outside the factory/establishment premises through factories/establishments engaging less than 10/20 employees which are not independently coverable, and where no supervision is exercised, and who are undertaking the work for more than one employer.

(g) Job work done outside the factory premises through contractors/immediate employers who perform the work through home workers or work in non-implemented areas.

With regards,

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

9025792684 - 9025792634

Sub: Union Government Open to Changes in Contract Labour Law [CLRA]

Dear All,

As per the report from the premier press organization in India, Press Trust of India [PTI], in its report dated 22-10-2010 published in the Business Standard of 23rd October 2010, Honorable Minister of State for Labour and Employment, Mr. Harish Rawat, addressing a seminar on 'Management of Contract Labour in PSEs' [Public Sector Enterprises] organized by Standing Conference of Public Enterprise, expressed concerns over the denial of statutory benefits to contract labour and said the government would proceed with amendments to the law for such workers with an open mind.

"As far as amendments to the Contract Labour (Regulation & Abolition) Act, 1970 are concerned, we will proceed with an open mind," Mr. Rawat said. Industry has been demanding for long that Section 10 of the Contract Labour (Regulation & Abolition) Act 1970 should be dispensed with, but indicated that on the contrary, the Unionists think the other way round. He indicated that under Section 10, the Government can identify any process, operation, or other work in an establishment where it can prohibit any employment of contract labour and pointed out that the act is aimed to abolish and regulate contract labour.

When asked whether any amendment bill for making changes in the Act is expected to be tabled in the forthcoming winter session, Mr. Rawat said, "We are preparing the draft bill, which is unlikely to be tabled in the next Parliament session."

The Minister urged the public sector to be a role model employer and to show a pathway to the private sector in implementing government regulations on labour.

Echoing similar views, Labour Secretary P.C. Chaturvedi said, "The law (for contract labour) has lost its spirit. There was an intention to reduce labour law over a period of time, but it happened the other way round." "Everybody is employing contract labour to reduce cost. But cutting cost does not mean exploitation of labour. It should be done by increasing productivity by modernization, best practices, and using the best technology," he said.

Mr. Chaturvedi said, "Now the public sector is using contract labour to cut cost, and such workers are treated as second-grade citizens."

"It is the PSUs, which should show the way to the private sector. If the contract workers are treated with a human face, the demand for regularization (of employment) would mellow down," he added.

On this occasion, Director-General SCOPE U D Choubey said, "There are a plethora of social security laws in India, and SCOPE endorses the views of the government that the welfare of the workers is a real concern as a large number of people in the country are living below the poverty line."

We support the views of the Minister and Labour Secretary P.C. Chaturvedi that there should be a balanced approach.

We eagerly await the draft legislation on behalf of the Industry.

With Regards,

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth,net, -9025792684-9025792634

Though the Act in its title proclaims "Abolition" of contract labor, in effect, it only 'regulates' the employment of contract labor.

The reality is that today contract labor has become an essential source of employment in any industry/office, be it private or government. It is noted that even in some judicial forums, contract labor exists. So, it is an accepted mode of employment.

Efforts should, therefore, be made to ensure that such a mode of employment does not lead to the exploitation of labor. At the same time, the concerns of employers to have a disciplined and flexible workforce for effective and profitable working should also be addressed.

IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES

In continuation of our earlier post on the subject:

A common question arises in Contractual Employment: Whether on termination of the Contract Employee, the Employer is bound to issue the Experience certificate?

In Contract Labour Law [CLRA], the Relieving Letter is called the Service Certificate and is governed by Rule 77 of the CLRA Rules. This can also be called the Experience Certificate.

Service certificate.- On termination of employment for any reason whatsoever, the contractor shall issue to the workman whose services have been terminated a Service Certificate in Form XV.

The salient details are:

- Name and address of contractor
- Name and address of establishment in/ under which the contract is carried on ...
- Nature and location of work
- Name and address of the workman
- Age or Date of Birth
- Identification Marks
- Father's / Husband's name
- Total period Employed
- Starting Date
- Ending Date
- Nature of the Work
- Details of Salary/Wages

Consequently, the issue of the Service Certificate as per Form XV is mandatory. It has to be automatically issued without a request from the Contract Employee for the following cases:

1. Termination
2. Resignation
3. Absconding or voluntary cessation of work.

The issue of the Service Certificate is also protective as the Last working Day with the Contractor and the Principal Employer is established. Therefore, from the Employer's side, there should be no hesitation in issuing this certificate as a part of the F & F. Impression to the contrary may lead to Labour claims for back wages and re-instatement claims.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

-9025792684-9025792634

Dear All

IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES

In continuation of our earlier post on the subject:

A common question arises in Contractual Employment "Whether on termination of the Contract Employee the Employer is bound to settle the dues to the Employee at his own sweet will and pleasure or there is any rule to settle it within a time?

In the Contract Labour Law [CLRA] Rule 66 provides for the answer. It reads like this:

“Where the employment of any worker is terminated by or contractor the wages earned by him shall be paid before the expiry of the second working day from the day on which ‘he employment is terminated. “

Therefore there is a duty to settle the dues of employee before the expiry of the second working day from the day on which the employment is terminated.

Employers therefore cannot legally delay the Full & Final Settlement of Temporary or Contract Employees beyond the Statutory period .

With Regards

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail : rajanassociates@eth,net,

Mobile : 9025792684-9025792634

Best wishes to our followers for a prosperous 2011.

Immediate Legal Questions for Indian Staffing Companies

In continuation of our earlier post on the subject:

A common question arises in Contractual Employment regarding the duty of the Principal Employer in ensuring timely payment of salaries to the contract workmen.

Rule 72 of the CLRA Rules states as follows:

"The principal employer shall ensure the presence of his authorized representative at the place and time of disbursement of wages by the contractor to the workmen, and it shall be the duty of the contractor to ensure the disbursement of wages in the presence of such authorized representative."

Consequently, when the rule clearly stipulates a duty on the part of the Principal Employer to be present at the place and time of disbursement of wages by the contractor to the workmen and also the duty of the contractor to ensure the disbursement of wages in the presence of the Principal Employer, it is a matter of joint responsibility.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

Email: rajanassociates@eth.net

9025792684

Dear All,

In continuation of our earlier post on the timely payment of wages to the Contractor's employees under Rule 72 of CLRA Rules, under the next Rule 73, it is expressly provided that the authorized representative of the principal employer shall record, under his signature, a certificate at the end of the entries in the register of wages or the Register of Wages-cum-Muster Roll, as the case may be, in the following form:

"Certified that the amount shown in column No---------- has been paid to the workmen concerned in my presence on -------- at ---------"

Actually, the Rules provide for supervision and certification by the Principal Employer at the time of every payment to the Contractor's employees by the Contractor.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

-9025792684.

IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES

In continuation of our earlier post on the subject:

What is Sec 25 F of the Industrial Disputes Act 1947?

It reads like this:

25F. CONDITIONS PRECEDENT TO RETRENCHMENT OF WORKMEN. - No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until - (a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice; (b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months; and (c) notice in the prescribed manner is served on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette.

Since the word "retrenchment" is used in Section 25 F, the definition of retrenchment has to be seen in Section 2 (OO):

(oo) "retrenchment" means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include &ndash; (a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuating if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or (bb) termination of the service of the workman as a result of the non-removal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or (c) termination of the service of a workman on the ground of continued ill-health;

For Compliance of Sec 25 F of the ID Act, the following is to be done:

i. The employee of the Staffing Entity sent for work to the Client must be given a one month's notice in writing, indicating the reasons for retrenchment. The retrenchment can take effect only after the notice period has expired, or if the employee of the Staffing Entity sent for work to the Client has been paid wages in lieu of such notice.

ii. The employee of the Staffing Entity sent for work to the Client must be paid, at the time of retrenchment, compensation, which is equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months.

iii. A notice must be served in the prescribed manner, on the appropriate Government. (Section 25F of the ID Act)

With Regards,

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

9025792684.

IMMEDIATE LEGAL QUESTIONS HAUNTING INDIAN STAFFING COMPANIES

In continuation of our earlier post on the subject:

A common question that arises in the Staffing Industry is whether compliance with Sec 25(F) of the Industrial Disputes Act is the correct process for the termination of the Deputed candidate?

Absolutely, it is a watertight process and a safeguard to avoid wrongful termination litigation. In the field, you will find that clients will hesitate to provide the minimum 15 days' notice for terminating the candidate.

For compliance with Sec 25 F of the ID Act, the following is to be done:

i. The employee of the Staffing Entity sent for work to the Client must be given one month's notice in writing, indicating the reasons for retrenchment. The retrenchment can take effect only after the notice period has expired, or if the employee of the Staffing Entity sent for work to the Client has been paid wages in lieu of such notice.

ii. The employee of the Staffing Entity sent for work to the Client must be paid, at the time of retrenchment, compensation equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months.

iii. A notice must be served in the prescribed manner on the appropriate Government (Section 25F of the ID Act). It has become a practice in the industry to dispense with this notice. The Government can take steps to delete this provision.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

Email: rajanassociates@eth.net

-9025792684.

Dear All,

Sub: Statistics of Enforcement of CLRA by the Central Govt

The enforcement of the provisions of various labour laws has been prescribed under provisions of the relevant Acts and is secured through the officers of the Central Industrial Relations Machinery (CIRM) in the Central Sphere, and through the State enforcement machinery in the State Sphere.

In the Central sphere, the officers of the Chief Labour Commissioner (Central)'s organization conduct inspections regularly under the Contract Labour (Regulation & Abolition) Act, 1970, and take action by filing prosecution cases against the defaulting employers and contractors.

Details of inspections conducted and prosecutions launched during the last three years and the current year under the Contract Labour Act, 1970, are found in the attachment. Shri Harish Rawat, Minister of Labour and Employment, gave this information in reply to a question in the Lok Sabha.

The attached data will give a picture of the realistic enforcement scenario in respect of these two enactments.

Presently, the level playing field available for the Indian Staffing Industry to operate in the present liberalised regime of the Central Government is commendable and will be an invitation to International Staffing & Recruiting Companies to open shop in India.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

9025792684 | 9025792634

Subject: Immediate Legal Questions for Indian Staffing Companies

Re: Recovery for Damage or Loss to the Client's Property

A common question arises in Contractual Employment when Contract Employees sent for work with the Client cause damage or loss to the Client's property. The Client then makes a claim on the Temping or Staffing Company and wants the loss to be adjusted in the Contract Employee's salary. Can such a request be entertained?

The Temping or Staffing Contractor cannot adjust it without affording an opportunity to the Contract Employee. Apparently, it is for the period the Contract Employee had worked. Recovery from salary has to be under Section 10 of the Payment of Wages Act, 1936, for a loss provided under clause (c) of sub-section (2) of section 7, as extracted below:

Clause (c) of sub-section (2) of section 7:

(c) deductions for damage to or loss of goods expressly entrusted to the employed person for custody, or for the loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default;

Section 10: Deductions for Damage or Loss:

(1) A deduction under clause (c) or clause (o) of sub-section (2) of section 7 shall not exceed the amount of the damage or loss caused to the employer by the neglect or default of the employed person.
(1-A) A deduction shall not be made under clause (c) or clause (m) or clause (n) or clause (o) of subsection (2) of section 7 until the employed person has been given an opportunity to show cause against the deduction, or otherwise than in accordance with such procedure as may be prescribed for the making of such deductions.
(2) All such deductions and all realizations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed.

Recovery from the salary can be done only after following the above procedure, which is the due process of law as provided above:
First by issuing a show cause notice for salary adjustment and after receiving any objections; and
Second pass an order of Adjustment; and
Third record the proof of delivery of the Salary adjustment letter; and
Lastly, the adjustment request from the Client's claim can be entertained.

This procedure can be made a part of the Code of Conduct issued by the Staffing or Temping Company to their Contract Employees.

With Regards,

V. Sounder Rajan
Advocates & Notaries & Legal Consultants
Email: rajanassociates@eth.net
Phone: 9025792684 / 9025792634

Dear All,

We send our Pongal & Maha Sankranti Greetings.

Significance of Pongal

Pongal is a harvest festival - the Tamil equivalent of Thanksgiving. It is held to honor the Sun for a bountiful harvest. Families gather to rejoice and share their joy and their harvests with others. The Sun is offered a "Pongal" of rice and milk.

Literally meaning "Boiling over," Pongal signifies the advent of prosperity. Pongal is normally celebrated over a period of four days, starting on the 13th of January. Since the calculation to determine the day is based on the solar calendar, the date doesn't change. It is considered a very auspicious occasion when the Sun transits the Capricorn sign. A rich and abundant harvest of paddy and other crops depends on the availability of good rain, as most of the rivers in Tamil Nadu are not perennial. Hence, there is the invocation of the Sun God and the God of Rain at the time of Pongal.

The period is referred to as Uttarayan Punyakalam and is considered auspicious. Legend has it that the Devas wake up after a six-month long slumber during this period. And so it is believed that those who pass away during Uttarayana attain salvation. In fact, Bheeshma is believed to have waited for the dawn of Uttarayana before he gave up his life.

As is customary, the cleaning of every house a few days prior to the Pongal festival is an indispensable ritual. Not only is every house cleaned, but it is also dusted and whitewashed. Wearing new clothes on Pongal is also customary. Attired in a new "Lehanga" and half sari for young girls and lungi and angavastram, the men, women, and children prepare themselves for celebrating the first day called Bhogi Pandigai. This day is dedicated to Indra, who is also called Bhogi. It is believed that on this day Lord Krishna had urged the people to neglect Indra and not worship him. People take an oil bath on this day. Using rice paste, "Kolam" is drawn and this represents the Sun. The items that are generally used to celebrate Pongal include Sandalwood paste, vermilion, mango saplings, coconut fronds, sugarcanes, banana leaves, ginger pieces, white flour, new vessels for cooking, tu.

Pongal is a four-day affair. The first day, Bhogi, is celebrated on the last day of the month of Margazhi. Scholars have often compared Bhogi to the Indra Vizha celebrated by the Chola kings at Kaveripattinam, also known as Poompuhar. Indra Vizha was celebrated in honor of Lord Indra, also called Bhogi, the God of thunder and rain.

The second day is Surya Pongal, also called Perum Pongal. It is the most important day, and people worship Surya, the Sun God, and his consorts, Chaya and Samgnya. There are several legends associated with Surya Pongal. A sage named Hema prayed to Lord Vishnu on the banks of the Pottramarai tank in Kumbakonam. On Surya Pongal day, the lord is believed to have taken the form of Sarangapani and blessed the sage. Yet another legend has it that Lord Shiva performed a miracle where a stone image of an elephant ate a piece of sugarcane.

The third day is Mattu Pongal, celebrated to glorify cattle that help farmers in myriad ways. On this day, the cows are bathed and decorated with vermilion and garlands and fed. The last day is Kaanum Pongal. It is that part of the festival when families used to gather on the riverbanks and have a sumptuous meal (kootanchoru). It is also time for some traditional dances such as kummi and kolattam. In recent years, that day is celebrated as Uzhavar Tirunal in honor of farmers.

The dishes prepared during these days are "Sarkarai Pongal," "Ven Pongal," Dosai and Sambhar, Vadai, and Payasam (a sweet rice pudding).

The sun itself stands for all the ideals of the Pongal festival. Its message is that of light, unity, equality, and true selflessness. These are the ideals of Karma Yoga. Hence, the sun is the greatest Karma Yogi.

When we celebrate Pongal, our sense of value changes. We begin to understand that our real wealth is the goodwill and friendship of your relatives, friends, neighbors, and other human beings, and ESPECIALLY OUR VIEWERS IN CITEHR.

Our wealth is the land on which our food grows, the cattle which help us in agriculture, and the cow which gives us milk. We begin to have greater love and respect for them and for all living beings - the crows, the fish, and all other creatures.

To the agriculturalist, Pongal is a day of triumph. He would have by then brought home the fruits of his patient toil. Symbolically, the first harvest is offered to the Almighty - and that is Pongal. To toil was his task, his duty, but the fruit is now offered to the Lord. This is the spirit of Karma Yoga.

Thanks & Regards

V. Sounder Rajan - Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

We are back after the Pongal Break.

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

A common question arises in Contractual Employment: whether the doctrine of equal pay for equal work incorporated in the CLRA. Is there a need for Contractors and Principal Employers to adhere to this?

Yes. It is incorporated in Rule 25 of the CLRA Rules, which is extracted below:

25. Form and terms and condition of licence&mdash;(1) Every license granted under sub-section (1) of Sec. 12 shall be in Form VI.

(2) Every license granted under sub-rule (11) or renewed under 29 shall be subject to the following conditions, namely:

***

(v) (a) In cases where the workmen employed by the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of work, and other conditions of service of the workmen of the contractor shall be the same as applicable to the workman directly employed by the principal employer of the establishment on the same or similar kind of work.

Provided that in the case of any disagreement with regard to the type of work, the same shall be decided by the Labor Commissioner.

The effect of the rule is that wherever Contract Labor or Temporary Employees are appointed, i.e., where the workmen employed by the contractor perform the same or similar kind of work as the workmen directly employed by the principal employer of the establishment, the wage rates, holidays, hours of work, and other conditions of service of the workmen of the contractor shall be the same as applicable to the workman directly employed by the principal employer of the establishment on the same or similar kind of work.

In a recent Judgment of the Madras High Court, Madurai Bench decided by Mr. Justice K. Chandru in the matter of A. Victor vs. Executive Director BHEL, it has been held that in case a contract workman is paid less than the wages payable to a similarly placed workman by the principal employer, the TN Contract Labor Rules, 1975, has a remedy under Rule 25(v)(a). Justice K. Chandru, quoting the rules, held that in such circumstances, it was for the registering authority to go into the question as to whether the workman employed by the contractor performed the same or similar kind of work as the workman directly employed by the principal employer. But it was held that the High Court would not entertain the Writ Petition to implement the circular dated July 28, 2005, issued by R-1 (BHEL, Corporate Office, New Delhi 110 049) and to revise the wages to employees who were working as contract labor through the labor contract society.

Both the Principal Employer, as well as the Staffing Agency, have to ensure the above compliance. If there is a violation, the Contract Employee has the remedy under Rule 25(v)(a) of CLRA Rules.

Thanks & Regards

V. Sounder Rajan
Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

-9025792684-9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

A common question arises in Contractual Employment: whether the Staffing or Temping Agency Employees sent for work to the Clients' place are to be paid under the Minimum Wages Act?

Yes, it is incorporated in Rule 25 of the CLRA Rules, which is extracted below:

25. Form and terms and condition of licence&mdash; (1) Every license granted under subsection (1) of Sec. 12 shall be in Form VI.

(2) Every license granted under sub-rule (11) or renewed under the rules shall be subject to the following conditions, namely:

(IV) the rates of wages payable to the workmen by the contractor shall not be less than the rates prescribed under the Minimum Wages Act, 1948 for such employment where applicable, and where the rates have been fixed by agreement, settlement, or award, not less than the rates so fixed.

Consequently, compliance with Minimum Wages is mandatory and not optional.

In fact, the Inspecting Agencies under the Payment of Wages Act, both at the Center and States, prioritize this compliance for inspection, and strict action is taken.

The next time any Staffing or Temping Agency receives a Notice after inspection, the issue is to be taken very seriously, and a proper reply is to be sent by the Staffing or Temping Agency.

Thanks & Regards,

V. Sounder Rajan - Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

-9025792684 - 9025792634

Dear All,

PUNISHMENT FOR NON-COMPLIANCE OF MINIMUM WAGES ACT

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

In continuation of our previous post on compliance with the Minimum Wages Act, the next question is the nature and type of penal action that can be taken by the authorities against the Staffing Entity or Contractor for non-compliance with the Minimum Wages Act?

For non-compliance, Section 20(3)(i) of the Minimum Wages Act provides that in the case of a claim arising out of payment of less than the minimum rates of wages, the payment to the employee of the amount by which the minimum wages payable to him exceed the amount actually paid together with the payment of such compensation as the authority may think fit not exceeding ten times the amount of such excess.

In short, the violator may have to shell out up to 10 times the compensation amount together with compliance with the Minimum Wages Act.

Apart from the above, Section 22 provides for a penalty to any employer who pays to any employee less than the minimum rates of wages fixed for that employee's class of work or less than the amount due to him under the provisions of the Minimum Wages Act shall be punishable with imprisonment for a term which may extend to six months or with a fine which may extend to five hundred rupees or with both. While imposing the punishment of a fine for an offense under Sec 22, the Court shall take into consideration the amount of any compensation already awarded against the violator in any proceedings taken under Section 20.

Thanks & Regards,

V. Sounder Rajan - Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net,

-9025792684-9025792634

Dear All,

Sub: Enhancement of wage ceiling by the ID Amendment Act

(s) "workman" means any person, but does not include any such person &ndash;

(iii) who is employed mainly in a managerial or administrative capacity; or

(iv) who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

Can someone shed a bit more light on the exclusion clauses above from the definition of workmen? What is "managerial capacity" for the ID Act? We are living in a world of mammoth enterprises that are bigger than many governments and have more than 10 levels of reporting hierarchy. It is silly to think that the ID Act doesn't cover everyone except the board of directors and those directly appointed by the board of directors of a company. This has no relevance to the salary or the nature of the job since technically everyone else will not be in a managerial capacity in true sense. If we take the view that everyone except the board of directors and their direct appointee to be acting in a non-managerial capacity, then everyone else would be included as workman for the purposes of the ID Act, is it not?

Dear PvtProfessional,

Can someone shed a bit more light on the exclusion clauses above from the definition of workmen?

What is the "managerial capacity" for the ID Act? We are living in a world of mammoth enterprises that are bigger than many governments and have more than 10 levels of reporting hierarchy. It is silly to think that the ID Act doesn't cover everyone except the board of directors and those directly appointed by the board of directors of a company. This has no relevance to the salary or the nature of the job since technically everyone else will not be in a managerial capacity in the true sense.

If we take the view that everyone except the board of directors and their direct appointee to be acting in non-managerial capacity, then everyone else would be included as a workman for the purposes of the ID Act, is it not?

Please find below the amended definition of workman under the ID Act:

The recent ID Act amendments for the Staffing Industry have enhanced the wage ceiling.

Prior to the amendment, the wage ceiling of workman in the definition clause Sec 2(s) was Rs. 1600/-. Now it is enhanced to Rs. 10,000/- per month.

Consequently, any person working in any industry doing any manual, unskilled, skilled, technical, operational, clerical, or supervisory work drawing wages up to Rs. 10,000/- will be considered a workman. The workman definition now reads as follows:

(s) "workman" means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward, whether the terms of employment be express or implied. For the purposes of any proceeding under this Act in relation to an industrial dispute, it includes any such person who has been dismissed, discharged, or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge, or retrenchment has led to that dispute, but does not include any such person: (i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); (ii) who is employed in the police service or as an officer or other employee of a prison; (iii) who is employed mainly in a managerial or administrative capacity; or (iv) who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

The exclusion is where the workmen employed in a supervisory capacity draw wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.

The Judgment of the Bombay High Court [attached]. Specifically, para 18 settles the issue. We are not having the information whether any SLP has been filed in the Supreme Court on the Bombay High Court decision.

You can refer to it and apply it to your facts.

Rajan Associates

Thanks, Mr. Rajan. I did get some more judgments on this topic, and I still feel that the notion of "managerial capacity" has not been defined clearly yet. I think we ought to see the objects and reasons of the ID Act to see if these judgments are good.

Any chance you happen to have the objects and reasons for the ID Act (the original and the amendments)? Also, thanks for posting this thread.

Cheers!! Raj

Hi Rajan,

This information has been very useful. Does it also apply in the BPOs, KPOs, and other outsourcing industries?

Thanks,
Pritam

Dear Sec 2(j) of the Industrial Disputes Act defines "industry" as any systematic activity carried out by cooperation between an employer and his workmen (whether these workmen are employed directly by the employer or through any agency, including a contractor) for the production, supply, or distribution of goods or services with the aim of satisfying human wants or wishes (excluding purely spiritual or religious wants or wishes), whether or not - (i) capital has been invested for this purpose, or (ii) the activity is intended to generate gain or profit. This definition also includes activities such as those of the Dock Labour Board established under section 5A of the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1949), and activities related to the promotion of sales or business conducted by an establishment. However, it does not encompass agricultural operations except when integrated with other activities as mentioned in the clause, with the other activity being predominant. Explanation: The term "agricultural operation" excludes activities conducted on plantations as defined in clause (f) of section 2 of the Plantations Labour Act, 1951 (69 of 1951), hospitals, dispensaries, educational, scientific, research, or training institutions, institutions owned or managed by organizations primarily engaged in charitable, social, or philanthropic services, khadi or village industries, activities of the Government related to its sovereign functions, domestic services, activities comprising a profession practiced by fewer than ten individuals, and activities carried out by a cooperative society, club, or similar body involving less than ten employees.

The definition is sufficiently broad to be inclusive, with clear exclusions provided.

rajanassociates

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

A common question arises in Contractual Employment:

What are the Statutory Registers to be maintained by the Staffing Agency in relation to Muster roll, wages registers, deduction register, and overtime?

As per Rule 78 of CLRA Rules, it provides for the maintenance of the following: Muster roll, wages registers, deduction register, and overtime register. (1) (a)

Every contractor shall, in respect of each work on which he engages contract labour:

- Maintain a muster roll and a register of wages in Form XVI and Form XVII, respectively.
- Provided that combined Register of Wage-cum Muster Roll in Form XVIII shall be maintained by the contractor where the wage period is a fortnight or less;
- Maintain a Register of Deductions for damage or loss, Register of Fines, and Register of Advances in Form XX, Form XXI, and Form XXII, respectively;
- Maintain a Register of Overtime in Form XXIII recording therein the number of hours of, and wages paid for, overtime work, if any.

Every contractor shall issue wage slips in Form XIX to the workmen at least a day prior to the disbursement of wages where the wage period is one week or more.

Every contractor shall obtain the signature or thumb-impression of the worker concerned against the entries relating to him on the Register of Wages or Muster Roll-cum-Wages Register. The entries shall be authenticated by the initials of the contractor or his authorized representative and shall also be duly certified by the authorized representative of the principal employer in the manner provided in rule 73.

In respect of establishments governed by the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, or other related rules and regulations, the following registers and records are required to be maintained by a contractor:

- Muster roll;
- Register of wages;
- Register of deductions;
- Register of overtime;
- Register of fines;
- Register of advances;
- Wage slip.

Notwithstanding anything contained in these rules, where a combined or alternative form is sought to be used by the contractor to avoid duplication of work for compliance with the provisions of any other Act, the previous approval of the Chief Labour Commissioner needs to be obtained.

Thanks & Regards,

V. Sounder Rajan
Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net
Phone: 9025792684, 9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

A common question arises in Contractual Employment: In case the Principal Employer is employing different Staffing Agencies for different Services, is there any duty for the Principal Employer to maintain any Statutory Record? In accordance with Rule 74 of CLRA Rules, every principal employer shall maintain, in respect of each registered establishment, a register of contractors in Form XII. This Register would disclose that fact. Otherwise, there may be confusion regarding the numbers working for each Agency. The Staffing Entity must ensure compliance on this score.

Thanks & Regards,

V. Sounder Rajan Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

9025792684 / 9025792634

In case the employee works for just a day and does not return to work, how could we handle his personal data? You may understand that in the case of contract staff, it takes at least a week's time to gather their personal information. If an employee quits within a day, how can we manage the payment of ESI/PF when we do not have their details for registration? According to CLA, we are required to pay and register the employee for all compliance.

Please suggest...

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Viewer Lakshmi has posed the following crucial question which arises in Contractual Employment:

In case the employee works for just a day and does not return to work, how could we handle his personal data? You might understand that in the case of contract staff, it takes at least a week to gather their personal data. If he quits within a day, how can we handle the payment of ESI/PF when we do not have their details for registration? According to CLA, we need to pay and register the employee for all compliance.

The ESI Act states that an employee must file a declaration form upon employment in a factory or establishment to demonstrate coverage under the Act. Upon registration, each insured person receives a 'temporary identification certificate' valid for three months, extendable for another three months if needed. Within this period, the insured person receives a permanent 'family photo identity card' in exchange for the certificate.

The above is a compliance requirement from the Employee, providing insight into compliance requirements.

However, the EPF Act's Section 6 reads as follows:

"Contributions and matters which may be provided for in Schemes." The employer's contribution to the Fund shall be ten percent of the basic wages, dearness allowance, and retaining allowance, if any, payable to each employee. The employee's contribution shall match the employer's contribution. In certain cases specified by the Central Government, the contribution percentage may be modified.

Contribution is defined as the payment due in respect of a member under a scheme or the payment due for an employee covered by the Insurance Scheme.

The definition of an "Employee" includes any person employed for wages in connection with an establishment, directly or indirectly paid by the employer, and covers those employed through a contractor.

Regarding single-day absconding cases, organizational payroll procedures will influence compliance. For specific cases, consult your EPF/ESI Inspector for guidance as they enforce regulations. There is a need for amendments to EPF/ESI laws to address situations in the Flexi-Staffing/Temping Industry.

The EPF website states that an employee is eligible for PF Act membership from the first day of joining a covered establishment since 1-11-90.

Thanks & Regards,

V. Sounder Rajan - Advocates & Notaries - Legal Consultants

Email: rajanassociates@eth.net

9025792684 | 9025792634

First, thank you for the reply.

Statutory payments made to the government are of no use to the employee because some of them come to collect their salary, and when we inform them about statutory deductions, they are not happy about it. Additionally, these deductions may not benefit them. For example, ESI may not be beneficial if the employee does not use it, and an employee working for a day might not have provided all the necessary details. The same issue applies to EPF, which has large amounts of unclaimed money. There should be a feasible solution that benefits both the employee and the employer.

Dear All

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Whether Trainees employed by the Staffing Agency and sent for work to Establishments covered under Shops & Establishments Act are exempted for Statutory Benefits ?

Sec 2 (f) of EPF Act does not provide for an exclusion or exemption of an Apprentice/Trainee under the Shops & Establishments Act .

The Apex Court Judgment in the case reported in the matter of The Regional Provident Fund Commissioner, Mangalore Versus M/s. Central Aercanut & Coca Marketing and Processing Co-op. Ltd. the Hon’ble Bench comprising of THE HONOURABLE MR. JUSTICE ARIJIT PASAYAT & THE HONOURABLE MR. JUSTICE R.V. RAVEENDRAN touched on exemption of an apprentice engaged under the Apprentices Act or under the Standing Orders is excluded from the definition of an 'employee' as per Section 2(f) of the Act .

In the ESI Act also there is exemption of an apprentice engaged under the Apprentices Act or under the Standing Orders.

Shops & Establishments Act is not included either in Sec 2 (f) of the EPF Act or Sec 2 (9) of the ESI Act.Both these Statutes need to be amended to include this.



Hence coverage is not exempted unless he /she are taken into employment under Apprentices Act or under the Standing Orders. For availing this benefit the Certification of the Standing Orders is to be done or the Model Standing Orders adopted by the Staffing Company.

Thanks & Regards

V.Sounder Rajan -

Advocates & Notaries -Legal Consultants

E-mail : rajanassociates@eth,net,

-9025792684-9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Under what circumstances can an establishment be exempted from the operation of the EPF Scheme?

Section 17 provides for it:

17. Power of Exempt

(1) The appropriate government may, by notification in the Official Gazette and subject to such conditions as may be specified in the notification, exempt, whether prospectively or retrospectively, from the operation of all or any of the provisions of any Scheme:

(a) any establishment to which this Act applies if, in the opinion of the appropriate government, the rules of its provident fund with respect to the rates of contribution are not less favorable than those specified in section 6 and the employees are also enjoying other provident fund benefits which, on the whole, are not less favorable to the employees than the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of similar character or

(b) any establishment that is enjoying benefits in the nature of provident fund pension or gratuity, and the appropriate government is of the opinion that such benefits separately or jointly are, on the whole, not less favorable to such employees than the benefits provided under this Act or any Scheme in relation to the employees in any other establishment of a similar character:

Provided that no such exemption shall be made except after consultation with the Central Board, which, on such consultation, shall forward its views on exemption to the appropriate government within such a time limit as may be specified in the Scheme.

Section 17 (1)(a) refers to exemption from PF Contribution, and Section 17 (1)(b) refers to Pension and Gratuity.

The condition for exemption is that the establishment claiming exemption is providing benefits to its employees in the form of provident fund, pension, or gratuity, and the appropriate government is of the opinion that such benefits are, on the whole, not less favorable to such employees than the benefits provided under the EPF Act or any Scheme in relation to the employees in any other establishment of a similar character.

Supposing a Scheme for PF, Pension, or Gratuity is framed by an entity to be more beneficial than those provided in the EPF Act, then the organization can file an Exemption Application with the Appropriate Govt, and the exemption can be granted after consultation with the Central Board.

Thanks & Regards,

V. Sounder Rajan
Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net
Phone: 9025792684, 9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Is there any recent development in law giving recognition to the Contract Staffing or Temp Staffing Industry?

Recently, the Government of India introduced THE PROHIBITION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE BILL, 2010.

In the Bill, the following definitions are noteworthy:
2 (f) &ldquo;employee&rdquo; means a person employed at a workplace for any work on a regular, temporary, ad hoc, or daily wage basis, either directly or by or through an agent, including a contractor, with or without the knowledge of the principal employer, whether for remuneration or not, or working on a voluntary basis or otherwise, whether the terms of employment are express or implied and includes a domestic worker, a co-worker, a contract worker, probationer, trainee, apprentice, or by any other name called;
Contract Staff deputation is taken care of by including a person employed at a workplace for any work on a regular, temporary, ad hoc, or daily wage basis, either directly or by or through an agent, including a contractor, with or without the knowledge of the principal employer.

(g) &ldquo;employer&rdquo; means: (i) in relation to any department, organization, undertaking, establishment, enterprise, institution, office, branch, or unit of the appropriate Government or a local authority, the head of that department, organization, undertaking, establishment, enterprise, institution, office, branch, or unit or such other officer as the appropriate Government or the local authority, as the case may be, may by an order specify in this behalf; (ii) in any workplace not covered under clause (i), any person responsible for the management, supervision, and control of the workplace;

(l) &ldquo;Workplace&rdquo; includes: (i) any department, organization, undertaking, establishment, enterprise, institution, office, branch, or unit which is established, owned, controlled, or wholly or substantially financed by funds provided directly or indirectly by the appropriate Government or the local authority or a Government company or a corporation or a cooperative society (ii) any private sector organization or a private venture, undertaking, enterprise, institution, establishment, society, trust, non-governmental organization, unit, or service provider carrying on commercial, professional, vocational, educational, entertainmental, industrial, or financial activities including production, supply, sale, distribution, or service; (iii) a house or dwelling place; (iv) any place, vehicle either by air, land, rail, or sea visited by the employee arising out of, or during and in the course of, employment;

Similarly, in the Workplace definition, the concept of a service provider carrying on commercial, professional, vocational, educational, entertainmental, industrial, or financial activities including production, supply, sale, distribution, or service has been included.

Viewers may also note that THE PROHIBITION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE BILL, 2010 is in the Bill stage and it has to be passed by both houses of Parliament, then assent given by the President and then Notified in the Gazette to make it effective.

Thanks & Regards,

V. Sounder Rajan - Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

9025792684 - 9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

What are the penal provisions in the EPF Act for non-compliance of the provisions of contribution both by the employer and employee by Staffing and Recruiting Companies?

The rate of penal damages for belated payment of EPF dues is as follows:

- If the period of default is less than 2 months - 5%
- If the period of default is 2 months or more but less than 4 months &ndash; 10%
- If the period of default is 4 months or more but less than 6 months &ndash; 15%
- If the period of default is 6 months or more &ndash; 25%

The above is in addition to 12% simple interest.

Apart from the above, the further consequences for default are:

- Attachment of Bank Accounts
- Realization of dues from Debtors [Garnishee Order]
- Attachment of moveable and immovable properties
- Arrest and detention in Prison
- Action under Section 406/409 of the Indian Penal Code [Criminal Law] and Section 110 of Cr. P.C
- Prosecution. Prosecution for Non-payment of contributions normally ends in favor of the Department. Mandatory punishment of detention in Prison is provided.

Thanks & Regards,

V. Sounder Rajan
Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

Mobile: 9025792684 - 9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Are there any statutory provisions to be followed by the Staffing or Temping Agency in respect of the Salary Payments of Contract employees sent by the Staffing or Temping Agency for work to the Client as per the CLRA Rules?

In the CLRA Rules, reference can be found from Rule 63 to 73 of Chapter VI. The same is extracted below:

63. The contractor shall fix wage periods in respect of which wages shall be payable.

64. No wage period shall exceed one month.

65. The wages of every person employed as contract labour by a contractor where less than one thousand such persons are paid before the expiry of the seventh day; in other cases before the expiry of the tenth after the last day of the wage period in respect of which the wages are payable.

66. Where the employment of any worker is terminated by a contractor, the wages earned by him shall be paid before the expiry of the second working day from the day on which the employment is terminated.

67. All payments of wages shall be made on a working day at the work premises and during the working time and on a date notified in advance, and in case the work is completed before the expiry of the wage period, the final payment shall be made within forty-eight hours of the last working day.

68. Wages due to every worker shall be paid to him directly or to another person authorized by him in this behalf.

69. All wages shall be paid in current coin or currency or in both.

70. Wages shall be paid without any deductions of any kind except those specified by the Central Government by general or special order in this behalf or permissible under the Payment of Wages Act, 1936 (IV of 1936).

71. A notice showing the wage period and the place and time of disbursement of wages shall be displayed at the place of work, and a copy sent by the contractor to the principal employer under acknowledgment.

72. The principal employer shall ensure the presence of his authorized representative at the place and time of disbursement of wages by the contractor to workman, and it shall be the duty of the contractor to ensure the disbursement of wages in the presence of such authorized representative.

73. The authorized representative of the principal employer shall record under his signature a certificate at the end of the entries in the register of wages or the Register of Wages-cum-Muster Roll as the case may be in the following form: "Certified that the amount shown in column No. has been paid to the workmen concerned in my presence on at."

In our earlier posts, reference to Rule 66, 72, and 73 has been made. The remaining Rules are referred to in this Post.

Please note that the whole idea of Contract Labour Regulation on this aspect is to ensure timely payment of Salaries, and the Law has provided for such stringent provisions as there will be a tendency to avoid/delay the Salaries by Contractors to the Contract Employees.

Thanks & Regards,

V. Sounder Rajan - Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

Mobile: 9025792684 - 9025792634

Dear All

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

In case the Staffing or Temping Company engages women Employees and they are sent for work at the Clients place what are the special provision in the CLRA Rules on welfare measures for them?

Rule25. Of the CLRA Rules provides that Every licence granted under sub-section (1) of Sec. 12 shall be in Form VI.and (2) Every licence granted under sub-rule (11) or renewed under 29 shall be subject to the following conditions, namely:

(a) In every establishment where twenty or more women are ordinarily employed as contract labour, there shall be provided two rooms of reasonable dimensions for the use of their children under the age of six year

(b) one of such rooms shall be used as a play-room for the children and the other as bed-room for the children;

(c) the contractor shall supply adequate number of toys and games in the play¬room and sufficient number of -cots and bedding in the sleeping room;

(d) the standard of construction and maintenance of the creches shall be such as may be specified in this behalf by the Chief Labour Commissioner-(Central);

By the above provision in case the Staffing Agency employs 20 or more women the necessity of compliance of the above provision may be necessitated.

It is understood that implementation of the above provision is presently limited to Factories and the time when it is extended to all Establishments is not far off.

Thanks & Regards

V.Sounder Rajan -
Advocates & Notaries -Legal Consultants

E-mail : rajanassociates@eth,net,

Mobile :9025792684-9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Is there any provision for the issue of a Temporary Certificate of Registration in the CLRA?

Yes, where conditions arise in an establishment requiring the employment of contract labour immediately and such employment is estimated to last for not more than fifteen days, the principal employer of the establishment or the contractor, as the case may be, may apply for a temporary certificate of registration or license to the Registering officer or the licensing Officer.

Rule 32 of the CLRA Rules provides for handling this situation.

32. Grant of temporary certificate of registration and license

(1) Where conditions arise in an establishment requiring the employment of contract labour immediately and such employment is estimated to last for not more than fifteen days, the principal employer of the establishment or the contractor, as the case may be, may apply for a temporary certificate of registration or license to the Registering officer or the licensing Officer, as the case may be, having jurisdiction over the area in which the establishment is situated.

(2) The application for such temporary registration or license shall be made in triplicate in Forms VIII and X, respectively, and shall be accompanied by a Demand draft drawn in favor of the Pay and Accounts Officer, Office of the Chief Labour Commissioner (Central), New Delhi showing the payment of appropriate fees and in the case of the license, an appropriate amount of security also.

(3) On receipt of the application, complete in all respects, and on being satisfied either on affidavit by the applicant or otherwise that the work in respect of which the application has been made would be finished in a period of a nature which could not be carried out immediately, the registering Officer or the Licensing Officer, as the case may be, shall forthwith grant a certificate of registration of Form, or a license in Form XL as the case may be, for a period of not more than fifteen days.

(4) Where a certificate of registration or license is not granted, the reasons therefor shall be recorded by the registering Officer or the Licensing Officer as the case may be.

(5) On the expiry of the validity of the registration certificate, the establishment shall cease to employ contract labour in respect of which the certificate was given.

It is better for Staffing Companies and Principal Employers to apply for Temporary Registration when such a need arises.

Thanks & Regards,

V. Sounder Rajan
Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

Mobile: 9025792684 - 9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

In case a CLRA Licence is obtained for deploying Contract Labour and it specifies the number of persons to be employed, can the Contractor deploy in excess of the number? Rule 25 II of CLRA Rules specifies that the number of workmen employed as contract labour in the establishment shall not, on any day, exceed the maximum number specified in the licence. When the licence is issued and specifies the numbers, it cannot be exceeded.

With Regards,

V. Sounder Rajan
Advocates & Notaries & Legal Consultants
E-mail: rajanassociates@eth.net
Mobile: 9025792684-9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Is there any responsibility for the Contractor to maintain a canteen for the welfare of Contract Employees?

Yes, Rule 42 of the CLRA Rules prescribes the provision of Canteens and reads as follows:

42. &ndash; (1) In every establishment to which the Act applies and wherein work regarding the employment of contract labour is likely to continue for six months and labour numbering one hundred or more are ordinarily employed, an adequate canteen shall be provided by the contractor for the use of such contract labour within sixty days of the date of coming into force of the rules in the case of the existing establishments and within sixty days of the commencement of contract labour in the case of the establishments of the employment.

(2) If the contractor fails to provide the canteen within the time laid down, the same shall be provided by the principal employer within sixty days of the expiry of the time allowed to the contractor.

(3) The canteen shall be maintained by the contractor or principal employer, as the case may be, in an efficient manner.

43. (1) The canteen shall consist of at least a dining hall, kitchen, store room, pantry, and washing places separately for workers and for utensils.

(2)(i) The canteen shall be sufficiently lighted at all times when any person has access to it.
(ii) The floor shall be made of smooth and impervious material, and inside walls shall be lime-washed or color-washed at least once each year. Provided that the inside walls of the kitchen shall be lime-washed every four months.
(3)(i) The precincts of the canteen shall be maintained in a clean and sanitary condition.
(ii) Suitable arrangements shall be made for the collection and disposal of garbage.

44. (1) The dining hall shall accommodate at least 30 percent of the contract labor working at a time.

(2) The floor area of the dining hall, excluding the area occupied by the service counter and any furniture except tables and chairs, shall be not less than one square meter per diner to be accommodated as prescribed in sub-rule (1).

(3) (i) A portion of the dining hall and service counter shall be partitioned off and reserved for women workers, in proportion to their number.
(ii) Washing places for women shall be separate and screened to secure privacy.

(4) Sufficient tables, stools, chairs, or benches shall be available for the number of diners to be accommodated as prescribed in sub-rule (1).

45. (1) (i) There shall be provided and maintained sufficient utensils, crockery, cutlery, furniture, and any other equipment necessary for the sufficient running of the canteen.
(ii) The furniture, utensils, and other equipment shall be in a hygienic condition.

(2) (i) Suitable clean clothes for the employees' service in the canteen shall also be provided and maintained.
(ii) A service counter, if provided, shall have a top of smooth and impervious material.
(iii) Suitable facilities, including an adequate supply of hot water, shall be provided for the cleaning of utensils and equipment.

46. The foodstuffs and other items to be served in the canteen shall be in conformity with the normal habits of the contract labor.

47. The charges for foodstuffs, beverages, and any other items served in the canteen shall be based on "no-profit, no-loss" and shall be conspicuously displayed in the canteen.

48. In arriving at the prices of foodstuffs and other articles served in the canteen, the following items shall not be taken into consideration as expenditure, namely:
(a) the rent for the land and buildings;
(b) the depreciation and maintenance charges for the building and equipment provided for in the canteen;
(c) the cost of purchase, repairs, and replacement of equipment, including furniture, crockery, cutlery, and utensils;
(d) the water charges and other charges incurred for lighting and ventilation;
(e) the interest on the maintenance of amounts spent on the provision and maintenance of furniture and equipment provided for the canteen.

49. The books of accounts, registers, and other documents used in connection with the running of the canteen shall be produced on demand to an inspector.

50. The account pertaining to the canteen shall be audited once every twelve months by registered accountants and auditors. Provided that the Chief Labor Commissioner (general) may approve of any other person to audit the accounts if he is satisfied that it is not feasible to appoint a registered accountant and auditor in view of the site or the location of the canteen.

The Staffing Entity taking a CLRA License and employing contract or temporary labor which is likely to continue for six months and contract labor numbering one hundred or more are ordinarily employed would require the above compliance.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

Mobile: 9025792684-9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Whether there is any classification of workmen in the Model Standing Orders in respect of Industrial Establishment?

Yes, SCHEDULE I of MODEL STANDING ORDERS IN RESPECT OF INDUSTRIAL ESTABLISHMENTS provides the following:

Classification of workmen:
(a) Workmen shall be classified as:
(1) permanent,
(2) Probationers,
(3) badlis,
(4) temporary,
(5) casual,
(6) apprentices.

(b) A "permanent workman" is a workman who has been engaged on a permanent basis and includes any person who has satisfactorily completed a probationary period of three months in the same or another occupation in the industrial establishment, including breaks due to sickness, accident, leave, lock-out, strike (not being an illegal strike), or involuntary closure of the establishment.

(c) A "probationer" is a workman who is provisionally employed to fill a permanent vacancy in a post and has not completed three months' service therein. If a permanent employee is employed as a probationer in a new post, he may, at any time during the probationary period of three months, be reverted to his old permanent post.

(d) A "badli" is a workman who is appointed in the post of a permanent workman or probationer who is temporarily absent.

(e) A "temporary workman" is a workman who has been engaged for work which is of an essentially temporary nature likely to be finished within a limited period.

(f) A "casual workman" is a workman whose employment is of a casual nature.

(g) An "apprentice" is a learner who is paid an allowance during the period of his training.

The import of the definition of "temporary workman" can be understood to be one who has been engaged for work which is of an essentially temporary nature likely to be finished within a limited period.

With Regards,

V. Sounder Rajan
Advocates & Notaries & Legal Consultants
Email: rajanassociates@eth.net
Mobile: 9025792684-9025792634

Dear All,

Next immediate legal questions for Indian staffing or temping companies:

Is there any liability on the part of the Principal Employer to provide amenities like the supply of wholesome drinking water, a sufficient number of latrines and urinals, washing facilities, and first-aid facilities to the contract workers on failure by the Contractor?

Yes, Rule 40.(1) of the CLRA Rules provides that the facilities required to be provided under Sec., 18 and 19 of the CLRA, namely the provision of a sufficient supply of wholesome drinking water, a sufficient number of latrines and urinals, washing facilities, and first-aid facilities, shall be provided by the contractor in the case of existing establishments within seven days of the commencement of these rules and in the case of new establishments within seven days of the commencement of the employment of contract labour therein. Sub-rule (2) states that if any of the facilities mentioned in sub-rule (1) are not provided by the contractor within the prescribed period, the same shall be provided by the principal employer within seven days of the expiry of the period in the said sub-rule.

Therefore, on failure by the Contractor, the principal employer becomes liable to provide amenities like the supply of wholesome drinking water, a sufficient number of latrines and urinals, washing facilities, and first-aid facilities to the contract workers.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

Mobile: 9025792684-9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

In the next few posts, we will be dealing with issues concerning Staffing Company Management and the Temporary Employee. To begin with, statutory compliance of Section 9C of the Industrial Disputes Act will be required consequent to the Historic September 2010 amendments to the Industrial Disputes Act.

GRM - Grievance Redressal Machinery

9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committees for the resolution of disputes arising out of individual grievances.

(2) The Grievance Redressal Committee shall consist of an equal number of members from the employer and the workmen.

(3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on a rotation basis every year.

(4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:
Provided that there shall be, as far as practicable, one woman member if the Grievance Redressal Committee has two members and in case the number of members is more than two, the number of women members may be increased proportionately.

(5) Notwithstanding anything contained in this section, the setting up of the Grievance Redressal Committee shall not affect the right of the workman to raise an industrial dispute on the same matter under the provisions of this Act.

(6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party.

(7) The workman who is aggrieved by the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of the Grievance Redressal Committee, and the employer shall, within one month from the date of receipt of such appeal, dispose of the same and send a copy of his decision to the workman concerned.

The GRM is meant for resolving disputes arising out of individual grievances of the Temporary Employees.

An appeal will lie to the Management of the Staffing or Temping Company in case the Temporary Employee is aggrieved by the decision of the GRM.

A timeframe of 30 days for resolution is given both to the GRM and the Appellate authority, i.e., Management.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

Mobile: 9025792684-9025792634

Subject: ERA 2011 - Eighth Annual Convention

Dear All,

We were invited to the ERA 2011 - 8th Annual Convention. The convention theme was "Engaging the Unemployable Talent - Vision 2040 - Young India, a double-edged Sword," held at Le Meridien Hotel, Chennai between 18th and 19th March 2011. It was a great show organized by Mr. Veerendra Mathur, President of ERA, Mr. Pramod Thilakan, Dr. K. Thirugnanam, Convenor ERA - Chennai Chapter, and their team.

The topics deliberated on 18th March were:

- Harnessing Talent - Our march towards the future
- Compensation - A 3D Approach
- New Age Leaders
- Current Trends in Freshers Recruitment
- Encouraging Entrepreneurs in Recruitment and HR Industry

On 19th:

- Business Ethics
- Branding Yourself - Employer of Choice
- Using Technology for effective Recruitment
- Search Strategy
- Account Management in Recruitment Industry
- Strategies of Head Hunting - Then / Now / Future
- Focus on the Risk - Legal Aspects
- Succession Planning
- Attracting and Retaining Talent

We had the chance to address the top-notch HR professionals of the Recruiting and Staffing Industry on 19th March 2011 with the topic "Focus on the Risk - Legal Aspects." A major issue concerning Service Tax - Point of Taxation Rules, 2011, to take effect from 1-4-2011 was raised for ERA to address with the Government. ERA needs the support of all players in the Recruiting and Staffing Industry.

The Convention provided an opportunity for participants to understand the changing trends in the industry and ended on a promising note, positioning the Recruiting and Staffing Industry for sustained growth. If you were not there, you really missed the emerging trends in the industry.

Well done, ERA and their team, and thanks to ERA for appointing us as their Honorary Legal Adviser.

A memorable Convention of ERA held on the historic day of the Full Moon being closest to the Earth.

With Regards,

V. Sounder Rajan
Advocates & Notaries
Legal Consultants

E-mail: rajanassociates@eth.net
Mobile: 9025792684-9025792634

Dear All,

NEXT IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING OR TEMPING COMPANIES

Subject: Temporary Employee Welfare

Placing Temporary Employee Welfare/Satisfaction on the priority list will be the need of the hour. The Staffing Industry, deploying Temporary Employees in thousands to their Clients, has to build a strong internal mechanism.

An internal mechanism/Nodal Agency needs to be established for the following:

(a) to establish contacts and hold consultations with a view to maintaining harmonious relations between the Staffing Entity management and Temporary Employees;

(b) to bring to the notice of the Staffing Entity management the grievances of Temporary Employees, individual as well as collective, with a view to securing their expeditious redress and to act as a liaison officer between the management and labor;

(c) to study and understand the point of view of Temporary Employees in order to help the Staffing Entity management to shape and formulate labor policies and to interpret these policies to the Temporary Employees in a language they can understand;

(d) to watch industrial relations with a view to using influence in the event of a dispute between the Staffing Entity management and Temporary Employees and to help to bring about a settlement by persuasive effort;

(e) to advise on fulfillment by time management and the concerned departments of the Staffing Entity of obligations, statutory or otherwise, concerning regulation of working hours, maternity benefit, medical care, compensation for injuries and sickness, and other welfare and social benefit measures;

(f) to advise and assist the management in the fulfillment of its obligations, statutory or otherwise, concerning prevention of personal injuries and maintaining a safe work environment;

(g) to promote relations between the concerned departments of the Staffing Entity and Temporary Employees which will bring about productive efficiency as well as amelioration in the working conditions and to help Temporary Employees to adjust and adapt themselves to their working environments;

(h) to encourage provision of amenities at the Client's place, sickness gratuity payments, and legal advice to Temporary Employees;

(i) to help the Staffing Entity management in regulating the grant of leave with wages and explain to the Temporary Employees the provisions relating to leave with wages and other leave privileges and to guide the Temporary Employees in the matter of submission of application for grant of leave for regulating authorized absence;

(j) to advise on provision of welfare facilities, social and recreational facilities, sanitation, advice on individual personnel problems, and education of children;

(k) to suggest measures which will serve to raise the standard of living of Temporary Employees and in general promote their well-being.

Our future post will be indicative of the way forward and the legal sanction, if any, available for it.

With Regards,

V.Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

Dear All,

We have highlighted the Staffing Company's need for evolving a process for Temporary Employee Welfare.

The roots of this aspect of monitoring and placing Employee Welfare at a prime place are found in the Statute book, viz., Factories Act Section 49, which provides for the following:

49. Welfare officers.

(1) In every factory wherein five hundred or more workers are ordinarily employed, the occupier shall employ in the factory such number of welfare officers as may be prescribed.

(2) The State Government may prescribe the duties, qualifications, and conditions of service of officers employed under subsection (1).

Taking the cue and beneficial provision in the Factories Act, a similar analogy can be adopted in the Staffing Industry and inducting it for the Staffing Industry.

Duties of Temporary Employee Welfare Officers:
The duties of a Welfare Officer shall be:
(a) to establish contacts and hold consultations with a view to maintaining harmonious relations between the Staffing Entity management and Temporary Employees;
(b) to bring to the notice of the Staffing Entity management the grievances of Temporary Employees, individual as well as collective, with a view to securing their expeditious redress and to act as a liaison officer between the management and labor;
(c) to study and understand the point of view of labor to help the Staffing Entity management shape and formulate labor policies and interpret these policies to the Temporary Employees in a language they can understand;
(d) to watch industrial relations with a view to using his influence in the event of a dispute between the Staffing Entity management and Temporary Employees and to help bring about a settlement by persuasive effort;
(e) to advise on fulfillment by time management and the concerned departments of the Staffing Entity of obligations, statutory or otherwise, concerning the regulation of working hours, maternity benefits, medical care, compensation for injuries and sickness, and other welfare and social benefit measures;
(f) to advise and assist the management in the fulfillment of its obligations, statutory or otherwise, concerning the prevention of personal injuries and maintaining a safe work environment;
(g) to promote relations between the concerned departments of the Staffing Entity and Temporary Employees which will bring about productive efficiency as well as amelioration in the working conditions and to help Temporary Employees adjust and adapt themselves to their working environments;
(h) to encourage the provision of amenities at the Client's place, sickness and benevolent scheme payments, pension and superannuation funds, gratuity payments, and legal advice to Temporary Employees;
(i) to help the Staffing Entity management in regulating the grant of leave with wages and explain to the Temporary Employees the provisions relating to leave with wages and other leave privileges and to guide the Temporary Employees in the matter of submission of an application for the grant of leave for regulating authorized absence;
(j) to advise on the provision of welfare facilities, social and recreational facilities, sanitation, advice on individual personnel problems, and education of children;
(k) to suggest measures that will serve to raise the standard of living of Temporary Employees and, in general, promote their well-being.

It is a normal practice that the Welfare officers so appointed should not deal with disciplinary cases or appear on behalf of the management against Temporary Employees, and No Welfare Officer should deal with any disciplinary cases against Temporary Employees or appear before a conciliation officer in a court or tribunal on behalf of the Staffing Entity management against a worker or Temporary Employees. If the person employed as a Temporary Employee in the Staffing Industry voluntarily approaches the welfare officer regarding a grievance arising out of any case of disciplinary action against him, the prohibition can be waived.

Qualification of Temp Welfare Officers:

Qualifications:
No person shall be eligible for appointment as a welfare officer unless he possesses the following qualifications, namely:

(a) a Master's Degree in Labor Management or a Bachelor's Degree in Labor Management awarded by the Institute of Labor Studies;
(b) a Postgraduate Degree or Diploma in Social Work, Social Science, Personnel Management, Labor Relations, or Social Welfare with Labor Laws or Industrial Relations and Labor Welfare or Industrial Relations as a main subject, of any University or Institution recognized by the University Grants Commission for the purpose of its grant;
(c) a Postgraduate Diploma in Labor Administration awarded by the Institute of Labor Studies;
(d) a Postgraduate Diploma in Personnel Management, Industrial Relations, and Labor Welfare awarded by Productivity Councils in States or any other Institutions recognized by the State Government for this purpose;
(e) a Postgraduate Diploma in Labor Laws and Administrative Laws conducted by Law University;
(f) a Degree of any University or Institution recognized by the University Grants Commission for the purpose of its grant and a Diploma in Labor Laws awarded by the Indian Law Institute, New Delhi.

Adequate knowledge of the language spoken by the majority of the Temporary Employees in the Area of operation of the Staffing Business to which he is to be attached.

The CLRA Law may require changes to replicate the relevant provisions of the Factory Act to see the deployment of Temporary Employee Welfare Officers becoming a reality.

Great Staffing Industry Entity-Temporary Employee relationships are vital for the success of any Staffing Business. If the Temporary employees are not happy, there is no way that they will make the Staffing Company's Clients happy. The Staffing Company will be throwing their profits and business away to strive for a good working environment for the Temporary Employees.

If one perceives from the point of the Principal Employer a Staffing company retaining TWO will actually reduce the burden of the Principal Employer in resolving issues of Temps and TWO can be designated to monitor and solve them. Literally they will have a single contact. This may also be a plus point for that Staffing Company having TWO's.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

Dear All,

Subject: Effect of the Recent Amendment - Sec 2A of the Industrial Disputes Act - Subsection (2) & (3) Direct Reference of Dispute.

In one of our earlier posts, we had touched upon the second aspect of the recent historic amendments to the ID Act.

The following, which is in the nature of our view, would touch upon another important aspect and whether the Staffing Entity Legal Department is well-equipped to deal with its impact.

Previously, the temporary employee or contract worker could not approach a Labour Court for disputes related to discharge, dismissal, termination, or retrenchment without the assistance of a Labour Union. Now, by the amendment, he/she can approach the Labour court directly. This is a drastic provision and will have a crippling effect on the Staffing Industry.

The remedy is:

1. First, he/she has to make an application to the Labour Department Conciliation Officer.

2. If no action is taken by the Conciliation Officer, then he/she can file an application to the Labour Court for adjudication of the dispute.

3. The time limit for questioning all such disputes related to discharge, dismissal, termination, or retrenchment is 3 years.

Issue for the Staffing Industry:

1. Individual employee grievances/disputes related to discharge, dismissal, termination, or retrenchment are subject to conciliation by a Labour Officer and thereafter by the Labour Court.

2. This will open the floodgates of temporary/contract employee litigation.

Tips for Avoidance:

1. There is a need to have a strong internal redressal mechanism to close all issues internally. GRM (Grievance Redressal Machinery) can resolve such issues.

2. Take notices from individual temporary employees and their lawyers seriously and solve them immediately. Take expert legal advice on each issue.

3. A pro-temporary employee approach, even without consulting the Principal Employer (Client), needs to be taken.

4. Due to the insertion of this provision, a separate provision needs to be made by way of contingent liability to cover such risks in the Staffing Company's budget.

5. CEOs/HODs should be vigilant on this and take direct action in resolving disputes. They must receive weekly reports from their Compliance Head/Team on resolution. They must appoint an official directly reporting to them to monitor and secure compliance. In special cases, they must seek independent unbiased opinion from an Ombudsman appointed for such purposes, as there will be a tendency by the handling team to justify their actions, which could potentially result in claims.

6. Resolution of disputes will provide satisfaction to the disgruntled temporary employee/contract worker. Ultimately, human capital is what gives returns for the business. Temps are the ultimate breadwinners. But they are also the unsung heroes.

In one of our future posts, we will address the issue of an Ombudsman and also the effect of the amendments on the industry as a whole.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

Email: rajanassociates@eth.net

-9025792684 - 9025792634

The recent ID Act amendments for the Staffing Industry refer to the aspect of enhancement of the wage ceiling by the ID Amendment Act.

Dear All,

Prior to the amendment, the wage ceiling of a workman in the definition clause Sec 2 (s) was Rs. 1600/-. Now it is enhanced to Rs. 10,000/- per month.

Consequently, any person working in any industry, doing any manual, unskilled, skilled, technical, operational, clerical, or supervisory work drawing wages up to Rs. 10,000/- will be considered as a workman. In the present scenario, if a workman is drawing more than 10k, does this workman still fall under the aforementioned definition? Kindly clarify.

Regards,
Rns

Dear All,

In our earlier post, we highlighted the impact of the recent amendments to Section 2A of the ID Act. We had suggested referencing the decision by the Management to an Ombudsman for reviewing its correctness.

Upon reviewing the material on Ombudsman in our views expressed herein, we cannot refer to that independent person as an Ombudsman. The definition of Ombudsman by the Committee of the International Bar Association defines the term "Ombudsman" as follows:

An office provided for by the constitution or by action of the Legislature or Parliament, headed by an independent high-level public official responsible to the Legislature or Parliament. This official receives complaints from aggrieved persons against government agencies, officials, and employees, or acts on their own motion, with the power to investigate, recommend corrective action, and issue reports.

Therefore, the term Ombudsman is used in Administrative and Constitutional Law. In India, this concept was introduced in the realm of the Banking and Insurance Industry for disputes with customers.

In the Staffing Industry, this concept can be adapted. Normally, the decision of a Staffing Entity has to be consistent and provide reasons for adverse employment actions, such as terminating a Temporary Employee's employment. When informing an employee of the decision, the Staffing Entity needs to be honest with the Temporary employee.

If a Temporary employee complains about the Staffing Entity's action before a Labour Authority, the Staffing Agency must provide reasons for the challenged action consistent with the law and the reasons provided to the Temporary employee to sustain the termination. Subsequently, if the employee pursues judicial action in Court or Shop Appeal, the employer must provide reasons for the adverse employment action to the court consistent with Labour Law and those provided to the employee and the administrative agency.

To avoid such complications, whenever a termination or severance of temporary employment is done, if the Temporary Employee is aggrieved by the action, they should be permitted to file a review motion to an Independent Authority who will review the decision of the Staffing Agency Management. In many cases, this decision will be taken by the Staffing Agency Management at the instance of the Client. The Independent Authority, which we will call an "Employment Ombudsman" or "Reviewing Authority," should be an Employment Law Expert or a Retired Labour or Industrial Court Judge who was not part of or involved in the earlier decision-making process.

The Authority can receive and consider complaints relating to the Staffing Entity discharging in any manner, including contract ending, dismissal, retrenchment, or other termination or discharge of the services of an individual Temporary Employee. Any dispute or difference between that Temporary Employee and Staffing Entity connected with, or arising out of, such discharge, including contract ending, dismissal, retrenchment, or termination, shall be deemed a complaint for decision by the Authority.

The scheme and procedure to be followed by the Authority can be prescribed by the Staffing Entity Management.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

Dear All,

In the previous posts, in our opinion, we had touched on the need to strive for cordial Management-Temporary Employee Relations. To recapitulate, the following steps were suggested:

GRM - Grievance Redressal Machinery

Consequent to the Historic September 2010 amendments to the Industrial Disputes Act, GRM has become Statutory.

9C. (1) Every industrial establishment employing twenty or more workmen shall have one or more Grievance Redressal Committee for the resolution of disputes arising out of individual grievances.

(2) The Grievance Redressal Committee shall consist of an equal number of members from the employer and the workmen.

(3) The chairperson of the Grievance Redressal Committee shall be selected from the employer and from among the workmen alternatively on a rotation basis every year.

(4) The total number of members of the Grievance Redressal Committee shall not exceed more than six:
Provided that there shall be, as far as practicable, one woman member if the Grievance Redressal Committee has two members and in case the number of members is more than two, the number of women members may be increased proportionately.

(5) Notwithstanding anything contained in this section, the setting up of the Grievance Redressal Committee shall not affect the right of the workman to raise an industrial dispute on the same matter under the provisions of this Act.

(6) The Grievance Redressal Committee may complete its proceedings within thirty days on receipt of a written application by or on behalf of the aggrieved party.

(7) The workman who is aggrieved by the decision of the Grievance Redressal Committee may prefer an appeal to the employer against the decision of the Grievance Redressal Committee, and the employer shall, within one month from the date of receipt of such appeal, dispose of the same and send a copy of his decision to the workman concerned.

Temp Welfare Officers - TWO

Akin to Welfare Officers in the Factory scenario, induct dedicated Zonal Temp Welfare Officers:

(a) to establish contacts and hold consultations with a view to maintaining harmonious relations between the Staffing Entity management and Temporary Employees;

(b) to bring to the notice of the Staffing Entity management the grievances of Temporary Employees, individual as well as collective, with a view to securing their expeditious redress and to act as a liaison officer between the management and labor;

(c) to study and understand the point of view of labor in order to help the Staffing Entity management shape and formulate labor policies and to interpret these policies to the Temporary Employees in a language they can understand;

(d) to watch industrial relations with a view to using his influence in the event of a dispute between the Staffing Entity management and Temporary Employees and to help bring about a settlement by persuasive effort;

(e) to advise on fulfillment by time management and the concerned departments of the Staffing Entity of obligations, statutory or otherwise, concerning the regulation of working hours, maternity benefit, medical care, compensation for injuries and sickness, and other welfare and social benefit measures;

(f) to advise and assist the management in the fulfillment of its obligations, statutory or otherwise, concerning the prevention of personal injuries and maintaining a safe work environment;

(g) to promote relations between the concerned departments of the Staffing Entity and Temporary Employees which will bring about productive efficiency as well as amelioration in the working conditions and to help Temporary Employees adjust and adapt themselves to their working environments;

(h) to encourage the provision of amenities at the Client's place, sickness and benevolent scheme payments, pension and superannuation funds, gratuity payments, and legal advice to Temporary Employees;

(i) to help the Staffing Entity management in regulating the grant of leave with wages and explain to the Temporary Employees the provisions relating to leave with wages and other leave privileges and to guide the Temporary Employees in the matter of submission of an application for the grant of leave for regulating authorized absence;

(j) to advise on the provision of welfare facilities, social and recreational facilities, sanitation, advice on individual personnel problems, and education of children;

(k) to suggest measures that will serve to raise the standard of living of Temporary Employees and, in general, promote their well-being.

"Reviewing Authority" or Ombudsman

The Ombudsperson should receive and consider complaints relating to the Staffing Entity discharging or terminating in any manner inclusive of Contract ending, dismissal, retrenchment, or otherwise termination or discharge of the services of an individual Temporary Employee or any dispute or difference between that Temporary Employee and Staffing Entity connected with or arising out of such discharge inclusive of Contract ending, dismissal, retrenchment, or termination shall be deemed to be a complaint for decision by the Authority.

The Staffing Entity management should endeavor to have all of them in place. GRM is Statutory whereas TWO and Ombudsman are recommended. If all three are there, the Staffing Entity Management would be secure and insulated from Temp-related disputes. The system of GRM-TWO & Ombudsman will take care of itself and a secure Internal Responsive Machinery created. In the Staffing Industry glossary, we can coin a new word "Temp Employee Relations" - TER.

With Regards,

V. Sounder Rajan
Advocates & Notaries & Legal Consultants
E-mail: rajanassociates@eth.net

Dear All,

Please see the following link for important information regarding the amendment rules for claiming death benefits under the Act: https://www.citehr.com/331279-esic-central-amendment-rules-2011-wef-1st-april-2011-a.html

Thank you,
rajanassociates

Dear All,

We had earlier posted an item on Gratuity payment to Contract workers, and the response for its relevance is enormous considering the mails we are getting. This shows that the Staffing Industry Professionals are very sensitive to happenings around them.

One viewer has raised a point on the very relevancy of Gratuity to Temporary Employment - When the Employment is temporary and sent to the Client, why is that Staffing Company should pay Gratuity?

Our simple answer is the liability to pay rests with the Staffing Company. But the Principal Employer needs to reimburse it. To understand this, the definition of Employee in the Gratuity Act under Section 2 (e) needs to be seen:

e) "employee" means any person (other than an apprentice) employed on wages, in any establishment, factory, mine, oilfield, plantation, port, railway company, or shop, to do any skilled, semi-skilled, or unskilled, manual, supervisory, technical, or clerical work, whether the terms of such employment are express or implied, and whether or not such person is employed in a managerial or administrative capacity, but does not include any such person who holds a post under the Central Government or a State Government and is governed by any other Act or by any rules providing for payment of gratuity.

The qualifying period is provided under Section 4:

Section 4: Payment of gratuity.

Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, -

(a) on his superannuation, or

(b) on his retirement or resignation, or

(c) on his death or disablement due to accident or disease.

In the Industry, one will find Clients requiring the same Temporary Workers being continuously requisitioned beyond the qualifying period of gratuity. The problem will crop up if the Temporary Worker's Contract is terminated, say on the 65th month without payment of Gratuity when post-completion of the 60th month the Temporary Employee would have qualified for Gratuity. Then who is liable to pay the Gratuity? The Client will just say he or she is not their employee and the Staffing Company has to shell it out from their funds.

As the whole Staffing concept in India works on reimbursement of CTC of the Temporary Employee by the Client, the Staffing Company will not understand the issue and initially try to wash off its hands. Supposing there is a claim. In this context, the earlier Bench Judgment of the Madras High Court cited becomes relevant with the attendant risks on Gratuity accumulation as a contingent liability which can boomerang on the Staffing Entity if settled by the Client as per the dictum of the cited Judgment.

Staffing Entities can launch an audit of Gratuity Compliance by getting the details of those Temporary Employees who have completed or are in the process of completing 5 years and their Gratuity payment compliance. If they are not paid, then they should immediately direct their Compliance Team to make payment in compliance of the Act and seek reimbursement from Clients or vice-versa.

Managing Directors and CEOs being at the helm of affairs may need to call for Monthly Compliance reports from their Compliance Head so that they are not caught napping on this crucial compliance. Non-compliance may lead to penalties under Section 9 of the Act and will also lead to making hefty payments without reimbursement from their respective Clients.

For the Staffing Industry Professionals, whenever they are going in for a long-term relationship say beyond five years with a Client, it should be ensured they make this liability explicitly clear to the Client and make a provision for it in the CTC. This payout has to be made to the Temporary Employee whenever there is a resignation or termination beyond 5 years. In the case of disablement, the liability would arise earlier than that period. The best precaution is to make a provision for Gratuity as a part of the Standard Form Contract of the Staffing Company.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants

E-mail: rajanassociates@eth.net

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

Is there any duty for the Contractor or the Staffing Agency to maintain any Statutory Record of persons employed by them? In accordance with Rule 75 of the CLRA Rules, every contractor shall maintain, in respect of such registered establishment where he employs contract labour, a register in Form XIII. This means that the Register in Form XIII is to be in relation to such registered employment.

With Regards,

V. Sounder Rajan
Advocates & Notaries - Legal Consultants - HR
E-mail: rajanassociates@eth.net

Dear All,

You may remember the Historic September 2010 brought about changes to the industrial Disputes Act. One important change is the change made in the Section 11 –Enforcing the Awards of Labour Court which has been touched upon in an earlier post .

In section 11 of the principal Act, after sub-section eight , the following sub-sections shall be inserted, namely:

“(9) Every award made, order issued or settlement arrived at by or before Labour Court or Tribunal or National Tribunal shall be executed in accordance with the procedure laid down for execution of orders and decree of a Civil Court under order 21 of the Code of Civil Procedure, 1908

(10) The Labour Court or Tribunal or National Tribunal, as the case may be, shall transmit any award, order or settlement to a Civil Court having jurisdiction and such Civil Court shall execute the award, order or settlement as if it were a decree passed by it.”

The Execution provisions of CPC is :

51. Powers of Court to enforce execution: Subject to such conditions and limitations as may be prescribed, the Court may, on the application of the decree-holder, order execution of the decree :

(a) by delivery of any property specifically decreed;

(b) by attachment and sale or by the sale without attachment of any property;

(c) by arrest and detention in prison for such period not exceeding the period specified in section 58, where arrest and detention is permissible under that section;

(d) by appointing a receiver; or

(e) in such other manner as the nature of the relief granted may require:

Provided that, where the decree is for the payment of money, execution by detention in prison shall not be ordered unless, after giving the judgment-debtor an opportunity of showing cause why he should not be committed to prison, the Court, for reasons recorded in writing, is satisfied;

(a) that the judgment-debtor, with the object or effect of obstructing or delaying the execution of the decree,

(i) is likely to abscond or leave the local limits of the jurisdiction of the Court, or

(ii) has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property, or committed any other act of bad faith in relation to his property, or

(b) that the judgment-debtor has, or has had since the date of the decree, the means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same, or

(c) that the decree is for a sum for which the judgment-debtor was bound in a fiduciary capacity to account.

Explanation :In the calculation of the means of the judgment-debtor for the purposes of clause (b), there shall be left out of account any property which, by or under any law or custom having the force of law for the time being in force, is exempt from attachment in execution of the decree.

ORDER XXIX- SUITS BY OR AGAINST CORPORATIONS

3 . Power to require personal attendance of officer of corporation— The Court may, at any stage of the suit, require the personal appearance of the secretary or of any director, or other principal officer of the corporation who may be able to answer material questions relating to the suit.

By introduction of the provision the award of Labour Court / Tribunals is now additionally executable by a Civil Court. After the Labour Court/Tribunal passes the award it shall be automatically transmitted to the Civil Court for execution. By this process both the moveable and immovable property of the Judgment Debtor i.e. the person/company against whom the award is passed can be attached. Also the Judgment Debtor can be arrested and put in prison. Earlier the awards were executed by the Revenue Recovery process alone.

The Top management of the Staffing Industry needs to take the legal Process initiated by any Temporary Employees seriously as otherwise ultimately the Directors can be required to be present in Court,in the Execution process and even be detained in a Civil prison on failure of compliance subject to the above legal provisions.

Managing Directors need to be very cautious and call for timely reports from their Compliance Team on the existence of Temporary Employee related litigation or disputes and direct their immediate resolution.Randomly they should directly test check such issues with their Legal counsel handling such cases and direct resolution by direct intervention as otherwise they will become answerable to the Courts of Law..This way the Staffing Company can ensure zero level of Litigation and keep sailing in smooth risk free Business.

With Regards

V.Sounder Rajan

Legal Consultants for Staffing & Recruiting Industry

E-mail : rajanassociates@eth,net,

Dear All,

Immediate Legal questions for the Staffing & Recruiting Industry - The Sales Promotion Employees (Conditions of Service) Act, 1976 (No. 11 of 1976):

When the Staffing Agency is engaging Contract/Temporary Employees to work for Clients in the Pharmaceutical Industry for their sales promotion business, is there any extra legal compliance to be done?

A: Yes. There is an Act called The Sales Promotion Employees (Conditions of Service) Act, 1976 (No. 11 of 1976) which is An Act to regulate certain conditions of service of sales promotion employees in certain Establishments. It applies to every establishment engaged in the pharmaceutical industry.

With Regards,

V. Sounder Rajan
Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry
E-mail: rajanassociates@eth.net

Dear All,

Bonus to Contract Employees

What is the primary liability and responsibility of the Principal Employer to pay Bonus to the Contractors' Employee?

The definition of Employee in the Act is broad:

(13) "Employee" means any person (other than an apprentice) employed on a salary or wage not exceeding [(Note: Subs. by Act No.67 of 1985, Sec.2, for the words "one thousand and six hundred rupees" (w.e.f. 7th November, 1985)) two thousand and five hundred rupees] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment are express or implied;

(14) "Employer" includes -
(i) In relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under Cl. (f) of sub-section (1) of Sec.7 of the Factories Act, 1948, the person named; and

(ii) In relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;

Therefore, the Principal Employer will become liable due to having the ultimate control over the affairs of the establishment.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

ESI PENAL PROVISIONS

What is the sanction, i.e., the punishment for non-compliance of the ESI Act?

The ESI Act contains adequate provisions to penalize persons for violating its provisions. The relevant penal sections, in the matter of coverage, are sections 84, 85, 85-A, 86, and 86-A. Prosecutions under these sections can be filed in criminal courts, and adjudication of the same matter by the Employee's Insurance Court is not a condition precedent.

The salient features of the aforementioned sections are provided herein:

Section 84: This section, among other things, states that whoever, for the purpose of avoiding any payment to be made by himself under the said Act or enabling any other person to avoid any such payment, knowingly makes or causes to be made any false statement or false representations, shall be punishable with imprisonment for a term which may extend to six months or with a fine not exceeding two thousand rupees, or with both.

Thus, if any employer, whose factory or establishment is coverable, knowingly makes a false representation/statement about the coverage, he is liable to be punished under this section.

Section 85: Under this section, among other things, any person who is guilty of any contravention of or non-compliance with any of the requirements of the Act/rules/regulations shall be punishable with imprisonment for a term which may extend to one year or with a fine which may extend to four thousand rupees, or with both.

Failure to cover a coverable entity is punishable under this provision. The pendency of the employer's application for exemption under sections 87, 88, and 90 of the Act does not grant any immunity to the employer from this provision, as has been held by the Kerala High Court in P. Renuka Vs. ESIC.

Section 85-A: This section lays down that if any person, already convicted for any offence punishable under the Act, commits the same offence, he shall be punished with imprisonment for a term which may extend to two years and with a fine of five thousand rupees.

Section 86: According to this section, the prosecution against an employer or any other person shall be instituted with the previous sanction of the Insurance Commissioner or any other authorized officer of the Corporation. Under this provision, the power to sanction prosecution has been delegated to the Regional Directors and in charges of sub-regions.

A complaint for any offence under the Act has to be filed in writing in any court having jurisdiction but not inferior to that of the Metropolitan Magistrate or First Class Judicial Magistrate.

The complaint should be filed against the right person. In Ranjit Kumar Nandy Vs. ESIC, a complaint was filed against a person, with appropriate sanction, but subsequently, the real name of the suspect was found to be different. On this fact, the Calcutta High Court dismissed the case.

Section 86-A: If the person committing an offence under the ESI Act is a company (i.e., a body corporate including a firm and other associations of individuals), every person who was in charge of the company shall be liable to be proceeded against and punished unless it is proved that the offence was committed without his knowledge or despite the exercise of due diligence to prevent the same. Thus, any director, manager, secretary, etc., who has consented, connived, or was negligent in the matter of the commission of any such offence is guilty of that offence.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

What will be the risk if the Contractor engaged does not hold a valid CLRA license?

In such a case, the Principal Employer loses the opportunity to distinguish his direct employees from those of the Contractors. He will also run the risk of the Contractor's employees claiming permanency.

The risk is compounded because of the definition of 'workman' in section 2(1)(b) of the Contract Labour (Regulation and Abolition) Act, 1970, implies that if the workman is not hired through a contractor holding a valid license under the CLRA Act, he would be treated as a workman employed by the Principal Employer.

It is always a safe bet to get a CLRA License. It is a Protective Shield.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

E-mail: rajanassociates@eth.net

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

SUICIDE BY TEMPORARY EMPLOYEE

In the Staffing Industry, there are cases of suicide by Temporary Employees for various reasons. In all cases, it will happen outside working hours and the workplace. How do we handle them?

Even if there is a Personal Accident Policy, the insurer will not honor it for suicide. Therefore, the dependents will be left high and dry. The place of suicide being away from the workplace, the Staffing Company's liability is excluded unless the cause is traced to specific employment issues like harassment in the workplace (not personal problems like a love affair, etc.).

Full and final settlement for the dependents will comprise unpaid salary till LWD, encashment of unavailed leave, and other payments, including gratuity to the dependents. For a married person, the wife and mother are legally entitled to get 50% each of the F & F.

Apart from this, there is a social problem of the breadwinner dying. Staffing Companies need to address this social issue in the long run by providing some sort of Solatium Fund to meet such exigencies.

With Regards,

V. Sounder Rajan

Advocates & Notaries & Legal Consultants for Recruiting & Staffing Industry

Email: rajanassociates@eth.net

Dear Sir,

I would like to know which are the top contract staffing companies in India. If you could provide me with statistics, it will be of great help. Also, what are the terms and conditions that have to be followed for contract staffing?

Regards,
Vinod

Dear,

Please see the following links for information on the top staffing consulting companies in India:

1. [CiteHR - Top 10 Staffing Consulting Companies in India](https://www.citehr.com/70981-top-10-staffing-consulting-companies-india.html)

2. [My Views! - Top Ten Staffing Agencies](http://itsmejayan.blogspot.com/2009/11/top-ten-staffing-agencies.html)

Thank you,
rajanassociates

Subject: CLRA Compliance Assessment

Dear All,

CLRA - Contract Labour (Regulation & Abolition) Act - Registration Compliance Assessment by Staffing Companies.

In relation to the number of contracts with clients of staffing companies requiring CLRA compliance -

CLRA REGISTRATION INDICATOR:

5/5 Strong CLRA Compliance
4/5 Above-average CLRA Compliance
3/5 Average CLRA Compliance
2/5 Below-average CLRA Compliance
1/5 Poor CLRA Compliance

Managing Directors and CEOs of staffing companies need to make a CLRA Compliance Assessment on a quarterly basis. The self-rating will help them assess the risk. A higher CLRA compliance rating will also be a selling point to gain a higher market share for the staffing company.

Before the enforcement machinery of CLRA lands at your doorstep, the staffing company, through self-assessment, can achieve the rating of Strong and claim "Excellence in Compliance."

With Regards,

V. Sounder Rajan

Advocates & Notaries - Legal Consultants for the Indian Staffing and Recruiting Industry

E-mail: rajanassociates@eth.net

Subject: Splitting of Minimum Wages for the purpose of PF contribution not permissible

Dear All,

Staffing Industry Professionals need to be aware that according to Circular No.: Coord/4(6)2003/Clarification/Vol-II/ Dated: 23-05-2011 of Mr. K.C. Pandey, Addl. Central P.F. Commissioner (Compliance), Employees Provident Fund Organization (Ministry of Labour & Employment, Govt. of India), Head Office, Bhavrshya Yidhr Bhawan, 14, Bhikaiji Cama Place, New Delhi - 110 066, splitting of Minimum Wages for the purpose of PF contribution is not permissible. All covered Establishments are directed to ensure that P.F. Contributions are not remitted on wages less than Minimum Wages since every employer is legally bound to pay at least minimum wages to his/her employees and minimum wages are not amenable to split up. It is one pay package.

Further, it has been intimated and made abundantly clear by the Circular that the basic wage in no case can be lesser than the minimum wage as the same is not only contrary to the law of the land but is also beyond logic and rationale. An establishment that cannot pay even minimum wages to its employees would not be willing to pay allowances to them. If such instances exist, there is certainly a malafide motive, which may be considered as knowingly making or causing to make false statement/representation punishable under Section 14(1) of EPF & MP Act, 1952. It may also attract the provision of section 418 of IPC.

Staffing Companies need to address themselves to the compliance of the Circular to avoid prosecution under Section 14(1) of EPF & MP Act, 1952. It may also attract the provision of section 418 of IPC.

The Circular is reproduced below for easy reference.

With Regards,

V. Sounder Rajan
Advocates & Notaries - Legal Consultants for the Indian Staffing and Recruiting Industry
Email: rajanassociates@eth.net

EMPLOYEES&rsquo; PROVIDENT FUND ORGANISATION
EMPLOYEES&rsquo; PROVIDENT FUND ORGANISATION, (Ministry of Labour & Employment, Govt. of India), Head Office, Bhavrshya Yidhr Bhawan, 14, Bhikaiji Cama Place, New Delhi - 110 066.

No.: Coord/4(6)2003/Clarification/Vol-II/ Dated: 23-05-2011

Subject: Splitting of Minimum Wages for the purpose of PF contribution not permissible.

Sir,

Attention of all concerned is invited towards this office circular no. Coord./4(6)2003/Clarification/13633 dated 06.06.2008, vide which it was advised to ensure that P.F. Contributions on at least Minimum Wages are remitted by the establishments. It was also directed to review all such cases disposed of u/s 7A of the Act where determination of dues has taken place on wages lesser than Minimum Wages.

However, it has been observed that still a uniform approach in this regard is not followed by all the field offices which is viewed seriously. It is also observed that the field offices are not duly defending the issue in spite of the fact that the Division Bench of Hon'ble High Court, Karnataka, in the matter of Group 4 Securities Guarding Ltd Vs. RPFC has categorically upheld the view that RPFCs u/s 7A of the Act can examine and look into the nature of the contract entered between the employer and its employees as well as the pay structure to decide whether the pay is being split up under several heads as a subterfuge to avoid PF Contribution.

The order of the Division Bench was challenged by the establishment before the Apex Court. While tentatively upholding the order of the Division Bench, the Hon'ble Supreme Court in its order dated 23.07.2004 again granted liberty to the authorities to decide the matter in accordance with the law on its merits. As such, the authorities have to consider the order of the Division Bench of Hon'ble High Court, Karnataka unless there is substantial evidence to lead otherwise.

Accordingly, the matter has been examined in view of the Apex Court's direction and the following guidelines are issued which should be adhered to and followed by all strictly.

The EPF & MP Act, 1952 is a beneficial social security legislation. In construing the provisions of the Act, it has already been settled earlier that wherever two views are reasonably possible, the view which helps the achievement of the object should be preferred. Accordingly, the assessing authority while determining dues under Section 7A should curb any attempt to curtail the legitimate social security benefits of the employees. It is needless to reiterate the impact of contribution on lesser wages by splitting the wages into different heads, which results in lesser accumulations in PF account and minuscule pension to the member/family.

As you are aware, section 2(b) of EPF & MP Act, 1952, defines the basic wage which excludes all kinds of allowances from being considered as basic wage. As the term suggests, 'basic wage' or 'basic salary' is the base salary provided to a person in lieu of his services. It is without any allowances which may or may not be added to basic wages in terms of employment.

However, it appears that some confusion is prevailing among field offices as to whether basic wages can be lower than the minimum wages or whether an establishment paying minimum wages to its employees can be allowed to split up the wages into various allowances reducing the PF contribution by making it a part of "terms of employment or Contract".

It would be worth noting that the terms 'basic,' 'basic wage,' and 'minimum wage' are defined in the Oxford Dictionary as below:
(i) "basic. Adj.1. forming an essential foundation; fundamental. 2. consisting of the minimum required or offered"
(ii) "basic wage. n. 1 a minimum wage earned before additional payments such as overtime. 2. Austral/NZ/ the minimum living wage, as determined by industrial tribunal"
(iii) "minimum wage, n. the lowest wage permitted by law or by agreement."

Thus, whereas the minimum wage is the lowest permitted wage to be paid to a worker as per law, as upheld and revisited on various occasions by the Hon'ble Supreme Court, basic wage is only relevant for allowing additional allowances by treating it (basic wage) as a basic/floor level.

Another aspect of basic wage/salary is that it is provided to all classes of employees irrespective of the quantum of their salary, and its quantum varies with every class/post of an employee, whereas minimum wage is prescribed only for the lowest-paid employee to whom any lesser payment of wages is not permitted by law.

From the above, it is abundantly clear that the basic wage in no case can be lesser than the minimum wage as the same is not only contrary to the law of the land but is also beyond logic and rationale. An establishment that cannot pay even minimum wages to its employees would not be willing to pay allowances to them. If such instances exist, there is certainly a malafide motive, which may be considered as knowingly making or causing to make false statement/representation punishable under Section 14(1) of EPF & MP Act, 1952. It may also attract the provision of section 418 of IPC.

Further, it also needs to be kept in mind that any agreement which negates any law of the land is ab-initio-void and would have the effect of non-existence. Therefore, any such terms of agreement for employment where the minimum wage is split to reduce the liability under EPF & MP Act, 1952, would be governed by the same logic as it is against the provisions of the Minimum Wages Act and hence illegal.

Also, Minimum Wage being a state matter, clarifications were sought from various state Governments. The replies received reveal that the minimum wage is a lump sum composite amount arrived at by following the permissible procedure of fixation as revised from time to time, and it cannot be segregated and reclassified. Thus, the State governments have also observed that splitting of minimum wages is not permissible in the eye of the law.

Accordingly, all concerned are directed to ensure that P.F. Contributions are not remitted on wages less than Minimum Wages since every employer is legally bound to pay at least minimum wages to his/her employees, and minimum wages are not amenable to split up. It is one pay package.

It is needless to mention that wherever the matter regarding splitting of wages is challenged or pending in a court of law, the stand of the department along with all rules and guidelines of the Hon'ble Supreme Court should be effectively utilized to defend the case. It is also mentioned that nothing said above shall come in the way of the implementation/execution of any order of a court of law.

The assessing officers shall examine full facts about the wage structure, minimum wages prescribed by the appropriate govt. for the relevant class and provide a reasonable opportunity to the establishment before deciding the subterfuge, if any.

All the concerned officials/officers are requested to strictly comply with the above said guidelines in regard to the subject matter. Please acknowledge receipt.

(This issue with the approval of CPFC)

(K.C. Pandey) Addl. Central P.F. Commissioner (Compliance)

Copy to:
- FA & CAO/ CVO
- All Add I. CPFCs, Head Office
- Director, NATRSS
- All RPFC-Is, Head Office
- All RPFC IIs, HO
- All DD (Vig.)/DD ( Audit)
- All RPFCs (ZTIs)
- Web Administrator for uploading the circular on the central website of EPFO
- DD (OL.), Head Office &ndash; for release of Hindi Version

Dear All,

Mr. Dinesh Shah, by an email sent to us, has brought to our attention the extract of the following judgment decided on 01/02/2011 by the Punjab & Haryana High Court, which is at variance with Circular No: Coord/4(6)2003/Clarification/Vol-II/Dated: 23-05-2011:

&bull; Employees Provident Fund (Miscellaneous Provisions) Act, 1952, Minimum Wages Act, 1948 Date: 2011.04.01:

ASST. PROVIDENT FUND COMMISSIONER vs. M/S G4S SECURITY SERVICES (INDIA) LTD & ANR [P & H] CWP NO. 15433 OF 2009 (O & M) MAHESH GROVER, J [DECIDED ON 01/02/2011]

Employees Provident Fund (Miscellaneous Provisions) Act, 1952 &ndash; basic wages exclude HRA, etc. &ndash; Minimum Wages Act, 1948 - Basic wages include HRA &ndash; the company excluded HRA and paid contributions accordingly &ndash; PF Commissioner contended that basic wages should be as defined under Minimum Wages Act &ndash; whether correct &ndash; held, no.

Brief Facts: The respondent &ndash; company is an establishment amenable to the provisions of the Employees Provident Fund & Misc. Provisions Act and for the purposes of determining its contribution was taking into consideration the basic wage as given to its employees. The petitioner's grievance is that the respondents were splitting the wage structure of the employees as a subterfuge to dilute its liability and that this was contrary to the wage structure to be considered for the contributions to be made to the Fund under the Act. The precise grievance is that rates of minimum wages that should have been taken into consideration are not being done so by the respondents, and by splitting up the wage structure, there is an evasion of its liability. The Tribunal considered the matter and held that the respondents were right in taking into consideration the basic wage of the employee for determining the contribution to the Fund. The plea of the petitioner was negated, prompting him to file the instant writ petition.

Decision: Petition dismissed

Reason: On due consideration, it is noticed that Section 2(b) of the Employees Provident Fund and Miscellaneous Provisions Act clearly provides that the basic wage means all emoluments earned by an employee while on duty, on leave, or on holidays with wages in either case in accordance with the terms of the contract of employment and which may be paid or payable in cash to him but would not include the cash value of any food concession, any Dearness Allowance, House Rent Allowance, Overtime Allowance, Bonus, Commission, or any other similar allowance payable to an employee in respect of his employment or work done in such an employment.

It is evident that under the provisions of the Employees Provident Fund Act, the definition of wage has an appended exclusion clause in which various allowances, broad in nature, are provided to enable the employee to determine its liability to make the contribution to the fund. The Minimum Wages Act, on the other hand, provides for a definition of wage distinct from that of the basic wage, including House Rent Allowance but excluding certain other allowances detailed therein. The object and reasons of both statutes are manifestly distinct even though they cover the beneficial aspect of the welfare of an employee. The laws of interpretation of statutes also provide that nothing more is to be read into the language of a statute, and words are to be read and interpreted as they exist to acknowledge the legislative intent. Having regard to the aforesaid, there is little hesitation to hold that the contention of the petitioner is misplaced and that the respondents have rightly excluded certain allowances such as House Rent Allowance, Washing Allowance, and Conveyance Allowance while determining the basic wage, and it cannot be said to be unjustified unless they are totally at variance and in complete deviation of the concept of the allowances sought to be under the exclusion clause.

In the Circular, there is no reference to the Judgment in ASST. PROVIDENT FUND COMMISSIONER vs. M/S G4S SECURITY SERVICES (INDIA) LTD & ANR [P & H] CWP NO. 15433 OF 2009 (O & M) MAHESH GROVER, J [DECIDED ON 01/02/2011]. It necessitates clarity on this issue.

With Regards,

V. Sounder Rajan

Advocates & Notaries - Legal Consultants for the Indian Staffing and Recruiting Industry

Email: rajanassociates@eth.net

Dear All,

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

Can the Temporary Employee of a Staffing Agency question his/her termination or retrenchment by an Appeal under the State Shops and Establishments Act?

A: Yes, it can be questioned. Because the termination under the Shops and Establishments Act has to be for a reasonable cause after conducting an inquiry. In such Shop Act Appeals, the Staffing Agency has to take proactive action for settling such disputes out of court.

With Regards,

V. Sounder Rajan

Advocates & Notaries - Legal Consultants for the Indian Staffing and Recruiting Industry

E-mail: rajanassociates@eth.net

Dear All,

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

In our earlier post, the following question came up:

Can the Temporary Employee of a Staffing Agency question his/her termination/retrenchment by an Appeal under the State Shops and Establishments Act?

Now let us see the Appeal provisions to question his/her termination/retrenchment in each State enactment starting with -

ANDHRA PRADESH SHOPS AND ESTABLISHMENTS ACT, 1988

First, the termination provision -

47. Conditions for terminating the services of an employee, payment of service compensation for termination, retirement, resignation, disablement, etc., and payment of subsistence allowance for the period of suspension: (1) No employer shall, without a reasonable cause, terminate the service of an employee who has been in his employment continuously for a period of not less than six months without giving such employee at least one month's notice in writing or wages in lieu thereof and in respect of an employee who has been in his employment continuously for a period of not less than one year, a service compensation amounting to fifteen days' average wages for each year of continuous employment:

Provided that every termination shall be made by the employer in writing, and a copy of such termination order shall be furnished to the Inspector having jurisdiction over the area within three days of such termination.

(2) The services of an employee shall not be terminated by the employer when such employee made a complaint to the Inspector regarding the denial of any benefit accruing to him under any labor welfare enactment applicable to the establishment and during the pendency of such complaint before the Inspector. The services of an employee shall not also be terminated for misconduct except for such acts or omissions and in such manner as may be prescribed.

(3) Every employee who has put in a continuous service of not less than one year shall be eligible for service compensation amounting to fifteen days' average wages for each year of continuous employment, (i) on voluntary cessation of his work after completion of 60 years of age, (ii) on his resignation, or (iii) on physical or mental infirmity duly certified by Registered Medical Practitioner, or (iv) on his death or disablement due to accident or disease:

Provided that the completion of continuous service of one year shall not be necessary where the termination of the employment of an employee is due to death or disablement:

Provided further that in a case of death of an employee service compensation payable to him shall be paid to his nominee or if no nomination has been made to his legal heir.

(4) Where a service compensation is payable under this section to an employee, he shall be entitled to receive his wages from the date of termination or cessation of his services until the date on which the service compensation so payable is actually paid.

(5) The payment of service compensation under this section shall not apply in cases where the employee is entitled to gratuity under the Payment of Gratuity Act, 1972 (Central Act 39 of 1972) and gratuity has been paid accordingly consequent on the termination or cessation of service.

(6) Where an employee is placed under suspension pending inquiry into grave misconduct, the employer shall pay a subsistence allowance equivalent to fifty percent of the last drawn wage for the first six months and at seventy-five percent of the last drawn wage beyond six months during the period of suspension. The total period of suspension shall not, however, exceed one year in any case. If the misconduct is not established or the total period of suspension exceeds one year, the employee shall be entitled to full wages during the suspension period, and the period of suspension shall be treated as on duty.

Explanation: (1) For the purpose of this section:

(a) the term employee shall include part-time employee also;

(b) the expression average wages means the daily average of wages for the days an employee actually worked during the thirty days immediately preceding the date of termination or cessation of service;

(c) the expression wages does not include overtime wages;

(d) an employee in an establishment shall be deemed to have been in continuous employment for a period of not less than six months if he has worked for not less than one hundred and twenty days in that establishment within a period of six months immediately preceding the date of termination or cessation of the service of that employee.

(e) where the total continuous employment is for a fraction of a year or extends over a fraction of a year in addition to one or more completed years of continuous employment, such fraction, if it is not less than a half-year, shall be counted as a year of continuous employment in calculating the total number of years for which the service compensation is to be given;

(f) the service compensation of an employee whose services have been terminated for any act, willful omission or negligence causing any damage or loss to, or destruction of property belonging to the employer, shall be forfeited to the extent of the damage or loss caused;

(g) disablement means such disablement which incapacitates an employee for the work which he was capable of performing before the accident or disease resulting in such disablement.

(2) An employee who has completed the age of sixty years or who is physically or mentally unfit having been so declared by a Registered Medical Practitioner or who wants to retire on medical grounds or to resign his service may give up his employment after giving to his employer notice of at least fifteen days and where no such notice is given, the service compensation payable to him shall be forfeited to the extent of fifteen days in lieu of the notice.

Now the Appeal section -

48. Appointment of authority to hear and decide appeals arising out of termination of services: (1)(a) The Chief Inspector may, by notification, appoint for any area as may be specified therein, any authority to hear and decide appeals arising out of the termination of service of employees under Section 47:

Provided that the Chief Inspector may on administrative grounds transfer any appeal arising in the territorial jurisdiction of any authority to the file of another authority for disposal, and such authority to whom the appeal is transferred by the Chief Inspector shall dispose of the appeal so transferred.

(b) Any employee whose services have been terminated may appeal to the authority concerned within such time and in such manner as may be prescribed.

(2) The appellate authority may, after an inquiry in the prescribed manner, dismiss the appeal or direct the reinstatement of the employee with or without wages for the period he was kept out of employment or direct payment of compensation without reinstatement or grant such other relief as it deems fit in the circumstances of the case:

Provided that the authority concerned shall, without delay, hear such appeal and pass such orders within a period of three months from the date of receipt of such appeal:

Provided further that where any such authority considers it necessary or expedient so to do, it may, for reasons to be recorded in writing, extend such period by such a further period as it may think fit:

Provided also that no proceedings before such authority shall lapse merely on the grounds that any period specified in this subsection had expired without such proceedings being completed.

(3) Against any decision of the authority under subsection (2), a second appeal shall lie to such authority as may be notified by the Government within thirty days from the date of communication of the decision, and the decision of such authority on such appeal shall be final and binding on both the employer and the employee and shall be given effect to within such time as may be specified in the order of that authority:

Provided that the second appeal shall not be entertained unless the employer deposits the entire amount of back wages as ordered by the appellate authority under subsection (2) or the amount of compensation ordered as the case may be:

Provided further that if the second appeal is against the order of reinstatement given by the appellate authority under subsection (2), the employee shall be entitled to wages last drawn by him during the pendency of the proceedings before the appellate authority.

(4) Where in any case, an appellate authority by its award directs reinstatement of any employee and the employer challenges such award in any Court of Law, the employer shall be liable to pay such employee during the pendency of such proceedings, full wages last drawn by him, if the employee had not been employed in any establishment during such period and an affidavit by such employee had been filed to that effect in such Court:

Provided that where it is proved to the satisfaction of the Court that such employee has been employed and has been receiving remuneration during any such period or part thereof the Court shall order that no wage shall be payable under this section for such period or part, as the case may be.

(5) Any amount directed to be paid under this section may be recovered:

(a) if the authority appointed under subsection (1) is a Magistrate, by the authority, as if it were a fine imposed by him as Magistrate; and

(b) If the authority is not a Magistrate, by any Magistrate to whom the authority makes the application in this behalf as if it were a fine imposed by such Magistrate.

Therefore, the power under Section 48 is wide. Staffing Companies operating/employing Temporary Employees in the State of Andhra Pradesh need to take absolute precautions while firing their Temporary Employees.

With Regards,

V. Sounder Rajan

Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

Dear All,

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

In our earlier post, the following question came up:

Can the Temporary Employee of a Staffing Agency question his/her termination/retrenchment by an Appeal under the State Shops and Establishments Act?

Now let us see the Appeal provisions to question his/her termination/retrenchment in each State enactment starting with -

TAMIL NADU SHOPS AND ESTABLISHMENTS ACT

First, the termination provision -

Section 41 of the Act reads as follows:

"41. Notice of dismissal: (1) No employer shall dispense with the services of a person employed continuously for a period of not less than six months, except for a reasonable cause and without giving such person at least one month's notice or wages in lieu of such notice, provided, however, that such notice shall not be necessary where the services of such person are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an enquiry held for the purpose.

(2) The person employed shall have a right to appeal to such authority and within such time as may be prescribed either on the ground that there was no reasonable cause for dispensing with his services or on the ground that he had not been guilty of misconduct as held by the employer.

(3) The decision of the Appellate Authority shall be final and binding on both the employer and the person employed."

The termination of Temporary Employees in the State of Tamil Nadu, if it is on the ground of misconduct, is to be supported by satisfactory evidence recorded at an enquiry held for the purpose.

Staffing Companies need to be careful when their clients make the request for termination.

With Regards,

V. Sounder Rajan

Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

Dear All,

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

In our earlier post, the following question came up:

Can the temporary employee of a staffing agency question his/her termination or retrenchment by an appeal under the State Shops and Establishments Act?

Now let us see the appeal provisions to question his/her termination or retrenchment in Kerala State.

KERALA SHOPS AND ESTABLISHMENTS ACT 1960

First, the termination provision -

18. Notice of Dismissal.&mdash;(1) No employer shall dispense with the services of an employee employed continuously for a period of not less than six months, except for a reasonable cause and without giving such employee at least one month&rsquo;s notice or wages in lieu of such notice; provided, however, that such notice shall not be necessary where the services of such employee are dispensed with on a charge of misconduct supported by satisfactory evidence recorded at an inquiry held for the purpose.

(2) Any employee whose services are dispensed with may appeal to such authority and within such time as may be prescribed either on the ground that there was no reasonable cause for dispensing with his services or on the ground that he has not been guilty of misconduct as held by the employer.

(3) The appellate authority may, after giving notice in the prescribed manner to the employer and the employee, dismiss the appeal or direct the reinstatement of the employee with or without wages for the period he was kept out of employment or direct payment of compensation without reinstatement or grant such other relief as it deems fit in the circumstances of the case.

(4) In directing the reinstatement of an employee, the appellate authority shall also direct the payment of such amount of compensation as may be specified by him in case the employer fails to reinstate the employee in accordance with the directions.

(4A) In directing the payment of compensation under subsection (3) or subsection (4), the appellate authority may include as part of the compensation the wages of the employee for the period he was kept out of employment.

(5) The decision of the appellate authority shall be final and binding on both the parties, not be liable to be questioned in any court of law, and be given effect to within such time as may be specified in the order of the appellate authority.

(6) Any compensation required to be paid by the employer under subsections (3) and (4) but not paid by him shall be recoverable as arrears of land revenue under the provisions of the Revenue Recovery Act for the time being in force.

The termination of a temporary employee in the State of Kerala, if it is to be on the ground of misconduct, is to be supported by satisfactory evidence recorded at an inquiry held for the purpose.

Staffing companies need to be careful when their clients make the request for termination.

With Regards,

V. Sounder Rajan

Advocates & Notaries - Legal Consultants

Email: rajanassociates@eth.net

Dear All

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

In our earlier post the following question came up:

Can the Temporary Employee of a Staffing Agency question his/her termination,/ retrenchment by an Appeal under the State Shops and Establishments Act ?

Now let us see the Appeal provisions to question his/her termination,/ retrenchment in each State enactment :

Goa, Daman, Diu Shops-Establishment Act1973

39. Conditions for terminating the service of an employee and payment of gratuity.— (7) No employer

shall without a reasonable cause and except for misconduct, terminate the service of an employee who has been in his employment continuously for a period of not less than six months without giving such employee, at least one month's notice in writing or wages in lieu thereof and a gratuity amounting to fifteen day's average wages for each year of continous

employment.

Explanation.— For the purpose of this sub-section:

(a) the expression "wages" does not include over time wages;

(b) the expression "wages" means the daily average of wages for the days an employee actually worked during the thirty days immediately preceding the date of termination of service;

(c) an employee in an establishment shall be deemed to have been in continuous employment for a period of not less than six months, if he has worked for not less than one hundred and twenty days in that establishment within a period of six months immediately preceding the date of termination of the service of that employee;

(d) where the total continuous employment is for a fraction of a year or extends over a fraction of a year in addition to one or more completed years of continuous employment, such fraction, if it is not less than half a year shall be counted as a year of continuous employment in calculating the total number of year for which the gratuity is to be given. (2) Where a gratuity is payable under sub-section (1) to an employee, he shall be entitled to receive his wages from the date of termination of his service until the date on which the gratuity so payable is actually paid subject to a maximum of wages for two months.

(3) An employee, who has completed the age of sixty years or who is physically or mentally unfit having been

so declared by a medical certificate or who wants to retire on medical grounds or to resign his service, may give up his employment after giving to his employer notice of at least one month and every such employee and the dependent of an employee who dies while in service, shall be entitled to receive a gratuity amounting to fifteen days' average wages for each year of continuous employment calculated in the manner provided in the Explanation to sub-section (1). He shall be entitled to receive the wages from the date giving up the employment until the date on which the gratuity so payable is actually paid, subject to a maximum of wages for two months.

(4) The services of an employee shall not be terminated for misconduct except, for such acts or omissions and in such manner, as may be prescribed.

Explanation.— For the purpose of this section, the term "employee" shall include part-time employee also.

Now the Appeal provision

40. Appointment of authority to hear and decide appeals arising out of termination of service.—

(a) The Government may, by notification, appoint an authority to hear and decide appeals arising out of the termination of service of employee under section 39.

(b) Any employee whose service has been terminated may appeal to the authority concerned within such time and in such manner as may be prescribed.

(2) The authority may, after inquiring in the prescribed manner, dismiss the appeal or direct the reinstatement of the employee with or without wages for the period he was kept out of employment or direct payment of compensation without

reinstatement or grant such other relief as it deems fit in the circumstances of the case.

(3) Against any decision of the authority under sub--section (2), a second appeal shall lie to Labour Court constituted under section 7 of the Industrial disputes Act, 1947 (Central Act 14 of 1947) within thirty days from the date of

communication of the decision and the decision of the Labour Court on such appeal shall be final and binding on both the employer and the employee and shall be given effect to within such time as may be specified in the order of that Court.

(4) Any amount directed to be paid under this section may be recovered—

(a) if the authority is a Magistrate, by the authority, as if it were a fine imposed by him as magistrate; and

(b) if the authority is not a Magistrate, by any Magistrate to whom the authority makes application in

this behalf, as if it were a fine imposed by such Magistrate.

Staffing Companies operating in Goa, Daman, Diu need to be careful when their clients make the request for termination.

With Regards

V.Sounder Rajan

VS Rajan Associates,

Advocates & Notaries -Legal Consultants

No.27, Ist Floor, Singapore Plaza,

No.164, Linghi Chetty Street,

Chennai - 600 001.

E-mail : rajanassociates@eth,net,

Off : 044-42620864, 044-65874684, .

Dear All,

IMMEDIATE LEGAL QUESTIONS FOR PRINCIPAL EMPLOYERS/CLIENTS

The key risks in Staffing/Temping that need to be looked into by the Client are:

(a) Strategic Risk &ndash; The Staffing/Temping organization may conduct business on its own behalf, which is inconsistent with the overall strategic goals of the Client.

(b) Reputation Risk &ndash; Poor service from the service provider, its customer interaction not being consistent with the overall standards of the Client.

(c) Compliance Risk &ndash; Privacy, consumer, Statutory, and Labor laws not adequately complied with.

(d) Operational Risk &ndash; Arising due to technology failure, fraud, error, inadequate financial capacity to fulfill obligations and/or provide remedies.

(e) Exit Strategy Risk &ndash; This could arise from over-reliance on one firm, the loss of relevant skills in the Client itself preventing it from bringing the activity back in-house and contracts entered into wherein speedy exits would be prohibitively expensive.

(f) Country Risk &ndash; Due to the political, social, or legal climate creating added risk.

(h) Contractual Risk &ndash; Arising from whether or not the Client has the ability to enforce the contract.

(i) Concentration and Systemic Risk &ndash; Due to lack of control of individual Client over a Staffing/Temping organization, more so when overall Client has considerable exposure to one Staffing/Temping organization.

With Regards,

V. Sounder Rajan

Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net

Hi all members,

If an employee is appointed in an organization and on the appointment letter it is mentioned that "you are appointed for the post... And you will be on a probation period for one year, and after 1 year, you will be on a regular basis." Along with this, they signed a two-year service bond. Now the question is if a person wants to leave before one year, then what will the procedure be? Can he leave with 1-week notice (as he is on a probation period for 1 year), or does the two-year bond restrict him to do so?

Dear All,

IMMEDIATE LEGAL QUESTIONS FOR INDIAN STAFFING COMPANIES

In our earlier post, the following question came up:

Can the Temporary Employee of a Staffing Agency question his/her termination/retrenchment by an Appeal under the State Shops and Establishments Act?

Now let us see the LEGAL REMEDY provisions to question his/her termination/retrenchment under The Punjab Shops and Commercial Establishments Act, 1958:

22. Notice of removal. -- (1) No employee shall be removed from service unless and until one month's previous notice or pay in lieu thereof has been given to him:
Provided that &ndash;

(a) no employee shall be entitled to the notice or pay in lieu thereof if he is removed on account of misconduct established on record;

(b) no employee shall be entitled to one month's notice or notice pay unless and until he has been in the service of the employee continuously for a period of three months.

(2) In any case instituted for a contravention of the provisions of sub-section (1), if a Judicial Magistrate is satisfied that an employee has been removed without reasonable cause, the Judicial Magistrate shall, for reasons to be recorded in writing, award compensation to the employee equivalent to two months' salary;
Provided that no such claim shall be entertained unless it is preferred by the employee within six months from the date of his removal.

(3) The amount payable as compensation under this section shall be in addition to, and recoverable as fine payable under section 26.

(4) No person who has been awarded compensation under this section shall be entitled to bring a civil suit in respect of the same claim.

23. Notice by employee. -- (1) No employee, who has been in the service of the employer continuously for a period of three months, shall terminate his employment unless he has given to his employer seven days' previous notice or pay in lieu thereof.

(2) Where an employee contravenes the provisions of sub-section (1), his employer may forfeit his unpaid wages for a period not exceeding seven days.

The Punjab Act is balanced and provides notice periods for both the Employer and Employee.

With Regards,

V.Sounder Rajan

Advocates & Notaries - Legal Consultants

E-mail: rajanassociates@eth.net